UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C.  20549





FORM
10-Q


(Mark
One)


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




For
      the quarterly period ended
              December
      31, 2010




OR





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





For
      the transition period from
                _____________________
      to
________________________




Commission
File Number  001-12969




FIRST
ROBINSON FINANCIAL CORPORATION








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








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  ̈




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





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




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




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




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







FIRST
ROBINSON FINANCIAL CORPORATION


Index to
Form 10-Q





PAGEPART
      1. FINANCIAL INFORMATIONItem
      1.
                    Financial
      StatementsCondensed
      Consolidated Balance Sheets as of December 31, 2010 and March 31,
      2010
                    
                    3Condensed
      Consolidated Statements of Operations for the Three-Month and Nine-Month
      Periods Ended December 31, 2010 and 2009
                    
                    4Condensed
      Consolidated Statements of Changes in Stockholders’ Equity For the
      Nine-Month Periods ended December 31, 2010 and 2009
                    
                    6Condensed
      Consolidated Statements of Cash Flows for the Nine-Month Periods Ended
      December 31, 2010 and  2009
                    
                    7Notes
      to Condensed Consolidated Financial Statements
                    
                    9Item
      2.
                    Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
                    
                    22Item
      3.
                    Quantitative
      and Qualitative Disclosures about Market Risk
                    
                    37Item
      4.
                    Controls
      and Procedures
                    
                    37PART
      II. OTHER INFORMATIONItem
      1.
                    Legal
      Proceedings
                    
                    38Item
      1A.
                    Risk
      Factors
                    
                    38Item
      2.
                    Unregistered
      Sales of Equity Securities and Use of Proceeds
                    
                    39Item
      3.
                    Defaults
      Upon Senior Executives
                    
                    39Item
      4.
                    Removed
      and Reserved
                    
                    39Item
      5.
                    Other
      Information
                    
                    39Item
      6.
                    Exhibits
                    
                    39SIGNATURES
                    
                    40CERTIFICATIONS


2





Item
1:


FIRST
ROBINSON FINANCIAL CORPORATION


CONDENSED
CONSOLIDATED BALANCE SHEETS


(In
thousands, except share data)





(Unaudited)December 31, 2010
                
                
                March 31, 2010ASSETSCash
      and cash equivalents
                
                $
                8,248
                
                
                $
                6,562Interest-bearing
      deposits
                
                
                4,709
                
                
                
                3,475Federal
      funds sold
                
                
                19,730
                
                
                
                7,852Cash
      and cash equivalents
                
                
                32,687
                
                
                
                17,889Available-for-sale
      securities
                
                
                46,366
                
                
                
                55,399Loans,
      held for sale
                
                
                356
                
                
                
                88Loans,
      net of allowance for loan losses of $1,102 and $973 at December 31, 2010
      and March 31, 2010, respectively
                
                
                120,571
                
                
                
                100,063Federal
      Reserve and Federal Home Loan Bank stock
                
                
                1,051
                
                
                
                1,008Premises
      and equipment, net
                
                
                3,891
                
                
                
                4,018Foreclosed
      assets held for sale, net
                
                
                70
                
                
                
                52Interest
      receivable
                
                
                825
                
                
                
                906Prepaid
      income taxes
                
                
                39
                
                
                
                380Cash
      surrender value of life insurance
                
                
                1,541
                
                
                
                1,504Other
      assets
                
                
                1,458
                
                
                
                1,682Total
      Assets
                
                $
                208,855
                
                
                $
                182,989LIABILITIES
      AND STOCKHOLDERS’ EQUITYLiabilitiesDeposits
                
                $
                176,198
                
                
                $
                149,312Other
      borrowings
                
                
                16,151
                
                
                
                17,621Short-term
      borrowings
                
                
                1,800
                
                
                
                1,700Advances
      from borrowers for taxes and insurance
                
                
                173
                
                
                
                196Deferred
      income taxes
                
                
                474
                
                
                
                779Interest
      payable
                
                
                203
                
                
                
                251Other
      liabilities
                
                
                1,127
                
                
                
                1,085Total
      Liabilities
                
                
                196,126
                
                
                
                170,944Commitments
      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, 2010– 427,749 shares; March 31, 2010 –
      433,198 shares
                
                
                9
                
                
                
                9Additional
      paid-in capital
                
                
                8,769
                
                
                
                8,783Retained
      earnings
                
                
                11,160
                
                
                
                10,182Accumulated
      other comprehensive income
                
                
                870
                
                
                
                976Treasury
      stock, at costCommon:
      December 31, 2010 – 431,876 shares; March 31, 2010 – 426,427
      shares
                
                
                (8,079
                )
                
                
                (7,905
                )Total
      Stockholders’ Equity
                
                
                12,729
                
                
                
                12,045Total
      Liabilities and Stockholders’ Equity
                
                $
                208,855
                
                
                $
                182,989





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, 2010 and 2009


(In
thousands, except per share data)


(Unaudited)





Three-Month Period
                        
                        
                        Nine-Month Period2010
                        
                        
                        2009
                        
                        
                        2010
                        
                        
                        2009Interest
      and Dividend Income:Loans
                        
                        $
                        1,719
                        
                        
                        $
                        1,439
                        
                        
                        $
                        4,884
                        
                        
                        $
                        4,200Securities:Taxable
                        
                        
                        378
                        
                        
                        
                        463
                        
                        
                        
                        1,249
                        
                        
                        
                        1,547Tax-exempt
                        
                        
                        29
                        
                        
                        
                        31
                        
                        
                        
                        89
                        
                        
                        
                        106Other
      interest income
                        
                        
                        10
                        
                        
                        
                        1
                        
                        
                        
                        19
                        
                        
                        
                        7Dividends
      on Federal Reserve Bank stock
                        
                        
                        3
                        
                        
                        
                        3
                        
                        
                        
                        8
                        
                        
                        
                        8Total
      Interest and Dividend Income
                        
                        
                        2,139
                        
                        
                        
                        1,937
                        
                        
                        
                        6,249
                        
                        
                        
                        5,868Interest
      Expense:Deposits
                        
                        
                        578
                        
                        
                        
                        741
                        
                        
                        
                        1,789
                        
                        
                        
                        2,486Other
      borrowings
                        
                        
                        26
                        
                        
                        
                        31
                        
                        
                        
                        80
                        
                        
                        
                        59Total
      Interest Expense
                        
                        
                        604
                        
                        
                        
                        772
                        
                        
                        
                        1,869
                        
                        
                        
                        2,545Net
      Interest Income
                        
                        
                        1,535
                        
                        
                        
                        1,165
                        
                        
                        
                        4,380
                        
                        
                        
                        3,323Provision
      for Loan Losses
                        
                        
                        75
                        
                        
                        
                        1,072
                        
                        
                        
                        165
                        
                        
                        
                        1,252Net
      Interest Income After Provision for Loan Losses
                        
                        
                        1,460
                        
                        
                        
                        93
                        
                        
                        
                        4,215
                        
                        
                        
                        2,071Non-interest
      income:Charges
      and fees on deposit accounts
                        
                        
                        239
                        
                        
                        
                        270
                        
                        
                        
                        728
                        
                        
                        
                        747Charges
      and other fees on loans
                        
                        
                        107
                        
                        
                        
                        79
                        
                        
                        
                        265
                        
                        
                        
                        256Net
      gain on sale of loans
                        
                        
                        207
                        
                        
                        
                        100
                        
                        
                        
                        548
                        
                        
                        
                        282Net
      gain (loss) on sale of foreclosed property
                        
                        
                        —
                        
                        
                        
                        (2
                        )
                        
                        
                        15
                        
                        
                        
                        (2
                        )Net
      realized gain on sale of available-for-sale investments
                        
                        
                        —
                        
                        
                        
                        —
                        
                        
                        
                        —
                        
                        
                        
                        106Net
      gain on sale of equipment
                        
                        
                        —
                        
                        
                        
                        —
                        
                        
                        
                        4
                        
                        
                        
                        —Other
                        
                        
                        142
                        
                        
                        
                        127
                        
                        
                        
                        409
                        
                        
                        
                        366Total
      Non-Interest Income
                        
                        
                        695
                        
                        
                        
                        574
                        
                        
                        
                        1,969
                        
                        
                        
                        1,755Non-interest
      expense:Compensation
      and employee benefits
                        
                        
                        680
                        
                        
                        
                        684
                        
                        
                        
                        2,218
                        
                        
                        
                        2,024Occupancy
      and equipment
                        
                        
                        198
                        
                        
                        
                        174
                        
                        
                        
                        549
                        
                        
                        
                        534Data
      processing
                        
                        
                        74
                        
                        
                        
                        59
                        
                        
                        
                        214
                        
                        
                        
                        186Audit,
      legal and other professional
                        
                        
                        62
                        
                        
                        
                        91
                        
                        
                        
                        204
                        
                        
                        
                        284Advertising
                        
                        
                        64
                        
                        
                        
                        87
                        
                        
                        
                        198
                        
                        
                        
                        263Telephone
      and postage
                        
                        
                        56
                        
                        
                        
                        45
                        
                        
                        
                        152
                        
                        
                        
                        148FDIC
      insurance
                        
                        
                        55
                        
                        
                        
                        54
                        
                        
                        
                        159
                        
                        
                        
                        234Loss
      on cost basis equity investment
                        
                        
                        —
                        
                        
                        
                        60
                        
                        
                        
                        —
                        
                        
                        
                        197Other
                        
                        
                        168
                        
                        
                        
                        158
                        
                        
                        
                        466
                        
                        
                        
                        499Total
      Non-Interest Expense
                        
                        
                        1,357
                        
                        
                        
                        1,412
                        
                        
                        
                        4,160
                        
                        
                        
                        4,369





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, 2010 and 2009


(In
thousands, except per share data)


(Unaudited)





Three-Month Period
                  
                  
                  Nine-Month Period2010
                  
                  
                  2009
                  
                  
                  2010
                  
                  
                  2009Income
      (loss) before income taxes
                  
                  $
                  798
                  
                  
                  $
                  (745
                  )
                  
                  $
                  2,024
                  
                  
                  $
                  (543
                  )Provision
      (benefit) for income taxes
                  
                  
                  275
                  
                  
                  
                  (285
                  )
                  
                  
                  681
                  
                  
                  
                  (212
                  )Net
      Income (Loss)
                  
                  $
                  523
                  
                  
                  $
                  (460
                  )
                  
                  $
                  1,343
                  
                  
                  $
                  (331
                  )Earnings
      (Loss) Per Share-Basic
                  
                  $
                  1.27
                  
                  
                  $
                  (1.10
                  )
                  
                  $
                  3.25
                  
                  
                  $
                  (0.79
                  )Earnings
      (Loss) Per Share-Diluted
                  
                  $
                  1.22
                  
                  
                  $
                  (1.10
                  )
                  
                  $
                  3.13
                  
                  
                  $
                  (0.79
                  )





See Notes
to Condensed Consolidated Financial Statements


5





FIRST
ROBINSON FINANCIAL CORPORATION


CONDENSED
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY


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


(In
thousands, except share data)


(Unaudited)





AccumulatedAdditional
                                    
                                    
                                    
                                    
                                    
                                    OtherCommon
      Stock
                                    
                                    
                                    Paid-in
                                    
                                    
                                    Retained
                                    
                                    
                                    Comprehensive
                                    
                                    
                                    Treasury
                                    
                                    
                                    
                                    
                                    
                                    ComprehensiveShares
                                    
                                    
                                    Amount
                                    
                                    
                                    Capital
                                    
                                    
                                    Earnings
                                    
                                    
                                    Income
                                    
                                    
                                    Stock
                                    
                                    
                                    Total
                                    
                                    
                                    IncomeBalance,
      April 1, 2009
                                    
                                    
                                    435,232
                                    
                                    
                                    $
                                    9
                                    
                                    
                                    $
                                    8,791
                                    
                                    
                                    $
                                    10,560
                                    
                                    
                                    $
                                    782
                                    
                                    
                                    $
                                    (7,835
                                    )
                                    
                                    $
                                    12,307Comprehensive
      incomeNet
      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
                                    )
                                    
                                    $
                                    11,738Balance,
      April 1, 2010
                                    
                                    
                                    433,198
                                    
                                    
                                    $
                                    9
                                    
                                    
                                    $
                                    8,783
                                    
                                    
                                    $
                                    10,182
                                    
                                    
                                    $
                                    976
                                    
                                    
                                    $
                                    (7,905
                                    )
                                    
                                    $
                                    12,045Comprehensive
      incomeNet
      income
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    1,343
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    1,343
                                    
                                    
                                    $
                                    1,343Change
      in unrealized appreciation on available-for-sale securities, net of taxes
      of $(67)
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    (106
                                    )
                                    
                                    
                                    
                                    
                                    
                                    
                                    (106
                                    )
                                    
                                    
                                    (106
                                    )Total
      comprehensive income
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    $
                                    1,237Treasury
      shares purchased
                                    
                                    
                                    (5,449
                                    )
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    (174
                                    )
                                    
                                    
                                    (174
                                    )Dividends
      on common stock, $0.85 per share
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    (365
                                    )
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    (365
                                    )Incentive
      compensation
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    (14
                                    )
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    (14
                                    )Balance,
      December 31, 2010
                                    
                                    
                                    427,749
                                    
                                    
                                    $
                                    9
                                    
                                    
                                    $
                                    8,769
                                    
                                    
                                    $
                                    11,160
                                    
                                    
                                    $
                                    870
                                    
                                    
                                    $
                                    (8,079
                                    )
                                    
                                    $
                                    12,729





See Notes
to Condensed Consolidated Financial Statements


6





FIRST
ROBINSON FINANCIAL CORPORATION


CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS


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


(In
thousands)


(Unaudited)





2010
                
                
                2009Cash
      flows from operating activities:Net
      income (loss)
                
                $
                1,343
                
                
                $
                (331
                )Items
      not requiring (providing) cashDepreciation
      and amortization
                
                
                233
                
                
                
                236Provision
      for loan losses
                
                
                165
                
                
                
                1,252Amortization
      of premiums and discounts on securities
                
                
                204
                
                
                
                230Amortization
      of loan servicing rights
                
                
                202
                
                
                
                83Deferred
      income taxes
                
                
                (238
                )
                
                
                7Originations
      of mortgage loans held for sale
                
                
                (33,325
                )
                
                
                (24,492
                )Proceeds
      from the sale of mortgage loans
                
                
                33,604
                
                
                
                25,096Net
      gain on loans sold
                
                
                (548
                )
                
                
                (282
                )Net
      (gain) loss on sale of foreclosed property
                
                
                (15
                )
                
                
                2Net
      gain on sale of equipment
                
                
                (4
                )
                
                
                —Loss
      on cost basis equity investment
                
                
                —
                
                
                
                197Net
      realized gain on sale of securities
                
                
                —
                
                
                
                (106
                )Cash
      surrender value of life insurance
                
                
                (37
                )
                
                
                (39
                )Changes
      in:Interest
      receivable
                
                
                81
                
                
                
                45Other
      assets
                
                
                13
                
                
                
                (941
                )Interest
      payable
                
                
                (48
                )
                
                
                (76
                )Other
      liabilities
                
                
                42
                
                
                
                100Income
      taxes, prepaid
                
                
                341
                
                
                
                (221
                )Net
      cash provided by operating activities
                
                
                2,013
                
                
                
                760Cash
      flows from investing activities:Purchase
      of available-for-sale securities
                
                
                (2,631
                )
                
                
                (31,100
                )Proceeds
      from maturities of available-for-sale securities
                
                
                3,550
                
                
                
                1,820Proceeds
      from sales of available-for-sale securities
                
                
                —
                
                
                
                15,448Repayment
      of principal on mortgage-backed securities
                
                
                7,737
                
                
                
                9,703Purchase
      of Federal Home Loan Bank stock
                
                
                (43
                )
                
                
                (195
                )Net
      change in loans
                
                
                (20,742
                )
                
                
                (12,071
                )Purchase
      of premises and equipment
                
                
                (117
                )
                
                
                (333
                )Proceeds
      from sale of equipment
                
                
                24
                
                
                
                —Proceeds
      from sale of foreclosed assets
                
                
                67
                
                
                
                44Net
      cash used in investing activities
                
                
                (12,155
                )
                
                
                (16,684
                )





See Notes
to Condensed Consolidated Financial Statements.


7


FIRST
ROBINSON FINANCIAL CORPORATION


CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)


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


(In
thousands)


(Unaudited)





2010
                
                
                2009Cash
      flows from financing activities:Net
      increase in deposits
                
                $
                26,886
                
                
                $
                5,252Proceeds
      from other borrowings
                
                
                97,857
                
                
                
                86,950Repayment
      of other borrowings
                
                
                (99,327
                )
                
                
                (76,841
                )Advances
      from Federal Home Loan Bank
                
                
                10
                
                
                
                5,500Repayment
      of advances from Federal Home Loan Bank
                
                
                (10
                )
                
                
                (5,500
                )Borrowings
      from Federal Reserve Bank
                
                
                10
                
                
                
                —Repayment
      of borrowings from Federal Reserve Bank
                
                
                (10
                )
                
                
                —Net
      change in from short-term borrowings
                
                
                100
                
                
                
                2,500Purchase
      of incentive plan shares
                
                
                (14
                )
                
                
                (18
                )Purchase
      of treasury stock
                
                
                (174
                )
                
                
                (70
                )Dividends
      paid
                
                
                (365
                )
                
                
                (348
                )Net
      increase in advances from borrowers for taxes and
insurance
                
                
                (23
                )
                
                
                (66
                )Net
      cash  provided by financing activities
                
                
                24,940
                
                
                
                17,359Increase
      in cash and cash equivalents
                
                
                14,798
                
                
                
                1,435Cash
      and cash equivalents at beginning of period
                
                
                17,889
                
                
                
                13,709Cash
      and cash equivalents at end of period
                
                $
                32,687
                
                
                $
                15,144Supplemental
      Cash Flows Information:Interest
      paid
                
                $
                1,917
                
                
                $
                2,621Income
      taxes paid (net of refunds)
                
                
                454
                
                
                
                —Real
      estate acquired in settlement of loans
                
                
                70
                
                
                
                —





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, 2010, the results
of its operations for the three and nine month periods ended December 31, 2010
and 2009, the changes in stockholders’ equity for the nine month periods ended
December 31, 2010 and 2009, and cash flows for the nine month periods ended
December 31, 2010 and 2009.  The results of operations for those
months ended December 31, 2010 are not necessarily indicative of the results to
be expected for the full year.





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





2.
            Newly Adopted and
      Recent Accounting
Pronouncements





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





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


9





FIRST
ROBINSON FINANCIAL CORPORATION


NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS





3.
            Fair Value
      Measurements




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





Level 1
            Quoted
      prices in active markets for identical assets or
    liabilities.





Level 2
            Observable
      inputs other than Level 1 prices, such as quoted prices for similar assets
      or liabilities; quoted prices in markets that are not active; or other
      inputs that are observable or can be corroborated by observable market
      data for substantially the full term of the assets or
      liabilities.





Level 3
            Unobservable
      inputs that are supported by little or no market activity and that are
      significant to the fair value of the assets or
  liabilities.




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




Available-for-Sale
Securities




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


10


FIRST
ROBINSON FINANCIAL CORPORATION


NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS




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





Carrying value at December 31, 2010Description
                        
                        Fair Value
                        
                        
                        Quoted Prices in
                          Active Markets
                          for Identical
                          Assets
                          (Level 1)
                        
                        
                        Significant
                          Other
                          Observable
                          Inputs
                          (Level 2)
                        
                        
                        Significant
                          Unobservable
                          Inputs
                          (Level 3)U.S.
      government sponsored enterprises (GSE)
                        
                        $
                        12,413
                        
                        
                        $
                        —
                        
                        
                        $
                        12,413
                        
                        
                        $
                        —Mortgage-backed,
      GSE residential
                        
                        
                        28,442
                        
                        
                        
                        —
                        
                        
                        
                        28,442
                        
                        
                        
                        —Mortgage-backed,
      GSE commercial
                        
                        
                        1,462
                        
                        
                        
                        —
                        
                        
                        
                        1,462
                        
                        
                        
                        —State
      and political subdivisions
                        
                        
                        4,049
                        
                        
                        
                        —
                        
                        
                        
                        4,049
                        
                        
                        
                        —Total
      available-for-sale securities
                        
                        $
                        46,366
                        
                        
                        $
                        —
                        
                        
                        $
                        46,366
                        
                        
                        $
                        —




Carrying value at March 31, 2010Description
                
                Fair Value
                
                
                Quoted Prices in
                  Active Markets
                  for Identical
                  Assets
                  (Level 1)
                
                
                Significant
                  Other
                  Observable
                  Inputs
                  (Level 2)
                
                
                Significant
                  Unobservable
                  Inputs
                  (Level 3)U.S.
      government sponsored enterprises (GSE)
                
                $
                15,191
                
                
                $
                —
                
                
                $
                15,191
                
                
                $
                —Mortgage-backed,
      GSE residential
                
                
                36,472
                
                
                
                —
                
                
                
                36,472
                
                
                
                —State
      and political subdivisions
                
                
                3,736
                
                
                
                —
                
                
                
                3,736
                
                
                
                —Total
      available-for-sale securities
                
                $
                55,399
                
                
                $
                —
                
                
                $
                55,399
                
                
                $
                —




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




Impaired
Loans (Collateral
Dependent)




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




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





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





Mortgage
Servicing Rights





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


11


FIRST
ROBINSON FINANCIAL CORPORATION


NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS





Foreclosed
Assets Held for Sale





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





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





Carrying value at December 31, 2010Quoted Prices in
                
                
                SignificantActive Markets
                
                
                Other
                
                
                Significantfor Identical
                
                
                Observable
                
                
                UnobservableAssets
                
                
                Inputs
                
                
                InputsDescription
                
                Fair Value
                
                
                (Level 1)
                
                
                (Level 2)
                
                
                (Level 3)Impaired
      loans (collateral dependent)
                
                $
                590
                
                
                $
                —
                
                
                $
                —
                
                
                $
                590





Carrying value at March 31, 2010Quoted Prices in
                
                
                SignificantActive Markets
                
                
                Other
                
                
                Significantfor Identical
                
                
                Observable
                
                
                UnobservableAssets
                
                
                Inputs
                
                
                InputsDescription
                
                Fair Value
                
                
                (Level 1)
                
                
                (Level 2)
                
                
                (Level 3)Impaired
      loans (collateral dependent)
                
                $
                66
                
                
                $
                —
                
                
                $
                —
                
                
                $
                66Mortgage
      servicing rights
                
                
                422
                
                
                
                —
                
                
                
                —
                
                
                
                422Foreclosed
      assets held for sale, net
                
                
                52
                
                
                
                —
                
                
                
                52
                
                
                
                —





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





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




12





FIRST
ROBINSON FINANCIAL CORPORATION


NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS





December 31, 2010
                
                
                March 31, 2010Carrying
                
                
                
                
                
                
                CarryingAmount
                
                
                Fair Value
                
                
                Amount
                
                
                Fair Value(In thousands)Financial
      assetsCash
      and cash equivalents
                
                $
                8,248
                
                
                $
                8,248
                
                
                $
                6,562
                
                
                $
                6,562Interest-bearing
      deposits
                
                
                4,709
                
                
                
                4,709
                
                
                
                3,475
                
                
                
                3,475Federal
      funds sold
                
                
                19,730
                
                
                
                19,730
                
                
                
                7,852
                
                
                
                7,852Available-for-sale
      securities
                
                
                46,366
                
                
                
                46,366
                
                
                
                55,399
                
                
                
                55,399Loans
      held for sale
                
                
                356
                
                
                
                356
                
                
                
                88
                
                
                
                88Loans,
      net of allowance for loan losses
                
                
                120,571
                
                
                
                122,179
                
                
                
                100,063
                
                
                
                101,214Federal
      Reserve and Federal Home Loan Bank stock
                
                
                1,051
                
                
                
                1,051
                
                
                
                1,008
                
                
                
                1,008Interest
      receivable
                
                
                825
                
                
                
                825
                
                
                
                906
                
                
                
                906Financial
      liabilitiesDeposits
                
                
                176,198
                
                
                
                165,867
                
                
                
                149,312
                
                
                
                139,318Other
      borrowings
                
                
                16,151
                
                
                
                16,156
                
                
                
                17,621
                
                
                
                17,630Short-term
      borrowings
                
                
                1,800
                
                
                
                1,800
                
                
                
                1,700
                
                
                
                1,700Advances
      from borrowers for taxes and insurance
                
                
                173
                
                
                
                173
                
                
                
                196
                
                
                
                196Interest
      payable
                
                
                203
                
                
                
                203
                
                
                
                251
                
                
                
                251Unrecognized
      financial instruments(net
      of contract amount)Commitments
      to originate loans
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                —Letters
      of credit
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                —Lines
      of credit
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                —





4.
            Federal Home Loan Bank
      Stock





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





5.
            Authorized Share
      Repurchase Program





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


13





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, 2010U.S.
      government sponsored enterprises (GSE)
                      
                      $
                      12,103
                      
                      
                      $
                      310
                      
                      
                      $
                      —
                      
                      
                      $
                      12,413Mortgage-backed
      securities, GSE, residential
                      
                      
                      27,342
                      
                      
                      
                      1,101
                      
                      
                      
                      (1
                      )
                      
                      
                      28,442Mortgage-backed
      securities, GSE, commercial
                      
                      
                      1,502
                      
                      
                      
                      —
                      
                      
                      
                      (40
                      )
                      
                      
                      1,462State
      and political subdivisions
                      
                      
                      3,997
                      
                      
                      
                      54
                      
                      
                      
                      (2
                      )
                      
                      
                      4,049$
                      44,944
                      
                      
                      $
                      1,465
                      
                      
                      $
                      (43
                      )
                      
                      $
                      46,366March
      31, 2010U.S.
      government sponsored enterprises (GSE)
                      
                      $
                      14,852
                      
                      
                      $
                      339
                      
                      
                      $
                      —
                      
                      
                      $
                      15,191Mortgage-backed
      securities, GSE residential
                      
                      
                      35,308
                      
                      
                      
                      1,186
                      
                      
                      
                      (22
                      )
                      
                      
                      36,472State
      and political subdivisions
                      
                      
                      3,644
                      
                      
                      
                      96
                      
                      
                      
                      (4
                      )
                      
                      
                      3,736$
                      53,804
                      
                      
                      $
                      1,621
                      
                      
                      $
                      (26
                      )
                      
                      $
                      55,399





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





Amortized
                      Cost
                    
                    
                    Fair
                      Value(In
      thousands)Within
      one year
                    
                    $
                    5,345
                    
                    
                    $
                    5,412One
      to five years
                    
                    
                    10,338
                    
                    
                    
                    10,623Five
      to ten years
                    
                    
                    417
                    
                    
                    
                    42716,100
                    
                    
                    
                    16,462Mortgage-backed
      securities
                    
                    
                    28,844
                    
                    
                    
                    29,904Totals
                    
                    $
                    44,944
                    
                    
                    $
                    46,366





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


14




FIRST
ROBINSON FINANCIAL CORPORATION


NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS




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





Description of Securities
                        
                        Less than 12 Months
                        
                        
                        More than 12 Months
                        
                        
                        TotalFair Value
                        
                        
                        Unrealized
                          Losses
                        
                        
                        Fair Value
                        
                        
                        Unrealized
                          Losses
                        
                        
                        Fair Value
                        
                        
                        Unrealized
                          Losses(In thousands)As of December 31, 2010Mortgage-backed
      securities, GSE, residential
                        
                        $
                        429
                        
                        
                        $
                        1
                        
                        
                        $
                        —
                        
                        
                        $
                        —
                        
                        
                        $
                        429
                        
                        
                        $
                        1Mortgage-backed
      securities, GSE, commercial
                        
                        
                        1,462
                        
                        
                        
                        40
                        
                        
                        
                        —
                        
                        
                        
                        —
                        
                        
                        
                        1,462
                        
                        
                        
                        40State
      and political subdivisions
                        
                        
                        529
                        
                        
                        
                        2
                        
                        
                        
                        —
                        
                        
                        
                        —
                        
                        
                        
                        529
                        
                        
                        
                        2Total
      temporarily impaired securities
                        
                        $
                        2,420
                        
                        
                        $
                        43
                        
                        
                        $
                        —
                        
                        
                        $
                        —
                        
                        
                        $
                        2,420
                        
                        
                        $
                        43As
      of March 31, 2010Mortgage-backed
      securities, GSE, residential
                        
                        $
                        2,712
                        
                        
                        $
                        22
                        
                        
                        $
                        —
                        
                        
                        $
                        —
                        
                        
                        $
                        2,712
                        
                        
                        $
                        22State
      and political subdivisions
                        
                        
                        303
                        
                        
                        
                        2
                        
                        
                        
                        227
                        
                        
                        
                        2
                        
                        
                        
                        530
                        
                        
                        
                        4Total
      temporarily impaired securities
                        
                        $
                        3,015
                        
                        
                        $
                        24
                        
                        
                        $
                        227
                        
                        
                        $
                        2
                        
                        
                        $
                        3,242
                        
                        
                        $
                        26





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





7.
            Accumulated Other
      Comprehensive Income





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




2010
                        
                        
                        2009(In thousands)Unrealized
      gains on available-for-sale securities
                        
                        $
                        173
                        
                        
                        $
                        456Less
      reclassification adjustment for realized gains included in
      income
                        
                        
                        —
                        
                        
                        
                        106Other
      comprehensive income, before tax effect
                        
                        
                        173
                        
                        
                        
                        350Less
      tax expense
                        
                        
                        67
                        
                        
                        
                        152Other
      comprehensive income related to available-for-sale
    securities
                        
                        $
                        106
                        
                        
                        $
                        198




15


FIRST
ROBINSON FINANCIAL CORPORATION


NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS




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




December 31,
                    2010
                  
                  
                  March 31,
                    2010(In thousands)Net
      unrealized gain on securities available for sale
                  
                  $
                  1,422
                  
                  
                  $
                  1,595Tax
      effect
                  
                  
                  (552
                  )
                  
                  
                  (619
                  )Net-of-tax
      amount
                  
                  $
                  870
                  
                  
                  $
                  976





8.
            Loans and Allowance
      for Loan Losses





Categories of loans
include:




December 31,
                      2010
                    
                    
                    March 31,
                      2010(In thousands)Mortgage
      loans on real estate:Residential:1-4
      Family
                    
                    $
                    42,746
                    
                    
                    $
                    41,349Construction
                    
                    
                    5,636
                    
                    
                    
                    4,222Second
      mortgages
                    
                    
                    1,567
                    
                    
                    
                    1,386Equity
      lines of credit
                    
                    
                    3,922
                    
                    
                    
                    3,819Commercial
                    
                    
                    32,168
                    
                    
                    
                    21,843Total
      mortgage loans on real estate
                    
                    
                    86,039
                    
                    
                    
                    72,619Commercial
      loans
                    
                    
                    20,387
                    
                    
                    
                    18,883Consumer/other
      loans
                    
                    
                    15,574
                    
                    
                    
                    9,834States
      and municipal government loans
                    
                    
                    945
                    
                    
                    
                    1,885LessNet
      deferred loan fees, premiums and discounts
                    
                    
                    9
                    
                    
                    
                    4Undisbursed
      portion of loans
                    
                    
                    907
                    
                    
                    
                    2,093Allowance
      for loan losses
                    
                    
                    1,102
                    
                    
                    
                    973Net
      loans
                    
                    $
                    120,927
                    
                    
                    $
                    100,151




16


FIRST
ROBINSON FINANCIAL CORPORATION


NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS





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




2010Commercial
                    Real Estate
                  
                  
                  Residential
                    Real Estate
                  
                  
                  Commercial
                  
                  
                  Consumer/
                    Other
                    Loans
                  
                  
                  State and
                    Municipal
                    Government
                  
                  
                  Total(In thousands)Allowance
      for loan losses:Balance,
      beginning of year
                  
                  $
                  593
                  
                  
                  $
                  72
                  
                  
                  $
                  279
                  
                  
                  $
                  29
                  
                  
                  $
                  —
                  
                  
                  $
                  973Provision
      charged to expense
                  
                  
                  (95
                  )
                  
                  
                  303
                  
                  
                  
                  (70
                  )
                  
                  
                  27
                  
                  
                  
                  —
                  
                  
                  
                  165Losses
      charged off
                  
                  
                  18
                  
                  
                  
                  31
                  
                  
                  
                  1
                  
                  
                  
                  40
                  
                  
                  
                  —
                  
                  
                  
                  90Recoveries
                  
                  
                  24
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  30
                  
                  
                  
                  —
                  
                  
                  
                  54Balance,
      end of period
                  
                  $
                  504
                  
                  
                  $
                  344
                  
                  
                  $
                  208
                  
                  
                  $
                  46
                  
                  
                  $
                  —
                  
                  
                  $
                  1,102Ending
      balance:  individually evaluated for impairment
                  
                  $
                  152
                  
                  
                  $
                  281
                  
                  
                  $
                  74
                  
                  
                  $
                  17
                  
                  
                  $
                  —
                  
                  
                  $
                  524Ending
      balance:  collectively evaluated for impairment
                  
                  $
                  352
                  
                  
                  $
                  63
                  
                  
                  $
                  134
                  
                  
                  $
                  29
                  
                  
                  $
                  —
                  
                  
                  $
                  578Loans:Ending
      balance
                  
                  $
                  32,168
                  
                  
                  $
                  53,871
                  
                  
                  $
                  20,387
                  
                  
                  $
                  15,574
                  
                  
                  $
                  945
                  
                  
                  $
                  122,945Ending
      balance:  individually evaluated for impairment
                  
                  $
                  2,931
                  
                  
                  $
                  1,397
                  
                  
                  $
                  1,543
                  
                  
                  $
                  21
                  
                  
                  $
                  —
                  
                  
                  $
                  5,892Ending
      balance:  collectively evaluated for impairment
                  
                  $
                  29,237
                  
                  
                  $
                  52,474
                  
                  
                  $
                  18,844
                  
                  
                  $
                  15,553
                  
                  
                  $
                  945
                  
                  
                  $
                  117,053




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


17


FIRST
ROBINSON FINANCIAL CORPORATION


NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS




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




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




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




30-59 Days
                  Past Due
                
                
                60-89 Days
                  Past Due
                
                
                Greater
                  Than 90
                  Days
                
                
                Non-
                  accrual
                
                
                Total Loans
                  Past Due
                  and Non-
                  accrual
                
                
                Current
                
                
                Total
                  Loans
                  Receivable
                
                
                Total Loans
                  > 90 Days &
                  Accruing(In
      thousands)Real
      Estate:Residential:1-4
      Family
                
                $
                54
                
                
                $
                54
                
                
                $
                —
                
                
                $
                185
                
                
                $
                293
                
                
                $
                42,453
                
                
                $
                42,746
                
                
                $
                —Construction
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                5,636
                
                
                
                5,636
                
                
                
                —Second
      mortgages
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                1,567
                
                
                
                1,567
                
                
                
                —Equity
      lines of credit
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                10
                
                
                
                10
                
                
                
                3,912
                
                
                
                3,922
                
                
                
                —Commercial
      real estate
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                32,168
                
                
                
                32,168
                
                
                
                —Commercial
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                78
                
                
                
                78
                
                
                
                20,309
                
                
                
                20,387
                
                
                
                —Consumer/other
      loans
                
                
                97
                
                
                
                13
                
                
                
                —
                
                
                
                10
                
                
                
                120
                
                
                
                15,454
                
                
                
                15,574
                
                
                
                —State
      and municipal government
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                945
                
                
                
                945
                
                
                
                —Total
                
                $
                151
                
                
                $
                67
                
                
                $
                —
                
                
                $
                283
                
                
                $
                501
                
                
                $
                122,444
                
                
                $
                122,945
                
                
                $
                —


18


FIRST
ROBINSON FINANCIAL CORPORATION


NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS




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




December 31,
                    2010
                  
                  
                  March 31,
                    2010(In thousands)Residential:1-4
      Family
                  
                  $
                  185
                  
                  
                  $
                  85Equity
      line of credit
                  
                  
                  10
                  
                  
                  
                  —Commercial
      real estate
                  
                  
                  —
                  
                  
                  
                  32Commercial
                  
                  
                  78
                  
                  
                  
                  13Consumer/other
      loans
                  
                  
                  10
                  
                  
                  
                  5Total
                  
                  $
                  283
                  
                  
                  $
                  135





9.
            Lines of
      Credit





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





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





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





10.
            Other
      Borrowings





Other
borrowings included the following:




December 31,
                    2010
                  
                  
                  March 31,
                    2010(In thousands)Securities
      sold under repurchase agreements
                  
                  $
                  16,151
                  
                  
                  $
                  17,621







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




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




19


FIRST
ROBINSON FINANCIAL CORPORATION


NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS




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





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





WeightedIncome
                                      
                                      
                                      Average
                                      
                                      
                                      Per
      Share(Loss)
                                      
                                      
                                      Shares
                                      
                                      
                                      AmountFor
      the Three-Months Ended December 31, 2010:Basic
      Earnings per Share:Income
      available to common stockholders
                                      
                                      $
                                      523
                                      
                                      
                                      
                                      412,263
                                      
                                      
                                      $
                                      1.27Effect
      of Dilutive Securities:Incentive
      plan shares
                                      
                                      
                                      
                                      
                                      
                                      
                                      16,280Diluted
      Earnings per Share:Income
      available to common stockholders
                                      
                                      $
                                      523
                                      
                                      
                                      
                                      428,543
                                      
                                      
                                      $
                                      1.22For
      the Three-Months Ended December 31, 2009:Basic
      Earnings (Loss) per Share:Income
      (loss) available to common stockholders
                                      
                                      $
                                      (460
                                      )
                                      
                                      
                                      416,931
                                      
                                      
                                      $
                                      (1.10
                                      )Effect
      of Dilutive Securities:Incentive
      plan shares
                                      
                                      
                                      
                                      
                                      
                                      
                                      —Diluted
      Earnings (Loss) per Share:Income
      (loss) available for common stockholders
                                      
                                      $
                                      (460
                                      )
                                      
                                      
                                      416,931
                                      
                                      
                                      $
                                      (1.10
                                      )




20


FIRST
ROBINSON FINANCIAL CORPORATION


NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS





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





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





WeightedIncome
                                      
                                      
                                      Average
                                      
                                      
                                      Per Share(Loss)
                                      
                                      
                                      Shares
                                      
                                      
                                      AmountFor
      the Nine-Months Ended December 31, 2010:Basic
      Earnings per Share:Income
      available to common stockholders
                                      
                                      $
                                      1,343
                                      
                                      
                                      
                                      412,930
                                      
                                      
                                      $
                                      3.25Effect
      of Dilutive Securities:Unearned
      incentive plan shares
                                      
                                      
                                      
                                      
                                      
                                      
                                      16,132Diluted
      Earnings per Share:Income
      available to common stockholders
                                      
                                      $
                                      1,343
                                      
                                      
                                      
                                      429,062
                                      
                                      
                                      $
                                      3.13For
      the Nine-Months Ended December 31, 2009:Basic
      Earnings (Loss) per Share:Income
      (loss) available to common stockholders
                                      
                                      $
                                      (331
                                      )
                                      
                                      
                                      418,032
                                      
                                      
                                      $
                                      (0.79
                                      )Effect
      of Dilutive Securities:Unearned
      incentive plan shares
                                      
                                      
                                      
                                      
                                      
                                      
                                      —Diluted
      Earnings (Loss) per Share:Income
      (loss) available for common stockholders
                                      
                                      $
                                      (331
                                      )
                                      
                                      
                                      418,032
                                      
                                      
                                      $
                                      (0.79
                                      )




21




Item  2:


FIRST
ROBINSON FINANCIAL CORPORATION


Management’s
Discussion and Analysis of Financial Condition


And
Results of Operations





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





Forward-Looking
Statements





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





Critical
Accounting Policies





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





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





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




22




FIRST
ROBINSON FINANCIAL CORPORATION


Management’s
Discussion and Analysis of Financial Condition


And
Results of Operations




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





Overview
and Recent Developments





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





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





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


23




FIRST
ROBINSON FINANCIAL CORPORATION


Management’s
Discussion and Analysis of Financial Condition


And
Results of Operations




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





Asset
Quality




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




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




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




Loans Delinquent For:30-89 Days(1)
                
                
                90 Days and Over(1)
                
                
                Nonaccrual
                
                
                Total Delinquent 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:1-4
      Family
                
                
                5
                
                
                $
                108
                
                
                
                0.25
                %
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                3
                
                
                $
                185
                
                
                
                0.43
                %
                
                
                8
                
                
                $
                293
                
                
                
                0.68
                %Equity
      line of credit
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                1
                
                
                
                10
                
                
                
                0.25
                
                
                
                1
                
                
                
                10
                
                
                
                0.25Consumer
      and other loans
                
                
                10
                
                
                
                110
                
                
                
                0.71
                
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                2
                
                
                
                10
                
                
                
                0.06
                
                
                
                12
                
                
                
                120
                
                
                
                0.77Commercial
      business and agriculturalfinance
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                3
                
                
                
                78
                
                
                
                0.38
                
                
                
                3
                
                
                
                78
                
                
                
                0.38Total
                
                
                15
                
                
                $
                218
                
                
                
                0.18
                %
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                9
                
                
                $
                283
                
                
                
                0.23
                %
                
                
                24
                
                
                $
                501
                
                
                
                0.41
                %





(1)
              Loans
      are still accruing.




24


FIRST
ROBINSON FINANCIAL CORPORATION


Management’s
Discussion and Analysis of Financial Condition


And
Results of Operations





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




December 31,
                        
                        
                        March 31,
                        
                        
                        December 31,2010
                        
                        
                        2010
                        
                        
                        2009(In
      thousands)Non-accruing
      loans:1-4
      Family
                        
                        $
                        185
                        
                        
                        $
                        85
                        
                        
                        $
                        108Equity
      line of credit
                        
                        
                        10
                        
                        
                        
                        —
                        
                        
                        
                        —Commercial
      real estate
                        
                        
                        —
                        
                        
                        
                        32
                        
                        
                        
                        —Consumer
      and other loans
                        
                        
                        10
                        
                        
                        
                        5
                        
                        
                        
                        6Commercial
                        
                        
                        78
                        
                        
                        
                        13
                        
                        
                        
                        16Total
                        
                        
                        283
                        
                        
                        
                        135
                        
                        
                        
                        130Foreclosed/Repossessed
      assets:1-4
      Family
                        
                        
                        70
                        
                        
                        
                        52
                        
                        
                        
                        —Total
                        
                        
                        70
                        
                        
                        
                        52
                        
                        
                        
                        —Total
      non-performing assets
                        
                        $
                        353
                        
                        
                        $
                        187
                        
                        
                        $
                        130Total
      as a percentage of total assets
                        
                        
                        0.17
                        %
                        
                        
                        0.10
                        %
                        
                        
                        0.07
                        %





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





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





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





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


25




FIRST
ROBINSON FINANCIAL CORPORATION


Management’s
Discussion and Analysis of Financial Condition


And
Results of Operations





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





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





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





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





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




26


FIRST
ROBINSON FINANCIAL CORPORATION


Management’s
Discussion and Analysis of Financial Condition


And
Results of Operations





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




December 31, 2010
                  
                  
                  March 31, 2010Amount of
                      Loan Loss
                      Allowance
                  
                  
                  Loan
                      Amounts by
                      Category
                  
                  
                  Percent of
                      Loans in Each
                      Category to
                      Total Loans
                  
                  
                  Amount of
                      Loan Loss
                      Allowance
                  
                  
                  Loan
                      Amounts by
                      Category
                  
                  
                  Percent of
                      Loans in
                      Each
                      Category to
                      Total Loans(Dollars in thousands)Real
      Estate:Residential
                  
                  
                  344
                  
                  
                  $
                  53,871
                  
                  
                  
                  43.82
                  %
                  
                  
                  72
                  
                  
                  $
                  50,776
                  
                  
                  
                  49.19
                  %Commercial
                  
                  
                  504
                  
                  
                  
                  32,168
                  
                  
                  
                  26.16
                  
                  
                  
                  593
                  
                  
                  
                  21,843
                  
                  
                  
                  21.16Commercial
      loans
                  
                  
                  208
                  
                  
                  
                  20,387
                  
                  
                  
                  16.58
                  
                  
                  
                  279
                  
                  
                  
                  18,883
                  
                  
                  
                  18.29Consumer/other
      loans
                  
                  
                  46
                  
                  
                  
                  15,574
                  
                  
                  
                  12.67
                  
                  
                  
                  29
                  
                  
                  
                  9,834
                  
                  
                  
                  9.53State
      and municipal government
                  
                  
                  —
                  
                  
                  
                  945
                  
                  
                  
                  0.77
                  
                  
                  
                  
                  
                  
                  
                  1,885
                  
                  
                  
                  1.83Gross
      Loans
                  
                  
                  
                  
                  
                  
                  122,945
                  
                  
                  
                  100.00
                  %
                  
                  
                  
                  
                  
                  
                  103,221
                  
                  
                  
                  100.00
                  %Deferred
      loan fees
                  
                  
                  
                  
                  
                  
                  (9
                  )
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  (4
                  )Undisbursed
      portion of loans
                  
                  
                  
                  
                  
                  
                  (907
                  )
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  (2,093
                  )Total
                  
                  $
                  1,102
                  
                  
                  $
                  122,029
                  
                  
                  
                  
                  
                  
                  $
                  973
                  
                  
                  $
                  101,124





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





Three Months Ended
                      December 31,
                    
                    
                    Nine Months Ended
                      December 31,2010
                    
                    
                    2009
                    
                    
                    2010
                    
                    
                    2009(Dollars in thousands)Balance
      at beginning of period
                    
                    $
                    1,060
                    
                    
                    $
                    893
                    
                    
                    $
                    973
                    
                    
                    $
                    780Charge-offs:One-
      to four-family
                    
                    
                    —
                    
                    
                    
                    62
                    
                    
                    
                    31
                    
                    
                    
                    130Commercial
      non-residential real estate
                    
                    
                    18
                    
                    
                    
                    —
                    
                    
                    
                    18
                    
                    
                    
                    —Commercial
      business
                    
                    
                    1
                    
                    
                    
                    —
                    
                    
                    
                    1
                    
                    
                    
                    —Consumer
      and other loans
                    
                    
                    19
                    
                    
                    
                    1,005
                    
                    
                    
                    40
                    
                    
                    
                    1,017Total
      charge-offs
                    
                    
                    38
                    
                    
                    
                    1,067
                    
                    
                    
                    90
                    
                    
                    
                    1,147Recoveries:Commercial
      non-residential real estate
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    24
                    
                    
                    
                    —Consumer
      and other loans
                    
                    
                    5
                    
                    
                    
                    33
                    
                    
                    
                    30
                    
                    
                    
                    46Total
      recoveries
                    
                    
                    5
                    
                    
                    
                    33
                    
                    
                    
                    54
                    
                    
                    
                    46Net
      charge-offs .
                    
                    
                    33
                    
                    
                    
                    1,034
                    
                    
                    
                    36
                    
                    
                    
                    1,101Additions
      charged to operations
                    
                    
                    75
                    
                    
                    
                    1,072
                    
                    
                    
                    165
                    
                    
                    
                    1,252Balance
      at end of period
                    
                    $
                    1,102
                    
                    
                    $
                    931
                    
                    
                    $
                    1,102
                    
                    
                    $
                    931Ratio
      of net charge-offs during the period to average loans outstanding during
      the period
                    
                    
                    0.03
                    %
                    
                    
                    1.07
                    %
                    
                    
                    0.03
                    %
                    
                    
                    1.91
                    %Ratio
      of net charge-offs during the period to average non-performing
      assets
                    
                    
                    8.53
                    %
                    
                    
                    534.49
                    %
                    
                    
                    13.04
                    %
                    
                    
                    435.93
                    %




27


FIRST
ROBINSON FINANCIAL CORPORATION


Management’s
Discussion and Analysis of Financial Condition


And
Results of Operations




Financial
Condition


December
31, 2010 Compared to March 31, 2010





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





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





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





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





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





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





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





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




28




FIRST
ROBINSON FINANCIAL CORPORATION


Management’s
Discussion and Analysis of Financial Condition


And
Results of Operations





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





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





Results
of Operations


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





Net
Income (Loss)





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





Net
Interest Income





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





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





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




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




29


FIRST
ROBINSON FINANCIAL CORPORATION


Management’s
Discussion and Analysis of Financial Condition


And
Results of Operations





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





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





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





Provision
for Loan Losses





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





Non-Interest
Income





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





Three Months EndedDecember 31,2010
                    
                    
                    2009
                    
                    
                    %Change(In
      thousands)Non-interest income:Charges
      and fees on deposit accounts
                    
                    $
                    239
                    
                    
                    $
                    270
                    
                    
                    
                    (11.5
                    )%Charges
      and other fees on loans
                    
                    
                    107
                    
                    
                    
                    79
                    
                    
                    
                    35.4Net
      gain (loss) on sale of foreclosed assets
                    
                    
                    —
                    
                    
                    
                    (2
                    )
                    
                    
                    (100.0
                    )Net
      gain on sale of loans
                    
                    
                    207
                    
                    
                    
                    100
                    
                    
                    
                    107.0Other
                    
                    
                    142
                    
                    
                    
                    127
                    
                    
                    
                    11.8Total
      non-interest income
                    
                    $
                    695
                    
                    
                    $
                    574
                    
                    
                    
                    21.1
                    %


30


FIRST
ROBINSON FINANCIAL CORPORATION


Management’s
Discussion and Analysis of Financial Condition


And
Results of Operations





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





Non-Interest
Expense





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





Three Months EndedDecember 31,2010
                    
                    
                    2009
                    
                    
                    %Change(In thousands)Non-interest expense:Compensation
      and employee benefits
                    
                    $
                    680
                    
                    
                    $
                    684
                    
                    
                    
                    (0.6
                    )%Occupancy
      and equipment
                    
                    
                    198
                    
                    
                    
                    174
                    
                    
                    
                    13.8Data
      processing
                    
                    
                    74
                    
                    
                    
                    59
                    
                    
                    
                    25.4Audit,
      legal and other professional
                    
                    
                    62
                    
                    
                    
                    91
                    
                    
                    
                    (31.9
                    )Advertising
                    
                    
                    64
                    
                    
                    
                    87
                    
                    
                    
                    (26.4
                    )Telephone
      and postage
                    
                    
                    56
                    
                    
                    
                    45
                    
                    
                    
                    24.4FDIC
      Insurance
                    
                    
                    55
                    
                    
                    
                    54
                    
                    
                    
                    1.9Loss
      on cost basis equity security
                    
                    
                    —
                    
                    
                    
                    60
                    
                    
                    
                    (100.0
                    )Other
                    
                    
                    168
                    
                    
                    
                    158
                    
                    
                    
                    6.3Total
      non-interest expense
                    
                    $
                    1,357
                    
                    
                    $
                    1,412
                    
                    
                    
                    (3.9
                    )%





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





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





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





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





Income
Tax Expense





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


31


FIRST
ROBINSON FINANCIAL CORPORATION


Management’s
Discussion and Analysis of Financial Condition


And
Results of Operations





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





Net
Income (Loss)





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





Net
Interest Income





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





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





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





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


32


FIRST
ROBINSON FINANCIAL CORPORATION


Management’s
Discussion and Analysis of Financial Condition


And
Results of Operations





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





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





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





Provision
for Loan Losses





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





Non-Interest
Income





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





Nine Months EndedDecember 31,2010
                    
                    
                    2009
                    
                    
                    % Change(In thousands)Non-interest
      income:Charges
      and fees on deposit accounts
                    
                    $
                    728
                    
                    
                    $
                    747
                    
                    
                    
                    (2.5
                    )%Charges
      and other fees on loans
                    
                    
                    265
                    
                    
                    
                    256
                    
                    
                    
                    3.5Net
      gain on sale of loans
                    
                    
                    548
                    
                    
                    
                    282
                    
                    
                    
                    94.3Net
      gain (loss) on sale of foreclosed property
                    
                    
                    15
                    
                    
                    
                    (2
                    )
                    
                    
                    850.0Net
      realized gain on sale of available for sale securities
                    
                    
                    —
                    
                    
                    
                    106
                    
                    
                    
                    (100.0
                    )Net
      gain on sale of equipment
                    
                    
                    4
                    
                    
                    
                    —
                    
                    
                    
                    —Other
                    
                    
                    409
                    
                    
                    
                    366
                    
                    
                    
                    11.7Total
      Non-Interest Income
                    
                    $
                    1,969
                    
                    
                    $
                    1,755
                    
                    
                    
                    12.2
                    %


33


FIRST
ROBINSON FINANCIAL CORPORATION


Management’s
Discussion and Analysis of Financial Condition


And
Results of Operations





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





Non-Interest
Expense





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





Nine Months EndedDecember 31,2010
                    
                    
                    2009
                    
                    
                    %Change(In thousands)Non-interest
      expense:Compensation
      and employee benefits
                    
                    $
                    2,218
                    
                    
                    $
                    2,024
                    
                    
                    
                    9.6
                    %Occupancy
      and equipment
                    
                    
                    549
                    
                    
                    
                    534
                    
                    
                    
                    2.8Data
      processing
                    
                    
                    214
                    
                    
                    
                    186
                    
                    
                    
                    15.1Audit,
      legal and other professional
                    
                    
                    204
                    
                    
                    
                    284
                    
                    
                    
                    (28.2
                    )Advertising
                    
                    
                    198
                    
                    
                    
                    263
                    
                    
                    
                    (24.7
                    )Telephone
      and postage
                    
                    
                    152
                    
                    
                    
                    148
                    
                    
                    
                    2.7FDIC
      insurance
                    
                    
                    159
                    
                    
                    
                    234
                    
                    
                    
                    (32.1
                    )Loss
      on cost basis equity security
                    
                    
                    —
                    
                    
                    
                    197
                    
                    
                    
                    (100.0
                    )Other
                    
                    
                    466
                    
                    
                    
                    499
                    
                    
                    
                    (6.6
                    )Total
      Non-Interest Expense
                    
                    $
                    4,160
                    
                    
                    $
                    4,369
                    
                    
                    
                    (4.8
                    )%





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





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





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





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





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





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


34


FIRST
ROBINSON FINANCIAL CORPORATION


Management’s
Discussion and Analysis of Financial Condition


And
Results of Operations





Income
Tax Expense





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





Off-Balance
Sheet Arrangements





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





Liquidity
and Capital Resources





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





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





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





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


35


FIRST
ROBINSON FINANCIAL CORPORATION


Management’s
Discussion and Analysis of Financial Condition


And
Results of Operations





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





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





To be Well CapitalizedUnder the PromptFor Capital
                          
                          
                          Corrective ActionActual
                          
                          
                          Adequacy Purposes
                          
                          
                          ProvisionsAmount
                          
                          
                          Ratio
                          
                          
                          Amount
                          
                          
                          Ratio
                          
                          
                          Amount
                          
                          
                          RatioTotal
      Risk-Based Capital(to
      Risk-Weighted Assets)
                          
                          $
                          14,504
                          
                          
                          
                          11.88
                          %
                          
                          $
                          9,766
                          
                          
                          
                          8.00
                          %
                          
                          $
                          12,207
                          
                          
                          
                          10.00
                          %Tier
      I Capital(to
      Risk-Weighted Assets)
                          
                          
                          13,386
                          
                          
                          
                          10.97
                          
                          
                          
                          4,883
                          
                          
                          
                          4.00
                          
                          
                          
                          7,324
                          
                          
                          
                          6.00Tier
      I Capital(to
      Average Assets)
                          
                          
                          13,386
                          
                          
                          
                          6.73
                          
                          
                          
                          7,956
                          
                          
                          
                          4.00
                          
                          
                          
                          9,945
                          
                          
                          
                          5.00





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


36


FIRST
ROBINSON FINANCIAL CORPORATION





Item:  3    Quantitative and Qualitative
Disclosures about Market Risk





Not
applicable.





Item:  4    Controls and
Procedures





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





Disclosure Controls and
Procedures





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





Internal Control Over
Financial Reporting





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


37


PART II
OTHER INFORMATION





Item
1.                   Legal
Proceedings


None





Item  1A.                 Risk
Factors


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





Credit
Risks





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





Operational
Risks





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





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




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


38


PART II
OTHER INFORMATION





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





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





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





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





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


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





PURCHASES
OF EQUITY SECURITIES BY COMPANY (1)


Period
                            
                            Total
                              Number of
                              Shares
                              Purchased
                            
                            
                            Average Price
                              Paid per Share
                            
                            
                            Total Number of
                              Shares Purchased
                              as Part of
                              Publicly
                              Announced Plans
                              or Programs
                            
                            
                            Maximum
                              Number of
                              Shares that May
                              Yet Be
                              Purchased Under
                              the Plans or
                              Programs10/1/2010
      – 10/31/2010
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            5,00011/1/2010
      – 11/30/2010
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            5,00012/1/2010–
      12/31/2010
                            
                            
                            955
                            
                            
                            $
                            32.67
                            
                            
                            
                            955
                            
                            
                            
                            4,045Total
                            
                            
                            955
                            
                            
                            $
                            32.67
                            
                            
                            
                            955
                            
                            
                            
                            4,045





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





Item
3.                   Defaults Upon Senior
Executives


None





Item
4.                   Removed and
Reserved





Item
      5.
            Other
      Information


None





Item
      6.
            Exhibits





1.
            Exhibit
      31: Section 302 Certifications





2.
            Exhibit
      32: Section 906 Certifications


39


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 14,
      2011
                        /s/ Rick L. CattRick
      L. CattPresident
      and Chief Executive OfficerDate:   February 14,
      2011
                        /s/ Jamie E. McReynoldsJamie
      E. McReynoldsChiefFinancial Officer
      and Vice President


40


EXHIBIT
INDEX





Exhibit
No.





31.1
              Certification
      by the CEO pursuant to Section 302 of the Sarbanes-Oxley Act of
      200231.2
              Certification
      by the CFO pursuant to Section 302 of the Sarbanes-Oxley Act of
      200232
              Certifications
      of the CEO and CFO pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002


41