2000 ANNUAL REPORT
FIRST ROBINSON FINANCIAL CORPORATION
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TABLE OF CONTENTS
Page No.
President's Message........................................................ 1
Selected Consolidated Financial Information................................ 2
Management's Discussion and Analysis of Financial
Condition and Results of Operations..................................... 4
Financial Statements....................................................... 16
Stockholder Information.................................................... 48
Corporate Information...................................................... 50
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[FIRST ROBINSON FINANCIAL CORPORATION LETTERHEAD]
Dear Stockholder,
The board of directors and management are pleased to present to you the
Annual Report of First Robinson Financial Corporation for the twelve-month
fiscal year ending March 31, 2000.
During this past twelve months, we have seen Y2K come and go, mostly as
a non-event. The Company spent time and resources to ensure that the century
change would go smoothly and it did. Our employees did an outstanding job of
planning and preparing us for any possible adverse situation. Many procedures
that were implemented as a result of Y2K will serve us well in the future.
However, even though Y2K received most of our attention, our employees,
management and the board of directors continued to strive to improve the
Company. As you will see when you review this Annual Report, significant
improvement has been made in several areas. Check cards or debit cards are now
available to our customers. Internet banking is being tested by a control group
and will be introduced to our customers in the very near future. Perhaps most
importantly, the Company has continued to grow, both in profitability and asset
size, thanks to the continued commitment and performance of our employees,
management and board of directors in addition to the invaluable support of our
customers and stockholders. We are very appreciative of this support.
The board of directors and management are committed to increasing the
value of our Company. The board has approved a stock repurchase plan that allows
management, at their discretion and within limitations, to purchase outstanding
shares of First Robinson Financial Corporation. The Company has been, and
intends to be, a community-oriented financial institution serving the residents
and businesses of Crawford County and surrounding counties. Our share of the
market continues to increase, we believe in large part because of our "local
flavor," your continued support, and a strong commitment to high quality
customer service by all of our staff.
On behalf of all of us at First Robinson, we thank you for your
friendship, your business, and your commitment to help us face the challenges
and opportunities of the coming year.
Sincerely,
/s/ Rick L. Catt
Rick L. Catt
President and Chief Executive Officer
1
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SELECTED CONSOLIDATED FINANCIAL INFORMATION
The following table sets forth selected consolidated financial data of
First Robinson Financial Corporation (the "Company") at and for the periods
indicated. In the opinion of management, all adjustments (consisting only of
normal recurring accruals) necessary for a fair presentation have been included.
The consolidated financial data is derived in part from, and should be read in
conjunction with, the Financial Statements and Notes thereto presented elsewhere
in this Annual Report.
March 31,
----------------------
2000 1999
--------- ----------
(in thousands)
Selected Financial Condition Data:
Total assets $87,255 $83,797
Loans receivable, net 63,982 62,593
Mortgage-backed securities 10,983 8,131
Interest bearing deposits 1,390 4,268
Investment securities 5,466 3,978
Deposits 71,960 67,325
Total borrowings 5,090 4,206
Stockholders' equity 9,306 11,562
Year Ended March 31,
----------------------
2000 1999
--------- ----------
(in thousands)
Selected Operations Data:
Total interest income $ 6,539 $ 6,545
Total interest expense (3,105) (3,260)
-------- -------
Net interest income 3,434 3,285
Provision for loan losses (139) (435)
-------- -------
Net interest income after provision for loan 3,295 2,850
-------- -------
losses
Fees and service charges 390 269
Gain (loss) on sales of loans, securities and
fixed assets 40 (31)
Other non-interest income 222 130
-------- -------
Total non-interest income 652 368
-------- -------
Total non-interest expense (2,885) (2,888)
-------- -------
Income (loss) before taxes and extraordinary 1,062 330
item
Income tax provision 405 120
Extraordinary item --- ---
-------- -------
Net income $ 657 $ 210
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2
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Year Ended March 31,
---------------------
2000 1999
-------- -------
Selected Financial Ratios and Other Data:
Performance Ratios:
Return on assets (ratio of net income to
average total assets) .77% .25%
Return on stockholders equity (ratio of net
income to average equity) 6.25 1.76
Interest rate spread information:
Average during period 3.64 3.49
End of period 3.62 3.51
Net interest margin(1) 4.24 4.20
Ratio of operating expense to average total 3.37 3.48
assets
Ratio of average interest-earning assets to
average interest-bearing liabilities 115.69 117.14
Quality Ratios:
Non-performing assets to total assets at end
of period 1.31 .18
Allowance for loan losses to non-performing 55.12 428.38
loans
Allowance for loan losses to loans receivable, .98 1.01
net
Capital Ratios:
Stockholders' equity to total assets at end of 10.67 13.80
period
Average stockholders equity to average assets 12.27% 14.34%
Other Data:
Number of full-service offices 3 3
Number of full-time employees 43 39
Number of deposit accounts 11,468 10,036
Number of loan accounts 2,636 2,973
--------------
(1) Net interest income divided by average interest-earning assets.
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MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
When used in this filing and in future filings by First Robinson
Financial Corporation (the "Company") with the Securities and Exchange
Commission, in the Company's press releases or other public or shareholder
communications, or in oral statements made with the approval of an authorized
executive officer, the words or phrases "would be," "will allow," "intends to,"
"will likely result," "are expected to," "will continue," "is anticipated,"
"estimate," "project" or similar expressions are intended to identify
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such statements are subject to risks and
uncertainties, including but not limited to changes in economic conditions in
the Company's market area, changes in policies by regulatory agencies,
fluctuations in interest rates, demand for loans in the Company's market area
and competition, all or some of which could cause actual results to differ
materially from historical earnings and those presently anticipated or
projected. References in this filing to "we", "us", and "our" refer to the
Company and/or the Bank, as the content requires.
We wish to caution readers not to place undue reliance on any such
forward-looking statements, which speak only as of the date made, and advises
readers that various factors, including regional and national economic
conditions, substantial changes in levels of market interest rates, credit and
other risks of lending and investment activities and competitive and regulatory
factors, could affect our financial performance and could cause our actual
results for future periods to differ materially from those anticipated or
projected.
We do not undertake, and specifically disclaims any obligation, to
update any forward-looking statements to reflect occurrences or unanticipated
events or circumstances after the date of such statements.
General
Our principal business, through our operating subsidiary, First
Robinson Savings Bank, National Association, (the "Bank") consists of accepting
deposits from the general public and investing these funds primarily in loans,
mortgage-backed securities and other securities. Our loans consist primarily of
loans secured by residential real estate located in our market area, consumer
loans, commercial loans, and agricultural loans.
Our net income is dependent primarily on our net interest income, which
is the difference between interest earned on interest-earning assets and the
interest paid on interest-bearing liabilities. Net interest income is a function
of our "interest rate spread," which is the difference between the average yield
earned on interest-earning assets and the average rate paid on interest-bearing
liabilities. The interest rate spread is affected by regulatory, economic and
competitive factors that influence interest rates, loan demand and deposit
flows. To a lesser extent, our net income also is affected by the level of
general and administrative expenses and the level of other income, which
primarily consists of service charges and other fees.
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Our operations are significantly affected by prevailing economic
conditions, competition and the monetary, fiscal and regulatory policies of
government agencies. Lending activities are influenced by the demand for and
supply of housing, competition among lenders, the level of interest rates and
the availability of funds. Deposit flows and costs of funds are influenced by
prevailing market rates of interest, competing investments, account maturities
and the levels of personal income and savings in our market area.
Historically, our mission has been to originate loans on a profitable
basis to the communities we serve. In seeking to accomplish our mission, the
Board of Directors and management have adopted a business strategy designed (i)
to maintain the Bank's capital level in excess of regulatory requirements; (ii)
to maintain asset quality, (iii) to maintain, and if possible, increase our
earnings; and (iv) to manage our exposure to changes in interest rates.
Business Strategy
First Robinson Savings Bank, N.A. is a community-oriented, locally
owned financial institution offering services to residents and businesses of
Crawford County, Illinois, our primary market area. The Board of Directors and
management meet periodically to strategically plan for our future. We review and
discuss new products and services to determine their effect on our profitability
and customer service. The Bank offers fixed rate mortgage products through the
Federal Home Loan Bank of Chicago and USDA Rural Development. These programs are
continuing to grow and have provided additional non-interest income to the Bank.
Our staff has developed some new checking account products and revised existing
accounts as we continue to see excellent growth in the number of new checking
and savings accounts. This fit well within our strategic plan as it helps us
lower our overall cost of funds. Our Internet service continues to be a good
producer of non-interest income, as we provide services to over 1,450 customers
throughout Crawford County. A new wireless Internet service will be introduced
to our customers within the next few months. Internet banking services are being
tested and should also be available to the public within ninety days. These
products will allow us to offer cash management and bill paying. PrimeVest
Financial Services provides investment brokerage services to our customers. The
service continues to grow and is also providing non-interest income. Our
customer surveys, which are sent to every new checking and savings customer,
reflect our success in providing excellent customer service and help us evaluate
our service and products. The Company maintains a strong presence in the
community and is the only independent community bank in Robinson, Palestine and
Oblong, Illinois.
Financial Condition
Comparison of March 31, 2000 to March 31, 1999
The Company's total assets increased by $3.5 million or 4.1% to $87.3
million at March 31, 2000 from $83.8 million at March 31, 1999. This increase in
total assets is primarily the result of a $4.3 million or 35.8% increase in
mortgage backed securities and investment securities, an increase of $1.4
million or 2.2% in loans receivable, net, an increase of $242,000 in deferred
taxes, a $79,000 increase in foreclosed real estate, an increase of $76,000 in
premises and equipment and a $45,000 increase in other assets offset by a
decrease of $2.6 million in cash and cash equivalents, and a decrease of $97,000
in prepaid income taxes.
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Loans receivable, net, increased $1.4 million or 2.2% to $64.0 million
at March 31, 2000 from $62.6 million at March 31, 1999. The increase in loans
receivable, net was from an increase in real estate loans of $4.3 million or
9.7% from $44.7 million as of March 31, 1999 to $49.0 million on March 31, 2000.
The most significant growth, $2.5 million or 7.9%, in real estate loans was in
one-to-four family dwellings. The growth in real estate was offset by the
decrease of $2.6 million or 14.1% in consumer and commercial loans. The tighter
underwriting standards implemented last year, still in effect today, are the
main reason for the decrease in consumer loans.
Held to maturity investment securities decreased from $190,000 at March
31, 1999 to $148,000 at March 31, 2000. This $42,000 or 22.1% decrease came from
the maturity of municipal securities.
Mortgage-backed securities held to maturity increased to $747,000 as of
March 31, 2000 from $0 for March 31, 1999. During the year a mortgage-backed
security for $750,000 was purchased that management deemed necessary to classify
as held to maturity. The offset was $3,000 in principal payments.
Investment securities held available for sale increased to $5.3 million
as of March 31, 2000 from $3.8 million on March 31, 1999. The $1.5 million or
40.4% increase came from the purchase of $1.9 million in government securities,
the purchase of $232,000 in municipals and the purchase of $45,000 in Federal
Home Loan Bank Stock ("FHLB") offset by the maturity of a $500,000 government
security and $183,000 in gross unrealized losses.
Available for sale mortgage-backed securities increased by $2.1 million
or 25.9% from $8.1 million on March 31, 1999 to $10.2 million at March 31, 2000.
The increase is due to the purchase of $4.5 million in mortgage-backed
securities offset by $1.9 million in payments and $474,000 in unrealized losses.
In an effort to manage the risk in our balance sheet, mortgage-backed securities
and investment securities were purchased with excess funds.
Total liabilities increased approximately $5.7 million or 7.9% to $77.9
million at March 31, 2000 from $72.2 million at March 31, 1999. This increase in
liabilities was primarily the result of a $4.6 million, or 6.9% increase in
deposits to $72.0 million at March 31, 2000 from $67.3 million at March 31, 1999
and an increase of $1.6 million or 80.0% in Federal Home Loan Bank advances from
$2.0 million as of March 31, 1999 to $3.6 million at March 31, 2000. However
repurchase agreements decreased from $2.2 million at March 31, 1999 to $1.5
million at March 31, 2000. The $716,000 or 32.5% decrease was the result of one
of our largest personal depositors transferring her funds into the investment
brokerage service we now offer. The past year we have concentrated our
advertising on growing our core deposit accounts. The $4.6 million increase in
total deposits was derived entirely from our low or no-interest bearing
transaction accounts, passbook savings accounts and money market accounts.
Stockholders' equity decreased to $9.3 million as of March 31, 2000
from $11.6 million at March 31, 1999. The $2.3 million or 19.5% decrease in
stockholders' equity is primarily from the $2.5 million increase of the
Companies common stock held in Treasury at a cost of $3.2 million as of March
31, 2000 from the total amount held at March 31, 1999 of $747,000, the payment
of
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$247,000 in dividends, and the $400,000 decrease in the valuation of securities
held available for sale, offset by the valuation of $107,000 of the Employee
Stock Ownership Plan (the "ESOP") shares allocated to participants as of
December 31, 1999 and those shares ratably released for allocation for the
period ending March 31, 2000, the amortization of $123,000 of the Recognition
and Retention Plan (the "RRP") shares, and an increase in net income of $447,000
for the fiscal year ended March 31, 2000 as compared to the same period in the
prior year.
Operating Results
Comparison of Operating Results for the Years Ended March 31, 2000 and 1999
Performance Summary
We are reporting net income of $657,000 during the year ended March 31,
2000, as compared to a net income of $210,000 for the year ended March 31, 1999.
The $447,000, or 212.9%, increase in net income during the year ended March 31,
2000, as compared to the same period in the prior year, was primarily
attributable to an increase of $284,000, or 77.2%, in non-interest income, a
decrease of $296,000, or 68.1%, in provision for loan losses, an increase of
$149,000 or 4.5% in net interest income, and a decrease of $3,000 in
non-interest expense partially offset by an increase of $285,000, or 237.5%, in
provision for income tax. For the year ended March 31, 2000 and the year ended
March 31, 1999 the returns on average assets were 0.77% and 0.25% respectively,
while the returns on average equity were 6.25% and 1.76% respectively.
Net Interest Income
Net interest income is our largest component of income and represents
the difference between interest and fees earned on loans and investments and the
interest paid on interest bearing liabilities. For the year ended March 31,
2000, net interest income increased by $149,000, or 4.5% to $3.4 million
compared to the year ended March 31, 1999. This reflects a decrease of $155,000,
or 4.8%, in interest expense offset by a decrease of $6,000, or 0.1%, in
interest income. The decrease in interest expense was the result of a $146,000,
or 4.8%, decrease in interest on deposits and a $9,000, or 4.0%, decrease in
interest on other borrowed funds. The decrease in interest income is the result
of a $325,000, or 85.8%, increase in interest on mortgage-backed securities
offset by a decrease in interest on securities and interest-bearing deposits of
$33,000, or 8.4%and a decrease of $298,000, or 5.2%, in interest on loans. The
amount of net interest income is affected by changes in the volume and mix of
earning assets and interest bearing deposits and liabilities, and the interest
rates on these assets and liabilities. An analysis of how changes in volumes and
rates have affected net interest income for the years ended March 31, 2000 and
1999 is presented on page 11 of this report.
For the year ended March 31, 2000, the average yield on
interest-earning assets was 8.08% compared to 8.38% for the year ended March 31,
1999. The average cost of interest-bearing liabilities was 4.44% for the year
ended March 31, 2000, a decrease from 4.89% for the year ended March 31, 1999.
The average balance of interest-earning assets increased by $ 2.8 million, or
3.6%, to $80.9 million for the year ended March 31, 2000, compared to $78.1
million for the
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year ended March 31, 1999. The average balance of interest-bearing liabilities
increased by $ 3.2 million or 4.9%, to $70.0 million for the year ended March
31, 2000 from $66.7 million for the year ended March 31, 1999. A detailed
analysis of net interest income, with average balances and related interest
rates comparing the years ended March 31, 2000 and 1999 appear on page 10 of
this report.
The average interest rate spread was 3.64% for the fiscal year ended
March 31, 2000 compared to 3.49% for the year ended March 31, 1999. The average
net interest margin was 4.24% for the fiscal year ended March 31, 2000 compared
to 4.20% for the year ended March 31, 1999.
Non-Interest Income
For the year ended March 31, 2000, non-interest income increased
$284,000, or 77.2% when compared to the year ended March 31, 1999. Service
charges on our deposit accounts were evaluated and adjusted beginning April 1,
1999. This adjustment had a positive impact on our non-interest income. Service
charges and fees on our deposit accounts increased $121,000, or 45.0% from
$269,000 as of March 31, 1999 to $390,000 at March 31, 2000.
Also increasing our non-interest income was the addition of an
investment brokerage service. In April of 1999, we began offering this service
to our customers. The net commissions received from the brokerage service were
$38,000 for the year ended March 31, 2000. We expect our commissions to increase
in the coming year as our representative's client base grows. Our internet
service also provided $65,000 in non-interest income for the year ended March
31, 2000.
This is an increase of $30,000, or 85.7%, from March 31, 1999.
We also began offering fixed rate one-to- four family home loans
through the Mortgage Partnership Finance program of the Federal Home Loan Bank
of Chicago in the past year. We receive a premium from the sale of these loans.
For the year ended March 31, 2000 we had a gain on sale of loans of $40,000.
This is an increase from $0 for March 31, 1999. Charges and fees on loans
increased $14,000, or 22.2% from the prior fiscal year. The last factor
impacting non-interest income for this year was the decrease of net loss on sale
of assets. We had no loss on the sale of any assets for the year ended March 31,
2000 as compared to a $31,000 loss for the year ended March 31, 1999.
Non-Interest Expense
Non-interest expense decreased by $3,000, or 0.1%, for the year ended
March 31, 2000 in comparison to the year ended March 31, 1999. Contributing
factors were a decrease of $8,000, or 0.5%, in compensation and employee
benefits, a decrease of $32,000, or 24.4%, in audit, legal and other
professional fees, a decrease of $15,000, or 27.3%, in Federal Deposit Insurance
Premiums and a decrease of $11,000, or 2.5% in miscellaneous operating expenses.
Controlling these costs is one of our goals we strive to achieve each year.
However, offsetting these decreases were increases in occupancy and equipment
expense and advertising.
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Occupancy and equipment expense increased $34,000, or 7.6%, for the
year ended March 31, 2000 as compared to the year ended March 31, 1999. This
increase is the result of an increase in depreciation expense of furniture and
fixtures and an increase in building expense due to needed remodeling of the
Robinson facility.
Advertising expense increased $29,000, or 42.0% for the fiscal year
ended March 31, 2000 as compared to the same period ended March 31, 1999. The
increase in advertising expense is relative to our focus on growing our deposit
customer base and push for name recognition. We also like to stay active and
reinvest in our community by sponsoring and donating to worthwhile events.
Provision for Loan Losses
During the year ended March 31, 2000, we recorded provision for loan
losses of $139,000, as compared to $435,000 for the same period of the prior
year, a decrease of $296,000, or 68.1%. We recorded such provisions to adjust
our allowance for loan losses to a level deemed appropriate based on the
assessment of the volume and lending presently being conducted, industry
standards, past due loans, economic conditions in our market area generally and
other factors related to the collectability of our loan portfolio. Implementing
tighter underwriting has been a significant source in the decrease of our
provision for loan losses. Non-performing assets as a percentage of total assets
was 1.31% at March 31, 2000, as compared to .18% at March 31, 1999.
Management will continue to monitor its allowance for loan losses and
make additions to the allowance through the provision for loan losses as
economic conditions and other factors dictate. Although we maintain our
allowance for loan losses at a level which we consider to be adequate to provide
for loan losses, there can be no assurance that future losses will not exceed
estimated amounts or that additional provisions for loan losses will not be
required in the future.
Provision for Income Taxes
We recorded a provision for income taxes of $405,000 for the fiscal
year ended March 31, 2000, as compared to a provision for income taxes of
$120,000 for the year ended March 31, 1999, an increase of $285,000 or 237.5%.
The effective tax rate during the year ended March 31, 2000 was 38.1% (federal
and state), as compared to 36.4% during the same period in the prior year.
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Average Balances/Interest Rates and Yields
The following table presents for the years indicated the total dollar
amount of interest income from average interest earning assets and the resultant
yields, as well as the interest expense on average interest bearing liabilities,
expressed both in dollars and rates. No tax equivalent adjustments were made.
All average balances are monthly average balances. Nonaccruing loans have been
included in the table as loans carrying a zero yield.
<TABLE>
<CAPTION>
Year Ended March 31,
------------------------------------------------------------------------
2000 1999
---------------------------------- ----------------------------------
Average Interest Average Interest
Outstanding Earned/ Yield/ Outstanding Earned/ Yield/
Balance Paid Rate Balance Paid Rate
--------- ----------- ------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans receivable(1) $62,409 $ 5,477 8.78% $63,777 $ 5,775 9.05%
Mortgage-backed securities 10,980 704 6.41 6,210 379 6.10
Investment securities 4,833 279 5.77 4,162 243 5.83
Interest-bearing deposits 2,709 79 2.94 3,998 148 3.70
------- -------- ------- --------
Total interest-earning assets 80,931 $ 6,539 8.08 78,147 $ 6,545 8.38
======== ==== ========
Noninterest-earning assets 4,754 4,932
------- -------
Total assets $85,685 $83,079
======= =======
Interest-bearing liabilities:
Savings deposits $ 8,572 233 2.72 $ 6,819 $ 206 3.02
MMDA and NOW deposits 12,397 304 2.45 10,808 342 3.16
Certificate of deposits 44,892 2,351 5.24 44,987 2,486 5.53
Borrowings 4,095 217 5.30 4,097 226 5.52
------- -------- ------- --------
Total interest-bearing 69,956 $ 3,105 4.44 66,711 3,260 4.89
======== --------
liabilities
Noninterest-bearing liabilities 5,215 4,458
------- -------
Total liabilities 75,171 71,169
Stockholders' equity 10,514 11,910
------- -------
Total liabilities and capital $85,685 $83,079
======= =======
Net interest income $ 3,434 $ 3,285
======== ========
Net interest spread 3.64% 3.49%
==== ====
Net average earning assets $10,975 $11,436
======= =======
Net yield on average earning assets 4.24% 4.20%
==== ====
Average interest-earning assets 1.16x 1.17x
to average interest-bearing
liabilities
<FN>
-----------------
(1) Calculated net of deferred loan fees, loan discounts, loans in process and
loss reserves.
</FN>
</TABLE>
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Rate/Volume Analysis of Net Interest Income
The following schedule presents the dollar amount of changes in
interest income and interest expense for major components of interest-earning
assets and interest-bearing liabilities. It distinguishes between the changes
related to outstanding balances and in interest rates. For each category of
interest-earning assets and interest-bearing liabilities, information is
provided on changes attributable to (i) changes in volume (i.e., changes in
volume multiplied by old rate) and (ii) changes in rate (i.e., changes in rate
multiplied by old volume). For purposes of this table, changes attributable to
both rate and volume, which cannot be segregated, have been allocated
proportionately to the change due to rate.
<TABLE>
<CAPTION>
Year Ended March 31,
--------------------
1999 vs. 2000 1998 vs. 1999
--------------------------- ----------------------
Increase Increase
(Decrease) (Decrease)
Due to Total Due to Total
--------------- Increase ----------------- Increase
Volume Rate (Decrease) Volume Rate (Decrease)
------- ------- ------------ -------- -------- -------------
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans receivable $ (125) $ (173) $(298) $ 6 $ (84) $ (78)
Mortgage-backed securities 305 20 325 193 (6) 187
Investments securities 38 (2) 36 167 1 168
Other (42) (27) (69) 19 (13) 6
------ ------ ----- ----- ----- ------
Total interest-earning assets $ 176 $ (182) $ (6) $ 385 $(102) $ 283
------ ------ ----- ----- ----- ------
Interest-bearing liabilities:
Savings deposits 43 (16) 27 10 --- 10
Demand and NOW accounts 70 (108) (38) 82 (6) 76
Certificate accounts (5) (130) (135) 62 (82) (20)
Borrowings --- (9) (9) 124 2 126
------ ------ ----- ----- ----- ------
Total interest-bearing liabilities $ 108 $ (263) $(155) $ 278 $ (86) $ 192
------ ------ ----- ----- ----- ------
Net interest income $ 68 $ 81 $ 149 $ 107 $ (16) $ 91
====== ====== ===== ===== ===== ======
</TABLE>
Asset/Liability Management
A principal financial objective of ours is to achieve long-term
profitability while reducing our exposure to fluctuations in interest rates. We
have sought to reduce exposure of our earnings to changes in market interest
rates by managing the mismatch between asset and liability maturities and
interest rates. The principle element in achieving this objective has been to
increase the interest-rate sensitivity of our assets by originating loans with
interest rates subject to periodic repricing to market conditions. Accordingly,
we have emphasized the origination of one to five year adjustable rate mortgage
loans and daily adjustable commercial loans and short-term consumer loans for
retention in our portfolio. We are offering higher yields on all non-maturity
deposits. This will assist in getting rate sensitive liabilities to off-set the
short term variable rate loans being offered. We have also established a fixed
rate one- to four- family real estate mortgage program, whereby these loans are
sold off to the Federal Home Loan Bank. This program allows us to originate and
service these loans and not be subject to any interest rate risk with only a
minimal amount of credit risk while receiving significant fee income.
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An asset or liability is interest rate sensitivity within a specific
time period if it will mature or reprice within that time period. If our assets
mature or reprice more quickly or to a greater extent than our liabilities, the
our net portfolio value and net interest income would tend to increase during
periods of rising interest rates but decrease during periods of falling interest
rates.
If our assets mature or reprice more slowly or to a lesser extent than
our liabilities, our net portfolio value and net interest income would tend to
decrease during periods of rising interest rates but increase during periods of
falling interest rates.
Our Board of Directors has formulated an Interest Rate Management
Policy designed to promote long-term profitability while managing interest rate
risk. We have established an Asset/Liability Committee which consists primarily
of the management team of the Bank. This committee meets periodically and
reports to the Board of Directors monthly concerning asset/liability policies,
strategies and our current interest rate risk position. The committee's first
priority is to structure and price our assets and liabilities to maintain an
acceptable interest spread while reducing the net effects of changes in interest
rates.
Our principal strategy in managing our interest rate risk is to analyze
all assets based on rate, rate adjustment and maturity versus liabilities and
equity with a resulting matrix, (using a 1 month to greater than 3 years time
frames) being prepared and a net interest income change computed and compared to
capital. All asset and liability sales strategies are priced on the need of
volume in a particular time frame. We do not engage in hedging activities.
Net Portfolio Value. We voluntarily measure our interest rate risk
("IRR") into our internal risk based capital calculation. The IRR component is a
dollar amount that measures the terms of the sensitivity of our net portfolio
value ("NPV") to changes in interest rates. NPV is the difference between
incoming and outgoing discounted cash flows from assets, liabilities, and
off-balance sheet contracts. We measure the change to NPV as a result of a
hypothetical 200 basis point ("bp") change in market interest rates. We review
the IRR measurements on a monthly basis. We also monitor effects on net interest
income resulting from increases and decreases in rates. The following table
presents our NPV at March 31, 2000, as calculated by us.
12
<PAGE>
At March 31, 2000
--------------------------------------------------------
NPV as % of PV of
Change in Net Portfolio Value Assets
Rate ------------------------------- ---------------------
(Basis Points) $ Amount $ Change % Change NPV Ratio BP Change
-------------- -------- -------- -------- --------- ---------
(Dollars in thousands)
+200 bp $9,802 $805 8.95% 11.29% 92
100 9,617 620 6.89 11.08 71
0 8,997 0 0 10.37 0
-100 8,521 (476) (5.30) 9.82 (55)
-200 7,506 (1,491) (16.57) .65 (172)
In the above table, the first column on the left presents the basis
point increments of yield curve shifts. The second column presents the overall
dollar amount of NPV at each basis point increment. The third and forth columns
present our actual position in dollar change and percentage change in NPV at
each basis point increment. The remaining columns present our percentage change
and basis point change in our NPV as a percentage of portfolio value of assets.
Certain shortcomings are inherent in the method of analysis presented
in the computation of NPV. Although certain assets and liabilities may have
similar maturities or periods within which they will reprice, they may react
differently to changes in market interest rates. The interest rates on certain
types of assets and liabilities may fluctuate in advance of changes in market
interest rates, while interest rates on other types may lag behind changes in
market rates.
While our Board of Directors has not established any limits for changes
in NPV, the Board of Directors are responsible for reviewing our asset and
liability policies and meets monthly to review interest rate risk and trends, as
well as liquidity and capital ratios and requirements. Our management is
responsible for administering the policies and determinations of the Board of
Directors with respect to our asset and liability goals and strategies.
Liquidity
Our primary sources of funds are deposits, repayments and prepayments
of loans and interest income. Although maturity and scheduled amortization of
loans are relatively predictable sources of funds, deposit flows and prepayments
on loans are influenced significantly by general interest rates, economic
conditions and competition.
Our primary investment activity is originating one-to-four family
residential mortgages, commercial business and real estate loans, and consumer
loans to be held to maturity. For the years ended March 31, 2000 and 1999, we
originated loans for our portfolio in the amount of $31.0 million and $34.3
million respectively. For the years ended March 31, 2000 and 1999, these
activities were funded from repayments of $ 26.3 million and $33.1 million,
respectively and sales and participations of $3.3 million and $1.9 million,
respectively.
Our most liquid assets are cash and cash equivalents, which include
short-term investments. For the years ended March 31, 2000 and 1999, cash and
cash equivalents were $2.7
13
<PAGE>
million and $5.3 million, respectively. In addition, we have used jumbo
certificates of deposits as a source of funds. Jumbo certificates of deposits
represented $14.6 million and $11.0 million for the years ended March 31, 2000
and March 31, 1999, respectively, or 20.2% of total deposits for March 31, 2000
and 16.4% of total deposits for March 31, 1999. We have monitored and reviewed
our liquidity and maintain a $ 14.6 million line of credit with the FHLB, which
can be assessed immediately. We also maintain a $2.0 million line of credit with
Cole Taylor Bank located in Chicago, Illinois and a $2.0 million line of credit
with Independent Banker's Bank located in Springfield, Illinois. We have also
established borrowing capabilities at the discount window with the Federal
Reserve Bank of St. Louis.
Our liquidity management is both an ongoing and long-term function of
our asset/liability management strategy. Excess funds, when applicable,
generally are invested in deposits at the FHLB of Chicago. Currently, when we
require funds, beyond its ability to generate deposits, additional sources of
funds are available through the FHLB of Chicago. We have the ability to pledge
our FHLB of Chicago stock or certain other assets as collateral for such
advances. We use FHLB advances to fund cash flow shortages. These advances are
generally less than .10% over the average rate paid on our certificates of
deposit. We may also use FHLB advances to fund loan demand in excess of the
available funds.
Management and the Board of Directors believe that due to significant
amounts of adjustable rate mortgage loans that could be sold and our ability to
acquire funds from the FHLB of Chicago and our other correspondent relationships
that our liquidity is adequate.
Impact of Inflation and Changing Prices
The financial statements and related data presented in this Annual
Report have been prepared in accordance with generally accepted accounting
principles which require the measurement of financial position and operating
results in terms of historical dollars without considering changes in relative
purchasing power of money over time due to inflation. The primary impact of
inflation on our operation is reflected in increased operating costs. Unlike
most industrial companies, virtually all of the assets and liabilities of a
financial institution are monetary in nature. As a result, interest rates
generally have a more significant impact on a financial institution's
performance than does inflation. Interest rates do not necessarily move in the
same direction or to the same extent as the prices of goods and services.
14
<PAGE>
LARSSON, WOODYARD & HENSON, LLP
CERTIFIED PUBLIC ACCOUNTANTS
MEMBERS OF AMERICAN INSTITUTE OF
CERTIFIED PUBLIC ACCOUNTANTS o ILLINOIS CPA SOCIETY
702 E. COURT STREET o P. O. BOX 426 o PARIS, ILLINOIS 61944
TEL (217) 465-6494 o FAX (217) 465-6499
Independent Auditors' Report
To the Board of Directors
First Robinson Financial Corp.
and Subsidiary
Robinson, Illinois
We have audited the accompanying consolidated balance sheets of First Robinson
Financial Corp. and Subsidiary as of March 31, 2000 and 1999 and the related
consolidated statements of income, stockholders' equity, and cash flows for
the years then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the
consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall consolidated financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of First Robinson Financial Corp. and Subsidiary as of March 31, 2000 and 1999
and the results of their operations and their cash flows for the years then
ended, in conformity with generally accepted accounting principles.
/s/ LARSSON, WOODYARD & HENSON, LLP
April 20, 2000
Paris, Illinois
15
<PAGE>
FIRST ROBINSON FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
ASSETS
March 31, March 31,
2000 1999
---------- -----------
(1,000's)
Cash and cash equivalents:
Cash $ 1,269 $ 1,007
Interest bearing deposits 1,390 4,268
-------- --------
Total cash and cash equivalents 2,659 5,275
Securities available for sale
(amortized cost of $5,490,000 and $3,777,000
at March 31, 2000 and 1999, respectively) 5,318 3,788
Securities held to maturity (estimated
market value of $148,000 and $195,000
at March 31, 2000 and 1999, respectively) 148 190
Mortgage-backed and related securities available for sale
(amortized cost of $10,744,000 and $8,165,000
at March 31, 2000 and 1999, respectively) 10,236 8,131
Mortgage-backed and related securities held to maturity
(estimated market value of $766,000 and $0
at March 31, 2000 and 1999, respectively) 747 0
Loans receivable, net 63,982 62,593
Foreclosed real estate 79 0
Premises and equipment 2,994 2,918
Accrued interest receivable 698 698
Prepaid income taxes 0 97
Deferred income taxes 242 0
Other assets 152 107
-------- --------
Total Assets $ 87,255 $ 83,797
======== ========
16
<PAGE>
FIRST ROBINSON FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
March 31, March 31,
2000 1999
---------- -----------
(1,000's)
Deposits $ 71,960 $67,325
Federal Home Loan Bank advances 3,600 2,000
Repurchase agreements 1,490 2,206
Advances from borrowers for taxes and insurance 112 98
Accrued interest payable 308 294
Accrued income taxes 228 0
Deferred income taxes 0 69
Accrued expenses 251 243
-------- -------
Total Liabilities 77,949 72,235
-------- -------
Commitments and contingencies
Stockholders' Equity
Preferred stock, $.01 par value;
authorized 500,000 shares,
no shares issued and outstanding
Common stock $.01 par value;
authorized 2,000,000 shares
859,625 shares issued and outstanding 9 9
Treasury stock, at cost (3,243) (747)
Additional paid-in capital 8,305 8,277
Accumulated other comprehensive income (414) (14)
Common stock acquired by ESOP/RRP (936) (1,138)
Retained earnings 5,585 5,175
-------- -------
Total Stockholders' Equity 9,306 11,562
-------- -------
Total Liabilities and Stockholders' Equity $ 87,255 $83,797
======== =======
See accompanying notes to consolidated financial statements.
17
<PAGE>
FIRST ROBINSON FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
March 31,
--------------------
2000 1999
-------- ---------
(1,000's)
Interest income:
Interest on loans $ 5,477 $ 5,775
Interest on mortgage-backed securities 704 379
Interest on securities and
interest-bearing deposits 358 391
-------- ---------
Total interest income 6,539 6,545
-------- ---------
Interest expense:
Interest on deposits 2,888 3,034
Interest on other borrowed funds 217 226
-------- ---------
Total interest expense 3,105 3,260
-------- ---------
Net interest income 3,434 3,285
Provision for loan losses 139 435
-------- ---------
Net interest income after provision for loan losses 3,295 2,850
Non-interest income 652 368
Non-interest expense 2,885 2,888
-------- ---------
Income before income taxes 1,062 330
Provision for income taxes 405 120
-------- ---------
Net income $ 657 $ 210
======== =========
Basic earnings per share $ 0.96 $ 0.27
Diluted earnings per share $ 0.96 $ 0.27
See accompanying notes to consolidated financial statements.
18
<PAGE>
FIRST ROBINSON FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Accumulated
ESOP/RRP Other Com- Compre-
Common Paid-in Retained Treasury Common prehensive hensive
Stock Capital Earnings Stock Shares Income Total Income
---------- -------- ---------- --------- ------- ----------- --------- ---------
(1,000's)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at March 31, 1998 $ 9 $ 8,232 $ 5,223 $ --- $ (602) $ 33 $ 12,895 $ ---
Comprehensive Income
Net income 210 210 210
Other comprehensive income
Unrealized gain (loss) on
Securities, net of related
tax effects of $30 (47)
-------
Total other comprehensive income (47) (47) (47)
-------
Total comprehensive income $ 163
=======
Treasury stock, at cost (42,981 shares) (747) (747)
Common stock acquired by RRP
at cost (42,981 shares) (746) (746)
Dividends ($0.30 per share) (258) (258)
Amortization of RRP 124 124
ESOP shares allocated 45 86 131
------- ------- --------
Balance at March 31, 1999 $ 9 $ 8,277 $ 5,175 $ (747) $(1,138) $ (14) $ 11,562
Comprehensive Income
Net income 657 657 $ 657
Other comprehensive income
Unrealized gain (loss) on
Securities, net of related
tax effects of $256 (400)
-------
Total other comprehensive income (400) (400) (400)
-------
Total comprehensive income $ 257
=======
Treasury stock, at cost (181,187 shares) (2,496) (2,496)
Dividends ($0.31 per share) (247) (247)
Amortization of RRP 123 123
ESOP shares allocated 28 79 107
------- ------- --------
Balance at March 31, 2000 $ 9 $ 8,305 $ 5,585 $(3,243) $ (936) $ (414) $ 9,306
==== ======= ======= ======= ======= ====== ========
</TABLE>
See accompanying notes to consolidated financial statements.
19
<PAGE>
FIRST ROBINSON FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
March 31
-------------------
2000 1999
-------- ---------
(1,000's)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 657 $ 210
Adjustments to reconcile net income to net
cash provided by operating activities
Provision for depreciation 277 245
Provision for loan losses 139 435
Net amortization and accretion on securities
and mortgage-backed securities 26 38
Amortization of RRP 123 124
ESOP shares allocated 107 131
Decrease in accrued interest receivable 0 17
Decrease (increase) in prepaid income taxes 97 (68)
(Increase) decrease in other assets (45) 117
Increase (decrease) in accrued interest payable 14 (54)
Increase in accrued income taxes 228 0
Increase in deferred income taxes (55) (88)
Increase in accrued expenses 8 24
Gain on sale of loans (40) 0
------- -------
Net cash provided by operating activities 1,536 1,131
------- -------
Cash flows from investing activities:
Proceeds from maturities of securities available for sale 500 1,500
Proceeds from maturities of securities held to maturity 42 35
Purchase of securities held to maturity 0 (35)
Purchase of securities available for sale (2,170) (1,832)
Purchase of mortgage-backed securities held to maturity (750) 0
Purchase of mortgage-backed securities available for sale (4,498) (8,469)
FHLB stock purchased (45) (35)
Repayment of principal on mortgage-backed securities 1,898 1,716
Increase in loans receivable (4,775) (55)
Purchase of loans and participations (149) (678)
Sale or participation of originated loans 3,328 1,939
Sale of foreclosed real estate 30 221
Purchase of premises and equipment (353) (266)
------- -------
Net cash used in investing activities (6,942) (5,959)
------- -------
</TABLE>
20
<PAGE>
FIRST ROBINSON FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
March 31
-----------------
2000 1999
------- -------
(1,000's)
<S> <C> <C>
Cash flows from financing activities:
Net increase in deposits $ 4,635 $ 4,695
(Decrease) increase in repurchase agreements (716) 562
Advances from Federal Home Loan Bank 27,360 1,500
Repayment of Federal Home Loan Bank advances (25,760) (1,500)
Increase in advances from borrowers for taxes and insurance 14 23
Purchase of treasury stock (2,496) (747)
Purchase of stock for RRP 0 (746)
Dividends paid (247) (258)
------- -------
Net cash provided by financing activities 2,790 3,529
------- -------
Decrease in cash and cash equivalents (2,616) (1,299)
Cash and cash equivalents at beginning of year 5,275 6,574
------- -------
Cash and cash equivalents at end of year $ 2,659 $ 5,275
------- -------
Supplemental Disclosures:
Additional Cash Flows
Information:
Cash paid for:
Interest on deposits, advances and other borrowings $ 3,091 $ 3,314
Income taxes:
Federal 106 230
State 28 26
Non-Cash Investing Activities
Loans transferred to foreclosed real estate 115 49
Securities transferred to available for sale 0 751
</TABLE>
See accompanying notes to consolidated financial statements.
21
<PAGE>
FIRST ROBINSON FINANCIAL CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Summary of Significant Accounting Policies
Description of the Business
First Robinson Financial Corporation (the Company) was incorporated as a
Delaware corporation in March of 1997 at the direction of the Board of
Directors of First Robinson Savings and Loan, F.A., the predecessor of
First Robinson Savings Bank, National Association (the Bank), to become the
holding company for the Bank upon its conversion from a mutual federal
savings and loan to a national stock bank (the Conversion). The Bank was
originally chartered in 1883. As of March 31, 2000, the Company has no
significant assets other than the outstanding stock of the Bank and a note
receivable from the ESOP Trust for the shares purchased for the Employee
Stock Ownership Plan. The Company's principal business is overseeing and
directing the business of the Bank and investing the assets of the Company.
The Company has registered with the Board of Governors of the Federal
Reserve System as a bank holding company.
The Bank operates through four facilities serving Crawford County, Illinois
and contiguous counties in southeastern Illinois. The principal business of
the Bank consists of attracting deposits from the general public and using
such deposits, together with other funds, to originate one to four family
residential mortgage loans, consumer loans, commercial and agricultural
business loans, commercial and agricultural mortgage loans, and to a lesser
extent, multifamily and construction loans. The Bank's main office is
located in Robinson with facilities in Oblong and Palestine.
Basis of Financial Statement Presentation
The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiary First Robinson Savings Bank, National
Association. All material intercompany transactions and accounts have been
eliminated.
The consolidated financial statements have been prepared in conformity with
generally accepted accounting principles. In preparing the consolidated
financial statements, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities as
of the date of the balance sheet and revenues and expenses for the period.
Actual results could differ significantly from those estimates. Material
estimates that are particularly susceptible to significant change relate to
the determination of the allowance for losses on loans and the valuation of
real estate acquired in connection with foreclosures or in satisfaction of
loans.
Management believes the allowance for loan losses and real estate owned is
adequate. Management uses available information to recognize losses on
loans and foreclosed real estate. Future additions to the allowances may be
necessary based on changes in economic conditions. In addition, regulatory
agencies, as an integral part of their examination process, periodically
review the Bank's allowances for losses on loans and foreclosed real
estate. Such agencies may require the Bank to recognize additions to the
allowances based on their judgments about information available to them at
the time of their examination.
Cash Equivalents
For purposes of the consolidated statements of cash flows, cash equivalents
consist of daily interest bearing demand deposits, federal funds sold, and
interest bearing deposits and securities having original maturities of
three months or less.
22
<PAGE>
FIRST ROBINSON FINANCIAL CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Summary of Significant Accounting Policies
Securities and Mortgage-Backed Securities
Investment and mortgage-backed securities available for sale include
securities that management intends to use as part of its overall
asset/liability management strategy and that may be sold in response to
changes in interest rates and resultant prepayment risk and other related
factors. Securities available for sale are carried at fair value, and
unrealized gains and losses (net of related tax effects) are excluded from
earnings but are included in stockholders' equity. Upon realization, such
gain and losses will be included in earnings using the specific
identification method. Investment securities and mortgage-backed
securities, other than those designated as available for sale or trading,
are comprised of debt securities for which the Bank has positive intent and
ability to hold to maturity and are carried at cost. All securities are
adjusted for amortization of premiums and accretion of discounts using the
level-yield method over the estimated lives of the securities.
Trading account securities are adjusted to market value through earnings.
There were no trading account securities during the periods presented in
these financial statements.
Management determines the appropriate classification of investment and
mortgage-backed securities as either available for sale, held to maturity,
or held for trading at the purchase date.
Loans
Loans are, other than loans available for sale, considered a
held-to-maturity asset and, accordingly, are carried at historical cost.
Loans are stated at unpaid principal balances, less the allowance for loan
losses and net deferred loan fees and unearned discounts. Unearned
discounts on installment loans are recognized as income over the term of
the loans using the interest method. Loan origination and commitment fees,
as well as certain direct origination costs, are deferred and amortized as
a yield adjustment over the lives of the related loans using the interest
method when in excess of loan origination cost. Amortization of deferred
loan fees is discontinued when a loan is placed on nonaccrual status.
Loans are placed on nonaccrual when collection of principal or interest is
considered doubtful (generally loans past due 90 days or more). Any unpaid
interest previously accrued on those loans is reversed from income.
Interest income generally is not recognized on nonaccrual loans unless the
likelihood of further loss is remote. Income is subsequently recognized
only to the extent that cash payments are received until, in management's
judgment, the borrower's ability to make periodic interest and principal
payments is back to normal, in which case the loan is returned to accrual
status.
The allowance for loan losses is maintained at a level which, in
management's judgment, is adequate to absorb probable losses 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. The allowance is
increased by a provision for loan losses, which is charged to expense, and
reduced by charge-offs, net of recoveries. Loans are charged off when
management believes there has been permanent impairment of their carrying
values.
23
<PAGE>
FIRST ROBINSON FINANCIAL CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Summary of Significant Accounting Policies
Loans
The Bank also provides a reserve for losses on specific loans which are
deemed to be impaired. Groups of small balance homogeneous basis loans
(generally residential real estate and consumer loans) are evaluated for
impairment collectively. A loan is considered impaired when, based upon
current information and events, it is probable that the Bank will be unable
to collect on a timely basis, all principal and interest according to the
contractual terms of the loan's original agreement. When a specific loan is
determined to be impaired, the reserve for possible loan losses is
increased through a charge to expense for the amount of the impairment. For
all loans other than consumer and residential real estate loans, impairment
is measured based on value of the underlying collateral. The value of the
underlying collateral is determined by reducing the collateral's estimated
current value by anticipated selling costs. The bank's impaired loans are
the same as those loans currently reported as nonaccrual other than
consumer and residential real estate loans. The Bank recognizes interest
income on impaired loans only to the extent that cash payments are
received.
Mortgage Servicing Rights
For the year ended March 31, 2000, the Bank entered into the Mortgage
Partnership Finance program (MPF) of the Federal Home Loan Bank of Chicago.
This MPF program allows the Bank to sell residential mortgage loans to the
Federal Home Loan Bank. The Bank sells only individual loans and does not
originate loans for future sales. The Bank has retained servicing on these
loans. Mortgage servicing rights are estimated at fair value an amortized
in proportion to, and over the period of estimated servicing revenues.
Servicing rights are assessed for impairment periodically, based on fair
value, and with any impairment recognized through a valuation allowance.
For purposes of measuring impairment, the loans are stratified on annual
production. The Bank has not established a valuation allowance as of March
31, 2000. Costs of servicing loans are charged to expense as incurred.
Mortgage servicing rights amounted to $22,000 at March 31, 2000.
Foreclosed Real Estate
Foreclosed real estate held for sale is carried at the lower of cost or
estimated fair market value, net of estimated selling costs. Costs of
holding foreclosed property are charged to expense in the current period,
except for significant property improvements, which are capitalized to the
extent that carrying value does not exceed estimated fair market value, net
of estimated selling cost.
Premises and Equipment
Land is carried at cost. Buildings and furniture, fixtures and equipment
are carried at cost adjusted for accumulated depreciation. Depreciation is
calculated over the estimated useful lives of the assets. Buildings and
furniture, fixtures and equipment are depreciated using the straight-line
method. The estimated useful lives are five to fifty years for buildings
and improvements and five to fifteen years for equipment.
24
<PAGE>
FIRST ROBINSON FINANCIAL CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Summary of Significant Accounting Policies
Income Taxes
Deferred income tax assets and liabilities are computed annually for
differences between the financial statement and tax bases of assets and
liabilities that will result in taxable or deductible amounts in the future
based on enacted tax laws and rates applicable to the periods in which the
differences are expected to affect taxable income. Deferred tax assets are
reduced by a valuation allowance when, in the opinion of management, it is
more likely than not that some portion or all of the deferred tax assets
will not be realized. Deferred tax assets and liabilities are adjusted for
the effects of changes in tax laws and rates on the date of enactment.
Income tax expense is the tax payable or refundable for the period plus or
minus the change during the period in deferred tax assets and liabilities.
The Company files a consolidated income tax return with the Bank.
Per Share Data
The Company adopted Statement of Financial Accounting Standards (SFAS) No.
128, "Earnings Per Share." SFAS No. 128 revises the manner in which
earnings per share (EPS) is calculated by replacing the presentation of
primary and fully diluted EPS with a presentation of basic and diluted EPS.
Basic earnings per common share is calculated by dividing net income by the
weighted average number of common shares outstanding during the period less
unvested MRP and unallocated ESOP shares. Diluted earnings per common share
is calculated by dividing net income by the weighted average number of
common shares used to compute basic EPS plus the incremental amount of
potential common stock determined by the treasury stock method.
Off-Balance-Sheet Financial Instruments
In the ordinary course of business, the Company has entered into
off-balance-sheet financial instruments consisting of commitments to extend
credit, commitments under credit card arrangements, commercial letters of
credit and standby letters of credit. Such instruments are recorded in the
consolidated financial statements when they become payable.
Investment Services
The Bank offers investment brokerage services in a fiduciary or agency
capacity and are not included in the consolidated balance sheets because
such items are not assets of the Bank.
Reclassifications
Amounts presented in prior years consolidated financial statements have
been reclassified to conform to the 2000 presentation.
25
<PAGE>
FIRST ROBINSON FINANCIAL CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Summary of Significant Accounting Policies
New Accounting Standards
Comprehensive Income
In June, 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income," establishes standards for reporting and display of comprehensive
income and its components (revenues, expenses, gains, and losses) in a full
set of general-purpose financial statements. This statement requires that
all items that are required to be recognized under accounting standards as
components of comprehensive income be reported in a financial statement
that is displayed with the same prominence as other financial statements.
This statement requires that an enterprise (a) classify items of other
comprehensive income by their nature in a financial statement and (b)
display the accumulated balance of other comprehensive income separately
from retained earnings and additional paid-in capital in the equity section
of a statement of financial position. This statement is effective for
fiscal years beginning after December 15, 1997. The Company has adopted the
provisions of the statement for the year ended March 31, 1999 and has
presented comprehensive income information in the consolidated balance
sheets and statements of stockholders' equity. Because the statement solely
relates to disclosure requirements, it had no effect on the Company's
financial results.
Disclosures about Segments of an Enterprise and Related Information
In June, 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information" SFAS 131 establishes standards for
the way that public business enterprises report information about operating
segments in annual financial statements and requires that those enterprises
report selective information about operating segments in interim financial
reports issued to shareholders. It also establishes standards for related
disclosures about products and services, geographic areas, and major
customers. This statement is effective for financial statements for periods
beginning after December 15, 1997. The Company has adopted the appropriate
provisions of the statement for the year ended March 31, 1999.
Employers' Disclosure about Pension and Other Postretirement Benefits
In February 1998, the FASB issued SFAS No. 132, "Employers' Disclosures
about Pensions and Other Postretirement Benefits." SFAS No. 132
standardizes the disclosure requirements for pensions and other
postretirement benefits. This statement is effective for financial
statements for periods beginning after December 15, 1997. The Company has
adopted the appropriate provisions of the statement for the year ended
March 31, 1999.
Accounting for Derivative Instruments and Hedging Activities
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," establishes accounting and reporting
standards for derivative instruments and hedging activities and requires
recognition of all derivatives as either assets or liabilities measured at
fair value. The accounting for changes in the fair value of a derivative
depends on the intended use of the derivative and the resulting
designation. SFAS No. 137, "Accounting for Derivative Instruments and
Hedging Activities - Deferral of the Effective Date of FASB Statement No.
133," amended Statement No. 133 to be effective for all fiscal years
beginning after June 15, 2000. Although the Company has not formally
completed its evaluation of SFAS No. 133, as amended, the adoption of the
statement is not expected to have a material effect on the consolidated
financial statements.
26
<PAGE>
FIRST ROBINSON FINANCIAL CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 2. Securities
Securities available for sale are summarized as follows:
March 31, 2000
------------------------------------------
Gross Gross Approximate
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
--------- ---------- ---------- ----------
(1,000's)
U. S. government and agency securities $3,442 $ 0 $ 42 $ 3,400
State and municipal obligations 1,528 0 130 1,398
FRB stock 123 0 0 123
FHLB stock 397 0 0 397
------ ------ ------- ---------
$5,490 $ 0 $ 172 $ 5,318
====== ====== ======= =========
March 31, 1999
------------------------------------------
Gross Gross Approximate
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
--------- ---------- ---------- ----------
(1,000's)
U. S. government and agency securities $2,006 $ 23 $ 0 $ 2,029
State and municipal obligations 1,296 1 13 1,284
FRB stock 123 0 0 123
FHLB stock 352 0 0 352
------ ------ ------- ---------
$3,777 $ 24 $ 13 $ 3,788
====== ====== ======= =========
The amortized cost and approximate market value of securities available for
sale, by contractual maturity, are shown below. Expected maturities will
differ from contractual maturities from call options and prepayments.
March 31, 2000 March 31, 1999
-------------------- ---------------------
Approximate Approximate
Amortized Market Amortized Market
Cost Value Cost Value
--------- ---------- --------- ----------
(1,000's)
Due in one year or less $ 504 $ 500 $ 499 $ 502
Due after one year through five years 1,502 1,485 1,507 1,527
Due after five years through ten years 1,863 1,793 0 0
Due after ten years 1,621 1,540 1,771 1,759
------- -------- -------- -------
$ 5,490 $ 5,318 $ 3,777 $ 3,788
======= ======== ======== =======
27
<PAGE>
FIRST ROBINSON FINANCIAL CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 2. Securities
Securities held to maturity are summarized as follows:
March 31, 2000
------------------------------------------
Gross Gross Approximate
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
--------- ---------- ---------- ----------
(1,000's)
State and municipal obligations $ 148 $ 0 $ 0 $ 148
======= ====== ===== =======
March 31, 1999
------------------------------------------
Gross Gross Approximate
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
--------- ---------- ---------- ----------
(1,000's)
State and municipal obligations $ 190 $ 5 $ 0 $ 195
======= ====== ===== =======
The amortized cost and approximate market value of securities held to
maturity, by contractual maturity, are shown below. Expected maturities
will differ from contractual maturities from call options and prepayments.
March 31, 2000 March 31, 1999
-------------------- ---------------------
Approximate Approximate
Amortized Market Amortized Market
Cost Value Cost Value
--------- ---------- --------- ----------
(1,000's)
Due in one year or less $ 49 $ 49 $ 43 $ 43
Due after one year through five years 99 99 147 152
Due after five years through ten years 0 0 0 0
Due after ten years 0 0 0 0
------- -------- ------- -------
$ 148 $ 148 $ 190 $ 195
======= ======== ======= =======
Securities with a carrying amount of $2,715,000 and $2,029,000 at March 31,
2000 and 1999 were pledged to secure public deposits and for other purposes
as required or permitted by law. The Company transferred one U.S.
Government security from held to maturity to available for sale during the
prior year in accordance with SFAS 133. Carrying value was $500,000 and
estimated fair market value was $513,000 and the increase was included in
unrealized gains (loss) on securities in other comprehensive income.
28
<PAGE>
FIRST ROBINSON FINANCIAL CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 2. Securities
Proceeds from sales of securities, gross gains and gross losses from such
sales were as follows:
Year Ended Year Ended
March 31, March 31,
2000 1999
-------------- ----------------
(1,000's)
Proceeds from sales $ 0 $ 0
======== =======
Gross gains $ 0 $ 0
Gross losses 0 0
-------- -------
$ 0 $ 0
======== =======
Note 3. Mortgage-Backed and Related Securities
Mortgage-backed and related securities available for sale are summarized as
follows:
March 31, 2000
------------------------------------------
Gross Gross Approximate
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
--------- ---------- ---------- ----------
(1,000's)
GNMA certificates $ 6,412 $ 1 $ 355 $ 6,058
FNMA certificates 2,996 1 129 2,868
FHLMC certificates 1,336 2 28 1,310
-------- -------- ------- --------
$ 10,744 $ 4 $ 512 $ 10,236
======== ======== ======= ========
March 31, 1999
------------------------------------------
Gross Gross Approximate
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
--------- ---------- ---------- ----------
(1,000's)
GNMA certificates $ 5,328 $ 1 $ 33 $ 5,296
FNMA certificates 2,222 3 5 2,220
FHLMC certificates 615 0 0 615
-------- -------- ------- --------
$ 8,165 $ 4 $ 38 $ 8,131
======== ======== ======= ========
29
<PAGE>
FIRST ROBINSON FINANCIAL CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 3. Mortgage-Backed and Related Securities
Mortgage-backed and related securities held to maturity are summarized as
follows:
March 31, 2000
------------------------------------------
Gross Gross Approximate
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
--------- ---------- ---------- ----------
(1,000's)
FHLMC certificates $ 747 $ 19 $ 0 $ 766
======== ======== ======= ========
March 31, 1999
------------------------------------------
Gross Gross Approximate
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
--------- ---------- ---------- ----------
(1,000's)
FHLMC certificates $ 0 $ 0 $ 0 $ 0
======== ======== ======= ========
Mortgage-backed and related securities with a carrying amount of
$10,170,000 and $7,223,000 at March 31, 2000 and 1999, respectively, were
pledged to secure public deposits and for other purposes as required or
permitted by law.
The weighted average interest rate on mortgage-backed and related
securities is 6.82% and 6.85% at March 31, 2000 and 1999, respectively.
Expected maturities of mortgaged-backed securities will differ from
contractual maturities because issuers may have the right to prepay without
penalties. The weighted average contractual life of the mortgage-backed
securities was 18.7 and 21.3 years at March 31, 2000 and 1999,
respectively.
The Company transferred one mortgage-backed security from held to maturity
to available for sale during the prior year. Carrying value was $239,000,
estimated fair market value was $238,000, and the decrease was included in
unrealized gains (loss) on securities in other comprehensive income in
accordance with SFAS 133. No mortgage-backed and related securities were
sold during the years ended March 31, 2000 and 1999.
30
<PAGE>
FIRST ROBINSON FINANCIAL CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 4. Loans Receivable
Loans receivable consisted of the following:
March 31,
----------------------
2000 1999
--------- -----------
(1,000's)
Real estate loans:
One to four family residential $ 34,100 $ 31,609
Multi-family residential 823 676
Commercial 12,745 11,857
Construction 1,418 602
-------- ---------
49,086 44,744
Other loans:
Deposit accounts 669 410
Automobile 4,051 5,534
Commercial 9,889 10,876
Other loans 1,492 1,913
-------- ---------
Total loans 65,187 63,477
Less:
Loans in process 575 250
Allowance for loan losses 630 634
-------- ---------
Net loans $ 63,982 $ 62,593
======== =========
Changes in allowance for loan losses are as follows:
March 31,
----------------------
2000 1999
--------- -----------
(1,000's)
Balance $ 634 $ 665
Provision for losses 139 435
Loans charged off (197) (613)
Recoveries 54 147
-------- ---------
Balance $ 630 $ 634
======== =========
The weighted average interest rate on loans at March 31, 2000 and 1999 were
8.84% and 8.71% respectively.
Impaired loans totaled $912,000 and $56,000 at March 31, 2000 and 1999,
respectively. An allowance for losses was not deemed necessary for impaired
loans totaling $51,000 and $56,000 at March 31, 2000 and 1999,
respectively. An allowance of $72,000 and $0 was recorded for the remaining
balance of impaired loans of $861,000 and $0 at March 31, 2000 and 1999,
respectively. Impaired loans averaged $343,000 and $174,000 for 2000 and
1999, respectively. Interest income recognized was insignificant for the
years ended March 31, 2000 and 1999, respectively.
31
<PAGE>
FIRST ROBINSON FINANCIAL CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 4. Loans Receivable
Loans on which the accrual of interest was discontinued or reduced amounted
to $1,064,000 and $148,000 at March 31, 2000 and 1999, respectively.
Additional interest income of approximately $76,000 and $28,000 would have
been recorded had income on these loans been accounted for on the accrual
basis.
The Company sold participating interest in real estate and commercial loans
of $0 and $1,000,000, and whole loans of $3,328,000 and $939,000 for the
years ended March 31, 2000 and 1999. Whole loans sold under the Federal
Home Loan Bank MFP program amounted to $2,493,000 and $0 at March 31, 2000
and 1999, respectively. Unpaid principal balance of loan participations and
loans sold amounted to $4,908,000 and $3,286,000 at March 31, 2000 and
1999, respectively. As of March 31, 2000, loans sold under th MFP program
amounted to $2,274,000 and are included in the total. The Company
recognized gains on the loans sold of $40,000 and $0 for the years ended
March 31, 2000 and 1999. The Company purchased participating interest and
whole loans in the amount of $149,000 and $678,000 for the years ended
March 31, 2000 and 1999.
Note 5. Accrued Interest Receivable
Accrued interest receivable consisted of the following:
March 31,
----------------------
2000 1999
--------- -----------
(1,000's)
Loans $ 548 $ 601
Securities 85 51
Mortgage-backed and related securities 65 46
----- ------
$ 698 $ 698
===== ======
Note 6. Premises and Equipment
Premises and equipment consisted of the following:
March 31,
----------------------
2000 1999
--------- -----------
(1,000's)
Land $ 334 $ 334
Building 2,492 2,367
Furniture and equipment 2,062 1,834
------- -------
4,888 4,535
Accumulated depreciation (1,894) (1,617)
------- -------
$ 2,994 $ 2,918
======= =======
Depreciation included in the consolidated statements of income amounted to
$277,000 and $245,000 for the years ended March 31, 2000 and 1999,
respectively.
Included in the buildings is $187,000 of capitalized interest from the 1985
building project. Amortization of capitalized interest, which is included
in premises, occupancy and equipment expense, amounted to $4,000 for each
of the years ended March 31, 2000 and 1999.
32
<PAGE>
FIRST ROBINSON FINANCIAL CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 7. Deposit Analysis
Deposits and weighted average interest rates are summarized as follows:
March 31,
--------------------------------------
2000 1999
------------------- ------------------
Weighted Weighted
Average Average
Interest Interest
Amount Rate Amount Rate
--------- --------- -------- ---------
(1,000's)
Non-interest bearing $ 4,920 .00% $ 3,444 .00%
NOW accounts 12,317 2.45 11,829 3.19
Passbook 10,166 3.01 7,512 3.00
Certificates 44,557 5.38 44,540 5.31
-------- ---- -------- ----
Total deposits $ 71,960 4.18% $ 67,325 4.41%
======== ==== ======== ====
Certificates had the following remaining maturities:
March 31, 2000
------------------------------------------------------------
Less Than One to Two to After
One Year Two Years Three Years Three Years Totals
------------ ---------- ------------- ------------ ---------
(1,000's)
2.00 to 3.99% $ 12 $ 0 $ 0 $ 0 $ 12
4.00 to 5.99% 21,919 4,556 1,860 915 29,250
6.00 to 7.99% 10,328 2,258 2,284 425 15,295
-------- ------- ------- -------- --------
Totals $ 32,259 $ 6,814 $ 4,144 $ 1,340 $ 44,557
======== ======= ======= ======== ========
March 31, 1999
------------------------------------------------------------
Less Than One to Two to After
One Year Two Years Three Years Three Years Totals
------------ ---------- ------------- ------------ ---------
(1,000's)
2.00 to 3.99% $ 474 $ 0 $ 0 $ 0 $ 474
4.00 to 5.99% 22,706 5,982 576 1,124 30,388
6.00 to 7.99% 7,607 3,771 1,475 825 13,678
-------- ------- ------- -------- --------
Totals $ 30,787 $ 9,753 $ 2,051 $ 1,949 $ 44,540
======== ======= ======= ======== ========
33
<PAGE>
FIRST ROBINSON FINANCIAL CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 7. Deposit Analysis
Interest expense on deposits is summarized as follows:
March 31, March 31,
2000 1999
---------- ----------
(1,000's)
Passbook $ 233 $ 206
NOW accounts 304 342
Certificates 2,351 2,486
------- --------
$ 2,888 $ 3,034
======= ========
At March 31, 2000 and 1999, the Company had $16,447,000 and $12,743,000,
respectively, of deposit accounts with balances of $100,000 or more. The
Company did not have brokered deposits at March 31, 2000 and 1999. Deposits
in excess of $100,000 are not federally insured. The Company has pledged
mortgage-backed certificates and securities, when requested by public fund
depositors, for deposits of $100,000 or more.
Note 8. Other Borrowed Funds
The Company has entered into a convertible fixed rate advance with the FHLB
on December 31, 1997 for $2,000,000. This advance has call provisions, at
the FHLB option, on March 31, 1998 and quarterly thereafter with a maturity
date of December 30, 2004 at 4.98%. This advance was called by the FHLB in
the current year. The FHLB advance is secured by qualified mortgage loans.
The Company has used daily advances from the FHLB for short-term cash flow
needs. Interest expense for advances amounted to $126,000 and $102,000 for
year ended March 31, 2000 and 1999, respectively. The Company had daily
advances outstanding at March 31, 2000 and the convertible fixed rate
advance outstanding at March 31, 1999 with accrued interest payable of
$13,000 and $9,000 at March 31, 2000 and 1999, respectively. Interest rates
can adjust daily on daily advances. Information concerning FHLB advances is
summarized as follows:
March 31,
----------------------------------------------
2000 1999
---------------------- -----------------------
Term Daily Term Daily
Notes Advances Notes Advances
--------- ------------ ---------- ------------
(1,000's)
Balance at March 31 $ 0 $ 3,600 $ 2,000 $ 0
Average amount outstanding
during the year 1,501 839 2,000 16
Maximum amount outstanding
at any month-end 2,000 3,600 2,000 1,500
Weighted average interest rate:
During the year 4.98% 5.38% 4.98% 4.98%
End of year 0.00% 6.59% 4.98% 0.00%
34
<PAGE>
FIRST ROBINSON FINANCIAL CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 8. Other Borrowed Funds
The Company has entered into repurchase agreements with customers at
various interest rates with an average maturity of less than three months.
Securities are pledged to secure the repurchase agreements. Interest
expense amounted to $91,000 and $124,000 for the years ended March 31, 2000
and 1999, respectively. Information concerning repurchase agreements is
summarized as follows:
March 31,
----------------------
2000 1999
---------- ----------
(1,000's)
Balance at March 31 $ 1,490 $ 2,206
Average balance $ 1,755 $ 2,199
Maximum month-end balance $ 2,250 $ 2,304
Weighted average interest rate:
During the year 5.15% 5.64%
End of the year 4.91% 5.77%
Note 9. Stockholders' Equity
The Company is regulated by the Board of Governors of the Federal Reserve
System ("FRB") and is subject to securities registration and public
reporting regulations of the Securities and Exchange Commission. The Bank
is regulated by the Office of the Comptroller of the Currency ("OCC"). The
Bank is subject to the capital requirements of the OCC. The OCC requires
the Bank to maintain minimum ratios of Tier 1 capital to total
risk-weighted assets and total capital to risk-weighted assets of 4% and
8%, respectively. Tier 1 capital consists of total shareholders' equity
calculated in accordance with generally accepted accounting principles less
intangible assets, and total capital is comprised of Tier 1 capital plus
certain adjustments, the only one of which is applicable to the Bank is the
allowance for possible loan losses. Risk-weighted assets refer to the on-
and off-balance sheet exposures of the Bank adjusted for relative risk
levels using formulas set forth in OCC regulations. The Bank is als subject
to an OCC leverage capital requirement, which calls for a minimum ratio of
Tier 1 capital (as defined above) to quarterly average total assets of 3%
to 5%, depending on the institution's composite ratings as determined by
its regulators. As of December 31, 1999, the most recent notification from
regulators, the Bank was considered well capitalized.
At March 31, 2000 and 1999, the Bank was in compliance with all of the
aforementioned capital requirements as summarized below.
March 31, March 31,
2000 1999
--------- ---------
(1,000's)
Tier I Capital:
Common stockholders' equity $ 8,366 $ 9,674
Disallowances (2) 0
Unrealized holding loss (gain) on
securities available for sale 414 14
------- -------
Total Tier I capital $ 8,778 $ 9,688
======= =======
Risk based Capital:
Total Tier I capital $ 8,778 $ 9,688
Qualifying allowance for loan losses 630 608
------- -------
Total risk-based $ 9,408 $10,296
======= =======
Risk-weighted assets $54,568 $54,342
Average assets $85,637 $83,793
35
<PAGE>
FIRST ROBINSON FINANCIAL CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 9. Stockholders' Equity
To be Well
Capitalized
For Capital under the
Adequacy Prompt Corrective
Actual Purposes Action Provisions
---------------- -------------- -----------------
Amount Ratio Amount Ratio Amount Ratio
-------- ------- -------- ----- --------- -------
As of March 31, 2000:
Total Risk-Based Capital
(to Risk-Weighted Assets) $ 9,408 17.24% $ 4,365 >=8.0% $ 5,457 >=10.0%
Tier I Capital
(to Risk-Weighted Assets) 8,778 16.09% 2,183 >=4.0% 3,274 >=6.0%
Tier I Capital
(to Average Assets) 8,778 10.25% 3,425 >=4.0% 4,282 >=5.0%
To be Well
Capitalized
For Capital under the
Adequacy Prompt Corrective
Actual Purposes Action Provisions
---------------- -------------- -----------------
Amount Ratio Amount Ratio Amount Ratio
-------- ------- -------- ----- --------- -------
As of March 31, 1999:
Total Risk-Based Capital
(to Risk-Weighted Assets) $10,296 18.95% $ 4,347 >=8.0% $5,434 >=10.0%
Tier I Capital
(to Risk-Weighted Assets) 9,688 17.83% 2,174 >=4.0% 3,261 >=6.0%
Tier I Capital
(to Average Assets) 9,688 11.56% 3,352 >=4.0% 4,190 >=5.0%
At the time of the conversion of the Bank to a stock organization, a
special liquidation account was established for the benefit of eligible
account holders and the supplemental eligible account holders in an amount
equal to the net worth of the Bank. The special liquidation account will be
maintained for the benefit of eligible account holders and the supplemental
eligible account holders who continue to maintain their accounts in the
Bank after the conversion on June 27, 1997. The special liquidation account
was $5,070,000 as of conversion date. In the event of a complete
liquidation, each eligible and the supplemental eligible accounts holders
will be entitled to receive a liquidation distribution from the liquidation
account in an amount proportionate to the current adjusted qualifying
balances for accounts then held. With the reorganization completed on June
27, 1997, this liquidation account became part of stockholders' equity for
the Company under the same terms and conditions a if the reorganization had
not occurred. The Bank may not declare or pay cash dividends on or
repurchase any of its common stock if stockholders' equity would be reduced
below applicable regulatory capital requirements or below the special
liquidation account.
Subject to applicable law, the Boards of Directors of the Company and the
Bank may each provide for the payment of dividends. Future declarations of
cash dividends, if any, by the Company may depend upon dividend payments by
the Bank to the Company. Subject to regulations of the OCC, the Bank may
not declare or pay a cash dividend if its stockholder's equity would
thereby be reduced below either the aggregate amount then required for the
liquidation account or the minimum regulatory capital requirements imposed
by federal regulations. The Bank may not declare or pay a cash dividend to
the Company in excess of 100% of its net income to date, less dividends
paid, during the current calendar year plus the preceding year's net
income, less any dividends paid or declared during that year without prior
regulatory approval.
36
<PAGE>
FIRST ROBINSON FINANCIAL CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 9. Stockholders' Equity
Retained earnings at March 31, 2000 and 1999 include approximately
$1,257,000 for which federal income tax has not been provided. If the
amounts that qualify as deductions for federal income tax purposes are
later used for purposes other than for bad debt losses, they will be
subject to federal income tax at the then current corporate rate. The
unrecorded deferred tax liability on the above amount is approximately
$427,000.
Note 10. Non-Interest Income and Expense
Non-interest income and expense is summarized as follows:
Year Ended March 31,
---------------------
2000 1999
--------- ---------
(1,000's)
Non-interest income
Charges and fees on loans $ 77 $ 63
Charges and fees on deposit accounts 390 269
Net loss on sale of assets 0 (31)
Gain on sale of loans 40 0
Internet fees, net 65 35
Primevest commissions, net 38 0
Other 42 32
------- --------
$ 652 $ 368
======= ========
Non-interest expense
Compensation and employee benefits $ 1,653 $ 1,661
Occupancy and equipment 479 445
Data processing expense 87 87
Audit, legal and other professional services 99 131
Federal Deposit Insurance Premium 40 55
Advertising 98 69
Telephone and postage 94 89
Other 335 351
------- --------
$ 2,885 $ 2,888
======= ========
Note 11. Income Tax
The components of the provision for income taxes are summarized as follows:
Year Ended March 31,
-----------------------
2000 1999
-------- -----------
(1,000's)
Currently payable:
Federal $ 382 $ 153
State 78 24
Deferred:
Federal (45) (45)
State (10) (12)
------- --------
$ 405 $ 120
======= ========
37
<PAGE>
FIRST ROBINSON FINANCIAL CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 11. Income Tax
An analysis of tax expense for the two years setting forth the reasons for
the variations from the federal statutory rate of 34% is as follows:
March 31,
------------------
2000 1999
------- -------
(1,000's)
Computed tax at statutory rates $ 361 $ 112
Increase (decrease) in tax expense resulting from:
State and local taxes based on income,
net of federal income tax benefit 59 16
Tax-exempt interest (24) (5)
Other 9 (3)
------- -------
$ 405 $ 120
======= =======
Effective tax rate 38.1% 36.4%
The tax effects of temporary differences that give rise to the deferred tax
assets and deferred tax liabilities are as follows:
March 31,
------------------
2000 1999
------- -------
(1,000's)
Deferred tax assets:
Allowance for loan losses $ 259 $ 260
Allowance for unrealized loss
on securities available for sale 266 9
Directors' retirement 49 47
------- -------
574 316
------- -------
Deferred tax liabilities:
Recapture of tax bad debts reserves 17 25
Accrual basis adjustment 140 186
Depreciation 163 164
FHLB stock 12 10
------- -------
332 385
------- -------
Net deferred tax assets (liabilities) $ 242 $ (69)
======= =======
No valuation allowance was required for deferred tax assets at March 31, 2000
and 1999.
38
<PAGE>
FIRST ROBINSON FINANCIAL CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 12. Employee Benefit Plans
The Company has established a 401(k) profit sharing plan which covers all
employees with three months of service and minimum age of 21. This plan
allows for individual employees to elect a portion of their salary to be
deferred with a matching provision of the first four percent of salary
deferral at a rate of twenty-five percent from the Company. The plan has a
five year vesting schedule. Contributions to this plan by the Company
amounted to $7,000 for each of the years ended March 31, 2000 and 1999,
which are included in compensation and employee benefits. Total pension
cost including administration and other fees amounted to $21,000 and $9,000
for the years ended March 31, 2000 and 1999, respectively, which are
included in compensation and employee benefits.
The Bank approved a directors' retirement plan during 1996. The plan
provided for a one-time contribution of $2,000 per year of service for each
director, future contributions of $2,000 per year for each director, and a
discretionary annual contribution for each director using performance
standards similar to those used under the existing 401(k) plan. Each
director's account will include a rate of return equal to the highest
interest rate paid on the Bank's one year or less certificate of deposits.
Future annual contributions will be made for each director to the plan as
of January 1 of each year starting with January 1, 1998. The Company's
contribution for the years ended March 31, 2000 and 1999 were $12,000 and
$12,000. The plan expense is included in compensation and employee
benefits.
Note 13. Treasury Stock
The Company can repurchase up to five percent of its outstanding common
stock any twelve-month period without prior regulatory approval. During the
prior year, the Company repurchased 42,981 shares of common stock, five
percent of the outstanding common stock, at a cost of $747,000. During the
current year, the Company repurchased 181,187 shares of common stock with
regulatory approval, at a cost of $2,496,000.
Note 14. Employee Stock Ownership Plan (ESOP)
In June 1997 the Company established an Employee Stock Ownership Plan (the
ESOP) in connection with the stock conversion in which employees meeting
age and service requirements are eligible to participate. A participant is
100% vested after five years of credit service. The ESOP borrowed $688,000
from the Company and purchased 68,770 shares of common stock of the Company
at the date of the conversion. This debt carries an interest rate of 7.11%
and requires annual principal and interest payments. The Company has
committed to make annual contributions, on December 31, to the ESOP
necessary to repay the loan including interest.
39
<PAGE>
FIRST ROBINSON FINANCIAL CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 14. Employee Stock Ownership Plan (ESOP)
As the debt is repaid, ESOP shares which were initially pledged as
collateral for its debt, are released from collateral and allocated to
active employees, based on the proportion of debt service paid in the year
to total debt service of the plan. Accordingly, the shares pledged as
collateral are reported as unearned ESOP shares in the consolidated balance
sheets. As shares are determined to be ratably released from collateral,
the Company reports compensation expense equal to the current market price
of the shares, and the shares become outstanding for earnings per share
computations. Dividends on allocated ESOP shares are recorded as a
reduction of stockholders' equity and dividends on unallocated ESOP shares
are used to pay debt-servicing costs. The trustees' of the plan may direct
payments of cash dividends be paid to the participants or to be credited to
participant accounts and invested. Compensation expense for the ESOP was
$91,000 and $113,000 for the years ended March 31, 2000 and 1999,
respectively. The ESOP shares were as follows:
March 31, 2000 March 31, 1999
Allocated shares 23,168 15,197
Shares ratably released for allocation 1,903 1,992
Unallocated shares 43,699 51,581
-------- --------
Total ESOP shares 68,770 68,770
======== ========
Fair value of unreleased shares $622,710 $625,420
======== ========
Note 15. Recognition and Retention Plan
The Company adopted the Recognition and Retention Plan (the RRP) on July
29, 1998. The plan provides for the granting of shares of common stock to
the eligible directors, officers and employees. The RRP was approved for
42,981 shares of common stock of the Company. The RRP granted 35,560 shares
to existing directors, officers and employees with 7,421 available for
future grants. The granted shares will vest in five equal annual
installments, with the first installment vesting immediately upon the plan
approval. The vesting of the granted shares can be accelerated based on
certain plan provisions. Directors, officers and employees granted shares
retain voting rights and, if dividends are paid, dividends during the
vesting period. The RRP will continue in effect for a term of ten years
unless otherwise terminated. The Company's stock price was $17.25 on the
RRP approval date. The Company repurchased 42,981 shares of its common
stock during the year ended March 31, 1999 at a cost of $746,000. The cost
of this plan including administrative fees and related bonus program
amounted to $169,000 and $297,000 for the respective years ended March 31,
2000 and 1999.
Note 16. Stock Option and Incentive Plan
The stockholders have approved a Stock Option and Incentive Plan (the SOP)
on July 29, 1998. The terms of the plan provide for the granting of up to
12% of the outstanding shares of the Company to directors, officers and
employees. The SOP provides for the granting, up to 103,155 shares of
common stock, of incentive stock options, non-qualified stock options,
stock appreciation rights, limited stock appreciation rights or restricted
stock, or any combination thereof, as provided in the plan. These options
have a exercise period not to exceed ten years from the date of the award
with the exercise price equal to the fair market value of stock as of the
date of the award. The following table reflects a summary of the SOP.
40
<PAGE>
FIRST ROBINSON FINANCIAL CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 16. Stock Option and Incentive Plan
March 31,
----------------------------------
2000 1999
---------------- ----------------
Common Exercise Common Exercise
Shares Price Shares Price
------ -------- ------ --------
Options outstanding, beginning of year 87,888 $ 17.25 87,888 $ 17.25
Granted 0 0 0 0
Exercised 0 0 0 0
------ ------
Options outstanding, end of year 87,888 $ 17.25 87,888 $ 17.25
====== ======
Options exercisable at end of year 35,155 $ 17.25 17,578 $ 17.25
====== ======
Information regarding fixed options outstanding at March 31, 2000 follows:
Options Outstanding Options Exercisable
----------------------- -------------------------
Weighted
Range of Weighted average Weighted
exercise Common average remaining Common average
price shares exercise price life in years Shares exercise price
--------- -------- -------------- --------------- ------ ------------------
$ 17.25 87,888 $17.25 8.3 17,578 $17.25
No compensation cost has been recognized in the consolidated statements of
operations for options granted under the plans. Had compensation cost for
options granted been determined based on the estimated fair value of the
options issued at the dates of grant, the Company's net income and income
per common share amounts for the year ended March 31 would have been as
follows:
2000 1999
-------- --------
Net income, as reported $ 657 $ 210
====== ======
Net income, pro forma $ 607 $ 160
====== ======
Income per common share:
As reported:
Basic $ 0.96 $ 0.27
====== ======
Diluted $ 0.96 $ 0.27
====== ======
Pro forma:
Basic $ 0.89 $ 0.21
====== ======
Diluted $ 0.89 $ 0.21
====== ======
The fair value of the options granted during the year was estimated using
the Black-Scholes model with the following assumptions: dividend yield of
3%; expected life of 9 years; volatility of 21% and a risk-free interest
rate of 5.5%. The effects of applying SFAS No. 123 in this pro-forma
disclosure may not be indicative of future results.
41
<PAGE>
FIRST ROBINSON FINANCIAL CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 17. Earnings per Share
The following data shows the amounts used in computing earnings per share
and the effect on income and the weighted average number of shares of
dilutive potential common stock.
2000 1999
-------- --------
(1,000's)
Income available to common stockholders used in basic EPS $ 657 $ 210
======== ========
Income available to common stockholders after assumed -
conversions of dilutive securities $ 657 $ 210
======== ========
Weighted average number of common shares used in basic EPS 685,309 771,561
Effect of dilutive securities:
Stock options 0 0
-------- --------
Weighted number of common shares and dilutive potential
common stock used in diluted EPS 685,309 771,561
======== ========
Note 18. Economic Dependency
The Company is a nondiscriminatory lender in their market area as defined
by their Community Reinvestment Act. The Company is a full service
institution with facilities located in southeast central Illinois. The
Company has no economic dependency other than the general market area.
Note 19. Commitments and Contingencies
In the ordinary course of business, the Company has various outstanding
commitments and contingent liabilities that are not reflected in the
accompanying consolidated financial statements. In addition, the Company is
a defendant in certain claims and legal actions arising in the ordinary
course of business. In the opinion of management, after consultation with
legal counsel, the ultimate disposition of these matters is not expected to
have a material adverse effect on the consolidated financial statements of
the Company.
The Company had outstanding commitments to originate mortgage loans as
follows:
March 31,
--------------
2000 1999
------ ------
(1,000's)
Fixed rate $ 241 $ 103
====== ======
Variable rate $1,865 $ 540
====== ======
Interest rates for fixed rate loan commitments at March 31, 2000 and 1999
were 8.5% and from 8.75% to 9.00%, respectively. Interest rates for
variable rate loan commitments at March 31, 2000 and 1999, were from 8.75%
to 10.25% and 8.00% to 9.25%, respectively. The Bank had unused lines of
credit in the amount of $4,123,000 and $3,233,000 at March 31, 2000 and
1999, respectively. The Bank had outstanding letters of credit in the
amount of $99,000 and $100,000 at March 31, 2000 and 1999, respectively.
42
<PAGE>
FIRST ROBINSON FINANCIAL CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 19. Commitments and Contingencies
The Company is a party to financial instruments with off-balance-sheet risk
in the normal course of business to meet the financing needs of its
customers. These financial instruments include commitments to extend
credit. These instruments involve, to varying degrees, elements of credit
and interest rate risk in excess of the amounts recognized in the
consolidated statements of financial condition. The Company's exposure to
credit loss in the event of nonperformance by the other party to the
financia instruments for commitments to extend credit is represented by the
contractual notional amount of these instruments. The Company uses the same
credit policies in making commitments and conditional obligations as it
does for on-balance-sheet instruments.
Commitments to extend credit are agreements to lend to a customer as long
as there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination
clauses and may require payment of a fee. Since many of the commitments are
expected to expire without being drawn upon, the total commitment amounts
do not necessarily represent future cash requirements. The Company
evaluates each customer's creditworthiness on a case-by-case basis. Th
amount and type of collateral obtained, if deemed necessary by the Company
upon extension of credit, varies and is based on management's credit
evaluation of the counterparty.
Note 20. Related Parties
The Company has entered into transactions with its directors, and executive
officers, and their affiliates. Such transactions were made in the ordinary
course of business on substantially the same terms and conditions,
including interest rates and collateral, as those prevailing at the same
time for comparable transactions with other customers, and did not, in the
opinion of management, involve more than normal credit risk or present
other unfavorable features. A summary of loans to such related parties is
as follows:
March 31,
--------------
2000 1999
------ ------
(1,000's)
Balance $ 151 $ 274
New loans 32 85
Repayments (79) (208)
------ ------
Balance $ 104 $ 151
====== ======
Note 21. Carrying Amounts and Fair Value of Financial Instruments
The estimated fair value amounts have been determined by the Company using
available market information and appropriate valuation methodologies.
However, considerable judgment is required to interpret market data to
develop the estimates of fair value. Accordingly, the estimates presented
herein are not necessarily indicative of the amounts the Company could
realize in a current market exchange. The use of different market
assumptions and/or estimation methodologies may have a material effect on
th estimated fair value amounts.
43
<PAGE>
FIRST ROBINSON FINANCIAL CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 21. Carrying Amounts and Fair Value of Financial Instruments
For cash and cash equivalents, Federal Home Loan Bank stock, Federal
Reserve Bank stock, and accrued interest receivable, the carrying value is
a reasonable estimate of fair value. The fair value of investment
securities is based on quoted market prices, dealer quotes, and prices
obtained from independent pricing services. The fair value of loans
receivable is estimated based on present values using the Bank's current
pricing structures to approximate current entry-value interest rates
considering anticipated prepayment speeds, maturity and credit risks.
The fair value of demand deposit accounts, NOW accounts, savings accounts
and money market deposits, and fixed-maturity certificates of deposit is
estimated using the rates currently offered for deposits of similar
remaining maturities at the reporting date. The fair value of FHLB advances
and other borrowings is estimated using rates currently available for debt
with similar terms and remaining maturities. For advance payments by
borrowers for taxes and insurance and accrued interest payable the carrying
value is a reasonable estimate of fair value. Commitments are generally
made at prevailing interest rates at the time of funding and, therefore,
there is no difference between the contract amount and fair value.
The fair value estimates presented herein are based on pertinent
information available to management as of March 31, 2000 and 1999. Although
management is not aware of any factors that would significantly affect the
estimated fair value amounts, such amounts have not been comprehensively
revalued for purposes of these financial statements since the reporting
date and, therefore, current estimates of fair value may differ
significantly from the amounts presented herein.
The estimated fair value of the Company's financial instruments is as
follows:
March 31, March 31,
2000 1999
----------------- -----------------
Carrying Fair Carrying Fair
Amount Value Amount Value
--------- ------- --------- -------
(1,000's)
ASSETS
Cash and interest bearing deposits $ 2,659 $ 2,659 $ 5,275 $ 5,275
Securities available for sale 15,554 15,554 11,919 11,919
Securities held to maturity 896 914 190 195
Loans receivable, net 63,982 63,689 62,593 63,162
Accrued interest receivable 698 698 698 698
LIABILITIES
Deposits 71,960 72,746 67,325 67,758
FHLB advances 3,600 3,600 2,000 2,026
Repurchase agreements 1,490 1,494 2,206 2,217
Advances from borrowers for
taxes and insurance 112 112 98 98
Accrued interest payable 308 308 294 294
44
<PAGE>
FIRST ROBINSON FINANCIAL CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 22. First Robinson Financial Corporation Condensed Financial Information
The parent company's principal assets are its cash and investment in
subsidiary bank. The following are the condensed balance sheets for the
parent company only as of March 31, 2000 and 1999 and its condensed
statements of operations and cash flows for the years then ended.
CONDENSED BALANCE SHEETS
March 31, 2000 and 1999
2000 1999
--------- --------
(1,000's)
ASSETS
Cash $ 1,059 $ 1,899
Investment in First Robinson Savings Bank, N.A. 8,366 9,674
Prepaid income taxes 0 78
Other assets 103 65
--------- --------
Total Assets $ 9,528 $ 11,716
========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accrued income taxes $ 79 $ 0
Other accrued expenses 143 154
Stockholders' equity 9,306 11,562
--------- --------
Total Liabilities and Stockholders' Equity $ 9,528 $ 11,716
========= ========
CONDENSED STATEMENTS OF INCOME
For the Years Ended March 31, 2000 and 1999
2000 1999
---------- ----------
(1,000's)
Income:
Dividends from subsidiary bank $ 1,675 $ 0
Interest income 74 118
---------- ----------
Total income 1,749 118
---------- ----------
Expenses:
Professional fees 42 78
Compensation 174 308
Other 30 48
---------- ----------
Total expense 246 434
---------- ----------
Income (loss) before income taxes and equity
in undistributed earnings of subsidiary 1,503 (316)
Benefit from (provision for) income taxes 62 123
---------- ----------
Income (loss) before equity in
undistributed earnings of subsidiary 1,565 (193)
Undistributed (distributions in excess
of) earnings of subsidiary (908) 403
---------- ----------
Net income $ 657 $ 210
========== ==========
45
<PAGE>
FIRST ROBINSON FINANCIAL CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 22. First Robinson Financial Corporation Condensed Financial Information
CONDENSED STATEMENTS OF CASH FLOWS
For the Years Ended March 31, 2000 and 1999
2000 1999
--------- ---------
(1,000's)
Cash Flows from Operating Activities:
Net income $ 657 $ 210
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Equity in (undistributed) excess
net income of subsidiary 908 (403)
RRP amortization 123 124
Increase in other assets (38) (19)
Decrease (increase) in prepaid
income taxes 78 (78)
Increase in accrued income taxes 79 0
Decrease in deferred income taxes 0 (1)
(Decrease) increase in other
accrued expenses (11) 139
--------- ---------
Net cash provided by (used in)
operating activities 1,796 (28)
--------- ---------
Cash Flows from Financing Activities:
Proceeds used to purchase RRP shares 0 (746)
Purchase of treasury stock (2,496) (747)
Dividends paid (247) (258)
ESOP Adjustments 107 131
--------- ---------
Net cash used in financing activities (2,636) (1,620)
--------- ---------
Net decrease in cash (840) (1,648)
Cash Beginning of Year 1,899 3,547
--------- ---------
Cash End of Year $ 1,059 $ 1,899
========= =========
46
<PAGE>
FIRST ROBINSON FINANCIAL CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 23. Segment Information
As discussed in Note 1, during the current year the Company adopted the
appropriate provisions of SFAS No. 131, "Disclosure about Segments of an
Enterprise and Related Information." The principal business of the Company
is overseeing the business of the Bank and investing the portion of the net
proceeds from its initial public offering retained by it. The Company has
no significant assets other than its investment in the Bank, a loan to the
ESOP plan, and certain investment securities and cash and cash equivalents.
The Bank's principal business consists of attracting deposits from the
general public and investing these deposits in loans to its customers. The
Bank's operating facilities are contained in Crawford County, Illinois, and
its lending is concentrated within Crawford and contiguous counties. The
Bank has no customer from which it derives 10% or more of its revenue. With
these facts in mind, the Company's management believes that the Company is
comprised of only one reportable operating segment, and that the
consolidated financial statements adequately reflect the financial
condition and operations of that segment.
46
<PAGE>
FIRST ROBINSON FINANCIAL CORPORATION AND SUBSIDIARY
STOCKHOLDER INFORMATION
ANNUAL MEETING
The annual meeting of stockholders will be held at 10:00 a.m., Wednesday, July
27, 2000, at the Company's office located at 501 East Main Street, Robinson,
Illinois.
STOCK LISTING
The Company's stock is traded on the over-the-counter market with quotations
available through the OTC Electronic Bulletin Board under the symbol "FRFC."
PRICE RANGE OF COMMON STOCK
The following table sets forth the high and low bid prices of the Company's
Common Stock for the periods indicated. The information set forth in the table
below was provided by the OTC Electronic Bulletin Board. The information
reflects interdealer prices, without retail mark-up, mark-down or commission and
may not represent actual transactions.
Fiscal 1999 Fiscal 2000
---------------------------- ------------------------------
High Low Dividends High Low Dividends
------ ------- ----------- ------- -------- -----------
First Quarter $18.75 $16.75 $0.30 $13.25 $12.12 $0.31
Second Quarter 17.37 13.50 --- 13.81 13.00 ---
Third Quarter 15.00 11.62 --- 14.00 12.00 ---
Fourth Quarter 14.25 10.75 --- 14.32 13.31 ---
The Company declared and paid a dividend of $0.31 per share in fiscal 2000.
Dividend payment decisions are made with consideration of a variety of factors
including earnings, financial condition, market considerations and regulatory
restrictions. Restrictions on dividend payments are described in Note 9 of the
Notes to Financial Statements included in this Annual Report.
As of June 19, 2000, the Company had approximately 584 stockholders of record
and 607,603 outstanding shares of Common Stock.
47
<PAGE>
SHAREHOLDERS AND GENERAL INQUIRIES TRANSFER AGENT
Rick L. Catt
President and Chief Executive Officer
First Robinson Financial Corporation Register and Transfer Company
501 East Main Street 10 Commerce Drive
Robinson, Illinois 62454 Cranford, New Jersey 07016
(618) 544-8621 (908) 272-8511
ANNUAL AND OTHER REPORTS
The Company is required to file an Annual Report on Form 10-KSB for its fiscal
year ended March 31, 2000, with the Securities and Exchange Commission. Copies
of the Annual Report on Form 10-KSB and the Company's Quarterly Reports on Form
10-QSB may be obtained without charge by contacting:
Rick L. Catt
President and Chief Executive Officer
First Robinson Financial Corporation
501 East Main Street
Robinson, Illinois 62454
(618) 544-8621
48
<PAGE>
FIRST ROBINSON FINANCIAL CORPORATION AND SUBSIDIARY
CORPORATE INFORMATION
COMPANY AND BANK ADDRESS
501 East Main Street Telephone: (618) 544-8621
Robinson, Illinois 62454 Fax: (618) 544-7506
DIRECTORS OF THE BOARD
SCOTT F. PULLMAN JAMES D. GOODWINE
Chairman of the Board Funeral Director
Public Accountant Robinson, Illinois
Robinson, Illionis
CLELL T. KELLER RICK L. CATT
Retired Clerk of Crawford President and Chief Executive Officer
County, Illinois Circuit Court First Robinson Financial Corporation
Robinson, Illinois Robinson, Illinois
WILLIAM K. THOMAS DONALD K. INBODEN
Attorney Retired - Marathon Oil Company
Robinson, Illinois Robinson, Illinois
EXECUTIVE OFFICER
RICK L. CATT W.E. HOLT
President and Chief Executive Officer Vice President and Senior Loan Officer
LESLIE TROTTER, III JAMIE E. McREYNOLDS
Vice Predsident Vice President, Chief Financial
WILLIAM D. SANDIFORD Officer and Secretary
Vice President
INDEPENDENT AUDITORS SPECIAL COUNSEL
Larsson, Woodyard & Henson, LLP Silver, Freedman & Taff, L.L.P.
702 East Court Street 1100 New York Avenue, N.W.
Paris, Illinois 61944 Seventh Floor, East Tower
Washington, D.C. 20005
49
