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FIRST CAPITAL, INC. REPORTS 2008 EARNINGS INCREASE
Corydon, Indiana--January 23, 2009. First Capital, Inc. (NASDAQ: FCAP - news)
(the "Company"), the holding company for First Harrison Bank (the "Bank"), today
reported net income of $3.6 million or $1.27 per diluted share for the year
ended December 31, 2008, compared to $3.4 million or $1.20 per diluted share for
the year ended December 31, 2007.
Net interest income after provision for loan losses increased $543,000 for the
year ended December 31, 2008 as compared to the year ended December 31, 2007.
Interest income decreased $1.4 million when comparing the two periods as the
average tax-equivalent yield of interest-earning assets decreased from 6.58%
during the year ended December 31, 2007 to 6.24% for 2008. The average balance
of those earning assets increased from $419.0 million in 2007 to $420.3 million
in 2008. Interest expense decreased $3.0 million as the average cost of
interest-bearing liabilities decreased from 3.76% to 2.94% when comparing the
same two periods. The average balance of those liabilities increased from $364.5
million in 2007 to $365.8 in 2008. The provision for loan losses increased from
$558,000 for the year ended December 31, 2007 to $1.6 million for the year ended
December 31, 2008. This increase was due to increased specific allowances due to
deteriorating commercial real estate values and an increase in the general
allowances due to deteriorating general economic conditions such as depreciating
collateral values, job losses and continued pressures on household budgets in
the Bank's market area.
Noninterest income increased $49,000 for the year ended December 31, 2008 as
compared to the year ended December 31, 2007. Service charges on deposits
accounts and the cash surrender value of life insurance increased $83,000 and
$78,000, respectively, when comparing the two periods. The increase in cash
surrender value of life insurance was due to the purchase of $3.6 million of
bank-owned life insurance in May 2007. These increases were partially offset by
a decrease of $114,000 in mortgage brokerage fees.
Noninterest expenses increased $497,000 during 2008 compared to the year ended
December 31, 2007. Other operating expenses and compensation and benefits
expense represented $212,000 and $205,000 of the additional expenses,
respectively. The increase in other operating expenses was primarily due to an
increase in the cost of FDIC insurance due to the Bank exhausting its one-time
FDIC credit assessment on deposits in existence as of December 31, 1996.
Compensation and benefits increased primarily due to normal salary increases.
For the quarter ended December 31, 2008, the Company earned $978,000 or $0.35
per diluted share compared to $901,000 or $0.32 per diluted share for the same
period in 2007.
Net interest income after provision for loan losses increased $301,000 during
the quarter ended December 31, 2008 as compared to the quarter ended December
31, 2007. Interest income decreased $626,000 when comparing the two periods as a
result of a decrease in the average tax-equivalent yield on interest earning
assets from 6.61% during the fourth quarter of 2007 to 5.97% during the same
period of 2008. Interest expense decreased $977,000 as the average cost of
interest-bearing liabilities decreased from 3.72% to 2.65% when comparing the
two periods. The provision for loan losses increased $50,000 when comparing the
two periods.
Noninterest income decreased $59,000 primarily due to a decrease of $45,000 in
service charges on deposit accounts.
Noninterest expenses increased $192,000 when comparing the quarter ended
December 31, 2008 to the quarter ended December 31, 2007, primarily due to a
$121,000 increase in other operating expenses. This was primarily due to
increases in the cost of FDIC insurance and in expenses related to the
maintenance and sale of foreclosed real estate properties.
Total assets as of December 31, 2008 were $458.6 million compared to $453.2
million at December 31, 2007. Securities available for sale and cash and cash
equivalents increased $9.7 million and $7.1 million, respectively, while net
loans receivable decreased $12.1 million. Deposits increased $27.7 million while
Federal Home Loan Bank advances and retail repurchase agreements decreased $12.9
million and $11.0 million, respectively.
First Harrison Bank currently has twelve offices in the Indiana communities of
Corydon, Edwardsville, Greenville, Floyds Knobs, Hardinsburg, Palmyra, New
Albany, New Salisbury, Jeffersonville and Salem. The Bank has also received
regulatory approval for a new office in Lanesville, Indiana in which
construction is expected to begin during the first quarter of 2009. Access to
First Harrison Bank accounts, including online banking and electronic bill
payments, is available anywhere with Internet access through the Bank's website
at www.firstharrison.com. First Harrison Bank, through its business arrangement
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with Great American Advisors, continues to offer non FDIC insured investments to
complement the Bank's offering of traditional banking products and services.
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This release may contain forward-looking statements within the meaning of the
federal securities laws. These statements are not historical facts; rather, they
are statements based on the Company's current expectations regarding its
business strategies and their intended results and its future performance.
Forward-looking statements are preceded by terms such as "expects," "believes,"
"anticipates," "intends" and similar expressions.
Forward-looking statements are not guarantees of 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 the 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; 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 report or made elsewhere from time to time by the Company or on its behalf.
Except as may be required by applicable law or regulation, the Company assumes
no obligation to update any forward-looking statements.
Contact:
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Chris Frederick
Chief Financial Officer
812-734-3464
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<Caption>
FIRST CAPITAL, INC. AND SUBSIDIARY
Consolidated Financial Highlights (Unaudited)
TWELVE MONTHS ENDED THREE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
OPERATING DATA 2008 2007 2008 2007
(Dollars in thousands, except per share data) ---- ---- ---- ----
Total interest income $ 25,686 $ 27,085 $ 6,159 $ 6,785
Total interest expense 10,745 13,699 2,423 3,400
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Net interest income 14,941 13,386 3,736 3,385
Provision for loan losses 1,570 558 230 180
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Net interest income after provision
for loan losses 13,371 12,828 3,506 3,205
Total non-interest income 3,573 3,524 844 903
Total non-interest expense 11,846 11,349 2,994 2,802
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Income before income taxes 5,098 5,003 1,356 1,306
Income tax expense 1,529 1,591 378 405
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Net income $ 3,569 $ 3,412 $ 978 $ 901
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Net income per common share, basic $ 1.27 $ 1.21 $ 0.35 $ 0.32
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Weighted average common shares
outstanding - basic 2,801,163 2,814,691 2,795,060 2,802,178
Net income per common share, diluted $ 1.27 $ 1.20 $ 0.35 $ 0.32
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Weighted average common shares 2,815,276 2,836,601 2,807,566 2,820,724
outstanding - diluted
OTHER FINANCIAL DATA
Cash dividends per share $ 0.71 $ 0.68 $ 0.18 $ 0.17
Return on average assets (three month
data, annualized) 0.79% 0.76% 0.86% 0.80%
Return on average equity (three month
data, annualized) 7.65% 7.74% 8.37% 7.92%
Net interest margin 3.68% 3.31% 3.67% 3.36%
Net overhead expense as a percentage
of average assets (three month
data, annualized) 2.62% 2.54% 2.64% 2.49%
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<Table>
<Caption>
December 31, December 31,
BALANCE SHEET INFORMATION 2008 2007
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Cash and cash equivalents $ 22,149 $ 15,055
Investment securities 82,819 74,041
Gross loans 325,047 336,695
Allowance for loan losses 2,662 2,232
Earning assets 417,938 417,358
Total assets 458,625 453,179
Deposits 355,891 328,151
FHLB debt 47,830 60,694
Repurchase agreements 4,552 15,562
Stockholders' equity 47,522 45,736
Non-performing assets:
Nonaccrual loans 4,441 4,879
Accruing loans past due 90 days 1,092 816
Foreclosed real estate 881 833
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