Table of Contents

 

 

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, 2008

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)

 

 

 

Indiana		35-2056949
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

 

220 Federal Drive NW, Corydon, Indiana 47112
(Address of principal executive offices) (Zip Code)

Registrant’s telephone number including area code 1-812-738-2198

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a small reporting company. See definition of “accelerated filer,” “large accelerated filer” and “small reporting company” in Rule 12b-2 of the Exchange Act.

 

(Check one):		Large Accelerated Filer		¨		Accelerated Filer		¨
		Non-accelerated Filer		¨		Small Reporting Company		x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 2,802,512 shares of common stock were outstanding as of July 31, 2008.

 

 

 

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Table of Contents

FIRST CAPITAL, INC.

INDEX

 

				Page
Part I		Financial Information
		Item 1. Consolidated Financial Statements
		Consolidated Balance Sheets as of June 30, 2008 and December 31, 2007 (unaudited)		3
		Consolidated Statements of Income for the three months and six months ended June 30, 2008 and 2007 (unaudited)		4
		Consolidated Statements of Cash Flows for the six months ended June 30, 2008 and 2007 (unaudited)		5
		Notes to consolidated financial statements (unaudited)		6-12
		Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		13-18
		Item 3. Quantitative and Qualitative Disclosures About Market Risk		19-20
		Item 4. Controls and Procedures		21
Part II		Other Information
		Item 1. Legal Proceedings		22
		Item 1A. Risk Factors		22
		Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		22-23
		Item 3. Defaults Upon Senior Securities		23
		Item 4T. Submission of Matters to a Vote of Security Holders		23
		Item 5. Other Information		23
		Item 6. Exhibits		24
Signatures				25

 

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PART I - FINANCIAL INFORMATION

FIRST CAPITAL, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

		June 30, 2008				December 31, 2007
		(In thousands)
ASSETS
Cash and due from banks		$	12,327			$	10,010
Interest bearing deposits with banks			6,017				4,646
Federal funds sold			1,639				399
Total cash and cash equivalents			19,983				15,055
Securities available for sale, at fair value			73,195				72,991
Securities-held to maturity			101				1,050
Loans, net			328,331				334,463
Loans held for sale			1,195				258
Federal Home Loan Bank stock, at cost			3,551				3,551
Foreclosed real estate			1,006				833
Premises and equipment			10,668				10,612
Accrued interest receivable			2,126				2,549
Cash value of life insurance			5,239				5,124
Goodwill			5,386				5,386
Core deposit intangibles			281				317
Other assets			1,171				990
Total Assets		$	452,233			$	453,179
LIABILITIES
Deposits:
Noninterest-bearing		$	37,809			$	35,292
Interest-bearing			300,199				292,859
Total Deposits			338,008				328,151
Retail repurchase agreements			14,059				15,562
Advances from Federal Home Loan Bank			51,119				60,694
Accrued interest payable			1,499				1,902
Accrued expenses and other liabilities			1,230				1,134
Total Liabilities			405,915				407,443
STOCKHOLDERS’ EQUITY
Preferred stock of $.01 par value per share; authorized 1,000,000 shares; none issued			—				—
Common stock of $.01 par value per share; authorized 5,000,000 shares; issued 3,128,502 shares (3,125,563 shares in 2007)			31				31
Additional paid-in capital			23,920				23,863
Retained earnings-substantially restricted			29,091				28,284
Unearned ESOP shares			(60	)			(121	)
Accumulated other comprehensive income			(264	)			(53	)
Less treasury stock, at cost - 319,225 shares (310,924 shares in 2007)			(6,400	)			(6,268	)
Total Stockholders’ Equity			46,318				45,736
Total Liabilities and Stockholders’ Equity		$	452,233			$	453,179

See accompanying notes to consolidated financial statements.

 

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PART I - FINANCIAL INFORMATION

FIRST CAPITAL, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

 

		Three Months Ended June 30,								Six Months Ended June 30,
		2008				2007				2008				2007
		(In thousands, except per share data)
INTEREST INCOME
Loans, including fees		$	5,551			$	5,826			$	11,247			$	11,587
Securities:
Taxable			556				598				1,120				1,182
Tax-exempt			234				207				458				397
Federal Home Loan Bank dividends			49				37				92				82
Federal funds sold and interest bearing deposits with banks			77				79				204				263
Total interest income			6,467				6,747				13,121				13,511
INTEREST EXPENSE
Deposits			1,983				2,513				4,260				5,027
Retail repurchase agreements			68				202				191				423
Advances from Federal Home Loan Bank			648				683				1,365				1,393
Total interest expense			2,699				3,398				5,816				6,843
Net interest income			3,768				3,349				7,305				6,668
Provision for loan losses			513				35				738				260
Net interest income after provision for loan losses			3,255				3,314				6,567				6,408
NON-INTEREST INCOME
Service charges on deposit accounts			678				641				1,309				1,208
Commission income			42				44				77				92
Gain on sale of mortgage loans			123				105				244				252
Mortgage brokerage fees			—				62				10				78
Increase in cash surrender value of life insurance			59				26				115				37
Other income			21				30				46				55
Total non-interest income			923				908				1,801				1,722
NON-INTEREST EXPENSE
Compensation and benefits			1,638				1,622				3,295				3,258
Occupancy and equipment			296				272				597				524
Data processing			214				229				432				451
Professional fees			148				101				283				206
Advertising			51				114				97				189
Other operating expenses			554				595				1,079				1,107
Total non-interest expense			2,901				2,933				5,783				5,735
Income before income taxes			1,277				1,289				2,585				2,395
Income tax expense			388				420				797				777
Net Income		$	889			$	869			$	1,788			$	1,618
OTHER COMPREHENSIVE LOSS, NET OF TAX
Unrealized loss on securities:
Unrealized holding losses arising during the period			(771	)			(422	)			(211	)			(335	)
Less: reclassification adjustment			—				—				—				—
Other comprehensive loss			(771	)			(422	)			(211	)			(335	)
Comprehensive Income		$	118			$	447			$	1,577			$	1,283
Net income per common share, basic		$	0.32			$	0.31			$	0.64			$	0.57
Net income per common share, diluted		$	0.32			$	0.31			$	0.63			$	0.57

See accompanying notes to consolidated financial statements.

 

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PART I - FINANCIAL INFORMATION

FIRST CAPITAL, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

		Six Months Ended June 30,
		2008				2007
		(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income		$	1,788			$	1,618
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of premiums and accretion of discounts			25				8
Depreciation and amortization expense			426				371
Deferred income taxes			(35	)			(75	)
ESOP and stock compensation expense			97				90
Increase in cash value of life insurance			(115	)			(37	)
Provision for loan losses			738				260
Proceeds from sales of mortgage loans			15,245				14,350
Mortgage loans originated for sale			(15,938	)			(11,823	)
Net gain on sale of mortgage loans			(244	)			(252	)
Net gain on sale of land			(13	)			—
Decrease in accrued interest receivable			423				103
Increase (decrease) in accrued interest payable			(403	)			79
Net change in other assets/liabilities			62				(342	)
Net Cash Provided By Operating Activities			2,056				4,350
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of securities available for sale			(15,340	)			(9,394	)
Proceeds from maturities of securities available for sale			11,416				5,008
Proceeds from maturities of securities held to maturity			943				8
Principal collected on mortgage-backed securities			3,377				2,159
Investment in cash surrender value of life insurance			—				(3,625	)
Net decrease in loans receivable			4,752				1,072
Proceeds from sale of foreclosed real estate			469				680
Proceeds from sale of land			284				—
Purchase of premises and equipment			(716	)			(474	)
Net Cash Provided By (Used In) Investing Activities			5,185				(4,566	)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in deposits			9,857				(8,291	)
Net decrease in advances from Federal Home Loan Bank			(9,575	)			(337	)
Net decrease in retail repurchase agreements			(1,503	)			(3,296	)
Exercise of stock options			21				40
Purchase of treasury stock			(132	)			(298	)
Dividends paid			(981	)			(959	)
Net Cash Used In Financing Activities			(2,313	)			(13,141	)
Net Increase (Decrease) in Cash and Cash Equivalents			4,928				(13,357	)
Cash and cash equivalents at beginning of period			15,055				24,468
Cash and Cash Equivalents at End of Period		$	19,983			$	11,111

See accompanying notes to consolidated financial statements.

 

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FIRST CAPITAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

1.	Presentation of Interim Information

First Capital, Inc. (“Company”) is the holding company for First Harrison Bank (“Bank”). The information presented in this report relates primarily to the Bank’s operations. The Bank has three wholly-owned subsidiaries that manage a portion of its investment securities portfolio. First Harrison Investments, Inc. and First Harrison Holdings, Inc. are Nevada corporations that jointly own First Harrison, LLC, a Nevada limited liability corporation that holds and manages an investment portfolio.

In the opinion of management, the unaudited consolidated financial statements include all normal adjustments considered necessary to present fairly the financial position as of June 30, 2008, and the results of operations for the three and six months ended June 30, 2008 and 2007 and cash flows for the six months ended June 30, 2008 and 2007. All of these adjustments are of a normal, recurring nature. Such adjustments are the only adjustments included in the unaudited consolidated financial statements. Interim results are not necessarily indicative of results for a full year.

The accompanying unaudited consolidated financial statements and notes have been prepared in accordance with generally accepted accounting principles for interim financial statements and are presented as permitted by the instructions to Form 10-Q. Accordingly, they do not contain certain information included in the Company’s annual audited consolidated financial statements and related footnotes for the year ended December 31, 2007 included in the Form 10-K.

The unaudited consolidated financial statements include the accounts of the Company and its subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation.

 

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FIRST CAPITAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

2.	Comprehensive Income

Comprehensive income is defined as the change in equity (net assets) of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners. Comprehensive income for the Company includes net income and other comprehensive income representing the net unrealized gains and losses on securities available for sale. The following tables set forth the components of other comprehensive income and the allocated tax amounts for the three and six months ended June 30, 2008 and 2007:

 

		Three Months Ended June 30,								Six Months Ended June 30,
		2008				2007				2008				2007
		(In thousands)								(In thousands)
Unrealized losses on securities:
Unrealized holding losses arising during the period		$	(1,277	)		$	(699	)		$	(349	)		$	(554	)
Income tax benefit			506				277				138				219
Net of tax amount			(771	)			(422	)			(211	)			(335	)
Less: reclassification adjustment for gains included in net income			—				—				—				—
Income tax benefit			—				—				—				—
Net of tax amount			—				—				—				—
Other comprehensive loss		$	(771	)		$	(422	)		$	(211	)		$	(335	)

 

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FIRST CAPITAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

3.	Supplemental Disclosure for Earnings Per Share

 

		Three Months Ended						Six Months Ended
		6/30/2008			6/30/2007			6/30/2008			6/30/2007
		(Dollars in thousands, except for share and per share data)
Basic
Earnings:
Net income		$	889		$	869		$	1,788		$	1,618
Shares:
Weighted average common shares outstanding			2,802,727			2,820,396			2,804,940			2,821,926
Net income per common share, basic		$	0.32		$	0.31		$	0.64		$	0.57
Diluted
Earnings:
Net income		$	889		$	869		$	1,788		$	1,618
Shares:
Weighted average common shares outstanding			2,802,727			2,820,396			2,804,940			2,821,926
Add: Dilutive effect of outstanding options			13,893			23,840			15,230			24,321
Add: Dilutive effect of restricted stock			—			—			—			17
Weighted average common shares outstanding, as adjusted			2,816,620			2,844,236			2,820,170			2,846,264
Net income per common share, diluted		$	0.32		$	0.31		$	0.63		$	0.57

 

4.	Stock Option Plan

Effective January 1, 2006, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 123R, a revision of SFAS No. 123, Accounting for Stock-Based Compensation. The Company’s stock option plan was previously accounted for in accordance with the provisions of APB Opinion No. 25, Accounting for Stock Issued to Employees, and, as such, no stock-based employee compensation cost was reflected in net income because all options granted under the stock option plan had an exercise price equal to the market value of the underlying common stock on the date of grant. The Company adopted SFAS No. 123R using the modified prospective method and, as such, results from prior periods have not been restated. Under the statement’s transition provisions, compensation cost is recognized on or after the effective date for the portion of outstanding awards, for which the requisite service has not yet been rendered, based on the grant date fair value of those awards calculated under the statement.

For the six month periods ended June 30, 2008 and 2007, the Company recognized compensation expense of $15,000 and $16,000, respectively, related to its stock option plans as expense is recognized ratably over the five-year vesting period of the options. At June 30, 2008, there was $31,000 of unrecognized compensation expense related to nonvested stock options, which will be recognized over the remaining vesting period. The Black-Scholes option pricing model was used to determine the fair value of the options granted.

 

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FIRST CAPITAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

5.	Supplemental Disclosures of Cash Flow Information

 

		Six Months Ended June 30,
		2008			2007
		(In thousands)
Cash payments for:
Interest		$	6,220		$	6,764
Taxes			718			1,024
Noncash investing activities:
Transfers from loans to real estate acquired through foreclosure			776			247

 

6.	Fair Value Measurements

Effective January 1, 2008, the Company adopted the provisions of Statement of Financial Accounting Standards (SFAS) No. 157, Fair Value Measurements, for financial assets and financial liabilities. In accordance with Financial Accounting Standards Board Position (FSP) No. 157-2, Effective Date of FASB Statement No. 157, the Company will delay application of SFAS No. 157 for nonfinancial assets, such as goodwill and real property held for sale, and nonfinancial liabilities, until January 1, 2009.

SFAS No. 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. SFAS No. 157 establishes a fair value hierarchy that prioritizes the use of inputs used in valuation methodologies into the following three levels:

 

Level 1:		Inputs to the valuation methodology are quoted prices, unadjusted, for identical assets or liabilities in active markets. A quoted market price in an active market provides the most reliable evidence of fair value and shall be used to measure fair value whenever available.
Level 2:		Inputs to the valuation methodology include quoted market prices for similar assets or liabilities in active markets; inputs to the valuation methodology include quoted market prices for identical or similar assets or liabilities in markets that are not active; or inputs to the valuation methodology that are derived principally from or can be corroborated by observable market data by correlation or other means.
Level 3:		Inputs to the valuation methodology are unobservable and significant to the fair value measurement. Level 3 assets and liabilities include financial instruments whose value is determined using discounted cash flow methodologies, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

 

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FIRST CAPITAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

A description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below. These valuation methodologies were applied to all of the Company’s financial assets carried at fair value or the lower of cost or fair value effective January 1, 2008. The table below presents the balances of assets measured at fair value on a recurring basis and assets measured at fair value on a nonrecurring basis as of June 30, 2008. The Company had no liabilities measured at fair value as of June 30, 2008.

 

		Carrying Value
		Level 1			Level 2			Level 3			Total
		(In thousands)
Assets Measured on a Recurring Basis
Securities available for sale		$	—		$	73,195		$	—		$	73,195
Assets Measured on a Nonrecurring Basis
Residential loans held for sale			—			—			1,195			1,195

In general, fair value is based upon quoted market prices, where available. If quoted market prices are not available, fair value is based on internally developed models or obtained from third parties that primarily use, as inputs, observable market-based parameters or a matrix pricing model that employs the Bond Market Association’s standard calculations for cash flow and price/yield analysis and observable market-based parameters. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value, or the lower of cost or fair value. These adjustments may include unobservable parameters. Any such valuation adjustments have been applied consistently over time. The Company’s valuation methodologies may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. While management believes the Company’s valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.

Securities Available for Sale. Securities classified as available for sale are reported at fair value on a recurring basis. These securities are classified as Level 1 of the valuation hierarchy where quoted market prices from reputable third-party brokers are available in an active market. If quoted market prices are not available, the Company obtains fair value measurements from an independent pricing service. These securities are reported using Level 2 inputs and the fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, U.S. government and agency yield curves, live trading levels, trade execution data, market consensus prepayment speeds, credit information, and the security’s terms and conditions, among other factors. Changes in fair value of securities available for sale are recorded in other comprehensive income.

 

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FIRST CAPITAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Residential Loans Held for Sale. Residential loans held for sale are reported in the aggregate at the lower of cost or fair value using Level 3 inputs. For these loans, the Company obtains fair value using an internal cash flow model. The fair value measurements consider observable data that may include loan type, spreads for other whole loans and mortgage-backed securities, prepayment speeds, servicing values, and index values. Management considers adjustments to data inputs that we believe other market participants would consider in estimating the fair value of the Company’s held for sale residential loan portfolio.

There are no impaired loans reported at fair value in the consolidated balance sheet at June 30, 2008. There were no transfers in or out of the Company’s Level 3 financial assets for the six months ended June 30, 2008.

The Company also adopted SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities – Including an Amendment of FASB Statement No. 115, which permits entities to measure many financial instruments and certain other assets and liabilities at fair value on an instrument-by-instrument basis. The fair value option permits all entities to choose to measure eligible items at fair value at specified election dates. An entity will be required to report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date. The Company did not elect to measure any financial instruments at fair value under SFAS No. 159 upon adoption.

 

7.	Recent Accounting Pronouncements

The following are summaries of recently issued accounting pronouncements that impact the accounting and reporting practices of the Company:

In June 2006, the Financial Accounting Standards Board (FASB) issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes, which clarifies the accounting for uncertainty in income taxes recognized in a Company’s financial statements in accordance with SFAS 109, Accounting for Income Taxes. The Interpretation prescribes a more-likely-than-not recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This Interpretation also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The provisions of the Interpretation was effective for fiscal years beginning after December 15, 2006 and the cumulative effect of applying the provisions of this Interpretation are recognized as an adjustment to the beginning balance of retained earnings. The Company adopted the Interpretation on January 1, 2007 as required. The Company and its subsidiaries file a consolidated federal income tax return and the Company and Bank file a combined unitary return in the state of Indiana. The Company’s federal income tax returns have not been examined in the past five years and the 2005, 2006 and 2007 tax years are subject to federal examination. The Company’s Indiana state income tax returns for the years 2003, 2004 and 2005 were examined, with no changes made. The 2006 and 2007 Indiana state income tax returns are subject to examination. The Company has no unrecognized tax benefits and does not anticipate any increase in unrecognized tax benefits during 2008 relative to any tax positions taken after January 1, 2007. The Company believes that its income tax filing positions and deductions would be sustained upon examination and does not anticipate any adjustments that would result in a material change to its financial position or results of operations. Consequently, no reserves for uncertain income tax positions have been recorded.

 

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FIRST CAPITAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

In December 2007, FASB issued Statement No. 160, Non-controlling Interests in Consolidated Financial Statements – an amendment of ARB No. 51 (SFAS No. 160). This statement applies to all entities that prepare consolidated financial statements, except not-for-profit organizations, but will affect only those entities that have an outstanding non-controlling interest in one or more subsidiaries or that deconsolidate a subsidiary. This statement amends ARB No. 51 to establish accounting and reporting standards for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. This statement is effective for fiscal years beginning after January 1, 2009. SFAS No. 160 is not expected to have a material impact on the Company’s consolidated financial position or results of operations.

In March 2008, FASB issued Statement No. 161, Disclosures about Derivative Instruments and Hedging Activities – an amendment of FASB Statement No. 133 (SFAS No. 161). This statement requires enhanced disclosures about an entity’s derivative and hedging activities and thereby improves the transparency of financial reporting. Entities are required to provide enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under Statement 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. This statement is effective for fiscal years and interim periods beginning after November 15, 2008. SFAS No. 161 is not expected to have a material impact on the presentation and disclosures in the Company’s consolidated financial statements.

In May 2008, FASB issued Statement No. 162, The Hierarchy of Generally Accepted Accounting Principles (SFAS No. 162). This statement identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles (GAAP) in the Unites States (the GAAP hierarchy). SFAS No. 162 divides the body of GAAP into four categories by level of authority. This statement is effective sixty days following the SEC’s approval of the Public Company Accounting Oversight Board amendments to AU Section 411, The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles. SFAS No. 162 is not expected to have a material impact on the Company’s consolidated financial position or results of operations.

 

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PART I - ITEM 2

MANAGEMENT’S DISCUSSION AND

ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

FIRST CAPITAL, INC.

Safe Harbor Statement for Forward-Looking Statements

This report 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 being 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; the quality and composition of the loan and investment securities portfolio; loan demand; deposit flows; competition; and changes in accounting principles and guidelines. Additional factors that may affect our results are discussed in our Annual Report on Form 10-K for the year ended December 31, 2007 under “Item 1A. Risk Factors.” These factors should be considered in evaluating the forward-looking statements and undue reliance should not be placed on such statements. Except as required by applicable law or regulation, the Company assumes no obligation and disclaims any obligation to update any forward-looking statements.

Critical Accounting Policies

During the six months ended June 30, 2008, there was no significant change in the Company’s critical accounting policies or the application of critical accounting policies as presented in the annual report on Form 10-K for the year ended December 31, 2007.

Financial Condition

Total assets decreased from $453.2 million at December 31, 2007 to $452.2 million at June 30, 2008, a decrease of 0.2%.

Net loans receivable (excluding loans held for sale) decreased $6.1 million from $334.5 million at December 31, 2007 to $328.3 million at June 30, 2008. Residential mortgages (including construction loans) and commercial business loans decreased $7.8 million and $2.0 million, respectively, while commercial mortgage loans and consumer installment loans increased $3.2 million and $1.0 million, respectively.

Securities available for sale increased $204,000 from $73.0 million at December 31, 2007 to $73.2 million at June 30, 2008. Maturities and principal repayments of these securities totaled $11.4 million and $3.4 million, respectively. Purchases of $15.3 million of securities classified as available for sale were made during the period. Due to changing market interest rates, the portfolio experienced an unrealized loss in market value of $349,000 during the six months ended June 30, 2008.

 

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Table of Contents

PART I - ITEM 2

MANAGEMENT’S DISCUSSION AND

ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

FIRST CAPITAL, INC.

Investment securities held-to-maturity decreased from $1.1 million at December 31, 2007 to $101,000 at June 30, 2008 due primarily to maturities of $943,000.

Cash and cash equivalents increased from $15.1 million at December 31, 2007 to $20.0 million at June 30, 2008. Cash and due from banks, interest bearing deposits with banks and federal funds sold increased $2.3 million, $1.4 million and $1.2 million, respectively, during the period. The excess liquidity resulted primarily from the repayment of loans outstanding.

Total deposits increased 3.0% from $328.2 million at December 31, 2007 to $338.0 million at June 30, 2008. Interest-bearing checking and savings deposits increased $17.4 million while time deposits decreased $10.1 million during the period. These changes can be partially attributed to customers not wanting to lock in to longer-term commitments while rates are at the current low levels. Rather, some have chosen to place those funds in interest-bearing demand accounts. Noninterest-bearing demand deposits also increased $2.4 million during the period due to growth in commercial and personal demand accounts.

Federal Home Loan Bank borrowings decreased from $60.7 million at December 31, 2007 to $51.1 million at June 30, 2008. The funds used to pay down the borrowings primarily came from the increase in deposits.

Retail repurchase agreements, which represent overnight borrowings from deposit customers, including businesses and local municipalities, decreased from $15.6 million at December 31, 2007 to $14.1 million at June 30, 2008, due primarily to the withdrawal of funds by local municipalities.

Total stockholders’ equity increased from $45.7 million at December 31, 2007 to $46.3 million at June 30, 2008. This increase was primarily the result of retained net income of $807,000 and additional paid-in capital of $57,000 from stock option exercises and employee stock ownership plan compensation, partially offset by a net unrealized loss of $211,000 on securities available for sale and treasury stock repurchases of $132,000.

Results of Operations

Net Income for the six-month periods ended June 30, 2008 and 2007. Net income was $1.8 million ($0.63 per share diluted) for the six months ended June 30, 2008 compared to $1.6 million ($0.57 per share diluted) for the six months ended June 30, 2007. The Company experienced an increase in net interest income after the provision for loan losses and an increase in noninterest income, partially offset by an increase in noninterest expenses.

Net Income for the three-month periods ended June 30, 2008 and 2007. Net income was $889,000 ($0.32 per share diluted) for the three months ended June 30, 2008 compared to $869,000 ($0.31 per share diluted) for the same period in 2007. An increase in noninterest income and a decrease in noninterest expenses were partially offset by a decrease in net interest income after the provision for loan losses.

 

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PART I - ITEM 2

MANAGEMENT’S DISCUSSION AND

ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

FIRST CAPITAL, INC.

Net interest income for the six-month periods ended June 30, 2008 and 2007. Net interest income increased $637,000 to $7.3 million for the six months June 30, 2008 compared to $6.7 million for the six months ended June 30, 2007 primarily due to an increase in the tax-equivalent interest rate spread.

Total interest income decreased $390,000 during the six months ended June 30, 2008 compared to the same period in 2007. During the six months ended June 30, 2008, the average balance of interest-earning assets and their tax-equivalent yield were $424.3 million and 6.31%, respectively. During the same period in 2007, the average balance of those assets was $421.1 million and the tax-equivalent yield was 6.53%. This decrease in yield is due primarily to the Federal Reserve’s Open Market Committee lowering the fed funds rate by 325 basis points from September 2007 to April 2008.

Total interest expense decreased $1.0 million during the six months ended June 30, 2008 compared to the six months ended June 30, 2007. The average balance of interest-bearing liabilities increased from $365.5 million in 2007 to $370.5 million in 2008 while the average rate paid on these liabilities decreased from 3.74% in 2007 to 3.14% in 2008. As a result, the Bank’s tax-equivalent interest rate spread increased from 2.79% during the first six months of 2007 to 3.17% for the same period in 2008.

Net interest income for the three-month periods ended June 30, 2008 and 2007. Net interest income increased from $3.3 million for the three months ended June 30, 2007 to $3.8 million for the same period in 2008 primarily due to an increase in the tax-equivalent interest rate spread.

Total interest income decreased $280,000 for the three months ended June 30, 2008 compared to the same period in 2007 primarily due to a decrease in the tax-equivalent yield of interest-earning assets. For the quarter ended June 30, 2007, those assets had a tax-equivalent yield of 6.57%, but the tax-equivalent yield decreased during the same period in 2008 to 6.25%.

Total interest expense decreased $699,000 for the three months ended June 30, 2008 compared to the same period in 2007. The average cost of interest-bearing liabilities decreased from 3.75% in 2007 to 2.93% in 2008. As a result, the tax-equivalent interest rate spread increased from 2.82% in the quarter ended June 30, 2007 to 3.32% during the same period in 2008.

Provision for loan losses. The provision for loan losses was $513,000 for the three-month period ended June 30, 2008 as compared to $35,000 for the same period in 2007. Net charge offs amounted to $337,000 and $171,000 for the three-month periods ended June 30, 2008 and 2007, respectively. The provision for loan losses was $738,000 for the six-month period ended June 30, 2008 as compared to $260,000 for the same period in 2007. During the six-month period ended June 30, 2008, gross loans receivable decreased $5.9 million while net charge offs amounted to $519,000. Net charge offs totaled $247,000 for the six-month period ended June 30, 2007. As stated earlier in this report, residential mortgages and commercial business loans decreased $7.8 million and $2.0 million, respectively while commercial mortgages and consumer installment loans increased $3.2 million and $1.0 million, respectively. The consistent application of management’s allowance methodology resulted in an increase in the provision for loan losses and gives consideration to recent trends in qualitative factors including general economic conditions such as depreciating collateral values, job losses and continued pressures on household budgets in the Bank’s market area.

 

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PART I - ITEM 2

MANAGEMENT’S DISCUSSION AND

ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

FIRST CAPITAL, INC.

Provisions for loan losses are charges to earnings to maintain the total allowance for loan losses at a level considered reasonable by management to provide for probable known and inherent loan losses based on management’s evaluation of the collectibility of the loan portfolio, including the nature of the portfolio, credit concentrations, trends in historical loss experience, specified impaired loans and economic conditions. Although management uses the best information available, future adjustments to the allowance may be necessary due to changes in economic, operating, regulatory and other conditions that may be beyond the Bank’s control. While the Bank maintains the allowance for loan losses at a level that it considers adequate to provide for estimated losses, there can be no assurance that further additions will not be made to the allowance for loan losses and that actual losses will not exceed the estimated amounts.

The methodology used in determining the allowance for loan losses includes segmenting the loan portfolio by identifying risk characteristics common to groups of loans, determining and measuring impairment of individual loans based on the present value of expected future cash flows or the fair value of collateral, and determining and measuring impairment for groups of loans with similar characteristics by applying loss factors that consider the qualitative factors which may affect the loss rates.

The allowance for loan losses was $2.5 million at June 30, 2008 compared to $2.2 million at December 31, 2007. Management has deemed these amounts as adequate on those dates based on its best estimate of probable known and inherent loan losses. At June 30, 2008, nonperforming loans amounted to $5.8 million compared to $5.7 million at December 31, 2007. Included in nonperforming loans are loans over 90 days past due secured by residential mortgages in the amount of $1.1 million, consumer loans of $176,000, commercial loans amounting to $128,000, and commercial mortgages of $15,000. These loans are accruing interest as the estimated value of the collateral and collection efforts are deemed sufficient to ensure full recovery. At June 30, 2008 and December 31, 2007, nonaccrual loans amounted to $4.4 million and $4.9 million, respectively.

Noninterest income for the six-month periods ended June 30, 2008 and 2007. Noninterest income increased to $1.8 million for the six months ended June 30, 2008 from $1.7 million for the six months ended June 30, 2007. Service charges on deposit accounts and the earnings from bank-owned life insurance increased $101,000 and $78,000, respectively, when comparing the two periods. The increase in cash surrender value of bank-owned life insurance was due to the purchase of $3.6 million of bank-owned life insurance in May 2007.

Noninterest income for the three-month periods ended June 30, 2008 and 2007. Noninterest income for the quarter ended June 30, 2008 increased to $923,000 compared to $908,000 for the quarter ended June 30, 2007. Service charges on deposit accounts and the earnings from bank-owned life insurance increased $37,000 and $33,000, which was partially offset by a $62,000 decrease in mortgage brokerage fees when comparing the two periods.

Noninterest expense for the six-month periods ended June 30, 2008 and 2007. Noninterest expense increased to $5.8 million for the six months ended June 30, 2008 compared to $5.7 million for the same period in 2007. Professional fees and occupancy expenses increased $77,000 and $73,000, respectively, when comparing the two periods. Professional fees increased primarily due to an increase in legal fees relating to problem loan collections while the occupancy expense increase was primarily due to the opening of the Salem, Indiana branch in November 2007.

 

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PART I - ITEM 2

MANAGEMENT’S DISCUSSION AND

ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

FIRST CAPITAL, INC.

Noninterest expense for the three-month periods ended June 30, 2008 and 2007. Noninterest expense for the quarter ended June 30, 2008 decreased $32,000 when compared to the quarter ended June 30, 2007. This decrease was primarily due to a decrease in advertising expense as the Bank eliminated its television advertising for 2008 and focused on additional direct advertising.

Income tax expense. Income tax expense for the six-month period ended June 30, 2008 was $797,000, compared to $777,000 for the same period in 2007. The effective tax rate decreased from 32.4% in 2007 to 30.8% in 2008. Income tax expense for the three-month period ended June 30, 2008 was $388,000, compared to $420,000 for the same quarter in 2007. The effective tax rate was 32.6% for the second quarter in 2007 compared to 30.4% for the same period in 2008. The decrease in the effective tax rates for 2008 compared to 2007 was primarily the result of an increase in tax exempt income due to increases in municipal securities and bank-owned life insurance held in 2008 compared to 2007.

Liquidity and Capital Resources

The Bank’s primary sources of funds are customer deposits, proceeds from loan repayments, maturing securities and FHLB advances. While loan repayments and maturities are a predictable source of funds, deposit flows and mortgage prepayments are greatly influenced by market interest rates, general economic conditions and competition. At June 30, 2008, the Bank had cash and cash equivalents of $20.0 million and securities available-for-sale with a fair value of $73.2 million. If the Bank requires funds beyond its ability to generate them internally, it has additional borrowing capacity with the FHLB of Indianapolis and additional collateral eligible for repurchase agreements.

The Bank’s primary investing activity is the origination of one-to-four family mortgage loans and, to a lesser extent, consumer, multi-family, commercial real estate and residential construction loans. The Bank also invests in U.S. Government and agency securities and mortgage-backed securities issued by U.S. Government agencies.

The Bank must maintain an adequate level of liquidity to ensure the availability of sufficient funds to support loan growth and deposit withdrawals, to satisfy financial commitments and to take advantage of investment opportunities. Historically, the Bank has been able to retain a significant amount of its deposits as they mature.

The Bank is required to maintain specific amounts of capital pursuant to OTS regulatory requirements. As of June 30, 2008, the Bank was in compliance with all regulatory capital requirements, which were effective as of such date with tangible, core and risk-based capital ratios of 8.7%, 8.7% and 14.0%, respectively. The regulatory requirements at that date were 1.5%, 3.0% and 8.0%, respectively. At June 30, 2008, the Bank was considered “well-capitalized” under applicable regulatory guidelines.

 

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PART I - ITEM 2

MANAGEMENT’S DISCUSSION AND

ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

FIRST CAPITAL, INC.

Off-Balance Sheet Arrangements

In the normal course of operations, the Company engages in a variety of financial transactions that, in accordance with generally accepted accounting principles, are not recorded on the Company’s financial statements. These transactions involve, to varying degrees, elements of credit, interest rate and liquidity risk. Such transactions are primarily used to manage customers’ requests for funding and take the form of loan commitments and letters of credit. A further presentation of the Company’s off-balance sheet arrangements is presented in the Company’s 2007 Annual Report to Stockholders, filed as an exhibit to the Form 10-K for the year ended December 31, 2007.

For the six months ended June 30, 2008, the Company did not engage in any off-balance sheet transactions reasonably likely to have a material effect on the Company’s financial condition, results of operations or cash flows.

 

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Table of Contents

PART I - ITEM 3

QUANTITATIVE AND QUALITATIVE DISCLOSURES

ABOUT MARKET RISK

FIRST CAPITAL, INC.

Qualitative Aspects of Market Risk. The Bank’s principal financial objective is to achieve long-term profitability while reducing its exposure to fluctuating market interest rates. The Bank has sought to reduce the exposure of its earnings to changes in market interest rates by attempting to manage the mismatch between asset and liability maturities and interest rates. In order to reduce the exposure to interest rate fluctuations, the Bank has developed strategies to manage its liquidity, shorten its effective maturities of certain interest-earning assets and decrease the interest rate sensitivity of its asset base. Management has sought to decrease the average maturity of its assets by emphasizing the origination of short-term commercial and consumer loans, all of which are retained by the Bank for its portfolio. The Bank relies on retail deposits as its primary source of funds. Management believes retail deposits, compared to brokered deposits, reduce the effects of interest rate fluctuations because they generally represent a more stable source of funds.

Quantitative Aspects of Market Risk. The Bank does not maintain a trading account for any class of financial instrument nor does the Bank engage in hedging activities or purchase high-risk derivative instruments. Furthermore, the Bank is not subject to foreign currency exchange rate risk or commodity price risk.

The Bank uses interest rate sensitivity analysis to measure its interest rate risk by computing changes in net portfolio value (“NPV”) of its cash flows from assets, liabilities and off-balance sheet items in the event of a range of assumed changes in market interest rates. NPV represents the market value of portfolio equity and is equal to the market value of assets minus the market value of liabilities, with adjustments made for off-balance sheet items. This analysis assesses the risk of loss in market risk sensitive instruments in the event of a sudden and sustained 100 to 300 basis point increase or a sudden and sustained 100 basis point decrease in market interest rates with no effect given to any steps that management might take to counter the effect of that interest rate movement. Using data compiled by the OTS, the Bank receives a report that measures interest rate risk by modeling the change in NPV over a variety of interest rate scenarios.

The following tables are provided by the OTS and set forth the change in the Bank’s NPV at December 31, 2007 and March 31, 2008, based on OTS assumptions that would occur in the event of an immediate change in interest rates, with no effect given to any steps that management might take to counteract that change. Given the timing of the release of this information by the OTS, information as of June 30, 2008 is unavailable for inclusion in this report.

 

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PART I - ITEM 3

QUANTITATIVE AND QUALITATIVE DISCLOSURES

ABOUT MARKET RISK

FIRST CAPITAL, INC.

 

		At December 31, 2007
		Net Portfolio Value										Net Portfolio Value as a
Change In Rates		Dollar Amount			Dollar Change				Percent Change			Percent of Present Value of Assets
												NPV Ratio			Change
									(Dollars in thousands)
300bp		$	38,799		$	(13,312	)		(26	)%		8.71	%		(249	)bp
200bp			44,362			(7,749	)		(15	)		9.80			(140	)bp
100bp			49,195			(2,916	)		(6	)		10.70			(50	)bp
Static			52,111			—			—			11.20			—	bp
(100)bp			53,705			1,594			3			11.43			23	bp

 

		At March 31, 2008
		Net Portfolio Value										Net Portfolio Value as a
Change In Rates		Dollar Amount			Dollar Change				Percent Change			Percent of Present Value of Assets
												NPV Ratio			Change
									(Dollars in thousands)
300bp		$	41,524		$	(9,968	)		(19	)%		9.18	%		(178	)bp
200bp			45,968			(5,524	)		(11	)		10.01			(95	)bp
100bp			49,257			(2,235	)		(4	)		10.60			(36	)bp
Static			51,492			—			—			10.96			—	bp
(100)bp			52,176			684			1			11.03			7	bp

The preceding tables indicate that the Bank’s NPV would be expected to decrease in the event of a sudden and sustained increase in prevailing interest rates, but would be expected to increase in the event of sudden and sustained decrease in rates. The expected decrease in the Bank’s NPV given an increase in rates is primarily attributable to the relatively high percentage of fixed-rate loans in the Bank’s loan portfolio. At June 30, 2008, approximately 62% of the loan portfolio consisted of fixed-rate loans.

Certain assumptions utilized by the OTS in assessing the interest rate risk of savings associations within its region were utilized in preparing the preceding tables. These assumptions relate to interest rates, loan prepayment rates, deposit decay rates and the market values of certain assets under differing interest rate scenarios, among others.

As with any method of measuring interest rate risk, certain shortcomings are inherent in the method of analysis presented in the foregoing tables. For example, although certain assets and liabilities may have similar maturities or periods to repricing, they may react in different degrees to changes in market interest rates. Also, the interest rates on certain types of assets and liabilities may fluctuate in advance of changes in market interest rates, while interest rates on other types may lag behind changes in market rates. Additionally, certain assets, such as adjustable-rate mortgage loans, have features that restrict changes in interest rates on a short-term basis and over the life of the asset. Further, in the event of a change in interest rates, expected rates of prepayments on loans and early withdrawals from certificates of deposit could deviate significantly from those assumed in calculating the tables.

 

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Table of Contents

PART I - ITEM 4T

CONTROLS AND PROCEDURES

FIRST CAPITAL, INC.

Controls and Procedures

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. The internal control process has been designed under our supervision to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external reporting purposes in accordance with accounting principles generally accepted in the United States of America.

Management conducted an assessment of the effectiveness of the Company’s internal control over financial reporting as of June 30, 2008, utilizing the framework established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this assessment, management has determined that the Bank’s internal control over financial reporting as of June 30, 2008 is effective.

Our internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that accurately and fairly reflect, in reasonable detail, transactions and dispositions of assets; and provide reasonable assurances that: (1) transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States; (2) receipts and expenditures are being made only in accordance with authorizations of management and the directors of the Company; and (3) unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the Company’s financial statements are prevented or timely detected.

All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

The Company’s annual report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s independent registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in the annual report.

There have been no changes in the Company’s internal control over financial reporting during the quarter ended June 30, 2008 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

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Table of Contents

PART II

OTHER INFORMATION

FIRST CAPITAL, INC.

 

Item 1.

Legal Proceedings

The Company is not a party to any legal proceedings. Periodically, there have been various claims and lawsuits involving the Bank, mainly as a plaintiff, such as claims to enforce liens, condemnation proceedings on properties in which the Bank holds security interests, claims involving the making and servicing of real property loans and other issues incident to the Bank’s business. The Bank is not a party to any pending legal proceedings that it believes would have a material adverse affect on its financial condition or operations.

 

Item 1A.

Risk Factors

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2007, which could materially affect our business, financial condition or future results. There have been no material changes to the risk factors described in our Annual Report on Form 10-K, however these are not the only risks that we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

 

Period		(a) Total Number of Shares Purchased		(b) Average Price Paid Per Share			(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		(d) Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
April 1 through April 30, 2008		6,231		$	16.20		6,231		26,940
May 1 through May 31, 2008		640		$	14.07		640		26,300
June 1 through June 30, 2008		500		$	14.50		500		25,800
Total		7,371		$	15.90		7,371

 

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PART II

OTHER INFORMATION

FIRST CAPITAL, INC.

On January 4, 2001, the Company announced a stock repurchase program to purchase up to 101,000 shares of its outstanding common stock. On September 30, 2002, the Board of Directors authorized an increase in the stock repurchase program in connection with the merger of Hometown Bancshares whereby the Company would purchase up to 345,000 shares of its outstanding common stock. The stock repurchase program expires upon the purchase of the maximum number of shares authorized under the program.

 

Item 3.

Defaults upon Senior Securities

Not applicable.

 

Item 4.

Submission of Matters to a Vote of Security Holders

The Annual Meeting of Stockholders of the Company was held on May 14, 2008. There were 2,813,856 shares entitled to vote at the time of the annual meeting. Holders of 2,144,219 shares were represented at the meeting. The results of the vote on the matters presented at the meeting were as follows:

 

1.

The following individuals were elected as directors:

 

Name		Vote For		Vote Withheld		Term to Expire
J. Gordon Pendleton		1,929,536		214,683		2011
Gerald L. Uhl		1,931,393		212,826		2011
Dennis L. Huber		1,931,227		212,992		2011
William W. Harrod		1,932,902		211,317		2011

The terms of directors John W. Buschemeyer, Kenneth R. Saulman, Kathryn W. Ernstberger, Samuel E. Uhl, Mark D. Shireman, Michael L. Shireman, James S. Burden and James E. Nett continued after the annual meeting.

 

2.

The appointment of Monroe Shine & Co., Inc. as auditors for the Company for the fiscal year ending December 31, 2008 was ratified by stockholders by the following vote:

For 2,120,441; Against 14,143; Abstain 9,635

 

Item 5.

Other Information

None.

 

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PART II

OTHER INFORMATION

FIRST CAPITAL, INC.

 

Item 6.

Exhibits

 

3.1		Articles of Incorporation of First Capital, Inc. (1)
3.2		Second Amended and Restated Bylaws of First Capital, Inc. (6)
10.1		Employment Agreement with J. Gordon Pendleton (3)
10.2		Employment Agreement with Samuel E. Uhl (2)
10.3		Employment Agreement with Michael C. Frederick (2)
10.4		Employment Agreement with Joel E. Voyles (2)
10.5		Employee Severance Compensation Plan (3)
10.6		First Federal Bank, A Federal Savings Bank 1994 Stock Option Plan (as assumed by First Capital, Inc. effective December 31, 1998) (4)
10.7		First Capital, Inc. 1999 Stock-Based Incentive Plan (5)
10.8		1998 Officers’ and Key Employees’ Stock Option Plan for HCB Bancorp (5)
10.9		Employment Agreement with William W. Harrod (2)
11.0		Statement Regarding Computation of Per Share Earnings (incorporated by reference to Note 4 of the Unaudited Consolidated Financial contained herein)
31.1		Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
31.2		Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
32.1		Section 1350 Certification of Chief Executive Officer
32.2		Section 1350 Certification of Chief Financial Officer

 

(1)	Incorporated by reference from the Exhibits filed with the Registration Statement on Form SB-2, and any amendments thereto, Registration No. 333-63515.

(2)	Incorporated by reference to the Annual Report on Form 10-KSB for the year ended December 31, 1999.

(3)	Incorporated by reference to the Quarterly Report on Form 10-QSB for the quarter ended December 31, 1998.

(4)	Incorporated by reference from the Exhibits filed with the Registration Statement on Form S-8, and any amendments thereto, Registration Statement No. 333-76543.

(5)	Incorporated by reference from the Exhibits filed with the Registration Statement on Form S-8, and any amendments thereto, Registration Statement No. 333-95987.

(6)	Incorporated by reference to the Current Report on Form 8-K filed on August 22, 2007.

 

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Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

		FIRST CAPITAL, INC.
		(Registrant)
Dated August 12, 2008		BY:		/s/William W. Harrod
				William W. Harrod
				President and CEO
Dated August 12, 2008		BY:		/s/ Michael C. Frederick
				Michael C. Frederick
				Senior Vice President and Treasurer