First Capital, Inc. (the “Company”) (NASDAQ:FCAP), the holding
company for First Harrison Bank (the “Bank”), today reported net
income of $1.8 million or $0.53 per diluted share for the quarter
ended June 30, 2016, compared to $1.2 million or $0.45 per diluted
share for the same period in 2015. The increase in net income
is primarily due to increases in net interest income after
provision for loan losses and noninterest income 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,
assumed liabilities with a fair value of $211 million and issued
580,017 shares of Company common stock.
Net interest income after provision for loan
losses increased $1.4 million for the quarter ended June 30, 2016
as compared to the quarter ended June 30, 2015. Interest income
increased $1.7 million when comparing the two periods due to an
increase in the average balance of interest-earning assets from
$446.5 million for the second quarter of 2015 to $690.9 million for
the second quarter of 2016. This increase was partially
offset by a decrease in the average tax-equivalent yield on
interest-earning assets from 4.22% for the second quarter 2015 to
3.74% for the second quarter 2016. Both the increase in the
average balance of interest-earning assets and the decrease in the
average tax-equivalent yield for the second 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 second quarter 2016.
Interest expense increased $217,000 when comparing the periods as
the average cost and average balance of interest-bearing
liabilities increased from 0.28% to 0.34% and from $348.4 million
to $536.3 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 3.94% for the quarter ended June 30, 2015 to 3.40%
for the same period in 2016.
The provision for loan losses was $150,000 for
the quarter ended June 30, 2016, compared to $50,000 for the same
period in 2015, based on management’s analysis of the allowance for
loan losses. The Bank recognized net charge-offs of $280,000
for the quarter ended June 30, 2016 compared to $85,000 for the
same period in 2015.
Noninterest income increased $401,000 for the
quarter ended June 30, 2016 as compared to the same period in 2015
primarily due to increases in gains on the sale of securities,
service charges on deposit accounts and gains on the sale of
loans. Service charges on deposit accounts increased $142,000
when comparing the two periods primarily due to fees earned on the
acquired Peoples accounts.
Noninterest expenses increased $1.1 million for
the quarter ended June 30, 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 expense increased $649,000 when comparing
the two periods due to normal salary increases and the retained
Peoples personnel. Other operating expense and data
processing expense also increased $339,000 and $191,000,
respectively, when comparing the two periods.
For the six months ended June 30, 2016, the
Company reported net income of $3.4 million or $1.01 per diluted
share compared to net income of $2.7 million or $0.98 per diluted
share for the same period in 2015.
Net interest income after provision for loan
losses increased $2.9 million for the six months ended June 30,
2016 compared to the same period in 2015. Interest income
increased $3.6 million when comparing the two periods, due to an
increase in the average balance of interest-earning assets from
$439.8 million for 2015 to $681.1 million for 2016, partially
offset by a decrease in the average tax-equivalent yield on
interest-earning assets from 4.26% for 2015 to 3.80% for
2016. Interest expense increased $474,000 as the average
balance and average cost of interest-bearing liabilities increased
from $342.9 million and 0.28%, respectively, in 2015 to $525.2
million and 0.36%, respectively, in 2016. As a result of the
changes in interest-earning assets and interest-bearing
liabilities, the interest rate spread decreased from 3.98% for the
six months ended June 30, 2015 to 3.44% for the same period in
2016.
The provision for loan losses was $225,000 for
the six months ended June 30, 2016 compared to $50,000 for the same
period in 2015. The Bank recognized net charge-offs of
$451,000 for the six months ended June 30, 2016 compared to $1.3
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 $405,000 for the
six months ended June 30, 2016 as compared to the six months ended
June 30, 2015. The increase was primarily due to increases in
service charges on deposit accounts and gains on the sale of
securities of $292,000 and $176,000, respectively, when comparing
the two periods.
Noninterest expenses increased $2.4 million for
the six months ended June 30, 2016 as compared to the same period
in 2015, primarily due to increases in compensation and benefit
expense of $1.4 million, other operating expense of $699,000, data
processing expense of $304,000 and occupancy and equipment expense
of $152,000 when comparing the two periods. As discussed
above, each of these increases are primarily attributable to the
Peoples acquisition.
Total assets as of June 30, 2016 were $739.3
million compared to $715.8 million at December 31, 2015.
Investment securities and net loans receivable increased $62.9
million and $3.0 million, respectively, which was partially offset
by a decrease in cash and cash equivalents of $38.6 million.
Investment securities increased due to management investing excess
liquidity obtained in the Peoples acquisition primarily in
government agency mortgage-backed securities. Deposits also
increased $20.3 million primarily due to increases in
interest-bearing demand and savings deposits during the six months
ended June 30, 2016. 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 $9.8 million
at June 30, 2016 as management continues to work to resolve
nonperforming assets acquired from Peoples.
At June 30, 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) |
|
|
|
|
|
|
|
Six Months Ended |
|
Three Months Ended |
|
June 30, |
|
June 30, |
OPERATING DATA |
|
2016 |
|
|
2015 |
|
|
|
2016 |
|
|
2015 |
|
(Dollars
in thousands, except per share data) |
|
|
|
|
|
|
|
|
|
|
|
Total interest
income |
$ |
12,635 |
|
$ |
9,051 |
|
|
$ |
6,289 |
|
$ |
4,555 |
|
Total interest
expense |
|
956 |
|
|
482 |
|
|
|
456 |
|
|
239 |
|
Net interest
income |
|
11,679 |
|
|
8,569 |
|
|
|
5,833 |
|
|
4,316 |
|
Provision for loan
losses |
|
225 |
|
|
50 |
|
|
|
150 |
|
|
50 |
|
Net interest income
after provision for loan losses |
|
11,454 |
|
|
8,519 |
|
|
|
5,683 |
|
|
4,266 |
|
|
|
Total non-interest
income |
|
2,983 |
|
|
2,578 |
|
|
|
1,615 |
|
|
1,214 |
|
Total non-interest
expense |
|
9,834 |
|
|
7,440 |
|
|
|
4,844 |
|
|
3,761 |
|
Income before income
taxes |
|
4,603 |
|
|
3,657 |
|
|
|
2,454 |
|
|
1,719 |
|
Income tax expense |
|
1,231 |
|
|
956 |
|
|
|
667 |
|
|
487 |
|
Net income |
$ |
3,372 |
|
$ |
2,701 |
|
|
$ |
1,787 |
|
$ |
1,232 |
|
Less net income
attributable to the noncontrolling interest |
|
7 |
|
|
7 |
|
|
|
4 |
|
|
4 |
|
Net income attributable
to First Capital, Inc. |
$ |
3,365 |
|
$ |
2,694 |
|
|
$ |
1,783 |
|
$ |
1,228 |
|
|
|
|
|
|
|
Net income per share
attributable to |
|
|
|
|
|
First
Capital, Inc. common shareholders: |
|
|
|
|
|
Basic |
$ |
1.01 |
|
$ |
0.98 |
|
|
$ |
0.53 |
|
$ |
0.45 |
|
|
|
|
|
|
|
Diluted |
$ |
1.01 |
|
$ |
0.98 |
|
|
$ |
0.53 |
|
$ |
0.45 |
|
|
|
|
|
|
|
Weighted average common
shares outstanding: |
|
|
|
|
|
Basic |
|
3,339,082 |
|
|
2,740,596 |
|
|
|
3,339,063 |
|
|
2,740,689 |
|
|
|
|
|
|
|
Diluted |
|
3,340,618 |
|
|
2,740,752 |
|
|
|
3,341,307 |
|
|
2,741,195 |
|
|
|
|
|
|
|
OTHER FINANCIAL DATA |
|
|
|
|
|
|
|
|
|
|
|
Cash dividends per
share |
$ |
0.42 |
|
$ |
0.42 |
|
|
$ |
0.21 |
|
$ |
0.21 |
|
Return on average
assets (annualized) |
|
0.93 |
% |
|
1.14 |
% |
|
|
0.97 |
% |
|
1.02 |
% |
Return on average
equity (annualized) |
|
8.84 |
% |
|
9.25 |
% |
|
|
9.30 |
% |
|
8.37 |
% |
Net interest
margin |
|
3.52 |
% |
|
4.04 |
% |
|
|
3.47 |
% |
|
4.01 |
% |
Interest rate
spread |
|
3.44 |
% |
|
3.98 |
% |
|
|
3.40 |
% |
|
3.94 |
% |
Net overhead expense as
a percentage |
|
|
|
|
|
of
average assets (annualized) |
|
2.71 |
% |
|
3.15 |
% |
|
|
2.63 |
% |
|
3.14 |
% |
|
|
|
|
|
|
|
June 30, |
December 31, |
|
|
|
BALANCE SHEET
INFORMATION |
|
2016 |
|
|
2015 |
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents |
$ |
70,528 |
|
$ |
109,174 |
|
|
|
|
Interest-bearing time
deposits |
|
16,035 |
|
|
16,655 |
|
|
|
|
Investment
securities |
|
249,607 |
|
|
186,755 |
|
|
|
|
Gross loans |
|
365,318 |
|
|
362,581 |
|
|
|
|
Allowance for loan
losses |
|
3,189 |
|
|
3,415 |
|
|
|
|
Earning assets |
|
680,765 |
|
|
661,725 |
|
|
|
|
Total assets |
|
739,344 |
|
|
715,827 |
|
|
|
|
Deposits |
|
657,457 |
|
|
637,177 |
|
|
|
|
Stockholders' equity,
net of noncontrolling interest |
|
77,910 |
|
|
74,396 |
|
|
|
|
Non-performing
assets: |
|
|
|
|
|
Nonaccrual loans |
|
3,611 |
|
|
4,222 |
|
|
|
|
Accruing
loans past due 90 days |
|
123 |
|
|
355 |
|
|
Foreclosed real estate |
|
4,252 |
|
|
4,890 |
|
|
Troubled
debt restructurings on accrual status |
|
1,804 |
|
|
1,710 |
|
|
Regulatory capital
ratios (Bank only): |
|
Tier I -
adjusted total assets |
|
9.02 |
% |
|
12.15 |
% |
|
Tier I -
risk based |
|
14.61 |
% |
|
15.26 |
% |
|
Total
risk-based |
|
15.32 |
% |
|
16.07 |
% |
|
|
|
|
|
|
|
|
|
Contact:
Chris Frederick
Chief Financial Officer
812-734-3464
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