<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
(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, 2000
-------------
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
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First Capital, Inc.
-------------------
(Exact name of registrant as specified in its charter)
Indiana 35-2056949
----------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) 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
Check whether the issuer (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[__]
APPLICABLE ONLY TO CORPORATE ISSUERS; Indicate the number of shares
outstanding of each of the issuer's classes of common stock, as of the latest
practicable date: 2,537,324 shares of common stock were outstanding as of July
31, 2000.
<PAGE>
FIRST CAPITAL, INC.
INDEX
<TABLE>
<CAPTION>
Part I Financial Information Page
----
<S> <C> <C>
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets as of June 30, 2000 (unaudited)
and December 31, 2000 3
Consolidated Statements of Income for the three months
and six months ended June 30, 2000 and 1999 (unaudited) 4
Consolidated Statements of Cash Flows for the six months
ended June 30, 2000 and 1999 (unaudited) 5
Notes to consolidated financial statements (unaudited) 6-8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-12
Part II. Other Information 13-14
Signatures 15
</TABLE>
2
<PAGE>
PART I - FINANCIAL INFORMATION
FIRST CAPITAL, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
-------- ------------
2000 1999
---- ----
(In thousands)
<S> <C> <C>
ASSETS
Cash and due from banks $ 7,057 $ 5,820
Interest bearing deposits with banks 3,616 3,702
Securities available for sale, at fair value 35,210 30,097
Securities-held to maturity 11,898 12,325
Federal funds sold - 4,000
Loans receivable, net 167,516 154,982
Federal Home Loan Bank stock, at cost 1,252 1,252
Foreclosed real estate - 256
Premises and equipment 6,388 6,459
Accrued interest receivable 1,733 1,578
Cash value of life insurance 1,136 1,111
Other assets 1,252 1,215
---------------------------------
Total Assets $ 237,058 $ 222,797
=================================
LIABILITIES
Deposits $ 185,553 $ 175,342
Advances from Federal Home Loan Bank 20,169 16,750
Accrued interest payable 1,127 971
Accrued expenses and other liabilities 749 858
---------------------------------
Total Liabilities 207,598 193,921
---------------------------------
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 2,537,324 shares 25 25
Additional paid-in capital 12,798 12,446
Retained earnings-substantially restricted 18,349 17,781
Unearned ESOP shares (543) (564)
Unearned stock compensation (318) -
Accumulated other comprehensive income-net
unrealized loss on securities available for sale (851) (812)
---------------------------------
Total Stockholders' Equity 29,460 28,876
---------------------------------
Total Liabilities and Stockholders' Equity $ 237,058 $ 222,797
=================================
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
PART I - FINANCIAL INFORMATION
FIRST CAPITAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
2000 1999 2000 1999
---- ---- ---- ----
(In thousands, except per share data)
<S> <C> <C> <C> <C>
INTEREST INCOME
Loans receivable, including fees $ 3,376 $ 2,900 $ 6,615 $ 5,787
Securities 739 668 1,400 1,170
Federal funds sold - 47 33 76
Federal Home Loan Bank dividends 25 23 52 51
Interest bearing deposits with banks 78 71 190 161
--------------------- ---------------------
Total interest income 4,218 3,709 8,290 7,245
INTEREST EXPENSE
Deposits 1,989 1,665 3,894 3,303
Advances from Federal Home Loan Bank 227 170 433 267
--------------------- ---------------------
Total interest expense 2,216 1,835 4,327 3,570
Net interest income 2,002 1,874 3,963 3,675
Provision for loan losses - 44 - 92
--------------------- ---------------------
Net interest income after provision for
loan losses 2,002 1,830 3,963 3,583
NON-INTEREST INCOME
Service charges on deposit accounts 158 142 302 261
Commission income 58 26 122 81
Gain on sale of mortgage loans - 15 11 27
Gain on sale of foreclosed real estate 5 - 11 -
Other income 68 65 127 103
--------------------- ---------------------
Total non-interest income 289 248 573 472
--------------------- ---------------------
NON-INTEREST EXPENSE
Compensation and benefits 733 663 1,522 1,317
Occupancy and equipment 218 206 424 415
Other operating expenses 418 398 939 725
--------------------- ---------------------
Total non-interest expense 1,369 1,267 2,885 2,457
--------------------- ---------------------
Income before income taxes 922 811 1,651 1,598
Income tax expense 333 300 587 574
--------------------- ---------------------
Net Income 589 511 1,064 1,024
OTHER COMPREHENSIVE LOSS, NET OF TAX
Unrealized gain (loss) on securities:
Unrealized holding gains (losses) arising during the period (55) (381) (39) (537)
Less: reclassification adjustment - - - -
--------------------- ---------------------
Other comprehensive loss (55) (381) (39) (537)
--------------------- ---------------------
Comprehensive Income $ 534 $ 130 $ 1,025 $ 487
===================== =====================
Net income per common share, basic $ 0.24 $ 0.21 $ 0.43 $ 0.42
===================== =====================
Net income per common share, diluted $ 0.24 $ 0.21 $ 0.43 $ 0.42
===================== =====================
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
PART I - FINANCIAL INFORMATION
FIRST CAPITAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
2000 1999
---- ----
(In thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,064 $ 1,024
Adjustments to reconcile net income to net
cash provided by operating activities:
Amortization of premiums and accretion of discounts (1) 19
Depreciation expense 243 249
Deferred income taxes (44) (23)
ESOP compensation expense 22 31
Stock compensation expense 35 -
Increase in cash value of life insurance (25) (24)
Provision for loan losses - 92
Proceeds from sales of mortgage loans 615 1,284
Mortgage loans originated for sale (604) (1,257)
Net gain on sale of mortgage loans (11) (27)
Net gain on sale of foreclosed real estate (11) -
Increase in accrued interest receivable (155) (229)
Increase in accrued interest payable 156 29
Net change in other assets/liabilities (77) (84)
-------------------------
Net Cash Provided By Operating Activities 1,207 1,084
-------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Net decrease in interest bearing deposits with banks 86 7,190
(Increase) decrease in federal funds sold 4,000 (900)
Purchase of securities available for sale (6,921) (16,974)
Proceeds from maturities of securities available for sale 1,500 5,544
Proceeds from maturities of securities held to maturity 370 1,396
Purchase of securities held to maturity - (7,829)
Principal collected on mortgage-backed securities 300 574
Net increase in loans receivable (12,271) (7,811)
Purchase of Federal Home Loan Bank stock - (124)
Proceeds from sale of foreclosed real estate 4 -
Purchase of premises and equipment (172) (1,514)
-------------------------
Net Cash Used By Investing Activities (13,104) (20,448)
-------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposits 10,211 11,874
Net increase in advances from Federal Home Loan Bank 3,419 7,000
Exercise of stock options - 6
Dividends paid (496) (183)
-------------------------
Net Cash Provided By Financing Activities 13,134 18,697
-------------------------
Net Increase (Decrease) in Cash and Due From Banks 1,237 (667)
Cash and due from banks at beginning of period 5,820 4,918
-------------------------
Cash and Due From Banks at End of Period $ 7,057 $ 4,251
=========================
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
FIRST CAPITAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Presentation of Interim Information
First Capital, Inc. ("Company") was incorporated by First Harrison Bank
(formerly First Federal Bank, A Federal Savings Bank) ("Bank") in September
1998 in connection with the conversion from the mutual holding company form
of organization to the stock holding company form of organization. Upon
consummation of the conversion on December 31, 1998, the Company became the
holding company for the Bank and the former mutual holding company, First
Capital, Inc., M.H.C. ("MHC"), was merged with and into the Bank.
Accordingly, the information presented in this report relates primarily to
the Bank's operations.
In the opinion of the management, the unaudited consolidated financial
statements include all normal adjustments considered necessary to present
fairly the financial position as of June 30, 2000, and the results of
operations for the six months ended June 30, 2000 and 1999 and cash flows
for the six months ended June 30, 2000 and 1999. All of these adjustments
are of a normal, recurring nature. Interim results are not necessarily
indicative of results for a full year.
The consolidated financial statements and notes are presented as permitted
by Form 10-QSB, and do not contain certain information included in the
Company's annual audited consolidated financial statements.
The consolidated financial statements include the accounts of the Company,
the Bank and the Bank's wholly-owned subsidiary, First Harrison Financial
Services, Inc. (formerly HCB Insurance Agency, Inc.). (See Note 2) All
material intercompany balances and transactions have been eliminated in
consolidation.
2. Merger with HCB Bancorp
On January 12, 2000, the Company completed the plan of merger with HCB
Bancorp (HCB), a bank holding company located in Palmyra, Indiana. HCB was
the parent company of Harrison County Bank, a state-chartered commercial
bank, which was merged with and into the Bank. The merger provided for an
exchange of 15.5 shares of the Company's common stock for each share of HCB
common stock. The merger was accounted for as a pooling of interests and
the consolidated financial statements give effect to the merger as if the
merger had been consummated on January 1, 1999.
3. Supplemental Disclosures of Cash Flow Information
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------
2000 1999
---- ----
(In thousands)
<S> <C> <C>
Cash payments for:
Interest $ 4,171 $ 3,589
Taxes 585 595
Noncash investing activity:
Proceeds from sales of foreclosed real estate
financed through loans 296 -
</TABLE>
6
<PAGE>
FIRST CAPITAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(Unaudited)
4. 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 (loss) and the allocated
income tax amounts for the three and six months ended June 30, 2000 and
1999:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
2000 1999 2000 1999
----- ----- ----- --------
(In thousands)
<S> <C> <C> <C> <C>
Unrealized gains (losses) on securities:
Unrealized holding gains
(losses)
arising during the period $ (91) $(631) $ (65) $(890)
Income tax expense (benefit) 36 250 26 353
----- ----- ----- --------
Net of tax amount (55) (381) (39) (537)
----- ----- ----- --------
Less: reclassification
adjustment for (gains)
losses included in net
income - - - -
Income tax expense (benefit) - - - -
----- ----- ----- --------
- - - -
----- ----- ----- --------
Other comprehensive
loss $ (55) $(381) $ (39) $(537)
===== ===== ===== ========
</TABLE>
7
<PAGE>
FIRST CAPITAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(Unaudited)
5. Supplemental Disclosure for Earnings Per Share
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
2000 1999 2000 1999
---- ---- ---- ----
(In thousands, except per share data)
<S> <C> <C> <C> <C>
Basic:
Net income $ 589 $ 511 $ 1,064 $ 1,024
====================================================
Shares:
Weighted average common shares outstanding 2,450,198 2,444,798 2,450,198 2,444,798
====================================================
Net income per common share, basic $ 0.24 $ 0.21 $ 0.43 $ 0.42
====================================================
Diluted:
Net income $ 589 $ 511 $ 1,064 $ 1,024
====================================================
Shares:
Weighted average common shares outstanding 2,450,198 2,444,798 2,450,198 2,444,798
Add: Dilutive effect of outstanding options 8,259 8,029 8,729 7,388
Add: Dilutive effect of restricted share awards 1,719 - 3,124 -
----------------------------------------------------
Weighted average common shares
outstanding, as adjusted 2,460,176 2,452,827 2,462,051 2,452,186
====================================================
Net income per common share, diluted $ 0.24 $ 0.21 $ 0.43 $ 0.42
====================================================
</TABLE>
8
<PAGE>
PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FIRST CAPITAL, INC. AND SUBSIDIARY
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
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 to be 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; and other factors disclosed periodically in the Company's filings with
the Securities and Exchange Commission.
Because of the risks and uncertainties inherent in forward-looking statements,
readers are cautioned not to place undue reliance on them, whether included in
this report or made elsewhere from time to time by the Company or on its behalf.
The Company assumes no obligation to update any forward-looking statements.
Financial Condition
Total assets increased 6.4% from $222.8 million at December 31, 1999 to
$237.1 million at June 30, 2000, primarily as a result of increases in cash,
investment securities and loans receivable, net, which was funded primarily by a
decrease in federal funds sold, growth in deposits and an increase in advances
from the Federal Home Loan Bank of Indianapolis.
Loans receivable, net, were $155.0 million at December 31, 1999, compared
to $167.5 million at June 30, 2000, an 8.1% increase. This increase is
primarily the result of increases in residential and commercial mortgage loans.
The investment in securities held-to-maturity decreased from $12.3 million
at December 31, 1999 to $11.9 million at June 30, 2000 as a result of maturities
of $370,000 and principal repayments of $55,000.
Securities available for sale increased $5.1 million from $30.1 million at
December 31, 1999 to $35.2 million at June 30, 2000 as a result of purchases of
$6.9 million offset by maturities of $1.5 million and principal repayments of
$245,000.
Cash and interest bearing deposits with banks increased from $9.5 million
at December 31, 1999 to $10.7 million at June 30, 2000 as a result of excess
liquidity funded by growth in deposits.
9
<PAGE>
PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FIRST CAPITAL, INC. AND SUBSIDIARY
Total deposits increased from $175.3 million at December 31, 1999 to $185.6
million at June 30, 2000. The increase in deposits resulted primarily from
growth in demand and savings deposit accounts, which management attributes to
the customers' positive reactions to the merger and its promotional efforts to
attract lower cost accounts. Time deposits also increased $5.0 million from
$89.5 million at December 31, 1999 to $94.5 million at June 30, 2000.
Total stockholders' equity increased from $28.9 million at December 31,
1999 to $29.5 million at June 30, 2000 as a result of retained net income of
$568,000.
Results of Operations
Net Income. Net income was $1.1 million ($.43 per share diluted) for the
six months ended June 30, 2000 compared to $1.0 million ($.42 per share diluted)
for the six months ended June 30, 1999. Net income increased for 2000 compared
to 1999 primarily from an increase in net interest income offset by an increase
in non-interest expenses.
Net interest income for the six month periods ended June 30, 2000 and
1999. Net interest income increased 7.8% from $3.7 million in 1999 to $4.0
million in 2000 primarily as a result of the increase in interest-earning assets
funded by growth in deposits and additional borrowings from the Federal Home
Loan Bank of Indianapolis.
Total interest income increased $1.0 million, or 14.4% to $8.3 million for
the six months ended June 30, 2000 compared to $7.2 million in the prior year as
a result of a higher balance of interest earning assets. Interest on loans
receivable increased $828,000 and interest on securities increased $230,000 as a
result of higher average balances in 2000. The yield on interest earning assets
increased from 7.69% in 1999 to 7.72% in 2000 due to increases in average
interest rates for securities and interest bearing deposits with banks.
Total interest expense increased $757,000, or 21.2%, to $4.3 million for
the six months ended June 30, 2000 compared to $3.6 million for the six months
ended June 30, 1999 as a result of the growth in deposits and an increase in
average borrowings from the Federal Home Loan Bank of Indianapolis. The average
cost of funds increased from 4.62% in 1999 to 4.74% in 2000 due to the use of
higher cost borrowed funds and an increase in market interest rates.
Net interest income for the three month periods ended June 30, 2000 and
1999. Net interest income increased from $1.9 million in 1999 to $2.0 million
for 2000 primarily as a result of an increase in interest-earning assets during
the three months ended June 30,2000 compared to 1999.
Total interest income increased $509,000, or 13.7%, to $4.2 million for the
three months ended June 30, 2000 compared to $3.7 million for the three months
ended June 30, 1999.
Total interest expense increased $381,000, or 20.8%, to $2.2 million for
the three months ended June 30, 2000 compared to $1.8 million for the three
months ended June 30, 1999 due to growth in deposits and advances from the
Federal Home Loan Bank.
10
<PAGE>
PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FIRST CAPITAL, INC. AND SUBSIDIARY
Provision for loan losses. The provision for loan losses was $92,000 for
the six month period ended June 30, 1999. No provisions were made for the six
month period ended June 30, 2000. Provisions for loan losses are charged to
operations to bring the total allowance for loan losses to a level considered by
management to be adequate to provide for estimated 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 its allowance for loan
losses at a level which 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. At June 30, 2000, non-performing loans amounted to $309,000. Included
in non-performing loans are loans over 90 days past due secured by one-to-four
family residential real estate in the amount of $199,000. These loans are
accruing interest as the estimated value of the collateral and collection
efforts are deemed sufficient to ensure full recovery.
Non-interest income. Non-interest income increased 21.4% to $573,000 for
the six months ended June 30, 2000 compared to $472,000 for the six months ended
June 30, 1999. The increase is attributable to an increase in service charges
on deposit accounts of $41,000 resulting from growth in transaction accounts, an
increase in commission income of $41,000 due to increased investment product
sales and an increase in other income of $24,000 resulting primarily from
increases in automated teller machine and debit card fees.
Non-interest expense. Non-interest expense increased by $428,000 for the
six month period ended June 30, 2000 compared to the same period for the prior
year. The increase results primarily from increases in compensation and
benefits and other operating expenses. Compensation and benefits expense
increased $205,000 due to normal compensation increases, compensation
adjustments after the merger, additional staff for the new branch office in New
Albany, Indiana opened during 1999 and the adoption of a stock compensation plan
in the third quarter of 1999. Other operating expenses increased $214,000
during the six month period ended June 30, 2000 primarily due to increases in
advertising, data processing fees, office supplies and professional fees. The
increases in advertising and office supplies were merger related as the Company
attempted to gain recognition for the new bank name and had to replace the
existing stationery and office products with those bearing the new bank logo.
The increase in data processing fees related to the increase in loan and deposit
accounts and the expense necessary to merge the computer systems. Professional
fees increased due to merger related expenses, costs associated with the
Company's change in fiscal year to a calendar year end and other expenses
incurred as part of operating as a public company.
Income tax expense. Income tax expense for the six month period ended June
30, 2000 was $587,000, compared to $574,000 for the same period in 1999. The
effective tax rate for 2000 is 35.6% compared to 35.9% for 1999.
11
<PAGE>
PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FIRST CAPITAL, INC. AND SUBSIDIARY
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, 2000, the Bank had cash and interest-
bearing deposits with banks of $10.7 million and securities available-for-sale
with a fair value of $35.2 million. If the Bank requires funds beyond its
ability to generate them internally, it has additional borrowing capacity with
the FHLB of Indianapolis and 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.
Current OTS regulations require savings institutions to maintain an average
daily balance of liquid assets (cash and eligible investments) equal to at least
4.0% of the average daily balance of its net withdrawable deposits and short-
term borrowings. Historically, the Bank has maintained liquidity levels in
excess of regulatory requirements.
The Bank is required to maintain specific amounts of capital pursuant to
OTS requirements. As of June 30, 2000, 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 11.88%, 11.88% and 20.41%,
respectively. The regulatory requirements at that date were 1.5%, 3.0% and
8.0%, respectively.
Year 2000 Update
The year 2000 issue exists because many computer systems and applications use
two-digit date fields to designate a year. Date-sensitive systems may recognize
the year 2000 as 1900, or not at all. This inability to recognize or properly
treat the year 2000 may cause erroneous results, ranging from system
malfunctions to incorrect or incomplete processing. As a user of computers,
computer software and equipment utilizing embedded microprocessors, failure to
resolve year 2000 issues could cause substantial disruption of the Bank's
business and could have a material adverse effect on the Bank's business,
financial condition or results of operations.
While there can be no assurances that the Bank's year 2000 plan has effectively
addressed the year 2000 issue, the Bank has not been notified, and is unaware
of, any vendor or service provider problems related to year 2000 and all systems
have performed properly since January 1, 2000. Likewise, the Bank is unaware of
any year 2000 issues that have impaired the ability of the Bank's borrowers to
repay their debt.
12
<PAGE>
PART II
OTHER INFORMATION
FIRST CAPITAL, INC.
Item 1. 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 it's financial condition or operations.
Item 2. Changes in Securities and Use of Proceeds
Not applicable.
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 April 19,
2000. There were 2,506,573 shares entitled to vote at the time of the
annual meeting. Holders of 1,861,081 shares were represented at the
meeting. The results of the vote on the matters presented at the
meeting is as follows:
1. The following individuals were elected as directors:
<TABLE>
<CAPTION>
Vote Vote Term to
Name For Withheld Expire
---- ---- -------- -------
<S> <C> <C> <C> <C>
John W. Buschemeyer 1,802,661 58,420 2003
Kenneth R. Saulman 1,785,845 75,236 2003
Marvin E. Kiesler 1,803,146 57,935 2003
Loren E. Voyles 1,800,146 60,935 2003
</TABLE>
The terms of directors Earl H. Book, William W. Harrod, James S.
Breeden, Michael L. Shireman, James E. Nett, J. Gordon Pendleton,
Samuel E. Uhl, Mark D. Shireman, Dennis L. Huber and Gerald L.
Uhl 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, 2000 was ratified
by stockholders by the following vote:
For 1,785,092; Against 17,414; Abstain 58,575
13
<PAGE>
PART II - CONTINUED
OTHER INFORMATION
FIRST CAPITAL, INC.
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
Exhibit
-------
27 Financial Data Schedule
No reports on Form 8-K were filed during the period covered by this
report.
14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed by the undersigned thereunto
duly authorized.
FIRST CAPITAL, INC.
(Registrant)
Dated August 11, 2000 BY: /s/ William W. Harrod
---------------------- -------------------------
William W. Harrod
President and CEO
Dated August 11, 2000 BY: /s/ Michael C. Frederick
---------------------- ---------------------------
Michael C. Frederick
Senior Vice President
and Treasurer
15
