FIRST CAPITAL, INC.
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SECOND QUARTER REPORT
SIX MONTHS ENDED JUNE 30, 2006
First Capital, Inc.
Report to Shareholders
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First Capital is happy to report an 8.2% increase in net income for the first
six months of 2006 compared to the first six months of 2005. We are pleased with
the improvement in our net interest margin as the flat yield curve continues to
put pressure on pricing deposits and loans. Management continues to look for
efficiencies in our operations, while maintaining our high standards for
customer service.
The Bank has experienced good loan growth in the first six months of 2006 and
continues to see opportunities for growth. Our branches are doing a good job of
attracting deposit accounts. Our increase in electronic services such as
internet banking, bill paying, and payroll services are indicative of their
efforts and the support staff to cross sell these services at the point of
contact. We believe these strategies will strengthen our ties to our best and
most profitable customers in the future.
We were pleased to announce a 10% stock dividend in the second quarter. We
appreciate our shareholders and the support of our shareholders. This is our way
of saying thank you and we hope you continue to consider First Capital and First
Harrison Bank for all your banking and investment needs in the future.
We understand there is always room for improvement. We continue our focus on
core growth. Our plan to transition our operations and balance sheet to that of
a commercial bank is well under way. As always we appreciate your confidence and
support. We will continue to put all of our efforts into growing your company in
a safe and profitable manner.
Sincerely,
/s/ William Harrod
William Harrod
President and CEO
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 As of June 30, Percent
(In thousands except per share in per share information) 2006 2005 Change
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Total loans (excluding loans held for sale) $337,525 $318,271 6.05%
Allowance for loan losses 2,289 2,110 8.48%
Allowance for loan losses as a percentage
of total loans (excluding loans held for sale) 0.68% 0.66% 2.30%
Total assets $447,949 $438,420 2.17%
Total deposits 322,250 324,353 -0.65%
Other borrowings 80,395 69,984 14.88%
Shareholders equity 42,523 41,550 2.34%
Book value per share * 14.94 14.55 2.65%
Six
Three Months Six Months Months'
INCOME STATEMENT SUMMARY Ended June 30, Ended June 30, Percent
(In thousands) 2006 2005 2006 2005 Change
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Net interest income $ 3,471 $ 3,328 $ 6,899 $ 6,547 5.38%
Provision for loan losses 200 163 370 313 18.21%
Noninterest income 809 755 1,546 1,541 0.32%
Noninterest expense 2,677 2,592 5,260 5,183 1.49%
Earnings before taxes 1,403 1,328 2,815 2,592 8.60%
Provision for income taxes 467 456 945 864 9.38%
Net income 936 872 1,870 1,728 8.22%
Six
Three Months Six Months Months
Ended June 30, Ended June 30, Percent
OTHER FINANCIAL DATA 2006 2005 2006 2005 Change
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Diluted earnings per share * $ 0.33 $ 0.31 $ 0.66 $ 0.61 8.20%
Cash dividends per share 0.17 0.15 0.34 0.30 13.33%
Return on average assets (annualized) 0.85% 0.81% 0.85% 0.81% 4.94%
Return on average equity (annualized) 8.80% 8.49% 8.82% 8.43% 4.63%
Net interest margin 3.46% 3.37% 3.45% 3.36% 2.68%
Net overhead expense as a percentage
of average assets (annualized) 2.42% 2.40% 2.39% 2.42% -1.24%
* Per share information provided gives effect to the 10% stock dividend declared on June 19, 2006.