UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended June 30, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934.
For the transition period from _______ to _______
Commission file number 2-89283
IOWA FIRST BANCSHARES CORP.
(Exact name of registrant as specified in its charter)
STATE OF IOWA 42-1211285
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
300 East Second Street
Muscatine, Iowa 52761
(Address of principal executive offices)
319-263-4221
(Registrant's telephone number)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
YES X NO
At June 30, 1995 there were 572,101 shares of the registrant's common
stock outstanding.
<PAGE>
IOWA FIRST BANCSHARES CORP. AND SUBSIDIARIES
INDEX TO FORM 10-Q
PAGE NO.
PART 1 Financial Information
Item 1. Financial Statements
Consolidated Condensed Balance Sheets,
June 30, 1995 and December 31, 1994 1
Consolidated Condensed Statements of
Operations, Three and Six Months Ended
June 30, 1995 and 1994 2
Consolidated Condensed Statements of
Cash Flows, Six Months Ended
June 30, 1995 and 1994 3
Notes to Consolidated Condensed
Financial Statements 4-6
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations 7-12
PART II Other Information
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
<PAGE>
IOWA FIRST BANCSHARES CORP. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(In Thousands)
(Unaudited)
June 30, December 31,
1995 1994
ASSETS
Cash and due from banks $ 12,376 $ 11,720
Investment securities held to maturity (fair
value June 30, 1995 $47,324; December 31,
1994 $52,022) 47,319 53,659
Investment securities available for sale (cost
June 30, 1995 $15,027; December 31, 1994
$16,160) 15,073 15,791
Federal funds sold and securities purchased
under resale agreements 9,060 3,337
Loans, net of allowance for possible loan
losses June 30, 1995 $2,609; December 31,
1994 $2,526 166,961 162,015
Bank premises and equipment, net 4,479 4,545
Other assets 2,504 2,733
TOTAL ASSETS $257,772 $253,800
LIABILITIES AND STOCKHOLDERS' EQUITY
Noninterest bearing deposits $ 33,245 $ 35,336
Interest bearing deposits 195,158 193,687
TOTAL DEPOSITS $228,403 $229,023
Other borrowings 1,450 - -
Securities sold under agreements
to repurchase 4,459 2,248
Other liabilities 1,741 1,857
TOTAL LIABILITIES $236,053 $233,128
STOCKHOLDERS' EQUITY
Common stock $ 200 $ 200
Surplus 3,800 3,800
Retained earnings 18,205 17,193
$ 22,205 $ 21,193
Unrealized gains (losses) on securities
available for sale, net 29 (233)
Less net cost of common shares acquired
for the treasury 515 288
TOTAL STOCKHOLDERS' EQUITY $ 21,719 $ 20,672
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $257,772 $253,800
See Notes to Consolidated Condensed Financial Statements.
<PAGE>
IOWA FIRST BANCSHARES CORP. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Data)
(Unaudited)
Three Months Six Months
Ended June 30, Ended June 30,
1995 1994 1995 1994
INTEREST INCOME:
Interest and fees on loans $3,622 $3,147 $7,084 $6,192
Interest on investment securities 919 1,001 1,901 1,975
Interest on federal funds sold and
securities purchased under resale
agreements 175 120 191 204
Other interest - - 10 - - 11
Total interest income $4,716 $4,278 $9,176 $8,382
INTEREST EXPENSE:
Interest on deposits, securities
sold under repurchase agreements
and other borrowings $2,259 $1,837 $4,297 $3,578
Interest on note payable - - 20 - - 40
Total interest expense $2,259 $1,857 $4,297 $3,618
Net interest income $2,457 $2,421 $4,879 $4,764
Provision for loan losses 15 15 30 30
Net interest income after provision
for loan losses $2,442 $2,406 $4,849 $4,734
Investment securities gains (losses) 4 20 6 50
Other income 360 411 730 813
Other expense 1,744 1,769 3,491 3,543
Income before income taxes $1,062 $1,068 $2,094 $2,054
Applicable income taxes 317 325 646 636
Net income $ 745 $ 743 $1,448 $1,418
Per share data:
Net earnings per common share $ 1.26 $ 1.28 $ 2.45 $ 2.44
Dividends declared per common share
(declared semi-annually until
quarterly dividend declarations
began first quarter of 1995) $ .39 $ .65 $ .76 $ .65
See Notes to Consolidated Condensed Financial Statements.
<PAGE>
IOWA FIRST BANCSHARES CORP. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In Thousands, Except Per Share Data)
(Unaudited)
Six Months Ended
June 30 ,
1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,448 $ 1,418
Adjustments to reconcile net income to net
cash provided by operating activities:
Proceeds from FHLMC 391 2,521
Loans underwritten for FHLMC (390) (2,496)
Gains on loans sold to FHLMC (1) (25)
Provision for loan losses 30 30
Investment securities (gains) losses, net (6) (50)
Depreciation 220 239
Deferred income taxes - - (267)
Amortization of premiums and accretion of
discounts on loans and investment
securities, net 113 173
Decrease in other assets 229 52
(Decrease) in other liabilities (116) (336)
Net cash provided by operating activities $ 1,918 $ 1,259
CASH FLOWS FROM INVESTING ACTIVITIES
Net (increase) decrease in federal funds sold $ (5,723) $ 5,080
Proceeds from maturities of investment securities 9,728 9,176
Proceeds from sales of investment securities 2,472 4,560
Purchases of investment securities (4,809) (15,838)
Net (increase) in loans (4,976) (5,622)
Purchases of bank premises and equipment (154) (155)
Net cash (used in) investing activities $ (3,462) $ (2,799)
CASH FLOWS FROM FINANCING ACTIVITIES
Net (decrease) in noninterest bearing deposits $ (2,091) $ (4,122)
Net increase in interest bearing deposits 1,471 7,163
Net increase in securities sold under
agreements to repurchase 2,211 1,782
Net increase in other borrowings 1,450 - -
Principal payments on notes payable - - (800)
Cash dividends paid (614) (342)
Purchases of common stock for the treasury,
net of sales (227) 136
Net cash provided by financing activities $ 2,200 $ 3,817
Net increase in cash and due from banks $ 656 $ 2,277
Cash and due from banks:
Beginning 11,720 9,100
Ending $ 12,376 $ 11,377
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash payments for:
Interest $ 4,982 $ 3,546
Income taxes 455 292
See Notes to Consolidated Condensed Financial Statements.
<PAGE>
IOWA FIRST BANCSHARES CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Nature of Business and Significant Accounting Policies
Nature of business:
Iowa First Bancshares Corp. is a bank holding company
providing bank and bank related services through its
subsidiaries.
Significant accounting policies:
Principles of consolidation:
The accompanying consolidated financial statements include
the accounts of the Company and its wholly-owned
subsidiaries, First National Bank of Muscatine (Muscatine)
and First National Bank in Fairfield (Fairfield),
collectively referred to herein as (Banks). All material
intercompany accounts and transactions have been eliminated
in consolidation. The unaudited interim financial
statements presented reflect all adjustments which are, in
the opinion of management, necessary to a fair statement of
the results for the interim periods. All such adjustments
are of a normal recurring nature.
Presentation of cash flows:
For purposes of reporting cash flows, cash and due from
banks include cash on-hand and amounts due from banks. Cash
flows from demand deposits, NOW accounts, savings accounts,
and federal funds sold are reported net, since their
original maturities are less than three months. Cash flows
are also reported net for other borrowings, securities sold
under agreements to repurchase, certificates of deposits,
and loans.
Investment securities:
Investment securities held to maturity are those debt
securities that the Banks have the ability and intent to
hold until maturity regardless of changes in market
conditions, liquidity needs or changes in general economic
conditions. Such securities are carried at cost adjusted
for amortization of premiums and accretion of discounts. If
the ability or intent to hold to maturity is not present for
certain specified securities, such securities are considered
available for sale as the Banks intend to hold them for an
indefinite period of time but not necessarily to maturity.
Any decision to sell a security classified as available for
sale would be based on various factors, including
significant movements in interest rates, changes in the
maturity mix of the Banks' assets and liabilities, liquidity
needs, regulatory capital considerations, and other similar
factors. Securities available for sale are carried at fair
value. Unrealized gains or losses are reported as increases
or decreases in stockholders' equity, net of the related
deferred tax effect. There are no securities held for
trading purposes. Realized gains or losses, determined on
the basis of the cost of specific securities sold, are
included in earnings.
<PAGE>
IOWA FIRST BANCSHARES CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Loans and direct lease financing:
Loans are stated at the amount of unpaid principal, reduced
by unearned discount and an allowance for loan losses. The
allowance for loan losses is maintained at the level
considered adequate by management of the Banks to provide
for losses that can be reasonably anticipated. The
allowance is increased by provisions charged to operating
expense and reduced by net charge-offs. In determining the
adequacy of the allowance balance, the Banks make continuous
credit reviews of the loan portfolio and consider current
economic conditions, historical loan loss experience, review
of specific problem loans and other factors. Unearned
interest on discounted loans is amortized to income over the
life of the loans using the interest method. For all other
loans, interest is accrued daily on the outstanding
balances. Accrual of interest is discontinued on a loan
when management believes, after considering collection
efforts and other factors, that the borrower's financial
condition is such that collection of interest is doubtful.
Generally this occurs when the collection of interest or
principal has become 90 days past due.
Financial Accounting Standards Board (FASB) Statement No.
114, Accounting by Creditors for Impairment of a Loan, as
amended by FASB Statement No. 118, was adopted as of
January 1, 1995. Under these standards, loans considered to
be impaired are reduced to the present value of expected
future cash flows or to the fair value of collateral, by
allocating a portion of the allowance for loan losses to
such loans. If these allocations cause the allowance for
loan losses to require increase, such increase is reported
as bad debt expense. Cash interest payments collected on
impaired loans are recorded as interest income. The effect
of adopting these standards was not material.
The leasing operations consist principally of the leasing of
various types of medical and transportation equipment. All
of the leases are classified and accounted for as direct
financing leases. Under the direct financing method of
accounting for leases, the total net rentals receivable
under the lease contracts and the estimated unguaranteed
residual value of the leased equipment, net of unearned
income, are recorded as a net investment in direct financing
leases and the unearned income is recognized each month as
it is earned so as to provide a constant periodic rate of
return on the unrecovered investment.
Direct loan and lease origination fees and costs are
generally being deferred and the net amount amortized as an
adjustment of the related loan's or lease's yield. The
Banks generally amortize these amounts over the contractual
life. Commitment fees based upon a percentage of customers'
unused lines of credit and fees related to standby letters
of credit are not significant.
Bank premises and equipment:
Bank premises and equipment are stated at cost less
accumulated depreciation. Depreciation is computed
primarily by the straight-line method based on estimated
useful lives.
<PAGE>
IOWA FIRST BANCSHARES CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Other assets:
Other real estate (ORE), which is included in other assets,
represents properties acquired through foreclosure,
in-substance foreclosure or other proceedings. ORE is
recorded at the lower of the amount of the loan or fair
market value of the properties. Any write-down to fair
market value at the time of transfer to ORE is charged to
the allowance for loan losses. Property is evaluated
regularly to ensure that the recorded amount is supported by
the current fair market value.
Income taxes:
The Company files its tax return on a consolidated basis
with its subsidiary banks. The entities follow the direct
reimbursement method of accounting for income taxes under
which income taxes or credits which result from the
subsidiary banks' inclusion in the consolidated tax return
are paid to or received from the parent company.
Statement of Financial Accounting Standard No. 109 ("FAS
109"), Accounting for Income Taxes, was adopted in 1993.
Under the asset and liability method of accounting for
income taxes prescribed by FAS 109, deferred tax assets and
liabilities are recognized for the estimated future tax
consequences attributable to differences between the
financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax
assets and liabilities are measured using enacted tax rates
in effect for the year in which those temporary differences
are expected to be recovered or settled. Under FAS 109, the
effect on deferred tax assets and liabilities of a change in
tax rates is recognized in income in the period that
includes the enactment date.
Deferred income taxes have not been provided on the equity
in undistributed net income of the subsidiaries as the
entities file a consolidated income tax return.
Trust assets:
Trust assets (other than cash deposits) held by the Banks in
fiduciary or agency capacities for its customers are not
included in the accompanying consolidated balance sheets
since such items are not assets of the Banks.
Fair value of financial instruments:
FAS No. 107, Disclosures about Fair Market Value of
Financial Instruments, requires disclosure of fair value
information about financial instruments, whether or not
recognized in the balance sheet, for which it is practicable
to estimate that value. Interim condensed financial
statements are not required to include the disclosures
outlined by FAS 107 and, accordingly, are not included
herein.
<PAGE>
IOWA FIRST BANCSHARES CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Note 2. Capital Stock and Earnings Per Share
Common shares and preferred stock authorized total 2,000,000
shares and 500,000 shares, respectively. Primary earnings per
share are arrived at by dividing net income by the weighted
average number of shares of common stock and common stock
equivalents outstanding for the respective period. The weighted
average number of shares of common stock and common stock
equivalents outstanding for the first six months of 1995 was
591,136.
<PAGE>
IOWA FIRST BANCSHARES CORP. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Discussion and Analysis of Financial Condition
The Company's total assets at June 30, 1995, were $257,772,000.
Muscatine's total assets were $176,905,000 which reflects a $4,974,000
(2.9%) increase from December 31, 1994, total assets. Fairfield's total
assets were $79,212,000 at June 30, 1995, which is a decrease of $995,000
(1.2%) when compared to December 31, 1994, total assets. Total
consolidated assets increased by 1.6% during the first six months of 1995.
Net loans totaled $166,961,000 at June 30, 1995. Net loans at Muscatine
increased by $3,922,000 (3.5%) during the first six months. Net loans
increased at Fairfield by $1,024,000 (2.0%) during the first six months.
Consolidated net loans increased by $4,946,000 (3.1%) year-to-date with
$1,615,000 of the increase occurring during the second quarter of 1995.
Total held to maturity and available for sale securities decreased over $7
million during the first six months of 1995 due to maturities and sales
utilized to generate funds primarily for loan growth. The Banks continue
to emphasize purchase of securities with maturities of five years and less
as such purchases offer reasonable yields with very little credit risk as
well as limited interest rate risk. Additionally, selected securities
with longer maturities have been purchased in order to enhance overall
portfolio yield without significantly increasing risk. At June 30, 1995,
less than 10% of investment securities mature in more than five years and
less than 2% mature in more than ten years. Securities totaling
approximately $2.5 million were sold from the available for sale
securities portfolio during the year with net gains before tax on these
sales of approximately $6,000.
Total deposits at June 30, 1995, were $228,403,000. Deposits at Muscatine
increased approximately $1.1 from the prior year end. Fairfield's total
deposits decreased approximately $1.9 million during the same period.
This represents a combined deposit decrease of .3% for the Company during
the first six months of 1995. Offsetting this deposit decline, securities
sold under agreements to repurchase increased $.7 million and $1.5 million
at Fairfield and Muscatine, respectively. Additionally, intermediate term
advances were borrowed from the Federal Home Loan Bank totaling $1.45
million.
Results of Operations
Consolidated net income from continuing operations was $745,000, or $1.26
per share, for the second quarter of 1995, a $2,000 increase from the same
period last year. Consolidated net income for the first six months of
1995 was $1,448,000, or $2.45 per share. This is $30,000 (2.1%) higher
than the same period in 1994. This improvement resulted primarily from
increased net interest margin and expense control.
The Company has been able to expand the net interest margin, as compared
to the prior year by actively managing asset quality, growth of the loan
portfolio, and rates paid on assets and liabilities. Management
expressed doubts as to the sustainability of these levels of net interest
margin as the Federal Reserve Bank raised short-term interest rates over
the past several quarters. With the Federal Reserve Bank's recent
one-quarter percent reduction in the targeted federal funds rate,
management of the Company is guardedly optimistic that the net interest
margin is less likely to erode substantially in the near term.
Provisions for loan losses were $30,000 for the six months ended June 30,
1995, the same as in 1994. Net loan recoveries totaled $53,000 compared
to net loan charge-offs of $41,000 for the first two quarters of 1995 and
1994, respectively.
<PAGE>
Nonaccrual loans were reduced during the past twelve months totaling $1.21
million at June 30, 1995, $311,000 less than the end of the second quarter
in 1994. Other real estate owned totaled $187,000, and loans past due 90
days or more and still accruing totaled $147,000. The reserve for loan
losses of $2,609,000 represents 1.6% of net loans and 169% of total
nonaccrual loans, other real estate owned, and loans past due 90 days or
more and still accruing.
The efficiency ratio, defined as noninterest expense as a percent of net
interest income plus noninterest income, was 62.2% for the first six
months of 1995 compared to 63% for all of 1994.
Interest Rate Sensitivity
The Company manages its balance sheet to minimize the impact of interest
rate movements on its earnings. The term "rate sensitive" refers to those
assets and liabilities which are "sensitive" to fluctuations in rates and
yields. When interest rates move, earnings may be affected in many ways.
Interest rates on assets and liabilities may change at different times or
by different amounts. Maintaining a proper balance between rate sensitive
earning assets and rate sensitive liabilities is the principal function of
asset and liability management of a banking organization.
The following table shows the interest rate sensitivity position at
several repricing intervals (dollar amounts in thousands):
<TABLE>
<CAPTION>
Repricing Maturities at June 30, 1995
Non-
Less Than 3-12 1-5 More Than interest
3 Months Months Years 5 years Bearing Total
<S> <C> <C> <C> <C> <C> <C>
Assets:
Loans $ 51,250 $ 34,805 $ 68,465 $ 13,838 $ 1,212 $169,570
Investments 6,749 11,918 39,671 4,044 10 62,392
Other earning
assets 9,060 - - - - - - - - 9,060
Nonearning
assets - - - - - - - - 16,750 16,750
Total assets $ 67,059 $ 46,723 $108,136 $ 17,882 $ 17,972 $257,772
Liabilities
and Equity:
Deposits $ 41,590 $ 87,323 $ 66,245 $ - - $ 33,245 $228,403
Other
purchased
funds 3,444 450 2,015 - - - - 5,909
Other liab. - - - - - - - - 1,741 1,741
Equity - - - - - - - - 21,719 21,719
Total
liabilities
and equity $ 45,034 $ 87,773 $ 68,260 $ - - $ 56,705 $257,772
Repricing gap $ 22,025 $(41,050) $ 39,876 $ 17,882 $(38,733) $ - -
Cumulative
repricing
gap $ 22,025 $(19,025) $ 20,851 $ 38,733 $ - - $ - -
</TABLE>
The data in this table incorporates the contractual characteristics as
well as an estimate of the actual repricing characteristics of the
Company's assets and liabilities. Based on the estimate, twenty percent
of the savings and NOW accounts are reflected in the less than three
months category, 30% in the three month to one year category, with the
remaining 50% in the 1-5 year time frame. Money market accounts are
estimated as 25% in the less than three months category and 75% in the
three months to one year time frame.
<PAGE>
A positive repricing gap for a given period exists when total
interest-earning assets exceed total interest-bearing liabilities and a
negative gap exists when total interest-bearing liabilities are in excess
of interest-earning assets. Generally a positive repricing gap will
result in increased net interest income in a rising rate environment and
decreased net interest income in a falling rate environment. A negative
repricing gap tends to produce increased net interest income in a falling
rate environment and decreased net interest income in a rising rate
environment. At June 30, 1995, rate sensitive liabilities exceeded rate
sensitive assets within a one year maturity range by $19 million and,
thus, the Company is positioned to benefit from a decline in interest
rates within the next year.
The Company's repricing gap position is useful for measuring general
relative risk levels. However, even with perfectly matched repricing of
assets and liabilities, interest rate risk cannot be avoided entirely.
Interest rate risk remains in the form of prepayment risk of assets and
liabilities, timing lags in adjusting certain assets and liabilities that
have varying sensitivities to market interest rates, and basis risk.
Basis risk refers to the possibility that the repricing behavior of
variable-rate assets could differ from the repricing characteristics of
liabilities which reprice in the same time period. Even though these
assets are match-funded, the spread between asset yields and funding costs
could change.
Because the repricing gap position does not capture these risks,
Management utilizes simulation modeling to measure and manage the rate
sensitivity exposure of earnings. The Company's simulation model provides
a projection of the effect on net interest income of various interest rate
scenarios and balance sheet strategies.
Liquidity
For banks, liquidity represents ability to meet both loan commitments and
deposit withdrawals. Factors which influence the need for liquidity are
varied, but include general economic conditions, asset/liability mix, bank
reputation, future FDIC funding needs, changes in regulatory environment,
and credit standing. Assets which provide liquidity consist principally
of loans, cash and due from banks, investment securities, and short-term
investments such as federal funds. Maturities of securities held for
investment purposes and loan payments provide a constant flow of funds
available for cash needs. Additionally, liquidity can be gained by the
sale of loans or securities prior to maturity if such assets had
previously been designated as available for sale. Interest rates,
relative to the rate paid by the security or loan sold, along with the
maturity of the security or loan, are the major determinates of the price
which can be realized upon sale.
The subsidiary banks do not have brokered deposits.
At June 30, 1995, the investment portfolio included $320,000 of gross
unrealized gains and $315,000 of gross unrealized losses related to
securities intended to be held until maturity. Such amounts are not
expected to have a material effect on future earnings beyond the usual
amortization of acquisition premium or discount, because no significant
sale of such investments is anticipated. Securities available for sale
with a cost totaling $15,027,000 at quarter-end included $80,000 of gross
unrealized gains and $34,000 of gross unrealized losses. These securities
may be sold in whole or in part to increase liquid assets, reposition the
investment portfolio, or for other purposes as defined by Management.
Capital
Stockholders' equity increased $429,000 and $1,047,000 during the three
and six months ended June 30, 1995, respectively.
Federal regulatory agencies have adopted various capital standards for
financial institutions, including risk-based capital standards. The
primary objectives of the risk-based capital framework are to provide a
more consistent system for comparing capital positions of financial
institutions and to take into account the different inherent risks among
financial institutions' assets and off-balance-sheet items.
<PAGE>
Risk-based capital standards have been supplemented with requirements for
a minimum Tier 1 capital to assets ratio (leverage ratio). In addition,
regulatory agencies consider the published capital levels as minimum
levels and may require a Financial Institution to maintain capital at
higher levels.
A comparison of the Company's capital as of June 30, 1995 with the minimum
requirements is presented below.
Minimum
Actual Requirements
Tier 1 risk-based capital 13.17% 4.00%
Total risk-based capital 14.75% 8.00%
Tier 1 leverage ratio 8.41% 3.00%
Impact of Inflation and Changing Prices
The financial statements and related data presented herein have been
prepared in accordance with generally accepted accounting principles,
which require the measurement of financial position and operating results
in terms of historical dollars without considering changes in the relative
purchasing power of money over time due to inflation.
Unlike most industrial companies, virtually all of the assets and
liabilities of a financial institution are monetary in nature. As a
result, interest rates have a more significant impact on a financial
institution's performance than the effects of general levels of inflation.
Interest rates do not necessarily move in the same direction or in the
same magnitude as the price of goods and services. In the current
interest rate environment, liquidity and the maturity structure of the
Company's assets and liabilities are critical to the maintenance of
acceptable performance levels.
Trends, Events or Uncertainties
Officers and Directors of the Company and its subsidiaries have had, and
may have in the future, banking transactions in the ordinary course of
business of the Company's subsidiaries. All such transactions are on
substantially the same terms, including interest rates on loans and
collateral, as those prevailing at the time for comparable transactions
with others, involve no more than normal risk of collectibility, and
present no other unfavorable features.
At its meeting on June 15, 1989, the Company's Board of Directors
authorized a stock repurchase program, to repurchase up to 10 percent of
the Company's shares or 60,000 shares. Through June 30, 1995, nearly
28,000 shares of common stock have been purchased under the program, net
of sales to the Company's Employee Stock Ownership Plan. The Company
expects to continue repurchase of its common stock from time to time under
the repurchase program.
In the normal course of business, the Banks are involved in various legal
proceedings. In the current opinion of management, any liability
resulting from such proceedings would not have a material effect on the
Company's financial statements.
<PAGE>
The Company has incurred legal and engineering fees, and performed various
tests on a bank-owned vacant lot to determine if the lot contains
environmental damage or a potential for environmental damage liability.
As a result of the testing, the Company has submitted a Site Clean-Up
Report with the Iowa Department of Natural Resources (IADNR). The Company
intends to work with the IADNR, as well as its own engineers and
attorneys, to determine the nature and scope of this environmental
concern, to ascertain the need for a monitoring and/or remediation program
and to consider the costs and allocations of responsibility with respect
to any expenses incurred under such a program. In the event that on-going
monitoring or remediation is required, investigation into the potential
for reimbursement by predecessor owners or insurers is in process. No
conclusions have been reached at this time about a final plan of
monitoring and/or remediation, if any, and the costs that may be
associated with such a plan.
Besides those previously discussed, management is not aware of any trends,
events, or uncertainties that will have or that are reasonably likely to
have material effect on the Company's liquidity, capital resources or
operations.
<PAGE>
IOWA FIRST BANCSHARES CORP. AND SUBSIDIARIES
OTHER INFORMATION
ITEM 6. Exhibits and reports on Form 8-K.
Reports on Form 8-K. No Form 8-K has been
filed for the quarter
ended June 30, 1995.
<PAGE>
IOWA FIRST BANCSHARES CORP. AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
IOWA FIRST BANCSHARES CORP.
(Registrant)
Date 8/4/95 /s/ George A. Shepley
George A. Shepley, Chairman of
the Board, President & Chief
Executive Officer
Date 8/4/95 /s/ Kim K. Bartling
Kim K. Bartling, Senior Vice
President, Chief Financial
Officer & Treasurer
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE JUNE
30, 1995 10-Q OF IOWA FIRST BANCSHARES CORP. AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-30-1995
<PERIOD-END> JUN-30-1995
<CASH> 12,376
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 9,060
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 15,073
<INVESTMENTS-CARRYING> 47,319
<INVESTMENTS-MARKET> 47,324
<LOANS> 169,570
<ALLOWANCE> 2,609
<TOTAL-ASSETS> 257,772
<DEPOSITS> 228,403
<SHORT-TERM> 5,909
<LIABILITIES-OTHER> 1,741
<LONG-TERM> 0
<COMMON> 200
0
0
<OTHER-SE> 21,519
<TOTAL-LIABILITIES-AND-EQUITY> 257,772
<INTEREST-LOAN> 7,084
<INTEREST-INVEST> 1,901
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<INTEREST-TOTAL> 9,176
<INTEREST-DEPOSIT> 4,297
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<INTEREST-INCOME-NET> 4,879
<LOAN-LOSSES> 30
<SECURITIES-GAINS> 6
<EXPENSE-OTHER> 3,491
<INCOME-PRETAX> 2,094
<INCOME-PRE-EXTRAORDINARY> 1,448
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,448
<EPS-PRIMARY> 2.45
<EPS-DILUTED> 2.45
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