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

·6-min read

Iowa First Bancshares Corp. (OTC Pink: IOFB) today reported net income of $796,000 for the quarter ended September 30, 2020, compared to net income of $784,000 for the quarter ended September 30, 2019, resulting in an increase in third quarter net income year-over-year of $12,000 (1.5%). During the quarter ending September 30, 2020, the company experienced an increase in noninterest income of $358,000 (41.4%) when compared to the same quarter in 2019. This increase was primarily attributable to servicing fee income and gains from residential real estate mortgages sold to the secondary market as consumers refinance to take advantage of the historically low interest rates. The decrease in third quarter net interest income year-over-year of $226,000 (6.4%) was heavily influenced by the substantial decrease in interest rates by the Federal Reserve Bank (Fed) in March 2020, which significantly reduced loan portfolio yields and interest earned on deposits maintained at the Fed by our banks. Provision for loan losses increased $20,000 (6.6%), noninterest expense increased $124,000 (4.0%) and income tax expense decreased $24,000 (10.3%) when comparing the third quarter of 2020 to the same quarter in 2019.

The Company recorded net income of $2,243,000 for the nine months ended September 30, 2020, compared with net income of $2,502,000 for the three quarters ended September 30, 2019, a decrease of $259,000 (10.4%). Over that time period, provision for loan losses decreased $195,000 (18.8%), noninterest income increased $719,000 (28.5%), and income tax expense decreased $96,000 (12.8%). Over the same period net interest income decreased $957,000 (8.7%) and noninterest expense increased $312,000 (3.4%).

Basic and diluted earnings per share were $1.99 for the nine months ended September 30, 2020, down $.22 or 10.0% from the earnings per share for the same period in 2019. The Company’s annualized return on average assets for the first three quarters of 2020 and 2019 was .62% and .72%, respectively. The Company’s annualized return on average equity for the nine months ended September 30, 2020 and September 30, 2019 was 6.0% and 7.0%, respectively.

Total assets at September 30, 2020 were $516,725,000, an increase of $62,097,000 (13.7%) from September 30, 2019. Gross loans outstanding decreased $15,538,000 (4.2%), while total deposits increased $61,395,000 (15.8%) year-over-year. The allowance for loan losses totaled $6,381,000 at September 30, 2020, or 1.82% of gross loans outstanding compared to $6,782,000 or 1.85% of gross loans outstanding at the same time last year.

The board of directors declared a $.29 per common share cash dividend payable on October 27, 2020, to shareholders of record October 1, 2020. On an annualized basis this dividend represents a return of 2.7% on the December 31, 2019 stock price. Iowa First Bancshares Corp. has paid a cash dividend to shareholders every year since 1989.

The coronavirus pandemic continues to significantly impact the world, national, and local economies. The directors, management, and employees of Iowa First Bancshares are fully committed to our longtime tradition of providing our customers and local communities the valuable financial services and guidance they have come to expect over many years. Our company had been a reliable provider of helpful lending assistance to many of our small business clients through utilization of the SBA Paycheck Protection Program.

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 Nine

For the Nine

Months Ended

Months Ended

Months Ended

Months Ended

September 30, 2020

September 30, 2019

September 30, 2020

September 30, 2019

Net Interest Income

$

3,323

$

3,549

$

10,064

$

11,021

Provision for Loan Losses

325

305

845

1,040

Noninterest Income

1,222

864

3,245

2,526

Noninterest Expense

3,215

3,091

9,567

9,255

Income Tax Expense

209

233

654

750

Net Income after Income Taxes

796

784

2,243

2,502

Net Income Per Common Share,

Basic and Diluted

$

.71

$

.69

$

1.99

$

2.21

Average year-to-date common shares

outstanding, basic and diluted

1,123,944

1,129,224

1,125,483

1,130,385

As of

As of

As of

September 30, 2020

December 31, 2019

September 30, 2019

Gross Loans

$

350,718

$

355,324

$

366,256

Total Assets

516,725

470,535

454,628

Total Deposits

449,399

405,869

388,004

Tier 1 Capital

50,131

49,006

48,359

Return on Average Equity

6.0

%

7.2

%

7.0

%

Return on Average Assets

.62

.75

.72

Net Interest Margin (tax equivalent)

2.98

3.29

3.35

Allowance as a Percent of Total Loans

1.82

1.69

1.85

View source version on businesswire.com: https://www.businesswire.com/news/home/20201022005147/en/

Contacts

D. Scott Ingstad, Chairman, President and CEO (563-262-4202) Or
Teresa A. Carter, Senior Vice President, Chief Financial Officer (563-262-4214)