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FIRST CAPITAL, INC. REPORTS THIRD QUARTER EARNINGS
Corydon, Indiana--October 22, 2009. First Capital, Inc. (NASDAQ: FCAP - news),
the holding company for First Harrison Bank (the "Bank"), today reported net
income of $408,000, or $0.15 per diluted share, for the nine months ended
September 30, 2009, compared to $2.6, million or $0.92 per diluted share, for
the same period in 2008.
The decrease in earnings is primarily due to increases in the provision for loan
losses and in noninterest expense.
Net interest income after provision for loan losses decreased $2.2 million for
the nine months ended September 30, 2009 as compared to the nine months ended
September 30, 2008. Interest income decreased $2.2 million when comparing the
two periods as the average tax-equivalent yield of interest-earning assets
decreased from 6.33% during the nine months ended September 30, 2008 to 5.60%
for the same period in 2009. This yield reduction was primarily caused by a
general decline in market interest rates. Interest expense decreased $2.1
million as the average cost of interest-bearing liabilities decreased from 3.03%
to 2.28% when comparing the same two periods. The provision for loan losses
increased from $1.3 million during the nine months ended September 30, 2008 to
$3.4 million for the nine months ended September 30, 2009. This increase was
primarily to allocate specific reserves of $1.6 million on two commercial loan
relationships totaling $4.6 million, which are secured by commercial real estate
and equipment, as well as to adjust for weakened general economic conditions
such as depreciating collateral values, job losses and continued pressures on
household budgets in the Bank's market area. The Bank has also established
specific reserves of $550,000 on impaired residential mortgage loans, which
totaled $1.9 million at September 30, 2009, in recognition of declining home
values in its market area.
Noninterest income decreased $167,000 for the nine months ended September 30,
2009 as compared to the same period in 2008. Service charges on deposit accounts
decreased $206,000 when comparing the two periods. This was partially offset by
an increase of $71,000 in gains on the sale of mortgage loans as the Bank
originated and sold $36.5 million of mortgage loans into the secondary market
during the nine months ended September 30, 2009 compared to $25.3 million during
the same period in 2008.
Noninterest expenses increased $1.5 million as compared to the nine months ended
September 30, 2008. Other operating expenses increased $771,000 when comparing
the nine months ended September 30, 2009 and September 30, 2008. The increase in
other operating expenses was primarily due to a $600,000 increase in FDIC
deposit insurance premiums. This included the special assessment imposed on all
banks by the FDIC effective June 30, 2009. The Bank's special assessment was
$205,000. Data processing expenses increased $514,000 when comparing the two
periods. This increase was primarily due to an increase of $444,000 in ATM
processing fees. A substantial portion of this increase includes disputed fees
for which the Bank is seeking a possible partial refund.
For the quarter ended September 30, 2009, the Company earned net income of
$10,000, or less than $0.01 per diluted share, compared to net income of
$803,000 or $0.29 for the same period in 2008.
Net interest income after provision for loan loss decreased $555,000 during the
quarter ended September 30, 2009 compared to the same period in 2008. Interest
income decreased $698,000 when comparing the two periods, due to a decrease in
the average tax-equivalent yield on interest-earning assets from 6.36% during
the quarter ended September 30, 2008 to 5.54% in the same period of 2009
primarily due to the general decline in market interest rates. Interest expense
decreased $521,000 as the average cost of interest-bearing liabilities decreased
from 2.81% to 2.16% when comparing the same two periods. The provision for loan
losses increased from $602,000 for the quarter ended September 30, 2008 to
$980,000 for the same period in 2009 primarily due to the establishment of
specific reserves on impaired residential mortgage loans previously mentioned.
Noninterest income decreased $66,000 for the quarter ended September 30, 2009 as
compared to the quarter ended September 30, 2008. The decrease was primarily due
to a $69,000 decrease in service charges on deposits.
Noninterest expenses increased $854,000 when comparing the three months ended
September 30, 2009 to the same period in 2008, primarily due to an increase in
data processing expenses of $475,000. The increase in ATM processing fees
previously mentioned was $438,000 when comparing the two periods. Other
operating expenses increased $272,000 when comparing the three month periods
ended September 30, 2009 and September 30, 2008. FDIC deposit insurance premiums
increased $155,000 while expenses related to the maintenance and sale of
foreclosed real estate properties increased $89,000 when comparing the two
periods.
Total assets as of September 30, 2009 were $456.6 million compared to $458.6
million at December 31, 2008. Cash and cash equivalents and net loans receivable
decreased $5.2 million and $3.3 million, respectively, while securities
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available for sale increased $5.9 million. Federal Home Loan Bank advances
decreased $15.1 million while deposits increased $12.7 million during the same
period. At September 30, 2009, the Bank was considered well-capitalized under
applicable federal regulatory capital guidelines.
First Harrison Bank recently added its thirteenth office with the opening of the
Lanesville, Indiana location. This is added to the twelve offices in the Indiana
communities of Corydon, Edwardsville, Greenville, Floyds Knobs, Hardinsburg,
Palmyra, New Albany, New Salisbury, Jeffersonville and Salem. 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 Financial Services, a division of the
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Bank, offers non-FDIC insured investments to compliment the Bank's offering of
traditional banking products and services.
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
FIRST CAPITAL, INC. AND SUBSIDIARY
Consolidated Financial Highlights (Unaudited)
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<Caption>
NINE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
OPERATING DATA 2009 2008 2009 2008
(Dollars in thousands, except per share data) ---- ---- ---- ----
Total interest income $ 17,323 $ 19,527 $ 5,708 $ 6,406
Total interest expense 6,263 8,322 1,985 2,506
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Net interest income 11,060 11,205 3,723 3,900
Provision for loan losses 3,364 1,340 980 602
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Net interest income after provision for loan losses 7,696 9,865 2,743 3,298
Total non-interest income 2,562 2,729 862 928
Total non-interest expense 10,392 8,852 3,923 3,069
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Income (loss) before income taxes (134) 3,742 (318) 1,157
Income tax expense (benefit) (551) 1,151 (331) 354
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Net income $ 417 $ 2,591 $ 13 $ 803
Less net income attributable to the noncontrolling interest 9 - 3 -
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Net income attributable to First Capital, Inc. $ 408 $ 2,591 $ 10 $ 803
========== ========== ========== ==========
Net income per share attributable to First Capital, Inc.
common shareholders:
Basic $ 0.15 $ 0.92 $ - $ 0.29
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Diluted $ 0.15 $ 0.92 $ - $ 0.29
========== ========== ========== ==========
Weighted average common shares outstanding:
Basic 2,775,076 2,803,220 2,761,357 2,800,598
Diluted 2,788,576 2,817,404 2,776,887 2,813,895
OTHER FINANCIAL DATA
Cash dividends per share $ 0.54 $ 0.53 $ 0.18 $ 0.18
Return on average assets (annualized) 0.12% 0.77% 0.01% 0.73%
Return on average equity (annualized) 1.15% 7.42% 0.08% 6.90%
Net interest margin 3.56% 3.69% 3.66% 3.92%
Net overhead expense as a percentage of average assets
(annualized) 3.05% 2.61% 3.45% 2.78%
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<Table>
<Caption>
September 30, December 31,
BALANCE SHEET INFORMATION 2009 2008
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Cash and cash equivalents $ 16,940 $ 22,149
Investment securities 88,729 82,819
Gross loans 323,255 325,047
Allowance for loan losses 4,172 2,662
Earning assets 421,091 417,938
Total assets 456,626 458,625
Deposits 368,628 355,891
FHLB debt 32,776 47,830
Repurchase agreements 5,826 4,552
Stockholders' equity, net of noncontrolling interest 46,624 47,522
Non-performing assets:
Nonaccrual loans 7,994 4,441
Accruing loans past due 90 days 1,157 1,092
Foreclosed real estate 845 881
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