Part I - Financial Information [Item 1. Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) The company presents its unaudited consolidated financial statements, reflecting its financial position and performance [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Total assets grew 14.6% to $948.2 million, driven by significant increases in cash and deposits Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2020 | Dec 31, 2019 | Change | Change (%) | | :--- | :--- | :--- | :--- | :--- | | **Total Assets** | **$948,166** | **$827,496** | **$120,670** | **14.6%** | | Cash and cash equivalents | $134,211 | $51,360 | $82,851 | 161.3% | | Securities available for sale | $264,034 | $254,562 | $9,472 | 3.7% | | Loans, net | $492,128 | $466,494 | $25,634 | 5.5% | | **Total Liabilities** | **$840,076** | **$728,548** | **$111,528** | **15.3%** | | Total deposits | $833,399 | $722,177 | $111,222 | 15.4% | | **Total Equity** | **$108,090** | **$98,948** | **$9,142** | **9.2%** | [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) Net income declined to $7.3 million for the nine-month period due to lower net interest income Key Performance Indicators (in thousands, except per share data) | Metric | Nine Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2019 | Three Months Ended Sep 30, 2020 | Three Months Ended Sep 30, 2019 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $21,045 | $22,647 | $6,869 | $7,717 | | Provision for loan losses | $1,576 | $975 | $400 | $225 | | Noninterest Income | $6,392 | $5,106 | $2,616 | $1,833 | | **Net Income Attributable to First Capital, Inc.** | **$7,278** | **$7,922** | **$2,746** | **$2,915** | | **Diluted EPS** | **$2.17** | **$2.37** | **$0.82** | **$0.87** | - Gain on sale of loans increased significantly to **$2.03 million** for the nine months ended Sep 30, 2020, compared to $771,000 in the prior-year period[12](index=12&type=chunk) [Consolidated Statements of Comprehensive Income](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Comprehensive income was $11.4 million, influenced by unrealized gains on available-for-sale securities Comprehensive Income (in thousands) | Metric | Nine Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2019 | | :--- | :--- | :--- | | Net Income | $7,288 | $7,932 | | Other Comprehensive Income, net of tax | $4,158 | $5,368 | | **Comprehensive Income Attributable to First Capital, Inc.** | **$11,436** | **$13,290** | [Consolidated Statements of Changes in Stockholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) Stockholders' equity grew to $108.1 million, driven by net income and OCI, net of dividend payments - Key changes in equity for the nine months ended September 30, 2020 include: **Net Income of $7.3 million**, **Other Comprehensive Income of $4.2 million**, and **Cash Dividends of $2.4 million**[17](index=17&type=chunk) [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Cash increased by $82.9 million, primarily fueled by a significant inflow from financing activities Cash Flow Summary (in thousands) | Activity | Nine Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2019 | | :--- | :--- | :--- | | Net Cash Provided By Operating Activities | $9,151 | $8,149 | | Net Cash Used In Investing Activities | ($34,929) | ($21,103) | | Net Cash Provided By Financing Activities | $108,629 | $15,300 | | **Net Increase in Cash and Cash Equivalents** | **$82,851** | **$2,346** | [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail accounting policies, the impact of COVID-19, and the delayed adoption of the CECL standard - The company is a financial holding company for First Harrison Bank and the financial statements include all normal, recurring adjustments[22](index=22&type=chunk)[23](index=23&type=chunk) - Due to the COVID-19 pandemic, the company has implemented loan modifications and participated in the **Paycheck Protection Program (PPP)**, originating approximately **$45.9 million** in PPP loans[30](index=30&type=chunk)[31](index=31&type=chunk) - As of September 30, 2020, the bank had approved payment extensions on **$68.1 million** of loans due to COVID-19, of which **$58.1 million** had resumed normal payments[110](index=110&type=chunk) - The company has **delayed the adoption of the Current Expected Credit Loss (CECL) methodology** to fiscal years beginning after December 15, 2022[167](index=167&type=chunk)[168](index=168&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=45&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management provides context on financial results, focusing on COVID-19 impacts and balance sheet changes [COVID-19 Update](index=45&type=section&id=COVID-19%20Update) The company details its operational and financial responses to the pandemic, including PPP loan activity - The bank approved payment extensions on approximately **$68.1 million** of loans, with **$58.1 million** of this total having resumed normal payments by September 30, 2020[182](index=182&type=chunk) - The bank was an active participant in the **Paycheck Protection Program (PPP)**, disbursing approximately **$45.9 million** in loans to its customers[183](index=183&type=chunk) - Commercial loan exposure to the hard-hit hotel and restaurant industries was approximately **$12.1 million** and **$5.2 million**, respectively[184](index=184&type=chunk) [Financial Condition](index=46&type=section&id=Financial%20Condition) Asset growth was driven by a surge in deposits, which increased cash reserves and funded PPP loans - Total assets increased by **$120.7 million (14.6%)** to **$948.2 million** at September 30, 2020[186](index=186&type=chunk) - The increase in commercial business loans was primarily due to participation in the PPP, with balances of such loans totaling **$45.9 million**[188](index=188&type=chunk) - Total deposits increased by **$111.2 million**, with significant growth in noninterest-bearing demand deposits (**$48.9 million**) and interest-bearing demand deposits (**$37.5 million**)[191](index=191&type=chunk) [Results of Operations](index=46&type=section&id=Results%20of%20Operations) Net income declined due to lower net interest income and higher loan loss provisions from COVID-19 Net Income Comparison (in millions) | Period | 2020 | 2019 | Change | | :--- | :--- | :--- | :--- | | Nine Months Ended Sep 30 | $7.3 | $7.9 | ($0.6) | | Three Months Ended Sep 30 | $2.7 | $2.9 | ($0.2) | - Net interest income decreased by **$1.6 million** for the nine-month period due to a decline in the tax-equivalent yield on interest-earning assets from **4.30%** in 2019 to **3.68%** in 2020[197](index=197&type=chunk)[198](index=198&type=chunk) - The provision for loan losses increased to **$1.6 million** for the nine months of 2020 from $975,000 in the prior year, due to COVID-19 uncertainties[204](index=204&type=chunk) - Noninterest income for the nine-month period increased by **$1.3 million**, driven by higher gains on loans sold, including a **$214,000** gain on the sale of the bank's credit card portfolio[209](index=209&type=chunk) [Liquidity and Capital Resources](index=49&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains a strong liquidity position and is well-capitalized under the CBLR framework - The Bank has opted into the **Community Bank Leverage Ratio (CBLR) framework** and its CBLR was **9.53%** as of September 30, 2020, exceeding the 8% minimum[220](index=220&type=chunk) - The Bank was considered **'well-capitalized'** under applicable regulatory guidelines as of September 30, 2020[220](index=220&type=chunk) - The parent company's primary source of income is dividends from the Bank, and it held **$3.0 million** in liquid assets at September 30, 2020[219](index=219&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=50&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate risk, managed via NII and EVE sensitivity models Net Interest Income (NII) Sensitivity Analysis (as of Sep 30, 2020) | Immediate Rate Change | One Year Dollar Change (thousands) | One Year Percent Change | | :--- | :--- | :--- | | +300bp | $1,843 | 7.10% | | +200bp | $2,239 | 8.62% | | +100bp | $1,121 | 4.32% | | -100bp | ($615) | (2.37)% | Economic Value of Equity (EVE) Sensitivity Analysis (as of Sep 30, 2020) | Immediate Rate Change | Dollar Change (thousands) | Percent Change | | :--- | :--- | :--- | | +300bp | $58,898 | 48.98% | | +200bp | $43,072 | 35.82% | | +100bp | $23,791 | 19.78% | | -100bp | ($17,153) | (14.26)% | - The company **does not maintain a trading account**, engage in hedging activities, or purchase high-risk derivative instruments[228](index=228&type=chunk) [Item 4. Controls and Procedures](index=52&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective with no material changes - The principal executive officer and principal financial officer concluded that the Company's **disclosure controls and procedures were effective**[242](index=242&type=chunk) - **No material changes** in internal control over financial reporting occurred during the quarter ended September 30, 2020[243](index=243&type=chunk) Part II - Other Information [Item 1. Legal Proceedings](index=53&type=section&id=Item%201.%20Legal%20Proceedings) The company reported no material pending legal proceedings during the period - **None**[245](index=245&type=chunk) [Item 1A. Risk Factors](index=53&type=section&id=Item%201A.%20Risk%20Factors) Risk factors are updated to include significant uncertainties related to the COVID-19 pandemic and PPP - The **COVID-19 pandemic poses a significant risk**, with potential adverse effects on business operations, financial condition, and borrower credit quality[247](index=247&type=chunk)[249](index=249&type=chunk) - Participation in the **Paycheck Protection Program (PPP) exposes the company to credit, compliance, and litigation risks**, including denial of the SBA guaranty[254](index=254&type=chunk)[256](index=256&type=chunk) - The company faces **potential litigation from PPP loan applicants** regarding processing policies and fees, which could result in financial liability[258](index=258&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=54&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased 1,911 shares of common stock under its authorized buyback program - During the quarter, the company purchased **1,911 shares** under its stock repurchase program at an average price of **$70.09 per share**[259](index=259&type=chunk) - The maximum number of shares that may still be purchased under the plan is **139,228**[259](index=259&type=chunk) [Item 6. Exhibits](index=55&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the report, including CEO/CFO certifications and XBRL data - Exhibits filed include **CEO and CFO certifications** pursuant to Rule 13a-14(a)/15d-14(a) and Section 1350[262](index=262&type=chunk) - The filing includes **Inline XBRL documents** for interactive data submission[262](index=262&type=chunk)

Part I Financial Information [Item 1. Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) This section presents First Capital, Inc.'s unaudited consolidated financial statements and notes for periods ending June 30, 2020, and December 31, 2019 [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) The consolidated balance sheets provide a snapshot of the Company's financial position, detailing assets, liabilities, and equity, with total assets increasing by 11.1% | Metric | June 30, 2020 (In thousands) | December 31, 2019 (In thousands) | | :----------------------------------- | :--------------------------- | :----------------------------- | | Total Assets | $919,618 | $827,496 | | Total Liabilities | $813,640 | $728,548 | | Total Equity | $105,978 | $98,948 | | Cash and cash equivalents | $106,421 | $51,360 | | Loans, net | $498,792 | $466,494 | | Total deposits | $807,636 | $722,177 | - Total assets increased by **$92.1 million (11.1%)** from December 31, 2019, to June 30, 2020[7](index=7&type=chunk)[179](index=179&type=chunk) - Net loans receivable increased by **$32.3 million**, primarily due to a **$45.1 million** increase in PPP loans[7](index=7&type=chunk)[68](index=68&type=chunk)[180](index=180&type=chunk) - Total deposits increased by **$85.5 million**, driven by increases in noninterest-bearing demand deposits, interest-bearing demand deposits, and savings accounts, influenced by stimulus funds and decreased consumer spending[7](index=7&type=chunk)[184](index=184&type=chunk) [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) Net income decreased for both the three and six months ended June 30, 2020, primarily due to a higher provision for loan losses | Metric | Three Months Ended June 30, 2020 (In thousands) | Three Months Ended June 30, 2019 (In thousands) | Six Months Ended June 30, 2020 (In thousands) | Six Months Ended June 30, 2019 (In thousands) | | :-------------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | :------------------------------------------ | :------------------------------------------ | | Total interest income | $7,374 | $8,219 | $15,048 | $15,877 | | Total interest expense | $404 | $491 | $872 | $947 | | Net interest income | $6,970 | $7,728 | $14,176 | $14,930 | | Provision for loan losses | $825 | $300 | $1,176 | $750 | | Net interest income after provision for loan losses | $6,145 | $7,428 | $13,000 | $14,180 | | Total noninterest income | $2,320 | $1,768 | $3,776 | $3,273 | | Total noninterest expense | $5,618 | $5,764 | $11,443 | $11,429 | | Income before income taxes | $2,847 | $3,432 | $5,333 | $6,024 | | Income tax expense | $405 | $568 | $794 | $1,010 | | Net Income Attributable to First Capital, Inc. | $2,438 | $2,860 | $4,532 | $5,007 | | Basic Earnings per common share | $0.73 | $0.86 | $1.36 | $1.50 | | Diluted Earnings per common share | $0.73 | $0.86 | $1.35 | $1.50 | - Net income attributable to the Company decreased by **$422,000** for the three months ended June 30, 2020, and by **$475,000** for the six months ended June 30, 2020, compared to the respective prior year periods[10](index=10&type=chunk)[186](index=186&type=chunk)[187](index=187&type=chunk) - The provision for loan losses significantly increased to **$825,000** for the three months and **$1.2 million** for the six months ended June 30, 2020, primarily due to economic uncertainties related to COVID-19[10](index=10&type=chunk)[195](index=195&type=chunk)[196](index=196&type=chunk) - Noninterest income increased by **$552,000** for the three months and **$503,000** for the six months ended June 30, 2020, driven by gains on loan sales and ATM/debit card fees[10](index=10&type=chunk)[201](index=201&type=chunk)[202](index=202&type=chunk) [Consolidated Statements of Comprehensive Income](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Comprehensive income attributable to First Capital, Inc. increased for the six months ended June 30, 2020, despite lower net income, due to higher other comprehensive income | Metric | Three Months Ended June 30, 2020 (In thousands) | Three Months Ended June 30, 2019 (In thousands) | Six Months Ended June 30, 2020 (In thousands) | Six Months Ended June 30, 2019 (In thousands) | | :--------------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | :------------------------------------------ | :------------------------------------------ | | Net Income | $2,442 | $2,864 | $4,539 | $5,014 | | Other Comprehensive Income, net of tax | $1,362 | $3,100 | $3,943 | $4,939 | | Comprehensive Income Attributable to First Capital, Inc. | $3,800 | $5,960 | $8,475 | $9,946 | - Unrealized holding gains on securities available for sale, net of tax, were **$1.36 million** for the three months and **$3.94 million** for the six months ended June 30, 2020[13](index=13&type=chunk)[14](index=14&type=chunk) [Consolidated Statements of Changes in Stockholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) This statement details equity movements for the six months ended June 30, 2020 and 2019, including net income, other comprehensive income, and dividends | Metric | Balances at January 1, 2020 (In thousands) | Net Income (In thousands) | Other Comprehensive Income (In thousands) | Cash Dividends (In thousands) | Restricted Stock Grants (In thousands) | Stock Compensation Expense (In thousands) | Purchase of Treasury Shares (In thousands) | Balances at June 30, 2020 (In thousands) | | :------------------------------------ | :--------------------------------------- | :------------------------ | :---------------------------------------- | :---------------------------- | :------------------------------------- | :---------------------------------------- | :----------------------------------------- | :--------------------------------------- | | Common Stock | $38 | - | - | - | - | - | - | $38 | | Additional Paid-in Capital | $40,723 | - | - | - | $961 | - | - | $41,684 | | Retained Earnings | $65,266 | $4,532 | - | $(1,621) | - | - | - | $68,177 | | Accumulated Other Comprehensive Income | $2,142 | - | $3,943 | - | - | - | - | $6,085 | | Unearned Stock Compensation | $(940) | - | - | - | $(961) | $197 | - | $(1,704) | | Treasury Stock | $(8,393) | - | - | - | - | - | $(14) | $(8,407) | | Noncontrolling Interest | $112 | $7 | - | $(14) | - | - | - | $105 | | Total | $98,948 | $4,539 | $3,943 | $(1,635) | - | $197 | $(14) | $105,978 | - Total stockholders' equity attributable to the Company increased from **$98.8 million** at December 31, 2019, to **$105.9 million** at June 30, 2020[7](index=7&type=chunk)[185](index=185&type=chunk) - This increase was primarily due to a **$3.9 million** increase in the net unrealized gain on available-for-sale securities and a **$2.9 million** increase in retained net income[185](index=185&type=chunk) [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities decreased, while net cash used in investing activities increased, and net cash provided by financing activities substantially increased | Metric | Six Months Ended June 30, 2020 (In thousands) | Six Months Ended June 30, 2019 (In thousands) | | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | | Net Cash Provided By Operating Activities | $4,242 | $6,099 | | Net Cash Used In Investing Activities | $(32,991) | $(18,069) | | Net Cash Provided By Financing Activities | $83,810 | $31,384 | | Net Increase in Cash and Cash Equivalents | $55,061 | $19,414 | | Cash and Cash Equivalents at End of Period | $106,421 | $60,526 | - Net cash provided by operating activities decreased from **$6.1 million** in 2019 to **$4.2 million** in 2020[18](index=18&type=chunk) - Net cash used in investing activities increased significantly from **$18.1 million** in 2019 to **$33.0 million** in 2020, primarily due to increased purchases of securities available for sale and net increase in loans receivable[18](index=18&type=chunk)[19](index=19&type=chunk) - Net cash provided by financing activities more than doubled, from **$31.4 million** in 2019 to **$83.8 million** in 2020, largely driven by an **$85.5 million** net increase in deposits[19](index=19&type=chunk) [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements%20(unaudited)) These notes provide detailed explanations and disclosures supporting the consolidated financial statements, offering crucial context for understanding the reported financial figures [1. Presentation of Interim Information](index=8&type=section&id=1.%20Presentation%20of%20Interim%20Information) This note outlines the Company's structure, interim financial statement presentation, and the significant impact of the COVID-19 pandemic and PPP loans - First Capital, Inc. is the financial holding company for First Harrison Bank and its subsidiaries[20](index=20&type=chunk) - The unaudited interim financial statements include all necessary adjustments and are prepared in accordance with GAAP for interim reporting[21](index=21&type=chunk)[22](index=22&type=chunk) - The COVID-19 pandemic has led to significant declines in market interest rates and may adversely affect future financial conditions and results, particularly regarding expected credit losses on loans[24](index=24&type=chunk)[27](index=27&type=chunk) - The Bank originated approximately **$45.5 million** in PPP loans through July 16, 2020, with net deferred loan fees of **$1.5 million** at June 30, 2020, expected to positively impact financial results[29](index=29&type=chunk) [2. Investment Securities](index=11&type=section&id=2.%20Investment%20Securities) This note details the Company's investment securities portfolio, including available-for-sale debt and equity securities, and their fair values and unrealized gains/losses | Investment Category | June 30, 2020 (Fair Value, In thousands) | December 31, 2019 (Fair Value, In thousands) | | :------------------------------------ | :--------------------------------------- | :----------------------------------------- | | Agency mortgage-backed securities | $69,876 | $69,498 | | Agency CMO | $35,191 | $43,084 | | Agency notes and bonds | $58,247 | $64,556 | | Municipal obligations | $93,785 | $77,424 | | Total securities available for sale | $257,099 | $254,562 | | Equity securities | $1,575 | $1,746 | | Metric | June 30, 2020 (In thousands) | December 31, 2019 (In thousands) | | :------------------------------------ | :--------------------------- | :----------------------------- | | Gross Unrealized Gains (AFS) | $7,950 | $3,644 | | Gross Unrealized Losses (AFS) | $82 | $901 | - The Company recognized an unrealized gain of **$223,000** for the three months ended June 30, 2020, and an unrealized loss of **$171,000** for the six months ended June 30, 2020, on its equity investment[45](index=45&type=chunk) - No sales of investment securities or time deposits occurred during the three and six months ended June 30, 2020[43](index=43&type=chunk) [3. Loans and Allowance for Loan Losses](index=14&type=section&id=3.%20Loans%20and%20Allowance%20for%20Loan%20Losses) This note details the loan portfolio, loan loss policies, and allowance for loan losses, highlighting COVID-19's impact and PPP loan increases | Loan Category | June 30, 2020 (In thousands) | December 31, 2019 (In thousands) | | :------------------------------------ | :--------------------------- | :----------------------------- | | Residential mortgage loans | $128,754 | $131,959 | | Commercial real estate | $129,321 | $121,563 | | Commercial business loans | $77,515 | $45,307 | | Home equity and second mortgage loans | $53,243 | $54,677 | | Total Gross Loans | $522,421 | $493,499 | | Allowance for loan losses | $(6,064) | $(5,061) | | Loans, net | $498,792 | $466,494 | - Commercial business loans increased significantly, primarily due to **$45.1 million** in PPP loans guaranteed by the SBA[68](index=68&type=chunk) | Metric | June 30, 2020 (In thousands) | December 31, 2019 (In thousands) | | :------------------------------------ | :--------------------------- | :----------------------------- | | Allowance for loan losses | $6,064 | $5,061 | | Provision for loan losses (6 months) | $1,176 | $750 | | Net charge-offs (6 months) | $173 | $206 | - The allowance for loan losses increased by **$1.0 million**, with increases to qualitative factors largely related to economic uncertainties surrounding COVID-19[75](index=75&type=chunk)[80](index=80&type=chunk) | Nonperforming Loans | June 30, 2020 (In thousands) | December 31, 2019 (In thousands) | | :------------------------------------ | :--------------------------- | :----------------------------- | | Nonaccrual Loans | $2,336 | $1,765 | | Loans 90+ Days Past Due Still Accruing | $16 | $13 | | Total Nonperforming Loans | $2,352 | $1,778 | - The Bank approved payment extensions on **$68.1 million** of loans due to COVID-19, with **$33.2 million** having resumed normal payments by June 30, 2020[106](index=106&type=chunk) [4. Qualified Affordable Housing Project Investment](index=32&type=section&id=4.%20Qualified%20Affordable%20Housing%20Project%20Investment) This note details the Bank's investment in affordable housing projects, including balances, unfunded commitments, amortization expense, and tax credits | Metric | June 30, 2020 (In thousands) | December 31, 2019 (In thousands) | | :------------------------------------ | :--------------------------- | :----------------------------- | | Investment balance | $3,100 | $3,200 | | Unfunded commitment | $1,100 | $1,900 | | Metric | Six Months Ended June 30, 2020 (In thousands) | Six Months Ended June 30, 2019 (In thousands) | | :------------------------------------ | :------------------------------------------ | :------------------------------------------ | | Amortization expense | $182 | $169 | | Tax credits and other tax benefits | $220 | $248 | [5. Supplemental Disclosure for Earnings Per Share](index=33&type=section&id=5.%20Supplemental%20Disclosure%20for%20Earnings%20Per%20Share) This note provides a breakdown of basic and diluted earnings per share calculations, including net income and weighted average common shares outstanding | Metric | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :--------------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income attributable to First Capital, Inc. (In thousands) | $2,438 | $2,860 | $4,532 | $5,007 | | Basic EPS | $0.73 | $0.86 | $1.36 | $1.50 | | Diluted EPS | $0.73 | $0.86 | $1.35 | $1.50 | | Weighted average common shares outstanding (Basic) | 3,336,573 | 3,329,837 | 3,336,516 | 3,329,840 | | Weighted average common shares outstanding (Diluted) | 3,347,871 | 3,341,813 | 3,349,079 | 3,340,950 | [6. Stock-Based Compensation Plan](index=33&type=section&id=6.%20Stock-Based%20Compensation%20Plan) This note describes the Company's equity incentive plans, including shares available for issuance, restricted stock grants, and recognized compensation expense - The 2009 Equity Incentive Plan terminated on May 20, 2019, and the 2019 Equity Incentive Plan was adopted on May 22, 2019, with **176,150 shares** available for issuance[120](index=120&type=chunk)[123](index=123&type=chunk) - As of June 30, 2020, **161,900 shares** were available for issuance under the 2019 Plan[124](index=124&type=chunk) - The Company granted **14,250 restricted stock shares** on February 18, 2020, under the 2019 Plan, with a total value of **$961,000**, vesting ratably through July 1, 2025[126](index=126&type=chunk) | Metric | Three Months Ended June 30, 2020 (In thousands) | Six Months Ended June 30, 2020 (In thousands) | | :------------------------------------ | :-------------------------------------------- | :------------------------------------------ | | Stock compensation expense | $104 | $197 | - At June 30, 2020, there was **$1.7 million** of unrecognized compensation expense related to nonvested restricted shares, expected to be recognized over a weighted average period of **3.8 years**[130](index=130&type=chunk) [7. Supplemental Disclosures of Cash Flow Information](index=35&type=section&id=7.%20Supplemental%20Disclosures%20of%20Cash%20Flow%20Information) This note provides additional details on cash payments for interest and taxes, and noncash investing activities like transfers from loans to foreclosed real estate | Metric | Six Months Ended June 30, 2020 (In thousands) | Six Months Ended June 30, 2019 (In thousands) | | :------------------------------------ | :------------------------------------------ | :------------------------------------------ | | Cash payments for interest | $895 | $926 | | Cash payments for taxes (net of refunds) | $0 | $642 | | Transfers from loans to real estate acquired through foreclosure | $58 | $206 | [8. Fair Value Measurements](index=35&type=section&id=8.%20Fair%20Value%20Measurements) This note details the Company's fair value measurements for financial and nonfinancial assets, categorizing them by input observability and describing valuation methodologies - The Company uses a fair value hierarchy (Level 1, 2, 3) to prioritize inputs to valuation techniques[132](index=132&type=chunk)[134](index=134&type=chunk)[135](index=135&type=chunk) | Asset Category | June 30, 2020 (Total Fair Value, In thousands) | December 31, 2019 (Total Fair Value, In thousands) | | :------------------------------------ | :--------------------------------------- | :----------------------------------------- | | Securities available for sale | $257,099 | $254,562 | | Equity securities | $1,575 | $1,746 | | Impaired loans | $3,763 | $2,731 | | Loans held for sale | $7,211 | $4,176 | | Foreclosed real estate | $58 | $170 | - All impaired loans and foreclosed real estate are classified as Level 3, with significant unobservable inputs including discounts from appraised value for market conditions, collateral condition, and estimated selling costs[143](index=143&type=chunk)[144](index=144&type=chunk)[147](index=147&type=chunk)[149](index=149&type=chunk)[150](index=150&type=chunk) - The weighted average discount for impaired loans increased from **47%** at December 31, 2019, to **91%** at June 30, 2020, reflecting changes in market conditions and collateral assessment[147](index=147&type=chunk) [9. Revenue from Contracts with Customers](index=42&type=section&id=9.%20Revenue%20from%20Contracts%20with%20Customers) This note details the Company's noninterest income from customer contracts, categorized by source and explaining the timing of revenue recognition | Revenue Source | Three Months Ended June 30, 2020 (In thousands) | Three Months Ended June 30, 2019 (In thousands) | Six Months Ended June 30, 2020 (In thousands) | Six Months Ended June 30, 2019 (In thousands) | | :------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | :------------------------------------------ | :------------------------------------------ | | Service charges on deposit accounts | $322 | $516 | $828 | $977 | | ATM and debit card fees | $876 | $729 | $1,641 | $1,376 | | Investment advisory income | $79 | $146 | $192 | $244 | | Other (from contracts) | $30 | $33 | $64 | $67 | | Total Revenue from contracts with customers | $1,307 | $1,424 | $2,725 | $2,664 | - ATM and debit card fees increased significantly, while service charges on deposit accounts decreased for both the three and six-month periods[156](index=156&type=chunk) - Revenue recognition varies by service: transaction-based fees are recognized at execution, account maintenance fees over time, and interchange fees daily[156](index=156&type=chunk)[157](index=157&type=chunk)[158](index=158&type=chunk) [10. Recent Accounting Pronouncements](index=43&type=section&id=10.%20Recent%20Accounting%20Pronouncements) This note discusses recently issued or adopted accounting pronouncements, specifically CECL and fair value measurement disclosures, and their impact on the Company - ASU No. 2016-13 (CECL) replaces the incurred loss methodology with an expected credit loss methodology[162](index=162&type=chunk) - The effective date for CECL for smaller reporting companies like First Capital, Inc. has been delayed to fiscal years beginning after December 15, 2022, and the Company does not intend to early adopt[163](index=163&type=chunk) - The adoption of ASU No. 2018-13, which modifies fair value measurement disclosure requirements, effective January 1, 2020, did not have a material impact on the Company's financial position or results of operations[166](index=166&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=45&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial performance and condition, including the impact of COVID-19 on assets, liabilities, and income drivers - The COVID-19 pandemic has significantly impacted operations, leading to updated branch procedures, expanded remote work, and assistance programs for customers, including payment extensions on **$68.1 million** of loans[172](index=172&type=chunk)[174](index=174&type=chunk)[175](index=175&type=chunk) - The Bank actively participated in the PPP, disbursing approximately **$45.5 million** in loans by July 16, 2020[176](index=176&type=chunk) - Total assets increased by **11.1%** to **$919.6 million** at June 30, 2020, primarily due to increases in cash and cash equivalents (**$55.1 million**) and net loans receivable (**$32.3 million**)[179](index=179&type=chunk)[180](index=180&type=chunk)[183](index=183&type=chunk) - Total deposits increased by **$85.4 million** to **$807.6 million**, driven by noninterest-bearing and interest-bearing demand deposits, influenced by stimulus funds and decreased consumer spending[184](index=184&type=chunk) - Net income attributable to the Company decreased for both the three and six months ended June 30, 2020, primarily due to a decrease in net interest income after provision for loan losses, partially offset by increased noninterest income[186](index=186&type=chunk)[187](index=187&type=chunk) - Net interest income decreased due to a decline in the interest rate spread, despite an increase in interest-earning assets, largely influenced by lower market rates and the origination of low-interest PPP loans[188](index=188&type=chunk)[190](index=190&type=chunk)[192](index=192&type=chunk)[193](index=193&type=chunk)[194](index=194&type=chunk) - The provision for loan losses increased significantly due to economic uncertainties surrounding COVID-19, despite a decrease in net charge-offs[195](index=195&type=chunk)[196](index=196&type=chunk) - Noninterest income increased, driven by gains on loan sales and ATM/debit card fees, partially offset by a decrease in service charges on deposit accounts[201](index=201&type=chunk)[202](index=202&type=chunk) - Income tax expense decreased, with the effective tax rate falling to **14.9%** for the six months and **14.2%** for the three months ended June 30, 2020, due to lower taxable income and increased nontaxable income[206](index=206&type=chunk) - The Bank opted into the Community Bank Leverage Ratio (CBLR) framework as of June 30, 2020, with a CBLR of **9.66%**, classifying it as 'well-capitalized' under regulatory guidelines[212](index=212&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=50&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section addresses the Company's exposure to interest rate risk and its management strategies, presenting quantitative analyses of NII at Risk and EVE sensitivity - Market risk is defined as the risk of declining fair value of assets and liabilities or reduced net income due to changes in interest rates or financial market volatility[217](index=217&type=chunk) - The Company manages interest rate risk by attempting to manage the mismatch between asset and liability maturities and interest rates, emphasizing short-term commercial and consumer loans, and relying on stable retail deposits[218](index=218&type=chunk) - The Company does not maintain a trading account, engage in hedging activities, purchase high-risk derivative instruments, or is subject to foreign currency or commodity price risk[219](index=219&type=chunk) Simulated Net Interest Income at Risk (One-Year Horizon) | Immediate Change in Interest Rates | June 30, 2020 (Dollar Change, In thousands) | June 30, 2020 (Percent Change) | December 31, 2019 (Dollar Change, In thousands) | December 31, 2019 (Percent Change) | | :--------------------------------- | :------------------------------------------ | :----------------------------- | :-------------------------------------------- | :--------------------------------- | | +300bp | $1,746 | 6.56% | $3,438 | 11.59% | | +200bp | $2,140 | 8.03% | $2,392 | 8.07% | | +100bp | $1,071 | 4.02% | $1,289 | 4.35% | | (100)bp | $(559) | (2.10)% | $(1,562) | (5.27)% | - NII at Risk simulations project that an immediate and sustained increase in rates would increase net interest income, while a **100bp** decrease would decrease it[224](index=224&type=chunk) Simulated Economic Value of Equity (EVE) Sensitivity | Immediate Change in Interest Rates | June 30, 2020 (Dollar Change, In thousands) | June 30, 2020 (Percent Change) | December 31, 2019 (Dollar Change, In thousands) | December 31, 2019 (Percent Change) | | :--------------------------------- | :------------------------------------------ | :----------------------------- | :-------------------------------------------- | :--------------------------------- | | +300bp | $52,034 | 43.84% | $56,973 | 38.81% | | +200bp | $44,094 | 37.15% | $40,896 | 27.86% | | +100bp | $23,451 | 19.76% | $21,902 | 14.92% | | (100)bp | $(21,303) | (17.95)% | $(23,704) | (16.15)% | - EVE simulations indicate an expected increase in EVE with rising interest rates and a decrease with falling rates[229](index=229&type=chunk) [Item 4. Controls and Procedures](index=53&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of the Company's disclosure controls and procedures and reports no material changes to internal control over financial reporting - The Company's disclosure controls and procedures were evaluated and deemed effective as of June 30, 2020[233](index=233&type=chunk) - No material changes to internal control over financial reporting occurred during the quarter ended June 30, 2020[234](index=234&type=chunk) Part II Other Information [Item 1. Legal Proceedings](index=54&type=section&id=Item%201.%20Legal%20Proceedings) This section states that there are no legal proceedings to report for the Company - The Company has no legal proceedings to disclose[236](index=236&type=chunk) [Item 1A. Risk Factors](index=54&type=section&id=Item%201A.%20Risk%20Factors) This section supplements previously disclosed risk factors, focusing on the adverse and uncertain impacts of the COVID-19 pandemic on business and financial results - The COVID-19 pandemic poses significant risks, including adverse effects on business, operations, and financial results, with ultimate impacts being highly uncertain and unpredictable[238](index=238&type=chunk)[240](index=240&type=chunk)[243](index=243&type=chunk) - Key uncertainties include the pandemic's duration, lifting of restrictions, changes in customer and business behavior, and potential impacts on collateral values, borrower credit quality, and loan repayment ability[241](index=241&type=chunk) - Market interest rates have significantly declined due to the COVID-19 pandemic, with the Federal Open Market Committee reducing the federal funds rate to **0% to 0.25%** in March 2020[239](index=239&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=55&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports on the Company's stock repurchase program, detailing shares purchased during the quarter and remaining authorization - The board of directors authorized the repurchase of up to **240,467 shares** of common stock[244](index=244&type=chunk) - During the quarter ended June 30, 2020, **211 shares** were purchased under the program at an average price of **$63.21 per share**[244](index=244&type=chunk) - A maximum of **141,139 shares** may yet be purchased under the plan[244](index=244&type=chunk) [Item 3. Defaults upon Senior Securities](index=55&type=section&id=Item%203.%20Defaults%20upon%20Senior%20Securities) This section indicates that there are no defaults upon senior securities to report - Not applicable; no defaults upon senior securities[245](index=245&type=chunk) [Item 4. Mine Safety Disclosures](index=55&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section states that mine safety disclosures are not applicable to the Company - Not applicable; no mine safety disclosures[246](index=246&type=chunk) [Item 5. Other Information](index=55&type=section&id=Item%205.%20Other%20Information) This section indicates that there is no other information to report - No other information to disclose[247](index=247&type=chunk) [Item 6. Exhibits](index=56&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including organizational documents, certifications, and XBRL-related documents - The exhibits include organizational documents (Articles of Incorporation, Bylaws), certifications (CEO, CFO), and XBRL interactive data files[250](index=250&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q (Mark One) (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2020 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from_____________________ to__________________ Commission File No. 0-25023 First Capital, Inc. (Exact name of registrant as specified in its charter) | --- | --- ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended December 31, 2019 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to __________ Commission File Number: 0-25023 FIRST CAPITAL, INC. (Exact name of registrant as specified in its charter) Indiana 35-2056949 (State or other juri ...

Financial Performance - Net income for the nine months ended September 30, 2019 was $7.9 million ($2.37 per diluted share), up from $6.8 million ($2.03 per diluted share) for the same period in 2018[198] - Net interest income increased by $2.5 million for the nine months ended September 30, 2019, primarily due to increases in interest-earning assets and the interest rate spread[200] - Noninterest income for the nine months ended September 30, 2019 increased by $146,000, driven by higher ATM and debit card fees[214] - Noninterest expense for the nine months ended September 30, 2019 rose by $1.2 million, mainly due to increases in compensation and benefit expenses[216] - Income tax expense for the nine-month period ended September 30, 2019 was $1.5 million, with an effective tax rate of 16.3%, up from 14.8% in the same period of 2018[218] Asset and Loan Growth - Total assets increased by $29.1 million, from $794.2 million at December 31, 2018 to $823.3 million at September 30, 2019, representing a growth of 3.7%[190] - Net loans receivable rose by $33.4 million, from $434.3 million at December 31, 2018 to $467.7 million at September 30, 2019, with notable increases in construction loans ($10.3 million) and commercial mortgage loans ($9.1 million)[191] - Total deposits increased from $701.6 million at December 31, 2018 to $719.4 million at September 30, 2019, with noninterest-bearing checking accounts growing by $12.4 million[196] - Cash and cash equivalents increased from $41.1 million at December 31, 2018 to $43.5 million at September 30, 2019, primarily due to excess liquidity from increased deposit balances[195] - As of September 30, 2019, the Company had liquid assets of $3.0 million[224] Capital and Risk Management - The Bank maintained Tier 1 capital ratios of 9.9%, 14.1%, 14.1%, and 14.9%, exceeding the regulatory requirements for being "well-capitalized"[225] - The allowance for loan losses was $4.7 million at September 30, 2019, compared to $4.1 million at December 31, 2018, with nonperforming loans decreasing to $1.8 million[213] - The Company's net interest income could increase by $3,658,000 (12.18%) with a 300 basis point increase in interest rates over a one-year horizon as of September 30, 2019[239] - The Economic Value of Equity (EVE) could increase by $58,898,000 (48.98%) with a 300 basis point increase in interest rates as of September 30, 2019[243] - The Company relies on retail deposits as its primary source of funds, which are considered more stable compared to brokered deposits[233] Internal Controls and Compliance - The Company's management concluded that its disclosure controls and procedures were effective as of the end of the reporting period[249] - There were no changes in the Company's internal control over financial reporting that materially affected its operations during the quarter ended September 30, 2019[250] - For the nine months ended September 30, 2019, the Company did not engage in any off-balance sheet transactions likely to materially affect its financial condition[229] - The Company has not engaged in trading or hedging activities, nor does it face foreign currency exchange rate risk[234] - The Company updated its interest rate risk model during the nine months ended September 30, 2019, reflecting market conditions more accurately[239]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q (Mark One) (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2019 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | --- | --- | |------------------------------------------------------------------------------|------------------------------------------------------| | For the transition period | from____ ...

Financial Performance - Net income for the three months ended March 31, 2019, was $2.1 million, unchanged from the same period in 2018, with net interest income increasing by $780,000[171]. - Total interest income increased by $894,000, with the average balance of interest-earning assets at $741.0 million and a tax-equivalent yield of 4.19% for the three months ended March 31, 2019[173]. - Noninterest income decreased by $21,000, with declines in gains on the sale of securities and loans offset by an unrealized gain on equity securities of $131,000[181]. - Noninterest expense increased by $411,000, driven by higher compensation and benefits, data processing expenses, and net losses on foreclosed real estate[182]. Asset and Deposit Growth - Total assets increased by $19.7 million, or 2.5%, from $794.2 million at December 31, 2018, to $813.9 million at March 31, 2019[164]. - Net loans receivable rose by $15.5 million, from $434.3 million to $449.8 million, with construction loans, residential mortgage loans, and commercial business loans increasing by $5.7 million, $5.1 million, and $3.8 million, respectively[164]. - Total deposits increased from $701.6 million to $718.5 million, with noninterest-bearing checking accounts, interest-bearing checking accounts, and savings accounts rising by $9.5 million, $5.9 million, and $2.5 million, respectively[169]. - Cash and cash equivalents increased from $41.1 million to $55.5 million, primarily due to excess liquidity from increased deposit balances[168]. Capital and Regulatory Compliance - The Bank maintained a Tier 1 capital ratio of 9.7% and was considered "well-capitalized" under regulatory guidelines as of March 31, 2019[190]. Interest Rate Sensitivity - As of March 31, 2019, a 300 basis point increase in interest rates could lead to a projected net interest income increase of $3,381,000, representing an 11.26% change compared to the base case scenario[204]. - The Economic Value of Equity (EVE) is projected to change by $43,010,000 (28.25% increase) with a 300 basis point increase in interest rates as of March 31, 2019[210]. - A 200 basis point increase in interest rates could result in a net interest income increase of $2,078,000, which is a 6.92% change from the base case scenario[204]. - The EVE is expected to decrease by $42,256,000 (27.76% decrease) with a 200 basis point decrease in interest rates[210]. - The company updated discount rates and betas on loans and deposits during the three months ended March 31, 2019, to better reflect market conditions[209]. - The EVE ratio is projected to be 25.27% with a 300 basis point increase in interest rates, indicating a significant sensitivity to interest rate changes[210]. - A static interest rate scenario would result in an EVE of $152,231,000, with no change in value[210]. - The company models various interest rate scenarios to assess overall sensitivity to market interest rate changes, acknowledging inherent limitations in the modeling approach[213]. - The company’s net interest income is sensitive to changes in market interest rates, with potential increases or decreases depending on the direction of the rate changes[205]. Internal Controls and Reporting - There have been no changes in the company's internal control over financial reporting that materially affected its effectiveness during the quarter ended March 31, 2019[216]. - The Company's management has evaluated the effectiveness of its disclosure controls and procedures, concluding they were effective as of the end of the reporting period[215]. - There have been no changes in the Company's internal control over financial reporting that materially affected its reporting during the quarter ended March 31, 2019[216].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended December 31, 2018 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to __________ Commission File Number: 0-25023 FIRST CAPITAL, INC. (Exact name of registrant as specified in its charter) Indiana 35-2056949 (State or other juri ...