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,
2009




OR




o
            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  029276





FIRST
      ROBINSON FINANCIAL CORPORATION(Exact
      name of registrant as specified in its
charter)





DELAWARE
              
              36-4145294(State
      or other jurisdiction of
              
              (I.R.S.
      Employerincorporation
      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 markwhether 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 o





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
               ̈
              Accelerated
      Filer
              oNon-Accelerated
      Filer
               ̈
      (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:  433,198 shares of common stock, par
value $.01 per share, as of February 16, 2010.








FIRST
ROBINSON FINANCIAL CORPORATION


Index to
Form 10-Q





PAGEPART
      1. FINANCIAL INFORMATIONItem 1.
                  Financial
      StatementsCondensed
      Consolidated Balance Sheets as of December 31, 2009 And March 31,
      2009
                  3Condensed
      Consolidated Statements of Operations for the Three-Month and Nine-Month
      Periods Ended December 31, 2009 and 2008
                  4Condensed
      Consolidated Statements of Changes in Stockholders’ Equity For the
      Nine-Month Periods ended December 31, 2009 and 2008
                  6Condensed
      Consolidated Statements of Cash Flows for the Nine-Month Periods Ended
      December 31, 2009 and  2008
                  7Notes
      to Condensed Consolidated Financial Statements
                  9Item 2.
                  Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
                  19Item 3.
                  Quantitative
      and Qualitative Disclosures about Market Risk
                  32Item 4T.
                  Controls
      and Procedures
                  32PART II. OTHER INFORMATIONItem 1.
                  Legal
      Proceedings
                  33Item 1A.
                  Risk
      Factors
                  33Item 2.
                  Unregistered
      Sales of Equity Securities and Use of Proceeds
                  33Item 3.
                  Defaults
      Upon Senior Executives
                  33Item 4.
                  Submission
      of Matters to a Vote of Security Holders
                  33Item 5.
                  Other
      Information
                  33Item 6.
                  Exhibits
                  33SIGNATURES
                  34CERTIFICATIONS
                  36


2


Item
1:


FIRST
ROBINSON FINANCIAL CORPORATION


CONDENSED
CONSOLIDATED BALANCE SHEETS


(In
thousands, except share data)





(Unaudited)December 31, 2009
                
                
                March 31, 2009ASSETSCash
      and cash equivalents
                
                $
                10,600
                
                
                $
                5,424Interest-bearing
      deposits
                
                
                4,227
                
                
                
                713Federal
      funds sold
                
                
                317
                
                
                
                7,572Available-for-sale
      securities
                
                
                60,281
                
                
                
                55,925Loans,
      held for sale
                
                
                70
                
                
                
                392Loans,
      net of allowance for loan losses of $931 and $780 at December 31, 2009 and
      March 31, 2009, respectively
                
                
                97,184
                
                
                
                86,365Federal
      Reserve and Federal Home Loan Bank stock
                
                
                1,006
                
                
                
                811Premises
      and equipment, net
                
                
                4,052
                
                
                
                3,940Foreclosed
      assets held for sale, net
                
                
                —
                
                
                
                46Interest
      receivable
                
                
                779
                
                
                
                824Prepaid
      income taxes
                
                
                302
                
                
                
                81Cash
      surrender value of life insurance
                
                
                1,492
                
                
                
                1,453Other
      assets
                
                
                1,519
                
                
                
                873Total
      Assets
                
                $
                181,829
                
                
                $
                164,419LIABILITIES
      AND STOCKHOLDERS’ EQUITYLiabilitiesDeposits
                
                $
                145,340
                
                
                $
                140,088Other
      borrowings
                
                
                20,023
                
                
                
                9,914Short-term
      borrowings
                
                
                2,500
                
                
                
                —Advances
      from borrowers for taxes and insurance
                
                
                100
                
                
                
                166Deferred
      income taxes
                
                
                612
                
                
                
                452Interest
      payable
                
                
                254
                
                
                
                330Other
      liabilities
                
                
                1,262
                
                
                
                1,162Total
      Liabilities
                
                
                170,091
                
                
                
                152,112Commitments
      and Contingencies
                
                
                —
                
                
                
                —Stockholders’
      EquityPreferred
      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, 2009– 433,198 shares; March 31, 2009 –
      435,232 shares
                
                
                9
                
                
                
                9Additional
      paid-in capital
                
                
                8,773
                
                
                
                8,791Retained
      earnings
                
                
                9,881
                
                
                
                10,560Accumulated
      other comprehensive income
                
                
                980
                
                
                
                782Treasury
      stock, at costCommon:
      December 31, 2009 – 426,427 shares; March 31, 2009 – 424,393
      shares
                
                
                (7,905
                )
                
                
                (7,835
                )Total
      Stockholders’ Equity
                
                
                11,738
                
                
                
                12,307Total
      Liabilities and Stockholders’ Equity
                
                $
                181,829
                
                
                $
                164,419





See Notes
to Condensed Consolidated Financial Statements


3





FIRST
ROBINSON FINANCIAL CORPORATION


CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS


For the
Three and Nine-Month Periods Ended December 31, 2009 and 2008


(In
thousands, except per share data)


(Unaudited)





Three-Month Period
                
                
                Nine-Month Period2009
                
                
                2008
                
                
                2009
                
                
                2008Interest
      and Dividend Income:Loans
                
                $
                1,439
                
                
                $
                1,364
                
                
                $
                4,200
                
                
                $
                4,020Securities:Taxable
                
                
                463
                
                
                
                527
                
                
                
                1,547
                
                
                
                1,456Tax-exempt
                
                
                31
                
                
                
                27
                
                
                
                106
                
                
                
                69Other
      interest income
                
                
                1
                
                
                
                8
                
                
                
                7
                
                
                
                117Dividends
      on Federal Reserve Bank stock
                
                
                3
                
                
                
                3
                
                
                
                8
                
                
                
                8Total
      Interest and Dividend Income
                
                
                1,937
                
                
                
                1,929
                
                
                
                5,868
                
                
                
                5,670Interest
      Expense:Deposits
                
                
                741
                
                
                
                762
                
                
                
                2,486
                
                
                
                2,156Other
      borrowings
                
                
                31
                
                
                
                23
                
                
                
                59
                
                
                
                129Total
      Interest Expense
                
                
                772
                
                
                
                785
                
                
                
                2,545
                
                
                
                2,285Net
      Interest Income
                
                
                1,165
                
                
                
                1,144
                
                
                
                3,323
                
                
                
                3,385Provision
      for Loan Losses
                
                
                1,072
                
                
                
                30
                
                
                
                1,252
                
                
                
                190Net
      Interest Income After Provision for Loan Losses
                
                
                93
                
                
                
                1,114
                
                
                
                2,071
                
                
                
                3,195Non-interest
      income:Charges
      and fees on deposit accounts
                
                
                270
                
                
                
                223
                
                
                
                747
                
                
                
                671Charges
      and other fees on loans
                
                
                79
                
                
                
                26
                
                
                
                256
                
                
                
                111Net
      gain on sale of loans
                
                
                100
                
                
                
                27
                
                
                
                282
                
                
                
                99Net
      realized gain on sale of available-for-sale investments
                
                
                —
                
                
                
                —
                
                
                
                106
                
                
                
                2Other
                
                
                127
                
                
                
                108
                
                
                
                366
                
                
                
                342Total
      Non-Interest Income
                
                
                576
                
                
                
                384
                
                
                
                1,757
                
                
                
                1,225Non-interest
      expense:Compensation
      and employee benefits
                
                
                684
                
                
                
                644
                
                
                
                2,024
                
                
                
                1,945Occupancy
      and equipment
                
                
                174
                
                
                
                132
                
                
                
                534
                
                
                
                465Data
      processing
                
                
                59
                
                
                
                79
                
                
                
                186
                
                
                
                198Audit,
      legal and other professional
                
                
                91
                
                
                
                49
                
                
                
                284
                
                
                
                148Advertising
                
                
                87
                
                
                
                59
                
                
                
                263
                
                
                
                156Telephone
      and postage
                
                
                45
                
                
                
                48
                
                
                
                148
                
                
                
                107Net
      loss on sale of foreclosed property
                
                
                2
                
                
                
                —
                
                
                
                2
                
                
                
                4FDIC
      insurance
                
                
                54
                
                
                
                18
                
                
                
                234
                
                
                
                28Loss
      on cost basis equity investment
                
                
                60
                
                
                
                —
                
                
                
                197
                
                
                
                —Other
                
                
                158
                
                
                
                186
                
                
                
                499
                
                
                
                459Total
      Non-Interest Expense
                
                
                1,414
                
                
                
                1,215
                
                
                
                4,371
                
                
                
                3,510





See Notes
to Condensed Consolidated Financial Statements.


4





FIRST
ROBINSON FINANCIAL CORPORATION


CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)


For the
Three and Nine-Month Periods Ended December 31, 2009 and 2008


(In
thousands, except per share data)


(Unaudited)





Three-Month Period
                
                
                Nine-Month Period2009
                
                
                2008
                
                
                2009
                
                
                2008Income
      (loss) before income taxes
                
                
                (745
                )
                
                
                283
                
                
                
                (543
                )
                
                
                910Provision
      (benefit)  for income taxes
                
                
                (285
                )
                
                
                89
                
                
                
                (212
                )
                
                
                298Net
      Income (Loss)
                
                $
                (460
                )
                
                $
                194
                
                
                $
                (331
                )
                
                $
                612Earnings
      (Loss) Per Share-Basic
                
                $
                (1.10
                )
                
                $
                0.46
                
                
                $
                (0.79
                )
                
                $
                1.41Earnings
      (Loss) Per Share-Diluted
                
                $
                (1.10
                )
                
                $
                0.44
                
                
                $
                (0.79
                )
                
                $
                1.36





See Notes
to Condensed Consolidated Financial Statements


5





FIRST
ROBINSON FINANCIAL CORPORATION


CONDENSED
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY


For the
Nine-Months Ended December 31, 2009 and 2008


(In
thousands, except share data)


(Unaudited)





AccumulatedAdditional
                                                      
                                                      
                                                      
                                                      Other
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      ComprehensiveCommon Stock
                                                      
                                                      Paid-in
                                                      
                                                      Retained
                                                      
                                                      Comprehensive
                                                      
                                                      Treasury
                                                      
                                                      
                                                      
                                                      IncomeShares
                                                      
                                                      Amount
                                                      
                                                      Capital
                                                      
                                                      Earnings
                                                      
                                                      Income
                                                      
                                                      Stock
                                                      
                                                      Total
                                                      
                                                      (Loss)Balance,
      April 1, 2008
                                                      
                                                      
                                                      451,464
                                                      
                                                      $
                                                      9
                                                      
                                                      $
                                                      8,491
                                                      
                                                      $
                                                      10,114
                                                      
                                                      $
                                                      247
                                                      
                                                      $
                                                      (6,985
                                                      )
                                                      $
                                                      11,876Comprehensive
      incomeNet
      income
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      612
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      612
                                                      
                                                      
                                                      612Change
      in unrealized appreciation on available-for-sale securities, net of taxes
      of $234
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      389
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      389
                                                      
                                                      
                                                      389Total
      comprehensive income
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      1,001Treasury
      shares purchased
                                                      
                                                      
                                                      (25,684
                                                      )
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      (889
                                                      )
                                                      
                                                      (889
                                                      )Transfer
      of Unallocated Recognition and Retention Shares to Treasury
      Shares
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      125
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      (125
                                                      )
                                                      
                                                      —Dividends
      on common stock, $0.75 per share
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      (345
                                                      )
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      (345
                                                      )Incentive
      compensation
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      (12
                                                      )
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      (12
                                                      )Stock
      options exercised
                                                      
                                                      
                                                      9,452
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      168
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      164
                                                      
                                                      
                                                      332Balance,
      December 31, 2008
                                                      
                                                      
                                                      435,232
                                                      
                                                      $
                                                      9
                                                      
                                                      $
                                                      8,772
                                                      
                                                      $
                                                      10,381
                                                      
                                                      $
                                                      636
                                                      
                                                      $
                                                      (7,835
                                                      )
                                                      $
                                                      11,963Balance,
      April 1, 2009
                                                      
                                                      
                                                      435,232
                                                      
                                                      $
                                                      9
                                                      
                                                      $
                                                      8,791
                                                      
                                                      $
                                                      10,560
                                                      
                                                      $
                                                      782
                                                      
                                                      $
                                                      (7,835
                                                      )
                                                      $
                                                      12,307Comprehensive
      lossNet
      loss
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      (331
                                                      )
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      (331
                                                      )
                                                      
                                                      (331
                                                      )Unrealized
      appreciation on available-for-sale securities, net of taxes of
      $188
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      269Less
      reclassification adjustment for realized gains included in income net of
      taxes $35
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      71Total
      unrealized appreciation on available-for-sale securities, net of taxes of
      $153
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      198
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      198
                                                      
                                                      
                                                      198Total
      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





See Notes
to Condensed Consolidated Financial Statements


6





FIRST
ROBINSON FINANCIAL CORPORATION


CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS


For the
Nine-Months Ended December 31, 2009 and 2008


(In
thousands)


(Unaudited)





2009
                
                
                2008Cash
      flows from operating activities:Net
      income (loss)
                
                $
                (331
                )
                
                $
                612Items
      not requiring (providing) cashDepreciation
      and amortization
                
                
                236
                
                
                
                193Provision
      for loan losses
                
                
                1,252
                
                
                
                190Amortization
      (accretion) of premiums and discounts on securities
                
                
                230
                
                
                
                (19
                )Amortization
      of loan servicing rights
                
                
                83
                
                
                
                48Compensation
      related to options exercised
                
                
                —
                
                
                
                182Deferred
      income taxes
                
                
                7
                
                
                
                (36
                )Originations
      of mortgage loans held for sale
                
                
                (24,492
                )
                
                
                (6,503
                )Proceeds
      from the sale of mortgage loans
                
                
                25,096
                
                
                
                6,327Net
      gain on loans sold
                
                
                (282
                )
                
                
                (99
                )Net
      loss on sale of foreclosed property
                
                
                2
                
                
                
                4Loss
      on cost basis equity investment
                
                
                197
                
                
                
                —Net
      realized gain on sale of securities
                
                
                (106
                )
                
                
                (2
                )Cash
      surrender value of life insurance
                
                
                (39
                )
                
                
                (44
                )Changes
      in:Interest
      receivable
                
                
                45
                
                
                
                (1
                )Other
      assets
                
                
                (941
                )
                
                
                (179
                )Interest
      payable
                
                
                (76
                )
                
                
                (1
                )Other
      liabilities
                
                
                100
                
                
                
                (87
                )Income
      taxes, prepaid/accrued
                
                
                (221
                )
                
                
                (23
                )Net
      cash provided by operating activities
                
                
                760
                
                
                
                562Cash
      flows from investing activities:Purchase
      of available-for-sale securities
                
                
                (31,100
                )
                
                
                (23,505
                )Proceeds
      from maturities of available-for-sale securities
                
                
                1,820
                
                
                
                1,100Proceeds
      from sales of available-for-sale securities
                
                
                15,448
                
                
                
                953Repayment
      of principal on mortgage-backed securities
                
                
                9,703
                
                
                
                5,422Purchase
      of Federal Home Loan Bank stock
                
                
                (195
                )
                
                
                —Net
      change in loans
                
                
                (12,071
                )
                
                
                (8,663
                )Purchase
      of premises and equipment
                
                
                (333
                )
                
                
                (1,037
                )Proceeds
      from sale of foreclosed assets
                
                
                44
                
                
                
                12Net
      cash used in investing activities
                
                
                (16,684
                )
                
                
                (25,718
                )





See Notes
to Condensed Consolidated Financial Statements.


7





FIRST
ROBINSON FINANCIAL CORPORATION


CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)


For The
Nine-Months Ended December 31, 2009 and 2008


(In
thousands)


(Unaudited)





2009
                    
                    
                    2008Cash
      flows from financing activities:Net
      increase in deposits
                    
                    $
                    5,252
                    
                    
                    $
                    17,632Proceeds
      from other borrowings
                    
                    
                    86,950
                    
                    
                    
                    110,938Repayment
      of other borrowings
                    
                    
                    (76,841
                    )
                    
                    
                    (110,009
                    )Advances
      from Federal Home Loan Bank
                    
                    
                    5,500
                    
                    
                    
                    —Repayment
      of advances from Federal Home Loan Bank
                    
                    
                    (5,500
                    )
                    
                    
                    —Proceeds
      from short-term borrowings
                    
                    
                    3,100
                    
                    
                    
                    —Repayment
      of short-term borrowings
                    
                    
                    (600
                    )
                    
                    
                    —Purchase
      of incentive plan shares
                    
                    
                    (18
                    )
                    
                    
                    (12
                    )Proceeds
      received from exercise of stock options
                    
                    
                    —
                    
                    
                    
                    150Purchase
      of treasury stock
                    
                    
                    (70
                    )
                    
                    
                    (889
                    )Dividends
      paid
                    
                    
                    (348
                    )
                    
                    
                    (345
                    )Net
      increase in advances from borrowers for taxes and
insurance
                    
                    
                    (66
                    )
                    
                    
                    (50
                    )Net
      cash  provided by financing activities
                    
                    
                    17,359
                    
                    
                    
                    17,415Increase
      (decrease) in cash and cash equivalents
                    
                    
                    1,435
                    
                    
                    
                    (7,741
                    )Cash
      and cash equivalents at beginning of period
                    
                    
                    13,709
                    
                    
                    
                    19,528Cash
      and cash equivalents at end of period
                    
                    $
                    15,144
                    
                    
                    $
                    11,787Supplemental
      Cash Flows Information:Interest
      paid
                    
                    $
                    2,621
                    
                    
                    $
                    2,284Income
      taxes paid (net of refunds)
                    
                    
                    —
                    
                    
                    
                    382Real
      estate acquired in settlement of loans
                    
                    
                    —
                    
                    
                    
                    90





See Notes
to Condensed Consolidated Financial Statements.


8





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, 2009, the results
of its operations for the three and nine month periods ended December 31, 2009
and 2008, the changes in stockholders’ equity for the nine month periods ended
December 31, 2009 and 2008, and cash flows for the nine month periods ended
December 31, 2009 and 2008.  The results of operations for those
months ended December 31, 2009 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, 2009, has
been derived from the audited Consolidated Balance Sheet for the Company as of
that date.





2.
            Newly Adopted and
      Recent Accounting
Pronouncements





Effective
September 15, 2009, Financial Accounting Standards Board (FASB) Accounting
Standards Codification (ASC) No. 815-10-65-1, formerly Statement No. 161,
“Disclosures about Derivative
Instruments and Hedging Activities—An Amendment of FASB Statement
No. 133”, which was orignally issued in March 2008, requires
enhanced qualitative disclosures about objectives and strategies for using
derivatives, quantitative disclosures about fair value amounts of and gains and
losses on derivative instruments, and disclosures about credit-risk-related
contingent features in derivative agreements. FASB ASC No. 815-10-65-1 was
effective for the Company for the interim period beginning April 1, 2009, and
did not have an effect on the Company’s condensed consolidated financial
statements.





In April
2009, the FASB issued  FASB ASC No. 820, formerly FASB Staff Position
FAS 157-4,“Determining Fair
Value When the Volume and Level of Activity For the Asset or Liability Have
Significantly Decreased and Identifying Transactions That Are Not
Orderly”. FASB ASC No. 820 provides additional guidance for estimating
fair value when the volume and level of activity for the asset or liability have
decreased significantly.  FASB ASC No. 820 also provides guidance on
identifying circumstances that indicate a transaction is not
orderly.  The provisions of FASB ASC No. 820 were effective for the
Company’s interim period ended June 30, 2009 and did not have a material effect
on the Company’s condensed consolidated financial statements.





In April
2009, FASB ASC No. 320-10 and FASB ASC No. 958-320, formerly FASB Staff
Positions FAS 115-2 and FAS 124-2, “Recognition and Presentation
of Other-Than-Temporary Impairments”were issued.  FASB ASC No.
320-10 and FASB ASC No. 958-320 establish methodologies of determining and
recording other-than-temporary impairments of debt securities and expands
disclosures about fair value measurements.  The provisions were
effective for the Company’s interim period ended June 30, 2009 and are reflected
in the Company’s condensed consolidated financial statements.





In April
2009, the FASB issued FASB ASC No. 825-10-50 and FASB ASC No. 270-10, formerly
FASB Staff Position on FAS 107-1 and APB 28-1, “Interim Disclosures About Fair
Value of Financial Instruments”.  FASB ASC No. 825-10-50 and
FASB ASC No. 270-10 require disclosures about fair value of financial
instruments in interim reporting periods of publicly-traded companies that were
previously only required to be disclosed in annual financial
statements.  The provisions of the ASC’s were effective for the
Company for the interim period ended June 30, 2009. The disclosure provisions of
these ASC’s are reflected in the Company’s condensed consolidated financial
statements.





In May
2009, the FASB issued FASB ASC No. 855-10, (the ASC),  formerly
Statement No. 165, “Subsequent
Events”.  FASB ASC No. 855-10 establishes general standards of
accounting for and disclosure of events that occur after the balance sheet date
but before financial statements are issued or available to be
issued.  The ASC does not apply to subsequent events or transactions
that are within the scope of other generally accepted accounting principles
(GAAP) that provide different guidance on the accounting treatment for subsequent
events or transactions.  FASB ASC No. 855-10 was effective for interim
or annual financial periods after June 15, 2009.  The Company
adopted  the provisions of FASB ASC No 855-10 for the quarter ended
June 30, 2009, as required, and adoption did not have a material impact on the
Company’s condensed consolidated financial statements.


9





FIRST
ROBINSON FINANCIAL CORPORATION


NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS





On June
12, 2009, the FASB issued SFAS No. 166, “Accounting for Transfers
of  Financial Assets”, (“SFAS 166”). SFAS 166 is
a  revision to FAS 140, “Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities”, and
will require more information about transfers of financial assets, including
securitization transactions, and where companies have continuing exposure to the
risks related to transferred financial assets.  SFAS 166 also
eliminates the concept of a “qualifying special-purpose entity”, changes the
requirements for derecognizing financial assets and requires additional
disclosures.  SFAS 166 will be effective as of the beginning of the
Company’s first annual reporting period that begins after November 15, 2009, for
interim periods within that first annual reporting period and for interim and
annual reporting periods thereafter.  Earlier application is
prohibited.  The recognition and measurement provisions of SFAS 166
shall be applied to transfers that occur on or after the effective
date.  The Company will adopt SFAS 166 on April 1, 2010, as
required.  Management has not determined the impact adoption may have
on the Company’s consolidated financial statements.





On June
12, 2009, the FASB issued Statement of Financial Accounting Standards No. 167,
“Amendments to FASB
Interpretation No. 46(R)” (“SFAS167”).  SFAS 167 is a revision
to FASB Interpretation No. 46(R), “Consolidation of Variable Interest
Entities,” and changes how a company determines when an entity that is
insufficiently capitalized or is not controlled through voting (or similar
rights) should be consolidated.  The determination of whether a
company is required to consolidate an entity is based on, among other things, an
entity’s purpose and design and a company’s ability to direct the activities of
the entity that most significantly impact the entity’s economic
performance.  SFAS 167 will be effective as of the Company’s first
annual reporting period that begins after November 15, 2009, for interim periods
within that first annual reporting period and for interim and annual reporting
periods thereafter.  Earlier adoption is prohibited.  The
Company will adopt SFAS 167 on April 1, 2010, as required.  Management
has not determined the impact adoption may have on the Company’s consolidated
financial statements.





On June
29, 2009, the FASB issued FASB ASC No. 105, formerly Statement of Financial
Accounting Standards No. 168 (“SFAS 168”) “Accounting Standards
CodificationTMand the Hierarchy of Generally
Accepted Accounting Principles” – a replacement of FASB Statement No.
162.  FASB ASC No. 105 establishes the FASB Accounting Standards
CodificationTMas
a source of authoritative accounting principles recognized by the FASB to be
applied by nongovernmental entities in the preparation of financial statements
in conformity with US GAAP.  FASB ASC No. 105 was effective for
financial statements issued for interim and annual reporting periods ending
after September 15, 2009, for most entities.  On the effective date,
all non-SEC accounting and reporting standards will be
superceded.  The Company adopted FASB ASC No. 105 for the quarterly
period ended September 30, 2009, as required, and adoption did not have a
material impact on the Company’s consolidated financial statements.





In
January 2010, the FASB updated ASC No. 820-10, Improving Disclosures about Fair
Value.  A reporting entity should disclose separately the amounts of
significant transfers in and out of Level 1 and Level 2 fair value measurements
and describe the reasons for the transfers and in the reconciliation for fair
value measurements using significant unobservable inputs (Level 3) should
present separately information about purchases, sales, issuances and settlements
on a gross basis, rather than a net number.   A reporting entity
should also provide fair value measurement disclosures for each class of assets
and liabilities.  The amendment is effective for interim and annual
reporting periods beginning after December 15, 2009 except for the disclosure
about purchases, sales, issuances and settlements.  Those disclosures
are effective for fiscal years beginning after December 15, 2010, and for
interim periods within those fiscal years. Management has not determined the
impact adoption may have on the Company’s 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:


10


FIRST
ROBINSON FINANCIAL CORPORATION
 NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
 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 used for instruments measured at
fair value on a recurring basis and recognized in the accompanying condensed
consolidated balance sheet at December 31, 2009 and March 31, 2009.
  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.
  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, 2009 and March 31,
2009 (in thousands):
 
 Carrying value at December 31, 2009Description
                          
                          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 (GSEs)
                          
                          $
                          17,278
                          
                          
                          $
                          —
                          
                          
                          $
                          17,278
                          
                          
                          $
                          —Mortgage-backed,
      GSE residential
                          
                          
                          39,273
                          
                          
                          
                          —
                          
                          
                          
                          39,273
                          
                          
                          
                          —State
      and political subdivisions
                          
                          
                          3,730
                          
                          
                          
                          —
                          
                          
                          
                          3,730
                          
                          
                          
                          —Total
      available-for-sale securities
                          
                          $
                          60,281
                          
                          
                          $
                          —
                          
                          
                          $
                          60,281
                          
                          
                          $
                          —
 
 Carrying value at March 31, 2009Description
                          
                          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 (GSEs)
                          
                          $
                          9,992
                          
                          
                          $
                          —
                          
                          
                          $
                          9,992
                          
                          
                          $
                          —Mortgage-backed,
      GSE residential
                          
                          
                          40,901
                          
                          
                          
                          —
                          
                          
                          
                          40,901
                          
                          
                          
                          —State
      and political subdivisions
                          
                          
                          5,032
                          
                          
                          
                          —
                          
                          
                          
                          5,032
                          
                          
                          
                          —Total
      available-for-sale securities
                          
                          $
                          55,925
                          
                          
                          $
                          —
                          
                          
                          $
                          55,925
                          
                          
                          $
                          —
  11
  FIRST
ROBINSON FINANCIAL CORPORATION
 NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  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 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
  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 or
collateral dependent loans or, where a loan is determined not to be collateral
dependent, using the discounted cash flow method.
  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.
 
 Cost
Method Investments
 
 Cost
method investments do not trade in an active, open market with readibly
observable prices.  The cost method invesments are peridoically
reviewed for impairment based on each investee’s earning performance, asset
quality, changes in the economic environment, and current and projected future
cash flows.  Due to the nature of the valuation inputs, cost method
investments are classified within Level 3 of the 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, 2009
and  March 31, 2009:
 
 Carrying value at December 31, 2009Quoted Prices in
                  
                  
                  SignificantActive Markets
                  
                  
                  Other
                  
                  
                  Significantfor Identical
                  
                  
                  Observable
                  
                  
                  UnobservableAssets
                  
                  
                  Inputs
                  
                  
                  InputsDescription
                  
                  Fair Value
                  
                  
                  (Level 1)
                  
                  
                  (Level 2)
                  
                  
                  (Level 3)Impaired
      loans
                  
                  $
                  46
                  
                  
                  $
                  —
                  
                  
                  $
                  —
                  
                  
                  $
                  46Cost
      method investments
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
  12
  FIRST
ROBINSON FINANCIAL CORPORATION
 NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
 Carrying value at March 31, 2009Quoted Prices in
                  
                  
                  SignificantActive Markets
                  
                  
                  Other
                  
                  
                  Significantfor Identical
                  
                  
                  Observable
                  
                  
                  UnobservableAssets
                  
                  
                  Inputs
                  
                  
                  InputsDescription
                  
                  Fair Value
                  
                  
                  (Level 1)
                  
                  
                  (Level 2)
                  
                  
                  (Level 3)Impaired
      loans
                  
                  $
                  154
                  
                  
                  $
                  —
                  
                  
                  $
                  —
                  
                  
                  $
                  154Motgage
      servicing rights
                  
                  
                  243
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  $
                  243
 
 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.
  13
  FIRST
ROBINSON FINANCIAL CORPORATION
 NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
 December
      31, 2009
                  
                  
                  March
      31, 2009Carrying
                  
                  
                  
                  
                  
                  
                  CarryingAmount
                  
                  
                  Fair Value
                  
                  
                  Amount
                  
                  
                  Fair Value(In thousands)Financial
      assetsCash
      and cash equivalents
                  
                  $
                  10,600
                  
                  
                  $
                  10,600
                  
                  
                  $
                  5,424
                  
                  
                  $
                  5,424Interest-bearing
      deposits
                  
                  
                  4,227
                  
                  
                  
                  4,227
                  
                  
                  
                  713
                  
                  
                  
                  713Federal
      funds sold
                  
                  
                  317
                  
                  
                  
                  317
                  
                  
                  
                  7,572
                  
                  
                  
                  7,572Available-for-sale
      securities
                  
                  
                  60,281
                  
                  
                  
                  60,281
                  
                  
                  
                  55,925
                  
                  
                  
                  55,925Loans
      held for sale
                  
                  
                  70
                  
                  
                  
                  70
                  
                  
                  
                  392
                  
                  
                  
                  392Loans,
      net of allowance for loan losses
                  
                  
                  97,184
                  
                  
                  
                  98,116
                  
                  
                  
                  86,365
                  
                  
                  
                  87,092Federal
      Reserve and Federal Home Loan Bank stock
                  
                  
                  1,006
                  
                  
                  
                  1,006
                  
                  
                  
                  811
                  
                  
                  
                  811Interest
      receivable
                  
                  
                  779
                  
                  
                  
                  779
                  
                  
                  
                  824
                  
                  
                  
                  824Financial
      liabilitiesDeposits
                  
                  
                  145,340
                  
                  
                  
                  136,783
                  
                  
                  
                  140,088
                  
                  
                  
                  135,883Other
      borrowings
                  
                  
                  20,023
                  
                  
                  
                  20,033
                  
                  
                  
                  9,914
                  
                  
                  
                  9,927Short-term
      borrowings
                  
                  
                  2,500
                  
                  
                  
                  2,500
                  
                  
                  
                  —
                  
                  
                  
                  —Advances
      from borrowers for taxes and insurance
                  
                  
                  100
                  
                  
                  
                  100
                  
                  
                  
                  166
                  
                  
                  
                  166Interest
      payable
                  
                  
                  254
                  
                  
                  
                  254
                  
                  
                  
                  330
                  
                  
                  
                  330Unrecognized
      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 $836,000 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.  With regard to dividends, which have not
been declared since July 24, 2007, the FHLB will continue to assess its dividend
capacity each quarter and make appropriate requests for
approval.  Management performed an analysis and deemed the Company’s
cost method investment in FHLB stock to be recoverable as of December 31,
2009.
 
 5.
              Authorized Share
      Repurchase Program
 
 On July
23, 2009, the Board of Directors of the Company voted to approve the extension
and expansion of the repurchase program of its equity stock approved on July 24,
2008.  The Company may repurchase up to 10,000 additional shares of
the Company’s outstanding common stock in the open market or in negotiated
private transactions from time to time when deemed appropriate by management.
The increase represents approximately 2.5% of the Company’s issued and
outstanding shares.  As of July 22, 2009, the Company had repurchased
22,782 shares of its common stock out of the 26,892 shares that had been
previously authorized for repurchase leaving 4,110 remaining to be
purchased.  As a result of these combined actions, the Company is
currently authorized to repurchase 14,110 shares of common stock.  The
program has been extended to August 2, 2010 or  the earlier of the
completion of the repurchase of the 14,110 shares.   As of
February 12, 2010 1,950 shares of the 14,110 have been purchased in the expanded
program leaving 12,160 remaining to be purchased pursuant to this share
repurchase program.
  14
  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, 2009U.S.
      Government sponsored enterprises (GSEs)
                                
                                $
                                16,884
                                
                                
                                $
                                394
                                
                                
                                $
                                —
                                
                                
                                $
                                17,278Corporate
      Mortgage-backed:GSE
      residential
                                
                                
                                38,147
                                
                                
                                
                                1,158
                                
                                
                                
                                32
                                
                                
                                
                                39,273State
      and political subdivisions
                                
                                
                                3,647
                                
                                
                                
                                89
                                
                                
                                
                                6
                                
                                
                                
                                3,730$
                                58,678
                                
                                
                                $
                                1,641
                                
                                
                                $
                                38
                                
                                
                                $
                                60,281March
      31, 2009U.S.
      Government sponsored enterprises (GSEs)
                                
                                $
                                9,793
                                
                                
                                $
                                199
                                
                                
                                $
                                —
                                
                                
                                $
                                9,992Corporate
      Mortgage-backed:GSE
      residential
                                
                                
                                39,878
                                
                                
                                
                                1,045
                                
                                
                                
                                22
                                
                                
                                
                                40,901State
      and political subdivisions
                                
                                
                                5,002
                                
                                
                                
                                52
                                
                                
                                
                                22
                                
                                
                                
                                5,032$
                                54,673
                                
                                
                                $
                                1,296
                                
                                
                                $
                                44
                                
                                
                                $
                                55,925
 
 The
amortized cost and fair value of available-for-sale securities at December 31,
2009, 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
                      
                      $
                      3,329
                      
                      
                      $
                      3,370One
      to five years
                      
                      
                      16,037
                      
                      
                      
                      16,458Five
      to ten years
                      
                      
                      1,165
                      
                      
                      
                      1,18020,531
                      
                      
                      
                      21,008Mortgage-backed
      securities
                      
                      
                      38,147
                      
                      
                      
                      39,273Totals
                      
                      $
                      58,678
                      
                      
                      $
                      60,281
 
 Proceeds
from the sale of investment securities available-for-sale during the nine-months
ended December 31, 2009 and 2008 were $2,508,000 and $15,408,000,
respectively.  There were no sales of investments during the three
months ended December 2009 and 2008.  Gross gains of $113,000 and
gross losses of $7,000 were realized on the sales for the nine-months ended
December 31, 2009.    During the nine-months ended December
31, 2008, gross gains of $4,000 and gross losses of $2,000 were realized on the
sales of available-for-sale securities.
  15
  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, 2009 and March 31, 2009.  At December 31, 2009, 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
                                    
                                    
                                    TotalFair Value
                                    
                                    
                                    Unrealized
                                      Losses
                                    
                                    
                                    Fair Value
                                    
                                    
                                    Unrealized
                                      Losses
                                    
                                    
                                    Fair Value
                                    
                                    
                                    Unrealized
                                      LossesAs
      of December 31, 2009Mortgage-backed
      securities
                                    
                                    $
                                    2,193
                                    
                                    
                                    $
                                    32
                                    
                                    
                                    $
                                    —
                                    
                                    
                                    $
                                    —
                                    
                                    
                                    $
                                    2,193
                                    
                                    
                                    $
                                    32State
      and political subdivisions
                                    
                                    
                                    302
                                    
                                    
                                    
                                    3
                                    
                                    
                                    
                                    226
                                    
                                    
                                    
                                    3
                                    
                                    
                                    
                                    528
                                    
                                    
                                    
                                    6Total
      temporarily impaired securities
                                    
                                    $
                                    2,495
                                    
                                    
                                    $
                                    35
                                    
                                    
                                    $
                                    226
                                    
                                    
                                    $
                                    3
                                    
                                    
                                    $
                                    2,721
                                    
                                    
                                    $
                                    38As
      of March 31, 2009Mortgage-backed
      securities
                                    
                                    $
                                    6,307
                                    
                                    
                                    $
                                    20
                                    
                                    
                                    $
                                    125
                                    
                                    
                                    $
                                    2
                                    
                                    
                                    $
                                    6,432
                                    
                                    
                                    $
                                    22State
      and political subdivisions
                                    
                                    
                                    290
                                    
                                    
                                    
                                    16
                                    
                                    
                                    
                                    225
                                    
                                    
                                    
                                    6
                                    
                                    
                                    
                                    515
                                    
                                    
                                    
                                    22Total
      temporarily impaired securities
                                    
                                    $
                                    6,597
                                    
                                    
                                    $
                                    36
                                    
                                    
                                    $
                                    350
                                    
                                    
                                    $
                                    8
                                    
                                    
                                    $
                                    6,947
                                    
                                    
                                    $
                                    44
 
 There are
4 securities in an unrealized loss position in the investment portfolio at
December 31, 2009, all due to interest rate changes and not credit
events.  These 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 value is expected to recover as the
investments approach their maturity date or there is a downward shift in
interest rates.  All mortgage-backed securities in the portfolio are
residential properties.
 
 7.
              Lines of
      Credit
 
 The
Company’s revolving line of credit note payable matured on July 31, 2009 but was
extended to September 30, 2009.  The revolving line of credit renewed
on September 17, 2009 and increased from $600,000 to $2,500,000 with the
renewal.  The balance of the revolving line of credit was $2,500,000
and $0 as of December 31, 2009 and March 31, 2009, respectively.  The
note bears interest at the prime commercial rate with a floor of 3.50% which was
the rate on December 31, 2009, matures on September 16, 2010, and is secured by
100% stock of the Bank.
 
 The Bank
maintains a $5,000,000 revolving line of credit, of which none was outstanding
at December 31, 2009 and March 31, 2009, with an unaffiliated financial
institution. The line bears interest at the federal funds rate of the financial
institution (1.0% at December 31, 2009), has an open-end maturity and is
unsecured if used for less than fifteen (15) consecutive business
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, 2009 and March 31, 2009 no
amounts were outstanding.   The primary credit borrowing rate at
December 31, 2009 was 0.50%, has a term of up to 90 days, and has no
restrictions on use of the funds borrowed.
  16
  FIRST
ROBINSON FINANCIAL CORPORATION
 NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
 8.
              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.  As of December 31, 2009 and 2008, all outstanding options had
been exercised.  Therefore, there is no dilutive effect with regards
to options for the earnings (loss) per share calculation for the three month
periods ended December 31, 2009 or 2008.  The components of basic and
diluted earnings (loss) per share for the three months ended December 31, 2009
and 2008 were computed as follows (dollar amounts in thousands except share
data):
 
 WeightedIncome
                            
                            
                            Average
                            
                            
                            Per Share(Loss)
                            
                            
                            Shares
                            
                            
                            AmountFor
      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 to common stockholders
                            
                            $
                            (460
                            )
                            
                            
                            416,931
                            
                            
                            $
                            (1.10
                            )For
      the Three-Months Ended December 31, 2008:Basic
      Earnings per Share:Income
      available to common stockholders
                            
                            $
                            194
                            
                            
                            
                            426,388
                            
                            
                            $
                            0.46Effect
      of Dilutive Securities:Incentive
      plan shares
                            
                            
                            
                            
                            
                            
                            16,299Diluted
      Earnings per Share:Income
      available for common stockholders
                            
                            $
                            194
                            
                            
                            
                            442,687
                            
                            
                            $
                            0.44
 
 The
Company had 16,272 incentive plan shares outstanding at December 31, 2009 that
were excluded from the above calculation as they were
anti-dilutive.
 
 17
  FIRST
ROBINSON FINANCIAL CORPORATION
 NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
 8.  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.  As of December 31, 2008, all
outstanding options had been exercised.  Therefore, there is no
dilutive effect with regards to options for the earnings (loss) per share
calculation for the nine-month periods ended December 31, 2009 and
2008.   The components of basic and diluted earnings (loss) per
share for the nine months ended December 31, 2009 and 2008 were computed as
follows (dollar amounts in thousands except share data):
 
 WeightedIncome
                                
                                
                                Average
                                
                                
                                Per Share(Loss)
                                
                                
                                Shares
                                
                                
                                AmountFor
      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 to common stockholders
                                
                                $
                                (331
                                )
                                
                                
                                418,032
                                
                                
                                $
                                (0.79
                                )For
      the Nine-Months Ended December 31, 2008:Basic
      Earnings per Share:Income
      available to common stockholders
                                
                                $
                                612
                                
                                
                                
                                435,038
                                
                                
                                $
                                1.41Effect
      of Dilutive Securities:Unearned
      incentive plan shares
                                
                                
                                
                                
                                
                                
                                16,139Diluted
      Earnings per Share:Income
      available for common stockholders
                                
                                $
                                612
                                
                                
                                
                                451,177
                                
                                
                                $
                                1.36
 
 The
Company had 16,272 incentive plan shares outstanding at December 31, 2009 that
were excluded from the above calculation as they were
anti-dilutive.
 
 9.
              Subsequent
      Events
  Subsequent
events have been evaluated through February 15, 2010, which is the date the
financial statements were issued.  There were no reportable subsequent
events.
  18
  Item  2:
 FIRST
ROBINSON FINANCIAL CORPORATION
 Management’s
Discussion and Analysis of Financial Condition
 And
Results of Operations
 
 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. Such statements are subject
to risks and uncertainties, including but not limited to 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.
 
 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.
  19
  FIRST
ROBINSON FINANCIAL CORPORATION
 Management’s
Discussion and Analysis of Financial Condition
 And
Results of Operations
 
 Overview
 
 First
Robinson Financial Corporation (the “Company”) is the holding company for First
Robinson Savings Bank, National Association (the “Bank”). The Company is
headquartered in Robinson, Illinois and operates three full service offices and
one drive-up facility in Crawford County, Illinois and one full service office
in Knox County, Indiana.  Assets grew $17.4 million, or 10.6%, from
$164.4 million at March 31, 2009 to $181.8 million at December 31,
2009.  See “Financial Condition” for more information. The Company had
a net loss of $460,000 for the three month period ending December 31, 2009,
versus net income of $194,000 in the same period of 2008. For the nine months
ended December 31, 2009, the Company recorded a net loss of $331,000 compared to
net income of $612,000 for the same period of 2008, a decrease of
$943,000.  The primary reason for the decrease in earnings can be
attributed to the net write off of $972,000 for a loan that we made to the
holding company of a financial institution that was placed under receivership on
December 18, 2009 by its primary regulator, the increase in the FDIC insurance
assessment in both the three-month and nine-month periods, and the recognized
loss on a cost basis equity security investment in the holding company of the
financial institution that was placed in receivership.  See “Results
of Operations” for further information. Basic loss per share for the three month
period was $(1.10) per share and $(0.79) for the nine month period ended
December 31, 2009,  versus net income of $0.46 per share for the three
month period and $1.41 for the nine month period ended December 31,
2008.  Diluted earnings (loss) 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.  Diluted loss
per share for the three months and nine months ending December 31, 2009 were
$(1.10) and $(0.79) respectively.  For the three months and nine
months ending December 31, 2008, diluted earnings per share were $0.44 per share
and $1.36 per share, repsectively .
 
 The
Company’s principal business, through its operating subsidiary, the Bank,
consists of accepting deposits from the general public in our market area and
investing these funds primarily in loans, mortgage-backed securities and other
securities.  Loans consist primarily of loans secured by residential
real estate located in our market area, consumer loans, commercial loans, and
agricultural loans.  With the addition of a branch in Vincennes,
Indiana, our market area has expanded to include Knox and surrounding counties
in Indiana along with Crawford and contiguous counties in Illinois.
 
 Typically
the Company’s results of operations are dependent primarily on net
interest  income, which is the difference between interest earned on
interest-earning assets and the interest paid on interest-bearing
liabilities.  Net interest income is a function of “interest rate
spread,” which is the difference between the average yield earned on
interest-earning assets and the average rate paid on interest-bearing
liabilities.  The interest rate spread is affected by regulatory,
economic and competitive factors that influence interest rates, loan demand and
deposit flows.  Results of operations are also affected by other
income, and general, administrative and other expense, the provision for losses
on loans and income tax expense.  Other income consists primarily of
service charges and gains (losses) on sales of loans.  General,
administrative and other expense consists primarily of salaries and employee
benefits, occupancy and office expenses, advertising, data processing expenses
and the costs associated with being a publicly held company.
 
 Operations
are significantly affected by prevailing economic conditions, competition and
the monetary, fiscal and regulatory policies of government
agencies.  Lending activities are influenced by the demand for and
supply of housing, competition among lenders, the level of interest rates and
the availability of funds.  Deposit flows and costs of funds are
influenced by prevailing market rates of interest, competing investments,
account maturities and the levels of personal income and savings in the
Company’s market area.
 
 Historically,
the Company’s mission has been to originate loans on a profitable basis to the
communities served.  In seeking to accomplish this mission, the Board
of Directors and management have adopted a business strategy designed (i) to
maintain the Bank's capital
level in excess of regulatory requirements; (ii) to maintain asset quality,
(iii) to maintain, and if possible, increase earnings; and (iv) to manage
exposure to changes in interest rates.
 
 In
response to the current national and international economic recession, however,
the U.S. government has taken a variety of actions intended to stimulate the
national economy, including the passage of legislation, such as the Emergency
Economic Stabilization Act of 2008 (the “EESA”), and the implementation of
certain programs by federal agencies.
 
 The first
program put forth by the U.S. Treasury pursuant to its authority under the EESA
was the Troubled Asset Relief Program’s Capital Purchase Program (the
“CPP”).  Pursuant to the CPP, the US Treasury, on behalf of the US
government, is authorized to purchase up to $250 billion of preferred stock,
along with warrants to purchase common stock, from certain financial
institutions that applied to receive funds.  The CPP is intended to
shore up bank capital and to stimulate lending.  Neither the Company
nor the Bank has participated in the CPP.
  20
  FIRST
ROBINSON FINANCIAL CORPORATION
 Management’s
Discussion and Analysis of Financial Condition
 And
Results of Operations
 
 In
response to the current reserve ratios of the Deposit Insurance Fund, and the
need to restore it to its statutory minimum, the Federal Deposit Insurance
Corporation (the “FDIC”) announced on May 22, 2009, a final rule imposing a 5
basis point special assessment on each insured depository institution’s assets
minus Tier 1 capital as of June 30, 2009 (although no institution’s special
assessment exceeded 10 basis points times the institution’s assessment base for
the second quarter of 2009).  The Company’s special assessment of
$81,000 was paid on September 30, 2009.
 
 In
addition to the special assessment , the FDIC required each depository
institution with FDIC-insured deposits to prepay three years of deposit
insurance premiums.  The Company has recognized the prepaid assessment
in other assets on the condensed consolidated balance sheet for December 31,
2009.  Under the rule, the prepaid amount was based on an
institution’s assessment rate and assessment base for the third quarter of 2009,
assuming a 5% annual growth in deposits each year.  While the FDIC
plan will maintain current assessment rates through 2010, effective January 1,
2011, the rates will increase by three basis points across the board (e.g., Risk
Catagory I banks paying 12-16 basis points for 2010 would pay 1.5-19 basis
points).  Additionally, the FDIC voted to extend the DIF restoration
plan from seven to eight years, with a target of returning the fund to a 1.15%
reserve ratio (the minimum required by law) by the first quarter of
2014.  The total prepayment will be booked as a “prepaid expense”
asset and will qualify as a zero risk weight under the risk-based capital
requirements.   Any prepayment amounts not exhausted after
collection of the amount due on June 30, 2013, will be refunded to the
institution, rather than on December 30, 2014, as originally
proposed.
 
 Finally,
the FDIC promulgated a temporary liquidity guarantee program that had both a
debt guarantee component, whereby the FDIC agreed to guarantee certain senior
unsecured debt issued by eligible financial institutions and a transaction
account guarantee component (TAG), whereby the FDIC agreed to insure 100% of
non-interest bearing deposit transaction accounts held at eligible financial
institutions, such as lawyers’ trust accounts, payment processing accounts,
payroll accounts and working capital accounts through December 31,
2009.  The FDIC granted an extension of the transaction account
guarantee component of this program through June 30,
2010.  Institutions had until November 2, 2009 to opt-out of the TAG
program. The Bank did not participate in the debt guarantee program but opted to
participate in the TAG program and its extension.
 
 The
extent to which these programs and others like them will succeed in ameliorating
tight credit conditions or otherwise result in an improvement in the national
economy is uncertain.  It is also likely, but not certain, that
additional legislation affecting financial institutions (such as the Bank) and
their holding companies (such as the Company) will be enacted.
 
 Legislative
and regulatory changes continue to be proposed with respect to consumer
financial products and services.  The most significant of these
proposals was released by the U.S. Treasury in June 2009 and involves the
creation of a new, independent federal agency to be called the Consumer
Financial Protection Agency.  The proposed agency would regulate
consumer financial products and services
and provide minimum, uniform rules with respect to such products, including
products currently offered by the Bank.  The proposal also includes a
rollback of preemption for federally chartered banks (like the Bank) such that a
broad category of state consumer law not currently applicable to the Bank would
be applicable to the operations and product offerings of the Bank, its
subsidiaries and its affiliates.  In addition, the proposed agency
would have sole rulemaking and interpretive authority.  Debate
continues with respect to the creation and powers of the proposed agency and
there is no way to predict whether it will be created and, if it is, the
authority it will possess.
 
 We
continue to maintain a strong presence in the community and are pleased to be
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.
  21
  FIRST
ROBINSON FINANCIAL CORPORATION
 Management’s
Discussion and Analysis of Financial Condition
 And
Results of Operations
 
 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, 2009.
 
 Loans Delinquent For:30-89 Days(1)
                
                
                90 Days and Over(1)
                
                
                Nonaccrual
                
                
                Total Delinquent LoansNumber
                
                
                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:One-
      to four-family
                
                
                5
                
                
                $
                151
                
                
                
                0.33
                %
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                6
                
                
                $
                108
                
                
                
                0.24
                %
                
                
                11
                
                
                $
                259
                
                
                
                0.57
                %Construction
      or development
                
                
                1
                
                
                
                86
                
                
                
                1.70
                
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                1
                
                
                
                86
                
                
                
                1.70Commercial
      and agriculture
                
                
                1
                
                
                
                33
                
                
                
                0.19
                
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                1
                
                
                
                33
                
                
                
                0.19Consumer
      and  other loans
                
                
                7
                
                
                
                37
                
                
                
                0.42
                
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                1
                
                
                
                6
                
                
                
                0.07
                
                
                
                8
                
                
                
                43
                
                
                
                0.49
                %Commercial
      business and agricultural finance
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                1
                
                
                
                16
                
                
                
                0.09
                
                
                
                1
                
                
                
                16
                
                
                
                0.09
                %Total
                
                
                14
                
                
                $
                307
                
                
                
                0.31
                %
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                8
                
                
                $
                130
                
                
                
                0.13
                %
                
                
                22
                
                
                $
                437
                
                
                
                0.44
                %
 
 (1)
                Loans
      are still accruing.
 
  22
  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 31,2009
                                          
                                          
                                          2009
                                          
                                          
                                          2008(In thousands)Non-accruing
      loans:One-
      to four-family
                                          
                                          $
                                          108
                                          
                                          
                                          $
                                          192
                                          
                                          
                                          $
                                          92Consumer
      and other loans
                                          
                                          
                                          6
                                          
                                          
                                          
                                          14
                                          
                                          
                                          
                                          —Commercial
      business and agricultural finance
                                          
                                          
                                          16
                                          
                                          
                                          
                                          29
                                          
                                          
                                          
                                          20Total
                                          
                                          
                                          130
                                          
                                          
                                          
                                          235
                                          
                                          
                                          
                                          112Foreclosed/Repossessed
      assets:One-
      to four-family
                                          
                                          
                                          —
                                          
                                          
                                          
                                          46
                                          
                                          
                                          
                                          90Consumer
      vehicle
                                          
                                          
                                          —
                                          
                                          
                                          
                                          —
                                          
                                          
                                          
                                          9Total
                                          
                                          
                                          —
                                          
                                          
                                          
                                          46
                                          
                                          
                                          
                                          99Total
      non-performing assets
                                          
                                          $
                                          130
                                          
                                          
                                          $
                                          281
                                          
                                          
                                          $
                                          211Total
      as a percentage of total assets
                                          
                                          
                                          0.07
                                          %
                                          
                                          
                                          0.17
                                          %
                                          
                                          
                                          0.14
                                          %
 
 Gross
interest income which would have been recorded had the non-accruing loans been
current in accordance with their original terms amounted to approximately $3,000
for the three months and $8,000 for the nine months ended December 31, 2009 and
$3,000 for the three months and $13,000 for the nine months ended December 31,
2008.
 
 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, 2009, the Company
had classified a total of $367,000 of its assets as substandard and $139,000 as
doubtful.  At December 31, 2009, total classified assets comprised
$506,000, or 4.3% of the Company’s capital, and 0.3% of the Company’s total
assets.
  23
  FIRST
ROBINSON FINANCIAL CORPORATION
 Management’s
Discussion and Analysis of Financial Condition
 And
Results of Operations
 
 Other Loans of
Concern.  As of December
31, 2009, there were $3.6 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.
 
 During
the quarter ended December 31, 2009, the Company charged off the full amount of
a $1.0 million loan with a recovery of $27,000 being received prior to December
31, 2009, resulting in a net chargeoff of $972,000.  The borrower’s
primary subsidiary bank was closed by its regulator and the FDIC was appointed
as receiver.  Collection efforts are being pursued but collectibility
of the debt is doubtful.
 
 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, 2009, the Bank
had no real estate properties acquired through foreclosure.  During
January 2010, one property was transferred into other real estate owned at a
value of $24,000.
 
 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, 2009, the Company had a total allowance
for loan losses of $931,000, representing 0.96% of the Company’s loans,
net.   At March 31, 2009, the Company’s total allowance for loan
losses to the Company’s loans, net was at 0.90%.
  24
  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, 2009
                                        
                                        
                                        March 31, 2009Amount 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)One-
      to four-family including loans held for sale
                                        
                                        $
                                        93
                                        
                                        
                                        $
                                        45,788
                                        
                                        
                                        
                                        45.69
                                        %
                                        
                                        $
                                        66
                                        
                                        
                                        $
                                        43,903
                                        
                                        
                                        
                                        48.59
                                        %Multi-family
                                        
                                        
                                        —
                                        
                                        
                                        
                                        2,923
                                        
                                        
                                        
                                        2.92
                                        
                                        
                                        
                                        —
                                        
                                        
                                        
                                        1,242
                                        
                                        
                                        
                                        1.38Commercial
      and agricultural real estate
                                        
                                        
                                        547
                                        
                                        
                                        
                                        16,982
                                        
                                        
                                        
                                        16.94
                                        
                                        
                                        
                                        458
                                        
                                        
                                        
                                        14,793
                                        
                                        
                                        
                                        16.37Construction
      or development
                                        
                                        
                                        —
                                        
                                        
                                        
                                        5,063
                                        
                                        
                                        
                                        5.05
                                        
                                        
                                        
                                        —
                                        
                                        
                                        
                                        2,624
                                        
                                        
                                        
                                        2.90Consumer
      and other loans
                                        
                                        
                                        38
                                        
                                        
                                        
                                        8,784
                                        
                                        
                                        
                                        8.76
                                        
                                        
                                        
                                        34
                                        
                                        
                                        
                                        7,783
                                        
                                        
                                        
                                        8.62State
      and municipal governments
                                        
                                        
                                        —
                                        
                                        
                                        
                                        1,912
                                        
                                        
                                        
                                        1.91
                                        
                                        
                                        
                                        —
                                        
                                        
                                        
                                        2,172
                                        
                                        
                                        
                                        2.40Commercial
      business and agricultural finance
                                        
                                        
                                        253
                                        
                                        
                                        
                                        18,771
                                        
                                        
                                        
                                        18.73
                                        
                                        
                                        
                                        222
                                        
                                        
                                        
                                        17,835
                                        
                                        
                                        
                                        19.74Gross
      Loans
                                        
                                        
                                        
                                        
                                        
                                        
                                        100,223
                                        
                                        
                                        
                                        100.00
                                        %
                                        
                                        
                                        
                                        
                                        
                                        
                                        90,352
                                        
                                        
                                        
                                        100.00
                                        %Unallocated
                                        
                                        
                                        —
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        —Deferred
      loan fees
                                        
                                        
                                        
                                        
                                        
                                        
                                        (3
                                        )
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        (4
                                        )Undisbursed
      portion of loans
                                        
                                        
                                        
                                        
                                        
                                        
                                        (2,035
                                        )
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        (2,811
                                        )Total
                                        
                                        $
                                        931
                                        
                                        
                                        $
                                        98,185
                                        
                                        
                                        
                                        
                                        
                                        
                                        $
                                        780
                                        
                                        
                                        $
                                        87,537
 
 The
following table sets forth an analysis of the Company’s allowance for loan
losses.
 
 Three Months Ended
                            December
      31,
                          
                          
                          Nine Months Ended
                            December
      31,2009
                          
                          
                          2008
                          
                          
                          2009
                          
                          
                          2008(Dollars
      in thousands)Balance
      at beginning of period
                          
                          $
                          893
                          
                          
                          $
                          752
                          
                          
                          $
                          780
                          
                          
                          $
                          727Charge-offs:One-
      to four-family
                          
                          
                          62
                          
                          
                          
                          19
                          
                          
                          
                          130
                          
                          
                          
                          19Commercial
      non-residential real estate
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          123Consumer
      and other loans
                          
                          
                          1,005
                          
                          
                          
                          10
                          
                          
                          
                          1,017
                          
                          
                          
                          34Total
      charge-offs
                          
                          
                          1,067
                          
                          
                          
                          29
                          
                          
                          
                          1,147
                          
                          
                          
                          176Recoveries:One-
      to four-family
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          1Consumer
      and other loans
                          
                          
                          33
                          
                          
                          
                          4
                          
                          
                          
                          46
                          
                          
                          
                          15Total
      recoveries
                          
                          
                          33
                          
                          
                          
                          4
                          
                          
                          
                          46
                          
                          
                          
                          16Net
      charge-offs .
                          
                          
                          1,034
                          
                          
                          
                          25
                          
                          
                          
                          1,101
                          
                          
                          
                          160Additions
      charged to operations
                          
                          
                          1,072
                          
                          
                          
                          30
                          
                          
                          
                          1,252
                          
                          
                          
                          190Balance
      at end of period
                          
                          $
                          931
                          
                          
                          $
                          757
                          
                          
                          $
                          931
                          
                          
                          $
                          757Ratio
      of net charge-offs during the period to average loans outstanding during
      the period
                          
                          
                          1.07
                          %
                          
                          
                          0.03
                          %
                          
                          
                          1.91
                          %
                          
                          
                          0.20
                          %Ratio
      of net charge-offs during the period to average non-performing
      assets
                          
                          
                          534.49
                          %
                          
                          
                          9.95
                          %
                          
                          
                          435.93
                          %
                          
                          
                          4.68
                          %
  25
  FIRST
ROBINSON FINANCIAL CORPORATION
 Management’s
Discussion and Analysis of Financial Condition
 And
Results of Operations
 
 Financial
Condition
 
 Total
assets of the Company increased by $17.4 million, or 10.6%, to $181.8 million at
December 31, 2009 from $164.4 million at March 31, 2009. The increase in assets
was primarily due to an increase of $10.5 million, or 12.1%, loans receivable,
net, and an increase of $4.4 million, or 7.8%, in available for sale
securities.
 
 Total
cash and cash equivalents, interest bearing deposits and federal funds sold
increased by $1.4 million from $13.7 million at March 31, 2009 to $15.1 million
at December 31, 2009. The increase resulted from the $10.1 million, or 102.0%,
growth in repurchase agreements and the $5.3 million, or 3.7%, growth in total
deposits, offset, in part, by increases of $4.4 million, or 7.8%, in
available-for-sale securities and the $10.5 million, or 12.5%, increase in loans
receivable, net.
 
 Available-for-sale
investment securities increased to $60.3 million at December 31, 2009 compared
to $55.9 million at March 31, 2009, a $4.4 million increase. The increase
resulted from the purchase of $31.1 million in available-for-sale securities and
the realized net gain on sale of available-for-sale securities of $106,000, and
the increase of $351,000 in the market valuation of the available-for-sale
portfolio, offset by $9.7 million in repayments on mortgage-backed securities,
by $1.8 million in proceeds from the maturity of available-for-sale securities,
and by $15.4 million in proceeds from the sale of available-for-sale securities,
and the amortization of $230,000 of premiums and discounts on investments. The
investment portfolio is managed to limit the Company's exposure to 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.
 
 During
April 2009, the Company was required to purchase $195,000 in additional Federal
Home Loan Bank (“FHLB”) stock which increased our holdings to
$836,000.  The amount of required investment in FHLB stock is
calculated based on a formula which includes the amount of  one- to-
four family dwelling loans held in the Company’s loan portfolio and the amount
of mortgage-backed securities held in the Company’s investment
portfolio.
 
 The
Company's net loan portfolio including loans held for sale increased by $10.5
million to $97.3 million at December 31, 2009 from $86.8 million at March 31,
2009. Loans on one- to four-family real estate, including one- to four-family
loans held for sale, increased by $1.9 million, or 4.3%; commercial
nonresidential real estate and farmland loans increased by $2.2 million, or
14.8%; construction and development loans increased by $2.4 million, or 93.0%;
consumer and other loans increased by $1.0 million, or 12.9%; loans on
multi-family properties increased by $1.7 million, or 135.4%,
and  loans in commercial business and agricultural
finance  increase by $936,000, or 5.3%.  These increases
were offset, in part, by the decrease in loans to state and municpal governments
by $260,000, or 12.0%.  The total amount of undisbursed closed-ended
lines of credit decreased by $776,000, or 27.6% from $2.8 million at March 31,
2009 to $2.0 million at December 31, 2009.
 
 At
December 31, 2009, the allowance for loan losses was $931,000, or 0.96% of the
net loan portfolio, an increase of $151,000 from the allowance for loan losses
at March 31, 2009 of $780,000, or 0.90% of the net loan portfolio. During the
first nine-months of fiscal 2010, the Company charged off $1.1 million of loan
losses, $990,000 in other loans, and $130,000 on a one- to four- family property
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 had no foreclosed real estate properties held for sale at December 31,
2009. 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.
 
 Total
deposits increased by $5.3 million, or 3.7%, to $145.3 million at December 31,
2009 from $140.1 million at March 31, 2009. The increase in total deposits was
due to an increase of  $7.8 million in savings, NOW, and money market
accounts, and an increase of $634,000 in non-interest bearing demand deposits
offset by the decrease of $3.2 million in certificates of deposit.
 
 Other
borrowings, consisting entirely of repurchase agreements, increased $10.1
million, or 102.0% from $9.9 million at March 31, 2009 to $20.0 million at
December 31, 2009. The obligations are secured by mortgage-backed securities and
US Government agency obligations.  At
December 31, 2009, the average rate on the repurchase agreements was 0.18%
compared to 0.30% at March 31, 2009.  The rate on approximately $18.3
million of the repurchase agreements reprice daily.  All agreements
mature periodically within 24 months.
  26
  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 that matured on July 31, 2009 but was extended to September 30,
2009.  The revoloving line of credit renewed on September 17, 2009 and
increased from $600,000 to $2,500,000 with the renewal.  The balance
of the revolving line of credit was $2,500,000 and $0 as of December 31, 2009
and March 31, 2009, respectively.  The note bears interest at the
prime commercial rate with a floor of 3.50% which was the rate on December 31,
2009, matures on September 16, 2010, and is secured by stock in the
Bank.  The Company is in the process of refinancing the $2.5 million
line of credit with another financial institution.
 
 Stockholders'
equity at December 31, 2009 was $11.7 million compared to $12.3 million at March
31, 2009, a decrease of $569,000, or 4.6%.  Factors relating to the
decrease in stockholders’ equity can be attributed primarily to the $331,000 net
loss and $348,000 in dividends declared and paid, offset, in part, by the
increase of $198,000 in accumulated other comprehensive income due to the
increase in the fair value of securities available for sale.
 
 Results
of Operations
 
 Net
Income (Loss)
 
 The
Company recorded a net loss of $460,000 for the three month period ending
December 31, 2009, versus net income of $194,000 in the same period of 2008.
Primary contributers to the loss for the three months ended December 31, 2009
were the net write off of $972,000 for a loan secured by the stock of a
financial institution, the loss of $60,000 on the cost basis of an equity
security of the same financial institution, and an increase in FDIC
insurance.  Offsetting the amount of the loss for the quarter were a
$192,000, or 50.0%, increase in non-interest income and a $374,000 decrease in
the provision for income taxes. Basic earnings (loss) per share for the December
31, 2009 three month period were $(1.10) per share versus $0.46 per share for
the same period of 2008.  Diluted earnings (loss) per share reflect
incentive plan shares and the potential dilutive impact of stock options granted
under the stock option plan.  Diluted earnings (loss) per share for
the three months ending December 31, 2009 were $(1.10) compared to $0.44 at
December 31, 2008.  For the nine month period ended December 31, 2009,
the Company had a loss of $331,000, a decrease of $943,000 from net income of
$612,000 for the nine months ending December 31, 2008.  The loss for
the nine months ended December 31, 2009 was negatively impacted by a decrease of
$1,124,000, or 35.2%, in net interest income after provision and by an increase
of $861,000, or 24.5%, in non-interest expense which were offset by an increase
in non-interest income of $532,000, or 43.4%, and a decrease of $510,000, or
171.1%, in provision for income taxes when compared to the same period in the
prior year.  Basic earnings (loss) per share for the December 31, 2009
nine month period were $(0.79) per share versus $1.41 per share for the same
period of 2008.  Diluted earnings  (loss) per share reflect
incentive plan shares and the potential dilutive impact of stock options granted
under the stock option plan.  Diluted earnings (loss) per share for
the nine months ending December 31, 2009 were $(0.79) compared to $1.36 at
December 31, 2008.
 
 Net
Interest Income
 
 For the
three-month period ended December 31, 2009, net interest income totaled
$1,165,000, an increase of 1.8%, or $21,000, compared to the same period of
2008. The increase in net interest income can be attributed to an increase of
$8,000, or 0.4%, in total interest income, and by the decrease of $13,000, or
1.7%, in total interest expense. The decrease in total interest expense can be
attributed, in part, to the 0.62% decrease in the average cost of funds on
interest bearing liabilities for the three months ended December 31, 2009 to
2.04% compared to 2.66% for the three-months ended December 31,
2008.
 
 For the
nine-month period ended December 31, 2009, net interest income totaled
$3,323,000, a decrease of $62,000, or 1.8%, from the same period in the prior
year.  Contributing to the decrease was the increase of $260,000, or
11.4%, in total interest expense, offset by the increase of $198,000, or 3.5% in
total interest income.  The net interest margin for the nine-months
ended December 31, 2009 was 2.76%, a 71 basis point decrease from 3.43% for the
nine-months ended December 31, 2008.  The squeezing of the net
interest margin is a direct cause of the decrease in the net interest
income.  During the past six months, management has made a conscience
effort to improve the net interest margin.  At June 30, 2009, the net
interest margin was 2.60%, at September 30, 2009 it was 2.70% and for December
31, 2009 it was 2.76%.
  27
  FIRST
ROBINSON FINANCIAL CORPORATION
 Management’s
Discussion and Analysis of Financial Condition
 And
Results of Operations
 
 Provision
for Loan Losses
 
 The
provision for loan losses for the quarter ended December 31, 2009 was $1,072,000
compared to $30,000 for the December 31, 2008 quarter. For the nine-months ended
December 31, 2009, the provision was $1,252,000 compared to $190,000 over the
same period in 2008.  The increase in the provision is attributed to
the write off of the loan that was secured by the stock of a 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, 2009, its allowance for loan losses was
adequate.
 
 Non-Interest
Income
 
 Non-interest
income categories for the three-month and nine-month periods ended December 31,
2009 and 2008 are shown in the following table:
 Three Months EndedDecember 31,2009
                                
                                
                                2008
                                
                                
                                %Change(In thousands)Non-interest income:Charges
      and fees on deposit accounts
                                
                                $
                                270
                                
                                
                                $
                                223
                                
                                
                                
                                21.1
                                %Charges
      and other fees on loans
                                
                                
                                79
                                
                                
                                
                                26
                                
                                
                                
                                203.8Net
      gain on sale of loans
                                
                                
                                100
                                
                                
                                
                                27
                                
                                
                                
                                270.4Other
                                
                                
                                127
                                
                                
                                
                                108
                                
                                
                                
                                17.6Total
      non-interest income
                                
                                $
                                576
                                
                                
                                $
                                384
                                
                                
                                
                                50.0
                                %
 
 Nine Months EndedDecember 31,2009
                            
                            
                            2008
                            
                            
                            %Change(In thousands)Non-interest income:Charges
      and fees on deposit accounts
                            
                            $
                            747
                            
                            
                            $
                            671
                            
                            
                            
                            11.3
                            %Charges
      and other fees on loans
                            
                            
                            256
                            
                            
                            
                            111
                            
                            
                            
                            130.6Net
      gain on sale of loans
                            
                            
                            282
                            
                            
                            
                            99
                            
                            
                            
                            184.8Net
      realized gain on sale of available for sale securities
                            
                            
                            106
                            
                            
                            
                            2
                            
                            
                            
                            5,200.0Other
                            
                            
                            366
                            
                            
                            
                            342
                            
                            
                            
                            7.0Total
      Non-Interest Income
                            
                            $
                            1,757
                            
                            
                            $
                            1,225
                            
                            
                            
                            43.4
                            %
 
 Non-interest
income increased $192,000 when comparing the three-months ended December 31,
2009 to December 31, 2008.  The largest contributing factors to the
increase were the increase in gain on sale of loans and the fees related to the
servicing of loans.  The gain on sale of loans is due to the sale of
$6.4 million in loans for the three-months ended December 31, 2009 compared to
$1.6 million in loans sold during the three months ended December 31,
2008.  For the nine-months ended December 31, 2009, non-interest
income increased $532,000 over the nine-months ended December 31,
2008.  The increase can be primarily attributed to the net realized
gain on the sale of available for sale securities due to the sale of $15.4
million in mortgage-backed and agency securities; and he net gain from the sale
of loans.  During the nine-months ended December 31, 2009, the Company
sold $25.1 million in loans into the secondary market compared to $6.3 million
during the nine-months ended December 31, 2008.
  28
  FIRST
ROBINSON FINANCIAL CORPORATION
 Management’s
Discussion and Analysis of Financial Condition
 And
Results of Operations
 
 Non-Interest
Expense
 
 Non-interest
expense categories for the three-month and nine-month periods ended December 31,
2009 and 2008 are shown in the following table:
 
 Three Months EndedDecember 31,2009
                                
                                
                                2008
                                
                                
                                %Change(In thousands)Non-interest expense:Compensation
      and employee benefits
                                
                                $
                                684
                                
                                
                                $
                                644
                                
                                
                                
                                6.2
                                %Occupancy
      and equipment
                                
                                
                                174
                                
                                
                                
                                132
                                
                                
                                
                                31.8Data
      processing
                                
                                
                                59
                                
                                
                                
                                79
                                
                                
                                
                                (25.3
                                )Audit,
      legal and other professional
                                
                                
                                91
                                
                                
                                
                                49
                                
                                
                                
                                85.7Advertising
                                
                                
                                87
                                
                                
                                
                                59
                                
                                
                                
                                47.5Telephone
      and postage
                                
                                
                                45
                                
                                
                                
                                48
                                
                                
                                
                                (6.3
                                )Net
      loss on sale of foreclosed property
                                
                                
                                2
                                
                                
                                
                                —
                                
                                
                                
                                —FDIC
      Insurance
                                
                                
                                54
                                
                                
                                
                                18
                                
                                
                                
                                200.0Loss
      on cost basis equity security
                                
                                
                                60
                                
                                
                                
                                —
                                
                                
                                
                                —Other
                                
                                
                                158
                                
                                
                                
                                186
                                
                                
                                
                                (15.1
                                )Total
      non-interest expense
                                
                                $
                                1,414
                                
                                
                                $
                                1,215
                                
                                
                                
                                16.4
                                %
 
 Nine Months EndedDecember 31,2009
                            
                            
                            2008
                            
                            
                            %Change(In thousands)Non-interest expense:Compensation
      and employee benefits
                            
                            $
                            2,024
                            
                            
                            $
                            1,945
                            
                            
                            
                            4.1
                            %Occupancy
      and equipment
                            
                            
                            534
                            
                            
                            
                            465
                            
                            
                            
                            14.8Data
      processing
                            
                            
                            186
                            
                            
                            
                            198
                            
                            
                            
                            (6.1
                            )Audit,
      legal and other professional
                            
                            
                            284
                            
                            
                            
                            148
                            
                            
                            
                            91.9Advertising
                            
                            
                            263
                            
                            
                            
                            156
                            
                            
                            
                            68.6Telephone
      and postage
                            
                            
                            148
                            
                            
                            
                            107
                            
                            
                            
                            38.3Net
      loss on sale of foreclosed property
                            
                            
                            2
                            
                            
                            
                            4
                            
                            
                            
                            (50.0
                            )FDIC
      insurance
                            
                            
                            234
                            
                            
                            
                            28
                            
                            
                            
                            735.7Loss
      on cost basis equity security
                            
                            
                            197
                            
                            
                            
                            —
                            
                            
                            
                            —Other
                            
                            
                            499
                            
                            
                            
                            459
                            
                            
                            
                            8.7Total
      Non-Interest Expense
                            
                            $
                            4,371
                            
                            
                            $
                            3,510
                            
                            
                            
                            24.5
                            %
 
 Compensation
and employee benefits increased by $40,000 when comparing the December 2009 and
2008 quarters primarily due to a $14,000 increase in salaries and the increase
of $27,000 in the market value of the shares held in the directors’ retirement
plan.  For the nine-months ended December 31, 2009, compensation
expense increased $79,000 over the nine-months ended December 31,
2008.  Salaries and payroll taxes increased by $241,000 due to the
additional employees for the Vincennes branch and the Trust
department.
 
 Audit,
legal and other professional fees increased by $42,000 for the three-months
ended December 31, 2009 and $136,000 for the nine-months ended December 31, 2009
when comparing to the three- and nine-months ended December 31,
2008.  The increase can be attributed, in part, to costs associated
with compliance with Sox 404.
 
 Advertising
expense increased $28,000 and $107,000 for the three- and nine- months ended
December 31, 2009, respectively, when compared to the same period of the prior
year due to increased advertising in a new market area: Vincennes, Indiana. On
May 1st, 2009,
in response to a marketing program to promote branding, our deposit product
called “Reward Checking” was renamed Kasasa TM
Cash.   This promotion has also led to the increase in
advertising.
  29




FIRST
ROBINSON FINANCIAL CORPORATION


Management’s
Discussion and Analysis of Financial Condition


And
Results of Operations





Telephone
and postage expense decreased by $3,000 for the three-months ended December 31,
2009 when compared to the same period in 2008 but increased by $41,000 for the
nine-months ended December 31, 2009 over the nine-months ended December 31,
2008.  During August 2008, the Company signed with a company that
would supply all lines necessary for integrated technologies, secure networking,
and communicating with branches and ATMs.  The addition of phones and
lines at the new branch in Vincennes also contributed to the
increases.





The
Company recognized losses of $60,000 and $197,000 during the three-months and
nine-months ended December 31, 2009, respectively, related to a cost basis
equity security investment in a financial institution.   With the
additional $60,000 being charged to expense, the investment was written down to
zero as the financial institution was placed into receivership under the
FDIC.  No loss was recognized on this investment in prior year
periods.





The
increase of $206,000 in Federal Deposit Insurance Corporation (“FDIC”) insurance
when comparing the nine-months ended December 31, 2009 to the same period in the
prior year was due to the increase in the assessment from 5 basis points to 12
basis points paid on deposits and the additional 5 basis point special
assessment on each insured depository institution's assets minus Tier 1 capital
as of June 30, 2009.  The special assessment was collected on
September 30, 2009. The additional amount  imposed on the Company, as
a result of the June 30, 2009 final rule, was $81,359.





Income
Tax Expense





The
provision in income tax expense decreased $374,000, or 420.2%, for the
three-months ending December 31, 2009, compared to the same period in 2008. The
decreases can be attributed in part to decreased profitability as a result of
the write off of the loan secured by the stock of a financial
institution.   For the nine-months ended December 31, 2009, the
provision for income tax expense decreased $510,000, or 171.1%, from the
nine-months ended December 31, 2008 due to decreased profitability and the
increase in non-taxable income.





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
$394,000. 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,
2009, outstanding commitments to extend credit amounted to $20.2 million
(including $11.0 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 $24.6 million line of credit with the FHLB, which can be accessed
immediately.  As of December 31, 2009 and 2008, there were no advances
outstanding for either period.  However, the $24.6 million line of
credit with the FHLB was reduced by $1.2 million for the credit enhancement
reserve established as a result of the participation in the FHLB Mortgage
Partnership Finance (“MPF”) program.  At December 31, 2009, the
Company also maintained a $5.0 million revolving federal funds line of credit
and a $2.5 million revolving line of credit with IBBBB located in Springfield,
Illinois, the assets and liabilities of which were later purchased and assumed
by The Independent BankersBank (“TIB”).  Our revolving federal funds
line of credit was assumed by TIB but the $2.5 million revolving line of credit
was not.   The Company is in the process of refinancing the $2.5
million line of credit with another financial institution.  The
Company borrowed the full amount of the $2.5 million revolving line in September
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, 2009
and 2008, no amounts were outstanding at the Federal Reserve discount
window.





30





FIRST
ROBINSON FINANCIAL CORPORATION


Management’s
Discussion and Analysis of Financial Condition


And
Results of Operations





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.





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, 2009, the Bank’s compliance with all of the aforementioned capital
requirements is summarized below:




To be Well CapitalizedUnder the PromptFor Capital
                    
                    
                    Corrective ActionActual
                    
                    
                    Adequacy Purposes
                    
                    
                    ProvisionsAmount
                    
                    
                    Ratio
                    
                    
                    Amount
                    
                    
                    Ratio
                    
                    
                    Amount
                    
                    
                    RatioTotal
      Risk-Based Capital
                      (to
      Risk-Weighted Assets)
                    
                    $
                    13,219
                    
                    
                    
                    13.29
                    %
                    
                    $
                    7,955
                    
                    
                    
                    8.00
                    %
                    
                    $
                    9,944
                    
                    
                    
                    10.00
                    %Tier
      I Capital
                      (to
      Risk-Weighted Assets)
                    
                    
                    12,273
                    
                    
                    
                    12.34
                    
                    
                    
                    3,978
                    
                    
                    
                    4.00
                    
                    
                    
                    5,967
                    
                    
                    
                    6.00Tier
      I Capital
                      (to
      Average Assets)
                    
                    
                    12,273
                    
                    
                    
                    6.97
                    
                    
                    
                    7,042
                    
                    
                    
                    4.00
                    
                    
                    
                    8,803
                    
                    
                    
                    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.


31


FIRST
ROBINSON FINANCIAL CORPORATION





Item:  3    Quantitative and Qualitative
Disclosures about Market Risk





Not
applicable.





Item:  4T    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, 2009 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.





32





PART II
OTHER INFORMATION





Item
      1.
            Legal
      Proceedings


None





Item
      1A.
            Risk
      Factors


None





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, 2009 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 Programs10/1/2009
      – 10/31/2009
                                            
                                            
                                            
                                            106
                                            
                                            
                                            $
                                            36.00
                                            
                                            
                                            
                                            —
                                            
                                            
                                            
                                            12,16011/1/2009
      – 11/30/2009
                                            
                                            
                                            
                                            —
                                            
                                            
                                            
                                            —
                                            
                                            
                                            
                                            —
                                            
                                            
                                            
                                            12,16012/1/2009–
      12/31/2009
                                            
                                            
                                            
                                            —
                                            
                                            
                                            
                                            —
                                            
                                            
                                            
                                            —
                                            
                                            
                                            
                                            12,160Total
                                            
                                            
                                            
                                            106
                                            
                                            
                                            $
                                            36.00
                                            
                                            
                                            
                                            —
                                            
                                            
                                            
                                            12,160


(1)  On
July 23, 2009, the Board of Directors of the Company voted to approve the
extension and expansion of the repurchase program of its equity stock approved
on July 24, 2008.  The Company may repurchase up to 10,000 additional
shares of the Company’s outstanding common stock in the open market or in
negotiated private transactions from time to time when deemed appropriate by
management. The increase represents approximately 2.5% of the Company’s issued
and outstanding shares.  As of July 22, 2009, the Company had
repurchased 22,782 shares of its common stock out of the 26,892 shares that had
been previously authorized for repurchase leaving 4,110 remaining to be
purchased.  As a result of these actions, the Company is currently
authorized to repurchase 14,110 shares of common stock.  The program
has been extended to August 2, 2010 or  the earlier of the completion
of the repurchase of the 14,110 shares.   As of February 12, 2010
1,950 shares of the 14,110 have been purchased in the expanded program leaving
12,160 remaining to be purchased pursuant to this share repurchase
program.





Item
      3.
            Defaults Upon Senior
      Executives


None





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


None





Item
      5.
            Other
      Information


None





Item
      6.
            Exhibits





1.
            Exhibit
      31: Section 302 Certifications





2.
            Exhibit
      32: Section 906 Certifications


33


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

                                                CORPORATIONDate:February 16, 2010
                                            /s/ Rick L. CattRick
      L. CattPresident
      and Chief Executive OfficerDate:February 16, 2010
                                            /s/ Jamie E. McReynoldsJamie
      E. McReynoldsChiefFinancial Officer
      and Vice
President




34


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
  35