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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                           WASHINGTON, D.C. 20549-1004

                                    FORM 10-Q


(Mark One)

[X]  Quarterly  report  pursuant  to  Section  13 or 15 (d)  of  the  Securities
     Exchange Act of 1934

     For the quarterly period ended December 31, 2000
                                    -----------------

                                       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 333-38673

                                 RB ASSET, INC.
                                 --------------
             (Exact name of registrant as specified in its charter)

Delaware                                                13-5041680
-------------------------------------------------------------------------------
(State or other jurisdiction                            (I.R.S. Employer
of incorporation or organization)                       Identification No.)


645 Fifth Avenue  Eight Floor, New York, New York       10022
-------------------------------------------------------------------------------
(Address of principal executive offices)                (Zip Code)

Company's telephone number, including area code:   (212)  848-0201
                                                   ---------------



  Securities registered pursuant to section 12(b) of the Act:       None
  Securities registered pursuant to section 12(g) of the Act:       None



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  periods 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
                                       ---    ---


The  number  of  shares  of the  Registrant's  Common  Stock,  $.01  par  value,
outstanding as of February 14, 2001 was  7,100,000.  The number of shares of the
Registrant's 15% Non-cumulative  Perpetual  Preferred Stock,  Series A, $.01 par
value, outstanding as of February 14, 2001 was 937,277.



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<PAGE>




                                 RB ASSET, INC.
                          QUARTERLY REPORT ON FORM 10-Q
                   FOR THE SIX MONTHS ENDED DECEMBER 31, 2000

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>

INDEX                                                                                                        PAGE
                                                                                                             ----
PART I.     FINANCIAL INFORMATION

            Item 1.   Financial Statements

<S>                       <C>                                                                                 <C>
                          Consolidated Statements of Financial Condition as of December 31, 2000
                          (unaudited) and June 30, 2000...........................................             1

                          Consolidated Statements of Operations for the three and six months ended
                          December 31, 2000 and 1999 (unaudited)..................................             2

                          Consolidated Statements of Changes in Stockholders' Equity for the six
                          months ended December 31, 2000 and 1999 (unaudited) ....................             3

                          Consolidated Statements of Cash Flows for the six months ended December
                          31, 2000 and 1999 (unaudited)...........................................             4

                          Notes to the Consolidated Financial Statements .........................             6

            Item 2.   Management's Discussion and Analysis of Financial Condition
                      and the Results of Operations ..............................................            12

            Item 3.   Quantitative and Qualitative Disclosures About Market Risk..................            18

PART II.    OTHER INFORMATION

            Item 1.   Legal Proceedings ...........................................................           19
            Item 2.   Changes in Securities .......................................................           20
            Item 3.   Defaults Upon Senior Securities .............................................           20
            Item 4.   Submission of Matters to a Vote of Securities Holders .......................           20
            Item 5.   Other Information ...........................................................           20
            Item 6.   Exhibits and Reports on Form 8-K ............................................           20

SIGNATURE..........................................................................................           21
</TABLE>


                                       -i-

<PAGE>




PART I.  FINANCIAL INFORMATION
Item 1.  Financial Statements

                                 RB ASSET, INC.
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                       December 31, 2000 and June 30, 2000
                             (dollars in thousands)
<TABLE>
<CAPTION>
                                     Assets
                                                                             (Unaudited)
                                                                             December 31,         June 30,
                                                                                 2000              2000
                                                                             ------------         --------
<S>                                                                      <C>                  <C>
Real estate assets:
Real estate held for investment, net of accumulated
   depreciation of $6,517 and $ 5,550 respectively                       $         104,080    $         99,321

Real estate held for disposal                                                        2,040               2,040
      Allowance for fair market value reserve under SFAS-121                           (40)                (40)
                                                                         -----------------   -----------------
           Total real estate held for disposal, net                                  2,000               2,000

Investments in joint ventures                                                        1,454               1,454
                                                                         -----------------   -----------------
     Total real estate assets                                                      107,534             102,775

Loans receivable:
      Secured by real estate                                                        32,288              32,339
      Commercial and consumer                                                        3,967               7,247
      Allowance for possible credit losses                                          (9,694)            (13,341)
                                                                         -----------------   -----------------
           Total loans receivable, net                                              26,561              26,245

Cash, due from banks and cash equivalents                                           32,715              33,666
Cash, due from banks - restricted                                                    7,500               7,500
Investment securities available for sale                                             1,260               1,170
Other assets                                                                         2,086               2,425
                                                                         -----------------   -----------------
        Total Assets                                                     $         177,656   $         173,781
                                                                         =================   =================

                      Liabilities and Stockholders' Equity

Increasing Rate Junior Subordinated Notes due 2006                       $          13,158   $          12,527
Borrowed funds                                                                      51,667              52,033
Other liabilities                                                                   13,459              12,379
                                                                         -----------------   -----------------
        Total Liabilities                                                           78,284              76,939
                                                                         -----------------   -----------------

Commitments and contingencies (Note 3)
Stockholders' equity:
15% non-cumulative preferred stock, series A par value $1,
liquidation value $25 (1,400,000 shares authorized, 937,277
issued and outstanding at December 31, 2000 and 937,777                                937                 938
issued and outstanding at June 30, 2000)

Common stock par value $1 (30,000,000 shares authorized,
7,100,000 shares issued and outstanding at December 31,
2000 and June 30, 2000)                                                              7,100               7,100

Additional paid in capital                                                         100,429             100,439
Accumulated deficit                                                                 (8,056)            (10,507)
Securities valuation account                                                        (1,038)             (1,128)
                                                                         -----------------   -----------------
        Total Stockholders' Equity                                                  99,372              96,842
                                                                         -----------------   -----------------
Total Liabilities and Stockholders' Equity                               $         177,656   $         173,781
                                                                         =================   =================
</TABLE>


See notes to Consolidated Financial Statements



                                        1

<PAGE>




                                 RB ASSET, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
             Three and Six Months Ended December 31, 2000 and 1999
                 (dollars in thousands, except per share data)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                   Three months ended                     Six months ended
                                                                      December 31,                          December 31,
                                                            --------------------------------      --------------------------------
                                                                 2000             1999                 2000             1999
                                                            ---------------  ---------------      ---------------  ---------------
<S>                                                          <C>             <C>                  <C>               <C>
Revenue:
Rental revenue and operations:
         Rental income and other property revenue            $        4,419  $         3,763      $         8,439   $        7,794
         Property operating and maintenance expense                  (3,081)          (2,784)              (5,653)          (5,499)
         Depreciation - real estate held for investment                (577)            (569)              (1,181)          (1,140)
                                                            ---------------  ---------------      ---------------  ---------------
     Net rental operations                                              761              410                1,605            1,155

Net gain on sale of real estate                                       3,141              994                3,979              963

Interest income:
         Loans receivable                                               403              237                  737              807
         Money market investments and other                             188              174                  382              346
                                                            ---------------  ---------------      ---------------  ---------------
     Total interest income                                              591              411                1,119            1,153

Gain on satisfaction of loan asset                                       --              429                   --              429

         Total revenues                                               4,493            2,244                6,703            3,700
                                                            ---------------  ---------------      ---------------  ---------------

Expenses:
   Interest expense:
         Increasing Rate Junior Subordinated Notes due 2006             321              291                  639              579
         Borrowed funds                                                 526              531                1,212            1,204
         Other                                                                             2                    3               10
                                                            ---------------  ---------------      ---------------  ---------------
              Total interest expense                                    847              824                1,854            1,793

   Other expenses:
         Salaries and employee benefits                                  64               47                  123               99
         Legal and professional fees                                    361              340                  660              542
         Management fees                                                595              578                1,186            1,156
         Other                                                           (8)              90                   78              236
                                                            ---------------  ---------------      ---------------  ---------------
              Total other expenses                                    1,012            1,055                2,047            2,033

         Total expenses                                               1,859            1,879                3,901            3,826
                                                            ---------------  ---------------      ---------------  ---------------


Income (loss) before provision for income taxes                       2,634              365                2,802             (126)

Provision for income taxes                                              124              182                  350              363
                                                            ---------------  ---------------      ---------------  ---------------

Net income (loss)                                                     2,510              183                2,452             (489)

Dividends declared on preferred stock                                    --               --                   --               --
                                                            ---------------  ---------------      ---------------  ---------------

Net income (loss) applicable to common stock                 $        2,510   $          183      $         2,452  $          (489)
                                                            ===============  ===============      ===============  ===============

Basic and diluted income (loss) per common share             $         0.35   $         0.03      $          0.35  $         (0.07)
                                                            ===============  ===============      ===============  ===============
</TABLE>



See notes to Consolidated Financial Statements

                                        2

<PAGE>




                                 RB ASSET, INC.
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                  Six months ended December 31, 2000 and 1999
                             (dollars in thousands)
                                   (Unaudited)


<TABLE>
<CAPTION>
                                       Series A
                                       Non-
                                       cumulative
                                       Perpetual                  Additional       Retained          Accumulated           Total
                                       Preferred       Common       Paid-in        Earnings         Comprehensive      Stockholders'
                                       Stock           Stock        Capital        (Deficit)        Income(Loss)          Equity
                                       ------------  ----------  -------------  ---------------  -------------------  -------------


<S>                                     <C>           <C>         <C>            <C>               <C>              <C>
Balances at June 30, 1999               $       938   $   7,100   $    100,439   $      (10,956)   $       (1,004)  $       96,517

Net loss for the six months ended
December 31, 1999                              --          --             --               (489)             --               (489)

Preferred stock dividends payable              --          --             --               --                --                --


Change in comprehensive income
resulting from changes in unrealized
loss on securities available-for-sale          --          --             --               --                (169)            (169)
                                       ------------  ----------  -------------  ---------------  ----------------  ---------------
Balances at December 31, 1999           $       938   $  7,100    $    100,439   $      (11,445)   $       (1,173)   $      95,859
                                       ============  ==========  =============  ===============  ================  ===============

Balances at June 30, 2000               $       938   $   7,100   $    100,439     $    (10,507)    $      (1,128)    $     96,842

Net income for the six months
ended December 31, 2000                        --           --            --              2,452              --              2,452


Reduction in Stockholders' Equity                (1)        --             (11)            --                --                (12)
resulting from Preferred Stock
Exchange

Change in comprehensive income
resulting from changes in unrealized
loss on securities available-for-sale          --           --            --               --                  90               90
                                       ------------  ----------  -------------  ---------------  ----------------  ---------------
Balances at December 31, 2000           $       937   $   7,100   $    100,428   $       (8,055)  $        (1,038)  $       99,372
                                       ============  ==========  =============  ===============  ================  ===============
</TABLE>


See notes to Consolidated Financial Statements

                                        3

<PAGE>




                                 RB ASSET, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                   Six Months Ended December 31, 2000 and 1999
                             (dollars in thousands)
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                                     Six months ended
                                                                                       December 31,
                                                                            ---------------------------------
                                                                                  2000              1999
                                                                            ---------------   ---------------
<S>                                                                           <C>               <C>
Operating Activities:
Cash flows provided by / (used in) Operating Activities:
  Net income / (loss)                                                         $       2,452     $        (489)
  Adjustments to reconcile net income (loss)  to cash provided by/
   (used in) operating activities:
      Net gain on sale of real estate assets                                         (3,979)             (963)
      Net gain on satisfaction of loan assets                                           --               (429)
      Depreciation and amortization                                                   1,181             1,140
      Amortization of capitalized issuance costs and accretion of
        issuance discount - Increasing Rate Junior Subordinated Notes
        due 2006                                                                         98                82
  Change in operating assets and liabilities:
      Net (increase) / decrease in accrued interest  receivable                          (2)              186
     Increase in accrued interest payable, net of accrued interest
         payable capitalized as additional principal - Increasing Rate Junior
       Subordinated Notes due 2006                                                      571               408
      Net increase / (decrease) in accrued income taxes                                 114              (281)
      Net increase / (decrease) in accrued expenses and
            other liabilities                                                           837              (944)
      Net decrease in prepaid expenses and other assets                                 341               886
      Cash effect of increases in allowance for possible credit losses                   --                76
                                                                            ---------------   ---------------
            Net cash (used in) / provided by operating activities                     1,613              (328)
                                                                            ---------------   ---------------

   Investing Activities:
   Cash flows provided by Investing Activities:
      Net repayment of loans secured by real estate, net                                 51            23,310
      Net (origination)/repayment of commercial and consumer loans                    (367)               509
   Proceeds from partnership distributions - investments in joint ventures              --                 24
   Proceeds related to sales of real estate held                                      9,894             1,472
   Additional fundings on real estate held                                          (11,776)           (1,063)
                                                                            ---------------   ---------------
            Net cash provided by / (used in) investing activities                    (2,198)           24,252
                                                                            ---------------   ---------------
</TABLE>


(Continued on next page)




See notes to Consolidated Financial Statements






                                        4

<PAGE>






                                 RB ASSET, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                       Six Months Ended December 31, 2000
                             (dollars in thousands)
                                   (Unaudited)

(Continued from previous page)


<TABLE>
<CAPTION>
                                                                                    Six months ended
                                                                                       December 31,
                                                                             -------------------------------
                                                                                  2000            1999
                                                                             -------------- ----------------
<S>                                                                           <C>            <C>
Financing Activities:
Cash flows used in Financing Activities:
  Increase in restricted cash                                                           --           (23,497)
  Proceeds from borrowed funds                                                        8,719              --
  Repayment of borrowed funds                                                        (9,085)             --
                                                                             -------------- ----------------
            Net cash (used in)/ provided by financing activities                       (366)         (23,497)
                                                                             -------------- ----------------

Net (decrease)/increase in cash, due from banks and cash
equivalents                                                                            (951)             427

Cash, due from banks and cash equivalents - beginning of period                      33,666           14,780
                                                                             -------------- ----------------

Cash, due from banks and cash equivalents - end of period                     $      32,715  $        15,207
                                                                             ============== ================



Supplemental Disclosure of Cash Flow Information
Cash paid for:
      Interest                                                                $       1,228  $        1,792
      Federal, state and local income and franchise taxes                               364             670

Supplemental Disclosure of Non-cash Transactions
Accrued interest capitalized as additional principal - Increasing Rate
Junior Subordinated Notes due 2006                                            $         518  $          487
</TABLE>







See notes to Consolidated Financial Statements


                                        5

<PAGE>


                                 RB ASSET, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 2000
                             (dollars in thousands)
                                   (Unaudited)

1.  Organization and Formation of the Company

RB Asset,  Inc.  (the  "Company")  is a  Delaware  corporation  whose  principal
business  is the  management  of its real  estate  assets,  mortgage  loans  and
investment  securities,  under a business plan intended to maximize  shareholder
value.   As  a  result  of  the   completion   of   reorganization   steps  (the
"Reorganization")  in the fiscal year ended June 30, 1998, the Company succeeded
to the assets,  liabilities  and business of River Bank America ("River Bank" or
the "Predecessor  Bank").  Unless the context otherwise requires,  references to
the  business,  assets and  liabilities  of the  Company  prior to May 22,  1998
include the business,  assets and  liabilities  of the  Predecessor  Bank.  This
report is for the six months ended December 31, 2000.

On May 22, 1998, under a plan that was approved by its stockholders,  River Bank
completed its  Reorganization  into a Delaware  corporation named RB Asset, Inc.
Prior to the  Reorganization,  River Bank was a New York State  chartered  stock
savings bank and was  regulated by the New York State Banking  Department  ("the
Banking  Department"  or the "NYSBD") and,  until December 31, 1997, the Federal
Deposit Insurance Corporation (the "FDIC").

In connection with the  Reorganization,  on June 23, 1998, the Predecessor  Bank
was dissolved and its legal existence  terminated.  Upon such  dissolution,  the
capital stock of River Bank was canceled and the stock transfer records of River
Bank were closed. On that date, common and preferred  stockholders of River Bank
received shares of RB Asset, Inc. on a  share-for-share  basis so that RB Asset,
Inc. was owned by the same  stockholders,  in the same proportions,  as owned by
the Predecessor Bank on the record date. The transfer of assets, liabilities and
business of River Bank to RB Asset,  Inc.  was expected to qualify as a tax-free
reorganization under the Internal Revenue Code and, as such, the Company expects
that certain tax attributes of the Predecessor Bank have been preserved.

On June 28, 1996, the Predecessor  Bank had consummated  the  transactions  (the
"Branch Sale")  contemplated by the Purchase of Assets and Liability  Assumption
Agreement (the "Branch  Agreement") by and between the Predecessor Bank and HSBC
Bank USA ("HSBC"),  a banking corporation formerly known as Marine Midland Bank.
Following  consummation of the Branch Sale, all retail banking operations of the
Predecessor  Bank ceased.  Pursuant to the terms of the Branch  Agreement,  HSBC
assumed  $1,159.6 million of deposit  liabilities  (the "Assumed  Deposits") and
acquired  assets  with an  aggregate  carrying  value of $1,066.6  million  (the
"Transferred  Assets").  The  Transferred  Assets  consisted  primarily of loans
secured by real estate,  mortgage-backed and investment securities,  and 11 bank
branch offices,  inclusive of the name East River Savings Bank.  Included in the
Transferred  Assets  was  approximately  $32.4  million  of loans  in which  the
Predecessor Bank was granted subordinated participation interests. Also included
in the Transferred Assets were the proceeds of dispositions from five individual
asset sale transactions with parties other than HSBC, aggregating $60.4 million,
composed of real estate  assets,  loans and other  receivables  (the "Asset Sale
Transactions").  The Asset Sale  Transactions were structured to include ongoing
recourse  to, and  participation  by, the  Predecessor  Bank with respect to the
assets sold,  based upon the net proceeds  realized on  disposition of assets by
the purchasers.

At June 30,  1996,  the  Predecessor  Bank  retained  $285.5  million in assets,
including primarily real estate assets and non-performing  loans. The balance of
the assets  retained  after the Branch Sale  primarily  consisted of  performing
loans (including loans sold with recourse,  subordinated participations,  junior
subordinated  participations,  loans to facilitate the sale of real estate owned
and  mortgage  and  other  loans)  and a modest  amount  of cash and  investment
securities  (collectively,  the  "Retained  Assets").  Over the five year period
preceding  the  Branch  Sale,  the Bank's  primary  loan  origination  focus was
single-family (one-to-four units) and, to a lesser extent, multi-family (five or
more  units)  residential  loans  secured  by  properties  in the New York  City
metropolitan area.  Primarily as a result of conditions imposed by the NYSBD and
the terms of the HSBC  Facility,  subsequent to June 28, 1996,  the  Predecessor
Bank and the Company have not originated a material amount of loans.



                                        6

<PAGE>


                                 RB ASSET, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 2000
                             (dollars in thousands)
                                   (Unaudited)

Following the Branch Sale, the Company engaged RB Management Company, LLC (the
"Management Company") to manage its operations on a day-to-day basis, including
developing and recommending strategies to the Company's Board of Directors
regarding the ongoing management of assets. The Management Company is a
privately-owned entity that was newly formed in June 1996 and is controlled by
Alvin Dworman, who owns 39.8% of the outstanding Common Stock of the Company.
The Management Company was engaged pursuant to a Management Agreement (the
"Management Agreement") with an initial term expiring on June 30, 2001. In
December, 2000 the Board of Directors of the Company renewed the Management
Agreement for a term of an additional five years on essentially similar terms as
the initial Management Agreement.

At the time of the closing of the Branch Sale,  the  Predecessor  Bank  obtained
from HSBC a loan facility  (the  "Facility")  consisting  of eleven  independent
mortgage  loans  with  additional   collateral,   in  an  aggregate   amount  of
approximately  $100.0  million.  The  Facility  has been  reduced  by  repayment
activity to $39.2 million at December 31, 2000.

On January 31, 2000,  the Company  completed a  refinancing  of the  outstanding
balance of the existing HSBC Facility.  Under the terms of the  refinancing  the
principal  balance  was  reduced by $1.3 to $49.5  million  and the terms of the
refinancing  provide for  amortization  of the HSBC  Facility  over a term of 20
years and extended the maturity of the HSBC Facility  through  January 31, 2005.
The  HSBC  Facility  is  secured  by a  first  lien on two  properties,  certain
cooperative  shares and a  restricted  cash  collateral  account  (the  "Special
Collateral")  in the  amount  of $7.5  million.  Under  the  terms  of the  HSBC
Facility,  HSBC has  retained  the right to  approve  declaration  or payment of
dividends  on  the   Company's   Preferred   Stock  as  well  as  other  capital
transactions.

As a consequence of the  refinancing of the HSBC Facility,  all loan  collateral
under the previous Facility agreement, other than specified above, including all
cash balances held by HSBC in excess of the $7.5 million Special  Collateral was
released from all liens held by HSBC.

The Predecessor Bank had previously received notice that the approvals necessary
to declare or pay dividends on the Predecessor  Bank's outstanding shares of 15%
noncumulative  perpetual  Preferred  Stock,  Series A, par value $1.00 per share
("Predecessor  Preferred  Stock")  would  not be  provided.  In June  1996,  the
Predecessor  Bank's Board of Directors  declared a Predecessor  Preferred  Stock
dividend for the quarter  ending June 30, 1996,  payment of which was subject to
the receipt of required  approvals from the FDIC and the NYSBD (the  Predecessor
Bank's regulators at the time), as well as HSBC (the Predecessor  Bank's and the
Company's  principal  lender).  Primarily as a result of the above,  neither the
Company's or the  Predecessor  Bank's  Board of Directors  have taken any action
regarding  a  quarterly  dividend  on the  Predecessor  Preferred  Stock  or the
Company's 15% noncumulative perpetual preferred stock, Series A, $1.00 par value
("Company  Preferred  Stock")  for  any  of the  quarterly  periods  ended  from
September 30, 1996 through December 31, 2000.  Although the Company is no longer
subject to the  jurisdiction  of either the FDIC or the  NYSBD,  declaration  or
payment of future  dividends on the Company  Preferred Stock will continue to be
subject to the approval of HSBC for so long as the Facility remains outstanding.
The Company has received notice from HSBC that the approval necessary to declare
or pay  dividends  on the Company  Preferred  Stock will not be provided at this
time.  There can be no assurance that the Board of Directors of the Company will
deem it appropriate  to pay dividends on the Company  Preferred  Stock,  even if
permitted to do so by HSBC.

The  Company  is  subject  to the  information  requirements  of the  Securities
Exchange Act of 1934 (the "Exchange  Act") as amended and is presently  required
to file periodic  reports and other  information  with the  Securities  Exchange
Commission (the "SEC").

During the six months ended December 31, 2000,  the Company  reported net income
applicable  to common  shares of $2.5  million or $0.35 per  share.  Significant
factors  contributing to the Company's  operating  results during this six month
period  include  rental  income from real estate  operations of $8.4 million and
gains on the sale of real estate of $4 million,  partially offset by real estate
property and maintenance expenses of $5.6 million, a net interest loss (interest
expense on  borrowed  funds in excess of interest  income  from loan  assets) of
$735,000,  other operating  expenses of $2.0 million,  depreciation  expenses of
$1.2 million and provision for income taxes of $350,000.

                                        7

<PAGE>


                                 RB ASSET, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 2000
                             (dollars in thousands)
                                   (Unaudited)



2.  Presentation of Interim Financial Statements

The  accompanying  unaudited  consolidated  financial  statements of the Company
include  all  adjustments  which  management   believes  necessary  for  a  fair
presentation  of the  Company's  financial  condition at December 31, 2000,  the
results of its  operations  for the three and six months ended December 31, 2000
and 1999 and the statements of changes in stockholders'equity and cash flows for
the six months  ended  December 31, 2000 and 1999.  Adjustments  are of a normal
recurring nature.  These unaudited  consolidated  financial statements have been
prepared in conformity with the accounting principles and practices in effect as
of December 31, 2000, as set forth in the consolidated  financial  statements of
RB Asset, Inc., at such date. These unaudited  consolidated financial statements
should be read in conjunction with the audited consolidated financial statements
of RB Asset, Inc. as of June 30, 2000.

The consolidated financial statements include the accounts of RB Asset, Inc. and
its wholly-owned subsidiaries.  Intercompany balances and transactions have been
eliminated in  consolidation.  Due to the anticipated  short-term nature of such
investments,  unconsolidated  real estate  partnerships are generally carried at
cost,  subject  to  periodic  assessment  of fair  value.  Losses  on  sales  or
dispositions and any adjustments  related to  redetermination  of fair value are
charged,  as real estate  charge-offs  to operations of the period in which such
charges occurred.

In the opinion of management,  the accompanying unaudited consolidated financial
statements  contain  all  adjustments   (consisting  of  only  normal  recurring
accruals)  necessary for a fair presentation of the Company's financial position
as of December 31, 2000,  the results of operations for the three and six months
ended December 31, 2000 and 1999, and changes in  stockholders'  equity and cash
flows for the six months ended December 31, 2000 and 1999.

In preparing the consolidated  financial  statements,  management is required to
make estimates and  assumptions  that affect the reported  amounts of assets and
liabilities  as of  the  dates  of  the  consolidated  statements  of  financial
condition  and   operations  for  the  period.   Material   estimates  that  are
particularly  susceptible to significant  change in the near-term  relate to the
determination  of the allowance for possible  credit losses and the valuation of
investments in real estate.

Management  believes that the  allowance for possible  credit losses is adequate
and that loans  secured by real estate and real estate held for  investment  are
properly  valued.  While  management  uses  available  information  to establish
reserves,  future additions to the allowance or write downs of other real estate
owned or real estate held for  investment  may be necessary  based on changes in
economic conditions, as well as changes in management strategies.

Management  determines  the  appropriate   classification  of  debt  and  equity
securities  (collectively,  "marketable" securities) at the time of purchase and
reevaluates such  designation as of each balance sheet date.  Available-for-sale
securities are stated at estimated fair value, with unrealized gains and losses,
net of tax, reported in a separate  component of stockholders'  equity. The cost
of  marketable  securities  classified  as  available-for-sale  is adjusted  for
amortization   of  premiums  and  accretion  of  discounts  to  maturity.   Such
amortization  is included in interest  income  from  investments.  Interest  and
dividends are included in interest income from  investments.  Realized gains and
losses, and declines in value judged to be other-than- temporary are included in
net  securities  gains and losses.  The cost of securities  sold is based on the
specific   identification   method.   At  December  31,  2000,  the  balance  of
stockholders'  equity  included  a  cumulative  $1,038,250  unrealized  loss  on
marketable securities classified as available-for-sale.

The provision for income taxes differs from the amount  computed by applying the
statutory  Federal income tax rate of 35% to the income (loss) before  provision
for income taxes primarily due to state and local income and franchise taxes and
limitations  on the  recognition  of tax benefits of net  operating  losses.  At
December  31, 2000,  the Company  reviewed  its  potential  current and deferred
federal and state tax  liabilities in light of the results of operations for the
Company since June 30, 2000. As a result of this analysis, the

                                        8

<PAGE>


                                 RB ASSET, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 2000
                             (dollars in thousands)
                                   (Unaudited)

Company  recognized  income tax  expense in the amount of  $124,000,  during the
quarter ending December 31, 2000.



For the purpose of the statements of cash flows, cash equivalents are defined as
those amounts included in cash and due from banks and money market investments.

Certain  reclassifications  have  been  made  to  the  prior  year  consolidated
financial statements to conform to the current year presentation.


3.  Commitments and Contingencies

At December  31, 2000,  the Company had deferred tax assets that were  primarily
attributable  to NOLs,  an  allowance  for loan  losses  and  suspended  passive
activity  losses and  credits  which  were  partially  offset by a deferred  tax
liability  in  its  consolidated  financial  statements.  However,  a  valuation
allowance was set up equal to the amount of the difference between the tentative
deferred  tax  asset  and  the  tentative  deferred  tax  liability  due  to the
uncertainty  of the Company's  ability to utilize the deferred tax assets in the
future. Accordingly, neither a net overall asset nor a net overall liability was
reflected in the Company's consolidated financial statements.

Under current tax law, the Company's  ability to utilize certain tax benefits in
the future may be limited in the event of an  "ownership  change," as defined by
the Internal  Revenue Code Section 382 and the  regulations  thereunder.  In the
event  that the  Reorganization  in Note 1 were to be deemed to be an  ownership
change,  or if,  transactions in the Company's  capital stock  subsequent to the
Reorganization result in an ownership change, the subsequent  utilization of net
operating loss  carryforwards,  suspended  passive  activity losses and credits,
alternative  minimum tax credit  carryforwards and certain other built-in losses
would  be  subject  to  an  annual  limitation  as  prescribed  by  current  tax
regulations.  The application of this limitation could have a material effect on
the Company's ability to realize its deferred tax assets.  The Company is of the
view that no ownership  change of the Company will be deemed to have occurred as
a result of the Reorganization or otherwise. However, the application of Section
382  is  in  many  respects  uncertain.   In  assessing  the  effects  of  prior
transactions and of the  Reorganization  under Section 382, the Company has made
certain legal  judgments and certain  factual  assumptions.  The Company has not
requested or received  any rulings from the IRS with respect to the  application
of Section 382 to the  implementation  of the  Reorganization  and the IRS could
challenge the Company's determinations.

In the normal course of the Company's  business,  there are outstanding  various
claims, commitments and contingent liabilities.  The Company also is involved in
various other legal  proceedings  which have occurred in the ordinary  course of
business. Management, based on discussions with legal counsel, believes that the
Company will not be materially  affected by the actions of any outstanding legal
proceedings.  However,  there can be no  assurance  that any  outstanding  legal
proceedings  will not be decided  adversely  to the  Company and have a material
adverse  effect on the financial  condition and the results of operations of the
Company. See Note 6.


4.  Earnings per share

Earnings per share were based upon 7,100,000  weighted  average shares of Common
Stock  outstanding  during the three and six months ended  December 31, 2000 and
1999,  respectively.  The  Company  had  no  securities  outstanding  that  were
convertible to common stock at December 31, 2000 or 1999.


5.  Comprehensive Income

As of July 1, 1998, the Company  adopted  Statement of Accounting  Standards No.
130, "Reporting  Comprehensive  Income " ("SFAS-130").  SFAS-130 establishes new
rules for the reporting and display of

                                        9

<PAGE>


                                 RB ASSET, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 2000
                             (dollars in thousands)
                                   (Unaudited)

comprehensive income and its components. However, the adoption of this Statement
has had no effect on the Company's net income or stockholders' equity.  SFAS-130
requires  unrealized  gains  or  losses  on  the  Company's   available-for-sale
securities,  which prior to adoption were reported  separately in  shareholders'
equity, to be included in other comprehensive income.

During the three months ended  December 31, 2000 and 1999,  total  comprehensive
income  (loss) was $2,454 and $161,  respectively.  During the six months  ended
December 31, 2000 and 1999,  total  comprehensive  income  (loss) was $2,542 and
$(658),   respectively.   The  following   table  describes  the  components  of
comprehensive  income  and  accumulated   comprehensive  income  for  the  dates
indicated:


<TABLE>
<CAPTION>

         Components of Comprehensive Income (Loss)
         (Unaudited):
                                                                      Three months ended December 31,
                                                                        2000                     1999
                                                                  -----------------        ----------------

<S>                                                               <C>                       <C>
         Net income / (loss)                                      $           2,510         $          183
         Unrealized losses on securities                                        (56)                   (22)
                                                                  -----------------        ----------------
         Comprehensive income / (loss)                            $           2,454         $          161
                                                                  =================        ================

                                                                       Six months ended December 31,
                                                                        2000                     1999
                                                                  -----------------        ----------------

         Net income / loss                                        $           2,452         $         (489)
         Unrealized gains / (losses) on securities                               90                   (169)
                                                                  -----------------        ----------------
         Comprehensive income / (loss)                            $           2,542         $         (658)
                                                                  =================        ================

         Components of Accumulated Comprehensive
         Income (Unaudited):
                                                                    December 31,             December 31,
                                                                        2000                     1999

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

         Unrealized losses on securities                           $         (1,038)       $        (1,173)
                                                                  -----------------        ----------------
         Accumulated comprehensive income (loss)                   $         (1,038)       $        (1,173)
                                                                  =================        ================
</TABLE>


6.  Legal Proceedings


The Company is involved in various legal  proceedings  occurring in the ordinary
course  of  business.  Management  of the  Company,  based on  discussions  with
litigation  counsel,  believes  that such  proceedings  will not have a material
adverse  effect on the financial  condition or operations of the Company.  There
can be no assurance that any of the outstanding  legal  proceedings to which the
Company is a party will not be decided adversely to the Company's  interests and
have a material adverse effect on the financial  condition and operations of the
Company.

By letter,  dated May 22,  1998,  counsel for  certain  holders of shares of the
Company's  Preferred Stock advised the Company that such holders objected to the
Reorganization.  Specifically,  such counsel alleged that the Reorganization (I)
constituted a  "liquidation"  of River Bank America in violation of the terms of
the

                                       10

<PAGE>


                                 RB ASSET, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 2000
                             (dollars in thousands)
                                   (Unaudited)

certificate of  designations  of the  Predecessor  Preferred Stock by failing to
provide for the payment to the holders of the Predecessor Preferred Stock of the
liquidating  distribution  required by the certificate of designations of $25.00
per share, plus all accrued,  undeclared and unpaid dividends thereon,  (ii) was
illegal under the New York Banking Law (the "NYBL") which provides,  in the case
of a voluntary  liquidation,  that the liquidating  corporation shall distribute
its remaining assets among its shareholders according to their respective rights
and interests, (iii) violated a commitment made in River Bank's proxy statement,
dated May 13, 1996, to retire the Predecessor Preferred Stock following approval
and  finalization  of the sale of certain of its branches and assets to HSBC and
(iv) constituted a breach of duty owed by River Bank's Board of Directors to the
holders of the Predecessor Preferred Stock.

The Company believed such allegations were without merit.  However, in an effort
to resolve these claims on an amicable basis, representatives of the Company and
such  holders  had  discussed  from time to time since the date of such  letter,
certain proposals under which the Company would offer to exchange a new security
for the Company  Preferred  Stock.  In October,  1998,  the Company  proposed to
representatives  of such holders to effect an exchange offer upon  substantially
the terms and conditions of the Exchange  Offer. On October 27, 1998, 11 holders
of Company  Preferred Stock who claimed to  beneficially  own, in the aggregate,
849,000  shares  (approximately  60.6% of the  outstanding  shares)  of  Company
Preferred  Stock (the  "Organized  Group")  commenced a lawsuit  entitled Strome
Global  Income Fund et al. v. River Bank America et. al. ( the  "Complaint" ) in
Supreme Court of the State of New York,  County of New York, Index No. 605226198
(the "Action" ), against the Company, certain of its predecessors and certain of
its  directors  (collectively,  the  "Defendants").  The complaint in the Action
alleged  (the  "Allegations"),  among  other  things,  that  (i) the  Defendants
breached the certificate of designations  relating to the Predecessor  Preferred
Stock  by  fraudulently  transferring  assets  of River  Bank  and by  illegally
amending the  certificate  of  designations,  (ii) the  Defendants  fraudulently
conveyed  the  assets  of  River  Bank,  thereby  depriving  the  holders  of  a
liquidating distribution,  (iii) the Defendants violated the NYBL by liquidating
River Bank without making the liquidating  distribution required by the NYBL and
by denying  holders  appraisal  rights to which they were  entitled by the NYBL,
(iv) the Defendants  breached their  fiduciary duty to holders by depriving them
of their  liquidating  distribution,  (v) the defendants  breached their duty of
disclosure  by omitting from the Proxy  Statement  dated March 27, 1998 material
facts  relating to the holders'  rights to receive a  liquidating  distribution,
their appraisal rights for their shares and the requirement that holders vote as
a class with respect to the amendment of the certificate of  designations,  (vi)
the  Defendants'  implementation  of the  liquidation  of  River  Bank  and  the
amendment  of the  certificate  of  designations  were ultra vires and should be
declared void and (vii) the  intentionally  tortious  nature of the  Defendants'
conduct bars them from seeking indemnification for their actions and, therefore,
the Defendants  should be enjoined from seeking  indemnification  for damages or
attorney's fees relating to the action.

The Company  believes  that the  Allegations  are  without  merit and intends to
vigorously oppose the Action. Consequently, the Company and the other defendants
responded to the Action by filing a motion to dismiss on December 21, 1998 which
was argued before the court on March 23, 1999.  The court issued its decision on
December 2, 1999.  The court granted in part the Company's  motion and dismissed
the causes of action based upon fraudulent conveyance, breach of fiduciary duty,
breach of duty of  disclosure  and ultra vires acts and ordered the remainder of
the Action to continue.  Both the Plaintiffs  and the Defendants  have completed
discovery and filed motions for summary  judgement on June 29, 2000. The motions
remain pending before the court.








                                       11

<PAGE>



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

Financial Condition:

At December 31, 2000,  the  consolidated  assets of the Company  totaled  $177.7
million,  an increase of $3.9 million, or 2.2%, as compared with total assets at
June 30, 2000.

Real estate held for investment, net of accumulated depreciation, increased $4.7
million,  or 4.8%,  from  $99.3  million  at June 30,  2000 to $104  million  at
December  31,  2000.  The  increase in real estate held for  investment,  net of
accumulated  depreciation  at December 31, 2000 as compared  with the balance at
June 30, 2000, was primarily attributable to funding for capital improvements of
$9 million,  partially  offset by reductions in carrying value  attributable  to
sales of $3.3 million and accumulated depreciation of $1 million.

Real estate held for  disposal,  net of allowance  for fair market value reserve
under Statement of Accounting  Standards No. 121 (SFAS-121),  remained unchanged
at  December  31, 2000 from the balance of $2.0  million at June 30,  2000.  The
balance  categorized  as real estate held for  disposal at December 31, 2000 are
apartment units which are expected to be sold within the next twelve months.

Total loans, net of the related allowance for possible credit losses,  increased
$316,000,  or 1.2%,  from  $26.2  million at June 30,  2000 to $26.5  million at
December 31, 2000. The $316,000  increase in real estate loans,  net, during the
six  months  ended  December  31,  2000,  was  primarily   attributable  to  the
origination  of a  $900,000  commercial  real  estate  loan,  offset  by  normal
scheduled principal repayments.

The Company's  allowance for possible  credit losses related to loans secured by
real  estate  decreased  by $3.6  million  from a balance  of $13.3  million  at
December 31, 2000.  This decrease in loan loss reserves was  proportionate  with
the  corresponding   decrease  in  the  Commercial  and  Consumer  Loans,  which
represented  the write off of a fully  reserved  commercial  loan. The Company's
allowance for possible  credit losses is maintained at a level which  management
considers  adequate based on its periodic  review of the Company's loans secured
by  real  estate   portfolios  and  certain   individual   loans,   taking  into
consideration, among other things, the likelihood of repayment, the diversity of
the borrowers,  the type of loan, the quality of the collateral,  current market
conditions  and the  associated  risks.  At December 31, 2000, the allowance for
possible credit losses was 26.8% of total loans as compared to 33.7% at June 30,
2000.

Cash, due from banks and cash equivalents  decreased by $951,000, or 2.82%, from
$33.7  million at June 30,  2000 to $32.7  million at  December  31,  2000.  The
decrease in cash, due from banks and cash equivalents was primarily attributable
to the voluntary  debt  reduction of $7.5 million offset by a positive cash flow
from total operating  revenues and available asset sales proceeds less scheduled
asset fundings and the payment of operating expenses.

At December 31, 2000, HSBC had restricted a total of $7.5 million in funds, held
on  deposit at HSBC,  in  accordance  with the terms of the Branch  Sale and the
Facility  agreements.  HSBC  had  restricted  $7.5  million  at June  30,  2000.
Restricted  funds held by HSBC are not available to the Company for  settlements
of any of the Company's current obligations.  The restricted cash reserves arose
from the sale of assets which had served as primary or  supplemental  collateral
for the HSBC Facility.  The restricted cash held by HSBC is intended to serve as
substitute  collateral  for the  HSBC  Facility,  until  such  time as the  HSBC
Facility is reduced in accordance with the Company's  Asset  Management Plan and
the HSBC Facility Agreements. See "Liquidity and Capital Resources," below.

Borrowed funds decreased by $366,000 or .7% from $52 million at June 30, 2000 to
$51.6 million at December 31, 2000. The decrease was primarily attributable to a
voluntary  debt  reduction  payment of $7.5 million and regular  scheduled  debt
reduction payments of $1.5 million,  partially offset by additional borrowing of
$8.7 million on the construction loan facility.

During the six months  ended  December  31,  2000,  total  stockholders'  equity
increased by $2.5, or 7.9%, to $99.3 million,  as compared with $96.8 million at
June 30,  2000.  This  increase  was due to the net income  recorded for the six
months ended December 31, 2000 in the amount of $2.45 million and an increase in
the securities  valuation account (allowance for unrealized losses on marketable
securities) of $90,000.




                                       12

<PAGE>



The following  table  summarizes the calculation of the Company's book value per
share at December 31, 2000 and June 30, 2000.

<TABLE>
<CAPTION>
                                                          December 31,                June 30,
                                                              2000                      2000
                                                        -----------------         ----------------

<S>                                                     <C>                       <C>
Total stockholders' equity                              $      99,372,000         $     96,842,000

   Less: liquidation value of preferred stock
      ($25 per share issued and outstanding)                   23,432,000               23,444,000
                                                        -----------------         ----------------
Net stockholders' equity                                $      75,940,000         $     73,398,000
                                                        =================         ================

Total shares of Common Stock issued and
     outstanding                                                7,100,000                7,100,000
                                                        =================         ================

     Book value per share                               $           10.70         $          10.34
                                                        =================         ================
</TABLE>



Results of Operations:

General.  The Company reported net income  attributable to common shares of $2.5
million,  or $0.35 per basic  and  diluted  share,  for the three  months  ended
December  31,  2000,  an  increase  of $2.3  million,  compared  with net income
attributable  to common  shares of $183,000,  or $0.03 per share,  for the three
month  period  ended  December  31,  1999.  The  Company   reported  net  income
attributable  to common shares of $2.4 million,  or $ 0.35 per basic and diluted
share,  for the six months ended  December 31, 2000, an increase of $2.9 million
as compared with a net loss attributable to common shares of $488,000,  or $0.07
per share, for the six month period ended December 31, 1999.

The primary  reason for the increase in the Company's net operating  results for
the quarter  ended  December  31,  2000,  as compared to the same quarter in the
previous  year,  was an  increase  in net  revenue  from  rental  operations  of
$351,000,  or  85.6%  and the  effects  of  increased  sales  and net  gains  on
dispositions of real estate held for sale which increased $2.1 million.

The primary  reason for the increase in the Company's net operating  results for
the six months ended  December  31, 2000,  as compared to the same six months in
the  previous  year,  was the  effects  of  increased  sales  and net  gains  on
dispositions  of real  estate  held for sale which  increased  $3 million and an
increase  in  net  revenues  from  operations  of  $450,000  or  39%.  Partially
offsetting this increased  income was an increase in net interest loss (interest
expense on  borrowed  funds in excess of interest  income  from loan  assets) of
$100,000. In addition,  there was a $429,000 gain on satisfaction of loan assets
recognized in the six month period ended December 31, 1999.

Net Rental Operations.  For the three months ended December 31, 2000, net rental
operations  resulted in income of $761,000,  an increase of $351,000,  or 85.6%,
from $410,000 for the same three month period in the previous  year. For the six
months ended December 31, 2000, net rental operations resulted in income of $1.6
million,  an increase of $449,000 from the $1.15  million  recorded for the same
six month period in the  previous  year.  The  increase in net rental  operating
revenue for the three month period  ended  December 31, 2000 and the increase in
the income  recorded from net rental  operations  for the six month period ended
December 31, 2000, as compared with the same periods in the previous year,  were
due to various,  individually  immaterial  operating factors affecting aggregate
rental income and expenses within the Company's rental properties.

Net Gain on the Sale of Real Estate  Assets.  Net gain on sale of real estate of
$3.1 million was recorded for the quarter  ended  December 31, 2000, an increase
of $2.1  million,  as compared with the net gains on sale of real estate held of
$1 million in the quarter ended December 31, 1999.


                                       13

<PAGE>



For the quarter ended December 31, 2000, there was a gain on sale of real estate
held for  investment  of $5.6  million,  offset  by the  cost of a $2.5  million
construction  warranty  liability  settlement,  net of  recoveries  for  related
insurance  coverage.  The  resulting  net  gain of $3.1  million  was  primarily
attributable  to the sale of $8.8  million of real  estate  held for  investment
which had a carrying value of $3.2 million. Included in the sale of $8.8 million
was $834,000 which was related to the sale of 2 co-operative units at one of the
Company's  multi-family housing projects with a carrying value of $174,000,  for
which a gain in the amount of  $660,000  was  recognized  and the sale of one of
three buildings of an office complex real estate  investment in Atlanta,  GA for
approximately  $8 million  which had a carrying  value of $3 million for which a
gain of $5 million was recognized.

Interest  Income.  For the three months ended December 31, 2000,  total interest
income was $591,000,  an increase of $180,000,  or 43.8%, from $411,000 recorded
for the same quarter in the previous year. Loan interest increased $166,000,  or
70.4%,  from $237,000 in the quarter ended December 31, 1999 to $403,000 for the
same quarter in the current year.  This increase in loan interest income was due
to the  acquisition of an additional  performing loan through the asset swap and
purchase agreement with HSBC on January 31, 2000. The additional interest income
on this  particular  loan is partially  offset by a reduced  average balance for
loan assets resulting from satisfactions and the effects of normal  amortization
and repayment activity.

For the three months ended December 31, 2000, loan interest income was $403,000,
an increase of  $166,000,  or 70%,  from  $237,000  for the same  quarter in the
previous  year.  The $166,000  increase in loan  interest  income in the quarter
ended December 31, 2000, as compared with the same quarter in the previous year,
was primarily  due to the  acquisition  of a performing  loan in the January 31,
2000 HSBC Asset swap and purchase agreement.

In addition to the  increase in loan  interest  income in the three months ended
December 31, 2000,  as compared with the same three month period in the previous
year, there was an increase in other interest income to $188,000, an increase of
$14,000,  or 8.1%, in the quarter ended December 31, 2000 as compared with other
interest  income of $174,000  recorded in the quarter  ended  December 31, 1999.
Other interest income increased  $36,000 for the six month period ended December
31, 2000 or 10.4% from  $346,000 in the same quarter of the previous year to the
six month period ended December 3,1, 2000. The increase in other interest income
was due to an increase in the average balance of funds held in  interest-bearing
money  market  accounts  during both the quarter and the six month  period ended
December 31, 2000 as compared  with the same quarter and six month period in the
previous year.

Interest  Expense.  During the three months ended December 31, 2000, the Company
recorded interest expenses in the amount of $847,000, an increase of $23,000, or
2.8%, as compared with interest  expenses of $824,000 in the same quarter of the
previous year.  Interest expense for borrowed funds declined  $19,000,  or 3.5%,
from  $545,000 in the quarter  ended  December 31, 1999 to $526,000 for the same
quarter in the current year. This decline in interest  expense on borrowed funds
was partially  offset by the recognition of $321,000 in interest expense related
to the Company's Increasing Rate Junior Subordinated Notes due 2006.

During the six months ended  December 31, 2000,  the Company  recorded  interest
expense in the amount of $1.85  million,  an increase of  $61,000,  or 3.4%,  as
compared with  interest  expense of $1.8 million in the same six month period of
the previous year. This increase in interest expense was primarily  attributable
to the  recognition  of  $639,000,  an increase of $60,000 or 10.3% from the six
month period in the previous year, in interest  expense related to the Company's
Increasing  Rate  Junior  Subordinated  Notes due  2006.  Interest  expense  for
borrowed funds remained approximately the same for the six months ended December
31, 1999 and the same six month period of the current year.

During the quarter ended December 31, 2000,  the Company  borrowed an average of
$39.6  million,  a decline of $11 million,  or 21.7%,  as compared  with average
borrowings of $50.6 million during the same quarter of the previous year. During
the six month period ended December 31, 2000, the Company borrowed an average of
$43.8  million,  a decline of $6.8  million,  or 13.4% as compared  with average
borrowings  of $50.6  million  during the same six month  period of the previous
year. The decline in the average amount of borrowed  funds was  attributable  to
regular loan repayments,  repayments  funded by asset sales and a voluntary loan
repayment of $7.5 million.

The average interest rate paid to HSBC on borrowed funds was 4.65% and 4.56% for
the three and six months ended December 31, 2000,  respectively,  as compared to
4.20% and 4.76%,  respectively,  for the same three and six month  period of the
previous year. The increase in rates paid to HSBC in the three month

                                       14

<PAGE>



period ended December 31, 2000, as compared with the same period in the previous
year, was primarily due to an increase in prevailing interest rates. The average
interest rate is attributable  to the  renegotiation  of the Company's  interest
rate with HSBC.  Under the terms of the  renegotiated  interest rate  agreements
with HSBC, which became effective October 1, 1998, the Company receives interest
rate  reductions for borrowed funds,  calculated  using a formula that considers
certain  compensating  balances held in bank  accounts  with HSBC.  The interest
expense rate reductions received under the new rate schedule agreement with HSBC
are in lieu of interest  income that had been earned on those  deposited  funds.
During the quarter  ended  December 31, 2000 a reduction in interest  expense on
borrowed funds of approximately $417,000 was recognized.

Other Expenses. During the quarter ended December 31, 2000, the Company recorded
total  other  expenses in the amount of $1  million,  a decrease of $43,000,  or
4.1%, as compared with other expenses of $1.1 million in the same quarter of the
previous year. Other expenses  decreased in the quarter ended December 31, 2000,
as compared with the quarter ended  December 31, 1999,  primarily as a result of
differences in the timing of certain non-recurring expense payments.

During the six months ended December 31, 2000, the Company  recorded total other
expenses in the amount of $2.05  million,  an increase of $14,000,  or .69%,  as
compared  with  other  expenses  of $2.03  million in the same six months of the
previous  year.  Other  expenses  increased in the six months ended December 31,
2000,  as compared with the six months ended  December 31, 1999,  primarily as a
result of differences in the timing of certain non-recurring expense payments.

The Company engaged RB Management  Company,  LLC (the  "Management  Company") to
manage the  operations  of the  Company  after the Branch  Sale,  including  the
management and disposition of Company assets. The Management Company was a newly
formed,  privately-owned  entity controlled by Alvin Dworman,  who owns 39.8% of
the  outstanding  Common Stock of the  Company.  During the three and six months
ended  December  31,  2000,  the Company  accrued  $670,000  and $1.27  million,
respectively  in fees payable to the  Management  Company,  of which $73,000 and
$81,000,  respectively,  related to fees incurred for the successful disposition
of assets.  During the three and six months ended December 31, 1999, the Company
accrued  $748,000  and  $1.4  million,  respectively  in  fees  payable  to  the
Management  Company,  of which $170,000 and $298,000,  respectively,  related to
fees incurred for the successful disposition of assets.

Provision for Income Taxes.  Statement of Financial Accounting Standards No. 109
(SFAS-109),  "Accounting for Income Taxes,"  requires the Company to recognize a
deferred  tax asset  relating  to the  unrecognized  benefit  for all  temporary
differences that will result in future tax deductions and for all unused NOL and
tax credit carryforwards, subject to, in certain circumstances, reduction of the
asset by a valuation allowance.  A valuation allowance is recorded if it is more
likely than not that some  portion or all of the  deferred tax asset will not be
realized  based on a review of available  evidence.  Realization of tax benefits
for deductible temporary differences and unused NOL and tax credit carryforwards
may  be  based  upon  the  future  reversals  of  existing   taxable   temporary
differences,  future taxable income exclusive of reversing temporary differences
and carryforwards,  taxable income in prior carryback years and, if appropriate,
from tax planning strategies.

The high  levels  of loan  charge-offs  and other  losses,  which  were  largely
responsible for losses during the periods, effectively eliminated federal income
tax liability for the quarters ended  September 30, 1998 and 1997. The Company's
income tax provision  includes  state and local taxes on the greater of combined
entire net income,  combined  alternative  entire net income or combined taxable
assets.  Certain  subsidiaries  provide  for state and local taxes on a separate
company basis on income, capital, assets or an alternative minimum tax.

The provision for income taxes differs from the amount  computed by applying the
statutory  Federal income tax rate of 35% to the reported loss before  provision
for income taxes primarily due to state and local income and franchise taxes and
limitations on the recognition of tax benefits of net operating  losses.  During
the three and six months ended  December 31,  2000,  the Company  recorded a net
provision  for income taxes of $124,000 and $350,000,  respectively.  During the
three and six  months  ended  December  31,  1999,  the  Company  recorded a net
provision for income taxes of $182,000 and $363,000, respectively.  Income taxes
recorded by the Company  primarily  reflect  the  effects of  operations  on its
current  state and local  income tax  liability  at December  31, 2000 and 1999,
respectively.



                                       15

<PAGE>



Liquidity and Capital Resources

The Company must maintain sufficient  liquidity to meet its funding requirements
for debt repayments  related to asset sales,  operating expenses and development
costs  related to certain real estate  projects,  and to satisfy the  regulatory
requirements described below.

On January 31, 2000,  the Company  completed a  refinancing  of the  outstanding
balance of the existing HSBC Facility.  Under the terms of the  refinancing  the
principal  balance  was  reduced by $1.3 to $49.5  million  and the terms of the
refinancing  provide for  amortization  of the HSBC  Facility  over a term of 20
years and extended the maturity of the HSBC Facility  through  January 31, 2005.
The  HSBC  Facility  is  secured  by a  first  lien on two  properties,  certain
cooperative  shares  and a  restricted  cash  collateral  account  (the  Special
Collateral) in the amount of $7.5 million. Under the terms of the HSBC Facility,
HSBC has  retained the right to approve  declaration  or payment of dividends on
the Company's Preferred Stock as well as other capital transactions.

As a consequence of the  refinancing of the HSBC Facility,  all loan  collateral
under the previous Facility agreement, other than specified above, including all
cash balances held by HSBC in excess of the $7.5 million Special  Collateral was
released from all liens held by HSBC.

The HSBC  Facility has an annual  interest rate equal to the Prime lending rate,
or the three-month  London Interbank Offered Rate (LIBOR) plus 2%, at the option
of the Company.  Notwithstanding  the foregoing,  interest on the Facility shall
accrue at 2% per annum on the portion of the outstanding  Facility  balance that
is  equal  to the  combined  balances  of the  Special  Collateral  account  and
unrestricted funds that remain on deposit with HSBC.

The Company  will make  monthly  payments  to HSBC of  interest,  as  calculated
according to the formula  outlined  above,  and scheduled  principal  reductions
based  on a  hypothetical  loan  amount  of  $34.8  million.  Minimum  scheduled
principal  reduction  payments  under this  provision of the Facility  agreement
approximate $800,000 per year.

The Loan Agreement  requires that while any amounts remain outstanding under the
Facility,  the Company must receive HSBC's prior written consent to, among other
things,  materially  alter its charter or by-laws,  incur  additional  corporate
indebtedness and liens, make any distributions to stockholders or repurchases or
redemptions of capital  stock,  acquire  additional  assets,  exchange  existing
assets with a third party or assume  additional  liabilities  as a result of any
proposed merger transaction.

In order to facilitate the  development of the Company's  three-building  office
complex in Atlanta,  Georgia,  in May 2000 the Company  obtained  $23.5  million
construction loan facility (the "Construction Loan") financed by Bank of America
and secured by two buildings under  development  within this office complex.  At
December 31,  2000,  approximately  $12.4  million had been  advanced  under the
Construction  Loan, as compared with  approximately  $3.7 at June 30, 2000.  The
completion of the  development of this project is anticipated  prior to June 30,
2001. The Construction  Loan has an annualized rate equal to LIBOR plus 2% and a
maturity  date in May 2003.  The loan allows for the deferral of interest  until
May 2003 or such time as the collateral  buildings are disposed of through sale.
The Company has incurred approximately $41,000 in interest during the year ended
June 30, 2000 and an additional  $392,000  during the six months ended  December
31, 2000 related to the  Construction  Loan, which have been accounted for as an
additional investment in the office complex.

At December 31, 2000 the Company had $39.2 million in borrowed funds outstanding
under  the  Facility   provided  by  HSBC  Bank  and  $12.4  million  under  the
Construction Loan provided by Bank of America. The Company actively monitors and
manages its cash inflows and  outflows in the  management  of the Facility  with
HSBC and invests, to the extent possible, all available cash balances.

The Company seeks to maintain  liquidity  within the range of 5% to 10% of total
assets, with amounts above that level considered necessary to meet the projected
cash  requirements  of  new  investments  and  endeavors  such  as  real  estate
developments.  Liquidity  for this purpose is defined as  unrestricted  cash. At
December 31, 2000, the Company's  liquidity  ratio,  as so defined,  amounted to
18.5%, which was consistent with the maintenance range.



                                       16

<PAGE>



Recent Accounting Developments

From time to time the  Financial  Accounting  Standards  Board  ("FASB")  adopts
accounting   standards   (generally  referred  to  as  Statements  of  Financial
Accounting  Standards,  or "SFASs") which set forth required  generally accepted
accounting  principles.  Set forth  below is a  description  of  certain  of the
accounting  standards  recently  adopted  by the  FASB  which  are  relevant  to
financial institutions such as the Company.

SFAS No. 133 and No.  137.  On June 15,  1998,  the FASB  issued  SFAS No.  133,
"Accounting  for  Derivative  Instruments  and Hedging  Activities"  (SFAS-133).
SFAS-133 is  effective  for all fiscal  quarters of all fiscal  years  beginning
after June 15, 1999,  which was deferred  until June 30, 2000 as a result of the
promulgation of SFAS-137,  requires that all derivative  instruments be recorded
on the  balance  sheet  at  their  fair  value.  Changes  in the  fair  value of
derivatives are recorded each period in current earnings or other  comprehensive
income,  depending  on whether a  derivative  is  designated  as part of a hedge
transaction  and,  if it is, the type of hedge  transaction.  Management  of the
Company  anticipates  that,  due  to the  Company's  limited  use of  derivative
instruments,  the adoption of SFAS-133 does not have a significant effect on the
Company's results of operations or its financial condition.

Other Pronouncements.  In December, 1999, the Securities and Exchange Commission
(the "SEC") released Staff  Accounting  Bulletin No. 101,  "Revenue  Recognition
("SAB No.  101"),  to provide  guidance  on the  recognition,  presentation  and
disclosure  of  revenue  in  financial  statements.  Specifically,  SAB No.  101
provides  guidance on  lessors'  accounting  for  contingent  rent.  SAB No. 101
explains the SEC staff's general framework for revenue recognition.  SAB No. 101
does not change existing literature on revenue recognition, but rather clarifies
the SEC's  position on preexisting  literature.  SAB No. 101 did not require the
Company to change  existing  revenue  recognition  policies and therefore had no
impact on the Company's  financial position or results of operations at December
31, 2000.  From time to time the Financial  Accounting  Standards Board ("FASB")
adopts accounting  standards  (generally  referred to as Statements of Financial
Accounting  Standards,  or "SFASs") which set forth required  generally accepted
accounting principles.


Impact of Inflation

The consolidated  financial  statements and related  consolidated 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  without  considering the changes in the
relative  purchasing  power of dollars over time due to  inflation.  The primary
impact of inflation on the  operations  of the Company is reflected in increased
operating  costs and,  generally,  increases in interest  rates paid on borrowed
funds. Over any given term,  however,  interest rates do not necessarily move in
the same  direction or in the same  magnitude as changes in prices for goods and
services.


Risks Associated with Forward-Looking Statements

This  Form  10-Q,  together  with  other  statements  and  information  publicly
disseminated by the Company, contains certain forward-looking  statements within
the  meaning of Section  27A of the  Securities  Act of 1933,  as  amended,  and
Section 21E of the  Securities  Exchange Act of 1934, as amended.  Such forward-
looking  statements  involve  known and unknown  risk,  uncertainties  and other
factors which may cause the actual  results,  performance or achievements of the
Company or industry results to be materially  different from any future results,
performance  or  achievements  expressed  or  implied  by  such  forward-looking
statements.  Such  factors  include,  among  others,  the  following,  which are
discussed  in greater  detail in the "Risk  Factors"  section  of the  Company's
Registration   Statement  on  Form  S-4  (File  No.   333-386730  and  File  No.
333-386730-01)  filed  with the  Securities  and  Exchange  Commission  ("SEC"),
general economic  conditions,  which will among other things,  affect demand for
commercial and residential  properties,  availability  and credit  worthiness of
prospective tenants,  lease rents and the availability of financing:  difficulty
of locating suitable investments; competition; risks of real estate acquisition,
development,  construction  and  renovation;  vacancies  at existing  commercial
properties; dependence on rental income from real property; adverse consequences
of debt financing; risks of investments in debt instruments, including





                                       17

<PAGE>



possible payment defaults and reductions in the value of collateral; illiquidity
of real estate  investments;  lack of prior operating  history;  and other risks
listed from time to time in the Company's reports filed with the SEC. Therefore,
actual results could differ materially from those projected in such statements.


Item 3.  Quantitative and Qualitative Disclosures About Market Risk

The primary market risk facing the company is interest rate risk on its borrowed
funds, mortgage notes and notes receivable.  The Company does not hedge interest
rate risk using  financial  instruments  nor is the  Company  subject to foreign
currency risk.

The Company has assessed the market risk for its variable rate debt and believes
that a 1% increase in interest  rates (as measured by changes in the LIBOR rate)
would result in an approximate  $392,000  increase in interest  expense based on
approximately  $39.2  million  outstanding  at December 31,  2000.  See Note 14,
"Borrowed Funds," contained within the Consolidated  Financial  Statements dated
June 30, 2000.

In addition,  the Company has issued  $13.5  million in  Increasing  Rate Junior
Subordinated  Notes due 2006.  The  Subordinated  Notes  provide  for a steadily
increasing  interest  cost after  December 15, 2001. A  substantial  increase in
general  interest rates would  potentially  prevent the Company from refinancing
the  Subordinated  Notes  at a rate  favorable  to the  Company.  See  Note  27,
"Preferred   Stock  Exchange  Offer"  and  Note  24,   "Increasing  Rate  Junior
Subordinated  Notes," contained within the Consolidated  Financial Statements at
June 30, 2000.

The fair value of the Company's long term debt, mortgage notes, notes receivable
and other financial  assets is estimated based on discounting  future cash flows
at interest rates that  management  believes  reflect the risks  associated with
long term debt,  mortgage notes,  notes receivable and other financial assets of
similar risk and duration.  See Note 22, "Fair Value of Financial  Instruments,"
within the Consolidated Financial Statements at June 30, 2000.







                                       18

<PAGE>




PART II - OTHER INFORMATION
Item 1.  Legal Proceedings


The Company is involved in various legal  proceedings  occurring in the ordinary
course  of  business.  Management  of the  Company,  based on  discussions  with
litigation  counsel,  believes  that such  proceedings  will not have a material
adverse  effect on the financial  condition or operations of the Company.  There
can be no assurance that any of the outstanding  legal  proceedings to which the
Company is a party will not be decided adversely to the Company's  interests and
have a material adverse effect on the financial  condition and operations of the
Company.

By letter,  dated May 22,  1998,  counsel for  certain  holders of shares of the
Company's  Preferred Stock advised the Company that such holders objected to the
Reorganization.  Specifically,  such counsel alleged that the Reorganization (I)
constituted a  "liquidation"  of River Bank America in violation of the terms of
the certificate of designations of the Predecessor Preferred Stock by failing to
provide for the payment to the holders of the Predecessor Preferred Stock of the
liquidating  distribution  required by the certificate of designations of $25.00
per share, plus all accrued,  undeclared and unpaid dividends thereon,  (ii) was
illegal under the New York Banking Law (the "NYBL") which provides,  in the case
of a voluntary  liquidation,  that the liquidating  corporation shall distribute
its remaining assets among its shareholders according to their respective rights
and interests, (iii) violated a commitment made in River Bank's proxy statement,
dated May 13, 1996, to retire the Predecessor Preferred Stock following approval
and  finalization  of the sale of certain of its branches and assets to HSBC and
(iv) constituted a breach of duty owed by River Bank's Board of Directors to the
holders of the Predecessor Preferred Stock.

The Company believed such allegations were without merit.  However, in an effort
to resolve these claims on an amicable basis, representatives of the Company and
such  holders  had  discussed  from time to time since the date of such  letter,
certain proposals under which the Company would offer to exchange a new security
for the Company  Preferred  Stock.  In October,  1998,  the Company  proposed to
representatives  of such holders to effect an exchange offer upon  substantially
the terms and conditions of the Exchange  Offer. On October 27, 1998, 11 holders
of Company  Preferred Stock who claimed to  beneficially  own, in the aggregate,
849,000  shares  (approximately  60.6% of the  outstanding  shares)  of  Company
Preferred  Stock (the  "Organized  Group")  commenced a lawsuit  entitled Strome
Global  Income Fund et al. v. River Bank America et. al. ( the  "Complaint" ) in
Supreme Court of the State of New York,  County of New York, Index No. 605226198
(the "Action" ), against the Company, certain of its predecessors and certain of
its  directors  (collectively,  the  "Defendants").  The complaint in the Action
alleged  (the  "Allegations"),  among  other  things,  that  (I) the  Defendants
breached the certificate of designations  relating to the Predecessor  Preferred
Stock  by  fraudulently  transferring  assets  of River  Bank  and by  illegally
amending the  certificate  of  designations,  (ii) the  Defendants  fraudulently
conveyed  the  assets  of  River  Bank,  thereby  depriving  the  holders  of  a
liquidating distribution,  (iii) the Defendants violated the NYBL by liquidating
River Bank without making the liquidating  distribution required by the NYBL and
by denying  holders  appraisal  rights to which they were  entitled by the NYBL,
(iv) the Defendants  breached their  fiduciary duty to holders by depriving them
of their  liquidating  distribution,  (v) the defendants  breached their duty of
disclosure  by omitting from the Proxy  Statement  dated March 27, 1998 material
facts  relating to the holders'  rights to receive a  liquidating  distribution,
their appraisal rights for their shares and the requirement that holders vote as
a class with respect to the amendment of the certificate of  designations,  (vi)
the  Defendants'  implementation  of the  liquidation  of  River  Bank  and  the
amendment  of the  certificate  of  designations  were ultra vires and should be
declared void and (vii) the  intentionally  tortious  nature of the  Defendants'
conduct bars them from seeking indemnification for their actions and, therefore,
the Defendants  should be enjoined from seeking  indemnification  for damages or
attorney's fees relating to the action.

The Company  believes  that the  Allegations  are  without  merit and intends to
vigorously oppose the Action. Consequently, the Company and the other defendants
responded to the Action by filing a motion to dismiss





                                       19

<PAGE>



on December 21, 1998 which was argued  before the court on March 23,  1999.  The
court  issued its  decision on December 2, 1999.  The court  granted in part the
Company's  motion  and  dismissed  the causes of action  based  upon  fraudulent
conveyance,  breach of fiduciary  duty,  breach of duty of disclosure  and ultra
vires  acts and  ordered  the  remainder  of the  Action to  continue.  Both the
Plaintiffs  and the Defendants  have  completed  discovery and filed motions for
summary judgement on June 29, 2000. The motions remain pending before the court.


Item 2.  Changes in Securities

Subsequent to the expiration of the Exchange Offer, the Company accepted private
requests for the exchange of its Series A Preferred Stock from individuals under
terms identical to those of the Exchange  Offer. As a result,  500 shares of the
Company's  Series A Preferred  Stock were  exchanged  during the  quarter  ended
December  31,  2000.  As  a  result  of  the  exchange,   the  Company's   total
Stockholder's Equity was reduced by $12,400 and its liabilities increased by the
same amount  (composed of a net increase in Increasing Rate Junior  Subordinated
Notes due 2006 of  $12,900,  offset by a net  decrease in other  liabilities  of
$500).

Item 3.  Defaults Upon Senior Securities

None.


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

None.




Item 5.  Other Information

At a Board of Directors meeting held on December 21, 2000, the Board of
Directors acted to expand the Board of Directors from nine to eleven directors
thereby creating two additional vacancies in addition to three other vacancies
on the Board. Further, acting in accordance with the By-Laws of the Company, the
Board of Directors filled all five vacancies by appointing Mr. Jerome R.
McDougal and Mr. Francis L. Bryant, Jr. (who had previously been incumbent
directors) and Ms. B.J. Hoppe to the 2003 class of directors and Mr. Nelson L.
Stephenson and Mr. Stephen Mann to the 2002 class of directors. Mr. Alvin
Dworman, Mr. James J. Houlihan, Jr. and Mr. Edward V. Regan remained in office
in the 2001 class of directors, Mr. David A. Shapiro remained in office in the
2002 class of directors and Mr. David J. Liptak and Jeffrey E. Susskind remained
in office as directors elected by the holders of the Company's outstanding
preferred stock.

The Board of Directors also acted to engage Ernst & Young, LLP as independent
auditors of the Company for the fiscal year ending June 30, 2001 upon
recommendation of the Audit Committee of the Board of Directors.

The Board of Directors elected take the action discussed above to avoid the time
and expense of calling and convening an annual meeting of the stockholders of
the Company.


Item 6.  Exhibits and Reports on Form 8-K

None.









                                       20

<PAGE>


                                    SIGNATURE

Pursuant to the requirements of Section 15(d) of the Securities  Exchange Act of
1934,  the Company has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.


                                              RB ASSET, INC.
                                                (Registrant)


Date: February 14, 2001        By:   /s/ Nelson L. Stephenson
      ------------------            ---------------------------------
                                    Nelson L. Stephenson
                                    President and Chief Executive Officer
                                    (principal executive and principal financial
                                    officer)



                                       21