SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

[X] QUARTERLY  REPORT  PURSUANT  TO  SECTION  13 OR 15 (d) OF THE SECURITIES
    EXCHANGE  ACT OF  1934  FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000

                                   OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
    EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM              TO


                        Commission file number: 000-21137

                            R&G FINANCIAL CORPORATION
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


         Puerto Rico                                        66-0532217
   -----------------------                               ----------------
   (State of incorporation                               (I.R.S. Employer
       or organization)                                 Identification No. )

  280 Jesus T. Pinero Avenue
Hato Rey, San Juan, Puerto Rico                                00918
--------------------------------------------------------------------------------
(Address of principal executive offices)                     (Zip Code)


                                 (787) 758-2424
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)

Indicate by check mark whether  Registrant (a) has filed all reports required to
be filed by Section 13 or 15 (d) of the  Securities  Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  report  (s) and (b) has  been  subject  to such  filing
requirements for at least 90 days.

                                    YES [ X ]   NO    [  ]

Number of  shares  of Class B Common  Stock  outstanding  as of March 31,  2000:
10,219,012.  (Does not include  18,440,556  Class A Shares of Common Stock which
are  exchangeable  into  Class B Shares  of  Common  Stock at the  option of the
holder.)
<PAGE>

                            R&G FINANCIAL CORPORATION

                                      INDEX



Part I  -  Financial Information
           ---------------------                                           Page

Item 1.  Consolidated Financial Statements .................................  3

             Consolidated Statement of Financial Condition as of
                      March 31, 2000 (Unaudited) and December 31, 1999......  3

             Consolidated Statements of Income for the Three
                      Months Ended March 31, 2000 and 1999 (Unaudited)......  4

             Consolidated Statements of Comprehensive Income for the Three
                      Months Ended March 31, 2000 and 1999 (Unaudited)....... 5

             Consolidated Statements of Cash Flows for the Three Months
                      Ended March 31, 2000 and 1999 (Unaudited) ............. 6

             Notes to Unaudited Consolidated Financial Statements ........... 7


Item 2   Management's Discussion and Analysis............................... 14

Item 3   Quantitative and Qualitative Disclosures about Market Risk......... 17


Part II  - Other Information

Item 1.  Legal Proceedings ................................................. 17

Item 2.  Changes in Securities ............................................. 17

Item 3.  Defaults upon Senior Securities ................................... 17

Item 4.  Submission of Matters ............................................. 17

Item 5.  Other Information ................................................. 18

Item 6.  Exhibits and Reports on Form 8-K .................................. 18

                  Signatures ............................................... 18

                                       2


<PAGE>
                        PART 1 - FINANCIAL INFORMATION

Item 1:Consolidated Financial Statements
<TABLE>
<CAPTION>
R&G FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION


                                                                                          March 31,         December 31,
                                                                                            2000                1999
                                                                                     ---------------      ---------------
ASSETS                                                                                  (Unaudited)
<S>                                                                                  <C>                 <C>
Cash and due from banks ........................................................     $    34,818,742      $    42,251,508
Money market investments:
    Securities purchased under agreements to resell ............................           7,017,275                   --
    Time deposits with other banks .............................................          28,494,723           23,744,037
    Federal funds sold .........................................................                  --                   --
Mortgage loans held for sale, at lower of cost or market .......................          97,976,426           77,277,133
Mortgage-backed securities held for trading, at fair value .....................          14,966,981           43,563,817
Mortgage-backed securities available for sale, at fair value ...................         703,737,979          712,705,165
Mortgage-backed securities held to maturity, at amortized cost
(estimated market value: 2000 - $21,517,036; 1999 - $23,305,029) ...............          22,338,300           23,249,247
Investment securities available for sale, at fair value ........................         320,655,791          258,163,657
Investment securities held to maturity, at amortized cost
(estimated market value: 2000- $5,395,170; 1999- $5,403,755) ...................           5,435,820            5,437,630
Loans receivable, net ..........................................................       1,714,800,299        1,563,006,802
Accounts receivable, including advances to investors, net ......................          17,068,195           16,230,457
Accrued interest receivable ....................................................          22,623,770           22,386,746
Servicing Asset ................................................................          86,603,354           84,252,506
Premises and equipment .........................................................          19,241,061           19,459,353
Other assets ...................................................................          26,056,413           20,264,778
                                                                                     ---------------      ---------------
                                                                                     $ 3,121,835,129      $ 2,911,992,836
                                                                                     ===============      ===============

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
     Deposits ..................................................................     $ 1,434,860,852      $ 1,330,506,368
     Federal funds purchased ...................................................          25,000,000           15,000,000
     Securities sold under agreements to repurchase ............................         780,850,091          731,341,340
     Notes payable .............................................................         113,995,751          132,707,001
     Advances from FHLB ........................................................         435,000,000          384,000,000
     Other borrowings ..........................................................           9,557,172            9,842,894
     Accounts payable and accrued liabilities ..................................          41,072,337           33,917,329
     Other liabilities .........................................................           6,269,599            5,142,627
                                                                                     ---------------      ---------------
                                                                                       2,846,605,802        2,642,457,559
                                                                                     ---------------      ---------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S>                                                                                  <C>                 <C>
Stockholders' equity:
     Preferred stock, $.01 par value, 10,000,000 shares authorized:
          7.40% Monthly Income Preferred Stock, Series A, $25 liquidation value,
          2,000,000 shares authorized, issued and outstanding ..................          50,000,000           50,000,000
          7.75% Monthly Income Preferred Stock, Series B, $25 liquidation value,
          1,000,000 shares authorized, issued and outstanding ..................          25,000,000           25,000,000
     Common stock: .............................................................             184,406              184,406
          Class A - $.01 par value, 40,000,000 shares authorized, 18,440,556
          issued and outstanding ...............................................             102,190              102,177
          Class B - $.01 par value, 20,000,000 shares authorized, 10,219,012
          issued  and outstanding in 2000 (1999 - 10,217,731) ..................          40,761,539           40,753,856
     Additional paid-in capital ................................................         162,981,363          156,193,131
     Retained earnings .........................................................           5,095,658            5,095,658
     Capital reserves of the Bank ..............................................          (8,895,829)          (7,793,951)
                                                                                     ---------------      ---------------
     Accumulated other comprehensive loss ......................................         275,229,327          269,535,277
                                                                                     ---------------      ---------------
                                                                                     $ 3,121,835,129      $ 2,911,992,836
                                                                                     ===============      ===============

</TABLE>

          The accompanying notes are an integral part of these statements.


                                                                               3
<PAGE>
<TABLE>
<CAPTION>
R&G FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME

                                                                      Three month
                                                                     period ended
                                                                       March 31,
                                                            ------------------------------
                                                                2000               1999
                                                            ------------        ----------
                                                                       (Unaudited)
<S>                                                         <C>               <C>
Interest income:
     Loans ............................................     $ 36,728,899      $ 26,053,747
     Money market and other investments ...............        5,207,548         1,296,223
     Mortgage-backed securities .......................       11,346,540         8,035,385
                                                            ------------      ------------
                                                              53,282,987        35,385,355
                                                            ------------      ------------
Interest expense:
     Deposits .........................................       17,026,210        11,460,159
     Securities sold under agreements to repurchase ...       10,535,209         5,374,542
     Notes payable ....................................        3,364,353         3,729,187
          Other .......................................        5,597,206         1,587,320
                                                            ------------      ------------
          Total interest expense ......................       36,522,978        22,151,208
                                                            ------------      ------------
Net interest income ...................................       16,760,009        13,234,147
Provision for loan losses .............................       (1,350,000)       (1,300,000)
                                                            ------------      ------------
Net interest income after provision for loan losses ...       15,410,009        11,934,147
                                                            ------------      ------------
 Other income:
     Net gain on origination and sale of loans ........        7,324,164        10,497,736
     Loan administration and servicing fees ...........        7,611,148         5,760,770
     Service charges, fees and other ..................        1,488,632         1,485,172
                                                            ------------      ------------
                                                              16,423,944        17,743,678
                                                            ------------      ------------
          Total revenues ..............................       31,833,953        29,677,825
                                                            ------------      ------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S>                                                         <C>               <C>
Operating expenses:
     Employee compensation and benefits ...............        7,227,430         4,770,004
     Office occupancy and equipment ...................        3,251,909         2,389,800
     Other administrative and general .................        9,593,130         7,677,815
                                                            ------------      ------------
                                                              20,072,469        14,837,619
                                                            ------------      ------------
Income before income taxes ............................       11,761,484        14,840,206
                                                            ------------      ------------
Income tax expense:
     Current ..........................................        2,431,428         1,924,408
     Deferred .........................................         (157,174)        1,764,920
                                                            ------------      ------------
                                                               2,274,254         3,689,328
                                                            ------------      ------------
          Net income ..................................        9,487,230        11,150,878
Less:  Dividends on preferred stoxk ...................        1,409,375           925,000
                                                            ------------      ------------
Net income available to common stockholders ...........     $  8,077,855        10,225,878
                                                            ============      ============
Earnings per common share - Basic .....................     $       0.28      $       0.36
                                                            ============      ============
                          - Diluted ...................     $       0.28      $       0.35
                                                            ============      ============
Weighted average number of shares outstanding - Basic .       28,659,107        28,600,647
                                              - Diluted       29,316,344        29,342,647
</TABLE>

        The accompanying notes are an integral part of these statements.


                                                                               4
<PAGE>
<TABLE>
<CAPTION>
R&G Financial Corporation
Consolidated Statements of Comprehensive Income


                                                                                Three month
                                                                                period ended
                                                                                  March 31,
                                                                      ------------------------------
                                                                           2000               1999
                                                                      ------------      ------------
<S>                                                                   <C>               <C>
Net income ......................................................     $  9,487,230      $ 11,150,878
                                                                      ------------      ------------

Other comprehensive income, before tax:

Unrealized losses on securities:

     Arising during period ......................................       (1,886,302)       (1,200,797)
     Less: Reclassification adjustments for losses included in
                 net income .....................................           79,945           136,002
                                                                      ------------      ------------
                                                                        (1,806,357)       (1,064,795)


Income tax benefit related to items of other comprehensive income          704,479           415,270
                                                                      ------------      ------------

Other comprehensive loss, net of tax ............................       (1,101,878)         (649,525)
                                                                      ------------      ------------

Comprehensive income, net of tax ................................     $  8,385,352      $ 10,501,353
                                                                      ============      ============

</TABLE>
        The accompanying notes are an integral part of these statements.

                                                                               5
<PAGE>
<TABLE>
<CAPTION>
R&G  FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                                                                      Three month
                                                                                                      Period ended
                                                                                                        March, 31
                                                                                             --------------------------------
                                                                                                 2000               1999
                                                                                             -------------      -------------
                                                                                                     (Unaudited)
<S>                                                                                         <C>                  <C>
Cash flows from operating activities:
     Net income ...................................................................        $   9,487,230         $  11,150,878
                                                                                           -------------         -------------
Adjustments to reconcile net income to net cash provided by operating activities:
      Depreciation and amortization ...............................................            1,231,838               891,342
      Amortization of premium on investments and mortgage-backed ..................               62,433                13,141
            securities, net .......................................................            2,315,595             1,634,426
      Amortization of servicing rights ............................................            1,350,000             1,300,000
      Provision for loan losses ...................................................              150,000               100,000
      Provision for bad debts in accounts  receivable .............................                   --            (2,578,960)
      Gain on sales of  loans .....................................................               79,945               136,002
      Loss on sales of mortgage-backed and investment securities available for sale               62,872               181,718
      Unrealized loss on trading securities .......................................          (37,885,010)          (42,955,011)
      Increase in mortgage loans held for sale ....................................           28,533,964            (2,260,268)
      Net decrease (increase) in mortgage-backed  securities held for trading .....           (1,224,762)           (3,911,376)
      Increase in receivables .....................................................           (5,999,110)              310,741
      (Increase) decrease in other assets .........................................          (18,996,972)          (10,278,927)
      Decrease in notes payable ...................................................            7,859,487              (930,362)
      Increase (decrease) in accounts payable and accrued liabilities
      Increase in other liabilities ...............................................            1,126,972             1,683,583
                                                                                           -------------         -------------
               Total adjustments ..................................................          (21,332,748)          (56,663,951)
                                                                                           -------------         -------------
               Net cash (used)  provided  in operating activities .................          (11,845,518)          (45,513,073)
                                                                                           -------------         -------------
Cash flows from investing activities:
      Purchases of investment securities ..........................................          (58,790,740)          (29,600,000)
       Proceeds from sales and maturities of securities available for sale ........           25,977,231            63,415,118
      Proceeds from maturities of securities held to maturity .....................                   --                    --
      Proceeds from sales of loans ................................................           19,306,593            49,660,184
      Net originations of loans ...................................................         (172,450,090)         (143,853,477)
      Purchases of  FHLB stock, net ...............................................           (4,561,700)                   --
      Acquisition of premises and equipment .......................................             (806,071)           (1,308,900)
      Acquisition of servicing rights .............................................           (4,666,443)           (5,357,624)
                                                                                           -------------         -------------
               Net cash used by investing activities ..............................         (195,991,220)          (67,044,699)
                                                                                           -------------         -------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S>                                                                                          <C>                <C>
Cash flows from financing activities:
     Increase in deposits - net ........................................................       104,354,484         86,993,206
     Increase in federal funds purchased ...............................................        10,000,000                 --
     Increase (decrease) in securities sold under agreements to repurchase - net .......        49,508,751        (48,080,804)
     Advances from FHLB, net ...........................................................        51,000,000         20,000,000
     Proceeds from issuance of common stock ............................................             7,696            159,500
     Cash dividends:
          Common stock .................................................................        (1,289,623)          (943,360)
          Preferred stock ..............................................................        (1,409,375)          (925,000)
            Net cash provided by financing activities ..................................       212,171,933         57,203,542
Cash and cash equivalents at  beginning of  period .....................................         4,335,195        (55,354,230)
Cash and cash equivalents at end of period .............................................        65,995,545        103,728,448
                                                                                             -------------      -------------
                                                                                             $  70,330,740      $  48,374,218
                                                                                             =============      =============
Cash and cash equivalents include:
     Cash and due from banks ...........................................................     $  34,818,742      $  35,700,762
     Securities purchased under agreements to resell ...................................         7,017,275          7,501,490
     Time deposits with other banks ....................................................        28,494,723          5,171,966
     Federal funds sold ................................................................                --                 --
                                                                                             -------------      -------------
                                                                                             $  70,330,740      $  48,374,218
                                                                                             =============      =============
</TABLE>
        The accompanying notes are an integral part of these statements.

                                                                               6
<PAGE>
R&G FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1  -         REPORTING ENTITY AND BASIS OF PRESENTATION


Reporting entity

         The accompanying  unaudited  consolidated  financial statements include
the accounts of R&G  Financial  Corporation  (the  Company) and its wholly owned
subsidiaries,  R&G Mortgage Corp. ("R&G  Mortgage"),  a Puerto Rico corporation,
and R-G Premier Bank of Puerto Rico (the "Bank"),  a commercial  bank  chartered
under the laws of the Commonwealth of Puerto Rico.

         R&G  Mortgage  is engaged  primarily  in the  business  of  originating
FHA-insured,  VA  guaranteed,  and privately  insured first and second  mortgage
loans on residential real estate. R&G Mortgage pools loans into  mortgage-backed
securities  and  collateralized  mortgage  obligation  certificates  for sale to
investors.  After  selling the loans,  it retains the  servicing  function.  R&G
Mortgage  is also a  seller-servicer  of  conventional  loans.  R&G  Mortgage is
licensed by the  Secretary of the Treasury of Puerto Rico as a mortgage  company
and is duly authorized to do business in the Commonwealth of Puerto Rico.

         R&G  Mortgage  is  also   engaged  in  the   business  of   originating
non-conforming  conventional  first mortgage loans on residential real estate (1
to 4 families),  including B&C credit  quality loans,  through its  wholly-owned
subsidiary Champion Mortgage Corporation.

         The  Bank  provides  a  full  range  of  banking  services,   including
residential,  commercial and personal  loans and a diversified  range of deposit
products through twenty- three branches located mainly in the northeastern  part
of the  Commonwealth of Puerto Rico. The Bank also provides  private banking and
trust and other financial services to its customers.  The Bank is subject to the
regulations  of certain  federal  and local  agencies,  and  undergoes  periodic
examinations by those regulatory agencies.

         The Bank also is engaged in the business of originating FHA insured, VA
guaranteed and privately  insured first and second mortgage loans on residential
real estate (1 to 4 families) in the State of New York through its  wholly-owned
subsidiary Continental Capital Corporation.

Basis of presentation

         The accompanying  unaudited consolidated financial statements have been
prepared in accordance with the instructions for Form 10-Q. Accordingly, they do
not include all of the information and footnotes  required by generally accepted
accounting principles.  However, in the opinion of management,  the accompanying
unaudited consolidated financial statements contain all adjustments (principally
consisting of normal recurring  accruals)  necessary for a fair  presentation of
the  Company's  financial  condition  as of March 31,  2000 and the  results  of
operations  and changes in its cash flows for the three  months  ended March 31,
2000 and 1999.


                                                                               7
<PAGE>
         The results of  operations  for the three month  period ended March 31,
2000 are not  necessarily  indicative of the results to be expected for the year
ending December 31, 2000. The unaudited  consolidated  financial  statements and
notes  thereto  should  be  read  in  conjunction  with  the  audited  financial
statements and notes thereto for the year ended December 31, 1999.

         Certain  reclassifications (not affecting income before income taxes or
net  income)  have been made to the  consolidated  statements  of income for the
quarter  ended  March 31,  1999 to conform to the  presentation  for the quarter
ended March 31, 2000.


Basis of consolidation

         All  significant  inter-company  balances  and  transactions  have been
eliminated in the accompanying unaudited financial statements.

Accounting for Derivative Instruments and Hedging Activities

         In June 1998, the FASB issued SFAS No. 133-  "Accounting for Derivative
Instruments and Hedging Activities."

         This  Statement  requires that an entity  recognize all  derivatives as
either assets or liabilities in the statement of financial  position and measure
those instruments at fair value. If certain conditions are met, a derivative may
be  specifically  accounted as a hedge.  The  accounting for changes in the fair
value of a derivative (that is, gains and losses) depends on the intended use of
the derivative and the resulting designation.

         This  Statement  is effective  for all fiscal  quarters of fiscal years
beginning  after June 15, 1999. In June 1999 the FASB delayed the effective date
of this statement to all fiscal  quarters of fiscal years  beginning  after June
15, 2000. Initial  application of the statement should be as of the beginning of
an entity's  fiscal  quarter.  Management is evaluating its hedging  strategy in
light of this new  pronouncement  to establish  the initial  designation  of its
hedging activities and determine the effect and timing of adoption. However, due
to the  relatively  limited  extent to which  the  Company  is using  derivative
instruments and the simple nature of the instruments  used,  management does not
expect the impact of adoption to be significant.


NOTE 2  -         EARNINGS PER SHARE

         Basic  earnings  per common  share for the three months ended March 31,
2000 and 1999 are  computed  by  dividing  net  income  for such  periods by the
weighted  average  number  of shares of common  stock  outstanding  during  such
periods.  Outstanding  stock options  granted in  connection  with the Company's
Stock  Option Plan are  included in the  weighted  average  number of shares for
purposes of the diluted earnings per share computation.


                                                                               8
<PAGE>
NOTE 3  -         INVESTMENT AND MORTGAGE-BACKED SECURITIES

         The  carrying   value  and  estimated  fair  value  of  investment  and
mortgage-backed  securities  by  category  are shown  below.  The fair  value of
investment securities is based on quoted market prices and dealer quotes, except
for the investment in Federal Home Loan Bank (FHLB) stock which is valued at its
redemption value.

<TABLE>
<CAPTION>
                                                     March  31,      December 31,
                                                        2000             1999
                                                     -----------     -----------
                                                            (Unaudited)
<S>                                                  <C>             <C>
Mortgage-backed securities held for trading:

     CMO Residuals (all interest only)               $        --     $        --
     GNMA Certificates                                14,966,981      43,563,817
                                                     -----------     -----------
                                                     $14,966,981     $43,563,817
                                                     ===========     ===========

</TABLE>

                                                                               9

<PAGE>
<TABLE>
<CAPTION>
                                                                  March  31, 2000                    December 31, 1999
                                                            -----------------------------     -----------------------------
                                                              Amortized         Fair          Amortized             Fair
                                                                cost            value            cost               value
                                                            ------------     ------------     ------------     ------------
                                                                                  (Unaudited)
<S>                                                         <C>              <C>              <C>              <C>
Mortgage-backed securities available for sale:

CMO residuals (interest only) and other mortgage-backed
securities ............................................     $ 21,352,402     $ 23,434,272     $ 20,709,050     $ 22,772,039
                                                            ------------     ------------     ------------     ------------
FNMA certificates:
     Due from five to ten years .......................          701,027          675,396          740,977          718,979
     Due over ten years ...............................      107,830,121      106,100,841      110,854,889      109,705,450
                                                            ------------     ------------     ------------     ------------
                                                             108,531,148      106,776,237      111,595,866      110,424,429
                                                            ------------     ------------     ------------     ------------
FHLMC certificates:
     Due from one to five years .......................           90,650           90,198           98,693           98,882
     Due from five to ten years .......................        1,227,344        1,187,206        1,891,072        1,840,979
     Due over ten years ...............................       14,511,439       13,887,686       14,586,274       14,036,216
                                                            ------------     ------------     ------------     ------------
                                                              15,829,433       15,165,090       16,576,039       15,976,077
                                                            ------------     ------------     ------------     ------------
GNMA certificates:
     Due from five to ten years .......................       10,005,167        9,848,595               --               --
     Due over ten years ...............................      555,872,271      548,513,785      570,748,830      563,532,620
                                                            ------------     ------------     ------------     ------------
                                                             565,877,438      558,362,380      570,748,830      563,532,620
                                                            ------------     ------------     ------------     ------------
                                                            $711,590,421     $703,737,979     $719,629,785     $712,705,165
                                                            ============     ============     ============     ============
Investment securities available for sale:

U.S.  Treasury securities:
     Due within one year ..............................     $  6,998,757     $  6,950,630     $  4,998,011     $  4,944,500
                                                            ------------     ------------     ------------     ------------
U.S. Government and agencies securities:
      Due from one to five years ......................      161,176,856      157,553,824      133,955,940      130,950,440
      Due from five to ten years ......................      121,824,195      118,764,470       92,236,888       89,443,550
                                                             283,001,051      276,318,294      226,192,828      220,393,990
                                                            ------------     ------------     ------------     ------------

FHLB stock ............................................       37,386,867       37,386,867       32,825,167       32,825,167
                                                            ------------     ------------     ------------     ------------
                                                            $327,386,675     $320,655,791     $264,016,006     $258,163,657
                                                            ============     ============     ============     ============
</TABLE>

                                                                              10
<PAGE>
<TABLE>
<CAPTION>
                                                             March  31, 2000                   December 31, 1998
                                                     ---------------------------     -----------------------------
                                                     Amortized           Fair         Amortized           Fair
                                                        cost             value           cost             value
                                                     -----------     -----------     -----------     -----------
                                                                                  (Unaudited)
<S>                                                  <C>             <C>             <C>             <C>
Mortgage-backed securities held to maturity:

GNMA certificates:
          Due within one year ..................     $    12,344     $    13,239     $        --     $        --
          Due from one to five years ...........              --              --          15,478          16,601
          Due from five to ten years ...........      10,200,307       9,941,718      10,659,910      10,390,712
          Due over ten years ...................       2,061,578       1,161,560       2,132,629       2,074,108
                                                     -----------     -----------     -----------     -----------
                                                      12,274,229      11,116,517      12,808,017      12,481,421
                                                     -----------     -----------     -----------     -----------

FNMA certificates:
     Due over ten years ........................       9,881,614      10,227,437      10,252,615      10,643,767
                                                     -----------     -----------     -----------     -----------

FHLMC certificates:
     Due over ten years ........................         182,457         173,082         188,615         179,841
                                                     -----------     -----------     -----------     -----------

                                                     $22,338,300     $21,517,036     $23,249,247     $23,305,029
                                                     ===========     ===========     ===========     ===========

Investment securities held to maturity:

Puerto Rico Government and Agencies obligations:
       Due from one to five years ..............     $ 1,280,000     $ 1,270,400     $ 1,280,000     $ 1,272,000
       Due from five to ten years ..............       4,155,820       4,124,770       4,157,630       4,131,755
                                                     -----------     -----------     -----------     -----------
                                                     $ 5,435,820     $ 5,395,170     $ 5,437,630     $ 5,403,755
                                                     ===========     ===========     ===========     ===========

</TABLE>
                                                                              11
<PAGE>
 NOTE 4  -         LOANS AND ALLOWANCE FOR LOAN LOSSES

   Loans consists of the following:
<TABLE>
<CAPTION>
                                                      March 31,          December 31,
                                                        2000                 1999
                                                  ----------------     ----------------
                                                      (Unaudited)
<S>                                                <C>                  <C>
       Real estate loans:
            Residential - first mortgage .....     $ 1,184,531,026      $ 1,097,891,436
            Residential - second mortgage ....          13,391,975           13,028,816
            Land .............................           2,505,993            1,952,043
            Construction .....................         107,184,950           95,201,185
            Commercial .......................         245,232,063          226,036,358
                                                   ---------------      ---------------
                                                     1,552,846,007        1,434,109,838

       Undisbursed portion of loans in process         (54,324,571)         (50,622,579)
       Net deferred loan costs (fees) ........             268,609             (436,852)
                                                   ---------------      ---------------
                                                     1,498,790,045        1,383,050,407
                                                   ---------------      ---------------
       Other loans:
            Commercial .......................          83,177,536           54,230,506
            Consumer:
               Secured by deposits ...........          20,961,848           20,538,734
               Secured by real estate ........          82,289,452           76,944,484
               Other .........................          39,543,885           37,653,140
       Unamortized discount ..................            (372,585)            (356,142)
       Unearned interest .....................             (69,840)             (83,722)
                                                   ---------------      ---------------
                                                       225,530,296          188,927,000
                                                   ---------------      ---------------
               Total loans ...................       1,724,320,341        1,571,977,407
            Allowance for loan losses ........          (9,520,042)          (8,970,605)
                                                   ---------------      ---------------
                                                   $ 1,714,800,299      $ 1,563,006,802
                                                   ===============      ===============
</TABLE>
The changes in the allowance for loan losses follow:
<TABLE>
<CAPTION>
                                                     Three months ended
                                                           March 31,
                                               --------------------------------
                                                   2000                1999
                                               (Unaudited)
<S>                                            <C>                  <C>
Balance, beginning of period .........         $ 8,970,605          $ 8,055,432
Provision for loan losses ............           1,350,000            1,300,000
Loans charged-off ....................          (1,026,608)          (1,039,726)
Recoveries ...........................             226,045              177,411
                                               -----------          -----------
Balance, end of period ...............         $ 9,520,042          $ 8,493,117
                                               ===========          ===========
</TABLE>
                                                                              12
<PAGE>
NOTE 5  -         COMMITMENTS AND CONTINGENCIES


Commitments to buy and sell GNMA certificates

         As of March 31, 2000,  the Company had open  commitments  to issue GNMA
certificates of approximately $119.3 million.


Commitments to sell mortgage loans

         As of March 31, 2000 the Company had commitments to sell mortgage loans
to third party investors amounting to approximately $40.6 million.


Lease commitments

         The Company is obligated under several noncancellable leases for office
space and equipment rentals, all of which are accounted for as operating leases.
The leases expire at various dates with options for renewals.


Other

         At March 31,  2000,  the  Company  is  liable  under  limited  recourse
provisions  resulting from the sale of loans to several  investors,  principally
FHLMC. The principal balance of these loans,  which are serviced by the Company,
amounts to approximately  $671.3 million at March 31, 2000.  Liability,  if any,
under the recourse provisions at March 31, 2000 is estimated by management to be
in significant.


                                                                              13
<PAGE>
Item 2:  Management's Discussion and Analysis
-------  ------------------------------------

Financial Condition

         At March 31, 2000, the Company's total assets amounted to $3.1 billion,
as compared to $2.9  billion at December 31,  1999.  The $209.8  million or 7.2%
increase in total assets  during the three month period ended March 31, 2000 was
attributable  to a $151.8  million or 9.7% increase in loans  receivable,  which
reflects net  originations  following  repayments and sales, and a $62.5 million
increase in investment securities available for sale, principally as a result of
purchases of such securities during the period, which amounted to $58.8 million.

         The increase in the Company's assets were primarily funded by increased
deposits of $104.4  million or 7.8%,  increased  repurchase  agreements of $49.5
million or 6.8% and  increased  Federal Home Loan Bank Advances of $51.0 million
or 13.3% during the three month period ended March 31, 2000.

         At March 31,  2000,  the  Company's  stockholders'  equity  amounted to
$275.2  million,  which is an increase  of $5.7  million or 2.1% from the amount
reported at December 31, 1999.  The primary  reason for the increase was the net
income  earned for the  quarter,  which was  partially  offset by a $1.1 million
increase in unrealized  losses on securities  available for sale,  net of income
tax benefits, and $2.7 million in dividends paid during the period. At March 31,
2000, the Bank's  leverage and Tier 1 risk-based  capital  amounted to 6.52% and
11.33% of  adjusted  total  assets,  respectively,  compared  to a 4.0%  minimum
requirement, and its total risk-based capital amounted to 12.03%, compared to an
8.0% minimum requirement.

Results of Operations

         The Company reported net income of $9.5 million during the three months
ended March 31, 2000, as compared to $11.1 million  during the prior  comparable
period.

         Total revenues  amounted to $31.8 million during the three months ended
March 31, 2000 compared to $29.7 million for the prior  comparable  period.  The
7.3% increase was due to an increase in net interest  income of $14.4 million or
64.9%  during the three  months  ended March 31, 2000 over the prior  comparable
period, primarily due to a $10.7 million or 41.0% increase in interest income on
loans, which was primarily associated with an increase in the average balance of
the outstanding loan portfolio.

         Contributing to the 7.3% increase in revenues during the March 31, 2000
quarter  was a $1.9  million  or  32.1%  increase  in  loan  administration  and
servicing fees due to an increase of the Company's loan servicing portfolio,  as
a result of an  increase in the number of loans  serviced.  These  increases  in
revenues were  partially  offset by a $3.2 million or 30.2% decrease in net gain
on origination and sale of loans, which reflects increases in interest rates for
mortgage loans, which have reduced the level of loans being refinanced.

         Total  expenses  increased  by $5.2  million or 35.3%  during the three
months ended March 31, 2000 over the prior comparable  period. The quarter ended
March 31, 2000 includes  expenses  associated with the operations of Continental
Capital,  the Company's  recently acquired  mortgage banking  subsidiary in Long

<PAGE>
Island,  New York,  which was a significant  reason for the increase in expenses
during the quarter.  Excluding  expenses  associated with  Continental  Capital,
expenses during the quarter increased by $2.9 million or 19.3%, due primarily to
a  $1.3  million  or  27.1%  increase  in  employee  compensation  and  benefits
associated  with  employees  hired for new  branch  openings  and the  Company's
commercial  loans  department  expansion,

                                                                              14
<PAGE>
in both instances  after March of last year, and a $739,000 or 30.9% increase in
occupancy  expenses  mainly related to the operation of six additional  branches
completed  during the latter part of 1999 and an additional  branch completed in
early 2000.  These increases in expenses were accompanied by a $825,000 or 10.7%
increase  in other  miscellaneous  expenses,  mainly as a result  of a  $681,000
increase in amortization expenses of the Company's servicing asset.

         Total income tax expense  decreased by $1.4 mililon or 38.4% during the
three  months  ended  March  31,  2000  over the prior  comparable  period,  due
primarily to a $3.1 million or 20.7%  decrease in income before taxes during the
2000 period. The Company's effective tax rate amounted to 19.3% during the three
month  period  ended  March 31, 2000  compared  to 24.9% in the 1999  comparable
period.  The decrease in 2000 of the  Company's  effective tax rate is primarily
attributable to an increase in the Company's  exempt interest income and certain
tax planning strategies implemented during the 2000 period.

Liquidity and Capital Resources

         Liquidity  -  Liquidity  refers to the  Company's  ability to  generate
sufficient  cash to meet the  funding  needs of  current  loan  demand,  savings
deposit withdrawals, principal and interest payments with respect to outstanding
borrowings and to pay operating expenses.  It is management's policy to maintain
greater  liquidity  than  required  in order to be in a  position  to fund  loan
purchases and originations,  to meet withdrawals from deposit accounts,  to make
principal and interest  payments with respect to  outstanding  borrowings and to
make  investments  that take  advantage of interest  rate  spreads.  The Company
monitors its liquidity in accordance with guidelines  established by the Company
and  applicable  regulatory  requirements.  The Company's  need for liquidity is
affected  by loan  demand,  net  changes  in deposit  levels  and the  scheduled
maturities of its borrowings.  The Company can minimize the cash required during
the times of heavy loan demand by modifying its credit  policies or reducing its
marketing  efforts.  Liquidity  demand caused by net  reductions in deposits are
usually  caused by factors  over which the  Company  has  limited  control.  The
Company derives its liquidity from both its assets and liabilities. Liquidity is
derived  from  assets  by  receipt  of  interest  and  principal   payments  and
prepayments,  by the  ability to sell assets at market  prices and by  utilizing
unpledged  assets as  collateral  for  borrowings.  Liquidity  is  derived  from
liabilities by  maintaining a variety of funding  sources,  including  deposits,
advances from the FHLB of New York and other short and long-term borrowings.

         The  Company's  liquidity  management  is  both a daily  and  long-term
function of funds management. Liquid assets are generally invested in short-term
investments  such as securities  purchased under  agreements to resell,  federal
funds sold and certificates of deposit in other financial  institutions.  If the
Company requires funds beyond its ability to generate them  internally,  various
forms of both short and long-term  borrowings  provide an  additional  source of
funds.  At March 31, 2000, the Company had $238.4 million in borrowing  capacity
under  warehousing  and other  lines of credit,  $710.2  million  in  borrowings
capacity  under a line of credit with the FHLB of New York and $25 million under
federal  funds  lines of credit.  The  Company  has  generally  not relied  upon
brokered deposits as a source of liquidity,  and does not anticipate a change in
this practice in the foreseeable future.

         At March 31, 2000,  the Company had  outstanding  commitments to extend
credit  totaling $16.5 million  (excluding the  undisbursed  portion of loans in
process).  Certificates of deposit which are scheduled to mature within one year
totaled $821.3  million at March 31, 2000, and borrowings  that are scheduled to
mature within the same period amounted to $1.3 billion.  The Company anticipates
that  it  will  have  sufficient  funds  available  to  meet  its  current  loan
commitments.

                                                                              15
<PAGE>
         Capital Resources - The FDIC's capital regulations  establish a minimum
3.0  %  Tier  I  leverage   capital   requirement  for  the  most   highly-rated
state-chartered, non-member banks, with an additional cushion of at least 100 to
200  basis  points  for  all  other  state-chartered,  non-member  banks,  which
effectively will increase the minimum Tier 1 leverage ratio for such other banks
to 4.0% to 5.0% or more. Under the FDIC's  regulations,  the highest-rated banks
are  those  that  the  FDIC  determines  are not  anticipating  or  experiencing
significant  growth and have well diversified risk,  including no undue interest
rate risk exposure,  excellent asset quality, high liquidity, good earnings and,
in general,  which are  considered a strong banking  organization  and are rated
composite 1 under the Uniform Financial Institutions Rating System.  Leverage or
core  capital  is defined  as the sum of common  stockholders'equity  (including
retained earnings), noncumulative perpetual preferred stock and related surplus,
and minority interests in consolidated subsidiaries, minus all intangible assets
other  than  certain  qualifying  supervisory  goodwill  and  certain  purchased
mortgage servicing rights.

         The FDIC also requires that banks meet a risk-based  capital  standard.
The  risk-based  capital  standard for banks  requires the  maintenance of total
capital (which is defined as Tier I capital and supplementary  (Tier 2) capital)
to risk  weighted  assets  of 8%. In  determining  the  amount of  risk-weighted
assets,  all assets,  plus certain off balance sheet assets, are multiplied by a
risk-weight of 0% to 100%,  based on the risks the FDIC believes are inherent in
the type of asset or item.  The  components of Tier 1 capital are  equivalent to
those discussed above under the 3% leverage capital standard.  The components of
supplementary   capital  include  certain  perpetual  preferred  stock,  certain
mandatory  convertible  securities,  certain  subordinated debt and intermediate
preferred stock and general allowances for loan and lease losses.  Allowance for
loan and lease  losses  includable  in  supplementary  capital  is  limited to a
maximum of 1.25% of risk-weighted assets. Overall, the amount of capital counted
toward  supplementary  capital cannot exceed 100% of core capital.  At March 31,
2000,  the Bank met  each of its  capital  requirements,  with  Tier 1  leverage
capital, Tier 1 risk-based capital and total risk-based capital ratios of 6.52%,
11.33% and 12.03%, respectively.

         In addition, the Federal Reserve Board has promulgated capital adequacy
guidelines for bank holding companies which are  substantially  similar to those
adopted by FDIC regarding state-chartered banks, as described above. The Company
is currently in compliance with such regulatory capital requirements.

Inflation and Changing Prices

         The  unaudited  consolidated  financial  statements  and  related  data
presented  herein  have been  prepared in  accordance  with  generally  accepted
accounting  principles,  which require the measurement of financial position and
operating  results  in terms of  historical  dollars  (except  with  respect  to
securities which are carried at market value),  without  considering  changes in
the relative  purchasing power of money over time due to inflation.  Unlike most
industrial  companies,  substantially  all of the assets and  liabilities of the
Company  are  monetary  in  nature.  As a  result,  interest  rates  have a more
significant  impact on the  Company's  performance  than the  effects of general
levels  of  inflation.  Interest  rates  do not  necessarily  move  in the  same
direction or in the same magnitude as the prices of goods and services.

                                                                              16
<PAGE>
"SAFE HARBOR"  STATEMENT UNDER THE PRIVATE  SECURITIES  LITIGATION REFORM ACT OF
1995

         In addition to historical information,  forward-looking  statements are
contained  herein that are subject to risks and  uncertainties  that could cause
actual results to differ materially from those reflected in the  forward-looking
statements.  Factors  that  could  cause  future  results  to vary from  current
expectations, include, but are not limited to, the impact of economic conditions
(both  generally  and more  specifically  in the  markets  in which the  Company
operates),  the impact of government  legislation and regulation  (which changes
from time to time and over which the  Company has no  control),  and other risks
detailed in this Form 10-Q and in the Company's  other  Securities  and Exchange
Commission ("SEC") filings. Readers are cautioned not to place undue reliance on
these forward-looking statements, which reflect management's analysis only as of
the date hereof.  Readers should carefully review the risk factors  described in
other documents the Company files from time to time with the SEC.


Item 3:  Quantitative and Qualitative Disclosures about Market Risk
------   ----------------------------------------------------------


         Quantitative  and  qualitative   disclosures  about  market  risks  are
presented at December  31, 1999 in Item 7A of the  Comapany's  Annual  report on
Form  10-K.  Management  believes  there  have been no  material  changes in the
Company's market risk since December 31, 1999.


                           PART II - OTHER INFORMATION
                           -------   -----------------

Item 1:  Legal Proceedings

         The  Registrant  is  involved  in  routine  legal  proceedings
         occurring in the  ordinary  course of business  which,  in the
         aggregate,  are believed by management to be immaterial to the
         financial   condition   and  results  of   operations  of  the
         Registrant.

Item 2:  Changes in Securities

                  Not applicable

Item 3:  Defaults Upon Senior Securities

                  Not applicable

Item 4:  Submission of Matters to a Vote of Security Holders

                  Not applicable
                                                                              17
<PAGE>
Item 5:  Other Information

The Registrant  received  notification from the Federal Reserve Bank of New York
that its election to become a financial  holding  company  within the meaning of
the  Bank   Holding   Company  Act  of  1956,   as   recently   amended  by  the
Gramm-Leach-Bliley  Financial  Modernization Act of 1999 ("Modernization  Act"),
was effective May 12, 2000.  The  Registrant had filed its election on April 13,
2000. The Modernization Act allows,  among other things,  bank holding companies
meeting management,  capital and Community Reinvestment Act ("CRA") standards to
engage  in a  substantially  broader  range of  nonbanking  activities  than was
previously  permissible,  including  insurance  underwriting and making merchant
banking  investments  in commercial  and  financial  companies.  The  activities
permissible  for a  financial  holding  company  are  contained  in the  Federal
Reserve's  Regulation  Y. In order to qualify for the election,  the  Registrant
certified  that  each  depository   institution  that  it  controlled  was  well
capitalized, well managed and had an appropriate satisfactory CRA rating.

Item 6:  Exhibits and Reports on Form 8-K

                  a)       Exhibits
                           No.
                           27     Financial Data Schedule..............   E-1


                                   SIGNATURES

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  Registrant  has duly  caused  this report to be signed on its behalf by the
undersigned, thereunto duly authorized.


                                        R&G FINANCIAL CORPORATION



Date: May 15, 2000                      By:/S/ VICTOR J. GALAN
                                           -------------------
                                                 Victor J. Galan, Chairman
                                                 and Chief Executive Officer
                                                 (Principal Executive Officer)



                                        By: /S/ JOSEPH R. SANDOVAL
                                            ----------------------
                                                 Joseph R. Sandoval
                                                 Senior Vice President and
                                                 Chief Financial Officer
                                                 (Principal Financial and
                                                 Accounting Officer)


                                                                              18