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Iowa First Bancshares Corp. Reports Third Quarter 2010 Financial Results and Dividend Payment

^{Published on 2010-10-29 09:10:55 - Market Wire}
 

MUSCATINE, Iowa--([ BUSINESS WIRE ])--Iowa First Bancshares Corp. (OTCBB: IOFB) today reported net income of $851,000 for the quarter ended September 30, 2010, compared to net income of $674,000 for the quarter ended September 30, 2009, an increase of $177,000 or 26.3%. The increase in net income during the third quarter of 2010 compared to the third quarter of 2009 resulted from a decrease in provision for loan losses of $160,000 or 32.0%. Also impacting this comparison of the third quarter of 2010 versus 2009 was a decrease of $104,000 or 3.8% in noninterest expense. Noninterest income during the third quarter of 2010 was a modest $16,000 or 1.7% more than during the third quarter of 2009 and income tax expense was $62,000 or 19.3% higher during the third quarter of 2010 compared to the same period in 2009.

Basic and diluted earnings per share were $.75 for the three months ended September 30, 2010, $.16 or 27.1% more than the same period in 2009.

The Company recorded net income of $2,279,000 for the nine months ended September 30, 2010, compared with net income of $2,362,000 for the three quarters ended September 30, 2009, a decrease of $83,000 or 3.5%. The primary factors contributing to this earnings decline were a reduction of $109,000 in net interest income, a $220,000 decline in provision for loan losses, a $379,000 reduction in noninterest income (mainly due to the reduced volume of mortgage origination fees compared to the prior yeara™s record level), a decrease of $99,000 in noninterest expense and $86,000 less income tax expense.

Basic and diluted earnings per share were $2.00 for the nine months ended September 30, 2010, down $.07 from the same period in 2009. The Companya™s annualized return on average assets for the first three quarters of 2010 and 2009 was .75% and .79%, respectively. The Companya™s annualized return on average equity for the nine months ended September 30, 2010 and September 30, 2009 was 9.7% and 10.5%, respectively.

The Company's assets at September 30, 2010 totaled $405,823,000, a decrease of $2,380,000 or 0.6% from December 31, 2009. Gross loans outstanding declined $5,296,000 (1.7%) while total deposits increased $466,000 (0.1%) during the first nine months of 2010. The allowance for loan losses totaled $5,096,000 at September 30, 2010, or 1.7% of gross loans outstanding. This compares to the allowance for loan losses balance of $4,325,000 or 1.4% of gross loans outstanding at December 31, 2009.

The net interest margin of 3.53% during the first three quarters of 2010 compared to 3.79% during the first three quarters of the prior year. The Company has operated during 2010 in an economy experiencing very low interest rates coupled with significant uncertainty by businesses as to the timing and impact of future income tax legislation, regulatory burden, and overall national monetary policy. As a result, commercial loan demand has been relatively muted and the Company has been quite liquid, with the end result of more deposits on the balance sheet than needed to fund such modest loan demand. The yields available on alternative investment options for this liquidity have been quite low, thus exerting downward pressure on the net interest margin.

The board of directors declared a $.285 per common share cash dividend to be paid to shareholders of record September 30, 2010. Annualized, the dividends paid by the Company result in a yield of 5.30% on the December 31, 2009 common stock price.

As reported in earlier press releases, 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.