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 $0.88 per diluted share for the quarter
ended March 31, 2021, compared to $2.1 million or $0.63 per diluted
share for the quarter ended March 31, 2020. The increase in net
income is primarily due to an increase in noninterest income.
Net interest income after provision for loan
losses increased $74,000 for the quarter ended March 31, 2021 as
compared to the same period in 2020. Interest income decreased
$382,000 when comparing the periods due to a decrease in the
average tax-equivalent yield on interest-earning assets from 4.10%
for the first quarter of 2020 to 3.13% for the first quarter of
2021 partially offset by an increase in the average balance of
interest-earning assets from $761.7 million for the first quarter
of 2020 to $954.8 million for the first quarter of 2021. The
decrease in the tax-equivalent yield was due to the Federal Open
Market Committee (FOMC) lowering interest rates during March 2020
due to the COVID-19 pandemic and an increase in the average balance
of federal funds sold. Federal funds sold increased primarily due
to increased balances in deposit accounts from stimulus programs
and normal deposit growth. Interest expense decreased $180,000 when
comparing the periods due to a decrease in the average cost of
interest-bearing liabilities from 0.33% for the first quarter of
2020 to 0.17% for the first quarter of 2021 partially offset by an
increase in the average balance of interest-bearing liabilities
from $571.2 million for the first quarter of 2020 to $684.7 million
for the first quarter of 2021. As a result of the changes in
interest-earning assets and interest-bearing liabilities, the
interest rate spread decreased from 3.77% for the quarter ended
March 31, 2020 to 2.96% for the same period in 2021.
Based on management’s analysis of the allowance
for loan losses, the provision for loan losses decreased from
$351,000 for the quarter ended March 31, 2020 to $75,000 for the
quarter ended March 31, 2021. The provision for loan losses was
higher in the first quarter of 2020 compared to the first quarter
of 2021 due to changes to the qualitative factors within the Bank’s
allowance for loan losses calculation related to uncertainties that
surrounded the COVID-19 pandemic in the first quarter of 2020. The
Bank recognized net charge-offs of $72,000 for the quarter ended
March 30, 2021 compared to $105,000 for the same period in
2020.
Noninterest income increased $982,000 for the
quarter ended March 31, 2021 as compared to the same period in
2020. The first quarter of 2021 included a $234,000 unrealized gain
on equity securities compared to a $394,000 unrealized loss on
equity securities during the same period in 2020. Gains on the sale
of loans and ATM and debit card fees increased $277,000 and
$203,000, respectively, when comparing the two periods. This was
partially offset by a $96,000 decrease in service charges on
deposit accounts.
Noninterest expense decreased $18,000 for the
quarter ended March 31, 2021 as compared to the same period in
2020, due primarily to decreases in other expenses and advertising
expenses of $91,000 and $58,000, respectively, partially offset by
an increase in professional services of $65,000.
Income tax expense increased $229,000 for the
first quarter of 2021 as compared to the first quarter of 2020
primarily due to an increase in pre-tax net income and a change in
Kentucky tax law that subjects the Bank to the state’s corporate
income tax effective January 1, 2021 as opposed to the bank
franchise tax, which was repealed. As a result, the effective tax
rate for the quarter ended March 31, 2021 was 17.4% compared to
15.6% for the same period in 2020.
Total assets increased $38.1 million to $1.06
billion at March 31, 2021 from $1.02 billion at December 31, 2020.
Cash and cash equivalents and investments securities increased
$30.1 million and $30.0 million, respectively, from December 31,
2020 to March 31, 2021 while net loans receivable decreased $17.7
million during the same period. Deposit growth funded the increase
in assets as deposits grew $40.0 million from $900.5 million at
December 31, 2020 to $940.5 million at March 31, 2021.
Nonperforming assets (consisting of nonaccrual loans, accruing
loans 90 days or more past due, troubled debt restructurings on
accrual status, and foreclosed real estate) increased from $3.2
million at December 31, 2020 to $3.3 million at March 31,
2021. The Bank has assisted customers experiencing a
COVID-19 related hardship by approving payment extensions on loans
totaling $68.1 million, primarily related to commercial real estate
lending relationships. As of March 31, 2021, $61.7 million of those
loans remain outstanding and all have resumed payments.
Additionally, the Bank is participating in the Small Business
Administration’s (SBA’s) Paycheck Protection Program (PPP), and has
approved approximately $58.5 million of PPP loans, including $12.6
million in second-draw PPP loans originated during 2021. The Bank
has received payoffs on $30.6 million of PPP loans from the SBA,
and as of March 31, 2021 had $990,000 remaining in deferred fees
related to PPP loans.
At March 31, 2021, the Bank was considered
well-capitalized under applicable federal regulatory capital
guidelines.
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) |
|
|
|
|
Three Months Ended |
|
March 31, |
OPERATING DATA |
|
2021 |
|
|
2020 |
|
(Dollars in thousands, except
per share data) |
|
|
|
|
|
Total interest income |
$ |
7,292 |
|
$ |
7,674 |
|
Total interest expense |
|
288 |
|
|
468 |
|
Net interest income |
|
7,004 |
|
|
7,206 |
|
Provision for loan losses |
|
75 |
|
|
351 |
|
Net interest income after
provision for loan losses |
|
6,929 |
|
|
6,855 |
|
|
|
|
Total non-interest income |
|
2,438 |
|
|
1,456 |
|
Total non-interest
expense |
|
5,807 |
|
|
5,825 |
|
Income before income
taxes |
|
3,560 |
|
|
2,486 |
|
Income tax expense |
|
618 |
|
|
389 |
|
Net income |
|
2,942 |
|
|
2,097 |
|
Less net income attributable
to the noncontrolling interest |
|
3 |
|
|
3 |
|
Net income attributable to
First Capital, Inc. |
$ |
2,939 |
|
$ |
2,094 |
|
|
|
|
Net income per share
attributable to |
|
|
First Capital, Inc. common
shareholders: |
|
|
Basic |
$ |
0.88 |
|
$ |
0.63 |
|
|
|
|
Diluted |
$ |
0.88 |
|
$ |
0.63 |
|
|
|
|
Weighted average common shares
outstanding: |
|
|
Basic |
|
3,342,492 |
|
|
3,336,459 |
|
|
|
|
Diluted |
|
3,347,767 |
|
|
3,349,716 |
|
|
|
|
OTHER FINANCIAL
DATA |
|
|
|
|
|
Cash dividends per share |
$ |
0.26 |
|
$ |
0.24 |
|
Return on average assets
(annualized) (1) |
|
1.15 |
% |
|
1.02 |
% |
Return on average equity
(annualized) (1) |
|
10.59 |
% |
|
8.34 |
% |
Net interest margin
(tax-equivalent basis) |
|
3.01 |
% |
|
3.85 |
% |
Interest rate spread
(tax-equivalent basis) |
|
2.96 |
% |
|
3.77 |
% |
Net overhead expense as a
percentage |
|
|
of average assets (annualized)
(1) |
|
2.28 |
% |
|
2.84 |
% |
|
|
|
|
March 31, |
December 31, |
BALANCE SHEET
INFORMATION |
|
2021 |
|
|
2020 |
|
|
|
|
Cash and cash equivalents |
$ |
205,956 |
|
$ |
175,888 |
|
Interest-bearing time
deposits |
|
6,195 |
|
|
6,396 |
|
Investment securities |
|
313,540 |
|
|
283,502 |
|
Gross loans |
|
489,251 |
|
|
506,956 |
|
Allowance for loan losses |
|
6,628 |
|
|
6,625 |
|
Earning assets |
|
994,286 |
|
|
947,123 |
|
Total assets |
|
1,055,676 |
|
|
1,017,551 |
|
Deposits |
|
940,522 |
|
|
900,461 |
|
Stockholders' equity, net of
noncontrolling interest |
|
109,771 |
|
|
110,639 |
|
Non-performing assets: |
|
|
Nonaccrual loans |
|
1,860 |
|
|
1,406 |
|
Accruing loans past due 90 days |
|
- |
|
|
59 |
|
Foreclosed real estate |
|
- |
|
|
- |
|
Troubled debt restructurings on accrual status |
|
1,412 |
|
|
1,732 |
|
Regulatory capital ratio (Bank
only): |
|
|
Community Bank Leverage Ratio (2) |
|
9.18 |
% |
|
9.37 |
% |
|
|
|
(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 |
|
March 31, |
|
2021 |
|
2020 |
|
|
|
|
Return on average assets
before annualization |
0.29 |
% |
0.26 |
% |
Annualization factor |
4.00 |
|
4.00 |
|
Annualized return on average
assets |
1.15 |
% |
1.02 |
% |
|
|
|
|
|
|
Return on average equity
before annualization |
2.65 |
% |
2.09 |
% |
Annualization factor |
4.00 |
|
4.00 |
|
Annualized return on average
equity |
10.59 |
% |
8.34 |
% |
|
|
|
|
|
|
Net overhead expense as a % of
average assets before |
|
|
annualization |
0.57 |
% |
0.71 |
% |
Annualization factor |
4.00 |
|
4.00 |
|
Annualized net overhead
expense as a % of average assets |
2.28 |
% |
2.84 |
% |
|
|
|
|
|
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