Company: FCAP
Filing Date: 2025-03-31
Form Type: 10-K
Source: 0001171843-25-001868
Chunk: 1688

Company: FIRST CAPITAL INC
Filing Date: 2025-03-31
Form: 10-K
Item: Item 7A
Chunk 1688
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 and evaluated on at least a quarterly basis for additional impairment and adjusted accordingly.  In accordance with accounting standards, only collateral dependent loans for which a specific ACL has been established require classification in the fair value hierarchy.  The fair value of collateral dependent loans is classified as Level 3 in the fair value hierarchy. 

Collateral dependent loans with specific allocations of ACL are measured at the fair value of the collateral less estimated costs to sell. Collateral may be real estate and/or business assets, including equipment, inventory and/or accounts receivable.  The fair value of the collateral is generally determined based on real estate appraisals or other independent evaluations by qualified professionals, which are then discounted to reflect management’s estimate of the fair value of the collateral given the current market conditions and the condition of the collateral. 

At December 31, 2024, the significant unobservable inputs used in the fair value measurement of collateral dependent loans included a discount from appraised value for estimates of changes in market conditions, the condition of the collateral, and estimated costs to sell the collateral ranging from 10% to 20%, with a weighted average discount of 10.6%.  At December 31, 2023, the significant unobservable inputs used in the fair value measurement of collateral dependent loans included a discount from appraised value for estimates of changes in market conditions, the condition of the collateral, and estimated costs to sell the collateral ranging from 23% to 30%, with a weighted average discount of 27%.

The Company recognized provisions for loan losses of $1.2 million, $97,000 and $148,000 for the years ended December 31, 2024, 2023 and 2022, respectively, for collateral dependent loans. 

Loans Held for Sale.  Loans held for sale are carried at the lower of cost or market value.  The portfolio is comprised of residential real estate loans and fair value is estimated based on specific prices of underlying contracts for sales to investors.  These measurements are carried at Level 2 in the fair value hierarchy.  At December 31, 2024 and 2023, the Company did not have any loans held for sale measured at fair value on a nonrecurring basis.

Foreclosed Real Estate.  Foreclosed real estate is reviewed and evaluated on at least a quarterly basis for additional impairment and adjusted accordingly.  The fair value of foreclosed real estate is classified as Level 3 in the fair value hierarchy.

Foreclosed real estate is reported