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

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Iowa First Bancshares Corp. IOFB today reported net income of $682,000 for the quarter ended June 30, 2020, compared to net income of $909,000 for the quarter ended June 30, 2019. The decrease in second quarter net income year-over-year of $227,000 (25.0%) was primarily attributable to lower net interest income of $467,000 (12.5%) and higher noninterest expense of $166,000 (5.5%). The significant reduction in net interest income was heavily influenced by the substantial decrease in interest rates engineered by the Federal Reserve Bank (Fed) in March 2020, which significantly reduced yields earned on both loans and deposits maintained at the Fed by our banks. Provision for loan losses decreased $15,000 (4.2%) Noninterest income increased $326,000 (38.4%) and income tax expense decreased $65,000 (23.2%) when comparing the second quarter of 2020 to the same quarter in 2019.

The Company recorded net income of $1,447,000 for the six months ended June 30, 2020, compared with net income of $1,718,000 for the two quarters ended June 30, 2019, a decrease of $271,000 (15.8%). Over that time period, net interest income decreased $731,000 (9.8%), noninterest income increased $361,000 (21.7%), and noninterest expense increased $188,000 (3.0%). Over the same period provision for loan losses decreased $215,000 (29.3%) and income tax expense decreased $72,000 (13.9%).

Basic and diluted earnings per share were $1.29 for the six months ended June 30, 2020, down $.23 or 15.1% from the same period in 2019. The Company's annualized return on average assets for the first two quarters of 2020 and 2019 was .61% and .74%, respectively. The Company's annualized return on average equity for the six months ended June 30, 2020 and June 30, 2019 was 5.8% and 7.2%, respectively.

Total assets at June 30, 2020 were $493,731,000, an increase of $33,303,000 (7.2%) from June 30, 2019. Gross loans outstanding decreased $11,256,000 (3.1%), while total deposits increased $36,120,000 (9.2%) year-over-year. The allowance for loan losses totaled $6,054,000 at June 30, 2020, or 1.70% of gross loans outstanding.

The board of directors declared a $.29 per common share cash dividend to be paid on July 28, 2020, to shareholders of record July 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 has significantly impacted 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. Most recently during these unprecedented times, our company has 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

Months Ended

June 30, 2020

 

For the Three

Months Ended

June 30, 2019

 

For the Six

Months Ended

June 30, 2020

 

For the Six

Months Ended

June 30, 2019

Net Interest Income

$

3,267

$

3,734

$

6,741

$

7,472

Provision for Loan Losses

 

345

 

360

 

520

 

735

Noninterest Income

 

1,174

 

848

 

2,023

 

1,662

Noninterest Expense

 

3,199

 

3,033

 

6,352

 

6,164

Income Tax Expense

 

215

 

280

 

445

 

517

Net Income after Income Taxes

 

682

 

909

 

1,447

 

1,718

 
Net Income Per Common Share,
Basic and Diluted

$

0.61

$

0.80

$

1.29

$

1.52

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

 

1,126,253

 

1,130,966

 

1,126,253

 

1,130,966

   

As of

June 30, 2020

 

 

As of

December 31, 2019

 

 

As of

June 30, 2019

             
Gross Loans    

$

356,783

 

   

$

355,324

 

   

$

368,039

 

Total Assets    

 

493,731

 

   

 

470,535

 

   

 

460,428

 

Total Deposits    

 

429,515

 

   

 

405,869

 

   

 

393,395

 

Tier 1 Capital    

 

49,799

 

   

 

49,006

 

   

 

48,098

 

             
Return on Average Equity    

 

5.8

%

   

 

7.2

%

   

 

7.2

%

Return on Average Assets    

 

.61

 

   

 

.75

 

   

 

.74

 

Net Interest Margin (tax equivalent)    

 

3.05

 

   

 

3.29

 

   

 

3.39

 

Allowance as a Percent of Total Loans    

 

1.70

 

   

 

1.69

 

   

 

1.81

 

 

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Posted In: Press Releases
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