First Capital, Inc. (the “Company”) (NASDAQ:FCAP), the holding
company for First Harrison Bank (the “Bank”), today reported net
income of $2.1 million or $0.63 per diluted share for the quarter
ended September 30, 2017, compared to $1.8 million or $0.53 per
diluted share for the same period in 2016. The increase in
net income is primarily due to an increase in net interest income
after provision for loan losses partially offset by an increase in
noninterest expense.
Net interest income after provision for loan
losses increased $634,000 for the quarter ended September 30, 2017
as compared to the quarter ended September 30, 2016. Interest
income increased $513,000 when comparing the two periods due to an
increase in the average balance of interest-earning assets from
$684.8 million for the third quarter of 2016 to $711.0 million for
the third quarter of 2017 and an increase in the average
tax-equivalent yield on interest-earning assets from 3.72% for the
third quarter of 2016 to 3.90% for the third quarter of 2017.
The increase in the average tax-equivalent yield for the quarter
ended September 30, 2017 compared to the same period in 2016 is
primarily due to growth in the loan portfolio and an increase in
short-term interest rates, partially offset by the effect of
purchase accounting adjustments related to the December 2015
acquisition of Peoples Bancorp, Inc. of Bullitt County and its
wholly-owned bank subsidiary Peoples Bank of Bullitt County
(collectively, “Peoples”), headquartered in Shepherdsville,
Kentucky. Interest expense decreased $71,000 when comparing
the periods as the average cost of interest-bearing liabilities
decreased from 0.31% to 0.25%. This was partially offset by
an increase in the average balance of interest-bearing liabilities
from $531.9 million to $537.3 million, when comparing the two
periods. The decrease in the average cost of funds is
primarily due to the repricing of savings and interest-bearing
demand deposits acquired from Peoples. As a result of the
changes in interest-earning assets and interest-bearing
liabilities, the interest rate spread increased from 3.41% for the
quarter ended September 30, 2016 to 3.65% for the same period in
2017.
Based on management’s analysis of the allowance
for loan losses, the provision for loan losses decreased from
$200,000 for the quarter ended September 30, 2016 to $150,000 for
the quarter ended September 30, 2017. The Bank recognized net
charge-offs of $69,000 for the quarter ended September 30, 2016
compared to $139,000 for the same period in 2017.
Noninterest income decreased $2,000 for the
quarter ended September 30, 2017 as compared to the same period in
2016. Other income decreased $145,000 when comparing the two
periods and was partially offset by increases in service charges on
deposit accounts and gains on the sale of loans of $109,000 and
$46,000, respectively. The decrease in other income was due
to the sale of the Company’s investment in another financial
institution in July 2016, resulting in a gain of
$145,000.
Noninterest expenses increased $122,000 for the
quarter ended September 30, 2017 as compared to the quarter ended
September 30, 2016. Compensation and benefits expense and
data processing expense increased $161,000 and $46,000,
respectively, when comparing the two periods and were partially
offset by decreases in occupancy and equipment expense and other
operating expenses of $58,000 and $39,000, respectively. The
increase in compensation and benefit expense is primarily due to
normal salary increases.
For the nine months ended September 30, 2017,
the Company reported net income of $5.9 million or $1.76 per
diluted share compared to net income of $5.1 million or $1.53 per
diluted share for the same period in 2016.
Net interest income after provision for loan
losses increased $929,000 for the nine months ended September 30,
2017 compared to the same period in 2016. Interest income
increased $799,000 when comparing the two periods, primarily due to
an increase in the average balance of interest-earning assets from
$682.3 million for 2016 to $708.8 million for 2017. Interest
expense decreased $322,000 as the average cost of interest-bearing
liabilities decreased from 0.35% for 2016 to 0.26% for 2017,
partially offset by an increase in the average balance of
interest-bearing liabilities from $527.6 million for the nine
months ended September 30, 2016 to $542.6 million for the same
period in 2017. As a result of the changes in interest-earning
assets and interest-bearing liabilities, the interest rate spread
increased from 3.43% for the nine months ended September 30, 2016
to 3.54% for the nine months ended September 30, 2017.
The provision for loan losses was $617,000 for
the nine months ended September 30, 2017 compared to $425,000 for
the same period in 2016. The Bank recognized net charge-offs
of $466,000 for the nine months ended September 30, 2017 compared
to $520,000 for the same period in 2016.
Noninterest income increased $324,000 for the
nine months ended September 30, 2017 as compared to the nine months
ended September 30, 2016. The increase was primarily due to
increases in service charges on deposit accounts and gains on the
sale of loans of $320,000 and $139,000, respectively, when
comparing the two periods. This was partially offset by
decreases in gains on the sale of securities and other income of
$122,000 and $69,000, respectively.
Noninterest expenses increased $246,000 for the
nine months ended September 30, 2017 as compared to the same period
in 2016, primarily due to increases in compensation and benefits
expense of $258,000 and data processing expense of $238,000 when
comparing the two periods. This was partially offset by
decreases of $104,000 in professional fees and $64,000 in occupancy
and equipment expense.
Total assets as of September 30, 2017 were
$754.2 million compared to $743.7 million at December 31,
2016. Investment securities and net loans receivable
increased $21.1 million and $19.6 million, respectively, which was
partially offset by a decrease in cash and cash equivalents of
$21.0 million. Investment securities increased due to
management investing excess liquidity in government agency
mortgage-backed securities and municipal obligations. Loan
growth was primarily due to increases in home equity and second
mortgage loans of $6.1 million and other consumer loans and
commercial business loans each increasing $4.5 million during the
nine months ended September 30, 2017. Deposits increased from
$664.7 million at December 31, 2016 to $665.5 million at September
30, 2017 due to increases in noninterest-bearing demand deposits
and savings accounts of $11.7 million and $9.1 million,
respectively, offset by decreases in NOW accounts, money market
accounts and certificates of deposits of $4.3 million, $5.6 million
and $8.3 million, respectively. Nonperforming assets
(consisting of nonaccrual loans, accruing loans 90 days or more
past due, troubled debt restructurings on accrual status, and
foreclosed real estate) decreased from $8.4 million at December 31,
2016 to $7.4 million at September 30, 2017 as management continues
to work to resolve nonperforming assets acquired from Peoples.
At September 30, 2017, 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 Bank’s website at www.firstharrison.com. The Bank
currently offers non-FDIC insured investments through its business
arrangement with Investment Centers of America (“ICA”), member
SIPC. ICA has announced its sale to LPL Financial LLC
(“LPL”). The transaction is expected to be complete in the
fourth quarter of 2017 and the Bank will utilize LPL to continue to
offer non-FDIC insured investments to complement the Bank’s
offering of traditional banking products and services. For more
information and financial data about the Company, please visit
Investor Relations at the Bank’s 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 Company’s 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 Company’s 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, 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 Company’s 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
Company’s 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.
FIRST CAPITAL, INC. AND
SUBSIDIARY |
Consolidated Financial Highlights (Unaudited) |
|
|
|
|
|
|
|
|
|
Nine Months Ended |
|
Three Months Ended |
|
|
September 30, |
|
September 30, |
OPERATING DATA |
|
|
2017 |
|
|
2016 |
|
|
|
2017 |
|
|
2016 |
|
(Dollars in thousands, except per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest
income |
|
$ |
19,649 |
|
$ |
18,850 |
|
|
$ |
6,728 |
|
$ |
6,215 |
|
Total interest
expense |
|
|
1,048 |
|
|
1,370 |
|
|
|
343 |
|
|
414 |
|
Net interest
income |
|
|
18,601 |
|
|
17,480 |
|
|
|
6,385 |
|
|
5,801 |
|
Provision for loan
losses |
|
|
617 |
|
|
425 |
|
|
|
150 |
|
|
200 |
|
Net interest income
after provision for loan losses |
|
|
17,984 |
|
|
17,055 |
|
|
|
6,235 |
|
|
5,601 |
|
|
|
|
Total non-interest
income |
|
|
5,057 |
|
|
4,733 |
|
|
|
1,748 |
|
|
1,750 |
|
Total non-interest
expense |
|
|
15,004 |
|
|
14,758 |
|
|
|
5,046 |
|
|
4,924 |
|
Income before income
taxes |
|
|
8,037 |
|
|
7,030 |
|
|
|
2,937 |
|
|
2,427 |
|
Income tax
expense |
|
|
2,175 |
|
|
1,897 |
|
|
|
825 |
|
|
666 |
|
Net income |
|
$ |
5,862 |
|
$ |
5,133 |
|
|
$ |
2,112 |
|
$ |
1,761 |
|
Less net income
attributable to the noncontrolling interest |
|
|
10 |
|
|
10 |
|
|
|
3 |
|
|
3 |
|
Net income attributable
to First Capital, Inc. |
|
$ |
5,852 |
|
$ |
5,123 |
|
|
$ |
2,109 |
|
$ |
1,758 |
|
|
|
|
|
|
|
|
Net income per share
attributable to |
|
|
|
|
|
|
First Capital,
Inc. common shareholders: |
|
|
|
|
|
|
Basic |
|
$ |
1.76 |
|
$ |
1.53 |
|
|
$ |
0.63 |
|
$ |
0.53 |
|
|
|
|
|
|
|
|
Diluted |
|
$ |
1.76 |
|
$ |
1.53 |
|
|
$ |
0.63 |
|
$ |
0.53 |
|
|
|
|
|
|
|
|
Weighted average common
shares outstanding: |
|
|
|
|
|
|
Basic |
|
|
3,324,550 |
|
|
3,340,066 |
|
|
|
3,326,513 |
|
|
3,342,015 |
|
|
|
|
|
|
|
|
Diluted |
|
|
3,329,111 |
|
|
3,341,853 |
|
|
|
3,329,549 |
|
|
3,344,049 |
|
|
|
|
|
|
|
|
OTHER FINANCIAL DATA |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends per
share |
|
$ |
0.64 |
|
$ |
0.63 |
|
|
$ |
0.22 |
|
$ |
0.21 |
|
Return on average
assets (annualized) |
|
|
1.03 |
% |
|
0.94 |
% |
|
|
1.11 |
% |
|
0.96 |
% |
Return on average
equity (annualized) |
|
|
9.92 |
% |
|
8.88 |
% |
|
|
10.42 |
% |
|
8.96 |
% |
Net interest
margin |
|
|
3.61 |
% |
|
3.51 |
% |
|
|
3.70 |
% |
|
3.48 |
% |
Interest rate
spread |
|
|
3.54 |
% |
|
3.43 |
% |
|
|
3.65 |
% |
|
3.41 |
% |
Net overhead expense as
a percentage |
|
|
|
|
|
|
of average
assets (annualized) |
|
|
2.65 |
% |
|
2.70 |
% |
|
|
2.66 |
% |
|
2.68 |
% |
|
|
|
|
|
|
|
|
|
September 30, |
December 31, |
|
|
|
BALANCE SHEET
INFORMATION |
|
|
2017 |
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents |
|
$ |
24,798 |
|
$ |
45,835 |
|
|
|
|
Interest-bearing time
deposits |
|
|
10,295 |
|
|
14,735 |
|
|
|
|
Investment
securities |
|
|
276,938 |
|
|
255,846 |
|
|
|
|
Gross loans |
|
|
404,299 |
|
|
384,540 |
|
|
|
|
Allowance for loan
losses |
|
|
3,537 |
|
|
3,386 |
|
|
|
|
Earning assets |
|
|
701,860 |
|
|
684,890 |
|
|
|
|
Total assets |
|
|
754,235 |
|
|
743,658 |
|
|
|
|
Deposits |
|
|
665,512 |
|
|
664,650 |
|
|
|
|
Stockholders' equity,
net of noncontrolling interest |
|
|
81,270 |
|
|
75,730 |
|
|
|
|
Non-performing
assets: |
|
|
|
|
|
|
Nonaccrual
loans |
|
|
2,661 |
|
|
2,946 |
|
|
|
|
Accruing loans
past due 90 days |
|
|
13 |
|
|
78 |
|
|
Foreclosed real
estate |
|
|
3,882 |
|
|
4,674 |
|
|
Troubled debt
restructurings on accrual status |
|
|
892 |
|
|
742 |
|
|
Regulatory capital
ratios (Bank only): |
|
|
Tier I -
adjusted total assets |
|
|
9.52 |
% |
|
9.30 |
% |
|
Tier I - risk
based |
|
|
14.02 |
% |
|
14.28 |
% |
|
Total
risk-based |
|
|
14.72 |
% |
|
14.98 |
% |
|
Contact:
Chris Frederick
Chief Financial Officer
812-734-3464
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