Edgar Filing: FIRST ROBINSON FINANCIAL CORP

Unassociated Document

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

September 30, 2010

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

For the transition period from _____________________ to ________________________

Commission File Number 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 ¨

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 ¨ No ¨

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	¨
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 ¨ No x

The number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 428,704 shares of common stock, par value $.01 per share, as of November 12, 2010.

FIRST ROBINSON FINANCIAL CORPORATION

Index to Form 10-Q

		PAGE
PART 1. FINANCIAL INFORMATION

Item 1.	Financial Statements	3

	Condensed Consolidated Balance Sheets as of September 30, 2010 and March 31, 2010	3

	Condensed Consolidated Statements of Operations for the Three-Month and Six-Month Periods Ended September 30, 2010 and 2009	4

	Condensed Consolidated Statements of Changes in Stockholders’ Equity For the Six-Month Periods ended September 30, 2010 and 2009	6

	Condensed Consolidated Statements of Cash Flows for the Six-Month Periods Ended September 30, 2010 and 2009	7

	Notes to Condensed Consolidated Financial Statements	9

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

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	34

Item 4T.	Controls and Procedures	34

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	35

Item 1A.	Risk Factors	35

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35

Item 3.	Defaults Upon Senior Executives	35

Item 4.	Removed and Reserved	35

Item 5.	Other Information	35

Item 6.	Exhibits	35

SIGNATURES		36

CERTIFICATIONS		38

Item 1:

FIRST ROBINSON FINANCIAL CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

	(Unaudited)
	September 30, 2010			March 31, 2010
ASSETS

Cash and cash equivalents	$	7,314		$	6,562
Interest-bearing deposits		3,081			3,475
Federal funds sold		—			7,852
Cash and cash equivalents		10,395			17,889
Available-for-sale securities		51,958			55,399
Loans, held for sale		682			88
Loans, net of allowance for loan losses of $1,060 and $973 at September 30, 2010 and March 31, 2010, respectively		115,951			100,063
Federal Reserve and Federal Home Loan Bank stock		1,051			1,008
Premises and equipment, net		3,894			4,018
Foreclosed assets held for sale, net		55			52
Interest receivable		988			906
Prepaid income taxes		133			380
Cash surrender value of life insurance		1,529			1,504
Other assets		1,596			1,682

Total Assets	$	188,232		$	182,989

LIABILITIES AND STOCKHOLDERS’ EQUITY

Liabilities
Deposits	$	156,770		$	149,312
Other borrowings		14,840			17,621
Federal funds purchased		35			—
Short-term borrowings		1,800			1,700
Advances from borrowers for taxes and insurance		115			196
Deferred income taxes		797			779
Interest payable		215			251
Other liabilities		1,222			1,085
Total Liabilities		175,794			170,944

Commitments and Contingencies		—			—

Stockholders’ Equity
Preferred stock, $.01 par value; authorized 500,000 shares, no shares issued and outstanding		—			—
Common stock, $ .01 par value; authorized 2,000,000 shares; 859,625 shares issued; outstanding September 30, 2010– 428,704 shares; March 31, 2010 – 433,198 shares		9			9
Additional paid-in capital		8,769			8,783
Retained earnings		10,637			10,182
Accumulated other comprehensive income		1,071			976
Treasury stock, at cost
Common: September 30, 2010 – 430,921 shares; March 31, 2010 – 426,427 shares		(8,048	)		(7,905	)

Total Stockholders’ Equity		12,438			12,045

Total Liabilities and Stockholders’ Equity	$	188,232		$	182,989

See Notes to Condensed Consolidated Financial Statements

FIRST ROBINSON FINANCIAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three and Six-Month Periods Ended September 30, 2010 and 2009

(In thousands, except per share data)

(Unaudited)

	Three-Month Period					Six-Month Period
	2010			2009		2010		2009
Interest and Dividend Income:
Loans	$	1,627		$	1,414	$	3,164	$	2,761
Securities:
Taxable		421			518		871		1,085
Tax-exempt		30			37		59		75
Other interest income		5			1		10		5
Dividends on Federal Reserve Bank stock		3			2		6		5

Total Interest and Dividend Income		2,086			1,972		4,110		3,931

Interest Expense:
Deposits		591			823		1,212		1,745
Other borrowings		29			18		53		28

Total Interest Expense		620			841		1,265		1,773

Net Interest Income		1,466			1,131		2,845		2,158

Provision for Loan Losses		45			135		90		180

Net Interest Income After Provision for Loan Losses		1,421			996		2,755		1,978

Non-interest income:
Charges and fees on deposit accounts		240			256		489		476
Charges and other fees on loans		68			78		158		178
Net gain on sale of loans		206			55		341		182
Net gain (loss) on sale of foreclosed property		(2	)		—		15		—
Net realized gain on sale of available-for-sale investments		—			5		—		106
Net gain on sale of equipment		—			—		4		—
Other		130			121		267		239

Total Non-Interest Income		642			515		1,274		1,181

Non-interest expense:
Compensation and employee benefits		799			690		1,538		1,340
Occupancy and equipment		184			176		352		360
Data processing		70			66		140		126
Audit, legal and other professional		77			107		142		192
Advertising		72			75		134		177
Telephone and postage		53			50		96		104
FDIC insurance		52			50		103		181
Loss on cost basis equity investment		—			137		—		137
Other		149			183		298		341

Total Non-Interest Expense		1,456			1,534		2,803		2,958

See Notes to Condensed Consolidated Financial Statements.

FIRST ROBINSON FINANCIAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)

For the Three and Six-Month Periods Ended September 30, 2010 and 2009

(In thousands, except per share data)

(Unaudited)

	Three-Month Period					Six-Month Period
	2010		2009			2010		2009

Income (loss) before income taxes		607		(23	)		1,226		201

Provision for income taxes		203		11			406		72

Net Income (Loss)	$	404	$	(34	)	$	820	$	129

Earnings (Loss) Per Share-Basic	$	0.98	$	(0.08	)	$	1.98	$	0.31
Earnings (Loss) Per Share-Diluted	$	0.94	$	(0.08	)	$	1.91	$	0.30

See Notes to Condensed Consolidated Financial Statements

FIRST ROBINSON FINANCIAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

For the Six-Months Ended September 30, 2010 and 2009

(In thousands, except share data)

(Unaudited)

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

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

Comprehensive income
Net income										129								129		$	129

Unrealized appreciation on available-for-sale securities, net of taxes of $146																					203
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 $111													132					132			132

Total comprehensive income																				$	261

Treasury shares purchased		(2,034	)												(70	)		(70	)
Dividends on common stock, $0.80 per share										(348	)							(348	)
Incentive compensation							(14	)										(14	)

Balance, September 30, 2009		433,198		$	9	$	8,777		$	10,341		$	914	$	(7,905	)	$	12,136

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

Comprehensive income
Net income										820								820		$	820
Change in unrealized appreciation on available-for-sale securities, net of taxes of $60													95					95			95

Total comprehensive income																				$	915

Treasury shares purchased		(4,494	)												(143	)		(143	)
Dividends on common stock, $0.85 per share										(365	)							(365	)
Incentive compensation							(14	)										(14	)

Balance, September 30, 2010		428,704		$	9	$	8,769		$	10,637		$	1,071	$	(8,048	)	$	12,438

See Notes to Condensed Consolidated Financial Statements

FIRST ROBINSON FINANCIAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Six-Months Ended September 30, 2010 and 2009

(In thousands)

(Unaudited)

	2010			2009
Cash flows from operating activities:
Net income	$	820		$	129
Items not requiring (providing) cash
Depreciation and amortization		154			150
Provision for loan losses		90			180
Amortization of premiums and discounts on securities		132			126
Amortization of loan servicing rights		143			57
Deferred income taxes		(43	)		(38	)
Originations of mortgage loans held for sale		(21,189	)		(18,555	)
Proceeds from the sale of mortgage loans		20,936			18,710
Net gain on loans sold		(341	)		(182	)
Net gain on sale of foreclosed property		(15	)		—
Net gain on sale of equipment		(4	)		—
Loss on cost basis equity investment		—			137
Net realized gain on sale of securities		—			(106	)
Cash surrender value of life insurance		(25	)		(24	)
Changes in:
Interest receivable		(82	)		(175	)
Other assets		(63	)		(211	)
Interest payable		(36	)		(30	)
Other liabilities		137			94
Income taxes, prepaid		247			109

Net cash provided by operating activities		861			371

Cash flows from investing activities:
Purchase of available-for-sale securities		(2,631	)		(26,983	)
Proceeds from maturities of available-for-sale securities		1,398			330
Proceeds from sales of available-for-sale securities		—			15,448
Repayment of principal on mortgage-backed securities		4,698			6,579
Purchase of Federal Home Loan Bank stock		(43	)		(195	)
Net change in loans		(16,033	)		(8,574	)
Purchase of premises and equipment		(44	)		(103	)
Proceeds from sale of equipment		24			—
Proceeds from sale of foreclosed assets		67			16

Net cash used in investing activities		(12,564	)		(13,482	)

See Notes to Condensed Consolidated Financial Statements.

FIRST ROBINSON FINANCIAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

For The Six-Months Ended September 30, 2010 and 2009

(In thousands)

(Unaudited)

	2010			2009

Cash flows from financing activities:
Net increase in deposits	$	7,458		$	8,175
Federal funds purchased		14,280			—
Repayment of federal funds purchased		(14,245	)		—
Proceeds from other borrowings		54,401			54,591
Repayment of other borrowings		(57,182	)		(52,118	)
Advances from Federal Home Loan Bank		10			5,500
Repayment of advances from Federal Home Loan Bank		(10	)		(5,500	)
Net change in from short-term borrowings		100			2,500
Purchase of incentive plan shares		(14	)		(14	)
Purchase of treasury stock		(143	)		(70	)
Dividends paid		(365	)		(348	)
Net increase in advances from borrowers for taxes and insurance		(81	)		(100	)

Net cash provided by financing activities		4,209			12,616

Decrease in cash and cash equivalents		(7,494	)		(495	)

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

Cash and cash equivalents at end of period	$	10,395		$	13,214

Supplemental Cash Flows Information:

Interest paid	$	1,302		$	1,803

Income taxes paid (net of refunds)		202			—

Real estate acquired in settlement of loans		55			—

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 September 30, 2010, the results of its operations for the three and six month periods ended September 30, 2010 and 2009, the changes in stockholders’ equity for the six month periods ended September 30, 2010 and 2009, and cash flows for the six month periods ended September 30, 2010 and 2009. The results of operations for those months ended September 30, 2010 are not necessarily indicative of the results to be expected for the full year.

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

2.	Newly Adopted and Recent Accounting Pronouncements

In July 2010, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (ASU) No. 2010-20, “Receivables (Topic 310) – Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses,” which requires significant new disclosures about the allowance for credit losses and the credit quality of financing receivables. The requirements are intended to enhance transparency regarding credit losses and the credit quality of loan losses receivables. Under this statement, allowance for credit losses and fair value are to be disclosed by portfolio segment, while credit quality information, impaired financing receivables and nonaccrual status are to be presented by class of financing receivable. Disclosure of the nature and extent, the financial impact and segment information of troubled debt restructurings will also be required. The dislcosures are to be presented at the level of disaggregation that management uses when assessing and monitoring the portfolio’s risk and performance. ASU 2010-20 is effective for interim and annual reporting periods after December 15, 2010. The Company is currently assessing the effects of adopting the provisions of ASU 2010-20 and will provide the required disclosure in their March 2011 Report on Form 10-K.

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

FIRST ROBINSON FINANCIAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

3.	Fair Value Measurements

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

Level 1

Quoted prices in active markets for identical assets or liabilities.

Level 2

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

Level 3

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

Following is a description of the valuation methodologies used for instruments measured at fair value on a recurring basis and recognized in the accompanying condensed consolidated balance sheet at September 30, 2010 and March 31, 2010.

Available-for-Sale Securities

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

FIRST ROBINSON FINANCIAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table presents the Company’s assets that are measured at fair value on a recurring basis and the level within the FASB ASC No. 820 hierarchy in which the fair value measurements fall as of September 30, 2010 and March 31, 2010 (in thousands):

	Carrying value at September 30, 2010
Description	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)

U.S. government sponsored enterprises (GSE)	$	14,016	$	—	$	14,016	$	—
Mortgage-backed, GSE residential		31,656		—		31,656		—
Mortgage-backed, GSE commercial		1,572		—		1,572		—
State and political subdivisions		4,714		—		4,714		—
Total available-for-sale securities	$	51,958	$	—	$	51,958	$	—

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

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

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

Impaired Loans (Collateral Dependent)

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

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

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

Mortgage Servicing Rights

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

FIRST ROBINSON FINANCIAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Foreclosed Assets Held for Sale

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

The following table presents the fair value measurement of assets measured at fair value on a nonrecurring basis and the level within the FASB ASC No. 820 fair value hierarchy in which the fair value measurements fall at September 30, 2010 and March 31, 2010:

Carrying value at September 30, 2010

Quoted Prices in

Significant

Active Markets

Other

Significant

for Identical

Observable

Unobservable

Assets

Inputs

Description

Fair Value

(Level 1)

(Level 2)

(Level 3)

Impaired loans (collateral dependent)

321

—

321

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

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

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

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

FIRST ROBINSON FINANCIAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

	September 30, 2010				March 31, 2010
	Carrying				Carrying
	Amount		Fair Value		Amount		Fair Value
	(In thousands)
Financial assets
Cash and cash equivalents	$	7,314	$	7,314	$	6,562	$	6,562
Interest-bearing deposits		3,081		3,081		3,475		3,475
Federal funds sold		—		—		7,852		7,852
Available-for-sale securities		51,958		51,958		55,399		55,399
Loans held for sale		682		682		88		88
Loans, net of allowance for loan losses		115,951		117,477		100,063		101,214
Federal Reserve and Federal Home Loan Bank stock		1,051		1,051		1,008		1,008
Interest receivable		988		988		906		906

Financial liabilities
Deposits		156,770		150,772		149,312		139,318
Other borrowings		14,840		14,850		17,621		17,630
Federal funds purchased		35		35		—		—
Short-term borrowings		1,800		1,800		1,700		1,700
Advances from borrowers for taxes and insurance		115		115		196		196
Interest payable		215		215		251		251

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

4.	Federal Home Loan Bank Stock

The Company owns approximately $879,000 of Federal Home Loan Bank of Chicago (“FHLB”) stock. During the third quarter of 2007, the FHLB of Chicago received a Cease and Desist Order from its regulator, the Federal Housing Finance Board. The order generally prohibits capital stock repurchases and redemptions until a time to be determined by the Federal Housing Finance Board. The FHLB will continue to provide liquidity and funding through advances. 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 September 30, 2010.

5.	Authorized Share Repurchase Program

The Board of Directors voted, on August 17, 2010, to approve a stock repurchase program of approximately 5,000 shares, or approximately 1.2% of the Company’s issued and outstanding shares. The repurchase program will expire the earlier of the completion of the purchase of the shares or August 16, 2011. The previous program that was approved July 24, 2009, expired on August 2, 2010, with 6,444 of the authorized 14,110 shares purchased.

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)
September 30, 2010
U.S. government sponsored enterprises (GSE)	$	13,634	$	382	$	—		$	14,016
Mortgage-backed securities, GSE, residential		30,322		1,334		—			31,656
Mortgage-backed securities, GSE, commercial		1,615		—		(43	)		1,572
State and political subdivisions		4,636		78		—			4,714

	$	50,207	$	1,794	$	(43	)	$	51,958
March 31, 2010
U.S. government sponsored enterprises (GSE)	$	14,852	$	339	$	—		$	15,191
Mortgage-backed securities, GSE residential		35,308		1,186		(22	)		36,472
State and political subdivisions		3,644		96		(4	)		3,736

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

The amortized cost and fair value of available-for-sale securities at September 30, 2010, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized Cost		Fair Value
	(In thousands)

Within one year	$	6,306	$	6,392
One to five years		11,107		11,453
Five to ten years		857		885

		18,270		18,730
Mortgage-backed securities		31,937		33,228

Totals	$	50,207	$	51,958

There were no sales of investment securities during the six months ended September 30, 2010. Proceeds from the sale of investment securities available-for-sale during the six-months ended September 30, 2009 were $15,448,000. Gross gains of $113,000 and gross losses of $7,000 were realized on the sales for the six-months ended September 30, 2009.

FIRST ROBINSON FINANCIAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table shows our investments’ gross unrealized losses and fair value (in thousands), aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at September 30, 2010 and March 31, 2010. At September 30, 2010, the Company does not hold any security that it considers other-than-temporarily impaired.

Description of Securities	Less than 12 Months				More than 12 Months				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
As of September 30, 2010
Mortgage-backed securities, GSE, commercial	$	1,572	$	43	$	—	$	—	$	1,572	$	43

Total temporarily impaired securities	$	1,572	$	43	$	—	$	—	$	1,572	$	43

As of March 31, 2010
Mortgage-backed securities, GSE, residential	$	2,712	$	22	$	—	$	—	$	2,712	$	22
State and political subdivisions		303		2		227		2		530		4

Total temporarily impaired securities	$	3,015	$	24	$	227	$	2	$	3,242	$	26

There is one security in an unrealized loss position in the investment portfolio at September 30, 2010, due to interest rate changes and not credit events. The unrealized loss is considered temporary and, therefore, has not been recognized into income, because the issuer is 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 investment approaches its maturity date or there is a downward shift in interest rates. All but one of the mortgage-backed securities in the portfolio are residential properties. The mortgage-backed security with a temporary loss is secured by 5 or more dwelling units.

7.	Accumulated Other Comprehensive Income

Other comprehensive income components and related taxes were as follows at September 30:

	2010		2009
	(In thousands)

Unrealized gains on available-for-sale securities	$	155	$	349
Less reclassification adjustment for realized gains included in income		—		106

Other comprehensive income, before tax effect		155		243
Less tax expense		60		111

Other comprehensive income related to available-for-sale securities	$	95	$	132

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

	September 30, 2010			March 31, 2010
	(In thousands)

Net unrealized gain on securities available for sale	$	1,751		$	1,595
Tax effect		(680	)		(619	)

Net-of-tax amount	$	1,071		$	976

FIRST ROBINSON FINANCIAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

8.	Lines of Credit

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

The Bank maintains a $5,000,000 revolving line of credit, of which $35,000 was outstanding at September 30, 2010 with no amount outstanding at March 31, 2010, with an unaffiliated financial institution. The line bears interest at the federal funds rate of the financial institution (1.15% at September 30, 2010), has an open-end maturity and is unsecured if used for less than thirty (30) consecutive days.

The Bank has also established borrowing capabilities at the Federal Reserve Bank of St. Louis discount window. Investment securities of $3,000,000 have been pledged as collateral. As of September 30, 2010 and March 31, 2010 no amounts were outstanding. The primary credit borrowing rate at September 30, 2010 was 0.50%, has a term of up to 90 days, and has no restrictions on use of the funds borrowed.

9.	Other Borrowings

Other borrowings included the following:

	September 30, 2010		March 31, 2010
	(In thousands)

Securities sold under repurchase agreements	$	14,840	$	17,621

Securities sold under agreements to repurchase consist of obligations of the Company to other parties. The obligations are secured by investments and such collateral is held by the Company in safekeeping at a correspondent bank. The maximum amount of outstanding agreements at any month end during the six months ending September 30, 2010 and the twelve months ending March 31, 2010 totaled $20,388,000 and $20,023,000, respectively. The monthly average of such agreements totaled $18,861,000 for the six months ending September 30, 2010 and $15,222,000 for the twelve months ending March 31, 2010. The average rate on the agreements for the six months ending September 30, 2010 was 0.17% and 0.14% for the twelve months ending March 31, 2010. The agreements at September 30, 2010, mature periodically within 24 months.

The Company has a repurchase agreement with one customer with an outstanding balance of $8.5 million at September 30, 2010. The repurchase agreement matures daily.

FIRST ROBINSON FINANCIAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Basic earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per share gives effect to the increase in the average shares outstanding resulting from the exercise of dilutive stock options and the effect of the incentive plan shares. The Company had 15,996 incentive plan shares outstanding at September 30, 2009 that were excluded from the calculation as they were anti-dilutive. The components of basic and diluted earnings (loss) per share for the three months ended September 30, 2010 and 2009 were computed as follows (dollar amounts in thousands except share data):

				Weighted
				Average		Per Share
	Income (Loss)			Shares		Amount

For the Three-Months Ended September 30, 2010:

Basic Earnings per Share:
Income available to common stockholders	$	404			412,485	$	0.98

Effect of Dilutive Securities:
Incentive plan shares					16,244

Diluted Earnings per Share:
Income available to common stockholders	$	404			428,729	$	0.94

For the Three-Months Ended September 30, 2009:

Basic Earnings (Loss) per Share:
Income (loss) available to common stockholders	$	(34	)		417,916	$	(0.08	)

Effect of Dilutive Securities:
Incentive plan shares					—

Diluted Earnings (Loss) per Share:
Income (loss) available for common stockholders	$	(34	)		417,916	$	(0.08	)

FIRST ROBINSON FINANCIAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

11.	Earnings Per Share for the Six-Month Periods

Basic earnings per share is calculated by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings 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 September 30, 2010 and 2009, all outstanding options had been exercised. Therefore, there is no dilutive effect with regards to options for the earnings per share calculation for the six month periods ended September 30, 2010 and 2009. The components of basic and diluted earnings per share for the six months ended September 30, 2010 and 2009 were computed as follows (dollar amounts in thousands except share data):

			Weighted
			Average		Per Share
	Income		Shares		Amount

For the Six-Months Ended September 30, 2010:

Basic Earnings per Share:
Income available to common stockholders	$	820		413,265	$	1.98

Effect of Dilutive Securities:
Unearned incentive plan shares				16,056

Diluted Earnings per Share:
Income available to common stockholders	$	820		429,321	$	1.91

For the Six-Months Ended September 30, 2009:

Basic Earnings per Share:
Income available to common stockholders	$	129		418,586	$	0.31

Effect of Dilutive Securities:
Unearned incentive plan shares				15,947

Diluted Earnings per Share:
Income available for common stockholders	$	129		434,533	$	0.30

Item 2:

FIRST ROBINSON FINANCIAL CORPORATION

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

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

Forward-Looking Statements

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

Critical Accounting Policies

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

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

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

FIRST ROBINSON FINANCIAL CORPORATION

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

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

Overview and Recent Developments

The Company is the holding company for First Robinson Savings Bank, National Association (the “Bank”). The Company is headquartered in Robinson, Illinois and operates three full service banking offices and one drive-up facility in Crawford County, Illinois and one full service banking office in Knox County, Indiana. Assets grew $5.2 million, or 2.9%, from $183.0 million at March 31, 2010 to $188.2 million at September 30, 2010. See “Financial Condition” for more information. The Company is reporting net income of $404,000 for the three month period and $820,000 for the six month period ending September 30, 2010, versus a net loss of $34,000 in the three months ending September 30, 2009 and net income of $129,000 for the six months ended September 30, 2009. See “Results of Operations” for further information. Basic and diluted earnings per share for the three month period were $0.98 and $0.94, respectively, per share for the three-months ended September 30, 2010 compared to basic and diluted loss per share of $(0.08) for the three-months ended September 30, 2009. Diluted earnings per share reflect incentive plan shares and the potential dilutive impact of stock options granted under the stock option plan and the effect of the incentive plan shares, however, if there is a net loss, dilutive shares are not included in the calculation as they become anti-dilutive. For the six-months ended September 30, 2010, basic earnings per share are being reported at $1.98 with diluted earnings per share at $1.91 compared to basic earnings per share of $0.31 and diluted earnings per share of $0.30 for the six months ended September 30, 2009. We continue to maintain a strong presence in the community and are one of the few independent community banks in our primary market area. To visit First Robinson Savings Bank on the web, go to www.frsb.net.

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

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

FIRST ROBINSON FINANCIAL CORPORATION

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

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

Asset Quality

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

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

The following table sets forth the Company’s loan delinquencies by type, by amount and by percentage of type at September 30, 2010.

	Loans Delinquent For:
	30-89 Days(1)							90 Days and Over(1)						Nonaccrual							Total Delinquent Loans
	Number		Amount		Percent of Loan Category			Number		Amount		Percent of Loan Category		Number		Amount		Percent of Loan Category			Number		Amount		Percent of Loan Category
												(Dollars in thousands)
Real Estate:
One- to four-family		5	$	153		0.32	%		—		—		—		5	$	240		0.49	%		10	$	393		0.81	%
Commercial and agriculture		—		—		—			—		—		—		1		32		0.14			1		32		0.14
State and Municipal Government		1		8		0.52			—		—		—		—		—		—			1		8		0.52
Consumer and other loans		10		51		0.36			—		—		—		1		4		0.03			11		55		0.39
Commercial business and agricultural finance		4		177		0.84			—		—		—		4		80		0.38			8		257		1.22

Total		20	$	389		0.33	%		—		—		—		11	$	356		0.30	%		31	$	745		0.63	%

(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.

	September 30,			March 31,			September 30,
	2010			2010			2009
				(In thousands)
Non-accruing loans:
One- to four-family	$	240		$	85		$	170
Commercial and agriculture real estate		32			32			—
Consumer and other loans		4			5			7
Commercial business and agricultural finance		80			13			43
Total		356			135			220

Foreclosed/Repossessed assets:
One- to four-family		55			52			30
Consumer vehicle		5			—			—
Total		60			52			30

Total non-performing assets	$	416		$	187		$	250
Total as a percentage of total assets		0.22	%		0.10	%		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 $7,000 for the three months and $11,000 for the six months ended September 30, 2010 and $4,000 for the three months and $6,000 for the six months ended September 30, 2009.

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

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

In connection with the filing of its periodic reports with the OCC and in accordance with its classification of assets policy, the Company regularly reviews loans in its portfolio to determine whether such assets require classification in accordance with applicable regulations. On the basis of management’s review of its assets, at September 30, 2010, the Company had classified a total of $1,528,000 of its assets as substandard and $423,000 as doubtful. At September 30, 2010, total classified assets comprised $1,951,000, or 15.7% of the Company’s capital, and 1.0% of the Company’s total assets. Total classified assets have increased by approximately $1.4 million, or 286.0% from March 31, 2010. The increase can be partially attributed to two large commercial credits whose earnings declined due to the economic downturn. Both commercial businesses have seen an increase in earnings during calendar 2010 and the credits will be reevaluated within the next six months. The Company does not expect any losses associated with these credits.

FIRST ROBINSON FINANCIAL CORPORATION

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

Other Loans of Concern. As of September 30, 2010, there were $3.5 million in loans identified, but not classified, by the Company with respect to which known information about the possible credit problems of the borrowers or the cash flows of the business have caused management to have some doubts as to the ability of the borrowers to comply with present loan repayment terms and which may result in the future inclusion of such items in the non-performing asset categories.

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

Real estate properties acquired through foreclosure are recorded at the fair value minus 20% of the fair value if the property is appraised at $50,000 or less. If the property is appraised at greater than $50,000, then the property is recorded at the fair value less 10% of the fair value. If fair value at the date of foreclosure is lower than the balance of the related loan, the difference will be charged-off to the allowance for loan losses at the time of transfer. Valuations are periodically updated by management and if the value declines, a specific provision for losses on such property is established by a charge to operations. At September 30, 2010, the Bank had one real estate property acquired through foreclosure. The property is listed for sale.

Although management believes that it uses the best information available to determine the allowance, unforeseen market conditions could result in adjustments and net earnings could be significantly affected if circumstances differ substantially from the assumptions used in making the final determination. Future additions to the Company’s allowance for loan losses will be the result of periodic loan, property and collateral reviews and thus cannot be predicted in advance. In addition, federal regulatory agencies, as an integral part of the examination process, periodically review the Bank’s operations. Such agencies may require the Bank to increase the Bank’s allowance for loan losses, increase classified assets, or take other actions that could significantly affect the Company’s earnings based upon their judgment of the information available to them at the time of their examination. At September 30, 2010, the Company had a total allowance for loan losses of $1,060,000, representing 0.91% of the Company’s loans, net. At March 31, 2010, the Company’s total allowance for loan losses to the Company’s loans, net was at 0.97%.

FIRST ROBINSON FINANCIAL CORPORATION

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

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

	September 30, 2010								March 31, 2010
	Amount of Loan Loss Allowance		Loan Amounts by Category			Percent of Loans in Each Category to Total Loans			Amount of Loan Loss Allowance		Loan Amounts by Category			Percent of Loans in Each Category to Total Loans
	(Dollars in thousands)
One- to four-family including loans held for sale	$	143	$	48,520			40.92	%	$	72	$	46,554			45.10	%
Multi-family		—		4,106			3.47			—		2,780			2.69
Commercial and agricultural real estate...		548		22,680			19.13			593		18,155			17.59
Construction or development		—		6,406			5.40			—		5,130			4.97
Consumer and other loans.		38		14,054			11.85			29		9,834			9.53
State and municipal governments		—		1,625			1.37			—		1,885			1.83
Commercial business and agricultural finance		331		21,179			17.86			279		18,883			18.29

Gross Loans				118,570			100.00	%				103,221			100.00	%
Unallocated		—								—
Deferred loan fees				(7	)							(4	)
Prepaid loan fees				40								—
Undisbursed portion of loans				(910	)							(2,093	)
Total	$	1,060	$	117,693					$	973	$	101,124

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

	Three Months Ended September 30,						Six Months Ended September 30,
	2010			2009			2010			2009
	(Dollars in thousands)

Balance at beginning of period	$	1,044		$	825		$	973		$	780

Charge-offs:
One- to four-family		31			68			31			68
Commercial non-residential real estate		—			—			—			—
Consumer and other loans		11			6			21			12
Total charge-offs		42			74			52			80

Recoveries:
Commercial non-residential real estate		—			—			24			—
Consumer and other loans		13			7			25			13
Total recoveries		13			7			49			13

Net charge-offs .		29			67			3			67
Additions charged to operations		45			135			90			180
Balance at end of period	$	1,060		$	893		$	1,060		$	893

Ratio of net charge-offs during the period to average loans outstanding during the period		0.03	%		0.07	%		0.00	%		0.07	%

Ratio of net charge-offs during the period to average non-performing assets		10.91	%		22.64	%		1.63	%		23.45	%

FIRST ROBINSON FINANCIAL CORPORATION

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

Financial Condition

September 30, 2010 Compared to March 31, 2010

Total assets of the Company increased by $5.2 million, or 2.9%, to $188.2 million at September 30, 2010 from $183.0 million at March 31, 2010. The increase in assets was primarily due to an increase of $16.5 million, or 16.5%, loans receivable, net, offset by a decrease of $7.5 million, or 41.9% in cash and cash equivalents and a decrease of $3.4 million, or 6.2%, in available for sale securities.

Available-for-sale securities decreased to $52.0 million at September 30, 2010 compared to $55.4 million at March 31, 2010, a $3.4 million decrease. The decrease resulted from the maturity of $1.4 million in available-for-sale securities, the repayment of $4.7 million in mortgage-backed securities and the amortization of $132,000 of premiums and discounts on investments, offset by, the purchase of $2.6 million of available-for-sale securities, and the increase of $156,000 in the market valuation of the available-for-sale portfolio. 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.

The decrease of $7.5 million in cash and cash equivalents was mainly derived from the decrease of $7.8 million in federal funds sold. At September 30, 2010, the Company was in federal funds purchased positon of $35,000. The decrease in cash and the decrease in available-for-sale securities funded the growth in loans.

The Company's net loan portfolio including loans held for sale increased by $16.5 million to $116.6 million at September 30, 2010 from $100.1 million at March 31, 2010. Loans on one- to four-family real estate, including one- to four-family loans held for sale, increased by $2.0 million, or 4.2%; commercial nonresidential real estate and farmland loans increased by $4.5 million, or 24.9%; construction and development loans increased by $1.3 million, or 24.9%; consumer and other loans increased by $4.2 million, or 42.9%; loans on multi-family properties increased by $1.3 million, or 47.7%, commercial business and agricultural finance loans increased by $2.3 million, or 12.2% and the reduction of $1.2 million in undisbursed loan funds. These increases were offset, in part, by the decrease in loans to state and municpal governments by $260,000, or 14.0%. The increase in commercial real estate can be attributed to the Vincennes area where there are more opportunities for this type of lending. The increase in consumer and other loans reflects our more aggressive policy in writing indirect loans for vehicles.

At September 30, 2010, the allowance for loan losses was $1,060,000, or 0.91% of the net loan portfolio, an increase of $87,000 from the allowance for loan losses at March 31, 2010 of $973,000, or 0.97% of the net loan portfolio. During the six-months ended September 30, 2010, the Company charged off $52,000 in loan losses; $21,000 from consumer and other loans and $31,000 in loans secured by one- to- four family properties. The charge offs were offset by recoveries of $49,000 derived from $25,000 in consumer and other loans and $24,000 in non-residential commercial loans. Management reviews the adequacy of the allowance for loan losses quarterly, and believes that its allowance is adequate; however, the Company cannot assure that future chargeoffs and/or provisions will not be necessary. See “Asset Quality” for further information on delinquencies.

The Company had one foreclosed real estate property held for sale at September 30, 2010. 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 $7.5 million, or 5.0%, to $156.8 million at September 30, 2010 from $149.3 million at March 31, 2010. The increase in total deposits was due to an increase of $5.5 million in savings, NOW, and money market accounts, the increase of $1.1 million in certificates of deposit and the increase of $833,000 in non-interest bearing demand deposits.

Other borrowings, consisting of repurchase agreements, decreased $2.8 million, or 15.8% from $17.6 million at March 31, 2010 to $14.8 million at September 30, 2010. The obligations are secured by mortgage-backed securities and US Government agency obligations. At September 30, 2010, the average rate on the repurchase agreements was 0.20% compared to 0.14% at March 31, 2010. The rate on approximately $14.3 million of the repurchase agreements reprice daily. All agreements mature periodically within 24 months.

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

FIRST ROBINSON FINANCIAL CORPORATION

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

Stockholders' equity at September 30, 2010 was $12.4 million compared to $12.0 million at March 31, 2010, an increase of $393,000, or 3.3%. Factors relating to the increase in stockholders’ equity can be attributed primarily to the addition of $820,000 of net income, offset by the payment of $365,000 in dividends and the increase of $95,000 in accumulated other comprehensive income due to the increase in the fair value of securities available for sale. These increases were offset by the addition of $143,000 in treasury stock relating to the purchase of 4,494 shares and the purchase of $14,000 in shares related to an incentive plan.

Results of Operations

Comparison of Operating Results for the Three Months Ended September 30, 2010 and 2009

Net Income

The Company earned $404,000 for the three month period ending September 30, 2010, versus a net loss of $34,000 in the same period of 2009, an increase of $438,000. Earnings for the three months ended September 30, 2010 were positively impacted by a $425,000, or 42.7%, increase in net-interest income after provision for loan losses, the increase of $127,000, or 24.7%, in non-interest income, and the decrease of $78,000, or 5.1%, in non-interest expense offset by an increase of $192,000 in income tax provision when compared to the prior year. Basic earnings per share for the September 30, 2010 three month period were $0.98 per share versus net loss per share of $(0.08) for the same period of 2009. Diluted earnings per share reflect incentive plan shares and the potential dilutive impact of stock options granted under the stock option plan and the effect of the incentive plan shares, however, if there is a net loss, dilutive shares are not included in the calculation as they become anti-dilutive. Diluted earnings per share for the three months ending September 30, 2010 were $0.94 per share.

Net Interest Income

For the three-month period ended September 30, 2010, net interest income totaled $1,466,000, an increase of 29.6%, or $335,000, compared to the same period of 2009. The increase in the three-month period ended September 30, 2010 versus the comparable period of 2009 was due to a decrease of $221,000, or 26.3%, in total interest expense and the increase of $114,000, or 5.8%, in total interest income. The increase of $213,000, or 15.1%, in interest income from loans receivable was offset by the decrease of $97,000, or 18.7%, in interest income on taxable securities and the decrease of $7,000, or 18.9%, from tax-exempt securities. The decrease in total interest expense is due to the decrease of $232,000, or 28.2%, in interest expense on deposits, offset by the increase of $11,000, or 64.7%, in interest expense on other and short-term borrowings for the three months ended September 30, 2010 compared to the three months ended September 30, 2009.

For the three-months ended September 30, 2010 total average interest earning assets increased by $10.6 million, or 6.6%, to $172.5 million as of September 30, 2010 from $161.9 million as of September 30, 2009. The yield on the earning assets decreased by 3 basis points when comparing the three months ended September 30, 2010 to the same period in 2009. Total average interest bearing liabilities for the three months ended September 30, 2010 were $159.2 million compared to $149.1 million as of September 30, 2009, an increase of $10.1 million, or 6.8%. The cost on the average interest bearing liabilities decreased by 70 basis points. For the three-month period ended September 30, 2010, the net interest spread increased 67 basis points to 3.28% versus 2.61% in the comparable period of 2009.

Interest income on loans receivable increased $213,000 to $1,627,000 for the quarter ended September 30, 2010 from $1,414,000 for the quarter ended September 30, 2009 due to the average balance on loans for the quarter ended September 30, 2010 increasing $18.8 million, or 20.1%, to $112.3 million, versus $93.5 million for the same period of 2009. During the same period, the yield on loans decreased 25 basis points to 5.80% from 6.05% for the September 30, 2010 quarter compared to the September 30, 2009 quarter. The 25 point basis decrease primarily reflected the low interest rate environment.

Interest income on taxable securities decreased $97,000 to $421,000 for the quarter ended September 30, 2010 from $518,000 for the quarter ended September 30, 2009. The decrease was derived from a decrease of $61,000 in interest income from mortgage-backed securities and a decrease of $36,000 in interest income from investment securities. The decrease in interest income from mortgage-backed securities can be attributed to the decrease of $6.3 million in the average balance of mortgage-backed securities from $39.4 million as of September 30, 2009 to $33.1 million as of September 30, 2010, offset, by the slight increase of 4 basis points in the average yield from 4.05% as of September 30, 2009 to 4.09% as of September 30, 2010. The decrease in interest income from investment securities can be attributed to the decrease of $6.9 million in the average balance of investment securities from $20.6 million as of September 30, 2009 to $13.7 million as of September 30, 2010, offset, by the increase of 11 basis points in the average yield from 2.32% as of September 30, 2009 to 2.43% as of September 30, 2010.

FIRST ROBINSON FINANCIAL CORPORATION

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

Interest income on tax-exempt securities decreased $7,000 when comparing the three months ended September 30, 2010 to the same period in the prior year. The average balance on tax-exempt securities decreased by $14,000 from $4.6 million as of September 30, 2009 compared to $4.6 million as of September 30, 2010. The average yield on tax-exempt securities decreased 55 basis points from 3.16% as of September 30, 2009 to 2.61% as of September 30, 2010. The average yield does not reflect the benefit of the higher tax-equivalent yield attributed to municipal securities, which is reflected in income tax expense.

Total interest expense on deposits decreased $232,000 from $823,000 for the three-months ended September 30, 2009 to $591,000 for the three months ended September 30, 2010. The decrease can be attributed to a 76 basis point decrease in the average rate paid on total deposits from 2.47% as of September 30, 2009 to 1.71% as of September 30, 2010, offset by the increase of $5.2 million in the average balance of deposits from $133.2 million as of September 30, 2009 to $138.4 million as of September 30, 2010. The decrease in the average rate paid on deposits is a reflection of the low short-term market interest rates.

Interest expense on other and short-term borrowings increased $11,000 from $18,000 for the three months ended September 30, 2009 to $29,000 for the same period of 2010. The increase is due to the increase of $4.9 million, or 31.0%, from $15.9 million as of the quarter ended September 30, 2009 to $20.8 million for the three-months ended September 30, 2010 in the average daily balance of other and short-term borrowings. The average rate paid increased for the September 2010 quarter by 11 basis points to 0.56% from 0.45% for the September 2009 quarter.

Provision for Loan Losses

The provision for loan losses for the quarter ended September 30, 2010 was $45,000, a $90,000, or 66.7%, decrease over the provision of $135,000 for the September 30, 2009 quarter. 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 September 30, 2010, its allowance for loan losses was adequate. See “Asset Quality” for additional information.

Non-Interest Income

Non-interest income categories for the three-month periods ended September 30, 2010 and 2009 are shown in the following table:

	Three Months Ended September 30,
	2010			2009		% Change
	(In thousands)
Non-interest income:

Charges and fees on deposit accounts	$	240		$	256		(6.3	)%
Charges and other fees on loans		68			78		(12.8	)
Net gain on sale of loans		206			55		274.5
Net gain (loss) on sale of foreclosed property		(2	)		—		(100.0	)
Net realized gain on sale of available-for-sale securities		—			5		(100.0	)
Other		130			121		7.4

Total non-interest income	$	642		$	515		24.7	%

Non-interest income increased $127,000 when comparing the three-months ended September 30, 2010 to September 30, 2009 as a result of the the increase of $151,000 in net gain on sale of loans and the increase of $9,000 in other non-interest income, offset, in part, by the decrease in the realized gain on sale of securities of $5,000, the decrease in charges and fees on deposit accounts of $16,000, and the decrease of $10,000 in charges and fees on loans. The decrease in charges and fees on deposit accounts is a result in part to the implementation of Regulation E, which does not allow assessing an overdraft charge for ATM or one-time debit card transactions without the customer opting in to an overdraft program sponsored by the Company.

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 periods ended September 30, 2010 and 2009 are shown in the following table:

	Three Months Ended September 30,
	2010		2009		% Change
	(In thousands)
Non-interest expense:
Compensation and employee benefits	$	799	$	690		15.8	%
Occupancy and equipment		184		176		4.5
Data processing		70		66		6.1
Audit, legal and other professional		77		107		(28.0	)
Advertising		72		75		(4.0	)
Telephone and postage		53		50		6.0
FDIC Insurance		52		50		4.0
Loss on cost basis equity security		—		137		(100.0	)
Other		149		183		(18.6	)

Total non-interest expense	$	1,456	$	1,534		(5.1	)%

Compensation and employee benefits increased by $109,000 when comparing the September 2010 and 2009 quarters primarily due to the $56,000 increase in market value of the shares held in the Directors Retirement Plan, a $38,000 net increase in salaries and accrued paid time off days and a $12,000 increase in health insurance costs.

Audit, legal and other professional services decreased $30,000 when comparing the September 2010 and 2009 quarters due to decreased costs related to Sox-404 compliance.

The Company recognized a loss of $137,000 during the three-months ended September 30, 2009 related to a cost basis equity security investment in a financial institution. During the three months ended September 30, 2010, the Company did not record any losses associated with cost basis equity securities.

Income Tax Expense

The provision in income tax expense increased $192,000, or 1,745.4%, for the three-months ending Septbmer 30, 2010, compared to the same period in 2009. The increase can be attributed, in part, to increased profitability. The effective tax rate was 33.4% for the quarter ended September 30, 2010.

Comparison of Operating Results for the Six Months Ended September 30, 2010 and 2009

Net Income

For the six month period ended September 30, 2010, the Company earned $820,000, an increase of $691,000, or 535.6%, from $129,000 for the six months ending September 30, 2009. Earnings for the six months ended September 30, 2010 were positively impacted by an increase of $777,000, or 39.3%, in net interest income after provision for loan losses, an increase of $93,000, or 7.9%, in non-interest income, and the decrease of $155,000, or 5.2%, in non-interest expense which were offset by an increase of $334,000, or 463.9%, in provision for income taxes when compared to the six months ended September 30, 2009. Basic earnings per share for the September 30, 2010 six month period were $1.98 per share versus $0.31 per share for the same period of 2009. Diluted earnings per share reflect incentive plan shares and the potential dilutive impact of stock options granted under the stock option plan. Diluted earnings per share for the six months ending September 30, 2010 were $1.91 compared to $0.30 at September 30, 2009.

FIRST ROBINSON FINANCIAL CORPORATION

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

Net Interest Income

For the six-month period ended September 30, 2010, net interest income totaled $2,845,000, an increase of $687,000, or 31.8%, from the same period in the prior year. Contributing to the increase was the increase of $179,000, or 4.6%, in total interest income and the decrease of $508,000, or 28.6%, in total interest expense. The increase in total interest income can be attributed to a $403,000, or 14.6%, increase in interest income from loans receivable, and the increase of $6,000 in other interest income and dividends received from Federal Reserve Bank stock offset, in part, by the decrease of $214,000, or 19.7%, in interest income from taxable securities and a $16,000, or 21.3%, decrease in tax-exempt securities. The major factor contributing to the decrease in total interest expense is due to the decrease of $533,000, or 30.5%, interest expense on deposits. This decrease was offset, in part, by the increase of $25,000, or 89.3%, in interest expense on the short-term borrowing.

For the six-months ended September 30, 2010 total average interest earning assets increased by $10.6 million, or 6.6%, to $170.5 million as of September 30, 2010 from $159.9 million as of September 30, 2009. The yield on the earning assets decreased by 10 basis points when comparing the six months ended September 30, 2010 to the same period in 2009. Total average interest bearing liabilities for the six months ended September 30, 2010 were $158.0 million compared to $147.3 million as of September 30, 2009, an increase of $10.7 million, or 7.3%. The cost on the average interest bearing liabilities decreased by 81 basis points. For the six-month period ended September 30, 2010, the net interest spread increased 71 basis points to 3.22% versus 2.51% in the comparable period of 2009.

Interest income on loans receivable increased $403,000 to $3,164,000 for the six-months ended September 30, 2010 from $2,761,000 for the six-months ended September 30, 2009 due to the average balance on loans for the six-months ended September 30, 2010 increasing $18.5 million, or 20.5%, to $108.6 million, versus $90.1 million for the same period of 2009. During the same period, the yield on loans decreased 30 basis points to 5.83% from 6.13% for the September 30, 2010 six-month period compared to the September 30, 2009 six-month period.

Interest income on taxable securities decreased $214,000 to $871,000 for the six-months ended September 30, 2010 from $1,085,000 for the six-months ended September 30, 2009. The decrease was derived from a decrease of $186,000 in interest income from mortgage-backed securities and a decrease of $28,000 in interest income from investment securities. The decrease in interest income from mortgage-backed securities can be attributed to the decrease of $6.1 million in the average balance of mortgage-backed securities from $39.8 million as of September 30, 2009 to $33.7 million as of September 30, 2010 and the decrease of 31 basis points in the average yield from 4.42% as of September 30, 2009 to 4.11% as of September 30, 2010. The decrease in interest income from investment securities can be attributed to the decrease of $2.9 million in the average balance of investment securities from $17.0 million as of September 30, 2009 to $14.1 million as of September 30, 2010, offset, by the increase of 11 basis points in the average yield from 2.41% as of September 30, 2009 to 2.52% as of September 30, 2010.

Interest income on tax-exempt securities decreased $16,000 when comparing the six months ended September 30, 2010 to the same period in the prior year. The average balance on tax-exempt securities decreased by $255,000 from $4.7 million as of September 30, 2009 compared to $4.5 million as of September 30, 2010. The average yield on tax-exempt securities decreased 51 basis points from 3.19% as of September 30, 2009 to 2.68% as of September 30, 2010. The average yield does not reflect the benefit of the higher tax-equivalent yield attributed to municipal securities, which is reflected in income tax expense.

Total interest expense on deposits decreased $533,000 from $1,745,000 for the six months ended September 30, 2009 to $1,212,000 for the six months ended September 30, 2010. The decrease can be attributed to a 87 basis point decrease in the average rate paid on total deposits from 2.47% as of September 30, 2009 to 1.71% as of September 30, 2010, offset by the increase of $5.2 million in the average balance of deposits from $133.2 million as of September 30, 2009 to $138.4 million as of September 30, 2010. The decrease in the average rate paid on deposits is a reflection of the low short-term market interest rates.

Interest expense on other and short-term borrowings increased $25,000 from $28,000 for the six months ended September 30, 2009 to $53,000 for the same period of 2010. The increase is due to the increase of $5.8 million, or 37.9%, from $15.2 million for the six- months ended September 30, 2009 to $21.0 million for the six-months ended September 30, 2010 in the average daily balance of other and short-term borrowings. The average rate paid increased for the September 2010 six-month period by 14 basis points to 0.51% from 0.37% for the same period in September 2009.

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 six-months ended September 30, 2010 was $90,000 with a 50.0% decrease over the provision of $180,000 for the September 30, 2009 six-month period. 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 September 30, 2010, its allowance for loan losses was adequate.

Non-Interest Income

Non-interest income categories for the six-month periods ended September 30, 2010 and 2009 are shown in the following table:

	Six Months Ended September 30,
	2010		2009		% Change
	(In thousands)
Non-interest income:
Charges and fees on deposit accounts	$	489	$	476		2.7	%
Charges and other fees on loans		158		178		(11.2	)
Net gain on sale of loans		341		182		87.4
Net gain on sale of foreclosed property		15		—		—
Net realized gain on sale of available for sale securities		—		106		(100.0	)
Net gain on sale of equipment		4		—		—
Other		267		239		11.7

Total Non-Interest Income	$	1,274	$	1,181		7.9	%

Non-interest income increased $93,000 when comparing the six-months ended September 30, 2010 to September 30, 2009 as a result of the increase in charges and fees on deposit accounts of $13,000, the increase of $159,000 in net gain on sale of loans, the $15,000 increase on net gain on sale of foreclosed assets, and the increase of $28,000 in other non-interest income offset, in part by the decrease in the realized gain on sale of securities of $106,000, and the $20,000 decrease in charges and other fees on loans. The increase in charges and fees on deposit accounts came from fees received on insufficient and overdraft charges. With the implementation of Regulation E, which will not allow assessing an overdraft charge for ATM or one-time debit card transactions without the customer opting in to an overdraft program sponsored by the Company, future income from overdraft charges could decrease. The $28,000 increase in other non-interest income is primarily from interchange income from debit card usage by customers. The Company promotes a checking account product that rewards customers for debit card usage.

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 six-month periods ended September 30, 2010 and 2009 are shown in the following table:

	Six Months Ended September 30,
	2010		2009		% Change
	(In thousands)
Non-interest expense:
Compensation and employee benefits	$	1,538	$	1,340		14.8	%
Occupancy and equipment		352		360		(2.2	)
Data processing		140		126		11.1
Audit, legal and other professional		142		192		(26.0	)
Advertising		134		177		(24.3	)
Telephone and postage		96		104		(7.7	)
FDIC insurance		103		181		(43.1	)
Loss on cost basis equity security		—		137		(100.0	)
Other		298		341		(12.6	)

Total Non-Interest Expense	$	2,803	$	2,958		(5.2	)%

For the six-months ended September 30, 2010, compensation expense increased $198,000 over the six-months ended September 30, 2009 primarily due to the $107,000 increase in market value of the shares held in the Directors Retirement Plan, a $59,000 net increase in salaries and accrued paid time off days and a $24,000 increase in health insurance costs.

Audit, legal and other professional services decreased $50,000 when comparing the September 2010 and 2009 six-month periods due to decreased costs related to Sox-404 compliance.

Advertising expense decreased $43,000 for the six-months ended September 30, 2010 when compared to the same period of the prior year due to a decreased budget being allocated for marketing expense.

Telephone and postage expense decreased by $8,000 for the six-months ended September 30, 2010 when compared to the same period in 2009. The reduction can be attributed, in part, to the use of electronic statements for customers.

The decrease of $78,000 in Federal Deposit Insurance Corporation (“FDIC”) insurance when comparing the six-months ended September 30, 2010 to the same period in the prior year was due the additional 5 basis point special assessment on each insured depository institution's assets minus Tier 1 capital that was calculated as of June 30, 2009 and collected on September 30, 2009. The additional amount imposed on the Company, as a result of the June 30, 2009 final rule, was approximately $81,000. There was no special assessment for the six-months ended September 30, 2010.

The Company recognized a loss of $137,000 during the six-months ended September 30, 2009 related to a cost basis equity security investment in a financial institution. During the six-months ended September 30, 2010, the Company did not record any losses associated with cost basis equity securities.

Income Tax Expense

The provision in income tax expense increased $334,000, or 463.9%, for the six-months ending September 30, 2010, compared to the same period in 2009. The increases can be attributed to increased profitability. The effective tax rate for the six-months ended September 30, 2010 and 2009 were 33.1% and 35.8%, respectively.

FIRST ROBINSON FINANCIAL CORPORATION

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

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 $356,000. 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 September 30, 2010, outstanding commitments to extend credit amounted to $21.0 million (including $13.7 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 $25.7 million line of credit with the FHLB, which can be accessed immediately. As of September 30, 2010 and 2009, there were no advances outstanding for either period. However, the $24.7 million line of credit with the FHLB is reduced by $943,000 for the credit enhancement reserve established as a result of the participation in the FHLB Mortgage Partnership Finance (“MPF”) program. The Bank also maintains a $5.0 million revolving federal funds line of credit with The Independent BankersBank (“TIB”) of which $35,000 was outstanding at September 30, 2010 and no balance outstanding at September 30, 2009. The Company also has a $2.5 million revolving line of credit with an unaffiliated financial institution of which $1.8 million was outstanding at September 30, 2010 and $2.5 million outstanding at September 30, 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 September 30, 2010 and 2009, no amounts were outstanding at the Federal Reserve discount window.

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

FIRST ROBINSON FINANCIAL CORPORATION

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

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

At September 30, 2010, the Bank’s compliance with all of the aforementioned capital requirements is summarized below:

											To be Well Capitalized
											Under the Prompt
						For Capital					Corrective Action
	Actual					Adequacy Purposes					Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
Total Risk-Based Capital
(to Risk-Weighted Assets)	$	13,896		12.12	%	$	9,169		8.00	%	$	11,461		10.00	%
Tier I Capital
(to Risk-Weighted Assets)		12,821		11.19			4,584		4.00			6,877		6.00
Tier I Capital
(to Average Assets)		12,821		6.84			7,497		4.00			9,371		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 September 30, 2010 the Company’s disclosure controls and procedures were effective to provide reasonable assurance that (i) the information required to be disclosed in this Report was recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (ii) information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding disclosure.

Internal Control Over Financial Reporting

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

PART II OTHER INFORMATION

Item 1.

Legal Proceedings

None

Item 1A.

Risk Factors

Various risks and uncertainties, some of which are difficult to predict and beyond the Company’s control, could negatively impact the Company. As a financial institution, the Company is exposed to interest rate risk, liquidity risk, credit risk, operational risk, risks from economic or maket conditions, and general business risks among others. Adverse experience with these and other risks could have a material impact on the Company’s financial condition and results of operations, as well as the value of its common stock. See the risk factors described in the Company’s Annual Report on Form 10-K for the year ended March 31, 2010 and Current Report on Form 10-Q for the period ended June 30, 2010

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides information about purchases by the Company for the quarter ended September 30, 2010 regarding the Company’s common stock.

PURCHASES OF EQUITY SECURITIES BY COMPANY (1)

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
7/1/2010 – 7/31/2010		500	$	33.25		90		7,666
8/1/2010 – 8/31/2010		—		—		—		5,000
9/1/2010– 9/30/2010		—		—		—		5,000
Total		500	$	33.25		90		5,000

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

Item 3.

Defaults Upon Senior Executives

None

Item 4.

Removed and Reserved

Item 5.

Other Information

None

Item 6.

Exhibits

Exhibit 31: Section 302 Certifications

Exhibit 32: Section 906 Certifications

SIGNATURES

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

	FIRST ROBINSON FINANCIAL
	CORPORATION

Date: November 12, 2010	/s/ Rick L. Catt
	Rick L. Catt
	President and Chief Executive Officer

Date: November 12, 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