REPORT TO SHAREHOLDERS
First Capital, Inc.
Dear Shareholders:
Year-to-date net income for the first six months totaled $398,000 or $0.14 per
diluted share. This compares to $1.8 million or $.63 per diluted share for the
same period in 2008.
The provision for loan losses increased from $738,000 for the six months ended
June 30, 2008 to $2.4 million for the six months ended June 30, 2009. This
increase was primarily to allocate specific reserves on two nonperforming
commercial real estate loans with balances totaling $4.5 million. We also had to
reverse out of income $77,000 of previously accrued interest on these two loans
which negatively impacted our net interest margin. Despite the impact of these
nonperforming loans, our net interest margin for the six months ended June 30,
2009 improved to 3.60% as compared to 3.57% for the same period in 2008.
Noninterest expenses increased $686,000 compared to the six months ended June
30, 2008. This increase in other operating expenses was primarily due to
$445,000 increase in FDIC deposit insurance premiums. This included the special
assessment imposed on all banks by the FDIC effective June 30, 2009.
We recognized $318,000 in gains from the sale of mortgage loans as our
originations of loans held for sale increased to $26.6 million during the six
months ended June 30, 2009 compared to $15.2 million during the same period in
2008. Residential mortgage loan rates remain at historically low rates. These
low rates have had a positive effect on loan activity.
Our Lanesville branch opened for business on June 29th. Craig Engleman is
directing this team as branch manager of the office. Our community support
activities pick up during the summer as our staff becomes involved with county
fairs, relay for life, and back to school programs.
Many people believe the recession has ended and banks will begin to see
improvement in consumer demand and consumer budgets. We are cautiously
optimistic about the near term economy. We continue to closely monitor asset
quality and look for opportunities to originate good loans. Please feel free to
contact us with any questions.
Sincerely,
/s/ William Harrod
William Harrod
President and CEO
SECOND QUARTER REPORT
THREE MONTHS ENDED JUNE 30, 2009
First Capital, Inc.
FINANCIAL HIGHLIGHTS (UNAUDITED)
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.
BALANCE SHEET HIGHLIGHTS As of June 30, Percent
(Dollars in thousands except per share in per share information) 2009 2008 Change
---------- ---------- ----------
Total loans (excluding loans held for sale) $ 321,128 $ 330,782 -2.92%
Allowance for loan losses 4,345 2,451 77.27%
Allowance for loan losses as a percentage
of total loans (excluding loans held for sale) 1.35% 0.74% 82.60%
Total assets $ 449,344 $ 452,233 -0.64%
Total deposits 353,189 338,008 4.49%
Other borrowings 46,852 65,178 -28.12%
Total equity 46,705 46,318 0.84%
Book value per share 16.86 16.49 2.23%
Six
Three Months Six Months Months
INCOME STATEMENT SUMMARY Ended June 30, Ended June 30, Percent
(In thousands) 2009 2008 2009 2008 Change
-------- -------- -------- -------- ----------
Net interest income $ 3,618 $ 3,768 $ 7,337 $ 7,305 0.44%
Provision for loan losses 1,959 513 2,384 738 223.04%
Noninterest income 894 923 1,700 1,801 -5.61%
Noninterest expense 3,438 2,901 6,469 5,783 11.86%
Earnings (loss) before taxes (885) 1,277 184 2,585 -92.88%
Income tax expense (benefit) (484) 388 (220) 797 -127.60%
Less net income attributable to the
noncontrolling interest in subsidiary 4 - 6 -
Net income (loss) attributable to
First Capital, Inc. (405) 889 398 1,788 -77.74%
Six
Three Months Six Months Months
OTHER FINANCIAL DATA Ended June 30, Ended June 30, Percent
2009 2008 2009 2008 Change
-------- ---------- --------- --------- ------------
Diluted earnings (loss) per share $ (0.15) $ 0.32 $ 0.14 $ 0.63 -77.78%
Cash dividends per share 0.18 0.18 0.36 0.35 2.86%
Return on average assets (annualized) -0.36% 0.78% 0.18% 0.78% -76.92%
Return on average equity (annualized) -3.38% 7.59% 1.66% 7.67% -78.36%
Net interest margin 3.56% 3.69% 3.60% 3.57% 0.84%
Net overhead expense as a percentage
of average assets (annualized) 3.04% 2.55% 2.85% 2.54% 12.20%