UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended March 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission file number 0-29276
FIRST ROBINSON FINANCIAL CORPORATION
--------------------------------------------------------------------------------
(Name of small business issuer in its charter)
Delaware 36-4145294
--------------------------------------------------------------------------------
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
501 East Main Street, Robinson, Illinois 62454
--------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (618) 544-8621
Securities Registered Pursuant to Section 12(b) of the Act:
None
--------------------------------------------------------------------------------
Securities Registered Pursuant to Section 12(g) of the Act:
Common Stock, par value $0.01 per share
--------------------------------------------------------------------------------
(Title of class)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports) and (2) has been subject to such filing requirements for the past 90
days. YES X . NO ___.
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained herein, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]
State the issuer's revenues for its most recent fiscal year: $7.2
million.
The aggregate market value of the voting stock held by non-affiliates
of the registrant, computed by reference to the average of the bid and ask price
of such stock as of June 26, 2000, was approximately $7.3 million.
As of June 20, 2000, there were 607,603 shares issued and outstanding
of the Registrant's common stock.
DOCUMENTS INCORPORATED BY REFERENCE
Parts II of Form 10-KSB - Annual Report to Stockholders for the fiscal
year ended March 31, 2000. Part III of Form 10-KSB - Portions of Proxy
Statement for the 2000 Annual Meeting of Stockholders.
<PAGE>
FORWARD-LOOKING STATEMENTS
When used in this Annual Report on Form 10-KSB or future filings by
First Robinson Financial Corporation (the "Company") or the Company's wholly
owned subsidiary, First Robinson Savings Bank, National Association (the "Bank")
with the Securities and Exchange Commission, in the Company's press releases or
other public or shareholder communications, or in oral statements made with the
approval of an authorized executive officer, the words or phrases "will likely
result", "are expected to", "will continue", "is anticipated", "estimate",
"project", "believe" or similar expressions are intended to identify
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. The Company wishes to caution readers not to
place undue reliance on any such forward-looking statements, which speak only as
of the date made, and to advise readers that various factors, including regional
and national economic conditions, changes in levels of market interest rates,
credit risks of lending activities, and competitive and regulatory factors could
affect the Company's financial performance and could cause the Company's actual
results for future periods to differ materially from those anticipated or
projected. All references to the Company prior to March 1997, except where
otherwise indicated, are to the Bank. References in this Annual Report to "we",
"us", and "our" refer to the Company and/or the Bank, as the context requires.
We do not undertake and specifically disclaim any obligation to
publicly release the result of any revisions which may be made to any
forward-looking statements to reflect the occurrence of anticipated or
unanticipated events or circumstances after the date of such statements.
IMPACT OF THE YEAR 2000
Due to much planning and preparation by our employees, the Year 2000
transition went smoothly. However, we will continue to monitor all systems with
regards to Year 2000 issues to prevent and correct any glitches that may occur.
The total expenditures for the fiscal year ending March 31, 2000 were $2,300.
2
<PAGE>
PART I
Item 1. Description of Business
General
The Company. First Robinson Financial Corporation (the "Company") was
incorporated under the laws of the State of Delaware in March 1997, at the
direction of the Board of Directors of First Robinson Savings and Loan
Association (the "Association"), the predecessor institution to First Robinson
Savings Bank, National Association (the "Bank") for the purpose of serving as a
holding company of the Bank. The Company has no significant assets other than
the outstanding capital stock of the Bank. Unless otherwise indicated, all
activities discussed below are of the Bank.
The Bank. The Bank is a national bank, the deposits of which are
federally insured and backed by the full faith and credit of the U.S.
Government. The Bank is a community-oriented financial institution and seeks to
serve the financial needs of the residents and businesses in its market area.
The principal business of the Bank has historically consisted of attracting
retail deposits from the general public and investing those funds in primarily
one-to four-family residential real estate loans and, to a lesser extent,
consumer loans, commercial and agricultural real estate loans and commercial
business and agricultural finance loans. At March 31, 2000, substantially all of
the Bank's real estate mortgage loans, were secured by properties located in the
Bank's market area. The Bank also invests in investment and equity securities
and mortgage-backed securities, and other permissible investments.
The Bank currently offers a variety of deposit accounts having a wide
range of interest rates and terms. The Bank's deposits include passbook savings,
NOW accounts, Super NOW accounts, certificate accounts, IRA accounts, limited
accounts and non-interest bearing accounts. The Bank generally solicits deposits
in its primary market area. The Bank does not accept any brokered deposits.
The Bank's revenues are derived principally from interest income,
including primarily interest on loans, deposits in other banks and
mortgage-backed securities and other investments.
Market Area
The Bank primarily serves Crawford County, Illinois. The Bank currently
has four offices, consisting of three full service offices and one drive-up,
located in Robinson, Palestine and Oblong, Illinois.
Robinson, Palestine and Oblong, Illinois are located in Crawford
County, Illinois, approximately 150 miles east of St. Louis, Missouri and 35
miles northwest of Vincennes, Indiana. The major employers in the Bank's primary
market area include: Marathon Oil Company, Hershey Chocolate, USA, Robinson
Correctional Facility, Dana Corporation, Fair Rite Products, Crawford Memorial
Hospital and E.H. Baare Corporation.
3
<PAGE>
The Bank and therefore the Company, is dependent upon the economy of
its market share for continued success, since the vast majority of its loans are
located in the Bank's market area. See Note 18 of Notes To Consolidated
Financial Statements.
Lending Activities
General. The Bank's loan portfolio consists primarily of conventional,
first mortgage loans secured by one- to four-family residences and, to a lesser
extent, consumer loans, commercial and agricultural real estate loans,
commercial business and agricultural finance loans and multi-family real estate
and construction loans. At March 31, 2000, the Bank's gross loans outstanding
totaled $65.2 million, of which $34.1 million or 52.31% were one-to four-family
residential mortgage loans. Of the one- to four-family mortgage loans
outstanding at that date, 26.47% were fixed-rate loans, and 73.53% were
adjustable-rate loans. At that same date, consumer loans totaled $6.2 million or
9.53% of the Bank's total loan portfolio. Also at that date, the Bank's
commercial and agricultural real estate loans totaled $12.7 million or 19.55% of
the Bank's total loan portfolio of which 93.76% were adjustable-rate loans. At
March 31, 2000, commercial business and agricultural finance loans totaled $9.9
million or 15.17% of the Bank's total loan portfolio, of which 24.95% were
fixed-rate loans and 75.05% adjustable-rate loans. At that same date,
multi-family real estate and construction loans totaled $2.2 million or 3.44% of
the Bank's total loan portfolio. See Notes 1 and 4 of Notes To Consolidated
Financial Statements.
The Bank also invests in mortgage-backed securities, government
securities, obligations of states or political subdivisions and other debt
securities. At March 31, 2000, mortgage-backed securities totaled $11.0 million
or 66.77% of the Bank's total investment and mortgage-backed securities
portfolio, government securities and obligations of states and political
subdivisions and other debt securities totaled $5.5 million, or 33.23% of the
Bank's total investment and mortgage-backed securities portfolio.
The Bank's loans-to-one borrower limit is generally limited to the
greater of 15% of unimpaired capital and surplus or $500,000. See "Regulation --
Federal Regulation of National Banks." At March 31, 2000, the maximum amount
which the Bank could have lent under this limit to any one borrower and the
borrower's related entities was approximately $1.4 million. At March 31, 2000,
the Bank had no loans or groups of loans to related borrowers with outstanding
balances in excess of this amount.
The Bank's five largest lending relationships at March 31, 2000 were as
follows: (i) $2.9 million in loans to a heavy equipment contractor, of which
$1.7 million was participated to other lenders, secured by real estate,
equipment, inventory, and accounts receivable as well as certificates of deposit
and personal guarantees; (ii) $1.0 million in loans to a grain farming operation
and grain elevator business, of which $336,000 was participated to other
lenders, secured by warehouse receipts and personal guarantees; (iii) $862,000
in loans to a grain farming operation and concrete business secured by crops,
equipment, inventory, real estate and personal guarantees; (iv) $751,000 in
loans to a fast food franchise secured by real estate, equipment, inventory, and
personal guarantees; (v) $739,000 in loans to a grain farming operation of which
$260,000 was participated to other lenders, secured by crops, equipment,
inventory, and personal guarantees. At March 31, 2000, all of these loans
totaling $6.3 million in the aggregate, of which $2.3 million was participated
4
<PAGE>
to other lenders, were performing in accordance with their terms with the
exception of (iii) which was in Chapter 12 reorganization bankruptcy at the time
and awaiting direction from the Bankruptcy Trustee. This loan is also included
in the non-performing asset total.
Loan Portfolio Composition. The following information concerning the
composition of the Bank's loan portfolios in dollar amounts and in percentages
(before deductions for loans in process, deferred fees and discounts and
allowances for losses) as of the dates indicated.
March 31,
--------------------------------------
2000 1999
------------------ -------------------
Amount Percent Amount Percent
-------- --------- --------- ---------
Real Estate Loans:
One- to four-family..................... $34,100 52.31% $31,609 49.80%
Multi-family............................ 823 1.26 676 1.06
Commercial and agricultural............. 12,745 19.55 11,857 18.68
Construction or development............. 1,418 2.18 602 0.95
------- ------ ------- ------
Total real estate loans............. 49,086 75.30 44,744 70.49
------- ------ ------- ------
Other Loans:
Consumer Loans:
Deposit account........................ 669 1.03 410 0.65
Automobile............................. 4,051 6.21 5,534 8.72
Other.................................. 1,492 2.29 1,913 3.01
------- ------ ------- ------
Total consumer loans................ 6,212 9.53 7,857 12.38
------- ------ ------- ------
Commercial business and agricultural
finance loans.......................... 9,889 15.17 10,876 17.13
------- ------ ------- ------
Total other......................... 16,101 24.70 18,733 29.51
------- ------ ------- ------
Total loans......................... 65,187 100.00% 63,477 100.00%
------- ====== ------- ======
Less:
Loans in process........................ (575) (250)
Unearned discounts...................... --- ---
Allowance for losses.................... (630) (634)
------- -------
Total loans receivable, net............. $63,982 $62,593
======= =======
5
<PAGE>
The following schedule illustrates the interest rate sensitivity of the
Bank's loan portfolio at March 31, 2000. Mortgages which have adjustable or
renegotiable interest rates are shown as maturing in the period during which the
contract reprices. The schedule does not reflect the effects of possible
prepayments or enforcement of due-on-sale clauses.
<TABLE>
<CAPTION>
Real Estate
--------------------------------------------------------------------------------
One- to Multi-family and Commercial Business
Four-Family Commercial and and Agricultural
and Construction Agriculture Consumer Finance Total
---------------- --------------- --------------- --------------- ---------------
Weighted Weighted Weighted Weighted Weighted
Average Average Average Average Average
Amount Rate Amount Rate Amount Rate Amount Rate Amount Rate
------- -------- ------ -------- ------ -------- ------ -------- ------ --------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Due During Years Ending
March 31,
2001(1)................ $10,637 8.92 $ 7,434 8.94% $1,240 9.96% $7,908 9.40% $27,219 9.11%
2002 and 2003.......... 11,611 8.95 3,909 8.57 2,573 10.81 785 9.08 18,878 9.13
2004 and 2005.......... 2,817 8.47 1,328 8.27 1,942 8.93 1,080 9.23 7,167 8.67
After 2005............. 10,453 7.82 897 7.95 457 7.71 116 9.85 11,923 7.84
------- ---- ------- ---- ------ ----- ------ ---- ------- ----
Total.................. $35,518 8.57% $13,568 8.70% $6,212 9.82% $9,889 9.36% $65,187 8.84%
======= ==== ======= ==== ====== ===== ====== ==== ======= ====
<FN>
(1) Includes demand loans, loans having no stated maturity and overdraft loans.
</FN>
</TABLE>
The total amount of loans due after March 31, 2001 which have
predetermined interest rates is $14.6 million, while the total amount of loans
due after such dates which have floating or adjustable interest rates is $23.4
million.
6
<PAGE>
Underwriting Standards. All of the Bank's lending is subject to its
written underwriting standards and loan origination procedures. Decisions on
loan applications are made on the basis of detailed applications and, if
applicable, property valuations. Properties securing real estate loans made by
the Bank are generally appraised by Board approved independent appraisers. In
the loan approval process, the Bank assesses the borrower's ability to repay the
loan, the adequacy of the proposed security, the employment stability of the
borrower and the credit-worthiness of the borrower.
The Bank requires evidence of marketable title and lien position or
appropriate title insurance on all loans secured by real property. The Bank also
requires fire and extended coverage casualty insurance in amounts at least equal
to the lesser of the principal amount of the loan or the value of improvements
on the property, depending on the type of loan. As required by federal
regulations, the Bank also requires flood insurance to protect the property
securing its interest if such property is located in a designated flood area.
Management reserves the right to change the amount or type of lending
in which it engages to adjust to market or other factors.
One- to- Four-Family Residential Mortgage Lending. Residential loan
originations are generated by the Bank's marketing efforts, its present
customers, walk-in customers, and referrals from real estate brokers.
Historically, the Bank has focused its lending efforts primarily on the
origination of loans secured by one- to four-family residential mortgages in its
market area. At March 31, 2000, the Bank's one- to four-family residential
mortgage loans totaled $34.1 million, or 52.31%, of the Bank's gross loan
portfolio of which $150,000 was non-performing at that date.
The Bank offers both adjustable and fixed rate mortgage loans. For the
year ended March 31, 2000, the Bank originated $17.9 million of real estate
loans, of which $12.4 million were secured by one- to four-family residential
real estate, and $5.2 million was secured by commercial or agricultural real
estate and $281,000 secured by multifamily dwellings. Substantially all of the
Bank's one- to four-family residential mortgage originations are secured by
properties located in its market area.
The Bank offers adjustable-rate mortgage loans at rates and on terms
determined in accordance with market and competitive factors. The Bank currently
originates adjustable-rate mortgage loans with a term of up to 30 years. The
Bank generally offers from one to five year adjustable-rate mortgage loans with
a stated interest rate margin generally over the one-year Treasury Bill Index,
which adjusts from one to ten year terms. Increases or decreases in the interest
rate of the Bank's adjustable-rate loans is generally limited to 200 basis
points at any adjustment date and 600 basis points over the life of the loan. As
a consequence of using caps, the interest rates on these loans may not be as
rate sensitive as are the Bank's liabilities. The Bank qualifies borrowers for
adjustable-rate loans based on the initial interest rate of the loan. As a
result, the risk of default on these loans may increase as interest rates
increase. See "Asset Quality -- Non-Performing Assets." At March 31, 2000, the
total balance of one-to four-family adjustable-rate loans was $25.1 million or
38.47% of the Bank's gross loan portfolio. See "-- Originations, Purchases and
Sales of Loans."
7
<PAGE>
The Bank offers and retains fixed-rate mortgage loans with a term of up
to 30 years. At March 31, 2000, the total balance of one- to four-family
fixed-rate loans was $9.0 million or 13.84% of the Bank's gross loan portfolio.
The Bank also offers U.S. Department of Agriculture ("USDA") Guaranteed Rural
Housing Loans to first-time home buyers with minimal to no down payments and
that meet certain income limitations. These loans are 30-year fixed rate loans
with a 90% guarantee from USDA. At March 31, 2000, the total balance of USDA
Guaranteed Rural Housing Loans was $2.2 million or 3.46% of the Bank's gross
loan portfolio. See "-- Originations, Purchases and Sales of Loans."
Currently, the Bank will generally lend up to 80% of the appraised
value of the security property on owner occupied one- to four-family loans.
Residential loans do not include prepayment penalties, are non-assumable (other
than government-insured or guaranteed loans), and do not produce negative
amortization. Real estate loans originated by the Bank contain a "due on sale"
clause allowing the Bank to declare the unpaid principal balance due and payable
upon the sale of the security property. The Bank does utilize private mortgage
insurance.
The loans currently originated by the Bank are not typically
underwritten and documented pursuant to the guidelines of the FHLMC. Under
current policy, the Bank originates these loans for portfolio. Effective January
1, 1999, the Bank entered into an agreement with FHLB to originate loans for
them. This program offers 15 to 30 year fixed rate mortgages. The Bank sells
100% of the principal and receives a fee. The Bank also receives 25 basis points
servicing per month. A portion of the fee is retained by FHLB to cover any
contingent debt incurred by the Bank if these loans are written off. During the
year ended March 31, 2000, the Bank originated loans of $2.4 million. See "--
Originations, Purchases and Sales of Loans and -- Investment Activities --
Mortgage-backed Securities."
Consumer Lending. The Bank offers secured and unsecured consumer loans.
Secured loans may be collateralized by a variety of asset types, including
automobiles, mobile homes and deposits. The Bank currently originates
substantially all of its consumer loans in its primary market area. At March 31,
2000, the Bank's consumer loan portfolio totaled $6.2 million, or 9.53% of its
gross loan portfolio, of which 96.26% were fixed rate loans.
A significant component of the Bank's consumer loan portfolio consists
of new and used automobile loans. These loans generally have terms that do not
exceed five years. Generally, loans on vehicles are made in amounts up to 80% of
the sales price. At March 31, 2000, the Bank's automobile loans totaled $4.1
million or 6.21% of the Bank's gross loan portfolio. These loans were originated
predominately on a direct basis.
Consumer loan terms vary according to the type and value of collateral,
length of contract and creditworthiness of the borrower. The underwriting
standards employed by the Bank for consumer loans include an application, a
determination of the applicant's payment history on other debts and an
assessment of ability to meet existing obligations and payments on the proposed
loan. Although creditworthiness of the applicant is a primary consideration, the
underwriting process also includes a comparison of the value of the security, if
any, in relation to the proposed loan amount.
8
<PAGE>
Consumer loans may entail greater credit risk than do residential
mortgage loans, particularly in the case of consumer loans which are unsecured
or are secured by rapidly depreciable assets, such as automobiles. Further, any
repossessed collateral for a defaulted consumer loan may not provide an adequate
source of repayment of the outstanding loan balance as a result of the greater
likelihood of damage, loss or depreciation. In addition, consumer loan
collections are dependent on the borrower's continuing financial stability, and
thus are more likely to be affected by adverse personal circumstances.
Furthermore, the application of various federal and state laws, including
bankruptcy and insolvency laws, may limit the amount which can be recovered on
such loans. At March 31, 2000, $2,000 of the Bank's consumer loans were
non-performing. There can be no assurances that additional delinquencies will
not occur in the future.
Commercial and Agricultural Real Estate Lending. The Bank also
originates commercial and agricultural real estate loans. At March 31, 2000
approximately $12.7 million, or 19.55% of the Bank's gross loan portfolio, was
comprised of commercial and agricultural real estate loans of which $50,000 were
non-performing at that date. Of this amount, approximately $795,000 or 6.24% of
these loans were fixed-rate commercial and agricultural real estate loans and
approximately $11.9 million or 93.76% were adjustable-rate loans. The largest
commercial real estate loan was for $718,000. At March 31, 2000 this borrower
had only a $33,000 additional loan outstanding to the Bank.
The Bank will generally lend up to 80% of the value of the collateral
securing the loan with varying maturities up to 20 years for loans generally
with repricing of daily to 5 years. In underwriting these loans, the Bank
currently analyzes the financial condition of the borrower, the borrower's
credit history, and the reliability and predictability of the cash flow
generated by the business. The Bank requires personal guaranties of corporate
borrowers. Appraisals on properties securing commercial and agricultural real
estate loans originated by the Bank are performed by independent appraisers. The
Bank also offers small business loans, which are generally guaranteed up to 90%
by various governmental agencies. The Bank has, in the past, sold the guaranteed
portion of such loans and retained the uninsured portion as well as the
servicing.
Commercial and agricultural real estate loans generally present a
higher level of risk than loans secured by one- to four-family residences. This
greater risk is due to several factors, including the concentration of principal
in a limited number of loans and borrowers, the effect of general economic
conditions on income and the increased difficulty of evaluating and monitoring
these types of loans. Furthermore, the repayment of loans secured by commercial
and agricultural real estate is typically dependent upon the successful
operation of the business. If the cash flow from the project is reduced (for
example, if leases are not obtained or renewed, or a bankruptcy court modifies a
lease term, or a major tenant is unable to fulfill its lease obligations), the
borrower's ability to repay the loan may be impaired.
Commercial and Agricultural Business Lending. The Bank also originates
commercial and agricultural business loans. At March 31, 2000 approximately $9.9
million, or 15.17% of the Bank's gross loan portfolio, was comprised of
commercial and agricultural business loans of which $862,000 were non-performing
at that date. Of the $9.9 million, approximately $2.5 million or 24.95% were
fixed rate loans and approximately $7.4 million or 75.05% were adjustable-rate
loans.
9
<PAGE>
The largest commercial business loan was to a heavy equipment contractor who had
loans totaling $2.9 million. Of this amount, $1.7 million was participated to
other lenders.
Unlike residential mortgage loans, which generally are made on the
basis of the borrower's ability to make repayment from his or her employment and
other income and which are secured by real property whose value tends to be more
easily ascertainable, commercial business and agricultural finance loans
typically are made on the basis of the borrower's ability to make repayment from
the cash flow of the borrower's business. As a result, the availability of funds
for the repayment of commercial business and agricultural finance loans may be
substantially dependent on the success of the business itself (which, in turn,
is likely to be dependent upon the general economic environment). The Bank's
commercial business and agricultural finance loans are usually secured by
business or personal assets. However, the collateral securing the loans may
depreciate over time, may be difficult to appraise and may fluctuate in value
based on the success of the business. At March 31, 2000, $68,000 of the Bank's
commercial business and agricultural finance loans were unsecured.
The Bank's commercial business and agricultural finance lending policy
includes credit file documentation and analysis of the borrower's character,
capacity to repay the loan, the adequacy of the borrower's capital and
collateral as well as an evaluation of conditions affecting the borrower.
Analysis of the borrower's past, present and future cash flows is also an
important aspect of the Bank's current credit analysis. Nonetheless, such loans,
are believed to carry higher credit risk than more traditional investments.
Construction Lending. The Bank had $1.4 million in construction loans
for one- to four-family residences and commercial property or 2.18% of the total
loan portfolio at March 31, 2000. A construction loan for $446,000 for a
commercial property existed as of March 31, 2000.
The Bank offers construction loans to individuals for the construction
of one- to four-family residences or commercial buildings. Such loans are
offered with fixed and adjustable-rates of interest. Following the construction
period, these loans may become permanent loans.
Construction lending is generally considered to involve a higher level
of credit risk since the risk of loss on construction loans is dependent largely
upon the accuracy of the initial estimate of the individual property's value
upon completion of the project and the estimated cost (including interest) of
the project. If the cost estimate proves to be inaccurate, the Bank may be
required to advance funds beyond the amount originally committed to permit
completion of the project.
Multi-Family Lending. The Bank offers one- to five-year adjustable-rate
multi-family loans for terms of up to 20 years. The Bank will generally lend up
to 80% of the value of the collateral securing the loan. At March 31, 2000, the
Bank had $823,000 of multi-family real estate loans or 1.26% of the Bank's gross
loan portfolio was comprised of such loans of which none were non-performing at
that date.
Multi-family lending is generally considered to involve a higher level
of credit risk than one- to four-family residential lending. This greater risk
in multi-family lending is due to several factors, including the concentration
of principal in a limited number of loans and borrowers, the effect of
10
<PAGE>
general economic conditions on income producing properties and the increased
difficulty of evaluating and monitoring these types of loans. Furthermore, the
repayment of loans secured by multi-family real estate is typically dependent
upon the successful operation of the related real estate project. If the cash
flow from the project is reduced (for example, if leases are not obtained or
renewed, or a bankruptcy court modifies a lease term, or a major tenant is
unable to fulfill its lease obligations), the borrower's ability to repay the
loan may be impaired.
Originations, Purchases and Sales of Loans
Loan originations are developed from continuing business with
depositors and borrowers, soliciting realtors, builders, walk-in customers.
While the Bank currently originates adjustable-rate and fixed-rate
loans, its ability to originate loans to a certain extent is dependent upon the
relative customer demand for loans in its market, which is affected by the
interest rate environment, among other factors. For the year ended March 31,
2000, the Bank originated $15.3 million in fixed-rate loans and $15.7 million in
adjustable-rate loans.
The Bank sold through participations with other lenders, $835,000 in
commercial business and agricultural finance loans and $2.5 million in one- to
four-family loans through market programs for the year ended March 31, 2000.
Sales of these loans generally are beneficial to the Bank since these sales may
produce future servicing income, provide funds for additional lending and other
investments and increase liquidity. The Bank does not sell loans pursuant to
forward sales commitments and, therefore, an increase in interest rates after
loan origination and prior to sale may adversely affect the Bank's income at the
time of sale.
11
<PAGE>
The following table shows the loan origination, purchase, sale and
repayment activities of the Bank for the periods indicated.
Year Ended March 31,
------------------------
2000 1999
--------- --------
Originations by type:
Real estate:
One to four-family.................... $12,441 $10,897
Multi-family.......................... 281 370
Commercial and agricultural........... 5,216 6,331
--------- --------
Other:
Consumer.............................. 5,543 5,823
Commercial business and agricultural
finance............................ 7,545 10,847
--------- --------
Total loans originated............. 31,026 34,268
--------- --------
Purchases:
Real Estate:
Commercial and agricultural........... --- ---
Other:
Commercial business and agricultural
finance........................... 149 678
--------- --------
Total loan purchases................ 149 678
Mortgage-backed securities................. 5,248 8,469
--------- --------
Total purchases....................... 5,397 9,147
--------- --------
Sales and Repayments:
Real estate:
Commercial and agricultural........... 2,493 508
Mortgage-backed securities sales...... --- ---
Other:
Commercial business and agricultural
finance................................... 835 1,431
--------- --------
Total sales........................... 3,328 1,939
--------- --------
Principal reductions
Loans................................. 26,337 33,075
Mortgaged-backed securities........... 1,898 1,716
--------- --------
Total reductions..................... 28,235 34,791
--------- --------
Decreases in other items, net (298) (2,103)
--------- --------
Net increase (decrease).................... $ 4,562 $ 4,582
========= ========
12
<PAGE>
Asset Quality
Delinquencies. When a borrower fails to make a required payment on a
loan, the Bank attempts to cause the delinquency to be cured by contacting the
borrower. In the case of loans secured by real estate, reminder notices are sent
to borrowers. If payment is late, appropriate late charges are assessed and a
notice of late charges is sent to the borrower. If the loan is in excess of 60
days delinquent, the loan will generally be referred to the Bank's legal counsel
for collection.
When a loan becomes more than 90 days delinquent and collection of
principal and interest is considered doubtful, or is otherwise impaired, the
Bank will generally place the loan on non-accrual status and previously accrued
interest income on the loan is charged against current income.
Delinquent consumer loans are handled in a similar manner as to those
described above; however, shorter time frames for each step apply due to the
type of collateral generally associated with such types of loans. The Bank's
procedures for repossession and sale of consumer collateral are subject to
various requirements under applicable consumer protection laws.
The following table sets forth the Bank's loan delinquencies by type,
by amount and by percentage of type at March 31, 2000.
<TABLE>
<CAPTION>
Loans Delinquent For:
------------------------------------------------------------------------------------------------------------
60-89 Days(1) 90 Days and Over(1) Nonaccrual Total Delinquent Loans
----------------------------- ----------------------- ------------------------- ----------------------------
Percent Percent Percent Percent
of Loan of Loan of Loan of Loan
Number Amount Category Number Amount Category Number Amount Category Number Amount Category
---------- ------ ----------- ------ ------- -------- ------ ------- ---------- ------ ---------- ----------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Real Estate:
One- to four-family... --- $--- --- --- $--- --- 2 $ 150 0.44 2 $ 150 0.44
Commercial and
agricultural real estate --- --- --- --- --- --- 1 50 0.39 1 50 0.39
Consumer................ 1 1 0.02 --- --- --- 2 2 0.03 3 3 0.05
Commercial business
and agricultural finance --- --- --- --- --- --- 8 862 8.71 8 862 8.71
---- ---- ------ ----- ---- ---- --- ------ ---- --- ------ ----
Total.............. 1 $ 1 ---% --- $--- ---% 13 $1,064 1.63% 14 $1,065 1.63%
==== ==== ====== ===== ==== ==== === ====== ==== === ====== ====
<FN>
(1) Loans are still accruing.
</FN>
</TABLE>
13
<PAGE>
Non-Performing Assets. The table below sets forth the amounts and
categories of non-performing assets in the Bank's loan portfolio. Loans are
placed on non-accrual status when the collection of principal and/or interest
become doubtful. Foreclosed assets include assets acquired in settlement of
loans.
Year Ended
March 31,
------------------------
2000 1999
---------- -------
(Dollars in thousands)
Non-accruing loans:
One- to four-family.................... $ 150 $ 53
Commercial and agricultural real estate 50 51
Consumer............................... 2 39
Commercial business and agricultural
finance............................... 862 5
---------- -------
Total............................... 1,064 148
---------- -------
Accruing loans delinquent more than 90 days:
One- to four-family.................... --- ---
Commercial and agricultural real estate --- ---
Consumer............................... --- ---
Commercial business and
agricultural finance.................. --- ---
---------- --------
Total............................... --- ---
---------- --------
Foreclosed assets:
One- to four-family.................... 55 ---
Commercial and agricultural real estate 24 ---
Consumer............................... --- ---
---------- -------
Total............................... --- ---
---------- -------
Total non-performing assets.............. $1,143 $148
========== =======
Total as a percentage of total assets.... 1.31% 0.18%
========== =======
For the year ended March 31, 2000, gross interest income which would
have been recorded had the non-accruing loans been current in accordance with
their original terms amounted to approximately $76,000. There was $28,000 that
was included in interest income on such loans for the year ended March 31, 1999.
Classified Assets. Federal regulations provide for the classification
of loans and other assets, such as debt and equity securities, considered by the
OCC to be of lesser quality, as "substandard," "doubtful" or "loss." An asset is
considered "substandard" if it is inadequately protected by the current net
worth and paying capacity of the obligor or the collateral pledged, if any.
"Substandard" assets include those characterized by the "distinct possibility"
that the insured institution will sustain "some loss" if the deficiencies are
not corrected. Assets classified as "doubtful" have all of the weaknesses
inherent in those classified "substandard" with the added characteristic that
the weaknesses present make "collection or liquidation in full" on the basis of
currently existing facts, conditions and values, "highly questionable and
improbable." Assets classified as "loss" are those
14
<PAGE>
considered "uncollectible" and of such little value that their continuance as
assets without the establishment of a specific loss reserve is not warranted.
When an insured institution classifies problem assets as either
substandard or doubtful, it may establish general allowances for losses in an
amount deemed prudent by management. General allowances represent loss
allowances which have been established to recognize the inherent risk associated
with lending activities, but which, unlike specific allowances, have not been
allocated to particular problem assets. When an insured institution classifies
problem assets as "loss," it is required either to establish a specific
allowance for losses equal to 100% of that portion of the asset so classified or
to charge-off such amount. An institution's determination as to the
classification of its assets and the amount of its valuation allowances is
subject to review by the regulatory authorities, who may order the establishment
of additional general or specific loss allowances.
In connection with the filing of its periodic reports with the OCC and
in accordance with its classification of assets policy, the Bank regularly
reviews loans in its portfolio to determine whether such assets require
classification in accordance with applicable regulations. On the basis of
management's review of its assets, at March 31, 2000, the Bank had classified a
total of $1.8 million of its assets as substandard and $1.0 million as doubtful
or loss. At March 31, 2000, total classified assets comprised $2.8 million, or
30.25% of the Bank's capital, or 3.23% of the Bank's total assets.
Other Loans of Concern. As of March 31, 2000, there were $130,000 loans
identified, but not classified, by the Bank with respect to which known
information about the possible credit problems of the borrowers or the cash
flows of the business have caused management to have some doubts as to the
ability of the borrowers to comply with present loan repayment terms and which
may result in the future inclusion of such items in the non-performing asset
categories.
Allowance for Loan Losses. The allowance for loan losses is maintained
at a level which, in management's judgment, is adequate to absorb credit losses
inherent in the loan portfolio. The amount of the allowance is based on
management's evaluation of the collectibility of the loan portfolio, including
the nature of the portfolio, credit concentrations, trends in historical loss
experience, specific impaired loans and economic conditions. Allowances for
impaired loans are generally determined based on collateral values. The
allowance is increased by a provision for loan losses, which is charged to
expense and reduced by charge-offs, net of recoveries.
Real estate properties acquired through foreclosure are recorded at the
market fair value minus 20% of the market fair value. If fair value at the date
of foreclosure is lower than the balance of the related loan, the difference
will be charged-off to the allowance for loan losses at the time of transfer.
Valuations are periodically updated by management and if the value declines, a
specific provision for losses on such property is established by a charge to
operations. At March 31, 2000, the Bank had $79,000 in real estate properties
acquired through foreclosure. The properties are for sale and will be sold if
the offers to purchase are approved by the board.
Although management believes that it uses the best information
available to determine the allowance, unforeseen market conditions could result
in adjustments and net earnings could be significantly affected if circumstances
differ substantially from the assumptions used in making the final
determination. Future additions to the Bank's allowance for loan losses will be
the result of
15
<PAGE>
periodic loan, property and collateral reviews and thus cannot be predicted in
advance. In addition, federal regulatory agencies, as an integral part of the
examination process, periodically review the Bank's allowance for loan losses.
Such agencies may require the Bank to increase the allowance based upon their
judgment of the information available to them at the time of their examination.
At March 31, 2000, the Bank had a total allowance for loan losses of $630,000,
representing 0.97% of the Bank's loans. See Note 4 of Notes To Consolidated
Financial Statements.
The distribution of the Bank's allowance for losses on loans at the
dates indicated is summarized as follows:
<TABLE>
<CAPTION>
March 31,
-----------------------------------------------------------------
2000 1999
-------------------------------- --------------------------------
Percent Percent
of Loans of Loans
Amount of Loan in Each Amount of Loan in Each
Loan Loss Amounts by Category to Loan Loss Amounts by Category to
Allowance Category Total Loans Allowance Category Total Loans
--------- ---------- ----------- --------- ---------- -----------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
One- to four-family....... $ 115 $34,100 52.31% $ 34 $31,609 49.80%
Multi-family........... --- 823 1.26 --- 676 1.06
Commercial and
agricultural real estate 140 12,745 19.55 45 11,857 18.68
Construction or
development............. --- 1,418 2.18 --- 602 .95
Consumer.................. 75 6,212 9.53 157 7,857 12.38
Commercial business and
agricultural finance.... 172 9,889 15.17 398 10,876 17.13
Unallocated............... 128 --- --- --- --- ---
------ ------- ------ ---- ------- ------
Total................ $ 630 $65,187 100.00% $634 $63,477 100.00%
====== ======= ====== ==== ======= ======
</TABLE>
16
<PAGE>
The following table sets forth an analysis of the Bank's allowance for
loan losses.
Year Ended
March 31,
------------------------------
2000 1999
--------------- ------------
(Dollars in thousands)
Balance at beginning of year...................... $ 634 $ 665
Charge-offs:
One- to four-family............................. 42 56
Commercial and agricultural real estate......... 9 353
Consumer........................................ 101 182
Commercial business and agricultural finance.... 45 22
----- ------
197 613
----- ------
Recoveries:
One- to four-family............................. 4 14
Commercial and agricultural real estate......... --- 22
Consumer........................................ 50 111
Commercial business and agricultural finance.... --- ---
----- ------
54 147
----- ------
Net charge-offs................................... 143 466
Additions charged to operations................... 139 435
----- ------
Balance at end of year............................ $ 630 $ 634
===== ======
Ratio of net charge-offs during the year to
average loans outstanding during the year........ 0.23% .73%
===== ======
Ratio of net charge-offs during the year to
average non-performing assets.................... 29.42% 168.23%
===== ======
Investment Activities
General. Historically, the Bank has generally maintained liquid assets
at levels believed adequate to meet the requirements of normal operations,
including repayments of maturing debt and potential deposit outflows. Cash flows
projections are regularly reviewed and updated to assure that adequate liquidity
is maintained. A national bank is not subject to prescribed requirements. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resource" and "Regulation -- Liquidity."
National banking associations have the authority to invest in various
types of liquid assets, including U.S. Treasury obligations, securities of
various federal agencies, certain certificates of deposit of insured banks and
savings institutions, certain bankers' acceptances, repurchase agreements and
federal funds. Subject to various restrictions, national banks may also invest
their assets in commercial paper, investment grade corporate debt securities and
mutual funds whose assets conform to the investments that a federally chartered
savings institution is otherwise authorized to make directly.
17
<PAGE>
Generally, the investment policy of the Bank, as established by the
Board of Directors, is to invest funds among various categories of investments
and maturities based upon the Bank's liquidity needs, asset/liability management
policies, investment quality, marketability and performance objectives.
Investment Securities. At March 31, 2000, the Bank's investment
securities (including a $397,000 investment in the common stock of the FHLB of
Chicago and Federal Reserve stock of $123,000) totaled $5.5 million, or 6.26% of
its total assets. It has been the Bank's general policy to invest in obligations
of state and political subdivisions, federal agency obligations and other
investment securities.
National banks are restricted in investments in corporate debt and
equity securities. These restrictions include prohibitions against investments
in the debt securities of any one issuer in excess of 15% of the Bank's
unimpaired capital and unimpaired surplus as defined by federal regulations,
which totaled $9.7 million as of March 31, 2000, plus an additional 10% if the
investments are fully secured by readily marketable collateral. At March 31,
2000, the Bank was in compliance with this regulation. See "Regulation --
Federal Regulation of National Banks" for a discussion of additional
restrictions on the Bank's investment activities. See Note 1 of Notes To
Consolidated Financial Statements.
18
<PAGE>
The following table sets forth the composition of the Bank's investment
and mortgage-backed securities at the dates indicated.
March 31,
-----------------------------------
2000 1999
----------------- ----------------
Book % of Book % of
Value Total Value Total
--------- ------ -------- ------
(Dollars in thousands)
AVAILABLE FOR SALE
Equity securities:
FHLB stock............................. $ 397 2.55% $ 352 2.95%
FHLMC stock............................ --- --- --- ---
FRB stock.............................. 123 0.79 123 1.03
--------- ------ -------- ------
Total equity securities.............. 520 3.34 475 3.98
--------- ------ -------- ------
Investments securities:
U.S. treasury.......................... 1,000 6.43 1,030 8.64
Municipal bonds........................ 1,398 8.99 1,284 10.78
FHLB agency............................ 2,400 15.43 999 8.38
--------- ------ -------- ------
Total investment securities......... 4,798 30.85 3,313 27.80
Mortgage-backed securities:
GNMA................................... 6,058 38.95 5,296 44.43
FNMA................................... 2,868 18.44 2,220 18.63
FHLMC.................................. 1,310 8.42 615 5.16
--------- ------ -------- ------
Total mortgage-backed securities..... $ 10,236 65.81% $ 8,131 68.22%
--------- ------ -------- ------
Total available for sale............. $ 15,554 100.00% $11,919 100.00%
========= ====== ======= ======
HELD TO MATURITY
Investment securities:
Municipal bonds........................ 148 16.54 190 100.00
U.S. treasury notes.................... --- --- --- ---
--------- ------ -------- ------
Total investment securities.......... 148 16.54% 190 100.00%
--------- ------ -------- ------
Mortgage-backed securities:
FNMA.................................... $ 747 83.46 $ --- ---
--------- ------ -------- ------
Total held to maturity............... $ 895 100.00% $ 190 100.00%
========= ====== ======== ======
Average remaining life of
investment securities.................. 7.71 Years 7.13 Years
Other interest-earning assets:
Total interest-bearing
deposits with banks............. $ 1,390 100.00% $ 4,268 100.00%
======== ====== ======== ======
19
<PAGE>
The Bank's investment securities portfolio at March 31, 2000, contained
no securities of any issuer with an aggregate book value in excess of 10% of the
Bank's retained earnings, excluding those issued by the U.S. government, or its
agencies.
First Robinson's investments, including the mortgage-backed securities
portfolio, are managed in accordance with a written investment policy adopted by
the Board of Directors.
OCC guidelines, as well as those of the other federal banking
regulators, regarding investment portfolio policy and accounting require banks
to categorize securities and certain other assets as held for "investment,"
"sale," or "trading." In addition, effective April 1, 1994, the Bank adopted
SFAS 115 which states that securities available for sale are accounted for at
fair value and securities which management has the intent and the Bank has the
ability to hold to maturity are accounted for on an amortized cost basis. The
Bank's investment policy has strategies for each type of security. At March 31,
2000, the Bank classified $15.6 million of its investments as available for sale
and $895,000 as held to maturity.
Mortgage-backed Securities. The Bank invests primarily in federal
agency obligations. At March 31, 2000, the Bank's investment in mortgage-backed
securities totaled $11.0 million or 12.59% of its total assets. Of this amount,
$747,000 was held to maturity and $10.2 million was available for sale. At March
31, 2000, the Bank did not have a trading portfolio.
The following table sets forth the maturities of the Bank's
mortgage-backed securities at March 31, 2000.
Due in
----------------------------------------
1 Year 1 to 5 to 10 10 Years
or Less 5 Years Years or More Total
------- ------- ------- -------- -------
Federal Home Loan Mortgage Corporation.. --- 308 --- 1,208 1,336
Weighted Average...................... --- 5.50 --- 6.51 6.28
Federal National Mortgage Company....... --- --- --- 3,743 3,743
Weighted Average...................... --- --- --- 6.92 6.92
Government National Mortgage Company.... --- --- --- 6,412 6,412
Weighted Average...................... --- --- --- 6.88 6.88
Total.............................. --- 308 --- 11,183 11,491
Weighted Average...................... --- 5.50 --- 6.86 6.82
20
<PAGE>
Sources of Funds
General. The Bank's primary sources of funds are deposits, receipt of
principal and interest on loans and securities, interest earned on deposits with
other banks, and other funds provided from operations.
The Bank has used FHLB advances to support lending activities and to
assist in the Bank's asset/liability management strategy. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Asset\Liability Management." At March 31, 2000, the Bank had $3.6 million in
FHLB advances, but had the capacity to borrow an additional $14.6 million from
the FHLB. The Bank could also borrow up to $2.0 million from a correspondent
bank located in Chicago, Illinois, and an additional $2.0 million form a
correspondent bank located in Springfield, Illinois. The Bank has also
established borrowing capabilities with the Federal Reserve Bank of St.
Louis. See Note 8 of Notes To Consolidated Financial Statements.
At March 31, 2000, the Bank had $1.5 million in repurchase agreements.
See Note 8 of Notes to Consolidated Financial Statements.
Deposits. The Bank offers a variety of deposit accounts having a wide
range of interest rates and terms. The Bank's deposits consist of passbook,
money market deposit, IRA accounts, and certificate accounts. The certificate
accounts currently range in terms from 90 days to five years. The Bank has a
significant amount of deposits that will mature within one year. However,
management expects that virtually all of the deposits will be renewed.
The Bank relies primarily on advertising, competitive pricing policies
and customer service to attract and retain these deposits. Currently, the Bank
solicits deposits from its market area only, and does not use brokers to obtain
deposits. The flow of deposits is influenced significantly by general economic
conditions, changes in money market and prevailing interest rates and
competition.
The Bank has become more susceptible to short-term fluctuations in
deposit flows as customers have become more interest rate conscious. The Bank
endeavors to manage the pricing of its deposits in keeping with its
profitability objectives giving consideration to its asset/liability management.
The ability of the Bank to attract and maintain savings accounts and
certificates of deposit, and the rates paid on these deposits, has been and will
continue to be significantly affected by market conditions. See Note 7 of Notes
To Consolidated Financial Statements.
21
<PAGE>
The following table sets forth the savings flows at the Bank during the
periods indicated.
Year Ended
March 31,
-----------------------------------
2000 1999
------------------ ----------------
(Dollars in thousands)
Opening balance............................. $ 67,325 $ 62,630
Deposits.................................... 359,868 503,805
Withdrawals................................. (358,149) (502,294)
Interest credited........................... 2,916 3,184
----------- -----------
Ending balance.............................. $ 71,960 $ 67,325
----------- ===========
Net increase................................ $ 4,635 $ 4,695
=========== ===========
Percent increase............................ 6.88% 7.50%
==== ====
The following table sets forth the dollar amount of savings deposits in
the various types of deposit programs offered by the Bank for the periods
indicated.
March 31,
----------------------------------------
2000 1999
------------------- --------------------
Percent Percent
Amount of Total Amount of Total
-------- ---------- --------- ----------
(Dollars in thousands)
Transactions and Savings Deposits:
Non-interest bearing demand 0%...... $ 4,920 6.84% $ 3,444 5.11%
Passbook Accounts (3.01%)........... 10,166 14.13 7,512 11.16
NOW Accounts (2.45%)................ 12,317 17.11 11,829 17.57
------- ------ ------- ------
Total non-certificates.............. 27,403 38.08 22,785 33.84
------- ------ ------- ------
Certificates:
2.00 - 3.99%....................... $ 12 0.02$ 474 .70
4.00 - 5.99%....................... 29,250 40.65 30,388 45.14
6.00 - 7.99%....................... 15,295 21.25 13,678 20.32
Total certificates.................. 44,557 61.92 44,540 66.16%
------- ------ ------- ------
Total deposits...................... $71,960 100.00% $67,325 100.00%
======= ====== ======= ======
22
<PAGE>
The following table shows rate and maturity information for the Bank's
certificates of deposit as of March 31, 2000.
<TABLE>
<CAPTION>
Weighted
2.00- 4.00- 6.00- Percent Average
3.99% 5.99% 7.99% Total of Total Rate
------------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Certificate accounts maturing
in quarter ending:
June 30, 2000.................. 12 8,885 6,671 15,568 34.94 5.44
September 30, 2000............. --- 4,910 1,627 6,537 14.67 5.26
December 31, 2000.............. --- 3,268 1,017 4,285 9.62 5.21
March 31, 2001................. --- 4,856 1,013 5,869 13.17 5.26
June 30, 2001.................. --- 1,142 596 1,738 3.90 5.30
September 30, 2001............. --- 2,199 470 2,669 5.99 5.19
December 31, 2001.............. --- 775 451 1,226 2.75 5.50
March 31, 2002................. --- 440 741 1,181 2.65 5.65
June 30, 2002.................. --- 385 386 771 1.73 5.79
September 30, 2002............. --- 373 610 983 2.20 5.92
December 31, 2002.............. --- 845 780 1,625 3.65 5.67
March 31, 2003................. --- 257 508 765 1.72 5.68
Thereafter..................... --- 915 425 1,340 3.01 5.44
Total....................... 12 29,250 15,295 44,557 100.00% 5.38
==== ====== ====== ====== ====== ====
Percent of total............ 0.02% 65.65% 34.33% 100.00%
==== ===== ===== ======
</TABLE>
The following table indicates the amount of the Bank's certificates of
deposit and other deposits by time remaining until maturity as of March 31,
2000.
<TABLE>
<CAPTION>
Maturity
-------------------------------------------------------------
Over Over
3 Months 3 to 6 6 to 12 Over
or Less Months Months 12 months Total
------- ------ ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Certificates of deposit less than $100,000....... $ 7,303 $4,893 $7,523 $10,272 $29,991
Certificates of deposit of $100,000 or more...... 1,617 869 2,512 2,026 7,024
Public funds of $100,000 or more (1)............. 6,648 775 119 --- 7,542
------- ------ ------- ------- -------
Total certificates of deposit.................... $15,568 $6,537 $10,154 $12,298 $44,557
======= ====== ======= ======= =======
<FN>
---------------
(1) Deposits from governmental and other public entities.
</FN>
</TABLE>
23
<PAGE>
Subsidiary Activities
As a national bank, the Bank is able to invest unlimited amounts in
subsidiaries that are engaged in activities in which the parent bank may engage.
In addition, a national bank may invest limited amounts in subsidiaries that
provide banking services, such as data processing, to other financial
institutions. At March 31, 2000, the Bank had one subsidiary, First Robinson
Service Corporation, Inc.
Competition
The Bank faces strong competition, both in originating real estate,
commercial and consumer loans and in attracting deposits. Competition in
originating loans comes primarily from commercial banks and credit unions
located in the Bank's market area. Commercial banks provide vigorous competition
in consumer lending. The Bank competes for real estate and other loans
principally on the basis of the quality of services it provides to borrowers,
the interest rates and loan processing fees it charges, and the types of loans
it originates. See "-- Lending Activities."
The Bank attracts all of its deposits through its retail banking
office. Therefore, competition for those deposits is principally from retail
brokerage offices, commercial banks and credit unions located in the community.
The Bank competes for these deposits by offering a variety of account
alternatives at competitive rates and by providing convenient business hours.
The Bank primarily serves Crawford County, Illinois. There are four
commercial banks and one credit union which compete for deposits and loans in
the Bank's market area.
REGULATION
General
The Company is a registered bank holding company, subject to broad
federal regulation and oversight by the FRB. The Bank is a national bank, the
deposits of which are federally insured and backed by the full faith and credit
of the U.S. Government. Accordingly, the Bank is subject to broad federal
regulation and oversight extending to all its operations by the OCC, the FDIC
and the FRB. The Bank is also a member of the FHLB of Chicago. The Bank is a
member of the SAIF and the deposits of the Bank are insured by the FDIC.
Certain of these regulatory requirements and restrictions are discussed
below or elsewhere in this document. See Note 9 of Notes To Consolidated
Financial Statements.
24
<PAGE>
Federal Regulation of National Banks
The OCC has extensive authority over the operations of national banks.
As part of this authority, the Bank is required to file periodic reports with
the OCC and is subject to periodic examinations by the OCC. All national banks
are subject to a semi-annual assessment, based upon the bank's total assets, to
fund the operations of the OCC.
The OCC also has extensive enforcement authority over all national
banks, including the Bank. This enforcement authority includes, among other
things, the ability to assess civil money penalties, to issue cease-and-desist
or removal orders and to initiate injunctive actions. In general, these
enforcement actions may be initiated for violations of laws and regulations as
well as unsafe or unsound practices. Other actions or inactions may provide the
basis for enforcement action, including misleading or untimely reports filed
with the OCC. Except under certain circumstances, public disclosure of final
enforcement actions by the OCC is required.
The Bank's loans-to-one borrower limit is generally limited to 15% of
unimpaired capital and surplus. At March 31, 2000, the maximum amount which the
Bank could have lent under this limit to any one borrower and the borrower's
related entities was approximately $1.4 million. At March 31, 2000, the Bank had
no loans or groups of loans to related borrowers with outstanding balances in
excess of this amount. The Bank's five largest lending relationships at March
31, 2000 totaled $6.3 million in the aggregate and were performing in accordance
with their terms with the exception of one borrower with loans totaling $862,000
who was in Chapter 12 reorganized bankruptcy. Of this amount, $2.3 million was
participated to other lenders.
The OCC, as well as the other federal banking agencies, have adopted
regulations and guidelines establishing safety and soundness standards on such
matters as loan underwriting and documentation, internal controls and audit
systems, interest rate risk exposure, asset quality and earnings, and
compensation and other employee benefits. Any institution which fails to comply
with these standards must submit a compliance plan. A failure to submit a plan
or to comply with an approved plan will subject the institution to further
enforcement action.
Insurance of Accounts and Regulation by the FDIC
The Bank is a member of the SAIF, which is administered by the FDIC.
Deposits are insured up to applicable limits by the FDIC and such insurance is
backed by the full faith and credit of the U.S. Government. As insurer, the FDIC
imposes deposit insurance premiums and is authorized to conduct examinations of
and to require reporting by FDIC-insured institutions. It also may prohibit any
FDIC-insured institution from engaging in any activity the FDIC determines by
regulation or order to pose a serious risk to the FDIC. The FDIC also has the
authority to initiate enforcement actions against banks after giving the OCC an
opportunity to take such action, and may terminate the deposit insurance if it
determines that the institution has engaged in unsafe or unsound practices or is
in an unsafe or unsound condition.
25
<PAGE>
The FDIC's deposit insurance premiums are assessed through a risk-based
system under which all insured depository institutions are placed into one of
nine categories and assessed insurance premiums based upon their level of
capital and supervisory evaluation. Under the system, institutions classified as
well capitalized (i.e., a Tier 1 capital ratio of at least 5%, a ratio of Tier 1
capital to risk-weighted assets ("Tier 1 risk-based capital") of at least 6% and
a risk-based capital ratio of at least 10%) and considered healthy, pay the
lowest premium, while institutions that are less than adequately capitalized
(i.e., Tier 1 or Tier 1 risk-based capital ratios of less than 4% or a
risk-based capital ratio of less than 8%) and considered of substantial
supervisory concern pay the highest premium. Risk classification of all insured
institutions will be made by the FDIC for each semi-annual assessment period.
SAIF-insured and BIF-insured institutions are required to pay a
Financing Corporation (FICO) assessment, in order to fund the interest on bonds
issued to resolve thrift failures in the 1980s, equal to approximately 2.120
basis points for each $100 in domestic deposits. These assessments, which may be
revised based upon the level of BIF and SAIF deposits will continue until the
bonds mature in the years 2017 through 2019.
National Banks. The Bank is subject to the capital regulations of the
OCC. The OCC's regulations establish two capital standards for national banks: a
leverage requirement and a risk-based capital requirement. In addition, the OCC
may, on a case-by-case basis, establish individual minimum capital requirements
for a national bank that vary from the requirements which would otherwise apply
under OCC regulations. A national bank that fails to satisfy the capital
requirements established under the OCC's regulations will be subject to such
administrative action or sanctions as the OCC deems appropriate.
The leverage ratio adopted by the OCC requires a minimum ratio of "Tier
1 capital" to adjusted total assets of 3% for national banks rated composite 1
under the CAMELS rating system for banks. National banks not rated composite 1
under the CAMELS rating system for banks are required to maintain a minimum
ratio of Tier 1 capital to adjusted total assets of 4% to 5%, depending upon the
level and nature of risks of their operations. For purposes of the OCC's
leverage requirement, Tier 1 capital generally consists of common stockholders'
equity and retained income and certain non-cumulative perpetual preferred stock
and related income, except that no intangibles and certain purchased mortgage
servicing rights and purchased credit card relationships may be included in
capital.
The risk-based capital requirements established by the OCC's
regulations require national banks to maintain "total capital" equal to at least
8% of total risk-weighted assets. For purposes of the risk-based capital
requirement, "total capital" means Tier 1 capital (as described above) plus
"Tier 2 capital," provided that the amount of Tier 2 capital may not exceed the
amount of Tier 1 capital, less certain assets. The components of Tier 2 capital
include certain permanent and maturing capital instruments that do not qualify
as core capital and general valuation loan and lease loss allowances up to a
maximum of 1.25% of risk-weighted assets.
26
<PAGE>
Prompt Corrective Action. The OCC is authorized and, under certain
circumstances required, to take certain actions against national banks that fail
to meet their capital requirements. The OCC is generally required to take action
to restrict the activities of an "undercapitalized institution" (generally
defined to be one with less than either a 4% core capital ratio, a 4% Tier 1
risked-based capital ratio or an 8% risk-based capital ratio). Any such
institution must submit a capital restoration plan and until such plan is
approved by the OCC may not increase its assets, acquire another institution,
establish a branch or engage in any new activities, and generally may not make
capital distributions. The OCC is authorized to impose the additional
restrictions that are applicable to significantly undercapitalized institutions.
Any national bank that fails to comply with its capital plan or is
"significantly undercapitalized" (i.e., Tier 1 risk-based or core capital ratios
of less than 3% or a risk-based capital ratio of less than 6%) must be made
subject to one or more of additional specified actions and operating
restrictions which may cover all aspects of its operations and include a forced
merger or acquisition of the bank. A national bank that becomes "critically
undercapitalized" (i.e., a tangible capital ratio of 2% or less) is subject to
further mandatory restrictions on its activities in addition to those applicable
to significantly undercapitalized institutions. In addition, the OCC must
appoint a receiver (or conservator with the concurrence of the FDIC) for an
institution, with certain limited exceptions, within 90 days after it becomes
critically undercapitalized. Any undercapitalized institution is also subject to
the general enforcement authority of the OCC, including the appointment of a
conservator or a receiver.
The OCC is also generally authorized to reclassify a bank into a lower
capital category and impose the restrictions applicable to such category if the
institution is engaged in unsafe or unsound practices or is in an unsafe or
unsound condition.
The imposition by the OCC of any of these measures on the Bank may have
a substantial adverse effect on the Bank's operations and profitability and the
value of the Company's common stock.
Limitations on Dividends and Other Capital Distributions
The Bank's ability to pay dividends is governed by the National Bank
Act and OCC regulations. Under such statute and regulations, all dividends by a
national bank must be paid out of current or retained net profits, after
deducting reserves for losses and bad debts. The National Bank Act further
restricts the payment of dividends out of net profits by prohibiting a national
bank from declaring a cash dividend on its shares of common stock until the
surplus fund equals the amount of capital stock or, if the surplus fund does not
equal the amount of capital stock, until one-tenth of the bank's net profits for
the preceding half year in the case of quarterly or semi-annual dividends, or
the preceding two half-year periods in the case of annual dividends, are
transferred to the surplus fund. In addition, the prior approval of the OCC is
required for the payment of a dividend if the total of all dividends declared by
a national bank in any calendar year would exceed
27
<PAGE>
the total of its net profits for the year combined with its net profits for the
two preceding years, less any required transfers to surplus or a fund for the
retirement of any preferred stock.
The OCC has the authority to prohibit the payment of dividends by a
national bank when it determines such payment to be an unsafe and unsound
banking practice. In addition, the bank would be prohibited by federal statute
and the OCC's prompt corrective action regulations from making any capital
distribution if, after giving effect to the distribution, the bank would be
classified as "undercapitalized" under OCC regulations. See "-- Prompt
Corrective Action." Finally, the Bank would not be able to pay dividends on its
capital stock if its capital would thereby be reduced below the remaining
balance of the liquidation account established in connection with the Bank's
conversion from mutual to stock form.
Accounting
The OCC requires that investment activities of a national bank be in
compliance with approved and documented investment policies and strategies, and
must be accounted for in accordance with generally accepted accounting
principles ("GAAP"). Accordingly, management must support its classification of
and accounting for loans and securities (i.e., whether held for investment, sale
or trading) with appropriate documentation. The Bank is in compliance with these
requirements.
Community Reinvestment Act
Under the Community Reinvestment Act ("CRA"), every FDIC-insured
institution has a continuing and affirmative obligation consistent with safe and
sound banking practices to help meet the credit needs of its entire community,
including low and moderate income neighborhoods. The CRA does not establish
specific lending requirements or programs for financial institutions nor does it
limit an institution's discretion to develop the types of products and services
that it believes are best suited to its particular community, consistent with
the CRA. The CRA requires the OCC, in connection with the examination of the
institution, to assess the institution's record of meeting the credit needs of
its community and to take such record into account in its evaluation of certain
applications, such as a merger or the establishment of a branch, by the
institution. An unsatisfactory rating may be used as the basis for the denial of
an application by the OCC.
Transactions with Affiliates
Generally, transactions between a national bank or its subsidiaries and
its affiliates are required to be on terms as favorable to the bank as
transactions with non-affiliates. In addition, certain of these transactions,
such as loans to an affiliate, are restricted to a percentage of the bank's
capital. Affiliates of the bank include any company which is under common
control with the bank. In addition, the bank may not acquire the securities of
most affiliates. Subsidiaries of the bank are not deemed affiliates. However,
the Federal Reserve Board (the "FRB") has the discretion to treat subsidiaries
of national banks as affiliates on a case-by-case basis.
28
<PAGE>
Certain transactions with directors, officers or controlling persons
("Insiders") are also subject to conflict of interest rules enforced by the OCC.
These conflict of interest regulations and other statutes also impose
restrictions on loans to such persons and their related interests. Among other
things, as a general matter, loans to Insiders must be made on terms
substantially the same as for loans to unaffiliated individuals.
Federal Reserve System
The FRB requires all depository institutions to maintain non-interest
bearing reserves at specified levels against their transaction accounts
(primarily checking, NOW and Super NOW checking accounts). At March 31, 2000,
the Bank had $123,000 FRB stock, which was in compliance with these reserve
requirements.
The Bank is a member of the Federal Reserve System. National banks are
authorized to borrow from the Federal Reserve Bank "discount window," but FRB
regulations require banks to exhaust other reasonable alternative sources of
funds, including FHLB borrowings, before borrowing from the FRB.
Holding Company Regulation
General. The Company is a bank holding company registered with the FRB.
Bank holding companies are subject to comprehensive regulation by the FRB under
the BHCA, and the regulations of the FRB. As a bank holding company, the Company
is required to file reports with the FRB and such additional information as the
FRB may require, and will be subject to regular examinations by the FRB. The FRB
also has extensive enforcement authority over bank holding companies, including,
among other things, the ability to assess civil money penalties, to issue cease
and desist or removal orders and to require that a holding company divest
subsidiaries (including its bank subsidiaries). In general, enforcement actions
may be initiated for violations of law and regulations and unsafe or unsound
practices.
Under FRB policy, a bank holding company must serve as a source of
strength for its subsidiary banks. Under this policy the FRB may require, and
has required in the past, a holding company to contribute additional capital to
an undercapitalized subsidiary bank.
Under the Banking Holding Company Act (the "BHCA"), a bank holding
company must obtain FRB approval before: (i) acquiring, directly or indirectly,
ownership or control of any voting shares of another bank or bank holding
company if, after such acquisition, it would own or control more than 5% of such
shares (unless it already owns or controls the majority of such shares); (ii)
acquiring all or substantially all of the assets of another bank or bank holding
company; or (iii) merging or consolidating with another bank holding company.
The BHCA also prohibits a bank holding company, with certain
exceptions, from acquiring direct or indirect ownership or control of more than
5% of the voting shares of any company which
29
<PAGE>
is not a bank or bank holding company, or from engaging directly or indirectly
in activities other than those of banking, managing or controlling banks, or
providing services for its subsidiaries. The principal exceptions to these
prohibitions involve certain non-bank activities which, by statute or by FRB
regulation or order, have been identified as activities closely related to the
business of banking or managing or controlling banks. The list of activities
permitted by the FRB includes, among other things, operating a savings
institution, mortgage company, finance company, credit card company or factoring
company; performing certain data processing operations; providing certain
investment and financial advice; underwriting and acting as an insurance agent
for certain types of credit-related insurance; leasing property on a
full-payout, non-operating basis; selling money orders, travelers' checks and
U.S. Savings Bonds; real estate and personal property appraising; providing tax
planning and preparation services; and, subject to certain limitations,
providing securities brokerage services for customers. The Company has no
present plans to engage in any of these activities.
Interstate Banking and Branching. On September 29, 1994, the
Riegle-Neal Interstate Banking and Branching Act of 1994 (the "Act") was enacted
to ease restrictions on interstate banking. Effective September 29, 1995, the
Act allows the FRB to approve an application of an adequately capitalized and
adequately managed bank holding company to acquire control of, or acquire all or
substantially all of the assets of, a bank located in a state other than such
holding company's home state, without regard to whether the transaction is
prohibited by the laws of any state. The FRB may not approve the acquisition of
the bank that has not been in existence for the minimum time period (not
exceeding five years) specified by the statutory law of the host state. The Act
also prohibits the FRB from approving an application if the applicant (and its
depository institution affiliates) controls or would control more than 10% of
the insured deposits in the United States or 30% or more of the deposits in the
target bank's home state or in any state in which the target bank maintains a
branch. The Act does not affect the authority of states to limit the percentage
of total insured deposits in the state which may be held or controlled by a bank
or bank holding company to the extent such limitation does not discriminate
against out-of-state banks or bank holding companies. Individual states may also
waive the 30% state-wide concentration limit contained in the Act. The State of
Illinois does not currently have any deposit concentration limits or age
protection for new banks.
Additionally, on June 1, 1997, the federal banking agencies were
authorized to approve interstate merger transactions without regard to whether
such transaction is prohibited by the law of any state, unless the home state of
one of the banks opts out of the Act by adopting a law after the date of
enactment of the Act and prior to June 1, 1997 which applies equally to all
out-of-state banks and expressly prohibits merger transactions involving
out-of-state banks. Interstate acquisitions of branches will be permitted only
if the law of the state in which the branch is located permits such
acquisitions. Interstate mergers and branch acquisitions will also be subject to
the nationwide and statewide insured deposit concentration amounts described
above. The State of Illinois has authorized interstate merger transactions
effective June 1, 1997.
The Act authorizes the OCC and FDIC to approve interstate branching de
novo by national and state banks, respectively, only in states which
specifically allow for such branching. The Act
30
<PAGE>
also requires the appropriate federal banking agencies to prescribe regulations
by June 1, 1997 which prohibit any out-of-state bank from using the interstate
branching authority primarily for the purpose of deposit production. These
regulations must include guidelines to ensure that interstate branches operated
by an out-of-state bank in a host state are reasonably helping to meet the
credit needs of the communities which they serve.
Dividends. The FRB has issued a policy statement on the payment of cash
dividends by bank holding companies, which expresses the FRB's view that a bank
holding company should pay cash dividends only to the extent that the Company's
net income for the past year is sufficient to cover both the cash dividends and
a rate of earning retention that is consistent with the Company's capital needs,
asset quality and overall financial condition. The FRB also indicated that it
would be inappropriate for a company experiencing serious financial problems to
borrow funds to pay dividends. Furthermore, under the prompt corrective action
regulations adopted by the FRB, the FRB may prohibit a bank holding company from
paying any dividends if the holding company's bank subsidiary is classified as
"undercapitalized". See " -- Regulatory Capital Requirements -- Prompt
Corrective Action."
Redemption. Bank holding companies are required to give the FRB prior
written notice of any purchase or redemption of its outstanding equity
securities if the gross consideration for the purchase or redemption, when
combined with the net consideration paid for all such purchases or redemptions
during the preceding 12 months, is equal to 10% or more of their consolidated
net worth. The FRB may disapprove such a purchase or redemption if it determines
that the proposal would constitute an unsafe or unsound practice or would
violate any law, regulation, FRB order, or any condition imposed by, or written
agreement with, the FRB. This notification requirement does not apply to any
company that meets the well-capitalized standard for commercial banks, is well
managed and is not subject to any unresolved supervisory issues.
Capital Requirements. The FRB has established capital requirements for
bank holding companies that generally parallel the capital requirements for
national banks. For bank holding companies with consolidated assets of less than
$150 million, such as the Company, compliance is measured on a case-by-case
basis. See "-- Regulatory Capital Requirements -- National Banks." The Company's
capital exceeds such requirements.
Federal Home Loan Bank System
The Bank is a member of the FHLB of Chicago, which is one of 12
regional FHLBs, that administers the home financing credit function of savings
institutions. Each FHLB serves as a reserve or central bank for its members
within its assigned region. It is funded primarily from proceeds derived from
the sale of consolidated obligations of the FHLB System. It makes loans to
members (i.e., advances) in accordance with policies and procedures, established
by the board of directors of the FHLB which are subject to the oversight of the
Federal Housing Finance Board. All advances from the FHLB are required to be
fully secured by sufficient collateral as determined by
31
<PAGE>
the FHLB. In addition, all long-term advances are required to provide funds for
residential home financing.
As a member, the Bank is required to purchase and maintain stock in the
FHLB of Chicago. At March 31, 2000, the Bank had $397,000 in FHLB stock, which
was in compliance with this requirement. In the past year, the Bank has received
dividends on its FHLB stock.
Under federal law the FHLBs are required to provide funds for the
resolution of troubled savings institutions and to contribute to low- and
moderately priced housing programs through direct loans or interest subsidies on
advances targeted for community investment and low- and moderate-income housing
projects. These contributions have affected adversely the level of FHLB
dividends paid and could continue to do so in the future. These contributions
could also have an adverse effect on the value of FHLB stock in the future. A
reduction in value of the Bank's FHLB stock may result in a corresponding
reduction in the Bank's capital.
Federal and State Taxation
Federal Taxation. In addition to the regular income tax, corporations
generally are subject to a minimum tax. An alternative minimum tax is imposed at
a minimum tax rate of 20% on alternative minimum taxable income, which is the
sum of a corporation's regular taxable income (with certain adjustments) and tax
preference items, less any available exemption. The alternative minimum tax is
imposed to the extent it exceeds the corporation's regular income tax and net
operating losses can offset no more than 90% of alternative minimum taxable
income.
The Bank has recorded a deferred tax asset of approximately $242,000,
of which $266,000 relates to unrealized losses on available-for-sale securities,
which has been reduced for income tax timing adjustments. See Note 11 of Notes
to Consolidated Financial Statements.
The Company and the Bank file a consolidated income tax return on the
accrual basis of accounting. Neither the Company nor the Bank have been audited
by the IRS with respect to federal income tax returns.
Illinois Taxation. For Illinois income tax purposes, the Bank is taxed
at an effective rate equal to 7.18% of Illinois taxable income. For these
purposes, "Illinois Taxable Income" generally means federal taxable income,
subject to certain adjustments, including the addition of interest income on
state and municipal obligations and the exclusion of interest income on U.S.
Treasury obligations.
The Bank's accounting activities are maintained on an in-house computer
system.
32
<PAGE>
Competition
The Bank faces strong competition, both in originating real estate,
commercial and consumer loans and in attracting deposits. Competition in
originating loans comes primarily from commercial banks, credit unions and
savings institutions located in the Bank's market area. Commercial banks, credit
unions and savings institutions provide vigorous competition in consumer
lending. The Bank competes for real estate and other loans principally on the
basis of the quality of services it provides to borrowers, the interest rates
and loan processing fees it charges, and the types of loans it originates. See
"-- Lending Activities."
The Bank attracts all of its deposits through its retail banking
offices. Therefore, competition for those deposits is principally from retail
brokerage offices, commercial banks, credit unions and savings institutions
located in the community. The Bank competes for these deposits by offering a
variety of account alternatives at competitive rates and by providing convenient
business hours.
The Bank primarily serves Crawford County, Illinois and surrounding
counties. There are four commercial banks and two credit unions, other than the
Bank, which compete for deposits and loans in the Bank's primary market area.
33
<PAGE>
Employees
At March 31, 2000, the Company and the Bank had a total of 43 full-time
and 10 part-time employees. The Company's and the Bank's employees are not
represented by any collective bargaining group. Management considers its
employee relations to be good.
Item 2. Description of Properties
The Bank conducts its business through its main office and three branch
offices, which are located in Crawford County, Illinois. The Bank owns its main
office and branch offices. The total net book value of the Bank's premises and
equipment (including land, buildings and leasehold improvements and furniture,
fixtures and equipment) at March 31, 2000 was approximately $3.0 million. The
following table sets forth information relating to the Bank's offices as of
March 31, 2000.
Total
Approximate
Date Square Net Book Value at
Location Acquired Footage March 31, 2000
---------------------------------------------------------------------
Main Office:
501 East Main Street 1985 12,420 $1.6 million
Robinson, Illinois
Branch Offices:
119 East Grand Prairie 1995 1,800 365,000
Palestine, Illinois
102 West Main Street 1995 2,260 75,000
Oblong, Illinois
Outer East Main Street 1997 1,000 $215,000
Oblong, Illinois
The Company and the Bank believe that its current facilities are
adequate to meet the present and foreseeable needs. See Note 6 of Notes To
Consolidated Financial Statements.
Item 3. Legal Proceedings
The Bank is involved, from time to time, as plaintiff or defendant in
various legal actions arising in the normal course of its businesses. While the
ultimate outcome of these proceedings cannot be predicted with certainty, it is
the opinion of management, after consultation with counsel representing the Bank
in the proceedings, that the resolution of these proceedings should not have a
material effect on the Company's results of operations on a consolidated basis.
34
<PAGE>
Item 4. Submission of Matters to a Vote of Security Holders
No matter was submitted to a vote of security holders, through the
solicitation of proxies or otherwise, for the quarter ended March 31, 2000.
35
<PAGE>
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
Page 48 of the attached 2000 Annual Report to Stockholders is herein
incorporated by reference.
Item 6. Management's Discussion and Analysis of Financial Condition and Results
of Operation
Pages 4 through 14 of the attached 2000 Annual Report to Stockholders
are herein incorporated by reference.
Item 7. Financial Statements
The following information appearing in the Company's Annual Report to
Stockholders for the year ended March 31, 2000, is incorporated by reference in
this Annual Report on Form 10-KSB as Exhibit 13.
Pages in
Annual
Annual Report Section Report
---------------------------------------------------------------- -----------
Report of Independent Auditors.................................. 15
Consolidated Statements of Financial Condition for the
Fiscal Years Ended March 31, 2000 and 1999................... 16-17
Consolidated Statements of Income for the
Years Ended March 31, 2000 and 1999.......................... 18
Consolidated Statements of Stockholders' Equity for
Years Ended March 31, 2000 and 1999.......................... 19
Consolidated Statements of Cash Flows for the
Years Ended March 31, 2000 and 1999.......................... 20-21
Notes to Consolidated Financial Statements...................... 22-47
With the exception of the aforementioned information, the Company's
Annual Report to Stockholders for the year ended March 31, 2000, is not deemed
filed as part of this Annual Report on Form 10-KSB.
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
There have been no changes in or disagreements with the Company's
accountants on accounting and financial disclosure matters.
36
<PAGE>
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
with Section 16(a) of the Exchange Act
Directors
Information concerning directors of the Company is incorporated herein
by reference from the definitive Proxy Statement for the Annual Meeting of
Stockholders to be held on July 27, 2000, a copy of which will be filed not
later than 120 days after the close of the fiscal year.
Executive Officers
Information concerning Executive Officers of the Company and the Bank
is incorporated herein by reference from the definitive Proxy Statement for the
Annual Meeting of Stockholders to be held on July 27, 2000, a copy of which will
be filed not later than 120 days after the close of the fiscal year.
Compliance with Section 16(a)
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than 10% of
a registered class of the Company's equity securities, to file with the SEC
initial reports of ownership and reports of changes in ownership of common stock
and other equity securities of the Company. Officers, directors and greater than
10 percent stockholders are required by SEC regulation to furnish the Company
with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended March 31, 2000, all Section
16(a) filing requirements applicable to its officers, directors and greater than
10 percent beneficial owners were complied with. However, Clell Keller
inadvertently failed to file a Form 4 to report one transaction during 1998.
Item 10. Executive Compensation
Information concerning executive compensation is incorporated herein by
reference from the definitive Proxy Statement for the Annual Meeting of
Stockholders to be held on July 27, 2000, a copy of which will be filed not
later than 120 days after the close of the fiscal year.
Item 11. Security Ownership of Certain Beneficial Owners and Management
Information concerning security ownership of certain beneficial owners
and management is incorporated herein by reference from the definitive Proxy
Statement for the Annual Meeting of
37
<PAGE>
Stockholders to be held on July 27, 2000, a copy of which will be filed not
later than 120 days after the close of the fiscal year.
Item 12. Certain Relationships and Related Transactions
Information concerning certain relationships and related transactions
is incorporated herein by reference from the definitive Proxy Statement for the
Annual Meeting of Stockholders to be held on July 27, 2000, a copy of which will
be filed not later than 120 days after the close of the fiscal year.
Item 13. Exhibits and Reports on Form 8-K
(a) Exhibits
Regulation Reference to
S-B Prior Filing or
Exhibit Exhibit Number
Number Document Attached Hereto
--------------------------------------------------------------------------------
2 Plan of acquisition, reorganization, arrangement,
liquidation or succession None
3(i) Certificate of Incorporation *
3(ii) By-Laws *
4 Instruments defining the rights of security holders, *
including debentures
9 Voting Trust Agreement None
10 Material Contracts None
11 Statement re: computation of per share earnings None
13 Annual Report to Stockholders 13
16 Letter re: change in certifying accountants None
18 Letter re: change in accounting principles None
21 Subsidiaries of Registrant 21
22 Published report regarding matters submitted to vote of None
security holders
23 Consents of Experts and Counsel None
24 Power of Attorney Not required
27 Financial Data Schedule 27
99 Additional Exhibits None
-------
* Filed as exhibits to the Company's Form S-1 registration statement filed on
March 19, 1997 (File No. 333-23625) of the Securities Act of 1933. All of
such previously filed documents are hereby incorporated herein by reference
in accordance with Item 601 of Regulation S-B.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the three-month period ended
March 31, 2000.
38
<PAGE>
SIGNATURES
In accordance with Section 13 of 15(d) of the Exchange Act, the Issuer
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
FIRST ROBINSON FINANCIAL
CORPORATION
Date: June 29, 2000 By: /s/ Rick L. Catt
--------------------- -----------------------
Rick L. Catt
(Duly Authorized Representative)
In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the Issuer and in the capacities and on
the dates indicated.
By: /s/ Rick L. Catt By: /s/ Jamie E. McReynolds
----------------------- -----------------------
Rick L. Catt, Director, President Jamie E. McReynolds, Vice
and Chief Executive Officer President, Chief Financial Officer
(Principal Executive and Operating and Secretary (Chief Financial
Officer) and Accounting Officer)
Date: June 29, 2000 Date: June 29, 2000
----------------------- -----------------------
By: /s/ Scott F. Pulliam By: /s/ James D. Goodwine
Scott F. Pulliam, Director James D. Goodwine, Director
----------------------- -----------------------
Date: June 29, 2000 Date: June 29, 2000
----------------------- -----------------------
By: /s/ Clell T. Keller By: /s/ Rick L. Catt
Clell T. Keller, Director Rick L. Catt, Director
----------------------- -----------------------
Date: June 29, 2000 Date: June 29, 2000
----------------------- -----------------------
By: /s/ William K. Thomas By: /s/ Donald K. Inboden
William K. Thomas, Director Donald K. Inboden, Director
----------------------- -----------------------
Date: June 29, 2000 Date: June 29, 2000
----------------------- -----------------------
39
