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What changed in FIRST CAPITAL INC's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of FIRST CAPITAL INC's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+242 added−293 removedSource: 10-K (2026-03-31) vs 10-K (2025-03-31)

Top changes in FIRST CAPITAL INC's 2025 10-K

242 paragraphs added · 293 removed · 209 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

91 edited+8 added−20 removed188 unchanged
Biggest changeTreasury notes and bonds: Due in one year or less 18,772 18,940 4.45 % 1.72 % 42,157 43,046 9.05 % 1.29 % Due after one year through five years 2,777 2,864 0.67 % 2.92 % 20,927 21,712 4.57 % 1.88 % Due after five years through ten years - - 0.00 % 0.00 % - - 0.00 % 0.00 % Due after ten years - - 0.00 % 0.00 % - - 0.00 % 0.00 % Mortgage-backed securities and CMOs (3) Due in one year or less 90 91 0.02 % 0.98 % 28 29 0.01 % 1.11 % Due after one year through five years 5,048 5,245 1.23 % 1.58 % 6,608 7,066 1.49 % 1.60 % Due after five years through ten years 8,625 9,304 2.18 % 1.69 % 12,215 13,181 2.77 % 1.70 % Due after ten years 101,696 109,476 25.71 % 3.48 % 78,366 86,292 18.15 % 2.66 % Municipal obligations Due in one year or less 1,626 1,617 0.38 % 3.94 % 2,529 2,533 0.53 % 3.52 % Due after one year through five years 24,840 26,118 6.13 % 2.08 % 25,065 26,071 5.48 % 2.54 % Due after five years through ten years 50,011 56,033 13.16 % 2.70 % 37,334 39,483 8.30 % 2.86 % Due after ten years 57,678 66,413 15.59 % 2.71 % 82,537 90,962 19.13 % 2.80 % $ 389,243 $ 418,935 98.36 % $ 437,271 $ 468,549 98.53 % SECURITIES HELD TO MATURITY (2) Corporate notes: Due in one year or less $ - $ - 0.00 % 0.00 % $ - $ - 0.00 % 0.00 % Due after one year through five years - - 0.00 % 0.00 % - - 0.00 % 0.00 % Due after five years through ten years 1,324 2,000 0.47 % 3.25 % 1,279 2,000 0.42 % 3.28 % Due after ten years 3,267 5,000 1.17 % 3.92 % 3,167 5,000 1.05 % 3.92 % $ 4,591 $ 7,000 1.64 % $ 4,446 $ 7,000 1.47 % _______________________________________ (1) Yields are calculated on a fully taxable equivalent basis using a marginal federal income tax rate of 21%.
Biggest changeTreasury notes and bonds: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Due in one year or less ​ — ​ — 0.00 % 0.00 % 18,772 ​ 18,940 4.45 % 1.72 % Due after one year through five years ​ 2,461 ​ 2,485 0.57 % 2.84 % 2,777 ​ 2,864 0.67 % 2.92 % Due after five years through ten years ​ — ​ — 0.00 % 0.00 % — ​ — 0.00 % 0.00 % Due after ten years ​ — ​ — 0.00 % 0.00 % — ​ — 0.00 % 0.00 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Mortgage-backed securities and CMOs (3) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Due in one year or less ​ 64 ​ 64 0.01 % 1.11 % 90 ​ 91 0.02 % 0.98 % Due after one year through five years ​ 4,519 ​ 4,644 1.06 % 1.70 % 5,048 ​ 5,245 1.23 % 1.58 % Due after five years through ten years ​ 9,709 ​ 10,460 2.38 % 1.46 % 8,625 ​ 9,304 2.18 % 1.69 % Due after ten years ​ 178,384 ​ 181,068 41.22 % 4.26 % 101,696 ​ 109,476 25.71 % 3.48 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Municipal obligations ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Due in one year or less ​ 1,544 ​ 1,560 0.36 % 1.68 % 1,626 ​ 1,617 0.38 % 3.94 % Due after one year through five years ​ 19,964 ​ 20,869 4.75 % 1.94 % 24,840 ​ 26,118 6.13 % 2.08 % Due after five years through ten years ​ 68,574 ​ 74,890 17.05 % 2.58 % 50,011 ​ 56,033 13.16 % 2.70 % Due after ten years ​ 57,580 ​ 60,679 13.82 % 3.75 % 57,678 ​ 66,413 15.59 % 2.71 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 417,190 ​ $ 432,167 98.40 % ​ ​ $ 389,243 ​ $ 418,935 98.36 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ SECURITIES HELD TO MATURITY (2) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Corporate notes: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Due in one year or less ​ $ — ​ $ — 0.00 % 0.00 % $ — ​ $ — 0.00 % 0.00 % Due after one year through five years ​ — ​ — 0.00 % 0.00 % — ​ — 0.00 % 0.00 % Due after five years through ten years ​ 1,560 ​ 2,000 0.46 % 3.27 % 1,324 ​ 2,000 0.47 % 3.25 % Due after ten years ​ 3,683 ​ 5,000 1.14 % 3.91 % 3,267 ​ 5,000 1.17 % 3.92 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 5,243 ​ $ 7,000 1.60 % ​ ​ $ 4,591 ​ $ 7,000 1.64 % ​ ​ (1) Yields are calculated on a fully taxable equivalent basis using a marginal federal income tax rate of 21%.
Civil penalties cover a wide range of violations and can amount to $2 million in especially egregious cases. State nonmember banks are regulated by the FDIC and state regulators. 23 Federal Home Loan Bank System The Bank is a member of the FHLB System, which consists of 11 regional FHLBs and the Office of Finance.
Civil penalties cover a wide range of violations and can amount to $2 million in especially egregious cases. State nonmember banks are regulated by the FDIC and state regulators. Federal Home Loan Bank System The Bank is a member of the FHLB System, which consists of 11 regional FHLBs and the Office of Finance.
As such, the Bank was required to use the specific charge-off method to compute bad debt deductions beginning in 2016 and its bad debt reserves calculated using the experience reserve method were recaptured in taxable income over the four-year period ending December 31, 2019. 25 Potential Recapture of Base Year Bad Debt Reserve.
As such, the Bank was required to use the specific charge-off method to compute bad debt deductions beginning in 2016 and its bad debt reserves calculated using the experience reserve method were recaptured in taxable income over the four-year period ending December 31, 2019. Potential Recapture of Base Year Bad Debt Reserve.
New appraisals are generally obtained for all significant properties when a loan is individually evaluated for credit losses, and a property is considered significant if the value of the property is estimated to exceed $200,000. Subsequent appraisals are obtained as needed or if management believes there has been a significant change in the market value of the property.
New appraisals are generally obtained for all significant properties when a loan is initially individually evaluated for credit losses, and a property is considered significant if the value of the property is estimated to exceed $200,000. Subsequent appraisals are obtained as needed or if management believes there has been a significant change in the market value of the property.
The Bank limits the number of speculative construction loans outstanding to any one builder based on the Bank’s assessment of the builder’s capacity to service the debt. 4 Most construction loans are originated with an LTV ratio not to exceed 80% of the appraised estimated value of the completed property.
The Bank limits the number of speculative construction loans outstanding to any one builder based on the Bank’s assessment of the builder’s capacity to service the debt. Most construction loans are originated with an LTV ratio not to exceed 80% of the appraised estimated value of the completed property.
If a loan continues in a delinquent status for 90 days or more, the Bank generally initiates foreclosure or other litigation proceedings. See Note 4 in the accompanying Notes to Consolidated Financial Statements for additional information regarding delinquent loans. 7 Nonperforming Assets.
If a loan continues in a delinquent status for 90 days or more, the Bank generally initiates foreclosure or other litigation proceedings. See Note 4 in the accompanying Notes to Consolidated Financial Statements for additional information regarding delinquent loans. Nonperforming Assets.
As a general matter, the Federal Reserve Board has indicated that the board of directors of a bank holding company should eliminate, defer or significantly reduce dividends to shareholders if: (i) the company's net income available to shareholders for the past four quarters, net of dividends previously paid during that period, is not sufficient to fully fund the dividends; (ii) the prospective rate of earnings retention is inconsistent with the company's capital needs and overall current and prospective financial condition; or (iii) the company will not meet, or is in danger of not meeting, its minimum regulatory capital adequacy ratios.
As a general matter, the Federal Reserve Board has indicated that the board of directors of a bank holding company should eliminate, defer or significantly reduce dividends to shareholders if: (i) the company’s net income available to shareholders for the past four quarters, net of dividends previously paid during that period, is not sufficient to fully fund the dividends; (ii) the prospective rate of earnings retention is inconsistent with the company’s capital needs and overall current and prospective financial condition; or (iii) the company will not meet, or is in danger of not meeting, its minimum regulatory 18 Table of Contents capital adequacy ratios.
However, at December 31, 2024, the Bank had no commitments required to be accounted for at fair value, as all mortgage loan commitments were best efforts commitments where specific loans were committed to be delivered if and when the loans were sold. Fair value is estimated based on fees that would be charged on commitments with similar terms. Delinquencies.
However, at December 31, 2025, the Bank had no commitments required to be accounted for at fair value, as all mortgage loan commitments were best efforts commitments where specific loans were committed to be delivered if and when the loans were sold. Fair value is estimated based on fees that would be charged on commitments with similar terms. Delinquencies.
The Bank accrues interest on loans over 90 days past due when, in the opinion of management, the estimated value of collateral and collection efforts are deemed sufficient to ensure full recovery. The Bank did not recognize any interest income on nonaccrual loans for the fiscal year ended December 31, 2024.
The Bank accrues interest on loans over 90 days past due when, in the opinion of management, the estimated value of collateral and collection efforts are deemed sufficient to ensure full recovery. The Bank did not recognize any interest income on nonaccrual loans for the fiscal year ended December 31, 2025.
The Bank was in compliance with this requirement with an investment in FHLB stock at December 31, 2024 of $1.7 million. The FHLBs were previously required to provide funds for the resolution of insolvent thrifts in the late 1980s and contribute funds for affordable housing programs.
The Bank was in compliance with this requirement with an investment in FHLB stock at December 31, 2025 of $1.7 million. The FHLBs were previously required to provide funds for the resolution of insolvent thrifts in the late 1980s and contribute funds for affordable housing programs.
Federal Reserve System Previously, the Federal Reserve Board regulations required banks to maintain non-interest earning reserves against their transaction accounts (primarily NOW and regular checking accounts). However, effective March 26, 2020, the Federal Reserve Board set reserve requirement ratios to 0.0%, and the requirement remained at 0.0% at December 31, 2024.
Federal Reserve System Previously, the Federal Reserve Board regulations required banks to maintain non-interest earning reserves against their transaction accounts (primarily NOW and regular checking accounts). However, effective March 26, 2020, the Federal Reserve Board set reserve requirement ratios to 0.0%, and the requirement remained at 0.0% at December 31, 2025.
The Bank had $1.1 million of net deferred loan costs at December 31, 2024. Mortgage Banking Activities. Mortgage loans originated and funded by the Bank and intended for sale in the secondary market are carried at the lower of aggregate cost or market value.
The Bank had $1.1 million of net deferred loan costs at December 31, 2025. Mortgage Banking Activities. Mortgage loans originated and funded by the Bank and intended for sale in the secondary market are carried at the lower of aggregate cost or market value.
Specific changes from the former capital rules impacting the Company’s determination of risk-weighted assets include, among other things: ● Applying a 150% risk weight instead of a 100% risk weight for certain high volatility commercial real estate acquisition, development and construction loans; ● Assigning a 150% risk weight to exposures (other than residential mortgage exposures) that are 90 days past due; ● Providing for a 20% credit conversion factor for the unused portion of a commitment with an original maturity of one year or less that is not unconditionally cancellable (currently set at 0%); and ● Providing for a risk weight, generally not less than 20% with certain exceptions, for securities lending transactions based on the risk weight category of the underlying collateral securing the transaction. 17 Holding Company Regulation General.
Specific changes from the former capital rules impacting the Company’s determination of risk-weighted assets include, among other things: ● Applying a 150% risk weight instead of a 100% risk weight for certain high volatility commercial real estate acquisition, development and construction loans; ● Assigning a 150% risk weight to exposures (other than residential mortgage exposures) that are 90 days past due; ● Providing for a 20% credit conversion factor for the unused portion of a commitment with an original maturity of one year or less that is not unconditionally cancellable (currently set at 0%); and ● Providing for a risk weight, generally not less than 20% with certain exceptions, for securities lending transactions based on the risk weight category of the underlying collateral securing the transaction.
The held to maturity securities portfolio includes subordinated debt obligations issued by other bank holding companies. The estimate of expected credit losses considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. At December 31, 2024, the estimated reserve was immaterial. 12 Deposit Activities and Other Sources of Funds General.
The held to maturity securities portfolio includes subordinated debt obligations issued by other bank holding companies. The estimate of expected credit losses considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. At December 31, 2025, the estimated reserve was immaterial. Deposit Activities and Other Sources of Funds General.
Any change in such regulatory requirements and policies, whether by the IDFI, FDIC, Federal Reserve Board or Congress, could have a material adverse impact on the Company, the Bank and their operations. The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) made extensive changes to the regulation of the Bank.
Any change in such regulatory requirements and policies, whether by the IDFI, FDIC, Federal Reserve Board or Congress, could have a material adverse impact on the Company, the Bank and their operations. 15 Table of Contents The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) made extensive changes to the regulation of the Bank.
In general, these regulations require that any such transaction by the Bank (or its subsidiaries) with an affiliate must be secured by designated amounts of specified collateral and must be limited to certain thresholds on an individual and aggregate basis. The Sarbanes-Oxley Act of 2002 generally prohibits loans by the Company to its executive officers and directors.
In general, these regulations require that any such transaction by the Bank (or its subsidiaries) with an affiliate must be secured by designated amounts of specified collateral and must be limited to certain thresholds on an individual and aggregate basis. 22 Table of Contents The Sarbanes-Oxley Act of 2002 generally prohibits loans by the Company to its executive officers and directors.
Because payments on loans secured by multi-family and commercial properties are often dependent on the successful operation and management of the properties, repayment of such loans may be affected by adverse conditions in the real estate market or the economy.
Because payments on loans secured by commercial properties are often dependent on the successful operation and management of the properties, repayment of such loans may be affected by adverse conditions in the real estate market or the economy.
The regulatory structure also gives the regulatory authorities extensive discretion in connection with their supervisory and enforcement activities and examination policies, including policies with respect to the classification of assets and the establishment of adequate loan loss reserves for regulatory purposes.
The regulatory structure also gives the regulatory authorities extensive discretion in connection with their supervisory and enforcement activities and examination policies, including policies with respect to the classification of assets and the establishment of adequate credit loss reserves for regulatory purposes.
The Bank relies upon advances from the FHLB and other sources to supplement its supply of lendable funds and to meet deposit withdrawal requirements. Advances from the FHLB are secured by certain investment securities and first mortgage loans. The FHLB functions as a central reserve bank providing credit for member financial institutions.
The Bank relies upon advances from the FHLB and other sources to supplement its supply of lendable funds and to meet deposit withdrawal requirements. Advances from the FHLB are secured by certain investment securities, first mortgage loans and Home Equity Lines of Credit. The FHLB functions as a central reserve bank providing credit for member financial institutions.
On February 28, 2024, the Bank entered into an Overdraft Line of Credit Agreement with the FHLB which established a line of credit not to exceed $10.0 million secured under a blanket collateral agreement. This agreement expires on February 28, 2025. At December 31, 2024, there were no borrowings under the agreement.
On February 28, 2024, the Bank entered into an Overdraft Line of Credit Agreement with the FHLB which established a line of credit not to exceed $10.0 million secured under a blanket collateral agreement. This agreement expires on March 2, 2027. At December 31, 2025, there were no borrowings under the agreement.
In reviewing applications seeking approval for mergers and other acquisition transactions, the bank regulatory authorities will consider, among other things, the competitive effect and public benefits of the transactions, the capital position of the combined organization, the risks to the stability of the U.S. banking or financial system, the applicant’s performance record under the Community Reinvestment Act and the effectiveness of the subject organizations in combating money laundering activities. 19 Federal Banking Regulation Business Activities.
In reviewing applications seeking approval for mergers and other acquisition transactions, the bank regulatory authorities will consider, among other things, the competitive effect and public benefits of the transactions, the capital position of the combined organization, the risks to the stability of the U.S. banking or financial system, the applicant’s performance record under the Community Reinvestment Act and the effectiveness of the subject organizations in combating money laundering activities.
The Company is a financial holding company within the meaning of federal law. As such, the Company is registered with the Federal Reserve Board and subject to Federal Reserve Board regulations, examination, supervision and reporting requirements.
Holding Company Regulation General. The Company is a financial holding company within the meaning of federal law. As such, the Company is registered with the Federal Reserve Board and subject to Federal Reserve Board regulations, examination, supervision and reporting requirements.
A financial institution that falls below the minimum CBLR generally has a two quarter grace period to get back into compliance as long as it maintains a minimum CBLR of 7% for 2020, 7.5% for 2021, 8% for 2022 and 9% for 2023 and thereafter.
A financial institution that falls 21 Table of Contents below the minimum CBLR generally has a two quarter grace period to get back into compliance as long as it maintains a minimum CBLR of 7% for 2020, 7.5% for 2021, 8% for 2022 and 9% for 2023 and thereafter.
A bank will be (i) “well capitalized” if the institution has a total risk-based capital ratio of 10.0% or greater, a Tier 1 risk-based capital ratio of 8.0% or greater, a common equity Tier 1 risk-based capital ratio of 6.5% or greater and a leverage ratio of 5.0% or greater, and is not subject to any order or written directive by any such regulatory authority to meet and maintain a specific capital level for any capital measure; (ii) “adequately capitalized” if the institution has a total risk-based capital ratio of 8.0% or greater, a Tier 1 risk-based capital ratio of 6.0% or greater, a common equity Tier 1 risk-based capital ratio of 4.5% or greater and a leverage ratio of 4.0% or greater and is not “well capitalized”; (iii) “undercapitalized” if the institution has a total risk-based capital ratio that is less than 8.0%, a Tier 1 risk-based capital ratio of less than 6.0%, a common equity Tier 1 risk-based capital ratio of less than 4.5%, or a leverage ratio of less than 4.0%; (iv) “significantly undercapitalized” if the institution has a total risk-based capital ratio of less than 6.0%, a Tier 1 risk-based capital ratio of less than 4.0%, a common equity Tier 1 risk-based capital ratio of less than 3.0%, or a leverage ratio of less than 3.0%; and (v) “critically undercapitalized” if the institution’s tangible equity is equal to or less than 2.0% of average quarterly tangible assets.
The relevant capital measures are the total risk-based capital ratio, the Tier 1 risk-based capital ratio, the common equity Tier 1 risk-based capital ratio, and the leverage ratio. 20 Table of Contents A bank will be (i) “well capitalized” if the institution has a total risk-based capital ratio of 10.0% or greater, a Tier 1 risk-based capital ratio of 8.0% or greater, a common equity Tier 1 risk-based capital ratio of 6.5% or greater and a leverage ratio of 5.0% or greater, and is not subject to any order or written directive by any such regulatory authority to meet and maintain a specific capital level for any capital measure; (ii) “adequately capitalized” if the institution has a total risk-based capital ratio of 8.0% or greater, a Tier 1 risk-based capital ratio of 6.0% or greater, a common equity Tier 1 risk-based capital ratio of 4.5% or greater and a leverage ratio of 4.0% or greater and is not “well capitalized”; (iii) “undercapitalized” if the institution has a total risk-based capital ratio that is less than 8.0%, a Tier 1 risk-based capital ratio of less than 6.0%, a common equity Tier 1 risk-based capital ratio of less than 4.5%, or a leverage ratio of less than 4.0%; (iv) “significantly undercapitalized” if the institution has a total risk-based capital ratio of less than 6.0%, a Tier 1 risk-based capital ratio of less than 4.0%, a common equity Tier 1 risk-based capital ratio of less than 3.0%, or a leverage ratio of less than 3.0%; and (v) “critically undercapitalized” if the institution’s tangible equity is equal to or less than 2.0% of average quarterly tangible assets.
These regulations outline how financial institutions can share information concerning suspected terrorist and money laundering activity with other financial institutions under the protection of a statutory safe harbor if each financial institution notifies FinCEN of its intent to share information.
These regulations outline how financial institutions can share information concerning suspected terrorist and money laundering activity with other financial institutions under the protection of a statutory safe harbor if each financial 19 Table of Contents institution notifies FinCEN of its intent to share information.
The identification of these loans results from the loan review process that identifies and monitors credits with weaknesses or conditions which call into question the full collection of the contractual payments due under the terms of the loan agreement.
The identification of these loans results from the loan review process that identifies and monitors credits with weaknesses or conditions which call into question the full collection of the contractual payments due under the terms of 9 Table of Contents the loan agreement.
If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security.
If this assessment 12 Table of Contents indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security.
Indiana law defines "retained net income" to mean the net income of a specified period, calculated under the consolidated report of income instructions, less the total amount of all dividends declared for the specified period.
Indiana law defines “retained net income” to mean the net income of a specified period, calculated under the consolidated report of income instructions, less the total amount of all dividends declared for the specified period.
Therefore, the Company’s independent registered public accounting firm was not required for SEC reporting purposes to attest on internal control over financial reporting as of December 31, 2024. Federal Securities Laws The Company’s common stock is registered with the SEC under the Securities Exchange Act of 1934, as amended.
Therefore, the Company’s independent registered public accounting firm was not required for SEC reporting purposes to attest on internal control over financial reporting as of December 31, 2025. 23 Table of Contents Federal Securities Laws The Company’s common stock is registered with the SEC under the Securities Exchange Act of 1934, as amended.
Treasuries and U.S. agency notes and bonds to secure borrowings through the Discount Window, if needed. While the Bank has conducted a test borrowing through the Discount Window, at December 31, 2024, there were no borrowings outstanding through the Discount Window.
The Bank has pledged certain U.S. Treasuries and U.S. agency notes and bonds to secure borrowings through the Discount Window, if needed. While the Bank has conducted a test borrowing through the Discount Window, at December 31, 2025, there were no borrowings outstanding through the Discount Window.
Factors considered by management include, among others, payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. At December 31, 2024, the Company’s specific allocation of the ACL for loans totaled $1.3 million. At December 31, 2024, the Company's ACL on loans totaled $9.3 million, of which $6.4 million related to qualitative factor adjustments.
Factors considered by management include, among others, payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. At December 31, 2025, the Company’s specific allocation of the ACL for loans totaled $1.3 million. At December 31, 2025, the Company’s ACL on loans totaled $10.1 million, of which $7.6 million related to qualitative factor adjustments.
As a result of this affiliation, the Bank may be included in the filing of a consolidated federal income tax return with the Company and, if a decision to file a consolidated tax return is made, the parties agree to compensate each other for their individual share of the consolidated tax liability and/or any tax benefits provided by them in the filing of the consolidated federal tax return.
As a result of this affiliation, the Bank may be included in the filing of a consolidated federal income tax return with the Company and, if a decision to file a consolidated tax return is made, the parties agree to compensate each other for their individual share of the consolidated tax liability and/or any tax benefits provided by them in the filing of the consolidated federal tax return. 24 Table of Contents Bad Debt Reserve.
A financial institution can elect to be subject to or opt out of the CBLR framework at any time. As a qualified community bank, the Bank has opted into the CBLR framework as of December 31, 2024 and, as of that date, its CBLR was 10.57%, meeting all capital adequacy requirements in effect at that date. Insurance of Deposit Accounts.
A financial institution can elect to be subject to or opt out of the CBLR framework at any time. As a qualified community bank, the Bank has opted into the CBLR framework as of December 31, 2025 and, as of that date, its CBLR was 11.01%, meeting all capital adequacy requirements in effect at that date. Insurance of Deposit Accounts.
The Company may incur costs to adopt additional policies and systems to ensure compliance with the Volcker Rule, but any such costs are not expected to be material. Regulatory Relief Act.
The Company may incur costs to adopt additional policies and systems to ensure compliance with the Volcker Rule, but any such costs are not expected to be material. 17 Table of Contents Regulatory Relief Act.
Historical loss experience provides the basis for the estimation of expected credit losses. Qualitative adjustments to historical loss information are made for losses reflected by peers, changes in underwriting standards, changes in economic conditions, changes in delinquency levels, collateral values and other factors. Losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed.
Qualitative adjustments to historical loss information are made for losses reflected by peers, changes in underwriting standards, changes in economic conditions, changes in delinquency levels, collateral values and other factors. Losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed.
The regulations also provide for a “special mention” category, described as assets which do not currently expose the institution to sufficient risk to warrant adverse classification, but have potential weaknesses that deserve management’s close attention. At December 31, 2024, the Bank had $4.4 million in doubtful/nonaccrual loans and $4.3 million in substandard loans.
The regulations also provide for a “special mention” category, described as assets which do not currently expose the institution to sufficient risk to warrant adverse classification, but have potential weaknesses that deserve management’s close attention. 8 Table of Contents At December 31, 2025, the Bank had $4.3 million in doubtful/nonaccrual loans and $2.7 million in substandard loans.
At December 31, 2024, the Bank had commitments to originate $836,000 in fixed-rate mortgage loans intended for sale in the secondary market after the loans are closed.
At December 31, 2025, the Bank had commitments to originate $799,000 in fixed-rate mortgage loans intended for sale in the secondary market after the loans are closed.
Such commitments are made in writing on specified terms and conditions and are honored for up to 60 days from the date of application, depending on the type of transaction. The Bank had outstanding loan commitments of approximately $16.5 million at December 31, 2024.
Such commitments are made in writing on specified terms and conditions and are honored for up to 60 days from the date of application, depending on the type of transaction. The Bank had outstanding loan commitments of approximately $20.6 million at December 31, 2025.
In addition, the Bank identified $5.5 million in loans as special mention loans at December 31, 2024. See Note 4 in the accompanying Notes to Consolidated Financial Statements for additional information regarding classified loans.
In addition, the Bank identified $1.9 million in loans as special mention loans at December 31, 2025. See Note 4 in the accompanying Notes to Consolidated Financial Statements for additional information regarding classified loans.
At December 31, 2024, the Bank had no outstanding federal funds purchased under the lines of credit and the Bank had no borrowings under the lines of credit during 2024. Subsidiary Activities The Bank is a subsidiary and is wholly-owned by the Company.
At December 31, 2025, the Bank had no outstanding federal funds purchased under the lines of credit and the Bank had no borrowings under the lines of credit during 2025. 14 Table of Contents Subsidiary Activities The Bank is a subsidiary and is wholly-owned by the Company.
The Basel III Capital Rules became effective on January 1, 2015 (subject to a phase-in period). 16 The Basel III Capital Rules, among other things: ● introduce a new capital measure called “Common Equity Tier 1” (“CET1”); ● specify that Tier 1 capital consists of CET1 and “Additional Tier 1 capital” instruments meeting specified requirements; ● define CET1 narrowly by requiring that most deductions/adjustments to regulatory capital measures be made to CET1 and not to the other components of capital; and ● expand the scope of the deductions/adjustments as compared to existing regulations.
The Basel III Capital Rules, among other things: ● introduce a new capital measure called “Common Equity Tier 1” (“CET1”); ● specify that Tier 1 capital consists of CET1 and “Additional Tier 1 capital” instruments meeting specified requirements; ● define CET1 narrowly by requiring that most deductions/adjustments to regulatory capital measures be made to CET1 and not to the other components of capital; and ● expand the scope of the deductions/adjustments as compared to existing regulations.
At December 31, 2024, the Bank had approved speculative construction loans, a construction loan for which there is not a commitment for permanent financing in place at the time the construction loan was originated, with total commitments of $5.2 million and outstanding balances of $3.2 million.
At December 31, 2025, the Bank had approved speculative construction loans, a construction loan for which there is not a commitment for permanent financing in place at the time the construction loan was originated, with total commitments of $6.8 million and outstanding balances of $3.1 million.
At December 31, 2024, discounts from appraised values used in management’s analysis for estimates of changes in market conditions and the condition of the collateral ranged from 10% to 20%, with a weighted average discount of 11%.
At December 31, 2025, discounts from appraised values used in management’s analysis for estimates of changes in market conditions and the condition of the collateral ranged from 20% to 40%, with a weighted average discount of 39%.
As of December 31, 2024, all of the Bank’s mortgage-backed securities had fixed rates. The Bank also invests in collateralized mortgage obligations (“CMOs”) issued by Ginnie Mae, Fannie Mae and Freddie Mac, and on occasion, private issuers.
As of December 31, 2025, all of the Bank’s mortgage-backed securities had fixed rates. The Bank also invests in collateralized mortgage obligations (“CMOs”) issued by Ginnie Mae, Fannie Mae and Freddie Mac.
At December 31, 2023, the Company's allowance for loan losses totaled $8.0 million, of which $6.1 million related to qualitative factor adjustments. 9 See Notes 1 and 4 in the accompanying Notes to Consolidated Financial Statements for additional information regarding management’s methodology for estimating the ACL on loans.
At December 31, 2024, the Company’s ACL totaled $9.3 million, of which $6.4 million related to qualitative factor adjustments. See Notes 1 and 4 in the accompanying Notes to Consolidated Financial Statements for additional information regarding management’s methodology for estimating the ACL on loans.
Under its current credit policies, the FHLB generally limits advances to 20% of a member’s assets, and short-term borrowing of less than one year may not exceed 10% of the institution’s assets. The FHLB determines specific lines of credit for each member institution.
Under its current credit policies, the FHLB generally limits advances to 20% of a member’s assets, and short-term borrowing of less than one year may not exceed 10% of the institution’s assets. The FHLB determines specific lines of credit for each member institution. The Bank also has access to the FRB’s Discount Window for borrowings.
Management cannot predict what insurance assessment rates will be in the future. 22 Insurance of deposits may be terminated by the FDIC upon a finding that the institution has engaged in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations or has violated any applicable law, regulation, rule, order or regulatory condition imposed in writing by the FDIC.
Insurance of deposits may be terminated by the FDIC upon a finding that the institution has engaged in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations or has violated any applicable law, regulation, rule, order or regulatory condition imposed in writing by the FDIC.
There are three classifications for problem assets: substandard, doubtful and loss. “Substandard” assets have one or more defined weaknesses and are characterized by the distinct possibility that the insured institution will sustain some loss if the deficiencies are not corrected.
“Substandard” assets have one or more defined weaknesses and are characterized by the distinct possibility that the insured institution will sustain some loss if the deficiencies are not corrected.
As an accommodation to its commercial business loan borrowers, the Bank issues standby letters of credit or performance bonds usually in favor of municipalities for whom its borrowers are performing services. At December 31, 2024, the Bank had outstanding letters of credit of $2.1 million. Loan Origination and Other Fees.
As an accommodation to its commercial business loan borrowers, the Bank issues standby letters of credit or performance bonds usually in favor of municipalities for whom its borrowers are performing services. At December 31, 2025, the Bank had outstanding letters of credit of $308,000. 7 Table of Contents Loan Origination and Other Fees.
On April 10, 2023, the IRS issued IR-2023-74 and proposed regulations that may have resulted in the Captive being considered a listed transaction. The proposed regulations included the possibility of material tax expense to the consolidated group if finalized in their current form.
On April 10, 2023, the IRS issued IR-2023-74 and proposed regulations that may have resulted in the Captive being considered a listed transaction. The proposed regulations included the possibility of material tax expense to the consolidated group if finalized in their current form. The Captive was formally dissolved with all remaining assets transferred to the Company on December 31, 2023.
Banking institutions with a ratio of CET1 to risk-weighted assets above the minimum but below the conservation buffer (or below the combined capital conservation buffer and countercyclical capital buffer, when the latter is applied) will face constraints on dividends, equity repurchases and compensation based on the amount of the shortfall.
Banking institutions with a ratio of CET1 to risk-weighted assets above the minimum but below the conservation buffer (or below the combined capital conservation buffer and countercyclical capital buffer, when the latter is applied) will face constraints on dividends, equity repurchases and compensation based on the amount of the shortfall. 16 Table of Contents The Basel III Capital Rules provide for a number of deductions from and adjustments to CET1.
For the years ended December 31, 2022, 2023 and 2024, the Company was subject to Kentucky Corporate income taxes at a rate of 5.00%. The Company’s Kentucky tax returns have not been audited in the past five years. 26
The Company’s Indiana tax returns for 2018, 2019 and 2020 were audited by the Indiana Department of Revenue during 2022. Kentucky. For the years ended December 31, 2023, 2024 and 2025, the Company was subject to Kentucky Corporate income taxes at a rate of 5.00%. The Company’s Kentucky tax returns have not been audited in the past five years. ​
As a qualified financial holding company, the Company is eligible to engage in, or acquire companies engaged in, the broader range of activities that are permitted by the GLB Act. 18 To commence any new activity permitted by the BHC Act or to acquire a company engaged in any new activity permitted by the BHC Act, each insured depository institution subsidiary of the financial holding company must have received a rating of at least “satisfactory” in its most recent examination under the Community Reinvestment Act.
To commence any new activity permitted by the BHC Act or to acquire a company engaged in any new activity permitted by the BHC Act, each insured depository institution subsidiary of the financial holding company must have received a rating of at least “satisfactory” in its most recent examination under the Community Reinvestment Act.
The majority of ARM loans provide that the amount of any increase or decrease in the interest rate is limited to 2.0% (upward or downward) per adjustment period and 6.0% over its lifetime and generally contains minimum and maximum interest rates.
The Bank may occasionally use below market interest rates and other marketing inducements to attract ARM loan borrowers. The majority of ARM loans provide that the amount of any increase or decrease in the interest rate is limited to 2.0% (upward or downward) per adjustment period and 6.0% over its lifetime and generally contains minimum and maximum interest rates.
Supplementary capital (“Tier II”) includes, among other items, cumulative perpetual and long-term limited-life preferred stock, mandatory convertible securities, certain hybrid capital instruments, term subordinated debt and the ACL on loans, subject to certain limitations, less required deductions.
Supplementary capital (“Tier II”) includes, among other items, cumulative perpetual and long-term limited-life preferred stock, mandatory convertible securities, certain hybrid capital instruments, term subordinated debt and the ACL on loans, subject to certain limitations, less required deductions. The regulations also require the maintenance of a leverage ratio designed to supplement the risk-based capital guidelines.
At December 31, 2024 2023 Amount Percent of Outstanding Loans in Category Amount Percent of Outstanding Loans in Category (Dollars in thousands) 1-4 Family Residential Mortgage $ 1,592 21.73 % $ 1,490 21.49 % Multifamily Residential 545 5.77 % 332 6.44 % Commercial Real Estate 2,459 28.91 % 2,119 27.16 % 1-4 Family Residential Construction 184 2.38 % 208 2.52 % Other Construction, Development and Land 588 11.86 % 804 12.35 % Home Equity and Second Mortgage 478 10.41 % 406 9.99 % Commercial Business 2,424 9.81 % 1,431 10.98 % Consumer and Other 1,011 9.13 % 1,215 9.07 % Total allowance for credit losses $ 9,281 100.00 % $ 8,005 100.00 % Investment Activities As an Indiana chartered commercial bank, the Bank has the authority to invest in various types of liquid assets, including United States Treasury obligations, securities of various federal agencies and of state and municipal governments, deposits at the applicable FHLB, certificates of deposit of federally insured institutions, certain bankers’ acceptances and federal funds.
The following table sets forth the breakdown of the ACL on loans by loan category at the dates indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At December 31, ​ ​ 2025 ​ 2024 ​ ​ ​ ​ ​ ​ ​ ​ Percent of Outstanding ​ ​ ​ ​ ​ ​ ​ Percent of Outstanding ​ ​ Amount ​ Loans in Category ​ Amount ​ Loans in Category ​ ​ (Dollars in thousands) 1-4 Family Residential Mortgage ​ $ 1,393 21.21 % $ 1,592 21.73 % Multifamily Residential ​ 696 10.49 % 545 5.77 % Commercial Real Estate ​ 3,243 31.23 % 2,459 28.91 % 1-4 Family Residential Construction ​ 213 2.33 % 184 2.38 % Other Construction, Development and Land ​ 437 6.22 % 588 11.86 % Home Equity and Second Mortgage ​ 937 10.77 % 478 10.41 % Commercial Business ​ 2,252 9.35 % 2,424 9.81 % Consumer and Other ​ 937 8.40 % 1,011 9.13 % Total allowance for credit losses ​ $ 10,108 100.00 % $ 9,281 100.00 % ​ Investment Activities As an Indiana chartered commercial bank, the Bank has the authority to invest in various types of liquid assets, including United States Treasury obligations, securities of various federal agencies and of state and municipal governments, deposits at the applicable FHLB, certificates of deposit of federally insured institutions, certain bankers’ acceptances and federal funds.
The Bank’s lending policies generally limit the maximum loan-to-value (“LTV”) ratio on fixed-rate and ARM loans to 80% of the lesser of the appraised value or purchase price of the underlying residential property unless private mortgage insurance to cover the excess over 80% is obtained, in which case the mortgage is limited to 95% (or 97% under a Freddie Mac program) of the lesser of appraised value or purchase price.
The relative amount of fixed-rate and ARM loans that can be originated at any time is largely determined by the demand for each in a competitive environment. 4 Table of Contents The Bank’s lending policies generally limit the maximum loan-to-value (“LTV”) ratio on fixed-rate and ARM loans to 80% of the lesser of the appraised value or purchase price of the underlying residential property unless private mortgage insurance to cover the excess over 80% is obtained, in which case the mortgage is limited to 95% (or 97% under a Freddie Mac program) of the lesser of appraised value or purchase price.
The Bank regularly reviews the loan portfolio to determine whether any loans require classification in accordance with applicable regulations. 8 Foreclosed Real Estate. Foreclosed real estate held for sale is carried at fair value minus estimated costs to sell.
The Bank regularly reviews the loan portfolio to determine whether any loans require classification in accordance with applicable regulations. Foreclosed Real Estate. Foreclosed real estate held for sale is carried at fair value minus estimated costs to sell. Costs of holding foreclosed real estate are charged to expense in the current period, except for significant property improvements, which are capitalized.
A significant increase in insurance premiums would likely have an adverse effect on the operating expenses and results of operations of the Bank.
A significant increase in insurance premiums would likely have an adverse effect on the operating expenses and results of operations of the Bank. Management cannot predict what insurance assessment rates will be in the future.
Commercial business loans are generally originated with LTV ratios not exceeding 75%. Aside from lines of credit, commercial business loans are generally originated for terms not to exceed seven years with variable interest rates based on the prime lending rate. Approved credit lines totaled $39.1 million at December 31, 2024, of which $15.2 million was outstanding.
Aside from lines of credit, commercial business loans are generally originated for terms not to exceed seven years with variable interest rates based on the prime lending rate. Approved credit lines totaled $39.3 million at December 31, 2025, of which $11.9 million was outstanding. Lines of credit are originated at fixed and variable interest rates for one-year renewable terms.
Such loans are generally originated at fixed interest rates for terms up to five years and at LTV ratios up to 90% of the blue book value in the case of used vehicles and 90% of the purchase price in the case of new vehicles. 5 The Bank originates variable-rate home equity and fixed-rate second mortgage loans generally for terms not to exceed ten years.
Such loans are generally originated at fixed interest rates for terms up to five years and at LTV ratios up to 90% of the Kelley Blue Book value in the case of used vehicles and 100% of the purchase price in the case of new vehicles.
Item 1. Business – Mortgage Banking Activities .” ARM loans originated generally have interest rates that adjust at regular intervals of one to five years based upon changes in the prevailing interest rates on United States Treasury Bills.
Item 1. Business–Mortgage Banking Activities .” ARM loans originated generally have interest rates that adjust at regular intervals of one to five years based upon changes in the prevailing interest rates on United States Treasury Bills. The Bank also originates “hybrid” ARM loans, which are fixed for an initial period of three or five years and adjust annually thereafter.
Year Ended December 31, 2024 2023 2022 (In thousands) Beginning balance, prior to adoption of ASC 326 $ 8,005 $ 6,772 $ 6,083 Impact of adopting ASC 326 - 561 - Provision for credit losses 1,449 1,141 950 9,454 8,474 7,033 Recoveries: 1-4 Family Residential Mortgage 29 21 5 Multifamily Residential - - - Commercial Real Estate 1 - - 1-4 Family Residential Construction - - - Other Construction, Development and Land - - 5 Home Equity and Second Mortgage 4 2 2 Commercial Business 2 9 - Consumer and Other 140 180 232 Total recoveries 176 212 244 Charge-offs: 1-4 Family Residential Mortgage 4 31 48 Multifamily Residential - - - Commercial Real Estate - - - 1-4 Family Residential Construction - - - Other Construction, Development and Land - - - Home Equity and Second Mortgage - 15 - Commercial Business - 205 - Consumer and Other 345 430 457 Total charge-offs 349 681 505 Net charge-offs (173 ) (469 ) (261 ) Balance at end of period $ 9,281 $ 8,005 $ 6,772 Ratio of allowance to total loans outstanding at the end of the period 1.45 % 1.29 % 1.25 % Ratio of nonaccrual loans to total loans 0.69 % 0.28 % 0.25 % Allowance as a % of nonperforming loans 211.80 % 457.17 % 454.50 % Ratio of net charge-offs to average loans outstanding during the period: 1-4 Family Residential Mortgage -0.02 % 0.01 % 0.04 % Multifamily Residential 0.00 % 0.00 % 0.00 % Commercial Real Estate 0.00 % 0.00 % 0.00 % 1-4 Family Residential Construction 0.00 % 0.00 % 0.00 % Other Construction, Development and Land 0.00 % 0.00 % -0.01 % Home Equity and Second Mortgage -0.01 % 0.02 % 0.00 % Commercial Business 0.00 % 0.29 % 0.00 % Consumer and Other 0.35 % 0.45 % 0.40 % Total net charge-offs to average loans outstanding during the period 0.03 % 0.08 % 0.05 % 10 ACL on Loans Analysis.
Allowance for Credit Losses Analysis The following table sets forth an analysis of the Bank’s ACL on loans for the periods indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ 2023 ​ ​ (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Beginning balance ​ $ 9,281 ​ $ 8,005 ​ $ 7,333 ​ Provision for credit losses ​ 1,144 ​ 1,449 ​ 1,141 ​ ​ ​ 10,425 ​ 9,454 ​ 8,474 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Recoveries: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 1-4 Family Residential Mortgage ​ 7 ​ 29 ​ 21 ​ Multifamily Residential ​ — ​ — ​ — ​ Commercial Real Estate ​ — ​ 1 ​ — ​ 1-4 Family Residential Construction ​ — ​ — ​ — ​ Other Construction, Development and Land ​ 1 ​ — ​ — ​ Home Equity and Second Mortgage ​ 1 ​ 4 ​ 2 ​ Commercial Business ​ 35 ​ 2 ​ 9 ​ Consumer and Other ​ 138 ​ 140 ​ 180 ​ Total recoveries ​ 182 ​ 176 ​ 212 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Charge-offs: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 1-4 Family Residential Mortgage ​ 1 ​ 4 ​ 31 ​ Multifamily Residential ​ — ​ — ​ — ​ Commercial Real Estate ​ — ​ — ​ — ​ 1-4 Family Residential Construction ​ — ​ — ​ — ​ Other Construction, Development and Land ​ — ​ — ​ — ​ Home Equity and Second Mortgage ​ — ​ — ​ 15 ​ Commercial Business ​ 83 ​ — ​ 205 ​ Consumer and Other ​ 415 ​ 345 ​ 430 ​ Total charge-offs ​ 499 ​ 349 ​ 681 ​ Net charge-offs ​ (317) ​ (173) ​ (469) ​ Balance at end of period ​ $ 10,108 ​ $ 9,281 ​ $ 8,005 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ratio of allowance to total loans outstanding at the end of the period ​ 1.52 % 1.45 % 1.29 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ratio of nonaccrual loans to total loans ​ 0.64 % 0.69 % 0.28 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Allowance as a % of nonperforming loans ​ 232.31 % 211.80 % 457.17 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ratio of net charge-offs to average loans outstanding during the period: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 1-4 Family Residential Mortgage ​ 0.00 % -0.02 % 0.01 % Multifamily Residential ​ 0.00 % 0.00 % 0.00 % Commercial Real Estate ​ 0.00 % 0.00 % 0.00 % 1-4 Family Residential Construction ​ 0.00 % 0.00 % 0.00 % Other Construction, Development and Land ​ 0.00 % 0.00 % 0.00 % Home Equity and Second Mortgage ​ 0.00 % -0.01 % 0.02 % Commercial Business ​ 0.08 % 0.00 % 0.29 % Consumer and Other ​ 0.49 % 0.35 % 0.45 % Total net charge-offs to average loans outstanding during the period ​ 0.05 % 0.03 % 0.08 % ​ 10 Table of Contents ACL on Loans Analysis.
The Bank utilized both advances from the FHLB and borrowings under the BTFP throughout the year ended December 31, 2024. The Bank had no outstanding borrowings at December 31, 2024. See Note 10 in the accompanying Notes to Consolidated Financial Statements for additional information regarding the Bank’s utilization of borrowed funds during the year ended December 31, 2024.
The Bank did not utilize either advances from the FHLB or borrowings from the FRB during the year ended December 31, 2025. The Bank had no outstanding borrowings at December 31, 2025. See Note 10 in the accompanying Notes to Consolidated Financial Statements for additional information regarding the Bank’s utilization of borrowed funds in prior years.
Lines of credit are originated at fixed and variable interest rates for one-year renewable terms. Consumer and Other Loans. The Bank offers a variety of secured or guaranteed consumer loans, including automobile and truck loans, home equity loans, home improvement loans, boat loans, mobile home loans and loans secured by savings deposits. In addition, the Bank offers unsecured consumer loans.
Consumer and Other Loans. The Bank offers a variety of secured or guaranteed consumer loans, including automobile and truck loans, home equity loans, home improvement loans, boat loans, mobile home loans and loans secured by savings deposits. In addition, the Bank offers unsecured consumer loans.
A bank’s capital category is determined solely for the purpose of applying prompt corrective action regulations, and the capital category may not constitute an accurate representation of the bank’s overall financial condition or prospects for other purposes. 21 The FDIA generally prohibits a depository institution from making any capital distributions (including payment of a dividend) or paying any management fee to its parent holding company if the depository institution would thereafter be “undercapitalized.” “Undercapitalized” institutions are subject to growth limitations and are required to submit a capital restoration plan.
The FDIA generally prohibits a depository institution from making any capital distributions (including payment of a dividend) or paying any management fee to its parent holding company if the depository institution would thereafter be “undercapitalized.” “Undercapitalized” institutions are subject to growth limitations and are required to submit a capital restoration plan.
The Company maintains the ACL on loans to cover management's estimate of all expected credit losses over the expected contractual life of the loan portfolio. The Company estimates the ACL on loans using relevant available information from internal and external sources relating to past events, current conditions, and reasonable and supportable forecasts.
The Company estimates the ACL on loans using relevant available information from internal and external sources relating to past events, current conditions, and reasonable and supportable forecasts. Historical loss experience provides the basis for the estimation of expected credit losses.
The Bank seeks to minimize these risks by limiting the maximum LTV ratio to 75% and strictly scrutinizing the financial condition of the borrower, the quality of the collateral and the management of the property securing the loan. The Bank also obtains loan guarantees from financially capable parties based on a review of personal financial statements. Commercial Business Loans.
The Bank seeks to minimize these risks by limiting the maximum LTV ratio to 75% and strictly scrutinizing the financial condition of the borrower, the quality of the collateral and the management of the property securing the loan.
The Captive was formally dissolved with all remaining assets transferred to the Company on December 31, 2023. 14 Human Capital As of December 31, 2024, the Bank had 173 full-time employees and 39 part-time employees. A collective bargaining unit does not represent the employees and the Bank considers its relationship with its employees to be good.
Human Capital As of December 31, 2025, the Bank had 176 full-time employees and 40 part-time employees. A collective bargaining unit does not represent the employees and the Bank considers its relationship with its employees to be good.
Demand loans, which are loans having neither a stated schedule of repayments nor a stated maturity, and overdrafts are reported as due in one year or less. Loan balances do not include undisbursed loan proceeds, unearned income and allowance for credit losses (“ACL”) on loans.
Demand loans, which are loans having neither a stated schedule of repayments nor a stated maturity, and overdrafts are reported as due in one year or less.
Although the applicant’s creditworthiness is a primary consideration, the underwriting process also includes a comparison of the value of the security, if any, to the proposed loan amount. The Bank underwrites and originates the majority of its consumer loans internally, which management believes limits exposure to credit risks relating to loans underwritten or purchased from brokers or other outside sources.
The Bank underwrites and originates the majority of its consumer loans internally, which management believes limits exposure to credit risks relating to loans underwritten or purchased from brokers or other outside sources.
Agency notes and bonds: Due in one year or less $ 44,604 $ 45,650 10.72 % 0.77 % $ 16,110 $ 16,363 3.44 % 2.33 % Due after one year through five years 69,986 73,658 17.29 % 1.04 % 110,124 118,563 24.93 % 0.92 % Due after five years through ten years 3,490 3,526 0.83 % 4.76 % 3,271 3,248 0.68 % 4.92 % Due after ten years - - 0.00 % 0.00 % - - 0.00 % 0.00 % U.S.
Agency notes and bonds: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Due in one year or less ​ $ 58,749 ​ $ 59,450 13.54 % 0.86 % $ 44,604 ​ $ 45,650 10.72 % 0.77 % Due after one year through five years ​ 11,264 ​ 11,650 2.65 % 1.29 % 69,986 ​ 73,658 17.29 % 1.04 % Due after five years through ten years ​ 4,378 ​ 4,348 0.99 % 5.07 % 3,490 ​ 3,526 0.83 % 4.76 % Due after ten years ​ — ​ — 0.00 % 0.00 % — ​ — 0.00 % 0.00 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S.
Other Regulations The Bank’s operations are also subject to federal laws applicable to credit transactions, including the: ● Truth-In-Lending Act, governing disclosures of credit terms to consumer borrowers; ● Home Mortgage Disclosure Act of 1975, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves; ● Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, creed or other prohibited factors in extending credit; ● Fair Credit Reporting Act, governing the use and provision of information to credit reporting agencies; ● Fair Debt Collection Act, governing the manner in which consumer debts may be collected by collection agencies; and ● Rules and regulations of the various federal agencies charged with the responsibility of implementing such federal laws. 24 The operations of the Bank also are subject to laws such as the: ● Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records; ● Electronic Funds Transfer Act and Regulation E promulgated thereunder, which govern automatic deposits to and withdrawals from deposit accounts and customers’ rights and liabilities arising from the use of automated teller machines and other electronic banking services; and ● Check Clearing for the 21st Century Act (also known as “Check 21”), which gives certain check reproductions, such as digital check images and copies made from that image (a “substitute check”), the same legal standing as the original paper check.
Other Regulations The Bank’s operations are also subject to federal laws applicable to credit transactions, including the: ● Truth-In-Lending Act, governing disclosures of credit terms to consumer borrowers; ● Home Mortgage Disclosure Act of 1975, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves; ● Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, creed or other prohibited factors in extending credit; ● Fair Credit Reporting Act, governing the use and provision of information to credit reporting agencies; ● Fair Debt Collection Act, governing the manner in which consumer debts may be collected by collection agencies; and ● Rules and regulations of the various federal agencies charged with the responsibility of implementing such federal laws.
The Bank, as an Indiana-chartered bank, is subject to extensive regulation, supervision and examination by the IDFI as its primary state regulator. Also, as to certain matters, the Bank is under the supervision of, and subject to examination by, the FDIC because the FDIC provides deposit insurance to the Bank and is the Bank’s primary regulator.
Federal Banking Regulation Business Activities. The Bank, as an Indiana-chartered bank, is subject to extensive regulation, supervision and examination by the IDFI as its primary state regulator.
Maturity Period Balance (In thousands) Three months or less $ 16,246 Three through six months 20,296 Six through twelve months 4,366 Over twelve months 1,901 Total $ 42,809 Uninsured deposits, which are the portion of deposit accounts that exceed the FDIC insurance limit (currently $250,000), were approximately $331.4 million and $319.5 million at December 31, 2024 and 2023, respectively.
The following table presents the maturity distribution of time deposits that are in excess of the FDIC insurance limit (currently $250,000) as of December 31, 2025. ​ ​ ​ ​ Maturity Period ​ ​ ​ Balance ​ ​ (In thousands) ​ ​ ​ ​ Three months or less ​ $ 26,439 Three through six months ​ 24,305 Six through twelve months ​ 13,514 Over twelve months ​ 2,355 Total ​ $ 66,613 ​ Uninsured deposits, which are the portion of deposit accounts that exceed the FDIC insurance limit (currently $250,000), were approximately $263.8 million and $331.4 million at December 31, 2025 and 2024, respectively.
The IDFI and FDIC have adopted various regulations regarding problem assets of financial institutions. The regulations require that each insured institution review and classify its assets on a regular basis. In addition, in connection with examinations of insured institutions, regulatory examiners have the authority to identify additional problem assets and, if appropriate, require them to be classified.
See Note 4 in the accompanying Notes to Consolidated Financial Statements for additional information regarding nonperforming loans. Classified Assets. The IDFI and FDIC have adopted various regulations regarding problem assets of financial institutions. The regulations require that each insured institution review and classify its assets on a regular basis.
Loan Maturity and Repricing The following table sets forth certain information at December 31, 2024 regarding the dollar amount of loans maturing in the Bank’s portfolio based on their contractual terms to maturity, but does not include potential prepayments.
Such loans may also give rise to claims and defenses by the borrower against the Bank as the holder of the loan, and a borrower may be able to assert claims and defenses that it has against the seller of the underlying collateral. 6 Table of Contents Loan Maturity and Repricing The following table sets forth certain information at December 31, 2025 regarding the dollar amount of loans maturing in the Bank’s portfolio based on their contractual terms to maturity, but does not include potential prepayments.
For the years ended December 31, 2022, 2023 and 2024, Indiana imposed a franchise tax based on a financial institution’s adjusted gross income as defined by statute at rates of 5.00%, 4.90% and 4.90%, respectively. The Indiana franchise tax rate will remain at 4.90% in future years.
For the years ended December 31, 2023, 2024 and 2025, Indiana imposed a franchise tax based on a financial institution’s adjusted gross income as defined by statute at a rate of 4.90%. In computing Indiana taxable income, deductions for municipal interest, state and local income taxes and certain accelerated depreciation permitted for federal tax purposes are disallowed.
Costs of holding foreclosed real estate are charged to expense in the current period, except for significant property improvements, which are capitalized. Valuations are periodically performed by management and an allowance is established by a charge to non-interest expense if the carrying value exceeds the fair value minus estimated costs to sell.
Valuations are periodically performed by management and an allowance is established by a charge to non-interest expense if the carrying value exceeds the fair value minus estimated costs to sell. The net income or loss from operations of foreclosed real estate held for sale is reported in noninterest expense. At December 31, 2025, the Bank had no foreclosed real estate.
Additionally, the health and safety of our employees is always the highest priority, we continuously evaluate our efforts and we make changes or accommodations to help ensure employees remain healthy, safe, and productive. 15 REGULATION AND SUPERVISION General As a financial holding company, the Company is required by federal law to report to, and otherwise comply with the rules and regulations of, the Board of Governors of the Federal Reserve Board (the “Federal Reserve Board”).
REGULATION AND SUPERVISION General As a financial holding company, the Company is required by federal law to report to, and otherwise comply with the rules and regulations of, the Board of Governors of the Federal Reserve Board (the “Federal Reserve Board”).

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf the Bank is unable to maintain its capital levels at “well capitalized” minimums, we could lose a significant source of funding, which would force us to utilize different wholesale funding or potentially sell assets at a time when pricing may be unfavorable, increasing our funding costs and reducing our net interest income and net income.
Biggest changeIf the Bank is unable to maintain its capital levels at “well capitalized” minimums, we could lose a significant source of funding, which would force us to utilize different wholesale funding or potentially sell assets at a time when pricing may be unfavorable, increasing our funding costs and reducing our net interest income and net income. 27 Table of Contents Our access to funding sources in amounts adequate to finance or capitalize our activities or on terms that are acceptable to us could be impaired by factors that affect us directly or the financial services industry or economy in general, such as disruptions in the financial markets or negative views and expectations about the prospects for the financial services industry.
Our continued success and growth depend in large part on the efforts of these key personnel, the support of the Company’s Board of Directors, and ability to attract, motivate and retain highly qualified senior and middle management and other skilled employees to complement and succeed to our core senior management team. 35 Our internal controls may be ineffective.
Our continued success and growth depend in large part on the efforts of these key personnel, the support of the Company’s Board of Directors, and ability to attract, motivate and retain highly qualified senior and middle management and other skilled employees to complement and succeed to our core senior management team. Our internal controls may be ineffective.
For a discussion of the Bank’s loan portfolio, see “Item 1. Business– Lending Activities.” 28 Liquidity risks could affect operations and jeopardize our business, financial condition, and results of operations. Our ability to implement our business strategy will depend on our liquidity and ability to obtain funding for loan originations, working capital, and other general purposes.
For a discussion of the Bank’s loan portfolio, see “Item 1. Business– Lending Activities.” Liquidity risks could affect operations and jeopardize our business, financial condition, and results of operations. Our ability to implement our business strategy will depend on our liquidity and ability to obtain funding for loan originations, working capital, and other general purposes.
Such disruption or breach of security may have a material adverse effect on our financial condition and results of operations. 30 Our framework for managing risks may not be effective in mitigating risk and loss to us. Our risk management framework seeks to mitigate risk and loss to us.
Such disruption or breach of security may have a material adverse effect on our financial condition and results of operations. Our framework for managing risks may not be effective in mitigating risk and loss to us. Our risk management framework seeks to mitigate risk and loss to us.
We have established processes and procedures intended to identify, measure, monitor, control, and analyze the types of risk to which we are subject, including liquidity risk, credit risk, market risk, interest rate risk, operational risk, information and cyber security risk, compensation risk, legal and compliance risk, and reputational risk, among others.
We have established processes and procedures intended to identify, measure, monitor, control, and analyze the types of risk to which we are subject, including liquidity risk, credit risk, market risk, interest rate risk, operational risk, information and cyber security risk, compensation risk, and legal and compliance risk, among others.
The combination of these provisions could have the effect of inhibiting a non-negotiated merger or other business combination, which, in turn, could adversely affect the market price of the Company’s common stock. The Company may issue additional securities, which could dilute the ownership percentage of holders of the Company ’ s common stock.
The combination of these provisions could have the effect of inhibiting a non-negotiated merger or other business combination, which, in turn, could adversely affect the market price of the Company’s common stock. The Company may issue additional securities, which could dilute the ownership percentage of holders of the Company’s common stock.
Significant prolonged reduced investor demand could manifest itself in lower fair values for these securities and may result in recognition of a credit loss through a valuation allowance, which could have a material adverse effect on our financial condition and results of operations. Municipal securities can also be impacted by the business environment of their geographic location.
Significant prolonged reduced investor demand could manifest itself in lower fair values for these securities and may result in recognition of a credit loss through a valuation allowance, which could have a material adverse effect on our financial condition and results of operations. 30 Table of Contents Municipal securities can also be impacted by the business environment of their geographic location.
The Company may issue additional securities to, among other reasons, raise additional capital or finance acquisitions, and, if it does, the ownership percentage of holders of the Company’s common stock could be diluted potentially materially. We may not be able to pay dividends in the future in accordance with past practice.
The Company may issue additional securities to, among other reasons, raise additional capital or finance acquisitions, and, if it does, the ownership percentage of holders of the Company’s common stock could be diluted potentially materially. 33 Table of Contents We may not be able to pay dividends in the future in accordance with past practice.
As a result, if you acquire the Company’s common stock, you could lose some or all of your investment. The price of the Company ’ s common stock may be volatile, which may result in losses for investors. General market price declines or market volatility in the future could adversely affect the price of the Company’s common stock.
As a result, if you acquire the Company’s common stock, you could lose some or all of your investment. The price of the Company’s common stock may be volatile, which may result in losses for investors. General market price declines or market volatility in the future could adversely affect the price of the Company’s common stock.
The trading volume in the Company ’ s common stock is less than that of other larger financial services institutions. Although the Company’s common stock is listed for trading on The NASDAQ Capital Market, the trading volume in its common stock may be less than that of other, larger financial services companies.
The trading volume in the Company’s common stock is less than that of other larger financial services institutions. Although the Company’s common stock is listed for trading on The NASDAQ Capital Market, the trading volume in its common stock may be less than that of other, larger financial services companies.
During any period of lower trading volume of the Company’s common stock, significant sales of shares of the Company’s common stock, or the expectation of these sales could cause the Company’s common stock price to fall. 34 The Company ’ s Articles of Incorporation, Indiana law, and certain banking laws may have an anti-takeover effect.
During any period of lower trading volume of the Company’s common stock, significant sales of shares of the Company’s common stock, or the expectation of these sales could cause the Company’s common stock price to fall. The Company’s Articles of Incorporation, Indiana law, and certain banking laws may have an anti-takeover effect.
Turmoil in the financial markets could result in lower fair values for our investment securities. Major disruptions in the capital markets and significant increases in market interest rates experienced in recent years have adversely affected investor demand for all classes of securities, excluding U.S. Treasury securities, and resulted in volatility in the fair values of our investment securities.
Major disruptions in the capital markets and significant increases in market interest rates experienced in recent years have adversely affected investor demand for all classes of securities, excluding U.S. Treasury securities, and resulted in volatility in the fair values of our investment securities.
If the issuer defaults on its payments, it may result in the recognition of a partial credit loss through a valuation allowance or total loss, which could have a material adverse effect on our financial condition and results of operations. Strong competition within the Bank ’ s market area could hurt the Company ’ s profitability and growth.
If the issuer defaults on its payments, it may result in the recognition of a partial credit loss through a valuation allowance or total loss, which could have a material adverse effect on our financial condition and results of operations. Strong competition within the Bank’s market area could hurt the Company’s profitability and growth.
Business – Lending Activities – Commercial Real Estate Loans .” Non-performing assets take significant time to resolve, adversely affect our results of operations and financial condition, and could result in losses. At December 31, 2024, our non-performing assets, consisting entirely of non-performing loans, totaled $4.4 million, or 0.69% of our gross loans and 0.37% of our total assets.
Business–Lending Activities–Commercial Real Estate Loans .” Non-performing assets take significant time to resolve, adversely affect our results of operations and financial condition, and could result in losses. At December 31, 2025, our non-performing assets, consisting entirely of non-performing loans, totaled $4.4 million, or 0.65% of our gross loans and 0.34% of our total assets.
The risks are organized in the following categories: ● Credit Risk ● Liquidity and Interest Rate Risk ● Operational Risk ● Strategic and External Risk ● Regulatory, Compliance, Legal, and Reputational Risk ● Risks Related to the Company’s Stock ● General Risk Factors Credit Risk We may not be able to measure and limit our credit risk adequately, which could adversely affect our profitability.
The risks are organized in the following categories: ● Credit Risk ● Liquidity and Interest Rate Risk ● Operational Risk ● Strategic and External Risk ● Regulatory, Compliance, Legal, and Other Risk ● Risks Related to the Company’s Stock ● General Risk Factors 25 Table of Contents Credit Risk We may not be able to measure and limit our credit risk adequately, which could adversely affect our profitability.
Our federal and state banking regulators, the Financial Crimes Enforcement Network, and other government agencies are authorized to impose significant civil money penalties for violations of anti-money laundering requirements.
We are required to comply with these and other anti-money laundering requirements. Our federal and state banking regulators, the Financial Crimes Enforcement Network, and other government agencies are authorized to impose significant civil money penalties for violations of anti-money laundering requirements.
We may be required to increase our ACL on loans and unfunded commitments, thus reducing earnings. 27 Commercial business lending may expose the Company to increased lending risks. At December 31, 2024, the Bank’s commercial business loan portfolio amounted to $62.7 million, or 9.8% of total loans.
We may be required to increase our ACL on loans and unfunded commitments, thus reducing earnings. Commercial business lending may expose the Company to increased lending risks. At December 31, 2025, the Bank’s commercial business loan portfolio amounted to $62.0 million, or 9.4% of total loans.
If we become subject to such regulatory actions, our business, results of operations, and financial condition may be adversely affected. Risks Related to the Company ’ s Stock An investment in the Company ’ s Common Stock is not an insured deposit.
If we become subject to such regulatory actions, our business, results of operations, and financial condition may be adversely affected. 32 Table of Contents Risks Related to the Company’s Stock An investment in the Company’s Common Stock is not an insured deposit.
Changes in these standards are continuously occurring and more drastic changes may occur in the future. The implementation of such changes could have a material adverse effect on our business, results of operations, and financial condition. Strategic and External Risk Our business may be adversely affected by conditions in the financial markets and economic conditions generally.
The implementation of such changes could have a material adverse effect on our business, results of operations, and financial condition. Strategic and External Risk Our business may be adversely affected by conditions in the financial markets and economic conditions generally.
Some of our accounting policies are critical because they require management to make difficult, subjective, and complex judgments about matters that are inherently uncertain and because it is likely that materially different amounts would be reported under different conditions or using different assumptions. If such estimates or assumptions underlying our financial statements are incorrect, we may experience material losses.
Some of our accounting policies are critical because they require management to make difficult, subjective, and complex judgments about matters that are inherently uncertain and because it is likely that materially different amounts would be reported under different conditions or using different assumptions.
Business – Lending Activities – Commercial Business Loans .” Commercial real estate lending may expose the Company to increased lending risks. At December 31, 2024, the Bank’s commercial real estate loan portfolio amounted to $184.9 million, or 28.9% of total loans. Commercial real estate lending is inherently riskier than residential mortgage lending.
Business–Lending Activities–Commercial Business Loans .” 26 Table of Contents Commercial real estate lending may expose the Company to increased lending risks. At December 31, 2025, the Bank’s commercial real estate loan portfolio amounted to $207.1 million, or 31.2% of total loans. Commercial real estate lending is inherently riskier than residential mortgage lending.
At December 31, 2024, $289.5 million, or 45.3% of the Bank’s total loans receivable, had fixed interest rates all of which were held for investment. The Bank offers ARM loans and fixed-rate loans.
At December 31, 2025, $308.8 million, or 46.6% of the Bank’s total loans receivable, had fixed interest rates all of which were held for investment. The Bank offers ARM loans and fixed-rate loans.
The BSA, the USA PATRIOT Act, and other laws and regulations require financial institutions, among other duties, to institute and maintain an effective anti-money laundering program and to file reports such as suspicious activity reports and currency transaction reports. We are required to comply with these and other anti-money laundering requirements.
We face a risk of noncompliance and enforcement action with the BSA and other anti-money laundering statutes and regulations. The BSA, the USA PATRIOT Act, and other laws and regulations require financial institutions, among other duties, to institute and maintain an effective anti-money laundering program and to file reports such as suspicious activity reports and currency transaction reports.
There can be no assurance that changes to existing laws, rules and regulations, or any other new laws, rules or regulations, will not be adopted in the future, which could make compliance more difficult or expensive or otherwise adversely affect our business, financial condition or prospects. Financial regulatory reform may have a material impact on the Company ’ s operations.
These laws, rules and regulations are frequently changed by legislative and regulatory authorities. There can be no assurance that changes to existing laws, rules and regulations, or any other new laws, rules or regulations, will not be adopted in the future, which could make compliance more difficult or expensive or otherwise adversely affect our business, financial condition or prospects.
The occurrence of operational interruption, cyber incident, or a deficiency in the cyber security of our technology systems (internal or outsourced) could negatively impact our financial condition or results of operations. 29 Information security risks have generally increased in recent years because of the proliferation of new technologies, the use of the Internet and telecommunications technologies to conduct financial and other transactions and the increased sophistication and activities of perpetrators of cyber-attacks and mobile phishing directed at our customers and our personnel.
Information security risks have generally increased in recent years because of the proliferation of new technologies, the use of the Internet and telecommunications technologies to conduct financial and other transactions and the increased sophistication and activities of perpetrators of cyber-attacks and mobile phishing directed at our customers and our personnel.
The occurrence of any failures, interruptions, or security breaches of our technology systems could damage our reputation, result in a loss of customer business, result in the unauthorized release, gathering, monitoring, misuse, loss, or destruction of proprietary information, subject us to additional regulatory scrutiny, or expose us to civil litigation and possible financial liability, any of which could have a material adverse effect on our financial condition, results of operations, or stock price.
Although we have not experienced any material losses related to a technology-related operational interruption or cyber-attack, there can be no assurance that such failures, interruptions, or security breaches will not occur in the future or, if they do occur, that the impact will not be substantial. 28 Table of Contents The occurrence of any failures, interruptions, or security breaches of our technology systems could damage our reputation, result in a loss of customer business, result in the unauthorized release, gathering, monitoring, misuse, loss, or destruction of proprietary information, subject us to additional regulatory scrutiny, or expose us to civil litigation and possible financial liability, any of which could have a material adverse effect on our financial condition, results of operations, or stock price.
Any of these circumstances could have an adverse effect on our business, financial condition and results of operations. 33 We are periodically subject to examination and scrutiny by a number of banking agencies and, depending upon the findings and determinations of these agencies, we may be required to make adjustments to our business that could adversely affect us.
We are periodically subject to examination and scrutiny by a number of banking agencies and, depending upon the findings and determinations of these agencies, we may be required to make adjustments to our business that could adversely affect us. Federal and state banking agencies periodically conduct examinations of our business, including compliance with applicable laws and regulations.
Failure to maintain and implement adequate programs to combat money laundering and terrorist financing could also have significant reputational consequences for us.
Failure to maintain and implement adequate programs to combat money laundering and terrorist financing could also have significant reputational consequences for us. Any of these circumstances could have an adverse effect on our business, financial condition and results of operations.
The costs to start up new branch facilities or to acquire existing branches, and the additional costs to operate these facilities, may increase our noninterest expense and decrease earnings in the short term. It may be difficult to adequately and profitably manage growth through the establishment of these branches.
New or acquired branch facilities and other facilities may not be profitable. We may not be able to correctly identify profitable locations for new branches. The costs to start up new branch facilities or to acquire existing branches, and the additional costs to operate these facilities, may increase our noninterest expense and decrease earnings in the short term.
Failure to successfully keep pace with technological change affecting the financial services industry could have a material adverse effect on our business, financial condition, and results of operations. 32 Regulatory, Compliance, Legal, and Reputational Risk We are subject to federal regulations that seek to protect the Deposit Insurance Fund and the depositors and borrowers of the Bank, and our federal regulators may impose restrictions on our operations that are detrimental to holders of the Company ’ s common stock.
Regulatory, Compliance, Legal, and Other Risk We are subject to federal regulations that seek to protect the Deposit Insurance Fund and the depositors and borrowers of the Bank, and our federal regulators may impose restrictions on our operations that are detrimental to holders of the Company’s common stock.
In addition, we can provide no assurance that these branch sites will successfully attract enough deposits to offset the expenses of operating these branch sites. Any new or acquired branches will be subject to regulatory approval, and there can be no assurance that we will succeed in securing such approvals.
It may be difficult to adequately and profitably manage growth through the establishment of these branches. In addition, we can provide no assurance that these branch sites will successfully attract enough deposits to offset the expenses of operating these branch sites.
From time to time, the FASB and SEC change the financial accounting and reporting standards or the interpretation of those standards that govern the preparation of our financial statements. These changes are beyond our control, can be difficult to predict, and could materially impact how we report our financial condition and results of operations.
These changes are beyond our control, can be difficult to predict, and could materially impact how we report our financial condition and results of operations. Changes in these standards are continuously occurring and more drastic changes may occur in the future.
The Bank’s operations are also subject to extensive regulation by other federal, state and local governmental authorities, and are subject to various laws and judicial and administrative decisions that impose requirements and restrictions on operations. These laws, rules and regulations are frequently changed by legislative and regulatory authorities.
Any change in our regulation or oversight, whether in the form of regulatory policy, regulations, legislation or supervisory action, may have a material impact on our operations. 31 Table of Contents The Bank’s operations are also subject to extensive regulation by other federal, state and local governmental authorities, and are subject to various laws and judicial and administrative decisions that impose requirements and restrictions on operations.
However, it is likely that the provisions of the Dodd-Frank Act will have an adverse impact on our operations, particularly through increased regulatory burden and compliance costs. We face a risk of noncompliance and enforcement action with the BSA and other anti-money laundering statutes and regulations.
The full impact of the Dodd-Frank Act on our business and operations will not be known for years until regulations implementing the statute are written and adopted. However, it is likely that the provisions of the Dodd-Frank Act will have an adverse impact on our operations, particularly through increased regulatory burden and compliance costs.
Future economic conditions in our market will depend on factors outside of our control such as political and market conditions, broad trends in industry and finance, legislative and regulatory changes, changes in government, military and fiscal policies. 31 Acquisitions and the addition of branch facilities may not produce revenue enhancements or cost savings at levels or within timeframes originally anticipated and may result in unforeseen integration difficulties and dilution to existing shareholder value.
Future economic conditions in our market will depend on factors outside of our control such as political and market conditions, broad trends in industry and finance, legislative and regulatory changes, changes in government, military and fiscal policies.
The Dodd-Frank Act contains various provisions designed to enhance the regulation of depository institutions and prevent the recurrence of a financial crisis such as occurred in 2008 and 2009. These include provisions strengthening holding company capital requirements, requiring retention of a portion of the risk of securitized loans and regulating debit card interchange fees.
Financial regulatory reform may have a material impact on the Company’s operations. The Dodd-Frank Act contains various provisions designed to enhance the regulation of depository institutions and prevent the recurrence of a financial crisis such as occurred in 2008 and 2009.
The Dodd-Frank Act also created the Consumer Financial Protection Bureau to administer consumer protection and fair lending laws, a function that was formerly performed by the depository institution regulators. The full impact of the Dodd-Frank Act on our business and operations will not be known for years until regulations implementing the statute are written and adopted.
These include provisions strengthening holding company capital requirements, requiring retention of a portion of the risk of securitized loans and regulating debit card interchange fees. The Dodd-Frank Act also created the Consumer Financial Protection Bureau to administer consumer protection and fair lending laws, a function that was formerly performed by the depository institution regulators.
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Our access to funding sources in amounts adequate to finance or capitalize our activities or on terms that are acceptable to us could be impaired by factors that affect us directly or the financial services industry or economy in general, such as disruptions in the financial markets or negative views and expectations about the prospects for the financial services industry.
Added
The occurrence of operational interruption, cyber incident, or a deficiency in the cyber security of our technology systems (internal or outsourced) could negatively impact our financial condition or results of operations.
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Although we have not experienced any material losses related to a technology-related operational interruption or cyber-attack, there can be no assurance that such failures, interruptions, or security breaches will not occur in the future or, if they do occur, that the impact will not be substantial.
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If such estimates or assumptions underlying our financial statements are incorrect, we may experience material losses. 29 Table of Contents From time to time, the FASB and SEC change the financial accounting and reporting standards or the interpretation of those standards that govern the preparation of our financial statements.
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We regularly explore opportunities to establish branch facilities and acquire other banks or financial institutions. New or acquired branch facilities and other facilities may not be profitable. We may not be able to correctly identify profitable locations for new branches.
Added
Acquisitions and the addition of branch facilities may not produce revenue enhancements or cost savings at levels or within timeframes originally anticipated and may result in unforeseen integration difficulties and dilution to existing shareholder value. We regularly explore opportunities to establish branch facilities and acquire other banks or financial institutions.
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Any change in our regulation or oversight, whether in the form of regulatory policy, regulations, legislation or supervisory action, may have a material impact on our operations.
Added
Any new or acquired branches will be subject to regulatory approval, and there can be no assurance that we will succeed in securing such approvals. Turmoil in the financial markets could result in lower fair values for our investment securities.
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Federal and state banking agencies periodically conduct examinations of our business, including compliance with applicable laws and regulations.
Added
Failure to successfully keep pace with technological change affecting the financial services industry could have a material adverse effect on our business, financial condition, and results of operations.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeTo our knowledge, previous cybersecurity incidents have not materially affected the Company, its business strategy, financial condition or results of operation. With regard to the possible impact of future cybersecurity threats or incidents, see "Item 1A. Risk Factors." 37
Biggest changeTo our knowledge, previous cybersecurity incidents have not materially affected the Company, its business strategy, financial condition or results of operation. With regard to the possible impact of future cybersecurity threats or incidents, see “Item 1A. Risk Factors.” ​ 36 Table of Contents
The CIO and other members of the information technology team receive ongoing training related to developing threats, proactive solutions and industry best practices in order to effectively protect the Company and its stakeholders. 36 The Company maintains a third-party risk management program designed to identify, analyze and monitor risks, including cybersecurity risks, associated with vendors and outside service providers.
The CIO and other members of the information technology team receive ongoing training related to developing threats, proactive solutions and industry best practices in order to effectively protect the Company and its stakeholders. The Company maintains a third-party risk management program designed to identify, analyze and monitor risks, including cybersecurity risks, associated with vendors and outside service providers.
Our policy requires material incidents to be reported within 36 hours after an incident is determined to be material with the materiality determination to be completed without unreasonable delay. The CMT has developed a plan to facilitate making timely determinations as to whether and when incidents should be disclosed.
Our policy requires material incidents to be reported within 36 hours after an incident is determined to be material with the materiality 35 Table of Contents determination to be completed without unreasonable delay. The CMT has developed a plan to facilitate making timely determinations as to whether and when incidents should be disclosed.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeApproximate Year Net Book Owned/ Square Location Opened Value (1) Leased Footage (Dollars in thousands) Main Office: 220 Federal Drive, NW Corydon, Indiana 47112 1997 1,280 Owned 12,000 Branch Offices: 391 Old Capital Plaza, NE Corydon, Indiana 47112 1997 62 Leased (2) 425 8095 State Highway 135, NW New Salisbury, Indiana 47161 1999 386 Owned 3,500 710 Main Street Palmyra, Indiana 47164 1991 609 Owned 6,000 9849 Highway 150 Greenville, Indiana 47124 1986 214 Owned 2,484 5100 State Road 64 Georgetown, Indiana 47122 2008 914 Owned 4,988 4303 Charlestown Crossing New Albany, Indiana 47150 1999 651 Owned 3,500 3131 Grant Line Road New Albany, Indiana 47150 2003 1,193 Owned 12,200 5609 Williamsburg Station Road Floyds Knobs, Indiana 47119 2003 516 Owned 4,160 2744 Allison Lane Jeffersonville, Indiana 47130 2003 926 Owned 4,090 1312 S.
Biggest changePROPERTIES The following table sets forth certain information regarding the Bank’s offices as of December 31, 2025. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Approximate ​ ​ ​ ​ ​ ​ ​ ​ Year ​ Net Book ​ Owned/ ​ Square Location ​ ​ ​ Opened ​ ​ ​ Value (1) ​ ​ ​ Leased ​ ​ ​ Footage ​ ​ (Dollars in thousands) Main Office: ​ ​ ​ ​ ​ ​ ​ ​ 220 Federal Drive, NW ​ ​ ​ ​ Corydon, Indiana 47112 1997 1,450 Owned 12,000 ​ ​ ​ ​ ​ ​ ​ ​ ​ Branch Offices: ​ ​ ​ ​ 8095 State Highway 135, NW ​ ​ ​ ​ New Salisbury, Indiana 47161 1999 351 Owned 3,500 ​ ​ ​ ​ ​ ​ ​ ​ ​ 710 Main Street ​ ​ ​ ​ Palmyra, Indiana 47164 1991 614 Owned 6,000 ​ ​ ​ ​ ​ ​ ​ ​ ​ 9849 Highway 150 ​ ​ ​ ​ Greenville, Indiana 47124 1986 474 Owned 2,484 ​ ​ ​ ​ ​ ​ ​ ​ ​ 5100 State Road 64 ​ ​ ​ ​ Georgetown, Indiana 47122 2008 904 Owned 4,988 ​ ​ ​ ​ ​ ​ ​ ​ ​ 4303 Charlestown Crossing ​ ​ ​ ​ New Albany, Indiana 47150 1999 615 Owned 3,500 ​ ​ ​ ​ ​ ​ ​ ​ ​ 3131 Grant Line Road ​ ​ ​ ​ New Albany, Indiana 47150 2003 1,152 Owned 12,200 ​ ​ ​ ​ ​ ​ ​ ​ ​ 5609 Williamsburg Station Road ​ ​ ​ ​ Floyds Knobs, Indiana 47119 2003 488 Owned 4,160 ​ ​ ​ ​ ​ ​ ​ ​ ​ 2744 Allison Lane ​ ​ ​ ​ Jeffersonville, Indiana 47130 2003 889 Owned 4,090 ​ ​ ​ ​ ​ ​ ​ ​ ​ 1312 S.
Jackson Street Salem, Indiana 47167 2007 703 Owned 3,400 2420 Barron Avenue, NW Lanesville, Indiana 47136 2010 631 Owned 1,450 7735 Highway 62 Charlestown, Indiana 47111 2017 1,305 Owned 2,500 1612 Highway 44 East Shepherdsville, Kentucky 40165 1980 2,037 Owned 11,892 130 S.
Jackson Street ​ ​ ​ ​ Salem, Indiana 47167 2007 687 Owned 3,400 ​ ​ ​ ​ ​ ​ ​ ​ ​ 2420 Barron Avenue, NW ​ ​ ​ ​ Lanesville, Indiana 47136 2010 663 Owned 1,450 ​ ​ ​ ​ ​ ​ ​ ​ ​ 7735 Highway 62 ​ ​ ​ ​ Charlestown, Indiana 47111 2017 1,255 Owned 2,500 ​ ​ ​ ​ ​ ​ ​ ​ ​ 1612 Highway 44 East ​ ​ ​ ​ Shepherdsville, Kentucky 40165 1980 1,963 Owned 11,892 ​ ​ ​ ​ ​ ​ ​ ​ ​ 130 S.
Buckman Street Shepherdsville, Kentucky 40165 1962 248 Owned 3,840 550 John Harper Highway Shepherdsville, Kentucky 40165 1999 1,497 Owned 6,648 100 S. Bardstown Road Mount Washington, Kentucky 40047 1991 868 Owned 5,169 140 S.
Buckman Street ​ ​ ​ ​ Shepherdsville, Kentucky 40165 1962 284 Owned 3,840 ​ ​ ​ ​ ​ ​ ​ ​ ​ 550 John Harper Highway ​ ​ ​ ​ Shepherdsville, Kentucky 40165 1999 1,447 Owned 6,648 ​ ​ ​ ​ ​ ​ ​ ​ ​ 100 S.
Poplar Street Lebanon Junction, Kentucky 40150 1973 139 Owned 2,795 _______________________________________________________ (1) Represents the net value of land, buildings, furniture, fixtures and equipment owned by the Bank. (2) Lease expires in April 2025. 38
Bardstown Road ​ ​ ​ ​ Mount Washington, Kentucky 40047 1991 953 Owned 5,169 ​ ​ ​ ​ ​ ​ ​ ​ ​ 140 S. Poplar Street ​ ​ ​ ​ Lebanon Junction, Kentucky 40150 1973 168 Owned 2,795 (1) Represents the net value of land, buildings, furniture, fixtures and equipment owned by the Bank. 37 Table of Contents
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ITEM 2. PROPERTIES The following table sets forth certain information regarding the Bank’s offices as of December 31, 2024.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCEEDINGS At December 31, 2024, neither the Company nor the Bank was involved in any pending legal proceedings believed by management to be material to the Company’s financial condition or results of operations. From time to time, the Bank is involved in legal proceedings occurring in the ordinary course of business.
Biggest changeITEM 3. LEGAL PROCEEDINGS At December 31, 2025, neither the Company nor the Bank was involved in any pending legal proceedings believed by management to be material to the Company’s financial condition or results of operations. From time to time, the Bank is involved in legal proceedings occurring in the ordinary course of business.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 39 Part II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 39 Item 6. [Reserved] 40 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 41 Item 7A. Quantitative and Qualitative Disclosures about Market Risk 55 Item 8.
Biggest changeItem 4. Mine Safety Disclosures 38 ​ ​ ​ ​ Part II 38 ​ ​ ​ Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 38 Item 6. [Reserved] 39 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 40 Item 7A.
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Financial Statements and Supplementary Data 55 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 55 Item 9A. Controls and Procedures 56 Item 9B. Other Information 56 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 56 Part III Item 10. Directors, Executive Officers and Corporate Governance 57 Item 11. Executive Compensation 57 Item 12.
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Quantitative and Qualitative Disclosures about Market Risk 52 Item 8. Financial Statements and Supplementary Data 52
Removed
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 57 Item 13. Certain Relationships and Related Transactions, and Director Independence 58 Item 14. Principal Accounting Fees and Services 58 Part IV Item 15. Exhibits and Financial Statement Schedules 59 Item 16.
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Form 10-K Summary 61 SIGNATURES i This Annual Report on Form 10-K contains certain “ forward-looking statements ” within the meaning of the Private Securities Litigation Reform Act of 1995. First Capital, Inc. also may make forward-looking statements in its other documents filed or furnished with the Securities and Exchange Commission ( “ SEC ” ).
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In addition, First Capital, Inc. ’ s senior management may make forward-looking statements orally to investors and others. These statements are not historical facts, rather statements based on First Capital, Inc. ’ s current expectations regarding its business strategies, intended results and future performance.
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Forward-looking statements are preceded by terms such as “ could, ” “ should, ” “ will, ” “ expects, ” “ believes, ” “ anticipates, ” “ intends ” and similar expressions. Forward-looking statements are not guarantees of future performance. Management ’ s ability to predict results or the effect of future plans or strategies is inherently uncertain.
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Numerous risks and uncertainties could cause or contribute to First Capital, Inc. ’ s actual results, performance and achievements being materially different from those expressed or implied by the forward-looking statements.
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Factors that may cause or contribute to these differences include, without limitation, the ability of First Capital, Inc. to execute its business plan; First Capital, Inc. ’ s ability to control costs and expenses; competitive products and pricing; deposit flows; loan delinquency rates; changes in federal and state legislation and regulation; and other factors disclosed periodically in First Capital, Inc. ’ s filings with the SEC.
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Additional factors that may affect our results are discussed in Item 1A to this Annual Report on Form 10-K titled “ Risk Factors ” below.
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These factors should be considered in evaluating the forward-looking statements and undue reliance should not be placed on such statements, whether included in this report or made elsewhere from time to time by First Capital, Inc. or on its behalf.
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Any forward-looking statements made by or on behalf of First Capital, Inc. speak only as of the date they are made, and except to the extent required by applicable law First Capital, Inc. does not undertake to update forward-looking statements to reflect the impact of circumstances or events that arise after the date the forward-looking statements were made.
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The reader should, however, consult any further disclosures of a forward-looking nature First Capital, Inc. may make in any subsequent Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, or Current Reports on Form 8-K. PART I ITEM 1. BUSINESS General First Capital, Inc. (the “Company” or “First Capital”) was incorporated under Indiana law on September 11, 1998.
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On December 31, 1998, the Company became the holding company for First Federal Bank, A Federal Savings Bank (the “Bank”) upon the Bank’s reorganization as a wholly owned subsidiary of the Company resulting from the conversion of First Capital, Inc., M.H.C. (the “MHC”), from a federal mutual holding company to a stock holding company.
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On January 12, 2000, the Company completed a merger of equals with HCB Bancorp, the former holding company for Harrison County Bank, and the Bank changed its name to First Harrison Bank. On March 20, 2003, the Company acquired Hometown Bancshares, Inc. (“Hometown”), a bank holding company located in New Albany, Indiana.
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On December 4, 2015, the Company acquired Peoples Bancorp, Inc. of Bullitt County and its wholly-owned bank subsidiary, Peoples Bank of Bullitt County (“Peoples”), headquartered in Shepherdsville, Kentucky.
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On September 20, 2017, the Bank filed applications with the Indiana Department of Financial Institutions (“IDFI”) and the Federal Deposit Insurance Corporation (“FDIC”) to convert from a federal savings association into an Indiana chartered commercial bank (the “Conversion”), and since June 30, 2018, the IDFI is the Bank’s primary regulator and the FDIC is the Bank’s primary federal regulator.
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The Conversion did not affect the Bank’s clients in any way and did not affect FDIC deposit insurance on eligible accounts as the Bank’s deposits are federally insured by the FDIC under the Deposit Insurance Fund. The Bank is a member of the Federal Home Loan Bank (“FHLB”) System.
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Additionally, in connection with the Conversion, the Company filed an application with the Federal Reserve Bank (“FRB”) of St. Louis to change from a savings and loan holding company to a financial holding company. This change occurred simultaneously with the Conversion discussed above. The Company’s primary business activity is the ownership of the outstanding common stock of the Bank.
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Management of the Company and the Bank are substantially similar and the Company neither owns nor leases any property, but instead uses the premises, equipment and furniture of the Bank in accordance with applicable regulations. 2 Availability of Information The Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to such reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are made available free of charge on the Company’s Internet website, www.firstharrison.com, as soon as practicable after the Company electronically files such material with, or furnishes it to, the SEC.
Removed
The contents of the Company’s website shall not be incorporated by reference into this Form 10-K or into any reports the Company files with or furnishes to the Securities and Exchange Commission. Market Area and Competition The Bank considers Harrison, Floyd, Clark and Washington counties in Indiana and Bullitt County in Kentucky its primary market area.
Removed
All of its offices are located in these five counties, which results in most of the Bank’s loans being made in these five counties. The main office of the Bank is located in Corydon, Indiana, 35 miles west of Louisville, Kentucky. The Bank aggressively competes for business with local banks, as well as large regional banks.
Removed
Its most direct competition for deposit and loan business comes from the commercial banks operating in these five counties. Based on data published by the FDIC, the Bank is the leader in FDIC-insured institutions in deposit market share in Harrison County, Indiana, which includes the Bank’s main office, and in Bullitt County, Kentucky, where Peoples was headquartered. Lending Activities General.
Removed
The Bank has transformed the composition of its balance sheet from that of a traditional thrift institution to that of a commercial bank. On the asset side, this was accomplished in part by selling in the secondary market the newly-originated qualified fixed-rate residential mortgage loans while retaining variable rate residential mortgage loans in the portfolio.
Removed
This transformation was also enhanced by expanding commercial lending staff dedicated to growing commercial real estate and commercial business loans. The Bank also originates consumer loans and residential construction loans for the loan portfolio. The Bank does not offer, and has not offered, Alt-A, sub-prime or no-document mortgage loans. Loan Portfolio Analysis.
Removed
The following table presents the composition of the Bank’s loan portfolio by type of loan at the dates indicated.
Removed
At December 31, 2024 2023 Amount Percent Amount Percent (Dollars in thousands) Mortgage Loans: 1-4 Family Residential Mortgage $ 138,936 21.73 % $ 133,480 21.49 % Multifamily Residential 36,822 5.77 % 39,963 6.44 % Commercial Real Estate 184,851 28.91 % 168,757 27.16 % 1-4 Family Residential Construction 15,245 2.38 % 15,667 2.52 % Other Construction, Development and Land 75,840 11.86 % 76,713 12.35 % Home Equity and Second Mortgage 66,549 10.41 % 62,070 9.99 % Total Mortgage Loans 518,243 81.06 % 496,650 79.95 % Commercial Business Loans 62,727 9.81 % 68,223 10.98 % Consumer and Other 58,406 9.13 % 56,373 9.07 % Total Gross Loans 639,376 100.00 % 621,246 100.00 % Less: Deferred Loan Fees Net of Direct Costs (1,104 ) (1,168 ) Allowance for Credit Losses 9,281 8,005 Total Loans, Net $ 631,199 $ 614,409 3 Residential Loans.
Removed
The Bank’s lending activities have concentrated on the origination of residential mortgages, including those secured by 1-4 family residential and multifamily properties, both for sale in the secondary market and for retention in the Bank’s loan portfolio. Substantially all residential mortgages are collateralized by properties within the Bank’s market area.
Removed
The Bank offers both fixed-rate mortgage loans and adjustable rate mortgage (“ARM”) loans typically with terms of 15 to 30 years. The Bank uses loan documents approved by the Federal National Mortgage Corporation (“Fannie Mae”) and the Federal Home Loan Mortgage Corporation (“Freddie Mac”) whether the loan is originated for investment or sale in the secondary market.
Removed
Retaining fixed-rate loans in its portfolio subjects the Bank to a higher degree of interest rate risk. See “ Item 1A. Risk Factors – Above Average Interest Rate Risk Associated with Fixed-Rate Loans ” for a further discussion of certain risks of rising interest rates.
Removed
A strategic goal of the Bank is to expand its mortgage business by originating mortgage loans for sale, while offering a full line of mortgage products to current and prospective customers.
Removed
This practice increases the Bank’s lending capacity and allows the Bank to more effectively manage its profitability since it is not required to predict the prepayment, credit or interest rate risks associated with retaining either the loan or the servicing asset.
Removed
For the year ended December 31, 2024, the Bank originated and funded $32.8 million of residential mortgage loans for sale in the secondary market. For a further discussion of the Bank’s mortgage banking operations, see “

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+3 added−2 removed1 unchanged
Biggest changeMarket Price High Sale Low Sale Dividends end of Period 2024: First Quarter $ 30.40 $ 26.03 $ 0.27 $ 28.55 Second Quarter 31.40 26.73 0.27 29.99 Third Quarter 38.00 29.01 0.29 34.96 Fourth Quarter 37.50 28.50 0.29 32.25 2023: First Quarter $ 28.99 $ 23.48 $ 0.27 $ 25.65 Second Quarter 31.50 22.85 0.27 30.80 Third Quarter 37.90 26.00 0.27 27.75 Fourth Quarter 29.99 22.95 0.27 27.90 Dividend Policy It has been our policy to pay quarterly dividends to holders of our common stock, and we intend to continue paying dividends.
Biggest changeThe following table lists quarterly market price and dividend information per common share for the years ended December 31, 2025 and 2024 as reported by NASDAQ. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Market Price ​ ​ ​ ​ High Sale ​ ​ ​ Low Sale ​ ​ ​ Dividends ​ ​ ​ End of Period 2025: ​ ​ ​ ​ ​ ​ ​ ​ First Quarter ​ $ 39.40 ​ $ 30.49 ​ $ 0.29 ​ $ 38.15 Second Quarter ​ 53.85 ​ 37.53 ​ 0.29 ​ 41.29 Third Quarter ​ 46.52 ​ 33.73 ​ 0.31 ​ 45.80 Fourth Quarter ​ 71.00 ​ 37.64 ​ 0.31 ​ 59.20 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024: ​ ​ ​ ​ ​ ​ ​ ​ First Quarter ​ $ 30.40 ​ $ 26.03 ​ $ 0.27 ​ $ 28.55 Second Quarter ​ 31.40 ​ 26.73 ​ 0.27 ​ 29.99 Third Quarter ​ 38.00 ​ 29.01 ​ 0.29 ​ 34.96 Fourth Quarter ​ 37.50 ​ 28.50 ​ 0.29 ​ 32.25 ​ Dividend Policy It has been our policy to pay quarterly dividends to holders of our common stock, and we intend to continue paying dividends.
This does not reflect the number of persons whose shares are in nominee or "street" name accounts through brokers. See Note 17 in the accompanying Notes to Consolidated Financial Statements for information regarding dividend restrictions applicable to the Company.
This does not reflect the number of persons whose shares are in nominee or “street” name accounts through brokers. See Note 17 in the accompanying Notes to Consolidated Financial Statements for information regarding dividend restrictions applicable to the Company.
Any future determination to pay dividends to holders of our common stock will depend on our results of operations, financial condition, capital requirements, banking regulations, contractual restrictions and any other factors that our board of directors may deem relevant. 39 Unregistered Sales and Repurchases of Equity Securities On August 19, 2008, the Board of Directors authorized the repurchase of up to 240,467 shares of the Company’s outstanding common stock.
Any future determination to pay dividends to holders of our common stock will depend on our results of operations, financial condition, capital requirements, banking regulations, contractual restrictions and any other factors that our Board of Directors may deem relevant. ​ 38 Table of Contents Repurchases of Equity Securities On August 19, 2008, the Board of Directors authorized the repurchase of up to 240,467 shares of the Company’s outstanding common stock.
ITEM 5. MARKET FOR REGISTRANT ’ S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES The common shares of the Company are traded on The NASDAQ Capital Market under the symbol “FCAP.” As of December 31, 2024, the Company had 856 stockholders of record and 3,351,703 common shares outstanding.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES The common shares of the Company are traded on The NASDAQ Capital Market under the symbol “FCAP.” As of December 31, 2025, the Company had 831 stockholders of record and 3,341,871 common shares outstanding.
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 300 shares purchased under the stock repurchase program during the quarter ended December 31, 2024. The maximum number of shares that may yet be purchased under the plan is 113,721.
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 12,039 shares purchased under the stock repurchase program during the quarter ended December 31, 2025.
Removed
The following table lists quarterly market price and dividend information per common share for the years ended December 31, 2024 and 2023 as reported by NASDAQ.
Added
The maximum number of shares that may yet be purchased under the plan is 99,989. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (c) Total Number of ​ ​ ​ (d) Maximum ​ ​ ​ ​ ​ ​ Shares Purchased as ​ Number of Shares ​ ​ ​ ​ ​ ​ Part of Publicly ​ that May Yet Be ​ ​ (a) Total Number of ​ (b) Average Price ​ Announced Plans or ​ Purchased Under the Period ​ Shares Purchased ​ Paid Per Share ​ Programs ​ Plans or Programs ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ October 1 through October 31, 2025 6,283 $ 41.55 6,283 105,745 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ November 1 through November 31, 2025 5,652 ​ ​ 45.09 5,652 100,093 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 1 through December 31, 2025 104 ​ ​ 65.00 104 99,989 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total 12,039 ​ $ 43.42 12,039 ​ ​ On August 29, 2025, the Company entered into a Joint Rule 10b5-1/Rule 10b-18 Plan Agreement (the “10b5-1 Plan”) under which the Company’s designated broker has the authority to repurchase up to 113,236 shares of common stock of the Company.
Removed
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 October 1 through October 31, 2024 - N/A - 114,021 November 1 through November 30, 2024 300 $ 34.50 300 113,721 December 1 through December 31, 2024 - N/A - 113,721 Total 300 $ 34.50 300 Equity Compensation Plan Information See Item 12 of this report for disclosure regarding securities authorized for issuance and equity compensation plans required by Item 201(d) of Regulation S-K.
Added
The Plan commenced on September 4, 2025, and expires on August 28, 2026. The Plan was established in connection with the Company’s previously disclosed stock repurchase authorization, which was approved by the Company’s Board of Directors on August 19, 2008.
Added
The purchases disclosed in the table above were pursuant to the terms of the 10b5-1 Plan. ​ Sales of Unregistered Equity Securities ​ There were no sales of unregistered Company securities sold by the Company in the years 2023, 2024, or 2025. ​ Equity Compensation Plan Information See Item 12 of this report for disclosure regarding securities authorized for issuance and equity compensation plans required by Item 201(d) of Regulation S-K.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

66 edited+16 added−25 removed65 unchanged
Biggest changeTax-exempt income on loans and investment securities has been adjusted to a tax equivalent basis using the federal marginal tax rate of 21%. 48 Year ended December 31, 2024 2023 2022 Average Average Average (Dollars in thousands) Average Yield/ Average Yield/ Average Yield/ Balance Interest Cost Balance Interest Cost Balance Interest Cost Interest-earning assets: Loans (1) (2) (3): Taxable $ 624,193 $ 37,974 6.08 % $ 582,465 $ 33,153 5.69 % $ 521,945 $ 24,768 4.75 % Tax-exempt 9,805 377 3.84 % 8,144 249 3.06 % 8,214 240 2.92 % Total loans 633,998 38,351 6.05 % 590,609 33,402 5.66 % 530,159 25,008 4.72 % Investment securities: Taxable (4) 333,195 6,918 2.08 % 358,860 5,635 1.57 % 348,431 4,509 1.29 % Tax-exempt 121,947 3,329 2.73 % 147,667 4,236 2.87 % 147,215 4,056 2.76 % Total investment securities 455,142 10,247 2.25 % 506,527 9,871 1.95 % 495,646 8,565 1.73 % Federal funds sold 45,563 2,357 5.17 % 19,512 989 5.07 % 91,982 1,137 1.24 % Other interest-earning assets (5) 6,473 294 4.54 % 7,079 285 4.03 % 7,918 132 1.67 % Total interest-earning assets 1,141,176 51,249 4.49 % 1,123,727 44,547 3.96 % 1,125,705 34,842 3.10 % Noninterest-earning assets 28,479 20,139 28,849 Total assets $ 1,169,655 $ 1,143,866 $ 1,154,554 Interest-bearing liabilities: Interest-bearing demand deposits $ 433,495 $ 6,086 1.40 % $ 447,895 $ 4,652 1.04 % $ 466,476 $ 928 0.20 % Savings accounts 230,353 810 0.35 % 255,126 917 0.36 % 282,455 357 0.13 % Time deposits 156,534 6,331 4.04 % 91,423 2,672 2.92 % 53,851 309 0.57 % Total deposits 820,382 13,227 1.61 % 794,444 8,241 1.04 % 802,782 1,594 0.20 % FHLB advances 1,736 99 5.70 % 6,084 340 5.59 % - - 0.00 % BTFP advances 27,918 1,355 4.85 % 8,632 436 5.05 % - - 0.00 % Total borrowings 29,654 1,454 4.90 % 14,716 776 5.27 % - - 0.00 % Total interest-bearing liabilities 850,036 14,681 1.73 % 809,160 9,017 1.11 % 802,782 1,594 0.20 % Noninterest-bearing liabilities: Noninterest-bearing deposits 203,699 236,471 255,113 Other liabilities 7,046 7,056 5,591 Total liabilities 1,060,781 1,052,687 1,063,486 Stockholders' equity (6) 108,874 91,179 91,068 Total liabilities and stockholders' equity $ 1,169,655 $ 1,143,866 $ 1,154,554 Net interest income (tax equivalent basis) $ 36,568 $ 35,530 $ 33,248 Less: tax equivalent adjustment (778 ) (942 ) (902 ) Net interest income $ 35,790 $ 34,588 $ 32,346 Interest rate spread 2.70 % 2.77 % 2.82 % Interest rate spread (tax equivalent basis) 2.76 % 2.85 % 2.90 % Net interest margin 3.14 % 3.08 % 2.87 % Net interest margin (tax equivalent basis) 3.20 % 3.16 % 2.95 % Ratio of average interest-earning assets to average interest-bearing liabilities 134.25 % 138.88 % 140.23 % (1) Interest income on loans includes fee income of $727,000, $961,000, and $925,000 for the years ended December 31, 2024, 2023, and 2022, respectively.
Biggest changeTax-exempt income on loans and investment securities has been adjusted to a tax equivalent basis using the federal marginal tax rate of 21%. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ 2025 ​ 2024 ​ 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average ​ ​ Average ​ ​ ​ ​ Yield/ ​ Average ​ ​ ​ ​ Yield/ ​ Average ​ ​ ​ ​ Yield/ (Dollars in thousands) ​ Balance ​ Interest ​ Cost ​ Balance ​ Interest ​ Cost ​ Balance ​ Interest ​ Cost Interest-earning assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loans (1) (2) (3): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Taxable ​ $ 641,291 ​ $ 40,566 ​ 6.33 % $ 624,193 ​ $ 37,974 6.08 % $ 582,465 ​ $ 33,153 5.69 % Tax-exempt ​ 10,522 ​ 446 ​ 4.24 % 9,805 ​ 377 3.84 % 8,144 ​ 249 3.06 % Total loans ​ 651,813 ​ 41,012 ​ 6.29 % 633,998 ​ 38,351 6.05 % 590,609 ​ 33,402 5.66 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Investment securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Taxable (4) ​ 314,384 ​ 8,711 ​ 2.77 % 333,195 ​ 6,918 2.08 % 358,860 ​ 5,635 1.57 % Tax-exempt ​ 119,379 ​ 3,438 ​ 2.88 % 121,947 ​ 3,329 2.73 % 147,667 ​ 4,236 2.87 % Total investment securities ​ 433,763 ​ 12,149 ​ 2.80 % 455,142 ​ 10,247 2.25 % 506,527 ​ 9,871 1.95 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest bearing deposits with banks (5) ​ 104,385 ​ 4,502 ​ 4.31 % 52,036 ​ 2,651 5.09 % 26,591 ​ 1,274 4.79 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total interest-earning assets ​ 1,189,961 ​ 57,663 ​ 4.85 % 1,141,176 ​ 51,249 4.49 % 1,123,727 ​ 44,547 3.96 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Noninterest-earning assets ​ 34,977 ​ ​ ​ ​ ​ ​ 28,479 ​ ​ ​ ​ ​ 20,139 ​ ​ ​ ​ Total assets ​ $ 1,224,938 ​ ​ ​ ​ ​ ​ ​ $ 1,169,655 ​ ​ ​ ​ $ 1,143,866 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest-bearing liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest-bearing demand deposits ​ $ 436,909 ​ $ 5,280 ​ 1.21 % $ 433,495 ​ $ 6,086 1.40 % $ 447,895 ​ $ 4,652 1.04 % Savings accounts ​ 225,817 ​ 598 ​ 0.26 % 230,353 ​ 810 0.35 % 255,126 ​ 917 0.36 % Time deposits ​ 223,315 ​ 8,819 ​ 3.95 % 156,534 ​ 6,331 4.04 % 91,423 ​ 2,672 2.92 % Total deposits ​ 886,041 ​ 14,697 ​ 1.66 % 820,382 ​ 13,227 1.61 % 794,444 ​ 8,241 1.04 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ FHLB advances ​ — ​ — ​ — % 1,736 ​ 99 5.70 % 6,084 ​ 340 5.59 % BTFP advances ​ — ​ — ​ — % 27,918 ​ 1,355 4.85 % 8,632 ​ 436 5.05 % Total borrowings ​ — ​ — ​ — % 29,654 ​ 1,454 4.90 % 14,716 ​ 776 5.27 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total interest-bearing liabilities ​ 886,041 ​ 14,697 ​ 1.66 % 850,036 ​ 14,681 1.73 % 809,160 ​ 9,017 1.11 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Noninterest-bearing liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Noninterest-bearing deposits ​ 205,822 ​ ​ ​ ​ ​ ​ ​ 203,699 ​ ​ ​ ​ 236,471 ​ ​ ​ ​ Other liabilities ​ 8,852 ​ ​ ​ ​ ​ ​ ​ 7,046 ​ ​ ​ ​ 7,056 ​ ​ ​ ​ Total liabilities ​ 1,100,715 ​ ​ ​ ​ ​ ​ ​ 1,060,781 ​ ​ ​ ​ 1,052,687 ​ ​ ​ ​ Stockholders' equity (6) ​ 124,223 ​ ​ ​ ​ ​ ​ ​ 108,874 ​ ​ ​ ​ 91,179 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total liabilities and stockholders' equity ​ $ 1,224,938 ​ ​ ​ ​ ​ ​ ​ $ 1,169,655 ​ ​ ​ ​ $ 1,143,866 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net interest income (tax equivalent basis) ​ ​ ​ ​ $ 42,966 ​ ​ ​ ​ ​ ​ $ 36,568 ​ ​ ​ ​ $ 35,530 ​ ​ Less: tax equivalent adjustment ​ ​ ​ ​ (816) ​ ​ ​ ​ ​ ​ (778) ​ ​ ​ ​ (942) ​ ​ Net interest income ​ ​ ​ ​ $ 42,150 ​ ​ ​ ​ ​ ​ $ 35,790 ​ ​ ​ ​ $ 34,588 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest rate spread ​ ​ ​ ​ ​ 3.12 % ​ ​ ​ 2.70 % ​ ​ ​ 2.77 % Interest rate spread (tax equivalent basis) ​ ​ ​ ​ ​ 3.19 % ​ ​ ​ 2.76 % ​ ​ ​ 2.85 % Net interest margin ​ ​ ​ ​ ​ 3.54 % ​ ​ ​ 3.14 % ​ ​ ​ 3.08 % Net interest margin (tax equivalent basis) ​ ​ ​ ​ ​ 3.61 % ​ ​ ​ 3.20 % ​ ​ ​ 3.16 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ratio of average interest-earning assets to average interest-bearing liabilities ​ ​ ​ ​ ​ 134.30 % ​ ​ ​ 134.25 % ​ ​ ​ 138.88 % (1) Interest income on loans includes fee income of $806,000, $727,000, and $961,000 for the years ended December 31, 2025, 2024, and 2023, respectively.
The Company’s average outstanding borrowings under the Federal Reserve Bank’s BTFP increased from $8.6 million for 2023 to $27.9 million for 2024, partially offset by a decrease in the average rate on outstanding borrowings under the Federal Reserve Bank’s BTFP from 5.05% for 2023 to 4.85% for 2024. For further information, see “ Average Balances and Yields ” below.
The Company’s average outstanding borrowings under the Federal Reserve Bank’s BTFP increased from $8.6 million for $27.9 million for 2024, partially offset by a decrease in the average rate on outstanding borrowings under the Federal Reserve Bank’s BTFP from 5.05% for 2023 to 4.85% for 2024. For further information, see “ Average Balances and Yields ” below.
Based on management’s analysis of the ACL on loans and unfunded loan commitments, the provision for credit losses increased from $1.1 million for 2023 to $1.4 million for 2024 primarily due to loan growth, an increase in nonperforming assets during the year, as well as management’s consideration of macroeconomic uncertainty.
Based on management’s analysis of the ACL on loans and unfunded loan commitments, the provision for credit losses increased from $1.1 million for 2023 to $1.4 million for 2024 primarily due to loan growth, an increase in nonperforming assets during the year, as well as management’s consideration of the macroeconomic uncertainty.
These factors include, among other things, whether the estimates are significant to the financial statements, the nature of the estimates, the ability to readily validate the estimates with other information including third parties or available prices, and sensitivity of the estimates to changes in economic conditions and whether alternative accounting methods may be utilized under U.S. GAAP.
These factors include, among other things, whether the estimates are significant to the financial statements, the nature of the estimates, the ability to readily validate the estimates with other information including third parties or available prices, and sensitivity of the estimates to changes in economic conditions and whether alternative accounting methods may be utilized under U.S.
Net income attributable to the Company was $11.9 million ($3.57 per share diluted; weighted average common shares outstanding of 3,346,161, as adjusted) for the year ended December 31, 2023 compared to $12.8 million ($3.82 per share diluted; weighted average common shares outstanding of 3,347,341, as adjusted) for the year ended December 31, 2023. Net Interest Income.
Net income attributable to the Company was $11.9 million ($3.57 per share diluted; weighted average common shares outstanding of 3,346,161 as adjusted) for the year ended December 31, 2024 compared to $12.8 million ($3.82 per share diluted; weighted average common shares outstanding of 3,347,341, as adjusted) for the year ended December 31, 2023. Net Interest Income.
At December 31, 2024, an immediate and sustained decrease in rates of 1.00%, 2.00% or 3.00% would decrease the Company’s net interest income over a one year horizon compared to a flat interest rate scenario.
At December 31, 2025 and 2024, an immediate and sustained decrease in rates of 1.00%, 2.00% or 3.00% would decrease the Company’s net interest income over a one year horizon compared to a flat interest rate scenario.
The increase was primarily due to an increase in the tax-equivalent yield on interest-earning assets increased from 3.96% in 2023 to 4.49% in 2024. The increase in the yield was primarily due to an increase in the tax-equivalent yield on loans from 5.66% 2023 to 6.05% in 2024.
The increase was primarily due to an increase in the tax-equivalent yield on interest-earning assets from 3.96% in 2023 to 4.49% in 2024. The increase in the yield was primarily due to an increase in the tax-equivalent yield on loans from 5.66% in 2023 to 6.05% in 2024.
In 2025, management will continue to focus on maintaining a reduced level of nonperforming assets through improved collection efforts and underwriting on nonperforming loans. ● Being active in the local community, particularly through our efforts with local schools, to uphold our high standing in our community and marketing to our next generation of customers. ● Improving profitability by expanding our product offerings to customers and leveraging recent investments in technology to increase the productivity and efficiency of our staff.
In 2026, management will continue to focus on maintaining a reduced level of nonperforming assets through improved collection efforts and underwriting on nonperforming loans. ● Being active in the local community, particularly through our efforts with local schools, to uphold our high standing in our community and marketing to our next generation of customers. ● Improving profitability by expanding our product offerings to customers and leveraging recent investments in technology to increase the productivity and efficiency of our staff.
Interest rates do not necessarily move in the same direction or to the same extent as the prices of goods and services. 52 Market Risk Analysis Qualitative Aspects of Market Risk .
Interest rates do not necessarily move in the same direction or to the same extent as the prices of goods and services. Market Risk Analysis Qualitative Aspects of Market Risk .
During the year ended December 31, 2024, management evaluated and adjusted deposit rate betas and key interest rate index ties in its scenarios to better reflect the current interest rate environment and increased competitive pressure for deposits. The Company also has longer term interest rate risk exposure, which may not be appropriately measured by Net Interest Income at Risk modeling.
During the year ended December 31, 2025, management evaluated and adjusted deposit rate betas and key interest rate index ties in its scenarios to better reflect the current interest rate environment and increased competitive pressure for deposits. The Company also has longer term interest rate risk exposure, which may not be appropriately measured by Net Interest Income at Risk modeling.
Net interest income increased $1.2 million, or 3.5%, from $34.6 million for 2023 to $35.8 million for 2024 primarily due to increases in the average tax-equivalent yield on interest-earning assets partially offset by increases in the average balance and cost of interest-bearing liabilities. Total interest income increased $6.9 million for 2024 as compared to 2023.
Net interest income increased $1.2 million, or 3.5%, from $34.6 million for 2023 to $35.8 million for 2024 primarily due to increases in the average tax-equivalent yield on interest-earning assets partially offset by increases in the average balance and cost of interest-bearing liabilities. 45 Table of Contents Total interest income increased $6.9 million for 2024 as compared to 2023.
The changes in interest income and interest expense resulting from changes in volume and changes in rates for 2024 and 2023 are shown in the schedule captioned “ Rate/Volume Analysis ” included herein. Provision for Credit Losses .
The changes in interest income and interest expense resulting from changes in volume and changes in rates for 2025 and 2024 are shown in the schedule captioned “ Rate/Volume Analysis ” included herein. Provision for Credit Losses .
The changes in interest income and interest expense resulting from changes in volume and changes in rates for 2023 and 2022 are shown in the schedule captioned “ Rate/Volume Analysis ” included herein. Provision for Loan Losses .
The changes in interest income and interest expense resulting from changes in volume and changes in rates for 2024 and 2023 are shown in the schedule captioned “ Rate/Volume Analysis ” included herein. Provision for Loan Losses .
The increase in other expenses included a $90,000 increase in the Company’s support of local communities through sponsorships and donations, a $64,000 increase in check and debit card fraud losses, $30,000 in increased dues and subscriptions, and $25,000 in increased expenses related to employee training and education. 46 Income Tax Expense.
The increase in other expenses included a $90,000 increase in the Company’s support of local communities through partnerships and donations, a $64,000 increase in check and debit card fraud losses, $30,000 in increased dues and subscriptions, and $25,000 in increased expenses related to employee training and education. Income Tax Expense.
The decrease in the net unrealized loss on available for sale securities during 2024 is primarily due to decreases in market interest rates.
The decrease in the net unrealized loss on available for sale securities during 2025 is primarily due to decreases in market interest rates.
A large loss could deplete the allowance and require increased provisions to replenish the allowance, which would adversely affect earnings. Note 1 and Note 4 of the accompanying Notes to Consolidated Financial Statements describe the methodology used to determine the ACL on loans. 43 Selected Financial Data.
A large loss could deplete the allowance and require increased provisions to replenish the allowance, which would adversely affect earnings. Note 1 and Note 4 of the accompanying Notes to Consolidated Financial Statements describe the methodology used to determine the ACL on loans. 42 Table of Contents Selected Financial Data.
The Company’s average balance of outstanding advances from the FHLB decreased from $6.1 million for 2023 to $1.7 million for 2024, partially offset by an increase in the average rate on outstanding advances from the FHLB from 5.59% for 2023 to 5.70% for 2024.
The Company’s average outstanding borrowings from the FHLB decreased from $6.1 million for 2023 to $1.7 million for 2024, partially offset by an increase in the average rate on outstanding advances from the FHLB from 5.59% for 2023 to 5.70% for 2024.
(8) Nonperforming assets consist of nonperforming loans and real estate acquired in settlement of loans. 45 Results of Operations for the Year Ended December 31, 2024 Compared to the Year Ended December 31, 2023 Net Income.
(8) Nonperforming assets consist of nonperforming loans and real estate acquired in settlement of loans. ​ Results of Operations for the Year Ended December 31, 2025 Compared to the Year Ended December 31, 2024 Net Income.
Significant accounting policies, including the impact of recent accounting pronouncements, are discussed in Note 1 of the accompanying Notes to Consolidated Financial Statements. Those policies considered to be critical accounting policies are described below. ACL on Loans.
GAAP. 41 Table of Contents Significant accounting policies, including the impact of recent accounting pronouncements, are discussed in Note 1 of the accompanying Notes to Consolidated Financial Statements. Those policies considered to be critical accounting policies are described below. ACL on Loans.
Results of Operations for the Year Ended December 31, 2023 Compared to the Year Ended December 31, 2022 Net Income.
Results of Operations for the Year Ended December 31, 2024 Compared to the Year Ended December 31, 2023 Net Income.
At December 31, 2024, the Bank had certificates of deposit scheduled to mature within one year of $188.2 million. Historically, the Bank has been able to retain a significant amount of its deposits as they mature. The Company is a separate legal entity from the Bank and must provide for its own liquidity.
At December 31, 2025, the Bank had certificates of deposit scheduled to mature within one year of $222.0 million. Historically, the Bank has been able to retain a significant amount of its deposits as they mature. The Company is a separate legal entity from the Bank and must provide for its own liquidity.
The total return for the three-year period was -10.8%. Management’s discussion and analysis of financial condition and results of operations is intended to assist in understanding the financial condition and results of operations of the Company and the Bank.
The total return for the three-year period was 151.4%. Management’s discussion and analysis of financial condition and results of operations is intended to assist in understanding the financial condition and results of operations of the Company and the Bank.
(2) Per share data excludes net income attributable to noncontrolling interests. 44 At or For the Year Ended SELECTED FINANCIAL RATIOS: December 31, 2024 2023 2022 2021 2020 Performance Ratios: Return on assets (1) 1.02 % 1.12 % 1.03 % 1.05 % 1.12 % Return on average equity (2) 10.97 % 14.03 % 13.07 % 10.15 % 9.64 % Dividend payout ratio (3) 31.37 % 28.27 % 29.30 % 30.50 % 31.68 % Average equity to average assets 9.31 % 7.97 % 7.89 % 10.37 % 11.57 % Interest rate spread (4) 2.76 % 2.85 % 2.90 % 2.80 % 3.32 % Net interest margin (5) 3.20 % 3.16 % 2.95 % 2.84 % 3.39 % Non-interest expense to average assets 2.38 % 2.28 % 2.17 % 2.26 % 2.54 % Average interest earning assets to average interest bearing liabilities 134.25 % 138.88 % 140.23 % 139.51 % 137.42 % Regulatory Capital Ratios (Bank only): Community bank leverage ratio (6) 10.57 % 9.92 % 9.18 % 8.84 % 9.37 % Asset Quality Ratios: Nonperforming loans as a percent of net loans (7) 0.69 % 0.28 % 0.27 % 0.28 % 0.29 % Nonperforming assets as a percent of total assets (8) 0.37 % 0.15 % 0.13 % 0.12 % 0.14 % Allowance for credit losses as a percent of gross loans receivable 1.45 % 1.29 % 1.20 % 1.25 % 1.31 % (1) Net income attributable to First Capital, Inc. divided by average assets.
(2) Per share data excludes net income attributable to noncontrolling interests. 43 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ SELECTED FINANCIAL RATIOS: ​ At or For the Year Ended ​ ​ December 31, ​ ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ 2023 ​ ​ ​ 2022 ​ ​ ​ 2021 Performance Ratios: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Return on assets (1) 1.34 % 1.02 % 1.12 % 1.03 % 1.05 % Return on average equity (2) 13.18 % 10.97 % 14.03 % 13.07 % 10.15 % Dividend payout ratio (3) 24.54 % 31.37 % 28.27 % 29.30 % 30.50 % Average equity to average assets 10.14 % 9.31 % 7.97 % 7.89 % 10.37 % Interest rate spread (4) 3.19 % 2.76 % 2.85 % 2.90 % 2.80 % Net interest margin (5) 3.61 % 3.20 % 3.16 % 2.95 % 2.84 % Non-interest expense to average assets 2.41 % 2.38 % 2.28 % 2.17 % 2.26 % Average interest earning assets to average interest bearing liabilities 134.30 % 134.25 % 138.88 % 140.23 % 139.51 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Regulatory Capital Ratios (Bank only): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Community bank leverage ratio (6) 11.01 % 10.57 % 9.92 % 9.18 % 8.84 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Asset Quality Ratios: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nonperforming loans as a percent of net loans (7) 0.67 % 0.69 % 0.28 % 0.27 % 0.28 % Nonperforming assets as a percent of total assets (8) 0.34 % 0.37 % 0.15 % 0.13 % 0.12 % Allowance for credit losses as a percent of gross loans receivable 1.52 % 1.45 % 1.29 % 1.20 % 1.25 % (1) Net income attributable to First Capital, Inc. divided by average assets.
Unlike most industrial companies, virtually all the assets and liabilities of the financial institution are monetary in nature. As a result, interest rates generally have a more significant impact on the financial institution’s performance than do general levels of inflation.
The primary impact of inflation is reflected in increased operating costs. Unlike most industrial companies, virtually all the assets and liabilities of the financial institution are monetary in nature. As a result, interest rates generally have a more significant impact on the financial institution’s performance than do general levels of inflation.
Indicators include the following: ● Net income and earnings per share – Net income attributable to the Company was $11.9 million, or $3.57 per diluted share for 2024 compared to $12.8 million, or $3.82 per diluted share for 2023 and $11.9 million, or $3.55 per diluted share for 2022. ● Return on average assets and return on average equity – Return on average assets for 2024 was 1.02% compared to 1.12% for 2023 and 1.03% for 2022, and return on average equity for 2024 was 10.97% compared to 14.03% for 2023 and 13.07% for 2022. ● Efficiency ratio – The Company’s efficiency ratio (defined as noninterest expenses divided by net interest income plus noninterest income) was 64.1% for 2024 compared to 61.6% for 2023 and 62.3% for 2022. ● Asset quality – Net loan charge-offs totaled $261,000 for 2022, $469,000 for 2023 and $173,000 for 2024, and the ratio of net charge-offs to average loans outstanding remained virtually unchanged at 0.05% for 2022, 0.08% for 2023 and 0.03% for 2024.
Indicators include the following: ● Net income and earnings per share – Net income attributable to the Company was $16.4 million, or $4.89 per diluted share for 2025 compared to $11.9 million, or $3.57 per diluted share for 2024 and $12.8 million, or $3.82 per diluted share for 2023. ● Return on average assets and return on average equity – Return on average assets for 2025 was 1.34% compared to 1.02% for 2024 and 1.12% for 2023, and return on average equity for 2025 was 13.18% compared to 10.97% for 2024 and 14.03% for 2023. ● Efficiency ratio – The Company’s efficiency ratio (defined as noninterest expenses divided by net interest income plus noninterest income) was 58.4% for 2025 compared to 64.1% for 2024 and 61.6% for 2023. ● Asset quality – Net loan charge-offs totaled $469,000 for 2023, $173,000 for 2024 and $317,000 for 2025, and the ratio of net charge-offs to average loans outstanding remained virtually unchanged at 0.08% for 2023, 0.03% for 2024 and 0.05% for 2025.
ITEM 7. MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION General As the holding company for the Bank, the Company conducts its business primarily through the Bank.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION General As the holding company for the Bank, the Company conducts its business primarily through the Bank.
At December 31, 2024, the Company (on an unconsolidated basis) had liquid assets of $2.9 million. The Bank is required to maintain specific amounts of capital pursuant to regulations. As previously mentioned in this report, in 2020 the Bank elected to opt in to the CBLR framework.
At December 31, 2025, the Company (on an unconsolidated basis) had liquid assets of $2.3 million. 49 Table of Contents The Bank is required to maintain specific amounts of capital pursuant to regulations. As previously mentioned in this report, in 2020 the Bank elected to opt in to the CBLR framework.
Income tax expense decreased $32,000 for 2024 as compared to 2023 resulting in an effective tax rate of 15.6% for 2024, compared to 14.9% for 2023. See Note 12 of the accompanying Notes to Consolidated Financial Statements for additional details on the Company’s income tax expense.
Income tax expense decreased $32,000 for 2024 as compared to 2023 resulting in an effective tax rate of 15.6% for 2024, compared to 14.9% for 2023. See Note 12 of the accompanying Notes to Consolidated Financial Statements for additional details on the Company’s income tax expense. 46 Table of Contents Average Balances and Yields .
At December 31, 2023, the Company would expect decreases in its EVE in the event of sudden and sustained 200 and 300 basis points increases in prevailing interest rates as well as a sudden and sustained decrease of 100, 200 and 300 basis points in prevailing interest rates, while it would expect an increase in its EVE in the event of a sudden and sustained 100 basis point increase in prevailing interest rates.
At December 31, 2024, the Company would expect an increase in its EVE in the event of sudden and sustained 100, 200 and 300 basis points increases in prevailing interest rates and a decrease in its EVE in the event of sudden and sustained 100, 200 and 300 basis point decreases in prevailing interest rates.
Securities available for sale, at fair value, consisting primarily of U.S. agency mortgage-backed securities and collateralized mortgage obligations, U.S. agency notes and bonds, Treasury notes and bonds and municipal obligations, decreased from $437.3 million at December 31, 2023 to $389.2 million at December 31, 2024.
Securities available for sale, at fair value, consisting primarily of U.S. agency mortgage-backed securities and collateralized mortgage obligations, U.S. agency notes and bonds, Treasury notes and bonds and municipal obligations, increased from $389.2 million at December 31, 2024 to $417.2 million at December 31, 2025.
As previously mentioned in this report, during the year ended December 31, 2023, the Company evaluated and adjusted deposit rate betas and key interest rate index ties in its scenarios to better reflect the current interest rate environment and increased competitive pressure for deposits.
During the year ended December 31, 2025, management evaluated and adjusted deposit rate betas and key interest rate index ties in its scenarios to better reflect the current interest rate environment and increased competitive pressure for deposits.
Our focus in 2025 will be to continue the enhancement and expansion of our customer relationships in these and surrounding markets. ● Ensuring that the Company attracts and retains talented personnel and that an optimal level of performance and customer service is promoted at all levels of the Company. 42 Critical Accounting Policies and Estimates The accounting and reporting policies of the Company comply with U.S.
Our focus in 2026 will be to continue the enhancement and expansion of our customer relationships in these and surrounding markets. ● Ensuring that the Company attracts and retains talented personnel and that an optimal level of performance and customer service is promoted at all levels of the Company.
FINANCIAL CONDITION DATA: At December 31, 2024 2023 2022 2021 2020 (In thousands) Total assets $ 1,187,523 $ 1,157,880 $ 1,151,400 $ 1,156,603 $ 1,017,551 Cash and cash equivalents (1) 105,917 38,670 66,298 172,509 175,888 Securities available for sale 389,243 437,271 460,819 447,335 283,502 Securities held to maturity 7,000 7,000 7,000 2,000 - Interest-bearing time deposits 2,695 3,920 3,677 4,839 6,396 Net loans 631,199 614,409 557,958 483,287 500,331 Deposits 1,066,439 1,025,211 1,060,396 1,035,562 900,461 Borrowings - 21,500 - - - Stockholders' equity, net of noncontrolling interest in subsidiary 114,599 105,233 85,158 113,828 110,639 For the Year Ended OPERATING DATA: December 31, 2024 2023 2022 2021 2020 (In thousands) Interest income $ 50,471 $ 43,605 $ 33,940 $ 29,460 $ 29,647 Interest expense 14,681 9,017 1,594 1,128 1,561 Net interest income 35,790 34,588 32,346 28,332 28,086 Provision for (recapture of) credit losses 1,449 1,141 950 (325 ) 1,801 Net interest income after provision for (recapture of) credit losses 34,341 33,447 31,396 28,657 26,285 Noninterest income 7,656 7,632 7,927 9,551 8,599 Noninterest expense 27,828 26,028 25,088 24,531 23,048 Income before income taxes 14,169 15,051 14,235 13,677 11,836 Income tax expense 2,216 2,248 2,320 2,240 1,692 Net Income 11,953 12,803 11,915 11,437 10,144 Less: net income attributable to noncontrolling interest in subsidiary 13 13 13 13 13 Net Income attributable to First Capital Inc. $ 11,940 $ 12,790 $ 11,902 $ 11,424 $ 10,131 PER SHARE DATA (2): Net income - basic $ 3.57 $ 3.82 $ 3.55 $ 3.41 $ 3.03 Net income - diluted 3.57 3.82 3.55 3.41 3.02 Dividends 1.12 1.08 1.04 1.04 0.96 (1) Includes cash and due from banks, interest-bearing deposits in other depository institutions and federal funds sold.
The consolidated financial data presented below is qualified in its entirety by the more detailed financial data appearing elsewhere in this report, including the Company’s audited consolidated financial statements. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ FINANCIAL CONDITION DATA: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At December 31, ​ ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ 2023 ​ ​ ​ 2022 ​ ​ ​ 2021 ​ (In thousands) Total assets ​ $ 1,271,995 ​ $ 1,187,523 ​ $ 1,157,880 ​ $ 1,151,400 ​ $ 1,156,603 Cash and cash equivalents (1) ​ 137,288 ​ 105,917 ​ 38,670 ​ 66,298 ​ 172,509 Securities available for sale ​ 417,190 ​ 389,243 ​ 437,271 ​ 460,819 ​ 447,335 Securities held to maturity ​ 7,000 ​ 7,000 ​ 7,000 ​ 7,000 ​ 2,000 Interest-bearing time deposits ​ 1,470 ​ 2,695 ​ 3,920 ​ 3,677 ​ 4,839 Net loans ​ 654,100 ​ 631,199 ​ 614,409 ​ 557,958 ​ 483,287 Deposits ​ 1,122,990 ​ 1,066,439 ​ 1,025,211 ​ 1,060,396 ​ 1,035,562 Borrowings ​ — ​ — ​ 21,500 ​ — ​ — Stockholders' equity, net of noncontrolling interest in subsidiary ​ 137,797 ​ 114,599 ​ 105,233 ​ 85,158 ​ 113,828 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ OPERATING DATA: ​ For the Year Ended ​ ​ December 31, ​ ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ 2023 ​ ​ ​ 2022 ​ ​ ​ 2021 ​ ​ (In thousands) Interest income ​ $ 56,847 ​ $ 50,471 ​ $ 43,605 ​ $ 33,940 ​ $ 29,460 Interest expense ​ 14,697 ​ 14,681 ​ 9,017 ​ 1,594 ​ 1,128 Net interest income ​ 42,150 ​ 35,790 ​ 34,588 ​ 32,346 ​ 28,332 Provision for (recapture of) credit losses ​ 1,144 ​ 1,449 ​ 1,141 ​ 950 ​ (325) Net interest income after provision for (recapture of) credit losses ​ 41,006 ​ 34,341 ​ 33,447 ​ 31,396 ​ 28,657 Noninterest income ​ 8,465 ​ 7,656 ​ 7,632 ​ 7,927 ​ 9,551 Noninterest expense ​ 29,562 ​ 27,828 ​ 26,028 ​ 25,088 ​ 24,531 Income before income taxes ​ 19,909 ​ 14,169 ​ 15,051 ​ 14,235 ​ 13,677 Income tax expense ​ 3,529 ​ 2,216 ​ 2,248 ​ 2,320 ​ 2,240 Net Income ​ 16,380 ​ 11,953 ​ 12,803 ​ 11,915 ​ 11,437 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Less: net income attributable to noncontrolling interest in subsidiary ​ 13 ​ 13 ​ 13 ​ 13 ​ 13 Net Income attributable to First Capital Inc. ​ $ 16,367 ​ $ 11,940 ​ $ 12,790 ​ $ 11,902 ​ $ 11,424 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ PER SHARE DATA (2): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income - basic ​ $ 4.89 ​ $ 3.57 ​ $ 3.82 ​ $ 3.55 ​ $ 3.41 Net income - diluted ​ 4.89 ​ 3.57 ​ 3.82 ​ 3.55 ​ 3.41 Dividends ​ 1.20 ​ 1.12 ​ 1.08 ​ 1.04 ​ 1.04 (1) Includes cash and due from banks, interest-bearing deposits in other depository institutions and federal funds sold.
Total stockholders’ equity attributable to the Company increased $9.4 million from $105.2 million at December 31, 2023 to $114.6 million at December 31, 2024. This increase is primarily the result of the $8.2 million increase in retained net income and a $1.0 million decrease in the net unrealized loss on available for sale securities.
Total stockholders’ equity attributable to the Company increased $23.2 million from $114.6 million at December 31, 2024 to $137.8 million at December 31, 2025. This increase is primarily the result of the $12.3 million increase in retained net income and an $11.3 million decrease in the net unrealized loss on available for sale securities.
The ACL on loans was 1.45% of total outstanding loans and 211.8% of nonaccrual loans at December 31, 2024 compared to 1.29% of total outstanding loans and 457.2% of nonaccrual loans at December 31, 2023. ● Shareholder return – Total annual shareholder return, including the increase in the Company’s stock price from $27.90 at December 31, 2023 to $32.25 at December 31, 2024 and dividends of $1.12 per share, was 19.6% for 2024 compared to 16.4% for 2023 and -36.0% for 2022.
The ACL on loans was 1.52% of total outstanding loans and 232.3% of nonaccrual loans at December 31, 2025 compared to 1.45% of total outstanding loans and 211.8% of nonaccrual loans at December 31, 2024. ● Shareholder return – Total annual shareholder return, including the increase in the Company’s stock price from $32.25 at December 31, 2024 to $59.20 at December 31, 2025 and dividends of $1.20 per share, was 87.3% for 2025 compared to 19.6% for 2024 and 16.4% for 2023.
(5) Includes interest-bearing deposits with banks, federal funds sold and interest-bearing time deposits. (6) Stockholders' equity attributable to First Capital, Inc. 49 Rate/Volume Analysis . The following table sets forth the effects of changing rates and volumes on net interest income and interest expense computed on a tax-equivalent basis.
(6) Stockholders’ equity attributable to First Capital, Inc. ​ 47 Table of Contents Rate/Volume Analysis . The following table sets forth the effects of changing rates and volumes on net interest income and interest expense computed on a tax-equivalent basis.
Principal repayments of $28.1 million, maturities of $63.0 million and sales of $19.2 million during 2024 were only partially offset by purchases of $61.7 million of securities. There was also an unrealized gain of $1.6 million on the securities available for sale portfolio during 2024 due primarily to stabilizing market rates during the year.
Purchases of $137.9 million were partially offset by principal repayments of $38.8 million, maturities of $67.1 million and sales of $17.9 million during 2025. There was also an unrealized gain of $14.6 million on the securities available for sale portfolio during 2025 due primarily to decreasing market rates during the year.
The Bank continued to sell the majority of newly originated fixed-rate residential mortgage loans in the secondary market. The Bank originated $32.8 million in residential mortgages for sale in the secondary market during 2024 compared to $31.6 million in 2023. Of the total originations in 2024, $6.7 million paid off existing loans in the Bank’s portfolio.
The Bank originated $41.8 million in residential mortgages for sale in the secondary market during 2025 compared to $32.8 million in 2024. Of the total originations in 2025, $13.4 million paid off existing loans in the Bank’s portfolio.
Net loans receivable (excluding loans held for sale) increased $16.8 million from $614.4 million at December 31, 2023 to $631.2 million at December 31, 2024.
Net loans receivable (excluding loans held for sale) increased $22.9 million from $631.2 million at December 31, 2024 to $654.1 million at December 31, 2025.
Net income attributable to the Company was $12.8 million ($3.82 per share diluted; weighted average common shares outstanding of 3,347,341, as adjusted) for the year ended December 31, 2023 compared to $11.9 million ($3.55 per share diluted; weighted average common shares outstanding of 3,355,023, as adjusted) for the year ended December 31, 2022. Net Interest Income.
Net income attributable to the Company was $16.4 million ($4.89 per share diluted; weighted average common shares outstanding of 3,347,989, as adjusted) for the year ended December 31, 2025 compared to $11.9 million ($3.57 per share diluted; weighted average common shares outstanding of 3,346,161, as adjusted) for the year ended December 31, 2024. Net Interest Income.
As of December 31, 2024 the Bank was in compliance with all regulatory capital requirements which were effective as of such date with a CBLR of 10.57%. See Note 18 in the accompanying Notes to Consolidated Financial Statements. On September 24, 2020, the Company filed an automatic shelf registration statement with the SEC.
As of December 31, 2025 the Bank was in compliance with all regulatory capital requirements which were effective as of such date with a CBLR of 11.01%. See Note 18 in the accompanying Notes to Consolidated Financial Statements.
The Bank’s primary business strategy is attracting deposits from the general public and using those funds to originate residential mortgage loans, multi-family residential loans, commercial real estate and business loans and consumer loans.
The Company has no other material income other than that generated by the Bank and its subsidiaries. 40 Table of Contents The Bank’s primary business strategy is attracting deposits from the general public and using those funds to originate residential mortgage loans, multi-family residential loans, commercial real estate and business loans and consumer loans.
Net interest income increased $2.2 million, or 6.9%, from $32.3 million for 2022 to $34.6 million for 2023 primarily due to increases in the average tax-equivalent yield on interest-earning assets partially offset by increases in the average balance and cost of interest-bearing liabilities. Total interest income increased $9.7 million for 2023 as compared to 2022.
Net interest income increased $6.4 million, or 17.8%, from $35.8 million for 2024 to $42.2 million for 2025 primarily due to increases in the average tax-equivalent yield on interest-earning assets, the average balance of interest-earning assets and a decrease in the cost of interest-bearing liabilities, partially offset by an increase in the average balance of interest-bearing liabilities.
Interest on loans increased $8.4 million when comparing the two periods due to an increase in the average balance of loans from $530.2 million in 2022 to $590.6 million in 2023.
The increase in the yield was primarily due to an increase in the tax-equivalent yield on loans from 6.05% in 2024 to 6.29% in 2025. Interest on loans increased $2.6 million when comparing the two periods due to an increase in the average balance of loans from $634.0 million in 2024 to $651.8 million in 2025.
This increase was partially offset by decreases in noninterest-bearing demand deposits, savings accounts and interest-bearing demand deposit accounts (including money market accounts) of $7.5 million, $14.9 million and $10.6 million, respectively. Included in time deposits at December 31, 2024 were $20.2 million in brokered deposits. The Company had no outstanding brokered deposits at December 31, 2023.
These increases were partially offset by decreases in interest-bearing demand deposit accounts (including money market accounts) of $2.9 million. At December 31, 2025 and 2024, the Company had no outstanding borrowed funds.
GAAP and conform to general practices within the banking industry. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions. The financial position and results of operations can be affected by these estimates and assumptions, which are integral to understanding reported results.
Critical Accounting Policies and Estimates The accounting and reporting policies of the Company comply with U.S. GAAP and conform to general practices within the banking industry. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions.
GAAP, which generally require the measurement of financial position and operating results in terms of historical dollars, without considering the changes in relative purchasing power of money over time due to inflation. The primary impact of inflation is reflected in increased operating costs.
Effect of Inflation and Changing Prices The consolidated financial statements and related financial data presented in this report have been prepared in accordance with U.S. GAAP, which generally require the measurement of financial position and operating results in terms of historical dollars, without considering the changes in relative purchasing power of money over time due to inflation.
Tax exempt income on loans and investment securities has been adjusted to a tax-equivalent basis using the federal marginal tax rate of 21%. 2024 Compared to 2023 2023 Compared to 2022 Increase (Decrease) Due to Increase (Decrease) Due to Rate/ Rate/ Rate Volume Volume Net Rate Volume Volume Net (In thousands) Interest-earning assets: Loans: Taxable $ 2,284 $ 2,374 $ 163 $ 4,821 $ 4,941 $ 2,875 $ 569 $ 8,385 Tax-exempt 64 51 13 128 11 (2 ) - 9 Total loans 2,348 2,425 176 4,949 4,952 2,873 569 8,394 Investment securities: Taxable 1,817 (403 ) (131 ) 1,283 962 135 29 1,126 Tax-exempt (205 ) (738 ) 36 (907 ) 168 12 - 180 Total investment securities securities 1,612 (1,141 ) (95 ) 376 1,130 147 29 1,306 Federal funds sold 21 1,321 26 1,368 3,527 (899 ) (2,776 ) (148 ) Other interest-earnings assets 36 (24 ) (3 ) 9 187 (14 ) (20 ) 153 Total net change in income on interest- earning assets 4,017 2,581 104 6,702 9,796 2,107 (2,198 ) 9,705 Interest-bearing liabilities: Interest-bearing deposits 4,568 270 148 4,986 6,734 (17 ) (70 ) 6,647 Borrowed funds (54 ) 787 (55 ) 678 - - 776 776 Total net change in expense on interest- bearing liabilities 4,514 1,057 93 5,664 6,734 (17 ) 706 7,423 Net change in net interest income (tax equivalent basis) $ (497 ) $ 1,524 $ 11 $ 1,038 $ 3,062 $ 2,124 $ (2,904 ) $ 2,282 50 Comparison of Financial Condition at December 31, 2024 and 2023 Total assets increased from $1.16 billion at December 31, 2023 to $1.19 billion at December 31, 2024 primarily due to increases in total cash and cash equivalents and net loans receivable partially offset by a decrease in securities available for sale.
Tax exempt income on loans and investment securities has been adjusted to a tax-equivalent basis using the federal marginal tax rate of 21%. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2025 Compared to 2024 ​ ​ ​ 2024 Compared to 2023 ​ ​ Increase (Decrease) Due to ​ Increase (Decrease) Due to ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Rate/ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Rate/ ​ ​ ​ ​ ​ ​ ​ Rate ​ Volume ​ Volume ​ Net ​ Rate ​ Volume ​ Volume ​ Net ​ (In thousands) Interest-earning assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loans: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Taxable ​ $ 1,510 ​ $ 1,040 ​ $ 42 ​ $ 2,592 ​ $ 2,284 ​ $ 2,374 ​ $ 163 ​ $ 4,821 Tax-exempt ​ 39 ​ 28 ​ 2 ​ 69 ​ 64 ​ 51 ​ 13 ​ 128 Total loans ​ 1,549 ​ 1,068 ​ 44 ​ 2,661 ​ 2,348 ​ 2,425 ​ 176 ​ 4,949 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Investment securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Taxable ​ 2,314 ​ (391) ​ (130) ​ 1,793 ​ 1,817 ​ (403) ​ (131) ​ 1,283 Tax-exempt ​ 183 ​ (70) ​ (4) ​ 109 ​ (205) ​ (738) ​ 36 ​ (907) Total investment securities ​ 2,497 ​ (461) ​ (134) ​ 1,902 ​ 1,612 ​ (1,141) ​ (95) ​ 376 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest bearing deposits with banks ​ (407) ​ 2,667 ​ (409) ​ 1,851 ​ 57 ​ 1,297 ​ 23 ​ 1,377 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total net change in income on interest-earning assets ​ 3,639 ​ 3,274 ​ (499) ​ 6,414 ​ 4,017 ​ 2,581 ​ 104 ​ 6,702 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest-bearing liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest-bearing deposits ​ 381 ​ 1,059 ​ 30 ​ 1,470 ​ 4,568 ​ 270 ​ 148 ​ 4,986 Borrowed funds ​ — ​ (1,454) ​ — ​ (1,454) ​ (54) ​ 787 ​ (55) ​ 678 Total net change in expense on interest-bearing liabilities ​ 381 ​ (395) ​ 30 ​ 16 ​ 4,514 ​ 1,057 ​ 93 ​ 5,664 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net change in net interest income (tax equivalent basis) ​ $ 3,258 ​ $ 3,669 ​ $ (529) ​ $ 6,398 ​ $ (497) ​ $ 1,524 ​ $ 11 ​ $ 1,038 ​ Comparison of Financial Condition at December 31, 2025 and 2024 Total assets increased from $1.19 billion at December 31, 2024 to $1.27 billion at December 31, 2025 primarily due to increases in total cash and cash equivalents, securities available for sale and net loans receivable.
Interest and dividends on investment securities (including FHLB stock) increased $1.3 million for 2023 compared to 2022 due to an increase in the average balance of investment securities from $495.6 million for 2022 to $506.5 million for 2023 in addition to an increase in the tax-equivalent yield on investment securities from 1.73% in 2022 to 1.95% in 2023.
Interest and dividends on investment securities (including FHLB stock) increased $1.9 million for 2025 compared to 2024 due to an increase in the tax-equivalent yield on investment securities from 2.25% in 2024 to 2.80% in 2025, partially offset by a decrease in the average balance of investment securities from $455.1 million for 2024 to $433.8 million for 2025.
The information contained in this section should be read in conjunction with the consolidated financial statements and the accompanying Notes to Consolidated Financial Statements included in this report. 41 Operating Strategy The Company is the parent company of an independent community-oriented financial institution that delivers quality customer service and offers a wide range of deposit, loan and investment products to its customers.
Operating Strategy The Company is the parent company of an independent community-oriented financial institution that delivers quality customer service and offers a wide range of deposit, loan and investment products to its customers. The commitment to customer needs, the focus on providing consistent customer service, and community service and support are the keys to the Bank’s past and future success.
The Company’s average balance of interest-bearing deposits decreased from $802.8 million for 2022 to $794.4 million for 2023 while the average cost of interest-bearing deposits increased from 0.20% for 2022 to 1.04% for 2023.
The Company’s average balance of interest-bearing deposits increased from $820.4 million for 2024 to $886.0 million for 2025 in addition to the average cost of interest-bearing deposits increasing from 1.61% for 2024 to 1.66% for 2025.
At December 31, 2024 Immediate Change Economic Value of Equity Economic Value of Equity as a in the Level Dollar Dollar Percent Percent of Present Value of Assets of Interest Rates Amount Change Change EVE Ratio Change (Dollars in thousands) 300bp $ 257,887 $ 10,236 4.13 % 23.76 % 261bp 200bp 257,819 10,168 4.11 23.17 202bp 100bp 254,035 6,384 2.58 22.26 111bp Static 247,651 - - 21.15 0bp (100)bp 230,424 (17,227 ) (6.96 ) 19.24 (192)bp (200)bp 212,461 (35,190 ) (14.21 ) 17.26 (389)bp (300)bp 190,313 (57,338 ) (23.15 ) 15.02 (613)bp At December 31, 2023 Immediate Change Economic Value of Equity Economic Value of Equity as a in the Level Dollar Dollar Percent Percent of Present Value of Assets of Interest Rates Amount Change Change EVE Ratio Change (Dollars in thousands) 300bp $ 206,434 $ (4,405 ) (2.09 )% 19.65 % 111bp 200bp 209,839 (1,000 ) (0.47 ) 19.45 91bp 100bp 211,505 666 0.32 19.09 55bp Static 210,839 - - 18.54 0bp (100)bp 209,270 (1,569 ) (0.74 ) 17.94 (60)bp (200)bp 204,705 (6,134 ) (2.91 ) 17.10 (144)bp (300)bp 191,171 (19,668 ) (9.33 ) 15.61 (293)bp 54 The previous tables indicate that at December 31, 2024 the Company would expect an increase in its EVE in the event of a sudden and sustained 100, 200 and 300 basis point increase in prevailing interest rates and a decrease in its EVE in the event of a sudden and sustained 100, 200 and 300 basis point decrease in prevailing interest rates.
Results of the Company’s simulation modeling, which assumes an immediate and sustained parallel shift in market interest rates, project that the Company’s EVE could change as follows, relative to the Company’s base case scenario, based on December 31, 2025 and 2024 financial information. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At December 31, 2025 ​ Immediate Change ​ Economic Value of Equity ​ Economic Value of Equity as a ​ in the Level ​ Dollar ​ Dollar ​ Percent ​ Percent of Present Value of Assets ​ of Interest Rates ​ ​ ​ Amount ​ ​ ​ Change ​ ​ ​ Change ​ ​ ​ EVE Ratio ​ ​ ​ Change ​ ​ ​ (Dollars in thousands) ​ 300bp ​ $ 196,627 ​ $ (3,425) (1.71) % 17.19 % 96 bp 200bp ​ 200,019 ​ (33) (0.02) 17.04 81 bp 100bp ​ 201,438 ​ 1,386 0.69 16.73 50 bp Static ​ 200,052 ​ — — 16.23 0 bp (100)bp ​ 197,721 ​ (2,331) (1.17) 15.68 (55) bp (200)bp ​ 192,020 ​ (8,032) (4.01) 14.87 (136) bp (300)bp ​ 189,830 ​ (10,222) (5.11) 14.32 (191) bp ​ 51 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At December 31, 2024 ​ Immediate Change ​ Economic Value of Equity ​ Economic Value of Equity as a ​ in the Level ​ Dollar ​ Dollar ​ Percent ​ Percent of Present Value of Assets ​ of Interest Rates ​ ​ ​ Amount ​ ​ ​ Change ​ ​ ​ Change ​ ​ ​ EVE Ratio ​ ​ ​ Change ​ ​ ​ (Dollars in thousands) ​ 300bp ​ $ 257,887 ​ $ 10,236 4.13 % 23.76 % 261 bp 200bp ​ 257,819 ​ 10,168 4.11 23.17 202 bp 100bp ​ 254,035 ​ 6,384 2.58 22.26 111 bp Static ​ 247,651 ​ — — 21.15 0 bp (100)bp ​ 230,424 ​ (17,227) (6.96) 19.24 (192) bp (200)bp ​ 212,461 ​ (35,190) (14.21) 17.26 (389) bp (300)bp ​ 190,313 ​ (57,338) (23.15) 15.02 (613) bp ​ The previous tables indicate that at December 31, 2025 the Company would expect decreases in its EVE in the event of sudden and sustained 200 and 300 basis point increases in prevailing interest rates as well as a sudden and sustained decreases of 100, 200 and 300 basis points in prevailing interest rates, while it would expect an increase in its EVE in the event of a sudden and sustained 100 basis point increase in prevailing interest rates.
As of December 31, 2024, the Company had repurchased 126,746 shares of the 240,467 shares authorized by the Board of Directors under the current stock repurchase program which was announced in August 2008 and 455,280 shares since the original repurchase program began in 2001. 51 Liquidity and Capital Resources Liquidity refers to the ability of a financial institution to generate sufficient cash flow to fund current loan demand, meet deposit withdrawals and pay operating expenses.
As of December 31, 2025, the Company had repurchased 140,478 shares of the 240,467 shares authorized by the Board of Directors under the current stock repurchase program which was announced in August 2008 and 469,012 shares since the original repurchase program began in 2001.
At December 31, 2024 At December 31, 2023 Immediate Change One Year Horizon One Year Horizon in the Level Dollar Percent Dollar Percent of Interest Rates Change Change Change Change (Dollars in thousands) 300bp $ 1,314 3.56 % $ 503 1.44 % 200bp 1,154 3.13 354 1.01 100bp 656 1.78 199 0.57 Static - - - - (100)bp (897 ) (2.43 ) 72 0.21 (200)bp (1,681 ) (4.55 ) (48 ) (0.13 ) (300)bp (2,490 ) (6.74 ) (734 ) (2.10 ) 53 At December 31, 2024 and 2023, the Company’s simulated exposure to an increase in interest rates shows that an immediate and sustained increase in rates of 1.00%, 2.00% or 3.00% would increase the Company’s net interest income over a one year horizon compared to a flat interest rate scenario.
The scenarios include prepayment assumptions, changes in the level of interest rates, the shape of the yield curve, and spreads between market interest rates in order to capture the impact from re-pricing, yield curve, option, and basis risks. 50 Table of Contents Results of the Company’s simulation modeling, which assumes an immediate and sustained parallel shift in market interest rates, project that the Company’s net interest income could change as follows over a one-year horizon, relative to our base case scenario, based on December 31, 2025 and 2024 financial information. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At December 31, 2025 ​ At December 31, 2024 Immediate Change ​ One Year Horizon ​ One Year Horizon in the Level ​ Dollar ​ Percent ​ Dollar ​ Percent of Interest Rates ​ ​ ​ Change ​ ​ ​ Change ​ ​ ​ Change ​ ​ ​ Change ​ ​ (Dollars in thousands) 300bp ​ ​ ​ $ 7,555 ​ ​ ​ 16.40 % $ 1,314 ​ ​ ​ 3.56 % 200bp ​ 5,114 11.10 ​ 1,154 3.13 ​ 100bp ​ 2,563 5.56 ​ 656 1.78 ​ Static ​ — — ​ — — ​ (100)bp ​ (2,624) (5.70) ​ (897) (2.43) ​ (200)bp ​ (5,295) (11.49) ​ (1,681) (4.55) ​ (300)bp ​ (7,191) (15.61) ​ (2,490) (6.74) ​ ​ At December 31, 2025 and 2024, the Company’s simulated exposure to an increase in interest rates shows that an immediate and sustained increase in rates of 1.00%, 2.00% or 3.00% would increase the Company’s net interest income over a one year horizon compared to a flat interest rate scenario.
See Note 12 of the accompanying Notes to Consolidated Financial Statements for additional details on the Company’s income tax expense. Average Balances and Yields .
Income Tax Expense. Income tax expense increased $1.3 million for 2025 as compared to 2024 resulting in an effective tax rate of 17.7% for 2025, compared to 15.6% for 2024. See Note 12 of the accompanying Notes to Consolidated Financial Statements for additional details on the Company’s income tax expense.
Total loans outstanding increased $57.7 million during 2023 in addition to the $75.3 increase in 2022. The Bank recognized net charge-offs of $469,000 for 2023 compared to $261,000 for 2022. In addition, nonperforming loans increased from $1.3 million at December 31, 2022 to $1.8 million at December 31, 2023. Noninterest Income .
The Bank recognized net charge-offs of $317,000 for 2025 compared to $173,000 for 2024. In addition, nonperforming loans remained unchanged at $4.4 million at December 31, 2025 and 2024. Noninterest Income .
The Bank’s primary sources of funds are customer deposits, proceeds from loan repayments, maturing securities and borrowings from the FHLB or FRB. 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.
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 December 31, 2025, the Bank had cash and cash equivalents of $137.3 million and securities available-for-sale with a fair value of $417.2 million.
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. At December 31, 2024, the Bank had total commitments to extend credit of $154.9 million. See Note 16 in the accompanying Notes to Consolidated Financial Statements.
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. The Bank is guided by a board-approved Liquidity Management Policy and the Interagency Policy Statement on Funding and Liquidity Risk Management.
Cash and cash equivalents increased from $38.7 million at December 31, 2023 to $105.9 million at December 31, 2024, primarily due to inflows from available for sale security proceeds and deposit increases. Total deposits increased $41.2 million to $1.07 billion at December 31, 2024. During 2024, time deposits increased $74.3 million.
Cash and cash equivalents increased from $105.9 million at December 31, 2024 to $137.3 million at December 31, 2025, primarily due to deposit account increases. 48 Table of Contents Total deposits increased $56.6 million to $1.12 billion at December 31, 2025. During 2025, time deposits and non-interest bearing deposits increased $37.5 million and $22.1 million, respectively.
Increases in commercial real estate, 1-4 family residential mortgage, and home equity and second mortgage loans of $16.1 million, $5.5 million, and $4.5 million were partially offset by decreases in commercial business loans and multifamily residential loans of $5.5 million and $3.1 million, respectively.
Increases in multifamily residential, commercial real estate, and home equity and second mortgage loans of $32.7 million, $22.3 million, and $4.9 million were partially offset by decreases in other construction, development and land loans of $34.6 million. The Bank continued to sell the majority of newly originated fixed-rate residential mortgage loans in the secondary market.
The increase was primarily due to an increase in the tax-equivalent yield on interest-earning assets increased from 3.10% in 2022 to 3.96% in 2023, primarily due to the increase in short-term interest rates by the Federal Open Market Committee during 2022 and 2023.
Total interest income increased $6.4 million for 2025 as compared to 2024. The increase was primarily due to an increase in the tax-equivalent yield on interest-earning assets increased from 4.49% in 2024 to 4.85% in 2025.
Other interest income increased $6,000 for 2023 as compared to 2022 primarily due to the tax equivalent yield of federal funds sold increasing from 1.24% to 5.07% when comparing the two periods, almost entirely offset by a decrease in the average balance of federal funds sold from $92.0 million for 2022 to $19.5 million for 2023.
Other interest income increased $1.9 million for 2025 as compared to 2024 primarily due to an increase in the average balance of interest-bearing deposits with banks from $52.0 million in 2024 to $104.4 million in 2025 partially offset by the yield of interest-bearing deposits with banks decreasing from 5.09% to 4.31% when comparing the two periods. 44 Table of Contents Total interest expense was $14.7 million for 2025 and 2024.
In addition, total nonperforming assets (consisting of nonperforming loans and foreclosed real estate) increased from $1.8 million, or 0.15% of total assets, at December 31, 2023 to $4.4 million, or 0.37% of total assets, at December 31, 2024. The increase was primarily due to the nonaccrual classification of two commercial loan relationships totaling $2.6 million.
In addition, total nonperforming assets (consisting of nonperforming loans) remained virtually unchanged at $4.4 million, or 0.37% of total assets, at December 31, 2024 and $4.4 million, or 0.34% of total assets, at December 31, 2025.
The Company had average outstanding advances from the FHLB of $6.1 million with an average rate of 5.59% and average outstanding borrowings under the FRB’s BTFP of $8.6 million with an average rate of 5.05% during 2023. The Company’s total average outstanding balance of borrowings during 2023 was $14.7 million with an average rate of 5.27%.
The Company’s average balance of outstanding advances from the FHLB decreased from $1.7 million at an average rate of 5.70% for 2024 to the Company having no outstanding advances for 2025.
(2) Average loan balances include loans held for sale and nonperforming loans. (3) Interest income on loans includes net accretion on acquired loans of $10,000 for the the year ended December 31, 2022. There was no net accretion of acquired loans for the years ended December 31, 2024 and 2023. (4) Includes taxable debt and equity securities and FHLB Stock.
(2) Average loan balances include loans held for sale and nonperforming loans. (3) Tax-exempt income has been adjusted to a tax-equivalent basis using the federal marginal tax rate of 21%. (4) Includes taxable debt and equity securities and FHLB Stock. (5) Includes interest-bearing deposits with banks, federal funds sold and interest-bearing time deposits.
Total interest expense increased $7.4 million, from $1.6 million for 2022 to $9.0 million for 2023, due to increases in the average cost of interest-bearing liabilities from 0.20% for 2022 to 1.11% for 2023 and in the average balance of interest-bearing liabilities from $802.8 million for 2022 to $809.2 million for 2023.
Increases in the average balance of interest-bearing liabilities from $850.0 million for 2024 to $886.0 million for 2025 were offset by a decrease in the average cost of interest-bearing liabilities from 1.73% for 2024 to 1.66% for 2025.
Removed
Loans in the relationships are secured by a variety of real estate and business assets.
Added
The information contained in this section should be read in conjunction with the consolidated financial statements and the accompanying Notes to Consolidated Financial Statements included in this report.
Removed
The commitment to customer needs, the focus on providing consistent customer service, and community service and support are the keys to the Bank’s past and future success. The Company has no other material income other than that generated by the Bank and its subsidiaries.
Added
The financial position and results of operations can be affected by these estimates and assumptions, which are integral to understanding reported results.
Removed
The consolidated financial data presented below is qualified in its entirety by the more detailed financial data appearing elsewhere in this report, including the Company's audited consolidated financial statements.
Added
In addition, the Company’s lower yielding securities continue to mature with proceeds being reinvested in higher yielding loans or interest-bearing deposits with other banks.
Removed
There were no outstanding borrowed funds during 2022. As a result of the changes in interest-earning assets and interest-bearing liabilities, the interest rate spread (tax equivalent basis) decreased from 2.90% for 2022 to 2.85% for 2023. For further information, see “ Average Balances and Yields ” below.
Added
The Company’s average outstanding borrowings under the Federal Reserve Bank’s BTFP decreased from $27.9 million at an average rate of 4.85% for 2024 to having no outstanding borrowings for 2025. For further information, see “ Average Balances and Yields ” below.
Removed
Effective January 1, 2023, the Company adopted the FASB ASU 2016-13, Financial Instruments – Credit Losses (Topic 326) , as amended, and commonly referred to as the Current Expected Credit Loss model ("CECL"), under the modified retrospective method.
Added
Based on management’s analysis of the ACL on loans and unfunded loan commitments, the provision for credit losses decreased from $1.4 million for 2024 to $1.1 million for 2025. The decrease primarily reflected a lower incremental change in estimated lifetime expected credit losses under the Bank’s ACL methodology for loans and unfunded commitments compared to prior year.
Removed
The adoption replaced the allowance for loan losses with the ACL on loans on the consolidated balance sheets and replaced the related provision for loan losses with the provision for credit losses on loans on the consolidated statements of income.
Added
Noninterest income increased $809,000 for 2025 as compared to 2024 primarily due to the Company recognizing a $149,000 gain on equity securities for 2025 compared to a $374,000 loss on equity securities for 2024.
Removed
Upon adoption, the Company recorded an increase in the beginning ACL on loans of $561,000, increasing the ACL on loans as a percentage of loans receivable to 1.29% as compared to 1.20% at December 31, 2022 prior to adoption. In addition, the Company established an ACL related to unfunded loan commitments of $131,000 upon adoption of CECL.
Added
In addition, the Company recognized a $238,000 increase in gains on sale of loans as well as an increase of $73,000 in ATM and debit card fee income when comparing the two periods.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The information required by this item is incorporated herein by reference to the section captioned “Item 7. Management ’ s Discussion and Analysis of Financial Condition and Results of Operations – Market Risk Analysis ” in this Annual Report on Form 10-K.
Biggest changeITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The information required by this item is incorporated herein by reference to the section captioned “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Market Risk Analysis ” in this Annual Report on Form 10-K.

Other FCAP 10-K year-over-year comparisons