First Capital, Inc. (the “Company”) (NASDAQ: FCAP), the holding
company for First Harrison Bank (the “Bank”), today reported net
income of $2.7 million or $0.82 per diluted share for the quarter
ended June 30, 2021, compared to $2.4 million or $0.73 per diluted
share for the quarter ended June 30, 2020. The increase was
primarily due to an increase in net interest income after provision
for loan losses and noninterest income partially offset by an
increase in noninterest expense.
Net interest income after provision for loan
losses increased $699,000 for the quarter ended June 30, 2021 as
compared to the same period in 2020. Interest income decreased
$241,000 when comparing the periods due to a decrease in the
average tax-equivalent yield on interest-earning assets from 3.61%
for the second quarter of 2020 to 2.87% for the second quarter of
2021 partially offset by an increase in the average balance of
interest-earning assets from $834.1 million for the second quarter
of 2020 to $1.02 billion for the second quarter of 2021. The
decrease in the tax-equivalent yield was due to the Federal Open
Market Committee lowering interest rates during March 2020 due to
the COVID-19 pandemic and an increase in the average balance of
federal funds sold. Federal funds sold increased primarily due to
increased balances in deposit accounts from stimulus programs and
normal deposit growth. Interest expense decreased $115,000
when comparing the periods due to a decrease in the average cost of
interest-bearing liabilities from 0.27% for the second quarter of
2020 to 0.16% for the second quarter of 2021. This was partially
offset by an increase in the average balance of interest-bearing
liabilities from $607.9 million for the second quarter of 2020 to
$730.5 million for the second quarter of 2021. As a result of the
changes in interest-earning assets and interest-bearing
liabilities, the tax-equivalent interest rate spread decreased from
3.34% for the quarter ended June 30, 2020 to 2.71% for the same
period in 2021.
Based on management’s analysis of the allowance
for loan losses, no provision for loan losses was recorded for the
quarter ended June 30, 2021 compared to $825,000 for the quarter
ended June 30, 2020. The provision for loan losses was higher in
the second quarter of 2020 compared to the second quarter of 2021
due to changes to the qualitative factors within the Bank’s
allowance for loan losses calculation related to uncertainties that
surrounded the COVID-19 pandemic in the second quarter of 2020. The
Bank recognized net recoveries of $9,000 for the quarter ended June
30, 2021 compared to $68,000 in net charge-offs for the same period
in 2020.
Noninterest income increased $232,000 for the
quarter ended June 30, 2021 as compared to the same period in 2020.
This was primarily due to ATM and debit card fees and service
charges on deposit accounts increasing by $174,000 and $102,000,
respectively, when comparing the two periods.
Noninterest expense increased $547,000 for the
quarter ended June 30, 2021 as compared to the same period in 2020.
This was primarily due to increases in compensation and benefits
expense, professional fees and data processing expense by $240,000,
$171,000 and $112,000, respectively, when comparing the two
periods.
Income tax expense increased $92,000 for the
second quarter of 2021 as compared to the second quarter of 2020
primarily due to an increase in taxable income for the quarter
ended June 30, 2021. As a result, the effective tax rate for the
quarter ended June 30, 2021 was 15.4% compared to 14.2% for the
same period in 2020.
For the six months ended June 30, 2021, the
Company reported net income of $5.7 million or $1.69 per diluted
share compared to net income of $4.5 million or $1.35 per diluted
share for the same period in 2020.
Net interest income after provision for loan
losses increased $773,000 for the six months ended June 30, 2021
compared to the same period in 2020. Interest income decreased
$623,000 when comparing the two periods, due to a decrease in the
average tax-equivalent yield on interest-earning assets from 3.82%
for the six months ended June 30, 2020 to 3.00% for the same period
in 2021 partially offset by an increase in the average balance of
interest-earning assets from $797.9 million for the six months
ended June 30, 2020 to $988.0 million for the same period in 2021.
Interest expense decreased $295,000 as the average cost of
interest-bearing liabilities decreased from 0.30% for the six
months ended June 30, 2020 to 0.16% for the same period in 2021,
while the average balance of interest-bearing liabilities increased
from $589.6 million for the six months ended June 30, 2020 to
$707.6 million for the same period in 2021. As a result of the
changes in interest-earning assets and interest-bearing
liabilities, the tax-equivalent interest rate spread decreased from
3.52% for the six months ended June 30, 2020 to 2.84% for the six
months ended June 30, 2021.
Based on management’s analysis of the allowance
for loan losses, the provision for loan losses decreased from $1.2
million for the six months ended June 30, 2020 to $75,000 for the
six months ended June 30, 2021. The provision for loan loss was
higher in 2020 compared to 2021 due to changes to the qualitative
factors within the Bank’s allowance for loan losses calculation
related to uncertainties surrounding the COVID-19 pandemic in 2020.
The Bank recognized net charge-offs of $63,000 for the six months
ended June 30, 2021 compared to $173,000 for the same period in
2020.
Noninterest income increased $1.2 million for
the six months ended June 30, 2021 as compared to the six months
ended June 30, 2020. The increase was primarily due to a $427,000
unrealized gain on equity securities during the six months ended
June 30, 2021 compared to a $171,000 unrealized loss on equity
securities during the same period in 2020. In addition, ATM and
debit card fees and gains on loans sold increased $377,000 and
$246,000, respectively, when comparing the two periods.
Noninterest expenses increased $529,000 for the
six months ended June 30, 2021 as compared to the same period in
2020. This was primarily due to increases in compensation and
benefit expense, professional fees and data processing expense by
$268,000, $236,000 and $125,000, respectively, when comparing the
two periods.
Income tax expense increased $321,000 for the
six months ended June 30, 2021 as compared to the same period in
2020 resulting in an effective tax rate of 16.4% for the six months
ended June 30, 2021, compared to 14.9% for the same period in 2020.
As discussed above, the increase in the effective tax rate is
primarily due to an increase in taxable income.
Total assets increased $61.1 million to $1.08
billion at June 30, 2021 from $1.02 billion at December 31, 2020.
Investment securities and cash and cash equivalents increased $72.0
million and $8.1 million, respectively, from December 31, 2020 to
June 30, 2021 while net loans receivable decreased $15.6 million
during the same period. Deposit growth funded the increase in
assets as deposits grew $61.1 million from $900.5 million at
December 31, 2020 to $961.6 million at June 30, 2021. Nonperforming
assets (consisting of nonaccrual loans, accruing loans 90 days or
more past due, troubled debt restructurings on accrual status, and
foreclosed real estate) increased from $3.2 million at December 31,
2020 to $3.3 million at June 30, 2021. Additionally,
the Bank is participating in the Small Business Administration’s
(“SBA’s”) Paycheck Protection Program (“PPP”), and has originated
approximately $62.4 million of PPP loans, including $16.5 million
in second-draw PPP loans originated during 2021. The Bank has
received payoffs on $39.0 million of PPP loans from the SBA, and as
of June 30, 2021 had $1.1 million remaining in deferred fees
related to PPP loans.
At June 30, 2021, the Bank was considered
well-capitalized under applicable federal regulatory capital
guidelines.
The Bank currently has eighteen offices in the
Indiana communities of Corydon, Edwardsville, Greenville, Floyds
Knobs, Palmyra, New Albany, New Salisbury, Jeffersonville, Salem,
Lanesville and Charlestown and the Kentucky communities of
Shepherdsville, Mt. Washington and Lebanon Junction.
Access to First Harrison Bank accounts,
including online banking and electronic bill payments, is available
through the Bank’s website at www.firstharrison.com. The Bank
offers non-FDIC insured investments to complement its offering of
traditional banking products and services through its business
arrangement with LPL Financial LLC, member SIPC. For more
information and financial data about the Company, please visit
Investor Relations at the Bank’s aforementioned website. The Bank
can also be followed on Facebook.
Cautionary Note Regarding Forward-Looking
Statements
This press release may contain certain
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Forward-looking
statements can be identified by the use of the words “anticipate,”
“believe,” “expect,” “intend,” “could” and “should,” and other
words of similar meaning. Forward-looking statements are not
historical facts nor guarantees of future performance; rather, they
are statements based on the Company’s current beliefs, assumptions,
and expectations regarding its business strategies and their
intended results and its 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 these forward-looking statements. Factors that may cause
or contribute to these differences include, without limitation, the
severity, magnitude and duration of the COVID-19 pandemic,
including impacts of the pandemic and of businesses’ and
governments’ responses to the pandemic on our operations and
personnel, and on commercial activity and demand across our and our
customers’ businesses, market, economic, operational, liquidity,
credit and interest rate risks associated with the Company’s
business (including developments and volatility arising from the
COVID-19 pandemic), general economic conditions, including changes
in market interest rates and changes in monetary and fiscal
policies of the federal government; competition; the ability of the
Company to execute its business plan; 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 press release, the
Company’s reports, or made elsewhere from time to time by the
Company or on its behalf. These forward-looking statements are made
only as of the date of this press release, and the Company assumes
no obligation to update any forward-looking statements after the
date of this press release.
Contact:Chris FrederickChief Financial
Officer812-734-3464
|
FIRST
CAPITAL, INC. AND SUBSIDIARIES |
Consolidated
Financial Highlights (Unaudited) |
|
|
|
|
|
|
|
Six Months Ended |
|
Three Months Ended |
|
June 30, |
|
June 30, |
OPERATING DATA |
2021 |
2020 |
|
2021 |
2020 |
(Dollars in thousands, except per share data) |
|
|
|
|
|
|
|
|
|
|
|
Total interest income |
$ |
14,425 |
|
$ |
15,048 |
|
|
$ |
7,133 |
|
$ |
7,374 |
|
Total
interest expense |
|
577 |
|
|
872 |
|
|
|
289 |
|
|
404 |
|
Net interest
income |
|
13,848 |
|
|
14,176 |
|
|
|
6,844 |
|
|
6,970 |
|
Provision
for loan losses |
|
75 |
|
|
1,176 |
|
|
|
- |
|
|
825 |
|
Net interest
income after provision for loan losses |
|
13,773 |
|
|
13,000 |
|
|
|
6,844 |
|
|
6,145 |
|
|
|
|
|
|
|
Total
non-interest income |
|
4,990 |
|
|
3,776 |
|
|
|
2,552 |
|
|
2,320 |
|
Total
non-interest expense |
|
11,972 |
|
|
11,443 |
|
|
|
6,165 |
|
|
5,618 |
|
Income
before income taxes |
|
6,791 |
|
|
5,333 |
|
|
|
3,231 |
|
|
2,847 |
|
Income tax
expense |
|
1,115 |
|
|
794 |
|
|
|
497 |
|
|
405 |
|
Net
income |
|
5,676 |
|
|
4,539 |
|
|
|
2,734 |
|
|
2,442 |
|
Less net
income attributable to the noncontrolling interest |
|
7 |
|
|
7 |
|
|
|
4 |
|
|
4 |
|
Net income
attributable to First Capital, Inc. |
$ |
5,669 |
|
$ |
4,532 |
|
|
$ |
2,730 |
|
$ |
2,438 |
|
|
|
|
|
|
|
Net income
per share attributable to First Capital, Inc. common
shareholders: |
|
|
|
|
|
Basic |
$ |
1.70 |
|
$ |
1.36 |
|
|
$ |
0.82 |
|
$ |
0.73 |
|
|
|
|
|
|
|
Diluted |
$ |
1.69 |
|
$ |
1.35 |
|
|
$ |
0.82 |
|
$ |
0.73 |
|
|
|
|
|
|
|
Weighted
average common shares outstanding: |
|
|
|
|
|
Basic |
|
3,342,462 |
|
|
3,336,516 |
|
|
|
3,342,432 |
|
|
3,336,573 |
|
|
|
|
|
|
|
Diluted |
|
3,346,624 |
|
|
3,349,079 |
|
|
|
3,345,359 |
|
|
3,347,871 |
|
|
|
|
|
|
|
OTHER FINANCIAL DATA |
|
|
|
|
|
|
|
|
|
|
|
Cash
dividends per share |
$ |
0.52 |
|
$ |
0.48 |
|
|
$ |
0.26 |
|
$ |
0.24 |
|
Return on
average assets (annualized) (1) |
|
1.08 |
% |
|
1.05 |
% |
|
|
1.01 |
% |
|
1.08 |
% |
Return on
average equity (annualized) (1) |
|
10.19 |
% |
|
8.89 |
% |
|
|
9.80 |
% |
|
9.42 |
% |
Net interest
margin (tax-equivalent basis) |
|
2.88 |
% |
|
3.60 |
% |
|
|
2.76 |
% |
|
3.41 |
% |
Interest
rate spread (tax-equivalent basis) |
|
2.84 |
% |
|
3.52 |
% |
|
|
2.71 |
% |
|
3.34 |
% |
Net overhead
expense as a percentage of average assets (annualized) (1) |
|
2.28 |
% |
|
2.66 |
% |
|
|
2.28 |
% |
|
2.50 |
% |
|
|
|
|
|
|
|
June 30, |
December 31, |
|
|
|
BALANCE SHEET INFORMATION |
2021 |
2020 |
|
|
|
|
|
|
|
|
|
Cash and
cash equivalents |
$ |
183,996 |
|
$ |
175,888 |
|
|
|
|
Interest-bearing time deposits |
|
6,193 |
|
|
6,396 |
|
|
|
|
Investment
securities |
|
355,482 |
|
|
283,502 |
|
|
|
|
Gross
loans |
|
491,387 |
|
|
506,956 |
|
|
|
|
Allowance
for loan losses |
|
6,637 |
|
|
6,625 |
|
|
|
|
Earning
assets |
|
1,018,497 |
|
|
947,123 |
|
|
|
|
Total
assets |
|
1,078,666 |
|
|
1,017,551 |
|
|
|
|
Deposits |
|
961,581 |
|
|
900,461 |
|
|
|
|
Stockholders' equity, net of noncontrolling interest |
|
112,413 |
|
|
110,639 |
|
|
|
|
Non-performing assets: |
|
|
|
|
|
Nonaccrual loans |
|
1,726 |
|
|
1,406 |
|
|
|
|
Accruing loans past due 90 days |
|
52 |
|
|
59 |
|
|
|
|
Foreclosed real estate |
|
110 |
|
|
- |
|
|
|
|
Troubled debt restructurings on accrual status |
|
1,388 |
|
|
1,732 |
|
|
|
|
Regulatory
capital ratios (Bank only): |
|
|
|
|
|
Community Bank Leverage Ratio (2) |
|
8.79 |
% |
|
9.37 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) See reconciliation
of GAAP and non-GAAP financial measures for additional
information relating to the calculation of this item. |
(2) Effective March
31, 2020, the Bank opted in to the Community Bank Leverage Ratio
(CBLR) framework. As such, the other regulatory ratios are no
longer provided. |
|
|
|
|
|
|
RECONCILIATION
OF GAAP AND NON-GAAP FINANCIAL MEASURES (UNAUDITED): |
|
|
|
|
|
|
|
This presentation
contains financial information determined by methods other than in
accordance with accounting principles generally accepted in the
United States of America (“GAAP”). Management uses these “non-GAAP”
measures in its analysis of the Company's performance. Management
believes that these non-GAAP financial measures allow for better
comparability with prior periods, as well as with peers in the
industry who provide a similar presentation, and provide a further
understanding of the Company's ongoing operations. These
disclosures should not be viewed as a substitute for operating
results determined in accordance with GAAP, nor are they
necessarily comparable to non-GAAP performance measures that may be
presented by other companies. The following table summarizes the
non-GAAP financial measures derived from amounts reported in the
Company's consolidated financial statements and reconciles those
non-GAAP financial measures with the comparable GAAP financial
measures. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
Three Months Ended |
|
June 30, |
|
June 30, |
|
2021 |
2020 |
|
2021 |
2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on
average assets before annualization |
|
0.54 |
% |
|
0.53 |
% |
|
|
0.25 |
% |
|
0.27 |
% |
Annualization factor |
|
2.00 |
|
|
2.00 |
|
|
|
4.00 |
|
|
4.00 |
|
Annualized
return on average assets |
|
1.08 |
% |
|
1.05 |
% |
|
|
1.01 |
% |
|
1.08 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on
average equity before annualization |
|
5.10 |
% |
|
4.45 |
% |
|
|
2.45 |
% |
|
2.36 |
% |
Annualization factor |
|
2.00 |
|
|
2.00 |
|
|
|
4.00 |
|
|
4.00 |
|
Annualized
return on average equity |
|
10.19 |
% |
|
8.89 |
% |
|
|
9.80 |
% |
|
9.42 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Net overhead
expense as a % of average assets before annualization |
|
1.14 |
% |
|
1.33 |
% |
|
|
0.57 |
% |
|
0.63 |
% |
Annualization factor |
|
2.00 |
|
|
2.00 |
|
|
|
4.00 |
|
|
4.00 |
|
Annualized
net overhead expense as a % of average assets |
|
2.28 |
% |
|
2.66 |
% |
|
|
2.28 |
% |
|
2.50 |
% |
|
|
|
|
|
|
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