<PAGE>



                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    Form 10-Q

(Mark One)

[ X ]    QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
         OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2001
                                       OR

[   ]    TRANSITION REPORT UNDER SECTION 13 OR 15(d)
         OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

               Commission file number 23663
                                      -----

                          CRUSADER HOLDING CORPORATION
                ------------------------------------------------
             (Exact name of registrant as specified in its charter)

          Pennsylvania                                    23-2562545
-------------------------------               ---------------------------------
(State or other jurisdiction of               (IRS Employer Identification No.)
incorporation or organization)

                   1230 Walnut Street, Philadelphia, PA 19107
                ------------------------------------------------
                    (Address of principal executive offices)
                                   (Zip Code)

                                 (215) 893-1500
                ------------------------------------------------
              (Registrant's telephone number, including area code)




-------------------------------------------------------------------------------
               (Former name, former address and former fiscal year
                          if changed since last report)


        Indicate by check mark whether the registrant (1) 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 reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES [X]   NO [  ]


        Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date:

Common Stock, par value $0.01 per share, 3,855,387 shares outstanding as of May
9, 2001.




<PAGE>

                          Crusader Holding Corporation

                            Index to Form 10-Q Report

<TABLE>
<CAPTION>


PART I. FINANCIAL INFORMATION                                                                                Page


        Item 1. Financial Statements

<S>                                                                                                          <C>
        Consolidated Balance Sheets as of March 31, 2001 and June 30, 2000.................................... 3

        Consolidated Statements of Income for the three months ended and
        nine months ended March 31, 2001 and 2000............................................................. 4

        Consolidated Statement of Shareholders' Equity and Comprehensive
        Income for the nine months ended March 31, 2001....................................................... 5

        Consolidated Statements of Cash Flows for the nine months ended March 31, 2001 and 2000............... 6

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

        Item 2. Management's Discussion and Analysis of Financial
        Condition and Results of Operations................................................................... 9

        Item 3. Quantitative and Qualitative Disclosures about Market Risk....................................12

PART II. OTHER INFORMATION


        Item 1            Legal Proceedings  .................................................................14

        Item 2.           Changes in Securities and Use of Proceeds ..........................................14

        Item 3.           Defaults Upon Senior Securities.....................................................14

        Item 4.           Submission of Matters to a Vote of Security Holders ................................14

        Item 5.           Other Information...................................................................14

        Item 6.           Exhibits and Reports on Form 8-K ...................................................14

</TABLE>

                                       2

<PAGE>


Item 1.  Financial Statements

Crusader Holding Corporation and Subsidiary
Consolidated Balance Sheets
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                               March 31,        June 30,
                                                                 2001             2000
                                                            -------------    -------------
                                                            (Unaudited)
ASSETS
<S>                                                         <C>              <C>
  Cash and cash equivalents                                 $  51,559,000    $  13,332,000
  Investment securities available-for-sale                     24,494,000       26,312,000
  Mortgage-backed securities available-for-sale                14,238,000       14,393,000
  Loans held for sale (estimated market value
      of $9,082,000 and $9,850,000 at March 31, 2001
      and June 30, 2000, respectively)                          8,992,000        9,735,000
  Loans receivable, net                                       276,567,000      320,839,000
  Accrued interest receivable                                   2,706,000        2,326,000
  Other real estate owned                                         530,000        1,149,000
  Premises and equipment, net                                     728,000          773,000
  Other assets                                                  5,124,000        4,889,000
                                                            -------------    -------------
               Total Assets                                 $ 384,938,000    $ 393,748,000
                                                            =============    =============

LIABILITIES

  Deposits                                                  $ 249,753,000    $ 243,261,000
  Advances from Federal Home Loan Bank                         85,500,000       95,200,000
  Other borrowings                                              4,133,000        9,033,000
  Other liabilities                                             3,301,000       13,372,000
                                                            -------------    -------------
               Total Liabilities                              342,687,000      360,866,000

MINORITY INTEREST                                                 285,000          286,000

SHAREHOLDERS' EQUITY
  Preferred stock - authorized, 5,000,000 shares of
      $0.01 par value; none outstanding                              --               --
  Common stock - authorized, 20,000,000 shares of
      $0.01 par value; 3,855,387 and 3,865,087
      shares outstanding at March 31, 2001
      and June 30, 2000, respectively                              40,240           40,240
  Additional paid-in capital                                   23,521,510       23,521,510
  Retained earnings                                            20,222,250       11,822,250
  Treasury stock, at cost (168,795 and 159,095 shares at
      March 31, 2001 and June 30, 2000, respectively)          (1,465,000)      (1,390,000)
  Accumulated other comprehensive loss                           (353,000)      (1,398,000)
                                                            -------------    -------------
               Total Shareholders' Equity                      41,966,000       32,596,000
                                                            -------------    -------------
               Total Liabilities and Shareholders' Equity   $ 384,938,000    $ 393,748,000
                                                            =============    =============

</TABLE>



See accompanying notes to consolidated financial statements



                                       3

<PAGE>


Crusader Holding Corporation and Subsidiary
Consolidated Statements of Income (Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                              Three months                 Nine months
                                                             ended March 31,             ended March 31,
                                                        -------------------------   -------------------------
                                                           2001           2000          2001         2000
                                                        -----------   -----------   -----------   -----------
INTEREST INCOME
<S>                                                     <C>           <C>           <C>           <C>
  Loans, including fees                                 $ 7,044,000   $ 7,007,000   $22,257,000   $19,921,000
  Short-term consumer loans, including fees               2,607,000     1,103,000     6,503,000     2,913,000
  Investment and mortgage-backed securities               1,073,000       805,000     3,016,000     2,238,000
                                                        -----------   -----------   -----------   -----------
                    Total interest income                10,724,000     8,915,000    31,776,000    25,072,000
                                                        -----------   -----------   -----------   -----------

INTEREST EXPENSE
  Deposits                                                3,945,000     2,805,000    12,314,000     7,546,000
  Borrowed funds                                            884,000     1,578,000     3,193,000     4,548,000
                                                        -----------   -----------   -----------   -----------
                    Total interest expense                4,829,000     4,383,000    15,507,000    12,094,000
                                                        -----------   -----------   -----------   -----------

NET INTEREST INCOME                                       5,895,000     4,532,000    16,269,000    12,978,000

  PROVISION FOR LOAN LOSSES
  Short-term consumer loans                                 389,000       545,000     1,822,000     1,430,000
  Other loans                                               150,000       250,000       750,000       900,000
                                                        -----------   -----------   -----------   -----------
                   Total provision for loan losses          539,000       795,000     2,572,000     2,330,000
                                                        -----------   -----------   -----------   -----------

NET INTEREST INCOME AFTER PROVISION
    FOR LOAN LOSSES                                       5,356,000     3,737,000    13,697,000    10,648,000

NON-INTEREST INCOME
  Service charges on deposit accounts and
     other fees                                              35,000        27,000       116,000       118,000
  Mortgage banking revenues                                 140,000       390,000       525,000     1,341,000
  Other                                                     201,000       133,000       573,000       486,000
                                                        -----------   -----------   -----------   -----------
                    Total non-interest income               376,000       550,000     1,214,000     1,945,000

NON-INTEREST EXPENSES
  Employee compensation and benefits                        506,000       385,000     1,428,000     1,227,000
  Data processing                                            49,000        43,000       125,000       108,000
  Federal insurance premiums                                 33,000        23,000        90,000        70,000
  Occupancy and equipment                                   128,000       101,000       339,000       290,000
  Professional fees                                          83,000       137,000       271,000       273,000
  Mortgage banking expenses                                 356,000       505,000     1,017,000     1,808,000
  Other operating                                           218,000       223,000       630,000       549,000
  Goodwill amortization                                      21,000        21,000        63,000        63,000
                                                        -----------   -----------   -----------   -----------
                    Total non-interest expenses           1,394,000     1,438,000     3,963,000     4,388,000
                                                        -----------   -----------   -----------   -----------

INCOME BEFORE INCOME TAX EXPENSE                          4,338,000     2,849,000    10,948,000     8,205,000

INCOME TAX EXPENSE                                          918,000       841,000     2,270,000     2,546,000
                                                        -----------   -----------   -----------   -----------
    Income before minority interest                       3,420,000     2,008,000     8,678,000     5,659,000
Minority interest                                           101,000       105,000       278,000       268,000
                                                        -----------   -----------   -----------   -----------
    NET INCOME                                          $ 3,319,000   $ 1,903,000   $ 8,400,000   $ 5,391,000
                                                        ===========   ===========   ===========   ===========


Net income per share, basic and diluted                 $     0 .86   $      0.49   $      2.18   $      1.38
                                                        ===========   ===========   ===========   ===========


Basic and diluted weighted average shares outstanding     3,856,000     3,876,000     3,858,000     3,903,000
                                                        ===========   ===========   ===========   ===========
</TABLE>

See accompanying notes to consolidated financial statements.


                                       4

<PAGE>


Crusader Holding Corporation and Subsidiary
Consolidated Statement of Shareholders' Equity and Comprehensive Income
For the nine months ended March 31, 2001 (Unaudited)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>


                                                                                       Accumulated
                                            Additional                                    other            Total
                                 Common       paid-in      Treasury      Retained     Comprehensive    Shareholders'  Comprehensive
                                 stock        capital        stock       earnings     income (loss)        equity        Income
                                 -----        -------        -----       --------     -------------        ------        ------

<S>                           <C>         <C>           <C>            <C>             <C>             <C>           <C>
Balance at June 30, 2000      $ 40,240    $23,521,510   ($1,390,000)   $11,822,250     ($1,398,000)    $32,596,000

Net unrealized loss on
  securities available-
  for-sale                         -             -               -           -           1,045,000       1,045,000   $ 1,045,000

Purchase of treasury stock         -             -       (  75,000)          -               -            ( 75,000)

Net income                         -             -               -       8,400,000           -           8,400,000     8,400,000
                                                                                                                     -----------
Total comprehensive income                                                                                           $ 9,445,000
                              --------    -----------   -----------    -----------    ------------     -----------   ===========
Balance at March 31, 2001     $ 40,240    $23,521,510   ($1,465,000)   $20,222,250    ($   353,000)    $41,966,000
                              ========    ===========   ===========    ===========    ============     ===========

</TABLE>


See accompanying notes to consolidated financial statements.


                                       5

<PAGE>


Crusader Holding Corporation and Subsidiary
Consolidated Statements of Cash Flows (Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                                    Nine months ended
                                                                                         March 31,
                                                                                   2001             2000
                                                                               ------------    ------------

OPERATING ACTIVITIES
<S>                                                                            <C>             <C>
Net income                                                                     $  8,400,000    $  5,391,000
Adjustments to reconcile net income to net cash provided by
  (used in) operating activities:
Amortization of premiums and discounts on securities and loans, net                 136,000          23,000
Amortization of goodwill                                                             64,000          64,000
Provision for loan losses                                                         2,572,000       2,330,000
Net gain on sale of loans held for sale                                            (524,000)       (907,000)
Depreciation and amortization of premises and equipment                             172,000         178,000
Proceeds from sale of assets held for sale                                       48,213,000      95,885,000
Originations of loans held for sale                                             (46,946,000)    (75,500,000)
(Increase) decrease in accrued interest receivable                                 (380,000)       (110,000)
(Increase) decrease in deferred income taxes                                       (374,000)       (450,000)
Other, net                                                                      (10,792,000)        235,000
                                                                               ------------    ------------
    Net cash provided by (used in) operating activities                             541,000      27,139,000

INVESTMENT ACTIVITIES
Net (increase) decrease in loans                                                 43,442,000     (77,613,000)
Purchase of investment securities available-for-sale                                   --        (5,073,000)
Purchase of mortgage-backed securities available-for-sale                              --        (6,505,000)
Repayment of principal of investment securities available-for-sale                2,726,000            --
Repayment of principal of mortgage-backed securities available-for-sale             912,000       1,125,000
Proceeds from sale of property acquired through loan foreclosure actions           (619,000)        681,000
Purchase of premises and equipment                                                 (126,000)       (199,000)
                                                                               ------------    ------------
    Net cash provided by (used in) investing activities                          46,335,000     (87,584,000)

FINANCING ACTIVITIES
Net increase in deposits                                                          6,517,000      23,799,000
Advances (repayments) from Federal Home Loan Bank, net                           (9,700,000)     34,200,000
(Repayment) proceeds from long-term FHLB advances                                      --         8,700,000
Repayment of securities sold under agreements to repurchase                      (4,900,000)     (1,834,000)
(Decrease) Increase in advance payments by borrowers for taxes and insurance       (490,000)         58,000
Purchase of treasury stock                                                          (75,000)       (966,000)
Increase(decrease) in minority interest                                              (1,000)        (12,000)
                                                                               ------------    ------------
    Net cash (used in) provided by financing activities                          (8,649,000)     63,945,000

Net increase (decrease) in cash and cash equivalents                             38,227,000       3,500,000

Cash and cash equivalents at beginning of period                                 13,332,000       6,056,000
                                                                               ------------    ------------

Cash and cash equivalents at end of period                                     $ 51,559,000    $  9,556,000
                                                                               ============    ============


</TABLE>

See accompanying notes to consolidated financial statements.

                                       6

<PAGE>


Crusader Holding Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Information as of and for the three and nine month periods ended
March 31, 2001 and 2000 is unaudited)

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

1. BASIS OF PRESENTATION

The unaudited consolidated financial statements as of March 31, 2001, and for
the three and nine month periods ended March 31, 2001 and 2000 include the
accounts of Crusader Holding Corporation (the "Company") and its wholly-owned
subsidiary, Crusader Savings Bank, FSB (the "Bank"), along with the Bank's
wholly-owned and majority-owned subsidiaries. All significant intercompany
accounts and transactions have been eliminated.

The interim financial statements have been prepared in accordance with generally
accepted accounting principles for interim financial information. Accordingly,
they do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the opinion
of management, all adjustments (including normal recurring accruals) necessary
for fair presentation of results of operations for the interim periods included
herein have been made. The results of operations for the three and nine month
periods ended March 31, 2001 are not necessarily indicative of results to be
anticipated for the full year.


2. NET INCOME PER SHARE

Basic and diluted earnings per share are calculated using statement of Financial
Accounting Standards ("SFAS") No. 128. Under SFAS No. 128, basic earnings per
share is computed based upon the weighted average number of common shares
outstanding during the period while diluted earnings per share is computed based
upon the weighted average number of common shares and common equivalent shares
outstanding during the period. Common equivalent shares are stock options,
warrants and similar items. In converting the common equivalent shares to common
shares, the Treasury Stock Method is utilized whereby it is assumed that the
proceeds that would be received upon the exercise of the common stock equivalent
shares are used to repurchase outstanding common shares at the average market
price during the period. There was no difference between the Company's basic and
diluted earnings per share.

In determining the weighted average shares outstanding during the period in the
computation of basic and diluted earnings per share, retroactive effect was
given to all stock dividends, including the 5% stock dividend paid October 14,
1999. Basic and diluted weighted average shares outstanding were 3,856,000 and
3,876,000 for the three months ended March 31, 2001, and March 31, 2000,
respectively.


3. ALLOWANCE FOR LOAN LOSSES

The allowance for loan losses is established through a provision for possible
loan losses charged to expenses. Loans are charged against the allowance for
loan losses when management believes that the collectibility of the principal is
unlikely. The allowance is an amount that management believes will be adequate
to absorb possible loan losses on existing loans that may become uncollectible
based on evaluations of the collectibility of loans and prior loan loss
experience. The evaluations take into consideration such factors as changes in
the nature and volume of the loan portfolio, overall portfolio quality, the
status of specific problem loans and overall current economic conditions that
may affect the ability of borrowers to repay their loans. While management uses
available information to recognize losses on loans, future additions to the
allowance may be necessary based on changes in economic conditions. In addition,
various regulatory agencies, as an integral part of their examination processes,
periodically review the Bank's allowance for loan losses based on their
judgments about information available to them at the time of their examinations.


                                       7
<PAGE>

4.  RECENT PRONOUNCEMENTS

        None

5.  RECENT LITIGATION

During October 1998, one of the Bank's deposit customers (the "Bank Depositor")
had deposited approximately $1.3 million of dishonored money orders which
resulted in its account being deficient by a similar amount. The Bank has
initiated a lawsuit in the Court of Common Pleas of Philadelphia County against
the money order company which placed the stop payments on the money orders
issued by the Bank Depositor alleging, among other things, that the money orders
were improperly stopped and the Bank was a holder in due course and is therefore
entitled to reimbursement. The Bank is seeking reimbursement in the lawsuit. The
Bank has also initiated an involuntary bankruptcy proceeding against the Bank
Depositor in the United States Bankruptcy Court for the Eastern District of
Pennsylvania. The Bank is seeking to have a trustee preserve the assets of the
Bank Depositor in order that the Bank may receive partial reimbursement. An
order for relief under Chapter 7 of the Bankruptcy Code was granted on March 8,
1999. At March 31, 2001 the Company has a remaining receivable of $275,000
related to this matter. The Company believes its litigation has strong merit.


                                       8
<PAGE>



Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with the
consolidated financial statements and related notes appearing on the preceding
pages as well as in the Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 2000. Unaudited results of operations for the three and nine
month periods ended March 31, 2001 are compared to the unaudited results of
operations for the comparable periods ended March 31, 2000. Such information is
based upon the historical financial information available as of the dates
indicated. Results of operations for the three and nine month periods ended
March 31, 2001 are not necessarily indicative of results to be attained for any
other period.

Statements regarding the Company's expectations as to financial results and
other aspects of its business set forth herein or otherwise made in writing or
orally by the Company may constitute forward looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Although the
Company believes that its expectations are based on reasonable assumptions
within the bounds of its knowledge of its business and operations, there can be
no assurance that actual results will not differ materially from its
expectations. Factors that might cause or contribute to such differences
include, but are not limited to, uncertainty of future profitability, changing
economic conditions and monetary policies, uncertainty of interest rates, risks
inherent in banking transactions, the impact of the action to limit the Bank's
asset growth and any related future actions by the Office of Thrift Supervision
("OTS"), competition, extent of government regulations, and delay in or failure
in obtaining regulatory approvals.


GENERAL

The Company is a holding company operating a federally chartered savings bank.
The Bank conducts community banking activities by accepting deposits from the
public and investing the proceeds in loans and investment securities. The
Company's lending products include residential mortgages, home equity loans,
multi-family residential and non-residential real estate loans, SBA loans, and
secured property tax liens. As announced in December 2000, the Company has
discontinued its short-term consumer lending business during the quarter. In
order to manage its liquidity and interest rate risk, the Company maintains an
investment portfolio consisting of bonds and mortgage-backed securities, most of
which are investment quality. The Company's loan and investment portfolios are
funded with deposits as well as borrowings from the Federal Home Loan Bank of
Pittsburgh ("FHLB") or collateralized borrowings secured by the Company's
investment securities. The Company's earnings are largely dependent upon its net
interest income (the difference between what it earns on its loans and
investments and what it pays on its deposits and borrowings). In addition to net
interest income, the Company's net income is impacted by its loan loss
provision, non-interest income (mortgage banking revenue and loan, deposit and
ATM fees) and non-interest expenses (such as salaries and benefits, professional
fees, occupancy cost, deposit insurance premiums and expenses related to
mortgage operations).

As previously disclosed, the Company entered into an agreement during the
quarter pursuant to which Royal Bank of Pennsylvania will acquire substantially
all of the Company's assests and assume its liabilities. The closing of the
transaction, which is expected to occur prior to July 31, 2001, is subject to
regulatory approval and certain other conditions, including shareholder
approval, as set forth in the agreement. The Company anticipates that it will
distribute the available proceeds, net of closing costs, as soon as is
practicable following the settlement of the transaction.

FINANCIAL CONDITION

The Company's assets decreased to $384.9 million at March 31, 2001 compared to
$393.7 million at June 30, 2000. The decrease in assets primarily reflects a
$44.3 million decrease in loans receivable, partially offset by a $38.2 million
increase in cash and cash equivalents. At March 31, 2001, the loan portfolio
aggregated $276.6 million compared to $320.8 million at June 30, 2000. Loans
held for sale decreased to $9.0 million at March 31, 2001 as compared to $9.7
million at June 30, 2000. Cash and cash equivalents aggregated $55.6 million at
March 31, 2001 compared to $13.3 million at June 30, 2000. Deposits were $249.8
million at March 31, 2001 as compared to $243.3 million at June 30, 2000
reflecting primarily an increase in certificates of deposit. FHLB advances
decreased to $85.5 million at March 31, 2001 from $95.2 million at June 30,
2000. Shareholders' equity increased by $9.4 million due primarily to net income
generated during the period and a decrease of $1.0 million in unrealized losses
on securities available for sale. These increases were offset by $75,000 of
treasury stock purchases.

                                       9
<PAGE>

RESULTS OF OPERATIONS

Three months ended March 31, 2001 versus three months ended March 31, 2000. Net
income increased to $3.3 million for the three months ended March 31, 2001 as
compared to $1.9 million for the comparable prior period. Net interest income
increased by $1.4 million due to a $11.7 million increase in average earning
assets and an increase in the net yield on interest-earning assets to 6.47% as
compared to 5.14% in the prior year period. The increase in the net yield on
interest-earning assets is primarily attributable to an increase in short-term
consumer loan fees during the quarter. The provision for loan losses was
$539,000 for the three months ended March 31, 2001 as compared to $795,000 for
the prior period. Non-interest income decreased by $174,000 due primarily to a
decrease in mortgage banking revenues. Non-interest expenses were $1.4 million
in both the current and prior year periods. A reduction in mortgage banking
expenses of $149,000 was offset by an increase in core operating expenses of
$105,000.


Nine months ended March 31, 2001 versus nine months ended March 31, 2000. Net
income increased to $8.4 million for the nine months ended March 31, 2001 as
compared to $5.4 million for the comparable prior period. Net interest income
increased by $3.3 million due to a $38.4 million increase in average earning
assets and an increase in the net yield on interest-earning assets to 5.84% as
compared to 5.20% in the prior year period. The provision for loan losses
increased to $2.6 million for the nine months ended March 31, 2001 as compared
to $2.3 million for the prior year period. The increase relates to increased
short-term consumer lending activity. Non-interest income decreased by $731,000
due primarily to a decrease in mortgage banking revenues. The reduction in
mortgage banking revenues is consistent with the Company's strategy to
de-emphasize the origination and resale of nonconforming loans in the current
year. Non-interest expenses decreased to $4.0 million as compared to $4.4
million in the prior year period, due primarily to a $791,000 reduction in
mortgage banking expenses, partially offset by a $366,000 increase in core
operating expenses.

As a result of the 1999 OTS examination, the Bank has entered into a supervisory
agreement with the OTS effective April 26, 2000. Effective for the quarter ended
March 31, 2000, the Bank is required to limit its ongoing quarterly asset growth
based on the interest credited on its deposits each quarter and certain other
factors. The agreement also requires the Bank to enhance its policies and
procedures and its management, internal control and audit functions. As a result
of the OTS concens, the Bank has not originated any new commerical loans since
October 2000. In addition, the Bank has curtailed its purchase of new tax lein
certificates. The OTS has also expressed concern about and is investigating
certain possible violations of lending practices, including those with respect
to affiliates. There can be no assurance that the OTS will remove the asset
growth restriction in any particular time period or that the OTS will not impose
additional regulatory constraints on the Bank. Failure to comply with the
provisions of the supervisory agreement could expose the Bank to futher
regulatory sanctions that could have a material adverse effect on the Company.

As previously disclosed, the Bank has discontinued its short-term consumer
lending business. Income from this business segment for the quarters ended March
31, 2001 and 2000 was $1.5 million and $379,000, respectively, based upon the
assumptions as set forth in the Company's "Segment Information" disclosure in
its June 30, 2000 Annual Report on Form 10-K.



                                       10
<PAGE>


LIQUIDITY AND CAPITAL RESOURCES

A major source of the Company's asset growth has been funded through deposits,
mostly certificates of deposit ("CDs"), generated through the Bank's two branch
offices and a network of financial planners and brokers and FHLB advances.

The ability of the Bank to retain and attract deposits is dependent upon a
number of factors, including interest rates offered on the Bank's products.
Historically, most of the Bank's deposits have been in the form of CDs, which
typically provide for a higher interest rate than other bank deposit products,
such as checking and savings accounts. The Bank also funds its assets with
secured borrowings from the FHLB and collateralized borrowings secured by its
investment securities portfolio. These borrowings generally provide the Bank
with greater flexibility in matching the duration of its liabilities with that
of certain of its assets. Future availability of these funding sources is
largely dependent upon the Bank having sufficient available eligible assets to
collateralize these borrowings. The Bank's assets generally provide for
scheduled principal and interest payments which provide the Bank with additional
sources of funds. If required, additional funds could be obtained through the
sale of either loans or investment securities which are classified as
available-for-sale. The Bank has and will continue to utilize its investment
securities portfolio to manage liquidity.

The Bank's primary uses of funds are for the origination and acquisition of
loans, the funding of maturing deposits and the repayment of borrowings. Based
upon management's current business strategy, management believes that the
Company's income from operations and existing funding sources will be adequate
to meet its operating and growth requirements for the foreseeable future;
however, there can be no assurance that such strategy will not change or that
the implementation of the strategy will not require additional capital or
funding sources.

Net cash provided by operating activities for the nine months ended March 31,
2001 was $541,000 as compared to $27.1 million of net cash provided in the
comparable prior year period. The decrease in net cash provided by operating
activities primarily relates to the change in the level of loans
available-for-sale. Net cash provided by investment activities was $46.3
million, as compared to $87.6 million used for the prior year period. The change
primarily relates to the level of the Company's loan portfolio. Net cash used in
financing activities was $8.7 million for the nine months ended March 31, 2000
compared with $63.9 million provided by financing activities for the comparable
period last year. The change relates primarily to the change in Federal Home
Loan Bank advances.

The Bank monitors its capital level relative to its business operations and
anticipated growth and has continually maintained it at a level which would
allow it to be classified as "well-capitalized" under the Federal Deposit
Insurance Corporation Improvement Act ("FDICIA"). The Bank's capital growth
during the period presented has come primarily from internally generated
earnings.

The following table sets forth the Bank's regulatory capital levels at March 31,
2001. The Company is not subject to regulatory capital requirements.

<TABLE>
<CAPTION>

                                                       Required for        To Be Well Capitalized
                                                    Capital Adequacy          Corrective Action
                                 Actual                 Purposes                Provisions
                                 ------             ----------------       -----------------------
                                                   (Dollars in thousands)
                          Amount       Ratio       Amount       Ratio      Amount         Ratio
                          ------       -----       ------       -----      ------         -----
<S>                       <C>          <C>        <C>           <C>       <C>            <C>
Tangible capital          $42,044      11.05%     $ 5,708       1.50%     $19,028        5.00%
Core capital              $42,044      11.05%     $15,222       4.00%     $22,833        6.00%
Risk-based capital        $45,182      18.00%     $20,086       8.00%     $25,107       10.00%
</TABLE>



                                       11
<PAGE>




Item 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk. Interest rate risk is defined as the sensitivity of the
Company's current and future earnings and capital to changes in the level of
market interest rates. The Bank's exposure to interest rate risk results from,
among other things, the difference in maturities on interest-earning assets and
interest-bearing liabilities. Since the Bank's assets currently have a longer
maturity than its liabilities, the Bank's earnings could be negatively impacted
during a period of rising interest rates and conversely positively impacted
during a period of falling interest rates. The relationship between the interest
rate sensitivity of the Bank's assets and liabilities is continually monitored
by management. In this regard, the Bank emphasizes the origination of adjustable
rate assets for portfolio while originating longer term fixed rate assets for
resale. Additionally, the origination level of fixed rate assets are continually
monitored and if deemed appropriate, the Bank will enter into forward
commitments for the sale of these assets to ensure the Bank is not exposed to
undue interest rate risk.

The Bank utilizes its investment and mortgage-backed portfolio in managing its
liquidity and therefore generally seeks securities with a stated or estimated
duration of less than five years. These securities are readily marketable and
provide the Bank with a cash flow stream to fund asset growth or liability
maturities.

A significant portion of the Bank's assets have been funded with CDs, including
jumbo CDs. Unlike other deposit products such as checking and savings accounts,
CDs carry a high degree of interest rate sensitivity and therefore, their
renewal will vary based on the competitiveness of the Bank's interest rates. The
Bank has customarily priced its CDs to be competitive at the shorter maturities
(i.e., maturities of less than one year) in order to better match the repricing
characteristics of portfolio loans and the anticipated holding period for loans
held for sale.

The Bank utilizes borrowings from the FHLB and collateralized repurchase
agreements in managing its interest rate risk and as a tool to augment deposits
in funding asset growth. The Bank may utilize these funding sources to better
match its longer term repricing assets (i.e., between one and five years).

The nature of the Bank's current operations is such that it is not subject to
foreign currency exchange or commodity price risk. Additionally, neither the
Company nor the Bank owns any trading assets. At March 31, 2001, the Bank did
not have any hedging transactions in place, such as caps or floors.

Interest Rate Sensitivity Analysis. One measure of a bank's interest rate
sensitivity is through the use of a GAP analysis. Using a GAP analysis, the Bank
matches the extent to which its interest-earning assets and interest-bearing
liabilities mature or reprice within specified time horizons. The interest rate
sensitivity gap is defined as the excess of interest-earning assets maturing or
repricing within a specific time period over the interest-bearing liabilities
maturing or repricing within the same time period (a negative GAP for a
specified time period would indicate there are more liabilities than assets
maturing or repricing within that time period).

Gap analysis is a useful measurement of asset and liability management; however,
it is difficult to predict the effect of changing interest rates based solely on
this measure. An additional analysis required by the OTS and generated quarterly
is the OTS Interest Rate Exposure Report. This report forecasts changes in the
Bank's market value of portfolio equity ("MVPE") under alternative interest rate
environments. The MVPE is defined as the net present value of the Bank's
existing assets, liabilities and off-balance sheet instruments.

Management believes that the assumptions utilized in evaluating the
vulnerability of the Company's earnings and capital to changes in interest rates
approximate actual experience; however, the interest rate sensitivity of the
Bank's assets and liabilities as well as the estimated effect of changes in
interest rates on MVPE could vary substantially if different assumptions are
used or actual experience differs from the experience on which the assumptions
were based.

                                       12
<PAGE>

In the event the Bank should experience a mismatch in its desired GAP ranges or
an excessive decline in its MVPE subsequent to an immediate and sustained change
in interest rate, it has a number of options which it could utilize to remedy
such mismatch. The Bank could restructure its investment portfolio through sale
or purchase of securities with more favorable repricing attributes. It could
also emphasize loan products with appropriate maturities or repricing attributes
or it could attract deposits or obtain borrowings with desired maturities.


                                       13
<PAGE>


PART II. OTHER INFORMATION

Item 1. Legal Proceedings

There are various claims and lawsuits in which the Company or the Bank are
periodically involved, such as claims to enforce liens, condemnation proceedings
on properties in which the Bank holds security interests, claims involving the
making and servicing of real property loans, and other issues incident to the
Bank's business. In the opinion of management, there are no material pending
claims or lawsuits.

During October 1998, one of the Bank's deposit customers (the "Bank Depositor")
had deposited approximately $1.3 million of dishonored money orders which
resulted in its account being deficient by a similar amount. The Bank has
initiated a lawsuit in the Court of Common Pleas of Philadelphia County against
the money order company which placed the stop payments on the money orders
issued by the Bank Depositor alleging, among other things, that the money orders
were improperly stopped and the Bank was a holder in due course and is therefore
entitled to reimbursement. The Bank is seeking reimbursement in the lawsuit. The
Bank has also initiated an involuntary bankruptcy proceeding against the Bank
Depositor in the United States Bankruptcy Court for the Eastern District of
Pennsylvania. The Bank is seeking to have a trustee preserve the assets of the
Bank Depositor in order that the Bank may receive partial reimbursement. An
order for relief under Chapter 7 of the Bankruptcy Code was granted on March 8,
1999. At March 31, 2001 the Company has a remaining receivable of $275,000
related to this matter. The Company believes its litigation has strong merit.


Item 2. Changes in Securities and Use of Proceeds

               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)    Exhibits

                     Those exhibits previously filed with the Securities and
                     Exchange Commission as required by Item 601 of Regulation
                     S-K, are incorporated herein by reference in accordance
                     with the provision of Rule 12b-32.

               (B)    Reports on Form 8-K

                     On March 13, 2001, the Company filed an 8-K to report that
                     the Company executed an agreement pursuant to which Royal
                     Bank of Pennsylvania, a wholly-owned subsidiary of Royal
                     Bancshares of Pennsylvania, will acquire substantially all
                     of the Company's assets and assume substantially all of its
                     liabilities.


                                       14
<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.



                                           Crusader Holding Corporation


Date: May 11, 2001                    By:  /s/  Thomas J. Knox
                                           ----------------------------
                                           Thomas J. Knox
                                           Chairman and Chief Executive Officer
                                           (Principal Executive Officer)




Date: May 11, 2001                    By:  /s/  Robert C. Faix
                                           -----------------------------
                                           Robert C. Faix
                                           Senior Vice President and
                                           Chief Financial Officer
                                           (Principal Accounting and
                                           Financial Officer)




                                       15