<PAGE>

                          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, 1996

                                          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) 766-2424
-------------------------------------------------------------------------------
                 (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 September 30, 1996: 
2,435,000.  (Does not include 5,122,377 Class A Shares of Common Stock which are
exchangeable into Class B Shares of Common Stock at the option of the holder.)


<PAGE>
                              R&G FINANCIAL CORPORATION

                                        INDEX




PART I - FINANCIAL INFORMATION                                              PAGE

Item 1.  Consolidated Financial Statements  

         Consolidated Statement of Financial Condition as of
              September 30, 1996 (Unaudited) and December 31, 1995           3

         Consolidated Statements of Income for the Three and
              Nine Months Ended September 30, 1996 and 1995 (Unaudited)      4

         Consolidated Statements of Cash Flows for the Nine Months
              Ended September 30, 1996 and 1995 (Unaudited)                  5

         Notes to Unaudited Consolidated Financial Statements                7

Item 2.   Management's Discussion and Analysis                              16

PART II - OTHER INFORMATION

Item 1.  Legal Proceedings                                                  21

Item 2.  Changes in Securities                                              21

Item 3.  Defaults upon Senior Securities                                    21

Item 4.   Submission of Matters to a Vote of Security Holders               21

Item 5.   Other Information                                                 21

Item 6.   Exhibits and Reports on Form 8-K                                  21

    Signatures










                           PART I  -  FINANCIAL INFORMATION

                                       2

<PAGE>

ITEM 1:  CONSOLIDATED FINANCIAL STATEMENTS.

R&G FINANCIAL CORPORATION
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION


<TABLE>
<CAPTION>
                                                                                          September 30,     December 31,
                                                                                              1996              1995
                                                                                          -------------     ------------
                                                                                           (Unaudited)
<S>                                                                                       <C>               <C>
ASSETS
Cash and due from banks...............................................................       $24,799,694     $32,559,429
Money market investments:
    Securities purchased under agreements to resell...................................        19,582,136      21,694,675
    Time deposits with other banks....................................................        59,735,976      44,930,015
    Federal funds sold................................................................                --       5,011,048
Mortgage loans held for sale, at lower of cost or market..............................        64,460,238      21,318,340
Mortgage-backed securities held for trading, at fair value............................       149,817,085     113,808,624
Mortgage-backed securities available for sale, at fair value..........................        43,578,377      61,008,432
Mortgage-backed securities held to maturity, at amortized cost 
 (estimated market value: 1996 -- $37,605,685; 1995 -- $40,784,831)...................        38,547,205      41,730,889
    Investment securities held for trading, at fair value.............................         8,289,590              --
    Investment securities available for sale, at fairvalue............................        29,306,685       3,279,610
    Investment securities held to maturity, at amortized cost 
 (estimated market value: 1996 -- $8,683,597; 1995 -- $1,996,307......................         8,715,406       2,046,046
    Loans receivable, net.............................................................       563,208,118     473,840,637
    Accounts receivable, including advances to investors, net.........................         6,056,128       5,578,965
    Accrued interest receivable.......................................................         5,424,893       4,051,702
    Mortgage servicing rights.........................................................        11,347,811       8,209,661
    Excess servicing receivable.......................................................           789,790         847,938
    Premises and equipment............................................................         7,543,573       6,973,325
    Other assets......................................................................        11,270,285       6,316,826
                                                                                          --------------    ------------
                                                                                          $1,052,035,672    $853,206,162
                                                                                          ==============    ============
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities:
    Deposits..........................................................................      $595,573,971    $518,186,563
    Securities sold under agreements to repurchase....................................       127,239,927      98,483,188
    Notes payable.....................................................................       144,405,987      81,130,032
    Advances from FHLB................................................................         5,000,000       6,007,135
    Long-term debt....................................................................                --       5,323,899
    Other secured borrowings..........................................................        52,394,035      55,983,501
    Accounts payable and accrued liabilities..........................................        10,386,621      12,068,490
    Other liabilities.................................................................         5,025,998       2,431,577
                                                                                          --------------    ------------
                                                                                             940,026,539     779,614,385
                                                                                          --------------    ------------
Subordinated notes....................................................................         3,250,000       3,250,000
                                                                                          --------------    ------------
Minority interest in the Bank.........................................................         4,374,108       3,956,597
                                                                                          --------------    ------------
Stockholder's equity:
    Preferred stock, $.01 par value, 10,000,000 shares authorized, none issued
      and outstanding.................................................................                --              --
    Common stock:
         Class A -- $.01 par value, 10,000,000 shares authorized, 5,122,377 shares
            issued and outstanding in 1996 and 5,189,044 in 1995......................            51,223          51,890
         Class B -- $.01 par value, 15,000,000 shares authorized, 2,435,000 issued and
           outstanding in 1996 (none in 1995).........................................            24,350              --
    Additional paid-in capital........................................................        31,701,775         362,710
    Retained earnings.................................................................        72,058,843      64,351,564
    Capital reserves of the Bank......................................................         1,021,166         666,767
    Unrealized (loss) gains on securities available for sale..........................          (472,332)        952,249
                                                                                          --------------    ------------
                                                                                             104,385,025      66,385,180
                                                                                          --------------    ------------
                                                                                          $1,052,035,672    $853,206,162
                                                                                          ==============    ============
</TABLE>

            The accompanying notes are an integral part of this statement. 

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

<TABLE>
<CAPTION>
                                                                         Three month                    Nine month
                                                                         period ended                  period ended
                                                                         September 30,                 September 30,
                                                                   --------------------------    --------------------------
                                                                      1996           1995           1996           1995
                                                                   -----------    -----------    -----------    -----------
                                                                          (Unaudited)                   (Unaudited)
<S>                                                                <C>            <C>            <C>            <C>
Interest income:
    Loans.......................................................   $17,009,004    $11,941,060    $46,581,093    $32,378,233
    Money market and other investments..........................     1,087,002        627,428      2,891,876      1,358,790
    Mortgage-backed securities..................................     1,362,890      1,447,946      4,331,435      4,617,170
                                                                   -----------    -----------    -----------    -----------
         Total interest income..................................    19,458,896     14,016,434     53,804,404     38,354,193
                                                                   -----------    -----------    -----------    -----------
Interest expense:
    Deposits....................................................     7,008,851      6,143,453     20,053,430     15,912,545
    Securities sold under agreements to repurchase..............     1,362,801      1,516,920      3,946,440      5,041,829
    Notes payable...............................................     1,823,107        507,142      4,785,077      1,995,292
    Secured borrowings..........................................     1,038,045             --      3,178,077             --
    Other.......................................................       456,543        194,627        626,009        636,431
                                                                   -----------    -----------    -----------    -----------
         Total interest expense.................................    11,689,347      8,362,142     32,589,033     23,586,097
                                                                   -----------    -----------    -----------    -----------
Net interest income.............................................     7,769,549      5,654,292     21,215,371     14,768,095
Provision for loan losses.......................................    (2,485,000)      (500,000)    (2,841,525)      (450,000)
                                                                   -----------    -----------    -----------    -----------
Net interest income after provision for loan losses.............     5,284,549      5,154,292     18,373,846     14,318,095
                                                                   -----------    -----------    -----------    -----------
Other income:
    Net gain on sale of loans...................................     3,909,251      1,411,056      7,901,505      3,621,017
    Unrealized gain (loss) on trading securities................       674,805       (648,269)        53,464      1,646,442
    Change in provision for cost in excess of
       market value of loans held for sale......................            --        500,000             --        570,000
    Net gain (loss) on trading account..........................      (385,428)            --        201,344             --
    Net gain on sales of investments............................            --             --        329,225             --
    Loan administration and servicing fees......................     3,128,347      3,007,691      9,624,789      8,242,599
    Service charges, fees and other.............................     1,112,701        536,401      2,931,707      1,787,871
                                                                   -----------    -----------    -----------    -----------
                                                                     8,439,676      4,806,879     21,042,034     15,867,929
                                                                   -----------    -----------    -----------    -----------
                                                                    13,724,225      9,961,171     39,415,880     30,186,025
                                                                   -----------    -----------    -----------    -----------
Operating expenses:
    Employee compensation and benefits..........................     3,115,337      2,323,967      9,070,089      5,687,391
    Office occupancy and equipment..............................     1,162,782      1,719,091      4,057,897      3,729,470
    SAIF one-time assessment....................................     2,508,380             --      2,508,380             --
    Other administrative and general............................     3,232,674      2,592,066      9,748,815      8,970,222
                                                                   -----------    -----------    -----------    -----------
                                                                    10,019,173      6,635,124     25,385,181     18,387,083
                                                                   -----------    -----------    -----------    -----------
Income before minority interest and income taxes................     3,705,052      3,326,047     14,030,699     11,798,942
                                                                   -----------    -----------    -----------    -----------
Minority interest in the Bank...................................         8,745        171,229        417,511        516,207
                                                                   -----------    -----------    -----------    -----------
Income before income taxes......................................     3,696,307      3,154,818     13,613,188     11,282,735
                                                                   -----------    -----------    -----------    -----------
Income tax expense (credit):
    Current.....................................................     1,615,572       (138,745)     6,389,460      2,152,250
    Deferred....................................................      (386,050)       978,274     (1,337,951)     1,561,191
                                                                   -----------    -----------    -----------    -----------
                                                                     1,229,522        839,529      5,051,509      3,713,441
                                                                   -----------    -----------    -----------    -----------
         Net income.............................................   $ 2,466,785    $ 2,315,289    $ 8,561,679    $ 7,569,294
                                                                   -----------    -----------    -----------    -----------
Earnings per common share.......................................         $0.40          $0.45          $1.55          $1.37
                                                                         -----          -----          -----          -----
                                                                         -----          -----          -----          -----
Weighted average number of shares outstanding...................     6,218,754      5,189,044      5,534,786      5,189,044

         The accompanying notes are an integral part of this statement.
</TABLE>
                                       4
<PAGE>

R&G FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                                       Nine month
                                                                                                      period ended
                                                                                                      September 30,
                                                                                              -----------------------------
                                                                                                   1996           1995
                                                                                              -----------------------------
                                                                                                       (Unaudited)
<S>                                                                                           <C>                <C>
Cash flows from operating activities:

   Net income.......................................................................          $8,561,679         $7,569,294
                                                                                              ----------         ----------
   Adjustments to reconcile net income to net cash provided by operating activities:
      Depreciation and amortization.................................................           1,500,316          1,056,690
                                                                                              
   Amortization of premium on investments and mortgage-backed securities, net.......             204,423              5,877

   Amortization of deferred loan origination fees and accretion of discount on 
          loans.....................................................................            (388,833)          (241,083)

   Amortization of excess servicing receivable......................................              58,148             98,301
   Amortization of servicing rights.................................................             908,418          1,233,495

   Change in provision for cost in excess of market value of loans held for sale....                  --           (570,000)
   Provision for loan losses........................................................           2,841,525            450,000

   Provision for bad debts in accounts receivable...................................             225,000            225,000
   Gain on sales of mortgage loans..................................................            (856,408)          (210,744)
   Gain on sale of investment securities............................................            (329,225)                --

   Unrealized gain on trading securities............................................             (53,464)        (1,646,442)

   Minority interest in earnings of the Bank........................................             417,511            516,207

   Decrease (increase) in mortgage loans held for sale..............................           4,319,333         (4,983,123)

   Net (increase) decrease in mortgage-backed securities held for trading...........         (36,060,242)        16,348,767
   (Increase) decrease in receivables...............................................          (2,075,354)         1,429,848
   Increase in other assets.........................................................          (4,700,322)        (1,394,401)
   Increase in notes payable........................................................           2,775,955          9,611,388

   Increase in accounts payable and accrued liabilities.............................             754,609            824,430
   (Decrease) increase in deferred taxes............................................          (1,337,951)         1,561,991
   Increase in other liabilities....................................................           2,594,421            905,288
                                                                                              -----------         ---------
      Total adjustments.............................................................         (29,202,140)        25,291,489
                                                                                              ----------         ----------
      Net cash provided by (used in) operating activities...........................         (20,640,461)        32,860,783

</TABLE>
                                                                    (CONTINUED)

               The accompanying notes are an integral part of this statement. 

                                       5

<PAGE>

<TABLE>
<CAPTION>

                                                                                                       Nine month
                                                                                                      period ended
                                                                                                     September, 30,
                                                                                              -----------------------------
                                                                                                 1996             1995
                                                                                              -----------     -------------
                                                                                                      (Unaudited)

<S>                                                                                           <C>             <C>

Cash flows from investing activities:
   Purchases of investment securities ..............................................          $(49,064,258)   $          --
   Proceeds from sale and maturities of investment securities available for sale....            22,012,780               --
   Proceeds from maturities of investment securities held to maturity...............               377,000          450,000
   Proceeds from maturities of investment securities held for trading...............               400,000               --
   Principal repayments on mortgage-backed and other securities.....................             6,151,774        6,011,821
   Proceeds from sale of loans......................................................            49,372,646       14,473,826

   Net originations of loans........................................................          (184,012,539)    (132,431,189)
   Purchases of FHLB stock, net.....................................................              (967,700)      (1,401,700)
   Acquisition of premises and equipment............................................            (2,163,066)      (1,635,986)
   Proceeds from sales of premises and equipment....................................               350,000               --
   Net (increase) decrease in foreclosed real estate................................              (510,635)          53,488
   Acquisition of servicing rights..................................................            (4,046,568)      (2,461,082)
                                                                                              ------------       -----------
      Net cash used by investing activities.........................................          (162,100,566)    (166,940,822)
                                                                                              ------------      ------------
Cash flows from financing activities:
   Proceeds from issuance of notes payable..........................................            60,500,000       12,400,000
   Payments of long-term debt.......................................................            (5,323,899)        (900,003)
   Increase in deposits -- net......................................................            77,192,544      107,554,145

   (Decrease) increase in securities sold under agreements to repurchase -- net.....            28,756,739      (25,583,415)
   Payments on secured borrowings...................................................            (3,589,466)              --
   Advances from FHLB...............................................................             6,000,000               --
   Repayment of advances from FHLB..................................................            (7,000,000)      (2,500,000)
   Proceeds from issuance of common stock in initial public offering................            31,362,748               --
   Proceeds from issuance of common stock to minority shareholders..................                    --            5,060
   Cash dividends on common stock...................................................              (500,000)              --
                                                                                              ------------         --------
      Net cash provided by financing activities.....................................           187,398,666       85,975,787
                                                                                              ------------       ----------
   Net (decrease) increase in cash and cash equivalents.............................             4,657,639        1,895,748
   Cash and cash equivalents at beginning of period.................................           104,195,167       45,622,362
                                                                                              ------------       ----------
   Cash and cash equivalents at end of period.......................................          $108,852,806      $47,518,110
                                                                                              -------------     -----------
                                                                                              -------------     -----------
Cash and cash equivalents include: 
   Cash and due from banks..........................................................           $24,799,694      $28,442,080
   Securities purchased under agreements to resell..................................            19,582,136       14,516,849
   Time deposits with other banks...................................................            64,470,976        4,559,181
                                                                                              ------------      -----------
                                                                                              $108,852,806      $47,518,110
                                                                                              ------------      -----------
                                                                                              ------------      -----------

</TABLE>

                 The accompanying notes are an integral part of this statement.
                                       6
<PAGE>
R&G FINANCIAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1--REPORTING ENTITY, PUBLIC OFFERING AND STOCK OPTIONS AND BASIS 
        OF PRESENTATION

REPORTING ENTITY

  The accompanying unaudited consolidated financial statements of R&G 
Financial Corporation (the "Company") include the accounts of 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 was formed in March 1996 for the 
sole purpose of becoming the parent corporation and sole stockholder of R&G 
Mortgage and the Bank. On July 19, 1996, the Company acquired the 88% 
ownership interest of the Bank and the 100% ownership interest of R&G 
Mortgage held by the Company's Chairman of the Board and Chief Executive 
Officer (CEO). In consideration of the acquisition of such interests, the 
Company issued the CEO 5,189,044 shares of its Class A $.01 par value newly 
issued common stock (the "Class A Shares"), in exchange for his 100% 
ownership interest in R&G Mortgage and 88% ownership interest in the Bank. 

   As a result of this transaction, the accompanying unaudited consolidated 
financial statements have been restated to reflect the consolidated financial 
condition as of September 30, 1996 (unaudited), the related consolidated 
statements of income and retained earnings for the three and nine months 
ended September 30, 1996 and 1995 (unaudited), and of cash flows for the nine 
months ended September 30, 1996 and 1995 (unaudited) as if the above 
transaction had been consummated as of January 1, 1995. The transaction has 
been accounted for at historical cost in a manner similar to pooling of 
interests accounting. 

   The Company intends to acquire as well the 12% minority ownership 
interest in the Bank which, as of July 19, 1996, was held by approximately 
200 other stockholders (the "Minority Bank Stockholders") following the 
receipt of all required regulatory approvals through the issuance of Class B 
$.01 par value common stock (the "Class B Shares") of the Company. All 
Minority Bank Stockholders will receive, in exchange for their aggregate 12% 
interest in the Bank's common stock, an aggregate of 300,962 shares of the 
Company's Class B shares, which was determined based on an independent 
valuation of the Bank. Such transaction will be accounted for under the 
purchase method of accounting; based on presently available information, 
management of the Company does not believe that this transaction will have a 
material effect on the Company's Consolidated Financial Statements or 
earnings per share. The Company filed a Registration Statement with the 
Securities and Exchange Commission ("SEC") with respect to this transaction 
on September 30, 1996. The Registration Statement was declared effective on 
October 29, 1996 and the transaction is expected to close at the end of 
November 1996.

                                   7

<PAGE>

   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 (1 to 4 families). R&G Mortgage pools FHA and VA 
loans into GNMA (Government National Mortgage Association) mortgage-backed 
securities and collateralized mortgage obligation (CMO) certificates for sale 
to permanent investors. After selling the loans, it retains the servicing 
function. R&G Mortgage is also a Federal National Mortgage Association (FNMA) 
and Federal Home Loan Mortgage Corporation (FHLMC) 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 through fourteen 
branches located mainly in the northern part of the Commonwealth of Puerto 
Rico. The Bank is subject to the regulations of certain federal and local 
agencies, and undergoes periodic examinations by those regulatory agencies. 
As of the close of business on November 30, 1994, the Bank was converted from 
a federally chartered savings bank to a commercial bank chartered under the 
laws of the Commonwealth of Puerto Rico. 

PUBLIC OFFERING AND STOCK OPTIONS

   On August 27, 1996, the Company sold 2,348,333 Class B Shares of its 
Common Stock to the general public in an underwritten offering. The 
Company's CEO also converted 66,667 of his Class A Shares into Class B Shares 
and sold such shares in the public offering. As a result of such 
transaction, an aggregate of 2,415,000 Class B Shares have publicly issued 
and are now traded on the NASDAQ Stock Market.  The Company received gross 
proceeds of $35.0 million in the transaction, which resulted in estimated net 
proceeds of $31.4 million after payment of the underwriting discount and 
expenses.  Immediately following the Company's initial public offering, the 
Company issued an additional 20,000 Class B Shares to the Company's Vice 
Chairman of the Board in consideration for his past and ongoing services, 
which shares were not registered in such offering.

   In connection with the public offering, R&G Financial adopted a Stock 
Option Plan, which is designed to attract and retain qualified personnel in 
key positions, provide officers and key employees of R&G Financial and its 
subsidiaries with a proprietary interest in R&G Financial as an incentive to 
contribute to the success of R&G Financial and reward key employees for 
outstanding performance and the attainment of targeted goals. The Stock 
Option Plan was approved by R&G Financial's stockholder in June 1996. An 
amount of Common Stock equal to 10% of the aggregate number of Class B Shares 
sold in R&G Financial's initial public offering (241,500 shares) were 
authorized under the Stock Option Plan, which may be filled by authorized but 
unissued shares, treasury shares or shares purchased by R&G Financial on the 
open market or from private sources. The Stock Option Plan provides for the 
grant of stock options and stock appreciation rights (collectively "Awards"). 
In connection with R&G Financial's initial public offering, R&G Financial 

                                    8

<PAGE>

awarded options for 200,000 shares to 28 employees of R&G Mortgage and the 
Bank at the initial public offering price of $14.50 per share.

BASIS OF PRESENTATION

   The accompanying unaudited consolidated financial statements have been 
prepared in accordance with the instructions for Form 10-Q.  Additional 
information regarding the Company's Consolidated Financial Statements and the 
Notes to Consolidated Financial Statements for the year ended December 31, 
1995 is included in the Company's Registration Statements which have been 
filed with the SEC.  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, 1996 and December 31, 
1995 and the results of operations and changes in its cash flows for the 
three and nine months ended September 30, 1996 and 1995.

BASIS OF CONSOLIDATION

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

ACCOUNTING FOR TRANSFERS AND SERVICING OF FINANCIAL ASSETS AND EXTINGUISHMENT 
OF LIABILITIES

   In June 1996, the FASB issued SFAS No. 125, "Accounting for Transfers and 
Servicing of Financial Assets and Extinguishments of Liabilities."  This 
Statement provides accounting and reporting standards for transfers and 
servicing of financial assets and extinguishments of liabilities based on 
consistent application of a financial-components approach that focuses on 
control.  Under that approach, after a transfer of financial assets, and 
entity recognizes the financial and servicing assets it controls and the 
liabilities it has incurred, and stops recognizing financial assets when 
control has been surrendered, and liabilities when extinguished.

   This Statement requires that liabilities and derivatives incurred or 
obtained by transferors as part of a transfer of financial assets be 
initially measured at fair value, if practicable.  It also requires that 
servicing assets and other retained interests in the transferred assets be 
measured by allocating the previous carrying amount between the assets sold, 
if any, and retained interest, if any, based on their relative fair values at 
the date of the transfer.  Servicing assets and liabilities must be 
subsequently measured by (a) amortization in proportion to and over the 
period of estimated net servicing income or loss and (b) assessment for asset 
impairment or increased obligation based on their fair value.

   This Statement is effective for transfers and servicing of financial 
assets and extinguishments of liabilities occurring after December 31, 1996, 
and must be applied prospectively.  Earlier or retroactive application is not 
permitted. Management has not 

                                    9

<PAGE>

estimated yet the effect, if any, of the adoption of this Statement on the 
Consolidated Financial Statements of the Company.

STOCK OPTION PLANS

   In October 1995, the FASB issued SFAS No. 123, "Accounting for 
Stock-Based Compensation," establishing financial accounting and reporting 
standards for stock-based employee compensation plans.  This Statement 
encourages all entities to adopt a new method of accounting to measure 
compensation cost of all employee stock compensation plans based on the 
estimated fair value of the award at the date it is granted.  Companies are, 
however, allowed to continue to measure compensation cost for those plans 
using the intrinsic value based method of accounting, which generally does 
not result in compensation expense recognition for most plans.  Companies 
that elect to remain with the existing accounting are required to disclose in 
a footnote to the financial statements pro forma net income, and if 
presented, earnings per share, as if this Statement had been adopted.  The 
accounting requirements of this Statement are effective for transactions 
entered into during fiscal years that begin after December 15, 1995; however, 
companies are required to disclose information for awards granted in their 
first fiscal year beginning after December 15, 1994.  The Company adopted a 
Stock Option Plan in June 1996 and made awards thereunder in conjuction with 
the Company's initial public offering.  Management intends to utilize the 
intrinsic value based method of accounting for compensation cost.

NOTE 2--EARNINGS PER SHARE

   Primary earnings per common share for the three and nine months ended 
September 30, 1996 and 1995 were computed by dividing net income for such 
periods by the weighted average number of shares of common stock outstanding 
during such periods, which was 6,218,754 and 5,534,786 shares for the three 
and nine month periods ended September 30, 1996 and 5,189,044 shares for the 
respective periods in 1995.  Oustanding stock options granted in connection 
with the Company's initial public offering were excluded from the weighted 
average number of shares because their dilutive effect is not 
significant.

                                        10


<PAGE>

NOTE 3   --   INVESTMENT AND MORTGAGE-BACKED SECURITIES

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

<TABLE>
<CAPTION>
                                                             September 30, 1996
                                                         ---------------------------
                                                         Amortized cost   Fair value
                                                         --------------   ----------
                                                                (Unaudited)
        <S>                                              <C>              <C>
        INVESTMENT SECURITIES HELD TO MATURITY
        Puerto Rico Government obligations:
            Due within one year.......................     $       --     $       --
            Due from one to five years................      1,119,009      1,094,790
            Due over ten years........................        500,000        492,500
                                                           ----------     ----------
                                                            1,619,099      1,587,290
                                                           ----------     ----------
        Corporate  securities --
            Due within one year.......................      3,759,132      3,759,132
            Due from one to five years................      3,337,175      3,337,175
                                                           ----------     ----------
                                                            7,096,307      7,096,307
                                                           ----------     ----------
                                                            8,715,406      8,683,597
                                                           ==========     ==========
</TABLE>

                                       11
<PAGE>

<TABLE>
<CAPTION>
                                                              September 30, 1996
                                                         ----------------------------
                                                         Amortized cost    Fair value
                                                         --------------    ----------
                                                                 (Unaudited)
<S>                                                      <C>              <C>
MORTGAGE-BACKED SECURITIES HELD TO MATURITY
GNMA certificates:
     Due from one to five years.......................    $   101,254     $   103,575
     Due over ten years...............................     22,026,347      20,861,141
                                                          -----------     -----------
                                                           22,127,601      20,964,716
                                                          -----------     -----------
Federal National Mortgage Association (FNMA) --
     Due over ten years...............................     16,085,829      16,316,225
                                                          -----------     -----------
Federal Home Loan Mortgage Corporation (FHLMC) 
  participation certificates --
     Due over ten years...............................        333,775         324,744
                                                          -----------     -----------
                                                              333,775         324,744
                                                          -----------     -----------
                                                           38,547,205      37,605,685
                                                          ===========     ===========
</TABLE>



<TABLE>
<CAPTION>

                                                              September 30, 1996
                                                         ----------------------------
                                                         Amortized cost    Fair value
                                                         --------------    ----------
                                                                 (Unaudited)
<S>                                                      <C>              <C>
MORTGAGE-BACKED SECURITIES AVAILABLE FOR SALE:
CMO residuals and other mortgage-backed securities....    $ 7,081,610     $ 7,861,551
                                                          -----------     -----------
Federal National Mortgage Association (FNMA) --
  Due over ten years..................................     15,165,211      14,784,497
                                                          -----------     -----------
FHLMC participation certificates:
  Due from five to ten years..........................        563,100         574,410
  Due over ten years..................................     21,073,402      20,357,919
                                                          -----------     -----------
                                                           21,636,502      20,932,329
                                                          -----------     -----------
                                                           43,883,323      43,578,377
                                                          ===========     ===========
INVESTMENT SECURITIES AVAILABLE FOR SALE:
U.S. Government and agencies securities...............     25,528,744      25,059,375
FHLB stock............................................      4,247,310       4,247,310
                                                          -----------     -----------
                                                           29,776,054      29,306,685
                                                          ===========     ===========
</TABLE>


    Mortgage backed securities available for sale include interest only
securities with an amortized cost of $2,363,941 as of September 30, 1996, which
are associated with the sale in prior years of collateralized mortgage
obligations, which were not made in connection with the Company's mortgage
banking activities.

                                       12

<PAGE>
<TABLE>
<CAPTION>

                                                                     September
                                                                     30, 1996
                                                                    -----------
                                                                    (Unaudited)
        <S>                                                         <C>
        MORTGAGE-BACKED SECURITIES HELD FOR TRADING:
            CMO Certificates.....................................   $15,147,000
            CMO Residuals (all interest only)....................     9,199,566
            GNMA Certificates....................................   125,470,519
                                                                   ------------
                                                                   $149,817,085
                                                                   ============
</TABLE>

         During 1996, the Company entered into various agreements with an
unrelated investment management firm whereby such firm has been appointed as
investment advisor with respect to a portion of the Company's securities
portfolio. Pursuant to such agreements, this investment advisory firm advises
and recommends management on the purchase and/or sale of otherwise eligible
investments as well as the execution of various hedging strategies to reduce
interest rate risk, mainly through the use of various financial instruments.  At
September 30, 1996, this investment advisory firm was managing Company assets
with a market value of approximately $39.3 million of which $14.2 million was
designated for trading. Such assets were invested as follows: 


<TABLE>
<CAPTION>
                                                               September 30, 1996
                                                           ---------------------------
                                                           Amortized cost   Fair value
                                                           --------------   ----------
                                                                  (Unaudited)
<S>                                                        <C>             <C>
Cash and due from banks..................................  $        --     $        --
                                                           -----------     -----------
    HELD-FOR-TRADING SECURITIES
    U.S. Treasury Bills..................................    8,289,590       8,289,590
    Money market investments.............................    5,933,246       5,933,246
                                                           -----------     -----------
                                                            14,222,836      14,222,836
                                                           -----------     -----------
    AVAILABLE-FOR-SALE SECURITIES
    U.S. Government and agencies securities..............   25,528,744      25,059,375
                                                           -----------     -----------
                                                           $39,751,580     $39,282,211
                                                           ===========     ===========
</TABLE>

         The above available for sale securities are being hedged with
financial futures contracts based on U.S. Treasury securities and Eurodollars
which are settled on a quarterly basis.  Such firm also executes hedging
strategies on behalf of the Company for all mortgage-backed securities which are
available for sale (excluding CMOs) or held for trading.  At September 30, 1996,
$93,750 of such contracts were outstanding with a fair value of $46,875.

                                       13
<PAGE>

NOTE 4--LOANS AND ALLOWANCE FOR LOAN LOSSES

   Loans consists of the following: 


                                              September 30,
                                                  1996
                                              -------------
                                               (Unaudited)


Real estate loans:
   Residential--first mortgage..............   $333,793,249
   Residential--second mortgage.............     15,284,080
   Construction.............................      6,304,277
   Commercial...............................     74,482,414
                                               ------------
                                                429,864,020

Undisbursed portion of loans in process.....     (2,859,294)
Net deferred loan fees......................           (425)
                                               ------------
                                                427,004,301
                                               ------------

Other loans:
   Commercial...............................     33,937,706
   Consumer:
      Loans secured by deposits.............      8,946,917
      Other.................................     99,865,138
   Unamortized discount.....................       (259,726)
   Unearned interest........................       (976,440)
                                               ------------
                                                141,513,595
                                               ------------

         Total loans........................    568,517,896
   Allowance for loan losses................     (5,309,778)
                                               ------------
                                               $563,208,118
                                               ------------
                                               ------------

   The changes in the allowance for loan losses follow: 

                                                      Nine months ended
                                                         September 30,
                                                  ------------------------
                                                    1996            1995
                                                  --------        -------
                                                         (Unaudited)
Balance, beginning of year..................   $  3,510,251      $2,887,099
Provision for loan losses...................      2,841,525         450,000
Loans charged-off...........................     (1,187,633)       (274,250)
Recoveries..................................        145,635         155,377
                                               ------------       ---------
   Balance, end of year.....................     $5,309,778      $3,218,226

                                      14

<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 
$371,292,000 at September 30, 1996. 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 amounting to
approximately $74,185,000 at September 30, 1996.

COMMITMENTS TO BUY AND SELL GNMA CERTIFICATES

   As of September 30, 1996, the Company had open commitments to issue GNMA
certificates of approximately $64,254,000.

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. 

OTHERS

   At September 30, 1996, 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 $203,329,000 at September 30, 1996.  
Liability, if any, under the recourse provisions at September 30, 1996 is 
estimated by management to be insignificant. 

NOTE 6--STATEMENT OF CASH FLOWS: NON-CASH TRANSACTIONS

   During the third quarter of 1996, the Company reclassified $42,299,551 of 
conventional mortgage loans from its loan portfolio as held for sale.  In 
October 1996, the Company securitized such loans into mortgage backed 
securities available for sale.  The securitization is unrelated to the 
Company's mortgage banking activities.

                                      15


<PAGE>



NOTE 7--INCOME TAX SETTLEMENT

   On June 29, 1996, the Company settled with the Puerto Rico Treasury 
Department (PRTD) an income tax examination of R&G Mortgage's income tax 
returns for the years 1989 to 1992.  While the Company believes that it had 
valid defenses for its positions, management believes that it was in the 
Company's best interest to settle the case rather than entering into an 
expensive, protracted negotiation with the PRTD. The settlement reached was 
for $1.6 million. The effect of this settlement was to record additional 
income tax expense for the six months ended June 30, 1996 of approximately 
$400,000. The remainder of the settlement was reserved for during prior 
periods.


ITEM 2:  MANAGEMENT'S DISCUSSION AND ANALYSIS

FINANCIAL CONDITION

   At September 30, 1996, the Company's total assets amounted to $1.1 
billion, as compared to $965.6 million at June 30, 1996 and $853.2 million at 
December 31, 1995.  The $86.5 million or 9.0% increase in total assets during 
the most recent three month period ended September 30, 1996 was attributable 
to a $46.7 million or 81.5% increase in cash and cash equivalents, due to the 
investment of proceeds from the Company's initial public offering and loans 
sold during the quarter, a $20.5 million or 14.9% increase in mortgage-backed 
and investment securities held for trading, a $6.0 million or .97% aggregate 
increase in loans receivable, net and mortgage loans held for sale, which 
reflects net originations following repayments and sales, and a $4.8 million 
or 54.7% increase in investment securities held to maturity.

   The increase in the Company's assets was funded primarily by increased
deposits of $32.4 million or 5.8% and  by a $28.9 million or 29.4% increase in
securities sold under agreements to repurchase, which increases were partially
offset by a $11.7 million or 16.9% decrease in other borrowings, primarily the
repayment of $10.5 million of FHLB advances and long-term notes.

   At September 30, 1996, the Company's stockholders' equity amounted to
$104.4 million, which is an increase of $33.9 million or 48.1% from the amount
reported at June 30, 1996.  The primary reason for the increase was the $31.7
million in net proceeds obtained by the Company in connection with its initial
public offering, which was completed in August 1996.  Stockholders' equity also
increased by $2.5 million, reflecting the net income earned for the quarter,
which was partially offset by $472,000 of unrealized loss on securities
available for sale, net of income tax benefits.  At September 30, 1996, the
Bank's leverage and Tier 1 risk-based capital amounted to 8.04% and 13.77% of
adjusted total assets, compared to a 4.0% minimum requirement, and its total
risk-based capital amounted to 14.54%, compared to an 8.0% minimum requirement.

                                         16

<PAGE>

RESULTS OF OPERATIONS

   The Company reported net income of $2.5 million and $8.6 million during the
three and nine months ended September 30, 1996, as compared to $2.3 million and
$7.6 million during the prior comparable periods.  The increases in net income
during the three and nine month periods in 1996 over the comparable 1995 periods
of $153,000 or 6.6% and $993,000 or 13.1%, respectively, was achieved
notwithstanding the Company taking a one-time SAIF assessment charge of $2.5
million ($1.5 million net of taxes) and a $2.0 million ($1.2 million net of
taxes) increase in the provision for loan losses during the September 1996
quarter.  The Company incurred a special assessment of $2.5 million as the
result of federal legislation signed into law to recapitalize the federal
deposit insurance fund.  The legislation enacted by the U.S. Congress, which was
signed by the President on September 30, 1996, will recapitalize the SAIF by a
one-time charge of approximately $0.657 for every $100 of assessable deposits
held at March 31, 1995.  Future earnings will be enhanced due to lower insurance
premiums.  The Bank's insurance premiums, which has amounted to $0.23 for every
$100 of deposits, will be reduced to $0.064 for every $100 of deposits beginning
January 1, 1997.  Based upon the $596.3 million of assessable deposits at
September 30, 1996, the Bank would expect to pay $138,000 less in insurance
premiums per quarter during 1997.

   The Company increased its provision for loans losses by $2.0 million and 
$2.4 million during the three and nine months ended September 30, 1996, over 
the prior comparable periods, which primarily reflects a $2.0 million 
provision which was taken during the third quarter of 1996.  On August 29, 
1996, as a result of a review of its loan portfolio, management of the Bank 
became aware of certain potential loan losses related to the operation of its 
insurance premiums financing business and began an intensive investigation.  
The Bank believes that there were irregularities with respect to the 
origination and administration of a number of loans in contravention of 
established Bank policies by the former loan officer in charge of the 
department and has also notified the appropriate regulatory enforcement 
authorities.  Even though the Bank's investigation is not fully completed 
yet, management, based on a review of the collectibility of the loans in 
question, believes that the reserve established in the third quarter of 1996 
is sufficient to cover estimated losses which will result from this matter. 
Notwithstanding the reserve established, management intends to submit and 
vigorously pursue a claim pursuant to its fidelity insurance policy with 
respect to the actual loan losses. 

   The increase in net income during the nine months ended September 30, 1996
over the prior comparable period is also noteworthy due to the fact that the
1996 results reflect the increased expenses associated with operating an
additional six branch offices acquired from a commercial bank at the end of June
1995.

   Total revenues amounted to $13.7 million during the three months ended
September 30, 1996 compared to $10.0 million for the prior comparable period. 
The 37.0% increase was due to an increase in net gain on origination and sale of
loans of $2.5 million 

                                       17

<PAGE>

or 177.0% during the three months ended September 30, 1996 over the prior 
comparable period.  Net interest income increased significantly, by $2.1 
million or 37.4%, during the three months ended September 30, 1996 over the 
prior comparable period, primarily due to a $5.1 million or 42.4% increase in 
interest income on loans.  However, the aforementioned increase in the 
provision for loan losses significantly offset the increase in net interest 
income.  Contributing to the increase in revenues was a change of $1.3 
million in unrealized gain (loss) on trading securities from a $675,000 
unrealized gain during the September 1996 quarter, compared to a $648,000 
loss during the prior comparable quarter.  Service charges, fees and other 
increased by $576,000 or 107.4%, due to increased fees on non-mortgage loan 
originations, deposit accounts and new deposit products, while loan 
administration and servicing fees increased by $121,000 or 4.0% due to an 
increase in the loan servicing portfolio.

   Total revenues amounted to $39.4 million during the nine months ended 
September 30, 1996 compared to $30.2 million during the prior comparable 
period. The 30.5% increase again was primarily attributable to net gain on 
sale of loans, which increased $4.3 million or 118.2% over the prior 
comparable period. Although significantly offset by the increased provision 
for loan losses, net interest income increased by $6.4 million or 43.7%, 
primarily due to a $14.2 million or 43.9% increase in interest income on 
loans.  A decrease of $1.6 million in unrealized gain on trading securities 
was more than offset by increases in loan administration and servicing fees 
of $1.4 million or 16.8%, service charges, fees and other of $1.1 million or 
64.0% and net gains on trading account and sale of investments of $531,000 or 
100%.

   Total expenses increased by $3.4 million or 51.0% and by $7.0 million or
38.1% during the three and nine months ended September 30, 1996 over the prior
comparable periods, which takes into consideration the one-time $2.5 million
SAIF assessment.  Without the assessment, total expenses would have increased by
$875,000 or 13.2% and by $4.5 million or 24.4% during the same respective
periods.  The increase during the nine month period in 1996 reflects the full
period effect of the operation of six branch offices acquired in late June 1995
and the operation of a new data processing center, which opened in February
1996, compared to only one quarter during the 1995 nine month period.  For the
nine months ended September 30, 1996, employee compensation and benefits
increased by $3.4 million or 59.5%, other administrative and general increased
by $779,000 or 8.68%, and office occupancy and equipment increased by $329,000
or 8.8%.  During the three months ended September 30, 1996, a $641,000 or 24.7%
increase in other administrative and general expense and a $791,000 or 34.1%
increase in employee compensation and benefits more than offset a $556,000 or
32.4% decrease in office occupancy and equipment.

   Total income tax expense increased by $390,000 or 46.5% and $1.3 million or
36.0% during the three and nine months ended September 30, 1996 over the prior
comparable periods, due primarily to the settlement of a tax audit with the
Puerto Rico Treasury Department covering prior years during the third quarter 
of 1996. See Note 29 of R&G Financials' Notes to Consolidated Financial
Statements. 

                                         18
<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, 1996, the Company had $34.1 million in borrowing
capacity under unused warehouse lines of credit and $45 million in borrowing
capacity under a line of credit with the FHLB of New York. 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 September 30, 1996, the Company had outstanding commitments (including
unused lines of credit) to originate and/or purchase mortgage and non-mortgage
loans of $384.1 million. Certificates of deposit which are scheduled to mature
within one year totalled $287.0 million at September 30, 1996, and borrowings
that are scheduled to mature within the same period amounted to $215.1 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 I leverage ratio for such other banks to 4.0% to 5.0% or more.
Under the FDIC's regulations, the highest-rated 

                                    19
<PAGE>

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 I 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 September
30, 1996, the Bank met each of its capital requirements, with Tier I leverage
capital, Tier I risk-based capital and total risk-based capital ratios of 8.04%,
13.77% and 14.54%, 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.

                                        20

<PAGE>

                         PART II     OTHER INFORMATION

ITEM 1:  LEGAL PROCEEDINGS

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

ITEM 2:  CHANGES IN SECURITIES

         Not applicable

ITEM 3:  DEFAULTS UPON SENIOR SECURITIES

         Not applicable

ITEM 4:  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         Not applicable

ITEM 5:  OTHER INFORMATION

         Not applicable

ITEM 6:  EXHIBITS AND REPORTS ON FORM 8-K

         a)   Not applicable

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


                                      21
<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 13, 1996                     By:  /S/ VICTOR J. GALAN  
                                                 -----------------------------
                                                 Victor J. Galan, Chairman
                                                 and Chief Executive Officer
                                                 (Principal Executive Officer)



                                            By:  /S/ ANA M. ARMENDARIZ 
                                                 -----------------------------
                                                 Ana M. Armendariz 
                                                 Controller and Treasurer
                                                 (Principal Accounting Officer)


                                      22