UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-KSB
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x
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ANNUAL
REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934.
FOR THE FISCAL YEAR ENDED MARCH 31,
2008
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OR
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o
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TRANSITION
REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT
OF 1934.
FOR THE TRANSITION PERIOD FROM ____________ TO
____________
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COMMISSION
FILE NUMBER 0-29276
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FIRST
ROBINSON FINANCIAL CORPORATION
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(Name
of Small Business Issuer in its
Charter)
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Delaware
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36-4145294
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(State
or other jurisdiction of incorporation or
organization)
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(I.R.S.
Employer Identification No.)
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501
East Main Street, Robinson, Illinois
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62454
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant’s
telephone number, including area code:
(618)
544-8621
Securities
Registered Under Section 12(b) of the Act:
None
Securities
Registered Under Section 12(g) of the Act:
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Common
Stock, Par Value $0.01 Per Share
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(Title
of class)
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Check
whether the issuer is not required to file reports pursuant to Section 13 or
15(d) of the Exchange Act.
o
Check
whether the issuer: (1) filed all reports required to be filed by Section 13
or
15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
for
such shorter period that the registrant was required to file such reports),
and
(2) has been subject to such filing requirements for the past 90 days. YES
x
NO
o
.
Check
if
there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained herein, and no disclosure will be contained, to the
best of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment
to
this Form 10-KSB.
x
Indicate
by check mark whether registrant is a shell company (as defined in Rule 12b-2
of
the Exchange Act). YES
o
NO
x
.
State
the
issuer’s revenues for its most recent fiscal year: $8.9 million.
As
of
June 6, 2008, the aggregate value of the 323,094 shares of Common Stock of
the
Registrant outstanding on such date, which excludes 137,562 shares held by
directors and executive officers as a group, was approximately $11.5 million.
This figure is based on the market price of $35.45 per share of the Registrant’s
Common Stock as of, the last trade prior to, June 6, 2008.
As
of
June 6, 2008, there were 450,656 shares issued and outstanding of the
Registrant’s common stock.
Transitional
Small Business Disclosure check one: YES
o
NO
x
.
DOCUMENTS
INCORPORATED BY REFERENCE
Part
II
of Form 10-KSB - Portions of the Annual Report to Stockholders for the fiscal
year ended
March
31,
2008.
Part
III
of Form 10-KSB - Portions of Proxy Statement for the 2008 Annual Meeting of
Stockholders.
FORWARD-LOOKING
STATEMENTS
When
used
in this Annual Report on Form 10-KSB or future filings by First Robinson
Financial Corporation (the “Company”) or the Company’s wholly owned subsidiary,
First Robinson Savings Bank, National Association (the “Bank”) 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 “will likely
result”, “are expected to”, “will continue”, “is anticipated”, “estimate”,
project”, “believe” or similar expressions are intended to identify
forward-looking statements” within the meaning of the Private Securities
Litigation Reform Act of 1995. The Company wishes to caution readers not to
place undue reliance on any such forward-looking statements, which speak only
as
of the date made, and to advise readers that various factors, including, but
not
limited to, regional and national economic conditions; legislative and
regulatory changes; monetary and fiscal policies of the federal government;
changes in tax policies, rates and regulations of federal, state, and local
tax
authorities; changes in interest rates; deposit flows; the cost of funds; demand
for loan products; demand for financial services; competition; changes in the
quality or composition of the Company’s loan and investment portfolios; real
estate values; risks associated with the ability to control costs and expenses;
changes in accounting principles, policies, or guidelines; and other economic,
competitive, governmental and technological factors could affect the Company’s
financial performance and could cause the Company’s actual results for future
periods to differ materially from those anticipated or projected. All references
to the Company prior to March 1997, except where otherwise indicated, are to
the
Bank. References in this Annual Report to “we”, “us”, and “our” refer to the
Company and/or the Bank, as the context requires.
We
do not
undertake and specifically disclaim any obligation to publicly release the
result of any revisions which may be made to any forward-looking statements
to
reflect the occurrence of anticipated or unanticipated events or circumstances
after the date of such statements.
PART
I
ITEM
1.
DESCRIPTION
OF BUSINESS
General
The
Company.
First
Robinson Financial Corporation (the “Company”) was incorporated under the laws
of the State of Delaware in March 1997, at the direction of the Board of
Directors of First Robinson Savings and Loan Association (the “Association”),
the predecessor institution to First Robinson Savings Bank, National Association
(the “Bank”) for the purpose of serving as a holding company of the Bank. The
Company has no significant assets other than the outstanding capital stock
of
the Bank.
Unless
otherwise indicated, all activities discussed below are of the
Bank.
The
Bank.
The Bank
is a national bank, the deposits of which are federally insured and backed
by
the full faith and credit of the U.S. Government up to $100,000 or $250,000
for
certain retirement account deposits. The Bank is a community-oriented financial
institution that seeks to serve the financial needs of the residents and
businesses in its market area. The Bank primarily serves Crawford County,
Illinois. The principal business of the Bank has historically consisted of
attracting retail deposits from the general public and primarily investing
those
funds in one- to four-family residential real estate loans and, to a lesser
extent, consumer loans, commercial and agricultural real estate loans and
commercial business and agricultural finance loans. At March 31, 2008,
substantially all of the Bank’s real estate mortgage loans, were secured by
properties located in the Bank’s market area.
The
Bank
also invests in investment and equity securities and mortgage-backed securities,
and other permissible investments.
The
Bank
currently offers a variety of deposit accounts having a wide range of interest
rates and terms. The Bank’s deposits include passbook savings, NOW accounts,
certificate accounts, IRA accounts, limited accounts and non-interest bearing
accounts. The Bank generally solicits deposits in its primary market area.
The
Bank does not accept any brokered deposits.
The
Bank’s revenues are derived principally from interest income, including interest
on loans, deposits in other banks and mortgage-backed securities and other
investments.
Risk
Factors
The
Company’s business could be harmed by any of the risks noted below, or by other
risks not noted because they were not apparent to management. Similarly, the
trading price of the Company’s common stock could decline, and stockholders may
lose all or part of their investment. In assessing these risks, you should
also
refer to the other information contained in this annual report on Form 10-KSB,
including the Company’s financial statements and related notes.
Risks
Related to the Banking Industry
Changes
in economic and political conditions could adversely affect the Company’s
earnings, as the Company’s borrowers’ ability to repay loans and the value of
the collateral securing the Company’s loans decline.
The
Company’s success depends, to a certain extent, upon economic and political
conditions, local and national, as well as governmental monetary policies.
Conditions such as inflation, recession, unemployment, changes in interest
rates, money supply and other factors beyond the Company’s control may adversely
affect the Company’s asset quality, deposit levels and loan demand and,
therefore, the Company’s earnings. Because we have a significant amount of real
estate loans, decreases in real estate values could adversely affect the value
of property used as collateral. Adverse changes in the economy may also have
a
negative effect on the ability of the Company’s borrowers to make timely
repayments of their loans, which would have an adverse impact on the Company’s
earnings. In addition, substantially all of the Company’s loans are to
individuals and businesses in the Company’s market area. Consequently, any
economic decline in the Company’s market area could have an adverse impact on
the Company’s earnings.
Changes
in interest rates could adversely affect the Company’s results of operations and
financial condition.
The
Company’s earnings depend substantially on the Company’s interest rate spread,
which is the difference between (i) the rates we earn on loans, securities
and other earning assets, and (ii) the interest rates we pay on deposits
and other borrowings. These rates are highly sensitive to many factors beyond
the Company’s control, including general economic conditions and the policies of
various governmental and regulatory authorities. For additional information,
see
“Management’s Discussion and Analysis of Financial Condition and Results of
Operations.”
We
operate in a highly regulated environment, and changes in laws and regulations
to which we are subject may adversely affect the Company’s results of
operations.
The
Company and the Bank operate in a highly regulated environment and are subject
to extensive regulation, supervision and examination by the Office of the
Comptroller of the Currency (“OCC”) and the Board of Governors of the Federal
Reserve System (the “Federal Reserve”). See “Business – Regulation” herein.
Applicable laws and regulations may change, and there is no assurance that
such
changes will not adversely affect the Company’s business. Such regulation and
supervision govern the activities in which an institution may engage, and are
intended primarily for the protection of banks and their depositors. Regulatory
authorities have extensive discretion in connection with their supervisory
and
enforcement activities, including but not limited to the imposition of
restrictions on the operation of an institution, the classification of assets
by
the institution and the adequacy of an institution’s allowance for loan losses.
Any change in such regulation and oversight, whether in the form of restrictions
on activities, regulatory policy, regulations, or legislation, including but
not
limited to changes in the regulations governing national banks, could have
a
material impact on the bank and the Company’s operations.
Changes
in technology could be costly.
The
banking industry is undergoing technological innovation at a fast pace. To
keep
up with its competition, the Company needs to stay abreast of innovations and
evaluate those technologies that will enable it to compete on a cost-effective
basis. The cost of such technology, including personnel, can be high in both
absolute and relative terms. There can be no assurance, given the fast pace
of
change and innovation, that the Company’s technology, either purchased or
developed internally, will meet or continue to meet the needs of the
Company.
Risks
Related to the Company’s Business
We
operate in an extremely competitive market, and the Company’s business will
suffer if we are unable to compete effectively.
In
the
Company’s market area, the Bank encounters significant competition from other
commercial banks, a credit union, consumer finance companies, securities
brokerage firms, insurance companies, money market mutual funds and other
financial intermediaries. Many of the Bank’s competitors have substantially
greater resources and lending limits than we do and may offer services that
we
do not or cannot provide. The Company’s profitability depends upon the Company’s
continued ability to compete successfully in the Company’s market area.
The
loss of key members of the Company’s senior management team could adversely
affect the Company’s business.
We
believe that the Company’s success depends largely on the efforts and abilities
of the Company’s senior management. Their experience and industry contacts
significantly benefit us. The competition for qualified personnel in the
financial services industry is intense, and the loss of any of the Company’s key
personnel or an inability to continue to attract, retain and motivate key
personnel could adversely affect the Company’s business.
The
Company’s loan portfolio includes loans with a higher risk of loss.
The
Bank
originates commercial loans, consumer loans, agricultural finance loans and
residential mortgage loans primarily within the Company’s market areas.
Commercial mortgage, commercial, and consumer loans may expose a lender to
greater credit risk than loans secured by residential real estate because the
collateral securing these loans may not be sold as easily as residential real
estate. These loans also have greater credit risk than residential real estate
for the following reasons:
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·
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Commercial
Loans.
Repayment is dependent upon the successful operation of the borrower’s
business
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·
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Consumer
Loans.
Consumer loans (such as personal lines of credit) are collateralized,
if
at all, with assets that may not provide an adequate source of payment
of
the loan due to depreciation, damage, or
loss.
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·
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Agricultural
Finance Loans.
Repayment is dependent upon the successful operation of the business,
which are greatly dependent on many things outside the control of
either
the Bank or the borrowers. These factor include weather, commodity
prices,
and interest rates, among others.
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If
the Company’s actual loan losses exceed the Company’s allowance for loan losses,
the Company’s net income will decrease.
The
Company makes various assumptions and judgments about the collectibility of
the
Company’s loan portfolio, including the creditworthiness of the Company’s
borrowers and the value of the real estate and other assets serving as
collateral for the repayment of the Company’s loans. Despite the Company’s
underwriting and monitoring practices, the Company’s loan customers may not
repay their loans according to their terms, and the collateral securing the
payment of these loans may be insufficient to pay any remaining loan balance.
We
may experience significant loan losses, which could have a material adverse
effect on the Company’s operating results. Because we must use assumptions
regarding individual loans and the economy, the Company’s current allowance for
loan losses may not be sufficient to cover actual loan losses, and increases
in
the allowance may be necessary. We may need to significantly increase the
Company’s provision for losses on loans if one or more of the Company’s larger
loans or credit relationships becomes delinquent or if we continue to expand
the
Company’s commercial real estate and commercial lending. In addition, federal
regulators periodically review the Company’s allowance for loan losses and may
require us to increase the Company’s provision for loan losses or recognize loan
charge-offs. Material additions to the Company’s allowance would materially
decrease the Company’s net income. We cannot assure you that the Company’s
monitoring procedures and policies will reduce certain lending risks or that
the
Company’s allowance for loan losses will be adequate to cover actual losses.
If
we foreclose on collateral property and own the underlying real estate, we
may
be subject to the increased costs associated with the ownership of real
property, resulting in reduced revenues.
We
may
have to foreclose on collateral property to protect the Company’s investment and
may thereafter own and operate such property, in which case we will be exposed
to the risks inherent in the ownership of real estate. The amount that we,
as a
mortgagee, may realize after a default is dependent upon factors outside of
the
Company’s control, including, but not limited to: (i) general or local
economic conditions; (ii) neighborhood values; (iii) interest rates;
(iv) real estate tax rates; (v) operating expenses of the mortgaged
properties; (vi) supply of and demand for rental units or properties;
(vii) ability to obtain and maintain adequate occupancy of the properties;
(viii) zoning laws; (x) governmental rules, regulations and fiscal
policies; and (x) acts of God. Certain expenditures associated with the
ownership of real estate, principally real estate taxes and maintenance costs,
may adversely affect the income from the real estate. Therefore, the cost of
operating a real property may exceed the rental income earned from such
property, and we may have to advance funds in order to protect the Company’s
investment, or we may be required to dispose of the real property at a loss.
The
foregoing expenditures and costs could adversely affect the Company’s ability to
generate revenues, resulting in reduced levels of profitability.
Environmental
liability associated with commercial lending could have a material adverse
effect on the Company’s business, financial condition and results of operations.
In
the
course of the Company’s business, we may acquire, through foreclosure,
commercial properties securing loans that are in default. There is a risk that
hazardous substances could be discovered on those properties. In this event,
we
could be required to remove the substances from and remediate the properties
at
the Company’s cost and expense. The cost of removal and environmental
remediation could be substantial. We may not have adequate remedies against
the
owners of the properties or other responsible parties and could find it
difficult or impossible to sell the affected properties. These events could
have
a material adverse effect on the Company’s business, financial condition and
operating results.
If
the Company fails to maintain an effective system of internal control over
financial reporting, it may not be able to accurately report the Company’s
financial results or prevent fraud, and, as a result, investors and depositors
could lose confidence in the Company’s financial reporting, which could
adversely affect the Company’s business, the trading price of the Company’s
stock and the Company’s ability to attract additional deposits.
Beginning
with this annual report on Form 10-KSB, we have to include in the Company’s
annual reports filed with the Securities and Exchange Commission (the
“Commission”) a report of the Company’s management regarding internal control
over financial reporting. As a result, we began last year to document and
evaluate the Company’s internal control over financial reporting in order to
satisfy the requirements of Section 404 of the Sarbanes-Oxley Act of 2002
(the “Sarbanes-Oxley Act”) and Commission rules and regulations, which require
an annual management report on the Company’s internal control over financial
reporting, including, among other matters, management’s assessment of the
effectiveness of internal control over financial reporting. Management has
retained outside consultants to assist in (i) assessing and documenting the
adequacy of the Company’s internal control over financial reporting,
(ii) improving control processes, where appropriate, and
(iii) verifying through testing that controls are functioning as
documented. If we fail to identify and correct any significant deficiencies
in
the design or operating effectiveness of the Company’s internal control over
financial reporting or fail to prevent fraud, current and potential stockholders
and depositors could lose confidence in the Company’s financial reporting, which
could adversely affect the Company’s business, financial condition and results
of operations, the trading price of the Company’s stock and the Company’s
ability to attract additional deposits.
A
breach of information security or compliance breach by one of our agents or
vendors could negatively affect the Company’s reputation and business.
The
Bank
depends on data processing, communication and information exchange on a variety
of computing platforms and networks and over the internet. We cannot be certain
all of the Company’s systems are entirely free from vulnerability to attack,
despite safeguards we have installed. Additionally, we rely on and do business
with a variety of third-party service providers, agents and vendors with respect
to the Company’s business, data and communications needs. If information
security is breached, or one of our agents or vendors breaches compliance
procedures, information could be lost or misappropriated, resulting in financial
loss or costs to us or damages to others. These costs or losses could materially
exceed the Company’s amount of insurance coverage, if any, which would adversely
affect the Company’s business.
The
price of the Company’s common stock may be volatile, which may result in losses
for investors.
The
market price for shares of the Company’s common stock has been volatile in the
past, and several factors could cause the price to fluctuate substantially
in
the future. These factors include:
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announcements
of developments related to the Company’s
business,
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fluctuations
in the Company’s results of
operations,
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sales
of substantial amounts of the Company’s securities into the
marketplace,
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general
conditions in the Company’s banking niche or the worldwide
economy,
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a
shortfall in revenues or earnings compared to securities analysts’
expectations,
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lack
of an active trading market for the common stock
,
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commencement
of, or changes in analysts’ recommendations or
projections, and
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·
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the
Company’s announcement of new acquisitions or other
projects.
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The
market price of the Company’s common stock may fluctuate significantly in the
future, and these fluctuations may be unrelated to the Company’s performance.
General market price declines or market volatility in the future could adversely
affect the price of the Company’s common stock, and the current market price may
not be indicative of future market prices.
Risks
Related to the Company’s Stock
The
Company’s common stock is thinly traded, and thus your ability to sell shares or
purchase additional shares of the Company’s common stock will be limited, and
the market price at any time may not reflect true
value.
Your
ability to sell shares of the Company’s common stock or purchase additional
shares largely depends upon the existence of an active market for the common
stock. The Company’s common stock is quoted on the Over the Counter Bulletin
Board. The volume of trades on any given day is light, and you may be unable
to
find a buyer for shares you wish to sell or a seller of additional shares you
wish to purchase. In addition, a fair valuation of the purchase or sales price
of a share of common stock also depends upon active trading, and thus the price
you receive for a thinly traded stock, such as the Company’s common stock, may
not reflect its true value.
Federal
regulations may inhibit a takeover, prevent a transaction you may favor or
limit
the Company’s growth opportunities, which could cause the market price of the
Company’s common stock to decline.
Certain
provisions of the Company’s charter documents and federal regulations could have
the effect of making it more difficult for a third party to acquire, or of
discouraging a third party from attempting to acquire, control of the Company.
In addition, we must obtain approval from regulatory authorities before
acquiring control of any other company.
We
may not be able to pay dividends in the future in accordance with past practice.
We
pay an
annual dividend to stockholders. The payment of dividends is subject to legal
and regulatory restrictions. Any payment of dividends in the future will depend,
in large part, on the Bank’s earnings, capital requirements, financial condition
and other factors considered relevant by the Company’s Board of Directors.
Market
Area
The
Bank
currently has four offices in Crawford County, consisting of three full service
offices and one drive-up, located in Robinson, Palestine and Oblong,
Illinois.
Robinson,
Palestine and Oblong, Illinois are located in Crawford County, Illinois,
approximately 150 miles east of St. Louis, Missouri and 35 miles northwest
of
Vincennes, Indiana. The major employers in the Bank’s primary market area
include: Marathon Petroleum Company LLC, The Hershey Company, Robinson
Correctional Facility, Dana Corporation, Crawford Memorial Hospital and E.H.
Baare Corporation.
The
Bank,
and therefore the Company, is dependent upon the economy of its market area
for
continued success, since the vast majority of its loans are located in the
Bank’s market area. See Note 4 of Notes to Consolidated Financial Statements.
Lending
Activities
General
.
The
Bank’s loan portfolio consists primarily of conventional, first mortgage loans
secured by one- to four-family residences and, to a lesser extent, consumer
loans, commercial and agricultural real estate loans, commercial business and
agricultural finance loans and multi-family real estate and construction loans.
At March 31, 2008, the Bank’s gross loans outstanding totaled $77.7 million, of
which $39.0 million, or 50.2%, were one- to four-family residential mortgage
loans.
This
amount also includes home equity loans totaling $3.0 million. Of the one- to
four-family mortgage loans outstanding at that date, 24.3% were fixed-rate
loans, and 75.7% were adjustable-rate loans.
At
that
same date, construction and development property loans totaled $2.9 million,
or
3.7%, of the Bank’s total loan portfolio. Also at that date, the Bank’s
multi-family real estate, commercial and agricultural real estate loans totaled
$15.1 million, or 19.5%, of the Bank’s total loan portfolio of which 66.0% were
adjustable-rate loans and 34.0% were fixed-rate loans. Loans to State and
Municipal Governments totaled $2.7 million, or 3.5%, of the Bank’s total loan
portfolio as of March 31, 2008.
At
that
same date, consumer and other loans totaled $6.2 million, or 8.0%, of the Bank’s
total loan portfolio.
At
March
31, 2008, commercial business and agricultural finance loans totaled $11.7
million, or 15.1%, of the Bank’s total loan portfolio, of which 36.2% were
fixed-rate loans and 63.8% adjustable-rate loans. See Note 4 of Notes to
Consolidated Financial Statements.
The
Bank’s loans to one borrower limit is generally limited to the greater of 15% of
unimpaired capital and surplus or, if a bank’s lending limit under this
calculation would be less than $500,000, a bank may make loans and extensions
of
credit to one borrower at one time in an amount not to exceed $500,000. See
“Regulation — Federal Regulation of National Banks.” Pursuant to certain lending
provisions in the OCC’s regulations for defined eligible banks, however, the
Bank may lend up to 25% of its unimpaired capital and surplus to one borrower
for loans secured by one-to-four family residential real estate, loans secured
by small businesses or small farm loans. The total outstanding amount of the
Bank’s loans or extensions of credit made to all of its borrowers under the
special limits in these regulations may not exceed 100% of the Bank’s unimpaired
capital and surplus. All loans to affiliates and their related interests are
not
eligible for this program. See Note 14 of Notes to Consolidated Financial
Statements for information regarding loans to affiliates. At March 31, 2008,
the
maximum amount which the bank could have lent under this program to any one
borrower and the borrowers related interests was approximately $3.1 million.
At
March 31, 2008, the Bank had one borrower with outstanding balances and
available lines of credit that exceeded the 15% legal lending limit but was
within the 25% legal lending limit for eligible banks.
At
March
31, 2008, the Bank had no loans or groups of loans to related borrowers with
outstanding balances in excess of $3.1 million.
The
Bank’s five largest lending relationships at March 31, 2008 were as follows: (i)
$4.5 million in loans and available lines of credit to a heavy equipment
operator of which $2.9 million was participated with other lenders and is
secured by real estate, equipment, inventory, accounts receivable and personal
guarantees; (ii) $4.0 million in loans and available lines of credit to an
individual and his closely held entities of which $1.5 million was participated
with other lenders and is secured by real estate, oil production and leaseholds,
inventory, equipment, and personal guarantees; (iii) $1.4 million in loans
to a
utility company secured by deposit accounts, equipment, accounts receivable,
assignment of contracts and general intangibles; (iv) $1.3 million in loans
and
available lines of credit to a farmer secured by crops, equipment, inventory,
government payments, and personal guarantees; and (v) $1.1 million in loans
and
available lines of credit to an individual and his closely held entities secured
by real estate, equipment, inventory, and personal guarantees. At March 31,
2008, all of these loans, which totaled $12.3 million in the aggregate of which
$4.4 million was participated to other lenders, were performing in accordance
with their terms.
Loan
Portfolio Composition.
The
following information concerning the composition of the Bank’s loan portfolios
in dollar amounts and in percentages (before deductions for loans in process,
deferred fees and discounts and allowances for losses) as of the dates
indicated.
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March
31,
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2008
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2007
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Amount
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Percent
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Amount
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Percent
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(Dollars
in Thousands)
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Real
Estate Loans
:
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One-
to four-family.
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$
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39,024
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50.21
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%
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$
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36,214
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|
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49.84
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%
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Multi-family
|
|
|
618
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|
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0.80
|
|
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591
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|
|
0.81
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Commercial
and agricultural
|
|
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14,527
|
|
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18.69
|
|
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14,815
|
|
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20.39
|
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Construction
or development
|
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2,909
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|
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3.74
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2,556
|
|
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3.52
|
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Total
real estate loans
|
|
|
57,078
|
|
|
73.44
|
|
|
54,176
|
|
|
74.56
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
Loans
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government
Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
State
& Municipal
|
|
|
2,720
|
|
|
3.50
|
|
|
3,265
|
|
|
4.50
|
|
|
Consumer
and other loans
|
|
|
6,221
|
|
|
8.00
|
|
|
6,168
|
|
|
8.49
|
|
|
Commercial
business and agricultural finance loans
|
|
|
11,710
|
|
|
15.06
|
|
|
9,048
|
|
|
12.45
|
|
|
Total
other
|
|
|
20,651
|
|
|
26.56
|
|
|
18,481
|
|
|
25.44
|
|
|
Total
loans
|
|
|
77,729
|
|
|
100.00
|
%
|
|
72,657
|
|
|
100.00
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans
in process
|
|
|
750
|
|
|
|
|
|
858
|
|
|
|
|
|
Deferred
loan fees
|
|
|
6
|
|
|
|
|
|
—
|
|
|
|
|
|
Allowance
for losses
|
|
|
727
|
|
|
|
|
|
729
|
|
|
|
|
|
Total
loans receivable, net
|
|
$
|
76,246
|
|
|
|
|
$
|
71,070
|
|
|
|
|
The
following schedule illustrates the interest rate sensitivity of the Bank’s loan
portfolio at March 31, 2008. Loans which have adjustable or renegotiable
interest rates are shown as maturing in the period during which the contract
reprices; however, $9.9 million in adjustable rate loans have reached their
contractual floor rate.
These
loans then report at their maturity date. The schedule does not reflect the
effects of possible prepayments or enforcement of due-on-sale
clauses.
|
|
|
Real
Estate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One-
to Four-Family and
Construction/Development
|
|
Multi-family
and
Commercial
and
Agriculture
|
|
Obligations
of State &
Municipal
Governments
|
|
Consumer
and Other
|
|
Commercial
Business
and
Agricultural
Finance
|
|
Total
|
|
|
|
|
Amount
|
|
Weighted
Average
Rate
|
|
Amount
|
|
Weighted
Average
Rate
|
|
Amount
|
|
Weighted
Average
Rate
|
|
Amount
|
|
Weighted
Average
Rate
|
|
Amount
|
|
Weighted
Average
Rate
|
|
Amount
|
|
Weighted
Average
Rate
|
|
|
|
|
(Dollars
in Thousands)
|
|
|
Due
During
Years
Ending
March
31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
(1)
|
|
$
|
13,630
|
|
|
7.46
|
%
|
$
|
5,065
|
|
|
7.22
|
%
|
$
|
218
|
|
|
4.80
|
%
|
$
|
608
|
|
|
7.80
|
%
|
$
|
7,858
|
|
|
5.87
|
%
|
$
|
27,379
|
|
|
6.95
|
%
|
|
2010
and 2011
|
|
|
9,318
|
|
|
7.46
|
|
|
2,039
|
|
|
4.43
|
|
|
156
|
|
|
3.92
|
|
|
2,047
|
|
|
8.48
|
|
|
1,243
|
|
|
6.63
|
|
|
14,803
|
|
|
7.08
|
|
|
2012
and 2013
|
|
|
3,566
|
|
|
7.30
|
|
|
2,464
|
|
|
6.98
|
|
|
1,680
|
|
|
5.12
|
|
|
2,978
|
|
|
7.46
|
|
|
1,904
|
|
|
7.25
|
|
|
12,592
|
|
|
6.98
|
|
|
After
2013
|
|
|
15,419
|
|
|
6.44
|
|
|
5,577
|
|
|
6.41
|
|
|
666
|
|
|
4.27
|
|
|
588
|
|
|
6.83
|
|
|
705
|
|
|
7.16
|
|
|
22,955
|
|
|
6.40
|
|
|
Total
|
|
$
|
41,933
|
|
|
7.07
|
%
|
$
|
15,145
|
|
|
6.51
|
%
|
$
|
2,720
|
|
|
4.81
|
%
|
$
|
6,221
|
|
|
7.77
|
%
|
$
|
11,710
|
|
|
6.26
|
%
|
$
|
77,729
|
|
|
6.82
|
%
|
|
(1)
|
Includes
demand loans, loans having no stated maturity and overdraft
loans.
|
The
total
amount of loans due after March 31, 2009 which have predetermined interest
rates
is $24.9 million, while the total amount of loans due after such dates which
have floating or adjustable interest rates is $42.6 million, a portion of which
have reached their contractual floor rate and are shown in the above table
at
their contractual maturity.
Underwriting
Standards.
All of
the Bank’s lending is subject to its written underwriting standards and loan
origination procedures. Decisions on loan applications are made on the basis
of
detailed applications and, if applicable, property valuations. Properties
securing real estate loans made by the Bank are generally appraised by
Board-approved independent appraisers. In the loan approval process, the Bank
assesses the borrower’s ability to repay the loan, the adequacy of the proposed
security, the employment stability of the borrower and the credit-worthiness
of
the borrower.
The
Bank
requires evidence of marketable title and lien position or appropriate title
insurance on all loans secured by real property. The Bank also requires fire
and
extended coverage casualty insurance in amounts at least equal to the lesser
of
the principal amount of the loan or the value of improvements on the property,
depending on the type of loan. As required by federal regulations, the Bank
also
requires flood insurance to protect the property securing its interest if such
property is located in a designated flood area.
Management
reserves the right to change the amount or type of lending in which it engages
to adjust to market or other factors.
One-
To- Four-Family Residential Mortgage Lending.
Residential loan originations are generated by the Bank’s marketing efforts, its
present customers, walk-in customers, and referrals from real estate brokers.
Historically, the Bank has focused its lending efforts primarily on the
origination of loans secured by one- to four-family residential mortgages in
its
market area. At March 31, 2008, the Bank’s one- to four-family residential
mortgage loans totaled $39.0 million, or 50.2%, of the Bank’s gross loan
portfolio, of which $143,000 was non-performing at that date.
The
Bank
offers both adjustable and fixed rate mortgage loans. For the year ended March
31, 2008, the Bank originated $28.6 million of real estate loans, of which
$22.0
million were secured by one- to four-family residential real estate, $3.1
million was secured by one- to four-family or commercial constructions and
land
loans, $3.4 million was secured by commercial or agricultural real estate,
and
$132,000 was secured by multi-family residential real estate. Substantially
all
of the Bank’s one- to four-family residential mortgage originations are secured
by properties located in its market area.
The
Bank
offers adjustable-rate mortgage loans at rates and on terms determined in
accordance with market and competitive factors. The Bank currently originates
adjustable-rate mortgage loans with a term of up to 30 years.
The
Bank
offers one-year adjustable-rate mortgage loans and loans that are fixed for
three or five years, then adjustable annually after that with a stated interest
rate margin generally over the one-year Treasury Bill Index. Increases or
decreases in the interest rate of the Bank’s adjustable-rate loans is generally
limited to 200 basis points at any adjustment date and 600 basis points over
the
life of the loan. As a consequence of using caps, the interest rates on these
loans may not be as rate sensitive as the Bank’s liabilities. The Bank qualifies
borrowers for adjustable-rate loans based on the initial interest rate of the
loan. As a result, the risk of default on these loans may increase as interest
rates increase. See “Asset Quality — Non-Performing Assets.” At March 31, 2008,
the total balance of one-to four-family adjustable-rate loans was $29.5 million,
or 38.0%, of the Bank’s gross loan portfolio.
See
“—
Originations, Purchases and Sales of Loans.”
The
Bank
offers fixed-rate mortgage loans with a term of up to 30 years. At March 31,
2008, the total balance of one- to four-family fixed-rate loans was $9.5
million, or 12.2 %, of the Bank’s gross loan portfolio.
The
Bank
also offers U.S. Department of Agriculture (“USDA”) Guaranteed Rural Housing
Loans to borrowers that meet certain income limitations with minimal to no
down
payment. These loans are 30-year fixed rate loans with a 90% guarantee from
USDA. At March 31, 2008, the total balance of USDA Guaranteed Rural Housing
Loans was $143,000, or 0.2%, of the Bank’s gross loan portfolio. During the
fiscal year ended March 31, 2008, the Bank sold $1.4 million in USDA Guaranteed
Rural Housing Loans. The Bank provides servicing on $1.3 million of these Rural
Housing Loans. In April 2007, the Bank began offering USDA Rural Housing Loans
where servicing is retained with a 44 basis point fee. See “— Originations,
Purchases and Sales of Loans.” The Bank will generally lend up to 80% of the
lesser of the appraised value or purchase price of the security property on
owner occupied one- to four-family loans. Residential loans do not include
prepayment penalties, are non-assumable (other than government-insured or
guaranteed loans), and do not produce negative amortization. Real estate loans
originated by the Bank contain a “due on sale” clause allowing the Bank to
declare the unpaid principal balance due and payable upon the sale of the
security property. The Bank utilizes private mortgage insurance.
The
majority of the fixed rate loans currently originated by the Bank are
underwritten and documented pursuant to the guidelines of the Federal Home
Loan
Bank of Chicago’s (the “FHLB”) Mortgage Partnership Finance (“MPF”) program.
Effective January 1, 1999, the Bank joined the MPF program offered by the FHLB.
This program offers 15 to 30 year fixed rate mortgages. The Bank sells 100%
of
the principal and receives a fee. The Bank also receives a 25 basis points
servicing fee. During the year ended March 31, 2008, the Bank originated $8.4
million in MPF loans. The FHLB recently announced, however, that it would no
longer enter into new master commitments or renew existing master commitments
to
purchase mortgage loans under the MPF program and would only fund loans through
July 31, 2008. However, in June 2008, the FHLB announced they would continue
to
purchase mortgage loans until October 31, 2008. See “—Originations, Purchases
and Sales of Loans.”
At
March
31, 2008, the Company's home equity loans amounted to $3.0 million, or 3.8%,
of
the total loan portfolio. These loans are secured by the underlying equity
in
the borrower's residence, and accordingly, are reported with the one-to-four
family real estate loans. As a result, the Company generally requires
loan-to-value ratios of 90% or less after taking into consideration the first
mortgage held by the Company. These loans typically have fifteen-year terms
with
an interest rate adjustment monthly.
Multi-Family
Lending.
The Bank
offers one year adjustable-rate multi-family loans for terms of up to 20 years.
The Bank will generally lend up to 80% of the value of the collateral securing
the loan. At March 31, 2008, the Bank had $618,000 of multi-family real estate
loans, or 0.8% of the Bank’s gross loan portfolio. All of these loans were
performing in accordance with their terms at that date.
Multi-family
lending is generally considered to involve a higher level of credit risk than
one- to four-family residential lending. This greater risk in multi-family
lending is due to several factors, including the concentration of principal
in a
limited number of loans and borrowers, the effect of general economic conditions
on income producing properties and the increased difficulty of evaluating and
monitoring these types of loans. Furthermore, the repayment of loans secured
by
multi-family real estate is typically dependent upon the successful operation
of
the related real estate project. If the cash flow from the project is reduced
(for example, if leases are not obtained or renewed, or a bankruptcy court
modifies a lease term, or a major tenant is unable to fulfill its lease
obligations), the borrower’s ability to repay the loan may be
impaired.
Commercial
and Agricultural Real Estate Lending.
The Bank
also originates commercial and agricultural real estate loans. At March 31,
2008
approximately $14.5 million, or 18.7% of the Bank’s gross loan portfolio, was
comprised of commercial and agricultural real estate loans. Of this amount,
approximately $4.9 million, or 34.1%, of these loans were fixed-rate commercial
and agricultural real estate loans and approximately $9.6 million, or 65.9%,
were adjustable-rate loans. At March 31, 2008, $126,000 of these loans was
non-performing. The largest commercial or agricultural real estate loan was
a
$3.5 million line of credit of which $1.5 million was participated to another
institution.
The
Bank
will generally lend up to 80% of the value of the collateral securing the loan
with varying maturities up to 20 years with re-pricing periods ranging from
daily to one year. In underwriting these loans, the Bank currently analyzes
the
financial condition of the borrower, the borrower’s credit history, and the
reliability and predictability of the cash flow generated by the business.
The
Bank generally requires personal guaranties on corporate borrowers. Appraisals
on properties securing commercial and agricultural real estate loans originated
by the Bank are primarily performed by independent appraisers. The Bank also
offers small business loans, which are generally guaranteed up to 90% by various
governmental agencies.
Commercial
and agricultural real estate loans generally present a higher level of risk
than
loans secured by one- to four-family residences. This greater risk is due to
several factors, including the concentration of principal in a limited number
of
loans and borrowers, the effect of general economic conditions on income and
the
increased difficulty of evaluating and monitoring these types of loans.
Furthermore, the repayment of loans secured by commercial and agricultural
real
estate is typically dependent upon the successful operation of the business.
If
the cash flow from the project is reduced, the borrower’s ability to repay the
loan may be impaired.
Construction
Lending.
The Bank
had $2.9 million in construction loans for one- to four- family residences,
commercial property and land loans, or 3.7%, of the total loan portfolio at
March 31, 2008. The Bank offers construction loans to individuals for the
construction of one- to four-family residences or commercial buildings. Such
loans are offered with fixed and adjustable-rates of interest. Following the
construction period, these loans may become permanent loans.
Construction
lending is generally considered to involve a higher level of credit risk since
the risk of loss on construction loans is dependent largely upon the accuracy
of
the initial estimate of the individual property’s value upon completion of the
project and the estimated cost (including interest) of the project. If the
cost
estimate proves to be inaccurate, the Bank may be required to advance funds
beyond the amount originally committed to permit completion of the project.
The
Bank conducts periodic inspections of the construction project to help mitigate
this risk.
State
and Municipal Government Loans.
The Bank
originates both fixed and adjustable loans for state and municipal governments.
At March 31, 2008, the Bank’s loans to state and municipal governments totaled
$2.7 million, or 3.5% of the total loan portfolio, of which 84.3% were fixed
and
15.7% were adjustable.
Loans
to
state and municipal governments are generally at a lower rate than consumer
or
commercial loans due to the tax-free nature of municipal loans.
For
underwriting purposes, the Bank does not require financial documentation as
long
as the loan is to the general obligation of the local entity. However, proper
documentation in the entity’s minutes, from a board meeting when a quorum was
present, that indicate the approval to seek a loan and the authorized
individuals to sign for the loan are required.
Consumer
and Other Lending.
The Bank
offers secured and unsecured consumer and other loans. Secured loans may be
collateralized by a variety of asset types, including automobiles, mobile homes,
equity securities, and deposits. The Bank currently originates substantially
all
of its consumer and other loans in its primary market area. At March 31, 2008,
the Bank’s consumer and other loan portfolio totaled $6.2 million, or 8.0%, of
its gross loan portfolio, of which 97.2% were fixed-rate loans.
A
significant component of the Bank’s consumer loan portfolio consists of new and
used automobile loans. These loans generally have terms that do not exceed
five
years. Generally, loans on vehicles are made in amounts up to 80% of the sales
price or the National Automobile Dealers Association value, whichever is least.
At March 31, 2008, the Bank’s automobile loans totaled $4.4 million, or 5.7%, of
the Bank’s gross loan portfolio. These loans were originated predominately on a
direct lending basis.
Consumer
and other loan terms vary according to the type and value of collateral, length
of contract and creditworthiness of the borrower. The underwriting standards
employed by the Bank for consumer loans include an application, a determination
of the applicant’s payment history on other debts and an assessment of ability
to meet existing obligations and payments on the proposed loan. Although
creditworthiness of the applicant is a primary consideration, the underwriting
process also includes a comparison of the value of the security, if any, in
relation to the proposed loan amount.
Consumer
and other loans may entail greater credit risk than do residential mortgage
loans, particularly in the case of consumer loans which are unsecured or are
secured by rapidly depreciable assets, such as automobiles. Further, any
repossessed collateral for a defaulted consumer loan may not provide an adequate
source of repayment of the outstanding loan balance as a result of the greater
likelihood of damage, loss or depreciation. In addition, consumer loan
collections are dependent on the borrower’s continuing financial stability, and
thus are more likely to be affected by adverse personal circumstances.
Furthermore, the application of various federal and state laws, including
bankruptcy and insolvency laws, may limit the amount which can be recovered
on
such loans. At March 31, 2008, all of the Bank’s consumer and other loans were
performing in accordance with their terms. There can be no assurances that
delinquencies will not occur in the future.
Commercial
and Agricultural Business Lending.
The Bank
also originates commercial and agricultural business loans. At March 31, 2008,
approximately $11.7 million, or 15.1% of the Bank’s gross loan portfolio, was
comprised of commercial and agricultural business loans. Of the $11.7 million,
approximately $4.2 million, or 36.2%, were fixed-rate loans and approximately
$7.5 million, or 63.8%, were adjustable-rate loans. At March 31, 2008, $23,000
of the Bank’s commercial and agricultural business loans were non-performing.
The largest commercial business loan was a $2.0 million line of credit of which
100% was participated.
Unlike
residential mortgage loans, which generally are made on the basis of the
borrower’s ability to make repayment from his or her employment and other income
and which are secured by real property whose value tends to be more easily
ascertainable, commercial business and agricultural finance loans typically
are
made on the basis of the borrower’s ability to make repayment from the cash flow
of the borrower’s business. As a result, the availability of funds for the
repayment of commercial business and agricultural finance loans may be
substantially dependent on the success of the business itself (which, in turn,
is likely to be dependent upon the general economic environment). The Bank’s
commercial business and agricultural finance loans are usually secured by
business or personal assets. However, the collateral securing the loans may
depreciate over time, may be difficult to appraise and may fluctuate in value
based on the success of the business. At March 31, 2008, $130,000 of the Bank’s
commercial business and agricultural finance loans were unsecured.
The
Bank’s commercial business and agricultural finance lending policy includes
credit file documentation and analysis of the borrower’s character, capacity to
repay the loan, the adequacy of the borrower’s capital and collateral as well as
an evaluation of conditions affecting the borrower. Analysis of the borrower’s
past, present and future cash flows is also an important aspect of the Bank’s
current credit analysis. Nonetheless, such loans are believed to carry higher
credit risk than more traditional investments.
Originations,
Purchases and Sales of Loans
Loan
originations are developed from continuing business with (i) depositors and
borrowers, (ii) soliciting realtors, (iii) builders, and (iv) walk-in
customers.
While
the
Bank currently originates adjustable-rate and fixed-rate loans, its ability
to
originate loans to a certain extent is dependent upon the relative customer
demand for loans in its market, which is affected by the interest rate
environment, among other factors. For the year ended March 31, 2008, the Bank
had total originations of $28.2 million in fixed-rate loans and $17.9 million
in
adjustable-rate loans.
The
Bank
sold $9.8 million in one- to four-family loans through market programs during
the year ended March 31, 2008. Sales of these loans generally are beneficial
to
the Bank since these sales may produce future servicing income, provide funds
for additional lending and other investments and increase liquidity. The Bank
does not sell loans pursuant to forward sales commitments and, therefore, an
increase in interest rates after loan origination and prior to sale may
adversely affect the Bank’s income at the time of sale.
The
following table shows the loan origination, purchase, sale and repayment
activities of the Bank for the periods indicated.
|
|
|
Year
Ended March 31,
|
|
|
|
|
2008
|
|
2007
|
|
|
|
|
(Dollars
in Thousands)
|
|
|
|
|
|
|
|
|
|
Originations
By Type
:
|
|
|
|
|
|
|
|
|
Real
estate:
|
|
|
|
|
|
|
|
|
One
to four-family
|
|
$
|
22,052
|
|
$
|
13,644
|
|
|
Multi-family
|
|
|
132
|
|
|
59
|
|
|
Commercial
and agricultural
|
|
|
3,396
|
|
|
3,499
|
|
|
Construction
and land development
|
|
|
3,065
|
|
|
2,499
|
|
|
|
|
|
|
|
|
|
|
|
Other:
|
|
|
|
|
|
|
|
|
Consumer
and other loans
|
|
|
5,397
|
|
|
6,304
|
|
|
State
& Municipal Government
|
|
|
1,629
|
|
|
2,640
|
|
|
Commercial
business and agricultural finance
|
|
|
10,484
|
|
|
9,523
|
|
|
Total
loans originated
|
|
|
46,155
|
|
|
38,168
|
|
|
|
|
|
|
|
|
|
|
|
Purchases
:
|
|
|
|
|
|
|
|
|
Real
estate:
|
|
|
|
|
|
|
|
|
One-
to four-family
|
|
|
—
|
|
|
53
|
|
|
Commercial
and agricultural
|
|
|
1,900
|
|
|
400
|
|
|
Total
loan purchases
|
|
|
1,900
|
|
|
453
|
|
|
|
|
|
|
|
|
|
|
|
Sales
And Repayments
:
|
|
|
|
|
|
|
|
|
Real
estate:
|
|
|
|
|
|
|
|
|
One-
to four-family
|
|
|
9,774
|
|
|
4,747
|
|
|
Other:
|
|
|
|
|
|
|
|
|
Commercial
business and agricultural finance and other loans
|
|
|
2,326
|
|
|
132
|
|
|
Total
sales
|
|
|
12,100
|
|
|
4,879
|
|
|
|
|
|
|
|
|
|
|
|
Principal
reductions
|
|
|
30,687
|
|
|
27,850
|
|
|
|
|
|
|
|
|
|
|
|
Decreases
in other items, net
|
|
|
196
|
|
|
105
|
|
|
|
|
|
|
|
|
|
|
|
Net
increase in gross loans
|
|
$
|
5,072
|
|
$
|
5,787
|
|
ASSET
QUALITY
Delinquencies
.
When a
borrower fails to make a required payment on a loan, the Bank 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 Bank’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 Bank 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 manner similar to that described above. The
Bank’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 Bank’s loan delinquencies by type, by amount and
by percentage of type at March 31, 2008.
|
|
|
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
|
|
|
4
|
|
$
|
198
|
|
|
0.51
|
%
|
|
—
|
|
$
|
—
|
|
|
—
|
%
|
|
5
|
|
$
|
143
|
|
|
0.37
|
%
|
|
9
|
|
$
|
341
|
|
|
0.88
|
%
|
|
Commercial
and agricultural
|
|
|
2
|
|
|
96
|
|
|
0.66
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
126
|
|
|
0.87
|
|
|
3
|
|
|
222
|
|
|
1.53
|
|
|
Other
Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
State
& Municipal Gov’t
|
|
|
1
|
|
|
9
|
|
|
0.33
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
9
|
|
|
0.33
|
|
|
Consumer
and others
|
|
|
5
|
|
|
17
|
|
|
0.27
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
17
|
|
|
0.27
|
|
|
Commercial
business
and
agricultural
finance
|
|
|
1
|
|
|
39
|
|
|
0.33
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
23
|
|
|
0.20
|
|
|
2
|
|
|
62
|
|
|
0.53
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
13
|
|
$
|
359
|
|
|
0.46
|
%
|
|
—
|
|
$
|
—
|
|
|
—
|
%
|
|
7
|
|
$
|
292
|
|
|
0.38
|
%
|
|
20
|
|
$
|
651
|
|
|
0.84
|
%
|
(1)
Loans
are
still accruing
.
Non-Performing
Assets.
The
table below sets forth the amounts and categories of non-performing assets
in
the Bank’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.
|
|
|
Year
Ended
March
31,
|
|
|
|
|
2008
|
|
2007
|
|
|
|
|
(Dollars
in thousands)
|
|
|
Non-accruing
loans:
|
|
|
|
|
|
|
|
|
One-
to four-family
|
|
$
|
143
|
|
$
|
119
|
|
|
Commercial
and agricultural real estate
|
|
|
126
|
|
|
—
|
|
|
Consumer
and other
|
|
|
—
|
|
|
4
|
|
|
Commercial
business and agricultural finance
|
|
|
23
|
|
|
32
|
|
|
Total
|
|
|
292
|
|
|
155
|
|
|
|
|
|
|
|
|
|
|
|
Foreclosed
assets:
|
|
|
|
|
|
|
|
|
One-
to four-family
|
|
|
16
|
|
|
—
|
|
|
Total
|
|
|
16
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
Total
non-performing assets
|
|
$
|
308
|
|
$
|
155
|
|
|
Total
as a percentage of total assets
|
|
|
0.23
|
%
|
|
0.14
|
%
|
For
the
year ended March 31, 2008, gross interest income which would have been recorded
had the non-accruing loans been current in accordance with their original terms
amounted to approximately $29,000.
This
represents $29,000 that would have been included in interest income on such
loans for the year ended March 31, 2008.
Classified
Assets
.
Federal
regulations provide for the classification of loans and other assets, such
as
debt and equity securities, considered by the Office of the Comptroller of
the
Currency (“OCC”) to be of lesser quality, as “substandard,” “doubtful” or
“loss.” An asset is considered “substandard” if it is inadequately protected by
the current net worth and paying capacity of the obligor or the collateral
pledged, if any. “Substandard” assets include those characterized by the
“distinct possibility” that the insured institution will sustain “some loss” if
the deficiencies are not corrected. Assets classified as “doubtful” have all of
the weaknesses inherent in those classified “substandard” with the added
characteristic that the weaknesses present make “collection or liquidation in
full” on the basis of currently existing facts, conditions and values, “highly
questionable and improbable.” Assets classified as “loss” are those considered
“uncollectible” and of such little value that their continuance as assets
without the establishment of a specific loss reserve is not
warranted
.
It
should
be noted that the OCC has proposed for comment a rule that would amend the
methodology currently used to assess the credit risk posed by individual
commercial extensions of credit and the level of an institution’s aggregate
commercial credit risk. No prediction can be made as to whether the rule will
be
finalized, in which final form it will emerge, or whether such rule, if
finalized, will have a material impact on the Bank.
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 Bank 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 March 31, 2008, the Bank had classified a total of $536,000
of
its assets as substandard and $65,000 as doubtful or loss. At March 31, 2008,
total classified assets comprised $601,000, or 5.1%, of the Bank’s capital, and
0.5% of the Bank’s total assets.
Other
Loans of Concern
.
As of
March 31, 2008, there were $3.9 million in loans identified, but not classified,
by the Bank 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 market fair
value minus 20% of the market 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 market fair value less 10% of the market 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 March 31, 2008, the Bank had one real estate property
acquired through foreclosure. 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 Bank’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 allowance for
loan losses. Such agencies may require the Bank to increase the allowance based
upon their judgment of the information available to them at the time of their
examination. At March 31, 2008, the Bank had a total allowance for loan losses
of $727,000, representing 0.95% of the Bank’s loans, net.
See
Note
4 of Notes to Consolidated Financial Statements.
The
distribution of the Bank’s allowance for losses on loans at the dates indicated
is summarized as follows:
|
|
|
March
31,
|
|
|
|
|
|
|
|
|
|
2008
|
|
2007
|
|
|
|
|
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
|
|
$
|
62
|
|
$
|
39,024
|
|
|
50.21
|
%
|
$
|
101
|
|
$
|
36,214
|
|
|
49.84
|
%
|
|
Multi-family
|
|
|
—
|
|
|
618
|
|
|
0.80
|
|
|
—
|
|
|
591
|
|
|
0.81
|
|
|
Commercial
and agricultural real
estate
|
|
|
481
|
|
|
14,527
|
|
|
18.69
|
|
|
346
|
|
|
14,815
|
|
|
20.39
|
|
|
Construction
or Development
|
|
|
—
|
|
|
2,909
|
|
|
3.74
|
|
|
8
|
|
|
2,556
|
|
|
3.52
|
|
|
State
& Municipal Government
Loans
|
|
|
—
|
|
|
2,720
|
|
|
3.50
|
|
|
—
|
|
|
3,265
|
|
|
4.50
|
|
|
Consumer
and other loans
|
|
|
27
|
|
|
6,221
|
|
|
8.00
|
|
|
41
|
|
|
6,168
|
|
|
8.49
|
|
|
Commercial
business and
agricultural
finance
|
|
|
157
|
|
|
11,710
|
|
|
15.06
|
|
|
233
|
|
|
9,048
|
|
|
12.45
|
|
|
Unallocated
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total
|
|
$
|
727
|
|
$
|
77,729
|
|
|
100.00
|
%
|
$
|
729
|
|
$
|
72,657
|
|
|
100.00
|
%
|
The
following table sets forth an analysis of the Bank’s allowance for loan
losses.
|
|
|
Year
Ended
March
31,
|
|
|
|
|
2008
|
|
2007
|
|
|
|
|
(Dollars
in thousands)
|
|
|
|
|
|
|
|
|
|
Balance
at beginning of year
|
|
$
|
729
|
|
$
|
753
|
|
|
|
|
|
|
|
|
|
|
|
Charge-offs:
|
|
|
|
|
|
|
|
|
One-
to four-family
|
|
|
25
|
|
|
49
|
|
|
Commercial
and agricultural real estate
|
|
|
102
|
|
|
—
|
|
|
Consumer
and other loans
|
|
|
27
|
|
|
56
|
|
|
Commercial
business and agricultural finance
|
|
|
26
|
|
|
—
|
|
|
Total:
|
|
|
180
|
|
|
105
|
|
|
|
|
|
|
|
|
|
|
|
Recoveries:
|
|
|
|
|
|
|
|
|
One-
to four-family
|
|
|
—
|
|
|
4
|
|
|
Consumer
and other loans
|
|
|
19
|
|
|
17
|
|
|
Total:
|
|
|
19
|
|
|
21
|
|
|
Net
charge-offs
|
|
|
161
|
|
|
84
|
|
|
Transfer
for off-balance sheet credit exposure
|
|
|
(16
|
)
|
|
—
|
|
|
Additions
charged to operations
|
|
|
175
|
|
|
60
|
|
|
Balance
at end of year
|
|
$
|
727
|
|
$
|
729
|
|
|
|
|
|
|
|
|
|
|
|
Ratio
of net charge-offs during the year to Average loans outstanding during
the
year
|
|
|
0.21
|
%
|
|
0.12
|
%
|
|
|
|
|
|
|
|
|
|
|
Ratio
of net charge-offs during the year to Average non-performing
assets
|
|
|
54.07
|
%
|
|
28.92
|
%
|
Investment
Activities
General
.
The
Bank
also invests in mortgage-backed securities, government securities, obligations
of states or political subdivisions and other debt securities. At March 31,
2008, mortgage-backed securities totaled $25.3 million, or 80.2%, of the Bank’s
total investment and mortgage-backed securities portfolio.
Government
securities, obligations of state and political subdivisions and other debt
and
equity securities totaled $6.2 million, or 19.8% of the Bank’s total investment
and mortgage-backed securities portfolio.
Historically,
the Bank has generally maintained liquid assets at levels believed adequate
to
meet the requirements of normal operations, including repayments of maturing
debt and potential deposit outflows. Cash flow projections are regularly
reviewed and updated to assure that adequate liquidity is maintained. A national
bank is not subject to prescribed requirements. See “Management’s Discussion and
Analysis of Financial Condition and Results of Operations — Liquidity and
Capital Resource” and “Regulation — Liquidity.”
National
banking associations have the authority to invest in various types of liquid
assets, including U.S. Treasury obligations, securities of various federal
agencies, certain certificates of deposit of insured banks and savings
institutions, certain bankers’ acceptances, repurchase agreements and federal
funds. Subject to various restrictions, national banks may also invest their
assets in commercial paper, investment grade corporate debt securities and
mutual funds whose assets conform to the investments that a national banking
association is otherwise authorized to make directly.
Generally,
the investment policy of the Bank, as established by the Board of Directors,
is
to invest funds among various categories of investments and maturities based
upon the Bank’s liquidity needs, asset/liability management policies, investment
quality, marketability and performance objectives.
Investment
Securities.
At March
31, 2008, the Bank’s investment securities, excluding mortgage-backed
securities, totaled $6.2 million, or 4.7% of its total assets. It has been
the
Bank’s general policy to invest in obligations of state and political
subdivisions, federal agency obligations and other investment securities.
National
banks are restricted in investments in corporate debt and equity securities.
These restrictions include prohibitions against investments in the debt
securities of any one issuer in excess of 15% of the Bank’s unimpaired capital
and unimpaired surplus as defined by federal regulations, which totaled $11.6
million as of March 31, 2008, plus an additional 10% if the investments are
fully secured by readily marketable collateral. At March 31, 2008, the Bank
was
in compliance with this regulation. See “Regulation — Federal Regulation of
National Banks” for a discussion of additional restrictions on the Bank’s
investment activities. See Note 3 of Notes to Consolidated Financial Statements.
The
following table sets forth the composition of the Bank’s securities, all of
which are classified as available for sale.
|
|
|
March
31,
|
|
|
|
|
2008
|
|
2007
|
|
|
|
|
Market
Value
|
|
%
of
Total
|
|
Market
Value
|
|
%
of
Total
|
|
|
|
|
(Dollars
in thousands)
|
|
|
|
|
|
|
|
U.S.
Government agencies
|
|
$
|
3,835
|
|
|
12.16
|
%
|
$
|
3,683
|
|
|
11.83
|
%
|
|
Mortgage-backed
securities
|
|
|
25,302
|
|
|
80.24
|
|
|
24,780
|
|
|
79.60
|
|
|
State
and political subdivisions
|
|
|
2,202
|
|
|
6.98
|
|
|
2,470
|
|
|
7.94
|
|
|
Other
securities
|
|
|
196
|
|
|
0.62
|
|
|
196
|
|
|
0.63
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
available for sale
|
|
$
|
31,535
|
|
|
100.00
|
%
|
$
|
31,129
|
|
|
100.00
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
remaining life of investment and
mortgage-backed
securities
|
|
16.43
Years
|
17.61
Years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
interest-earning assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal
funding sold
|
|
|
17,363
|
|
|
98.50
|
|
|
1,112
|
|
|
86.74
|
|
|
Interest-bearing
deposits with banks
|
|
|
264
|
|
|
1.50
|
|
|
170
|
|
|
13.26
|
|
|
Total
other interest earnings investments
|
|
$
|
17,627
|
|
|
100.00
|
%
|
$
|
1,282
|
|
|
100.00
|
%
|
The
Bank’s investment securities portfolio at March 31, 2008, contained no
securities of any issuer with an aggregate book value in excess of 10% of the
Bank’s retained earnings, excluding those issued by the U.S. government, or its
agencies.
First
Robinson’s investments, including the mortgage-backed securities portfolio, are
managed in accordance with a written investment policy adopted by the Board
of
Directors.
OCC
guidelines, as well as those of the other federal banking regulators, regarding
investment portfolio policy and accounting require banks to categorize
securities and certain other assets as held for “investment,” “sale,” or
“trading.” In addition, the Bank has adopted SFAS 115 which states that
securities available for sale are accounted for at fair value and securities
which management has the intent and the Bank has the ability to hold to maturity
are accounted for on an amortized cost basis. The Bank’s investment policy has
strategies for each type of security. At March 31, 2008, the Bank classified
$31.5 million of its investments as available for sale.
Mortgage-Backed
Securities.
The Bank
invests primarily in federal agency obligations. At March 31, 2008, the Bank’s
investment in mortgage-backed securities totaled $25.3 million or 18.9% of
its
total assets. All of the mortgage-backed securities are classified as available
for sale. At March 31, 2008, the Bank did not
have
a
trading portfolio.
The
following table sets forth the maturities of the Bank’s mortgage-backed
securities at March 31, 2008.
|
|
|
Due
in
|
|
|
|
|
|
|
1
Year
or
Less
|
|
1
to
5
Years
|
|
5
to 10
Years
|
|
10
Years
or
More
|
|
Total
|
|
|
Federal
Home Loan Mortgage Corporation
|
|
$
|
—
|
|
$
|
1,101
|
|
$
|
682
|
|
$
|
6,404
|
|
$
|
8,187
|
|
|
Weighted
Average Rate
|
|
|
—
|
|
|
4.60
|
%
|
|
4.56
|
%
|
|
4.54
|
%
|
|
4.55
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal
National Mortgage Company
|
|
|
—
|
|
|
46
|
|
|
1,388
|
|
|
13,819
|
|
|
15,253
|
|
|
Weighted
Average Rate
|
|
|
—
|
|
|
7.00
|
|
|
4.83
|
|
|
5.02
|
|
|
5.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government
National Mortgage Company
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,862
|
|
|
1,862
|
|
|
Weighted
Average Rate
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5.19
|
|
|
5.19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
—
|
|
$
|
1,147
|
|
$
|
2,070
|
|
$
|
22,085
|
|
$
|
25,302
|
|
|
Weighted
Average Rate
|
|
|
—
|
|
|
4.70
|
%
|
|
4.74
|
%
|
|
4.89
|
%
|
|
4.87
|
%
|
Sources
of Funds
General.
The
Bank’s primary sources of funds are deposits, receipt of principal and interest
on loans and securities, interest earned on deposits with other banks, and
other
funds provided from operations.
The
Bank
has used FHLB advances to support lending activities and to assist in the Bank’s
asset/liability management strategy. See “Management’s Discussion and Analysis
of Financial Condition and Results of Operations — AssetLiability Management.”
At March 31, 2008, the Bank had no FHLB advances and $6.0 million in FHLB
Letters of Credit pledged to secure public unit deposits. The Bank also had
a
credit enhancement reserve of $1.5 million established with the FHLB for
participation in the Mortgage Partnership Finance (“MPF”) program. The FHLB
Letters of Credit and the MPF credit enhancement reserve reduce the amount
available to borrow from the FHLB of Chicago to $18.0 million. The Company
and
Bank could also borrow up to $5.6 million from a correspondent bank located
in
Springfield, Illinois. The Bank has also established borrowing capabilities
with
the Federal Reserve Bank of St. Louis. See Notes 9 and 10 of Notes to
Consolidated Financial Statements.
At
March
31, 2008, the Bank had $16.3 million in repurchase agreements. See Note 8 of
Notes to Consolidated Financial Statements.
Deposits.
The Bank
offers a variety of deposit accounts having a wide range of interest rates
and
terms. The Bank’s deposits consist of passbook, money market deposit, NOW
accounts, IRA accounts, and certificate accounts. The certificate accounts
currently range in terms from 90 days to five years. The Bank also offers a
variable rate certificate for children. The certificate matures on the child’s
18th birthday. The Bank has a significant amount of deposits that will mature
within one year. However, management expects that virtually all of the deposits
will be renewed.
The
Bank
relies primarily on advertising, competitive pricing policies and customer
service to attract and retain these deposits. Currently, the Bank solicits
deposits from its market area only, and does not use brokers to obtain deposits.
The
flow
of deposits is influenced significantly by general economic conditions, changes
in money market and prevailing interest rates and competition.
The
Bank
remains susceptible to short-term fluctuations in deposit flows as customers
have become more interest rate conscious. The Bank endeavors to manage the
pricing of its deposits in keeping with its profitability objectives giving
consideration to its asset/liability management. The ability of the Bank to
attract and maintain deposit accounts and certificates of deposit, and the
rates
paid on these deposits, has been and will continue to be significantly affected
by market conditions.
The
following table sets forth the deposit flows at the Bank during the periods
indicated.
|
|
|
Year
Ended
March
31,
|
|
|
|
|
2008
|
|
2007
|
|
|
|
|
(Dollars
in thousands)
|
|
|
|
|
|
|
|
|
|
Opening
balance
|
|
$
|
86,773
|
|
$
|
86,202
|
|
|
Deposits
|
|
|
915,062
|
|
|
821,575
|
|
|
Withdrawals
|
|
|
(899,954
|
)
|
|
(822,536
|
)
|
|
Interest
credited
|
|
|
2,017
|
|
|
1,532
|
|
|
|
|
|
|
|
|
|
|
|
Ending
balance
|
|
|
103,898
|
|
|
86,773
|
|
|
|
|
|
|
|
|
|
|
|
Net
increase
|
|
$
|
17,125
|
|
$
|
571
|
|
|
|
|
|
|
|
|
|
|
|
Percent
increase
|
|
|
19.74
|
%
|
|
0.66
|
%
|
The
following table sets forth the dollar amount of deposits in the various types
of
deposit programs offered by the Bank for the periods indicated.
|
|
|
March
31,
|
|
|
|
|
2008
|
|
2007
|
|
|
|
|
Amount
|
|
Percent
of
Total
|
|
Amount
|
|
Percent
of
Total
|
|
|
|
|
(Dollars
in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transactions
and Savings Deposits
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest
bearing demand (0.00%)
|
|
$
|
12,919
|
|
|
12.43
|
%
|
$
|
11,749
|
|
|
13.54
|
%
|
|
Passbook
and Money Market Accounts (0.99%)
|
|
|
22,537
|
|
|
21.69
|
|
|
22,404
|
|
|
25.82
|
|
|
NOW
Accounts (1.96%)
|
|
|
28,442
|
|
|
27.38
|
|
|
20,071
|
|
|
23.13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
non-certificates
|
|
|
63,898
|
|
|
61.50
|
|
|
54,224
|
|
|
62.49
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certificates
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.75 –
1.99%
|
|
$
|
20
|
|
|
0.02
|
%
|
$
|
19
|
|
|
0.02
|
%
|
|
2.00
– 3.99%
|
|
|
10,221
|
|
|
9.84
|
|
|
9,309
|
|
|
10.73
|
|
|
4.00
– 5.99%
|
|
|
28,157
|
|
|
27.10
|
|
|
21,356
|
|
|
24.61
|
|
|
6.00
– 7.99%
|
|
|
1,602
|
|
|
1.54
|
|
|
1,865
|
|
|
2.15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
certificates
|
|
|
40,000
|
|
|
38.50
|
|
|
32,549
|
|
|
37.51
|
|
|
Total
deposits
|
|
$
|
103,898
|
|
|
100.00
|
%
|
$
|
86,773
|
|
|
100.00
|
%
|
The
following table shows rate and maturity information for the Bank’s certificates
of deposit as of March 31, 2008.
|
|
|
0.75
-
1.99%
|
|
2.00-
3.99%
|
|
4.00-
5.99%
|
|
6.00-
7.99%
|
|
Total
|
|
Percent
of
Total
|
|
Weighted
Average
Rate
|
|
|
|
|
(Dollars
in thousands)
|
|
|
Certificate
accounts maturing
In
quarter ending
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June
30, 2008
|
|
$
|
—
|
|
$
|
1,829
|
|
$
|
4,446
|
|
$
|
1,118
|
|
$
|
7,393
|
|
|
18.48
|
%
|
|
4.71
|
%
|
|
September
30, 2008
|
|
|
—
|
|
|
1,985
|
|
|
4,876
|
|
|
180
|
|
|
7,041
|
|
|
17.60
|
|
|
4.38
|
|
|
December
31, 2008
|
|
|
—
|
|
|
1,549
|
|
|
2,049
|
|
|
—
|
|
|
3,598
|
|
|
9.00
|
|
|
4.15
|
|
|
March
31, 2009
|
|
|
—
|
|
|
2,360
|
|
|
1,765
|
|
|
—
|
|
|
4,125
|
|
|
10.31
|
|
|
3.89
|
|
|
June
30, 2009
|
|
|
—
|
|
|
324
|
|
|
479
|
|
|
10
|
|
|
813
|
|
|
2.03
|
|
|
4.37
|
|
|
September
30, 2009
|
|
|
—
|
|
|
326
|
|
|
2,392
|
|
|
31
|
|
|
2,749
|
|
|
6.87
|
|
|
4.97
|
|
|
December
31, 2009
|
|
|
20
|
|
|
79
|
|
|
3,116
|
|
|
6
|
|
|
3,221
|
|
|
8.05
|
|
|
5.12
|
|
|
March
31, 2010
|
|
|
—
|
|
|
126
|
|
|
3,189
|
|
|
—
|
|
|
3,315
|
|
|
8.29
|
|
|
4.90
|
|
|
June
30, 2010
|
|
|
—
|
|
|
1,168
|
|
|
1,857
|
|
|
11
|
|
|
3,036
|
|
|
7.59
|
|
|
4.32
|
|
|
September
30, 2010
|
|
|
—
|
|
|
166
|
|
|
211
|
|
|
11
|
|
|
388
|
|
|
0.97
|
|
|
4.18
|
|
|
December
31, 2010
|
|
|
—
|
|
|
—
|
|
|
277
|
|
|
1
|
|
|
278
|
|
|
0.70
|
|
|
4.95
|
|
|
March
31, 2011
|
|
|
—
|
|
|
16
|
|
|
40
|
|
|
—
|
|
|
56
|
|
|
0.14
|
|
|
4.48
|
|
|
Thereafter
|
|
|
—
|
|
|
293
|
|
|
3,460
|
|
|
234
|
|
|
3,987
|
|
|
9.97
|
|
|
5.20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
20
|
|
$
|
10,221
|
|
$
|
28,157
|
|
$
|
1,602
|
|
$
|
40,000
|
|
|
100.00
|
%
|
|
4.59
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent
of total
|
|
|
0.05
|
%
|
|
25.55
|
%
|
|
70.39
|
%
|
|
4.01
|
%
|
|
100.00
|
%
|
|
|
|
|
|
|
The
following table indicates the amount of the Bank’s certificates of deposit and
other deposits by time remaining until maturity as of March 31,
2008.
|
|
|
3
Months
or
Less
|
|
Over
3
to 6
Months
|
|
Over
6
to 12
Months
|
|
Over
12
months
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certificates
of deposit less than $100,000
|
|
$
|
4,514
|
|
$
|
4,696
|
|
$
|
6,169
|
|
$
|
13,400
|
|
$
|
28,779
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certificates
of deposit of $100,000 or more
|
|
|
858
|
|
|
1,165
|
|
|
1,198
|
|
|
4,443
|
|
|
7,664
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Public
funds of $100,000 or more (1)
|
|
|
2,021
|
|
|
1,180
|
|
|
356
|
|
|
—
|
|
|
3,557
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
certificates of deposit
|
|
$
|
7,393
|
|
$
|
7,041
|
|
$
|
7,723
|
|
$
|
17,843
|
|
$
|
40,000
|
|
(1)
Deposits
from governmental and other public entities.
Subsidiary
Activities
As
a
national bank, the Bank is able to invest unlimited amounts in subsidiaries
that
are engaged in activities in which the parent bank may engage. In addition,
a
national bank may invest limited amounts in subsidiaries that provide banking
services, such as data processing, to other financial institutions. At March
31,
2008, the Bank had no subsidiaries.
Code
of Ethics
A
copy of
the Company’s Code of Ethics may be obtained in print, without charge, to any
stockholder upon written request to Secretary, c/o First Robinson Financial
Corporation, 501 East Main Street, Robinson, Illinois 62454.
Competition
The
Bank
faces strong competition, both in originating real estate, commercial and
consumer loans and in attracting deposits. Competition in originating loans
comes primarily from commercial banks and a credit union located in the Bank’s
market area. Commercial banks provide vigorous competition in consumer lending.
The Bank competes for real estate and other loans principally on the basis
of
the quality of services it provides to borrowers, the interest rates and loan
processing fees it charges, and the types of loans it originates. See “— Lending
Activities.”
The
Bank
attracts all of its deposits through its retail banking offices. Therefore,
competition for those deposits is principally from retail brokerage offices,
commercial banks and a credit union located in the community. The Bank competes
for these deposits by offering a variety of account alternatives at competitive
rates and by providing convenient business hours.
The
Bank
primarily serves Crawford County, Illinois. There are six commercial banks
and
one credit union, other than the Bank, which compete for deposits and loans
in
the Bank’s market area.
REGULATION
General
The
Company is a registered bank holding company, subject to broad federal
regulation and oversight by the Board of Governors of the Federal Reserve Bank
(“FRB”). The Bank is a national bank, the deposits of which are federally
insured and backed by the full faith and credit of the U.S. Government.
Accordingly, the Bank is subject to broad federal regulation and oversight
extending to all its operations by the OCC, the Federal Deposit Insurance
Corporation (“FDIC”) and the FRB. The Bank is also a member of the FHLB of
Chicago. The Bank is a member of the Deposit Insurance Fund (the “
DIF
”)
and
the deposits of the Bank are insured by the
FDIC
.
The
DIF
was
created on March 31, 2006 with the merger of the Bank Insurance Fund and Savings
Association Insurance Fund, pursuant to the Federal Deposit Insurance
Reform Act of 2005 (the "
FDIRA
"),
discussed in further detail below.
Certain
of these regulatory requirements and restrictions are discussed below or
elsewhere in this document. See Note 13 of Notes to Consolidated Financial
Statements.
Federal
Regulation of National Banks
The
OCC
has extensive authority over the operations of national banks. As part of this
authority, the Bank is required to file periodic reports with the OCC and is
subject to periodic examinations by the OCC. All national banks are subject
to a
semi-annual assessment, based upon the bank’s total assets, to fund the
operations of the OCC.
The
OCC
also has extensive enforcement authority over all national banks, including
the
Bank. This enforcement authority includes, among other things, the ability
to
assess civil money penalties, to issue cease-and-desist or removal orders and
to
initiate injunctive actions. In general, these enforcement actions may be
initiated for violations of laws and regulations as well as unsafe or unsound
practices. Other actions or inactions may provide the basis for enforcement
action, including misleading or untimely reports filed with the OCC. Except
under certain circumstances, public disclosure of final enforcement actions
by
the OCC is required.
The
Bank’s loans to one borrower limit is generally limited to the greater of 15% of
unimpaired capital and surplus or, if a bank’s lending limit under this
calculation would be less than $500,000, a bank may make loans and extensions
of
credit to one borrower at one time in an amount not to exceed $500,000. See
“Regulation — Federal Regulation of National Banks.” However, the Bank is
allowed to utilize a program offered by the OCC that permits it to exceed the
15% lending limit under certain exceptions. The Bank may lend up to 25% of
its
unimpaired capital and surplus to one borrower for loans secured by one-to-four
family residential real estate, loans secured by small businesses or small
farm
loans. The total outstanding amount of the Bank’s loans or extensions of credit
made to all of its borrowers under the special limits of this program may not
exceed 100% of the Bank’s unimpaired capital and surplus. All loans to
affiliates and their related interests are not eligible for this program. At
March 31, 2008, the maximum amount which the Bank could have lent under this
program to any one borrower and the borrowers related interests was
approximately $3.1 million. At March 31, 2008, the Bank had no loans or groups
of loans to related borrowers with outstanding balances in excess of this
amount. The Bank’s five largest lending relationships at March 31, 2008 totaled
$12.3 million in the aggregate and were performing in accordance with their
terms. Of this amount, $4.4 million was participated to other lenders.
The
OCC,
as well as the other federal banking agencies, have adopted regulations and
guidelines establishing safety and soundness standards on such matters as loan
underwriting and documentation, internal controls and audit systems, interest
rate risk exposure, asset quality and earnings, and compensation and other
employee benefits. Any institution which fails to comply with these standards
must submit a compliance plan. A failure to submit a plan or to comply with
an
approved plan will subject the institution to further enforcement
action.
Recent
Legislation
The
Sarbanes-Oxley Act.
While
not a banking law per se, the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”)
implements a broad range of corporate governance and accounting measures for
public companies (including publicly-held bank holding companies such as the
Company) designed to promote honesty and transparency in corporate America.
Sarbanes-Oxley’s principal provisions, many of which have been interpreted
through regulations, provide for and include, among other things: (i) the
creation of an independent accounting oversight board; (ii) auditor independence
provisions that restrict non-audit services that accountants may provide to
their audit clients; (iii) additional corporate governance and responsibility
measures, including the requirement that the chief executive officer and chief
financial officer of a public company certify financial statements; (iv) the
forfeiture of bonuses or other incentive-based compensation and profits from
the
sale of an issuer’s securities by directors and senior officers in the twelve
month period following initial publication of any financial statements that
later require restatement; (v) an increase in the oversight of, and enhancement
of certain requirements relating to, audit committees of public companies and
how they interact with the Company’s independent auditors; (vi) requirements
that audit committee members must be independent and are barred from accepting
consulting, advisory or other compensatory fees from the issuer; (vii)
requirements that companies disclose whether at least one member of the audit
committee is a ‘financial expert’ (as such term is defined by the SEC) and if
not discussed, why the audit committee does not have a financial expert; (viii)
expanded disclosure requirements for corporate insiders, including accelerated
reporting of stock transactions by insiders and a prohibition on insider trading
during pension blackout periods; (ix) a general prohibition on personal loans
to
directors and officers, except for certain loans made by subsidiary insured
financial institutions such as the Bank on non-preferential terms and in
compliance with other bank regulatory requirements; (x) disclosure of a code
of
ethics and filing a Form 8-K for a change or waiver of such code; (xi)
requirements that management assess the effectiveness of internal control over
financial reporting and that the Company’s Independent Registered Public
Accounting Firm attest to the assessment; and (xii) a range of enhanced
penalties for fraud and other violations.
Pursuant
to Section 302 of Sarbanes-Oxley, the Company’s Chief Executive Officer and the
Chief Financial Officer are required to certify that the Company’s quarterly and
annual reports filed with the SEC fairly present, in all material respects,
the
operations and conditions of the Company. In addition, as required by Section
404 of the Sarbanes-Oxley Act, management must make an assessment regarding
the
effect of internal controls on financial reporting and the Company’s external
auditors must attest to such management assessment and reports. The Company
is
considered a non-accelerated filer based on criteria established by the SEC,
and
accordingly, beginning with this annual report for the fiscal year ending March
31, 2008, the Company is required to provide management’s assessment of the
effectiveness of its internal control over financial reporting, which assessment
is included in Item 8A(T) below. Because the Company is a non-accelerated filer,
its independent registered public accounting firm is not yet required to issue
its attestation regarding the Company’s internal controls over financial
reporting.
The
Company’s management has developed policies, procedures and internal processes
to ensure compliance with all applicable provisions of the Sarbanes-Oxley Act.
It is anticipated that these and other requirements of Sarbanes-Oxley will
increase the Company’s cost of doing business both in terms of the time and
energy that its board, committees and executives will have to expend, as well
as
in hard dollars, although no prediction can be made at this time of how
extensive the increased costs will be.
Federal
Deposit Insurance Reform Act of 2005.
On
February 8, 2006, President Bush signed the Federal Deposit Insurance Reform
Act
of 2005 (“FDIRA”) into law as part of the Deficit Reduction Act of 2005. On
February 15, 2006, President Bush signed into law the technical and conforming
amendments designed to implement FDIRA. FDIRA provides for legislative reforms
to modernize the federal deposit insurance system.
Among
other things, FDIRA: (i) permitted the FDIC to merge the BIF and SAIF into
a
single deposit insurance fund, the DIF, which occurred on March 31, 2006; (ii)
increased the deposit insurance limit for certain retirement account deposits
from $100,000 to $250,000; (iii) permits an indexing to inflation calculation
with respect to deposit insurance coverage on individual accounts beginning
in
2010; (iv) replaces the fixed designated reserve ratio of 1.25% with a reserve
ratio range of 1.15%-1.50%, with the specific reserve ratio to be determined
annually by the FDIC by regulation (see below); (v) permits the FDIC to revise
the risk-based assessment system by regulation; and (vi) provides a one-time
credit against future assessments based upon the assessment base of the
institution on December 31, 1996 to each insured depository institution that
was
in existence as of December 31, 1996 and paid a deposit insurance assessment
prior to that date (or a successor to any such institution) (see the discussion
below with respect to the Bank’s proposed assessment credit).
Pursuant
to FDIRA, the FDIC set the designated reserve ratio for the DIF at 1.25%
effective January 1, 2008. This ratio is unchanged from 2007.
Department
of Defense Credit Regulations.
As
of
October 1, 2007, US Department of Defense (“DOD”) regulations regulating certain
credit terms for members of the US military became effective. Specifically,
these regulations impose certain restrictions on certain terms that may be
found
in consumer credit products provided to “covered borrowers,” a term that is
generally defined in the regulations to include all active duty service members
and their dependents. The regulations apply to all “creditors,” a term which
includes the Bank. Most importantly, the regulations provide for a Military
Annual Percentage Rate, which caps the applicable annual percentage rate on
covered transactions at 36%.
The
regulations were implemented by the DOD to protect service members from
predatory loan practices and are an attempt to balance service member
protections with access to credit.
Privacy.
The
Bank
is required by statute and regulation to disclose privacy policies to the
individuals requesting information about the Bank’s products and services (the
Bank’s consumers) and, on an annual basis, to their customers. The privacy
notices provided with respect to this requirement provide Bank customers’ with
the ability to opt out of the sharing of their nonpublic personal information
with non-affiliated third parties. Information safeguards are also required
with
respect to the Bank’s protection of non-public personal
information.
Other
Regulations.
The Bank
is also subject to numerous other regulations with respect to its operation,
including, but not limited to, the Truth in Lending Act, the Truth in Savings
Act, the Equal Credit Opportunity Act, the Electronic Funds Transfer Act, the
Fair Housing Act, the Home Mortgage Disclosure Act, the Fair Debt Collection
Practices Act, and the Fair Credit Reporting Act. Changes in any regulation
applicable to the operation of the Bank are not predictable and could affect
the
Bank’s operations and profitability.
Insurance
of Accounts and Regulation by the FDIC
The
Bank
is a member of the DIF, which is administered by the FDIC. Deposits are insured
up to applicable limits by the FDIC and such insurance is backed by the full
faith and credit of the U.S. Government. As insurer, the FDIC imposes deposit
insurance premiums and is authorized to conduct examinations of and to require
reporting by FDIC-insured institutions. It also may prohibit any FDIC-insured
institution from engaging in any activity the FDIC determines by regulation
or
order to pose a serious risk to the FDIC. The FDIC also has the authority to
initiate enforcement actions against banks after giving the OCC an opportunity
to take such action, and may terminate the deposit insurance if it determines
that the institution has engaged in unsafe or unsound practices or is in an
unsafe or unsound condition.
Deposit
Insurance.
As an
FDIC-insured institution, the Bank is required to pay deposit insurance premium
assessments to the FDIC based upon a risk classification system established
by
the agency comprised of four categories that are distinguished by capital ratios
and supervisory ratings. Each bank’s risk-based assessment category will be
determined, and assessments will be collected, on a quarterly
basis.
During
the year ended December 31, 2007, DIF assessments ranged from 5 basis points
to
43 basis points for every $100 of qualified deposits. The Bank qualified for
the
5 basis point deposit insurance rate in 2007. In 2008, the assessment rate
for
deposits will remain unchanged from that in 2007. The FDIC has indicated that
the Bank’s annual assessment rate for 2008 will be 5 basis points per $100 of
deposits. The FDIC has allowed eligible insured institutions to share in a
one-time assessment credit for institutions that were in existence at December
31, 1996 and paid deposit insurance assessments prior to that date. The Bank’s
one-time assessment credit was originally $83,138.70. The remaining credit,
as
of March 31, 2008, of $36,935.06 will reduce deposit assessments in 2008 and
2009. The Bank cannot, however, predict insurance assessment rates for the
future.
FICO
Assessments.
DIF-insured institutions are required to pay a quarterly Financing Corporation
(FICO) assessment in order to fund the interest on bonds issued to resolve
thrift failures in the 1980s. These FICO assessments are in addition to amounts
assessed by the FDIC for deposit insurance. During the calendar year ended
December 31, 2007, the FICO assessment rate for DIF members ranged between
1.14
basis points and 1.22 basis points. The Bank’s FICO assessment expense for 2008
was $10,000. Management believes this expense will be comparable in 2009.
National
Banks.
The Bank
is subject to, and in compliance with, the capital regulations of the OCC.
The
OCC’s regulations establish two capital standards for national banks: a leverage
requirement and a risk-based capital requirement. In addition, the OCC may,
on a
case-by-case basis, establish individual minimum capital requirements for a
national bank that vary from the requirements which would otherwise apply under
OCC regulations. A national bank that fails to satisfy the capital requirements
established under the OCC’s regulations will be subject to such administrative
action or sanctions as the OCC deems appropriate.
The
leverage ratio adopted by the OCC requires a minimum ratio of “Tier 1 capital”
to adjusted total assets of 3% for national banks rated composite 1 under the
CAMELS rating system for banks. National banks not rated composite 1 under
the
CAMELS rating system for banks are required to maintain a minimum ratio of
Tier
1 capital to adjusted total assets of 4% to 5%, depending upon the level and
nature of risks of their operations. For purposes of the OCC’s leverage
requirement, Tier 1 capital generally consists of common stockholders’ equity
and retained income and certain non-cumulative perpetual preferred stock and
related income, except that no intangibles and certain purchased mortgage
servicing rights and purchased credit card relationships may be included in
capital.
The
risk-based capital requirements established by the OCC’s regulations require
national banks to maintain “total capital” equal to at least 8% of total
risk-weighted assets. For purposes of the risk-based capital requirement, “total
capital” means Tier 1 capital (as described above) plus “Tier 2 capital,”
provided that the amount of Tier 2 capital may not exceed the amount of Tier
1
capital, less certain assets. The components of Tier 2 capital include certain
permanent and maturing capital instruments that do not qualify as core capital
and general valuation loan and lease loss allowances up to a maximum of 1.25%
of
risk-weighted assets.
Under
this current regulatory scheme, Bank management believes that it will meet
the
capital requirements set forth above. Economic downturns in the Bank’s market,
and other local and national events, however, could adversely affect the Bank’s
earnings, thereby affecting its ability to meet its capital
requirements.
Prompt
Corrective Action.
The OCC
is authorized and, under certain circumstances required, to take certain actions
against national banks that fail to meet their capital requirements. The OCC
is
generally required to take action to restrict the activities of an
“undercapitalized institution” (generally defined to be one with less than
either a 4% core capital ratio, a 4% Tier 1 risked-based capital ratio or an
8%
risk-based capital ratio). Any such institution must submit a capital
restoration plan and, until such plan is approved by the OCC, may not increase
its assets, acquire another institution, establish a branch or engage in any
new
activities, and generally may not make capital distributions. The OCC is
authorized to impose the additional restrictions that are applicable to
significantly undercapitalized institutions.
Any
national bank that fails to comply with its capital plan or is “significantly
undercapitalized” (i.e., Tier 1 risk-based or core capital ratios of less than
3% or a risk-based capital ratio of less than 6%) must be made subject to one
or
more of additional specified actions and operating restrictions which may cover
all aspects of its operations and include a forced merger or acquisition of
the
bank. A national bank that becomes “critically undercapitalized” (i.e., a
tangible capital ratio of 2% or less) is subject to further mandatory
restrictions on its activities in addition to those applicable to significantly
undercapitalized institutions. In addition, the OCC must appoint a receiver
(or
conservator with the concurrence of the FDIC) for an institution, with certain
limited exceptions, within 90 days after it becomes critically undercapitalized.
Any undercapitalized institution is also subject to the general enforcement
authority of the OCC, including the appointment of a conservator or a
receiver.
The
OCC
is also generally authorized to reclassify a bank into a lower capital category
and impose the restrictions applicable to such category if the institution
is
engaged in unsafe or unsound practices or is in an unsafe or unsound condition.
Notably, at March 31, 2008, the Bank was categorized as well capitalized under
the OCC’s prompt corrective action regulations.
The
imposition by the OCC of any of these measures on the Bank may have a
substantial adverse effect on the Bank’s operations and profitability and the
value of the Company’s common stock.
Limitations
on Dividends and Other Capital Distributions
The
Bank’s ability to pay dividends is governed by the National Bank Act and OCC
regulations. Under such statute and regulations, all dividends by a national
bank must be paid out of current or retained net profits, after deducting
reserves for losses and bad debts. The National Bank Act further restricts
the
payment of dividends out of net profits by prohibiting a national bank from
declaring a cash dividend on its shares of common stock until the surplus fund
equals the amount of capital stock or, if the surplus fund does not equal the
amount of capital stock, until one-tenth of the bank’s net profits for the
preceding half year in the case of quarterly or semi-annual dividends, or the
preceding two half-year periods in the case of annual dividends, are transferred
to the surplus fund. In addition, the prior approval of the OCC is required
for
the payment of a dividend if the total of all dividends declared by a national
bank in any calendar year would exceed the total of its net profits for the
year
combined with its net profits for the two preceding years, less any required
transfers to surplus or a fund for the retirement of any preferred
stock.
The
OCC
has the authority to prohibit the payment of dividends by a national bank when
it determines such payment to be an unsafe and unsound banking practice. In
addition, the bank would be prohibited by federal statute and the OCC’s prompt
corrective action regulations from making any capital distribution if, after
giving effect to the distribution, the bank would be classified as
“undercapitalized” under OCC regulations. See “— Prompt Corrective Action.”
Finally, the Bank would not be able to pay dividends on its capital stock if
its
capital would thereby be reduced below the remaining balance of the liquidation
account established in connection with the Bank’s conversion from mutual to
stock form.
Accounting
The
OCC
requires that investment activities of a national bank be in compliance with
approved and documented investment policies and strategies, and must be
accounted for in accordance with accounting principles generally accepted in
the
United States of America (“GAAP”). Accordingly, management must support its
classification of and accounting for loans and securities (i.e., whether held
for investment, sale or trading) with appropriate documentation. The Bank is
in
compliance with these requirements.
Community
Reinvestment Act
Under
the
Community Reinvestment Act (“CRA”), every FDIC-insured institution has a
continuing and affirmative obligation consistent with safe and sound banking
practices to help meet the credit needs of its entire community, including
low-
and moderate-income neighborhoods. The CRA does not establish specific lending
requirements or programs for financial institutions nor does it limit an
institution’s discretion to develop the types of products and services that it
believes are best suited to its particular community, consistent with the
CRA.
The
CRA
requires the OCC, in connection with the examination of the institution, to
assess the institution’s record of meeting the credit needs of its community and
to take such record into account in its evaluation of certain applications,
such
as a merger or the establishment of a branch, by the institution. An
unsatisfactory rating may be used as the basis for the denial of an application
by the OCC. The Bank’s CRA rating is “satisfactory.”
Transactions
with Affiliates
Generally,
transactions between a national bank or its subsidiaries and its affiliates
are
required to be on terms as favorable to the bank as transactions with
non-affiliates. In addition, certain of these transactions, such as loans to
an
affiliate, are restricted to a percentage of the bank’s capital. Affiliates of
the bank include any company which is under common control with the bank. In
addition, the bank may not acquire the securities of most affiliates.
Subsidiaries of the bank are not deemed affiliates. However, the Federal Reserve
Board (the “FRB”) has the discretion to treat subsidiaries of national banks as
affiliates on a case-by-case basis.
Certain
transactions with directors, officers or controlling persons (“Insiders”) are
also subject to conflict of interest rules enforced by the OCC. These conflict
of interest regulations and other statutes also impose restrictions on loans
to
such persons and their related interests. Among other things, as a general
matter, loans to Insiders must be made on terms substantially the same as for
loans to unaffiliated individuals.
Federal
Reserve System
The
FRB
requires all depository institutions to maintain non-interest bearing reserves
at specified levels against their transaction accounts (primarily checking
and
NOW checking accounts). At March 31, 2008, the Bank had $167,000 in FRB stock,
which was in compliance with these reserve requirements.
The
Bank
is a member of the Federal Reserve System. National banks are authorized to
borrow from the Federal Reserve Bank “discount window,” but FRB regulations
require banks to exhaust other reasonable alternative sources of funds,
including FHLB borrowings, before borrowing from the FRB.
Holding
Company Regulation
General
.
The
Company is a bank holding company registered with the FRB. Bank holding
companies are subject to comprehensive regulation by the FRB under the Banking
Holding Company Act (the “BHCA”), and the regulations of the FRB. As a bank
holding company, the Company is required to file reports with the FRB and such
additional information as the FRB may require, and will be subject to regular
examinations by the FRB. The FRB also has extensive enforcement authority over
bank holding companies, including, among other things, the ability to assess
civil money penalties, to issue cease and desist or removal orders and to
require that a holding company divest subsidiaries (including its bank
subsidiaries). In general, enforcement actions may be initiated for violations
of law and regulations and unsafe or unsound practices.
Under
FRB
policy, a bank holding company must serve as a source of financial and
managerial strength for its subsidiary banks. Under this policy the FRB may
require, and has required in the past, a holding company to contribute
additional capital to an undercapitalized subsidiary bank. Failure by a bank
holding company to act as a “source of strength” to its subsidiary bank could be
deemed by the FRB to be an unsafe and unsound banking practice, a violation
of
FRB regulation, or both.
Under
the
BHCA, a bank holding company must obtain FRB approval before: (i) acquiring,
directly or indirectly, ownership or control of any voting shares of another
bank or bank holding company if, after such acquisition, it would own or control
more than 5% of such shares (unless it already owns or controls the majority
of
such shares); (ii) acquiring all or substantially all of the assets of another
bank or bank holding company; or (iii) merging or consolidating with another
bank holding company.
The
BHCA
also prohibits a bank holding company, with certain exceptions, from acquiring
direct or indirect ownership or control of more than 5% of the voting shares
of
any company which is not a bank or bank holding company, or from engaging
directly or indirectly in activities other than those of banking, managing
or
controlling banks, or providing services for its subsidiaries. The principal
exceptions to these prohibitions involve certain non-bank activities which,
by
statute or by FRB regulation or order, have been identified as activities
closely related to the business of banking or managing or controlling banks.
The
list of activities permitted by the FRB includes, among other things, operating
a savings institution, mortgage company, finance company, credit card company
or
factoring company; performing certain data processing operations; providing
certain investment and financial advice; underwriting and acting as an insurance
agent for certain types of credit-related insurance; leasing property on a
full-payout, non-operating basis; selling money orders, travelers’ checks and
U.S. Savings Bonds; real estate and personal property appraising; providing
tax
planning and preparation services; and, subject to certain limitations,
providing securities brokerage services for customers. Other than as described
herein or as presently conducted by the Bank, the Company has no present plans
to engage in any of these activities.
Dividends.
The FRB
has issued a policy statement, with which the Bank is in compliance, on the
payment of cash dividends by bank holding companies, which expresses the FRB’s
view that a bank holding company should pay cash dividends only to the extent
that the Company’s net income for the past year is sufficient to cover both the
cash dividends and a rate of earning retention that is consistent with the
Company’s capital needs, asset quality and overall financial condition. The FRB
also indicated that it would be inappropriate for a company experiencing serious
financial problems to borrow funds to pay dividends. Furthermore, under the
prompt corrective action regulations adopted by the FRB, the FRB may prohibit
a
bank holding company from paying any dividends if the holding company’s bank
subsidiary is classified as “undercapitalized.” See “Regulation — Prompt
Corrective Action.”
Redemption.
Bank
holding companies are required to give the FRB prior written notice of any
purchase or redemption of its outstanding equity securities if the gross
consideration for the purchase or redemption, when combined with the net
consideration paid for all such purchases or redemptions during the preceding
12
months, is equal to 10% or more of their consolidated net worth. The FRB may
disapprove such a purchase or redemption if it determines that the proposal
would constitute an unsafe or unsound practice or would violate any law,
regulation, FRB order, or any condition imposed by, or written agreement with,
the FRB. This notification requirement does not apply to any company that meets
the well-capitalized standard for commercial banks, is well managed and is
not
subject to any unresolved supervisory issues.
Capital
Requirements.
The FRB
has established capital requirements for bank holding companies that generally
parallel the capital requirements for national banks. For bank holding companies
with consolidated assets of less than $150 million, such as the Company,
compliance is measured on a case-by-case basis. See “Regulation — National
Banks.” The Company’s capital exceeds such requirements.
Federal
Home Loan Bank System
The
Bank
is a member of the FHLB of Chicago, which is one of 12 regional FHLBs, that
administers the home financing credit function of savings institutions. Each
FHLB serves as a reserve or central bank for its members within its assigned
region. It is funded primarily from proceeds derived from the sale of
consolidated obligations of the FHLB System. It makes loans to members (i.e.,
advances) in accordance with policies and procedures, established by the board
of directors of the FHLB, which are subject to the oversight of the Federal
Housing Finance Board (“FHFB”), an agency of the United States government. All
advances from the FHLB are required to be fully secured by sufficient collateral
as determined by the FHLB. In addition, all long-term advances are required
to
provide funds for residential home financing.
As
a
member, the Bank is required to purchase and maintain stock in the FHLB of
Chicago. At March 31, 2008, the Bank had $641,000 in FHLB stock, which was
in
compliance with the stock maintenance requirement.
The
FHLB
of Chicago entered into a cease and desist order (“Order”) with the Finance
Board, its regulator, on October 10, 2007. Dividends were suspended by the
FHLB
of Chicago at the end of the third quarter in 2007 and have not yet been
reinstated as of the date of this filing. Among other things, the Order provides
that the Director of the Office of Supervision of the Finance Board may approve
a request of the FHLB of Chicago to redeem or repurchase stock of its members.
Although, the Bank has no current plans to ask for such redemption, the Bank
believes that such a request on its behalf by the FHLB of Chicago would be
delayed or denied.
Under
federal law, the FHLBs are required to provide funds for the resolution of
troubled savings institutions and to contribute to low- and moderately priced
housing programs through direct loans or interest subsidies on advances targeted
for community investment and low- and moderate-income housing projects. These
contributions could have an adverse effect on the value of FHLB stock in the
future. A reduction in value of the Bank’s FHLB stock may result in a
corresponding reduction in the Bank’s capital.
Federal
and State Taxation
Federal
Taxation.
In
addition to the regular income tax, corporations generally are subject to a
minimum tax. An alternative minimum tax is imposed at a minimum tax rate of
20%
on alternative minimum taxable income, which is the sum of a corporation’s
regular taxable income (with certain adjustments) and tax preference items,
less
any available exemption. The alternative minimum tax is imposed to the extent
it
exceeds the corporation’s regular income tax and net operating losses can offset
no more than 90% of alternative minimum taxable income.
The
Company and the Bank file a consolidated income tax return on the accrual basis
of accounting. Neither the Company nor the Bank have been audited by the IRS
with respect to federal income tax returns.
State
Taxation.
The
Company also is subject to various forms of state taxation under the laws of
Illinois as a result of the business it conducts in Illinois.
Employees
At
March
31, 2008, the Company and the Bank had a total of 40 full-time and 8 part-time
employees. The Company’s and the Bank’s employees are not represented by any
collective bargaining group. Management considers its employee relations to
be
good.
Recent
Accounting Pronouncements
In
March
2006, the FASB issued Statement of Financial Accounting Standards No. 156 (“SFAS
No. 156”),
Accounting
for Servicing of Financial Assets
,
an
amendment of FASB Statement No. 140,
Accounting
for Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities
,
which
requires that all separately recognized servicing assets and servicing
liabilities be initially measured at fair value, if practicable and permits
the
entities to elect either fair value measurement with changes in fair value
reflected in earnings or the amortization and impairment requirements of
Statement 140 for subsequent measurement. The subsequent measurement of
separately recognized servicing assets and servicing liabilities at fair value
eliminates the necessity for entities that manage the risks inherent in
servicing assets and servicing liabilities with derivatives to qualify for
hedge
accounting treatment and eliminates the characterization of declines in fair
value as impairments or direct write-downs. Statement No. 156 is effective
as of
the entity’s first fiscal year beginning after September 15, 2006. Earlier
adoption is permitted as of the beginning of an entity’s fiscal year, provided
the entity has not yet issued financial statements, including interim financial
statements for any period of that fiscal year. The Company adopted the statement
on April 1, 2007 and the impact of the adoption of this statement on the
financial results was minimal.
In
July
2006, the FASB issued FASB Interpretation No. 48 (FIN 48),
Accounting
for Uncertainty in Income Taxes -an Interpretation of FASB Statement
109
,
which
provides guidance on the measurement, recognition and disclosure of tax
positions taken or expected to be taken in a tax return. The Interpretation
also
provides guidance on derecognition, classification, interest and penalties,
and
disclosure. FIN 48 prescribes that a tax position should only be recognized
if
it is more-likely-than-not that the position will be sustained upon examination
by the appropriate taxing authority. A tax position that meets this threshold
is
measured as the largest amount of benefit that is greater than 50 percent likely
of being realized upon ultimate settlement. The cumulative effect of applying
the provisions of FIN 48 is to be reported as an adjustment to the beginning
balance of retained earnings in the period of adoption. FIN 48 is effective
for
fiscal years beginning after December 15, 2006. The Company adopted the
statement on April 1, 2007 and the impact of the adoption of this statement
on
the financial results was minimal.
In
September, 2006, FASB issued SFAS No. 157,
Fair
Value Measurements
,
which
provides enhanced guidance for using fair value to measure assets and
liabilities. SFAS No. 157 establishes a common definition of fair value,
provides a framework for measuring fair value under U.S. GAAP and expands
disclosure requirements about fair value measurements. SFAS No. 157 is effective
for financial statements issued in fiscal years beginning after November 15,
2007, and interim periods within those fiscal years. The Company is currently
evaluating the impact, if any, the adoption of SFAS No. 157 will have on
financial reporting and disclosures.
In
February, 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities," which permits companies to choose
to measure many financial instruments and certain other items at fair value.
The
objective of the new pronouncement is to improve financial reporting by
providing companies with the opportunity to mitigate volatility in reported
earnings caused by measuring assets and liabilities differently without having
to apply complex hedge accounting provisions. SFAS
159
is
effective for the Company in 2008. The Company has not yet made a determination
if it will elect to apply the options available in SFAS 159.
ITEM
2.
DESCRIPTION OF PROPERTY
The
Bank
conducts its business through its main office and three branch offices, which
are located in Crawford County, Illinois. In February 2008, the Company
purchased commercial property in Vincennes, Indiana with the intent of
establishing a branch. An application was filed, with the Office of the
Comptroller of the Currency, and approval was received on May 30, 2008. The
target opening date is December 2008. The Bank owns its main office and branch
offices. The total net book value of the Bank’s premises and equipment
(including land, buildings and leasehold improvements and furniture, fixtures
and equipment) at March 31, 2008 was approximately $2.9 million.
The
following table sets forth information relating to the Bank’s offices as of
March 31, 2008.
|
Location
|
|
Date
Acquired
|
|
Total
Approximate
Square
Footage
|
|
Net Book Value of
Buildings and
Improvements at
March 31, 2008
|
|
|
|
|
|
|
|
|
|
|
|
Main
Office:
501
East Main Street
Robinson,
Illinois
|
|
|
1985
|
|
|
12,420
|
|
$
|
1.4
million
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Branch
Offices:
119
East Grand Prairie
Palestine,
Illinois
|
|
|
1995
|
|
|
1,800
|
|
|
283,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
102
West Main Street
Oblong,
Illinois
|
|
|
1995
|
|
|
2,260
|
|
|
92,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outer East Main Street
Oblong,
Illinois
|
|
|
1997
|
|
|
1,000
|
|
|
147,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
615
Kimmel Road
Vincennes,
Indiana
|
|
|
2008
|
|
|
2,612
|
|
|
607,000
|
|
The
Company and the Bank believe that current facilities are adequate to meet the
present and foreseeable needs and are adequately covered by insurance. See
Note
5 of Notes to Consolidated Financial Statements.
ITEM
3.
LEGAL
PROCEEDINGS
The
Company and the Bank are involved, from time to time, as plaintiff or defendant
in various legal actions arising in the normal course of its businesses. While
the ultimate outcome of these proceedings cannot be predicted with certainty,
it
is the opinion of management, after consultation with counsel representing
the
Company and the Bank in the proceedings, that the resolution of these
proceedings should not have a material effect on the Company’s results of
operations on a consolidated basis.
ITEM
4.
SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS
No
matter
was submitted to a vote of security holders, through the solicitation of proxies
or otherwise, for the quarter ended March 31, 2008.
PART
II
|
ITEM 5.
|
MARKET
FOR COMMON EQUITY, RELATED STOCKHOLDER
MATTERS
AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY
SECURITIES
|
Pages
55
and 56 of the attached 2008 Annual Report to Stockholders are incorporated
herein by reference.
The
following table provides information about purchases by the Company for the
quarter ended March 31, 2008 regarding the Company’s common stock.
Purchases
of Equity Securities By Company
(1)(2)
|
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
|
|
|
1/1/2008 – 1/31/2008
|
|
|
600
|
|
|
33.50
|
|
|
600
|
|
|
10,972
|
|
|
2/1/2008 –
2/28/2008
|
|
|
700
|
|
|
33.75
|
|
|
700
|
|
|
10,272
|
|
|
3/1/2008–
3/31/2008
|
|
|
2,782
|
|
|
35.91
|
|
|
2,394
|
|
|
7,878
|
|
|
Total
|
|
|
4,082
|
|
|
35.19
|
|
|
3,694
|
|
|
7,878
|
|
|
(1)
|
The
program approved January 16, 2007 expired with the completion of
the
purchase of all 25,000 shares on September 14, 2007. On September
18,
2007, the Board of Directors of First Robinson Financial Corporation
approved another repurchase program of its equity stock. The Company
may
repurchase up to 25,000 shares of the Company’s outstanding common stock
from time to time, in the open market, when deemed appropriate by
management. The Program, approved September 18, 2007, will expire
the
earlier of the completion of the repurchase of the 25,000 shares
or
September 17, 2008. As of March 31, 2008, the number of shares held
in
Treasury were 400,930.
|
|
(2)
|
The
trustees of the First Robinson Savings & Loan Directors’ Retirement
Plan purchased 388 shares of the Company’s common stock. The stock is
allocated to the Directors’ accounts and will be distributed upon
retirement.
|
ITEM
6.
MANAGEMENT’S
DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION
Pages
5
through 23 of the attached 2008 Annual Report to Stockholders are incorporated
herein by reference.
ITEM
7.
FINANCIAL STATEMENTS
The
following information appearing in the Company’s Annual Report to Stockholders
for the year ended March 31, 2008, is incorporated by reference in this Annual
Report on Form 10-KSB as Exhibit 13.
|
Annual
Report Section
|
|
Pages
in
Annual
Report
|
|
|
|
|
|
Report
of Independent Registered Public Accounting Firm
|
|
24
|
|
Consolidated
Balance Sheets for the
|
|
|
|
Fiscal
Years Ended March 31, 2008 and 2007
|
|
25
|
|
Consolidated
Statements of Income for the
|
|
|
|
Years
Ended March 31, 2008 and 2007
|
|
26
|
|
Consolidated
Statements of Stockholders’ Equity for
|
|
|
|
Years
Ended March 31, 2008 and 2007
|
|
27
|
|
Consolidated
Statements of Cash Flows for the
|
|
|
|
Years
Ended March 31, 2008 and 2007
|
|
28
|
|
Notes
to Consolidated Financial Statements
|
|
30
|
With
the
exception of the aforementioned information, the Company’s Annual Report to
Stockholders for the year ended March 31, 2008, is not deemed filed as part
of
this Annual Report on Form 10-KSB.
|
ITEM 8.
|
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING
AND FINANCIAL DISCLOSURE
|
None.
ITEM
8A(T).
CONTROLS
AND PROCEDURES
(a)
Evaluation
of Disclosure Controls and Procedures.
Under
the
supervision and with the participation of our management, including our Chief
Executive Officer and Chief Financial Officer, we evaluated the effectiveness
of
the design and operation of our disclosure controls and procedures (as 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 Chief Executive
Officer and Chief Financial Officer concluded that our disclosure controls
and
procedures were effective in timely alerting them to the material information
relating to us required to be included in our periodic SEC filings. There were
no significant changes made in our internal controls during the period covered
by this report or, to our knowledge, in other factors that could significantly
affect these controls subsequent to the date of their evaluation.
(b)
Management’s
annual report on internal control over financial reporting.
Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting. The Company’s internal control over financial
reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting
principles. Our internal control over financial reporting includes those
policies and procedures that (i) pertain to the maintenance of records that,
in
reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the Company; (ii) provide reasonable assurance
that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and
that
receipts and expenditures of the Company are being made only in accordance
with
authorizations of management and directors of the Company; and (iii) provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the Company’s assets that could have a
material effect on the financial statements.
Because
of its inherent limitations, internal control over financial reporting may
not
prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
Management
assessed the effectiveness of the Company’s internal control over financial
reporting as of March 31, 2008, based on the criteria set forth by the Committee
of Sponsoring Organizations of the Treadway Commission in “Internal
Control-Integrated Framework.” Based on the assessment, management determined
that, as of March 31, 2008, the Company’s internal control over financial
reporting is effective, based on those criteria.
This
annual report does not include an attestation report of the Company’s registered
public accounting firm regarding internal control over financial reporting.
Management’s report was not subject to attestation by the Company’s registered
public accounting firm pursuant to temporary rules of the Securities and
Exchange Commission that permit the Company to provide only the management’s
report in this annual report.
ITEM
8B.
OTHER
INFORMATION
Not
applicable.
PART
III
ITEM
9.
DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Directors
Information
concerning Directors of the Company is incorporated herein by reference from
the
definitive Proxy Statement for the Annual Meeting of Stockholders to be held
on
July 24, 2008, a copy of which was filed with the Securities and Exchange
Commission (the “SEC”) on June 23, 2008.
Executive
Officers
Information
concerning Executive Officers of the Company and the Bank is incorporated herein
by reference from the definitive Proxy Statement for the Annual Meeting of
Stockholders to be held on July 24, 2008, a copy of which was filed with the
SEC
on June 23, 2008.
Compliance
with Section 16(A)
Information
concerning compliance with Section 16(a) of the Exchange Act is incorporated
herein by reference from the definitive Proxy Statement for the Annual Meeting
of Stockholders to be held on July 24, 2008, a copy of which was filed with
the
SEC on June 23, 2008.
ITEM
10.
EXECUTIVE
COMPENSATION
Information
concerning executive compensation is incorporated herein by reference from
the
definitive Proxy Statement for the Annual Meeting of Stockholders to be held
on
July 24, 2008, a copy of which was filed with the SEC on June 23, 2008.
|
ITEM 11.
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
AND RELATED STOCKHOLDER
MATTERS
|
Equity
Compensation Plan Information
The
following table provides information as of March 31, 2008 related to our equity
compensation plans in effect at that time.
|
Equity
Compensation Plan Information
|
|
|
Plan
Category
|
|
Number of
Securities
to be Issued
Upon Exercise
of
Outstanding Options,
Warrants and Rights
(a)
|
|
Weighted-Average
Exercise Price
of
Outstanding
Options,
Warrants and
Rights
(b)
|
|
Number of Securities
Remaining Available
for Future Issuance
Under Equity
Compensation Plans
(excluding securities
reflected in column (a))
(c)
|
|
|
Equity Compensation Plans
Approved by
Security Holders
|
|
|
10,190
|
|
$
|
17.25
|
|
|
13,583
|
|
The
Company does not maintain any equity compensation plans that have not been
approved by security holders.
Additional
information concerning security ownership of certain beneficial owners and
management is incorporated herein by reference from the definitive Proxy
Statement for the Annual Meeting of Stockholders to be held on July 24, 2008,
a
copy of which was filed with the SEC on June 23, 2008.
|
ITEM 12.
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND
DIRECTOR
INDEPENDENCE
|
Information
concerning certain relationships and related transactions is incorporated herein
by reference from the definitive Proxy Statement for the Annual Meeting of
Stockholders to be held on July 24, 2008, a copy of which was filed with the
SEC
on June 23, 2008.
ITEM
13.
EXHIBITS
(a)
Exhibits
|
Exhibit
Number
|
|
Document
|
|
Reference
to
Prior
Filing or
Exhibit
Number
Attached
Hereto
|
|
3(i)
|
|
Certificate
of Incorporation
|
|
*
|
|
3(ii)
|
|
By-Laws
|
|
3(ii)
|
|
4
|
|
Instruments
defining the rights of security holders, including
debentures
|
|
*
|
|
10
|
|
Material
Contracts
|
|
None
|
|
13
|
|
Annual
Report to Stockholders
|
|
13
|
|
21
|
|
Subsidiaries
of Registrant
|
|
21
|
|
23.0
|
|
Consent
of Independent Registered Public Accounting Firm
|
|
23.0
|
|
31.1
|
|
Certification
of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
|
|
31.1
|
|
31.2
|
|
Certification
of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
|
|
31.2
|
|
32.1
|
|
Certification
of CEO and CFO pursuant to Section 906 of the Sarbanes-Oxley Act
of
2002
|
|
32.1
|
|
*
|
Previously
filed as exhibits to the Company’s Registration Statement on Form S-1
filed with the SEC on March 19, 1997 (File No. 333-23625). All of
such
previously filed exhibits are hereby incorporated herein by reference
in
accordance with Item 601 of Regulation
S-B.
|
ITEM
14.
PRINCIPAL
ACCOUNTANT FEES AND SERVICES
Information
concerning principal accountant fees and services is incorporated herein by
reference from the definitive Proxy Statement for the Annual Meeting of
Stockholders to be held on July 24, 2008, a copy of which was filed with the
SEC
on June 23, 2008.
SIGNATURES
In
accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
|
|
FIRST
ROBINSON FINANCIAL CORPORATION
|
|
|
|
|
|
Date:
June 27, 2008
|
By:
|
/s/
Rick L.
Catt
|
|
|
|
Rick
L. Catt, Director,
President
and Chief Executive
Officer
|
In
accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on
the
dates indicated.
|
By:
|
/s/
Rick L. Catt
|
|
By:
|
/s/
Jamie E. McReynolds
|
|
|
Rick
L. Catt,
Director,
President and Chief
Executive
Officer
(Principal Executive
and
Operating
Officer)
|
|
|
Jamie
E. McReynolds,
Vice
President, Chief Financial Officer
and
Secretary
(Chief
Financial and Accounting Officer)
|
|
|
|
|
|
|
|
Date:
|
June
27, 2008
|
|
Date:
|
June
27, 2008
|
|
|
|
|
|
|
|
By:
|
/s/
Scott F. Pulliam
|
|
By:
|
/s/
J. Douglas Goodwine
|
|
|
Scott
F. Pulliam,
Director
|
|
|
J.
Douglas Goodwine,
Director
|
|
|
|
|
|
|
|
Date:
|
June
27, 2008
|
|
Date:
|
June
27, 2008
|
|
|
|
|
|
|
|
By:
|
/s/
Robin E. Guyer
|
|
By:
|
/s/
Steven E. Neeley
|
|
|
Robin
E. Guyer,
Director
|
|
|
Steven
E. Neeley,
Director
|
|
|
|
|
|
|
|
Date:
|
June
27, 2008
|
|
Date:
|
June
27, 2008
|
|
|
|
|
|
|
|
By:
|
/s/
William K. Thomas
|
|
|
|
|
|
William
K. Thomas,
Director
|
|
|
|
|
|
|
|
|
|
|
Date:
|
June
27, 2008
|
|
|
|
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