First Capital, Inc. (NASDAQ: FCAP), the holding company for First Harrison Bank, reported net income of $5.1 million, or $1.53 per diluted share, for the three months ended September 30, 2026. This figure represents an increase from the $4.5 million, or $1.34 per diluted share, reported for the same period in 2025. For the nine months ended September 30, 2026, the company recorded net income of $14.2 million, or $4.25 per diluted share, compared to $11.5 million, or $3.43 per diluted share, for the prior year.
Key drivers of the financial performance included a rise in interest income and a decrease in interest expense. Interest income increased by $1.4 million for the quarter and $4.6 million for the nine-month period. This was attributed to a higher average tax-equivalent yield on interest-earning assets, which rose from 4.94% in Q3 2025 to 5.23% in Q3 2026, alongside an increase in the average balance of these assets from $1.20 billion to $1.25 billion. Conversely, interest expense decreased by $119,000 for the quarter and $471,000 for the nine months, driven by a lower average cost of interest-bearing liabilities, which fell from 1.66% to 1.57%.
As a result of these changes, the tax-equivalent net interest margin expanded from 3.71% in Q3 2025 to 4.08% in Q3 2026. Noninterest income decreased by $14,000 for the quarter, primarily due to a $9,000 loss on equity securities compared to a $150,000 gain in the prior year. However, this was partially offset by increases in other income and service charges on deposit accounts. Noninterest expenses rose by $545,000 for the quarter, largely due to higher compensation and benefits costs, partially offset by a decrease in occupancy and equipment expenses.
On the balance sheet, total assets stood at $1.27 billion as of September 30, 2026. Net loans receivable increased by $20.9 million from the prior year-end, while deposits grew by $6.4 million to $1.13 billion. The company noted an increase in nonperforming assets, which rose from $4.4 million at December 31, 2025, to $5.5 million at September 30, 2026, primarily due to the nonaccrual classification of a non-owner occupied commercial real estate loan.
