FIRST CAPITAL, INC.
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FIRST QUARTER REPORT
THREE MONTHS ENDED MARCH 31, 2006
First Capital, Inc.
Report to Shareholders
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Dear Shareholders:
We were happy to report an increase in our dividend from 16 cents per share to
17 cents per share in the first quarter of 2006. Our income for the first
quarter increased 9% over the same period last year. We recognize we have
challenges ahead with the interest rate outlooks suggesting a continued flat
yield curve.
Our efforts are directed at growing our commercial and consumer business in a
safe and sound manner. We continue to monitor our asset quality closely. The
bank had good loan growth in the first quarter as we continue our transition
from a traditional thrift balance sheet to that of a commercial bank. Our growth
in adjustable residential mortgages and commercial real estate loans should
improve our interest rate risk profile for future rate adjustments. We were able
to attract lower cost deposits to replace higher cost borrowings which will help
improve our interest margin in the future. Our officers are focused on solid
growth based on sound banking principles. We do not believe in compromising our
core values for growth or profit.
Our efforts have led to an improvement in diluted earnings per share of 9% over
the same period last year and an improvement in our net interest margin over the
same period last year. We completed the hiring of three mortgage origination
officers in the first quarter. Their focus will be directed at growing our
secondary mortgage business through local realtor contacts. We consolidated our
Crandall office into our New Salisbury office at the end of the first quarter.
The staff at our Crandall office will be working with the staff at New Salisbury
to ensure a smooth transition for our customers.
Our corporate responsibility to our community remains strong. We made donations
to school library funds, school athletic teams, and our local YMCA expansion
project. We will again take the lead on our local Relay for Life fund drive and
United Way. Our employees are involved in numerous community activities from
fund raisers to teaching and coaching baseball, softball, and soccer teams. We
understand what it means to be a community bank.
Thank you for your continued support. Please remind your family and friends that
First Harrison Bank is a fullservice bank ready to serve all their financial
needs.
First Capital, Inc.
First Quarter Report
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CORPORATE ADDRESS
First Capital, Inc.
220 Federal Drive, NW
Corydon, Indiana 47112
COMMON SHARES
The common shares of the Company are listed on
The Nasdaq Stock Market(R). The trading symbol is FCAP.
In newspaper listings, Company shares are frequently listed as First Capital,
Inc.
TRANSFER AGENT
Investor Relations Department
Registrar and Transfer Company
10 Commerce Drive
Cranford, New Jersey 07016-9982
Tel: (800) 368-5948
www.rtco.com
MARKET MAKERS
Sweeney Cartwright
Keefe, Bruyette & Woods, Inc.
UBS Financial Services
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BALANCE SHEET HIGHLIGHTS March 31, December 31, Percent
(In thousands, except per share information) 2006 2005 Change
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Total loans (excluding loans held for sale) $333,187 $324,557 2.66%
Allowance for loan losses 2,237 2,104 6.32%
Allowance for loan losses as a percentage
of total loans (excluding loans held for sale) 0.67% 0.65% 3.07%
Total assets $444,804 $438,354 1.47%
Total deposits $330,016 317,264 4.02%
Other borrowings 69,281 76,651 -9.62%
Shareholder's equity 42,362 41,957 0.97
Book value per share 16.37 16.21 0.99%
Three
Three Months Months'
INCOME STATEMENT SUMMARY Ended March 31, Percent
(In thousands) 2006 2005 Change
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Net interest income $ 3,428 $ 3,219 6.49%
Provision for loan losses 170 150 13.33%
Noninterest income 737 786 -6.23%
Noninterest expense 2,583 2,591 -0.31%
Earnings before taxes 1,412 1,264 11.71%
Provision for income taxes 478 408 17.16%
Net income 934 856 9.11%
Three
Three Months Months'
Ended March 31, Percent
OTHER FINANCIAL DATA 2006 2005 Change
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Diluted earnings per share $ 0.36 $ 0.33 9.09%
Cash dividends per share 0.17 0.15 13.33%
Return on average assets (annualized) 0.85% 0.81% 4.94%
Return on average equity (annualized) 8.83% 8.37% 5.50%
Net interest margin 3.44% 3.34% 2.99%
Net overhead expense as a percentage
of average assets (annualized) 2.36% 2.45% -3.67%