First Capital, Inc. Reports Second Quarter Results

• Press Release
• Source: First Capital, Inc.
• On 8:00 am EDT, Friday July 24, 2009

CORYDON, Ind., July 24, 2009 (GLOBE NEWSWIRE) -- First Capital, Inc. (Nasdaq:FCAP - News), the holding company for First Harrison Bank (the "Bank"), today reported net income of $398,000 or $0.14 per diluted share for the six months ended June 30, 2009, compared to $1.8 million or $0.63 per diluted share for the same period in 2008.

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Symbol	Price	Change
FCAP	14.27	0.00

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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 $1.6 million for the six months ended June 30, 2009 as compared to the six months ended June 30, 2008. Interest income decreased $1.5 million when comparing the two periods as the average tax-equivalent yield of interest-earning assets decreased from 6.31% during the six months ended June 30, 2008 to 5.64% for the same period in 2009. This yield reduction was caused by a general decline in market interest rates as well as the reversal of previously accrued interest of $77,000 on two commercial credits with balances totaling $4.5 million. Interest expense decreased $1.5 million as the average cost of interest-bearing liabilities decreased from 3.14% to 2.34% when comparing the same two periods. The provision for loan losses increased from $738,000 during 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 the previously mentioned two commercial credits 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.

Noninterest income decreased $101,000 for the six months ended June 30, 2009 as compared to the same period in 2008. Service charges on deposit accounts decreased $137,000 when comparing the two periods. This was partially offset by an increase of $74,000 in gains on the sale of mortgage loans as the Bank originated and sold $26.6 million of mortgage loans into the secondary market during the six months ended June 30, 2009 compared to originations of $15.2 million during the same period in 2008.

Noninterest expenses increased $686,000 as compared to the six months ended June 30, 2008. Other operating expenses increased $499,000 when comparing the six months ended June 30, 2009 and June 30, 2008. The increase in other operating expenses was primarily due to a $445,000 increase in FDIC deposit insurance premiums. This included the special assessment imposed on all banks by the FDIC effective June 30, 2009.

For the quarter ended June 30, 2009, the Company recognized a net loss of $405,000 or $0.15 per diluted share compared to net income of $889,000 or $0.32 for the same period in 2008.

Net interest income after provision for loan loss decreased $1.6 million during the quarter ended June 30, 2009 compared to the same period in 2008. Interest income decreased $795,000 when comparing the two periods, due to a decrease in the average tax-equivalent yield on interest-earning assets from 6.25% during the quarter ended June 30, 2008 to 5.51% in the same period of 2009 primarily due to the items previously mentioned. Interest expense decreased $645,000 as the average cost of interest-bearing liabilities decreased from 2.93% to 2.26% when comparing the same two periods. The provision for loan losses increased from $513,000 for the quarter ended June 30, 2008 to $2.0 million for the same period in 2008.

Noninterest income decreased $29,000 for the quarter ended June 30, 2009 as compared to the quarter ended June 30, 2008. The decrease was primarily due to a $72,000 decrease in service charges on deposits partially offset by an increase of $62,000 in the gain on the sale of mortgage loans.

Noninterest expenses increased $537,000 when comparing the three months ended June 30, 2009 to the same period in 2008, primarily due to an increase in other operating expenses of $403,000. FDIC deposit insurance premiums increased $365,000 in the same quarter-to-quarter comparison.

Total assets as of June 30, 2009 were $449.3 million compared to $458.6 million at December 31, 2008. The primary factors behind this decrease were decreases in cash and cash equivalents and net loans receivable of $7.7 million and $5.6 million, respectively. Federal Home Loan Bank advances and deposits decreased $4.8 million and $2.7 million, respectively during the same period. At June 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 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.

                 FIRST CAPITAL, INC. AND SUBSIDIARY
           Consolidated Financial Highlights (Unaudited)

                           Six Months Ended      Three Months Ended
                               June 30,               June 30,
 OPERATING DATA             2009      2008         2009       2008
                        ----------  ----------  ----------  ----------
  (Dollars in thousands,
   except per share data)

 Total interest income  $   11,615  $   13,121  $    5,672  $    6,467
 Total interest expense      4,278       5,816       2,054       2,699
                        ----------------------  ----------------------
 Net interest income         7,337       7,305       3,618       3,768
 Provision for loan
 losses                      2,384         738       1,959         513
                        ----------------------  ----------------------
 Net interest income
 after provision for
 loan losses                 4,953       6,567       1,659       3,255

 Total non-interest
  income                     1,700       1,801         894         923
 Total non-interest
  expense                    6,469       5,783       3,438       2,901
                        ----------------------  ----------------------
 Income (loss) before
  income taxes                 184       2,585        (885)      1,277
 Income tax expense
  (benefit)                   (220)        797        (484)        388
                        ----------------------  ----------------------
 Net Income (loss)      $      404  $    1,788  $     (401) $      889
 Less net income
  attributable to the
  noncontrolling
  interest                       6          --           4          --
                        ----------------------  ----------------------
 Net income (loss)
  attributable to First
  Capital, Inc.         $      398  $    1,788  $     (405) $      889
                        ======================  ======================

 Net income (loss) per share attributable to
  First Capital, Inc.
  common shareholders:

  Basic                 $     0.14  $     0.64  $    (0.15) $     0.32
                        ======================  ======================

  Diluted               $     0.14  $     0.63  $    (0.15) $     0.32
                        ======================  ======================

 Weighted average common shares outstanding:

  Basic                  2,782,052   2,804,940   2,774,901   2,802,727

  Diluted                2,794,385   2,820,170   2,789,018   2,816,620

 OTHER FINANCIAL DATA

 Cash dividends per
  share                 $     0.36  $     0.35  $     0.18  $     0.18
 Return on average
  assets (annualized)        0.18%       0.78%      -0.36%       0.78%
 Return on average
  equity (annualized)        1.66%       7.67%      -3.38%       7.59%
 Net interest margin         3.60%       3.57%       3.56%       3.69%
 Net overhead expense
  as a percentage
  of average assets
  (annualized)               2.85%       2.54%       3.04%       2.55%


 BALANCE SHEET           June 30,   December 31,
  INFORMATION              2009        2008
   (in thousands)       ----------  ----------

 Cash and cash
  equivalents           $   14,472  $   22,149
 Investment securities      83,290      82,819
 Gross loans               321,128     325,047
 Allowance for loan
  losses                     4,345       2,662
 Earning assets            411,976     417,938
 Total assets              449,344     458,625
 Deposits                  353,189     355,891
 FHLB debt                  43,030      47,830
 Repurchase agreements       3,822       4,552
 Stockholders' equity,
  net of noncontrolling
  interest                  46,600      47,522
 Non-performing assets:
  Nonaccrual loans           9,545       4,441
  Accruing loans past
   due 90 days                 937       1,092
  Foreclosed real estate       900         881

First Capital, Inc.
Chris Frederick, Chief Financial Officer
812-734-3464