First Capital, Inc. Reports Annual And Quarterly Earnings
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- None.
Insights
The reported increase in net income and earnings per share for First Capital, Inc. indicates a positive trend in profitability, which is a key metric for investors assessing company performance. The rise in net interest income after provision for credit losses suggests an improved net interest margin, albeit with a slight decrease in the tax-equivalent interest rate spread. This could be attributed to a strategic shift in asset allocation or changes in the interest rate environment.
From a financial perspective, the increase in interest income due to higher average tax-equivalent yields on interest-earning assets demonstrates the company's ability to generate revenue from its core operations. However, the significant increase in interest expense as a result of higher average costs of interest-bearing liabilities highlights the impact of rising interest rates on the company's cost of funds. This is a critical factor for investors to monitor as it can affect future net interest margins.
The adoption of CECL and the subsequent increase in the allowance for credit losses reflect a more forward-looking approach to loan loss provisioning, which could impact the company's capital requirements and earnings volatility. The increase in nonperforming assets, although modest, should be closely watched as it may signal potential credit quality issues.
The financial results of First Capital, Inc. reveal a strategic approach to portfolio management, evidenced by the gains from the sale of VISA Class B stock and a regular evaluation of the securities portfolio. This suggests a proactive stance on capitalizing on market opportunities and optimizing the investment portfolio for long-term earnings enhancement.
Moreover, the decrease in noninterest income, primarily from the sale of loans and commission and fee income, indicates a potential shift in market demand or competitive dynamics within the industry. The increase in noninterest expenses, particularly in compensation and benefits, data processing and FDIC insurance premiums, reflects the broader economic trends of rising operational costs. These factors are essential for stakeholders to consider when evaluating the company's operational efficiency and cost management strategies.
The reported financials of First Capital, Inc. provide insights into the broader economic landscape, particularly the impact of monetary policy on financial institutions. The rise in average rates for borrowings under the FHLB and BTFP indicates a tightening monetary environment, which could suggest a response to inflationary pressures. This macroeconomic factor is crucial for understanding the challenges banks face in managing interest rate risk and the cost of capital.
The decrease in effective tax rates due to investments in tax credit entities highlights the importance of tax planning and its impact on net income. Additionally, the decrease in deposits and the increase in borrowings through the Federal Reserve Bank's BTFP reflect shifts in the bank's funding mix, which may be a strategic response to changing liquidity conditions in the financial markets.
CORYDON, Ind., Jan. 30, 2024 (GLOBE NEWSWIRE) -- First Capital, Inc. (the “Company”) (NASDAQ: FCAP), the holding company for First Harrison Bank (the “Bank”), today reported net income of
Net interest income after provision for credit losses increased
Effective January 1, 2023, the Company adopted the Financial Accounting Standard Board's (“FASB”) Accounting Standards Update (“ASU”) 2016-13, Financial Instruments – Credit Losses (Topic 326), as amended, and commonly referred to as the Current Expected Credit Loss model ("CECL"), under the modified retrospective method. The adoption replaced the allowance for loan losses with the allowance for credit losses (“ACL”) on loans on the Consolidated Balance Sheets and replaced the related provision for loan losses with the provision for credit losses on loans on the Consolidated Statements of Income. Upon adoption, the Company recorded an increase in the beginning ACL on loans of
Based on management’s analysis of the ACL on loans and unfunded loan commitments, the provision for credit losses increased from
Noninterest income decreased
The
Noninterest expenses increased
Income tax expense decreased
The Company’s net income was
Net interest income after provision for credit losses decreased
Based on management’s analysis of the ACL on loans and unfunded loan commitments, the provision for credit losses decreased from
Noninterest income decreased
Noninterest expense increased
Income tax expense decreased
Total assets were
The Bank currently has 18 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. 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, 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; the quality and composition of the loan and investment portfolios; loan demand; deposit flows; changes in accounting principles and guidelines; 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:
Joshua Stevens
Chief Financial Officer
812-738-1570
| FIRST CAPITAL, INC. AND SUBSIDIARIES | |||||||||||||
| Consolidated Financial Highlights (Unaudited) | |||||||||||||
| Three Months Ended | Year Ended | ||||||||||||
| December 31, | December 31, | ||||||||||||
| OPERATING DATA | 2023 | 2022 | 2023 | 2022 | |||||||||
| (Dollars in thousands, except per share data) | |||||||||||||
| Total interest income | $ | 11,639 | $ | 9,789 | $ | 43,605 | $ | 33,940 | |||||
| Total interest expense | 3,091 | 684 | 9,017 | 1,594 | |||||||||
| Net interest income | 8,548 | 9,105 | 34,588 | 32,346 | |||||||||
| Provision for credit losses | 308 | 400 | 1,141 | 950 | |||||||||
| Net interest income after provision for credit losses | 8,240 | 8,705 | 33,447 | 31,396 | |||||||||
| Total non-interest income | 1,831 | 1,942 | 7,632 | 7,927 | |||||||||
| Total non-interest expense | 6,480 | 6,300 | 26,028 | 25,088 | |||||||||
| Income before income taxes | 3,591 | 4,347 | 15,051 | 14,235 | |||||||||
| Income tax expense | 478 | 804 | 2,248 | 2,320 | |||||||||
| Net income | 3,113 | 3,543 | 12,803 | 11,915 | |||||||||
| Less net income attributable to the noncontrolling interest | 3 | 3 | 13 | 13 | |||||||||
| Net income attributable to First Capital, Inc. | $ | 3,110 | $ | 3,540 | $ | 12,790 | $ | 11,902 | |||||
| Net income per share attributable to | |||||||||||||
| First Capital, Inc. common shareholders: | |||||||||||||
| Basic | $ | 0.93 | $ | 1.05 | $ | 3.82 | $ | 3.55 | |||||
| Diluted | $ | 0.93 | $ | 1.05 | $ | 3.82 | $ | 3.55 | |||||
| Weighted average common shares outstanding: | |||||||||||||
| Basic | 3,345,910 | 3,359,662 | 3,347,341 | 3,355,023 | |||||||||
| Diluted | 3,345,910 | 3,359,662 | 3,347,341 | 3,355,023 | |||||||||
| OTHER FINANCIAL DATA | |||||||||||||
| Cash dividends per share | $ | 0.27 | $ | 0.26 | $ | 1.08 | $ | 1.04 | |||||
| Return on average assets (annualized) (1) | 1.09 | % | 1.24 | % | 1.12 | % | 1.03 | % | |||||
| Return on average equity (annualized) (1) | 13.67 | % | 18.19 | % | 14.03 | % | 13.07 | % | |||||
| Net interest margin (tax-equivalent basis) | 3.11 | % | 3.31 | % | 3.16 | % | 2.95 | % | |||||
| Interest rate spread (tax-equivalent basis) | 2.69 | % | 3.21 | % | 2.85 | % | 2.90 | % | |||||
| Net overhead expense as a percentage | |||||||||||||
| of average assets (annualized) (1) | 2.26 | % | 2.21 | % | 2.28 | % | 2.17 | % | |||||
| December 31, | December 31, | ||||||||||||
| BALANCE SHEET INFORMATION | 2023 | 2022 | |||||||||||
| Cash and cash equivalents | $ | 38,670 | $ | 66,298 | |||||||||
| Interest-bearing time deposits | 3,920 | 3,677 | |||||||||||
| Investment securities | 444,271 | 467,819 | |||||||||||
| Gross loans | 622,414 | 564,730 | |||||||||||
| Allowance for credit losses | 8,005 | 6,772 | |||||||||||
| Earning assets | 1,083,898 | 1,073,150 | |||||||||||
| Total assets | 1,157,880 | 1,151,400 | |||||||||||
| Deposits | 1,025,211 | 1,060,396 | |||||||||||
| Borrowed funds | 21,500 | - | |||||||||||
| Stockholders' equity, net of noncontrolling interest | 105,233 | 85,158 | |||||||||||
| Non-performing assets: | |||||||||||||
| Nonaccrual loans | 1,751 | 1,344 | |||||||||||
| Accruing loans past due 90 days | - | 82 | |||||||||||
| Foreclosed real estate | - | - | |||||||||||
| Regulatory capital ratios (Bank only): | |||||||||||||
| Community Bank Leverage Ratio (2) | 9.92 | % | 9.18 | % | |||||||||
| (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. | |||||||||||||
| Three Months Ended | |||||||||||||
| December 31, | |||||||||||||
| 2023 | 2022 | ||||||||||||
| Return on average assets before annualization | 0.27 | % | 0.31 | % | |||||||||
| Annualization factor | 4.00 | 4.00 | |||||||||||
| Annualized return on average assets | 1.09 | % | 1.24 | % | |||||||||
| Return on average equity before annualization | 3.42 | % | 4.55 | % | |||||||||
| Annualization factor | 4.00 | 4.00 | |||||||||||
| Annualized return on average equity | 13.67 | % | 18.19 | % | |||||||||
| Net overhead expense as a % of average assets before | |||||||||||||
| annualization | 0.57 | % | 0.55 | % | |||||||||
| Annualization factor | 4.00 | 4.00 | |||||||||||
| Annualized net overhead expense as a % of average assets | 2.26 | % | 2.21 | % | |||||||||
FAQ
What is the net income reported by First Capital, Inc. for the year ended December 31, 2023?
How did the net interest income change for First Capital, Inc. in 2023 compared to 2022?
What was the decrease in noninterest income for First Capital, Inc. in 2023?
What was the net income for the quarter ended December 31, 2023, for First Capital, Inc.?
