First Capital earnings increased to $5.1 million, or $1.53 per diluted share, for the quarter ended September 30, 2026, as stronger net interest income outweighed higher operating expenses and credit-loss provisions. The company announced the results on October 23, compared with net income of $4.5 million, or $1.34 per diluted share, a year earlier.
Key Takeaways
- Quarterly net interest income rose to $12.5 million as asset yields increased and funding costs declined.
- Higher compensation costs and credit-loss provisions absorbed part of the income improvement.
- Nine-month profit reached $14.2 million, while nonperforming assets increased from year-end.
Table of Contents
- First Capital earnings benefit from a wider interest margin
- Compensation costs offset part of the income gain
- Credit provisions and nonperforming assets increase
- Nine-month results show sustained interest-income growth
- Conclusion
First Capital earnings benefit from a wider interest margin
First Capital, which trades on Nasdaq under FCAP, is identified in its corporate and investor information as the holding company for First Harrison Bank. The bank operates 17 offices across communities in Indiana and Kentucky.
Third-quarter net interest income—the difference between interest earned and interest paid—rose to $12.5 million from $11.0 million a year earlier. After the provision for credit losses, it increased to $12.2 million from $10.8 million.
The improvement came from both sides of the interest business. The average tax-equivalent yield on earning assets increased to 5.23% from 4.94%, while average earning assets expanded to $1.25 billion from $1.20 billion. Meanwhile, the average cost of interest-bearing liabilities fell to 1.57% from 1.66%, despite an increase in their average balance.
Tax-equivalent net interest margin widened 37 basis points to 4.08%. This is a non-GAAP measure that adjusts for tax-exempt income; the unadjusted margin also widened 37 basis points, reaching 4.01%.
| Item | Details |
|---|---|
| Q3 annualized return on average assets | 1.59% in 2026 versus 1.45% in 2025. |
| Q3 annualized return on average equity | 14.40% in 2026 versus 14.29% in 2025. |
| Q3 cash dividends per share | $0.32 in 2026 versus $0.31 in 2025. |
| Q3 effective income tax rate | 19.4% in 2026 versus 19.2% in 2025. |
| Total assets | Approximately $1.27 billion at both September 30, 2026, and December 31, 2025. |
Compensation costs offset part of the income gain
Noninterest expenses increased $545,000 to $8.1 million. Compensation and benefits rose $585,000, reflecting annual salary adjustments and higher employer-provided health insurance costs.
A $148,000 decline in occupancy and equipment expenses provided a partial offset. The year-earlier quarter included branch disposal losses, a call-center system upgrade and a branch demolition that did not recur in the third quarter of 2026.
Noninterest income slipped $14,000 to $2.3 million. A $9,000 loss on equity securities, compared with a $150,000 gain a year earlier, outweighed increases in other income and deposit-account service charges.
Credit provisions and nonperforming assets increase
The quarterly provision for credit losses rose to $355,000 from $150,000. Net charge-offs—loans written off after recoveries—also increased, reaching $123,000 compared with $17,000 a year earlier.
Nonperforming assets stood at $5.5 million on September 30, up from $4.4 million at December 31, 2025. First Capital attributed the increase primarily to placing a non-owner-occupied commercial real estate loan on nonaccrual status.
The balance sheet remained broadly stable in size. Net loans receivable increased $20.9 million from year-end, while available-for-sale securities declined $22.5 million. Deposits increased $6.4 million to approximately $1.13 billion.
Nine-month results show sustained interest-income growth
For the first nine months of 2026, net income reached $14.2 million, or $4.25 per diluted share, compared with $11.5 million, or $3.43 per share, in the same period of 2025.
Net interest income after credit-loss provisions increased $4.7 million to $34.9 million. The tax-equivalent net interest margin widened to 3.96% from 3.55%, showing that the quarterly improvement extended across the year-to-date period.
Noninterest income increased $373,000, but noninterest expenses rose approximately $1.5 million. Nine-month credit-loss provisions reached $1.13 million, compared with $794,000 a year earlier.
Conclusion
First Capital earnings benefited from higher asset yields and lower funding costs, but rising expenses and credit provisions limited the gain. Subsequent results will show whether margin strength continues to offset those pressures; the announcement did not specify the next earnings-release date.
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