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Note 4 - Loans and Allowance for Loan Losses

6 Months Ended

Jun. 30, 2024

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

4. Loans and Allowance for Credit Losses

Loans at June 30, 2024 and December 31, 2023 consisted of the following:

	June 30,			December 31,
(In thousands)	2024			2023

1-4 Family Residential Mortgage	$	137,219		$	133,480
Home Equity and Second Mortgage		63,449			62,070
Multifamily Residential		37,224			39,963
1-4 Family Residential Construction		14,400			15,667
Other Construction, Development and Land		83,298			76,713
Commercial Real Estate		177,492			168,757
Commercial Business		64,695			68,223
Consumer and Other		59,694			56,373
Principal loan balance		637,471			621,246

Deferred loan origination fees and costs, net		1,113			1,168
Allowance for credit losses		(8,560	)		(8,005	)

Loans, net	$	630,024		$	614,409

The Allowance for Credit Losses (“ACL”) on loans is measured on a collective (pooled) basis when similar risk characteristics exist. The Company’s pools/segments are largely determined based on loan types as defined by Call Report instructions. The Company has identified and utilizes the following portfolio segments:

1–4 Family Residential Mortgage – 1–4 Family Residential Mortgage loans are primarily secured by 1-4 family residences that are owner-occupied and serve as the primary residence of the borrower. In addition, the Company typically has a senior (1st lien) position securing the collateral of loans in this portfolio. Repayment of these loans is primarily dependent on the personal income of the borrowers, which can be impacted by unemployment levels in the market area due to economic conditions. Repayment may also be impacted by changes in residential property values.

FIRST CAPITAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(4 – continued)

Home Equity and Second Mortgage – Home Equity and Second Mortgage loans and lines of credit are primarily secured by 1-4 family residences that are owner-occupied and serve as the primary residence of the borrower. However, the Company typically has a junior lien position securing the collateral of loans in this portfolio. Repayment of these loans is primarily dependent on the personal income of the borrowers, which can be impacted by unemployment levels in the market area due to economic conditions. Repayment may also be impacted by changes in residential property values. While secured by collateral similar to that of the 1–4 Family Residential Mortgage loans, loans within this segment are considered to carry elevated risk due to the Company’s junior lien position on the underlying collateral property.

Multi-family Residential – Multi-family Residential loans are primarily secured by properties such as apartment complexes and other multi-tenant properties within the Company’s market area. In some situations, the collateral may reside outside of the Company’s typical market area. Repayment of these loans is often dependent on the successful operation and management of the properties and collection of associated rents. Repayment of such loans may be affected by adverse conditions in the real estate market or the economy.

1–4 Family Residential Construction – 1–4 Family Residential Construction loans are generally secured by 1-4 family residences that will be owner-occupied upon completion. Risks inherent in construction lending are related to the market value of the property held as collateral, the cost and timing of constructing or improving a property, movements in interest rates and the real estate market during the construction phase, and the ability of the borrower to obtain permanent financing. Repayment of these loans is primarily dependent on the personal income of the borrowers, which can be impacted by unemployment levels in the market area due to economic conditions. Repayment may also be impacted by changes in residential property values.

Other Construction, Development and Land – Other Construction, Development and Land loans include loans secured by multi-family properties, commercial projects, and vacant land. This portfolio includes both owner-occupied and speculative investment properties. Risks inherent in construction lending are related to the market value of the property held as collateral, the cost and timing of constructing or improving a property, the borrower’s ability to use funds generated by a project to service a loan until a project is completed, movements in interest rates and the real estate market during the construction phase, and the ability of the borrower to obtain permanent financing.

Commercial Real Estate – Commercial Real Estate loans are comprised of loans secured by various types of collateral including warehouses, retail space, and mixed-use buildings, among others, located in the Company’s primary lending area. Risks related to commercial real estate lending are related to the market value of the property taken as collateral, the underlying cash flows, and general economic condition of the local real estate market. Repayment of these loans is generally dependent on the ability of the borrower to attract tenants at lease rates that provide for adequate debt service and can be impacted by local economic conditions which impact vacancy rates. The Company generally obtains loan guarantees from financially capable parties for Commercial Real Estate loans. To a lesser degree, this segment also includes loans secured by farmland. The risks associated with loans secured by farmland are related to the market value of the property taken as collateral and the underlying cash flows from farming operations and general economic conditions.

FIRST CAPITAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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(4 – continued)

Commercial Business – Commercial Business loans include lines of credit to businesses, term loans and letters of credit secured by business assets such as equipment, accounts receivable, inventory, or other assets excluding real estate. Loans in this portfolio may also be unsecured and are generally made to finance capital expenditures or fund operations. Commercial Business loans contain risks related to the value of the collateral securing the loan and the repayment is primarily dependent upon the financial success and viability of the borrower. As with Commercial Real Estate loans, the Company generally obtains loan guarantees from financially capable parties for Commercial Business loans.

Consumer and Other Loans – Consumer and Other Loans consist mainly of loans secured by new and used automobiles and trucks, recreational vehicles such as boats and RVs, mobile homes and secured and unsecured loans to individuals. The risks associated with these loans are related to local economic conditions including the unemployment level. To a lesser degree, this segment also includes loans secured by lawn and farm equipment, well as farm output and loans secured by marketable securities. The risks associated with these loans are related to local economic conditions including the unemployment level, general economic conditions impacting crop prices, the supply chain and the fair value of the security collateral.

Loans that do not share risk characteristics are evaluated on an individual basis. In addition, loans evaluated individually are not included in the collective evaluation. When management determines that foreclosure is probable or the borrower is experiencing financial difficulty at the reporting date and repayment is expected to be provided substantially through the operation or sale of the collateral, expected credit losses are based on the fair value of the collateral at the reporting date adjusted for selling costs.

FIRST CAPITAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(4 – continued)

The following table provides the components of the Company’s amortized cost basis in loans at June 30, 2024:

										Other
	1-4 Family		Home Equity					1-4 Family		Construction,
	Residential		and Second		Multifamily			Residential		Development			Commercial			Commercial			Consumer
	Mortgage		Mortgage		Residential			Construction		and Land			Real Estate			Business			and Other		Total
	(In thousands)
Amortized Cost Basis in Loans:
Principal loan balance	$	137,219	$	63,449	$	37,224		$	14,400	$	83,298		$	177,492		$	64,695		$	59,694	$	637,471

Net deferred loan origination fees and costs		110		1,212		(17	)		-		(37	)		(145	)		(10	)		-		1,113

Amortized cost basis in loans	$	137,329	$	64,661	$	37,207		$	14,400	$	83,261		$	177,347		$	64,685		$	59,694	$	638,584

The following table provides the components of the Company’s amortized cost basis in loans at December 31, 2023:

										Other
	1-4 Family		Home Equity					1-4 Family		Construction,
	Residential		and Second		Multifamily			Residential		Development			Commercial			Commercial			Consumer
	Mortgage		Mortgage		Residential			Construction		and Land			Real Estate			Business			and Other		Total
	(In thousands)
Amortized Cost Basis in Loans:
Principal loan balance	$	133,480	$	62,070	$	39,963		$	15,667	$	76,713		$	168,757		$	68,223		$	56,373	$	621,246

Net deferred loan origination fees and costs		121		1,231		(17	)		-		(44	)		(112	)		(11	)		-		1,168

Amortized cost basis in loans	$	133,601	$	63,301	$	39,946		$	15,667	$	76,669		$	168,645		$	68,212		$	56,373	$	622,414

FIRST CAPITAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(4 – continued)

An analysis of the changes in the ACL on loans for the three months ended June 30, 2024 is as follows:

												Other
	1-4 Family			Home Equity					1-4 Family			Construction,
	Residential			and Second		Multifamily			Residential			Development			Commercial			Commercial		Consumer
	Mortgage			Mortgage		Residential			Construction			and Land			Real Estate			Business		and Other			Total
	(In thousands)
ACL on Loans:

Beginning balance	$	1,338		$	444	$	423		$	192		$	811		$	2,754		$	1,302	$	966		$	8,230
Provision for credit losses		(46	)		114		(81	)		(13	)		(8	)		(407	)		617		184			360
Charge-offs		(3	)		-		-			-			-			-			-		(82	)		(85	)
Recoveries		13			1		-			-			-			-			1		40			55

Ending balance	$	1,302		$	559	$	342		$	179		$	803		$	2,347		$	1,920	$	1,108		$	8,560

An analysis of the changes in the ACL on loans for the three months ended June 30, 2023 is as follows:

												Other
	1-4 Family			Home Equity					1-4 Family			Construction,
	Residential			and Second			Multifamily		Residential			Development			Commercial			Commercial			Consumer
	Mortgage			Mortgage			Residential		Construction			and Land			Real Estate			Business			and Other			Total
	(In thousands)
ACL on Loans:

Beginning balance	$	1,414		$	366		$	381	$	187		$	489		$	2,190		$	1,084		$	1,212		$	7,323
Provision for credit losses		69			6			233		(16	)		(29	)		(174	)		510			(249	)		350
Charge-offs		(29	)		(9	)		-		-			-			-			(33	)		(164	)		(235	)
Recoveries		15			-			-		-			-			-			3			59			77

Ending balance	$	1,469		$	363		$	614	$	171		$	460		$	2,016		$	1,564		$	858		$	7,515

Accrued interest on loans of $2.3 million at both June 30, 2024 and December 31, 2023, is included in accrued interest receivable on the consolidated balance sheets and is excluded from the estimate of credit losses.

FIRST CAPITAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(4 – continued)

An analysis of the changes in the ACL on loans for the six months ended June 30, 2024 is as follows:

											Other
	1-4 Family			Home Equity				1-4 Family			Construction,
	Residential			and Second		Multifamily		Residential			Development			Commercial		Commercial		Consumer
	Mortgage			Mortgage		Residential		Construction			and Land			Real Estate		Business		and Other			Total
	(In thousands)
ACL on Loans:

Beginning balance,	$	1,490		$	406	$	332	$	208		$	804		$	2,119	$	1,431	$	1,215		$	8,005
Provision for credit losses		(198	)		149		10		(29	)		(1	)		227		488		(6	)		640
Charge-offs		(4	)		-		-		-			-			-		-		(181	)		(185	)
Recoveries		14			4		-		-			-			1		1		80			100

Ending balance	$	1,302		$	559	$	342	$	179		$	803		$	2,347	$	1,920	$	1,108		$	8,560

An analysis of the changes in the ACL on loans for the six months ended June 30, 2023 is as follows:

													Other
	1-4 Family			Home Equity						1-4 Family			Construction,
	Residential			and Second			Multifamily			Residential			Development			Commercial			Commercial			Consumer
	Mortgage			Mortgage			Residential			Construction			and Land			Real Estate			Business			and Other			Total
	(In thousands)
ACL on Loans:

Beginning balance, prior to adoption of ASC 326	$	1,036		$	531		$	346		$	206		$	587		$	2,029		$	1,156		$	881		$	6,772
Impact of adopting ASC 326		423			(26	)		(3	)		(9	)		13			(130	)		(142	)		435			561
Provision for credit losses		26			(133	)		271			(26	)		(140	)		117			730			(302	)		543
Charge-offs		(31	)		(9	)		-			-			-			-			(188	)		(282	)		(510	)
Recoveries		15			-			-			-			-			-			8			126			149

Ending balance	$	1,469		$	363		$	614		$	171		$	460		$	2,016		$	1,564		$	858		$	7,515

FIRST CAPITAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(4 – continued)

The Company utilizes a combination of the Open Pool/Snapshot and Weighted Average Remaining Maturity (“WARM”) methods in determining expected future credit losses. The Open Pool/Snapshot method takes a snapshot of a loan portfolio at a point in time in history and tracks that loan portfolio’s performance in the subsequent periods until its ultimate disposition. The WARM method uses average annual charge-off rates and the remaining life of the loan to estimate the ACL. For the Company’s loan portfolios, the remaining contractual life for each loan is adjusted by the expected scheduled payments and estimated prepayments. The average annual charge-off rate is applied to the amortization adjusted remaining life of the loan to determine the unadjusted lifetime historical charge-off rate. The Company’s expected loss estimate is anchored in historical credit loss experience, with an emphasis on all available portfolio data. The Company’s historical look-back periods for the loan portfolio range from one to 10 years depending on the WARM of the given portfolio segment and are updated on a quarterly basis.

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. Reasonable and supportable forecasts typically utilize a 12-month period with immediate reversion to historical losses. 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.

Qualitative adjustments reflect management’s overall estimate of the extent to which current expected credit losses on collectively evaluated loans will differ from historical loss experience. The analysis takes into consideration industry and collateral concentrations, acquired loan portfolio characteristics and other credit-related analytics as deemed appropriate.

Management exercises significant judgment in evaluating the relevant historical loss experience and the qualitative factors. Management also monitors the differences between estimated and actual incurred loan losses in order to evaluate the effectiveness of the estimation process and make any changes in the methodology as necessary.

FIRST CAPITAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(4 – continued)

Collateral dependent loans are loans for which the repayment is expected to be provided substantially through the operation or sale of the collateral and the borrower is experiencing financial difficulty. There have been no significant changes to the types of collateral securing the Company’s collateral dependent loans. The following table presents the amortized cost basis of, and ACL allocation to, individually evaluated collateral-dependent loans by class of loans as of June 30, 2024 and December 31, 2023:

	June 30, 2024										December 31, 2023
	Real								ACL		Real						ACL
	Estate		Equipment		Other		Total		Allocation		Estate		Other		Total		Allocation
	(In thousands)										(In thousands)

1-4 Family Residential Mortgage	$	1,539	$	-	$	-	$	1,539	$	-	$	1,651	$	-	$	1,651	$	9
Home Equity and Second Mortgage		647		-		-		647		-		548		-		548		-
Multifamily Residential		-		-		-		-		-		-		-		-		-
1-4 Family Residential Construction		87		-		-		87		50		87		-		87		60
Other Construction, Development and Land		54		-		-		54		-		54		-		54		-
Commercial Real Estate		2,614		-		-		2,614		-		1,055		-		1,055		-
Commercial Business		-		2,029		142		2,171		851		-		38		38		-
Consumer and Other		-		-		-		-		-		-		-		-		-
	$	4,941	$	2,029	$	142	$	7,112	$	901	$	3,395	$	38	$	3,433	$	69

FIRST CAPITAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(4 – continued)

Nonperforming loans consists of nonaccrual loans and loans past due and still accruing interest. The following table presents the amortized cost basis of loans on nonaccrual status and loans 90 days or more past due still accruing as of June 30, 2024:

							Loans 90+ Days		Total
	Nonaccrual Loans		Nonaccrual Loans		Total		Past Due		Nonperforming
	with No ACL		with An ACL		Nonaccrual		Still Accruing		Loans
	(In thousands)

1-4 Family Residential Mortgage	$	1,066	$	-	$	1,066	$	384	$	1,450
Home Equity and Second Mortgage		502		-		502		-		502
Multifamily Residential		-		-		-		-		-
1-4 Family Residential Construction		-		87		87		-		87
Other Construction, Development and Land		54		-		54		-		54
Commercial Real Estate		-		-		-		-		-
Commercial Business		-		2,029		2,029		-		2,029
Consumer and Other		-		-		-		-		-

Total	$	1,622	$	2,116	$	3,738	$	384	$	4,122

The following table presents the amortized cost basis of loans on nonaccrual status and loans 90 days or more past due still accruing as of December 31, 2023:

							Loans 90+ Days		Total
	Nonaccrual Loans		Nonaccrual Loans		Total		Past Due		Nonperforming
	with No ACL		with An ACL		Nonaccrual		Still Accruing		Loans
	(In thousands)

1-4 Family Residential Mortgage	$	1,120	$	36	$	1,156	$	-	$	1,156
Home Equity and Second Mortgage		454		-		454		-		454
Multifamily Residential		-		-		-		-		-
1-4 Family Residential Construction		-		87		87		-		87
Other Construction, Development and Land		54		-		54		-		54
Commercial Real Estate		-		-		-		-		-
Commercial Business		-		-		-		-		-
Consumer and Other		-		-		-		-		-

Total	$	1,628	$	123	$	1,751	$	-	$	1,751

FIRST CAPITAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(4 – continued)

No interest income was recognized on nonaccrual loans during the three and six months ended June 30, 2024 and 2023.

The following table presents the aging of the amortized cost basis in loans at June 30, 2024:

	30-59 Days		60-89 Days		90 Days or More		Total				Total
	Past Due		Past Due		Past Due		Past Due		Current		Loans
	(In thousands)

1-4 Family Residential Mortgage	$	1,293	$	111	$	1,082	$	2,486	$	134,843	$	137,329
Home Equity and Second Mortgage		586		78		61		725		63,936		64,661
Multifamily Residential		-		-		-		-		37,207		37,207
1-4 Family Residential Construction		-		-		87		87		14,313		14,400
Other Construction, Development and Land		165		59		54		278		82,983		83,261
Commercial Real Estate		-		718		-		718		176,629		177,347
Commercial Business		286		142		-		428		64,257		64,685
Consumer and Other		296		57		-		353		59,341		59,694

Total	$	2,626	$	1,165	$	1,284	$	5,075	$	633,509	$	638,584

The following table presents the aging of the amortized cost basis in loans at December 31, 2023:

	30-59 Days		60-89 Days		90 Days or More		Total				Total
	Past Due		Past Due		Past Due		Past Due		Current		Loans
	(In thousands)

1-4 Family Residential Mortgage	$	2,104	$	335	$	482	$	2,921	$	130,680	$	133,601
Home Equity and Second Mortgage		396		70		-		466		62,835		63,301
Multifamily Residential		-		-		-		-		39,946		39,946
1-4 Family Residential Construction		-		-		-		-		15,667		15,667
Other Construction, Development and Land		162		-		54		216		76,453		76,669
Commercial Real Estate		834		-		-		834		167,811		168,645
Commercial Business		-		-		-		-		68,212		68,212
Consumer and Other		302		51		-		353		56,020		56,373

Total	$	3,798	$	456	$	536	$	4,790	$	617,624	$	622,414

FIRST CAPITAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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Occasionally, the Company modifies loans to borrowers in financial distress by providing principal forgiveness, a term extension, an other-than-insignificant payment delay or an interest rate reduction. When principal forgiveness is provided, the amount of forgiveness is charged-off against the ACL on loans. In some cases, the Company may provide multiple types of concessions on one loan. Typically, one type of concession, such as a term extension, is granted initially. If the borrower continues to experience financial difficulty, another concession, such as principal forgiveness, may be granted.

During the three months ended June 30, 2024, the Company modified Commercial Business loans with an amortized cost basis of $2.0 million, or approximately 3% of the amortized cost of all Commercial Business loans, for which the borrowers were experiencing financial distress. The modification for each loan was the granting of a three-month, interest only payment period with an additional three months added to the original term of the loans. No principal was forgiven, no payments were delayed, and no interest rates were reduced for the modified loans. This is the same relationship that was modified during the three months ended March 31, 2024 with a similar three-month interest only payment period. For the six months ended June 30, 2024, the relationship was modified to allow for six months of interest only payments with maturity of the original loans being extended by six months. The Company monitors the performance of modified loans and none of the modified loans were delinquent at June 30, 2024. There were no modifications to borrowers in financial distress during the three or six months ended June 30, 2023. There were no loans to borrowers experiencing financial distress that were modified during the previous 12 months and which subsequently defaulted during the three or six months ended June 30, 2024 and 2023. There were no unfunded commitments associated with loans modified for borrowers experiencing financial distress as of June 30, 2024 and December 31, 2023.

Credit Quality Indicators

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, public information, historical payment experience, credit documentation, and current economic trends, among other factors. The Company classifies loans based on credit risk at least quarterly. The Company uses the following regulatory definitions for risk ratings:

Special Mention: Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

Substandard: Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful: Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loss: Loans classified as loss are considered uncollectible and of such little value that their continuance on the institution’s books as an asset is not warranted.

Loans not meeting the criteria above that are analyzed individually as part of the described process are considered to be pass rated loans.

FIRST CAPITAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(4 – continued)

Based on the analysis performed at June 30, 2024 and December 31, 2023, the risk category of loans by class of loans is as follows:

	Term Loans Amortized Cost Basis by Origination Year
	2024		2023		2022		2021		2020		Prior		Revolving		Total
June 30, 2024:	(In thousands)
1-4 Family Residential Mortgage
Pass	$	12,116	$	32,993	$	29,208	$	24,254	$	6,484	$	30,358	$	-	$	135,413
Special Mention		-		32		-		-		-		345		-		377
Substandard		-		-		-		-		74		399		-		473
Doubtful		-		-		44		156		-		866		-		1,066
	$	12,116	$	33,025	$	29,252	$	24,410	$	6,558	$	31,968	$	-	$	137,329

Current period gross write-offs	$	-	$	-	$	-	$	-	$	-	$	4	$	-	$	4

Home Equity and Second Mortgage
Pass	$	1,214	$	4,853	$	3,950	$	465	$	200	$	379	$	52,752	$	63,813
Special Mention		-		-		-		-		-		-		200		200
Substandard		-		-		-		-		-		-		146		146
Doubtful		-		-		-		-		-		502		-		502
	$	1,214	$	4,853	$	3,950	$	465	$	200	$	881	$	53,098	$	64,661

Current period gross write-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Multifamily Residential
Pass	$	639	$	3,567	$	10,484	$	8,616	$	7,814	$	6,087	$	-	$	37,207
Special Mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-
	$	639	$	3,567	$	10,484	$	8,616	$	7,814	$	6,087	$	-	$	37,207

Current period gross write-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

FIRST CAPITAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(4 – continued)

	Term Loans Amortized Cost Basis by Origination Year
	2024		2023		2022		2021		2020		Prior		Revolving		Total
June 30, 2024:	(In thousands)
1-4 Family Residential Construction
Pass	$	5,494	$	5,945	$	1,370	$	630	$	617	$	257	$	-	$	14,313
Special Mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Doubtful		-		-		-		87		-		-		-		87
	$	5,494	$	5,945	$	1,370	$	717	$	617	$	257	$	-	$	14,400

Current period gross write-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Other Construction, Development and Land
Pass	$	4,686	$	32,970	$	36,745	$	3,577	$	1,571	$	3,610	$	-	$	83,159
Special Mention		-		-		-		-		-		48		-		48
Substandard		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		54		-		54
	$	4,686	$	32,970	$	36,745	$	3,577	$	1,571	$	3,712	$	-	$	83,261

Current period gross write-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Commercial Real Estate
Pass	$	12,380	$	19,083	$	39,260	$	27,358	$	18,894	$	50,970	$	1,118	$	169,063
Special Mention		-		95		1,100		-		1,600		2,626		250		5,671
Substandard		311		718		-		566		216		802		-		2,613
Doubtful		-		-		-		-		-		-		-		-
	$	12,691	$	19,896	$	40,360	$	27,924	$	20,710	$	54,398	$	1,368	$	177,347

Current period gross write-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Commercial Business
Pass	$	4,364	$	12,878	$	11,281	$	9,704	$	5,202	$	5,074	$	13,347	$	61,850
Special Mention		40		65		82		89		43		155		190		664
Substandard		-		107		-		-		-		35		-		142
Doubtful		-		-		2,029		-		-		-		-		2,029
	$	4,404	$	13,050	$	13,392	$	9,793	$	5,245	$	5,264	$	13,537	$	64,685

Current period gross write-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

FIRST CAPITAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(4 – continued)

	Term Loans Amortized Cost Basis by Origination Year
	2024		2023		2022		2021		2020		Prior		Revolving		Total
June 30, 2024:	(In thousands)
Consumer and Other
Pass	$	10,914	$	20,041	$	10,976	$	5,472	$	1,555	$	8,238	$	2,405	$	59,601
Special Mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		93		93
Doubtful		-		-		-		-		-		-		-		-
	$	10,914	$	20,041	$	10,976	$	5,472	$	1,555	$	8,238	$	2,498	$	59,694

Current period gross write-offs	$	-	$	25	$	92	$	20	$	5	$	2	$	37	$	181

Total Loans
Pass	$	51,807	$	132,330	$	143,274	$	80,076	$	42,337	$	104,973	$	69,622	$	624,419
Special Mention		40		192		1,182		89		1,643		3,174		640		6,960
Substandard		311		825		-		566		290		1,236		239		3,467
Doubtful		-		-		2,073		243		-		1,422		-		3,738
	$	52,158	$	133,347	$	146,529	$	80,974	$	44,270	$	110,805	$	70,501	$	638,584

Current period gross write-offs	$	-	$	25	$	92	$	20	$	5	$	6	$	37	$	185

FIRST CAPITAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(4 – continued)

	Term Loans Amortized Cost Basis by Origination Year
	2023		2022		2021		2020		2019		Prior		Revolving		Total
December 31, 2023:	(In thousands)
1-4 Family Residential Mortgage
Pass	$	34,344	$	31,551	$	25,846	$	6,913	$	9,525	$	23,628	$	-	$	131,807
Special Mention		-		-		-		-		-		144		-		144
Substandard		-		-		-		75		265		155		-		495
Doubtful		-		48		192		78		-		837		-		1,155
	$	34,344	$	31,599	$	26,038	$	7,066	$	9,790	$	24,764	$	-	$	133,601

Home Equity and Second Mortgage
Pass	$	5,267	$	4,380	$	529	$	232	$	163	$	327	$	51,794	$	62,692
Special Mention		-		-		-		-		-		-		61		61
Substandard		-		-		-		-		-		-		94		94
Doubtful		-		-		-		-		264		190		-		454
	$	5,267	$	4,380	$	529	$	232	$	427	$	517	$	51,949	$	63,301

Multifamily Residential
Pass	$	3,374	$	10,495	$	9,534	$	7,943	$	4,137	$	4,463	$	-	$	39,946
Special Mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-
	$	3,374	$	10,495	$	9,534	$	7,943	$	4,137	$	4,463	$	-	$	39,946

1-4 Family Residential Construction
Pass	$	9,193	$	4,180	$	831	$	1,119	$	-	$	257	$	-	$	15,580
Special Mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Doubtful		-		-		87		-		-		-		-		87
	$	9,193	$	4,180	$	918	$	1,119	$	-	$	257	$	-	$	15,667

Other Construction, Development and Land
Pass	$	26,717	$	35,673	$	7,495	$	2,655	$	1,231	$	2,795	$	-	$	76,566
Special Mention		-		-		-		-		-		49		-		49
Substandard		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		54		-		54
	$	26,717	$	35,673	$	7,495	$	2,655	$	1,231	$	2,898	$	-	$	76,669

FIRST CAPITAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(4 – continued)

	Term Loans Amortized Cost Basis by Origination Year
	2023		2022		2021		2020		2019		Prior		Revolving		Total
December 31, 2023:	(In thousands)
Commercial Real Estate
Pass	$	14,818	$	40,675	$	29,656	$	19,589	$	18,231	$	38,818	$	1,755	$	163,542
Special Mention		823		-		573		1,622		417		62		550		4,047
Substandard		-		-		-		231		-		825		-		1,056
Doubtful		-		-		-		-		-		-		-		-
	$	15,641	$	40,675	$	30,229	$	21,442	$	18,648	$	39,705	$	2,305	$	168,645

Commercial Business
Pass	$	14,717	$	12,603	$	11,049	$	5,706	$	5,312	$	3,646	$	12,384	$	65,417
Special Mention		208		2,097		106		48		160		-		138		2,757
Substandard		-		-		-		-		38		-		-		38
Doubtful		-		-		-		-		-		-		-		-
	$	14,925	$	14,700	$	11,155	$	5,754	$	5,510	$	3,646	$	12,522	$	68,212

Consumer and Other
Pass	$	23,335	$	13,906	$	7,662	$	2,604	$	846	$	5,446	$	2,484	$	56,283
Special Mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		90		90
Doubtful		-		-		-		-		-		-		-		-
	$	23,335	$	13,906	$	7,662	$	2,604	$	846	$	5,446	$	2,574	$	56,373

Total Loans
Pass	$	131,765	$	153,463	$	92,602	$	46,761	$	39,445	$	79,380	$	68,417	$	611,833
Special Mention		1,031		2,097		679		1,670		577		255		749		7,058
Substandard		-		-		-		306		303		980		184		1,773
Doubtful		-		48		279		78		264		1,081		-		1,750
	$	132,796	$	155,608	$	93,560	$	48,815	$	40,589	$	81,696	$	69,350	$	622,414

FIRST CAPITAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(4 – continued)

The Company held no foreclosed real estate at either June 30, 2024 or December 31, 2023. At June 30, 2024, there were no loans secured by residential real estate properties for which the formal foreclosure proceedings had been initiated. At December 31, 2023, the amortized cost basis in loans secured by residential real estate properties for which formal foreclosure proceedings were in process was $1,000.

ACL on Off-Balance-Sheet Credit Exposures

The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company. The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over its estimated life. The ACL for off-balance-sheet credit exposures was $131,000 at both June 30, 2024 and December 31, 2023. The ACL for off-balance-sheet credit exposures is presented in accrued expenses and other liabilities on the consolidated balance sheets. Changes in the ACL for off-balance-sheet credit exposures are reflected in the provision for credit losses on the consolidated statements of income. There were no changes to the ACL for off-balance-sheet credit exposures during the three and six months ended June 30, 2024 and 2023.