First Capital, Inc. (the “Company”) (NASDAQ:FCAP), the holding
company for First Harrison Bank (the “Bank”), today reported net
income of $6.9 million, or $2.05 per diluted share, for the year
ended December 31, 2016, compared to net income of $5.2 million, or
$1.87 per diluted share, for the year ended December 31,
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 stock. During the year ended
December 31, 2015, the Company incurred one-time
acquisition-related expenses of $1.0 million. If the one-time
acquisition-related expenses are excluded from earnings, the
Company would have reported net income of $6.1 million, or $2.18
per diluted share, for the year ended December 31, 2015.
Net interest income after provision for loan
losses increased $5.0 million for 2016 as compared to 2015.
Interest income increased $6.4 million when comparing the two
periods due to an increase in the average balance in
interest-earning assets from $454.4 million for 2015 to $685.0
million for 2016, while the average tax-equivalent yield of
interest-earning assets decreased from 4.25% for 2015 to 3.76% for
2016. Both the increase in the average balance of
interest-earning assets and the decrease in the average
tax-equivalent yield for 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 2016. Interest expense increased $759,000 when
comparing the periods as the average cost and average balance of
interest-bearing liabilities increased from 0.29% to 0.33% and from
$350.6 million to $531.1 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 3.96% for 2015 to 3.43% for
2016.
The provision for loan losses was $645,000 for
2016 compared to $50,000 for 2015. Provisions for loan losses
are based on management’s analysis of the allowance for loan
losses. Net charge-offs were $674,000 for 2016 compared
to $1.5 million for 2015. The net charge-offs recognized for
2015 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 $1.0 million for
2016 as compared to 2015 primarily due to increases in service
charges on deposit accounts, gains on the sale of loans and gains
on the sale of securities of $521,000, $336,000 and $176,000,
respectively.
Noninterest expenses increased $3.8 million for
2016 compared to 2015 primarily due to the increased expenses
associated with operating the five offices acquired from Peoples,
partially offset by the $1.0 million in costs related to the 2015
acquisition. Compensation and benefits increased $2.6 million
primarily due to normal salary increases and the retained Peoples
personnel. Other operating expense and data processing
expense also increased $1.0 million and $708,000, respectively,
when comparing the two periods.
The Company’s net income was $1.7 million, or
$0.52 per diluted share, for the quarter ended December 31, 2016
compared to $1.1 million, or $0.38 per diluted share, for the
quarter ended December 31, 2015. During the quarter
ended December 31, 2015, the Company incurred one-time
acquisition-related expenses of $646,000. If the one-time
acquisition-related expenses are excluded from earnings, the
Company would have reported net income of $1.6 million, or $0.56
per diluted share, for the quarter ended December 31, 2015.
Net interest income after provision for loan
losses increased $824,000 for the quarter ended December 31, 2016
as compared to the same period in 2015. Interest income
increased $1.1 million when comparing the two periods, due to an
increase in the average balance of earning assets from $494.4
million for the quarter ended December 31, 2015 to $700.3 million
for the same period in 2016, partially offset by a decrease in the
average tax-equivalent yield on interest-earning assets from 4.25%
for the period in 2015 to 3.66% for 2016. Interest expense
increased $91,000 as the average balance of interest-bearing
liabilities increased from $383.3 million for the quarter ended
December 31, 2015 to $541.5 million for the same period in 2016 and
the average cost of interest-bearing liabilities decreased from
0.31% for the quarter ended December 31, 2015 to 0.29% for the same
period in 2016. The provision for loan losses was $220,000
for the quarter ended December 31, 2016, but no provision for loan
losses was recorded for the quarter ended December 31, 2015.
Noninterest income increased $116,000 for the
quarter ended December 31, 2016 as compared to the quarter ended
December 31, 2015, primarily due increases of $80,000 in service
charges on deposit accounts and $64,000 in gains on the sale of
loans.
Noninterest expenses increased $180,000 for the
quarter ended December 31, 2016 as compared to the same period in
2015, primarily due to increases in compensation and benefits
expense and data processing expense of $425,000 and $195,000,
respectively, partially offset by the $646,000 in costs related to
the Peoples acquisition recognized in the quarter ended December
31, 2015.
Total assets at December 31, 2016 were $743.7
million compared to $715.8 million at December 31, 2015.
Investment securities and net loans receivable increased $69.1
million and $22.0 million, respectively, which was partially offset
by a decrease in cash and cash equivalents of $63.3 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 $27.5 million primarily due to increases in
interest-bearing demand and savings deposits during 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 $8.4 million at December 31, 2016
as management continues to work to resolve nonperforming assets
acquired from Peoples.
At December 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. The
Company broke ground on the new office during the quarter ended
December 31, 2016 and expects the new office to be open in the
Spring of 2017.
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 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) |
|
|
|
|
|
|
|
Year Ended |
|
Three Months Ended |
|
December 31, |
|
December 31, |
OPERATING DATA |
|
2016 |
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
(Dollars
in thousands, except per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest
income |
$ |
25,094 |
|
$ |
18,713 |
|
|
$ |
6,244 |
|
|
$ |
5,109 |
|
Total interest
expense |
|
1,763 |
|
|
1,004 |
|
|
|
393 |
|
|
|
302 |
|
Net interest
income |
|
23,331 |
|
|
17,709 |
|
|
|
5,851 |
|
|
|
4,807 |
|
Provision for loan
losses |
|
645 |
|
|
50 |
|
|
|
220 |
|
|
|
0 |
|
Net interest income
after provision for loan losses |
|
22,686 |
|
|
17,659 |
|
|
|
5,631 |
|
|
|
4,807 |
|
|
|
Total non-interest
income |
|
6,169 |
|
|
5,124 |
|
|
|
1,436 |
|
|
|
1,320 |
|
Total non-interest
expense |
|
19,455 |
|
|
15,608 |
|
|
|
4,697 |
|
|
|
4,517 |
|
Income before income
taxes |
|
9,400 |
|
|
7,175 |
|
|
|
2,370 |
|
|
|
1,610 |
|
Income tax expense |
|
2,523 |
|
|
1,964 |
|
|
|
626 |
|
|
|
501 |
|
Net income |
$ |
6,877 |
|
$ |
5,211 |
|
|
$ |
1,744 |
|
|
$ |
1,109 |
|
Less net income
attributable to the noncontrolling interest |
|
13 |
|
|
13 |
|
|
|
3 |
|
|
|
3 |
|
Net income attributable
to First Capital, Inc. |
$ |
6,864 |
|
$ |
5,198 |
|
|
$ |
1,741 |
|
|
$ |
1,106 |
|
|
|
|
|
|
|
Net income per share
attributable to |
|
|
|
|
|
First
Capital, Inc. common shareholders: |
|
|
|
|
|
Basic |
$ |
2.05 |
|
$ |
1.87 |
|
|
$ |
0.52 |
|
|
$ |
0.38 |
|
|
|
|
|
|
|
Diluted |
$ |
2.05 |
|
$ |
1.87 |
|
|
$ |
0.52 |
|
|
$ |
0.38 |
|
|
|
|
|
|
|
Weighted average common
shares outstanding: |
|
|
|
|
|
Basic |
|
3,340,566 |
|
|
2,783,508 |
|
|
|
3,342,052 |
|
|
|
2,910,808 |
|
|
|
|
|
|
|
Diluted |
|
3,343,416 |
|
|
2,783,912 |
|
|
|
3,344,637 |
|
|
|
2,911,321 |
|
|
|
|
|
|
|
OTHER FINANCIAL DATA |
|
|
|
|
|
|
|
|
|
|
|
Cash dividends per
share |
$ |
0.84 |
|
$ |
0.84 |
|
|
$ |
0.21 |
|
|
$ |
0.21 |
|
Return on average
assets (annualized) |
|
0.94 |
% |
|
1.06 |
% |
|
|
0.93 |
% |
|
|
0.82 |
% |
Return on average
equity (annualized) |
|
8.90 |
% |
|
8.65 |
% |
|
|
8.97 |
% |
|
|
6.81 |
% |
Net interest
margin |
|
3.50 |
% |
|
4.03 |
% |
|
|
3.44 |
% |
|
|
4.01 |
% |
Interest rate
spread |
|
3.43 |
% |
|
3.96 |
% |
|
|
3.37 |
% |
|
|
3.94 |
% |
Net overhead expense as
a percentage |
|
|
|
|
|
of
average assets (annualized) |
|
2.65 |
% |
|
3.19 |
% |
|
|
2.51 |
% |
|
|
3.35 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
December 31, |
|
|
|
|
BALANCE SHEET
INFORMATION |
|
2016 |
|
|
2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents |
$ |
45,835 |
|
$ |
109,174 |
|
|
|
|
Interest-bearing time
deposits |
|
14,735 |
|
|
16,655 |
|
|
|
|
Investment
securities |
|
255,846 |
|
|
186,755 |
|
|
|
|
Gross loans |
|
384,540 |
|
|
362,581 |
|
|
|
|
Allowance for loan
losses |
|
3,386 |
|
|
3,415 |
|
|
|
|
Earning assets |
|
677,596 |
|
|
661,725 |
|
|
|
|
Total assets |
|
743,658 |
|
|
715,827 |
|
|
|
|
Deposits |
|
664,650 |
|
|
637,177 |
|
|
|
|
Stockholders' equity,
net of noncontrolling interest |
|
75,730 |
|
|
74,396 |
|
|
|
|
Non-performing
assets: |
|
|
|
|
|
Nonaccrual loans |
|
2,946 |
|
|
4,222 |
|
|
|
|
Accruing
loans past due 90 days |
|
78 |
|
|
355 |
|
|
Foreclosed real estate |
|
4,674 |
|
|
4,890 |
|
|
Troubled
debt restructurings on accrual status |
|
742 |
|
|
1,710 |
|
|
Regulatory capital
ratios (Bank only): |
|
Tier I -
adjusted total assets |
|
9.30 |
% |
|
12.15 |
% |
|
Tier I -
risk based |
|
14.28 |
% |
|
15.26 |
% |
|
Total
risk-based |
|
14.98 |
% |
|
16.07 |
% |
|
|
|
|
|
|
|
|
|
Contact:
Chris Frederick
Chief Financial Officer
812-734-3464
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