FIRST ROBINSON FINANCIAL CORP - FORM 10-Q

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EX-32 - FIRST ROBINSON FINANCIAL CORP	v210993_ex32.htm
EX-31.1 - FIRST ROBINSON FINANCIAL CORP	v210993_ex31-1.htm
EX-31.2 - FIRST ROBINSON FINANCIAL CORP	v210993_ex31-2.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended

December 31, 2010

¨	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 001-12969

FIRST ROBINSON FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

DELAWARE	36-4145294
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification Number)

501 East Main Street, Robinson, Illinois	62454
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code

(618) 544-8621

None

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File requested to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Larger Accelerated Filer	o	Accelerated Filer	o
Non-Accelerated Filer	o (Do not check if a smaller reporting company)	Smaller Reporting Company	x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.) Yes o No x

The number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 427,749 shares of common stock, par value $.01 per share, as of February 11, 2011.

FIRST ROBINSON FINANCIAL CORPORATION

Index to Form 10-Q

		PAGE
PART 1. FINANCIAL INFORMATION

Item 1.	Financial Statements

	Condensed Consolidated Balance Sheets as of December 31, 2010 and March 31, 2010	3

	Condensed Consolidated Statements of Operations for the Three-Month and Nine-Month Periods Ended December 31, 2010 and 2009	4

	Condensed Consolidated Statements of Changes in Stockholders’ Equity For the Nine-Month Periods ended December 31, 2010 and 2009	6

	Condensed Consolidated Statements of Cash Flows for the Nine-Month Periods Ended December 31, 2010 and 2009	7

	Notes to Condensed Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	37

Item 4.	Controls and Procedures	37

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	38

Item 1A.	Risk Factors	38

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	39

Item 3.	Defaults Upon Senior Executives	39

Item 4.	Removed and Reserved	39

Item 5.	Other Information	39

Item 6.	Exhibits	39

SIGNATURES		40

CERTIFICATIONS

Item 1:

FIRST ROBINSON FINANCIAL CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

	(Unaudited)
	December 31, 2010			March 31, 2010
ASSETS

Cash and cash equivalents	$	8,248		$	6,562
Interest-bearing deposits		4,709			3,475
Federal funds sold		19,730			7,852
Cash and cash equivalents		32,687			17,889
Available-for-sale securities		46,366			55,399
Loans, held for sale		356			88
Loans, net of allowance for loan losses of $1,102 and $973 at December 31, 2010 and March 31, 2010, respectively		120,571			100,063
Federal Reserve and Federal Home Loan Bank stock		1,051			1,008
Premises and equipment, net		3,891			4,018
Foreclosed assets held for sale, net		70			52
Interest receivable		825			906
Prepaid income taxes		39			380
Cash surrender value of life insurance		1,541			1,504
Other assets		1,458			1,682

Total Assets	$	208,855		$	182,989

LIABILITIES AND STOCKHOLDERS’ EQUITY

Liabilities
Deposits	$	176,198		$	149,312
Other borrowings		16,151			17,621
Short-term borrowings		1,800			1,700
Advances from borrowers for taxes and insurance		173			196
Deferred income taxes		474			779
Interest payable		203			251
Other liabilities		1,127			1,085
Total Liabilities		196,126			170,944


Commitments and Contingencies		—			—

Stockholders’ Equity
Preferred stock, $.01 par value; authorized 500,000 shares, no shares issued and outstanding		—			—
Common stock, $ .01 par value; authorized 2,000,000 shares; 859,625 shares issued; outstanding December 31, 2010– 427,749 shares; March 31, 2010 – 433,198 shares		9			9
Additional paid-in capital		8,769			8,783
Retained earnings		11,160			10,182
Accumulated other comprehensive income		870			976
Treasury stock, at cost
Common: December 31, 2010 – 431,876 shares; March 31, 2010 – 426,427 shares		(8,079	)		(7,905	)

Total Stockholders’ Equity		12,729			12,045

Total Liabilities and Stockholders’ Equity	$	208,855		$	182,989

See Notes to Condensed Consolidated Financial Statements

FIRST ROBINSON FINANCIAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three and Nine-Month Periods Ended December 31, 2010 and 2009

(In thousands, except per share data)

(Unaudited)

	Three-Month Period					Nine-Month Period

	2010		2009			2010		2009

Interest and Dividend Income:
Loans	$	1,719	$	1,439		$	4,884	$	4,200
Securities:
Taxable		378		463			1,249		1,547
Tax-exempt		29		31			89		106
Other interest income		10		1			19		7
Dividends on Federal Reserve Bank stock		3		3			8		8

Total Interest and Dividend Income		2,139		1,937			6,249		5,868

Interest Expense:
Deposits		578		741			1,789		2,486
Other borrowings		26		31			80		59

Total Interest Expense		604		772			1,869		2,545

Net Interest Income		1,535		1,165			4,380		3,323

Provision for Loan Losses		75		1,072			165		1,252

Net Interest Income After Provision for Loan Losses		1,460		93			4,215		2,071

Non-interest income:
Charges and fees on deposit accounts		239		270			728		747
Charges and other fees on loans		107		79			265		256
Net gain on sale of loans		207		100			548		282
Net gain (loss) on sale of foreclosed property		—		(2	)		15		(2	)
Net realized gain on sale of available-for-sale investments		—		—			—		106
Net gain on sale of equipment		—		—			4		—
Other		142		127			409		366

Total Non-Interest Income		695		574			1,969		1,755

Non-interest expense:
Compensation and employee benefits		680		684			2,218		2,024
Occupancy and equipment		198		174			549		534
Data processing		74		59			214		186
Audit, legal and other professional		62		91			204		284
Advertising		64		87			198		263
Telephone and postage		56		45			152		148
FDIC insurance		55		54			159		234
Loss on cost basis equity investment		—		60			—		197
Other		168		158			466		499

Total Non-Interest Expense		1,357		1,412			4,160		4,369

See Notes to Condensed Consolidated Financial Statements.

FIRST ROBINSON FINANCIAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)

For the Three and Nine-Month Periods Ended December 31, 2010 and 2009

(In thousands, except per share data)

(Unaudited)

	Three-Month Period					Nine-Month Period
	2010		2009			2010		2009

Income (loss) before income taxes	$	798	$	(745	)	$	2,024	$	(543	)

Provision (benefit) for income taxes		275		(285	)		681		(212	)

Net Income (Loss)	$	523	$	(460	)	$	1,343	$	(331	)

Earnings (Loss) Per Share-Basic	$	1.27	$	(1.10	)	$	3.25	$	(0.79	)
Earnings (Loss) Per Share-Diluted	$	1.22	$	(1.10	)	$	3.13	$	(0.79	)

See Notes to Condensed Consolidated Financial Statements

FIRST ROBINSON FINANCIAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

For the Nine-Month Periods Ended December 31, 2010 and 2009

(In thousands, except share data)

(Unaudited)

												Accumulated
						Additional						Other
	Common Stock					Paid-in			Retained			Comprehensive			Treasury						Comprehensive
	Shares			Amount		Capital			Earnings			Income			Stock			Total			Income

Balance, April 1, 2009		435,232		$	9	$	8,791		$	10,560		$	782		$	(7,835	)	$	12,307

Comprehensive income
Net loss										(331	)								(331	)	$	(331	)

Unrealized appreciation on available-for-sale securities, net of taxes of $188																						269
Less reclassification adjustment for realized gains included in income net of taxes $35																						71
Total unrealized appreciation on available-for-sale securities, net of taxes of $153													198						198			198

Total comprehensive loss																					$	(133	)

Treasury shares purchased		(2,034	)													(70	)		(70	)
Dividends on common stock, $0.80 per share										(348	)								(348	)
Incentive compensation							(18	)											(18	)

Balance, December 31, 2009		433,198		$	9	$	8,773		$	9,881		$	980		$	(7,905	)	$	11,738

Balance, April 1, 2010		433,198		$	9	$	8,783		$	10,182		$	976		$	(7,905	)	$	12,045

Comprehensive income
Net income										1,343									1,343		$	1,343
Change in unrealized appreciation on available-for-sale securities, net of taxes of $(67)													(106	)					(106	)		(106	)

Total comprehensive income																					$	1,237


Treasury shares purchased		(5,449	)													(174	)		(174	)
Dividends on common stock, $0.85 per share										(365	)								(365	)
Incentive compensation							(14	)											(14	)

Balance, December 31, 2010		427,749		$	9	$	8,769		$	11,160		$	870		$	(8,079	)	$	12,729

See Notes to Condensed Consolidated Financial Statements

FIRST ROBINSON FINANCIAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Nine-Month Periods Ended December 31, 2010 and 2009

(In thousands)

(Unaudited)

	2010			2009
Cash flows from operating activities:
Net income (loss)	$	1,343		$	(331	)
Items not requiring (providing) cash
Depreciation and amortization		233			236
Provision for loan losses		165			1,252
Amortization of premiums and discounts on securities		204			230
Amortization of loan servicing rights		202			83
Deferred income taxes		(238	)		7
Originations of mortgage loans held for sale		(33,325	)		(24,492	)
Proceeds from the sale of mortgage loans		33,604			25,096
Net gain on loans sold		(548	)		(282	)
Net (gain) loss on sale of foreclosed property		(15	)		2
Net gain on sale of equipment		(4	)		—
Loss on cost basis equity investment		—			197
Net realized gain on sale of securities		—			(106	)
Cash surrender value of life insurance		(37	)		(39	)
Changes in:
Interest receivable		81			45
Other assets		13			(941	)
Interest payable		(48	)		(76	)
Other liabilities		42			100
Income taxes, prepaid		341			(221	)

Net cash provided by operating activities		2,013			760

Cash flows from investing activities:
Purchase of available-for-sale securities		(2,631	)		(31,100	)
Proceeds from maturities of available-for-sale securities		3,550			1,820
Proceeds from sales of available-for-sale securities		—			15,448
Repayment of principal on mortgage-backed securities		7,737			9,703
Purchase of Federal Home Loan Bank stock		(43	)		(195	)
Net change in loans		(20,742	)		(12,071	)
Purchase of premises and equipment		(117	)		(333	)
Proceeds from sale of equipment		24			—
Proceeds from sale of foreclosed assets		67			44

Net cash used in investing activities		(12,155	)		(16,684	)

See Notes to Condensed Consolidated Financial Statements.

FIRST ROBINSON FINANCIAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

For The Nine-Month Periods Ended December 31, 2010 and 2009

(In thousands)

(Unaudited)

	2010			2009
Cash flows from financing activities:
Net increase in deposits	$	26,886		$	5,252
Proceeds from other borrowings		97,857			86,950
Repayment of other borrowings		(99,327	)		(76,841	)
Advances from Federal Home Loan Bank		10			5,500
Repayment of advances from Federal Home Loan Bank		(10	)		(5,500	)
Borrowings from Federal Reserve Bank		10			—
Repayment of borrowings from Federal Reserve Bank		(10	)		—
Net change in from short-term borrowings		100			2,500
Purchase of incentive plan shares		(14	)		(18	)
Purchase of treasury stock		(174	)		(70	)
Dividends paid		(365	)		(348	)
Net increase in advances from borrowers for taxes and insurance		(23	)		(66	)

Net cash provided by financing activities		24,940			17,359

Increase in cash and cash equivalents		14,798			1,435

Cash and cash equivalents at beginning of period		17,889			13,709

Cash and cash equivalents at end of period	$	32,687		$	15,144

Supplemental Cash Flows Information:

Interest paid	$	1,917		$	2,621

Income taxes paid (net of refunds)		454			—

Real estate acquired in settlement of loans		70			—

See Notes to Condensed Consolidated Financial Statements.

FIRST ROBINSON FINANCIAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.	Basis of Presentation

The condensed consolidated financial statements include the accounts of First Robinson Financial Corporation (the “Company”) and its wholly owned subsidiary, First Robinson Savings Bank, National Association (the “Bank”). All significant intercompany accounts and transactions have been eliminated in consolidation. The accompanying condensed consolidated financial statements are unaudited and should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Form 10-K filed with the Securities and Exchange Commission. The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with the rules and regulations for reporting on Form 10-Q and Article 8-03 of Regulation of S-X. Accordingly, they do not include information or footnotes necessary for a complete presentation of financial condition, results of operations, changes in stockholders’ equity, and cash flows in conformity with accounting principles generally accepted in the United States of America. In the opinion of management of the Company, the unaudited condensed consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments) necessary to present fairly the financial position of the Company at December 31, 2010, the results of its operations for the three and nine month periods ended December 31, 2010 and 2009, the changes in stockholders’ equity for the nine month periods ended December 31, 2010 and 2009, and cash flows for the nine month periods ended December 31, 2010 and 2009. The results of operations for those months ended December 31, 2010 are not necessarily indicative of the results to be expected for the full year.

The Condensed Consolidated Balance Sheet of the Company, as of March 31, 2010, has been derived from the audited Consolidated Balance Sheet for the Company as of that date.

2.	Newly Adopted and Recent Accounting Pronouncements

In July 2010, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (ASU) No. 2010-20, “Receivables (Topic 310) – Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses,” which requires significant new disclosures about the allowance for credit losses and the credit quality of financing receivables. The requirements are intended to enhance transparency regarding credit losses and the credit quality of loan losses receivables. Under this statement, allowance for credit losses and fair value are to be disclosed by portfolio segment, while credit quality information, impaired financing receivables and nonaccrual status are to be presented by class of financing receivable. Disclosure of the nature and extent, the financial impact and segment information of troubled debt restructurings will also be required. The dislcosures are to be presented at the level of disaggregation that management uses when assessing and monitoring the portfolio’s risk and performance. ASU 2010-20 is effective for interim and annual reporting periods after December 15, 2010. The Company has adopted the provisions of ASU 2010-20 and has provided the required disclosure in this December 31, 2010 Report on Form 10-Q.

In January 2010, the FASB issued ASU No. Topic 2010-06, “Fair Value Measurements and Disclosures (Topic 820) – Improving Disclosures about Fair Value Measurements.” ASU 2010-06 amends the fair value disclosure guidance. The amendments include new disclosures and changes to clarify existing disclosure requirements. ASU 2010-06 was effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances and settlements of Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. Adoption of this update did not have a material impact on the Company’s financial statements.

FIRST ROBINSON FINANCIAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

3.	Fair Value Measurements

FASB ASC No. 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. FASB ASC No. 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

Level 1

Quoted prices in active markets for identical assets or liabilities.

Level 2

Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3

Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Following is a description of the valuation methodologies and inputs used for instruments measured at fair value on a recurring basis and recognized in the accompanying condensed consolidated balance sheet at December 31, 2010 and March 31, 2010.

Available-for-Sale Securities

The fair value of available-for-sale securities are determined by various valuation methodologies. Where quoted market prices are available in an active market, securities are classified within Level 1. The Company has no Level 1 securities. If quoted market prices are not available, then fair values are estimated using pricing models or quoted prices of securities with similar characteristics. Level 2 securities include obligations of U.S. government corporations and agencies, obligations of states and political subdivisions, and mortgage-backed securities. The value of the Company’s Level 2 securities is set forth below. In certain cases where Level 1 or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy. The Company has no Level 3 available-for-sale securities.

FIRST ROBINSON FINANCIAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table presents the Company’s assets that are measured at fair value on a recurring basis and the level within the FASB ASC No. 820 hierarchy in which the fair value measurements fall as of December 31, 2010 and March 31, 2010 (in thousands):

	Carrying value at December 31, 2010
Description	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)

U.S. government sponsored enterprises (GSE)	$	12,413	$	—	$	12,413	$	—
Mortgage-backed, GSE residential		28,442		—		28,442		—
Mortgage-backed, GSE commercial		1,462		—		1,462		—
State and political subdivisions		4,049		—		4,049		—
Total available-for-sale securities	$	46,366	$	—	$	46,366	$	—

	Carrying value at March 31, 2010
Description	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)

U.S. government sponsored enterprises (GSE)	$	15,191	$	—	$	15,191	$	—
Mortgage-backed, GSE residential		36,472		—		36,472		—
State and political subdivisions		3,736		—		3,736		—
Total available-for-sale securities	$	55,399	$	—	$	55,399	$	—

The Company may be required, from time to time, to measure certain other financial assets and liabilities on a nonrecurring basis. These adjustments to fair value usually result from application of lower-of-cost-or-market accounting or write-downs of individual assets. Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a non-recurring basis and recognized in the accompanying balance sheets, as well as the general classification of such assets and liabilities pursuant to the valuation hierarchy.

Impaired Loans (Collateral Dependent)

Loans for which it is probable that the Company will not collect all principal and interest due according to contractual terms are measured for impairment in accordance with the provisions of FASB ASC No. 310-10-45 (“ASC 310-45”) “Accounting by Creditors for Impairment of a Loan.” Allowable methods for estimating fair value include using the fair value of the collateral for collateral dependent loans.

If the impaired loan is identified as collateral dependent, then the fair value method of measuring the amount of the impairment is utilized. This method requires reviewing an independent appraisal of the collateral and applying a discount factor to the value based on management’s estimation process.

Impaired loans are classified within Level 3 of the fair value hierarchy.

Mortgage Servicing Rights

The fair value used to determine the valuation allowance is estimated using discounted cash flow models. Due to the nature of the valuation inputs, mortgage servicing rights are classified within Level 3 of the hierarchy.

FIRST ROBINSON FINANCIAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Foreclosed Assets Held for Sale

Fair value of foreclosed assets held for sale is based on market prices determined by appraisals less discounts for costs to sell. Foreclosed assets held for sale are classified within Level 2 of the valuation hierarchy.

The following table presents the fair value measurement of assets measured at fair value on a nonrecurring basis and the level within the FASB ASC No. 820 fair value hierarchy in which the fair value measurements fall at December 31, 2010 and March 31, 2010:

Carrying value at December 31, 2010

Quoted Prices in

Significant

Active Markets

Other

Significant

for Identical

Observable

Unobservable

Assets

Inputs

Description

Fair Value

(Level 1)

(Level 2)

(Level 3)

Impaired loans (collateral dependent)

590

—

590

			Carrying value at March 31, 2010
			Quoted Prices in		Significant
			Active Markets		Other		Significant
			for Identical		Observable		Unobservable
			Assets		Inputs		Inputs
Description	Fair Value		(Level 1)		(Level 2)		(Level 3)

Impaired loans (collateral dependent)	$	66	$	—	$	—	$	66
Mortgage servicing rights		422		—		—		422
Foreclosed assets held for sale, net		52		—		52		—

The following methods were used to estimate fair values of the Company’s financial instruments. The fair values of certain of these instruments were calculated by discounting expected cash flows, which involves significant judgments by management and uncertainties. Fair value is the estimated amount at which financial assets or liabilities could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. Because no market exists for certain of these financial instruments and because management does not intend to sell these financial instruments, the Company does not know whether the fair values shown below represent values at which the respective financial instruments could be sold individually or in the aggregate.

Carrying amount is the estimated fair value for cash and cash equivalents, interest-bearing deposits, loans held for sale, federal funds sold, Federal Reserve and Federal Home Loan Bank stocks, accrued interest receivable and payable, and advances from borrowers for taxes and insurance. Security fair values equal quoted market prices, if available. If quoted market prices are not available, fair value is estimated based on quoted market prices of similar securities. The fair value of loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. Loans with similar characteristics were aggregated for purposes of the calculations. On demand deposits, savings accounts, NOW accounts, and certain money market deposits the carrying amount approximates fair value. The fair value of fixed-maturity time deposits is estimated using a discounted cash flow calculation that applies the rates currently offered for deposits of similar remaining maturities. On other borrowings and short-term borrowings, rates currently available to the Company for debt with similar terms and remaining maturities are used to estimate the fair value of existing debt. The fair value of commitments to originate loans is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. For fixed-rate loan commitments, fair value also considers the difference between current levels of interest rates and the committed rates. The fair value of forward sale commitments is estimated based on current market prices for loans of similar terms and credit quality. The fair values of letters of credit and lines of credit are based on fees currently charged for similar agreements or on the estimated cost to terminate or otherwise settle the obligations with the counterparties at the reporting date.

FIRST ROBINSON FINANCIAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

	December 31, 2010				March 31, 2010
	Carrying				Carrying
	Amount		Fair Value		Amount		Fair Value
	(In thousands)
Financial assets
Cash and cash equivalents	$	8,248	$	8,248	$	6,562	$	6,562
Interest-bearing deposits		4,709		4,709		3,475		3,475
Federal funds sold		19,730		19,730		7,852		7,852
Available-for-sale securities		46,366		46,366		55,399		55,399
Loans held for sale		356		356		88		88
Loans, net of allowance for loan losses		120,571		122,179		100,063		101,214
Federal Reserve and Federal Home Loan Bank stock		1,051		1,051		1,008		1,008
Interest receivable		825		825		906		906

Financial liabilities
Deposits		176,198		165,867		149,312		139,318
Other borrowings		16,151		16,156		17,621		17,630
Short-term borrowings		1,800		1,800		1,700		1,700
Advances from borrowers for taxes and insurance		173		173		196		196
Interest payable		203		203		251		251

Unrecognized financial instruments (net of contract amount)
Commitments to originate loans		—		—		—		—
Letters of credit		—		—		—		—
Lines of credit		—		—		—		—

4.	Federal Home Loan Bank Stock

The Company owns approximately $879,000 of Federal Home Loan Bank of Chicago (“FHLB”) stock. During the third quarter of 2007, the FHLB of Chicago received a Cease and Desist Order from its regulator, the Federal Housing Finance Board. The order generally prohibits capital stock repurchases and redemptions until a time to be determined by the Federal Housing Finance Board. The FHLB will continue to provide liquidity and funding through advances. The FHLB had not declared a dividend since July 24, 2007, however in January 2011, the FHLB declared a cash dividend at an annualized rate of 10 basis points per share, based on preliminary financial results for the fourth quarter of 2010. The dividend will be paid on February 14, 2011. Management performed an analysis and deemed the Company’s cost method investment in FHLB stock to be recoverable as of December 31, 2010.

5.	Authorized Share Repurchase Program

The Board of Directors voted, on August 17, 2010, to approve a stock repurchase program of approximately 5,000 shares, or approximately 1.2% of the Company’s issued and outstanding shares. The repurchase program will expire the earlier of the completion of the purchase of the shares or August 16, 2011. As of December 31, 2010, there had been 955 shares purchased during the program approved August 17, 2010.

FIRST ROBINSON FINANCIAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

6.	Investment Securities

The amortized cost and approximate fair values of available-for-sale securities are as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Approximate Fair Value
			(In thousands)
December 31, 2010
U.S. government sponsored enterprises (GSE)	$	12,103	$	310	$	—		$	12,413
Mortgage-backed securities, GSE, residential		27,342		1,101		(1	)		28,442
Mortgage-backed securities, GSE, commercial		1,502		—		(40	)		1,462
State and political subdivisions		3,997		54		(2	)		4,049

	$	44,944	$	1,465	$	(43	)	$	46,366
March 31, 2010
U.S. government sponsored enterprises (GSE)	$	14,852	$	339	$	—		$	15,191
Mortgage-backed securities, GSE residential		35,308		1,186		(22	)		36,472
State and political subdivisions		3,644		96		(4	)		3,736

	$	53,804	$	1,621	$	(26	)	$	55,399

The amortized cost and fair value of available-for-sale securities at December 31, 2010, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized Cost		Fair Value
	(In thousands)

Within one year	$	5,345	$	5,412
One to five years		10,338		10,623
Five to ten years		417		427

		16,100		16,462
Mortgage-backed securities		28,844		29,904

Totals	$	44,944	$	46,366

There were no sales of investment securities during the nine months ended December 31, 2010. Proceeds from the sale of investment securities available-for-sale during the nine-months ended December 31, 2009 were $15,448,000. Gross gains of $113,000 and gross losses of $7,000 were realized on the sales for the nine-months ended December 31, 2009.

FIRST ROBINSON FINANCIAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table shows our investments’ gross unrealized losses and fair value (in thousands), aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at December 31, 2010 and March 31, 2010. At December 31, 2010, the Company does not hold any security that it considers other-than-temporarily impaired.

Description of Securities	Less than 12 Months				More than 12 Months				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In thousands)
As of December 31, 2010
Mortgage-backed securities, GSE, residential	$	429	$	1	$	—	$	—	$	429	$	1
Mortgage-backed securities, GSE, commercial		1,462		40		—		—		1,462		40
State and political subdivisions		529		2		—		—		529		2
Total temporarily impaired securities	$	2,420	$	43	$	—	$	—	$	2,420	$	43

As of March 31, 2010
Mortgage-backed securities, GSE, residential	$	2,712	$	22	$	—	$	—	$	2,712	$	22
State and political subdivisions		303		2		227		2		530		4
Total temporarily impaired securities	$	3,015	$	24	$	227	$	2	$	3,242	$	26

There are four securities in unrealized loss positions in the investment portfolio at December 31, 2010, due to interest rate changes and not credit events. The unrealized losses are considered temporary and, therefore, have not been recognized into income, because the issuers are of high credit quality and management has the ability and intent to hold for the foreseeable future. The fair values are expected to recover as the investments approach their maturity dates or there is a downward shift in interest rates. All but one of the mortgage-backed securities in the portfolio are residential properties. One of the mortgage-backed securities with a temporary loss is secured by 5 or more dwelling units.

7.	Accumulated Other Comprehensive Income

Other comprehensive income components and related taxes were as follows at December 31:

	2010		2009
	(In thousands)

Unrealized gains on available-for-sale securities	$	173	$	456
Less reclassification adjustment for realized gains included in income		—		106

Other comprehensive income, before tax effect		173		350
Less tax expense		67		152

Other comprehensive income related to available-for-sale securities	$	106	$	198

FIRST ROBINSON FINANCIAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The components of accumulated other comprehensive income, included in stockholders’ equity, are as follows:

	December 31, 2010			March 31, 2010
	(In thousands)

Net unrealized gain on securities available for sale	$	1,422		$	1,595
Tax effect		(552	)		(619	)

Net-of-tax amount	$	870		$	976

8.	Loans and Allowance for Loan Losses

Categories of loans include:

	December 31, 2010		March 31, 2010
	(In thousands)
Mortgage loans on real estate:
Residential:
1-4 Family	$	42,746	$	41,349
Construction		5,636		4,222
Second mortgages		1,567		1,386
Equity lines of credit		3,922		3,819
Commercial		32,168		21,843
Total mortgage loans on real estate		86,039		72,619
Commercial loans		20,387		18,883
Consumer/other loans		15,574		9,834
States and municipal government loans		945		1,885

Less
Net deferred loan fees, premiums and discounts		9		4
Undisbursed portion of loans		907		2,093
Allowance for loan losses		1,102		973

Net loans	$	120,927	$	100,151

FIRST ROBINSON FINANCIAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following tables present the balance in the allowance for loan losses and the recorded investment in loans based on portfolio segment and impairment method as of December 31, 2010 and 2009:

	2010
	Commercial Real Estate			Residential Real Estate		Commercial			Consumer/ Other Loans		State and Municipal Government		Total
	(In thousands)
Allowance for loan losses:
Balance, beginning of year	$	593		$	72	$	279		$	29	$	—	$	973
Provision charged to expense		(95	)		303		(70	)		27		—		165
Losses charged off		18			31		1			40		—		90
Recoveries		24			—		—			30		—		54
Balance, end of period	$	504		$	344	$	208		$	46	$	—	$	1,102
Ending balance: individually evaluated for impairment	$	152		$	281	$	74		$	17	$	—	$	524
Ending balance: collectively evaluated for impairment	$	352		$	63	$	134		$	29	$	—	$	578

Loans:
Ending balance	$	32,168		$	53,871	$	20,387		$	15,574	$	945	$	122,945
Ending balance: individually evaluated for impairment	$	2,931		$	1,397	$	1,543		$	21	$	—	$	5,892
Ending balance: collectively evaluated for impairment	$	29,237		$	52,474	$	18,844		$	15,553	$	945	$	117,053

	2009
	Commercial Real Estate		Residential Real Estate		Commercial		Consumer/ Other Loans		State and Municipal Government		Total
	(In thousands)
Allowance for loan losses:
Balance, beginning of year	$	458	$	66	$	222	$	34	$	—	$	780
Provision charged to expense		89		157		31		975		—		1,252
Losses charged off		—		130		—		1,017		—		1,147
Recoveries		—		—		—		46		—		46
Balance, end of period	$	547	$	93	$	253	$	38	$	—	$	931

FIRST ROBINSON FINANCIAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following tables present the credit risk profile of the Company’s loan portfolio based on rating category and payment activity as of December 31, 2010:

	Commercial Real Estate		Residential Real Estate		Commercial		Consumer/Other Loans		State and Municipal Government		Total
	(In thousands)
Rating:
Pass	$	29,243	$	52,552	$	18,969	$	15,542	$	812	$	117,118
Watch		1,339		262		—		4		133		1,738
Special Mention		593		147		1,067		—		—		1,807
Substandard		602		399		273		6		—		1,280
Doubtful		391		511		78		22		—		1,002
Total	$	32,168	$	53,871	$	20,387	$	15,574	$	945	$	122,945

The following tables present the Company’s loan portfolio aging analysis as of December 31, 2010:

	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days		Non- accrual		Total Loans Past Due and Non- accrual		Current		Total Loans Receivable		Total Loans > 90 Days & Accruing
	(In thousands)
Real Estate:
Residential:
1-4 Family	$	54	$	54	$	—	$	185	$	293	$	42,453	$	42,746	$	—
Construction		—		—		—		—		—		5,636		5,636		—
Second mortgages		—		—		—		—		—		1,567		1,567		—
Equity lines of credit		—		—		—		10		10		3,912		3,922		—
Commercial real estate		—		—		—		—		—		32,168		32,168		—
Commercial		—		—		—		78		78		20,309		20,387		—
Consumer/other loans		97		13		—		10		120		15,454		15,574		—
State and municipal government		—		—		—		—		—		945		945		—

Total	$	151	$	67	$	—	$	283	$	501	$	122,444	$	122,945	$	—

FIRST ROBINSON FINANCIAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table presents the Company’s nonaccrual loans at December 31, 2010 and March 31, 2010. This table excludes purchased impaired loans and performing troubled debt restructurings.

	December 31, 2010		March 31, 2010
	(In thousands)
Residential:
1-4 Family	$	185	$	85
Equity line of credit		10		—
Commercial real estate		—		32
Commercial		78		13
Consumer/other loans		10		5

Total	$	283	$	135

9.	Lines of Credit

The Company’s $2.5 million revolving line of credit note payable matures September 30, 2011. The balance of the revolving line of credit was $1,800,000 and $1,700,000 as of December, 2010 and March 31, 2010, respectively. The note bears interest at the prime commercial rate with a floor of 3.50% which was the rate on December 31, 2010 and is secured by 100% of the stock of the Bank.

The Bank maintains a $5,000,000 revolving line of credit, of which no amounts outstanding at December 31, 2010 or at March 31, 2010, with an unaffiliated financial institution. The line bears interest at the federal funds rate of the financial institution (1.15% at December 31, 2010), has an open-end maturity and is unsecured if used for less than thirty (30) consecutive days.

The Bank has also established borrowing capabilities at the Federal Reserve Bank of St. Louis discount window. Investment securities of $3,000,000 have been pledged as collateral. As of December 31, 2010 and March 31, 2010 no amounts were outstanding. The primary credit borrowing rate at December 31, 2010 was 0.50%, has a term of up to 90 days, and has no restrictions on use of the funds borrowed.

10.	Other Borrowings

Other borrowings included the following:

	December 31, 2010		March 31, 2010
	(In thousands)

Securities sold under repurchase agreements	$	16,151	$	17,621

Securities sold under agreements to repurchase consist of obligations of the Company to other parties. The obligations are secured by investments and such collateral is held by the Company in safekeeping at a correspondent bank. The maximum amount of outstanding agreements at any month end during the nine months ending December 31, 2010 and the year ending March 31, 2010 totaled $20,388,000 and $20,023,000, respectively. The monthly average of such agreements totaled $18,277,000 for the nine months ending December 31, 2010 and $15,222,000 for the year ending March 31, 2010. The average rate on the agreements for the nine months ending December 31, 2010 was 0.18% and 0.14% for the twelve months ending March 31, 2010. The agreements at December 31, 2010, mature periodically within 24 months.

The Company has a repurchase agreement with one customer with an outstanding balance of $8.9 million at December 31, 2010. The repurchase agreement matures daily.

FIRST ROBINSON FINANCIAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

11.	Earnings (Loss) Per Share for the Three-Month Periods

Basic earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per share gives effect to the increase in the average shares outstanding resulting from the exercise of dilutive stock options and the effect of the incentive plan shares. The Company had 16,267 incentive plan shares outstanding at December 31, 2009 that were excluded from the calculation as they were anti-dilutive. The components of basic and diluted earnings (loss) per share for the three months ended December 31, 2010 and 2009 were computed as follows (dollar amounts in thousands except share data):

				Weighted
	Income			Average		Per Share
	(Loss)			Shares		Amount

For the Three-Months Ended December 31, 2010:

Basic Earnings per Share:
Income available to common stockholders	$	523			412,263	$	1.27

Effect of Dilutive Securities:
Incentive plan shares					16,280

Diluted Earnings per Share:
Income available to common stockholders	$	523			428,543	$	1.22

For the Three-Months Ended December 31, 2009:

Basic Earnings (Loss) per Share:
Income (loss) available to common stockholders	$	(460	)		416,931	$	(1.10	)

Effect of Dilutive Securities:
Incentive plan shares					—

Diluted Earnings (Loss) per Share:
Income (loss) available for common stockholders	$	(460	)		416,931	$	(1.10	)

FIRST ROBINSON FINANCIAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

11. Earnings (Loss) Per Share for the Nine-Month Periods

Basic earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per share gives effect to the increase in the average shares outstanding which would have resulted from the exercise of dilutive stock options. The Company had 16,267 incentive plan shares outstanding at December 31, 2009 that were excluded from the calculation as they were anti-dilutive. The components of basic and diluted earnings (loss) per share for the nine months ended December 31, 2010 and 2009 were computed as follows (dollar amounts in thousands except share data):

	Weighted
	Income			Average		Per Share
	(Loss)			Shares		Amount

For the Nine-Months Ended December 31, 2010:

Basic Earnings per Share:
Income available to common stockholders	$	1,343			412,930	$	3.25

Effect of Dilutive Securities:
Unearned incentive plan shares					16,132

Diluted Earnings per Share:
Income available to common stockholders	$	1,343			429,062	$	3.13

For the Nine-Months Ended December 31, 2009:

Basic Earnings (Loss) per Share:
Income (loss) available to common stockholders	$	(331	)		418,032	$	(0.79	)

Effect of Dilutive Securities:
Unearned incentive plan shares					—

Diluted Earnings (Loss) per Share:
Income (loss) available for common stockholders	$	(331	)		418,032	$	(0.79	)

Item 2:

FIRST ROBINSON FINANCIAL CORPORATION

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

Management’s discussion and analysis of financial condition and results of operations is intended to assist in understanding the financial condition and results of the Company. The information contained in this section should be read in conjunction with the unaudited condensed consolidated financial statements and accompanying notes thereto.

Forward-Looking Statements

When used in this filing and in future filings by First Robinson Financial Corporation (the “Company”) with the Securities and Exchange Commission, in the Company’s press releases or other public or shareholder communications, or in oral statements made with the approval of an authorized executive officer, the words or phrases “believe,” “expect,” “should,” “would be,” “will allow,” “intends to,” “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project” or similar expressions are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Examples of forward-looking statements include, but are not limited to, estimates with respect to our financial condition, results of operations and business that are subject to various factors that could cause actual results to differ materially from these estimates and most other statements that are not historical in nature. These factors and statements are subject to risks and uncertainties, including but not limited to, the effect of the current severe disruption in financial markets and the United States government programs introduced to restore stability and liquidity, changes in economic conditions nationally and in the Company’s market area; legislative/regulatory provisions; monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve Board; the quality of composition of the loan or investment portfolios; changes in accounting principles, policies, or guidelines; fluctuations in interest rates; deposit flows; demand for loans in the Company’s market area; real estate values; credit quality and adequacy of reserves; competition; customer growth and retention; earnings growth and expectations; new products and services; technological factors affecting operations, pricing of products and services; employees; unforseen difficulties and higher than expected costs associated with the implementation of our Strategic Plan; or failure to improve operating efficiencies through expense controls; all or some of which could cause actual results to differ materially from historical earnings and those presently anticipated or projected. References in this filing to “we,” “us,” and “our” refer to the Company and/or the Bank, as the content requires. The Company does not undertake, and specifically disclaims any obligation, to update any forward-looking statements to reflect occurrences or unanticipated events or circumstances after the date of such statements.

Critical Accounting Policies

The accounting and reporting policies of the Company are in accordance with accounting principles generally accepted in the United States and conform to general practices within the banking industry. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions. The financial position and results of operations can be affected by these estimates and assumptions and are integral to the understanding of reported results. Critical accounting policies are those policies that management believes are the most important to the portrayal of the Company's financial condition and results, and they require management to make estimates that are difficult, subjective, or complex.

Allowance for Loan Losses - The allowance for loan losses provides coverage for probable losses inherent in the Company's loan portfolio. Management evaluates the adequacy of the allowance for credit losses each quarter based on changes, if any, in underwriting activities, the loan portfolio composition (including product mix and geographic, industry or customer-specific concentrations), trends in loan performance, regulatory guidance and economic factors. This evaluation is inherently subjective, as it requires the use of significant management estimates. Many factors can affect management's estimates of specific and expected losses, including volatility of default probabilities, rating migrations, loss severity and economic and political conditions. The allowance is increased through provisions charged to operating earnings and reduced by net charge-offs.

The Company determines the amount of the allowance based on relative risk characteristics of the loan portfolio. The allowance recorded for commercial loans is based on reviews of individual credit relationships and an analysis of the migration of commercial loans and actual loss experience. The allowance recorded for homogeneous consumer loans is based on an analysis of loan mix, risk characteristics of the portfolio, fraud loss and bankruptcy experiences, and historical losses, adjusted for current trends, for each homogenous category or group of loans. The allowance for credit losses relating to impaired loans is based on the loan's observable market price, the collateral for certain collateral-dependent loans, or the discounted cash flows using the loan's effective interest rate.

FIRST ROBINSON FINANCIAL CORPORATION

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

Regardless of the extent of the Company's analysis of customer performance, portfolio trends or risk management processes, certain inherent but undetected losses are probable within the loan portfolio. This is due to several factors including inherent delays in obtaining information regarding a customer's financial condition or changes in their unique business conditions, the judgmental nature of individual loan evaluations, regulatory input, collateral assessments and the interpretation of economic trends. Volatility of economic or customer-specific conditions affecting the identification and estimation of losses for larger non-homogeneous credits and the sensitivity of assumptions utilized to establish allowances for homogeneous groups of loans are among other factors. The Company estimates a range of inherent losses related to the existence of the exposures. The estimates are based upon the Company's evaluation of risk associated with the commercial and consumer allowance levels and the estimated impact of the current economic environment.

Overview and Recent Developments

The Company is the holding company for First Robinson Savings Bank, National Association (the “Bank”). The Company is headquartered in Robinson, Illinois and the Bank operates three full service banking offices and one drive-up facility in Crawford County, Illinois and one full service banking office in Knox County, Indiana. Assets grew $25.9 million, or 14.1%, from $183.0 million at March 31, 2010 to $208.9 million at December 31, 2010. See “Financial Condition” for more information. The Company is reporting net income of $523,000 for the three month period and $1,343,000 for the nine month period ending December 31, 2010, versus a net loss of $460,000 in the three months ending December 31, 2009 and a net loss of $331,000 for the nine months ended December 31, 2009. See “Results of Operations” for further information. Basic and diluted earnings per share for the three month period ending December 31, 2010 were $1.27 and $1.22, respectively, per share compared to basic and diluted losses per share of $(1.10) for the three-months ended December 31, 2009. For the nine-months ended December 31, 2010, basic earnings per share are being reported at $3.25 with diluted earnings per share at $3.13 compared to basic and diluted losses per share of $(0.79) for the nine months ended December 31, 2009. Diluted earnings per share reflect incentive plan shares and the potential dilutive impact of stock options granted under the stock option plan and the effect of the incentive plan shares, however, if there is a net loss, dilutive shares are not included in the calculation as they become anti-dilutive. We continue to maintain a strong presence in the community and are one of the few independent community banks in our primary market area. To visit First Robinson Savings Bank on the web, go to www.frsb.net.

In response to the current national and international economic recession and to strengthen supervision of financial institutions and systemically important nonbank financial companies, Congress and the U.S. government have taken a variety of actions including the passage of legislation and the implementation of certain programs. By far, the most significant of these was the passage, on July 21, 2010, into law, the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Act”). The Act represents the most comprehensive change to banking laws since the Great Depression of the 1930’s, and mandates change in several key areas: regulation and compliance (both with respect to financial institutions and systemically important nonbank financial companies), securities regulation, executive compensation, regulation of derivatives, corporate governance, and consumer protection. While these changes in the law will have a major impact on large institutions, even relatively smaller institutions such as ours will be affected.

In this respect, it is noteworthy that preemptive rights heretofore granted to national banking associations by the OCC under the National Bank Act, and to federal savings banks by the Office of Thrift Supervision (which will be merged into the OCC) under the Home Owners Loan Act, will be diminished with respect to consumer financial laws and regulations. Thus, Congress has authorized states to enact their own substantive protections and to allow state attorneys general to initiate civil actions to enforce federal consumer protections. In this respect the Company will be subject to regulation by a new consumer protection bureau housed within the Federal Reserve, known as the Bureau of Consumer Financial Protection. The Bureau will consolidate enforcement currently undertaken by myriad financial regulatory agencies, and will have substantial power to define the rights of consumers and responsibilities of providers, including the Company. In addition, and among many other legislative changes that the Company will assess, the Company will (1) experience a new assessment model from the FDIC based on assets, not deposits, (2) be required to retain some credit risk for certain mortgages it sells into secondary markets via asset backed securities, (3) be subject to enhanced executive compensation and corporate governance requirements, and (4) be able, for the first time (and perhaps competitively compelled) to offer interest on business transaction and other accounts.

FIRST ROBINSON FINANCIAL CORPORATION

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

The extent to which the new legislation and existing and planned governmental initiatives hereunder will succeed in ameliorating tight credit conditions or otherwise result in an improvement in the national economy is uncertain. In addition, because most of the component parts of the new legislation will be subject to intensive agency rulemaking and subsequent public comment over the next six to 18 months prior to eventual implementation, it will be difficult to predict the ultimate effect of the Act on the Company at this time. It is not unlikely, however, that the Company’s expenses will increase as a result of new compliance requirements.

Asset Quality

Delinquencies. When a borrower fails to make a required payment on a loan, the Company attempts to cause the delinquency to be cured by contacting the borrower. In the case of loans secured by real estate, reminder notices are sent to borrowers. If payment is late, appropriate late charges are assessed and a notice of late charges is sent to the borrower. If the loan is between 60-90 days delinquent, the loan will generally be referred to the Company’s legal counsel for collection.

When a loan becomes more than 90 days delinquent and collection of principal and interest is considered doubtful, or is otherwise impaired, the Company will generally place the loan on non-accrual status and previously accrued interest income on the loan is charged against current income. Delinquent consumer loans are handled in a similar manner as to those described above. The Company’s procedures for repossession and sale of consumer collateral are subject to various requirements under applicable consumer protection laws.

The following table sets forth the Company’s loan delinquencies by type, by amount and by percentage of type at December 31, 2010.

	Loans Delinquent For:
	30-89 Days(1)							90 Days and Over(1)						Nonaccrual							Total Delinquent Loans
	Number		Amount		Percent of Loan Category			Number		Amount		Percent of Loan Category		Number		Amount		Percent of Loan Category			Number		Amount		Percent of Loan Category
												(Dollars in thousands)
Real Estate:
1-4 Family		5	$	108		0.25	%		—		—		—		3	$	185		0.43	%		8	$	293		0.68	%
Equity line of credit		—		—		—			—		—		—		1		10		0.25			1		10		0.25
Consumer and other loans		10		110		0.71			—		—		—		2		10		0.06			12		120		0.77
Commercial business and agricultural finance		—		—		—			—		—		—		3		78		0.38			3		78		0.38

Total		15	$	218		0.18	%		—		—		—		9	$	283		0.23	%		24	$	501		0.41	%


	(1)	Loans are still accruing.

FIRST ROBINSON FINANCIAL CORPORATION

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

Non-Performing Assets. The table below sets forth the amounts and categories of non-performing assets in the Company’s loan portfolio. Loans are placed on non-accrual status when the collection of principal and/or interest become doubtful. Foreclosed assets include assets acquired in settlement of loans.

	December 31,			March 31,			December 31,
	2010			2010			2009
				(In thousands)
Non-accruing loans:
1-4 Family	$	185		$	85		$	108
Equity line of credit		10			—			—
Commercial real estate		—			32			—
Consumer and other loans		10			5			6
Commercial		78			13			16
Total		283			135			130

Foreclosed/Repossessed assets:
1-4 Family		70			52			—
Total		70			52			—

Total non-performing assets	$	353		$	187		$	130
Total as a percentage of total assets		0.17	%		0.10	%		0.07	%

Gross interest income which would have been recorded had the non-accruing loans been current in accordance with their original terms amounted to approximately $4,000 for the three months and $14,000 for the nine months ended December 31, 2010 and $3,000 for the three months and $8,000 for the ninemonths ended December 31, 2009.

Classified Assets. Federal regulations provide for the classification of loans and other assets, such as debt and equity securities, considered by the Office of the Comptroller of the Currency (“OCC”) to be of lesser quality, as “substandard,” “doubtful” or “loss.” An asset is considered “substandard” if it is inadequately protected by the current net worth and paying capacity of the obligor or the collateral pledged, if any. “Substandard” assets include those characterized by the “distinct possibility” that the insured institution will sustain “some loss” if the deficiencies are not corrected. Assets classified as “doubtful” have all of the weaknesses inherent in those classified “substandard” with the added characteristic that the weaknesses present make “collection or liquidation in full” on the basis of currently existing facts, conditions and values, “highly questionable and improbable.” Assets classified as “loss” are those considered “uncollectible” and of such little value that their continuance as assets without the establishment of a specific loss reserve is not warranted.

When an insured institution classifies problem assets as either substandard or doubtful, it may establish general allowances for losses in an amount deemed prudent by management. General allowances represent loss allowances which have been established to recognize the inherent risk associated with lending activities, but which, unlike specific allowances, have not been allocated to particular problem assets. When an insured institution classifies problem assets as “loss,” it is required either to establish a specific allowance for losses equal to 100% of that portion of the asset so classified or to charge-off such amount. An institution’s determination as to the classification of its assets and the amount of its valuation allowances is subject to review by the regulatory authorities, who may order the establishment of additional general or specific loss allowances.

In connection with the filing of its periodic reports with the OCC and in accordance with its classification of assets policy, the Company regularly reviews loans in its portfolio to determine whether such assets require classification in accordance with applicable regulations. On the basis of management’s review of its assets, at December 31, 2010, the Company had classified a total of $1,280,000 of its assets as substandard and $1,002,000 as doubtful. At December 31, 2010, total classified assets comprised $2,282,000, or 17.9% of the Company’s capital, and 1.1% of the Company’s total assets. Total classified assets have increased by approximately $1.2 million, or 115.7% from March 31, 2010. The increase can be partially attributed to two large commercial credits

FIRST ROBINSON FINANCIAL CORPORATION

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

whose earnings declined due to the economic downturn and to a borrower with residential property, located in Colorado, that was sold for a loss. Both commercial businesses have seen an increase in earnings during calendar 2010 and the credits will be reevaluated within the next three months. The Company does not expect any losses associated with the commercial credits. However, the Company will sustain a loss of approximately $375,000 on the residential property.

Other Loans of Concern. As of December 31, 2010, there were $3.5 million in loans identified, but not classified, by the Company with respect to which known information about the possible credit problems of the borrowers or the cash flows of the business have caused management to have some doubts as to the ability of the borrowers to comply with present loan repayment terms and which may result in the future inclusion of such items in the non-performing asset categories.

Allowance for Loan Losses. The allowance for loan losses is maintained at a level which, in management’s judgment, is adequate to absorb credit losses inherent in the loan portfolio. The amount of the allowance is based on management’s evaluation of the collectibility of the loan portfolio, including the nature of the portfolio, credit concentrations, trends in historical loss experience, specific impaired loans and economic conditions. Allowances for impaired loans are generally determined based on collateral values. The allowance is increased by a provision for loan losses, which is charged to expense and reduced by charge-offs, net of recoveries.

Real estate properties acquired through foreclosure are recorded at the fair value minus 20% of the fair value if the property is appraised at $50,000 or less. If the property is appraised at greater than $50,000, then the property is recorded at the fair value less 10% of the fair value. If fair value at the date of foreclosure is lower than the balance of the related loan, the difference will be charged-off to the allowance for loan losses at the time of transfer. Valuations are periodically updated by management and if the value declines, a specific provision for losses on such property is established by a charge to operations. At December 31, 2010, the Bank had one residential property and a commercial building acquired through foreclosure. The properties are listed for sale.

Although management believes that it uses the best information available to determine the allowance, unforeseen market conditions could result in adjustments and net earnings could be significantly affected if circumstances differ substantially from the assumptions used in making the final determination. Future additions to the Company’s allowance for loan losses will be the result of periodic loan, property and collateral reviews and thus cannot be predicted in advance. In addition, federal regulatory agencies, as an integral part of the examination process, periodically review the Bank’s operations. Such agencies may require the Bank to increase the Bank’s allowance for loan losses, increase classified assets, or take other actions that could significantly affect the Company’s earnings based upon their judgment of the information available to them at the time of their examination. At December 31, 2010, the Company had a total allowance for loan losses of $1,102,000, representing 0.91% of the Company’s loans, net. At March 31, 2010, the Company’s total allowance for loan losses to the Company’s loans, net was at 0.97%.

FIRST ROBINSON FINANCIAL CORPORATION

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

The distribution of the Company’s allowance for losses on loans at the dates indicated is summarized as follows:

	December 31, 2010								March 31, 2010
	Amount of Loan Loss Allowance		Loan Amounts by Category			Percent of Loans in Each Category to Total Loans			Amount of Loan Loss Allowance		Loan Amounts by Category			Percent of Loans in Each Category to Total Loans
	(Dollars in thousands)

Real Estate:
Residential		344	$	53,871			43.82	%		72	$	50,776			49.19	%
Commercial		504		32,168			26.16			593		21,843			21.16
Commercial loans		208		20,387			16.58			279		18,883			18.29
Consumer/other loans		46		15,574			12.67			29		9,834			9.53
State and municipal government		—		945			0.77					1,885			1.83
Gross Loans				122,945			100.00	%				103,221			100.00	%

Deferred loan fees				(9	)							(4	)
Undisbursed portion of loans				(907	)							(2,093	)
Total	$	1,102	$	122,029					$	973	$	101,124

The following table sets forth an analysis of the Company’s allowance for loan losses.

	Three Months Ended December 31,						Nine Months Ended December 31,
	2010			2009			2010			2009
	(Dollars in thousands)

Balance at beginning of period	$	1,060		$	893		$	973		$	780

Charge-offs:
One- to four-family		—			62			31			130
Commercial non-residential real estate		18			—			18			—
Commercial business		1			—			1			—
Consumer and other loans		19			1,005			40			1,017
Total charge-offs		38			1,067			90			1,147

Recoveries:
Commercial non-residential real estate		—			—			24			—
Consumer and other loans		5			33			30			46
Total recoveries		5			33			54			46

Net charge-offs .		33			1,034			36			1,101
Additions charged to operations		75			1,072			165			1,252
Balance at end of period	$	1,102		$	931		$	1,102		$	931

Ratio of net charge-offs during the period to average loans outstanding during the period		0.03	%		1.07	%		0.03	%		1.91	%

Ratio of net charge-offs during the period to average non-performing assets		8.53	%		534.49	%		13.04	%		435.93	%

FIRST ROBINSON FINANCIAL CORPORATION

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

Financial Condition

December 31, 2010 Compared to March 31, 2010

Total assets of the Company increased by $25.9 million, or 14.1%, to $208.9 million at December 31, 2010 from $183.0 million at March 31, 2010. The increase in assets was primarily due to an increase of $20.5 million, or 20.5%, loans receivable, net, and an increase of $14.8 million, or 82.7% in cash and cash equivalents offset by a decrease of $9.0 million, or 16.3%, in available for sale securities.

The increase of $14.8 million in cash and cash equivalents was mainly derived from the increase of $11.9 million in federal funds sold. This increase can be attributed, primarily, to the growth of funds on deposit from a local commercial business.

Available-for-sale securities decreased to $46.4 million at December 31, 2010 compared to $55.4 million at March 31, 2010, a $9.0 million decrease. The decrease resulted from the maturity of $3.6 million in available-for-sale securities, the repayment of $7.7 million in mortgage-backed securities and the amortization of $204,000 of premiums and discounts on investments, and the decrease of $173,000 in the market valuation of the available-for-sale portfolio, offset by the purchase of $2.6 million of available-for-sale securities. The investment portfolio is managed to limit the Company's exposure to credit risk by investing primarily in mortgage-backed securities and other securities which are either directly or indirectly backed by the federal government or a local municipal government.

The Company's net loan portfolio including loans held for sale increased by $20.5 million to $120.6 million at December 31, 2010 from $100.1 million at March 31, 2010. The increase can be attributed to: loans on residential real estate, including one- to four-family loans, equity lines of credit, second mortgages and residential construction loans, increasing by $3.1 million, or 6.1%; commercial real estate increasing by $10.3 million, or 47.3%; consumer and other loans increasing by $5.7 million, or 58.4%; commercial business and agricultural finance loans increasing by $1.5 million, or 8.0% along with the reduction of $1.2 million in undisbursed loan funds. These increases were offset, in part, by the decrease in loans to state and municpal governments by $940,000, or 49.9%. The increase in commercial real estate can be attributed to the Vincennes market where there are more opportunities for this type of lending. The increase in consumer and other loans reflects our more aggressive policy in writing indirect loans for vehicles.

At December 31, 2010, the allowance for loan losses was $1,102,000, or 0.91% of the net loan portfolio, an increase of $129,000 from the allowance for loan losses at March 31, 2010 of $973,000, or 0.97% of the net loan portfolio. During the nine-months ended December 31, 2010, the Company charged off $90,000 in loan losses; $40,000 from consumer and other loans, $31,000 in loans secured by one- to- four family properties and $1,000 from commercial business and agricultural finance loans. The charge offs were offset by recoveries of $54,000 derived from $30,000 in consumer and other loans and $24,000 in non-residential commercial loans. Management reviews the adequacy of the allowance for loan losses quarterly, and believes that its allowance is adequate; however, the Company cannot assure that future chargeoffs and/or provisions will not be necessary. See “Asset Quality” for further information on delinquencies.

The Company has two foreclosed real estate properties held for sale at December 31, 2010 consisting of one residential property and one commercial non-residential building. Foreclosed assets are carried at lower of cost or fair value. When foreclosed assets are acquired, any required adjustment is charged to allowance for loan losses. All subsequent activity is included in current operations. Both properties are listed for sale.

Total deposits increased by $26.9 million, or 18.0%, to $176.2 million at December 31, 2010 from $149.3 million at March 31, 2010. The increase in total deposits was due to an increase of $16.0 million in non-interest bearing demand deposits, an increase of $10.6 million in savings, NOW, and money market accounts, and an increase of $295,000 in certificates of deposit.

Other borrowings, consisting of repurchase agreements, decreased $1.5 million, or 8.3% from $17.6 million at March 31, 2010 to $16.2 million at December 31, 2010. The obligations are secured by mortgage-backed securities and US Government agency obligations. At December 31, 2010, the average rate on the repurchase agreements was 0.32% compared to 0.14% at March 31, 2010. The rate on approximately $15.4 million of the repurchase agreements reprice daily. All agreements mature periodically within 24 months.

FIRST ROBINSON FINANCIAL CORPORATION

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

The short-term borrowing consists of the Company’s revolving line of credit note payable with an unaffiliated financial institution that matured September 30, 2010 and was renewed for an additional year. The balance of the revolving line of credit was $1.8 million and $1.7 million as of December 31, 2010 and March 31, 2010, respectively. The note bears interest at the prime commercial rate with a floor of 3.50% which was the rate on December 31, 2010 and is secured by stock in the Bank.

Stockholders' equity at December 31, 2010 was $12.7 million compared to $12.0 million at March 31, 2010, an increase of $684,000, or 5.7%. Factors relating to the increase in stockholders’ equity can be attributed primarily to the addition of $1,343,000 of net income, offset by the payment of $365,000 in dividends. These increases were offset by the decrease of $106,000 in accumulated other comprehensive income due to the decrease in the fair value of securities available for sale and by the addition of $174,000 in treasury stock relating to the purchase of 5,449 shares and the purchase of $14,000 in shares related to an incentive plan.

Results of Operations

Comparison of Operating Results for the Three Months Ended December 31, 2010 and 2009

Net Income (Loss)

The Company earned $523,000 for the three month period ending December 31, 2010, versus a net loss of $460,000 in the same period of 2009, an increase of $983,000. Earnings for the three months ended December 31, 2010 were positively impacted by a $1,367,000 increase in net interest income after provision for loan losses, the increase of $121,000, or 21.1%, in non-interest income, and the decrease of $55,000, or 3.9%, in non-interest expense offset by an increase of $560,000 in income tax provision when compared to the prior year. Basic earnings per share for the December 31, 2010 three month period were $1.27 per share versus net loss per share of $(1.10) for the same period of 2009. Diluted earnings per share reflect incentive plan shares and the potential dilutive impact of stock options granted under the stock option plan and the effect of the incentive plan shares, however, if there is a net loss, dilutive shares are not included in the calculation as they become anti-dilutive. Diluted earnings per share for the three months ending December 31, 2010 were $1.22 per share.

Net Interest Income

For the three-month period ended December 31, 2010, net interest income totaled $1,535,000, an increase of 31.8%, or $370,000, compared to the same period of 2009. The increase in the three-month period ended December 31, 2010 versus the comparable period of 2009 was due to a decrease of $168,000, or 21.8%, in total interest expense and the increase of $202,000, or 10.4%, in total interest income. The increase of $280,000, or 19.5%, in interest income from loans receivable and the increase of $9,000, or 900.0%, in interest earned on deposits were offset by the decrease of $85,000, or 18.4%, in interest income on taxable securities and the decrease of $2,000, or 6.5%, from tax-exempt securities. The decrease in total interest expense is due to the decrease of $163,000, or 22.0%, in interest expense on deposits along with the decrease of $5,000, or 16.1%, in interest expense on other and short-term borrowings for the three months ended December 31, 2010 compared to the three months ended December 31, 2009.

For the three-months ended December 31, 2010 total average interest earning assets increased by $22.5 million, or 13.9%, to $184.8 million as of December 31, 2010 from $162.3 million as of December 31, 2009. The yield on the earning assets decreased by 14 basis points when comparing the three months ended December 31, 2010 to the same period in 2009. Total average interest bearing liabilities for the three months ended December 31, 2010 were $162.8 million compared to $151.6 million as of December 31, 2009, an increase of $11.2 million, or 7.4%. The cost on the average interest bearing liabilities decreased by 56 basis points. For the three-month period ended December 31, 2010, the net interest spread increased 42 basis points to 3.15% versus 2.73% in the comparable period of 2009.

Interest income on loans receivable increased $280,000 to $1,719,000 for the quarter ended December 31, 2010 from $1,439,000 for the quarter ended December 31, 2009 due to the average balance on loans for the quarter ended December 31, 2010 increasing $21.3 million, or 22.0%, to $118.4 million, versus $97.1 million for the same period of 2009. During the same period, the yield on loans decreased 12 basis points to 5.81% from 5.93% for the December 31, 2010 quarter compared to the December 31, 2009 quarter. The 12 point basis decrease primarily reflected the low interest rate environment.

Interest income on taxable securities decreased $85,000 to $378,000 for the quarter ended December 31, 2010 from $463,000 for the quarter ended December 31, 2009. The decrease was derived from a decrease of $57,000 in interest income from mortgage-backed securities and a decrease of $28,000 in interest income from investment securities. The decrease in interest income from mortgage-backed securities can be attributed to the decrease of $5.4 million in the average balance of mortgage-backed securities from $36.1 million as of December 31, 2009 to $30.7 million as of December 31, 2010. The decrease in interest income from investment securities can be attributed to the decrease of $3.8 million in the average balance of investment securities from $17.2 million as of December 31, 2009 to $13.4 million as of December 31, 2010.

FIRST ROBINSON FINANCIAL CORPORATION

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

Interest income on tax-exempt securities decreased $2,000 when comparing the three months ended December 31, 2010 to the same period in the prior year. The average balance on tax-exempt securities decreased by $314,000 from $4.2 million as of December 31, 2009 compared to $4.5 million as of December 31, 2010. The average yield on tax-exempt securities decreased 33 basis points from 2.94% as of December 31, 2009 to 2.61% as of December 31, 2010. The average yield does not reflect the benefit of the higher tax-equivalent yield attributed to municipal securities, which is reflected in income tax expense.

Total interest expense on deposits decreased $163,000 from $741,000 for the three-months ended December 31, 2009 to $578,000 for the three months ended December 31, 2010. The decrease can be attributed to a 64 basis point decrease in the average rate paid on total deposits from 2.25% as of December 31, 2009 to 1.61% as of December 31, 2010, offset by the increase of $11.9 million in the average balance of deposits from $131.9 million as of December 31, 2009 to $143.8 million as of December 31, 2010. The decrease in the average rate paid on deposits is a reflection of the low short-term market interest rates.

Interest expense on other and short-term borrowings decreased $5,000 from $31,000 for the three months ended December 31, 2009 to $26,000 for the same period of 2010. The decrease is due to the decrease of $771,000, or 3.9%, from $19.7 million as of the quarter ended December 31, 2009 to $18.9 million for the three-months ended December 31, 2010 in the average daily balance of other and short-term borrowings. The average rate paid decreased for the December 2010 quarter by 99 basis points to 0.55% from 0.64% for the December 2009 quarter.

Provision for Loan Losses

The provision for loan losses for the quarter ended December 31, 2010 was $75,000, a $997,000, or 93.0%, decrease over the provision of $1,072,000 for the December 31, 2009 quarter. The provision for the period ended December 31, 2009 reflects the write off of a loan to a financial institution that failed. The loan was secured by the stock of the financial institution. The provision for both periods reflects management's analysis of the Company's loan portfolio based on the information which was available to the Company. Management meets on a quarterly basis to review the adequacy of the allowance for loan losses based on Company guidelines. Classified loans are reviewed by the loan officers to arrive at specific reserve levels for those loans. Once the specific reserve for each loan is calculated, management calculates general reserves for each loan category based on a combination of loss history adjusted for current national and local economic conditions, trends in delinquencies and charge-offs, trends in volume and term of loans, changes in underwriting standards, and industry conditions. While the Company cannot assure that future chargeoffs and/or provisions will not be necessary, the Company's management believes that, as December 31, 2010, its allowance for loan losses was adequate. See “Asset Quality” for additional information.

Non-Interest Income

Non-interest income categories for the three-month periods ended December 31, 2010 and 2009 are shown in the following table:

	Three Months Ended
	December 31,
	2010		2009			% Change
	(In thousands)
Non-interest income:

Charges and fees on deposit accounts	$	239	$	270			(11.5	)%
Charges and other fees on loans		107		79			35.4
Net gain (loss) on sale of foreclosed assets		—		(2	)		(100.0	)
Net gain on sale of loans		207		100			107.0
Other		142		127			11.8

Total non-interest income	$	695	$	574			21.1	%

FIRST ROBINSON FINANCIAL CORPORATION

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

Non-interest income increased $121,000 when comparing the three-months ended December 31, 2010 to December 31, 2009 as a result of the the increase of $107,000 in net gain on sale of loans, the increase of $28,000 in charges and fees on loans and the increase of $15,000 in other non-interest income, offset, in part, by the decrease in charges and fees on deposit accounts of $31,000. The decrease in charges and fees on deposit accounts is a result in part to the implementation of Regulation E, which does not allow assessing an overdraft charge for ATM or one-time debit card transactions without the customer opting in to an overdraft program sponsored by the Company.

Non-Interest Expense

Non-interest expense categories for the three-month periods ended December 31, 2010 and 2009 are shown in the following table:

	Three Months Ended
	December 31,
	2010		2009		% Change
	(In thousands)
Non-interest expense:
Compensation and employee benefits	$	680	$	684		(0.6	)%
Occupancy and equipment		198		174		13.8
Data processing		74		59		25.4
Audit, legal and other professional		62		91		(31.9	)
Advertising		64		87		(26.4	)
Telephone and postage		56		45		24.4
FDIC Insurance		55		54		1.9
Loss on cost basis equity security		—		60		(100.0	)
Other		168		158		6.3

Total non-interest expense	$	1,357	$	1,412		(3.9	)%

Occupancy and equipment expenses increased by $24,000 due to increases real estate taxes, insurance, and the costs associated with the upkeep on equipment and buildings.

The increase of $15,000 in data processing costs can be attributed, in part, to the increase in the usage of our bill pay product through internet banking and the increase in the maintenance costs associated with the software used for processing.

Audit, legal and other professional services decreased $29,000 when comparing the December 2010 and 2009 quarters due to decreased costs related to Sox-404 compliance and legal expense.

The Company recognized a loss of $60,000 during the three-months ended December, 2009 related to a cost basis equity security investment in a financial institution. During the three months ended December 31, 2010, the Company did not record any losses associated with cost basis equity securities.

Income Tax Expense

The provision in income tax expense increased $560,000, or 196.5%, for the three-months ending December 31, 2010, compared to the same period in 2009. The increase can be attributed, in part, to recording a profit in the December 2010 quarter compared to a loss in the December 2009 quarter. The effective tax rate was 34.5% for the quarter ended December 31, 2010.

FIRST ROBINSON FINANCIAL CORPORATION

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

Comparison of Operating Results for the Nine Months Ended December 31, 2010 and 2009

Net Income (Loss)

For the nine month period ended December 31, 2010, the Company earned $1,343,000, an increase of $1,674,000, or 505.7%, from a loss of $331,000 for the nine months ending December 31, 2009. Earnings for the nine months ended December 31, 2010 were positively impacted by an increase of $2,144,000, or 103.5%, in net interest income after provision for loan losses, an increase of $214,000, or 12.2%, in non-interest income, and the decrease of $209,000, or 4.8%, in non-interest expense which were offset by an increase of $893,000, or 421.2%, in provision for income taxes when compared to the nine months ended December 31, 2009. Basic earnings per share for the December 31, 2010 nine month period were $3.25 per share versus a loss of $(0.79) per share for the same period of 2009. Diluted earnings per share reflect incentive plan shares and the potential dilutive impact of stock options granted under the stock option plan and the effect of the incentive plan shares, however, if there is a net loss, as was the case with the nine months ending December 31, 2009, dilutive shares are not included in the calculation as they become anti-dilutive. Diluted earnings per share for the nine months ending December 31, 2010 were $3.13.

Net Interest Income

For the nine-month period ended December 31, 2010, net interest income totaled $4,380,000, an increase of $1,057,000, or 31.8%, from the same period in the prior year. Contributing to the increase was the increase of $381,000, or 6.5%, in total interest income and the decrease of $676,000, or 26.6%, in total interest expense. The increase in total interest income can be attributed to a $684,000, or 16.3%, increase in interest income from loans receivable, and the increase of $12,000 in other interest income and dividends received from Federal Reserve Bank stock offset, in part, by the decrease of $298,000, or 19.3%, in interest income from taxable securities and a $17,000, or 16.0%, decrease in tax-exempt securities. The major factor contributing to the decrease in total interest expense is due to the decrease of $697,000, or 28.0%, interest expense on deposits. This decrease was offset, in part, by the net increase of $21,000, or 35.6%, in interest expense on total other borrowings.

For the nine-months ended December 31, 2010 total average interest earning assets increased by $14.8 million, or 9.2%, to $175.3 million as of December 31, 2010 from $160.5 million as of December 31, 2009. The yield on the earning assets decreased by 12 basis points when comparing the nine months ended December 31, 2010 to the same period in 2009. Total average interest bearing liabilities for the nine months ended December 31, 2010 were $159.6 million compared to $148.7 million as of December 31, 2009, an increase of $10.9 million, or 7.3%. The cost on the average interest bearing liabilities decreased by 72 basis points. For the nine-month period ended December 31, 2010, the net interest spread increased 60 basis points to 3.19% versus 2.59% in the comparable period of 2009.

Interest income on loans receivable increased $684,000 to $4,884,000 for the nine-months ended December 31, 2010 from $4,200,000 for the nine-months ended December 31, 2009 as a result of the average balance on loans for the nine-months ended December 31, 2010 increasing $19.5 million, or 21.1%, to $111.9 million, versus $92.4 million for the same period of 2009. During the same period, the yield on loans decreased 24 basis points to 5.82% from 6.06% for the December 31, 2010 nine-month period compared to the December 31, 2009 nine-month period.

Interest income on taxable securities decreased $298,000 to $1,249,000 for the nine-months ended December 31, 2010 from $1,547,000 for the nine-months ended December 31, 2009. The decrease was derived from a decrease of $243,000 in interest income from mortgage-backed securities and a decrease of $55,000 in interest income from investment securities. The decrease in interest income from mortgage-backed securities can be attributed to the decrease of $5.9 million in the average balance of mortgage-backed securities from $38.6 million as of December 31, 2009 to $32.7 million as of December 31, 2010 and the decrease of 23 basis points in the average yield from 4.26% as of December 31, 2009 to 4.03% as of December 31, 2010. The decrease in interest income from investment securities can be attributed to the decrease of $3.2 million in the average balance of investment securities from $17.1 million as of December 31, 2009 to $13.9 million as of December 31, 2010, offset, by the increase of 4 basis points in the average yield from 2.46% as of December 31, 2009 to 2.50% as of December 31, 2010.

FIRST ROBINSON FINANCIAL CORPORATION

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

Interest income on tax-exempt securities decreased $17,000 when comparing the nine months ended December 31, 2010 to the same period in the prior year. The average balance on tax-exempt securities decreased by $64,000 from $4.5 million as of December 31, 2009 compared to $4.5 million as of December 31, 2010. The average yield on tax-exempt securities decreased 46 basis points from 3.11% as of December 31, 2009 to 2.65% as of December 31, 2010. The average yield does not reflect the benefit of the higher tax-equivalent yield attributed to municipal securities, which is reflected in income tax expense.

Total interest expense on deposits decreased $697,000 from $2,486,000 for the nine months ended December 31, 2009 to $1,789,000 for the nine months ended December 31, 2010. The decrease can be attributed to a 80 basis point decrease in the average rate paid on total deposits from 2.51% as of December 31, 2009 to 1.71% as of December 31, 2010, offset by the increase of $7.3 million in the average balance of deposits from $132.0 million as of December 31, 2009 to $139.3 million as of December 31, 2010. The decrease in the average rate paid on deposits is a reflection of the low short-term market interest rates.

Interest expense on other and short-term borrowings increased $21,000 from $80,000 for the nine months ended December 31, 2009 to $59,000 for the same period of 2010. The increase is due to the increase of $3.7 million, or 22.0%, from $16.6 million for the nine- months ended December 31, 2009 to $20.3 million for the nine-months ended December 31, 2010 in the average daily balance of other and short-term borrowings. The average rate paid increased for the December 2010 nine-month period by 5 basis points to 0.52% from 0.47% for the same period in December 2009.

Provision for Loan Losses

The provision for loan losses for the nine-months ended December 31, 2010 was $165,000 with an 86.8% decrease over the provision of $1,252,000 for the December 31, 2009 nine-month period. The provision for the period ended December 31, 2009 reflects the write off of a loan to a financial institution that failed. The loan was secured by the stock of the financial institution. The provision for both periods reflects management's analysis of the Company's loan portfolio based on the information which was available to the Company. Management meets on a quarterly basis to review the adequacy of the allowance for loan losses based on Company guidelines. Classified loans are reviewed by the loan officers to arrive at specific reserve levels for those loans. Once the specific reserve for each loan is calculated, management calculates general reserves for each loan category based on a combination of loss history adjusted for current national and local economic conditions, trends in delinquencies and charge-offs, trends in volume and term of loans, changes in underwriting standards, and industry conditions. While the Company cannot assure that future chargeoffs and/or provisions will not be necessary, the Company's management believes that, as of December 31, 2010, its allowance for loan losses was adequate.

Non-Interest Income

Non-interest income categories for the nine-month periods ended December 31, 2010 and 2009 are shown in the following table:

	Nine Months Ended
	December 31,
	2010		2009			% Change
	(In thousands)
Non-interest income:
Charges and fees on deposit accounts	$	728	$	747			(2.5	)%
Charges and other fees on loans		265		256			3.5
Net gain on sale of loans		548		282			94.3
Net gain (loss) on sale of foreclosed property		15		(2	)		850.0
Net realized gain on sale of available for sale securities		—		106			(100.0	)
Net gain on sale of equipment		4		—			—
Other		409		366			11.7

Total Non-Interest Income	$	1,969	$	1,755			12.2	%

FIRST ROBINSON FINANCIAL CORPORATION

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

Non-interest income increased $214,000 when comparing the nine-months ended December 31, 2010 to December 31, 2009 as a result of the increase of $266,000 in net gain on sale of loans, the $17,000 increase on net gain on sale of foreclosed assets, and the increase of $43,000 in other non-interest income offset, in part by the decrease in the realized gain on sale of securities of $106,000, and the decrease in charges and fees on deposit accounts of $19,000. The decrease in charges and fees on deposit accounts is a result of the implementation of Regulation E, as amended. Regulation E does not allow assessing an overdraft charge for ATM or one-time debit card transactions without the customer opting in to an overdraft program sponsored by the Company. Future income from overdraft charges could continue to decrease. The $43,000 increase in other non-interest income is primarily from interchange income from debit card usage by customers. The Company promotes a checking account product that rewards customers for debit card usage.

Non-Interest Expense

Non-interest expense categories for the nine-month periods ended December 31, 2010 and 2009 are shown in the following table:

	Nine Months Ended
	December 31,
	2010		2009		% Change
	(In thousands)
Non-interest expense:
Compensation and employee benefits	$	2,218	$	2,024		9.6	%
Occupancy and equipment		549		534		2.8
Data processing		214		186		15.1
Audit, legal and other professional		204		284		(28.2	)
Advertising		198		263		(24.7	)
Telephone and postage		152		148		2.7
FDIC insurance		159		234		(32.1	)
Loss on cost basis equity security		—		197		(100.0	)
Other		466		499		(6.6	)

Total Non-Interest Expense	$	4,160	$	4,369		(4.8	)%

For the nine-months ended December 31, 2010, compensation expense increased $194,000 over the nine-months ended December 31, 2009 primarily due to the $76,000 increase in market value of the shares held in the Directors Retirement Plan, a $75,000 net increase in salaries and accrued paid time off days and a $28,000 increase in health insurance costs.

The increase of $28,000 in data processing costs can be attributed, in part, to the increase in the usage of our bill pay product through internet banking and the increase in the maintenance costs associated with the software used for processing.

Audit, legal and other professional services decreased $80,000 when comparing the December 2010 and 2009 nine-month periods due to decreased costs related to Sox-404 compliance.

Advertising expense decreased $65,000 for the nine-months ended December 31, 2010 when compared to the same period of the prior year due to a decreased budget being allocated for marketing expense.

The decrease of $75,000 in Federal Deposit Insurance Corporation (“FDIC”) insurance when comparing the nine-months ended December 31, 2010 to the same period in the prior year was due the additional 5 basis point special assessment on each insured depository institution's assets minus Tier 1 capital that was calculated as of June 30, 2009 and collected on September 30, 2009. The additional amount imposed on the Company, as a result of the June 30, 2009 final rule, was approximately $81,000. There was no special assessment for the nine-months ended December 31, 2010.

The Company recognized a loss of $197,000 during the nine-months ended December 31, 2009 related to a cost basis equity security investment in a financial institution. During the nine-months ended December 31, 2010, the Company did not record any losses associated with cost basis equity securities.

FIRST ROBINSON FINANCIAL CORPORATION

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

Income Tax Expense

The provision in income tax expense increased $893,000, or 421.2%, for the nine-months ending December 31, 2010, compared to the same period in 2009. The increase can be attributed, in part, to recording a profit in the nine-month period ending December 2010 compared to a loss in the nine-month period ending December 2009. The effective tax rate for the nine-months ended December 31, 2010 was 33.7%.

Off-Balance Sheet Arrangements

The Company has entered into performance standby and financial standby letters of credit with various local commercial businesses in the aggregate amount of $381,000. The letters of credit are collateralized and underwritten, as currently required by our loan policy, in the same manner as any commercial loan. The advancement of any funds on these letters of credit is not anticipated.

Liquidity and Capital Resources

The Company’s principal sources of funds are deposits and principal and interest payments collected on loans, investments and related securities. While scheduled loan repayments and maturing investments are relatively predictable, deposit flows and early loan prepayments are more influenced by interest rates, general economic conditions and competition.

Liquidity resources are used principally to meet outstanding commitments on loans, to fund maturing certificates of deposit and deposit withdrawals and to meet operating expenses. The Company anticipates no foreseeable problems in meeting current loan commitments. At December 31, 2010, outstanding commitments to extend credit amounted to $22.6 million (including $14.8 million, in available revolving and closed-ended commercial and agricultural lines of credit). Management believes that loan repayments and other sources of funds will be adequate to meet any foreseeable liquidity needs.

The Bank maintains a $26.1 million line of credit with the FHLB, which can be accessed immediately. As of December 31, 2010 and 2009, there were no advances outstanding for either period. However, the $26.1 million line of credit with the FHLB is reduced by $943,000 for the credit enhancement reserve established as a result of the participation in the FHLB Mortgage Partnership Finance (“MPF”) program and is also reduced by $4.5 million for a letter of credit issued by the Federal Home Loan Bank of Chicago to secure the deposits held by the Company of a local municipality. The Bank also maintains a $5.0 million revolving federal funds line of credit with The Independent BankersBank (“TIB”) of which no balance outstanding at December 31, 2010 or 2009. The Company also has a $2.5 million revolving line of credit with an unaffiliated financial institution of which $1.8 million was outstanding at December 31, 2010 and $2.5 million outstanding at December 31, 2009. The Bank has also established borrowing capabilities at the discount window with the Federal Reserve Bank of St. Louis. Investment securities of $3,000,000 have been pledged as collateral. As of December 31, 2010 and 2009, no amounts were outstanding at the Federal Reserve discount window.

Liquidity management is both a daily and long-term responsibility of management. We adjust our investments in liquid assets based upon management's assessment of (i) expected loan demand, (ii) expected deposit flows, (iii) yields available on interest-bearing investments, and (iv) the objectives of its asset/liability management program. Excess liquidity generally is invested in interest-earning overnight deposits and other short-term government and agency obligations.

FIRST ROBINSON FINANCIAL CORPORATION

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

The Company and the Bank are subject to capital requirements of the federal bank regulatory agencies which require the Bank to maintain minimum ratios of Tier I capital to total adjusted assets and to risk-weighted assets of 4%, and total capital to risk-weighted assets of 8% respectively. Generally, Tier I capital consists of total stockholders’ equity calculated in accordance with generally accepted accounting principals less intangible assets, and total capital is comprised of Tier I capital plus certain adjustments, the only one of which is applicable to the Bank is the allowance for loan losses. Risk-weighted assets refer to the on- and off-balance sheet exposures of the Bank adjusted for relative risk levels using formulas set forth by OCC regulations. The Bank is also subject to an OCC leverage capital requirement, which calls for a minimum ratio of Tier I capital to quarterly average total assets of 3% to 5%, depending on the institution’s composite ratings as determined by its regulators. Both the Bank and the Company are considered well-capitalized under federal regulations.

At December 31, 2010, the Bank’s compliance with all of the aforementioned capital requirements is summarized below:

											To be Well Capitalized
											Under the Prompt
						For Capital					Corrective Action
	Actual					Adequacy Purposes					Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
Total Risk-Based Capital
(to Risk-Weighted Assets)	$	14,504		11.88	%	$	9,766		8.00	%	$	12,207		10.00	%
Tier I Capital
(to Risk-Weighted Assets)		13,386		10.97			4,883		4.00			7,324		6.00
Tier I Capital
(to Average Assets)		13,386		6.73			7,956		4.00			9,945		5.00

At the time of the conversion of the Bank to a stock organization, a special liquidation account was established for the benefit of eligible account holders and the supplemental account holders in an amount equal to the net worth of the Bank. This special liquidation account will be maintained for the benefit of eligible account holders and the supplemental account holders who continue to maintain their accounts in the Bank after June 27, 1997. In the unlikely event of a complete liquidation, each eligible and the supplemental eligible account holders will be entitled to receive a liquidation distribution from the liquidation account in an amount proportionate to the current adjusted qualifying balances for accounts then held. The Bank may not declare or pay cash dividends on or repurchase any of its common stock if stockholders’ equity would be reduced below applicable regulatory capital requirements or below the special liquidation account.

FIRST ROBINSON FINANCIAL CORPORATION

Item: 3 Quantitative and Qualitative Disclosures about Market Risk

Not applicable.

Item: 4 Controls and Procedures

Any control system, no matter how well designed and operated, can provide only reasonable (not absolute) assurance that its objectives will be met. Furthermore, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.

Disclosure Controls and Procedures

The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e)) under the Exchange Act as of the end of the period covered by this report. Based upon that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of December 31, 2010 the Company’s disclosure controls and procedures were effective to provide reasonable assurance that (i) the information required to be disclosed in this Report was recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (ii) information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding disclosure.

Internal Control Over Financial Reporting

There have been no changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II OTHER INFORMATION

Item 1. Legal Proceedings

None

Item 1A. Risk Factors

Various risks and uncertainties, some of which are difficult to predict and beyond the Company’s control, could negatively impact the Company. As a financial institution, the Company is exposed to interest rate risk, liquidity risk, credit risk, operational risk, risks from economic or maket conditions, and general business risks among others. Adverse experience with these and other risks could have a material impact on the Company’s financial condition and results of operations, as well as the value of its common stock.

Credit Risks

Our Allowance for Loan Losses may be Insufficient. All borrowers carry the potential to default and our remedies to recover (seizure and/or sale of collateral, legal actions, guarantees, etc.) may not fully satisfy money previously lent. We maintain an allowance for loan losses, which is a reserve established through a provision for loan losses charged to expense, which represents management’s best estimate of probable credit losses that have been incurred within the existing portfolio of loans. The allowance, in the judgment of management, is necessary to reserve for estimated loan losses and risks inherent in the loan portfolio. The level of the allowance for loan losses reflects management’s continuing evaluation of industry concentrations; specific credit risks; loan loss experience; current loan portfolio quality; present economic, political, and regulatory conditions; and unidentified losses inherent in the current loan portfolio. The determination of the appropriate level of the allowance for loan losses inherently involves a high degree of subjectivity and requires us to make significant estimates of current credit risks using existing qualitative and quantitative information, all of which may undergo material changes. Changes in economic conditions affecting borrowers, new information regarding existing loans, identification of additional problem loans, and other factors, both within and outside of our control, may require an increase in the allowance for loan losses. In addition, bank regulatory agencies periodically review our allowance for loan losses and may require an increase in the provision for loan losses or the recognition of additional loan charge offs, based on judgments different than those of management. An increase in the allowance for loan losses results in a decrease in net income, and possibly risk-based capital, and may have a material adverse effect on our financial condition and results of operations.

Operational Risks

A failure by the Bank to maintain required levels of capital could have a material adverse effect on the Company's business and profitability. The Bank is required to maintain adequate levels of capital to support its operations. If the Bank fail to maintain any required or expected capital level, it could be subject to various sanctions by its respective regulators. Such sanctions could include, without limitation, prohibitions on the ability to pay dividends, and the issuance of a specific capital directive requiring an increase in capital.

Changes in Our Accounting Policies or in Accounting Standards could Materially Affect How We Report Our Financial Results and Condition. Our accounting policies are fundamental to understanding our financial results and condition. Some of these policies require use of estimates and assumptions that may affect the value of our assets or liabilities and financial results. Some of our accounting policies are critical because they require management to make difficult, subjective and complex judgments about matters that are inherently uncertain and because it is likely that materially different amounts would be reported under different conditions or using different assumptions. If such estimates or assumptions underlying our financial statements are incorrect, we may experience material losses.

From time to time the Financial Accounting Standards Board (FASB) and the SEC change the financial accounting and reporting standards or the interpretation of those standards that govern the preparation of our external financial statements. These changes are beyond our control, can be hard to predict and could materially impact how we report our results of operations and financial condition. We could be required to apply a new or revised standard retroactively, resulting in our restating prior period financial statements in material amounts.

PART II OTHER INFORMATION

We are subject to certain operational risks, including but not limited to data processing system failures and errors and customer or employee fraud, identity theft or unauthorized transactions.

Recent cases of employee fraud or other misconduct have recently been in the news, particularly with respect to those employers in the financial services industry like the Bank. Employee fraud, errors and employee and customer misconduct could subject us to financial losses or regulatory sanctions and seriously harm our reputation. It is not always possible to prevent or detect employee errors or misconduct and the precautions we take to prevent and detect this activity may not be effective in all cases.

Although we maintain a system of internal controls and procedures designed to reduce the risk of loss from employee or customer fraud or misconduct and employee errors as well as insurance coverage to mitigate against operational risks, these internal controls may fail to prevent or detect an occurrence of employee or customer fraud, or such occurrence may not be insured (or, where insurance is available, exceeds applicable insurance limits).

In addition to the Risk Factors noted above, see the Risk Factors described in the Company’s Annual Report on Form 10-K for the year ended March 31, 2010 and Current Report on Form 10-Q for the period ended June 30, 2010.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides information about purchases by the Company for the quarter ended December 31, 2010 regarding the Company’s common stock.

PURCHASES OF EQUITY SECURITIES BY COMPANY (1)

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
10/1/2010 – 10/31/2010		—		—		—		5,000
11/1/2010 – 11/30/2010		—		—		—		5,000
12/1/2010– 12/31/2010		955	$	32.67		955		4,045
Total		955	$	32.67		955		4,045

(1) See Note 5 of Notes to Condensed Consolidated Financial Statements for more information regarding stock purchases.

Item 3. Defaults Upon Senior Executives

None

Item 4. Removed and Reserved

Item 5.

Other Information

None

Item 6.

Exhibits

Exhibit 31: Section 302 Certifications

Exhibit 32: Section 906 Certifications

SIGNATURES

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

	FIRST ROBINSON FINANCIAL CORPORATION

Date: February 14, 2011	/s/ Rick L. Catt
	Rick L. Catt
	President and Chief Executive Officer

Date: February 14, 2011	/s/ Jamie E. McReynolds
	Jamie E. McReynolds
	Chief Financial Officer and Vice President

EXHIBIT INDEX

Exhibit No.

31.1	Certification by the CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2	Certification by the CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32	Certifications of the CEO and CFO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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FIRST ROBINSON FINANCIAL CORP Reports