First Capital(FCAP) - 2022 Q4 - Annual Report

Financial Performance - Net income attributable to the Company was $11.9 million, or $3.55 per diluted share for 2022, compared to $11.4 million, or $3.41 per diluted share for 2021[241]. - The total annual shareholder return for 2022 was -36.0%, compared to -31.4% for 2021[241]. - Net income attributable to the Company for 2022 was $11.9 million, or $3.55 per diluted share, compared to $11.4 million, or $3.41 per diluted share, in 2021, representing a 4.4% increase in net income[256]. Asset and Loan Growth - Total assets as of December 31, 2022, were $1,151,400,000, a slight decrease from $1,156,603,000 in 2021[249]. - Net loans increased to $557,958,000 in 2022 from $483,287,000 in 2021, reflecting a growth of 15.4%[249]. - Total outstanding loans increased by $75.3 million during 2022, contrasting with a decrease of $18.4 million in 2021[260]. - Net loans receivable increased from $483.3 million at December 31, 2021 to $558.0 million at December 31, 2022, with significant growth in residential mortgage loans, commercial real estate loans, commercial business loans, and construction loans[284]. Income and Expenses - Noninterest income for 2022 was $7,927,000, down from $9,551,000 in 2021, representing a decrease of 17%[249]. - Noninterest income decreased by $1.6 million to $7.9 million in 2022, primarily due to a decline in gains on the sale of loans[263]. - Noninterest expense increased by $557,000 to $25.1 million in 2022, mainly due to higher data processing and compensation expenses[264]. Efficiency and Ratios - The Company's efficiency ratio improved to 62.3% for 2022 from 64.8% in 2021[241]. - Return on average assets for 2022 was 1.03%, down from 1.05% in 2021, while return on average equity increased to 13.07% from 10.15%[241]. - The allowance for loan losses was 1.20% of total outstanding loans at December 31, 2022, compared to 1.25% in 2021[241]. - Nonperforming loans as a percentage of net loans remained low at 0.27% in 2022, down from 0.28% in 2021[256]. Interest Income and Rates - Net interest income increased by $4.0 million, or 14.2%, from $28.3 million in 2021 to $32.3 million in 2022, primarily due to increases in the average balance of interest-earning assets and the interest rate spread[257]. - Total interest income rose by $4.5 million in 2022, driven by an increase in the average balance of interest-earning assets from $1.02 billion in 2021 to $1.13 billion in 2022[258]. - The tax-equivalent yield on interest-earning assets increased from 2.95% in 2021 to 3.10% in 2022, attributed to rising short-term interest rates[258]. - The interest rate spread improved to 2.90% in 2022 from 2.80% in 2021, while the net interest margin increased to 2.95% from 2.84%[279]. Capital and Regulatory Compliance - The Bank was in compliance with all regulatory capital requirements with a CBLR of 9.18% as of December 31, 2022[294]. - Total stockholders' equity attributable to the Company decreased by $28.7 million from $113.8 million at December 31, 2021 to $85.2 million at December 31, 2022, primarily due to a $37.5 million net unrealized loss on available for sale securities[289]. - The Company has a shelf registration permitting the issuance of up to $35 million of debt and equity securities, with $35 million remaining available[295]. Interest Rate Sensitivity - As of December 31, 2022, a 300 basis point increase in interest rates would result in a net interest income increase of $4,012,000, representing an 11.28% change compared to the base case scenario[304]. - The Economic Value of Equity (EVE) at December 31, 2022 would increase by $322,611,000 (8.49%) with a 300 basis point increase in interest rates, with an EVE ratio of 30.96%[307]. - In contrast, a 300 basis point decrease in interest rates would lead to a decrease in EVE by $69,583,000 (23.40%) at December 31, 2022[307]. - The company models various interest rate scenarios to assess sensitivity, acknowledging that model outputs are not guarantees of actual results[308]. Other Financial Insights - The company updated deposit betas and decay rates during 2022 to better reflect market conditions, based on a third-party study of customer accounts[306]. - The company’s net interest income is influenced by factors beyond market interest rates, including asset and liability behavior under different interest rate conditions[308]. - Recent accounting pronouncements and their impacts are discussed in Note 1 of the accompanying Notes to Consolidated Financial Statements[309].