Company: FCAP
Filing Date: 2025-05-14
Form Type: 10-Q
Source: 0001171843-25-003186
Chunk: 68

Company: FIRST CAPITAL INC
Filing Date: 2025-05-14
Form: 10-Q
Item: Part I, Item 8
Chunk 68
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 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 March 31, 2025, 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 10.7%. The Company recognized provisions for credit losses on collateral dependent loans of $1,000 for the three months ended March 31, 2025.  The Company recognized an $11,000 reduction in provisions for credit losses on collateral dependent impaired loans for the three months ended March 31, 2024.

-36-

FIRST CAPITAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(11 – continued)

There have been no changes in the valuation techniques and related inputs used for assets measured at fair value on a recurring and nonrecurring basis during the three month periods ended March 31, 2025 and 2024.  There were no transfers into or out of the Company’s Level 3 financial assets for the three month periods ended March 31, 2025 and 2024. 

GAAP requires disclosure of the fair value of financial assets and financial liabilities, whether or not recognized in the balance sheet.  In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques.  Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows.  In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instruments. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the Company.  The estimated fair values of the Company's financial instruments are as follows:

			Carrying

			Fair

			Fair Value Measurements Using

			(In thousands)

			Value

			Value