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FIRST CAPITAL , INC . REPORTS QUARTERLY EARNINGS Corydon , Indiana -- ( BUSINESS WIRE ) -October 22 , 2021. First Capital , Inc. ( the “ Company ” ) ( NASDAQ : FCAP ) , the holding company for First Harrison Bank ( the “ Bank ” ) , today reported net income of $ 2.9 million or $ 0.88 per diluted share for the quarter ended September 30 , 2021 , compared to $ 2.7 million or $ 0.82 per diluted share for the quarter ended September 30 , 2020. The increase was primarily due to an increase in net interest income after provision for loan losses partially offset by an increase in noninterest expense and a decrease in noninterest income . Net interest income after provision for loan losses increased $ 998,000 for the quarter ended September 30 , 2021 as compared to the same period in 2020. Interest income increased $ 505,000 when comparing the periods due to an increase in the average balance of interest - earning assets from $ 871.2 million for the third quarter of 2020 to $ 1.04 billion for the third quarter of 2021 partially offset by a decrease in the average tax - equivalent yield on interest - earning assets from 3.40 % for the third quarter of 2020 to 3.04 % for the third quarter of 2021. The decrease in the tax - equivalent yield was due to balance sheet growth in investment securities and federal funds sold , both lower - yielding asset classifications . Interest expense decreased $ 93,000 when comparing the periods due to a decrease in the average cost of interest - bearing liabilities from 0.24 % for the third quarter of 2020 to 0.15 % for the third quarter of 2021. This was partially offset by an increase in the average balance of interest - bearing liabilities from $ 625.9 million for the third quarter of 2020 to $ 744.7 million for the third 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 3.16 % for the quarter ended September 30 , 2020 to 2.89 % 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 September 30 , 2021 compared to $ 400,000 for the quarter ended September 30 , 2020. The provision for loan losses was higher in the third quarter of 2020 compared to the third 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 third quarter of 2020. The Bank recognized net charge - offs of $ 70,000 for the quarter ended September 30 , 2021 compared to $ 60,000 for the same period in 2020 . Noninterest income decreased $ 346,000 for the quarter ended September 30 , 2021 as compared to the same period in 2020 . The third quarter of 2021 included $ 603,000 in gains on the sale of loans compared to $ 980,000 during the same period in 2020. Included in gains on the sale of loans during the third quarter of 2020 was a $ 214,000 gain on the sale of the Bank's $ 1.5 million credit card portfolio . The third quarter of 2021 also included a $ 67,000 unrealized loss on equity securities compared to a $ 45,000 unrealized gain on equity securities during the same period in 2020. The decreases in noninterest income were partially offset by increases in ATM and debit card fees and service charges on deposit accounts of $ 70,000 and $ 50,000 , respectively , when comparing the two periods . Noninterest expense increased $ 279,000 for the quarter ended September 30 , 2021 as compared to the same period in 2020 . Compensation and benefits expense , data processing expense , and professional fees increased $ 141,000 , $ 112,000 , and $ 111,000 , respectively , when comparing the two periods . This was partially offset by other expenses which decreased $ 93,000 when comparing the two periods . Income tax expense increased $ 183,000 for the third quarter of 2021 as compared to the third quarter of 2020 primarily due to an increase in taxable income for the quarter ended September 30 , 2021. As a result , the effective tax rate for the quarter ended September 30 , 2021 was 16.9 % compared to 13.1 % for the same period in 2020 . For the nine months ended September 30 , 2021 , the Company reported net income of $ 8.6 million or $ 2.57 per diluted share compared to net income of $ 7.3 million or $ 2.17 per diluted share for the same period in 2020 . Net interest income after provision for loan losses increased $ 1.8 million for the nine months ended September 30 , 2021 compared to the same period in 2020. Interest income decreased $ 118,000 when comparing the two periods , due to a decrease in the average tax - equivalent yield on interest - earning assets from 3.68 % for the nine months ended September 30 , 2020 to 3.01 % for the same period in 2021 partially offset by an increase in the average balance of interest - earning assets from $ 822.3 million for the nine months ended September 30 , 2020 to $ 1.01 billion for the same period in 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 the growth in investment securities and federal funds sold previously described . Interest expense decreased $ 388,000 as the average cost of interest - bearing liabilities decreased from 0.28 % for the nine months ended September 30 , 2020 to 0.16 % for the same period in 2021 , while the average balance of interest - bearing liabilities increased from $ 601.7 million for the nine months ended September 30 , 2020 to $ 720.0 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 3.40 % for the nine months ended September 30 , 2020 to 2.85 % for the nine months ended September 30 , 2021 .