##### Table of Contents

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SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549



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FORM 10-Q



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(Mark One)

|x |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- |  | ---------------------------------------------------------------------------------------



For the quarterly period ended MARCH 31, 2003



OR



| ̈ |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- |  | ----------------------------------------------------------------------------------------



For the transition period from
 to



Commission File No. 0-25023



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First Capital, Inc.

(Exact name of registrant as specified in its charter)



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|Indiana                                                       |  | 35-2056949                            
|------------------------------------------------------------- |  | --------------------------------------
|(State or other jurisdiction ofincorporation or organization) |  | (I.R.S. EmployerIdentification Number)



220
Federal Drive NW, Corydon, Indiana 47112

(Address of principal executive offices) (Zip Code)



Registrants telephone number, including area code
1-812-738-2198



Not applicable

Former name, former address and former fiscal year, if changed since last report



---



Indicate by check mark whether the registrant (1) has filed all required reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days.    Yes  x    NO ̈



Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).    Yes ̈NO  x



APPLICABLE ONLY TO CORPORATE ISSUERS; Indicate the number of shares outstanding of each of the issuers classes of common stock, as
of the latest practicable date: 2,825,519 shares of common stock were outstanding as of April 30, 2003.



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##### Table of Contents



FIRST CAPITAL, INC.



INDEX



|               |  |                                                                                                      |  | Page 
|-------------- |  | ---------------------------------------------------------------------------------------------------- |  | -----
|Part I         |  | Financial Information                                                                                |  |      
|              
|               |  | Item 1. Consolidated Financial Statements                                                            |  |      
|              
|               |  | Consolidated Balance Sheets as of March 31, 2003 and December 31, 2002 (unaudited)                   |  | 3    
|              
|               |  | Consolidated Statements of Income for the three months ended March 31, 2003 and 2002 (unaudited)     |  | 4    
|              
|               |  | Consolidated Statements of Cash Flows for the three months ended March 31, 2003 and 2002 (unaudited) |  | 5    
|              
|               |  | Notes to consolidated financial statements (unaudited)                                               |  | 6-9  
|              
|               |  | Item 2.
Managements Discussion and Analysis of Financial Condition and Results of Operations        |  | 10-13
|              
|               |  | Item 3.
Quantitative and Qualitative Disclosures About Market Risk                                   |  | 14   
|              
|               |  | Item 4.
Controls and Procedures                                                                      |  | 14   
|              
|Part II        |  | Other Information                                                                                    |  |      
|              
|               |  | Item 1.
Legal Proceedings                                                                            |  | 15   
|              
|               |  | Item 2.
Changes in Securities and Use of Proceeds                                                    |  | 15   
|              
|               |  | Item 3.
Defaults Upon Senior Securities                                                              |  | 15   
|              
|               |  | Item 4.
Submission of Matters to a Vote of Security Holders                                          |  | 15   
|              
|               |  | Item 5.
Other Information                                                                            |  | 16   
|              
|               |  | Item 6.
Exhibits and Reports of Form 8-K                                                             |  | 16   
|              
|Signatures     |  | 17                                                                                                  
|              
|Certifications |  | 18-19                                                                                               



2



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##### Table of Contents



PART
IFINANCIAL INFORMATION



FIRST CAPITAL, INC. AND SUBSIDIARY



CONSOLIDATED BALANCE SHEETS

(Unaudited)



|                                                                                                                         |  | March 31,2003  |         |   | December 31,2002 |  
|------------------------------------------------------------------------------------------------------------------------ |  | -------------- | ------- | - | ---------------- | -
|                                                                                                                         |  | (In thousands) |        
|ASSETS                                                                                                                   |  |                |         |   |                  |  
|Cash and due from banks                                                                                                  |  | $              | 8,051   |   |                  | $
|Interest bearing deposits with banks                                                                                     |  |                | 16,943  |   |                  |  
|Securities available for sale, at fair value                                                                             |  |                | 66,466  |   |                  |  
|Securitiesheld to maturity                                                                                              |  |                | 1,568   |   |                  |  
|Loans receivable, net                                                                                                    |  |                | 280,629 |   |                  |  
|Federal Home Loan Bank stock, at cost                                                                                    |  |                | 2,980   |   |                  |  
|Foreclosed real estate                                                                                                   |  |                | 363     |   |                  |  
|Premises and equipment                                                                                                   |  |                | 10,207  |   |                  |  
|Accrued interest receivable:                                                                                             |  |                |         |   |                  |  
|Loans                                                                                                                    |  |                | 1,316   |   |                  |  
|Securities                                                                                                               |  |                | 671     |   |                  |  
|Cash value of life insurance                                                                                             |  |                | 1,280   |   |                  |  
|Goodwill                                                                                                                 |  |                | 5,307   |   |                  |  
|Core deposit intangibles                                                                                                 |  |                | 663     |   |                  |  
|Other assets                                                                                                             |  |                | 465     |   |                  |  
|                                                                                                                         |  |                |         |   |                  |  
|Total Assets                                                                                                             |  | $              | 396,909 |   |                  | $
|                                                                                                                         |  |                |         |   |                  |  
|LIABILITIES                                                                                                              |  |                |         |   |                  |  
|Deposits:                                                                                                                |  |                |         |   |                  |  
|Noninterestbearing                                                                                                      |  | $              | 26,026  |   |                  | $
|Interestbearing                                                                                                         |  |                | 271,281 |   |                  |  
|                                                                                                                         |  |                |         |   |                  |  
|Total Deposits                                                                                                           |  |                | 297,307 |   |                  |  
|                                                                                                                        
|Retail repurchase agreements                                                                                             |  |                | 192     |   |                  |  
|Advances from Federal Home Loan Bank                                                                                     |  |                | 54,595  |   |                  |  
|Accrued interest payable                                                                                                 |  |                | 1,245   |   |                  |  
|Accrued expenses and other liabilities                                                                                   |  |                | 957     |   |                  |  
|                                                                                                                         |  |                |         |   |                  |  
|Total Liabilities                                                                                                        |  |                | 354,296 |   |                  |  
|                                                                                                                         |  |                |         |   |                  |  
|STOCKHOLDERS' EQUITY                                                                                                     |  |                |         |   |                  |  
|Preferred stock of $.01 par value per share Authorized 1,000,000 shares; none
issued                                     |  |                |        |   |                  |  
|Common stock of $.01 par value per share Authorized 5,000,000 shares; issued 2,840,129
shares (2,551,763 shares in 2002) |  |                | 28      |   |                  |  
|Additional paid-in capital                                                                                               |  |                | 19,142  |   |                  |  
|Retained earningssubstantially restricted                                                                               |  |                | 23,471  |   |                  |  
|Unearned ESOP shares                                                                                                     |  |                | (430    | ) |                  |  
|Unearned stock compensation                                                                                              |  |                | (126    | ) |                  |  
|Accumulated other comprehensive income                                                                                   |  |                | 791     |   |                  |  
|Less treasury stock, at cost15,952 shares (8,980 shares in 2002)                                                        |  |                | (263    | ) |                  |  
|                                                                                                                         |  |                |         |   |                  |  
|Total Stockholders Equity                                                                                               |  |                | 42,613  |   |                  |  
|                                                                                                                         |  |                |         |   |                  |  
|Total Liabilities and Stockholders Equity                                                                               |  | $              | 396,909 |   |                  | $
|                                                                                                                         |  |                |         |   |                  |  



3



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##### Table of Contents



PART
IFINANCIAL INFORMATION



FIRST
CAPITAL, INC. AND SUBSIDIARY



CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)



|                                                    |  | Three Months EndedMarch 31,           |      
|--------------------------------------------------- |  | ------------------------------------- | -----
|                                                    |  | 2003                                  |      
|                                                    |  | (In thousands, except per share data) |      
|INTEREST INCOME                                     |  |                                       |      
|Loans receivable, including fees                    |  | $                                     | 3,916
|Securities                                          |  |                                       |      
|Taxable                                             |  |                                       | 588  
|Tax-exempt                                          |  |                                       | 125  
|Federal Home Loan Bank dividends                    |  |                                       | 37   
|Interest bearing deposits with banks                |  |                                       | 42   
|                                                    |  |                                       |      
|Total interest income                               |  |                                       | 4,708
|                                                    |  |                                       |      
|INTEREST EXPENSE                                    |  |                                       |      
|Deposits                                            |  |                                       | 1,327
|Advances from Federal Home Loan Bank                |  |                                       | 735  
|                                                    |  |                                       |      
|Total interest expense                              |  |                                       | 2,062
|                                                    |  |                                       |      
|Net interest income                                 |  |                                       | 2,646
|Provision for loan losses                           |  |                                       | 150  
|                                                    |  |                                       |      
|Net interest income after provision for loan losses |  |                                       | 2,496
|                                                    |  |                                       |      
|NON-INTEREST INCOME                                 |  |                                       |      
|Service charges on deposit accounts                 |  |                                       | 370  
|Commission income                                   |  |                                       | 60   
|Gain on sale of securities                          |  |                                       | 51   
|Other income                                        |  |                                       | 28   
|                                                    |  |                                       |      
|Total non-interest income                           |  |                                       | 509  
|                                                    |  |                                       |      
|NON-INTEREST EXPENSE                                |  |                                       |      
|Compensation and benefits                           |  |                                       | 1,024
|Occupancy and equipment                             |  |                                       | 194  
|Data processing                                     |  |                                       | 197  
|Other operating expenses                            |  |                                       | 503  
|                                                    |  |                                       |      
|Total non-interest expense                          |  |                                       | 1,918
|                                                    |  |                                       |      
|Income before income taxes                          |  |                                       | 1,087
|Income tax expense                                  |  |                                       | 366  
|                                                    |  |                                       |      
|Net Income                                          |  |                                       | 721  
|                                                   
|OTHER COMPREHENSIVE LOSS, NET OF TAX                |  |                                       |      
|Unrealized loss on securities:                      |  |                                       |      
|Unrealized holding losses arising during the period |  |                                       | (149 
|Less: reclassification adjustment                   |  |                                       | (31  
|                                                    |  |                                       |      
|Other comprehensive loss                            |  |                                       | (180 
|                                                    |  |                                       |      
|Comprehensive Income                                |  | $                                     | 541  
|                                                    |  |                                       |      
|Net income per common share, basic                  |  | $                                     | 0.29 
|                                                    |  |                                       |      
|Net income per common share, diluted                |  | $                                     | 0.28 
|                                                    |  |                                       |      



See
accompanying notes to consolidated financial statements.



4



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##### Table of Contents



PART
IFINANCIAL INFORMATION



FIRST
CAPITAL, INC. AND SUBSIDIARY



CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



|                                                                                  |  | Three Months EndedMarch 31, |       
|--------------------------------------------------------------------------------- |  | --------------------------- | ------
|                                                                                  |  | 2003                        |       
|                                                                                  |  | (In thousands)              |       
|CASH FLOWS FROM OPERATING ACTIVITIES                                              |  |                             |       
|Net income                                                                        |  | $                           | 721   
|Adjustments to reconcile net income to net cash provided by operating
activities: |  |                             |       
|Amortization of premiums and accretion of discounts                               |  |                             | 87    
|Depreciation and amortization expense                                             |  |                             | 135   
|Deferred income taxes                                                             |  |                             | 296   
|ESOP compensation expense                                                         |  |                             | 22    
|Stock compensation expense                                                        |  |                             | 17    
|Increase in cash value of life insurance                                          |  |                             | (13   
|Provision for loan losses                                                         |  |                             | 150   
|Net gain on sale of securities available for sale                                 |  |                             | (51   
|Decrease in accrued interest receivable                                           |  |                             | 137   
|Increase (decrease) in accrued interest payable                                   |  |                             | (111  
|Net change in other assets/liabilities                                            |  |                             | 130   
|                                                                                  |  |                             |       
|Net Cash Provided By Operating Activities                                         |  |                             | 1,520 
|                                                                                  |  |                             |       
|CASH FLOWS FROM INVESTING ACTIVITIES                                              |  |                             |       
|Net (increase) decrease in interest bearing deposits with banks                   |  |                             | 7,260 
|Purchase of securities available for sale                                         |  |                             | (8,143
|Proceeds from maturities of securities available for sale                         |  |                             | 6,000 
|Purchase of securities held to maturity                                           |  |                             |      
|Proceeds from maturities of securities held to maturity                           |  |                             | 107   
|Proceeds from sale of securities available for sale                               |  |                             | 2,551 
|Principal collected on mortgage-backed securities                                 |  |                             | 2,104 
|Net (increase) decrease in loans receivable                                       |  |                             | (663  
|Purchase of Federal Home Loan Bank stock                                          |  |                             | (64   
|Proceeds from sale of Federal Reserve Bank stock                                  |  |                             | 180   
|Proceeds from sale of foreclosed real estate                                      |  |                             |      
|Purchase of premises and equipment                                                |  |                             | (689  
|Net cash paid in acquisition of Hometown Bancshares, Inc.                         |  |                             | (5,726
|                                                                                  |  |                             |       
|Net Cash Provided (Used) By Investing Activities                                  |  |                             | 2,917 
|                                                                                  |  |                             |       
|CASH FLOWS FROM FINANCING ACTIVITIES                                              |  |                             |       
|Net increase (decrease) in deposits                                               |  |                             | (3,568
|Net increase in advances from Federal Home Loan Bank                              |  |                             | 1,275 
|Net decrease in retail repurchase agreements                                      |  |                             | (265  
|Exercise of stock options                                                         |  |                             | 32    
|Purchase of treasury stock                                                        |  |                             | (146  
|Dividends paid                                                                    |  |                             | (324  
|                                                                                  |  |                             |       
|Net Cash Provided (Used) By Financing Activities                                  |  |                             | (2,996
|                                                                                  |  |                             |       
|Net Increase (Decrease) in Cash and Due From Banks                                |  |                             | 1,441 
|Cash and due from banks at beginning of period                                    |  |                             | 6,610 
|                                                                                  |  |                             |       
|Cash and Due From Banks at End of Period                                          |  | $                           | 8,051 
|                                                                                  |  |                             |       



See
accompanying notes to consolidated financial statements.



5



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##### Table of Contents

FIRST CAPITAL, INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



|1. |  | Presentation of Interim Information
|-- |  | -----------------------------------



First Capital, Inc. (Company) is the holding company for First Harrison Bank (Bank). The information presented in
this report relates primarily to the Banks operations.



In the opinion of management, the unaudited consolidated financial statements include all normal adjustments considered necessary to present fairly the financial position as of March 31, 2003, and the results of operations for the
three months ended March 31, 2003 and 2002 and cash flows for the three months ended March 31, 2003 and 2002. All of these adjustments are of a normal, recurring nature. Such adjustments are the only adjustments included in the unaudited
consolidated financial statements. Interim results are not necessarily indicative of results for a full year.



The accompanying unaudited consolidated financial statements and notes have been prepared in accordance with generally accepted accounting
principles for interim financial statements and are presented as permitted by the instructions to Form 10-Q. Accordingly, they do not contain certain information included in the Companys annual audited consolidated financial statements and
related footnotes for the year ended December 31, 2002 included in the Form 10-KSB.



The unaudited consolidated financial statements include the accounts of the Company, the Bank and the Banks wholly owned subsidiary, First Harrison Financial Services, Inc. All material
intercompany balances and transactions have been eliminated in consolidation.



|2. |  | Comprehensive Income
|-- |  | --------------------



Comprehensive income is defined as the change in equity (net assets) of a business enterprise during a period from transactions and other
events and circumstances from non-owner sources. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners. Comprehensive income for the Company includes net income and other
comprehensive income representing the net unrealized gains and losses on securities available for sale. The following tables set forth the components of other comprehensive income and the allocated tax amounts for the three months ended March 31,
2003 and 2002:



|                                                                   |  | Three Months EndedMarch 31, |     
|------------------------------------------------------------------ |  | --------------------------- | ----
|                                                                   |  | 2003                        |     
|                                                                   |  | (In thousands)              |     
|Unrealized losses on securities:                                   |  |                             |     
|Unrealized holding losses arising during the period                |  | $                           | (247
|Income tax benefit                                                 |  |                             | 98  
|                                                                   |  |                             |     
|Net of tax amount                                                  |  |                             | (149
|                                                                   |  |                             |     
|Less: reclassification adjustment for gains included in net income |  |                             | (51 
|Income expense benefit                                             |  |                             | 20  
|                                                                   |  |                             |     
|                                                                   |  |                             | (31 
|                                                                   |  |                             |     
|Other comprehensive loss                                           |  | $                           | (180
|                                                                   |  |                             |     



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##### Table of Contents



FIRST
CAPITAL, INC. AND SUBSIDIARIES



NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



|3. |  | Merger with Hometown Bancshares, Inc.
|-- |  | -------------------------------------



On March 20, 2003, the Company consummated its acquisition of Hometown Bancshares, Inc. (Hometown), a bank holding company located in New
Albany, Indiana, pursuant to an Agreement and Plan of Merger dated September 25, 2002. Hometown is the parent company of Hometown National Bank, which was merged with and into the Bank. The acquisition was made for the purpose of expanding the
Companys presence in the New Albany and Floyd County, Indiana market area and the Company expects to benefit from growth in this market area as well as from expansion of the banking services provided to the existing customers of Hometown.



Pursuant to the terms of the merger agreement,
Hometown stockholders who elected to receive Company stock received 2.487 shares of Company common stock and Hometown shareholders who elected to receive cash received $46.50 in cash for each share of Hometown common stock. Hometown stockholders who
did not submit properly completed election forms within the required timeframe received 0.773 shares of Company common stock and $32.05 in cash for each share of Hometown common stock. The Company issued 285,446 shares of common stock and paid
approximately $5.4 million in cash consideration to former Hometown stockholders. The value assigned to the common shares issued in the transaction was approximately $6.1 million determined by the average closing price of the Companys common
stock over a twenty day period ending March 17, 2003. The transaction was accounted for under the purchase method of accounting. Accordingly, the results of operations of Hometown have been included in the Companys results of operations since
the date of acquisition. Under the purchase method of accounting, the purchase price is allocated to the respective assets acquired and liabilities assumed based on their estimated fair values, net of applicable income tax effects. The excess of
cost over the fair value of the net assets acquired of approximately $5.3 million has been recorded as goodwill.



The following unaudited pro forma information assumes that the acquisition was consummated on January 1, 2002:



|                                                    |  | Three Months Ended March 31,         
|--------------------------------------------------- |  | -------------------------------------
|                                                    |  | 2003                                 
|                                                    |  | (In thousands, except per share data)
|Interest income                                     |  | $                                    
|Interest expense                                    |  |                                      
|                                                    |  |                                      
|Net interest income                                 |  |                                      
|Provision for loan losses                           |  |                                      
|                                                    |  |                                      
|Net interest income after provision for loan losses |  |                                      
|                                                    |  |                                      
|Noninterest income                                  |  |                                      
|Noninterest expense                                 |  |                                      
|                                                    |  |                                      
|Income before income taxes                          |  |                                      
|Income tax expense                                  |  |                                      
|                                                    |  |                                      
|Net income                                          |  | $                                    
|                                                    |  |                                      
|Net income per common share, basic                  |  | $                                    
|Net income per common share, diluted                |  | $                                    



In
addition to combining the historical results of operations, the pro forma calculations consider the purchase accounting adjustments and nonrecurring charges directly related to the acquisition and the related tax effects. The pro forma calculations
do not include any anticipated cost savings as a result of the acquisition. The pro forma results of operations are not necessarily indicative of the actual results of operations that would have occurred had the Hometown acquisition actually been
consummated on January 1, 2002, or results that may occur in the future.



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##### Table of Contents



FIRST
CAPITAL, INC. AND SUBSIDIARIES



NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



|4. |  | Supplemental Disclosure for Earnings Per Share
|-- |  | ----------------------------------------------



|                                                        |  | Three Months Ended March 31,         
|------------------------------------------------------- |  | -------------------------------------
|                                                        |  | 2003                                 
|                                                        |  | (In thousands, except per share data)
|Basic:                                                  |  |                                      
|Earnings:                                               |  |                                      
|Net income                                              |  | $                                    
|                                                        |  |                                      
|Shares:                                                 |  |                                      
|Weighted average common shares outstanding              |  |                                      
|                                                        |  |                                      
|Net income per common share, basic                      |  | $                                    
|                                                        |  |                                      
|Diluted:                                                |  |                                      
|Earnings:                                               |  |                                      
|Net income                                              |  | $                                    
|                                                        |  |                                      
|Shares:                                                 |  |                                      
|Weighted average common shares outstanding              |  |                                      
|                                                       
|Add: Dilutive effect of outstanding options             |  |                                      
|Add: Dilutive effect of restricted shares               |  |                                      
|                                                        |  |                                      
|Weighted average common shares outstanding, as adjusted |  |                                      
|                                                        |  |                                      
|Net income per common share, diluted                    |  | $                                    
|                                                        |  |                                      



|5. |  | Stock Option Plan
|-- |  | -----------------



The Company accounts for its stock option plan under the recognition and measurement principles of APB Opinion No. 25, Accounting for
Stock Issued to Employees, and related Interpretations. No stock-based employee compensation cost is reflected in net income, as all options granted under the stock option plan had an exercise price equal to the market value of the underlying
common stock on the date of grant. The following table illustrates the effect on net income and earnings per share as if the Company had applied the fair value recognition provisions of SFAS 123 to stock-based employee compensation.



|                                                                                                                                            |  | Three Months Ended March 31,          |     
|------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------- | ----
|                                                                                                                                            |  | 2003                                  |     
|                                                                                                                                            |  | (In thousands, except per share data) |     
|Net income, as reported                                                                                                                     |  | $                                     | 721 
|Deduct: Total stock-based employee compensation expense determined under fair value
based method for all awards, net of related tax effects |  |                                       | (3  
|                                                                                                                                            |  |                                       |     
|Pro forma net income                                                                                                                        |  | $                                     | 718 
|                                                                                                                                            |  |                                       |     
|Earnings per share:                                                                                                                         |  |                                       |     
|Basicas reported                                                                                                                           |  | $                                     | 0.29
|                                                                                                                                            |  |                                       |     
|                                                                                                                                            |  |                                       |     
|Basicpro forma                                                                                                                             |  | $                                     | 0.29
|                                                                                                                                            |  |                                       |     
|Dilutedas reported                                                                                                                         |  | $                                     | 0.28
|                                                                                                                                            |  |                                       |     
|Dilutedpro forma                                                                                                                           |  | $                                     | 0.28
|                                                                                                                                            |  |                                       |     



8



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##### Table of Contents



FIRST
CAPITAL, INC. AND SUBSIDIARIES



NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



|6. |  | Supplemental Disclosures of Cash Flow Information
|-- |  | -------------------------------------------------



|                                                                 |  | Three Months EndedMarch 31,
|---------------------------------------------------------------- |  | ---------------------------
|                                                                 |  | 2003                       
|                                                                 |  | (In thousands)             
|Cash payments for:                                               |  |                            
|Interest                                                         |  | $                          
|Taxes                                                            |  |                            
|                                                                
|Noncash investing activities:                                    |  |                            
|Transfers from loans to real estate acquired through foreclosure |  |                            
|                                                                
|Acquisition of Hometown Bancshares, Inc. (Note 3)                |  |                            
|Assets acquired:                                                 |  |                            
|Cash and due from banks                                          |  | $                          
|Interestbearing deposits with banks                             |  |                            
|Investment securities                                            |  |                            
|Loans, net                                                       |  |                            
|Premises and equipment                                           |  |                            
|Goodwill                                                         |  |                            
|Core deposit intangible                                          |  |                            
|Other assets                                                     |  |                            
|                                                                 |  |                            
|                                                                 |  |                            
|                                                                 |  |                            
|Liabilities assumed:                                             |  |                            
|Deposit accounts                                                 |  |                            
|Other liabilities                                                |  |                            
|                                                                 |  |                            
|                                                                 |  |                            
|                                                                 |  |                            
|Net assets acquired                                              |  | $                          
|                                                                 |  |                            
|Cash paid                                                        |  | $                          
|Stock issued                                                     |  |                            
|                                                                 |  |                            
|Total purchase price                                             |  | $                          
|                                                                 |  |                            



9



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##### Table of Contents



PART
IITEM 2



MANAGEMENTS DISCUSSION AND

ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS



FIRST CAPITAL, INC. AND SUBSIDIARIES



Safe Harbor Statement for Forward Looking Statements



This report may contain forward-looking statements within the meaning of the federal securities laws. These statements are not historical facts, rather
statements based on the Companys current expectations regarding its business strategies and their intended results and its future performance. Forward-looking statements are preceded by terms such as expects, believes,
anticipates, intends and similar expressions.



Forward-looking statements are not guarantees of future performance. Numerous risks and uncertainties could cause or contribute to the Companys actual results, performance and achievements to be materially different from those
expressed or implied by the forward-looking statements. Factors that may cause or contribute to these differences include, without limitation, general economic conditions, including changes in market interest rates and changes in monetary and fiscal
policies of the federal government; legislative and regulatory changes; and other factors disclosed periodically in the Companys filings with the Securities and Exchange Commission.



Because of the risks and uncertainties inherent in forward-looking statements, readers are cautioned not to place undue
reliance on them, whether included in this report or made elsewhere from time to time by the Company or on its behalf. Except as required by applicable law or regulation, the Company assumes no obligation to update any forward-looking statements.



Financial Condition



Total assets increased $88.3 million, or 28.6%, from $308.6
million at December 31, 2002 to $396.9 million at March 31, 2003. The increase in total assets includes the assets acquired in the merger with Hometown, which had assets of $90.5 million, excluding goodwill and other purchase accounting adjustments.



Net loans receivable increased $64.6 million
from $216.0 million at December 31, 2002 to $280.6 million at March 31, 2003, a 29.9% increase. Loans totaling $64.3 million were acquired in the acquisition of Hometown, consisting primarily of commercial mortgages and commercial loans.



Securities available for sale increased $1.5
million from $65.0 million at December 31, 2002 to $66.5 million at March 31, 2003. The increase was primarily due to purchases of $8.1 million and the acquisition of Hometowns securities portfolio of $4.3 million, offset by maturities of $6.0
million, sales of $2.5 million and principal repayments of $2.1 million. The available for sale securities acquired from Hometown consisted of government agencies, mortgage-backed securities, notes and bonds.



Investment securities held-to-maturity increased $94,000
primarily as a result of $223,000 in securities acquired in the Hometown merger, offset by maturities of $107,000 and principal repayments of $21,000. The securities acquired in the Hometown merger consisted of local municipal obligations.



10



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##### Table of Contents



PART
IITEM 2



MANAGEMENTS DISCUSSION
AND

ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS



FIRST CAPITAL, INC. AND SUBSIDIARIES



Cash and short-term investments increased from $12.7 million at December 31, 2002 to $25.0 million at March 31, 2003. This increase is the
result of the acquisition of Hometown, which had $18.1 million in cash and short-term investments at the date of the acquisition, offset by $5.4 million in cash consideration paid to the Hometown shareholders.



Total deposits increased 37.5%, from $216.2 million at
December 31, 2002 to $297.3 million at March 31, 2003. Hometown had deposits of $84.7 million at the date of the acquisition, including time deposits of $63.3 million and checking and savings accounts $21.4 million.



Federal Home Loan Bank borrowings increased $1.3 million from
$53.3 million at December 31, 2002 to $54.6 million at March 31, 2003. The new advance was drawn primarily to take advantage of low interest rates at favorable terms.



Total stockholders equity increased from $36.3 million at December 31, 2002 to $42.6 million at March 31,
2003 primarily as a result of the issuance of common stock of $6.1 million related to the acquisition of Hometown and retained net income of $397,000 offset by net unrealized losses of $180,000 on securities available for sale and purchases of
treasury stock of $146,000.



Results of Operations



Net Income.Net income was $721,000
($.28 per share diluted) for the three months ended March 31, 2003 compared to $793,000 ($.32 per share diluted) for the same period in 2002. Net income decreased due to an increase in noninterest expense partially offset by increases in net
interest income and noninterest income.



Net
interest income for the three-month periods ended March 31, 2003 and 2002.Net interest income increased 7.9% from $2.5 million in 2002 to $2.6 million in 2003 as a result of an increase in interest-earning assets funded by growth in deposits
and borrowings from the Federal Home Loan Bank.



Total interest income increased $31,000 during the quarter ended March 31, 2003 compared to the first quarter in 2002. The average balance of interest-earning assets increased from $271.3 million to $299.9 million when comparing the
same periods. The average tax-equivalent yield on interest-earning assets declined from 6.93% in 2002 to 6.31% in 2003. The decline in yield can be primarily attributed to the continued refinancing of residential mortgages and the repricing of the
investment portfolio at lower interest rates.



Total interest expense decreased $163,000 to $2.1 million during the three months ended March 31, 2003 compared to $2.2 million for the same period in 2002. Interest on deposits decreased $257,000 while interest on Federal Home Loan
Bank borrowings increased $94,000 when comparing the first quarter of 2003 against the same period in 2002. The average balance of interest-bearing liabilities increased from $231.1 million in 2002 to $257.5 million in 2003 while the average rate on
these same liabilities decreased from 3.85% in 2002 to 3.20% in 2003. As a result, the Banks taxable-equivalent interest rate spread remained virtually unchanged at 3.11% for the first quarter of 2003 compared to 3.08% for the same period in
2002.



11



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##### Table of Contents



PART
IITEM 2



MANAGEMENTS DISCUSSION
AND

ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS



FIRST CAPITAL, INC. AND SUBSIDIARIES



Provision for loan losses. The provision for loan losses was $150,000 for the three-month period ended March 31, 2003 as compared
to $45,000 for the same period in 2002. During 2003, gross loans receivable increased $65.8 million. The acquisition of Hometown accounted for $65.4 million of that increase. The allowance for loan losses related to the acquired loans amounted to
$1.1 million as of the acquisition date. However, the consistent application of managements allowance methodology resulted in an increase in the provision for loan losses due to higher levels of nonperforming loans as compared to the prior
year and the general weakening of economic conditions.



Provisions for loan losses are charges to earnings to maintain the total allowance for loan losses at a level considered reasonable by management to provide for probable known and inherent loan losses based on managements
evaluation of the collectibility of the loan portfolio, including the nature of the portfolio, credit concentrations, trends in historical loss experience, specified impaired loans, and economic conditions. Although management uses the best
information available, future adjustments to the allowance may be necessary due to changes in economic, operating, regulatory and other conditions that may be beyond the Banks control. While the Bank maintains the allowance for loan losses at
a level that it considers adequate to provide for estimated losses, there can be no assurance that further additions will not be made to the allowance for loan losses and that actual losses will not exceed the estimated amounts.



The methodology used in determining the allowance for loan
losses includes segmenting the loan portfolio by identifying risk characteristics common to groups of loans, determining and measuring impairment of individual loans based on the present value of expected future cash flows or the fair value of
collateral, and determining and measuring impairment for groups of loans with similar characteristics by applying loss factors that consider the qualitative factors which may effect the loss rates.



The allowance for loan losses was $2.4 million at March 31,
2003 compared to $1.2 million at December 31, 2002. As previously discussed, Hometowns allowance for loan losses was $1.1 million at the date of acquisition. Management has deemed these amounts as adequate on those dates based on its best
estimate of probable known and inherent loan losses. At March 31, 2003, nonperforming loans amounted to $2.4 million compared to $1.3 million at December 31, 2002. Loans acquired in the Hometown acquisition accounted for $943,000 of the $2.4
million. Included in nonperforming loans are loans over 90 days past due secured by one-to-four family residential real estate in the amount of $806,000, commercial mortgages of $273,000, consumer loans amounting to $82,000 and commercial loans of
$45,000. These loans are accruing interest as the estimated value of the collateral and collection efforts are deemed sufficient to ensure full recovery.



Noninterest income. Noninterest income increased 28.5% to $509,000 for the three months ended March 31, 2003 compared to $396,000
for the three months ended March 31, 2002. Service charges on deposits increased $59,000, or 19.0%, from $311,000 in 2002 to $370,000 in 2003. Fees charged on deposit accounts were raised effective March 21, 2003, but the primary reason for the
increase was an increase in the number of transaction accounts. The Bank also recognized gains of $51,000 on the sale of securities during the first quarter of 2003. The Bank had a large amount of securities due to mature in the same time frame so a
portion of these securities were sold to reduce the interest rate risk. No securities were sold during the same period in 2002.



12



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##### Table of Contents



PART
IITEM 2



MANAGEMENTS DISCUSSION
AND

ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS



FIRST CAPITAL, INC. AND SUBSIDIARIES



Noninterest expense. Noninterest expense increased 20.0% to $1.9 million for the three month period ended March 31, 2003 compared
to $1.6 million for the same period in 2002. When comparing the two periods, compensation and benefits increased $147,000 primarily due to additional personnel from the Hometown acquisition and the new branch location in Jeffersonville, Indiana
scheduled to open in May of 2003. Other factors include the increased cost of employee health insurance and normal salary increases.



Data processing fees increased $87,000 from the first quarter of 2002 to the same period in 2003, primarily due to the conversion of the
Hometown accounts to the Banks computer system. Other operating expenses increased $71,000 compared to the same period one year ago. The primary factor causing this rise was an increase of $42,000 in advertising expenses. The Bank has adopted
a more aggressive marketing campaign, specifically to target the areas where the acquired offices are located as well as the new Jeffersonville location. Other contributing factors include an increase in ATM charges of $15,000 due to the conversion
of the Hometown ATMs to the Banks system and an increase of $12,000 in telephone expense. The Bank has added T-1 phone lines between all offices to increase the speed of transactions as well as the transfer of documents leading to improved
customer service.



Income tax expense.
Income tax expense for the three-month period ended March 31, 2003 was $366,000, compared to $412,000 for the same period in 2002. The effective tax rate was 34.2% for 2002 compared to 33.7% for 2003.



Liquidity and Capital Resources



The Banks primary sources of funds are customer
deposits, proceeds from loan repayments, maturing securities and FHLB advances. While loan repayments and maturities are a predictable source of funds, deposit flows and mortgage prepayments are greatly influenced by market interest rates, general
economic conditions and competition. At March 31, 2003, the Bank had cash and interest-bearing deposits with banks of $25.0 million and securities available-for-sale with a fair value of $66.5 million. If the Bank requires funds beyond its ability
to generate them internally, it has additional borrowing capacity with the FHLB of Indianapolis and collateral eligible for repurchase agreements.



The Banks primary investing activity is the origination of one-to-four family mortgage loans and, to a lesser extent, consumer,
multi-family, commercial real estate and residential construction loans. The Bank also invests in U.S. Government and agency securities and mortgage-backed securities issued by U.S. Government agencies.



The Bank must maintain an adequate level of liquidity to
ensure the availability of sufficient funds to support loan growth and deposit withdrawals, to satisfy financial commitments and to take advantage of investment opportunities. Historically, the Bank has been able to retain a significant amount of
its deposits as they mature.



The Bank is
required to maintain specific amounts of capital pursuant to OTS requirements. As of March 31, 2003, the Bank was in compliance with all regulatory capital requirements, which were effective as of such date with tangible, core and risk-based capital
ratios of 8.8%, 8.8% and 14.6%, respectively. The regulatory requirements at that date were 1.5%, 3.0% and 8.0%, respectively.





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##### Table of Contents



PART
IITEM 3



QUANTITATIVE AND QUALITATIVE DISCLOSURES

ABOUT MARKET RISK



FIRST CAPITAL, INC. AND SUBSIDIARIES



At March 31, 2003, there has been no material change in the
information set forth under the caption Market Risk Analysis contained in the Companys 2002 Annual Report to Stockholders, filed as an exhibit to the Companys Form 10-KSB for the year ended December 31, 2002.



PART IITEM 4



CONTROLS AND PROCEDURES



FIRST CAPITAL, INC. AND SUBSIDIARIES



(a) Evaluation of Disclosure Controls and Procedures: An evaluation of the Companys disclosure controls and procedures (as defined on Section 13(a)  14(c) of the Securities and Exchange Act of 1934 (the
Act)) was carried out under the supervision and with the participation of the Companys Chief Executive Officer, Chief Financial Officer and several other members of the Companys senior management within the 90-day period
preceding the filing date of this quarterly report. The Companys Chief Executive Officer and Chief Financial Officer concluded that the Companys disclosure controls and procedures as currently in effect are effective in ensuring that the
information required to be disclosed by the Company in the reports it files or submits under the Act is (i) accumulated and communicated to the Companys management (including the Chief Executive Officer and Chief Financial Officer) in a timely
manner, and (ii) recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms.



(b) Changes in Internal Controls: In the quarter ended March 31, 2003, the Company did not make any significant changes in, nor
take any corrective actions regarding, its internal controls or other factors that could significantly affect these controls.



14



---

##### Table of Contents



PART II

OTHER INFORMATION



FIRST CAPITAL, INC.



|Item 1. |  | Legal Proceedings
|------- |  | -----------------



The Company is not a party to any legal proceedings. Periodically, there have been various claims and lawsuits involving the Bank, mainly
as a plaintiff, such as claims to enforce liens, condemnation proceedings on properties in which the Bank holds security interests, claims involving the making and servicing of real property loans and other issues incident to the Banks
business. The Bank is not a party to any pending legal proceedings that it believes would have a material adverse affect on its financial condition or operations.



|Item 2. |  | Changes in Securities and Use of Proceeds
|------- |  | -----------------------------------------



In connection with the Hometown merger, the Company issued 285,446 shares of common stock to shareholders of Hometown. The shares were
issued at an assumed price of $21.50 per share.



|Item 3. |  | Defaults upon Senior Securities
|------- |  | -------------------------------



Not applicable.



|Item 4. |  | Submission of Matters to a Vote of Security Holders
|------- |  | ---------------------------------------------------



The Annual Meeting of Stockholders of the Company was held on April 23, 2003. There were 2,554,123 shares entitled to vote at the time of
the annual meeting. Holders of 1,994,467 shares were represented at the meeting. The results of the vote on the matters presented at the meeting were as follows:



| | 1. |  | The following individuals were elected as directors:
| | -- |  | ----------------------------------------------------



|Name                   |  | VoteFor   |  | VoteWithheld |  | Term toExpire
|---------------------- |  | --------- |  | ------------ |  | -------------
|John W. Buschemeyer    |  | 1,931,314 |  | 63,153       |  | 2006         
|                      
|Kenneth R. Saulman     |  | 1,945,791 |  | 48,676       |  | 2006         
|                      
|Kathryn W. Ernstberger |  | 1,910,613 |  | 83,854       |  | 2006         



The terms of directors James S. Burden, James E. Nett, Mark D. Shireman, Michael L. Shireman, Samuel E. Uhl, J. Gordon Pendleton, Gerald L. Uhl, Dennis L. Huber and William W. Harrod continued after the annual meeting.



| | 2. |  | The appointment of Monroe Shine & Co., Inc. as auditors for the Company for the fiscal year ending December 31, 2003 was ratified by stockholders by the
following vote:
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------



For 1,966,288; Against 9,014; Abstain 19,165



15



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##### Table of Contents



|Item 5. |  | Other Information
|------- |  | -----------------



Not applicable.



|Item 6. |  | Exhibits and Reports on Form 8-K
|------- |  | --------------------------------



|(a) |  | Exhibits
|--- |  | --------



| | 3.1 |  | Articles of Incorporation of First Capital, Inc. (incorporated by reference to Registration Statement on Form SB-2, and amendments thereto, File Number 333-63515)
| | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3.2 |  | Second Amended and Restated Bylaws of First Capital, Inc. (incorporated by reference to Form 10-KSB filed on April 1, 2002)
| | --- |  | ---------------------------------------------------------------------------------------------------------------------------



| | 11.0 |  | Statement Regarding Computation of Per Share Earnings (incorporated by reference to Note 4 of the Unaudited Consolidated Financial contained herein)
| | ---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------



| | 99.1 |  | Chief Executive Officer Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
| | ---- |  | ------------------------------------------------------------------------------------------------



| | 99.2 |  | Chief Financial Officer Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
| | ---- |  | ------------------------------------------------------------------------------------------------



|(b) |  | Reports on Form 8-K
|--- |  | -------------------



On January 10, 2003, the Company filed Form 8-K to announce the annual meeting of stockholders would be held on April 23, 2003.



On January 22, 2003, the Company filed Form 8-K
to announce the earnings for the year ended and quarter ended December 31, 2002.



On March 25, 2003, the Company filed Form 8-K to announce the consummation of its acquisition of Hometown Bancshares, Inc. pursuant to the Agreement and Plan of Merger dated September 25, 2002 by and
between First Capital and Hometown.



16



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##### Table of Contents



SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



|                   |  | FIRST CAPITAL,
INC.
|------------------ |  | -------------------
|                   |  |                    
|                  
|Dated May 14, 2003 |  | BY:                
|                   |  |                    
|                  
|Dated May 14, 2003 |  | BY:                
|                   |  |                    



17



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##### Table of Contents



CERTIFICATIONS



I, William W. Harrod,
certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of First Capital, Inc. and Subsidiaries;
|-- |  | -------------------------------------------------------------------------------------------



|2. |  | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|3. |  | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4. |  | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and we have:
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) |  | evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report
(the Evaluation Date); and
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | c) |  | presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation
Date;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



|5. |  | The registrants other certifying officer and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee
of registrants board of directors (or persons performing the equivalent functions):
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process, summarize
and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) |  | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



|6. |  | The registrants other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                  
|------------------
|DATE: May 14, 2003
|                  



18



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##### Table of Contents



CERTIFICATIONS



I, Michael C. Frederick,
certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of First Capital, Inc. and Subsidiaries;
|-- |  | -------------------------------------------------------------------------------------------



|2. |  | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|3. |  | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4. |  | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and we have:
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) |  | evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report
(the Evaluation Date); and
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | c) |  | presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation
Date;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



|5. |  | The registrants other certifying officer and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee
of registrants board of directors (or persons performing the equivalent functions):
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process, summarize
and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) |  | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



|6. |  | The registrants other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                  
|------------------
|DATE: May 14, 2003
|                  



19