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

MUSCATINE, Iowa--()--Iowa First Bancshares Corp. (OTC Pink: IOFB) today reported the highest second quarter net income in the Company’s history. Consolidated net income of $1,140,000 for the quarter ended June 30, 2017, compared to net income of $1,081,000 for the quarter ended June 30, 2016. The increase in second quarter net income year-over-year of $59,000 (5.5%) was primarily attributable to higher net interest income of $244,000 (6.6%). Noninterest income declined $24,000 (2.7%). Noninterest expense increased $29,000 (1.0%) and provision for loan losses was raised $105,000 or (100%). Income tax expense increased $27,000 (5.1%) when comparing the second quarter of 2017 to the same quarter in 2016. “We are very pleased to report record second quarter net income to our shareholders. Such performance is a direct result of the guidance provided by our board of directors, quality leadership of the management team and efficient execution of our community banking business plan by our dedicated team of bankers,” said D. Scott Ingstad, Chairman, President and CEO.

The Company recorded net income of $1,533,000 for the six months ended June 30, 2017, compared with net income of $2,081,000 for the two quarters ended June 30, 2016, a decrease of $548,000 (26.3%). Over that time period, net interest income increased $328,000 (4.5%) and noninterest income increased $23,000 (1.3%). However, more than offsetting these income gains, noninterest expense increased $110,000 (1.9%) and provision for loan losses was raised $1,080,000 (514%). 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 $23,615,000 (6.1%) from June 30, 2016 to June 30, 2017; and 3) replenishment of the allowance for loan losses following a year-over-year increase of $1,031,000 in net loan charge-offs for the six months ended June 30, 2017 compared to the first six months of 2016. Income tax expense declined $291,000 (28.0%).

Basic and diluted earnings per share were $1.36 for the six months ended June 30, 2017, down $.48 or 26.1% from the same period in 2016. The Company’s annualized return on average assets for the first two quarters of 2017 and 2016 was .64% and .90%, respectively. The Company’s annualized return on average equity for the six months ended June 30, 2017 and June 30, 2016 was 6.8% and 9.1%, respectively.

Total assets at June 30, 2017 were $486,077,000, an increase of $11,706,000 (2.5%) from June 30, 2016. As noted above, gross loans outstanding increased $23,615,000 (6.1%), while total deposits increased $10,573,000 (2.6%) year-over-year. The allowance for loan losses totaled $4,782,000 at June 30, 2017, or 1.17% of gross loans outstanding. Net loans charged-off during the first six months of 2017 and 2016 were $1,180,000 and $149,000, respectively. Nonaccrual loans totaled $2.3 million or .6% of gross loans outstanding at June 30, 2017, compared to $2.2 million of gross loans outstanding at June 30, 2016.

The board of directors declared a $.29 per common share cash dividend to be paid on July 25, 2017, to shareholders of record July 3, 2017. On an annualized basis this dividend represents a return of 3.1% on the December 31, 2016 stock price. Iowa First Bancshares Corp. has paid a cash dividend to shareholders every year since 1989.

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, 2017

June 30, 2016

June 30, 2017

June 30, 2016

 
Net Interest Income $ 3,934 $ 3,690 $ 7,707 $ 7,379
Provision for Loan Losses 210 105 1,290 210
Noninterest Income 883 907 1,738 1,715
Noninterest Expense 2,906 2,877 5,873 5,763
Income Tax Expense 561 534 749 1,040
Net Income after Income Taxes 1,140 1,081 1,533 2,081
 

Net Income Per Common Share, Basic and Diluted

$ 1.01 $ .96 $ 1.36 $ 1.84
 

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

1,131,630 1,129,898 1,131,033 1,129,424
 
 

As of

 

As of

 

As of

June 30, 2017

December 31, 2016

June 30, 2016

 
Gross Loans $ 408,111 $ 401,041 $ 384,496
Total Assets 486,077 489,976 474,371
Total Deposits 414,131 414,679 403,558
Tier 1 Capital 45,734 44,796 46,092
 
Return on Average Equity 6.8 % 3.1 % 9.1 %
Return on Average Assets .64 .30 .90
Net Interest Margin (tax equivalent) 3.47 3.43 3.46
Allowance as a Percent of Total Loans 1.17 1.16 1.20

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