SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-Q/A
                                 AMENDMENT NO. 1



[ X ]       QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF  THE SECURITIES
            EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1999

                                       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                                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  checkmark  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 June 30,
1999:  10,192,891  (Does not include  18,440,556  Class A Shares of Common Stock
which are exchangeable  into Class B Shares of Common Stock at the option of the
holder.)
<PAGE>













Explanatory Note:
-----------------

The undersigned  registrant  hereby amends and restates in their entirety Item 1
and Item 2 of Part I - Financial  Information  of its  quarterly  report on Form
10-Q for the quarter ended June 30, 1999.















                                      -2-
<PAGE>
                          PART 1-FINANCIAL INFORMATION
                          ----------------------------

ITEM 1:  CONSOLIDATED FINANCIAL STATEMENTS
-------  ---------------------------------
<TABLE>
<CAPTION>
R&G FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                                                                                              June 30,          December 31,
                                                                                                1999                1998
                                                                                          ---------------      ---------------
                                                                                            (Unaudited)
<S>                                                                                       <C>                  <C>
ASSETS
Cash and due from banks                                                                   $    32,927,917      $    51,804,750
Money market investments:
    Securities purchased under agreements to resell                                            10,002,847           11,544,123
    Time deposits with other banks                                                             12,691,371           30,361,527
    Federal funds sold                                                                               --             10,018,048
Mortgage loans held for sale, at lower of cost or market                                       75,205,656          117,126,040
Mortgage-backed securities held for trading, at fair value                                     44,457,191          450,546,034
Mortgage-backed securities available for sale, at fair value                                  530,712,426           95,040,331
Mortgage-backed securities held to maturity, at amortized cost
(estimated market value: 1999 - $25,462,066; 1998 - $28,260,925)                               25,303,394           28,255,518
Investment securities available for sale, at fair value                                       124,578,329           59,502,140
Investment securities held to maturity, at amortized cost
(estimated market value: 1999- $ 6,131,155; 1998- $6,378,634)                                   6,141,250            6,343,929
Loans receivable, net                                                                       1,315,053,005        1,073,668,278
Accounts receivable, including advances to investors, net                                      13,841,206            9,665,290
Accrued interest receivable                                                                    14,919,249           12,505,431
Servicing asset                                                                                66,173,253           58,221,052
Premises and equipment                                                                         15,154,370           12,962,435
Other assets                                                                                   22,284,380           17,216,602
                                                                                          ---------------      ---------------
                                                                                          $ 2,309,445,844      $ 2,044,781,528
                                                                                          ===============      ===============

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
     Deposits                                                                             $ 1,160,276,440      $ 1,007,297,304
     Securities sold under agreements to repurchase                                           522,235,642          471,421,726
     Notes payable                                                                            123,010,129          182,747,956
     Advances from FHLB                                                                       219,000,000          121,000,000
     Other borrowings                                                                           9,000,000            9,000,000
     Accounts payable and accrued liabilities                                                  31,173,978           28,020,080
     Other liabilities                                                                          6,813,073            4,132,603
                                                                                          ---------------      ---------------
                                                                                            2,071,509,262        1,823,619,669
                                                                                          ---------------      ---------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
R&G FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                                                                                              June 30,          December 31,
                                                                                                1999                1998
                                                                                          ---------------      ---------------
                                                                                            (Unaudited)
<S>                                                                                       <C>                  <C>
Stockholders'equity:
     Preferred stock,  $.01 par value,  10,000,000 shares  authorized,  7.40% Monthly
         Income Preferred Stock, Series A, $25 liquidation
          value, 2,000,000 shares authorized, issued and outstanding                           50,000,000           50,000,000
     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, 10,192,891
           issued  and outstanding in 1999 (1998-10,146,091)                                      101,929              101,461
     Additional paid-in capital                                                                41,732,410           41,544,378
     Retained earnings                                                                        143,561,850          124,418,278
     Capital reserves of the Bank                                                               3,547,798            3,547,798
     Accumulated other comprehensive (loss) income                                             (1,191,811)           1,365,538
                                                                                           ---------------      ---------------
                                                                                              237,936,582          221,161,859
                                                                                          ---------------      ---------------
                                                                                          $ 2,309,445,844      $ 2,044,781,528
                                                                                          ===============      ===============
</TABLE>

        The accompanying notes are an integral part of these statements.
<PAGE>
<TABLE>
<CAPTION>
R&G FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME

                                                                        Three month                        Six month
                                                                       period ended                       period ended
                                                                          June 30,                          June 30,
                                                             ------------------------------      ------------------------------
                                                                 1999              1998              1999              1998
                                                             ------------      ------------      ------------      ------------
                                                                       (Unaudited)                         (Unaudited)
                                                                         (Dollars in thousands except for per share data)
<S>                                                          <C>               <C>               <C>               <C>

Interest income:
     Loans                                                   $     27,957      $     21,487      $     54,574      $     40,144
     Money market and other investments                               872             1,538             1,605             2,966
     Mortgage-backed securities                                     7,608             6,921            15,643            14,612
                                                             ------------      ------------      ------------      ------------
          Total interest income                                    36,437            29,946            71,822            57,722
                                                             ------------      ------------      ------------      ------------

Interest expense:
      Deposits                                                     12,699             9,084            24,159            17,429
      Securities sold under agreements to repurchase                5,598             5,846            10,972            11,539
      Notes payable                                                 3,254             3,140             6,983             6,110
      Other                                                         2,358             1,064             3,946             1,846
                                                             ------------      ------------      ------------      ------------
          Total interest expense                                   23,909            19,134            46,060            36,924
                                                             ------------      ------------      ------------      ------------
Net interest income                                                12,528            10,812            25,762            20,798
Provision for loan losses                                          (1,100)           (1,500)           (2,400)           (3,000)
                                                             ------------      ------------      ------------      ------------
Net interest income after provision for loan losses                11,428             9,312            23,362            17,798
                                                             ------------      ------------      ------------      ------------
Other income:
     Net gain on origination and sale of loans
      and sales of securities available for sale                    9,304             7,660            19,801            15,217
     Loan administration and servicing fees                         6,618             3,833            12,379             7,520
     Service charges, fees and other                                2,090             1,472             3,575             2,656
                                                             ------------      ------------      ------------      ------------
                                                                   18,012            12,965            35,755            25,393
                                                             ------------      ------------      ------------      ------------
          Total revenues                                           29,440            22,277            59,117            43,191
                                                             ------------      ------------      ------------      ------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
R&G FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME

                                                                        Three month                        Six month
                                                                       period ended                       period ended
                                                                          June 30,                          June 30,
                                                             ------------------------------      ------------------------------
                                                                 1999              1998              1999              1998
                                                             ------------      ------------      ------------      ------------
                                                                        (Unaudited)                         (Unaudited)
                                                                         (Dollars in thousands except for per share data)
<S>                                                          <C>               <C>               <C>               <C>
Operating expenses:
     Employee compensation and benefits                             5,462             4,212            10,232             7,770
     Office occupancy and equipment                                 2,717             2,166             5,107             3,991
     Other administrative and general                               7,379             5,905            15,057            10,700
                                                             ------------      ------------      ------------      ------------
                                                                   15,558            12,283            30,396            22,461
                                                             ------------      ------------      ------------      ------------
Income before income taxes                                         13,882             9,994            28,721            20,730
                                                             ------------      ------------      ------------      ------------
Income tax expense:
     Current                                                        1,473               747             3,397             2,607
     Deferred                                                         599             1,276             2,364             2,672
                                                             ------------      ------------      ------------      ------------
                                                                    2,072             2,023             5,761             5,279
                                                             ------------      ------------      ------------      ------------

          Net income                                         $     11,810      $      7,971      $     22,960      $     15,451
                                                             ============      ============      ============      ============
Earnings per common share - Basic                            $       0.38      $       0.28      $       0.74      $       0.55
                                                             ------------      ------------      ------------      ------------
                          - Diluted                          $       0.37      $       0.27      $       0.72      $       0.53
                                                             ------------      ------------      ------------      ------------
Weighted average number of shares outstanding - Basic          28,631,073        28,289,504        28,615,943        28,289,504
                                              - Diluted        29,408,611        29,045,504        29,382,772        29,045,504
</TABLE>


        The accompanying notes are an integral part of these statements.



                                      -4-
<PAGE>
<TABLE>
<CAPTION>
R&G FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                                                                       Three Month                  Six Month
                                                                                      period ended                period ended
                                                                                         June 30,                   June 30,
                                                                                  ---------------------      ----------------------
                                                                                   1999           1998         1999          1998
                                                                                 -------         ------      -------        -------
                                                                                      (Unaudited)                  (Unaudited)
                                                                                               (Dollars in thousands)
<S>                                                                              <C>             <C>         <C>            <C>
Net Income                                                                       $11,810         $7,971      $22,960        $15,451
                                                                                 -------         ------      -------        -------

Other comprehensive income, before tax:

Unrealized gains (losses) on securities:

     Arising during period                                                        (3,573)           549       (4,773)           309
     Less:   Reclassification adjustments for (gains) losses included
                 in net income                                                       445            ---          581           (149)
                                                                                 -------         ------      -------        -------

                                                                                  (3,128)           549       (4,192)           160
Income tax benefit (expense) related to items of other comprehensive income        1,220           (214)       1,635            (62)
                                                                                 -------         ------      -------        -------

Other comprehensive (loss)  income, net of tax                                    (1,908)           335       (2,557)            98
                                                                                 -------         ------      -------        -------

Comprehensive income, net of tax                                                 $ 9,902         $8,306      $20,403        $15,549
                                                                                 =======         ======      =======        =======
</TABLE>

        The accompanying notes are an integral part of these statements.







                                      -5-


<PAGE>
<TABLE>
<CAPTION>
R&G  FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                                                            Six month
                                                                                                          period ended
                                                                                                             June 30,
                                                                                                    ------------------------
                                                                                                      1999            1998
                                                                                                    ---------      ---------
Cash flows from operating activities:                                                                      (Unaudited)
<S>                                                                                                 <C>            <C>
     Net income                                                                                     $  22,960      $  15,451
                                                                                                   ---------      ---------
           Adjustments  to  reconcile  net income to net cash  provided by  operating
              activities:
           Depreciation and amortization                                                                1,824          1,347
           Amortization of premium (accretion of discount) on investments and
                 mortgage-backed securities, net                                                          121             (9)
           Amortization of servicing rights                                                             3,381          1,323
           Provision for loan losses                                                                    2,400          3,000
           Provision for bad debts in accounts  receivable                                                150            150
           Gain on sales of  loans                                                                     (5,183)        (2,662)
           Loss (gain) on sales of mortgage-backed and investment securities available for sale           581           (149)
           Unrealized loss (profit) on trading securities                                                 746         (1,888)
           Increase in mortgage loans held for sale                                                    41,920        (43,454)
           Net increase in mortgage-backed  securities held for trading                               (22,066)       (42,797)
           Increase in receivables                                                                     (6,740)        (1,534)
           Increase in other assets                                                                    (5,407)          (694)
           (Decrease) increase in notes payable                                                       (59,738)        58,485
           Increase in accounts payable and accrued liabilities                                         5,220          3,013
           Increase in other liabilities                                                                2,681            562
                                                                                                    ---------      ---------
               Total adjustments                                                                      (40,110)       (25,307)
                                                                                                    ---------      ---------
               Net cash used in operating activities                                                  (17,150)        (9,856)
                                                                                                    ---------      ---------
Cash flows from investing activities:
      Purchases of investment securities                                                              (84,605)       (31,501)
      Proceeds from sales and maturities of securities available for sale                             111,236         39,663
      Proceeds from maturities of securities held to maturity                                             209          4,405
      Proceeds from sales of loans                                                                     99,809         73,398
      Net originations of loans                                                                      (436,234)      (287,438)
      Purchases of  FHLB stock, net                                                                    (4,096)        (4,160)
      Acquisition of premises and equipment                                                            (3,676)        (2,764)
      Acquisition of servicing rights                                                                 (11,332)        (8,712)
                                                                                                    ---------      ---------
               Net cash used by investing activities                                                 (328,689)      (217,109)
                                                                                                    ---------      ---------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
R&G  FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                                                            Six month
                                                                                                          period ended
                                                                                                             June 30,
                                                                                                    ------------------------
                                                                                                      1999            1998
                                                                                                    ---------      ---------
                                                                                                           (Unaudited)
<S>                                                                                                 <C>            <C>
Cash flows from financing activities:
     Increase in deposits - net                                                                       152,548         98,421
     Decrease in federal funds purchased                                                                 --            5,000
     (Decrease) increase in securities sold under agreements to repurchase - net                       50,814         42,786
     Advances from FHLB                                                                                98,000         79,400
     Repayment of advances from FHLB                                                                     --             --
     Repayment of subordinate notes                                                                      --           (3,250)
     Capital contribution to subsidiary                                                                  --              (12)
     Proceeds from issuance of common stock                                                               189           --
     Cash dividends on common stock                                                                    (3,817)        (1,468)
                                                                                                    ---------      ---------
               Net cash provided by financing activities                                              297,733        220,877
                                                                                                    ---------      ---------
Net decrease in cash and cash equivalents                                                             (48,106)        (6,088)
Cash and cash equivalents at  beginning of  period                                                    103,728         68,366
                                                                                                    ---------      ---------
Cash and cash equivalents at end of period                                                          $  55,622      $  62,278
                                                                                                    =========      =========

Cash and cash equivalents include:
     Cash and due from banks                                                                        $  32,928      $  22,900
     Securities purchased under agreements to resell                                                   10,003          8,000
     Time deposits with other banks                                                                    12,691         31,378
     Federal funds sold                                                                                  --             --
                                                                                                    ---------      ---------
                                                                                                    $  55,622      $  62,278
                                                                                                    =========      =========
</TABLE>

        The accompanying notes are an integral part of these statements.


                                      -6-

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


NOTE 1  -               REPORTING ENTITY AND BASIS OF PRESENTATION


Reporting entity

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

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

     The Bank provides a full range of banking services,  including residential,
commercial  and  personal  loans and a  diversified  range of  deposit  products
through twenty branches  located mainly in the northern 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.

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 June  30,  1999 and the  results  of
operations and changes in its cash flows for the three and six months ended June
30, 1999 and 1998.

     The results of  operations  for the three and six month  periods ended June
30, 1999 are not  necessarily  indicative  of the results to be expected for the
year ending December 31, 1999. 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, 1998.

     Certain  reclassifications (not affecting income before income taxes or net
income) have been made to the  consolidated  statements  of income for the three
and six month period ended June 30, 1998 to conform to the  presentation for the
1999 respective periods.


                                      -7-
<PAGE>
Basis of consolidation

All significant  intercompany  balances and transactions have been eliminated in
the accompanying unaudited financial statements.


NOTE 2  -               EARNINGS PER SHARE

     Basic  earnings per common share for the three and six month  periods ended
June 30, 1999 and 1998 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.

     On  June  25,  1998  the  Company  effected  a 2 for 1 stock  split  on the
Company's  common stock, in the form of a stock dividend of one additional share
of common  stock for each  share of common  stock  held of record as of June 12,
1998.  Following   distribution  of  the  additional  shares,  the  Company  had
28,289,504  common shares  outstanding.  Per share  information  for all periods
presented  take into  consideration  the stock split paid by the Company in June
1998.


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>
                                                      June 30,         December 31,
                                                        1999              1998
                                                     ----------       ------------
                                                     (Unaudited)
Mortgage-backed securities held for trading:

<S>                                                 <C>                <C>
     CMO residuals and interest only strips         $ 9,296,265        $  7,146,762
     GNMA certificates                               35,160,926         443,399,272
                                                    -----------       ------------
                                                    $44,457,191        $450,546,034
                                                    ===========        ============
</TABLE>


                                      -8-
<PAGE>
<TABLE>
<CAPTION>
                                                               June 30, 1999                 December 31, 1998
                                                        ------------------------------   ----------------------------
                                                         Amortized          Fair           Amortized          Fair
                                                           cost             value            cost             value
                                                       ------------     ------------     ------------     ------------
                                                                  (Unaudited)
Mortgage-backed securities available for sale:

<S>                                                    <C>              <C>              <C>              <C>
CMO residuals and other mortgage-backed securities     $  8,765,722     $ 10,576,856     $  7,845,382     $  9,661,171
                                                       ------------     ------------     ------------     ------------
FNMA certificates:
     Due from five to ten years                             846,601          836,813             --               --
     Due over ten years                                   6,553,891        6,407,634        8,091,335        8,161,704
                                                       ------------     ------------     ------------     ------------
                                                          7,400,492        7,244,447        8,091,335        8,161,704
                                                       ------------     ------------     ------------     ------------
FHLMC certificates:
     Due from one to five years                             237,882          241,470           89,209           90,765
     Due from five to ten years                           1,243,349        1,233,012          240,394          244,140
     Due over ten years                                  17,152,607       16,948,992       21,368,689       21,723,711
                                                        ------------     ------------     ------------     ------------
                                                         18,633,838       18,423,474       21,698,292       22,058,616
                                                       ------------     ------------     ------------     ------------
GNMA certificates:
      Due over ten years                                496,072,179      494,467,649       55,158,840       55,158,840
                                                       ------------     ------------     ------------     ------------

                                                       $530,872,231     $530,712,426     $ 92,793,849     $ 95,040,331
                                                       ============     ============     ============     ============

Investment securities available for sale:

U.S.  Treasury securities:
     Due from one to five years                        $  4,996,520     $  4,946,875     $  4,995,028     $  4,990,625
                                                       ------------     ------------     ------------     ------------

U.S. Government and Agencies securities:
      Due from one to five years                         85,951,128       84,713,528       38,100,000       38,106,648
      Due from five to ten years                         19,923,596       19,416,860        5,010,140        5,000,000
                                                       ------------     ------------     ------------     ------------
                                                        105,874,724      104,130,388       43,110,140       43,106,648
                                                       ------------     ------------     ------------     ------------

FHLB stock                                               15,501,066       15,501,066       11,404,867       11,404,867
                                                       ------------     ------------     ------------     ------------
                                                       $126,372,310     $124,578,329     $ 59,510,035     $ 59,502,140
                                                       ============     ============     ============     ============
</TABLE>
            Mortgage-backed  securities available for sale include interest only
securities  with an amortized cost of $4,213,054 as of June 30, 1999,  which are
primarily  associated  with the sale in prior years of  collateralized  mortgage
obligations. These sales were not made in connection with the Company's mortgage
banking activities.

                                      -9-
<PAGE>
<TABLE>
<CAPTION>
                                                            June 30, 1999                December 31, 1998
                                                     ---------------------------     ---------------------------
                                                       Amortized         Fair          Amortized        Fair
                                                         cost            value           cost           value
                                                    -----------     -----------     -----------     -----------
                                                           (Unaudited)
Mortgage-backed securities held to maturity:
<S>                                                  <C>             <C>             <C>             <C>
GNMA certificates:
      Due from one to five years                     $    21,506     $    23,065     $    27,227     $    29,201
      Due from five to ten years                      11,515,431      11,274,125      13,024,960      12,751,640
      Due over ten years                               2,315,522       2,263,333       2,359,713       2,306,529
                                                    -----------     -----------     -----------     -----------
                                                      13,852,459      13,560,523      15,411,900      15,087,370
                                                    -----------     -----------     -----------     -----------

FNMA certificates:
     Due over ten years                               11,239,902      11,696,220      12,607,700      12,944,020
                                                    -----------     -----------     -----------     -----------

FHLMC certificates:
     Due over ten years                                  211,033         205,323         235,918         229,535
                                                    -----------     -----------     -----------     -----------

                                                     $25,303,394     $25,462,066     $28,255,518     $28,260,925
                                                     ===========     ===========     ===========     ===========
Investment securities held to maturity:
U.S.  Treasury securities:
     Due within one year                             $   200,000     $   199,500     $   194,892     $   196,000
                                                    -----------     -----------     -----------     -----------

U.S. Government and Agencies securities:
      Due within one year                                   --              --           204,167         204,167
                                                    -----------     -----------     -----------     -----------

Puerto Rico Government and Agencies obligations:
       Due from one to five years                      1,280,000       1,283,200            --              --
       Due from five to ten years                      4,661,250       4,648,455       5,944,870       5,978,467
                                                    -----------     -----------     -----------     -----------
                                                       5,941,250       5,931,655       5,944,870       5,978,467
                                                    -----------     -----------     -----------     -----------

                                                     $ 6,141,250     $ 6,131,155     $ 6,343,929     $ 6,378,634
                                                     ===========     ===========     ===========     ===========
</TABLE>


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

             Loans consist of the following:
<TABLE>
<CAPTION>
                                                 June 30,           December 31,
                                                   1999                 1998
                                             --------------      ---------------
                                              (Unaudited)
<S>                                         <C>                  <C>
Real estate loans:
     Residential - first mortgage           $   950,484,488      $   735,457,756
     Residential - second mortgage               15,911,693           18,633,916
     Land                                           684,475              337,250
     Construction                                58,409,002           34,391,170
     Commercial                                 142,683,760          121,393,030
                                            ---------------      ---------------
                                              1,168,173,418          910,213,122
Undisbursed portion of loans in process         (34,849,356)         (18,170,178)
Net deferred loan costs (fees)                      148,868             (166,056)
                                            ---------------      ---------------
                                              1,133,472,930          891,876,888
                                            ---------------      ---------------
Other loans:
     Commercial                                  48,040,540           46,532,311
     Consumer:
        Secured by deposits                      16,896,735           17,225,437
        Secured by real estate                   86,481,278           85,054,815
        Other                                    39,391,033           41,381,304
Unamortized discount                               (302,415)            (163,499)
Unearned interest                                  (138,381)            (183,546)
                                            ---------------      ---------------
                                                190,368,790          189,846,822
                                            ---------------      ---------------

        Total loans                           1,323,841,720        1,081,723,710
     Allowance for loan losses                   (8,788,715)          (8,055,432)
                                            ---------------      ---------------
                                            $ 1,315,053,005      $ 1,073,668,278
                                            ===============      ===============
</TABLE>
The changes in the allowance for loan losses follow:
<TABLE>
<CAPTION>
                                                           Six months ended
                                                               June 30,
                                                      -------------------------
                                                        1999             1998
                                                      -------           -------
                                                              (Unaudited)
                                                        (Dollars in thousands)
<S>                                                   <C>               <C>
Balance, beginning of period                          $ 8,055           $ 6,772
Provision for loan losses                               2,400             3,000
Loans charged-off                                      (1,997)           (3,212)
Recoveries                                                331               135
                                                      -------           -------
Balance, end of period                                $ 8,789           $ 6,695
                                                      =======           =======
</TABLE>
                                   -11-

<PAGE>
NOTE 5  -               COMMITMENTS AND CONTINGENCIES

Commitments to developers providing end loans

            The Company has outstanding  commitments for various projects in the
process of  completion.  Total  commitments  amounted  to  approximately  $485.2
million at June 30,  1999.  All  commitments  are subject to  prevailing  market
prices at time of closing  with no market risk  exposure  against the Company or
with firm back-to-back commitments extended in favor of the mortgagee.


Loans in process

            Loans in process pending final approval  and/or closing  amounted to
approximately $156.9 million at June 30, 1999.


Commitments to buy and sell GNMA certificates

            As of June 30, 1999, the Company had open  commitments to issue GNMA
certificates of approximately $138.2 million.


Commitments to sell mortgage loans

            As of June 30,  1999 the Company had  commitments  to sell  mortgage
loans to third party investors amounting to approximately $ 30.6 million.


Lease commitments

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


Other

            At June 30,  1999,  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  $612.5 million at June 30, 1999.  Liability,  if any,
under the recourse  provisions at June 30, 1999 is estimated by management to be
insignificant.

                                      -12-
<PAGE>
Item 2:     Management's Discussion and Analysis
------------------------------------------------

Financial Condition

            At June 30,  1999,  the  Company's  total  assets  amounted  to $2.3
billion, as compared to $2.0 billion at December 31, 1998. The $264.7 million or
12.9%  increase in total assets  during the six month period ended June 30, 1999
was attributable to a $241.4 million or 22.5% increase in loans receivable, net,
which reflects net  originations  following  repayments  and sales,  and a $65.1
million or 109.4% increase in investment securities available for sale, which is
the  result of the  purchase  of $82.5  million  of such  securities  during the
period.  Such  increases  were  partially  offset  by a $48.1  million  or 46.4%
decrease in cash and cash equivalents due to the use of excess liquidity to fund
increased loan originations during the period.

            Effective  January 1, 1999, the Company made a  reclassification  of
$427.4 million of mortgage backed  securities from trading to available for sale
in connection with the adoption of SFAS 134. This adoption resulted  principally
in  an  increase  in  mortgage-backed   securities  available  for  sale  and  a
corresponding decrease in mortgage-backed securities held for trading.

            The  increase  in the  Company's  assets  were  primarily  funded by
increased  deposits of $153.0 million or 15.2%,  and by a $98.0 million or 81.0%
increase in FHLB advances.

            At June 30, 1999,  the Company's  stockholders'  equity  amounted to
$237.9  million,  which is an increase of $16.8  million or 7.6% from the amount
reported at December 31, 1998.  The primary  reason for the increase was the net
income  earned for the  quarter,  which was  partially  offset by a $2.6 million
decrease in unrealized gains on securities available for sale, net of income tax
benefits,  and $3.8  million in  dividends  paid during the period.  At June 30,
1999, the Bank's  leverage and Tier 1 risk-based  capital  amounted to 6.59% and
11.24% of  adjusted  total  assets,  respectively,  compared  to a 4.0%  minimum
requirement, and its total risk-based capital amounted to 12.15%, compared to an
8.0% minimum requirement.

Results of Operations

            The Company  reported net income of $11.8 million and $ 23.0 million
during the three and six months  period ended June 30, 1999, as compared to $8.0
million and $15.5 million during the prior comparable periods.

            Total revenues for the six month period ended June 30, 1999 amounted
to $59.1 million compared to $43.2 million for the prior comparable  period. The
36.9% increase was due to an increase in net interest  income of $5.0 million or
23.9%  during  the six  months  ended  June 30,  1999 over the prior  comparable
period, primarily due to a $14.4 million or 35.9% increase in interest income on
loans,  primarily  associated  with an increase  in the  average  balance of the
outstanding loan portfolio.
<PAGE>


            Contributing  to the 36.9% increase in revenues during the six month
period ended June 30, 1999 was a $4.7  million or 31.4%  increase in net gain on
origination and sale of loans,  which reflects a 37.0% increase in mortgage loan
originations during the 1999 period,  associated with the Company's expansion of
its existing  branch network during fiscal year 1998.  Loan  administration  and
servicing fees also increased by $4.9 million or 64.6% due to an increase in the
Company's  loan  servicing  portfolio.  Service  charges,  fees and  other  also
increased  by  $919,000  or 34.6%,  due mainly to an  increase  in banking  fees
associated with an increased  number of deposit accounts during the 1999 period,
and other fees due to an expanded  customer base as a result of the  acquisition
of a $1.1  billion  servicing  portfolio  in late  1998 from  another  financial
institution.



                                      -13-
<PAGE>
            Total revenues for the quarter ended June 30, 1999 amounted to $29.4
million,  a $7.2 million or 32.2% increase over the comparable  quarter in 1998.
The  increase  in  total   revenues   during  the  1999  quarter  was  primarily
attributable to a $1.7 million or 15.9% increase in net interest  income, a $1.6
million or 21.5%  increase  in net gain on  origination  and sale of loans and a
$2.8 million or 72.7% increase in loan administration and servicing fees.

            Total  expenses  increased  by $7.9  million or 35.3% during the six
months ended June 30, 1999 over the prior comparable period. The increase during
the six  month  period  in 1999 was due  primarily  to a $2.5  million  or 31.7%
increase in employee compensation and benefits, due to an increase in the number
of employees as a result of new branch  openings and increased  loan  production
during the 1999 period.  The increase in employee  expenses was accompanied by a
$4.4  million or 40.7%  increase in other  miscellaneous  expenses,  mainly as a
result of a $614,000  increase in advertising  costs and other expense increases
associated with an increase in loan  production,  and a $2.1 million increase in
amortization  expenses of the  Company's  servicing  asset.  Finally,  occupancy
expenses increased by $1.1 million or 28.0%, mainly as a result of the operation
of five  additional  branches  completed  during  fiscal 1998 and an  additional
branch completed in early 1999.

            Total  expenses  increased by $3.3 million or 26.7% during the three
month  period  ended June 30,  1999.  The  increase was due to a $1.3 million or
29.7%  increase  in  employee  compensation  and  benefits,  a $551,000 or 25.4%
increase in occupancy  expenses,  and a $1.5 million or 25.0%  increase in other
miscellaneous expenses.  These expenses increased during such three month period
for the reasons noted above.

            Total income tax expense  increased by $49,000 or 2.4%, and $482,000
or 9.1% during the three and six month period ended June 30, 1999,  respectively
over the prior comparable periods.  The Company's effective tax rate amounted to
18.5% and 21.8%,  respectively,  during the three and six months  periods  ended
June 30, 1999  (excluding  the effect of a $500,000  tax credit  recorded in the
second  quarter  of 1999  related to the  purchase  of  certain  investment  tax
credits),  compared  to 20.2%  and  25.5% in the 1998  comparable  periods.  The
decrease in 1999 of the Company's  effective tax rate is primarily  attributable
to the more effective management of the Company's exempt securities portfolio.

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.


                                      -14-
<PAGE>
            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 June 30, 1999, the Company had $200.0  million in borrowing  capacity
under warehousing lines of credit, $376.1 million in borrowings capacity under a
line of credit with the FHLB of New York and $15  million  under  federal  funds
lines of credit.  The Company has generally not relied upon brokered deposits as
a source of liquidity,  and does not anticipate a change in this practice in the
foreseeable future.

            At June 30, 1999, the Company had outstanding  commitments to extend
credit  totaling $54.1 million.  Certificates  of deposit which are scheduled to
mature within one year totaled  $612.3  million at June 30, 1999, and borrowings
that are scheduled to mature within the same period  amounted to $721.7 million.
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
to 4.0% to 5.0% or more. Under the FDIC's  regulations,  the highest-rated banks
are  those  that  the  FDIC  determines  are not  anticipating  or  experiencing
significant  growth and have well diversified risk,  including no undue interest
rate risk exposure,  excellent asset quality, high liquidity, good earnings and,
in general,  which are  considered a strong banking  organization  and are rated
composite 1 under the Uniform Financial Institutions Rating System.  Leverage or
core  capital  is defined  as the sum of common  stockholders'equity  (including
retained earnings), noncumulative perpetual preferred stock and related surplus,
and minority interests in consolidated subsidiaries, minus all intangible assets
other  than  certain  qualifying  supervisory  goodwill  and  certain  purchased
mortgage servicing rights.

            The  FDIC  also  requires  that  banks  meet  a  risk-based  capital
standard.  The risk-based capital standard for banks requires the maintenance of
total  capital  (which is defined as Tier I capital and  supplementary  (Tier 2)
capital)  to  risk  weighted   assets  of  8%.  In  determining  the  amount  of
risk-weighted  assets,  all assets,  plus certain  off-balance sheet assets, are
multiplied by a risk-weight of 0% to 100%,  based on the risks the FDIC believes
are inherent in the type of asset or item.  The components of Tier 1 capital are
equivalent to those discussed above under the 3% leverage capital standard.  The
components of supplementary  capital include certain perpetual  preferred stock,
certain  mandatory  convertible   securities,   certain  subordinated  debt  and
intermediate  preferred stock and general  allowances for loan and lease losses.
Allowance  for loan and lease  losses  includable  in  supplementary  capital is
limited to a maximum of 1.25% of risk-weighted  assets.  Overall,  the amount of
capital counted toward supplementary capital cannot exceed 100% of core capital.
At June 30,  1999,  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 6.59%, 11.24% and 12.15%, 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.

                                      -15-
<PAGE>
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.

                                       9
<PAGE>

                                   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 5, 1999                     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)