First Capital, Inc. (the “Company”) (NASDAQ: FCAP), the holding
company for First Harrison Bank (the “Bank”), today reported net
income of $2.9 million, or $0.87 per diluted share, for the quarter
ended September 30, 2024, compared to net income of $3.1 million,
or $0.94 per diluted share, for the quarter ended September 30,
2023.
Results of Operations for the Three
Months Ended September 30, 2024 and 2023
Net interest income after provision for credit
losses increased $415,000 for the quarter ended September 30, 2024
as compared to the same period in 2023. Interest income increased
$2.0 million when comparing the periods due to an increase in the
average yield on interest-earning assets from 3.96% for the third
quarter of 2023 to 4.53% for the third quarter of 2024. The average
balance of interest-earning assets increased from $1.13 billion for
the quarter ended September 30, 2023 to $1.17 billion at September
30, 2024. The increase in the yield was primarily due to an
increase in the yield on loans to 6.09% for the third quarter of
2024 compared to 5.74% for the same period in 2023. In addition,
the Company’s lower yielding securities continue to mature with
proceeds being reinvested in higher yielding loans or federal funds
sold. When compared to the quarter ended September 30, 2023, the
average balance of the Company’s securities decreased $59.0
million, while the Company’s average loans and federal funds sold
balances increased $40.6 million and $58.0 million, respectively,
during the quarter ended September 30, 2024. Interest expense
increased $1.5 million when comparing the periods due to an
increase in the average cost of interest-bearing liabilities from
1.30% for the third quarter of 2023 to 1.87% for the third quarter
of 2024, in addition to an increase in the average balance of
interest-bearing liabilities from $813.2 million for the third
quarter of 2023 to $875.8 million for the third quarter of 2024.
The Company had no outstanding advances from the Federal Home Loan
Bank (“FHLB”) during the quarter ended September 30, 2024 compared
to $3.3 million with an average rate of 6.03% during the quarter
ended September 30, 2023. The Company had average outstanding
borrowings under the Federal Reserve Bank’s Bank Term Funding
Program (“BTFP”) of $33.6 million and $13.0 million with an average
rate of 4.89% and 5.02% during the quarters ended September 30,
2024 and 2023, respectively. As a result of the changes in
interest-earning assets and interest-bearing liabilities, the net
interest margin increased from 3.02% for the quarter ended
September 30, 2023 to 3.12% for the same period in 2024.
Based on management’s analysis of the Allowance
for Credit Losses (“ACL”) on loans and unfunded loan commitments,
the provision for credit losses increased from $290,000 for the
quarter ended September 30, 2023 to $463,000 for the quarter ended
September 30, 2024. The increase was due to loan growth during the
period, the increase in nonperforming assets during the quarter
described later in this release, as well as management’s
consideration of macroeconomic uncertainty. The Bank recognized net
charge-offs of $64,000 and $19,000 for the quarters ended September
30, 2024 and 2023, respectively.
Noninterest income decreased $147,000 for the
quarter ended September 30, 2024 as compared to the same period in
2023. The Company recognized a $196,000 loss on equity securities
for the quarter ended September 30, 2024 compared to a loss of
$131,000 for the same quarter in 2023. The Company did not sell any
securities during the quarter ended September 30, 2024. The Company
recognized a net $63,000 gain on sale of securities during the
quarter ended September 30, 2023. During the quarter ended
September 30, 2023, the Company sold securities available for sale
with a market value of $9.4 million and an amortized cost basis of
$9.5 million resulting in a net loss of $94,000. The net loss was
more than offset by the $157,000 gain on sale of the Company’s VISA
Class B stock in September 2023. In addition, other income
decreased $54,000 during the quarter. These were partially offset
by increases of $17,000 and $13,000 in ATM and debit card fees and
service charges on deposit accounts, respectively.
Noninterest expense increased $543,000 for the
quarter ended September 30, 2024 as compared to the same period in
2023, due primarily to increases in professional fees and
compensation and benefits of $213,000 and $160,000, respectively.
The increase in professional fees is primarily due to increased
costs associated with the Company’s annual audit and fees being
accrued for the Company’s ongoing core contract negotiations. The
increase in compensation and benefits is due to standard increases
in salary and wages as well as increases in the cost of
Company-provided health insurance benefits. In addition, data
processing, advertising, and occupancy and equipment expenses
increased $51,000, $45,000, and $41,000, respectively.
Income tax expense decreased $35,000 for the
third quarter of 2024 as compared to the third quarter of 2023
primarily due to a decrease in the Company’s taxable income. The
effective tax rate for the quarter ended September 30, 2024 was
15.6% compared to 15.4% for the same period in 2023.
Results of Operations for the Nine
Months Ended September 30, 2024 and 2023
For the nine months ended September 30, 2024,
the Company reported net income of $8.7 million, or $2.59 per
diluted share, compared to net income of $9.7 million, or $2.89 per
diluted share, for the same period in 2023.
Net interest income after provision for credit
losses increased $72,000 for the nine months ended September 30,
2024 compared to the same period in 2023. Interest income increased
$5.3 million when comparing the two periods due to an increase in
the average yield on interest-earning assets from 3.80% for the
nine months ended September 30, 2023 to 4.37% for the same period
in 2024. The increase in the yield was primarily due to
an increase in the yield on loans to 5.99% for the first nine
months of 2024 compared to 5.57% for the same period in 2023. In
addition, the Company’s lower yielding securities continue to
mature with proceeds being reinvested in higher yielding loans or
federal funds sold. When compared to the nine months ended
September 30, 2023, the average balance of the Company’s securities
decreased $49.7 million, while the Company’s average loans and
federal funds sold balances increased $50.8 million and $15.5
million, respectively, during the nine months ended September 30,
2024. Interest expense increased $5.0 million as the average cost
of interest-bearing liabilities increased from 0.98% for the nine
months ended September 30, 2023 to 1.72% for the same period in
2024, in addition to an increase in the average balance of
interest-bearing liabilities from $805.1 million for the first nine
months of 2023 to $846.8 million for the same period of 2024. The
Company had average outstanding advances from the FHLB of $2.3
million and $2.6 million with an average rate of 5.69% and 5.49%
during the nine months ended September 30, 2024 and 2023,
respectively. The Company had average outstanding borrowings under
the Federal Reserve Bank’s BTFP of $33.1 million and $6.4 million
with an average rate of 4.84% and 5.03% during the nine months
ended September 30, 2024 and 2023, respectively. As a result of the
changes in interest-earning assets and interest-bearing
liabilities, the net interest margin decreased from 3.10% for the
nine months ended September 30, 2023 to 3.09% for the nine months
ended September 30, 2024.
Based on management’s analysis of the ACL on
loans and unfunded loan commitments, the provision for credit
losses increased from $833,000 for the nine months ended September
30, 2023 to $1.1 million for the nine months ended September 30,
2024. The increase was due to loan growth during the period, the
increase in nonperforming assets described later in this release,
as well as management’s consideration of macroeconomic uncertainty.
The Bank recognized net charge-offs of $149,000 for the nine months
ended September 30, 2024 compared to $380,000 for the same period
in 2023.
Noninterest income decreased $79,000 for the
nine months ended September 30, 2024 as compared to the nine months
ended September 30, 2023 primarily due to the Company recognizing a
$270,000 loss on equity securities during the nine months ended
September 30, 2024 compared to an $86,000 loss during the same
period in 2023. This was partially offset by increases
of $77,000 and $30,000 from gains on sale of loans and service
charges on deposit accounts, respectively.
Noninterest expenses increased $1.2 million for
the nine months ended September 30, 2024 as compared to the same
period in 2023. This was primarily due to increases in professional
fees, compensation and benefits, data processing, and other
expenses of $424,000, $374,000, $130,000, and $179,000,
respectively, when comparing the two periods. The increase in
professional fees is primarily due to increased costs associated
with the Company’s annual audit and fees being accrued for the
Company’s ongoing core contract negotiations. The increase in
compensation and benefits is due to standard increases in salary
and wages as well as increases in the cost of Company-provided
health insurance benefits. The increase in data processing expense
is primarily due to increased debit card interchange fees.
Increases in other expenses included a $77,000 increase in the
Company’s support of local communities through sponsorships and
donations, $26,000 in increased dues and subscriptions and $24,000
of additional FDIC insurance assessments for the nine months ended
September 30, 2024 compared to the same period of 2023.
Income tax expense decreased $238,000 for the
nine months ended September 30, 2024 as compared to the same period
in 2023 resulting in an effective tax rate of 15.0% for the nine
months ended September 30, 2024, compared to 15.4% for the same
period in 2023.
Comparison of Financial Condition at
September 30, 2024 and December 31, 2023
Total assets were $1.19 billion and $1.16
billion at September 30, 2024 and December 31, 2023, respectively.
Net loans receivable and total cash and cash equivalents increased
$16.2 million and $51.3 million from December 31, 2023 to September
30, 2024, respectively, while securities available for sale
decreased $28.8 million, during the same period. Deposits were
$1.03 billion at December 31, 2023 and September 30, 2024. The Bank
had $33.6 million in borrowings outstanding through the Federal
Reserve Bank’s BTFP at September 30, 2024 compared to $21.5 million
at December 31, 2023. Nonperforming assets (consisting of
nonaccrual loans, accruing loans 90 days or more past due, and
foreclosed real estate) increased from $1.8 million at December 31,
2023 to $4.5 million at September 30, 2024. The
increase was primarily due to the nonaccrual classification of two
commercial loan relationships totaling $2.6 million. Loans in the
relationship are secured by a variety of real estate and business
assets.
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. 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; the quality and
composition of the loan and investment portfolios; loan demand;
deposit flows; changes in accounting principles and guidelines; 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:Joshua StevensChief Financial
Officer812-738-1570
|
FIRST
CAPITAL, INC. AND SUBSIDIARIES |
Consolidated
Financial Highlights (Unaudited) |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
September 30, |
|
September 30, |
OPERATING DATA |
2024 |
|
2023 |
|
2024 |
|
2023 |
(Dollars in thousands, except per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest income |
$ |
13,224 |
|
|
$ |
11,179 |
|
|
$ |
37,279 |
|
|
$ |
31,966 |
|
Total
interest expense |
|
4,099 |
|
|
|
2,642 |
|
|
|
10,897 |
|
|
|
5,926 |
|
Net interest
income |
|
9,125 |
|
|
|
8,537 |
|
|
|
26,382 |
|
|
|
26,040 |
|
Provision
for credit losses |
|
463 |
|
|
|
290 |
|
|
|
1,103 |
|
|
|
833 |
|
Net interest
income after provision for credit losses |
|
8,662 |
|
|
|
8,247 |
|
|
|
25,279 |
|
|
|
25,207 |
|
|
|
|
|
|
|
|
|
Total
non-interest income |
|
1,800 |
|
|
|
1,947 |
|
|
|
5,722 |
|
|
|
5,801 |
|
Total
non-interest expense |
|
7,024 |
|
|
|
6,481 |
|
|
|
20,781 |
|
|
|
19,548 |
|
Income
before income taxes |
|
3,438 |
|
|
|
3,713 |
|
|
|
10,220 |
|
|
|
11,460 |
|
Income tax
expense |
|
537 |
|
|
|
572 |
|
|
|
1,532 |
|
|
|
1,770 |
|
Net
income |
|
2,901 |
|
|
|
3,141 |
|
|
|
8,688 |
|
|
|
9,690 |
|
Less net
income attributable to the noncontrolling interest |
|
3 |
|
|
|
3 |
|
|
|
10 |
|
|
|
10 |
|
Net income
attributable to First Capital, Inc. |
$ |
2,898 |
|
|
$ |
3,138 |
|
|
$ |
8,678 |
|
|
$ |
9,680 |
|
|
|
|
|
|
|
|
|
Net income
per share attributable to First Capital, Inc. common
shareholders: |
|
|
|
|
|
|
|
Basic |
$ |
0.87 |
|
|
$ |
0.94 |
|
|
$ |
2.59 |
|
|
$ |
2.89 |
|
|
|
|
|
|
|
|
|
Diluted |
$ |
0.87 |
|
|
$ |
0.94 |
|
|
$ |
2.59 |
|
|
$ |
2.89 |
|
|
|
|
|
|
|
|
|
Weighted
average common shares outstanding: |
|
|
|
|
|
|
|
Basic |
|
3,347,236 |
|
|
|
3,345,869 |
|
|
|
3,345,863 |
|
|
|
3,347,823 |
|
|
|
|
|
|
|
|
|
Diluted |
|
3,347,236 |
|
|
|
3,345,869 |
|
|
|
3,345,863 |
|
|
|
3,347,823 |
|
|
|
|
|
|
|
|
|
OTHER FINANCIAL DATA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
dividends per share |
$ |
0.29 |
|
|
$ |
0.27 |
|
|
$ |
0.83 |
|
|
$ |
0.81 |
|
Return on
average assets (annualized) (1) |
|
0.97 |
% |
|
|
1.09 |
% |
|
|
0.99 |
% |
|
|
1.13 |
% |
Return on
average equity (annualized) (1) |
|
10.48 |
% |
|
|
13.53 |
% |
|
|
10.84 |
% |
|
|
14.14 |
% |
Net interest
margin |
|
3.12 |
% |
|
|
3.02 |
% |
|
|
3.09 |
% |
|
|
3.10 |
% |
Interest
rate spread |
|
2.66 |
% |
|
|
2.66 |
% |
|
|
2.65 |
% |
|
|
2.82 |
% |
Net overhead
expense as a percentage of average assets (annualized) (1) |
|
2.35 |
% |
|
|
2.25 |
% |
|
|
2.38 |
% |
|
|
2.28 |
% |
|
|
|
|
|
|
|
|
|
September 30, |
|
December 31, |
|
|
|
BALANCE SHEET INFORMATION |
2024 |
|
2023 |
|
|
|
|
|
|
|
|
|
|
|
|
Cash and
cash equivalents |
$ |
89,939 |
|
|
$ |
38,670 |
|
|
|
|
|
Interest-bearing time deposits |
|
2,695 |
|
|
|
3,920 |
|
|
|
|
|
Investment
securities |
|
415,469 |
|
|
|
444,271 |
|
|
|
|
|
Gross
loans |
|
639,566 |
|
|
|
622,414 |
|
|
|
|
|
Allowance
for credit losses |
|
8,959 |
|
|
|
8,005 |
|
|
|
|
|
Earning
assets |
|
1,119,791 |
|
|
|
1,083,898 |
|
|
|
|
|
Total
assets |
|
1,189,295 |
|
|
|
1,157,880 |
|
|
|
|
|
Deposits |
|
1,030,249 |
|
|
|
1,025,211 |
|
|
|
|
|
Borrowed
funds |
|
33,625 |
|
|
|
21,500 |
|
|
|
|
|
Stockholders' equity, net of noncontrolling interest |
|
116,775 |
|
|
|
105,233 |
|
|
|
|
|
Allowance
for credit losses as a percent of gross loans |
|
1.40 |
% |
|
|
1.29 |
% |
|
|
|
|
Non-performing assets: |
|
|
|
|
|
|
|
Nonaccrual loans |
|
4,483 |
|
|
|
1,751 |
|
|
|
|
|
Accruing loans past due 90 days |
|
- |
|
|
|
- |
|
|
|
|
|
Foreclosed real estate |
|
- |
|
|
|
- |
|
|
|
|
|
Regulatory
capital ratios (Bank only): |
|
|
|
|
|
|
|
Community Bank Leverage Ratio (2) |
|
10.25 |
% |
|
|
9.92 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
(1) See reconciliation
of GAAP and non-GAAP financial measures for additional
information relating to the calculation of this item. |
(2) Effective March
31, 2020, the Bank opted in to the Community Bank Leverage Ratio
(CBLR) framework. As such, the other regulatory ratios are no
longer provided. |
|
|
|
|
|
|
|
|
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. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
September 30, |
|
September 30, |
|
2024 |
|
2023 |
|
2024 |
|
2023 |
|
|
|
|
|
|
|
|
Return on
average assets before annualization |
|
0.24 |
% |
|
|
0.27 |
% |
|
|
0.75 |
% |
|
|
0.85 |
% |
Annualization factor |
|
4.00 |
|
|
|
4.00 |
|
|
|
1.33 |
|
|
|
1.33 |
|
Annualized
return on average assets |
|
0.97 |
% |
|
|
1.09 |
% |
|
|
0.99 |
% |
|
|
1.13 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on
average equity before annualization |
|
2.62 |
% |
|
|
3.38 |
% |
|
|
8.13 |
% |
|
|
10.60 |
% |
Annualization factor |
|
4.00 |
|
|
|
4.00 |
|
|
|
1.33 |
|
|
|
1.33 |
|
Annualized
return on average equity |
|
10.48 |
% |
|
|
13.53 |
% |
|
|
10.84 |
% |
|
|
14.14 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net overhead
expense as a % of average assets before annualization |
|
0.59 |
% |
|
|
0.56 |
% |
|
|
1.78 |
% |
|
|
1.71 |
% |
Annualization factor |
|
4.00 |
|
|
|
4.00 |
|
|
|
1.33 |
|
|
|
1.33 |
|
Annualized
net overhead expense as a % of average assets |
|
2.35 |
% |
|
|
2.25 |
% |
|
|
2.38 |
% |
|
|
2.28 |
% |
|
|
|
|
|
|
|
|
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