Edgar Filing: FIRST ROBINSON FINANCIAL CORP

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended December 31, 2009

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

For the transition period from _____________________ to ________________________

Commission File Number 029276

FIRST ROBINSON FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

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

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

Registrant’s telephone number, including area code (618) 544-8621

None

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

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

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

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

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

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

The number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 433,198 shares of common stock, par value $.01 per share, as of February 16, 2010.

FIRST ROBINSON FINANCIAL CORPORATION

Index to Form 10-Q

			PAGE
PART 1. FINANCIAL INFORMATION

	Item 1.	Financial Statements

		Condensed Consolidated Balance Sheets as of December 31, 2009 And March 31, 2009	3

		Condensed Consolidated Statements of Operations for the Three-Month and Nine-Month Periods Ended December 31, 2009 and 2008	4

		Condensed Consolidated Statements of Changes in Stockholders’ Equity For the Nine-Month Periods ended December 31, 2009 and 2008	6

		Condensed Consolidated Statements of Cash Flows for the Nine-Month Periods Ended December 31, 2009 and 2008	7

		Notes to Condensed Consolidated Financial Statements	9

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19

	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	32

	Item 4T.	Controls and Procedures	32

PART II. OTHER INFORMATION

	Item 1.	Legal Proceedings	33

	Item 1A.	Risk Factors	33

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33

	Item 3.	Defaults Upon Senior Executives	33

	Item 4.	Submission of Matters to a Vote of Security Holders	33

	Item 5.	Other Information	33

	Item 6.	Exhibits	33

	SIGNATURES		34

	CERTIFICATIONS		36

Item 1:

FIRST ROBINSON FINANCIAL CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

	(Unaudited)
	December 31, 2009			March 31, 2009
ASSETS

Cash and cash equivalents	$	10,600		$	5,424
Interest-bearing deposits		4,227			713
Federal funds sold		317			7,572
Available-for-sale securities		60,281			55,925
Loans, held for sale		70			392
Loans, net of allowance for loan losses of $931 and $780 at December 31, 2009 and March 31, 2009, respectively		97,184			86,365
Federal Reserve and Federal Home Loan Bank stock		1,006			811
Premises and equipment, net		4,052			3,940
Foreclosed assets held for sale, net		—			46
Interest receivable		779			824
Prepaid income taxes		302			81
Cash surrender value of life insurance		1,492			1,453
Other assets		1,519			873

Total Assets	$	181,829		$	164,419

LIABILITIES AND STOCKHOLDERS’ EQUITY

Liabilities
Deposits	$	145,340		$	140,088
Other borrowings		20,023			9,914
Short-term borrowings		2,500			—
Advances from borrowers for taxes and insurance		100			166
Deferred income taxes		612			452
Interest payable		254			330
Other liabilities		1,262			1,162
Total Liabilities		170,091			152,112

Commitments and Contingencies		—			—

Stockholders’ Equity
Preferred stock, $.01 par value; authorized 500,000 shares, no shares issued and outstanding		—			—
Common stock, $ .01 par value; authorized 2,000,000 shares; 859,625 shares issued; outstanding December 31, 2009– 433,198 shares; March 31, 2009 – 435,232 shares		9			9
Additional paid-in capital		8,773			8,791
Retained earnings		9,881			10,560
Accumulated other comprehensive income		980			782
Treasury stock, at cost
Common: December 31, 2009 – 426,427 shares; March 31, 2009 – 424,393 shares		(7,905	)		(7,835	)

Total Stockholders’ Equity		11,738			12,307

Total Liabilities and Stockholders’ Equity	$	181,829		$	164,419

See Notes to Condensed Consolidated Financial Statements

FIRST ROBINSON FINANCIAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

(In thousands, except per share data)

(Unaudited)

	Three-Month Period				Nine-Month Period
	2009		2008		2009		2008

Interest and Dividend Income:
Loans	$	1,439	$	1,364	$	4,200	$	4,020
Securities:
Taxable		463		527		1,547		1,456
Tax-exempt		31		27		106		69
Other interest income		1		8		7		117
Dividends on Federal Reserve Bank stock		3		3		8		8

Total Interest and Dividend Income		1,937		1,929		5,868		5,670

Interest Expense:
Deposits		741		762		2,486		2,156
Other borrowings		31		23		59		129

Total Interest Expense		772		785		2,545		2,285

Net Interest Income		1,165		1,144		3,323		3,385

Provision for Loan Losses		1,072		30		1,252		190

Net Interest Income After Provision for Loan Losses		93		1,114		2,071		3,195

Non-interest income:
Charges and fees on deposit accounts		270		223		747		671
Charges and other fees on loans		79		26		256		111
Net gain on sale of loans		100		27		282		99
Net realized gain on sale of available-for-sale investments		—		—		106		2
Other		127		108		366		342

Total Non-Interest Income		576		384		1,757		1,225

Non-interest expense:
Compensation and employee benefits		684		644		2,024		1,945
Occupancy and equipment		174		132		534		465
Data processing		59		79		186		198
Audit, legal and other professional		91		49		284		148
Advertising		87		59		263		156
Telephone and postage		45		48		148		107
Net loss on sale of foreclosed property		2		—		2		4
FDIC insurance		54		18		234		28
Loss on cost basis equity investment		60		—		197		—
Other		158		186		499		459

Total Non-Interest Expense		1,414		1,215		4,371		3,510

See Notes to Condensed Consolidated Financial Statements.

FIRST ROBINSON FINANCIAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)

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

(In thousands, except per share data)

(Unaudited)

	Three-Month Period					Nine-Month Period
	2009			2008		2009			2008

Income (loss) before income taxes		(745	)		283		(543	)		910

Provision (benefit) for income taxes		(285	)		89		(212	)		298

Net Income (Loss)	$	(460	)	$	194	$	(331	)	$	612

Earnings (Loss) Per Share-Basic	$	(1.10	)	$	0.46	$	(0.79	)	$	1.41
Earnings (Loss) Per Share-Diluted	$	(1.10	)	$	0.44	$	(0.79	)	$	1.36

See Notes to Condensed Consolidated Financial Statements

FIRST ROBINSON FINANCIAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

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

(In thousands, except share data)

(Unaudited)

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

Balance, April 1, 2008		451,464		$	9	$	8,491		$	10,114		$	247	$	(6,985	)	$	11,876

Comprehensive income
Net income										612								612			612
Change in unrealized appreciation on available-for-sale securities, net of taxes of $234													389					389			389

Total comprehensive income																					1,001

Treasury shares purchased		(25,684	)												(889	)		(889	)
Transfer of Unallocated Recognition and Retention Shares to Treasury Shares							125								(125	)		—
Dividends on common stock, $0.75 per share										(345	)							(345	)
Incentive compensation							(12	)										(12	)
Stock options exercised		9,452					168								164			332

Balance, December 31, 2008		435,232		$	9	$	8,772		$	10,381		$	636	$	(7,835	)	$	11,963

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

Comprehensive loss
Net loss										(331	)							(331	)		(331	)

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

Total comprehensive loss																					(133	)

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

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

See Notes to Condensed Consolidated Financial Statements

FIRST ROBINSON FINANCIAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

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

(In thousands)

(Unaudited)

	2009			2008
Cash flows from operating activities:
Net income (loss)	$	(331	)	$	612
Items not requiring (providing) cash
Depreciation and amortization		236			193
Provision for loan losses		1,252			190
Amortization (accretion) of premiums and discounts on securities		230			(19	)
Amortization of loan servicing rights		83			48
Compensation related to options exercised		—			182
Deferred income taxes		7			(36	)
Originations of mortgage loans held for sale		(24,492	)		(6,503	)
Proceeds from the sale of mortgage loans		25,096			6,327
Net gain on loans sold		(282	)		(99	)
Net loss on sale of foreclosed property		2			4
Loss on cost basis equity investment		197			—
Net realized gain on sale of securities		(106	)		(2	)
Cash surrender value of life insurance		(39	)		(44	)
Changes in:
Interest receivable		45			(1	)
Other assets		(941	)		(179	)
Interest payable		(76	)		(1	)
Other liabilities		100			(87	)
Income taxes, prepaid/accrued		(221	)		(23	)

Net cash provided by operating activities		760			562

Cash flows from investing activities:
Purchase of available-for-sale securities		(31,100	)		(23,505	)
Proceeds from maturities of available-for-sale securities		1,820			1,100
Proceeds from sales of available-for-sale securities		15,448			953
Repayment of principal on mortgage-backed securities		9,703			5,422
Purchase of Federal Home Loan Bank stock		(195	)		—
Net change in loans		(12,071	)		(8,663	)
Purchase of premises and equipment		(333	)		(1,037	)
Proceeds from sale of foreclosed assets		44			12

Net cash used in investing activities		(16,684	)		(25,718	)

See Notes to Condensed Consolidated Financial Statements.

FIRST ROBINSON FINANCIAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

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

(In thousands)

(Unaudited)

	2009			2008

Cash flows from financing activities:
Net increase in deposits	$	5,252		$	17,632
Proceeds from other borrowings		86,950			110,938
Repayment of other borrowings		(76,841	)		(110,009	)
Advances from Federal Home Loan Bank		5,500			—
Repayment of advances from Federal Home Loan Bank		(5,500	)		—
Proceeds from short-term borrowings		3,100			—
Repayment of short-term borrowings		(600	)		—
Purchase of incentive plan shares		(18	)		(12	)
Proceeds received from exercise of stock options		—			150
Purchase of treasury stock		(70	)		(889	)
Dividends paid		(348	)		(345	)
Net increase in advances from borrowers for taxes and insurance		(66	)		(50	)

Net cash provided by financing activities		17,359			17,415

Increase (decrease) in cash and cash equivalents		1,435			(7,741	)

Cash and cash equivalents at beginning of period		13,709			19,528

Cash and cash equivalents at end of period	$	15,144		$	11,787

Supplemental Cash Flows Information:

Interest paid	$	2,621		$	2,284

Income taxes paid (net of refunds)		—			382

Real estate acquired in settlement of loans		—			90

See Notes to Condensed Consolidated Financial Statements.

FIRST ROBINSON FINANCIAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.	Basis of Presentation

The condensed consolidated financial statements include the accounts of First Robinson Financial Corporation (the “Company”) and its wholly owned subsidiary, First Robinson Savings Bank, National Association (the “Bank”). All significant intercompany accounts and transactions have been eliminated in consolidation. The accompanying condensed consolidated financial statements are unaudited and should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Form 10-K filed with the Securities and Exchange Commission. The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with the rules and regulations for reporting on Form 10-Q and Article 8-03 of Regulation of S-X. Accordingly, they do not include information or footnotes necessary for a complete presentation of financial condition, results of operations, changes in stockholders’ equity, and cash flows in conformity with accounting principles generally accepted in the United States of America. In the opinion of management of the Company, the unaudited condensed consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments) necessary to present fairly the financial position of the Company at December 31, 2009, the results of its operations for the three and nine month periods ended December 31, 2009 and 2008, the changes in stockholders’ equity for the nine month periods ended December 31, 2009 and 2008, and cash flows for the nine month periods ended December 31, 2009 and 2008. The results of operations for those months ended December 31, 2009 are not necessarily indicative of the results to be expected for the full year.

The Condensed Consolidated Balance Sheet of the Company, as of March 31, 2009, has been derived from the audited Consolidated Balance Sheet for the Company as of that date.

2.	Newly Adopted and Recent Accounting Pronouncements

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

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

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

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

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

FIRST ROBINSON FINANCIAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

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

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

3.	Fair Value Measurements

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

FIRST ROBINSON FINANCIAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Level 1

Quoted prices in active markets for identical assets or liabilities.

Level 2

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

Level 3

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

Following is a description of the valuation methodologies used for instruments measured at fair value on a recurring basis and recognized in the accompanying condensed consolidated balance sheet at December 31, 2009 and March 31, 2009.

Available-for-Sale Securities

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

The following table presents the Company’s assets that are measured at fair value on a recurring basis and the level within the FASB ASC No. 820 hierarchy in which the fair value measurements fall as of December 31, 2009 and March 31, 2009 (in thousands):

	Carrying value at December 31, 2009
Description	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)

U.S. Government sponsored enterprises (GSEs)	$	17,278	$	—	$	17,278	$	—
Mortgage-backed, GSE residential		39,273		—		39,273		—
State and political subdivisions		3,730		—		3,730		—
Total available-for-sale securities	$	60,281	$	—	$	60,281	$	—

	Carrying value at March 31, 2009
Description	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)

U.S. Government sponsored enterprises (GSEs)	$	9,992	$	—	$	9,992	$	—
Mortgage-backed, GSE residential		40,901		—		40,901		—
State and political subdivisions		5,032		—		5,032		—
Total available-for-sale securities	$	55,925	$	—	$	55,925	$	—

FIRST ROBINSON FINANCIAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Impaired Loans

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

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

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

Mortgage Servicing Rights

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

Cost Method Investments

Cost method investments do not trade in an active, open market with readibly observable prices. The cost method invesments are peridoically reviewed for impairment based on each investee’s earning performance, asset quality, changes in the economic environment, and current and projected future cash flows. Due to the nature of the valuation inputs, cost method investments are classified within Level 3 of the hierarchy.

The following table presents the fair value measurement of assets measured at fair value on a nonrecurring basis and the level within the FASB ASC No. 820 fair value hierarchy in which the fair value measurements fall at December 31, 2009 and March 31, 2009:

Carrying value at December 31, 2009

Quoted Prices in

Significant

Active Markets

Other

Significant

for Identical

Observable

Unobservable

Assets

Inputs

Description

Fair Value

(Level 1)

(Level 2)

(Level 3)

Impaired loans

—

Cost method investments

—

FIRST ROBINSON FINANCIAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

			Carrying value at March 31, 2009
			Quoted Prices in		Significant
			Active Markets		Other		Significant
			for Identical		Observable		Unobservable
			Assets		Inputs		Inputs
Description	Fair Value		(Level 1)		(Level 2)		(Level 3)

Impaired loans	$	154	$	—	$	—	$	154
Motgage servicing rights		243		—		—	$	243

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

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

The fair value of commitments to originate loans is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. For fixed-rate loan commitments, fair value also considers the difference between current levels of interest rates and the committed rates. The fair value of forward sale commitments is estimated based on current market prices for loans of similar terms and credit quality. The fair values of letters of credit and lines of credit are based on fees currently charged for similar agreements or on the estimated cost to terminate or otherwise settle the obligations with the counterparties at the reporting date.

FIRST ROBINSON FINANCIAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

	December 31, 2009				March 31, 2009
	Carrying				Carrying
	Amount		Fair Value		Amount		Fair Value
	(In thousands)
Financial assets
Cash and cash equivalents	$	10,600	$	10,600	$	5,424	$	5,424
Interest-bearing deposits		4,227		4,227		713		713
Federal funds sold		317		317		7,572		7,572
Available-for-sale securities		60,281		60,281		55,925		55,925
Loans held for sale		70		70		392		392
Loans, net of allowance for loan losses		97,184		98,116		86,365		87,092
Federal Reserve and Federal Home Loan Bank stock		1,006		1,006		811		811
Interest receivable		779		779		824		824

Financial liabilities
Deposits		145,340		136,783		140,088		135,883
Other borrowings		20,023		20,033		9,914		9,927
Short-term borrowings		2,500		2,500		—		—
Advances from borrowers for taxes and insurance		100		100		166		166
Interest payable		254		254		330		330

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

4.	Federal Home Loan Bank Stock

The Company owns approximately $836,000 of Federal Home Loan Bank of Chicago (“FHLB”) stock. During the third quarter of 2007, the FHLB of Chicago received a Cease and Desist Order from its regulator, the Federal Housing Finance Board. The order generally prohibits capital stock repurchases and redemptions until a time to be determined by the Federal Housing Finance Board. The FHLB will continue to provide liquidity and funding through advances. With regard to dividends, which have not been declared since July 24, 2007, the FHLB will continue to assess its dividend capacity each quarter and make appropriate requests for approval. Management performed an analysis and deemed the Company’s cost method investment in FHLB stock to be recoverable as of December 31, 2009.

5.	Authorized Share Repurchase Program

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

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, 2009
U.S. Government sponsored enterprises (GSEs)	$	16,884	$	394	$	—	$	17,278
Corporate Mortgage-backed:
GSE residential		38,147		1,158		32		39,273
State and political subdivisions		3,647		89		6		3,730

	$	58,678	$	1,641	$	38	$	60,281
March 31, 2009
U.S. Government sponsored enterprises (GSEs)	$	9,793	$	199	$	—	$	9,992
Corporate Mortgage-backed:
GSE residential		39,878		1,045		22		40,901
State and political subdivisions		5,002		52		22		5,032

	$	54,673	$	1,296	$	44	$	55,925

The amortized cost and fair value of available-for-sale securities at December 31, 2009, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized Cost		Fair Value
	(In thousands)

Within one year	$	3,329	$	3,370
One to five years		16,037		16,458
Five to ten years		1,165		1,180

		20,531		21,008
Mortgage-backed securities		38,147		39,273

Totals	$	58,678	$	60,281

Proceeds from the sale of investment securities available-for-sale during the nine-months ended December 31, 2009 and 2008 were $2,508,000 and $15,408,000, respectively. There were no sales of investments during the three months ended December 2009 and 2008. Gross gains of $113,000 and gross losses of $7,000 were realized on the sales for the nine-months ended December 31, 2009. During the nine-months ended December 31, 2008, gross gains of $4,000 and gross losses of $2,000 were realized on the sales of available-for-sale securities.

FIRST ROBINSON FINANCIAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table shows our investments’ gross unrealized losses and fair value (in thousands), aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at December 31, 2009 and March 31, 2009. At December 31, 2009, the Company does not hold any security that it considers other-than-temporarily impaired.

Description of Securities	Less than 12 Months				More than 12 Months				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
As of December 31, 2009
Mortgage-backed securities	$	2,193	$	32	$	—	$	—	$	2,193	$	32
State and political subdivisions		302		3		226		3		528		6

Total temporarily impaired securities	$	2,495	$	35	$	226	$	3	$	2,721	$	38
As of March 31, 2009
Mortgage-backed securities	$	6,307	$	20	$	125	$	2	$	6,432	$	22
State and political subdivisions		290		16		225		6		515		22

Total temporarily impaired securities	$	6,597	$	36	$	350	$	8	$	6,947	$	44

There are 4 securities in an unrealized loss position in the investment portfolio at December 31, 2009, all due to interest rate changes and not credit events. These unrealized losses are considered temporary and, therefore, have not been recognized into income, because the issuers are of high credit quality and management has the ability and intent to hold for the foreseeable future. The fair value is expected to recover as the investments approach their maturity date or there is a downward shift in interest rates. All mortgage-backed securities in the portfolio are residential properties.

7.	Lines of Credit

The Company’s revolving line of credit note payable matured on July 31, 2009 but was extended to September 30, 2009. The revolving line of credit renewed on September 17, 2009 and increased from $600,000 to $2,500,000 with the renewal. The balance of the revolving line of credit was $2,500,000 and $0 as of December 31, 2009 and March 31, 2009, respectively. The note bears interest at the prime commercial rate with a floor of 3.50% which was the rate on December 31, 2009, matures on September 16, 2010, and is secured by 100% stock of the Bank.

The Bank maintains a $5,000,000 revolving line of credit, of which none was outstanding at December 31, 2009 and March 31, 2009, with an unaffiliated financial institution. The line bears interest at the federal funds rate of the financial institution (1.0% at December 31, 2009), has an open-end maturity and is unsecured if used for less than fifteen (15) consecutive business days.

The Bank has also established borrowing capabilities at the Federal Reserve Bank of St. Louis discount window. Investment securities of $3,000,000 have been pledged as collateral. As of December 31, 2009 and March 31, 2009 no amounts were outstanding. The primary credit borrowing rate at December 31, 2009 was 0.50%, has a term of up to 90 days, and has no restrictions on use of the funds borrowed.

FIRST ROBINSON FINANCIAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Basic earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per share gives effect to the increase in the average shares outstanding resulting from the exercise of dilutive stock options and the effect of the incentive plan shares. As of December 31, 2009 and 2008, all outstanding options had been exercised. Therefore, there is no dilutive effect with regards to options for the earnings (loss) per share calculation for the three month periods ended December 31, 2009 or 2008. The components of basic and diluted earnings (loss) per share for the three months ended December 31, 2009 and 2008 were computed as follows (dollar amounts in thousands except share data):

				Weighted
	Income			Average		Per Share
	(Loss)			Shares		Amount

For the Three-Months Ended December 31, 2009:

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

Effect of Dilutive Securities:
Incentive plan shares					—

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

For the Three-Months Ended December 31, 2008:

Basic Earnings per Share:
Income available to common stockholders	$	194			426,388	$	0.46

Effect of Dilutive Securities:
Incentive plan shares					16,299

Diluted Earnings per Share:
Income available for common stockholders	$	194			442,687	$	0.44

The Company had 16,272 incentive plan shares outstanding at December 31, 2009 that were excluded from the above calculation as they were anti-dilutive.

FIRST ROBINSON FINANCIAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Basic earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per share gives effect to the increase in the average shares outstanding which would have resulted from the exercise of dilutive stock options. As of December 31, 2008, all outstanding options had been exercised. Therefore, there is no dilutive effect with regards to options for the earnings (loss) per share calculation for the nine-month periods ended December 31, 2009 and 2008. The components of basic and diluted earnings (loss) per share for the nine months ended December 31, 2009 and 2008 were computed as follows (dollar amounts in thousands except share data):

				Weighted
	Income			Average		Per Share
	(Loss)			Shares		Amount

For the Nine-Months Ended December 31, 2009:

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

Effect of Dilutive Securities:
Unearned incentive plan shares					—

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

For the Nine-Months Ended December 31, 2008:

Basic Earnings per Share:
Income available to common stockholders	$	612			435,038	$	1.41

Effect of Dilutive Securities:
Unearned incentive plan shares					16,139

Diluted Earnings per Share:
Income available for common stockholders	$	612			451,177	$	1.36

The Company had 16,272 incentive plan shares outstanding at December 31, 2009 that were excluded from the above calculation as they were anti-dilutive.

9.	Subsequent Events

Subsequent events have been evaluated through February 15, 2010, which is the date the financial statements were issued. There were no reportable subsequent events.

Item 2:

FIRST ROBINSON FINANCIAL CORPORATION

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

Forward-Looking Statements

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

Critical Accounting Policies

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

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

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

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

FIRST ROBINSON FINANCIAL CORPORATION

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

Overview

First Robinson Financial Corporation (the “Company”) is the holding company for First Robinson Savings Bank, National Association (the “Bank”). The Company is headquartered in Robinson, Illinois and operates three full service offices and one drive-up facility in Crawford County, Illinois and one full service office in Knox County, Indiana. Assets grew $17.4 million, or 10.6%, from $164.4 million at March 31, 2009 to $181.8 million at December 31, 2009. See “Financial Condition” for more information. The Company had a net loss of $460,000 for the three month period ending December 31, 2009, versus net income of $194,000 in the same period of 2008. For the nine months ended December 31, 2009, the Company recorded a net loss of $331,000 compared to net income of $612,000 for the same period of 2008, a decrease of $943,000. The primary reason for the decrease in earnings can be attributed to the net write off of $972,000 for a loan that we made to the holding company of a financial institution that was placed under receivership on December 18, 2009 by its primary regulator, the increase in the FDIC insurance assessment in both the three-month and nine-month periods, and the recognized loss on a cost basis equity security investment in the holding company of the financial institution that was placed in receivership. See “Results of Operations” for further information. Basic loss per share for the three month period was $(1.10) per share and $(0.79) for the nine month period ended December 31, 2009, versus net income of $0.46 per share for the three month period and $1.41 for the nine month period ended December 31, 2008. Diluted earnings (loss) per share reflect incentive plan shares and the potential dilutive impact of stock options granted under the stock option plan and the effect of the incentive plan shares. Diluted loss per share for the three months and nine months ending December 31, 2009 were $(1.10) and $(0.79) respectively. For the three months and nine months ending December 31, 2008, diluted earnings per share were $0.44 per share and $1.36 per share, repsectively .

The Company’s principal business, through its operating subsidiary, the Bank, consists of accepting deposits from the general public in our market area and investing these funds primarily in loans, mortgage-backed securities and other securities. Loans consist primarily of loans secured by residential real estate located in our market area, consumer loans, commercial loans, and agricultural loans. With the addition of a branch in Vincennes, Indiana, our market area has expanded to include Knox and surrounding counties in Indiana along with Crawford and contiguous counties in Illinois.

Typically the Company’s results of operations are dependent primarily on net interest income, which is the difference between interest earned on interest-earning assets and the interest paid on interest-bearing liabilities. Net interest income is a function of “interest rate spread,” which is the difference between the average yield earned on interest-earning assets and the average rate paid on interest-bearing liabilities. The interest rate spread is affected by regulatory, economic and competitive factors that influence interest rates, loan demand and deposit flows. Results of operations are also affected by other income, and general, administrative and other expense, the provision for losses on loans and income tax expense. Other income consists primarily of service charges and gains (losses) on sales of loans. General, administrative and other expense consists primarily of salaries and employee benefits, occupancy and office expenses, advertising, data processing expenses and the costs associated with being a publicly held company.

Operations are significantly affected by prevailing economic conditions, competition and the monetary, fiscal and regulatory policies of government agencies. Lending activities are influenced by the demand for and supply of housing, competition among lenders, the level of interest rates and the availability of funds. Deposit flows and costs of funds are influenced by prevailing market rates of interest, competing investments, account maturities and the levels of personal income and savings in the Company’s market area.

Historically, the Company’s mission has been to originate loans on a profitable basis to the communities served. In seeking to accomplish this mission, the Board of Directors and management have adopted a business strategy designed (i) to maintain the Bank's capital level in excess of regulatory requirements; (ii) to maintain asset quality, (iii) to maintain, and if possible, increase earnings; and (iv) to manage exposure to changes in interest rates.

In response to the current national and international economic recession, however, the U.S. government has taken a variety of actions intended to stimulate the national economy, including the passage of legislation, such as the Emergency Economic Stabilization Act of 2008 (the “EESA”), and the implementation of certain programs by federal agencies.

The first program put forth by the U.S. Treasury pursuant to its authority under the EESA was the Troubled Asset Relief Program’s Capital Purchase Program (the “CPP”). Pursuant to the CPP, the US Treasury, on behalf of the US government, is authorized to purchase up to $250 billion of preferred stock, along with warrants to purchase common stock, from certain financial institutions that applied to receive funds. The CPP is intended to shore up bank capital and to stimulate lending. Neither the Company nor the Bank has participated in the CPP.

FIRST ROBINSON FINANCIAL CORPORATION

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

In response to the current reserve ratios of the Deposit Insurance Fund, and the need to restore it to its statutory minimum, the Federal Deposit Insurance Corporation (the “FDIC”) announced on May 22, 2009, a final rule imposing a 5 basis point special assessment on each insured depository institution’s assets minus Tier 1 capital as of June 30, 2009 (although no institution’s special assessment exceeded 10 basis points times the institution’s assessment base for the second quarter of 2009). The Company’s special assessment of $81,000 was paid on September 30, 2009.

In addition to the special assessment , the FDIC required each depository institution with FDIC-insured deposits to prepay three years of deposit insurance premiums. The Company has recognized the prepaid assessment in other assets on the condensed consolidated balance sheet for December 31, 2009. Under the rule, the prepaid amount was based on an institution’s assessment rate and assessment base for the third quarter of 2009, assuming a 5% annual growth in deposits each year. While the FDIC plan will maintain current assessment rates through 2010, effective January 1, 2011, the rates will increase by three basis points across the board (e.g., Risk Catagory I banks paying 12-16 basis points for 2010 would pay 1.5-19 basis points). Additionally, the FDIC voted to extend the DIF restoration plan from seven to eight years, with a target of returning the fund to a 1.15% reserve ratio (the minimum required by law) by the first quarter of 2014. The total prepayment will be booked as a “prepaid expense” asset and will qualify as a zero risk weight under the risk-based capital requirements. Any prepayment amounts not exhausted after collection of the amount due on June 30, 2013, will be refunded to the institution, rather than on December 30, 2014, as originally proposed.

Finally, the FDIC promulgated a temporary liquidity guarantee program that had both a debt guarantee component, whereby the FDIC agreed to guarantee certain senior unsecured debt issued by eligible financial institutions and a transaction account guarantee component (TAG), whereby the FDIC agreed to insure 100% of non-interest bearing deposit transaction accounts held at eligible financial institutions, such as lawyers’ trust accounts, payment processing accounts, payroll accounts and working capital accounts through December 31, 2009. The FDIC granted an extension of the transaction account guarantee component of this program through June 30, 2010. Institutions had until November 2, 2009 to opt-out of the TAG program. The Bank did not participate in the debt guarantee program but opted to participate in the TAG program and its extension.

The extent to which these programs and others like them will succeed in ameliorating tight credit conditions or otherwise result in an improvement in the national economy is uncertain. It is also likely, but not certain, that additional legislation affecting financial institutions (such as the Bank) and their holding companies (such as the Company) will be enacted.

Legislative and regulatory changes continue to be proposed with respect to consumer financial products and services. The most significant of these proposals was released by the U.S. Treasury in June 2009 and involves the creation of a new, independent federal agency to be called the Consumer Financial Protection Agency. The proposed agency would regulate consumer financial products and services and provide minimum, uniform rules with respect to such products, including products currently offered by the Bank. The proposal also includes a rollback of preemption for federally chartered banks (like the Bank) such that a broad category of state consumer law not currently applicable to the Bank would be applicable to the operations and product offerings of the Bank, its subsidiaries and its affiliates. In addition, the proposed agency would have sole rulemaking and interpretive authority. Debate continues with respect to the creation and powers of the proposed agency and there is no way to predict whether it will be created and, if it is, the authority it will possess.

We continue to maintain a strong presence in the community and are pleased to be one of the few independent community banks in our primary market area. To visit First Robinson Savings Bank on the web, go to www.frsb.net.

FIRST ROBINSON FINANCIAL CORPORATION

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

Asset Quality

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

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

The following table sets forth the Company’s loan delinquencies by type, by amount and by percentage of type at December 31, 2009.

	Loans Delinquent For:
	30-89 Days(1)							90 Days and Over(1)						Nonaccrual							Total Delinquent Loans
	Number		Amount		Percent of Loan Category			Number		Amount		Percent of Loan Category		Number		Amount		Percent of Loan Category			Number		Amount		Percent of Loan Category
	(Dollars in thousands)
Real Estate:
One- to four-family		5	$	151		0.33	%		—		—		—		6	$	108		0.24	%		11	$	259		0.57	%
Construction or development		1		86		1.70			—		—		—		—		—		—			1		86		1.70
Commercial and agriculture		1		33		0.19			—		—		—		—		—		—			1		33		0.19
Consumer and other loans		7		37		0.42			—		—		—		1		6		0.07			8		43		0.49	%
Commercial business and agricultural finance		—		—		—			—		—		—		1		16		0.09			1		16		0.09	%

Total		14	$	307		0.31	%		—		—		—		8	$	130		0.13	%		22	$	437		0.44	%


(1)	Loans are still accruing.

FIRST ROBINSON FINANCIAL CORPORATION

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

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

	December 31,			March 31,			December 31,
	2009			2009			2008
				(In thousands)
Non-accruing loans:
One- to four-family	$	108		$	192		$	92
Consumer and other loans		6			14			—
Commercial business and agricultural finance		16			29			20
Total		130			235			112

Foreclosed/Repossessed assets:
One- to four-family		—			46			90
Consumer vehicle		—			—			9
Total		—			46			99

Total non-performing assets	$	130		$	281		$	211
Total as a percentage of total assets		0.07	%		0.17	%		0.14	%

Gross interest income which would have been recorded had the non-accruing loans been current in accordance with their original terms amounted to approximately $3,000 for the three months and $8,000 for the nine months ended December 31, 2009 and $3,000 for the three months and $13,000 for the nine months ended December 31, 2008.

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

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

In connection with the filing of its periodic reports with the OCC and in accordance with its classification of assets policy, the Company regularly reviews loans in its portfolio to determine whether such assets require classification in accordance with applicable regulations. On the basis of management’s review of its assets, at December 31, 2009, the Company had classified a total of $367,000 of its assets as substandard and $139,000 as doubtful. At December 31, 2009, total classified assets comprised $506,000, or 4.3% of the Company’s capital, and 0.3% of the Company’s total assets.

FIRST ROBINSON FINANCIAL CORPORATION

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

Other Loans of Concern. As of December 31, 2009, there were $3.6 million in loans identified, but not classified, by the Company with respect to which known information about the possible credit problems of the borrowers or the cash flows of the business have caused management to have some doubts as to the ability of the borrowers to comply with present loan repayment terms and which may result in the future inclusion of such items in the non-performing asset categories.

During the quarter ended December 31, 2009, the Company charged off the full amount of a $1.0 million loan with a recovery of $27,000 being received prior to December 31, 2009, resulting in a net chargeoff of $972,000. The borrower’s primary subsidiary bank was closed by its regulator and the FDIC was appointed as receiver. Collection efforts are being pursued but collectibility of the debt is doubtful.

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

Real estate properties acquired through foreclosure are recorded at the fair value minus 20% of the fair value if the property is appraised at $50,000 or less. If the property is appraised at greater than $50,000, then the property is recorded at the fair value less 10% of the fair value. If fair value at the date of foreclosure is lower than the balance of the related loan, the difference will be charged-off to the allowance for loan losses at the time of transfer. Valuations are periodically updated by management and if the value declines, a specific provision for losses on such property is established by a charge to operations. At December 31, 2009, the Bank had no real estate properties acquired through foreclosure. During January 2010, one property was transferred into other real estate owned at a value of $24,000.

Although management believes that it uses the best information available to determine the allowance, unforeseen market conditions could result in adjustments and net earnings could be significantly affected if circumstances differ substantially from the assumptions used in making the final determination. Future additions to the Company’s allowance for loan losses will be the result of periodic loan, property and collateral reviews and thus cannot be predicted in advance. In addition, federal regulatory agencies, as an integral part of the examination process, periodically review the Bank’s operations. Such agencies may require the Bank to increase the Bank’s allowance for loan losses, increase classified assets, or take other actions that could significantly affect the Company’s earnings based upon their judgment of the information available to them at the time of their examination. At December 31, 2009, the Company had a total allowance for loan losses of $931,000, representing 0.96% of the Company’s loans, net. At March 31, 2009, the Company’s total allowance for loan losses to the Company’s loans, net was at 0.90%.

FIRST ROBINSON FINANCIAL CORPORATION

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

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

	December 31, 2009								March 31, 2009
	Amount of Loan Loss Allowance		Loan Amounts by Category			Percent of Loans in Each Category to Total Loans			Amount of Loan Loss Allowance		Loan Amounts by Category			Percent of Loans in Each Category to Total Loans
	(Dollars in thousands)

One- to four-family including loans held for sale	$	93	$	45,788			45.69	%	$	66	$	43,903			48.59	%
Multi-family		—		2,923			2.92			—		1,242			1.38
Commercial and agricultural real estate		547		16,982			16.94			458		14,793			16.37
Construction or development		—		5,063			5.05			—		2,624			2.90
Consumer and other loans		38		8,784			8.76			34		7,783			8.62
State and municipal governments		—		1,912			1.91			—		2,172			2.40
Commercial business and agricultural finance		253		18,771			18.73			222		17,835			19.74

Gross Loans				100,223			100.00	%				90,352			100.00	%
Unallocated		—								—
Deferred loan fees				(3	)							(4	)
Undisbursed portion of loans				(2,035	)							(2,811	)
Total	$	931	$	98,185					$	780	$	87,537

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

	Three Months Ended December 31,						Nine Months Ended December 31,
	2009			2008			2009			2008
	(Dollars in thousands)

Balance at beginning of period	$	893		$	752		$	780		$	727

Charge-offs:
One- to four-family		62			19			130			19
Commercial non-residential real estate		—			—			—			123
Consumer and other loans		1,005			10			1,017			34
Total charge-offs		1,067			29			1,147			176

Recoveries:
One- to four-family		—			—			—			1
Consumer and other loans		33			4			46			15
Total recoveries		33			4			46			16

Net charge-offs .		1,034			25			1,101			160

Additions charged to operations		1,072			30			1,252			190
Balance at end of period	$	931		$	757		$	931		$	757

Ratio of net charge-offs during the period to average loans outstanding during the period		1.07	%		0.03	%		1.91	%		0.20	%

Ratio of net charge-offs during the period to average non-performing assets		534.49	%		9.95	%		435.93	%		4.68	%

FIRST ROBINSON FINANCIAL CORPORATION

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

Financial Condition

Total assets of the Company increased by $17.4 million, or 10.6%, to $181.8 million at December 31, 2009 from $164.4 million at March 31, 2009. The increase in assets was primarily due to an increase of $10.5 million, or 12.1%, loans receivable, net, and an increase of $4.4 million, or 7.8%, in available for sale securities.

Total cash and cash equivalents, interest bearing deposits and federal funds sold increased by $1.4 million from $13.7 million at March 31, 2009 to $15.1 million at December 31, 2009. The increase resulted from the $10.1 million, or 102.0%, growth in repurchase agreements and the $5.3 million, or 3.7%, growth in total deposits, offset, in part, by increases of $4.4 million, or 7.8%, in available-for-sale securities and the $10.5 million, or 12.5%, increase in loans receivable, net.

Available-for-sale investment securities increased to $60.3 million at December 31, 2009 compared to $55.9 million at March 31, 2009, a $4.4 million increase. The increase resulted from the purchase of $31.1 million in available-for-sale securities and the realized net gain on sale of available-for-sale securities of $106,000, and the increase of $351,000 in the market valuation of the available-for-sale portfolio, offset by $9.7 million in repayments on mortgage-backed securities, by $1.8 million in proceeds from the maturity of available-for-sale securities, and by $15.4 million in proceeds from the sale of available-for-sale securities, and the amortization of $230,000 of premiums and discounts on investments. The investment portfolio is managed to limit the Company's exposure to risk by investing primarily in mortgage-backed securities and other securities which are either directly or indirectly backed by the federal government or a local municipal government.

During April 2009, the Company was required to purchase $195,000 in additional Federal Home Loan Bank (“FHLB”) stock which increased our holdings to $836,000. The amount of required investment in FHLB stock is calculated based on a formula which includes the amount of one- to- four family dwelling loans held in the Company’s loan portfolio and the amount of mortgage-backed securities held in the Company’s investment portfolio.

The Company's net loan portfolio including loans held for sale increased by $10.5 million to $97.3 million at December 31, 2009 from $86.8 million at March 31, 2009. Loans on one- to four-family real estate, including one- to four-family loans held for sale, increased by $1.9 million, or 4.3%; commercial nonresidential real estate and farmland loans increased by $2.2 million, or 14.8%; construction and development loans increased by $2.4 million, or 93.0%; consumer and other loans increased by $1.0 million, or 12.9%; loans on multi-family properties increased by $1.7 million, or 135.4%, and loans in commercial business and agricultural finance increase by $936,000, or 5.3%. These increases were offset, in part, by the decrease in loans to state and municpal governments by $260,000, or 12.0%. The total amount of undisbursed closed-ended lines of credit decreased by $776,000, or 27.6% from $2.8 million at March 31, 2009 to $2.0 million at December 31, 2009.

At December 31, 2009, the allowance for loan losses was $931,000, or 0.96% of the net loan portfolio, an increase of $151,000 from the allowance for loan losses at March 31, 2009 of $780,000, or 0.90% of the net loan portfolio. During the first nine-months of fiscal 2010, the Company charged off $1.1 million of loan losses, $990,000 in other loans, and $130,000 on a one- to four- family property loans. Management reviews the adequacy of the allowance for loan losses quarterly, and believes that its allowance is adequate; however, the Company cannot assure that future chargeoffs and/or provisions will not be necessary. See “Asset Quality” for further information on delinquencies.

The Company had no foreclosed real estate properties held for sale at December 31, 2009. Foreclosed assets are carried at lower of cost or fair value. When foreclosed assets are acquired, any required adjustment is charged to allowance for loan losses. All subsequent activity is included in current operations.

Total deposits increased by $5.3 million, or 3.7%, to $145.3 million at December 31, 2009 from $140.1 million at March 31, 2009. The increase in total deposits was due to an increase of $7.8 million in savings, NOW, and money market accounts, and an increase of $634,000 in non-interest bearing demand deposits offset by the decrease of $3.2 million in certificates of deposit.

Other borrowings, consisting entirely of repurchase agreements, increased $10.1 million, or 102.0% from $9.9 million at March 31, 2009 to $20.0 million at December 31, 2009. The obligations are secured by mortgage-backed securities and US Government agency obligations. At December 31, 2009, the average rate on the repurchase agreements was 0.18% compared to 0.30% at March 31, 2009. The rate on approximately $18.3 million of the repurchase agreements reprice daily. All agreements mature periodically within 24 months.

FIRST ROBINSON FINANCIAL CORPORATION

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

The short-term borrowing consists of the Company’s revolving line of credit note payable that matured on July 31, 2009 but was extended to September 30, 2009. The revoloving line of credit renewed on September 17, 2009 and increased from $600,000 to $2,500,000 with the renewal. The balance of the revolving line of credit was $2,500,000 and $0 as of December 31, 2009 and March 31, 2009, respectively. The note bears interest at the prime commercial rate with a floor of 3.50% which was the rate on December 31, 2009, matures on September 16, 2010, and is secured by stock in the Bank. The Company is in the process of refinancing the $2.5 million line of credit with another financial institution.

Stockholders' equity at December 31, 2009 was $11.7 million compared to $12.3 million at March 31, 2009, a decrease of $569,000, or 4.6%. Factors relating to the decrease in stockholders’ equity can be attributed primarily to the $331,000 net loss and $348,000 in dividends declared and paid, offset, in part, by the increase of $198,000 in accumulated other comprehensive income due to the increase in the fair value of securities available for sale.

Results of Operations

Net Income (Loss)

The Company recorded a net loss of $460,000 for the three month period ending December 31, 2009, versus net income of $194,000 in the same period of 2008. Primary contributers to the loss for the three months ended December 31, 2009 were the net write off of $972,000 for a loan secured by the stock of a financial institution, the loss of $60,000 on the cost basis of an equity security of the same financial institution, and an increase in FDIC insurance. Offsetting the amount of the loss for the quarter were a $192,000, or 50.0%, increase in non-interest income and a $374,000 decrease in the provision for income taxes. Basic earnings (loss) per share for the December 31, 2009 three month period were $(1.10) per share versus $0.46 per share for the same period of 2008. Diluted earnings (loss) per share reflect incentive plan shares and the potential dilutive impact of stock options granted under the stock option plan. Diluted earnings (loss) per share for the three months ending December 31, 2009 were $(1.10) compared to $0.44 at December 31, 2008. For the nine month period ended December 31, 2009, the Company had a loss of $331,000, a decrease of $943,000 from net income of $612,000 for the nine months ending December 31, 2008. The loss for the nine months ended December 31, 2009 was negatively impacted by a decrease of $1,124,000, or 35.2%, in net interest income after provision and by an increase of $861,000, or 24.5%, in non-interest expense which were offset by an increase in non-interest income of $532,000, or 43.4%, and a decrease of $510,000, or 171.1%, in provision for income taxes when compared to the same period in the prior year. Basic earnings (loss) per share for the December 31, 2009 nine month period were $(0.79) per share versus $1.41 per share for the same period of 2008. Diluted earnings (loss) per share reflect incentive plan shares and the potential dilutive impact of stock options granted under the stock option plan. Diluted earnings (loss) per share for the nine months ending December 31, 2009 were $(0.79) compared to $1.36 at December 31, 2008.

Net Interest Income

For the three-month period ended December 31, 2009, net interest income totaled $1,165,000, an increase of 1.8%, or $21,000, compared to the same period of 2008. The increase in net interest income can be attributed to an increase of $8,000, or 0.4%, in total interest income, and by the decrease of $13,000, or 1.7%, in total interest expense. The decrease in total interest expense can be attributed, in part, to the 0.62% decrease in the average cost of funds on interest bearing liabilities for the three months ended December 31, 2009 to 2.04% compared to 2.66% for the three-months ended December 31, 2008.

For the nine-month period ended December 31, 2009, net interest income totaled $3,323,000, a decrease of $62,000, or 1.8%, from the same period in the prior year. Contributing to the decrease was the increase of $260,000, or 11.4%, in total interest expense, offset by the increase of $198,000, or 3.5% in total interest income. The net interest margin for the nine-months ended December 31, 2009 was 2.76%, a 71 basis point decrease from 3.43% for the nine-months ended December 31, 2008. The squeezing of the net interest margin is a direct cause of the decrease in the net interest income. During the past six months, management has made a conscience effort to improve the net interest margin. At June 30, 2009, the net interest margin was 2.60%, at September 30, 2009 it was 2.70% and for December 31, 2009 it was 2.76%.

FIRST ROBINSON FINANCIAL CORPORATION

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

Provision for Loan Losses

The provision for loan losses for the quarter ended December 31, 2009 was $1,072,000 compared to $30,000 for the December 31, 2008 quarter. For the nine-months ended December 31, 2009, the provision was $1,252,000 compared to $190,000 over the same period in 2008. The increase in the provision is attributed to the write off of the loan that was secured by the stock of a financial institution. The provision for both periods reflects management's analysis of the Company's loan portfolio based on the information which was available to the Company. Management meets on a quarterly basis to review the adequacy of the allowance for loan losses based on Company guidelines. Classified loans are reviewed by the loan officers to arrive at specific reserve levels for those loans. Once the specific reserve for each loan is calculated, management calculates general reserves for each loan category based on a combination of loss history adjusted for current national and local economic conditions, trends in delinquencies and charge-offs, trends in volume and term of loans, changes in underwriting standards, and industry conditions. While the Company cannot assure that future chargeoffs and/or provisions will not be necessary, the Company's management believes that, as of December 31, 2009, its allowance for loan losses was adequate.

Non-Interest Income

Non-interest income categories for the three-month and nine-month periods ended December 31, 2009 and 2008 are shown in the following table:

	Three Months Ended
	December 31,
	2009		2008		% Change
	(In thousands)
Non-interest income:

Charges and fees on deposit accounts	$	270	$	223		21.1	%
Charges and other fees on loans		79		26		203.8
Net gain on sale of loans		100		27		270.4
Other		127		108		17.6

Total non-interest income	$	576	$	384		50.0	%

	Nine Months Ended
	December 31,
	2009		2008		% Change
	(In thousands)
Non-interest income:

Charges and fees on deposit accounts	$	747	$	671		11.3	%
Charges and other fees on loans		256		111		130.6
Net gain on sale of loans		282		99		184.8
Net realized gain on sale of available for sale securities		106		2		5,200.0
Other		366		342		7.0

Total Non-Interest Income	$	1,757	$	1,225		43.4	%

Non-interest income increased $192,000 when comparing the three-months ended December 31, 2009 to December 31, 2008. The largest contributing factors to the increase were the increase in gain on sale of loans and the fees related to the servicing of loans. The gain on sale of loans is due to the sale of $6.4 million in loans for the three-months ended December 31, 2009 compared to $1.6 million in loans sold during the three months ended December 31, 2008. For the nine-months ended December 31, 2009, non-interest income increased $532,000 over the nine-months ended December 31, 2008. The increase can be primarily attributed to the net realized gain on the sale of available for sale securities due to the sale of $15.4 million in mortgage-backed and agency securities; and he net gain from the sale of loans. During the nine-months ended December 31, 2009, the Company sold $25.1 million in loans into the secondary market compared to $6.3 million during the nine-months ended December 31, 2008.

FIRST ROBINSON FINANCIAL CORPORATION

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

Non-Interest Expense

Non-interest expense categories for the three-month and nine-month periods ended December 31, 2009 and 2008 are shown in the following table:

	Three Months Ended
	December 31,
	2009		2008		% Change
	(In thousands)
Non-interest expense:
Compensation and employee benefits	$	684	$	644		6.2	%
Occupancy and equipment		174		132		31.8
Data processing		59		79		(25.3	)
Audit, legal and other professional		91		49		85.7
Advertising		87		59		47.5
Telephone and postage		45		48		(6.3	)
Net loss on sale of foreclosed property		2		—		—
FDIC Insurance		54		18		200.0
Loss on cost basis equity security		60		—		—
Other		158		186		(15.1	)

Total non-interest expense	$	1,414	$	1,215		16.4	%

	Nine Months Ended
	December 31,
	2009		2008		% Change
	(In thousands)
Non-interest expense:
Compensation and employee benefits	$	2,024	$	1,945		4.1	%
Occupancy and equipment		534		465		14.8
Data processing		186		198		(6.1	)
Audit, legal and other professional		284		148		91.9
Advertising		263		156		68.6
Telephone and postage		148		107		38.3
Net loss on sale of foreclosed property		2		4		(50.0	)
FDIC insurance		234		28		735.7
Loss on cost basis equity security		197		—		—
Other		499		459		8.7

Total Non-Interest Expense	$	4,371	$	3,510		24.5	%

Compensation and employee benefits increased by $40,000 when comparing the December 2009 and 2008 quarters primarily due to a $14,000 increase in salaries and the increase of $27,000 in the market value of the shares held in the directors’ retirement plan. For the nine-months ended December 31, 2009, compensation expense increased $79,000 over the nine-months ended December 31, 2008. Salaries and payroll taxes increased by $241,000 due to the additional employees for the Vincennes branch and the Trust department.

Audit, legal and other professional fees increased by $42,000 for the three-months ended December 31, 2009 and $136,000 for the nine-months ended December 31, 2009 when comparing to the three- and nine-months ended December 31, 2008. The increase can be attributed, in part, to costs associated with compliance with Sox 404.

Advertising expense increased $28,000 and $107,000 for the three- and nine- months ended December 31, 2009, respectively, when compared to the same period of the prior year due to increased advertising in a new market area: Vincennes, Indiana. On May 1st, 2009, in response to a marketing program to promote branding, our deposit product called “Reward Checking” was renamed Kasasa ™ Cash. This promotion has also led to the increase in advertising.

FIRST ROBINSON FINANCIAL CORPORATION

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

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

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

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

Income Tax Expense

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

Off-Balance Sheet Arrangements

The Company has entered into performance standby and financial standby letters of credit with various local commercial businesses in the aggregate amount of $394,000. The letters of credit are collateralized and underwritten, as currently required by our loan policy, in the same manner as any commercial loan. The advancement of any funds on these letters of credit is not anticipated.

Liquidity and Capital Resources

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

Liquidity resources are used principally to meet outstanding commitments on loans, to fund maturing certificates of deposit and deposit withdrawals and to meet operating expenses. The Company anticipates no foreseeable problems in meeting current loan commitments. At December 31, 2009, outstanding commitments to extend credit amounted to $20.2 million (including $11.0 million, in available revolving and closed-ended commercial and agricultural lines of credit). Management believes that loan repayments and other sources of funds will be adequate to meet any foreseeable liquidity needs.

The Bank maintains a $24.6 million line of credit with the FHLB, which can be accessed immediately. As of December 31, 2009 and 2008, there were no advances outstanding for either period. However, the $24.6 million line of credit with the FHLB was reduced by $1.2 million for the credit enhancement reserve established as a result of the participation in the FHLB Mortgage Partnership Finance (“MPF”) program. At December 31, 2009, the Company also maintained a $5.0 million revolving federal funds line of credit and a $2.5 million revolving line of credit with IBBBB located in Springfield, Illinois, the assets and liabilities of which were later purchased and assumed by The Independent BankersBank (“TIB”). Our revolving federal funds line of credit was assumed by TIB but the $2.5 million revolving line of credit was not. The Company is in the process of refinancing the $2.5 million line of credit with another financial institution. The Company borrowed the full amount of the $2.5 million revolving line in September 2009. The Bank has also established borrowing capabilities at the discount window with the Federal Reserve Bank of St. Louis. Investment securities of $3,000,000 have been pledged as collateral. As of December 31, 2009 and 2008, no amounts were outstanding at the Federal Reserve discount window.

FIRST ROBINSON FINANCIAL CORPORATION

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

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

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

At December 31, 2009, the Bank’s compliance with all of the aforementioned capital requirements is summarized below:

											To be Well Capitalized
											Under the Prompt
						For Capital					Corrective Action
	Actual					Adequacy Purposes					Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
Total Risk-Based Capital (to Risk-Weighted Assets)	$	13,219		13.29	%	$	7,955		8.00	%	$	9,944		10.00	%
Tier I Capital (to Risk-Weighted Assets)		12,273		12.34			3,978		4.00			5,967		6.00
Tier I Capital (to Average Assets)		12,273		6.97			7,042		4.00			8,803		5.00

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

FIRST ROBINSON FINANCIAL CORPORATION

Item: 3 Quantitative and Qualitative Disclosures about Market Risk

Not applicable.

Item: 4T Controls and Procedures

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

Disclosure Controls and Procedures

The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e)) under the Exchange Act as of the end of the period covered by this report. Based upon that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of December 31, 2009 the Company’s disclosure controls and procedures were effective to provide reasonable assurance that (i) the information required to be disclosed in this Report was recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (ii) information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding disclosure.

Internal Control Over Financial Reporting

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

PART II OTHER INFORMATION

Item 1.

Legal Proceedings

None

Item 1A.

Risk Factors

None

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides information about purchases by the Company for the quarter ended

December 31, 2009 regarding the Company’s common stock.

PURCHASES OF EQUITY SECURITIES BY COMPANY (1)

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
10/1/2009 – 10/31/2009		106	$	36.00		—		12,160
11/1/2009 – 11/30/2009		—		—		—		12,160
12/1/2009– 12/31/2009		—		—		—		12,160
Total		106	$	36.00		—		12,160

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

Item 3.

Defaults Upon Senior Executives

None

Item 4.

Submission of Matters to a Vote of Security Holders

None

Item 5.

Other Information

None

Item 6.

Exhibits

Exhibit 31: Section 302 Certifications

Exhibit 32: Section 906 Certifications

SIGNATURES

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

		FIRST ROBINSON FINANCIAL CORPORATION

Date: February 16, 2010		/s/ Rick L. Catt
		Rick L. Catt
		President and Chief Executive Officer

Date: February 16, 2010		/s/ Jamie E. McReynolds
		Jamie E. McReynolds
		Chief Financial Officer and Vice President

EXHIBIT INDEX

Exhibit No.

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

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

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