Iowa First Bancshares Corp. Reports Second Quarter Financial Results and Dividend Payment

MUSCATINE, Iowa--()--Iowa First Bancshares Corp. (OTC Pink: IOFB) today reported net income of $1,050,000 for the quarter ended June 30, 2015, compared to net income of $1,056,000 for the quarter ended June 30, 2014. The slight decrease in second quarter net income year-over-year of $6,000 or 0.6% was primarily attributable to higher noninterest expense of $182,000 or 6.9%. This increase in noninterest expense was largely offset by an increase of $122,000 or 3.6% in net interest income; a $34,000 or 4.0% increase in noninterest income; and a $20,000 or 3.6% reduction in income tax expense. Provision for loan loss expense was $30,000 in the second quarter of 2015 and 2014.

Basic and diluted earnings per share were $.93 for the three months ended June 30, 2015, $.01 or 1.1% less than the same period in 2014.

The Company recorded net income of $2,035,000 for the six months ended June 30, 2015, compared with net income of $2,072,000 for the two quarters ended June 30, 2014, a modest decrease of $37,000 or 1.8%. The primary factors contributing to this small earnings decline included a $264,000 (5.0%) increase in noninterest expense; a $30,000 (1.8%) decrease in noninterest income; and a $30,000 (100%) increase in provision for loan loss. Largely offsetting the earnings decline noted above was an increase of $253,000 (3.7%) in net interest income and a decrease of $34,000 (3.1%) in income tax expense.

Basic and diluted earnings per share were $1.80 for the six months ended June 30, 2015, down $.04 or 2.2% from the same period in 2014. The Company’s annualized return on average assets for the first two quarters of 2015 and 2014 was .92% and .95%, respectively. The Company’s annualized return on average equity for the six months ended June 30, 2015 and June 30, 2014 was 9.5% and 10.5%, respectively.

Total assets at June 30, 2015 totaled $445,122,000, an increase of $3,233,000 (0.7%) from June 30, 2014. Gross loans outstanding increased $15,125,000 (4.3%), while total deposits decreased $908,000 (0.2%) year-over-year. The allowance for loan losses totaled $4,619,000 at June 30, 2015, or 1.27% of gross loans outstanding.

The board of directors declared a $.285 per common share cash dividend to be paid on July 28, 2015, to shareholders of record July 1, 2015. On an annualized basis this dividend represents a return of 3.3% on the December 31, 2014 stock price.

In the May 2015 edition of American Banker Magazine’s ranking of the top 200 community banks and thrifts, Iowa First Bancshares Corp. was recognized for its outstanding three-year average return on equity. Employing this important financial benchmark, Iowa First was ranked number 97 among all U.S. community banking and thrift organizations with less than two billion dollars in assets. Moreover, Iowa First Bancshares Corp. has been not only in the top 200 community banks and thrifts each of the previous seven years, but in the top 100 for six of the last seven years.

As reported in the 2014 Annual Report to Shareholders, during the year ended December 31, 2013, representatives of a previous loan customer of the Company made certain allegations and threatened litigation against one of the subsidiary banks and certain officers thereof. The Company believes the alleged damages could have a material impact on future earnings if the customer is successful in the litigation. The actual lawsuit, which had not been filed prior to the issuance of the 2014 Annual Report to Shareholders, has now been filed. The Company intends to vigorously defend itself and its officers in this matter. Based upon current information, the Company has concluded that a loss is neither probable nor estimable at this time. Consequently, no loss contingency has been established as of June 30, 2015.

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 Six

For the Six

Months Ended

Months Ended

Months Ended

Months Ended

June 30, 2015

June 30, 2014

June 30, 2015

June 30, 2014

 
Net Interest Income $ 3,558 $ 3,436 $ 7,045 $ 6,792
Provision for Loan Losses 30 30 60 30
Noninterest Income 875 841 1,668 1,698
Noninterest Expense 2,809 2,627 5,548 5,284
Income Tax Expense 544 564 1,070 1,104
Net Income after Income Taxes 1,050 1,056 2,035 2,072
 
Net Income Per Common Share,
Basic and Diluted $ .93 $ .94 $ 1.80 $ 1.84
 

Average year-to-date common shares outstanding, basic and diluted

1,128,557 1,126,810 1,127,938 1,126,099
 
           

As of

As of

As of

June 30, 2015

December 31, 2014

June 30, 2014

 
Gross Loans $ 363,676 $ 355,093 $ 348,551
Total Assets 445,122 439,771 441,889
Total Deposits 377,971 375,582 378,879
Tier 1 Capital 43,149 41,696 40,156
 
Return on Average Equity 9.5 % 10.5 % 10.5 %
Return on Average Assets .92 .97 .95
Net Interest Margin (tax equivalent) 3.49 3.45 3.41
Allowance as a Percent of Total Loans 1.27 1.30 1.35
 

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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