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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

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


                                    FORM 10-Q

                                   (Mark One)
[ X ]              QUARTERLY REPORT PURSUANT TO SECTION 13 OR
                  15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
                              for the period ended

                                 March 31, 1996

[   ]              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: 1-8984



                              WEDGESTONE FINANCIAL
             (Exact Name of Registrant as Specified in its Charter)

      Massachusetts                                           04-26950000
(State or other jurisdiction                               (I.R.S. Employer
    of incorporation)                                   Identification Number)



                            5200 N. Irwindale Avenue
                                    Suite 168
                           Irwindale, California 91706
                                 (818) 338-3555

               (Address, including zip code and telephone number,
                  including area code of registrant's principal
                               executive offices)



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




Indicate by check mark whether the registrant has (1) 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 such shorter period that the
            registrant was required to file such reports and (2) has
                       been subject to filing requirements
                             for the past 90 days.

          [ X ]  Yes                                     [   ]   No

   Indicate by check mark whether the registrant has filed all documents and
   reports required to be filed by Section 12, 13 or 15(d) of the 
               Securities Exchange Act of 1934 subsequent to the
                    distribution of securities under a plan
                              confirmed by a court.

          [ X ]   Yes                                    [   ]   No

    Shares of Beneficial Interest Outstanding as of May 14, 1996: 21,885,668

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                       WEDGESTONE FINANCIAL & SUBSIDIARIES


                                TABLE OF CONTENTS

                                                                            Page
PART I  FINANCIAL INFORMATION

        Item 1 Financial Statements
               Consolidated Balance Sheets - March 31, 1996 (unaudited) and
               December 31, 1995..............................................2

               Consolidated Statements of Operations (unaudited) for
               the Three Months Ended March 31, 1996 and 1995.................3

               Consolidated Statements of Shareholders' Equity (unaudited) 
               for the Three Months Ended March 31, 1996 and 1995.............4

               Consolidated Statements of Cash Flows (unaudited) for
               the Three Months Ended March 31, 1996 and 1995.................5

               Notes to Unaudited Consolidated Financial Statements...........6

        Item 2 Management's Discussion and Analysis of Financial Condition
               and Results of Operations......................................8



PART II OTHER INFORMATION

        Item 1 Legal Proceedings.............................................10

        Item 2 Changes in Securities.........................................10

        Item 3 Defaults upon Senior Securities...............................10

        Item 4 Submission of Matters to a Vote of Security Holders...........10

        Item 5 Other Information.............................................10

        Item 6 Exhibits and Reports on Form 8-K..............................10



Signatures...................................................................11



                                       -1-



                      WEDGESTONE FINANCIAL AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

                   As of March 31, 1996 and December 31, 1995

                   (Amounts in Thousands - except share data)

                                                           (Unaudited)
ASSETS                                                        1996        1995
                                                              ----        ----

Current Assets:
Cash                                                       $    125    $    242
Accounts and other receivables - (net of allowances
    of $192 and $196 in 1996 and
    1995, respectively)                                       6,077       5,146
Inventories                                                   3,368       3,021
Prepaid expenses and other assets                               452         372
Deferred income taxes                                           476         476
                                                           --------    --------
     Total Current Assets                                    10,498       9,257
                                                           --------    --------

Notes receivable - net                                           84          84
Real estate acquired by foreclosure - net                     1,086       1,091
Property, plant and equipment - net                           3,251       3,248
Goodwill                                                        162         173
Deferred income taxes                                         2,114       2,114
Net assets of discontinued operations                          --           295
Other assets                                                    323         343
                                                           --------    --------
                                                              7,020       7,348
                                                           --------    --------

     Total Assets                                          $ 17,518    $ 16,605
                                                           ========    ========



LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities:
Current portion of long-term debt                          $  1,439    $  1,406
Accounts payable                                              3,220       2,739
Accrued payroll and related expenses                            585         501
Other accrued expenses                                          602         809
                                                           --------    --------
     Total Current Liabilities                                5,846       5,455

Long-term debt                                                5,694       5,403
Net liabilities of discontinued operations                       83        --
                                                           --------    --------
     Total Liabilities                                       11,623      10,858
Commitments and contingencies

Shareholders' Equity:

Shares of Beneficial Interest-par value
     $1.00 per share:  authorized - unlimited shares:
     issued and outstanding - 21,885,668 shares              21,886      21,886
Additional paid-in capital                                   31,396      31,396
Accumulated deficit                                         (47,387)    (47,535)
                                                           --------    --------
     Total Shareholders' Equity                               5,895       5,747
                                                           --------    --------

     Total Liabilities and Shareholders' Equity            $ 17,518    $ 16,605
                                                           ========    ========


                 See notes to consolidated financial statements.

                                       -2-



                      WEDGESTONE FINANCIAL AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS

               For the Three Months Ended March 31, 1996 and 1995

                                   (Unaudited)


                 (Amounts in Thousands - except per share data)



                                                              1996        1995
                                                              ----        ----

Net sales                                                  $  9,783    $  9,277
Cost of sales                                                 6,504       6,425
                                                           --------    --------
Gross profit                                                  3,279       2,852

Selling, general and administrative expenses                  2,445       2,279
                                                           --------    --------
Operating income                                                834         573

Goodwill amortization                                            11          11
Interest expense                                                219         215
                                                           --------    --------
Income before taxes                                             604         347

Provision for income taxes                                       78          92
                                                           --------    --------
Income from continuing operations                               526         255
Net loss from discontinued operations
    (net of income tax benefit of$231 and
    $80 in 1996 and 1995, respectively)                        (378)       (120)
                                                           --------    --------

Net income                                                 $    148    $    135
                                                           ========    ========


Net income (loss) per share of Beneficial Interest:
    Income from continuing operations                      $    .02    $    .01
    Loss from discontinued operations                          (.01)        .00
                                                           --------    --------
    Net income                                             $    .01    $    .01
                                                           ========    ========

Weighted average number of shares outstanding:
    Shares of Beneficial Interest                            21,886      21,786
                                                           ========    ========


                See notes to consolidated financial statements.

                                       -3-





                      WEDGESTONE FINANCIAL AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

               For the Three Months Ended March 31, 1996 and 1995

                                   (Unaudited)

                             (Amounts in Thousands)



                                                                                          Additional
                                                               Shares of Beneficial         paid-in       Accumulated
                                                                      Interest              capital         deficit         Total
                                                               ---------------------        -------         -------         -----
                                                               Shares        Amount

                                                                                                                  
Balance at December 31, 1994                                    20,386       $ 20,386       $ 32,376        ($49,380)       $  3,382
Issuance of shares of beneficial interest to
     secure third party debt guarantee                           1,200          1,200           (840)            360
Issuance of shares of beneficial interest in
     exchange for acquisition services                             200            200           (140)             60

Net Income                                                                                                       135             135
                                                                ------       --------       --------        --------        --------

Balance at March 31, 1995                                       21,786       $ 21,786       $ 31,396        ($49,245)       $  3,937
                                                                ======       ========       ========        ========        ========


Balance at December 31, 1995                                    21,886       $ 21,886       $ 31,396        ($47,535)       $  5,747

Net income                                                                                                       148             148
                                                                ------       --------       --------        --------        --------


Balance at  March 31, 1996                                      21,886       $ 21,886       $ 31,396        ($47,387)       $  5,895
                                                                ======       ========       ========        ========        ========

<FN>

                See notes to consolidated financial statements.

</FN>


                                       -4-



                      WEDGESTONE FINANCIAL AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

               For the Three Months Ended March 31, 1996 and 1995

                                   (Unaudited)

                             (Amounts in Thousands)

                                                                 1996      1995
                                                                 ----      ----


Cash Flows from Operating Activities:
Net income                                                       $ 148    $ 135
     Adjustments to reconcile net income to net
       cash used in operating activities:
         Depreciation and amortization                             211      190
         Losses on discontinued operations                         378      120

     Changes in operating assets and liabilities:
         Accounts and other receivables                           (931)    (397)
         Inventories                                              (347)     323
         Prepaid expenses and other current assets                 (80)     (20)
         Accrued payroll and related expenses                       83     (127)
         Other accrued expenses                                   (207)      28
         Accounts payable                                          481      246
         Other assets                                             --         (9)
                                                                 -----    -----
       Net cash provided by (used in) operating activities        (264)     489
                                                                 -----    -----

     Cash Flows from Investing Activities:
         Proceeds from repayment of mortgage notes receivable     --          1
         Capital expenditures                                     (183)    (722)
         Investment in real estate                                   5      (28)
                                                                 -----    -----
     Net cash used in investing activities                        (178)    (749)
                                                                 -----    -----

     Cash Flows from Financing Activities:
         Borrowings (Repayment) of term debt                      (123)      52
         Deferred financing fees paid                             --        (74)
         Net borrowings on revolving debt                          448      213
                                                                 -----    -----
     Net cash provided by financing activities                     325      191
                                                                 -----    -----


     Net decrease in cash                                         (117)     (69)


     Cash at beginning of period                                   242      179
                                                                 -----    -----
     Cash at end of period                                       $ 125    $ 110
                                                                 =====    =====



                 See notes to consolidated financial statements.

                                       -5-



                      WEDGESTONE FINANCIAL AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


               For the Three Months Ended March 31, 1996 and 1995



NOTE 1.     Background and Basis of Presentation

         Background - Wedgestone  Financial  ("Wedgestone" or the "Company") was
formed in 1980 as a real  estate  investment  trust  ("REIT")  and, on August 9,
1991, filed for bankruptcy.  Wedgestone's  plan of  reorganization  (the "Plan")
became effective on August 3, 1992.

         Under the guidance of its current  management,  Wedgestone  operates in
two  business  segments,   Automotive  Products  and  Real  Estate  and  Lending
activities.  The automotive  segment  manufactures  and  distributes  automotive
aftermarket  products for the light duty truck market.  Its  principal  products
include rear bumpers;  tubular  products such as grille  guards,  push bars, and
step rails;  and various  other  related  aftermarket  products.  The  Company's
automotive  products are marketed in traditional,  original equipment and retail
automotive  aftermarkets.  The  automotive  segment  manufactures  and sells its
products at two locations in California, and one in Minnesota.
Sales are also made from distribution centers in Texas and Utah.

         Although its primary focus has shifted toward its  Automotive  Products
business  segment,  Wedgestone's  Real Estate and Lending  business  segment has
continued  since  emerging  from  bankruptcy  in  1992.  Wedgestone  owns  three
properties  that were  acquired by  foreclosure.  The  aggregate  value,  net of
reserves,  is  approximately  $1,091,000  as of March 31, 1995.  Wedgestone  has
outstanding loans on one property,  net of reserves, of approximately $84,000 as
of March 31, 1995.

         Acquisitions   -  Since  May  1992,   Wedgestone   has  acquired  three
manufacturing operations. In June 1992, Wedgestone acquired St. James Automotive
Corp. ("St.  James") in exchange for 6,795,220 shares of beneficial  interest of
Wedgestone  and accounted for this  acquisition  as a purchase.  On November 18,
1994,  Wedgestone acquired the Automotive Segment of Standun,  Inc. ("Standun"),
which  consisted  of the Fey  Automotive  Products  Division  ("Fey")  and Sigma
Plating  Co.,  Inc.  ("Sigma") in exchange for  6,795,223  shares of  beneficial
interest  of  Wedgestone  and the  assumption  of  approximately  $1,104,000  of
outstanding  debt due to related  parties of both  Wedgestone  and Standun,  and
certain  other  liabilities.  The  shareholders  of Standun  owned,  directly or
indirectly,  approximately  48% of Wedgestone prior to the acquisition and, as a
result, this acquisition was accounted for as a "put-together"  which is similar
to the pooling of interest  method of accounting.  On January 9, 1995 Wedgestone
acquired substantially all of the assets of Hercules Bumpers, Inc. ("Hercules").
The purchase  price for the assets  acquired was the  assumption of certain debt
and other liabilities  approximating $5.1 million. In addition,  certain debt is
being guaranteed jointly and severally by Charles W. Brady ("Brady"), the former
principal  shareholder  of  Hercules,   and  Chattahoochee  Leasing  Corporation
("CLC"),  a  corporation  controlled by Brady.  In exchange for this  guarantee,
Brady received a promissory note in the amount of $300,000 and 1,200,000  shares
of beneficial interest of Wedgestone. In consideration for an agreement to pay a
liability of Hercules,  CLC  received a promissory  note for $100,000  which was
secured by 100,000 shares of beneficial  interest of Wedgestone.  In June, 1995,
the Company exercised its right under the CLC Agreement and acquired the note by
issuing these shares to CLC. (See Note 3 -- Discontinued Operations)

         Basis  of   Presentation   and  Principles  of   Consolidation   -  The
accompanying   consolidated  financial  statements  include  the  operations  of
Wedgestone  and  give  retroactive  effect  to the  discontinued  operations  of
Hercules (see Note 3).

         The  consolidated   financial   statements   include  the  accounts  of
Wedgestone  and its wholly  owned  subsidiaries.  All  significant  intercompany
transactions have been eliminated in consolidation.

         The financial  statements included in this Form 10-Q have been prepared
by the Company,  without  audit,  pursuant to the rules and  regulations  of the
Securities and Exchange Commission. Certain information and footnote disclosures
normally included in financial  statements prepared in accordance with generally
accepted accounting principles have been condensed, or omitted, pursuant to such
rules and regulations.  These financial statements should be read in conjunction
with the Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1995, and Form 8-K's issued March 5, 1996 and April 18, 1996.

                                       -6-



         The results of operations for the interim  periods shown in this report
are not necessarily indicative of results to be expected for the fiscal year. In
the  opinion of  management,  the  information  contained  herein  reflects  all
adjustments  necessary to make the results of operations for the interim periods
a fair statement of such operations.

         Income  Per  Share  of  Beneficial  Interest  -  Income  per  share  of
beneficial  interest is calculated based on weighted average  outstanding shares
of beneficial interest.


NOTE 2.     Inventories

         Inventories consist of the following: (In Thousands)

                                                March 31,    December 31,
                                                 1996           1995
                                                 ----           ----
          Finished goods                       $ 1,566        $ 1,480
          Work in progress                       1,048            893
          Raw materials                            871            785
                                               -------        -------
                                                 3,485          3,158
          Less allowances                         (117)          (137)
                                               -------        -------
                                               $ 3,368        $ 3,021
                                               =======        =======


NOTE 3.      Discontinued Operations

         On March 5, 1996, the Company  discontinued  operations of its Hercules
manufacturing  facility  in  Pelham,  Georgia.  Hercules  manufactured  and sold
bumpers under dealer direct and dealer oriented distributor programs. Subsequent
to March 31, 1996, on April 18, 1996, the Board of Directors authorized the sale
of the  Company's  stock  ownership in Hercules to MBC  Corporation  for nominal
consideration  pursuant to a Stock Purchase  Agreement.  Both the closure of the
Pelham  facility  and the  subsequent  sale of the stock of  Hercules  have been
recorded as a disposal of a segment of business.

         The net  assets  (liabilities)  of  discontinued  operations  have been
segregated  in the March 31, 1996 and  December  31, 1995  Consolidated  Balance
Sheets as follows: (In Thousands)

                                                       March 31,  December 31,
                                                         1996        1995
                                                         ----        ----
           Net Assets (Liabilities)
               Current Assets                          $ 1,537     $ 2,480
               Current Liabilities                      (1,282)     (1,749)
               Net Property Plant and Equipment          1,423       1,447
               Other Assets                              1,479       1,506
               Noncurrent Liabilities                   (3,240)     (3,045)
                                                       -------     -------
                                                          (283)        639
               Intercompany Receivable (Payable)
                    with Wedgestone Automotive Corp       --          (344)
                                                       -------     -------
                                                       $   (83)    $   295
                                                       =======     =======
         
   
         Operating  results of discontinued  operations  have been  reclassified
from  amounts  previously  reported  and have been  reported  separately  in the
consolidated statements of earnings. Net sales from discontinued operations were
$1,447,000  and  $2,766,000  for the three months ended March 31, 1996 and 1995,
respectively.

         Between  March 31,  1996 and  April  18,  1996,  the  Company  incurred
additional  operating losses on discontinued  operations totaling  approximately
$289,000.  In April, in connection  with the sale of the stock of Hercules,  the
Company will record a gain of approximately $372,000.

                                       -7-



Item 2.     Management's Discussion and Analysis of Financial Condition and 
            Results of Operations

General

         Wedgestone  (the  "Company")  is  primarily  engaged in the business of
manufacturing  automotive  products  for the light  duty truck  aftermarket.  It
markets its products under various tradenames including Fey, Westin and Tuffbar.
As of March 31, 1996,  the Company has two plants  located in California and one
in Minnesota.

Results of Operations

         The light duty truck market continues to demonstrate  strength and grow
as a percentage of total domestic new vehicle sales.  Sales  performance for the
first  quarter of 1996 was strong  for both Fey and  Westin  products.  Sales of
Hercules  products  continued to decline in the first quarter.  Hercules,  whose
products are primarily marketed through dealer oriented programs, have failed to
meet  expectations  since  being  acquired  on  January 9,  1995.  The  Company,
believing that these trends were likely to continue,  closed the Hercules Pelham
facility on March 5, 1996.  Subsequent to March 31, 1996, it was determined that
this business  segment be discontinued  in its entirety.  On April 18, 1996, the
Board approved the sale of the Company's stock in Hercules to MBC Corporation, a
Minnesota corporation.  The results of operations discussed below do not include
the results of the discontinued  business segment Hercules for both the quarters
ended March 31, 1996 and 1995.

Three Months Ended March 31, 1995 compared to Three Months Ended March 31, 1996

         Revenues:   Net  sales  from  continuing  operations  increased  5%  to
$9,783,000  for the first quarter of 1996  compared to  $9,277,000  for the same
period in 1995.  Sales of Westin  products  accounted  for the  majority of this
increase.

         Gross Profits:  Gross profits  increased to  $3,279,000,  or 34% of net
sales for the first quarter of 1996 compared to $2,852,000,  or 31% of net sales
for the same period last year.  This  increase is primarily due to sales in 1996
of a more profitable mix of products.

         Selling, General and Administrative Expenses:  Distribution,  sales and
marketing expenses were essentially unchanged totaling $1,427,000 and $1,424,000
for the  quarters  ended March 31, 1996 and 1995,  respectively.  Administrative
expenses  for the quarter  ended March 31, 1996 totaled  $1,018,000  compared to
$855,000 for the same period in 1995.  This increase is due to additional  costs
incurred in developing corporate management, legal fees, and corporate insurance
costs.

         Interest Expense:  Interest expense increased by $4,000 to $219,000 for
the three months  ended March 31, 1996  compared to $215,000 for the same period
in 1995.

         Net Income  from  Continuing  Operations:  Net income  from  continuing
operations  grew by 106% to $526,000  compared to $255,000  for the three months
ended March 31, 1996 and 1995, respectively,  primarily due to increased volumes
and more favorable product mix.

Liquidity and Capital Resources

         To date,  Wedgestone has financed its business  activities through cash
flow from  operations.  Additional debt has been incurred  primarily for working
capital and acquisitions.

         For the three months ended March 31, 1996,  cash flows from  operations
totaling $359,000 were  supplemented by repayments of intercompany  amounts owed
by Hercules  totaling  $378,000 as well as $229,000 in additional  advances from
trade creditors.  The Company  invested  $1,230,000 of this cash flow in working
capital,  including  $931,000 in trade  receivables and $347,000 in inventories.
This resulted in net cash used in operating activities of $264,000. Cash used in
operating activities,  additional investments in equipment totaling $178,000 and
repayments of long term debt totaling $123,000 were partially funded by $448,000
in additional borrowings under the Company's revolving line of credit, resulting
in a net  decrease in cash of $117,000 for the three months ended March 31, 1996
compared to a $69,000 reduction for the same period in 1995.


                                       -8-



         Wedgestone  has  borrowings  outstanding  from a related party totaling
$677,000 (the "Rockaway  Loan") as of March 31, 1996, which mature in July 1996.
Under this credit agreement,  the borrowings are collateralized by substantially
all of the assets of the Company.

         In  connection  with the  acquisition  of the  Automotive  Sergment  of
Standun, Inc., Wedgestone,  through certain wholly-owned  subsidiaries,  entered
into a $7.5 million  revolving  credit line with a financial  institution  which
expires in 1997. The credit line provides for borrowings  (minimum borrowings of
$4 million  are  required)  based on a  percentage  of  inventory  and  accounts
receivable.  Interest on the outstanding borrowings accures at prime, plus 2.5%.
The agreement also includes  equipment term loans  approximating $1.3 million at
March 31, 1996.  The  agreement  contains  certain  covenants  which require the
maintenance of minimum working capital and equity.

         To  the  extent  that  Wedgestone  expands  its  operations  and  makes
additional  acquisitions,  it  will  need  to  obtain  additional  funding  from
institutional  lenders and other sources.  Wedgestone's ability to use equity in
obtaining funding may be limited by its desire to preserve certain tax atributes
including its net operating loss carry forwards.



                                       -9-



                                     PART II

                                OTHER INFORMATION


Item 1.       Legal Proceedings

         None.

Item 2.       Changes in Securities

         None.

Item 3.       Defaults upon Senior Securities

         None.

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

         None.

Item 5.       Other Information

         None.

Item 6.       Exhibits and Reports on Form 8-K

         A report on Form 8-K was filed  March 5, 1996,  relating to the closure
of the Company's manufacturing plant in Pelham, Georgia.

          A report on Form 8-K was filed on April 18, 1996, relating to the sale
of Hercules Automotive Products, Inc. to MBC Corporation.



                                      -10-



                                     PART II

                                   SIGNATURES


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


                                           Wedgestone Financial



Date:                                      By: /s/   Jeffrey S. Goldstein
                                               -------------------------------
                                           President and Treasurer
                                           (Principal Executive and Financial
                                           Officer)






The name "Wedgestone  Financial" (Formerly Wedgestone Realty Investors Trust) is
the  designation  of the Trustees  under a Declaration  of Trust dated March 12,
1980, as amended,  and in accordance  with such  Declaration  of Trust notice is
hereby  given that all persons  dealing with  Wedgestone  Financial by so acting
acknowledge  and agree that such persons must look solely to the Trust  property
for the enforcement of any claims against Wedgestone  Financial and that neither
Trustees,  Officers,  employees,  agents nor  shareholders  assume any  personal
liability for claims against the Trust or obligations  entered into on behalf of
Wedgestone  Financial,  and that respective  properties  shall not be subject to
claims of any other person in respect of any such liability.


                                      -11-