As filed with the Securities and Exchange Commission on May 11, 2000
================================================================================
                                  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 March 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 May 11, 2000 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 May 11, 2000, was 937,777.


================================================================================


<PAGE>



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

                                TABLE OF CONTENTS


<TABLE>
<CAPTION>

<S>                       <C>                                                                                <C>
                                                                                                             PAGE
                                                                                                             ----
INDEX

PART I.     FINANCIAL INFORMATION

            Item 1.   Financial Statements

                          Consolidated Statements of Financial Condition as of March 31, 2000
                          (unaudited) and June 30, 1999............................................            1

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

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

                          Consolidated Statements of Cash Flows for the nine months ended March
                          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......................           20

PART II.    OTHER INFORMATION

            Item 1.   Legal Proceedings ...........................................................           21
            Item 2.   Changes in Securities .......................................................           22
            Item 3.   Defaults Upon Senior Securities .............................................           22
            Item 4.   Submission of Matters to a Vote of Securities Holders .......................           22
            Item 5.   Other Information ...........................................................           22
            Item 6.   Exhibits and Reports on Form 8-K ............................................           22

SIGNATURE..........................................................................................           23

</TABLE>


                                       -i-

<PAGE>




PART I.  FINANCIAL INFORMATION
Item 1.  Financial Statements

                                 RB ASSET, INC.
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                        March 31, 2000 and June 30, 1999
                             (dollars in thousands)

                                     Assets
<TABLE>
<CAPTION>

                                                                              (Unaudited)
                                                                               March 31,           June 30,
                                                                                 2000               1999
                                                                                ------              ----
<S>                                                                      <C>                   <C>
Real estate assets:
Real estate held for investment, net of accumulated
   depreciation of $4,948 and $3,264, respectively                       $          96,198     $         92,438

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                1,536
                                                                         -----------------    -----------------
     Total real estate assets                                                       99,652               95,974

Loans receivable:
      Secured by real estate                                                        32,394               53,697
      Commercial and consumer                                                        9,111               10,314
      Allowance for possible credit losses                                         (13,393)             (18,155)
                                                                         -----------------    -----------------
           Total loans receivable, net                                              28,112               45,856

Cash, due from banks and cash equivalents                                           33,321               14,780
Cash, due from banks - restricted                                                    7,500               13,355
Investment securities available for sale                                             1,260                1,294
Other assets                                                                         1,894                3,147
                                                                         -----------------    -----------------
        Total Assets                                                     $         171,739     $        174,406
                                                                         =================    =================

                      Liabilities and Stockholders' Equity

Increasing Rate Junior Subordinated Notes due 2006                       $          12,485     $         11,375
Borrowed funds                                                                      48,629               50,557
Other liabilities                                                                   12,999               15,957
                                                                         -----------------    -----------------
        Total Liabilities                                                           74,113               77,889
                                                                         -----------------    -----------------

Stockholders' equity:
15% non-cumulative perpetual preferred stock, series A par value $1,
liquidation value $25 (1,400,000 shares authorized, 937,777
issued and outstanding at March 31, 2000 and June 30, 1999)                            938                  938

Common stock par value $1 (30,000,000 shares authorized,
7,100,000 shares issued and outstanding at March 31, 2000
and June 30, 1999)                                                                   7,100                7,100

Additional paid in capital                                                         100,439              100,439
Accumulated deficit                                                                 (9,813)             (10,956)
Accumulated comprehensive loss                                                      (1,038)              (1,004)
                                                                         -----------------    -----------------
        Total Stockholders' Equity                                                  97,626               96,517
                                                                         -----------------    -----------------
Total Liabilities and Stockholders' Equity                               $         171,739     $        174,406
                                                                         =================    =================

</TABLE>

See notes to Consolidated Financial Statements



                                        1

<PAGE>




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

<TABLE>
<CAPTION>

                                                                    Three months ended                    Nine months ended
                                                                        March 31,                             March 31,
                                                               ----------------------------      --------------------------------
                                                                  2000           1999                 2000             1999
                                                               -------------  -------------      ---------------  ---------------
<S>                                                             <C>           <C>                 <C>             <C>
Revenue:
Rental revenue and operations:
         Rental income and other property revenue               $     3,698    $     3,696        $      11,493   $       11,210
         Property operating and maintenance expense                  (2,682)        (2,497)              (8,181)          (7,687)
         Depreciation - real estate held for investment                (568)          (582)              (1,708)          (1,767)
                                                               -------------  -------------      ---------------  ---------------
     Net  rental operations                                             448            617                1,604            1,756

Other property income (expense):
         Net gain on sale of real estate                                725            997                1,688            2,729
         Recovery of investments in real estate                          --             --                   --              106
                                                               -------------  -------------      ---------------  ---------------
      Total other property income (expense):                            725            997                1,688            2,835

Interest income:
         Loans receivable                                               962            591                1,769            1,964
         Money market investments and other                             157            123                  503              476
                                                               -------------  -------------      ---------------  ---------------
              Total interest income                                   1,119            714                2,272            2,440

Other Income
      Gain on settlement of Branch Sale contingencies, net              500             --                  500               --
      Loss on satisfaction of loan assets                            (1,272)            --                 (841)              --
      Realization of contingent participation revenues                2,400             --                2,400            1,000
                                                               -------------  -------------      ---------------  ---------------
     Total other income                                               1,628             --                2,059            1,000
                                                               -------------  -------------      ---------------  ---------------

         Total revenues                                               3,920          2,328                7,623            8,031
                                                               -------------  -------------      ---------------  ---------------

Expenses:
   Interest expense:
         Increasing Rate Junior Subordinated Notes due 2006             299            246                  879              248
         Borrowed funds                                                 558            928                1,762            3,342
         Other                                                          (10)            11                   --               44
                                                               -------------  -------------      ---------------  ---------------
              Total interest expense                                    847          1,185                2,641            3,634

   Other expenses:
         Salaries and employee benefits                                  61             32                  160              140
         Legal and professional fees                                    340            347                  883            1,118
         Management fees                                                579            613                1,735            1,844
         Other                                                          113             87                  350              225
                                                               -------------  -------------      ---------------  ---------------
              Total other expenses                                    1,093          1,079                3,128            3,327

         Total expenses                                               1,940          2,264                5,769            6,961
                                                               -------------  -------------      ---------------  ---------------

Income (loss) before provision for income taxes                       1,980             64                1,854            1,070

Provision for income taxes                                              348            118                  711              432
                                                               -------------  -------------      ---------------  ---------------
Net income (loss)                                                     1,632            (54)               1,143              638

Dividends declared on preferred stock                                    --             --                   --               --
                                                               -------------  -------------      ---------------  ---------------
Net income (loss) applicable to common stock                    $     1,632    $       (54)       $       1,143    $         638
                                                               =============  =============      ===============  ===============
Basic and diluted income (loss) per common share                $      0.23    $     (0.01)       $        0.16    $        0.09
                                                               =============  =============      ===============  ===============
</TABLE>



See notes to Consolidated Financial Statements


                                        2

<PAGE>




                                 RB ASSET, INC.
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                                  Nine months
                          ended March 31, 2000 and 1999
                             (dollars in thousands)
                                   (Unaudited)
<TABLE>
<CAPTION>

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


<S>                                     <C>            <C>          <C>           <C>             <C>             <C>
Balances at June 30, 1998               $    1,400     $  7,100     $  111,170     $   (11,561)   $      (926)   $    107,183

Net income for the nine months
ended March 31, 1999                            --           --             --             638             --             638

Preferred stock dividends payable               --           --             --              --             --              --
Reduction in Stockholders' Equity
resulting from Preferred Stock
Exchange Offer (Note 2)                       (448)          --        (10,524)             --             --         (10,972)

Change in comprehensive income
resulting from changes in unrealized
loss on securities available-for-sale           --           --             --              --            (90)            (90)

                                       ============   ==========   =============   ============   =============  ===============
Balances at March 31, 1999              $      952     $  7,100     $  100,646     $   (10,924)   $    (1,016)   $     96,758
                                       ============   ==========   =============   ============   =============  ===============

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

Net income for the nine months
ended March 31, 2000                            --           --             --           1,143             --           1,143

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

Change in comprehensive income
resulting from changes in unrealized
loss on securities available-for-sale           --           --             --              --            (34)            (34)

                                       ============   ==========   =============   ============   =============  ===============
Balances at March 31, 2000              $      938     $  7,100     $  100,439     $    (9,813)   $    (1,038)   $     97,626
                                       ============   ==========   =============   ============   =============  ===============

</TABLE>


See notes to Consolidated Financial Statements


                                        3

<PAGE>




                                 RB ASSET, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                        Nine Months Ended March 31, 2000
                             (dollars in thousands)
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                                    Nine months ended
                                                                                        March 31,
                                                                            ---------------------------------
                                                                                   2000             1999
                                                                            ----------------  ---------------
<S>                                                                          <C>                <C>
Operating Activities:
Cash flows provided by (used in) Operating Activities:
  Net income                                                                 $        1,143     $        638
  Adjustments to reconcile net income to cash provided by (used in)
         operating activities:
      Recovery of real estate assets                                                     --             (106)
      Net gain on sale of real estate assets                                         (1,688)          (2,736)
      Net loss on satisfaction of loan assets                                           841               --
      Depreciation and amortization                                                   1,708            1,768
      Amortization of capitalized issuance costs and accretion of
        issuance discount - Increasing Rate Junior Subordinated Notes
        due 2006                                                                        116               --
  Change in operating assets and liabilities:
      Net (increase) decrease in accrued interest receivable                           (293)              58
      Increase in accrued interest payable, net of additions to
        principal - Increasing Rate Junior Subordinated Notes due 2006                  683              107
      Net (decrease) increase in accrued income taxes                                    (3)             409
      Net decrease in accrued expenses and other liabilities                         (2,643)             (97)
      Net decrease (increase) in prepaid expenses and other assets                    1,546           (1,224)
      Cash effect of increases in allowance for possible credit losses                   74              330
      Other                                                                              --               49
                                                                            ----------------  ---------------
            Net cash provided by (used in) operating activities                       1,484             (804)
                                                                            ----------------  ---------------

Investing Activities:
Cash flows provided by Investing Activities:
  Repayment of loans secured by real estate, net                                     16,397            5,122
  Repayment of commercial and consumer loans                                            508               61
   Proceeds from partnership distributions - investments
      in joint ventures                                                                  82               --
  Proceeds related to sales of real estate held                                       2,478            6,713
  Additional net fundings of real estate held for investment                         (6,335)            (524)
                                                                            ----------------  ---------------
            Net cash provided by investing activities                                13,130           11,372
                                                                            ----------------  ---------------

</TABLE>


(Continued on next page)




See notes to Consolidated Financial Statements




                                        4

<PAGE>






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

(Continued from previous page)
<TABLE>
<CAPTION>

                                                                                  Nine months ended
                                                                                       March 31,
                                                                           --------------------------------
                                                                                 2000            1999
                                                                           ---------------- ---------------
<S>                                                                        <C>               <C>
Financing Activities:
Cash flows provided by (used in) Financing Activities:
  Decrease in restricted cash                                                        5,855           7,820
  Repayment of borrowed funds                                                       (1,928)        (16,096)
                                                                           ---------------- ---------------
            Net cash provided by (used in) financing activities                      3,927          (8,276)
                                                                           ---------------- ---------------

Net increase in cash, due from banks and cash equivalents                           18,541           2,292

Cash, due from banks and cash equivalents, beginning of period                      14,780          12,532
                                                                           ---------------- ---------------

Cash, due from banks and cash equivalents, end of period                    $       33,321   $      14,824
                                                                           ================ ===============



Supplemental Disclosure of Cash Flow Information
Cash paid for:
      Interest                                                              $        2,829   $       3,577
      Federal, state and local taxes                                                   758             523

Supplemental Disclosure of Non-cash Transactions
Accrued interest payable added as additional principal - Increasing
Rate Junior Subordinated Notes due 2006                                     $          994   $          --

</TABLE>






See notes to Consolidated Financial Statements


                                        5

<PAGE>


                                 RB ASSET, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 March 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 three months ended March 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. See Note 11 to the Consolidated Financial Statements at June 30,
1999.

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
                                 March 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 39.0% of the outstanding Common Stock of the Company.

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.

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.  The
Facility has been reduced by  repayment  activity to $48.6  million at March 31,
2000.

Also on January 31, 2000,  the Company  entered into  settlement  agreement with
HSBC related to the credit  indemnities  provided to HSBC in the Branch Sale and
claims related to the compensating  balance  arrangement with HSBC. The terms of
the  settlement  resulted  in a net  cash  gain on  settlement  of  Branch  Sale
contingencies  of $500 thousand,  reflected in the results of operations for the
three and nine months ended March 31, 2000.

During the quarter  ended March 31,  2000,  the Company and HSBC entered into an
asset swap and purchase  agreement,  whereby the Company exchanged its interests
in four  subordinated  participation and two junior  subordinated  participation
loans with a total net book value of $3.2 million and cash in the amount of $4.8
million for a loan held by HSBC in the amount of $11.1  million.  As a result of
this transaction during the quarter ended March 31, 2000, the Company recognized
contingent  participation revenues of $2.4 million and, in addition, the Company
received  $700,000 in previously  unaccrued loan interest  related to the junior
subordinated participation loans.

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  March 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,  until otherwise  notified,  the
approval  necessary to declare or pay dividends on the Company  Preferred  Stock
will not be provided.  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.





                                        7

<PAGE>


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


2.  Preferred Stock Exchange Offer

On November 25, 1998,  the Company  offered  upon the terms and  conditions  set
forth in its Offering  Circular  and the related  Letter of  Transmittal  (which
together  constituted the "Exchange Offer"), to exchange $25.94 principal amount
of its Increasing  Rate Junior  Subordinated  Notes due 2006 (the  "Subordinated
Notes") for each outstanding share of its 15% Non-Cumulative Preferred Perpetual
Stock,  Series A, par value  $1.00 (the  "Series A Preferred  Stock"),  of which
1,400,000 shares were outstanding on that date.

The Subordinated  Notes carry an interest rate of 8%, compounded  semi-annually,
for the first 36 months following December 30, 1998, the date of their issuance.
As a result of the tender of 462,223 shares of the Company's  Series A Preferred
Stock in exchange for the Subordinated Notes, the Company assumed the obligation
for the payment of interest on the Subordinated  Notes. During the quarter ended
March 31, 2000 and 1999, the Company recognized accrued interest expense related
to the Subordinated  Notes in the amount of approximately $299 thousand and $246
thousand,  respectively.  During the nine months  ended March 31, 2000 and 1999,
the Company  recognized  accrued  interest  expense related to the  Subordinated
Notes  in  the  amount  of  approximately   $879  thousand  and  $248  thousand,
respectively.

For a further discussion of the Exchange Offer see the Notes to the Consolidated
Financial  Statements  of the Company on Form 10-Q dated  December  31, 1998 and
Form 10-K dated June 30, 1999.


3.  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 March 31, 2000, the results
of its  operations  for the three and nine months  ended March 31, 2000 and 1999
and the statements of changes in stockholders'equity and cash flows for the nine
months  ended March 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 March
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, 1999.

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 net realizable
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 March 31, 2000,  the results of  operations  for the three and nine months
ended March 31,  2000 and 1999,  and  changes in  stockholders'  equity and cash
flows for the nine months ended March 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


                                        8

<PAGE>


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


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, where applicable,  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 March 31, 2000, the balance of stockholders'
equity  included a  cumulative  $1.038  million  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 March
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, 1999. As a result of this analysis, the Company recognized income
tax expense in the amount of $348,000, during the quarter ending March 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
when purchased with maturities of 90 days or less.

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


4.  Commitments, Contingencies and Other

At March 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


                                        9

<PAGE>


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


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 7.

5.  Earnings per share

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

6.  Comprehensive Income

During the three  months ended March 31, 2000,  total  comprehensive  income was
$1.7 million,  as compared to total  comprehensive loss of $313, during the same
three  month  period in 1999.  During the nine  months  ended March 31, 2000 and
1999, total comprehensive  income was $1.1 million and $548,  respectively.  The
following table describes the components of comprehensive income and accumulated
comprehensive income for the dates indicated:



         Components of Comprehensive Income (Loss)
         (Unaudited):
<TABLE>
<CAPTION>

                                                                      Three months ended March 31,
                                                                        2000                     1999
                                                                  -----------------        ----------------

<S>                                                                <C>                      <C>
         Net income (loss)                                         $        1,632           $         (54)
         Unrealized gain (loss) on securities                                 135                    (259)
                                                                  =================        ================
         Comprehensive (loss) income                               $        1,767           $        (313)
                                                                  =================        ================

                                                                        Nine months ended March 31,
                                                                        2000                     1999
                                                                  -----------------        ----------------

         Net income                                                $        1,143           $         638
         Unrealized losses on securities                                      (34)                    (90)
                                                                  =================        ================
         Comprehensive (loss) income                               $        1,109           $         548
                                                                  =================        ================

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

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

         Unrealized loss on securities                             $       (1,038)          $      (1,016)
                                                                  =================        ================
         Accumulated comprehensive loss                            $       (1,038)          $      (1,016)
                                                                  ================        ================
</TABLE>


7.  Legal Proceedings

On November 25, 1998,  the Company  offered  upon the terms and  conditions  set
forth in its Offering Circular


                                       10

<PAGE>


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


and the related Letter of Transmittal (which together  constituted the "Exchange
Offer"),  to exchange  $25.94  principal  amount of its  Increasing  Rate Junior
Subordinated  Notes due 2006 (the  "Subordinated  Notes")  for each  outstanding
share of its 15% Non-Cumulative  Preferred  Perpetual Stock, Series A, par value
$1.00  (the  "Series  A  Preferred  Stock"),  of  which  1,400,000  shares  were
outstanding on that date.

By letter,  dated May 22,  1998,  counsel for  certain  holders of shares of the
Company  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 believes such allegations are without merit.  However,  in an effort
to resolve these claims on an amicable basis, representatives of the Company and
such holders 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. Such proposal was not acceptable
to such holders and, on October 27, 1998, 11 holders of Company  Preferred Stock
who claim to beneficially own, in the aggregate,  849,000 shares  (approximately
60.6% of the then 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. The parties are proceeding with discovery.


                                       11

<PAGE>



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

Financial Condition:

At March 31,  2000,  the  consolidated  assets  of the  Company  totaled  $171.7
million,  a decrease of $2.7 million,  or 1.53%,  as compared with the Company's
total assets at June 30, 1999.

Real estate held for investment, net of accumulated depreciation, increased $3.8
million, or 4.07%, from $92.4 million at June 30, 1999 to $96.2 million at March
31, 2000.  The increase in real estate held for  investment,  net of accumulated
depreciation  at March 31, 2000,  as compared with the balance at June 30, 1999,
is primarily due to asset fundings for capital improvements and/or developmental
activities of $6.3  million,  partially  offset by reductions in carrying  value
attributable to unit sales of $800,000 and depreciation charges of $1.7 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 March 31,  2000,  from the  balance  of $2.0  million at June 30,  1999.  The
balance  categorized  as real  estate  held for  disposal  at March 31, 2000 are
apartment  units and 1-4 family  housing  units  which are  expected  to be sold
within the next twelve months.

During the quarter  ended March 31,  2000,  the Company and HSBC entered into an
asset swap and purchase  agreement,  whereby the Company exchanged its interests
in four  subordinated  participation and two junior  subordinated  participation
loans with a total net book value of $3.2 million and cash in the amount of $4.8
million for a loan held by HSBC in the amount of $11.1  million.  As a result of
this transaction during the quarter ended March 31, 2000, the Company recognized
contingent  participation revenues of $2.4 million and, in addition, the Company
received  $700,000 in previously  unaccrued loan interest  related to the junior
subordinated participation loans.

Total loans secured by real estate declined $21.3 million, or 39.67%, from $53.7
million at June 30, 1999 to $32.4  million at March 31, 2000.  The $21.3 million
decline in loans secured by real estate,  during the nine months ended March 31,
2000, was primarily attributable to the full satisfaction of ten loans, totaling
$31.9 million, for which losses on the satisfaction of loan assets in the amount
of  $841,000  and gains  related  to  realization  of  contingent  participation
revenues in the amount of $2.4 million were  recognized in the nine months ended
March 31, 2000. In addition to the $31.9  million  reduction in loans secured by
real estate  attributable to the  satisfaction  of loans,  the balances in these
loans  were  reduced  by an  additional  $500,000  due to the  effects of normal
scheduled principal repayments. These reductions in loans secured by real estate
were  partially  offset by the  acquisition  of a $11.1  million loan from HSBC,
which took place in the  quarter  ended March 31, 2000 as part of the HSBC asset
swap  transaction.  The loan  acquired  from HSBC is  secured by a New York City
apartment complex.

Commercial and consumer loans totaled $9.1 million at March 31, 2000, a decrease
of $1.2 million,  or 11.66%, from the June 30, 1999. This decrease was primarily
the  result  of  the  satisfaction  of a  single  non-  performing  loan  for  a
combination of cash and an irrevocable letter of credit totaling $1.5 million in
the quarter ended December 31, 1999 and the effects of normal  amortization  and
repayment of individual loans in the portfolio. The irrevocable letter of credit
received was in the amount $1 million, which bears interest at a rate of 8%, and
will be redeemed for cash in $500,000  increments  in December 2000 and December
2001. Prior to the satisfaction of this non-performing  loan, the carrying value
of the loan was $1.1 million,  net of a specific  reserve of $1.1 million.  As a
result of this $1.5  million  satisfaction,  the Company  reduced  its  recorded
balance in commercial and consumer loans by a net $1.2 million and its allowance
for possible  credit  losses  related to commercial  and consumer  loans by $1.1
million.  In addition,  as a result of this transaction,  the Company recorded a
gain on the  satisfaction  of loan assets in the amount of  $429,000  during the
quarter ended December 31, 1999.

The Company's allowance for possible credit losses decreased by $4.8 million, or
26.23%,  from $18.2 million at June 30, 1999 to $13.4 million at March 31, 2000.
The  decrease  resulted  from  chargeoffs  for  asset  disposition  transactions
previously  provided for at June 30, 1999. 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 March 31, 2000, the allowance for possible  credit losses was 32.27% of loans
outstanding, as compared to 28.36% at June 30, 1999.


                                       12

<PAGE>



Cash,  due from  banks  and cash  equivalents  increased  by $18.5  million,  or
125.45%, from $14.8 million at June 30, 1999 to $33.3 million at March 31, 2000.
Total  operating  revenues and available  asset sales  proceeds  exceeded  asset
fundings  and the amounts  paid out for  operating  expenses,  resulting  in the
increase in  unrestricted  cash  during the nine months  ended March 31, 2000 of
approximately $12.2 million. In addition, restricted cash totaling approximately
$5.8  million was released to  unrestricted  cash by HSBC during the nine months
ended March 31, 2000.

At March 31, 2000, HSBC had restricted a total of approximately  $7.5 million in
funds,  held on deposit at HSBC,  in  accordance  with the terms of the modified
Facility agreements, which became effective in January 2000. HSBC had restricted
approximately  $13.4 million at June 30, 1999 under the terms of the Branch Sale
and Facility  agreements dated June 28, 1996.  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 was intended to serve as substitute  collateral for
the  HSBC  Facility,  until  such  time as the  HSBC  Facility  was  reduced  in
accordance  with the  Company's  Asset  Management  Plan  and the HSBC  Facility
Agreements. See "Liquidity and Capital Resources," below.

The carrying amount of the Company's  Increasing Rate Junior  Subordinated Notes
due 2006  increased $1.1 million,  or 9.76%,  to $12.5 million at March 31, 2000
from $11.4  million at June 30, 1999.  This  increase was  primarily  due to the
addition of $994,000 in accrued interest payable to the principal balance of the
Subordinated Notes during the nine months ended March 31, 2000.

Other  liabilities  totaled  $13.0 million at March 31, 2000, a decrease of $3.0
million, or 18.53%, from the June 30, 1999 balance of $16.0 million. The decline
in other  liabilities  during the nine months ended March 31, 2000 was primarily
the  result  of  payments  made  to  HSBC,  various  service  providers  and  to
governmental  authorities  for state  income  and  franchise  taxes in excess of
required expense and liability  accruals for the nine month period.  The decline
in other  liabilities  over this nine month period is consistent  with a general
reduction in other operating  expenses incurred by the Company.  See "Results of
Operations," below.

During  the nine  months  ended  March  31,  2000,  total  stockholders'  equity
increased by $1.1 million,  or 1.15%,  to $97.6 million,  as compared with $96.5
million at June 30, 1999.  This  increase was due to the net income for the nine
months  ended March 31, 2000 in the amount of $1.1 million and a decrease in the
securities  valuation  account  (allowance for  unrealized  losses on marketable
securities) of $34,000.

The following  table  summarizes the calculation of the Company's book value per
share at March 31, 2000 and June 30, 1999.

<TABLE>
<CAPTION>

                                                            March 31,                 June 30,
                                                              2000                      1999
                                                        -----------------         ----------------

<S>                                                     <C>                       <C>
Total stockholders' equity                              $      97,625,000         $     96,517,000

   Less: liquidation value of preferred stock
      ($25 per share issued and outstanding)                   23,444,000               23,444,000
                                                        -----------------         ----------------
Net stockholders' equity                                $      74,181,000         $     73,073,000
                                                        =================         ================

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

     Book value per share                                 $       10.45              $     10.30
                                                        =================         ================


</TABLE>







                                       13

<PAGE>



Results of Operations:

General.  The Company reported net income  attributable to common shares of $1.6
million,  or $0.23 per basic and diluted share, for the three months ended March
31, 2000, an increase of $1.7 million, compared with net a net loss attributable
to common  shares of $54,000,  or $(0.01) per share,  for the three month period
ended March 31, 1999.  The Company  reported net income  attributable  to common
shares of $1.1  million,  or $0.16 per basic  and  diluted  share,  for the nine
months ended March 31, 2000,  an increase of $505,000,  or 75.15%  compared with
net income  attributable to common shares of $638,000,  or $0.09 per share,  for
the nine month period ended March 31, 1999.

The primary reasons for the increase in the Company's net operating  results for
the  quarter  ended  March 31,  2000,  as  compared  to the same  quarter in the
previous  year,  were (1) the  realization  of $2.4 million in  contingent  loan
participation  revenues,  (2)  the  collection  of  an  additional  $700,000  in
previously  unaccrued interest related to the junior subordinated  participation
loans that were paid in full during the quarter  ended March 31, 2000 as part of
the asset swap completed  with HSBC, (3) the  recognition of a $500,000 net gain
on  settlement  of Branch  Sale  contingencies  and the  Company's  compensating
balance  interest  claims with HSBC, and (4) a reduction of interest  expense of
$338,000.

Partially  offsetting  these  increases  in income  and  reductions  in  expense
recorded in the quarter ended March 31, 2000, as compared to the same  quarterly
period in the previous year,  were (1) the recognition of a $1.3 million loss on
the satisfaction of loan assets in the quarter ended March 31, 2000, as compared
with $0 in the quarter  ended March 31, 1999,  (2) an increase in the  provision
for state and local income taxes in the amount of $230,000,  (3)  reductions  in
interest  income  (excluding  the  non-recurring  collection of $700,000 in loan
interest,  sited  above) of $295,000,  and (4) a reduction of net revenues  from
rental operations of $169,000.

The primary reasons for the increase in the Company's net operating  results for
the nine months ended March 31, 2000,  as compared to the same nine month period
of the previous  year,  were (1) the  realization  of $1.4 million in additional
contingent loan participation  revenues in the nine months ended March 31, 2000,
as compared  with the nine months ended March 31,  1999,  and (3) a reduction of
interest  expense of $993,000,  (3) the collection of an additional  $700,000 in
previously  unaccrued interest related to the junior subordinated  participation
loans that were paid in full during the quarter  ended March 31, 2000 as part of
the asset swap completed  with HSBC, and (4) the  recognition of a $500,000 gain
on  settlement  of Branch  Sale  contingencies  and the  Company's  compensating
balance interest claims with HSBC.

Partially  offsetting  these  increases  in income  and  reductions  in  expense
recorded  during the nine months ended March 31,  2000,  as compared to the same
nine month period in the previous year, were (1) a reduction in the recorded net
gain on the sale of real  estate of $1.1  million,  (2)  reductions  in interest
income  (excluding  the  non-recurring  collection of $700,000 in loan interest,
sited above) of $868,000,  (3) the recognition of an additional $841,000 loss on
the  satisfaction  of loan assets in the nine months  ended March 31,  2000,  as
compared  with the nine  months  ended  March 31,  1999,  (4) an increase in the
provision for income taxes in the amount of $430,000, and (5) a reduction of net
revenues from rental operations of $152,000.

Net Rental  Operations.  For the three months  ended March 31, 2000,  net rental
operations  resulted in income of $448,000,  a decrease of $169,000,  or 27.39%,
from $617,000 for the same three month period in the previous year. For the nine
months ended March 31, 2000,  net rental  operations  resulted in income of $1.6
million,  a decrease of $152,000  from the $1.75  million  recorded for the same
nine month period in the  previous  year.  The decrease in net rental  operating
revenue for the three and nine month  periods  ended March 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. Net gain on sale of real estate of $725,000
was  realized for the quarter  ended March 31, 2000, a decrease of $272,000,  or
27.28%,  as compared  with net income of $997,000 in the quarter ended March 31,
2000.  For the  quarter  ended  March  31,  2000,  the  $725,000  net  gain  was
attributable  to sales of apartment  units,  categorized as real estate held for
disposal,  in the amount of $1.2  million,  for which the gain of  $725,000  was
recognized.

For the quarter ended March 31, 1999, the $1.0 million in other property  income
was  attributable to the sale of $2.3 million of real estate held, of which $2.1
million related to units in a multi-family apartment


                                       14

<PAGE>



complex in New York City for which a net gain in the amount of $1.2  million was
recognized  and the  sale of a  condominium  unit at  another  of the  Company's
multi-family housing projects in New York City for $276,000, for which a gain in
the amount of $251,000  was  recognized.  These  realized  gains were  partially
offset  by  $525,000  in   non-recurring   expenses   resulting  from  the  full
satisfaction  of certain  liabilities  related to  operations of a New York City
property that had been disposed of in prior periods.

Net gain on the sale of real estate was $1.7  million for the nine months  ended
March 31, 2000, a decrease of $1.0  million,  or 38.15%,  as compared with a net
gain of $2.7 million in the nine months  ended March 31, 1999.  The $1.7 million
net gain was  attributable  to sales of  apartment  units,  categorized  as real
estate held for disposal,  in the amount of $2.6 million,  for which the gain of
$1.7 million was recognized.

The $2.7  million in net gain on the sale of real  estate  recorded  in the nine
month  period  ended  March 31,  1999 was due to the $1.0  million in gains from
sales of real estate recorded during the quarter ended March 31, 1999 (described
above)  and to the  recognition  of a gain of  $500,000,  in the  quarter  ended
September  30,  1998,   resulting  from  the  full   satisfaction  of  a  junior
subordinated  participation  loan  secured by real  estate  which had been fully
reserved for in prior periods. In addition,  $1.2 million of the gain related to
sales of a New York City shopping  center complex during the first six months of
the year.

Interest  Income.  For the three  months ended March 31,  2000,  total  interest
income was $1.1  million,  an increase of  $405,000,  or 56.72%,  from  $714,000
recorded for the same  quarter in the previous  year.  Loan  interest  increased
$371,000,  or 62.77%,  from  $591,000  in the  quarter  ended  March 31, 2000 to
$962,000 for the same quarter in the current year.  This increase was due to the
collection  of  $700,000  in  previously   unaccrued  interest  related  to  two
contingent loan participations.  Without this collection of $700,000 in interest
related to contingent loan participations,  loan interest income would have been
$262,000,  a decline of $329,000,  or 55.67%,  from the $591,000 reported in the
same  quarter of 1999.  This decline in loan  interest  income is due to reduced
average balances for loan assets resulting from satisfactions and the effects of
normal amortization and repayment activity.

Partially  offsetting  the decline in loan  interest  income in the three months
ended March 31, 2000  (excluding the $700,000 in interest  collected  related to
contingent loan participations), as compared with the same three month period in
the previous  year,  was an increase in other  interest  income to $157,000,  an
increase of $34,000, or 27.64%, in the quarter ended March 31, 2000, as compared
with other interest  income of $123,000  recorded in the quarter ended March 31,
1999. The increase in other interest  income was primarily due to an increase in
the average  balance of funds held in  interest-bearing  money  market  accounts
during the quarter  ended March 31, 2000,  as compared  with the same quarter in
the previous year.

For the nine  months  ended  March 31,  2000,  total  interest  income  was $2.3
million,  a decrease of $168,000,  or 5.08%,  from the $2.4 million recorded for
the same nine months in the previous year. Loan interest decreased $195,000,  or
9.93%, from $2.0 million in the nine months ended March 31, 1999 to $1.8 million
for the same quarter in the current year.  This decline in loan interest  income
is due to reduced average balances for loan assets resulting from  satisfactions
and the effects of normal amortization and repayment activity,  partially offset
by the collection of $700,000 of previously  unaccrued  interest  related to two
contingent loan  participations.  Without the collection of $700,000 in interest
related to contingent loan  participations,  which occurred in the quarter ended
March 31, 2000, loan interest income would have been $1.1 million,  a decline of
$895,000,  or  45.57%,  from the $2.0  million  reported  in the same nine month
period of 1999.

Partially  offsetting  the  decline in loan  interest  income in the nine months
ended  March  31,  2000,  as  compared  with the same nine  month  period in the
previous year, was an increase in other interest income to $503,000, an increase
of $27,000,  or 5.67%,  in the quarter  ended March 31, 2000,  as compared  with
other interest income of $476,000  recorded in the quarter ended March 31, 1999.
The increase in other  interest  income was  primarily due to an increase in the
average balance of funds held in  interest-bearing  money market accounts during
the nine months ended March 31, 2000,  as compared with the nine month period in
the previous year.

Net Gain on Settlement of Branch Sale  Contingencies.  On January 31, 2000,  the
Company  entered  into  settlement  agreement  with HSBC  related  to the credit
indemnities  provided  to HSBC in the  Branch  Sale and  claims  related  to the
compensating balance arrangement with HSBC. The terms of the settlement resulted
in a net cash gain on settlement of Branch Sale  contingencies of $500 thousand,
reflected in the results of operations for the three and nine months ended March
31, 2000.


                                       15

<PAGE>



Net Loss on the Satisfaction of Loan Assets.  The Company  recognized a net loss
on the  satisfaction of loan assets in the amount of $1.3 million and $0 for the
three  months  ended March 31, 2000 and 1999,  respectively.  During the quarter
ended  March 31,  2000 the Company  received a final  liquidating  payment for a
non-performing  loan secured by an office building  located in New York State in
the amount of $1.9  million.  The  non-performing  loan had been  carried on the
books of the Company at $2.1 million,  net of applicable  reserves.  At the time
the  non-performing  loan was liquidated,  the Company  incurred  various costs,
primarily associated with property taxes that were due on the loan's collateral,
totaling approximately $1.0 million.  Accordingly,  a total loss of $1.3 million
was recorded on this liquidation.

The  Company  recognized  a net loss on the  satisfaction  of loan assets in the
amount of  $841,000  and $0 for the nine  months  ended March 31, 2000 and 1999,
respectively.  The net loss on the satisfaction of loan assets was the result of
a $1.3 million loss taken in the quarter ended March 31, 2000 on the liquidation
of a  non-performing  loan,  described  above,  and a $431,000 gain taken in the
quarter  ended   December  31,  1999  related  to  the  repayment  of  a  single
non-performing  loan for a  combination  of cash and an  irrevocable  letter  of
credit  totaling  $1.5  million in the quarter  ended  December  31,  1999.  The
irrevocable  letter of credit  received  was in the amount of $1 million,  which
bears  interest  at a rate of 8%,  and will be  redeemed  for  cash in  $500,000
increments in December 2000 and December 2001. Prior to the satisfaction of this
non- performing loan, the carrying value of the loan was $1.1 million,  net of a
specific reserve of $1.1 million. As a result of this $1.5 million satisfaction,
the Company  reduced its recorded  balance in commercial and consumer loans by a
net $1.2  million  and its  allowance  for  possible  credit  losses  related to
commercial and consumer loans by $1.1 million.

Contingent  Loan  Participation   Revenues.   The  Company  recorded  contingent
participation  revenues of $2.4  million and $0 in the three  months ended March
31, 2000 and 1999,  respectively.  During the quarter ended March 31, 2000,  the
Company received payments totaling $2.4 million in full satisfaction of two loan
participations  that had been  subordinated  to HSBC's priority claims on all of
the proceeds  associated with these loans. The loans had been fully reserved for
on the  Company's  books  prior to their  repayment.  In  addition,  the Company
received  approximately  $700,000 in unaccrued  interest income related to these
loans. This additional loan income was included in total interest income for the
quarter ended March 31, 2000 (see "Interest Income," above).

The Company recorded  contingent  participation  revenues of $2.4 million and $1
million in the nine months ended March 31, 2000 and 1999,  respectively.  During
the nine months ended March 31, 2000,  the Company  received  payments  totaling
$2.4 million in full satisfaction of two loan  participations,  described above.
During the quarter  ended  September  30, 1998,  contingent  loan  participation
revenues of $1.0 million were recognized on one subordinated  participation loan
and one junior subordinated  participation loan made to the same borrower with a
combined principal balance of $1.3 million. These loans were paid in full during
the  quarter  ended   September   30,  1998.  A  portion  of  the   subordinated
participation loan and the junior subordinated  participation loan had been sold
to HSBC on June 28, 1996 in  connection  with the Branch  Sale.  A total of $1.0
million,  representing a portion of the subordinated  participation loan and the
full amount of the junior  participation  loan had been reserved for at the time
of the Branch Sale.

At March 31, 2000, the Company no longer had any interests in any  participation
loans with either HSBC or any other business entity.

Interest  Expense.  During the three months  ended March 31,  2000,  the Company
recorded interest expense in the amount of $847,000,  a decline of $338,000,  or
28.52%, as compared with interest expense of $1.2 million in the same quarter of
the previous year.  Interest  expense for borrowed funds declined  $370,000,  or
47.28%,  from  $928,000 in the quarter  ended March 31, 1999 to $558,000 for the
same quarter in the current year.

During the nine months  ended March 31,  2000,  the  Company  recorded  interest
expense in the amount of $2.6  million,  a decline of  $993,000,  or 27.33%,  as
compared with interest  expense of $3.6 million in the same nine month period of
the previous year. Interest expense for borrowed funds declined $1.6 million, or
47.28%,  from $3.3  million  recorded in the nine months ended March 31, 1999 to
$1.7 million  recorded in the same nine month period of the current  year.  This
decline  in  interest  expense on  borrowed  funds was  partially  offset by the
recognition  of $879,000 in interest  expense in the nine months ended March 31,
2000 related to the  Company's  Increasing  Rate Junior  Subordinated  Notes due
2006, which were initially issued


                                       16

<PAGE>



on December 30, 1998.  Accordingly,  nine months of interest on the Subordinated
Notes was  recognized  during the nine months ended March 31, 2000,  as compared
with three months of interest during the nine month period ended March 31, 1999.

Interest  expense paid on borrowed  funds  declined in the three and nine months
ended March 31,  2000,  as compared  with the same three and nine month  periods
ended March 31, 1999 as the result of declines in the average amount borrowed by
the Company from HSBC and reductions in the interest rate paid by the Company on
borrowed funds, under the renegotiated terms of the Facility.

During the three months ended March 31, 2000, the Company borrowed an average of
$49.6 million,  a decline of $19.2 million,  or 27.8%,  as compared with average
borrowings of $68.8 million  during the three month period ended March 31, 1999.
During the nine months ended March 31, 2000, the Company  borrowed an average of
$50.1 million,  a decline of $18.7 million,  or 27.2%,  as compared with average
borrowings of $68.6  million  during the nine month period ended March 31, 2000.
The decline in the  average  amount of borrowed  funds was  attributable  to the
repayment of outstanding  obligations  which occurred in fiscal 2000,  primarily
funded by asset sales and loan repayments.

The average interest rate paid to HSBC on borrowed funds was 4.50% and 4.69% for
the three and nine months  ended March 31,  2000,  respectively,  as compared to
5.40% and 6.48%, respectively,  for the same three and nine month periods of the
previous  year.  The  decline  in rates paid to HSBC in the three and nine month
periods  ended March 31, 2000, as compared with the same periods in the previous
year, was primarily due to a 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.

Other  Expenses.  During the quarter ended March 31, 2000, the Company  recorded
total other expenses in the amount of $1.1 million,  an increase of $14,000,  or
1.30%,  as compared with the same quarter of the previous year.  During the nine
months ended March 31, 2000,  the Company  recorded  total other expenses in the
amount of $3.1 million, a decrease of $199,000, or 5.98%, as compared with other
expenses of $3.3  million in the same nine month  period of the  previous  year.
Other  expenses  decreased in the nine months ended March 31, 2000,  as compared
with the nine months ended March 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 39.0% of
the  outstanding  Common Stock of the Company.  During the three and nine months
ended  March  31,  2000,  the  Company   accrued   $657,000  and  $2.0  million,
respectively  in fees payable to the  Management  Company,  of which $78,000 and
$269,000, respectively,  related to fees incurred for the successful disposition
of assets.  During the three and nine months ended March 31,  1999,  the Company
accrued  $626,000  and  $2.0  million,  respectively  in  fees  payable  to  the
Management Company, of which $13,000 and $120,000, 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  currently
payable federal income tax liabilities through March 31, 2000. The


                                       17

<PAGE>



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 nine months  ended  March 31,  2000,  the  Company  recorded a net
provision  for income taxes of $348,000 and $711,000,  respectively.  During the
three and nine months ended March 31, 1999, the Company recorded a net provision
for income taxes of $118,000 and $432,000,  respectively.  Income taxes recorded
by the Company  primarily reflect the effects of operations on its current state
and local income tax liability at March 31, 2000 and 1999, respectively.


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.

At March 31, 2000 the Company had $48.6  million in borrowed  funds  outstanding
under the Credit  Facility (the  "Facility")  provided by HSBC Bank. 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.

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. Accordingly,  the balance of the Company's
unrestricted cash was increased $29.4 million by an offsetting  reduction in the
Company's unrestricted cash of $29.4 million, from $36.9 million at December 31,
1999 to $7.5 million at March 31, 2000.

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  Company  seeks to maintain  liquidity,  in the form of  unrestricted  cash,
within a range of 5% to 10% of total  assets.  At March 31, 2000,  the Company's
liquidity  ratio, as so defined,  amounted to 19.4%,  which exceeded the minimum
requirements of the targeted maintenance range.


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


                                       18

<PAGE>



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.FASB  Interpretation No.
43, "Real Estate Sales," interprets and amends Statement of Financial Accounting
Standards  No.  66  (SFAS-66),  "Accounting  for  Sales  of Real  Estate."  FASB
Interpretation  No. 43 states  that the sales  recognition  criteria  of SFAS-66
should apply to land and physical structures attached to the land (for instance,
property  improvements or integral  equipment such as manufacturing  facilities)
that cannot be removed and used separately  without incurring  significant cost.
FASB  Interpretation  No.  43 is  effective  for all sales of real  estate  with
property  improvements or integral  equipment  entered into after June 30, 1999.
Management has evaluated the provisions of this Interpretation and has concluded
that the  adoption of this  Interpretation  will have no material  effect on the
Company's results of operations and financial condition.

In  December,   1999,  the  Securities  and  Exchange  Commission  issued  Staff
Accounting   Bulletin   ("SAB")  No.  101  "Revenue   Recognition  in  Financial
Statements." SAB No. 101 draws upon existing accounting rules and explains those
rules,  by  analogy,  to other  transactions  that the  existing  rules  did not
address.  SAB No. 101 is effective for all fiscal years beginning after December
15, 1999.  Management  has evaluated the provisions of the SAB and has concluded
that  the  adoption  of this  Statement  will  have no  material  effect  on the
Company's results of operations and financial condition.


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.


Impact of Year 2000

The company sustained no significant operational problems, or material financial
effects,  associated  with the impact of the Year 2000 on the processing of date
sensitive  information by its computerized  information  systems. Due to (i) the
limited number of assets  managed by the Company,  (ii) the limited scope of the
Company's  continuing  operations and (iii) that all accounting software used by
the Company is  maintained  and  supported by a third party all of the Company's
costs of assessment,  and where  necessary,  remediation  were immaterial to the
reported operating results of the Company.


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 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.


                                       19

<PAGE>




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  $486,000  increase in interest  expense based on
approximately  $48.6  million  outstanding  at  March  31,  2000.  See  Note 16,
"Borrowed Funds," contained within the Consolidated  Financial  Statements dated
June 30, 1999.

In addition,  the Company has issued $12.49  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  28,   "Increasing  Rate  Junior
Subordinated  Notes," contained within the Consolidated  Financial Statements at
June 30, 1999.

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 25, "Fair Value of Financial  Instruments,"
within the Consolidated Financial Statements at June 30, 1999.




                                       20

<PAGE>



PART II - OTHER INFORMATION
Item 1.   Legal Proceedings

On November 25, 1998,  the Company  offered  upon the terms and  conditions  set
forth in its Offering  Circular  and the related  Letter of  Transmittal  (which
together  constituted the "Exchange Offer"), to exchange $25.94 principal amount
of its Increasing  Rate Junior  Subordinated  Notes due 2006 (the  "Subordinated
Notes") for each outstanding share of its 15% Non-Cumulative Preferred Perpetual
Stock,  Series A, par value  $1.00 (the  "Series A Preferred  Stock"),  of which
1,400,000 shares were outstanding on that date.

By letter,  dated May 22,  1998,  counsel for  certain  holders of shares of the
Company  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 believes such allegations are without merit.  However,  in an effort
to resolve these claims on an amicable basis, representatives of the Company and
such holders 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. Such proposal was not acceptable
to such holders and, on October 27, 1998, 11 holders of Company  Preferred Stock
who claim to beneficially own, in the aggregate,  849,000 shares  (approximately
60.6% of the then 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. The parties are proceeding with discovery.




                                       21

<PAGE>



Item 2.   Changes in Securities

None.


Item 3.   Defaults Upon Senior Securities

None.


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

None.


Item 5.   Other Information

None.


Item 6.   Exhibits and Reports on Form 8-K

(a)       Exhibits


          Exhibit Number            Description
          --------------            ------------

          27.1                      Financial Data Schedule

(b)       Reports on Form 8-K

          During the fiscal quarter ended March 31, 2000, the Company filed the
          following Current Reports on Form 8-K:

          None.



                                       22

<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: May 12, 2000          By: /s/ Nelson L. Stephenson
      ------------              -------------------------

                                Nelson L. Stephenson
                                President and Chief Executive Officer (principal
                                executive and principal financial officer)







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