Company: FCAP
Filing Date: 2025-03-31
Form Type: 10-K
Source: 0001171843-25-001868
Chunk: 14

Company: FIRST CAPITAL INC
Filing Date: 2025-03-31
Form: 10-K
Item: Item 1
Chunk 14
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 Loans evaluated individually are also not included in the collective evaluation. When the borrower is experiencing financial difficulty at the reporting date and repayment is expected to be provided substantially through the operation or sale of the collateral, expected credit losses are based on the fair value of the collateral at the reporting date adjusted for selling costs. Specific allocations of the ACL on loans related to individually evaluated loans are established where the present value of the loan’s discounted cash flows, observable market price or collateral value (for collateral dependent loans) is lower than the carrying value of the loan.  The identification of these loans results from the loan review process that identifies and monitors credits with weaknesses or conditions which call into question the full collection of the contractual payments due under the terms of the loan agreement.  Factors considered by management include, among others, payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due.  At December 31, 2024, the Company’s specific allocation of the ACL for loans totaled $1.3 million.

At December 31, 2024, the Company's ACL on loans totaled $9.3 million, of which $6.4 million related to qualitative factor adjustments.  At December 31, 2023, the Company's allowance for loan losses totaled $8.0 million, of which $6.1 million related to qualitative factor adjustments. 

9

See Notes 1 and 4 in the accompanying Notes to Consolidated Financial Statements for additional information regarding management’s methodology for estimating the ACL on loans.

The following table sets forth an analysis of the Bank’s ACL on loans for the periods indicated.  As previously described, activity for the year ending December 31, 2022 has been reclassified to reflect the adoption of ASU 2016-13.

Allowance for Credit Losses Analysis            

The following table sets forth an analysis of the Bank's ACL on loans for the periods indicated.             

			Year Ended December 31,

			2024

			2023

			2022

			(In thousands)

			Beginning balance, prior to adoption of ASC 326

			$
			8,005

			$
			6,772

			$
			6,083

			Impact of adopting ASC 326

			-

			561

			-

			Provision for credit losses

			1,449

			1,141

			950