# First Capital Inc: Form 10-Q for the period ended Sep 30, 2020

- Company: [First Capital Inc](/companies/fcap.md) (CIK 1070296)
- Form: 10-Q
- Filed: 2020-11-09
- Accepted by EDGAR: Nov 9, 2020, 08:30 ET
- Period: 2020-09-30
- Accession: 0001171843-20-007783
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1070296/000117184320007783/fcap20200930_10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1070296/000117184320007783/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2020-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2020-07-01 to 2020-09-30 | $1.5m | us-gaap:RevenueFromContractWithCustomerIncludingAssessedTax |
| Revenue | 9 months, 2020-01-01 to 2020-09-30 | $4.2m | us-gaap:RevenueFromContractWithCustomerIncludingAssessedTax |
| Operating income | 3 months, 2020-07-01 to 2020-09-30 | $3.2m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2020-01-01 to 2020-09-30 | $8.5m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2020-07-01 to 2020-09-30 | $371.0k | us-gaap:InterestExpense |
| Interest expense | 9 months, 2020-01-01 to 2020-09-30 | $1.2m | us-gaap:InterestExpense |
| Income tax | 3 months, 2020-07-01 to 2020-09-30 | $413.0k | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2020-01-01 to 2020-09-30 | $1.2m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2020-07-01 to 2020-09-30 | $2.7m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2020-01-01 to 2020-09-30 | $7.3m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2020-07-01 to 2020-09-30 | $0.82 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2020-01-01 to 2020-09-30 | $2.17 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2020-07-01 to 2020-09-30 | $0.82 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2020-01-01 to 2020-09-30 | $2.18 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2020-07-01 to 2020-09-30 | 3,348,332 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2020-01-01 to 2020-09-30 | 3,348,802 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2020-01-01 to 2020-09-30 | $9.2m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2020-01-01 to 2020-09-30 | $400.0k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 9 months, 2020-01-01 to 2020-09-30 | $2.4m | us-gaap:PaymentsOfDividends |
| Share repurchases | 9 months, 2020-01-01 to 2020-09-30 | $147.0k | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Total assets | at 2020-09-30 | $948.2m | us-gaap:Assets |
| Total liabilities | at 2020-09-30 | $840.1m | us-gaap:Liabilities |
| Shareholders' equity | at 2020-09-30 | $108.0m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 554 characters.

On August 19, 2008, the board of directors authorized the repurchase of up to 240,467 shares of the Company’s outstanding common stock. The stock repurchase program will expire upon the purchase of the maximum number of shares authorized under the program, unless the board of directors terminates the program earlier. There were 1,911 shares purchased under the stock repurchase program at an average price of $70.09 per share during the quarter ended September 30, 2020. The maximum number of shares that may yet be purchased under the plan is 139,228.

## Risk factors

As filed, 7,335 characters.

In addition to the risk factors previously disclosed in the “Risk Factors” section of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, the Company made the following update in its Form 10-Q for the quarter ended March 31, 2020, which has been further updated below for information as of September 30, 2020.

***The COVID-19 pandemic could adversely affect the business and results of operations of the Company, and the ultimate impact will depend on future developments, which are highly uncertain and cannot be predicted, including the scope and duration of the pandemic (including the possibility of resurgence of COVID-19 after initial abatement) and actions taken by governmental authorities to the pandemic.***

On March 11, 2020, the World Health Organization declared the outbreak of COVID-19 as a global pandemic, which continues to spread throughout the United States and around the world. Due to the COVID-19 pandemic, market interest rates have declined significantly, as the Federal Open Market Committee reduced the targeted federal funds interest rate range by 150 basis points during the month of March 2020 to 0% to 0.25%. Also in response to COVID-19, many state and local governments have instituted emergency restrictions that have substantially limited the activities of individuals and the operations of businesses and industries.

COVID-19 has had a substantial impact on numerous aspects of life in the United States, including threats to public health, increased volatility in markets, and severe effects on national and local economies. The ultimate effect of COVID-19 on the Company's business will depend on numerous factors and future developments that are highly uncertain and cannot be predicted with confidence.

At this time, it is unknown how long the COVID-19 pandemic will last, or when restrictions on individuals and businesses will be lifted and businesses and their employees will be able to resume normal activities. As a result, we have faced and may continue to face a decrease in demand for certain products, reduced access to our branches by our customers, and disruptions in the operations of our venders. Additionally, customers that are increasingly forced to work remotely and may not have appropriately secured remote networks may be more vulnerable to cyber-attacks or phishing schemes. Further, additional information may emerge regarding the severity of COVID-19 and additional actions may be taken by federal, state, and local governments to contain COVID-19 or treat its impact. Changes in the behavior of customers, businesses and their employees as a result of the COVID-19 pandemic, including social distancing practices, even after formal restrictions have been lifted, are also unknown. As a result of the COVID-19 pandemic and the actions taken to contain it or reduce its impact, the Company may experience changes in the value of collateral securing outstanding loans, impairment of our goodwill and other financial assets, diminished access to capital markets and other funding sources,

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### PART II

### OTHER INFORMATION

### FIRST CAPITAL, INC.

(1A – continued)

reductions in the credit quality of borrowers and the inability of borrowers to repay loans in accordance with their terms. Further, although the Federal Reserve's monetary policies to date have been accommodative and may benefit us to some degree by supporting economic activity of our customers, sudden shifts in the Federal Reserve's policies may impact our ability to grow and/or effectively manage interest-rate risk. While we continue to anticipate that our capital and liquidity positions will be sufficient, sustained adverse effects may impair these positions or prevent us from satisfying our minimum regulatory capital ratios and other supervisory requirements.

These and similar factors and events may have substantial negative effects on the business, financial condition, and results of operations of the Company and its customers. The extent to which the pandemic impacts our results will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning its severity and the actions necessary to contain it or address its impact, among others. The duration of these impacts resulting from the COVID-19 is unknown, and the resulting customer behavioral changes are not fully known and may not be temporary.

***As a participating lender in the Small Business Administration’s Paycheck Protection Program (the “PPP”), the Company may be exposed to credit losses as well as litigation and compliance risk.***

The Company is an active participant in the PPP and as of September 30, 2020 has processed and approved loan applications representing $45.9 million in funding to new and existing clients. The Company’s participation in the PPP, and participation in any other relief programs now or in the future, exposes the Company to credit, compliance, litigation and other risks.

Among other regulatory requirements, PPP loans are subject to forbearance of loan payments for a six-month period to the extent that loans are not eligible for forgiveness. If PPP borrowers fail to qualify for loan forgiveness, the Company has a greater risk of holding the PPP loans at unfavorable interest rates. In addition, since the passing of the CARES Act, there is continued ambiguity in the laws, rules, and guidance regarding the operation, application and forgiveness procedures, which exposes the Company to risks relating to noncompliance with the PPP. There is further risk that the SBA could conclude there is a deficiency in the manner in which the Company originated, funded, serviced, or processed PPP loans, which may or may not be related to the ambiguity in the CARES Act and subsequent rules and guidance promulgated by the SBA and the U.S. Department of the Treasury regarding the operation of the PPP. In the event of such deficiency, the SBA may deny its liability under its guaranty, reduce the amount of the guaranty, or, if the SBA has already made payment under the guaranty, seek recovery of any loss related to such deficiency.

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### PART II

### OTHER INFORMATION

### FIRST CAPITAL, INC.

(1A – continued)

Since the opening of the PPP, banks have been subject to litigation relating to the policies and procedures that they used in processing applications for the program. The Company may be exposed to the risk of litigation: (1) from both customers and non-customers that have approached the Company in connection with PPP loans and its policies and procedures used in processing applications for the program; and (2) from agents of the PPP borrowers claiming they are entitled to a portion of the Company’s loan processing fees as a result of their assisting borrowers with their PPP loan applications. If any such litigation is filed against the Company and is not resolved in a manner favorable to the Company, it may result in significant financial liability or adversely affect the Company’s reputation. In addition, litigation can be costly, regardless of outcome. Any financial liability, litigation costs or reputational damage caused by PPP-related litigation could have a material adverse impact on our business, financial condition and results of operations.

Filed Nov 9, 2020.
Source: SEC EDGAR, the filing index for accession 0001171843-20-007783. Last ingested by Listed: Nov 6, 2026, 18:07 ET. No prices; not investment advice.