First Capital, Inc. (the “Company”) (NASDAQ: FCAP), the holding
company for First Harrison Bank (the “Bank”), today reported net
income of $3.1 million or $0.93 per diluted share for the quarter
ended September 30, 2022, compared to $2.9 million or $0.88 per
diluted share for the quarter ended September 30, 2021. The
increase was primarily due to an increase in net interest income
after provision for loan losses partially offset by an increase in
noninterest expense and a decrease in noninterest income.
Net interest income after provision for loan
losses increased $1.0 million for the quarter ended September 30,
2022 as compared to the same period in 2021. Interest income
increased $1.3 million when comparing the periods due to an
increase in the average balance of interest-earning assets from
$1.04 billion for the third quarter of 2021 to $1.13 billion for
the third quarter of 2022, primarily due to increases in investment
securities and loans partially offset by a decrease in federal
funds sold. The tax-equivalent yield on interest-earning assets
increased from 3.04% for the third quarter of 2021 to 3.27% for the
third quarter of 2022, primarily due to increase of short term
interest rates by the Federal Open Market Committee during 2022.
This increase was partially offset by fees recognized from loans
issued as part of the Small Business Administration’s Paycheck
Protection Program (“PPP”) which are included in interest income.
These fees totaled $7,000 during the third quarter of 2022 compared
to $784,000 during the same period of 2021. Interest expense
increased $112,000 when comparing the periods due to an increase in
the average cost of interest-bearing liabilities from 0.15% for the
third quarter of 2021 to 0.20% for the third quarter of 2022, while
the average balance of interest-bearing liabilities increased from
$744.7 million for the third quarter of 2021 to $797.2 million for
the third quarter of 2022. As a result of the changes in
interest-earning assets and interest-bearing liabilities, the
tax-equivalent interest rate spread increased from 2.89% for the
quarter ended September 30, 2021 to 3.07% for the same period in
2022.
Based on management’s analysis of the allowance
for loan losses, $175,000 in provision for loan losses was recorded
for the quarter ended September 30, 2022 primarily due to growth in
the loan portfolio. There was no provision for loan losses recorded
for the quarter ended September 30, 2021. The Bank recognized
net charge-offs of $3,000 for the quarter ended September 30, 2022
compared to $70,000 for the same period in 2021.
Noninterest income decreased $397,000 for the
quarter ended September 30, 2022 as compared to the same period in
2021 primarily due to a decrease of $433,000 in gains on the sale
of loans as increased interest rates slowed lending in residential
mortgages. The third quarter of 2022 also included a $229,000
unrealized loss on equity securities compared to a $67,000
unrealized loss on equity securities during the same period in
2021. This was partially offset by increases in service charges on
deposit accounts, commission and fee income and ATM and debit card
fees of $104,000, $57,000 and $50,000, respectively, when comparing
the two periods.
Noninterest expense increased $357,000 for the
quarter ended September 30, 2022 as compared to the same period in
2021. Other expenses, data processing expense and
compensation and benefits expense increased $207,000, $172,000, and
$143,000, respectively, when comparing the two periods. This was
partially offset by professional fees which decreased $135,000 when
comparing the two periods.
Income tax expense increased $73,000 for the
third quarter of 2022 as compared to the third quarter of 2021
primarily due to an increase in taxable income for the quarter
ended September 30, 2022. As a result, the effective tax rate for
the quarter ended September 30, 2022 was 17.6% compared to 16.9%
for the same period in 2021.
For the nine months ended September 30, 2022,
the Company reported net income of $8.4 million or $2.49 per
diluted share compared to net income of $8.6 million or $2.57 per
diluted share for the same period in 2021.
Net interest income after provision for loan
losses increased $1.5 million for the nine months ended September
30, 2022 compared to the same period in 2021. Interest income
increased $2.0 million when comparing the two periods, due to an
increase in the average balance of interest-earning assets from
$1.01 billion for the nine months ended September 30, 2021 to $1.13
billion for the same period in 2022 partially offset by a decrease
in the average tax-equivalent yield on interest-earning assets from
3.01% for the nine months ended September 30, 2021 to 2.94% for the
same period in 2022. PPP loan fees recognized in interest
income totaled $34,000 during the nine months ended September 30,
2022 compared to $1.7 million during the same period in 2021.
Interest expense increased $55,000 as the average balance of
interest-bearing liabilities increased from $720.0 million for the
nine months ended September 30, 2021 to $804.4 million for the same
period in 2022. This was partially offset by the decrease in
average cost of interest-bearing liabilities from 0.16% for the
nine months ended September 30, 2021 to 0.15% for the same period
in 2022. As a result of the changes in interest-earning assets and
interest-bearing liabilities, the tax-equivalent interest rate
spread decreased from 2.85% for the nine months ended September 30,
2021 to 2.79% for the nine months ended September 30, 2022.
Based on management’s analysis of the allowance
for loan losses and primarily due to growth of the loan portfolio,
the provision for loan losses increased from $75,000 for the nine
months ended September 30, 2021 to $550,000 for the nine months
ended September 30, 2022. The Bank recognized net charge-offs of
$67,000 for the nine months ended September 30, 2022 compared to
$133,000 for the same period in 2021.
Noninterest income decreased $1.3 million for
the nine months ended September 30, 2022 as compared to the nine
months ended September 30, 2021 primarily due to a decrease of $1.2
million in gains on the sale of loans. The nine months ended
September 30, 2022 also included a $265,000 unrealized loss on
equity securities compared to a $360,000 unrealized gain on equity
securities during the same period in 2021. This was partially
offset by increases in service charges on deposit accounts,
commission and fee income and ATM and debit card fees of $322,000,
$128,000 and $105,000, respectively, when comparing the two
periods.
Noninterest expenses increased $614,000 for the
nine months ended September 30, 2022 as compared to the same period
in 2021. Data processing expense, other expenses and compensation
and benefits expense increased $358,000, $334,000 and $146,000,
respectively, when comparing the two periods. This was partially
offset by professional fees which decreased $254,000 when comparing
the two periods.
Income tax expense decreased $195,000 for the
nine months ended September 30, 2022 as compared to the same period
in 2021 resulting in an effective tax rate of 15.3% for the nine
months ended September 30, 2022, compared to 16.6% for the same
period in 2021.
Total assets decreased $9.8 million to $1.15
billion at September 30, 2022 from $1.16 billion at December 31,
2021. Net loans receivable and investment securities increased
$58.3 million and $12.9 million, respectively, from December 31,
2021 to September 30, 2022 while federal funds sold decreased $84.8
million during the same period. Deposits grew $27.5 million from
$1.04 billion at December 31, 2021 to $1.06 billion at September
30, 2022. 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 $2.3 million at December 31, 2021 to $2.0 million at
September 30, 2022.
The Bank currently has 18 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
offers non-FDIC insured investments to complement its offering of
traditional banking products and services through its business
arrangement with LPL Financial LLC (“LPL”), member SIPC. 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, 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 Company’s
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 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.
Contact:Chris FrederickChief Financial
Officer812-734-3464
|
FIRST
CAPITAL, INC. AND SUBSIDIARY |
Consolidated
Financial Highlights (Unaudited) |
|
|
|
|
|
|
|
Nine Months Ended |
|
Three Months Ended |
|
September 30, |
|
September 30, |
OPERATING DATA |
2022 |
2021 |
|
2022 |
2021 |
(Dollars in thousands, except per share data) |
|
|
|
|
|
|
|
|
|
|
|
Total interest income |
$ |
24,151 |
|
$ |
22,170 |
|
|
$ |
9,048 |
|
$ |
7,745 |
|
Total
interest expense |
|
910 |
|
|
855 |
|
|
|
390 |
|
|
278 |
|
Net interest
income |
|
23,241 |
|
|
21,315 |
|
|
|
8,658 |
|
|
7,467 |
|
Provision
for loan losses |
|
550 |
|
|
75 |
|
|
|
175 |
|
|
- |
|
Net interest
income after provision for loan losses |
|
22,691 |
|
|
21,240 |
|
|
|
8,483 |
|
|
7,467 |
|
|
|
|
|
|
|
Total
non-interest income |
|
5,985 |
|
|
7,260 |
|
|
|
1,873 |
|
|
2,270 |
|
Total
non-interest expense |
|
18,788 |
|
|
18,174 |
|
|
|
6,559 |
|
|
6,202 |
|
Income
before income taxes |
|
9,888 |
|
|
10,326 |
|
|
|
3,797 |
|
|
3,535 |
|
Income tax
expense |
|
1,516 |
|
|
1,711 |
|
|
|
669 |
|
|
596 |
|
Net
income |
|
8,372 |
|
|
8,615 |
|
|
|
3,128 |
|
|
2,939 |
|
Less net
income attributable to the noncontrolling interest |
|
10 |
|
|
10 |
|
|
|
3 |
|
|
3 |
|
Net income
attributable to First Capital, Inc. |
$ |
8,362 |
|
$ |
8,605 |
|
|
$ |
3,125 |
|
$ |
2,936 |
|
|
|
|
|
|
|
Net income per share attributable to First Capital, Inc. common
shareholders: |
|
|
|
|
|
Basic |
$ |
2.49 |
|
$ |
2.57 |
|
|
$ |
0.93 |
|
$ |
0.88 |
|
|
|
|
|
|
|
Diluted |
$ |
2.49 |
|
$ |
2.57 |
|
|
$ |
0.93 |
|
$ |
0.88 |
|
|
|
|
|
|
|
Weighted
average common shares outstanding: |
|
|
|
|
|
Basic |
|
3,353,459 |
|
|
3,344,832 |
|
|
|
3,358,800 |
|
|
3,349,494 |
|
|
|
|
|
|
|
Diluted |
|
3,353,459 |
|
|
3,346,273 |
|
|
|
3,358,800 |
|
|
3,349,494 |
|
|
|
|
|
|
|
OTHER FINANCIAL DATA |
|
|
|
|
|
|
|
|
|
|
|
Cash
dividends per share |
$ |
0.78 |
|
$ |
0.78 |
|
|
$ |
0.26 |
|
$ |
0.26 |
|
Return on
average assets (annualized) (1) |
|
0.96 |
% |
|
1.07 |
% |
|
|
1.08 |
% |
|
1.06 |
% |
Return on
average equity (annualized) (1) |
|
11.66 |
% |
|
10.22 |
% |
|
|
14.32 |
% |
|
10.27 |
% |
Net interest
margin (tax-equivalent basis) |
|
2.83 |
% |
|
2.90 |
% |
|
|
3.14 |
% |
|
2.94 |
% |
Interest
rate spread (tax-equivalent basis) |
|
2.79 |
% |
|
2.85 |
% |
|
|
3.07 |
% |
|
2.89 |
% |
Net overhead expense as a percentage of average assets
(annualized) (1) |
|
2.16 |
% |
|
2.27 |
% |
|
|
2.27 |
% |
|
2.25 |
% |
|
|
|
|
|
|
|
September 30, |
December 31, |
|
|
|
BALANCE SHEET INFORMATION |
2022 |
2021 |
|
|
|
|
|
|
|
|
|
Cash and
cash equivalents |
$ |
83,786 |
|
$ |
172,509 |
|
|
|
|
Interest-bearing time deposits |
|
2,454 |
|
|
4,839 |
|
|
|
|
Investment
securities |
|
462,279 |
|
|
449,335 |
|
|
|
|
Gross
loans |
|
548,159 |
|
|
489,370 |
|
|
|
|
Allowance
for loan losses |
|
6,566 |
|
|
6,083 |
|
|
|
|
Earning
assets |
|
1,073,275 |
|
|
1,090,874 |
|
|
|
|
Total
assets |
|
1,146,851 |
|
|
1,156,603 |
|
|
|
|
Deposits |
|
1,063,099 |
|
|
1,035,562 |
|
|
|
|
Stockholders' equity, net of noncontrolling interest |
|
77,725 |
|
|
113,828 |
|
|
|
|
Non-performing assets: |
|
|
|
|
|
Nonaccrual loans |
|
1,242 |
|
|
1,327 |
|
|
|
|
Accruing loans past due 90 days |
|
- |
|
|
3 |
|
|
|
|
Foreclosed real estate |
|
- |
|
|
36 |
|
|
|
|
Troubled debt restructurings on accrual status |
|
728 |
|
|
975 |
|
|
|
|
Regulatory
capital ratios (Bank only): |
|
|
|
|
|
Community Bank Leverage Ratio (2) |
|
8.92 |
% |
|
8.84 |
% |
|
|
|
Tier 1 - risk based assets (2) |
|
14.52 |
% |
N/A |
|
|
|
|
Total risk-based (2) |
|
15.45 |
% |
N/A |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) See reconciliation
of GAAP and non-GAAP financial measures for additional
information relating to the calculation of this item. |
(2) Effective December
31, 2021, the Bank had opted in to the Community Bank Leverage
Ratio (CBLR) framework. As such, the other regulatory ratios
are not presented as of that date. |
|
|
|
|
|
|
RECONCILIATION
OF GAAP AND NON-GAAP FINANCIAL MEASURES (UNAUDITED): |
|
|
|
|
|
|
This presentation
contains financial information determined by methods other than in
accordance with accounting principles generally accepted in the
United States of America (“GAAP”). Management uses these “non-GAAP”
measures in its analysis of the Company's performance. Management
believes that these non-GAAP financial measures allow for better
comparability with prior periods, as well as with peers in the
industry who provide a similar presentation, and provide a further
understanding of the Company's ongoing operations. These
disclosures should not be viewed as a substitute for operating
results determined in accordance with GAAP, nor are they
necessarily comparable to non-GAAP performance measures that may be
presented by other companies. The following table summarizes the
non-GAAP financial measures derived from amounts reported in the
Company's consolidated financial statements and reconciles those
non-GAAP financial measures with the comparable GAAP financial
measures. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended |
|
Three Months Ended |
|
September 30, |
|
September 30, |
|
2022 |
2022 |
|
2022 |
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on
average assets before annualization |
|
0.72 |
% |
|
0.81 |
% |
|
|
0.27 |
% |
|
0.27 |
% |
Annualization factor |
|
1.33 |
|
|
1.33 |
|
|
|
4.00 |
|
|
4.00 |
|
Annualized
return on average assets |
|
0.96 |
% |
|
1.07 |
% |
|
|
1.08 |
% |
|
1.06 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on
average equity before annualization |
|
8.75 |
% |
|
7.66 |
% |
|
|
3.58 |
% |
|
2.57 |
% |
Annualization factor |
|
1.33 |
|
|
1.33 |
|
|
|
4.00 |
|
|
4.00 |
|
Annualized
return on average equity |
|
11.66 |
% |
|
10.22 |
% |
|
|
14.32 |
% |
|
10.27 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Net overhead expense as a % of average assets before
annualization |
|
1.62 |
% |
|
1.70 |
% |
|
|
0.57 |
% |
|
0.56 |
% |
Annualization factor |
|
1.33 |
|
|
1.33 |
|
|
|
4.00 |
|
|
4.00 |
|
Annualized
net overhead expense as a % of average assets |
|
2.16 |
% |
|
2.27 |
% |
|
|
2.27 |
% |
|
2.25 |
% |
|
|
|
|
|
|
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