[First Capital, Inc. Letterhead]
REPORT TO SHAREHOLDERS
First Capital, Inc.
Dear Shareholders:
Our Salem office is under construction and plans are to be ready to open prior
to year end. We have an excellent staff selected for this office and anticipate
excellent growth in the market.
Net income for the second quarter is down due to slower than expected income
growth in mortgage loan sales and continued pressure on our margin. All
indications are that the flat yield curve environment will be with us for the
near term. Our mortgage loans sales should exceed last year, but are still under
what we expected.
We still rank as one of the top performing thrift companies in the state of
Indiana. This management team is committed to operating the company in a safe
and sound manner, which means making decisions for the long term. Loan demand
has remained soft and we have no plans to deviate from our lending policy in
order to take additional risk and grow loans. We continue to aggressively
compete for customers that make sense for our bank and risk profile.
The company has been authorized to repurchase shares from shareholders. We still
have 56,518 shares left to repurchase. If you would like to sell your shares
back to the company, please contact us at 812-738-2198.
I would encourage you to consider enrolling in the dividend reinvestment
program. You can print a copy of the plan and enrollment form by going to
http://www.rtco.com/inv/drp.asp. Type in First Capital and select your company
from the list.
Sincerely;
/s/ William Harrod
William Harrod
President and CEO
SECOND QUARTER REPORT
SIX MONTHS ENDED JUNE 30, 2007
SECOND QUARTER REPORT
First Capital, Inc.
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
BALANCE SHEET HIGHLIGHTS As of June 30, Percent
(Dollars in thousands, except per share information) 2007 2006 Change
- --------------------------------------------------------------------------------------------------------------------------
Total loans (excluding loans held for sale) $334,408 $337,525 -0.92%
Allowance for loan losses 2,333 2,289 1.92%
Allowance for loan losses as a percentage
of total loans (excluding loans held for sale) 0.70% 0.68% 2.87%
Total assets $445,346 $447,949 -0.58%
Total deposits 322,852 322,250 0.19%
Other borrowings 75,056 80,395 -6.64%
Shareholders' equity 44,250 42,523 4.06%
Book value per share 15.64 14.94 4.66%
Non-performing Assets:
Nonaccrual loans 3,881 1,893 105.02%
Foreclosed real estate 429 677 -36.63%
Six
Three Months Six Months Months
INCOME STATEMENT SUMMARY Ended June 30, Ended June 30, Percent
(Dollars in thousands) 2007 2006 2007 2006 Change
- --------------------------------------------------------------------------------------------------------------------------
Net interest income $3,349 $3,471 $6,668 $6,899 -3.35%
Provision for loan losses 35 200 260 370 -29.73%
Noninterest income 882 808 1,685 1,535 9.77%
Noninterest expense 2,907 2,676 5,698 5,249 8.55%
Earnings before taxes 1,289 1,403 2,395 2,815 -14.92%
Provision for income taxes 420 467 777 945 -17.78%
Net income 869 936 1,618 1,870 -13.48%
Six
Three Months Six Months Months
OTHER FINANCIAL DATA Ended June 30, Ended June 30, Percent
2007 2006 2007 2006 Change
- --------------------------------------------------------------------------------------------------------------------------
Diluted earnings per share $0.31 $0.33 $0.57 $0.66 -13.64%
Cash dividends per share 0.17 0.17 0.34 0.34 0.00%
Return on average assets (annualized) 0.78% 0.85% 0.72% 0.85% -15.29%
Return on average equity (annualized) 7.79% 8.80% 7.28% 8.82% -17.46%
Net interest margin 3.32% 3.46% 3.28% 3.45% -4.93%
Net overhead expense as a percentage
of average assets (annualized) 2.62% 2.42% 2.55% 2.39% 6.69%