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

Iowa First Bancshares Corp. (OTCQB: IOFB) today reported operating results for the three month period ended March 31, 2013. Consolidated net income totaled $650,000 compared to net income of $902,000 for the same period last year. The decrease in first quarter net income year-over-year of $252,000 or 27.9% was primarily attributable to one non-recurring transaction, the early redemption of company obligated mandatorily redeemable preferred securities (“Trust Preferred Securities”). These trust preferred securities had a 2031 scheduled redemption date and carried an interest rate of 10.18%. The early redemption in 2013 resulted in a one-time payment of a premium totaling $183,000 and another current expense totaling $102,000 to recognize unamortized issuance costs associated with the trust preferred securities. Consummation of this early redemption, while reducing net income in the short-term, will serve to enhance Iowa First’s future earnings as the current borrowing rate for the funds used to redeem the securities is only 3.00%, compared to the previous rate of 10.18%. Using these rates, the recurring annual pretax savings to Iowa First will be approximately equal to the one-time additional cost incurred to redeem the trust preferred securities. Adjusting for the impact of the early redemption of the trust preferred securities, net income during the first quarter of 2013 would have been approximately $840,000 or only 6.9% less than the first quarter of 2012, as opposed to the 27.9% reduction discussed above.... Read more

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