Iowa First Bancshares Corp. Reports Third Quarter and Year-To-Date 2015 Financial Results and Dividend Payment

MUSCATINE, Iowa--()--Iowa First Bancshares Corp. (OTC Pink: IOFB) today reported financial results for both the third quarter and first three quarters of 2015. Net income of $1,090,000 for the quarter ended September 30, 2015, compared to net income of $1,161,000 for the quarter ended September 30, 2014, a decrease of $71,000 or 6.1%. The decrease in third quarter net income year-over-year of $71,000 was primarily attributable to higher noninterest expenses, which rose $203,000 or 7.7%. Noninterest income for the third quarter of 2015 was $28,000 or 3.1% less than the third quarter of 2014. Provision for loan losses expense was $30,000 in the third quarter of both 2015 and 2014. Net interest income in the third quarter of 2015 exceeded the same quarter of 2014 by $126,000 or 3.6%. Due largely to lower pretax income, income tax expense decreased $34,000 or 5.6%.

Basic and diluted earnings per share were $.97 for the three months ended September 30, 2015, $.06 or 5.8% less than the same period in 2014.

The Company’s net income of $3,125,000 for the nine months ended September 30, 2015, compared with net income of $3,233,000 for the three quarters ended September 30, 2014, a decrease of $108,000 or 3.3%. The primary factors contributing to this earnings decrease included an increase of $467,000 (5.9%) in noninterest expense, a $30,000 (50.0%) increase in provision for loan losses, and a $58,000 (2.2%) decline in noninterest income. Partially offsetting the earnings reduction noted above was $379,000 (3.7%) higher net interest income and $67,000 (3.9%) lower income tax expense.

Basic and diluted earnings per share were $2.77 for the nine months ended September 30, 2015, a decrease of $.10 or 3.5% from the same period in 2014. The Company’s annualized return on average assets for the first three quarters of 2015 and 2014 was .94% and .99%, respectively. The Company’s annualized return on average equity for the nine months ended September 30, 2015 and September 30, 2014 was 9.6% and 10.7%, respectively.

The Company's assets at September 30, 2015 totaled $448,359,000, an increase of $18,932,000 (4.4%) from September 30, 2014. Gross loans outstanding increased $20,545,000 (5.8%) while total deposits increased $11,949,000 (3.3%) over the past year. The allowance for loan losses totaled $4,582,000 at September 30, 2015, or 1.23% of gross loans outstanding.

The board of directors declared a $.285 per common share cash dividend to be paid to shareholders of record October 1, 2015. Annualized, the dividends paid by the Company result in a yield of 3.3% on the December 31, 2014 common stock price.

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 September 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 per share data)

(unaudited)

 
 

For the Three

 

For the Three

 

For the Nine

 

For the Nine

Months Ended

Months Ended

Months Ended

Months Ended

September 30, 2015

September 30, 2014

September 30, 2015

September 30, 2014

 
Net Interest Income $ 3,651 $ 3,525 $ 10,696 $ 10,317
Provision for Loan Losses 30 30 90 60
Noninterest Income 877 905 2,545 2,603
Noninterest Expense 2,830 2,627 8,378 7,911
Income Tax Expense 578 612 1,649 1,716
Net Income After Income Taxes 1,090 1,161 3,125 3,233
 

Net Income Per Common Share, Basic and Diluted

$ .97 $ 1.03 $ 2.77 $ 2.87
 

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

1,128,951 1,127,319 1,128,276 1,126,505
 
 

As of

 

As of

 

As of

September 30, 2015

December 31, 2014

September 30, 2014

 
Gross Loans $ 372,203 $ 355,093 $ 351,658
Total Assets 448,359 439,771 429,427
Total Deposits 377,296 375,582 365,347
Tier 1 Capital 43,917 41,696 40,995
 
Return on Average Equity 9.6 % 10.5 % 10.7 %
Return on Average Assets .94 .97 .99
Net Interest Margin (tax equivalent) 3.52 3.45 3.43
Allowance as a Percent of Total Loans 1.23 1.30 1.33

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

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