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 SEPTEMBER 30, 1998
         
                                       OR

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

                        Commission file number: 000-21137


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

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

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

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


Indicate by 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, 1998:
10,146,091.  (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>
Note:  The  undersigned  registrant  hereby  amends and restates in its entirety
       Item 2 of Part I of its  Quarterly  Report on Form  10-Q for the  quarter
       ended  September  30, 1998.  Item 2 of Part I has been amended  solely to
       insert a Year 2000 discussion.






















                                      -2-
<PAGE>

Item 2:  Management's Discussion and Analysis

Financial Condition

         At September  30, 1998,  the  Company's  total assets  amounted to $1.8
billion, as compared to $1.5 billion at December 31, 1997. The $321.7 million or
21.3% increase in total assets during the nine month period ended  September 30,
1998 was primarily  attributable  to a $161.7 million or 21.1% increase in loans
receivable, net, which reflects net originations following repayments and sales,
a $68.3  million  or  17.1%  increase  in  mortgage-backed  securities  held for
trading,  and a $116.7  million or 248.8%  increase in  mortgage  loans held for
sale.

         The increase in the Company's  assets was funded primarily by increased
deposits of $153.1 million or 21.2%, a $59.7 million or 142.1%  increase in FHLB
advances,  and a $58.0  million  or 15.2%  increase  in  securities  sold  under
agreements to repurchase.

         At September 30, 1998, the Company's  stockholders'  equity amounted to
$213.4  million,  which is an increase of $75.4 million or 54.6% from the amount
reported at December  31,  1997.  The primary  reason for the  increase  was the
issuance of 2,000,000 shares in August 31,1998 of 7.40% Monthly Income Preferred
Stock, Series A, for an aggregate $50 million. Also contributing to the increase
in  stockholders'  equity was the net income  for the nine  month  period  ended
September 30, 1998 of $24.0 million,  which was partially offset by $2.6 million
of dividends paid during such period. At September 30, 1998, the Bank's leverage
and Tier 1  risk-based  capital  amounted to 9.01% and 15.47% of adjusted  total
assets,  respectively,  compared to a 4.0%  minimum  requirement,  and its total
risk-based capital amounted to 16.60%, compared to an 8.0% minimum requirement.

Results of Operations

         The  Company  reported  net income of $8.5  million  and $24.0  million
during the three and nine month periods ended September 30, 1998,  respectively,
as  compared  to $6.0  million  and $16.5  million  during the prior  comparable
periods,  or an increase  during such  periods of $2.5 million or 45.7% and $7.5
million or 41.1%, respectively.

         Total  revenues  for the nine month  period  ended  September  30, 1998
amounted to $67.6 million, a $15.9 million or 30.7% increase over the comparable
1997  period.  The  increase  in  revenues  during the nine month  period  ended
September  30,  1998  was  primarily  attributable  to a $6.1  million  or 23.1%
increase in net interest income and a $6.6 million or 37.9% increase in net gain
on  origination  and sale of  loans.  The  increase  in net  interest  income is
primarily due to a $13.9 million or 27.4% increase in interest  income on loans,
which is  primarily  associated  with an increase in the average  balance of the
outstanding loan portfolio,  and to a $8.8 million or 60.7% increase in interest
income on mortgage - backed securities due to an increase in securities held for
trading in the 1998 period.  The increase in net gain on origination and sale of
loans reflects an increase in mortgage loan originations during the 1998 period.
The volume of loan  originations  increased 56% to  approximately  $1.02 billion
during such period.  Contributing  also to the  increase in revenues  during the
nine month period ended  September 30, 1998 was a $1.5 million or 15.2% increase
in loan  administration and servicing fees, as the Company's servicing portfolio
expanded by 18.9% over the prior year to $3.6  billion,  and a $571,000 or 16.4%
increase in service charges,  fees and other miscellaneous  revenue sources, due
mainly to an increase in banking fees  associated  with an  increased  number of
deposit accounts during the 1998 period.

                                      -3-
<PAGE>
         Total  revenues for the quarter  ended  September  30, 1998 amounted to
$24.4 million,  a $6.4 million or 35.5% increase over the comparable  quarter in
1997.  The  increase in total  revenues  during the 1998  quarter was  primarily
attributable to a $2.1 million or 22.0% increase in net interest  income, a $2.8
million or 46.5%  increase  in net gain on  origination  and sale of loans and a
$805,000  or 27.8%  increase  in loan  administration  and  servicing  fees.  In
addition, an increase in trading revenue resulted from the absence of a $386,000
loss in the 1997 quarter.

         Total  expenses  increased  by $6.4  million  or 22.7%  during the nine
months ended September 30, 1998, over the prior comparable  period. The increase
during the nine month period  ended  September  30, 1998 was due  primarily to a
$2.1 million or 21.4% increase in employee  compensation and benefits associated
with an increase in the number of employees to accomodate higher loan production
during the 1998 period,  and a $679,000 or 12.3% increase in occupancy  expenses
related  to the  operation  of three  additional  branches  during  1998 and the
completion  (in late 1997) of the  remodeling  work of six branches  acquired in
1995 from another financial institution.  Other miscellaneous expenses increased
by  $3.6  million  or  28.2%  mainly  as a  result  of a  $652,000  increase  in
amortization  expenses of the Company's  servicing asset, a $845,000 increase in
advertising  costs, and other expense  increases  associated with an increase in
loan production.

          Total operating expenses increased by $2.4 million or 25.5% during the
three month period ended  September 30, 1998. The increase was due to a $912,000
or 27.9%  increase in employee  compensation  and benefits,  a $307,000 or 16.1%
increase in occupancy  expenses,  and a $1.2 million or 27.7%  increase in other
miscellaneous expenses.  These expenses increased during such three month period
for the reasons noted above.

         Total income tax expense increased by $1.5 million or 62.1% and $2.0 or
27.6%  during  the  three and nine  month  periods  ended  September  30,  1998,
respectively,  over the prior comparable periods.  The increase during the three
and nine month  periods  ended  September  30, 1998 is due  primarily  to a $3.9
million or 47.0% and a $9.5  million  or 40.2%,  respective  increase  in income
before taxes during such periods. Such increases also result from the absence of
a  $500,000  tax credit  recorded  in the third  quarter of 1997  related to the
purchase,  at a discount,  of certain  investment  tax  credits.  The  Company's
effective  tax rate  amounted to 30.9% and 27.5% during the three and nine month
periods  ended  September  30, 1998,  respectively,  compared to 33.9% and 32.3%
(excluding the referenced  $500,000 tax credit) in the 1997 comparable  periods.
The decrease in 1998 of the Company's effective tax rate is primarily associated
with an increase in the Company's  exempt interest income from an increased GNMA
mortgage backed 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

                                      -4-
<PAGE>
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,  1998,  the Company had $166.0  million in  borrowing
capacity under warehousing lines of credit, $501.6 million in borrowing capacity
under a line of credit  with the FHLB of New York and $ 15 million of  borrowing
capacity  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  September  30, 1998,  the Company had  outstanding  commitments  to
extend  credit  totaling  $25.6  million.  Certificates  of  deposit  which  are
scheduled to mature  within one year  totaled  $456.7  million at September  30,
1998,  and  borrowings  that are  scheduled  to mature  within  the same  period
amounted to $637.6 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  

                                      -5-
<PAGE>
supplementary capital cannot exceed 100% of core capital. At September 30, 1998,
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 9.01%,  15.47%
and 16.60%, 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.

Year 2000 Issue

         The Year  2000  problem  is  caused by the  situation  where  computers
worldwide were programmed to read only the last two digits of a calendar year to
save computer memory. Those programs could read "00" as the year 1900 instead of
the year 2000, and thus may not recognize  dates after  December 31, 1999.  This
misinterpretation  of data could  cause  significant  problems  to  banking  and
mortgage  banking  entities,  such  as  the  Company,  as the  use  of the  date
calculations  is  extensive  in daily  operations  for matters  such as interest
accruals, maturity dates, delinquency status, and customer statements. Year 2000
problems go beyond  computer  systems of the Company,  and affect  anything that
uses an internal microchip such as telephones, fax machines,  security and alarm
systems, vaults, elevators and air conditioning systems.

         The  Company  does  not  own  any  proprietary   software   systems  or
applications  and relies on those provided by third party  vendors.  The Company
has completed the  assessment of its computer  hardware,  software  programs and
data processing  applications,  including those provided by third party vendors.
The Company has received revised programs from its third party vendors that have
been  modified to address the Year 2000 problem for the  principal  applications
used in its  mortgage  banking and  banking  businesses.  The Company  began the
testing of these revised programs and applications during November 1998, and the
testing is scheduled  to be completed by December 31, 1998.  If the tests reveal
that such programs and  applications  do not adequately  deal with the Year 2000
problems,  the Company will seek to obtain replacement programs and applications
with other alternative suppliers.  The Company's main computer, used principally
in banking and mortgage banking operations, is Year 2000 compliant, meaning that
it can properly process and calculate date-related  information after January 1,
2000.  The Company is in the process of  replacing  other  equipment,  primarily
desktop  computers  that are not Year 2000  compliant.  The  Company  intends to
develop a contingency plan which is expected to be completed by March 31, 1999.


                                      -6-
<PAGE>
         The Company does not anticipate  that the Year 2000 problem will have a
material  adverse  effect on its financial  condition or results in  operations.
However, Year 2000 problems suffered by third party providers of basic services,
such as telephone, waste, sewer and electricity, could have an adverse impact on
the daily operations of the Company.  The Company would attempt to deal with any
disruption  of such  basic  services  caused by the Year 2000  problem  with its
existing  business   interruption   contingency   plans.   Under  the  Company's
contingency  plans,  most office branches of the Company are presently  equipped
with power plants and/or generators.

         The Company  estimates  that the cost of addressing the Year 2000 issue
will be approximately $300,000, most of which will be incurred during 1999. Most
of such costs are directly related to the costs of replacing existing equipment,
primarily desktop computers,  which have been fully depreciated on the Company's
financial statements.

         As a bank holding company,  the Company could be subject to enforcement
action by federal  banking  authorities  if it fails to adequately  address Year
2000 issues.


"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.

                                       -7-
<PAGE>


                                   SIGNATURES


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


                                             R&G FINANCIAL CORPORATION



Date:  March 16, 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
                                                 Vice President and
                                                 Chief Financial Officer
                                                 (Principal Financial and 
                                                 Accounting Officer)