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FIRST CAPITAL, INC. REPORTS 2009 EARNINGS
Corydon, Indiana--January 29, 2010. First Capital, Inc. (NASDAQ: FCAP) (the
"Company"), the holding company for First Harrison Bank (the "Bank"), today
reported net income of $766,000 or $0.28 per diluted share for the year ended
December 31, 2009, compared to $3.6 million or $1.27 per diluted share for the
year ended December 31, 2008.
Net interest income after provision for loan losses decreased $3.1 million for
the year ended December 31, 2009 as compared to the year ended December 31,
2008. Interest income decreased $2.7 million when comparing the two periods as
the average tax-equivalent yield of interest-earning assets decreased from 6.24%
for the year ended December 31, 2008 to 5.53% for 2009. The average balance of
those earning assets increased from $420.3 million in 2008 to $425.4 million in
2009. Interest expense decreased $2.4 million as the average cost of
interest-bearing liabilities decreased from 2.94% to 2.27% when comparing the
same two periods. The average balance of those liabilities increased from $365.8
million in 2008 to $369.7 million in 2009. In December 2009 the Bank repaid $8.0
million in Federal Home Loan Bank advances with a weighted average interest rate
of 5.97% and incurred a prepayment penalty of $295,000, which is reported as
interest expense. This additional interest expense increased the average cost of
interest-bearing liabilities during 2009 by eight basis points. The provision
for loan losses increased from $1.6 million for the year ended December 31, 2008
to $4.3 million for the year ended December 31, 2009. This increase was
primarily to allocate specific reserves of $2.3 million on two commercial loan
relationships totaling $4.6 million, which are secured by commercial real estate
and equipment, as well as to provide for increased inherent loss exposure due to
weakened general economic conditions such as depreciating collateral values, job
losses and continued pressures on household budgets in the Bank's market area.
Noninterest income decreased $200,000 for the year ended December 31, 2009 as
compared to the year ended December 31, 2008. Service charges on deposit
accounts decreased $220,000 when comparing the two periods. This decrease was
partially offset by an increase of $59,000 in gains on the sale of mortgage
loans.
Noninterest expenses increased $1.6 million during 2009 compared to the year
ended December 31, 2008. Other operating expenses and data processing expenses
increased $903,000 and $383,000, respectively, when comparing the two periods.
The increase in other operating expenses was primarily due to a $790,000
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. The increase in data processing expenses was
primarily due to an increase of $276,000 in ATM processing fees. A substantial
portion of this increase includes disputed fees for which the Bank is seeking a
possible partial refund. Also, as an incentive for switching its ATM processor,
the Bank received a cash payment of $225,000 which was netted against ATM
processing fees in 2009.
For the quarter ended December 31, 2009, the Company's net income was $358,000
or $0.13 per diluted share compared to $978,000 or $0.35 per diluted share for
the same period in 2008.
Net interest income after provision for loan losses decreased $910,000 during
the quarter ended December 31, 2009 as compared to the quarter ended December
31, 2008. Interest income decreased $513,000 when comparing the two periods as a
result of a decrease in the average tax-equivalent yield on interest earning
assets from 5.97% during the fourth quarter of 2008 to 5.33% during the same
period of 2009. Interest expense decreased $298,000 as the average cost of
interest-bearing liabilities decreased from 2.65% to 2.24% when comparing the
two periods. The previously mentioned $295,000 prepayment penalty on advances
occurred during the quarter ended December 31, 2009. Without taking this
penalty, the average cost of interest-bearing liabilities would have been 1.93%
during the quarter ended December 31, 2009. The provision for loan losses
increased $695,000 when comparing the two periods primarily due to an additional
$700,000 specific provision on the two previously mentioned large commercial
credit relationships.
Noninterest income decreased $33,000 primarily due to decreases of $14,000 and
$13,000 in service charges on deposit accounts and other income, respectively.
Noninterest expenses increased $87,000 when comparing the quarter ended December
31, 2009 to the quarter ended December 31, 2008, primarily due to increases in
other operating expenses and occupancy and equipment expenses of $132,000 and
$46,000, respectively. The increase in other operating expenses was primarily
due to an increase of $190,000 in the cost of FDIC insurance. Data processing
costs decreased $132,000 when comparing the two periods primarily due to the
cash incentive the Bank received for switching its ATM processor.
Total assets as of December 31, 2009 were $455.5 million compared to $458.6
million at December 31, 2008. Securities available for sale and other assets
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increased $11.0 million and $3.2 million, respectively, while net loans
receivable and cash and cash equivalents decreased $11.3 million and $6.3
million, respectively. Deposits increased $18.6 million while Federal Home Loan
Bank advances decreased $23.1 million.
At December 31, 2009, the Bank was considered well-capitalized under applicable
federal regulatory capital guidelines.
First Harrison Bank currently has thirteen offices in the Indiana communities of
Corydon, Edwardsville, Greenville, Floyds Knobs, Hardinsburg, Palmyra, New
Albany, New Salisbury, Jeffersonville, Salem and Lanesville. 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
with Great American Advisors, continues to offer non FDIC insured investments to
complement 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:
Chris Frederick
Chief Financial Officer
812-734-3464
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FIRST CAPITAL, INC. AND SUBSIDIARY
Consolidated Financial Highlights (Unaudited)
<Table>
<Caption>
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
OPERATING DATA 2009 2008 2009 2008
(Dollars in thousands, except per share data) ---- ---- ---- ----
Total interest income $ 22,969 $ 25,686 $ 5,646 $ 6,159
Total interest expense 8,388 10,745 2,125 2,423
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Net interest income 14,581 14,941 3,521 3,736
Provision for loan losses 4,289 1,570 925 230
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Net interest income after provision for loan losses 10,292 13,371 2,596 3,506
Total non-interest income 3,373 3,573 811 844
Total non-interest expense 13,473 11,846 3,081 2,994
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Income before income taxes 192 5,098 326 1,356
Income tax expense (benefit) (586) 1,529 (35) 378
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Net income $ 778 $ 3,569 $ 361 $ 978
Less net income attributable to the
noncontrolling interest 12 - 3 -
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Net income attributable to First Capital, Inc. $ 766 $ 3,569 $ 358 $ 978
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Net income per share attributable to
First Capital, Inc. common shareholders:
Basic $ 0.28 $ 1.27 $ 0.13 $ 0.35
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Diluted $ 0.28 $ 1.27 $ 0.13 $ 0.35
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Weighted average common shares outstanding:
Basic 2,770,934 2,801,163 2,758,639 2,795,060
Diluted 2,784,080 2,815,276 2,771,103 2,807,566
OTHER FINANCIAL DATA
Cash dividends per share $ 0.72 $ 0.71 $ 0.18 $ 0.18
Return on average assets (annualized) 0.17% 0.79% 0.31% 0.86%
Return on average equity (annualized) 1.66% 7.65% 3.08% 8.37%
Net interest margin 3.56% 3.68% 3.37% 3.67%
Net overhead expense as a percentage
of average assets (annualized) 2.95% 2.62% 2.64% 2.64%
</Table>
<Table>
<Caption>
DECEMBER 31, DECEMBER 31,
BALANCE SHEET INFORMATION 2009 2008
---- ----
Cash and cash equivalents $ 15,857 $ 22,149
Investment securities 93,791 82,819
Gross loans 316,023 325,047
Allowance for loan losses 4,931 2,662
Earning assets 415,325 417,938
Total assets 455,534 458,625
Deposits 374,476 355,891
FHLB debt 24,776 47,830
Repurchase agreements 7,949 4,552
Stockholders' equity, net of noncontrolling interest 45,944 47,522
Non-performing assets:
Nonaccrual loans 8,374 4,441
Accruing loans past due 90 days 1,118 1,092
Foreclosed real estate 877 881
Regulatory capital ratios (Bank only):
Tier I - adjusted total assets 8.66% 8.98%
Tier I - risk based 13.39% 14.10%
Total risk-based 13.99% 14.77%
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