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Iowa First Bancshares Corp. Reports Second Quarter Financial Results, Dividend Payment and Inclusion in Top Community Bank List

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^{Published in Business and Finance on Wednesday, July 28th 2010 at 9:05 GMT by Market Wire}  

MUSCATINE, Iowa--([ BUSINESS WIRE ])--Iowa First Bancshares Corp. (OTCBB: IOFB) today reported net income of $760,000 for the quarter ended June 30, 2010, compared to net income of $650,000 for the quarter ended June 30, 2009, an increase of $110,000 or 16.9%. The increase in net income during the second quarter of 2010 compared to the second quarter of 2009 resulted from an increase in net interest income of $134,000 or 4.2% and a decrease in provision for loan losses of $130,000 or 27.7%. Also impacting this comparison of the second quarter of 2010 versus 2009 was a decrease of $207,000 or 19.8% in noninterest income. This reduction was strongly influenced by a significant decline from the record experienced during the prior year in the volume of residential real estate loans underwritten and sold to the secondary market. The 2010 decline in volume was attributable to the fact that many borrowers had previously taken advantage of historically low interest rates by refinancing their mortgages, thereby reducing the pool of potential refinancers in the current year. Noninterest expense during the second quarter of 2010 was $108,000 or 3.9% less than during the second quarter of 2009 and income tax expense was $55,000 or 18.0% higher during the second quarter of 2010 compared to the same period in 2009.

Basic and diluted earnings per share were $.67 for the three months ended June 30, 2010, $.10 or 17.5% more than the same period in 2009.

The Company recorded net income of $1,428,000 for the six months ended June 30, 2010, compared with net income of $1,688,000 for the two quarters ended June 30, 2009, a decrease of $260,000 or 15.4%. The primary factors contributing to this earnings decline were a reduction of $68,000 in net interest income, a $60,000 decline in provision for loan losses, a $395,000 reduction in noninterest income (mainly due to the reduced volume of real estate loans discussed above), a very modest $5,000 increase in noninterest expense and $148,000 less income tax expense.

Basic and diluted earnings per share were $1.25 for the six months ended June 30, 2010, down $.23 from the same period in 2009. The Companya™s annualized return on average assets for the first two quarters of 2010 and 2009 was .70% and .84%, respectively. The Companya™s annualized return on average equity for the six months ended June 30, 2010 and June 30, 2009 was 9.2% and 11.4%, respectively.

The Company's assets at June 30, 2010 totaled $412,392,000, an increase of $4,189,000 or 1.0% from December 31, 2009. Gross loans outstanding declined $6,776,000 (2.2%) while total deposits increased $6,070,000 (1.8%) during the first six months of 2010. The allowance for loan losses totaled $4,946,000 at June 30, 2010, or 1.6% of gross loans outstanding.

The net interest margin of 3.54% during the first two quarters of 2010 compared to 3.72% during the first two quarters of the prior year.

The board of directors declared a $.285 per common share cash dividend to be paid to shareholders of record June 30, 2010.

As reported in a previous press release, in the June 2010 edition of the national banking publication U.S. Banker 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 seventy among all U.S. community banks and thrifts with less than two billion dollars in assets. Kim Bartling, Executive Vice President, Chief Operating Officer & Treasurer of the Company, stated, aWe are honored to be recognized as one of the top community banks in the country based on three year average return on equity. This financial metric, return on equity, is one of the most essential in assessing how well we are achieving the very important corporate goal of prudently maximizing shareholder value through the efficient and effective deployment of the capital entrusted to us by our shareholders.a

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 contains forward-looking statements. Investors are cautioned that all forward-looking statements involve risks and uncertainties, and several factors could cause actual results to differ materially from those in the forward-looking statements. Forward-looking statements may relate to anticipated revenues, gross margins, earnings, and growth of the market for our services and products. The following factors, among others, could cause actual results to differ from those indicated in the forward-looking statements: uncertainties associated with market acceptance of and demand for the Companya™s services and products, impact of competitive products and pricing, dependence on third party suppliers, uncertainties associated with the development and deployment of technology, regulatory or other developments in the industry, and the emergence of future opportunities or threats.