##### Table of Contents

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UNITED STATES

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, 2005



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 of incorporation or organization) |  | (I.R.S. Employer Identification 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)



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Indicate by
check mark whether the registrant (1) has filed all 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



Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable date: 2,598,333 shares of common stock were outstanding as of April 29, 2005.



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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, 2005 and December 31, 2004 (unaudited)                   |  | 3    
|           |  |                                                                                                     
|           |  | Consolidated Statements of Income for the three months ended March 31, 2005 and 2004 (unaudited)     |  | 4    
|           |  |                                                                                                     
|           |  | Consolidated Statements of Cash Flows for the three months ended March 31, 2005 and 2004 (unaudited) |  | 5    
|           |  |                                                                                                     
|           |  | Notes to consolidated financial statements (unaudited)                                               |  | 6-8  
|           |  |                                                                                                     
|           |  | Item 2.
Managements Discussion and Analysis of Financial Condition and Results of Operations        |  | 9-12 
|           |  |                                                                                                     
|           |  | Item 3.
Quantitative and Qualitative Disclosures About Market Risk                                   |  | 13   
|           |  |                                                                                                     
|           |  | Item 4.
Controls and Procedures                                                                      |  | 13   
|           |  |                                                                                                     
|Part II    |  | Other Information                                                                                    |  |      
|           |  |                                                                                                     
|           |  | Item 1.
Legal Proceedings                                                                            |  | 14   
|           |  |                                                                                                     
|           |  | Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds                                  |  | 14   
|           |  |                                                                                                     
|           |  | Item 3.
Defaults Upon Senior Securities                                                              |  | 14   
|           |  |                                                                                                     
|           |  | Item 4.
Submission of Matters to a Vote of Security Holders                                          |  | 15   
|           |  |                                                                                                     
|           |  | Item 5.
Other Information                                                                            |  | 15   
|           |  |                                                                                                     
|           |  | Item 6.
Exhibits                                                                                     |  | 15-16
|           | 
|Signatures |  | 17                                                                                                  



2



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##### Table of Contents

PART I - FINANCIAL INFORMATION

FIRST CAPITAL, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)



|                                                                                                                         |  |                |         |   |                  |   |         |  
|------------------------------------------------------------------------------------------------------------------------ |  | -------------- | ------- | - | ---------------- | - | ------- | -
|                                                                                                                         |  | March 31,2005  |         |   | December 31,2004 |  
|                                                                                                                         |  | (In thousands) |        
|ASSETS                                                                                                                   |  |                |         |   |                  |   |         |  
|Cash and due from banks                                                                                                  |  | $              | 15,078  |   |                  | $ | 14,191  |  
|Interest bearing deposits with banks                                                                                     |  |                | 11,993  |   |                  |   | 2,175   |  
|Fed funds sold                                                                                                           |  |                | 1,203   |   |                  |   | 1,059   |  
|                                                                                                                         |  |                |         |   |                  |   |         |  
|Total cash and cash equivalents                                                                                          |  |                | 28,274  |   |                  |   | 17,425  |  
|                                                                                                                         |  |               
|Securities available for sale, at fair value                                                                             |  |                | 68,466  |   |                  |   | 65,192  |  
|Securities-held to maturity                                                                                              |  |                | 1,231   |   |                  |   | 1,258   |  
|Loans, net                                                                                                               |  |                | 313,199 |   |                  |   | 317,086 |  
|Loans held for sale                                                                                                      |  |                | 841     |   |                  |   | 510     |  
|Federal Home Loan Bank stock, at cost                                                                                    |  |                | 3,707   |   |                  |   | 3,668   |  
|Foreclosed real estate                                                                                                   |  |                | 868     |   |                  |   | 442     |  
|Premises and equipment                                                                                                   |  |                | 9,752   |   |                  |   | 9,896   |  
|Accrued interest receivable                                                                                              |  |                | 2,068   |   |                  |   | 2,104   |  
|Cash value of life insurance                                                                                             |  |                | 1,278   |   |                  |   | 1,269   |  
|Goodwill                                                                                                                 |  |                | 5,386   |   |                  |   | 5,386   |  
|Core deposit intangibles                                                                                                 |  |                | 517     |   |                  |   | 536     |  
|Other assets                                                                                                             |  |                | 1,046   |   |                  |   | 530     |  
|                                                                                                                         |  |                |         |   |                  |   |         |  
|Total Assets                                                                                                             |  | $              | 436,633 |   |                  | $ | 425,302 |  
|                                                                                                                         |  |                |         |   |                  |   |         |  
|LIABILITIES                                                                                                              |  |                |         |   |                  |   |         |  
|Deposits:                                                                                                                |  |                |         |   |                  |   |         |  
|Noninterest-bearing                                                                                                      |  | $              | 34,753  |   |                  | $ | 33,801  |  
|Interest-bearing                                                                                                         |  |                | 286,566 |   |                  |   | 282,661 |  
|                                                                                                                         |  |                |         |   |                  |   |         |  
|Total Deposits                                                                                                           |  |                | 321,319 |   |                  |   | 316,462 |  
|                                                                                                                         |  |               
|Retail repurchase agreements                                                                                             |  |                | 8,583   |   |                  |   | 635     |  
|Advances from Federal Home Loan Bank                                                                                     |  |                | 63,399  |   |                  |   | 65,099  |  
|Accrued interest payable                                                                                                 |  |                | 1,238   |   |                  |   | 1,286   |  
|Accrued expenses and other liabilities                                                                                   |  |                | 1,490   |   |                  |   | 1,106   |  
|                                                                                                                         |  |                |         |   |                  |   |         |  
|Total Liabilities                                                                                                        |  |                | 396,029 |   |                  |   | 384,588 |  
|                                                                                                                         |  |                |         |   |                  |   |         |  
|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 2,848,107 shares (2,846,457 shares in 2004) |  |                | 28      |   |                  |   | 28      |  
|Additional paid-in capital                                                                                               |  |                | 19,315  |   |                  |   | 19,278  |  
|Retained earnings-substantially restricted                                                                               |  |                | 27,360  |   |                  |   | 26,888  |  
|Unearned ESOP shares                                                                                                     |  |                | (307    | ) |                  |   | (328    | )
|Unearned stock compensation                                                                                              |  |                | (3      | ) |                  |   | (3      | )
|Accumulated other comprehensive income                                                                                   |  |                | (610    | ) |                  |   | 29      |  
|Less treasury stock, at cost - 249,774 shares (249,742 shares in 2004)                                                   |  |                | (5,179  | ) |                  |   | (5,178  | )
|                                                                                                                         |  |                |         |   |                  |   |         |  
|Total Stockholders Equity                                                                                               |  |                | 40,604  |   |                  |   | 40,714  |  
|                                                                                                                         |  |                |         |   |                  |   |         |  
|Total Liabilities and Stockholders Equity                                                                               |  | $              | 436,633 |   |                  | $ | 425,302 |  
|                                                                                                                         |  |                |         |   |                  |   |         |  



See accompanying notes to consolidated
financial statements.



3



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##### Table of Contents

PART I - FINANCIAL INFORMATION

FIRST CAPITAL, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)



|                                                            |  |                                      |       |   |      |   |      
|----------------------------------------------------------- |  | ------------------------------------ | ----- | - | ---- | - | -----
|                                                            |  | Three Months EndedMarch 31,         
|                                                            |  | 2005                                 |       |   | 2004
|                                                            |  | (In thousands, exceptper share data)
|INTEREST INCOME                                             |  |                                      |       |   |      |   |      
|Loans, including fees                                       |  | $                                    | 4,888 |   |      | $ | 4,741
|Securities:                                                 |  |                                      |       |   |      |   |      
|Taxable                                                     |  |                                      | 488   |   |      |   | 501  
|Tax-exempt                                                  |  |                                      | 158   |   |      |   | 144  
|Federal Home Loan Bank dividends                            |  |                                      | 39    |   |      |   | 39   
|Fed funds sold and interest bearing deposits with banks     |  |                                      | 47    |   |      |   | 14   
|                                                            |  |                                      |       |   |      |   |      
|Total interest income                                       |  |                                      | 5,620 |   |      |   | 5,439
|                                                            |  |                                      |       |   |      |   |      
|INTEREST EXPENSE                                            |  |                                      |       |   |      |   |      
|Deposits                                                    |  |                                      | 1,597 |   |      |   | 1,430
|Retail repurchase agreements                                |  |                                      | 16    |   |      |   |     
|Advances from Federal Home Loan Bank                        |  |                                      | 788   |   |      |   | 796  
|                                                            |  |                                      |       |   |      |   |      
|Total interest expense                                      |  |                                      | 2,401 |   |      |   | 2,226
|                                                            |  |                                      |       |   |      |   |      
|Net interest income                                         |  |                                      | 3,219 |   |      |   | 3,213
|Provision for loan losses                                   |  |                                      | 150   |   |      |   | 125  
|                                                            |  |                                      |       |   |      |   |      
|Net interest income after provision for loan losses         |  |                                      | 3,069 |   |      |   | 3,088
|                                                            |  |                                      |       |   |      |   |      
|NONINTEREST INCOME                                          |  |                                      |       |   |      |   |      
|Service charges on deposit accounts                         |  |                                      | 509   |   |      |   | 433  
|Commission income                                           |  |                                      | 129   |   |      |   | 99   
|Gain on sale of mortgage loans                              |  |                                      | 87    |   |      |   |     
|Mortgage brokerage fees                                     |  |                                      | 42    |   |      |   | 38   
|Other income                                                |  |                                      | 19    |   |      |   | 18   
|                                                            |  |                                      |       |   |      |   |      
|Total noninterest income                                    |  |                                      | 786   |   |      |   | 588  
|                                                            |  |                                      |       |   |      |   |      
|NONINTEREST EXPENSE                                         |  |                                      |       |   |      |   |      
|Compensation and benefits                                   |  |                                      | 1,511 |   |      |   | 1,424
|Occupancy and equipment                                     |  |                                      | 269   |   |      |   | 254  
|Data processing                                             |  |                                      | 199   |   |      |   | 202  
|Professional fees                                           |  |                                      | 85    |   |      |   | 95   
|Advertising                                                 |  |                                      | 65    |   |      |   | 53   
|Other operating expenses                                    |  |                                      | 462   |   |      |   | 411  
|                                                            |  |                                      |       |   |      |   |      
|Total noninterest expense                                   |  |                                      | 2,591 |   |      |   | 2,439
|                                                            |  |                                      |       |   |      |   |      
|Income before income taxes                                  |  |                                      | 1,264 |   |      |   | 1,237
|Income tax expense                                          |  |                                      | 408   |   |      |   | 404  
|                                                            |  |                                      |       |   |      |   |      
|Net Income                                                  |  |                                      | 856   |   |      |   | 833  
|OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX               |  |                                      |       |   |      |   |      
|Unrealized gain (loss) on securities:                       |  |                                      |       |   |      |   |      
|Unrealized holding gains (losses) arising during the period |  |                                      | (639  | ) |      |   | 204  
|Less: reclassification adjustment                           |  |                                      |      |   |      |   |     
|                                                            |  |                                      |       |   |      |   |      
|Other comprehensive income (loss)                           |  |                                      | (639  | ) |      |   | 204  
|                                                            |  |                                      |       |   |      |   |      
|Comprehensive Income                                        |  | $                                    | 217   |   |      | $ | 1,037
|                                                            |  |                                      |       |   |      |   |      
|Net income per common share, basic                          |  | $                                    | 0.33  |   |      | $ | 0.30 
|                                                            |  |                                      |       |   |      |   |      
|Net income per common share, diluted                        |  | $                                    | 0.33  |   |      | $ | 0.30 
|                                                            |  |                                      |       |   |      |   |      



See accompanying notes to consolidated
financial statements.



4



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##### Table of Contents

PART I - FINANCIAL INFORMATION

FIRST CAPITAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



|                                                                                  |  |                             |        |   |      |   |        |  
|--------------------------------------------------------------------------------- |  | --------------------------- | ------ | - | ---- | - | ------ | -
|                                                                                  |  | Three Months EndedMarch 31, |       
|                                                                                  |  | 2005                        |        |   | 2004 |  
|                                                                                  |  | (In thousands)              |       
|CASH FLOWS FROM OPERATING ACTIVITIES                                              |  |                             |        |  
|Net income                                                                        |  | $                           | 856    |   |      | $ | 833    |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                             |        |   |      |   |        |  
|Amortization of premiums and accretion of discounts                               |  |                             | 44     |   |      |   | 63     |  
|Depreciation and amortization expense                                             |  |                             | 206    |   |      |   | 191    |  
|Deferred income taxes                                                             |  |                             | 187    |   |      |   | 35     |  
|ESOP and stock compensation expense                                               |  |                             | 41     |   |      |   | 41     |  
|Increase in cash value of life insurance                                          |  |                             | (10    | ) |      |   | (11    | )
|Provision for loan losses                                                         |  |                             | 150    |   |      |   | 125    |  
|Proceeds from sales of mortgage loans                                             |  |                             | 6,546  |   |      |   |       |  
|Mortgage loans originated for sale                                                |  |                             | (6,790 | ) |      |   |       |  
|Net gain on sale of mortgage loans                                                |  |                             | (87    | ) |      |   |       |  
|Stock dividends on Federal Home Loan Bank stock                                   |  |                             | (39    | ) |      |   | (39    | )
|Decrease in accrued interest receivable                                           |  |                             | 36     |   |      |   | 159    |  
|Decrease in accrued interest payable                                              |  |                             | (48    | ) |      |   |       |  
|Net change in other assets/liabilities                                            |  |                             | 62     |   |      |   | 646    |  
|                                                                                  |  |                             |        |   |      |   |        |  
|Net Cash Provided By Operating Activities                                         |  |                             | 1,154  |   |      |   | 2,043  |  
|                                                                                  |  |                             |        |   |      |   |        |  
|CASH FLOWS FROM INVESTING ACTIVITIES                                              |  |                             |        |   |      |   |        |  
|Purchase of securities available for sale                                         |  |                             | (6,964 | ) |      |   | (3,603 | )
|Proceeds from maturities of securities available for sale                         |  |                             | 1,615  |   |      |   | 5,070  |  
|Proceeds from maturities of securities held to maturity                           |  |                             | 12     |   |      |   | 154    |  
|Principal collected on mortgage-backed securities                                 |  |                             | 1,028  |   |      |   | 1,045  |  
|Net decrease (increase) in loans receivable                                       |  |                             | 3,227  |   |      |   | (7,874 | )
|Purchase of Federal Home Loan Bank stock                                          |  |                             |       |   |      |   | (118   | )
|Proceeds from sale of foreclosed real estate                                      |  |                             | 84     |   |      |   | 32     |  
|Purchase of premises and equipment                                                |  |                             | (43    | ) |      |   | (104   | )
|                                                                                  |  |                             |        |   |      |   |        |  
|Net Cash Used In Investing Activities                                             |  |                             | (1,041 | ) |      |   | (5,398 | )
|                                                                                  |  |                             |        |   |      |   |        |  
|CASH FLOWS FROM FINANCING ACTIVITIES                                              |  |                             |        |   |      |   |        |  
|Net increase in deposits                                                          |  |                             | 4,857  |   |      |   | 3,292  |  
|Net increase (decrease) in advances from Federal Home Loan Bank                   |  |                             | (1,700 | ) |      |   | 1,320  |  
|Net increase (decrease) in retail repurchase agreements                           |  |                             | 7,948  |   |      |   | (307   | )
|Exercise of stock options                                                         |  |                             | 17     |   |      |   | 1      |  
|Purchase of treasury stock                                                        |  |                             | (1     | ) |      |   | (148   | )
|Dividends paid                                                                    |  |                             | (385   | ) |      |   | (417   | )
|                                                                                  |  |                             |        |   |      |   |        |  
|Net Cash Provided By Financing Activities                                         |  |                             | 10,736 |   |      |   | 3,741  |  
|                                                                                  |  |                             |        |   |      |   |        |  
|Net Increase in Cash and Cash Equivalents                                         |  |                             | 10,849 |   |      |   | 386    |  
|Cash and cash equivalents at beginning of period                                  |  |                             | 17,425 |   |      |   | 13,561 |  
|                                                                                  |  |                             |        |   |      |   |        |  
|Cash and Cash Equivalents at End of Period                                        |  | $                           | 28,274 |   |      | $ | 13,947 |  
|                                                                                  |  |                             |        |   |      |   |        |  



See accompanying notes to consolidated
financial statements.



5



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##### Table of Contents

FIRST CAPITAL, INC.

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. During 2004, the Bank established three wholly-owned subsidiaries to manage a portion of its investment securities portfolio. First Harrison Investments, Inc. and First Harrison Holdings, Inc. are
Nevada corporations that jointly own First Harrison, LLC, a Nevada limited liability corporation that holds and manages an investment portfolio.



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, 2005, and the results of operations and cash flows for the three months ended March 31, 2005 and 2004. 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, 2004 included in the Form 10-K.



The unaudited consolidated financial statements include the accounts of the Company and its subsidiaries. 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, 2005 and 2004:



|                                                                   |  |                             |        |   |      |   |      |  
|------------------------------------------------------------------ |  | --------------------------- | ------ | - | ---- | - | ---- | -
|                                                                   |  | Three Months EndedMarch 31, |       
|                                                                   |  | 2005                        |        |   | 2004 |  
|                                                                   |  | (In thousands)              |       
|Unrealized gains (losses) on securities:                           |  |                             |        |   |      |   |      |  
|Unrealized holding gains (losses) arising during the period        |  | $                           | (1,059 | ) |      | $ | 338  |  
|Income tax (expense) benefit                                       |  |                             | 420    |   |      |   | (134 | )
|                                                                   |  |                             |        |   |      |   |      |  
|Net of tax amount                                                  |  |                             | (639   | ) |      |   | 204  |  
|                                                                   |  |                             |        |   |      |   |      |  
|Less: reclassification adjustment for gains included in net income |  |                             |       |   |      |   |     |  
|Income tax benefit                                                 |  |                             |       |   |      |   |     |  
|                                                                   |  |                             |        |   |      |   |      |  
|Other comprehensive income (loss)                                  |  | $                           | (639   | ) |      | $ | 204  |  
|                                                                   |  |                             |        |   |      |   |      |  



6



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##### Table of Contents

FIRST CAPITAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



|3. | Supplemental Disclosure for Earnings Per Share
|-- | ----------------------------------------------



|                                                                   |  |                                                |           |      |   |          
|------------------------------------------------------------------ |  | ---------------------------------------------- | --------- | ---- | - | ---------
|                                                                   |  | Three Months Ended March 31,                  
|                                                                   |  | 2005                                           |           | 2004
|                                                                   |  | (In thousands, except shareand per share data)
|Basic:                                                             |  |                                                |           |      |   |          
|Earnings:                                                          |  |                                                |           |      |   |          
|Net income                                                         |  | $                                              | 856       |      | $ | 833      
|                                                                   |  |                                                |           |      |   |          
|Shares:                                                            |  |                                                |           |      |   |          
|Weighted average common shares outstanding                         |  |                                                | 2,564,467 |      |   | 2,775,847
|                                                                   |  |                                                |           |      |   |          
|Net income per common share, basic                                 |  | $                                              | 0.33      |      | $ | 0.30     
|                                                                   |  |                                                |           |      |   |          
|Diluted:                                                           |  |                                                |           |      |   |          
|Earnings:                                                          |  |                                                |           |      |   |          
|Net income                                                         |  | $                                              | 856       |      | $ | 833      
|                                                                   |  |                                                |           |      |   |          
|Shares:                                                            |  |                                                |           |      |   |          
|Weighted average common shares outstanding                         |  |                                                | 2,564,467 |      |   | 2,775,847
|                                                                   |  |                                               
|Add: Dilutive effect of outstanding options                        |  |                                                | 26,870    |      |   | 33,610   
|Add: Dilutive effect of restricted stock                           |  |                                                | 547       |      |   | 2,763    
|                                                                   |  |                                                |           |      |   |          
|Weighted average common shares outstanding, assuming full dilution |  |                                                | 2,591,884 |      |   | 2,812,220
|                                                                   |  |                                                |           |      |   |          
|Net income per common share, diluted                               |  | $                                              | 0.33      |      | $ | 0.30     
|                                                                   |  |                                                |           |      |   |          



7



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##### Table of Contents

FIRST CAPITAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



|4. | 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 No. 123 to stock-based employee compensation.



|                                                                                                                                            |  |                                      |      |   |      |   |      |  
|------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------ | ---- | - | ---- | - | ---- | -
|                                                                                                                                            |  | Three Months Ended March 31,         |     
|                                                                                                                                            |  | 2005                                 |      |   | 2004 |  
|                                                                                                                                            |  | (In thousands, exceptper share data) |     
|Net income, as reported                                                                                                                     |  | $                                    | 856  |   |      | $ | 833  |  
|Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax
effects |  |                                      | (6   | ) |      |   | (3   | )
|                                                                                                                                            |  |                                      |      |   |      |   |      |  
|Pro forma net income                                                                                                                        |  | $                                    | 850  |   |      | $ | 830  |  
|                                                                                                                                            |  |                                      |      |   |      |   |      |  
|Earnings per share:                                                                                                                         |  |                                      |      |   |      |   |      |  
|Basic - as reported                                                                                                                         |  | $                                    | 0.33 |   |      | $ | 0.30 |  
|                                                                                                                                            |  |                                      |      |   |      |   |      |  
|Basic - pro forma                                                                                                                           |  | $                                    | 0.33 |   |      | $ | 0.30 |  
|                                                                                                                                            |  |                                      |      |   |      |   |      |  
|Diluted - as reported                                                                                                                       |  | $                                    | 0.33 |   |      | $ | 0.30 |  
|                                                                                                                                            |  |                                      |      |   |      |   |      |  
|Diluted - pro forma                                                                                                                         |  | $                                    | 0.33 |   |      | $ | 0.30 |  
|                                                                                                                                            |  |                                      |      |   |      |   |      |  



|5. | Supplemental Disclosures of Cash Flow Information
|-- | -------------------------------------------------



|                                                                 |  |                             |       |      |   |      
|---------------------------------------------------------------- |  | --------------------------- | ----- | ---- | - | -----
|                                                                 |  | Three Months EndedMarch 31,
|                                                                 |  | 2005                        |       | 2004
|                                                                 |  | (In thousands)             
|Cash payments for:                                               |  |                             |       |      |   |      
|Interest                                                         |  | $                           | 2,449 |      | $ | 2,226
|Taxes                                                            |  |                             | 111   |      |   | 67   
|                                                                 |  |                            
|Noncash investing activities:                                    |  |                             |       |      |   |      
|Transfers from loans to real estate acquired through foreclosure |  |                             | 549   |      |   | 197  



8



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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.



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 from $425.3 million at December 31, 2004 to $436.6 million at March 31, 2005, an increase of 2.7%. When compared to March 31, 2004,
the growth in assets was $22.0 million.



Net loans receivable
(excluding loans held for sale) decreased $3.9 million from $317.1 million at December 31, 2004 to $313.2 million at March 31, 2005. Residential mortgage loans decreased by $5.1 million during the period as the Bank originated and sold or acted as a
mortgage broker on residential mortgages totaling $8.8 million, of which $5.2 million of the loan proceeds were used to pay off existing loans in the Banks portfolio. These loans were sold to help better manage interest rate risk. Commercial
mortgages and commercial loans increased by $717,000 and $543,000, respectively.



Securities available for sale increased $3.3 million from $65.2 million at December 31, 2004 to $68.5 million at March 31, 2005. Purchases of these securities totaled $7.0 million while maturities and principal
repayments were $1.6 million and $1.0 million, respectively. Due to increasing market interest rates, the portfolio experienced an unrealized loss in market value of $1.1 million during the quarter ended March 31, 2005.



Investment securities held-to-maturity decreased $27,000 due to principal
repayments of $15,000 and maturities of $12,000.



Cash and cash
equivalents increased from $17.4 million at December 31, 2004 to $28.3 million at March 31, 2005. Interest bearing deposits with banks accounted for $9.8 million of that increase. This was funded primarily by an increase in public funds.



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.



Total deposits increased 1.5% from $316.5 million at December 31, 2004 to $321.3 million at March 31, 2005. Time deposits increased $2.8 million during
the period. Checking and savings accounts increased $2.0 million, of which $1.7 million was in the form of noninterest bearing checking accounts.



Federal Home Loan Bank borrowings decreased from $65.1 million at December 31, 2004 to $63.4 million at March 31, 2005. New advances of $5.0 million were
offset by principal repayments of $6.7 million.



Retail
repurchase agreements increased from $635,000 at December 31, 2004 to $8.6 million at March 31, 2005. This increase was primarily due to the Banks successful efforts to acquire local public funds.



Total stockholders equity decreased from $40.7 million at December 31,
2004 to $40.6 million at March 31, 2005. Retained net income of $472,000 was offset by a net unrealized loss of $639,000 on securities available for sale for the quarter ended March 31, 2005.



Results of Operations



Net Income.Net income was $856,000 ($0.33 per share diluted) for the three months ended March 31, 2005 compared to
$833,000 ($0.30 per share diluted) for the same period in 2004. Net income increased primarily due to an increase in noninterest income partially offset by an increase in noninterest expense. The increase in earnings per share is due to the Company
repurchasing approximately 221,000 shares of its stock in December 2004, thereby lowering the number of weighted average shares used in the earnings per share calculation. As of March 31, 2005, the Company has repurchased 249,764 shares of the
345,000 originally authorized in the repurchase plan.



Net
interest income for the three-month periods ended March 31, 2005 and 2004. Net interest income was virtually unchanged when comparing the two periods.



Total interest income increased $181,000 during the quarter ended March 31, 2005 compared to the same period in 2004. The average balance of
interest-earning assets increased from $383.3 million in 2004 to $396.0 million in 2005. The average tax-equivalent yield on these same assets remained unchanged at 5.76% when comparing the two periods. The average tax-equivalent yield on loans
increased .03% while the security portfolio yield experienced a .10% decline as higher yielding securities prepaid and the Company reinvested the funds in shorter-term securities.



Total interest expense increased $175,000 to $2.4 million for the quarter ended March 31, 2005 as compared to the same
period in 2004. The average balance of interest-bearing liabilities increased from $334.5 million in 2004 to $348.5 million in 2005 while the average rate on these same liabilities increased from 2.66% in 2004 to 2.76% in 2005. As a result, the
Companys taxable-equivalent interest rate spread decreased from 3.10% for the first quarter of 2004 to 3.00% for the same period in 2005.



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.



Provision for loan losses. The provision for loan losses was $150,000 for the three-month period ended March 31, 2005 as compared to $125,000 for
the same period in 2004. During 2005, gross loans receivable decreased $4.1 million while net charge offs totaled $400,000. As stated earlier in this report, the primary cause for the decrease in loans was the $5.1 million decrease in residential
mortgages, partially offset by increases in commercial mortgages and commercial loans. The consistent application of managements allowance methodology resulted in a slight increase in the provision for loan losses due to changed economic
conditions, particularly the loss of jobs caused by the closing of two large local manufacturing facilities, and the increased balance of commercial business loans.



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 affect the loss rates.



The
allowance for loan losses was $2.2 million at March 31, 2005 compared to $2.5 million at December 31, 2004. 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, 2005, nonperforming loans amounted to $2.7 million compared to $3.6 million at December 31, 2004. Included in nonperforming loans are loans over 90 days past due secured by one-to-four family residential real estate in the amount of
$512,000, commercial mortgages of $447,000, consumer loans amounting to $31,000 and commercial loans of $22,000. These loans are accruing interest as the estimated value of the collateral and collection efforts are deemed sufficient to ensure full
recovery. At March 31, 2005, nonaccrual loans amounted to $1.5 million compared to $2.1 million at December 31, 2004.



Noninterest income. Noninterest income increased 33.7% to $786,000 for the three months ended March 31, 2005 compared to $588,000 for the three
months ended March 31, 2004. Gains on the sale of mortgage loans increased $87,000 when comparing the two periods as the Bank did not sell loans during the first quarter of 2004. Service charges on deposits and commission income increased $76,000
and $30,000, respectively, when comparing the two periods.



Noninterest expense. Noninterest expense increased 6.2% to $2.6 million for the three month period ended March 31, 2005 compared to $2.4 million for the same period in 2004. Compensation and benefits increased $87,000 when comparing
the two periods, primarily due to increases in wages, the cost of health insurance and acceleration of the release of ESOP plan shares.



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.



Other operating expenses increased $51,000 when comparing the first quarter 2005 to the same period in 2004. Employee training and postage fees were the
primary contributors to this increase.



Income tax
expense. Income tax expense for the three-month period ended March 31, 2005 was $408,000, compared to $404,000 for the same period in 2004. The effective tax rate was 32.3% for 2005 compared to 32.7% for 2004.



Liquidity and Capital Resources



The Banks primary sources of funds are customer deposits, proceeds
from loan repayments, maturing securities, FHLB advances and retail repurchase agreements. 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, 2005, the Bank had cash and cash equivalents of $28.3 million and securities available-for-sale with a fair value of $68.5 million. If the Bank requires funds beyond its ability to
generate them internally, it has additional borrowing capacity with the FHLB of Indianapolis and additional 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, 2005, 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 7.7%, 7.7% and
13.3%, respectively. The regulatory requirements at that date were 1.5%, 3.0% and 8.0%, respectively. At March 31, 2005, the Bank was considered well-capitalized under applicable regulatory guidelines.



Off-Balance Sheet Arrangements



In the normal course of operations, the Company engages in a variety
of financial transactions that, in accordance with generally accepted accounting principles, are not recorded on the Companys financial statements. These transactions involve, to varying degrees, elements of credit, interest rate and liquidity
risk. Such transactions are primarily used to manage customers requests for funding and take the form of loan commitments and letters of credit. A further presentation of the Companys off-balance sheet arrangements is presented in the
Companys 2004 Annual Report to Stockholders, filed as an exhibit to the Form 10-K for the year ended December 31, 2004.



For the three months ended March 31, 2005, the Company did not engage in any off-balance sheet transactions reasonably likely to have a material effect on
the Companys financial condition, results of operations or cash flows.



12



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##### Table of Contents

PART I  ITEM 3



QUANTITATIVE AND QUALITATIVE DISCLOSURES

ABOUT MARKET RISK

FIRST CAPITAL, INC.



For a discussion of the Companys asset and liability management policies, as well as the potential impact of interest rate changes upon the market value of the Companys portfolio equity, see Market
Risk Analysis in the Companys 2004 Annual Report to Stockholders, filed as an exhibit to the Companys Form 10-K for the year ended December 31, 2004. Management reviews periodically the impact of interest rate changes upon net
interest income and the market value of the Companys portfolio equity. Based on such reviews, management believes that there have been no material changes in the market risk of the Companys asset and liability position since December 31,
2004.



PART I - ITEM 4



CONTROLS AND
PROCEDURES

FIRST CAPITAL, INC.



The Companys management, including the Companys principal executive officer and principal financial officer, have evaluated the effectiveness
of the Companys disclosure controls and procedures, as such term is defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended, (the Exchange Act). Based upon their evaluation, the
principal executive officer and principal financial officer concluded that, as of the end of the period covered by this report, the Companys disclosure controls and procedures were effective for the purpose of ensuring that the information
required to be disclosed in the reports that the Company files or submits under the Exchange Act with the Securities and Exchange Commission (the SEC) (1) is recorded, processed, summarized and reported within the time periods specified
in the SECs rules and forms, and (2) is accumulated and communicated to the Companys management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.



13



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##### Table of Contents

PART II

OTHER INFORMATION

FIRST CAPITAL, INC.



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



The Company is not a party to any pending 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. | Unregistered Sales of Equity Securities and Use of Proceeds
|------- | -----------------------------------------------------------



Issuer Purchases of Equity Securities



|                                     |  |                                   |  |                                 |       |                                                                               |    |                                                                              |       
|------------------------------------ |  | --------------------------------- |  | ------------------------------- | ----- | ----------------------------------------------------------------------------- | -- | ---------------------------------------------------------------------------- | ------
|Period                               |  | (a) TotalNumberof SharesPurchased |  | (b) AveragePrice Paid Per Share |       | (c) TotalNumber of SharesPurchasedas Part ofPubliclyAnnouncedPlans orPrograms |    | (d) MaximumNumber of Sharesthat May Yet BePurchasedUnder thePlans orPrograms
|January 1 through January 31, 2005   |  | 10                                |  | $                               | 20.25 |                                                                               | 10 |                                                                              | 95,258
|                                     |  |                                   |  |                                
|February 1 through February 28, 2005 |  | 22                                |  | $                               | 20.40 |                                                                               | 22 |                                                                              | 95,236
|                                     |  |                                   |  |                                
|March 1 through March 31, 2005       |  |                                  |  |                                 |      |                                                                               |   |                                                                              | 95,236
|                                     |  |                                   |  |                                
|Total                                |  | 32                                |  | $                               | 20.35 |                                                                               | 32 |                                                                              | 95,236



On January 4, 2001,
the Company announced a stock repurchase program to purchase up to 101,000 shares of its outstanding common stock. On September 30, 2002, the board of directors authorized an increase in the stock repurchase program in connection with the merger of
Hometown Bancshares whereby the Company would purchase up to 345,000 shares of its outstanding common stock. The stock repurchase program expires upon purchase of the maximum number of shares authorized under the program.



The Company has purchased ten shares of its common stock from the First
Harrison Bank Employee Stock Ownership Plan representing the aggregate amount of fractional shares of terminated participants.



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



Not applicable.



14



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##### Table of Contents

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



None.



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



None.



|Item 6. | Exhibits
|------- | --------



|     |  |                                                                                                                                                     
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------
|3.1  |  | Articles of Incorporation of First Capital, Inc. (1)                                                                                                
|     | 
|3.2  |  | Second Amended and Restated Bylaws of First Capital, Inc. (6)                                                                                       
|     | 
|10.1 |  | Employment Agreement with James G. Pendleton (3)                                                                                                    
|     | 
|10.2 |  | Employment Agreement with Samuel E. Uhl (2)                                                                                                         
|     | 
|10.3 |  | Employment Agreement with M. Chris Frederick (2)                                                                                                    
|     | 
|10.4 |  | Employment Agreement with Joel E. Voyles (2)                                                                                                        
|     | 
|10.5 |  | Employee Severance Compensation Plan (3)                                                                                                            
|     | 
|10.6 |  | First Federal Bank, A Federal Savings Bank 1994 Stock Option Plan (as assumed by First Capital, Inc. effective December 31, 1998) (4)               
|     | 
|10.7 |  | First Capital, Inc. 1999 Stock-Based Incentive Plan (5)                                                                                             
|     | 
|10.8 |  | 1998 Officers and Key Employees Stock Option Plan for HCB Bancorp (5)                                                                             
|     | 
|10.9 |  | Employment Agreement with William W. Harrod (2)                                                                                                     
|     | 
|11.0 |  | Statement Regarding Computation of Per Share Earnings (incorporated by reference to Note 3 of the Unaudited Consolidated Financial contained herein)
|     | 
|31.1 |  | Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer                                                                                   
|     | 
|31.2 |  | Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer                                                                                   
|     | 
|32.1 |  | Section 1350 Certification of Chief Executive Officer                                                                                               
|     | 
|32.2 |  | Section 1350 Certification of Chief Financial Officer                                                                                               



15



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##### Table of Contents

|Item 6. | Exhibits - (continued)
|------- | ----------------------

---

|(1) | Incorporated by reference from the Exhibits filed with the Registration Statement on Form SB-2, and any amendments thereto, Registration No. 333-63515.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Incorporated by reference to the Annual Report on Form 10-KSB for the year ended December 31, 1999.
|--- | ---------------------------------------------------------------------------------------------------

|(3) | Incorporated by reference to the Quarterly Report on Form 10-QSB for the quarter ended December 31, 1998.
|--- | ---------------------------------------------------------------------------------------------------------

|(4) | Incorporated by reference from the Exhibits filed with the Registration Statement on Form S-8, and any amendments thereto, Registration Statement No. 333-76543.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Incorporated by reference from the Exhibits filed with the Registration Statement on Form S-8, and any amendments thereto, Registration Statement No. 333-95987.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------

|(6) | Incorporated by reference to the Annual Report on Form 10-KSB for the year ended December 31, 2001.
|--- | ---------------------------------------------------------------------------------------------------



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.
|                   |  | (Registrant)       
|                   |  |                    
|Dated May 13, 2005 |  | BY:                 |  | /s/ William W. Harrod              
|                   |  |                     |  | William W. Harrod                  
|                   |  |                     |  | President and CEO                  
|                   |  |                    
|Dated May 13, 2005 |  | BY:                 |  | /s/ Michael C. Frederick           
|                   |  |                     |  | Michael C. Frederick               
|                   |  |                     |  | Senior Vice President and Treasurer



17