GlobeNewswire Inc | Jul 26, 2021 04:30PM EDT

July 26, 2021

CORYDON, Ind., July 26, 2021 (GLOBE NEWSWIRE) -- First Capital, Inc. (the Company) (NASDAQ: FCAP), the holding company for First Harrison Bank (the Bank), today reported net income of $2.7 million or $0.82 per diluted share for the quarter ended June 30, 2021, compared to $2.4 million or $0.73 per diluted share for the quarter ended June 30, 2020. The increase was primarily due to an increase in net interest income after provision for loan losses and noninterest income partially offset by an increase in noninterest expense.

Net interest income after provision for loan losses increased $699,000 for the quarter ended June 30, 2021 as compared to the same period in 2020. Interest income decreased $241,000 when comparing the periods due to a decrease in the average tax-equivalent yield on interest-earning assets from 3.61% for the second quarter of 2020 to 2.87% for the second quarter of 2021 partially offset by an increase in the average balance of interest-earning assets from $834.1 million for the second quarter of 2020 to $1.02 billion for the second quarter of 2021. The decrease in the tax-equivalent yield was due to the Federal Open Market Committee lowering interest rates during March 2020 due to the COVID-19 pandemic and an increase in the average balance of federal funds sold. Federal funds sold increased primarily due to increased balances in deposit accounts from stimulus programs and normal deposit growth. Interest expense decreased $115,000 when comparing the periods due to a decrease in the average cost of interest-bearing liabilities from 0.27% for the second quarter of 2020 to 0.16% for the second quarter of 2021. This was partially offset by an increase in the average balance of interest-bearing liabilities from $607.9 million for the second quarter of 2020 to $730.5 million for the second quarter of 2021. As a result of the changes in interest-earning assets and interest-bearing liabilities, the tax-equivalent interest rate spread decreased from 3.34% for the quarter ended June 30, 2020 to 2.71% for the same period in 2021.

Based on managements analysis of the allowance for loan losses, no provision for loan losses was recorded for the quarter ended June 30, 2021 compared to $825,000 for the quarter ended June 30, 2020. The provision for loan losses was higher in the second quarter of 2020 compared to the second quarter of 2021 due to changes to the qualitative factors within the Banks allowance for loan losses calculation related to uncertainties that surrounded the COVID-19 pandemic in the second quarter of 2020. The Bank recognized net recoveries of $9,000 for the quarter ended June 30, 2021 compared to $68,000 in net charge-offs for the same period in 2020.

Noninterest income increased $232,000 for the quarter ended June 30, 2021 as compared to the same period in 2020. This was primarily due to ATM and debit card fees and service charges on deposit accounts increasing by $174,000 and $102,000, respectively, when comparing the two periods.

Noninterest expense increased $547,000 for the quarter ended June 30, 2021 as compared to the same period in 2020. This was primarily due to increases in compensation and benefits expense, professional fees and data processing expense by $240,000, $171,000 and $112,000, respectively, when comparing the two periods.

Income tax expense increased $92,000 for the second quarter of 2021 as compared to the second quarter of 2020 primarily due to an increase in taxable income for the quarter ended June 30, 2021. As a result, the effective tax rate for the quarter ended June 30, 2021 was 15.4% compared to 14.2% for the same period in 2020.

For the six months ended June 30, 2021, the Company reported net income of $5.7 million or $1.69 per diluted share compared to net income of $4.5 million or $1.35 per diluted share for the same period in 2020.

Net interest income after provision for loan losses increased $773,000 for the six months ended June 30, 2021 compared to the same period in 2020. Interest income decreased $623,000 when comparing the two periods, due to a decrease in the average tax-equivalent yield on interest-earning assets from 3.82% for the six months ended June 30, 2020 to 3.00% for the same period in 2021 partially offset by an increase in the average balance of interest-earning assets from $797.9 million for the six months ended June 30, 2020 to $988.0 million for the same period in 2021. Interest expense decreased $295,000 as the average cost of interest-bearing liabilities decreased from 0.30% for the six months ended June 30, 2020 to 0.16% for the same period in 2021, while the average balance of interest-bearing liabilities increased from $589.6 million for the six months ended June 30, 2020 to $707.6 million for the same period in 2021. As a result of the changes in interest-earning assets and interest-bearing liabilities, the tax-equivalent interest rate spread decreased from 3.52% for the six months ended June 30, 2020 to 2.84% for the six months ended June 30, 2021.

Based on managements analysis of the allowance for loan losses, the provision for loan losses decreased from $1.2 million for the six months ended June 30, 2020 to $75,000 for the six months ended June 30, 2021. The provision for loan loss was higher in 2020 compared to 2021 due to changes to the qualitative factors within the Banks allowance for loan losses calculation related to uncertainties surrounding the COVID-19 pandemic in 2020. The Bank recognized net charge-offs of $63,000 for the six months ended June 30, 2021 compared to $173,000 for the same period in 2020.

Noninterest income increased $1.2 million for the six months ended June 30, 2021 as compared to the six months ended June 30, 2020. The increase was primarily due to a $427,000 unrealized gain on equity securities during the six months ended June 30, 2021 compared to a $171,000 unrealized loss on equity securities during the same period in 2020. In addition, ATM and debit card fees and gains on loans sold increased $377,000 and $246,000, respectively, when comparing the two periods.

Noninterest expenses increased $529,000 for the six months ended June 30, 2021 as compared to the same period in 2020. This was primarily due to increases in compensation and benefit expense, professional fees and data processing expense by $268,000, $236,000 and $125,000, respectively, when comparing the two periods.

Income tax expense increased $321,000 for the six months ended June 30, 2021 as compared to the same period in 2020 resulting in an effective tax rate of 16.4% for the six months ended June 30, 2021, compared to 14.9% for the same period in 2020. As discussed above, the increase in the effective tax rate is primarily due to an increase in taxable income.

Total assets increased $61.1 million to $1.08 billion at June 30, 2021 from $1.02 billion at December 31, 2020. Investment securities and cash and cash equivalents increased $72.0 million and $8.1 million, respectively, from December 31, 2020 to June 30, 2021 while net loans receivable decreased $15.6 million during the same period. Deposit growth funded the increase in assets as deposits grew $61.1 million from $900.5 million at December 31, 2020 to $961.6 million at June 30, 2021. Nonperforming assets (consisting of nonaccrual loans, accruing loans 90 days or more past due, troubled debt restructurings on accrual status, and foreclosed real estate) increased from $3.2 million at December 31, 2020 to $3.3 million at June 30, 2021. Additionally, the Bank is participating in the Small Business Administrations (SBAs) Paycheck Protection Program (PPP), and has originated approximately $62.4 million of PPP loans, including $16.5 million in second-draw PPP loans originated during 2021. The Bank has received payoffs on $39.0 million of PPP loans from the SBA, and as of June 30, 2021 had $1.1 million remaining in deferred fees related to PPP loans.

At June 30, 2021, the Bank was considered well-capitalized under applicable federal regulatory capital guidelines.

The Bank currently has eighteen offices in the Indiana communities of Corydon, Edwardsville, Greenville, Floyds Knobs, Palmyra, New Albany, New Salisbury, Jeffersonville, Salem, Lanesville and Charlestown and the Kentucky communities of Shepherdsville, Mt. Washington and Lebanon Junction.

Access to First Harrison Bank accounts, including online banking and electronic bill payments, is available through the Banks website at www.firstharrison.com. The Bank offers non-FDIC insured investments to complement its offering of traditional banking products and services through its business arrangement with LPL Financial LLC, member SIPC. For more information and financial data about the Company, please visit Investor Relations at the Banks aforementioned website. The Bank can also be followed on Facebook.

Cautionary Note Regarding Forward-Looking Statements

This press release may contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the use of the words anticipate, believe, expect, intend, could and should, and other words of similar meaning. Forward-looking statements are not historical facts nor guarantees of future performance; rather, they are statements based on the Companys current beliefs, assumptions, and expectations regarding its business strategies and their intended results and its future performance.

Numerous risks and uncertainties could cause or contribute to the Companys actual results, performance and achievements to be materially different from those expressed or implied by these forward-looking statements. Factors that may cause or contribute to these differences include, without limitation, the severity, magnitude and duration of the COVID-19 pandemic, including impacts of the pandemic and of businesses and governments responses to the pandemic on our operations and personnel, and on commercial activity and demand across our and our customers businesses, market, economic, operational, liquidity, credit and interest rate risks associated with the Companys business (including developments and volatility arising from the COVID-19 pandemic), general economic conditions, including changes in market interest rates and changes in monetary and fiscal policies of the federal government; competition; the ability of the Company to execute its business plan; legislative and regulatory changes; and other factors disclosed periodically in the Companys filings with the Securities and Exchange Commission.

Because of the risks and uncertainties inherent in forward-looking statements, readers are cautioned not to place undue reliance on them, whether included in this press release, the Companys reports, or made elsewhere from time to time by the Company or on its behalf. These forward-looking statements are made only as of the date of this press release, and the Company assumes no obligation to update any forward-looking statements after the date of this press release.

Contact:Chris FrederickChief Financial Officer812-734-3464

FIRST CAPITAL, INC. AND SUBSIDIARIESConsolidated Financial Highlights (Unaudited) Six Months Ended Three Months Ended June 30, June 30,OPERATING DATA 2021 2020 2021 2020(Dollars inthousands, except per share data) Total interest income $ 14,425 $ 15,048 $ 7,133 $ 7,374 Total interest 577 872 289 404 expenseNet interest income 13,848 14,176 6,844 6,970 Provision for loan 75 1,176 - 825 lossesNet interest incomeafter provision for 13,773 13,000 6,844 6,145 loan losses Total non-interest 4,990 3,776 2,552 2,320 incomeTotal non-interest 11,972 11,443 6,165 5,618 expenseIncome before income 6,791 5,333 3,231 2,847 taxesIncome tax expense 1,115 794 497 405 Net income 5,676 4,539 2,734 2,442 Less net incomeattributable to the 7 7 4 4 noncontrollinginterestNet incomeattributable to First $ 5,669 $ 4,532 $ 2,730 $ 2,438 Capital, Inc. Net income per shareattributable to First Capital, Inc. commonshareholders:Basic $ 1.70 $ 1.36 $ 0.82 $ 0.73 Diluted $ 1.69 $ 1.35 $ 0.82 $ 0.73 Weighted averagecommon shares outstanding:Basic 3,342,462 3,336,516 3,342,432 3,336,573 Diluted 3,346,624 3,349,079 3,345,359 3,347,871 OTHER FINANCIAL DATA Cash dividends per $ 0.52 $ 0.48 $ 0.26 $ 0.24 shareReturn on averageassets (annualized) 1.08 % 1.05 % 1.01 % 1.08 %(1)Return on averageequity (annualized) 10.19 % 8.89 % 9.80 % 9.42 %(1)Net interest margin(tax-equivalent 2.88 % 3.60 % 2.76 % 3.41 %basis)Interest rate spread(tax-equivalent 2.84 % 3.52 % 2.71 % 3.34 %basis)Net overhead expenseas a percentage of 2.28 % 2.66 % 2.28 % 2.50 %average assets(annualized) (1) June 30, December 31, BALANCE SHEET 2021 2020 INFORMATION Cash and cash $ 183,996 $ 175,888 equivalentsInterest-bearing time 6,193 6,396 depositsInvestment securities 355,482 283,502 Gross loans 491,387 506,956 Allowance for loan 6,637 6,625 lossesEarning assets 1,018,497 947,123 Total assets 1,078,666 1,017,551 Deposits 961,581 900,461 Stockholders' equity,net of noncontrolling 112,413 110,639 interestNon-performing assets:Nonaccrual loans 1,726 1,406 Accruing loans past 52 59 due 90 daysForeclosed real 110 - estateTroubled debtrestructurings on 1,388 1,732 accrual statusRegulatory capital ratios (Bank only):Community Bank 8.79 % 9.37 % Leverage Ratio (2) (1) See reconciliation of GAAP and non-GAAP financial measures for additionalinformationrelating to the calculation of this item.(2) Effective March 31, 2020, the Bank opted in to the Community Bank LeverageRatio (CBLR) framework. As such,the other regulatory ratios are no longerprovided. RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL MEASURES (UNAUDITED): This presentation contains financial information determined by methods otherthan in accordance with accounting principles generally accepted in the UnitedStates of America (?GAAP?). Management uses these ?non-GAAP? measures in itsanalysis of the Company's performance. Management believes that these non-GAAPfinancial measures allow for better comparability with prior periods, as wellas with peers in the industry who provide a similar presentation, and provide afurther understanding of the Company's ongoing operations. These disclosuresshould not be viewed as a substitute for operating results determined inaccordance with GAAP, nor are they necessarily comparable to non-GAAPperformance measures that may be presented by other companies. The followingtable summarizes the non-GAAP financial measures derived from amounts reportedin the Company's consolidated financial statements and reconciles thosenon-GAAP financial measures with the comparable GAAP financial measures. Six Months Ended Three Months Ended June 30, June 30, 2021 2020 2021 2020 Return on averageassets before 0.54 % 0.53 % 0.25 % 0.27 %annualizationAnnualization factor 2.00 2.00 4.00 4.00 Annualized return on 1.08 % 1.05 % 1.01 % 1.08 %average assets Return on averageequity before 5.10 % 4.45 % 2.45 % 2.36 %annualizationAnnualization factor 2.00 2.00 4.00 4.00 Annualized return on 10.19 % 8.89 % 9.80 % 9.42 %average equity Net overhead expenseas a % of average 1.14 % 1.33 % 0.57 % 0.63 %assets beforeannualizationAnnualization factor 2.00 2.00 4.00 4.00 Annualized netoverhead expense as a 2.28 % 2.66 % 2.28 % 2.50 %% of average assets