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

Basic and diluted earnings per share were $.59 for the three months ended September 30, 2009, $.27 or 31.4% less than the same period in 2008.

The Company recorded net income of $2,362,000 for the nine months ended September 30, 2009, compared with net income of $2,704,000 for the three quarters ended September 30, 2008, a decrease of $342,000 or 12.6%. Once again, the primary reasons for this reduction in net income were increased provisions for loan losses as well as much higher FDIC insurance premium expense during the first nine months of 2009 compared to the same period in 2008. The increase in loan loss provisions was the result of deterioration in the repayment ability of selected loans. The significant FDIC insurance premium increase resulted from a combination of several factors. First, the Company received in 2008 credits against FDIC insurance expense derived from prior years’ premium payments. Such credits served to reduce 2008 FDIC insurance premium expense, but had very little further impact in 2009. Second, the recurring premium per deposit dollar assessed by the FDIC on banks increased substantially in 2009. Finally, The FDIC implemented a special assessment on the banking industry to help replenish the insurance fund following the recent failure of numerous banking organizations and the resultant impact on the FDIC insurance fund. Excluding this increase in FDIC insurance expense and loan loss provision expense, total noninterest expense for the nine months ended September 30, 2009 was actually $144,000, or 1.8%, less than the same period in 2008.

Basic and diluted earnings per share were $2.07 for the nine months ended September 30, 2009, which was $.27 or 11.5% less than the same period in 2008. The Company’s annualized return on average assets for the first three quarters of 2009 and 2008 was .79% and .89%, respectively. The Company’s annualized return on average equity for the nine months ended September 30, 2009 and September 30, 2008 was 10.5% and 12.4%, respectively.

The Company's assets at September 30, 2009 totaled $392,916,000, a decrease of $10,403,000 (2.6%) from December 31, 2008. Gross loans outstanding declined $12,852,000 (3.9%) while total deposits decreased $1,854,000 (0.6%) during the first nine months of 2009. The allowance for loan losses totaled $4,885,000 at September 30, 2009, or 1.56% of gross loans outstanding.

The board of directors declared a $.285 per common share cash dividend, which was paid to shareholders of record September 30, 2009.

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 contains forward-looking statements. Investors are cautioned that all forward-looking statements involve risks and uncertainties, and several factors could cause actual results to differ materially from those in the forward-looking statements. Forward-looking statements may relate to anticipated revenues, gross margins, earnings, and growth of the market for our services and products. The following factors, among others, could cause actual results to differ from those indicated in the forward-looking statements: uncertainties associated with market acceptance of and demand for the Company’s services and products, impact of competitive products and pricing, dependence on third party suppliers, uncertainties associated with the development and deployment of technology, regulatory or other developments in the industry, and the emergence of future opportunities or threats.

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