Company: FCAP
Filing Date: 2025-03-31
Form Type: 10-K
Source: 0001171843-25-001868
Chunk: 1663

Company: FIRST CAPITAL INC
Filing Date: 2025-03-31
Form: 10-K
Item: Item 7A
Chunk 1663
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(4 - continued)

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 year ended December 31, 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 modifications for each loan were the modification of principal and interest payments for 12 months.  No principal was forgiven, no payments were delayed, and no interest rates were reduced for the modified loans.  All modifications occurred for one borrowing relationship only.  The Company monitors the performance of modified loans and none of the modified loans were delinquent at December 31, 2024.  There were no modifications to borrowers in financial distress during the year ended December 31, 2023.  There were no loans to borrowers experiencing financial distress that were modified during the previous 12 months and which subsequently defaulted during the years ended December 31, 2024 and 2023. There were no unfunded commitments associated with loans modified for borrowers experiencing financial distress as of December 31, 2024 or 2023.

Upon the Company’s determination that a modified loan (or portion of a loan) has subsequently been deemed uncollectible, the loan (or a portion of the loan) is written off. Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the allowance for credit losses is adjusted by the same amount. The Company does not consider modified loans (or potion of a modified loan) uncollectible as of December 31, 2024 or 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.