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

Company: FIRST CAPITAL INC
Filing Date: 2025-03-31
Form: 10-K
Item: Item 1
Chunk 10
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Commitments to originate and fund mortgage loans for sale in the secondary market are considered derivative financial instruments to be accounted for at fair value.  The Bank’s mortgage loan commitments subject to derivative accounting are fixed rate mortgage commitments at market rates when initiated.  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.  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.  The Bank’s collection procedures provide for a series of contacts with delinquent borrowers.  A late charge is assessed and a late charge notice is sent to the borrower after the 15th day of delinquency.  After 20 days, the collector places a phone call to the borrower.  When a payment becomes 60 days past due, the collector issues a default letter.  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.  Loans are reviewed regularly and when loans become 90 days delinquent, the loan is typically placed on nonaccrual status and the previously accrued interest income is reversed unless, in the opinion of management, the outstanding interest remains collectible.  Typically, payments received on a nonaccrual loan are applied to the outstanding principal and interest as determined at the time of collection of the loan when the likelihood of further loss on the loan is remote.  Otherwise, the Bank applies the cost recovery method and applies all payments as a reduction of the unpaid principal balance.

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 would have recorded interest income of $245,000 for the year ended December 31, 2024 had nonaccrual loans been current in accordance