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

Rhea-AI Summary

Iowa First Bancshares Corp. (OTC Pink: IOFB) reported third-quarter 2021 net income of $822,000, up 3.5% year-over-year. Major drivers included increased net interest income, boosted by PPP loan fee recognition. However, noninterest income decreased by $443,000 due to lower demand for residential loan refinancing and increased noninterest expense. Over nine months, net income dropped to $2,144,000, a 4.3% decline. The company maintains a strong capital position with a risk-based capital ratio of 18.7% and declared a quarterly dividend of $0.15 per share.

Positive

• Net income for Q3 2021 increased by $28,000 or 3.5% year-over-year.
• Net interest income rose by $488,000 compared to Q3 2020.
• Strong capital position with a total risk-based capital ratio of 18.7%.
• Declared a quarterly dividend of $0.15 per share.

Negative

• Noninterest income decreased by $443,000 year-over-year.
• Net income for nine months declined by $97,000 or 4.3%.
• Gross loans outstanding decreased by $39,893,000 or 11.4% year-over-year.

MUSCATINE, Iowa--(BUSINESS WIRE)-- Iowa First Bancshares Corp. (OTC Pink: IOFB) (“Iowa First” or the “Company”), the holding company for First National Bank of Muscatine and First National Bank in Fairfield, today reported financial results for the three month period ended September 30, 2021. Net income was $822,000 for the quarter ended September 30, 2021, compared to net income of $794,000 for the quarter ended September 30, 2020, an increase of $28,000 or 3.5%. Net interest income in the third quarter 2021 increased $488,000 from the quarter ended September 30, 2020 and was positively affected by the recognition of unearned loan fees on Paycheck Protection Program (“PPP”) loans forgiven by the Small Business Administration (“SBA”) in the third quarter of 2021, as well as a reduction in interest expense. Other factors affecting Iowa First’s third quarter results year-over-year were provision for loan losses decreasing $170,000, noninterest income decreasing $443,000, noninterest expense increasing $152,000, and income tax expense increasing $35,000. Noninterest income was negatively affected by the reduction of loans sold to the secondary market as the demand for residential loan refinancing declined.

The Company recorded net income of $2,144,000 for the nine months ended September 30, 2021, compared with net income of $2,241,000 for the three quarters ended September 30, 2020, a decrease of $97,000 or 4.3%. Over that time period, net interest income increased $396,000, provision for loan losses decreased $125,000, noninterest income decreased $531,000, noninterest expense increased $100,000, and income tax expense decreased $13,000.

Iowa First maintains a strong capital position, as evidenced by its September 30, 2021 total risk-based capital ratio of 18.7%. Basic and diluted earnings per share were $1.91 for the nine months ended September 30, 2021, a decrease of $0.08 or 4% from the same period in 2020. The Company’s annualized return on average assets for the first three quarters of 2021 and 2020 was .54% and .62% respectively. The Company’s annualized return on average equity for the nine months ended September 30, 2021 and September 30, 2020 was 5.6% and 6.0%, respectively.

Total assets at September 30, 2021 were $519,420,000, an increase of $2,695,000 (0.5%) from September 30, 2020. Gross loans outstanding decreased $39,893,000 (11.4%), while deposits increased $3,302,000 (0.7%) year-over-year. The allowance for loan losses totaled $6,597,000 at September 30, 2021, or 2.12% of gross loans outstanding. Nonaccrual loans totaled $7.5 million or 2.4% of gross loans outstanding at September 30, 2021, a decrease from $14.6 million or 4.2% at September 30, 2020. While nonaccrual loans remain at a higher than desired level, this significant decrease is a reflection of the continued focus at First National Bank in Fairfield on improving the quality of the overall loan portfolio and reducing the nonaccrual loans.

Both of the Iowa First banks were very active in the PPP loan program established through the SBA to assist businesses and farmers as they attempted to survive the coronavirus pandemic. Customer applications for loan forgiveness continue to be approved by the SBA. Outstanding PPP loans at September 30, 2021 were $3,454,000, a decrease of $20,270,000 (85.4%) from September 30, 2020.

The board of directors declared a quarterly cash dividend of $.15 per share payable November 30, 2021, to shareholders of record November 1, 2021. On an annualized basis this dividend represents a return of 2.22% on the December 31, 2020 stock price. Iowa First has paid a cash dividend to shareholders every year since 1989.

Iowa First Bancshares Corp. Pending Acquisition

On November 1, 2021, Iowa First and MidWestOne Financial Group, Inc. (“MidWestOne”), the holding company for MidWestOne Bank, jointly announced the signing of a definitive agreement pursuant to which MidWestOne will acquire Iowa First and its subsidiary banks. The acquisition is expected to close during the first quarter of 2022 and is subject to approval by Iowa First’s shareholders and regulatory agencies, as well as other customary closing conditions. Iowa First shareholders shall have the right to receive cash consideration in the amount of $47,582,612, or $42.64 per share, based on 1,115,939.22526 Iowa First shares issued and outstanding as of November 1, 2021, subject to adjustment pursuant to the terms of the definitive agreement.

Iowa First will mail a proxy statement and other relevant materials to its shareholders. Iowa First shareholders are advised to read, when available, the proxy statement and amendments thereto because these documents will contain important information about MidWestOne, Iowa First and the proposed transaction. These documents also can be obtained free of charge from Iowa First when available, upon written request to Iowa First, c/o First National Bank of Muscatine, Attention: Chief Executive Officer, 300 East Second Street, Muscatine, Iowa 52761 or by calling 563-263-4221.

About Us

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.

Special Note Concerning Forward-Looking Statements

This press release contains, and future oral and written statements of the Company and its management may contain, forward-looking statements with respect to the financial condition, results of operations, plans, objectives, future performance and business of the Company. 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. Additionally, all statements in this document, including forward-looking statements, speak only as of the date they are made, and the Company undertakes no obligation to update any statement in light of new information or future events. 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) the effects of the COVID-19 pandemic, including its potential effects on the economic environment, the Company’s customers and its operations, as well as any changes to federal, state or local government laws, regulations or orders in connection with the pandemic; (2) 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; (3) 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 (including the impact of LIBOR phase-out); (4) 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; (5) fluctuation in the value of our investment securities; (6) governmental monetary and fiscal policies; (7) legislative, regulatory and tax law changes; (8) the ability to attract and retain key executives and employees; (9) the sufficiency of the allowance for loan losses to absorb the amount of actual losses inherent in our loan portfolio; (10) our ability to adapt successfully to technological changes; (11) credit risks from concentrations (by geographic area and by industry) within our loan portfolio; (12) the effects of competition from numerous sources; (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 (including as a result of the future implementation of the current expected credit loss (CECL) impairment standards, that will change how the Company estimates credit losses); (18) the occurrence of any event, change or other circumstances that could give rise to the right of one or both of the parties to terminate the merger agreement to which the Company and MidWestOne are a party; and (19) the failure to obtain necessary regulatory approvals and shareholder approval or to satisfy any of the other conditions to the proposed merger on a timely basis or at all.

CONSOLIDATED FINANCIAL HIGHLIGHTS (Dollar amounts in thousands, except share and per share data) (unaudited)
	For the Three Months Ended September 30, 2021		For the Three Months Ended September 30, 2020		For the Nine Months Ended September 30, 2021		For the Nine Months Ended September 30, 2020
Net Interest Income	$3,809		$3,321		$10,458		$10,062
Provision for Loan Losses	155		325		720		845
Noninterest Income	779		1,222		2,714		3,245
Noninterest Expense	3,367		3,215		9,667		9,567
Income Tax Expense	244		209		641		654
Net Income after Income Taxes	822		794		2,144		2,241
Net Income Per Common Share, Basic and Diluted	$ 1.16		$0.71		$1.91		$1.99
Average year-to-date common shares outstanding, Basic and Diluted	1,118,127		1,123,944		1,121,296		1,125,483
	As of September 30, 2021		As of December 31, 2020		As of September 30, 2020
Gross Loans	$310,572		$324,356		$350,465
Total Assets	519,420		511,522		516,725
Total Deposits	452,701		445,952		449,399
Tier 1 Capital	51,825		50,216		50,129
Return on Average Equity	5.6%		4.6%		6.0%
Return on Average Assets	.54		.48		.62
Net Interest Margin (tax equivalent)	2.80		2.93		2.98
Allowance as a Percent of Total Loans	2.12		1.88		1.75

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20211103006102/en/

D. Scott Ingstad, Chairman, President and CEO (563-262-4202) Or

Teresa A. Carter, Chief Financial Officer (563-262-4214)

Source: Iowa First Bancshares Corp.

FAQ

What were Iowa First Bancshares Corp's Q3 2021 net income results?

Iowa First Bancshares Corp. reported a net income of $822,000 for Q3 2021, up 3.5% from Q3 2020.

How much did Iowa First Bancshares Corp's revenue change in 2021?

Net interest income increased by $488,000 in Q3 2021 compared to the previous year, but noninterest income decreased by $443,000.

What was the dividend declared by Iowa First Bancshares Corp?

The board declared a quarterly cash dividend of $0.15 per share payable on November 30, 2021.

What was the share price offered in the upcoming acquisition of Iowa First Bancshares Corp?

Iowa First shareholders are set to receive $42.64 per share as part of the acquisition by MidWestOne Financial Group, expected to close in Q1 2022.