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FIRST CAPITAL , INC . REPORTS QUARTERLY EARNINGS Corydon , Indiana -- ( BUSINESS WIRE ) —July 26 , 2021. First Capital , Inc. ( the “ Company ” ) ( NASDAQ : FCAP ) , the holding company for First Harrison Bank ( the “ Bank ” ) , today reported net income of $ 2.7 million or $ 0.82 per diluted share for the quarter ended June 30 , 2021 , compared to $ 2.4 million or $ 0.73 per diluted share for the quarter ended June 30 , 2020 . The increase was primarily due to an increase in net interest income after provision for loan losses and noninterest income partially offset by an increase in noninterest expense . Net interest income after provision for loan losses increased $ 699,000 for the quarter ended June 30 , 2021 as compared to the same period in 2020. Interest income decreased $ 241,000 when comparing the periods due to a decrease in the average tax - equivalent yield on interest - earning assets from 3.61 % for the second quarter of 2020 to 2.87 % for the second quarter of 2021 partially offset by an increase in the average balance of interest - earning assets from $ 834.1 million for the second quarter of 2020 to $ 1.02 billion for the second quarter of 2021. The decrease in the tax - equivalent yield was due to the Federal Open Market Committee lowering interest rates during March 2020 due to the COVID - 19 pandemic and an increase in the average balance of federal funds sold . Federal funds sold increased primarily due to increased balances in deposit accounts from stimulus programs and normal deposit growth . Interest expense decreased $ 115,000 when comparing the periods due to a decrease in the average cost of interest - bearing liabilities from 0.27 % for the second quarter of 2020 to 0.16 % for the second quarter of 2021. This was partially offset by an increase in the average balance of interest - bearing liabilities from $ 607.9 million for the second quarter of 2020 to $ 730.5 million for the second quarter of 2021. As a result of the changes in interest - earning assets and interest - bearing liabilities , the tax - equivalent interest rate spread decreased from 3.34 % for the quarter ended June 30 , 2020 to 2.71 % for the same period in 2021 . Based on management's analysis of the allowance for loan losses , no provision for loan losses was recorded for the quarter ended June 30 , 2021 compared to $ 825,000 for the quarter ended June 30 , 2020. The provision for loan losses was higher in the second quarter of 2020 compared to the second quarter of 2021 due to changes to the qualitative factors within the Bank's allowance for loan losses calculation related to uncertainties that surrounded the COVID - 19 pandemic in the second quarter of 2020. The Bank recognized net recoveries of $ 9,000 for the quarter ended June 30 , 2021 compared to $ 68,000 in net charge - offs for the same period in 2020 . Noninterest income increased $ 232,000 for the quarter ended June 30 , 2021 as compared to the same period in 2020. This was primarily due to ATM and debit card fees and service charges on deposit accounts increasing by $ 174,000 and $ 102,000 , respectively , when comparing the two periods . Noninterest expense increased $ 547,000 for the quarter ended June 30 , 2021 as compared to the same period in 2020. This was primarily due to increases in compensation and benefits expense , professional fees and data processing expense by $ 240,000 , $ 171,000 and $ 112,000 , respectively , when comparing the two periods . Income tax expense increased $ 92,000 for the second quarter of 2021 as compared to the second quarter of 2020 primarily due to an increase in taxable income for the quarter ended June 30 , 2021. As a result , the effective tax rate for the quarter ended June 30 , 2021 was 15.4 % compared to 14.2 % for the same period in 2020 . For the six months ended June 30 , 2021 , the Company reported net income of $ 5.7 million or $ 1.69 per diluted share compared to net income of $ 4.5 million or $ 1.35 per diluted share for the same period in 2020 . Net interest income after provision for loan losses increased $ 773,000 for the six months ended June 30 , 2021 compared to the same period in 2020. Interest income decreased $ 623,000 when comparing the two periods , due to a decrease in the average tax - equivalent yield on interest - earning assets from 3.82 % for the six months ended June 30 , 2020 to 3.00 % for the same period in 2021 partially offset by an increase in the average balance of interest - earning assets from $ 797.9 million for the six months ended June 30 , 2020 to $ 988.0 million for the same period in 2021. Interest expense decreased $ 295,000 as the average cost of interest - bearing liabilities decreased from 0.30 % for the six months ended June 30 , 2020 to 0.16 % for the same period in 2021 , while the average balance of interest - bearing liabilities increased from $ 589.6 million for the six months ended June 30 , 2020 to $ 707.6 million for the same period in 2021. As a result of the changes in interest - earning assets and interest - bearing liabilities , the tax - equivalent interest rate spread decreased from 3.52 % for the six months ended June 30 , 2020 to 2.84 % for the six months ended June 30 , 2021 . Based on management's analysis of the allowance for loan losses , the provision for loan losses decreased from $ 1.2 million for the six months ended June 30 , 2020 to $ 75,000 for the six months ended June 30 , 2021. The provision for loan loss was higher in 2020 compared to 2021 due to changes to the qualitative factors within the Bank's allowance for loan losses calculation related to uncertainties surrounding the COVID - 19 pandemic in 2020. The Bank recognized net charge - offs of $ 63,000 for the six months ended June 30 , 2021 compared to $ 173,000 for the same period in 2020 .