Company: FCAP
Filing Date: 2025-03-31
Form Type: 10-K
Source: 0001171843-25-001868
Chunk: 6

Company: FIRST CAPITAL INC
Filing Date: 2025-03-31
Form: 10-K
Item: Item 1
Chunk 6
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 loans are generally secured by inventory, accounts receivable, and business equipment such as trucks and tractors.  Many commercial business loans also have real estate as collateral.  The Bank generally requires a personal guaranty of payment by the principals of a corporate borrower, and reviews the personal financial statements and income tax returns of the guarantors.  Commercial business loans are generally originated with LTV ratios not exceeding 75%. 

Aside from lines of credit, commercial business loans are generally originated for terms not to exceed seven years with variable interest rates based on the prime lending rate.  Approved credit lines totaled $39.1 million at December 31, 2024, of which $15.2 million was outstanding.  Lines of credit are originated at fixed and variable interest rates for one-year renewable terms.

Consumer and Other Loans.  The Bank offers a variety of secured or guaranteed consumer loans, including automobile and truck loans, home equity loans, home improvement loans, boat loans, mobile home loans and loans secured by savings deposits.  In addition, the Bank offers unsecured consumer loans.  Consumer loans are generally originated at fixed interest rates and for terms not to exceed seven years.  The largest portion of the Bank’s consumer loan portfolio consists of home equity and second mortgage loans followed by automobile and truck loans.  Automobile and truck loans are originated on both new and used vehicles.  Such loans are generally originated at fixed interest rates for terms up to five years and at LTV ratios up to 90% of the blue book value in the case of used vehicles and 90% of the purchase price in the case of new vehicles.

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The Bank originates variable-rate home equity and fixed-rate second mortgage loans generally for terms not to exceed ten years.  The LTV ratio on such loans is limited to 80%, taking into account the outstanding balance on the first mortgage loan.

The Bank’s underwriting procedures for consumer loans includes an assessment of the applicant’s payment history on other debts and ability to meet existing obligations and payments on the proposed loans.  Although the applicant’s creditworthiness is a primary consideration, the underwriting process also includes a comparison of the value of the security, if any, to the proposed loan amount.  The Bank underwrites and originates the majority of its consumer loans internally, which management believes limits exposure to credit risks relating to loans underwritten or purchased from brokers or other outside sources.

Consumer loans generally entail greater risk than do residential mortgage loans, particularly in the case of consumer loans which are un