FIRST CAPITAL INC Q2 FY26 Results

The Company reported net income of $4.8 million, or $1.43 per diluted share, for the quarter ended June 30, 2026, compared to net income of $3.8 million, or $1.13 per diluted share, for the quarter ended June 30, 2025. Net interest income after provision for credit losses increased $1.6 million for the quarter ended June 30, 2026 compared to the same period in 2025. Interest income increased $1.6 million when comparing the two periods due to an increase in the average tax-equivalent yield(1) on interest-earning assets from 4.82% for the second quarter of 2025 to 5.12% for the same period in 2026, in addition to an increase in the average balance of interest-earning assets from $1.18 billion for the second quarter of 2025 to $1.24 billion for the same period in 2026. Interest expense decreased $93,000 when comparing the periods as the average cost of interest-bearing liabilities decreased from 1.64% for the quarter ended June 30, 2025 to 1.56% for the same period in 2026 while the average balance of interest-bearing liabilities increased from $883.8 million for the quarter ended June 30, 2025 to $907.3 million for the same period in 2026. As a result of the changes in interest-earning assets and interest-bearing liabilities, the tax-equivalent net interest margin(1) increased from 3.59% for the quarter ended June 30, 2025 to 3.98% for the same period in 2026. Based on management’s analysis of the Allowance for Credit Losses (“ACL”) on loans and unfunded loan commitments, the provision for credit losses increased from $306,000 for the quarter ended June 30, 2025 to $425,000 for the quarter ended June 30, 2026. The Bank recognized net charge-offs of $58,000 and $113,000 for the quarters ended June 30, 2026 and 2025, respectively. Noninterest income increased $187,000 for the quarter ended June 30, 2026 as compared to the quarter ended June 30, 2025. The increase is primarily due to the Company recognizing a $92,000 gain on equity securities during the quarter ended June 30, 2026 compared to a loss of $41,000 during the same period in 2025. In addition, the Company recognized an increase of $54,000 in service charges on deposit accounts when comparing the two periods. Noninterest expenses increased $359,000 for the quarter ended June 30, 2026 as compared to the same period in 2025. This was primarily due to increases in compensation and benefits, advertising, and other expenses of $235,000, $84,000 and $79,000, respectively, when comparing the two periods. The increase in compensation and benefits is due to increases in salary and wages associated with annual cost of living and performance related adjustments as well as increases in the cost of Company-provided health insurance benefits. The increase in advertising expenses is related to various new marketing campaigns undertaken during the quarter ended June 30, 2026. The increase in other expenses was primarily due to general inflationary pressures and routine pricing increases rather than any specific item. These increases were partially offset by a $75,000 decrease in professional services when comparing the two periods due to fewer consulting fees during the quarter ended June 30, 2026. Income tax expense increased $397,000 for the quarter ended June 30, 2026 as compared to the same period in 2025 resulting in an effective tax rate of 20.8% for the quarter ended June 30, 2026, compared to 18.4% for the same period in 2025. The increase in the Company’s effective tax rate for the quarter ended June 30, 2026 reflects a higher proportion of net income being subject to taxation compared to the same period last year. For the six months ended June 30, 2026, the Company reported net income of $9.1 million, or $2.72 per diluted share, compared to net income of $7.0 million, or $2.09 per diluted share, for the same period in 2025. Net interest income after provision for credit losses increased $3.4 million for the six months ended June 30, 2026 compared to the same period in 2025. Interest income increased $3.2 million when comparing the two periods due to an increase in the average tax-equivalent yield(1) on interest-earning assets from 4.73% for the six months ended June 30, 2025 to 5.04% for the same period in 2026, in addition to an increase in the average balance of interest-earning assets from $1.18 billion for the six months ended June 30, 2025 to $1.23 billion for the same period in 2026. Interest expense decreased $352,000 when comparing the periods as the average cost of interest-bearing liabilities decreased from 1.67% for the six months ended June 30, 2025 to 1.56% for the same period in 2026 while the average balance of interest-bearing liabilities increased from $883.2 million for the six months ended June 30, 2025 to $904.4 million for the same period in 2026. As a result of the changes in interest-earning assets and interest-bearing liabilities, the tax-equivalent net interest margin(1) increased from 3.47% for the six months ended June 30, 2025 to 3.90% for the same period in 2026. Based on management’s analysis of the ACL on loans and unfunded loan commitments, the provision for credit losses increased from $644,000 for the six months ended June 30, 2025 to $775,000 for the six months ended June 30, 2026. The Bank recognized net charge-offs of $169,000 and $197,000 for the six months ended June 30, 2026 and 2025, respectively. Noninterest income increased $387,000 for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025. The increase is primarily due to the Company recognizing a $270,000 gain on equity securities during the six months ended June 30, 2026 compared to a loss of $23,000 during the same period in 2025. In addition, the Company recognized increases of $70,000 and $53,000 in ATM and debit card fee income and service charges on deposit accounts, respectively, when comparing the two periods. These increases were partially offset by the Company recognizing a $92,000 loss on sale of available for sale securities for the six months ended June 30, 2026 compared to a loss of $55,000 for the same period in 2025. The loss on sale of available for sale securities during the six months ended June 30, 2026 was a result of management’s decision to sell $18.7 million of available for sale securities to better position the Company’s investment portfolio for increased future yields. Noninterest expenses increased $931,000 for the six months ended June 30, 2026 as compared to the same period in 2025. This was primarily due to increases in compensation and benefits, other expenses, professional services, and advertising expenses of $470,000, $178,000, $166,000 and $82,000, respectively, when comparing the two periods. The increase in compensation and benefits is due to increases in salary and wages associated with annual cost of living and performance related adjustments as well as increases in the cost of Company-provided health insurance benefits. The increase in other expenses is primarily due to an increase in consumer fraud losses and increased support of the Company’s local communities through sponsorships and donations during the six months ended June 30, 2026 as compared to the same period in 2025. The increase in professional services is due to increased consulting fees. The increase in advertising expenses is related to various new marketing campaigns undertaken during the six months ended June 30, 2026 as compared to the same period in 2025. Income tax expense increased $755,000 for the six months ended June 30, 2026 as compared to the same period in 2025 resulting in an effective tax rate of 20.0% for the six months ended June 30, 2026, compared to 17.9% for the same period in 2025. The increase in the Company’s effective tax rate for the six months ended June 30, 2026 reflects a higher proportion of net income being subject to taxation compared to the same period last year. Total assets were $1.29 billion at June 30, 2026 compared to $1.27 billion at December 31, 2025. Net loans receivable and cash and cash equivalents increased $14.0 million and $12.5 million, respectively, from December 31, 2025 to June 30, 2026. These increases were partially offset by a decrease of $10.3 million in available for sale securities when comparing the two periods. Deposits increased $13.7 million from $1.12 billion at December 31, 2025 to $1.14 billion at June 30, 2026. Nonperforming assets (consisting of nonaccrual loans, accruing loans 90 days or more past due, and foreclosed real estate) increased from $4.4 million at December 31, 2025 to $4.9 million at June 30, 2026.