Iowa First Bancshares Corp. Reports 2016 Financial Results and Dividend Payment

MUSCATINE, Iowa--()--Iowa First Bancshares Corp. (OTC Pink: IOFB) today reported financial results for the year ended December 31, 2016. The Company reached several important all-time highs at year-end 2016, including: loans totaled $401,041,000, an increase of $27,753,000 or 7.4% over the prior year-end; deposits totaled $414,679,000, an increase of $26,846,000 or 6.9%; and, assets totaled $489,976,000, an increase of $33,192,000 or 7.3%.

The Company’s net income would have been the second highest in history except for the negotiated settlement of a lawsuit which had been filed in 2015 against a wholly-owned subsidiary of the Company, and certain of its officers. After vigorously defending itself and its officers for an extended period the decision was made to reach a financial settlement with the plaintiffs. Iowa First determined that this settlement was in the best long-term interest of the Company’s shareholders.

Net income totaled $1,430,000 for the year ended December 31, 2016, a reduction of $2,695,000 (65.3%) from the prior year. Net interest income of $14,951,000 in 2016 exceeded the 2015 total by $622,000 (4.3%). This increase in net interest income was augmented by a $554,000 (16.1%) increase in noninterest income, including some income attributable to insurance on the aforementioned settlement. Noninterest expense increased $5,132,000 (45.5%), including the settlement amount and related legal costs. More information concerning the settlement will be included in the Company’s 2016 Annual Report to Shareholders which will be available by mid-March 2017. The provision for loan losses was raised $440,000 (200%). This large percentage increase in the provision is the result of three primary factors: 1) comparison of this year’s number to a relatively small provision for loan losses recognized in the prior year; 2) an increase in loans outstanding of $27,753,000 (7.4%) from December 31, 2015 to December 31, 2016; and 3) a year-over-year increase of 35.2% in nonaccrual loans. While higher than in the recent past, the nonaccrual loans represent a very manageable .58% of gross loans outstanding. Income tax expense declined $1,701,000 (79.5%) when comparing the full year 2016 to 2015.

The board of directors declared a $.285 per common share quarterly cash dividend which was paid on January 31, 2017, to shareholders of record January 3, 2017. At this quarterly rate, the indicated annual cash dividend is equal to $1.14 per common share.

Iowa First Bancshares Corp. is a bank holding company headquartered in Muscatine, Iowa. The Company provides a wide array of banking and other financial services to individuals, businesses and governmental organizations through its two wholly-owned national banks located in Muscatine and Fairfield, Iowa.

This press release may contain forward-looking statements. Investors are cautioned that all forward-looking statements involve risks and uncertainties, and many factors could cause actual results to differ materially from the results anticipated or projected. Our ability to predict results, or the actual effect of future plans or strategies, is inherently uncertain. Factors that could cause actual results to differ materially from those set forth in the forward-looking statements or that could have a material effect on the operations and future prospects of the Company include, but are not limited to: (1) credit quality deterioration or pronounced and sustained reduction in real estate or other collateral values could cause an increase in the allowance for loan losses and a reduction in net income; (2) our management’s ability to reduce and effectively manage interest rate risk and the impact of interest rates in general on the level and volatility of our net interest income; (3) changes in the economic environment, competition, or other factors that may affect our ability to acquire loans or influence the anticipated growth rate of loans and deposits and the quality of the loan portfolio and loan and deposit pricing; (4) fluctuations in the value of our investment securities; (5) governmental monetary and fiscal policies; (6) legislative, regulatory and tax law changes as well as changes in the scope and cost of Federal Deposit Insurance Corporation insurance and other fees; (7) the ability to attract and retain key executives and employees; (8) the sufficiency of the allowance for loan losses to absorb the amount of actual losses inherent in our loan portfolio; (9) our ability to adapt successfully to technological changes; (10) credit risks and risks from concentrations (by geographic area and by industry) within our loan portfolio; (11) the effects of competition from numerous sources; (12) the failure of assumptions underlying the establishment of allowances for loan losses and estimation of values of collateral and various other financial assets and liabilities; (13) volatility, duration and matching risks of rate-sensitive assets and liabilities as well as liquidity risk; (14) operational risks, including data processing system failure or fraud; (15) the costs, effects and outcomes of existing or future litigation; (16) changes in general economic or industry conditions, nationally or in the communities in which we conduct business; (17) changes in accounting policies and practices; and (18) other risks.

 
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Dollar amounts in thousands, except share and per share data)
(unaudited)
               

For the Three

For the Three

For the Twelve

For the Twelve

Months Ended

Months Ended

Months Ended

Months Ended

December 31, 2016

December 31, 2015

December 31, 2016

December 31, 2015

 
Net Interest Income $ 3,822 $ 3,632 $ 14,951 $ 14,329
Provision for Loan Losses 285 130 660 220
Noninterest Income 1,333 892 3,991 3,437
Noninterest Expense 7,777 2,904 16,414 11,282
Income Tax Expense (Benefit) (1,155 ) 490 438 2,139
Net Income (Loss) after Income Taxes (1,752 ) 1,000 1,430 4,125
 
Net Income (Loss) Per Common Share,
Basic and Diluted $ (1.55 ) $ .89 $ 1.27 $ 3.66
 
Average year-to-date common shares
outstanding, basic and diluted 1,130,436 1,128,951 1,129,930 1,128,445
 
       

As of

As of

December 31, 2016

December 31, 2015

 
Gross Loans $ 401,041 $ 373,288
Total Assets 489,976 456,784
Total Deposits 414,679 387,833
Tier 1 Capital 44,796 44,595
 
Return on Average Equity 3.1 % 9.4 %
Return on Average Assets .30 .92
Net Interest Margin (tax equivalent) 3.43 3.49
Allowance as a Percent of Total Loans 1.16 1.22
 

Contacts

Iowa First Bancshares Corp.
D. Scott Ingstad, 563-262-4202
Chairman, President and CEO
or
Kim K. Bartling, 563-262-4216
Executive Vice President, Chief Operating Officer & Treasurer

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