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

                                    FORM 10-Q


(Mark One)

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

         For the quarterly period ended September 30, 1998

                                       OR

[  ]     Transition  report  pursuant  to section 13 or 15(d) of the  Securities
         Exchange Act of 1934

         For the Transition Period From            To
                                        ----------     ------------

                        Commission file number 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 outstanding of the Registrant's Common Stock as of November
15, 1998 was 7,100,000. The number of shares outstanding of the Registrant's 15%
Non-cumulative  Perpetual  Preferred Stock, Series A as of November 15, 1998 was
1,400,000.

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778176.1

<PAGE>





                                 RB ASSET, INC.
                          QUARTERLY REPORT ON FORM 10-Q
                  FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1998

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                   PAGE
                                                                                   ----
<S>         <C>                                                                    <C>
INDEX

PART I.     FINANCIAL INFORMATION

            Item 1.    Financial Statements

                            Consolidated Statements of Financial Condition as of
                            September   30,  1998   (unaudited)   and  June  30,
                            1998................................................     3

                            Consolidated  Statements of Operations for the three
                            months   ended   September   30,   1998   and   1997
                            (unaudited).........................................     4

                            Consolidated  Statements of Changes in Stockholders'
                            Equity for the three months ended September 30, 1998
                            and 1997 (unaudited)................................     5

                            Consolidated  Statements of Cash Flows for the three
                            months   ended   September   30,   1998   and   1997
                            (unaudited).........................................     6

                            Notes to the Consolidated Financial Statements .....     8

            Item 2.    Management's   Discussion   and   Analysis  of  Financial
                       Condition     and    the     Results    of     
                       Operations...............................................    16

PART II.    OTHER INFORMATION

            Item 1.    Legal Proceedings .......................................    23
            Item 2.    Changes in Securities ...................................    23
            Item 3.    Defaults Upon Senior Securities .........................    23
            Item 4.    Submissions of Matters to a Vote of Securities Holders ..    23
            Item 5.    Other Information .......................................    23
            Item 6.    Exhibits and Reports ....................................    23

SIGNATURES......................................................................    24
</TABLE>


778176.1
                                        2

<PAGE>




PART I.  FINANCIAL INFORMATION
Item 1.  Financial Statements

                                 RB ASSET, INC.
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                      September 30, 1998 and June 30, 1998
                             (Dollars in Thousands)

                                     Assets

<TABLE>
<CAPTION>
                                                                         (Unaudited)
                                                                         September 30,         June 30,
                                                                              1998              1998
                                                                             ------             ----
<S>                                                                   <C>                  <C>
Real estate assets:
Real estate held for investment, net of accumulated
   depreciation of $1,160 and $583, respectively                      $        81,342      $         82,835

Real estate held for disposal                                                    5,300                5,013
      Allowance for fair market value reserve under SFAS-121                   (1,363)              (1,363)
                                                                       ----------------    -----------------
           Total real estate held for disposal, net                              3,937        3,650

Real estate loans receivable:
      Secured by real estate                                                    55,842               59,006
      Loans sold with recourse, net                                             14,939               15,781
      Allowance for possible credit losses                                    (16,752)             (17,697)
                                                                      ----------------    -----------------
           Total loans receivable, net                                          54,029               57,090

Investments in joint ventures                                                    1,536                1,536
                                                                      ----------------    -----------------
     Total real estate assets                                                  140,844              145,111

Cash, due from banks and cash equivalents                                       11,295               12,532
Cash, due from banks - restricted                                               26,217               19,555
Investment securities available for sale                                         1,260                1,373
Commercial and consumer loans                                                   10,324               10,431
  Allowance for possible credit losses                                         (2,388)              (2,340)
                                                                      ----------------    -----------------
Commercial and consumer loans, net                                               7,936                8,091
Other assets                                                                     4,192                4,248
                                                                      ----------------    -----------------
        Total Assets                                                  $       191,744     $        190,910
                                                                      ================    =================

                      Liabilities and Stockholders' Equity

Borrowed funds                                                        $        68,760     $         68,760
Other liabilities                                                               15,463               14,967
                                                                      ----------------    -----------------
        Total Liabilities                                                       84,223               83,727
                                                                      ----------------    -----------------

Stockholders' equity:
15% non-cumulative preferred stock, Series A par value $1, 
liquidation value $25 (1,400,000 shares authorized, issued
and outstanding at September 30, 1998 and June 30, 1998)                         1,400                1,400

Common stock par value $1 (30,000,000 shares authorized,
7,100,000 shares issued and outstanding at September 30,
1998 and June 30, 1998)                                                          7,100                7,100

Additional paid in capital                                                     111,170              111,170
Accumulated deficit                                                           (11,111)             (11,561)
Accumulated comprehensive income                                               (1,038)                (926)
                                                                      ----------------    -----------------
        Total Stockholders' Equity                                             107,521              107,183
                                                                      ----------------    -----------------
Total Liabilities and Stockholders' Equity                            $       191,744     $        190,910
                                                                      ================    =================
</TABLE>



See notes to Consolidated Financial Statements

778176.1
                                        3

<PAGE>




                                 RB ASSET, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 Three months ended September 30, 1998 and 1997
                  (dollars in thousands, except per share data)
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                                  Three months ended
                                                                                    September 30,
                                                                         ------------------------------------
                                                                              1998                1997
                                                                         ---------------    -----------------

<S>                                                                      <C>                 <C>
Revenue:
Rental revenue and operations:
         Rental income and other property revenue                         $       3,770      $         3,273
         Property operating and maintenance expense                              (2,564)              (2,264)
         Depreciation - real estate held for investment                            (577)                 (50)
                                                                         ---------------    -----------------
     Net  rental operations                                                         629                  959

Other property income (expense):
         Net gain/(loss) on sale of real estate                                     488                 (914)
         Writedown of investments in real estate                                      -                 (350)
                                                                         ---------------    -----------------
      Total other property income/ (expense)                                        488               (1,264)

Other income:
      Interest income:
         Loans receivable                                                           640                 767
         Investment securities                                                        -                  55
         Money market investments and other                                         227                  59
         Provision for possible credit losses                                         -                   -
                                                                         ---------------    -----------------
              Total interest income                                                 867                  881

         Realization of contingent participation revenues                         1,000                  769
                                                                         ---------------    -----------------
     Total other income                                                           1,867                1,650

         Total revenues                                                           2,984                1,345
                                                                         ---------------    -----------------

Expenses:
   Interest expense:
         Borrowed funds                                                           1,426                1,637
         Other                                                                        5                   21
                                                                         ---------------    -----------------
              Total interest expense                                              1,431                1,658

   Other expenses:
         Salaries and employee benefits                                              50                  205
         Legal and professional fees                                                202                  745
         Management fees                                                            617                  671
         Other                                                                       65                  101
                                                                         ---------------    -----------------
              Total other expenses                                                  934                1,722

         Total expenses                                                           2,365                3,380
                                                                         ---------------    -----------------

Loss before other income (expense) and before
 provision for income taxes                                                         619              (2,035)
                                                                         ---------------    -----------------

Other income (expense):
         Net gains (losses) on sales of investment securities                         -               1,697

                                                                         ---------------    -----------------
   Total other income (expense)                                                       -               1,697

Net income (loss) after other income (expense) and before
 provision for income taxes                                                         619                (338)
                                                                         ---------------    -----------------
Provision for (benefit from) income taxes                                           169                  51

Net income (loss)                                                                   450                (389)

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

Net income (loss) applicable to common stock                              $         450      $         (389)
                                                                         ===============    =================

Basic and diluted income (loss) per common share                          $        0.06      $        (0.05)
                                                                         ===============    =================
</TABLE>


See notes to Consolidated Financial Statements

778176.1
                                        4

<PAGE>




                                 RB ASSET, INC.
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                 Three months ended September 30, 1998 and 1997
                             (dollars in Thousands)
                                   (Unaudited)
<TABLE>
<CAPTION>

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


<S>                                    <C>           <C>          <C>           <C>             <C>               <C>        
Balances at June 30, 1997              $   1,400     $  7,100     $ 111,170     $ (10,055)      $    (1,105)      $   108,510

Net loss for the three months
ended September 30, 1997                       -           -             -           (389)               -               (389)

Preferred stock dividends payable              -           -             -             -                 -                 -

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

Balances at September 30, 1997         $   1,400     $  7,100     $ 111,170     $ (10,444)     $    (1,105)       $   108,121
                                       ==========   ==========   ===========   ============    ==============     =============

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

Net income for the three months
ended September 30, 1998                      -            -             -            450                -                450
                                                                                      

Preferred stock dividends payable             -            -             -              -                -                 -

Change in comprehensive income
resulting from changes in unrealized
loss on securities available-for-sale         -            -             -              -             (112)              (112)

Balances at September 30, 1998         $   1,400     $  7,100     $ 111,170     $ (11,111)     $    (1,038)     $     107,521
                                       ==========    ==========   ===========   ============   ==============   ===============

</TABLE>


See notes to Consolidated Financial Statements

778176.1
                                        5

<PAGE>




                                 RB ASSET, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (dollars in thousands)
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                                    Three months ended
                                                                                      September 30,
                                                                            ---------------------------------
                                                                                   1998             1997
                                                                            ----------------  ---------------
<S>                                                                         <C>               <C>
Operating Activities:
Cash Flows Provided by (Used in) Operating Activities:
  Net (loss)/income                                                         $        450      $         (389)
  Adjustments to reconcile net (loss)/income to cash
   used in operating activities:
      Net (gain) loss on sale of real estate assets                                 (488)                914
      Write downs of real estate assets                                                -                 350
      Depreciation and amortization                                                  577                  50
      Net gain on sales of loans, other investments
            and investment securities                                                  -              (1,697)
  Change in operating assets and liabilities:
      Net decrease/(increase) in accrued interest  receivable                        (11)                181
      Net (decrease)/increase in accrued interest payable                             15                (360)
      Net (decrease)/increase in accrued income taxes                                505                (207)
      Net (decrease)/increase in accrued expenses
            and other liabilities                                                    (24)             (1,314)
      Net (increase)/decrease in prepaid expenses and other assets                    67                 814
      Cash effect of increases/(decreases) in allowance for
            possible credit losses                                                    86                 173
      Other                                                                          (10)                  -
            Net cash (used in)/provided by operating activities                    1,167              (1,485)
                                                                             ----------------  ---------------

Investing Activities:
Cash Flows Provided by (Used in) Investing Activities:
  Proceeds from sales and maturities of investment
        securities, available for sale                                                 -               6,871
  Net repayment/(origination) of loans secured by real estate, net                 3,164                 472
  Net repayment/(reacquisition) of commercial and consumer loans                      59              (2,404)
  Net decrease/(increase) in loans sold with recourse                                406               3,516
  Proceeds from sales of real estate held                                            938               4,217
  Additional fundings on real estate held                                           (309)             (3,067)
            Net cash provided by investing activities                              4,258               9,605
                                                                            ----------------  ---------------
</TABLE>

(Continued on next page)




See notes to Consolidated Financial Statements





778176.1
                                        6

<PAGE>







                                 RB ASSET, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (dollars in thousands)
                                   (Unaudited)

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

                                                                                  Three months ended
                                                                                    September 30,
                                                                           --------------------------------
                                                                                 1998            1997
                                                                           ---------------- ---------------
<S>                                                                        <C>              <C>
Financing Activities:
Cash Flows Provided by (used in) Financing Activities:
  Increase in restricted cash                                                     (6,662)         (2,935)
  Proceeds from borrowed funds                                                                       116
  Repayment of borrowed funds                                                          -          (5,259)
  Increase/(decrease) in borrowed funds secured by loans
        sold with recourse, net of construction advances                               -          (2,410)
                                                                           ----------------
            Net cash used in financing activities                                 (6,662)        (10,488)
                                                                           ---------------- ---------------

Net increase/(decrease) in cash and money market investments                      (1,237)          (2,368)

Beginning cash                                                                    12,532            8,940
                                                                           ---------------- ---------------

Ending cash                                                                 $     11,295    $       6,572
                                                                           ================ ===============



Supplemental Disclosure of Cash Flow Information
Cash paid for:
      Interest                                                              $      1,416    $       1,052
      Federal, state and local taxes                                                 152              258


</TABLE>





See notes to Consolidated Financial Statements


778176.1
                                        7

<PAGE>


                                 RB Asset, Inc.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 1998
                             (dollars in thousands)
                                   (Unaudited)


1.  Organization and Formation of the Company

RB Asset,  Inc. (the "Company") is a Delaware  corporation  that, as a result of
the  completion  of  reorganization  steps (the  "Reorganization,"  described in
detail  below),  on May 22,  1998,  succeeded  to the  assets,  liabilities  and
business of River Bank America ("River Bank" or the "Predecessor  Bank").  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").  The Company's principal business continues
to be the  management of its real estate  assets,  mortgage loans and investment
securities,  under a business  plan  intended  to  maximize  stockholder  value.
Following  the  Reorganization,  the Company  intends to manage its business and
assets without the regulatory  constraints previously imposed on the Predecessor
Bank by the Banking Department.  This report is for the three month period ended
September 30, 1998.  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

The Predecessor  Bank was founded in 1848. In 1925, the Predecessor Bank adopted
the name "East  River  Savings  Bank"  which it  continued  to use in its retail
business  through June 28, 1996. The Predecessor  Bank converted to a stock-form
savings bank through a plan of  conversion in 1985.  Effective  October 1, 1988,
East River  Savings  Bank  formally  changed its  corporate  name to "River Bank
America." On June 28,  1996,  the  Predecessor  Bank sold its  remaining  eleven
branches ("the Branch Sale") to Marine Midland Bank ("Marine"), inclusive of the
name East River Savings Bank.  Following  consummation  of the Branch Sale,  all
retail banking operations of the Predecessor Bank ceased.

On May 22,  1998,  River  Bank  completed  its  Reorganization  into a  Delaware
corporation  named  RB  Asset,  Inc.,  under a plan  that  was  approved  at the
Predecessor Bank's special meeting of stockholders reconvened on May 1, 1998. RB
Asset,  Inc., as the successor in the  Reorganization,  succeeded to the assets,
liabilities  and business of River Bank. As a result of the  reorganization  and
related  dissolution  discussed  below,  the  capital  stock of  River  Bank was
canceled  and, as of the close of business on May 22,  1998,  River Bank's stock
transfer records were closed.

Following  stockholder  approval of the Reorganization,  on May 18, 1998, all of
the Predecessor Bank's assets,  liabilities and business were transferred to, or
assumed by, the Predecessor  Bank's  wholly-owned  subsidiary,  River Asset Sub,
Inc. on May 11,  1998,  pursuant to the terms of an  assignment  and  assumption
agreement and related  transfer  documents.  Thereafter,  the Board of Directors
declared distribution of the capital stock of its wholly-owned subsidiary, River
Distribution Sub, Inc. ("River Distribution"),  payable on a book-entry basis to
the  Predecessor  Bank's  stockholders of record on May 22, 1998. At the time of
such distribution the capital stock of River Distribution had no value.

In the  distribution,  all of the issued and outstanding  shares of common stock
and 15% noncumulative  perpetual preferred stock, series A of River Distribution
("River  Distribution  Series A Preferred")  held by the  Predecessor  Bank were
distributed to the Predecessor  Bank's  stockholders on a share-for-share  basis
such that each  holder of the common  stock of River Bank  ("River  Bank  Common
Stock") received one share of River Distribution  Common Stock for each share of
River Bank Common Stock held by such  stockholder  and each holder of River Bank
15%  noncumulative  perpetual  preferred  stock,  series A ("River Bank Series A
Preferred")  received one share of River  Distribution  Series A Preferred Stock
for each share of River Bank Series A Preferred Stock held by such stockholder.

Finally,  upon book-entry  payment of the  distribution,  on May 22, 1998, River
Distribution  merged with and into River Asset  whereupon  the  stockholders  of
River  Distribution  became  stockholders  of the  surviving  corporation  which
changed its name to RB Asset, Inc. In the merger, the shares of capital stock of
River  Distribution  were converted into identical shares of capital stock of RB
Asset, Inc.  Accordingly,  subsequent to the merger,  the capital stock of River
Bank had no value. Stock certificates representing shares of capital stock of RB
Asset, Inc. were then distributed to holders of record as of May 22, 1998.


778176.1
                                        8

<PAGE>


                                 RB Asset, Inc.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 1998
                             (dollars in thousands)
                                   (Unaudited)

In connection with the reorganization  steps, on May 19, 1998, a petition for an
order of  dissolution  declaring  River Bank  dissolved and its legal  existence
terminated  was filed in the Supreme Court of the State of New York. The Supreme
Court  issued  the order on June 18,  1998 and,  upon the filing of the order of
dissolution with the Banking Department,  on June 23, 1998, the Predecessor Bank
was dissolved and its legal  existence  terminated.  Prior to  dissolution,  the
stock transfer records of River Bank were closed and upon such dissolution,  the
capital stock of River Bank was canceled.

On June 28, 1996, the Predecessor Bank 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  Marine.
Pursuant to the terms of the Branch  Agreement,  Marine 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 third parties,  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.

The Assumed  Deposits  exceeded the Transferred  Assets by  approximately  $93.0
million,  which  represented the premium received by the Predecessor Bank in the
Branch Sale.  Marine also purchased the Predecessor  Bank's branch office realty
at 96th Street in Manhattan for $1.3 million.  The  Predecessor  Bank recorded a
net pretax gain on the sale of offices and branches of $77.6 million  reflecting
the  deposit  premium  of  $93.0  million,   partially  offset  by  Branch  Sale
transaction costs of $5.8 million,  professional fees of $3.2 million,  employee
benefits and severance  costs of $4.6 million,  net losses on the sale of assets
of $1.1 million and other net costs of $700,000.  During the year ended June 30,
1997, the Predecessor Bank's indemnification agreements with Marine were amended
and a $3.3 million contingency reserve was recorded.

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 retained assets  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").  Subsequent  to  the  Branch  Sale,  the  Predecessor  Bank  continued
substantially the same asset management strategy for Retained Assets as had been
previously  employed by the Predecessor  Bank, in the years immediately prior to
the Branch Sale.

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.

The  closing of the Branch  Sale was  conditioned  upon the  Predecessor  Bank's
obtaining  financing  with terms and in an amount  reasonably  acceptable to the
Predecessor Bank and determined to be reasonably adequate to permit consummation
of the Branch Sale.  The  Predecessor  Bank obtained from Marine a loan facility
(the  "Facility"  or  "Initial  Facilities")  consisting  of eleven  independent
mortgage loans with additional collateral,  in an aggregate amount not to exceed
$99.1 million.  As of June 30, 1996, Marine had extended $89.8 million under the
Facility to the Predecessor  Bank, which has been reduced by repayment  activity
to $60.6  million at September  30, 1998,  with an  additional  $26.2 million in
proceeds maintained in a restricted cash account pending negotiation with Marine
as to the application of such proceeds to reduce the outstanding balances of the
Facility.  Proceeds of the Facility were utilized by River Bank to (i) refinance
all or part of the certain  indebtedness  secured by assets to be transferred to
Marine, including all or a substantial part of the outstanding advances from the
Federal  Home Loan  Bank  ("FHLB")  and (ii)  provide  additional  funds for the
development  and completion of two individual  real estate assets as part of the
Predecessor Bank's operations subsequent to the Branch Sale.

778176.1
                                        9

<PAGE>


                                 RB Asset, Inc.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 1998
                             (dollars in thousands)
                                   (Unaudited)

Marine assumed  substantially  all of the Predecessor  Bank's retail deposits in
connection  with the Branch  Sale.  In  addition,  the  Predecessor  Bank ceased
accepting  retail deposits on the date of the Branch Sale. At June 30, 1996, the
Predecessor   Bank  held   certain   non-retail   deposits,   which   aggregated
approximately  $3.0 million.  During the quarter  following the Branch Sale, the
Predecessor  Bank  arranged  for the  assumption  by  other  insured  depository
institutions of its remaining non-retail deposits.  Accordingly, the Predecessor
Bank held no deposit  liabilities at June 30, 1997.  However,  at June 30, 1997,
the  Predecessor  Bank  continued to be regulated by the FDIC and the NYSBD.  On
October 31, 1996 the  Predecessor  Bank  requested  that the FDIC  terminate its
insurance  of  accounts  in  accordance  with the  requirements  of the  NYSBD's
approval of the Branch Sale. On April 14, 1997,  the  Predecessor  Bank received
notice  that the  FDIC,  as  requested  by the  Predecessor  Bank,  intended  to
terminate the  Predecessor  Bank's status as an insured state  nonmember Bank on
December 31, 1997.  Upon the issuance of this order by the FDIC, the Predecessor
Bank was no longer  subject to banking  regulation  by the FDIC.  In  connection
therewith,  the  Predecessor  Bank also received  from the Banking  Department a
waiver of any applicable New York State deposit insurance requirements.

Conditions  imposed in connection  with the NYSBD's  approval of the Branch Sale
included:  (i) the Predecessor  Bank's agreement to file an application with the
Banking  Department,  within one year of the  closing of the  Branch  Sale,  for
approval of a plan of dissolution; (ii) the Predecessor Bank's agreement to file
with the  Supreme  Court of the State of New York an  application  for a closing
order within 13 months of the closing of the Branch Sale and an application  for
a final  order of  dissolution  within five  months  following  the filing of an
application for a closing order;  (iii) increased  levels of minimum  regulatory
capital  requirements;  (iv) the  Predecessor  Bank's  agreement  to continue to
submit its proposed  capital  transactions to the NYSBD for prior approval;  (v)
the  continuation  of the Predecessor  Bank's  then-current  periodic  reporting
obligations with respect to its retained  assets,  as well as in connection with
its  ongoing  activities  subsequent  to the  Branch  Sale;  and (vi) such other
conditions  and   obligations   as  the  Banking   Department  may  have  deemed
appropriate.

In June  1997,  the  Predecessor  Bank  submitted  an  alternate  proposal  (the
"Alternate  Proposal") to the NYSBD pursuant to which the Predecessor Bank would
implement  Conditions  No.  1 and No.  2 of the  approval  of the  Branch  Sale,
described  above.  The Predecessor  Bank proposed to adopt a plan under which it
would  transfer  all of its assets and  liabilities,  including  all  contingent
liabilities,   to  a  successor  corporation  ("Successor")  incorporated  under
Delaware General  Corporation Law.  Successor would acquire all of the assets of
the Predecessor  Bank and continue all of the business of the  Predecessor  Bank
under the same business plan as adopted by the Predecessor  Bank.  Following the
transfer of its assets and liabilities to Successor,  the Predecessor Bank would
surrender its banking charter and dissolve.  The  implementation of the proposed
plan  would  result in a mere  change of form  from a banking  corporation  to a
corporation incorporated under the Delaware General Corporation Law, which would
not be subject to the  jurisdiction  of the  Banking  Department.  The  proposed
transfer was expected to qualify as a tax-free reorganization under the Internal
Revenue Code and, as such,  the Company  expected (and continues to expect) that
certain  of the  Predecessor  Bank's  tax  attributes  would  be  preserved.  In
connection  with the Alternate  Proposal,  common and preferred  stockholders of
River Bank would receive shares of Successor on a share-for-share  basis so that
Successor will be owned by the same  stockholders,  in the same proportions,  as
owned the Predecessor Bank on the record date.

Prior to June 30,  1997,  the  Predecessor  Bank  received  the  NYSBD's  letter
indicating their conditional  approval of the Alternate  Proposal as meeting the
Conditions  of  the  Banking  Department's  approval  of  the  Branch  Sale,  if
implemented by the Predecessor Bank on a timely basis.  The NYSBD's  conditional
approval of the Alternate  Proposal and related  modification of Condition No. 1
of the Approval of the Branch Sale provided that the approval of stockholders of
the  Alternate  Proposal  not later than  September  30, 1997 would be deemed to
satisfy Condition No. 1. Condition No. 2 of the Banking Department's approval of
the Branch  Sale would be deemed to be  satisfied  if the  petition  required by
Condition No. 2 was filed by the Bank by October 15, 1997. The Predecessor  Bank
met  Condition  No.  1 and  Condition  No. 2 on a  timely  basis.  A copy of the
Alternate Proposal and the NYSBD's letter indicating their conditional  approval
of the Alternate  Proposal were included as Exhibits 14 and 15 to FDIC Form F-2,
dated June 30, 1997.



778176.1
                                       10

<PAGE>


                                 RB Asset, Inc.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 1998
                             (dollars in thousands)
                                   (Unaudited)

The  Banking   Department  had  also  advised  the  Predecessor  Bank  that  the
Predecessor  Bank's  minimum  capital  requirement,  set at $115  million in the
NYSBD's approval of the Branch Sale and subsequently  amended to $106 million in
May 1997,  was to remain at $106  million  until the  Predecessor  Bank's  final
dissolution.  Further,  the  Banking  Department's  conditional  approval of the
Alternate  Proposal  required that the Predecessor Bank seek prior approval from
the NYSBD for any  material  sale or transfer  of assets,  or  expenditures  for
development or renovation of any properties held by the  Predecessor  Bank prior
to the completion of the dissolution of the Predecessor Bank.

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

The  Company's  principal  business  continues to be the  management of its real
estate assets,  mortgage loans and investment securities,  under a business plan
intended to maximize  stockholder value.  Primarily as a result of deterioration
in the real estate  markets  and a general  economic  recession  in the New York
metropolitan  area and, later in other areas in which the  Predecessor  Bank was
engaged  in  lending   activities,   particularly   California,   the  Company's
non-performing  assets began increasing in 1989 and continued to increase in the
aggregate  through  1992.  The  resolution  of  non-performing   assets,   which
substantially  resulted  from the  Predecessor  Bank's  lending  strategy of the
1980s,  required  significant  time  and  attention  by the  Predecessor  Bank's
management.  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,  subsequent to June 28, 1996, the  Predecessor
Bank has not originated a material amount of loans.

The Predecessor Bank has previously received notice that the approvals necessary
to declare or pay  dividends on the  Predecessor  Bank's  outstanding  shares of
River Bank Series A Preferred  Stock would not be  provided.  In June 1996,  the
Predecessor  Bank's  Board of  Directors  declared  a Series A  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 Marine (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  has taken any action
regarding a quarterly  dividend on the  Company's  Series A Preferred for any of
the quarterly  periods ended from September 30, 1996 through September 30, 1998.
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's Series
A Preferred  Stock will  continue to be subject to the approval of Marine for so
long as the Facility remains  outstanding.  The Company has received notice from
Marine that the approval  necessary to declare or pay dividends on the Company's
Series A  Preferred  Stock will not be  provided  at this time.  There can be no
assurance that the Board of Directors of the Company will deem it appropriate to
pay  dividends  on the Series A Preferred  Stock,  even if permitted to do so by
Marine.


2.  Presentation of Interim Financial Statements

The  accompanying  unaudited  consolidated  financial  statements of the Company
include  all  adjustments  which  management   believes  necessary  for  a  fair
presentation  of the Company's  financial  condition at September 30, 1998,  the
results of its operations for the three months ended September 30, 1998 and 1997
and the  statements  of changes in  stockholders'  equity and cash flows for the
three  months ended  September  30, 1998 and 1997.  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 June 30, 1998, 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, 1998.

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, investments in unconsolidated real estate partnerships are

778176.1
                                       11

<PAGE>


                                 RB Asset, Inc.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 1998
                             (dollars in thousands)
                                   (Unaudited)

generally  carried at cost,  subject to periodic  assessment  of net  realizable
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 current period.

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 condition
as of September 30, 1998,  the results of operations  for the three months ended
September 30, 1998 and 1997, and changes in stockholders'  equity and cash flows
for the three months ended September 30, 1998 and 1997.

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,  the valuation of
investments in real estate for investment.

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

Management  determines  the  appropriate   classification  of  debt  and  equity
securities  (collectively,  "marketable" securities) at the time of purchase and
reevaluates such  designation as of each balance sheet date.  Available-for-sale
securities are stated at estimated fair value, with unrealized gains and losses,
net of tax, reported in a separate  component of stockholders'  equity. The cost
of  marketable  securities  classified  as  available-for-sale  is adjusted  for
amortization of premiums and accretion of discounts to maturity,  or in the case
of mortgage-backed  securities,  over the estimated life of the security using a
method  approximating  the level yield method.  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 September 30, 1998, the balance of  stockholders'  equity included a
$1,038,000    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
September  30, 1998 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,  1998.  As a  result  of this  analysis,  the  Company
recognized  income tax  expense in the amount of  $169,000,  during the  quarter
ending September 30, 1998.

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

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


3.  Commitments, Contingencies and Other

As of  September  30,  1998,  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

778176.1
                                       12

<PAGE>


                                 RB Asset, Inc.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 1998
                             (dollars in thousands)
                                   (Unaudited)

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 is 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  regulations.  The
application  of this  limitation  could have a material  effect on the Company's
ability to realize its deferred  tax assets.  The Company is of the view that no
ownership  change of the Company will be deemed to have  occurred as a result of
the Reorganization or otherwise.  However,  the application of Section 382 is in
many respects  uncertain.  In assessing the effects of prior transactions and of
the  Reorganization  under  Section  382,  the  Company has made  certain  legal
judgments  and certain  factual  assumptions.  The Company has not  requested or
received any rulings from the IRS with respect to the application of Section 382
to the  implementation  of the  Reorganization  and the IRS could  challenge the
Company's determinations.

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


4.  Regulatory capital requirements

Prior to the reorganization of the Predecessor Bank into a Delaware corporation,
which was  completed on May 22,  1998,  the Banking  Department  had advised the
Predecessor Bank that the Predecessor Bank's minimum capital requirement, set at
$115 million in the NYSBD's approval of the Branch Sale and subsequently amended
to $106 million in May 1997, was to remain at $106 million until the Predecessor
Bank's final  dissolution,  unless the Banking  Department  shall  provide prior
approval of the Company's written request to amend the Company's minimum capital
requirement. So long as the Company's deposit accounts were insured by the FDIC,
as a  Federally-insured  state-chartered  bank,  the  Company  was  required  to
maintain  minimum levels of regulatory  capital.  Under those FDIC  regulations,
insured state-chartered banks were generally required to maintain (i) a ratio of
Tier 1 leverage  capital to total  assets of at least 4.0% to 5.0% (3.0% for the
most highly-rated banks) and (ii) a ratio of Tier 1 capital to risk weighted (as
defined by  regulation)  assets of at least 4.0% and a ratio of total capital to
risk weighted assets of at least 8.0%.

On October 31, 1996, the Company requested that the FDIC terminate its insurance
of accounts as a result of having  transferred  all of its remaining  non-retail
deposits and mortgage escrow accounts to other insured institutions or servicing
entities.  On April 14,  1997,  the Company  received  notice that the FDIC,  as
requested  by the  Company,  intended to terminate  the  Company's  status as an
insured state nonmember Bank on December 31, 1997.

Subsequent to the  termination  of the  Predecessor  Bank's status as an insured
nonmember bank by the FDIC and the  reorganization of the Predecessor Bank into
a  Delaware  corporation,  the  Company is no longer  subject to the  regulatory
capital requirements of either the FDIC or the Banking Department.

778176.1
                                       13

<PAGE>


                                 RB Asset, Inc.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 1998
                             (dollars in thousands)
                                   (Unaudited)

5.  Earnings per share

Earnings per share were based upon 7,100,000  weighted  average shares of Common
Stock  outstanding  during the three months ended  September  30, 1998 and 1997,
respectively. The Company had no securities outstanding that were convertible to
common stock at September 30, 1998 or 1997.

In February 1997, the Financial  Accounting  Standards Board issued Statement of
Accounting  Standards  No. 128,  "Earnings  Per Share"  ("SFAS-128"),  which was
required  to be adopted on  December  31,  1997.  At that time,  the Company was
required to change the method it previously  used to compute  earnings per share
and to restate all prior periods.  Under the new  requirements of SFAS-128,  the
dilutive effect of stock options was excluded.  The  implementation  of SFAS-128
has not had any effect upon the Company's  reported  primary  earnings per share
for the periods ended September 30, 1998 and 1997, or for the fiscal years ended
June 30, 1998, 1997 and 1996.


6.  Comprehensive Income

As of July 1, 1998, the Company  adopted  Statement of Accounting  Standards No.
130, "Reporting  Comprehensive  Income " ("SFAS-130").  SFAS-130 establishes new
rules for the reporting and display of comprehensive  income and its components.
However,  the adoption of this  Statement has had no effect on the Company's net
income or stockholders' equity.  SFAS-130 requires unrealized gains or losses on
the  Company's  available-for-sale  securities,  which  prior to  adoption  were
reported   separately  in  stockholders'   equity,   to  be  included  in  other
comprehensive  income. Prior year financial statements have been reclassified to
conform to the requirements of SFAS-130.

During the  quarters  ended  September  30, 1998 and 1997,  total  comprehensive
income (loss) was $338 and $(389),  respectively.  The following table describes
the components of comprehensive income and accumulated  comprehensive income for
the dates indicated:

<TABLE>
<CAPTION>

         Components of Comprehensive Income
         (Unaudited):
                                                                  Three months ended September 30,
                                                                     1998                    1997
                                                               ----------------        -----------------

<S>                                                             <C>                    <C>              
         Net income                                             $          450         $           (389)
         Unrealized losses on securities                                  (112)                      -
         Comprehensive income                                   $          338         $           (389)
                                                               ================        =================
</TABLE>

<TABLE>
<CAPTION>

         Components of Accumulated
         Comprehensive Income:
                                                                (Unaudited)
                                                                 September 30,             June 30,
                                                                      1998                   1998

<S>                                                             <C>                    <C>              
         Unrealized losses on securities                        $       (1,038)        $           (926)
         Accumulated comprehensive income                       $       (1,038)        $           (926)
                                                               ================        =================

</TABLE>

778176.1
                                       14

<PAGE>


                                 RB Asset, Inc.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 1998
                             (dollars in thousands)
                                   (Unaudited)

7.  Legal Proceedings

An action  entitled  Strome  Global  Income Fund et al. v. River Bank America et
al., Index No. 605226198, was commenced against the Registrant, its predecessors
and certain of its current and former directors in New York State Supreme Court,
New York County on October 27, 1998. Plaintiffs are holders of the Company's 15%
non-cumulative perpetual preferred stock, Series A, and were formerly holders of
River Bank America 15% non-cumulative  perpetual  preferred stock, Series A. The
complaint alleges various claims for breach of contract,  fraudulent conveyance,
violations  of  Sections  604 and 605 of the New York  Banking  Law,  breach  of
fiduciary  duty and the duty of  disclosure  and ultra vires acts based upon the
reorganization  into  the  Registrant,   and  subsequent  dissolution,   of  the
Registrant's  predecessor,  River Bank America,  and an amendment  made to River
Bank America's certificate of designations for the preferred stock in connection
with the reorganization.  Among other things,  plaintiffs claim that as a result
of the  reorganization  and dissolution  they were entitled to receive a $25 per
share liquidation  payment, as well as unpaid dividends,  and were also entitled
to appraisal rights as dissenting stockholders. Plaintiffs seek judgment against
the defendants  for the  liquidation  payment,  other  unspecified  compensatory
damages,  avoidance  of the  transfer of assets  from River Bank  America to the
Registrant,  punitive damages and other relief. The Registrant believes that the
reorganization  and  dissolution of River Bank America was in the best interests
of all of the River Bank America  stockholders  and did not violate  plaintiffs'
rights as  preferred  stockholders  in any  respect  and  intends  to defend the
lawsuit vigorously.


778176.1
                                       15

<PAGE>



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


Financial Condition:

At September  30, 1998 the  consolidated  assets of the Company  totaled  $191.7
million, an increase of $834,000, or 0.4% from June 30, 1998.

Real estate held for investment, net of accumulated depreciation,  declined $1.5
million,  or 1.8%,  from  $82.8  million  at June 30,  1998 to $81.3  million at
September  30,  1998.  The decline in real estate  held for  investment,  net of
accumulated  depreciation at September 30, 1998 was attributable to transfers of
$938,000 to real estate held for disposal and depreciation charges of $577,000.

Real estate held for  disposal,  net of allowance  for fair market value reserve
under Statement of Accounting Standards No. 121 (SFAS-121),  increased $287,000,
or 5.7%,  from $3.6 million at June 30, 1998 to $3.9  million at  September  30,
1998. During the quarter ended September 30, 1998, sales of real estate held for
disposal primarily consisted of apartment units sold from inventory held at June
30, 1998.  Such sales totaled  $938,000  during the quarter ended  September 30,
1998.  Offsetting the effects of the sales on the book value of real estate held
for disposal,  net at September 30, 1998 were transfers of additional  apartment
units from real estate held for investment, net totaling $938,000 and additional
capitalized  fundings of $287,000.  Apartment units transferred into real estate
held for disposal during the quarter ended September 30, 1998 are expected to be
sold within the next twelve months.

Total real estate loans  receivable,  net of the related  allowance for possible
credit losses  declined $3.1  million,  or 5.5%,  from $57.1 million at June 30,
1998 to $54.0  million at September 30, 1998.  The $3.1 million  decline in real
estate loans, net, during the quarter ended September 30, 1998, was attributable
to a decline in loans  receivable,  secured by real estate of $3.2 million and a
decline in loans sold with  recourse,  net of  $842,000,  partially  offset by a
decline in the related allowance for possible credit losses of $897,000.

The Company's loans secured by real estate  decreased by $3.2 million,  or 5.4%,
from $59.0  million at June 30, 1998 to $55.8  million at  September  30,  1998.
During the quarter ended  September 30, 1998, the Company  received  payments in
satisfaction of $3.2 million in loans secured by real estate,  recognizing a net
gain of  $488,000.  This  decrease  in loans  secured  by real  estate,  net was
partially offset by $80,000 in loan fundings advanced during the quarter.

The Company's loans sold with recourse, net decreased by $842,000, or 5.3%, from
$15.8 million,  at June 30, 1998 to $14.9 million at September 30, 1998.  During
the quarter ended  September  30, 1998,  the Company sold $837,000 in loans sold
with recourse,  net, which was partially  offset by additional asset fundings of
$430,000.  In  addition,  $435,000  in losses  related  to the asset  sales were
charged against the allowance for possible credit losses,  thereby  reducing the
remaining  book value of loans sold with  recourse,  net and the  allowance  for
possible credit losses by that amount.

The Company's  allowance for possible  credit losses related to loans secured by
real estate decreased by $897,000, or 5.1%, from $17.8 million, at June 30, 1998
to $16.8 million at September 30, 1998. The decrease resulted from chargeoffs of
$483,000  net of  recoveries  of  $86,000  for  asset  disposition  transactions
previously  provided  for at June 30,  1998.  In  addition,  the  allowance  for
possible  credit losses was reduced during the quarter ended  September 30, 1998
by  $500,000  when a junior  subordinated  participation  loan  secured  by real
estate,  that had been fully  reserved for at June 30, 1998, was repaid in full.
As a result of this  transaction,  the allowance for possible  credit losses was
reduced  by  $500,000  and a gain of  $500,000  was  recognized.  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 September 30, 1998, the allowance for
possible  credit  losses was 30.1% of real estate  loans as compared to 30.0% at
June 30, 1998.

Cash and due from banks  decreased by $1.2 million,  or 9.9%, from $12.5 million
at June 30,  1998 to  $11.3  million  at  September  30,  1998.  Allocations  to
restricted cash,  scheduled asset fundings and the payment of operating expenses
exceeded the total operating revenues and asset sales proceeds, resulting in the
decrease in unrestricted cash during the quarter ended September 30, 1998.

778176.1
                                       16

<PAGE>



At September  30, 1998,  Marine had  restricted a total of  approximately  $26.2
million in funds, held on deposit at Marine, in accordance with the terms of the
Branch  Sale  and  the  Marine  Facility   agreements.   Marine  had  restricted
approximately  $19.6 million at June 30, 1998.  Restricted  funds held by Marine
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 Marine  Facility.  The
restricted cash held by Marine is intended to serve as substitute collateral for
the  Marine  Facility,  until  such time as the  Marine  Facility  is reduced in
accordance  with the Company's  Asset  Management  Plan and the Marine  Facility
Agreements. See "Liquidity and Capital Resources," below.

Commercial  and consumer  loans,  net of the related  allowance for loan losses,
totaled  $8.0 million at  September  30, 1998, a decrease of $107,000,  or 1.3%,
from the June 30, 1998 balance of $8.1 million.  This decrease was primarily the
result of the effects of normal  amortization and prepayment of individual loans
in the portfolio.

Other  liabilities  totaled  $15.5 million at September 30, 1998, an increase of
$496,000,  or 3.3%,  from the June 30, 1998  balance of $15.0  million.  The net
increase in other  liabilities  during the quarter  ended  September 30, 1998 as
compared to the same date in the  previous  year,  was  related to the  relative
timing of  payments  for  certain  accrued  liabilities  during the  current and
previous fiscal years.

During the three months ended  September 30, 1998,  total  stockholders'  equity
increased by $338,000 or 0.3% to $107.5 million, as compared with $107.2 million
at June 30, 1998. This increase was due to the net income recorded for the three
months ended September 30, 1998 in the amount of $450,000,  partially  offset by
an increase in the securities valuation account (allowance for unrealized losses
on marketable securities) of $112,000.

The following  table  summarizes the calculation of the Company's book value per
share at September 30, 1998 and June 30, 1998.

<TABLE>
<CAPTION>

                                                          September 30,               June 30,
                                                              1998                      1998
                                                        -----------------         ----------------

<S>                                                     <C>                       <C>         
Total stockholders' equity                              $     107,521,000         $    107,183,000

   Less: liquidation value of preferred stock
      ($25 per share issued and outstanding)                   35,000,000               35,000,000
                                                        -----------------         ----------------
Net stockholders' equity                                $      72,521,000         $     72,183,000
                                                        =================         ================

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

                  Book value per share                  $         10.21           $        10.17
                                                        =================         ================

</TABLE>



Results of Operations:

General.  The  Company  reported  net income  attributable  to common  shares of
$450,000,  or $0.06 per share, for the three months ended September 30, 1998, an
increase of $839,000 as compared with a net loss  attributable  to common shares
of $389,000,  or ($0.05) per share,  for the three month period ended  September
30, 1997.  The primary  reason for the increase in the  Company's  net operating
results  for the  quarter  ended  September  30,  1998,  as compared to the same
quarter in the previous  year,  was the  recording of other  property  income of
$488,000 in the quarter ended September 30, 1998, an increase of $1.8 million as
compared with a net loss from other  property  operations of $1.3 million in the
same quarter of the previous

778176.1
                                       17

<PAGE>



year. In addition,  contingent participation revenues increased $231,000 to $1.0
million in the quarter ended  September 30, 1998 as compared to $769,000 in same
quarter of the previous year.  Interest expense and other expenses also declined
$227,000 and $788,000,  respectively, in the quarter ended September 30, 1998 as
compared with the same period in the previous year.  Interest  expense  declined
from $1.6 million in the quarter ended September 30, 1997 to $1.4 million during
the same quarter of the current year. Other expenses  declined from $1.7 million
in the quarter  ended  September  30, 1997 to $934,000  during the quarter ended
September 30, 1998.

Partially  offsetting the effects of increased other property income,  increased
contingent participation revenues and reduced interest and operating expenses on
the results of operations  reported for the quarter ended September 30, 1998, as
compared to the same quarter of the previous year, were reductions in net rental
operations and net gains on sales of investment  securities of $330,000 and $1.7
million,  respectively.  Net rental  operations  declined  from  $959,000 in the
quarter  ended  September  30, 1997 to $629,000  during the same  quarter of the
current  year.  Net gains on sales of investment  securities  declined from $1.7
million in the quarter  ended  September 30, 1997 to $0 during the quarter ended
September 30, 1998.

Net Rental Operations. For the three months ended September 30, 1998, net rental
operations  resulted in income of $629,000,  a decrease of  $330,000,  or 34.4%,
from $959,000 for the same three month period in the previous  year. The primary
reason for the decline in net rental  operations  income was the  recognition of
$527,000 in depreciation expense attributable to real estate held for investment
in excess of the amount  recognized  in the same  period of the  previous  year.
Excluding the $527,000 increase in depreciation  charges recorded in the quarter
ended  September  30,  1998,  as compared  with the same quarter in the previous
year, income from rental operations increased $197,000, or 20.5%, in the quarter
ended  September 30, 1998 as compared to the quarter  ended  September 30, 1997.
This  increase was due to various,  individually  immaterial  operating  factors
affecting  aggregate  rental  income and expenses  within the  Company's  rental
properties.

For the three months ended September 30, 1998,  depreciation  charges associated
with real estate held for investment were $577,000,  an increase of $527,000, or
1,054.0%, as compared with depreciation charges associated with real estate held
for  investment  in the quarter  ended  September  30,  1998 of  $50,000.  Under
SFAS-121,  the Company is required to depreciate real estate held for investment
over the estimated useful life of the assets.  No depreciation  charges are made
for the  portion of the assets  attributable  to land  values.  During the three
months year ended September 30, 1998, the Company recorded  depreciation charges
of  approximately  $577,000,  of which $525,000  represents  depreciation of the
capitalized  costs of the real estate held for investment  (less land value) for
five of the  Company's  six real estate  assets from the period June 30, 1998 to
September  30, 1998.  The remaining  $52,000 in  depreciation  charges  recorded
during the year ended June 30, 1998 were for the sixth property, consistent with
depreciation charges taken in prior periods for that property.  On May 22, 1998,
as a consequence of the Reorganization, the Company was no longer subject to the
categorization  and  depreciation  regulations  for  investments  in real estate
previously imposed by the Predecessor Bank's  regulators.  Accordingly,  on that
date, the Company began to record depreciation charges, as required by SFAS-121,
for all real  estate  held for  investment,  net  that had not been  subject  to
depreciation charges in prior periods.

Other Property Income.  Total other property income was $488,000 for the quarter
ended  September  30, 1998,  an increase of $1.8 million as compared  with a net
loss of $1.3 million in the quarter ended  September  30, 1997.  For the quarter
ended September 30, 1998, the $488,000 income was primarily  attributable to the
recognition  of a gain of $500,000  resulting  from the full  satisfaction  of a
junior  subordinated  participation  loan  secured by real estate which had been
fully reserved for in prior periods.

For the quarter ended  September 30, 1997, the net loss of $1.3 million in other
property  income was  attributable  to losses on the sale of real  estate in the
amount of $914,000 and a write down of a real estate joint  venture asset in the
amount of $350,000. The loss on the sale of real estate during the quarter ended
September 30, 1997,  was primarily  attributable  to the sale of one real estate
property  with a book value of $3.3  million,  which  resulted  in a net loss of
$932,000.


778176.1
                                       18

<PAGE>



Interest  Income.  For the three months ended September 30, 1998, total interest
income, net of provisions for possible credit losses, was $867,000, a decline of
$14,000,  from $881,000 for the same quarter in the previous year. Loan interest
declined  $127,000 in the quarter ended  September 30, 1998 as compared with the
same  quarter in the  previous  year due to reduced  average  balances  for loan
assets resulting from  dispositions  and the effects of normal  amortization and
repayment  activity.  This  decline  in  interest  income  from loan  assets was
substantially  offset by other interest income,  which increased $113,000 in the
quarter ended  September  30, 1998 as compared with the quarter ended  September
30, 1997. The increase in other interest  income in the quarter ended  September
30, 1998,  as compared  with the same quarter in the previous year was primarily
due to increased  average cash balances in the quarter ended September 30, 1998,
which earned interest at the prevailing money market rates.

Contingent Participation Revenues. The Company realized contingent participation
revenues of $1.0 million and $744,000 in the quarters  ended  September 30, 1998
and 1997, respectively.  The Company may realize contingent participation income
when a loan secured by real estate's  underlying  collateral property achieves a
level of predetermined  economic performance  sufficient to activate contingency
clauses  in the loan  agreement  that allow the  Company to share,  on a limited
basis,  in the economic  performance  of the  collateral  property.  The Company
recognizes  such revenues in the period when the loan is repaid and the terms of
all additional contingent payments are finalized.

Contingent  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 participation loan
had  been  sold  to  Marine  on  June  28,  1996  and  the  junior  subordinated
participation  loan was fully reserved for on the Company's  books following the
Branch Sale. The full repayment of the junior  subordinated  participation  loan
resulted  in the  recognition  of an  additional  gain in the amount of $500,000
during the quarter ended September 30, 1998. See "Other Property Income," above.

During the quarter ended September 30, 1997, contingent  participation  revenues
of $744,000 were realized on one junior  participation  loan,  which was paid in
full  during the  period.  A portion of the loan had been sold to Marine on June
28,  1996 as part of the Branch  Sale.  The Company  had  retained a  contingent
interest in the underlying  property's  economic  performance and an interest in
the loan's unpaid principal  balance  approximating  $10.1 million following the
Branch Sale.

At September 30, 1998,  the Company had a remaining  contingent  interest in two
junior subordinated participation loans in which the Company retains an interest
of approximately $2.4 million in principal amount,  which are fully reserved for
(100%) by the Company.  All of such loans have been modified  since  origination
and are currently performing in accordance with their terms.

Interest Expense.  During the three months ended September 30, 1998, the Company
recorded interest expenses in the amount of $1.4 million, a decline of $227,000,
or 13.7%, as compared with interest expenses of $1.7 million in the same quarter
during the  previous  year.  Interest  expenses  declined in the  quarter  ended
September  30,  1998 as compared  with the quarter  ended  September  30,  1997,
primarily as a result of declines in the average amount borrowed by the Company.
During the quarter ended September 30, 1998, the Company  borrowed an average of
$68.8 million,  a decline of $11.7 million,  or 14.6%,  as compared with average
borrowings of $80.5 million  during the quarter  ended  September 30, 1997.  The
decline  in the  average  amount  of  borrowed  funds  was  attributable  to the
repayment of outstanding  obligations which occurred in fiscal 1998 primarily as
a result of asset dispositions.

Other  Expenses.  During the  quarter  ended  September  30,  1998,  the Company
recorded total other expenses in the amount of $934,000,  a decline of $788,000,
or 45.8%, as compared with other expenses of $1.7 million in the same quarter of
the previous year.  Other expenses  declined in the quarter ended  September 30,
1998,  as compared with the quarter  ended  September  30, 1997,  primarily as a
result of declines in salaries  and  employee  benefits  expenses  and legal and
professional fees of $155,000 and $543,000, respectively.

Salaries and employee  benefits  expense declined in the quarter ended September
30, 1998, as compared with the same period in the previous  year, as a result of
the continued reduction of staff employed by the Company. At September 30, 1998,
the Company employed one full time employee engaged in administrative duties.


778176.1
                                       19

<PAGE>



Legal and professional  fees expense decreased  $543,000,  or 72.9%, to $202,000
during the quarter ended  September  30, 1998 from  $745,000  during the quarter
ended September 30, 1997, primarily as a result of the reduction of professional
fees incurred in  connection  with the  Reorganization  described in Note 1. The
Company  accrued and paid  $290,000 and $159,000,  respectively,  in the quarter
ended  September  30,  1997 and $0 and $0,  respectively  in the  quarter  ended
September  30,  1998,  for  legal  and  professional  fees  associated  with the
Reorganization.  In addition to this $290,000 reduction in accrued  professional
fees related to the Reorganization,  the Company incurred approximately $253,000
more in other professional fees during the quarter ended September 30, 1997 than
in the same quarter of the current  year.  The  additional  fees incurred in the
quarter  ended  September  30,  1997 as  compared  with the same  quarter of the
current  year  related  to  services  such  as  actuarial  evaluations  and  tax
preparation  which were primarily  related to the  finalization of the Company's
employee- and  tax-related  affairs as a business entity that had operated as an
insured depository institution.

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 quarter ended September
30,  1998,  the  Company  accrued  $664,000  in fees  payable to the  Management
Company,   of  which  $46,000  related  to  fees  incurred  for  the  successful
disposition of assets.  During the quarter ended September 30, 1997, the Company
accrued  $793,000 in fees payable to the Management  Company,  of which $121,000
related to fees incurred for the successful  disposition of assets. At September
30, 1998 the Company had accrued fees payable to the Management  Company and its
affiliate, Fintek, Inc., aggregating $846,000.

Other Income (Expense). The Company did not recognize any other income (expense)
in the quarter ended  September 30, 1997, a decrease of $1.7 million as compared
with the same  quarter of the  previous  year.  Other  income  (expense)  in the
quarter ended September 30, 1998 was primarily due to the $1.8 million  recorded
gain on sale of the Company's largest preferred stock holding, with a book value
of approximately $5.0 million.

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

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

The provision for income taxes differs from the amount  computed by applying the
statutory  Federal income tax rate of 35% to the reported loss before  provision
for income taxes primarily due to state and local income and franchise taxes and
limitations on the recognition of tax benefits of net operating  losses.  During
the  quarters  ended  September  30, 1998 and 1997,  the Company  recorded a net
provision for income taxes of $169,000 and $51,000,  respectively,  primarily to
reflect the effects of operations and asset disposition on its current state and
local income tax liability at September 30, 1998 and 1997, respectively.


Liquidity and Capital Resources

The Company must maintain sufficient  liquidity to meet its funding requirements
for scheduled debt  repayments,  operating  expenses  (including  current income
taxes  payable)  and for  development  costs  related  to  certain  real  estate
projects.

778176.1
                                       20

<PAGE>



At  September  30, 1998,  the Company had $68.8  million in borrowed  funds.  In
connection  with the Branch Sale,  the Company  obtained  financing  with Marine
(Initial  Facilities)  totaling  $89.8  million.  At  September  30,  1998,  the
remaining  outstanding balance of the Initial Facilities due to Marine was $60.6
million.  Borrowed  Funds  related to Asset Sale  Transactions  amounted to $8.2
million at September  30, 1998.  The Company  actively  monitors and manages its
cash  inflows  and  outflows  in an  attempt  to  maximize  payment  of its debt
obligations to Marine and to invest, to the extent possible, all cash balances.

The  Company  seeks to maintain  liquidity  within a range of 5% to 10% of total
assets. Liquidity for this purpose is defined as unrestricted cash. At September
30, 1998, the Company's  liquidity ratio, as so defined,  amounted to 5.9% which
was within the 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  generally accepted
accounting  principles.  Set forth  below is a  description  of  certain  of the
accounting  standards  recently  adopted  by the  FASB  which  are  relevant  to
financial institutions such as the Company.

SFAS No. 128.  In February  1997,  the FASB issued SFAS No. 128,  "Earnings  per
Share," which was required to be adopted on December 31, 1997. At that time, the
Company was required to change the method currently used to compute earnings per
share  and to  restate  all  prior  periods.  Under  the  new  requirements  for
calculating  primary  earnings per share,  the dilutive  effect of stock options
will be excluded.  The implementation of SFAS No. 128 did not have any effect on
the Company's  primary  earnings per share for the quarters ended  September 30,
1998 or 1997 or for the years ended June 30, 1998 or 1997.

SFAS No. 130. As of July 1, 1998,  the Company  adopted  Statement of Accounting
Standards No. 130,  "Reporting  Comprehensive  Income "  ("SFAS-130").  SFAS-130
establishes new rules for the reporting and display of comprehensive  income and
its components. However, the adoption of this Statement has had no effect on the
Company's net income or stockholders' equity. SFAS-130 requires unrealized gains
or  losses  on the  Company's  available-for-sale  securities,  which  prior  to
adoption were reported  separately in  stockholders'  equity,  to be included in
other comprehensive income.


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  positions 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 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

General  Description  of the Year 2000 Issue and the  Nature and  Effects of the
Year 2000 on Information Technology (IT) and Non-IT Systems. The Year 2000 issue
is the result of computer  programs  being  written using two digits rather than
four  digits  to define  the  applicable  year.  Any of the  Company's  computer
programs or hardware that have date-sensitive software or embedded computer chip
technology may recognize a date using "00" as the year 1900 rather than the Year
2000.  This  could  result  in  a  system  failure  or  miscalculations  causing
disruptions of operations,  including, among other things, a temporary inability
to process transactions or engage in similar normal business activities.

The Company believes that  modifications to existing software and conversions to
new software, the Year 2000 issue will not pose significant operational problems
for its computer systems.  Further,  due to the limited number of assets managed
by the Company and the limited  scope of the  Company's  continuing  operations,
which could be managed and  accounted for by methods not relying on the computer
systems currently  employed by the Company,  if such modifications are not made,
or if such  modifications  and conversions are not completed in a timely manner,
the Year 2000 issue is unlikely to have a material impact

778176.1
                                       21

<PAGE>



on the operations,  liquidity or capital resources of the Company.  In addition,
the Company believes that the  implementation  of modifications to components of
the  building  systems,  affecting  the  operations  of its  properties  held as
investments  in real  estate,  is  unlikely  to have a  material  affect  on the
operations, liquidity or capital resources of the Company.

Status of Progress in Becoming  Year 2000  Compliant,  Including  Timetable  for
Completion of Each Remaining  Phase. The Company's plan to resolve the Year 2000
issue  involves  four  phases:  assessment,  and where  necessary,  remediation,
testing and implementation.

To date,  the Company has  completed an  assessment of all systems that could be
significantly  affected by the Year 2000.  The  Company's  completed  assessment
indicated  the need to modify or replace  portions  of its  software so that its
computer  systems will function  properly with respect to dates in the year 2000
and  thereafter.  Since the  Company's  accounting  software is  maintained  and
supported by a third party,  the total Year 2000 cost has been,  and is expected
to be, minimal.

In addition, the Company has completed the assessment of all systems related to
the operations of its properties held as investments in real estate. Such
assessments were performed to ensure that remediation of building equipment
(such as security systems and elevators) could be completed and tested prior to
the year 2000. The Company's completed assessment indicated the need to modify
or replace portions of its buildings' systems so that these systems will
function properly with respect to dates in the year 2000 and thereafter. All
necessary remediation is expected to be completed as an integral part of
regularly scheduled building maintenance and repair activities. As a result, the
cost of such remediation is expected to be immaterial to the operations,
liquidity or capital resources of the Company.

Nature and Level of Third Parties and their Exposure to the Year 2000 Issue. The
Company has queried its significant  suppliers and  subcontractors  that provide
accounting or information  processing services to the Company (external agents).
To date,  the Company is not aware of any external  agent with a Year 2000 issue
that would materially impact the Company's  results of operations,  liquidity or
capital resources. However, the Company has no means of absolutely ensuring that
external  agents  will be Year 2000 ready.  Due to the limited  number of assets
managed  by the  Company  and the  limited  scope  of the  Company's  continuing
operations,  which could be managed and  accounted for by methods not relying on
the computer systems and services currently provided by external agents employed
by the Company, if such modifications are not made, or if such modifications and
conversions  are not  completed  in a  timely  manner,  the Year  2000  issue is
unlikely  to have a  material  impact on the  operations,  liquidity  or capital
resources of the Company.

Contingency   Plans.  The  Company  has  contingency   plans  for  all  critical
applications and systems.  These contingency plans involve,  among other planned
actions,  the  use  of  alternative  manual  procedures,  the  temporary  use of
increased or alternative third party services and adjusting staffing strategies.


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.

778176.1
                                       22

<PAGE>



PART II - OTHER INFORMATION


Item 1.   Legal Proceedings

An action  entitled  Strome  Global  Income Fund et al. v. River Bank America et
al., Index No. 605226198, was commenced against the Registrant, its predecessors
and certain of its current and former directors in New York State Supreme Court,
New York County on October 27, 1998. Plaintiffs are holders of the Company's 15%
non-cumulative perpetual preferred stock, Series A, and were formerly holders of
River Bank America 15% non-cumulative  perpetual  preferred stock, Series A. The
complaint alleges various claims for breach of contract,  fraudulent conveyance,
violations  of  Sections  604 and 605 of the New York  Banking  Law,  breach  of
fiduciary  duty and the duty of  disclosure  and ultra vires acts based upon the
reorganization  into  the  Registrant,   and  subsequent  dissolution,   of  the
Registrant's  predecessor,  River Bank America,  and an amendment  made to River
Bank America's certificate of designations for the preferred stock in connection
with the reorganization.  Among other things,  plaintiffs claim that as a result
of the  reorganization  and dissolution  they were entitled to receive a $25 per
share liquidation  payment, as well as unpaid dividends,  and were also entitled
to appraisal rights as dissenting stockholders. Plaintiffs seek judgment against
the defendants  for the  liquidation  payment,  other  unspecified  compensatory
damages,  avoidance  of the  transfer of assets  from River Bank  America to the
Registrant,  punitive damages and other relief. The Registrant believes that the
reorganization  and  dissolution of River Bank America was in the best interests
of all of the River Bank America  stockholders  and did not violate  plaintiffs'
rights as  preferred  stockholders  in any  respect  and  intends  to defend the
lawsuit vigorously.



Item 2.   Changes in Securities

None.


Item 3.   Defaults Upon Senior Securities

None.


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

The Company held its annual meeting of  stockholders  on September 16, 1998. The
submission of matters to a vote of the Company's  stockholders which occurred at
the annual meeting,  and the results of the stockholders'  vote on such matters,
were previously reported in the Company's Annual Report on Form 10-K, dated June
30, 1998, and are incorporated herein by reference.


Item 5.   Other Information

None.


Item 6.   Exhibits and Reports on Form 8-K

(i)  Form 8-K, dated October 27, 1998, to report  information  disclosed in Part
     II, Item 1 of this Form 10-Q, as filed on November 4, 1998.




778176.1
                                       23

<PAGE>


SIGNATURES

Pursuant to the  requirements  of Section 13 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:  November 13, 1998    By: /s/ Nelson L. Stephenson
       -----------------        -------------------------

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






778176.1
                                       24