First Capital(US:FCAP)2022-03-13 16:00Financial Performance - Net income attributable to the Company for 2021 was $11.4 million, or $3.41 per diluted share, compared to $10.1 million, or $3.02 per diluted share for 2020[260]. - Return on average assets for 2021 was 1.05%, down from 1.12% in 2020, while return on average equity increased to 10.15% from 9.64% in 2020[261]. - The efficiency ratio for 2021 was 64.8%, compared to 62.8% for 2020, indicating a decrease in operational efficiency[261]. - Total annual shareholder return for 2021 was -31.4%, compared to -15.7% for 2020, reflecting a significant decline in stock price[263]. - Net income for the year ended December 31, 2020, was $10.1 million ($3.02 per share diluted), a slight decrease from $10.3 million ($3.09 per share diluted) in 2019[300]. Loan and Asset Quality - Net loan charge-offs decreased to $217,000 in 2021 from $237,000 in 2020, with the ratio of net charge-offs to average loans outstanding decreasing to 0.04%[262]. - Total nonperforming assets decreased to $1.4 million, or 0.12% of total assets, at December 31, 2021, down from $1.5 million, or 0.14% of total assets, at December 31, 2020[262]. - Nonperforming loans decreased from $1.5 million at December 31, 2020, to $1.3 million at December 31, 2021[294]. - Management intends to maintain a strong emphasis on asset quality and credit risk management, particularly in light of pandemic impacts[268]. Income and Expenses - Net interest income increased by $246,000, or 0.9%, from $28.1 million in 2020 to $28.3 million in 2021, primarily due to an increase in the average balance of interest-earning assets[291]. - Total interest income decreased by $187,000 in 2021, primarily due to a decrease in the tax-equivalent yield on interest-earning assets from 3.57% in 2020 to 2.95% in 2021[292]. - Total interest expense decreased by $433,000, from $1.6 million in 2020 to $1.1 million in 2021, due to a decrease in the average cost of interest-bearing liabilities from 0.25% to 0.15%[293]. - Noninterest income increased by $952,000 to $9.6 million for 2021, driven by a $588,000 rise in ATM and debit card fees, despite a $277,000 decrease in gains on loans sold[297]. - Noninterest expense rose by $1.5 million to $24.5 million for 2021, primarily due to increases in compensation and benefits ($729,000), data processing ($349,000), and professional fees ($335,000)[298]. - Income tax expense increased by $548,000 to $2.2 million for 2021, with the effective tax rate rising from 14.3% in 2020 to 16.4% in 2021 due to higher pre-tax income and changes in state tax law[299]. Balance Sheet and Capital - Total assets increased from $1.02 billion at December 31, 2020 to $1.16 billion at December 31, 2021, primarily due to an increase in securities available for sale[319]. - The Bank's stockholders' equity increased to $112.5 million at December 31, 2021, up from $105.1 million at December 31, 2020[1]. - The total liabilities rose to $973.2 million in 2021, compared to $803.4 million in 2020[1]. - Total deposits increased to $734.5 million in 2021, with an interest-bearing demand deposit average balance of $427.4 million[1]. - Total stockholders' equity attributable to the Company rose by $3.2 million from $110.6 million at December 31, 2020 to $113.8 million at December 31, 2021, primarily due to retained net income of $7.9 million[324]. - The Company maintained a CBLR of 8.84% as of December 31, 2021, in compliance with all regulatory capital requirements[329]. Strategic Initiatives - The Company aims to enhance profitability by increasing noninterest income and improving operating efficiency through a profit improvement project with an outside consulting firm[270]. - The Bank will continue to focus on growing commercial and personal demand deposit accounts as a low-cost funding source[272]. - The Company is evaluating growth opportunities through acquisitions to expand its market area and market share[274]. Interest Rate Sensitivity - An immediate increase in interest rates of 300 basis points could increase the Company's net interest income by approximately $1.96 million over a one-year horizon[340]. - The Company's economic value of equity (EVE) could increase by 27.75% with a 300 basis point increase in interest rates, reflecting a dollar change of $46.62 million[346]. - The Company updated deposit betas and decay rates during 2021 to better reflect market conditions[342]. - The company models various interest rate scenarios to assess sensitivity to market interest rate changes, acknowledging inherent limitations in the analysis[348]. - Certain assets and liabilities may react differently to changes in market interest rates, affecting net interest income and economic value of equity (EVE)[348]. - Adjustable-rate mortgage loans have features that restrict short-term interest rate changes, impacting overall asset performance[348]. - Expected rates of prepayments on loans and early withdrawals from certificates of deposit may deviate significantly from modeling assumptions in the event of interest rate changes[348]. Regulatory and Accounting Considerations - Recent accounting pronouncements impact financial reporting, detailed in Note 1 of the accompanying Notes to Consolidated Financial Statements[349]. - Market risk analysis is discussed in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Annual Report on Form 10-K[350].