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 SEPTEMBER 30, 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 September 30, 2000:
10,225,696 (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.)


                                       1

<PAGE>

                            R&G FINANCIAL CORPORATION

                                      INDEX



Part I  -  Financial Information
                                                                            Page

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

             Consolidated Statements of Financial Condition as of
                  September 30, 2000 (Unaudited) and December 31, 1999.....   3

             Consolidated Statements of Income for the Three and Nine
                  Months Ended September 30, 2000 and 1999 (Unaudited)......  4

             Consolidated Statements of Comprehensive Income for the Three and
                 Nine Months Ended September 30, 2000 and 1999 (Unaudited)..  5

             Consolidated Statements of Cash Flows for the Nine Months
                  Ended September 30, 2000 and 1999 (Unaudited) ............  6

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


Item 2...Management's Discussion and Analysis      ......................... 16

Item 3...Quantitative and Qualitative Disclosures about Market Risk......... 24

Part II  - Other Information

Item 1.  Legal Proceedings ................................................. 24

Item 2.  Changes in Securities ............................................. 25

Item 3.  Defaults upon Senior Securities ................................... 25

Item 4.  Submission of Matters ............................................. 25

Item 5.  Other Information ................................................. 25

Item 6.  Exhibits and Reports on Form 8-K .................................. 25

             Signatures .................................................... 25



                                       2
<PAGE>
                          PART 1-FINANCIAL INFORMATION

ITEM 1:  CONSOLIDATED FINANCIAL STATEMENTS
-------  ---------------------------------
R&G FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
                                                                                      September 30,         December 31,
                                                                                          2000                  1999
                                                                                    ---------------      ---------------
                                                                                       (Unaudited)
<S>                                                                                 <C>                  <C>
ASSETS
Cash and due from banks                                                             $    27,410,145      $    42,251,508
Money market investments:
    Securities purchased under agreements to resell                                       6,163,202                   --
    Time deposits with other banks                                                       12,921,175           23,744,037
    Federal funds sold                                                                           --                   --
Mortgage loans held for sale, at lower of cost or market                                115,143,830           77,277,133
Mortgage-backed securities held for trading, at fair value                               11,901,000           43,563,817
Mortgage-backed securities available for sale, at fair value                            940,887,129          712,705,165
Mortgage-backed securities held to maturity, at amortized cost
(estimated market value: 2000 - $20,350,936; 1999 - $23,305,029)                         20,500,804           23,249,247
Investment securities available for sale, at fair value                                 375,847,059          258,163,657
Investment securities held to maturity, at amortized cost
(estimated market value: 2000- $ 5,391,549; 1999- $5,403,755)                             5,432,199            5,437,630
Loans receivable, net                                                                 1,713,641,021        1,563,006,802
Accounts receivable, including advances to investors, net                                17,253,643           16,230,457
Accrued interest receivable                                                              27,257,950           22,386,746
Servicing asset                                                                          90,389,387           84,252,506
Premises and equipment                                                                   18,657,213           19,459,353
Other assets                                                                             25,616,169           20,264,778
                                                                                    ---------------      ---------------
                                                                                    $ 3,409,021,926      $ 2,911,992,836
                                                                                    ===============      ===============

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
     Deposits                                                                       $ 1,582,358,244      $ 1,330,506,368
     Fed funds purchased                                                                 10,000,000           15,000,000
     Securities sold under agreements to repurchase                                     838,201,620          731,341,340
     Notes payable                                                                      161,533,053          132,707,001
     Advances from FHLB                                                                 454,250,000          384,000,000
     Other borrowings                                                                     9,133,795            9,842,894
     Accounts payable and accrued liabilities                                            53,397,520           33,917,329
     Other liabilities                                                                    6,380,079            5,142,627
                                                                                    ---------------      ---------------
                                                                                      3,115,254,311        2,642,457,559
                                                                                    ---------------      ---------------

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:
          Class A - $.01 par value, 40,000,000 shares authorized, 18,440,556
           issued  and outstanding                                                          184,406              184,406
          Class B - $.01 par value, 30,000,000 shares authorized, 10,225,696
           issued  and outstanding in 2000 (1999-10,217,731)                                102,257              102,177
     Additional paid-in capital                                                          40,793,970           40,753,856
     Retained earnings                                                                  179,330,375          156,193,131
     Capital reserves of the Bank                                                         5,095,658            5,095,658
     Accumulated other comprehensive loss                                                (6,739,051)          (7,793,951)
                                                                                    ---------------      ---------------
                                                                                        293,767,615          269,535,277
                                                                                    ---------------      ---------------
                                                                                    $ 3,409,021,926      $ 2,911,992,836
                                                                                    ===============      ===============


</TABLE>

The accompanying notes are an integral part of these statements.

                                       3
<PAGE>
R&G FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
                                                                             Three month                   Nine month
                                                                             period ended                  period ended
                                                                             September 30,                 September 30,
                                                                     -----------------------         ------------------------
                                                                       2000            1999           2000              1999
                                                                     -------         -------         --------         -------
                                                                            (Unaudited)                      (Unaudited)
                                                                             (Dollars in thousands except for per share data)
<S>                                                                  <C>             <C>             <C>              <C>
Interest income:
     Loans                                                           $42,337         $31,659         $119,115         $84,865
     Money market and other investments                                6,676           3,006           17,946           5,979
     Mortgage-backed securities                                       11,888           9,281           34,834          24,924
                                                                     -------         -------         --------         -------
          Total interest income                                       60,901          43,946          171,895         115,768
                                                                     -------         -------         --------         -------
Interest expense:
      Deposits                                                        21,439          14,114           57,496          38,273
      Securities sold under agreements to repurchase                  13,348           7,493           35,597          18,465
      Notes payable                                                    2,708           3,361            8,972          10,344
      Other                                                            7,528           3,174           20,459           7,120
                                                                     -------         -------         --------         -------
          Total interest expense                                      45,023          28,142          122,524          74,202
                                                                     -------         -------         --------         -------
Net interest income                                                   15,878          15,804           49,371          41,566
Provision for loan losses                                             (1,500)         (1,000)          (4,350)         (3,400)
                                                                     -------         -------         --------         -------
Net interest income after provision for loan losses                   14,378          14,804           45,021          38,166
                                                                     -------         -------         --------         -------
Other income:
     Net gain on origination and sale of loans
      and sales of securities available for sale                      11,407           8,674           28,220          28,475
     Loan administration and servicing fees                            7,730           6,535           22,720          18,914
     Service charges, fees and other                                   1,784           1,434            5,209           5,009
                                                                     -------         -------         --------         -------
                                                                      20,921          16,643           56,149          52,398
                                                                     -------         -------         --------         -------
          Total revenues                                              35,299          31,447          101,170          90,564
                                                                     -------         -------         --------         -------
Operating expenses:
     Employee compensation and benefits                                6,748           6,182           19,952          16,414
     Office occupancy and equipment                                    3,375           2,887            9,952           7,994
     Other administrative and general                                 10,260           8,472           30,381          23,529
                                                                     -------         -------         --------         -------
                                                                      20,383          17,541           60,285          47,937
                                                                     -------         -------         --------         -------
Income before income taxes                                            14,916          13,906           40,885          42,627
                                                                     -------         -------         --------         -------
Income tax expense:
     Current                                                           2,712           1,484           10,057           4,881
     Deferred                                                            842           2,305             (729)          4,669
                                                                     -------         -------         --------         -------
                                                                       3,554           3,789            9,328           9,550
                                                                     -------         -------         --------         -------
          Net income                                                 $11,362         $10,117          $31,557         $33,077
                                                                     =======         =======          =======         =======
Earnings per common share - Basic                                      $0.35           $0.32            $0.95           $1.06
                                                                      ------          ------           ------          -----
                          - Diluted                                    $0.34           $0.31            $0.93           $1.03
                                                                      ------          ------           ------          -----
Weighted average number of shares outstanding - Basic             28,663,526      28,639,528       28,660,813      28,623,892
                                              - Diluted           29,314,874      29,342,647       29,314,830      29,342,647

</TABLE>

The accompanying notes are an integral part of these statements.

                                       4
<PAGE>
R&G FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
                                                                               Three month period ended     Nine month period ended
                                                                                      September 30,               September 30,
                                                                               -------------------------    -----------------------
                                                                                  2000           1999         2000          1999
                                                                                --------      --------      --------      --------
                                                                                      (Unaudited)                (Unaudited)
                                                                                               (Dollars in thousands)
<S>                                                                             <C>           <C>           <C>           <C>
Net income                                                                      $ 11,362      $ 10,117      $ 31,557      $ 33,077
                                                                                --------      --------      --------      --------
Other comprehensive income, before tax:

Unrealized gains (losses) on securities:

    Arising during period                                                         3,784        (1,159)        1,400        (5,351)
     Less:       Reclassification adjustments for losses included
                 in net income                                                       176           218           329           800
                                                                                --------      --------      --------      --------
                                                                                   3,960          (941)        1,729        (4,551)

Income tax (expense) benefit related to items of other comprehensive income       (1,544)          367          (674)        1,775
                                                                                --------      --------      --------      --------

Other comprehensive income (loss), net of tax                                      2,416          (574)        1,055        (2,776)
                                                                                --------      --------      --------      --------

Comprehensive income, net of tax                                                $ 13,778      $  9,543      $ 32,612      $ 30,301
                                                                                ========      ========      ========      ========

</TABLE>

The accompanying notes are an integral part of these statements.

                                       5
<PAGE>
R&G  FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                                                 Nine month period ended
                                                                                                       September 30,
                                                                                                -------------------------
                                                                                                    2000          1999
                                                                                                 ---------      ---------
<S>                                                                                              <C>            <C>
                                                                                                       (unaudited)
Cash flows from operating activities:                                                             (Dollars in thousands)
     Net income                                                                                  $  31,557      $  33,077
                                                                                                 ---------      ---------
           Adjustments to reconcile net income to net cash provided by operating activities:
           Depreciation and amortization                                                             3,792          2,803
           Amortization of premium on investments and mortgage-backed securities, net                  203            188
           Amortization of servicing rights                                                          7,196          5,158
           Provision for loan losses                                                                 4,350          3,400
           Provision for bad debts in accounts receivable                                              370            275
           Gain on sales of  loans                                                                    (125)        (7,472)
           Loss on sales of mortgage-backed and investment securities available for sale               328            800
           Unrealized (profit) loss on trading securities                                               (6)            17
           (Increase) decrease  in mortgage loans held for sale                                   (131,897)        45,526
           Net decrease (increase) in mortgage-backed  securities held for trading                  31,669        (34,258)
           Increase in receivables                                                                  (6,264)       (12,430)
           Increase in other assets                                                                 (6,051)        (6,633)
           Increase (decrease) in notes payable and other borrowings                                33,117        (41,119)
           Increase in accounts payable and accrued liabilities                                     18,806          7,764
           Increase in other liabilities                                                             1,237          6,362
                                                                                                 ---------      ---------
               Total adjustments                                                                   (43,275)       (29,619)
                                                                                                 ---------      ---------
               Net cash (used in) provided by  operating activities                                (11,718)         3,458
                                                                                                 ---------      ---------
Cash flows from investing activities:
      Purchases of investment securities                                                          (107,865)      (198,291)
      Proceeds from sales and maturities of securities available for sale                           68,034        139,211
      Proceeds from maturities of securities held to maturity                                           --            409
      Proceeds from sales of loans                                                                  26,469        120,975
      Net originations of loans                                                                   (382,147)      (665,053)
      Purchases of  FHLB stock, net                                                                 (7,235)       (11,619)
      Acquisition of premises and equipment                                                         (2,290)        (6,577)
      Acquisition of servicing rights                                                              (13,332)       (18,357)
                                                                                                 ---------      ---------
               Net cash used by investing activities                                              (418,366)      (639,302)
                                                                                                 ---------      ---------
Cash flows from financing activities:
     Increase in deposits - net                                                                    251,852        259,827
     (Decrease) increase in federal funds purchased                                                 (5,000)        10,000
     Increase in securities sold under agreements to repurchase - net                              106,860        201,461
     Advances from FHLB, net                                                                        70,250        152,500
     Payments on term notes                                                                         (5,000)       (10,000)
     Proceeds from issuance of common stock                                                             40            289
     Cash dividends:
          Common stock                                                                              (4,192)        (3,069)
          Preferred stock                                                                           (4,228)        (2,775)
                                                                                                 ---------      ---------
               Net cash provided by financing activities                                           410,582        608,233
                                                                                                 ---------      ---------
Net decrease in cash and cash equivalents                                                          (19,502)       (27,611)
Cash and cash equivalents at  beginning of  period                                                  65,996        103,728
                                                                                                 ---------      ---------
Cash and cash equivalents at end of period                                                       $  46,494      $  76,117
                                                                                                 =========      =========

Cash and cash equivalents include:
     Cash and due from banks                                                                     $  27,410      $  38,024
     Securities purchased under agreements to resell                                                 6,163         12,600
     Time deposits with other banks                                                                 12,921         25,493
     Federal funds sold                                                                                 --             --
                                                                                                 ---------      ---------
                                                                                                 $  46,494      $  76,117
                                                                                                 =========      =========
</TABLE>
The accompanying notes are an integral part of these statements.


                                       6
<PAGE>
R&G FINANCIAL CORPORATION
NOTES TO UNAUDITED 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.

         The  Company,  currently in its 28th year of  operations,  operates R&G
Mortgage, which 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 and C credit quality loans, through its wholly-owned
subsidiary, Champion Mortgage Corporation.

         The Company  also  operates  the Bank,  which  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 ("Continental Capital").

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 September 30, 2000 and the results of
operations  and  changes in its cash flows for the three and nine  months  ended
September 30, 2000 and 1999.

         The results of  operations  for the three and nine month  periods ended
September 30, 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.



                                       7
<PAGE>
Basis of consolidation

         All  significant  intercompany  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"  and in June 2000  issued  SFAS No.  138-
"Accounting for Certain Derivative Instruments and Certain Hedging Activities."

         These  Statements  establish  accounting  and  reporting  standards for
derivative  instruments,  including certain derivative  instruments  embedded in
other  contracts,  and for hedging  activities.  The statements  require 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 designated and 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.

         The  Company is  required  to adopt SFAS No. 133  effective  January 1,
2001. As of September 30, 2000, the Company's derivative  instruments consist of
interest rate swap  agreements with aggregate  notional  amounts of $140 million
which are tied to  specifically  indentified  liabilities  which will qualify as
cash  flow  hedges  under the  provisions  of SFAS No.  133,  and  certain  caps
purchased  during the third quarter of 2000, with aggregate  notional amounts of
$200 million. Due to the relatively limited extent to which the Company is using
derivative   instruments  and  the  simple  nature  of  the  instruments   used,
management, based on presently available information, does not expect the impact
of adoption to be significant.

NOTE 2  -         EARNINGS PER SHARE

         Basic  earnings per common  share for the three and nine month  periods
ended  September  30, 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.


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>
                                                               September 30,           December 31,
                                                                   2000                   1999
                                                                -----------            -----------
                                                                (Unaudited)
<S>                                                             <C>                    <C>
Mortgage-backed securities held for trading:

     GNMA certificates                                          $11,901,000            $43,563,817
                                                                ===========            ===========

</TABLE>
                                       8
<PAGE>
<TABLE>
<CAPTION>
                                                             September 30, 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 and other mortgage-backed securities     $ 22,187,166     $ 24,007,674     $ 20,709,050     $ 22,772,039
                                                       ------------     ------------     ------------     ------------


FNMA certificates:
     Due from five to ten years                             649,319          636,942          740,977          718,979
     Due over ten years                                 101,854,526      101,437,977      110,854,889      109,705,450
                                                       ------------     ------------     ------------     ------------
                                                        102,503,845      102,074,919      111,595,866      110,424,429
                                                       ------------     ------------     ------------     ------------
FHLMC certificates:
     Due from one to five years                             157,810          156,123           98,693           98,882
     Due from five to ten years                           1,641,586        1,611,460        1,891,072        1,840,979
     Due over ten years                                 216,631,765      216,317,654       14,586,274       14,036,216
                                                       ------------     ------------     ------------     ------------
                                                        218,431,161      218,085,237       16,576,039       15,976,077
                                                       ------------     ------------     ------------     ------------
GNMA certificates:
      Due from one to five years                             25,587           25,440               --               --
      Due from five to ten years                         11,032,910       10,969,570               --               --
      Due over ten years                                594,444,560      585,724,289      570,748,830      563,532,620
                                                       ------------     ------------     ------------     ------------
                                                        605,503,057      596,719,299      570,748,830      563,532,620
                                                       ------------     ------------     ------------     ------------

                                                       $948,625,229     $940,887,129     $719,629,785     $712,705,165
                                                       ============     ============     ============     ============

Investment securities available for sale:

U.S.  Treasury securities:
     Due within one year                               $  5,000,000     $  5,000,000     $  4,998,011     $  4,944,500
                                                       ------------     ------------     ------------     ------------

U.S. Government and Agencies securities:
      Due within one year                                 6,000,000        5,888,500               --               --
      Due from one to five years                        207,257,125      205,756,509      133,955,940      130,950,440
      Due from five to ten years                        120,839,492      119,142,083       92,236,888       89,443,550
                                                       ------------     ------------     ------------     ------------
                                                        334,096,617      330,787,092      226,192,828      220,393,990
                                                       ------------     ------------     ------------     ------------

FHLB stock                                               40,059,967       40,059,967       32,825,167       32,825,167
                                                       ------------     ------------     ------------     ------------
                                                       $379,156,584     $375,847,059     $264,016,006     $258,163,657
                                                       ============     ============     ============     ============
</TABLE>
                                       9
<PAGE>
<TABLE>
<CAPTION>
                                                          September 30, 2000                         December 31, 1999
                                                    ---------------------------------         -------------------------------
                                                    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                                 $5,825                $6,247                 $ -                 $ -
      Due from one to five years                               -                     -              15,478              16,601
      Due from five to ten years                       9,237,668             8,967,766          10,659,910          10,390,712
      Due over ten years                               1,867,575             1,787,452           2,132,629           2,074,108
                                                    -----------           -----------         -----------         -----------
                                                      11,111,068            10,761,465          12,808,017          12,481,421
                                                    -----------           -----------         -----------         -----------
FNMA certificates:
     Due over ten years                                9,222,026             9,427,930          10,252,615          10,643,767
                                                    -----------           -----------         -----------         -----------
FHLMC certificates:
     Due over ten years                                  167,710               161,541             188,615             179,841
                                                    -----------           -----------         -----------         -----------
                                                     $20,500,804           $20,350,936         $23,249,247         $23,305,029
                                                     ===========           ===========         ===========         ===========
 Investment securities held to maturity:
Puerto Rico Government and Agencies obligations:
       Due from one to five years                     $1,800,000            $1,786,500          $1,280,000          $1,272,000
       Due from five to ten years                      3,632,199             3,605,049           4,157,630           4,131,755
                                                      ----------            ----------          ----------          ----------
                                                      $5,432,199            $5,391,549          $5,437,630          $5,403,755
                                                      ==========            ==========          ==========          ==========
</TABLE>

                                       10
<PAGE>
         NOTE 4  -          LOANS AND ALLOWANCE FOR LOAN LOSSES

          Loans consist of the following:

<TABLE>
<CAPTION>
                                            September 30,          December 31,
                                                2000                  1999
                                            ---------------      ---------------
                                             Unaudited)
<S>                                         <C>                  <C>
Real estate loans:
     Residential - first mortgage           $ 1,130,951,987      $ 1,097,891,436
     Residential - second mortgage               21,672,953           13,028,816
     Land                                         4,606,068            1,952,043
     Construction                               161,389,554           95,201,185
     Commercial                                 275,445,496          226,036,358
                                            ---------------      ---------------
                                              1,594,066,058        1,434,109,838
Undisbursed portion of loans in process         (91,210,756)         (50,622,579)
Net deferred loan costs (fees)                    1,629,635             (436,852)
                                            ---------------      ---------------
                                              1,504,484,937        1,383,050,407
                                            ---------------      ---------------
Other loans:
     Commercial                                  55,014,864           54,230,506
     Consumer:
        Secured by deposits                      23,268,977           20,538,734
        Secured by real estate                   97,818,366           76,944,484
        Other                                    44,558,041           37,653,140
Unamortized discount                               (374,533)            (356,142)
Unearned interest                                   (72,583)             (83,722)
                                            ---------------      ---------------
                                                220,213,132          188,927,000
                                            ---------------      ---------------

        Total loans                           1,724,698,069        1,571,977,407
     Allowance for loan losses                  (11,057,048)          (8,970,605)
                                            ---------------      ---------------
                                            $ 1,713,641,021      $ 1,563,006,802
                                            ===============      ===============




</TABLE>
The changes in the allowance for loan losses follow:
<TABLE>
<CAPTION>
                                                          Nine months ended
                                                            September 30,
                                                    ---------------------------
                                                      2000               1999
                                                    --------           --------
                                                            (Unaudited)
                                                        (Dollars in thousands)
<S>                                                 <C>                <C>
Balance, beginning of period                        $  8,971           $  8,055
Provision for loan losses                              4,350              3,400
Loans charged-off                                     (2,924)            (3,039)
Recoveries                                               660                594
                                                    --------           --------
Balance, end of period                              $ 11,057           $  9,010
                                                    ========           ========
</TABLE>
                                       11
<PAGE>
        The  following  table  sets  forth the  amounts  and  categories  of R&G
Financial's non-performing assets at the dates indicated.

<TABLE>
<CAPTION>
                                                                   September 30,       December 31,
                                                                        2000               1999
                                                                      -------             -------
                                                                              (Unaudited)
                                                                        (Dollars in thousands)
<S>                                                                   <C>                 <C>
Non-accruing loans:
  Residential real estate                                             $69,632             $47,413
  Residential construction                                                529                 478
  Commercial real estate                                               10,752               9,005
  Commercial business                                                   1,156               1,255
  Consumer unsecured                                                      843                 802
  Other                                                                    60                  61
                                                                      -------             -------
    Total                                                              82,972              59,014
                                                                      -------             -------
Accruing loans greater than 90 days
  delinquent:
  Residential real estate                                                  --                  --
  Residential construction                                                 --                  --
  Commercial real estate                                                   --                  --
  Commercial business                                                     314                  63
  Consumer                                                                236                 274
                                                                      -------             -------
    Total accruing loans greater than
      90 days delinquent                                                  550                 337
                                                                      -------             -------
    Total non-performing loans                                         83,522              59,351
                                                                      -------             -------
Real estate owned, net of reserves                                      7,753               5,852
Other repossessed assets                                                  572                 466
                                                                      -------             -------
                                                                        8,325               6,318
                                                                      -------             -------
    Total non-performing assets                                       $91,847             $65,669
                                                                      -------             -------
    Total non-performing loans as a
      percentage of total loans                                         4.60%               3.66%
                                                                      -------             -------
    Total non-performing assets as a
      percentage of total assets                                        2.69%               2.26%
                                                                       -------             -------
   Allowance for loan losses as a percentage
       of total non-performing loans                                   13.24%              15.11%
                                                                      -------             -------
     Allowance for loan losses as a percentage
        of total loans outstanding                                      0.61%               0.55%
                                                                      -------             -------
Net charge-offs tgo average loans
         outstanding                                                    0.16%               0.25%
                                                                      -------             -------
</TABLE>
                                       12
<PAGE>
NOTE 5  -         MORTGAGE LOAN SERVICING


The changes in the servicing asset of the Company follows:

<TABLE>
<CAPTION>

                                                    For the nine month period ended September 30,
                                                            2000                         1999
                                                       -----------                  -----------
                                                                      (Unaudited)
<S>                                                    <C>                          <C>
Balance at beginning of period                         $84,252,506                  $58,221,052

Rights originated                                        8,312,646                   11,698,042
Rights purchased                                         5,019,821                    6,658,717
Scheduled amortization                                  (7,195,586)                  (5,158,357)
                                                       -----------                  -----------

Balance at end of period                               $90,389,387                  $71,419,454
                                                       ===========                  ===========

</TABLE>
         The  portion  of  the  Company's  mortgage  loans  servicing  portfolio
consisting  of the servicing  asset that was  originated by the Company prior to
the  adoption  of SFAS No.  122 is not  reflected  as an asset on the  Company's
Consolidated  Financial  Statements,  and  is not  subject  to  amortization  or
impairment.

NOTE 6 -          DEPOSITS

Deposits are summarized as follows:


<TABLE>
<CAPTION>
                                                 September 30,         December 31,
                                                      2000                 1999
                                                   ----------         ----------
                                                   (Unaudited)
                                                        (Dollars in Thousands)
<S>                                                <C>                <C>
Passbook savings                                   $  113,560         $  113,576
                                                   ----------         ----------

NOW accounts                                           38,894             38,765
Super NOW accounts                                     94,765             93,913
Regular checking accounts
   (non-interest bearing)                              60,260             54,020
Commercial checking accounts
   (non-interest bearing)                              73,149            103,575
                                                   ----------         ----------
                                                      267,068            290,273
                                                   ----------         ----------

Certificates of deposit:
     Under $100,000                                   465,198            390,315
     $100,000 and over                                729,127            531,714
                                                   ----------         ----------
                                                    1,194,325            922,029
                                                   ----------         ----------
Accrued interest payable                                7,405              4,628
                                                   ----------         ----------

                                                   $1,582,358         $1,330,506
                                                   ==========         ==========


</TABLE>
                                       13
<PAGE>
NOTE 7  -         COMMITMENTS AND CONTINGENCIES


Commitments to buy and sell GNMA certificates

         As of September  30, 2000,  the Company had open  commitments  to issue
GNMA certificates of approximately $124.5 million.


Commitments to sell mortgage loans

         As of September 30, 2000 the Company had  commitments  to sell mortgage
loans to third party investors amounting to approximately $14.4 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 September  30, 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  $630.1 million at September 30, 2000.  Liability,  if
any,  under the  recourse  provisions  at  September  30, 2000 is  estimated  by
management to be insignificant.


NOTE 8  -         SUPLEMENTAL INCOME STATEMENT INFORMATION


         Employee costs and other  administrative and general expenses are shown
in the Consolidated  Statements of Income net of direct loan origination  costs.
Direct loan  origination  costs are  capitalized as part of the carrying cost of
mortgage  loans and are  offset  against  mortgage  loan sales and fees when the
loans are sold, or amortized as a yield  adjustment to interest  income on loans
held for investment.

         Total employee costs and other expenses before capitalization follows:

<TABLE>
<CAPTION>

                                                                                      (Unaudited)
                                                         Three month period ended                    Nine month period ended
                                                               September 30,                               September 30,
                                                         2000                 1999                  2000                   1999
                                                     -----------          -----------           -----------            -----------
<S>                                                  <C>                  <C>                   <C>                    <C>
Employee costs                                       $10,335,570          $10,282,044           $31,496,056            $28,117,822
                                                     -----------          -----------           -----------            -----------
Other administrative and general expenses            $11,337,002           $9,453,187           $33,289,473            $26,312,795
                                                     -----------          -----------           -----------            -----------



</TABLE>
                                       14
<PAGE>
         Set  forth  below  are the  direct  loan  origination  costs  that were
capitalized  as part of the carrying cost of mortgage  loan  inventory or offset
against mortgage loan sales and fees and interest income.

<TABLE>
<CAPTION>

                                                    Three month period ended         Nine month period ended
                                                          September 30,                    September 30,
                                                   ---------------------------     ---------------------------
                                                       2000             1999           2000            1999
                                                   -----------     -----------     -----------     -----------
<S>                                                <C>             <C>             <C>             <C>
Offset against mortgage loan sales and fees        $   763,202     $ 2,795,943     $ 1,436,152     $ 4,545,270
                                                   -----------     -----------     -----------     -----------

Offset against interest income on loans            $   608,022     $   776,065     $ 2,192,003     $ 2,382,354
                                                   -----------     -----------     -----------     -----------

Capitalized as part of loans held for sale and
   loans held for investment                       $ 3,294,554     $ 1,509,523     $10,825,107     $ 7,559,990
                                                   -----------     -----------     -----------     -----------
<PAGE>




</TABLE>

                                       15
<PAGE>

Item 2:  Management's Discussion and Analysis
---------------------------------------------

General

         R&G  Financial  Corporation  (the  "Company")  is a  financial  holding
company  that,  together  with its  wholly-owned  subsidiaries,  is  engaged  in
mortgage banking and banking activities. Its mortgage banking activities include
the origination, purchase, sale and servicing of mortgage loans on single-family
residences,   the  issuance  and  sale  of  various  types  of   mortgage-backed
securities, the holding of mortgage loans,  mortgage-backed securities and other
investment securities for sale or investment, the purchase and sale of servicing
rights associated with such mortgage loans (the "mortgage banking business").

         The  Company  is also  engaged  in  providing  a full  range of banking
services,  including  commercial  banking  services,  corporate and construction
lending,  consumer lending and credit cards, and trust and investment  services,
offering a diversified range of deposit products and private banking services.

         R&G Financial is currently in its 28th year of operations.  The Company
is the second largest  mortgage loans  originator and servicer of mortgage loans
on single family residences in Puerto Rico. R&G Financial's  mortgage  servicing
portfolio increased to approximately $6.5 billion as of September 30, 2000, from
$5.5  billion  as of the  same  date a year  ago,  an  increase  of  19.5%.  R&G
Financial's strategy is to increase the size of its mortgage servicing portfolio
by relying principally on internal loan originations.

         As part of its strategy to maximize net interest income,  R&G Financial
maintains a substancial portfolio of mortgage-backed and investment  securities.
At September  30, 2000,  the Company held  securities  available for sale with a
fair  market  value  of  $1.3  billion,   which   included   $940.9  million  of
mortgage-backed securities of which $596.7 million consisted primarily of Puerto
Rico GNMA  securities the interest on which is tax-exempt to the Company.  These
securities are generally held by the Company for longer periods prior to sale in
order to maximize the tax-exempt interest received thereon.

         A  substantial   portion  of  R&G   Financial's   total  mortgage  loan
originations has consistently been comprised of refinance loans. R&G Financial's
future results could be adversely affected by a significant increase in mortgage
interest rates that reduces refinancing activity.  However, the Company believes
that  refinancing  activity is less sensitive to interest rate changes in Puerto
Rico  than in the  mainland  United  States  because  a  significant  amount  of
refinance loans are made for debt consolidation purposes.

         R&G Financial  customarily  sells or securitizes  into  mortgage-backed
securities  substantially all the loans it originates,  except for substantially
all   non-conforming   conventional   mortgage   loans  and  certain   consumer,
construction,  land,  and  commercial  loans which are held for  investment  and
classified as Loans Receivable.

Financial Condition

         At September  30, 2000,  the  Company's  total assets  amounted to $3.4
billion, as compared to $2.9 billion at December 31, 1999. The $497.0 million or
17.1% increase in total assets during the nine month period ended  September 30,
2000 was attributable to a $378.8 million or 17.0% increase in loans receivable,
net, and  mortgage-backed  securities  available  for sale,  which  reflects net
originations following repayments and sales, and the eventual  securitization of
these  loans  into  mortgage-backed  securities,  and a $117.7  million or 45.6%
increase in investment  securities  available  for sale,  which is primarily the
result of the purchase of $107.9 million of such securities during the period.

         The increase in the Company's assets were primarily funded by increased
deposits of $251.9 million or 18.9%,  increased repurchase  agreements of $106.9
million  or 14.6% and by a $70.3  million  or 18.3%  increase  in FHLB  advances
during the nine month period ended September 30, 2000.

         At September 30, 2000, the Company's  stockholders'  equity amounted to
$293.8  million,  which is an increase of $24.2  million or 9.0% from the amount
reported at December 31, 1999.  The primary  reason for the increase was the net
income  earned  for  the  period,  together  with a  $1.1  million  decrease  in
unrealized losses on securities  available for sale, net of income tax benefits,
which was partially  offset by $8.4 million in dividends paid during the period.
At  September  30,  2000,  the Bank's  leverage  and Tier 1  risk-based  capital
amounted to 6.19% and 11.40% of adjusted total assets, respectively, compared to
a 4.0% minimum requirement, and its total risk-based capital amounted to 12.17%,
compared to an 8.0% minimum requirement.

Results of Operations

         The Company  reported  net income of $11.4  million  and $31.6  million
during the three and nine months period ended September 30, 2000, as compared to
$10.1 million and $33.1 million during the prior comparable periods.

         Total  revenues  for the nine month  period  ended  September  30, 2000
amounted to $101.2  million  compared to $90.6 million for the prior  comparable
period. The 11.7% increase was due to an increase in net interest income of $7.8
million or 18.8% during the nine months ended  September 30, 2000 over the prior
comparable  period,  primarily  due to a $34.3  million  or  40.4%  increase  in
interest income on loans,  primarily  associated with an increase in the average
balance of the outstanding loan portfolio.

         Contributing  to the 11.7%  increase in revenues  during the nine month
period ended  September  30, 2000 was a $3.8  million or 20.1%  increase in loan
administration  and  servicing  fees due to an  increase in the  Company's  loan
servicing portfolio.

         Total  revenues for the quarter  ended  September  30, 2000 amounted to
$35.3 million,  a $3.9 million or 12.2% increase over the comparable  quarter in
1999.  The  increase in total  revenues  during the 2000  quarter was  primarily
attributable  to a $2.7 million or 31.5% increase in net gain on origination and
sale of loans,  which  reflects  improved  margins on the sale of loans to third
party  investors as a result of less  volatility in interest  rates for mortgage
loans  during the 2000  quarter,  and a $1.2  million or 18.3%  increase in loan
administration and servicing fees.

         Total  expenses  increased  by $12.3  million or 25.8%  during the nine
months ended September 30, 2000 over the prior comparable period. The nine month
period ended September 30, 2000 includes expenses associated with the operations
of Continental  Capital,  the Bank's mortgage banking subsidiary in Long Island,
New York, acquired in late 1999, which was a significant reason for the increase
in expenses during the period.  Excluding  expenses  associated with Continental
Capital,  expenses  during the period  increased by $5.9  million or 12.4%,  due
primarily to a $4.0 million or 17.1% increase in other  miscellaneous  expenses,
mainly as a result of a $2.0 million  increase in  amortization  expenses of the
Company's  servicing asset. In addition,  occupancy  expenses  increased by $1.6
million or 19.4%,  related to the operation of six additional branches completed
during the latter part of 1999 and an additional branch completed in early 2000,
while employee compensation and benefits increased by a mere $355,000 or 2.2% in
spite of the hiring of  additional  employees  for new branch  openings  and the
Company's commercial loan department expansion,  in both instances after June of
last year

         Total  expenses  increased  by $2.8  million or 16.2%  during the three
month period  ended  September  30, 2000,  including  expenses  associated  with
Continental  Capital.  Total expenses for the quarter ended  September 30, 2000,
excluding  Continental  Capital  operations,  increased  by  $761,000 or 9.0% as
compared to the prior comparable  period.  The increase was due to a $343,000 or
11.9% increase in occupancy expenses,  and a $917,000 or 10.8% increase in other
miscellaneous  expenses,  which  was  partially  offset  by a  $499,000  or 8.1%
decrease in employee  compensation  and  benefits,  which  decrease was achieved
notwithstanding  the  hiring  of new  employees  for  new  branch  openings  and
expansion of the Company's commercial loan department after June 1999.

         Total income tax expense decreased by $235,000 or 6.2%, and $222.000 or
2.3%  during  the  three  and  nine  month  period  ended  September  30,  2000,
respectively over the prior comparable periods. The Company's effective tax rate
amounted  to 24.0% and 22.9%,  respectively,  during  the three and nine  months
periods  ended  September  30,  2000  compared  to 27.2%  and  22.4% in the 1999
comparable periods.  The decrease in the Company's effective tax rate during the
quarter  ended  September  30, 2000 is primarily  related to certain tax credits
recorded in the third quarter of 2000 related to the  implementation  of certain
tax strategies of the Company in such period.

                                       16
<PAGE>
Interest Rate Risk Management

         The following table summarizes the anticipated  maturities or repricing
or R&G Financial's  interest-earning assets and interest-bearing  liabilities as
of September 30, 2000, based on the information and assumptions set forth in the
notes below. For purposes of this presentation,  the interest earning components
of loans held for sale and  mortgage-backed  securities  held in connection with
the Company's  mortgage  banking business are assumed to mature within one year.
In  addition,  investments  held by the  Company  which have call  features  are
presented according to their contractual maturity date.

<TABLE>
<CAPTION>
                                                Within         Four to        More Than       More Than
                                                Three          Twelve        One Year to     Three Years    Over Five
(Dollars in Thousands)                          Months         Months        Three Years    to Five Years     Years         Total
                                         -------------------------------------------------------------------------------------------
<S>                                             <C>            <C>             <C>             <C>          <C>          <C>
Interest-earning assets(1):

Loans receivable:
     Residential real estate loans              $39,781        $110,557        $248,372        $193,570     $564,951     $1,157,231
     Construction loans                          45,118          11,218          13,843              --           --         70,179
     Commercial real estate loans               271,299             918             983           1,011        1,234        275,445
     Consumer loans                              36,889          36,513          52,671          25,271       14,301        165,645
     Commercial business loans                   32,863           9,337          11,064           1,741           10         55,015
Mortgage loans held for sale                     17,927          48,922          48,295              --           --        115,144
Mortgage-backed securities(2)(3)                 90,575         484,575          94,579          76,177      227,383        973,289
Investment Securities(3)                         65,134         121,548         144,283          31,685       18,629        381,279
Other interest-earning assets(4)                 19,084              --              --              --           --         19,084
                                         -------------------------------------------------------------------------------------------

Total                                          $618,670        $823,588        $614,090        $329,455     $826,508     $3,212,311
                                         ===========================================================================================

Interest bearing liabilities:

Deposits (5)
     NOW and Super NOW accounts                  $6,132         $18,793         $20,659         $16,734      $71,341       $133,659
     Passbook savings accounts                    2,838           8,232          20,498          16,398       65,594        113,560
     Regular and commercial checking              7,222          18,599          20,442          16,559       70,587        133,409
     Certificates of deposit                    303,332         645,230          92,040         144,440        9,283      1,194,325
FHLB advances                                   359,250           5,000              --          90,000           --        454,250
Securities sold under agreements to
   repurchase (6)                               848,202              --              --              --           --        848,202
Other borrowings(7)                             135,167          25,000          10,500              --           --        170,667
                                         -------------------------------------------------------------------------------------------

Total                                         1,662,143         720,854         164,139         284,131      216,805      3,048,072
                                         -------------------------------------------------------------------------------------------

Effect of hedging instruments                  (330,000)         40,000         210,000              --       80,000             --
                                         -------------------------------------------------------------------------------------------

                                             $1,332,143        $760,854        $374,139        $284,131     $296,805     $3,048,072
                                         ===========================================================================================

Excess (deficiency) of interest-earning
assets over interest-bearing liabilities      ($713,473)        $62,734        $239,951         $45,324     $529,703       $164,239
                                         -------------------------------------------------------------------------------------------

Cummulative excess (deficiency) of
interest-earning assets over
interest-bearing liabilities                  ($713,473)      ($650,739)      ($410,788)      ($365,464)    $164,239
                                         -------------------------------------------------------------------------------------------

Cummulative excess (deficiency) of
interest-earning assets over
interest-bearing liabilities as a percent
of total assets                                  (20.92)%        (19.08)%        (12.05)%        (10.72)%      4.81%
                                         -------------------------------------------------------------------------------------------

</TABLE>

                                                   (footnotes on following page)
                                       17
<PAGE>
----------------------

(1)  Adjustable-rate  loans are included in the period in which  interest  rates
     are next  scheduled  to adjust  rather that in the period in which they are
     due,  and  fixed-rate  loans are  included in the periods in which they are
     scheduled to be repaid,  based on scheduled  amortization,  in each case as
     adjusted to take into account estimated prepayments.

(2)  Reflects estimated prepayments in the current interest rate environment.

(3)  Includes  securities  held  for  trading,  available  for  sale and held to
     maturity.

(4)  Includes securities purchased under agreement to resell, time deposits with
     other banks and federal funds sold.

(5)  Does not include non-interest-bearing deposit accounts.

(6)  Includes federal funds purchased.

(7)  Comprised of warehousing lines, notes payable and other borrowings.

----------------------

         As of September  30, 2000 and December 31, 1999,  the Company had a one
year  negative  gap  of   approximately   $650.7  million  and  $691.8  million,
respectively.  R&G Financial's  negative gap within one year is due primarily to
its large fixed-rate mortgage loans receivable portfolio held for investment and
its  portfolio  of FHLB  notes and other US agency  securities  which  have call
features but are not likely to be  exercised by such  agencies due to the actual
interest rate  environment.  While the above table presents the Company's  loans
receivable  portfolio  held for  investment  purposes  according to its maturity
date,  from time to time the Company may  negotiate  special  transactions  with
FHLMC  and/or FNMA or other third  party  investors  for the sale of such loans.
There can be no  assurance,  however,  that the Company  will be  successful  in
consummating any such transactions.


         The following table presents for the periods  indicated R&G Financial's
total dollar  amount of interest  from average  interest-earning  assets and the
resultant  yields,  as well as the interest expense on average  interest-bearing
liabilities  expressed both in dollars and rates,  and the net interest  margin.
The table does not reflect any effect of income taxes.  All average balances are
based on the average of month-end  balances  for R&G Mortgage and average  daily
balances for the Bank in each case during the periods presented.

                                       18
<PAGE>
<TABLE>
<CAPTION>
                                                                      For the three month period ended September 30,
                                                                     2000                                       1999
                                                   -----------------------------------------------------------------------------
                                                     Average                    Yield /        Average                     Yield /
            (Dollars in Thousands)                   Balance       Interest      Rate          Balance        Interest       Rate
                                                   -----------------------------------------------------------------------------
<S>                                                 <C>            <C>         <C>            <C>             <C>         <C>
Interest-Earning Assets:

Cash and cash equivalents(1)                          $17,094        $291        6.81%          $12,901         $170        5.27%
Investment securities available for sale              324,333       5,640         6.96          151,147        2,426         6.42
Investment securities held to maturity                  5,493          79         5.75            5,547           81         5.84
Mortgage-backed securities held for trading            17,956         228         5.08           48,035          732         6.10
Mortgage-backed securities available for sale         715,493      11,288         6.31          543,140        8,173         6.02
Mortgage-backed securities held to maturity            21,222         372         7.01           24,860          376         6.05
Loans receivable, net (2)                           1,972,807      42,337         8.58        1,484,526       31,659         8.53
FHLB of New York Stock                                 40,085         666         6.65           18,628          329         7.06
                                                   -----------------------------------------------------------------------------
Total interest-earning assets                       3,114,483     $60,901        7.82%        2,288,784      $43,946        7.68%
                                                   -----------------------------------------------------------------------------
Non-interest-earning assets                           225,467                                   192,812
                                                   -----------------------------------------------------------------------------
Total assets                                       $3,339,950                                $2,481,596
                                                   =============================================================================
Interest-Bearing Liabilities:

Deposits                                           $1,568,110     $21,439        5.47%       $1,198,326      $14,114        4.71%
Securities sold under agreements to
   repurchase (3)                                     800,996      13,348         6.67          546,961        7,493         5.48
Notes payable                                         187,950       2,708         5.76          193,686        3,361         6.94
Other borrowings(4)                                   459,902       7,528         6.55          257,973        3,174         4.92
                                                   -----------------------------------------------------------------------------

Total interest-bearing liabilities                  3,016,958     $45,023        5.97%        2,196,946      $28,142        5.12%
                                                   -----------------------------------------------------------------------------
Non-interest-bearing liabilities                       34,670                                    42,972
                                                   -----------------------------------------------------------------------------
Total liabilites                                    3,051,628                                 2,239,918
                                                   -----------------------------------------------------------------------------
Stockholders' equity                                  288,322                                   241,678
                                                   -----------------------------------------------------------------------------
Total liabilities and stockholders' equity         $3,339,950                                $2,481,596
                                                   =============================================================================

Net interest income; interest rate spread (5)                     $15,878        1.85%                       $15,804        2.56%
                                                                  ====================                       ====================
Net interest margin                                                              2.04%                                      2.76%
                                                                                 =====                                      =====
Average interest-earning assets to average
   interest-bearing liabilities                                                103.23%                                    104.18%
                                                                               =======                                    =======
</TABLE>
                                                          (footnotes on page 21)
                                       19
<PAGE>
<TABLE>
<CAPTION>
                                                                        For the nine month period ended September 30,
                                                                      2000                                       1999
                                                   --------------------------------------------------------------------------------
                                                     Average                      Yield /        Average                     Yield /
             (Dollars in Thousands)                  Balance        Interest       Rate          Balance       Interest       Rate
<S>                                                <C>              <C>         <C>            <C>             <C>         <C>
Interest-Earning Assets:

Cash and cash equivalents (1)                         $15,001          $732        6.50%          $17,461         $681        5.20%
Investment securities available for sale              289,265        15,174         6.99           95,161        4,305         6.03
Investment securities held to maturity                  5,435           237         5.81            6,403          271         5.64
Mortgage-backed securities held for trading            20,706           891         5.74           30,203        1,274         5.62
Mortgage-backed securities available for sale         702,921        32,903         6.24          515,587       22,440         5.80
Mortgage-backed securities held to maturity            21,847         1,040         6.35           26,735        1,210         6.03
Loans receivable, net (2)                           1,849,630       119,115         8.58        1,347,355       84,865         8.40
FHLB of New York Stock                                 37,287         1,803         6.45           14,111          722         6.82
                                                   --------------------------------------------------------------------------------
Total interest-earning assets                       2,942,092      $171,895        7.79%        2,053,016     $115,768        7.52%
                                                   --------------------------------------------------------------------------------
Non-interest-earning assets                           236,340                                     224,614
                                                   --------------------------------------------------------------------------------
Total assets                                       $3,178,432                                  $2,277,630
                                                   ================================================================================
Interest-Bearing Liabilities:

Deposits                                           $1,465,850       $57,496        5.23%       $1,113,609      $38,273        4.58%
Securities sold under agreements to
   repurchase (3)                                     747,268        35,597         6.35          445,274       18,465         5.53
Notes payable                                         193,342         8,972         6.19          204,932       10,344         6.73
Other borrowings(4)                                   432,248        20,459         6.31          194,758        7,120         4.87
                                                   --------------------------------------------------------------------------------
Total interest-bearing liabilities                  2,838,708      $122,524        5.75%        1,958,573      $74,202        5.05%
                                                   --------------------------------------------------------------------------------
Non-interest-bearing liabilities                       59,372                                      85,439
                                                   --------------------------------------------------------------------------------
Total liabilites                                    2,898,080                                   2,044,012
                                                   --------------------------------------------------------------------------------
Stockholders' equity                                  280,352                                     233,618
                                                   --------------------------------------------------------------------------------
Total liabilities and stockholders' equity         $3,178,432                                  $2,277,630
                                                   ================================================================================
Net interest income; interest rate spread (5)                       $49,371        2.04%                       $41,566        2.47%
                                                                    ====================                       ====================
Net interest margin                                                                2.24%                                      2.70%
                                                                                   =====                                      =====
Average interest-earning assets to average
   interest-bearing liabilities                                                  103.64%                                    104.82%
                                                                                 =======                                    =======

</TABLE>
                                                   (footnotes on following page)

                                       20
<PAGE>
----------------------

(1)  Comprised of cash and due from banks, securities purchased under agreements
     to resell, time deposits with other banks and federal funds sold.

(2)  Includes mortgage loans held for sale and non-accrual loans.

(3)  Includes federal funds purchased.

(4)  Comprised of long-term  debt,  advances from the FHLB of New York and other
     borrowings.

(5)  Interest rate spread  represents  the  difference  between R&G  Financial's
     weighted average yield on interest-earning  assets and the weighted average
     rate on  interest-bearing  liabilities.  Net interest margin represents net
     interest income as a percent of average interest-earning assets.

----------------------

Mortgage Loan Servicing

         The  following  table  sets forth  certain  information  regarding  the
mortgage loan servicing portfolio of R&G Financial for the periods indicated.
<TABLE>
<CAPTION>

                                                       At or for the nine months ended
                                                                 September 30,
                                                          2000               1999
                                                      -----------       -----------
                                                           (Dollars in Thousands)
<S>                                                   <C>               <C>
Composition of Servicing Portfolio at period end:
   GNMA                                               $ 3,004,759       $ 2,630,922
   FNMA/FHLMC                                           1,715,331         1,307,124
   Other mortgage loans (3)                             1,810,896         1,529,119
                                                      -----------       -----------
Total servicing portfolio (3)                         $ 6,530,986       $ 5,467,165
                                                      ===========       ===========
Activity in the Servicing Portfolio:
  Beginning servicing portfolio                       $ 6,177,511       $ 4,827,798
  Add: Loan originations and purchases                    937,852         1,184,844
         Servicing of portfolio loans acquired             31,404               288
  Less: Sale of servicing rights(1)                      (171,578)          (  --  )
         Run-offs(2)                                     (444,203)         (545,765)
                                                      -----------       -----------
  Ending servicing portfolio(3)                       $ 6,530,986       $ 5,467,165
                                                      ===========       ===========
  Number of loans serviced                                110,192           101,796
  Average loan size                                   $        59       $        54
  Average servicing fee rate                                0.507%            0.533%
</TABLE>
--------------------

(1)  Includes loans sold,  servicing  released,  by Continental Capital totaling
     $130.5 million.


                                       21
<PAGE>
(2)  Run-off  refers  to  regular   amortization   of  loans,   prepayments  and
     foreclosures.

(3)  At the dates  shown,  included  $1.1  billion  and $913.0  million of loans
     serviced for the Bank,  respectively,  which constituted 17.4% and 16.7% of
     the total servicing portfolio, respectively.

--------------------

         Substantially  all of the mortgage loans in R&G  Financial's  servicing
portfolio are secured by single  (one-to-four) family residences secured by real
estate  located  in  Puerto  Rico.  At  September  30,  2000 less than 8% of the
Company's mortgage servicing  portfolio was related to mortgages secured by real
property located outside Puerto Rico.

         The  Company  reduces  the  sensitivity  of  its  servicing  income  to
increases in prepayment rates through a strong retail  origination  network that
has increased or maintained the size of R&G Financial's servicing portfolio even
during periods of high prepayments.  In addition,  a substantial  portion of the
Company's servicing portfolio consists of tax-exempt FHA/VA mortgage loans which
carry lower  interest  rates than those on  conventional  loans,  which tends to
reduce risks related to R&G Financial's servicing portfolio.


                                       22
<PAGE>
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  September  30,  2000,  the Company had $283.4  million in  borrowing
capacity  under  warehousing  and  other  lines of  credit,  $718.3  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.

         At  September  30, 2000,  the Company had  outstanding  commitments  to
extend credit totaling $68.3 million (excluding the undisbursed portion of loans
in process).  Certificates  of deposit  which are scheduled to mature within one
year totaled  $937.4  million at September  30, 2000,  and  borrowings  that are
scheduled to mature within the same period amounted to $1.4 billion. The Company
anticipates  that it will have  sufficient  funds  available to meet its current
loan commitments.

         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
from 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


                                       23
<PAGE>
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 September  30, 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 6.19%, 11.40% and 12.17%, 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.


"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 at December
31, 1999 are presented in Item 7A of the  Company's  Annual report on Form 10-K.
Information  at  September  30,  2000 is  presented  on page 17 of this  Report.
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.

                                       24

<PAGE>


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

Item 5:  Other Information

                  Not applicable.

Item 6:  Exhibits and Reports on Form 8-K

                  a)       Exhibits

                           No.
                           ---
                           27       Financial Data Schedule           E-1

                  b)       No Form 8-K reports were filed during the quarter.

                                   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: November 10, 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)