First Capital, Inc. (the “Company”) (NASDAQ:FCAP), the holding
company for First Harrison Bank (the “Bank”), today reported net
income of $1.6 million or $0.47 per diluted share for the quarter
ended March 31, 2016, compared to $1.5 million or $0.53 per diluted
share for the quarter ended March 31, 2015. The increase in net
income is primarily due to increases in net interest income after
provision for loan losses partially offset by an increase in
noninterest expenses.
As previously announced, on December 4, 2015,
the Company completed its 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. As part of the acquisition, the
Company acquired total assets with a fair value of $240 million and
assumed liabilities with a fair value of $211 million. The
Company issued 580,017 shares of Company common stock as part of
the acquisition, which caused the decrease in earnings per share
for 2016 despite an increase in net income.
Net interest income after provision for loan
losses increased $1.5 million for the quarter ended March 31, 2016
as compared to the same prior year period. Interest income
increased $1.9 million when comparing the periods due to an
increase in the average balance of interest-earning assets from
$432.0 million for the first quarter of 2015 to $671.3 million for
the first quarter of 2016. This increase was partially offset
by a decrease in the average tax-equivalent yield on
interest-earning assets from 4.31% for the first quarter 2015 to
3.88% for the first quarter 2016. Both the increase in the
average balance of interest-earning assets and the decrease in the
average tax-equivalent yield for first quarter of 2016 are
primarily attributable to the Peoples acquisition. Through
the acquisition of Peoples, the Company acquired loans, investment
securities, interest-bearing deposits with banks and federal funds
sold with a fair value of approximately $56 million, $132 million,
$5 million and $28 million, respectively. The high
concentration of investment securities, interest-bearing deposits
with banks and federal funds sold, which generally provide a lower
yield than loans, led to a decrease in the overall tax-equivalent
yield on interest-earning assets for the first quarter 2016.
Interest expense increased $257,000 when comparing the periods as
the average cost and average balance of interest-bearing
liabilities increased from 0.29% to 0.39% and from $337.4 million
to $514.2 million, respectively. These changes were also
primarily attributable to the Peoples acquisition, with the Company
assuming deposit liabilities with a fair value of approximately
$209 million. As a result of the changes in interest-earning
assets and interest-bearing liabilities, the interest rate spread
decreased from 4.02% for the quarter ended March 31, 2015 to 3.49%
for the same period in 2016.
The provision for loan losses was $75,000 for
the quarter ended March 31, 2016 based on management’s analysis of
the allowance for loan losses. No provision for loan losses
was recorded for the quarter ended March 31, 2015. The Bank
recognized net charge-offs of $171,000 for the quarter ended March
31, 2016 compared to $1.2 million for the same period in
2015. The net charge-offs recognized in the 2015 period
primarily related to a $1.2 million charge-off on a commercial loan
that had been fully reserved for in prior periods.
Noninterest income increased $4,000 for the
quarter ended March 31, 2016 as compared to the same period in
2015. Service charges on deposit accounts increased $150,000
when comparing the two periods primarily due to fees earned on the
acquired Peoples accounts. This was partially offset by
decreases in other income and gains on the sale of loans of
$103,000 and $58,000, respectively, when comparing the two
periods. The decrease in other income was primarily due to a
gain on life insurance of $110,000 recognized during the quarter
ended March 31, 2015, and the decrease in the gains on the sale of
loans is due gains on the sale of commercial Small Business
Administration loans recognized during the first quarter of
2015.
Noninterest expense increased $1.3 million for
the quarter ended March 31, 2016 as compared to the same period in
2015, due primarily to the increased expenses associated with
operating the five offices acquired from Peoples.
Compensation and benefits increased $707,000 when comparing the two
periods due to normal salary increases and the retained Peoples
personnel. Other expenses, occupancy and equipment expense
and data processing expense also increased $360,000, $117,000 and
$113,000, respectively, when comparing the quarter ended March 31,
2016 to the same period in 2015.
Total assets increased $19.9 million to $735.7
million at March 31, 2016 from $715.8 million at December 31,
2015. Investment securities increased $23.9 million as
management has sought to invest excess liquidity obtained in the
Peoples acquisition primarily in government agency mortgage-backed
securities and municipal obligations. The increase in
investment securities was partially offset by decreases of $1.7
million and $1.4 million in net loans receivable and loans held for
sale, respectively. Deposits increased $19.0 million to
$656.2 million at March 31, 2016 due primarily to increases in
demand deposits, both interest-bearing and noninterest-bearing, and
savings accounts. 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 $11.2 million at December 31, 2015 to $10.2 million
at March 31, 2016 as management continues to work to resolve
nonperforming assets acquired from Peoples.
At March 31, 2016, the Bank was considered
well-capitalized under applicable federal regulatory capital
guidelines.
The Bank currently has seventeen offices in the
Indiana communities of Corydon, Edwardsville, Greenville, Floyds
Knobs, Palmyra, New Albany, New Salisbury, Jeffersonville, Salem
and Lanesville and the Kentucky communities of Shepherdsville, Mt.
Washington and Lebanon Junction. In March 2016, the Company
also acquired property for a proposed branch location near the
River Ridge development in Jeffersonville, Indiana.
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, through its business arrangement with Investment Centers of
America, member SIPC, continues 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 report 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) |
|
|
|
|
|
|
Three Months
Ended |
|
|
March
31, |
OPERATING DATA |
|
2016 |
2015 |
(Dollars in thousands, except per
share data) |
|
|
|
|
|
|
|
Total interest income |
|
$ |
6,346 |
|
$ |
4,496 |
|
Total interest expense |
|
|
500 |
|
|
243 |
|
Net interest income |
|
|
5,846 |
|
|
4,253 |
|
Provision for loan losses |
|
|
75 |
|
|
- |
|
Net interest income after provision for
loan losses |
|
|
5,771 |
|
|
4,253 |
|
|
|
|
|
Total non-interest income |
|
|
1,368 |
|
|
1,364 |
|
Total non-interest expense |
|
|
4,990 |
|
|
3,679 |
|
Income before income taxes |
|
|
2,149 |
|
|
1,938 |
|
Income tax expense |
|
|
564 |
|
|
469 |
|
Net income |
|
|
1,585 |
|
|
1,469 |
|
Less net income attributable to the
noncontrolling interest |
|
|
3 |
|
|
3 |
|
Net income attributable to First
Capital, Inc. |
|
$ |
1,582 |
|
$ |
1,466 |
|
|
|
|
|
Net income per share attributable to
First Capital, Inc. |
|
|
|
common shareholders: |
|
|
|
Basic |
|
$ |
0.47 |
|
$ |
0.53 |
|
|
|
|
|
Diluted |
|
$ |
0.47 |
|
$ |
0.53 |
|
|
|
|
|
Weighted average common shares
outstanding: |
|
|
|
Basic |
|
|
3,339,103 |
|
|
2,740,502 |
|
|
|
|
|
Diluted |
|
|
3,341,283 |
|
|
2,740,502 |
|
|
|
|
|
OTHER FINANCIAL
DATA |
|
|
|
|
|
|
|
Cash dividends per share |
|
$ |
0.21 |
|
$ |
0.21 |
|
Return on average assets
(annualized) |
|
|
0.88 |
% |
|
1.26 |
% |
Return on average equity
(annualized) |
|
|
8.37 |
% |
|
10.15 |
% |
Net interest margin |
|
|
3.58 |
% |
|
4.09 |
% |
Interest rate spread |
|
|
3.49 |
% |
|
4.02 |
% |
Net overhead expense as a
percentage |
|
|
|
of average assets (annualized) |
|
|
2.79 |
% |
|
3.17 |
% |
|
|
|
|
|
|
March
31, |
December
31, |
BALANCE SHEET
INFORMATION |
|
2016 |
2015 |
(Dollars in thousands) |
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
108,791 |
|
$ |
109,174 |
|
Interest-bearing time deposits |
|
|
16,410 |
|
|
16,655 |
|
Investment securities |
|
|
210,668 |
|
|
186,755 |
|
Gross loans |
|
|
360,757 |
|
|
362,581 |
|
Allowance for loan losses |
|
|
3,319 |
|
|
3,415 |
|
Earning assets |
|
|
676,362 |
|
|
661,725 |
|
Total assets |
|
|
735,733 |
|
|
715,827 |
|
Deposits |
|
|
656,185 |
|
|
637,177 |
|
Stockholders' equity, net of
noncontrolling interest |
|
|
75,955 |
|
|
74,396 |
|
Non-performing assets: |
|
|
|
Nonaccrual loans |
|
|
3,739 |
|
|
4,222 |
|
Accruing loans past due 90
days |
|
|
13 |
|
|
355 |
|
Foreclosed real estate |
|
|
4,640 |
|
|
4,890 |
|
Troubled debt restructurings on
accrual status |
|
|
1,822 |
|
|
1,710 |
|
Regulatory capital ratios (Bank
only): |
|
|
|
Tier 1 - average total assets |
|
|
9.18 |
% |
|
12.15 |
% |
Tier 1 - risk based assets |
|
|
15.16 |
% |
|
15.26 |
% |
Total risk-based |
|
|
15.94 |
% |
|
16.07 |
% |
|
|
|
|
|
|
|
|
Contact:
Chris Frederick
Chief Financial Officer
812-734-3464
First Capital (NASDAQ:FCAP)
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