Iowa First Bancshares Corp. Reports Fourth Quarter and Full Year Financial Results

Iowa First Bancshares Corp. (OTCBB: IOFB) today reported net income of $954,000 for the quarter ended December 31, 2010, compared to net income of $538,000 for the quarter ended December 31, 2009, an increase of $416,000 or 77.3%. The improvement in net income was primarily attributable to provisions for loan losses which decreased to $223,000 during the fourth quarter of 2010 compared to $950,000 during the fourth quarter of 2009.

The Company recorded net income of $3,233,000 for the twelve months ended December 31, 2010, compared with net income of $2,900,000 for the four quarters ended December 31, 2009, an increase of $333,000 or 11.5%.

Net interest income in 2010 totaling $13,120,000 was $163,000, or 1.2% less than 2009. Other noninterest income sources totaled $3,655,000, which was $361,000 or 9.0% less than the prior year. In 2010 the Company sold the second highest volume in its history of single family real estate loans to the secondary market resulting in fees, servicing income and gains on loans sold totaling $468,000. However, record volume in 2009 resulted in fees, servicing income and gains on loans sold into the secondary market totaling $852,000. This decrease was the primary reason other noninterest income was lower in 2010 than 2009.

Noninterest operating expenses decreased $112,000 or 1.0% year-over-year. "An important factor influencing this positive result was the ability of our dedicated team of bankers to effectively operate our banks with fewer full-time equivalent employees than in prior years, which limited total employee expenses to an increase of less than .7% in spite of substantial increases in health insurance premium rates,” said Chairman D. Scott Ingstad.

Nonaccrual loans totaled $4,366,000 at December 31, 2010 compared to $5,588,000 at December 31, 2009, a decrease of $1,222,000 or 21.9%. Total nonaccrual loans represented 1.4% of gross loans outstanding at year-end 2010. Additionally, other real estate owned of $513,000 at December 31, 2010 decreased from $1,011,000 at the prior year-end.

The December 31, 2010 allowance for loan losses of $5,173,000 represented 1.7% of gross loans outstanding. Net loans charged-off during 2010 totaled only $395,000 compared to $2,348,000 the previous year. To properly fund the allowance for loan losses, a provision expense of $1,243,000 was recognized in 2010, which was $947,000 or 43.2% less than the provision expense recognized in 2009.

Basic and diluted earnings per share were $2.84 for the twelve months ended December 31, 2010, which was $.30 or 11.8% more than the same period in 2009. The Company’s annualized return on average assets for 2010 and 2009 was .79% and .72%, respectively. The Company’s annualized return on average equity for the twelve months ended December 31, 2010 and December 31, 2009 was 10.2% and 9.6%, respectively.

During 2010, Iowa First paid dividends to shareholders of $1.14 per share which represented approximately 40% of net income. Additionally, the board of directors declared a $.285 per common share cash dividend, which was paid in January 2011 to shareholders of record December 31, 2010.

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.