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

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

MUSCATINE, Iowa--(Business Wire)--
Iowa First Bancshares Corp. (OTCBB: IOFB) today reported net
income of $731,000 for the quarter ended June 30, 2008, compared to
record net income of $1,136,000 for the quarter ended June 30, 2007, a
decrease of $405,000 or 35.7%. The decline in net income resulted
primarily from an increase in provision for loan losses totaling
$558,000 compared to no such provision during the second quarter of
2007. These provisions were necessary due mainly to the deterioration
in the credit quality of one loan.

Basic and diluted earnings per share were $.64 for the three
months ended June 30, 2008, $.29 or 31.2% less than the same period in
2007.

The Company recorded net income of $1,712,000 for the six months
ended June 30, 2008, compared with net income of $2,136,000 for the
two quarters ended June 30, 2007, a decrease of $424,000 or 19.9%.
Once again, the primary reason for this net income decrease was much
higher provision for loan losses during the first six months of 2008
compared to the same period in 2007.

Basic and diluted earnings per share were $1.48 for the six months
ended June 30, 2008, $.26 or 14.9% lower than the same period in 2007.
The Company's annualized return on average assets for the first two
quarters of 2008 was .84% compared to 1.07% during the same quarters
of the prior year. The Company's annualized return on average equity
for the six months ended June 30, 2008 and June 30, 2007 was 11.9% and
15.1%, respectively.

The Company's assets at June 30, 2008 totaled $399,384,000, a
decrease of $8,818,000 or 2.2% from December 31, 2007. Gross loans
outstanding declined $4,165,000 (1.3%) while total deposits decreased
$10,434,000 (3.1%) during the first six months of 2008. The allowance
for loan losses totaled $3,260,000 at June 30, 2008, or 1.0% of gross
loans outstanding.

The net interest margin of 3.66% during the first two quarters of
2008 compared to 3.71% during the first two quarters of the prior
year.

The board of directors declared a $.285 per common share cash
dividend to be paid to shareholders of record June 30, 2008.

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.

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*T
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Dollar amounts in thousands, except per share data)
(unaudited)

For the Three For the Three For the Six For the Six
Months Ended Months Ended Months Ended Months Ended
June 30, 2008 June 30, 2007 June 30, 2008 June 30, 2007
------------- ------------- ------------- -------------

Net Interest
Income $ 3,314 $ 3,325 $ 6,669 $6,543
Provision for
Loan Losses 558 - - 636 5
Noninterest
Income 891 837 1,701 1,623
Noninterest
Expense 2,573 2,501 5,199 5,010
Net Income
After Income
Taxes 731 1,136 1,712 2,136

Net Income Per
Common Share,
Basic and
Diluted $ .64 $ 0.93 $ 1.48 $ 1.74

As of As of As of
June 30, 2008 December 31, 2007 June 30, 2007
------------- ----------------- -------------

Gross Loans $ 323,381 $ 327,546 $ 322,986
Total Assets 399,384 408,202 418,183
Total Deposits 323,006 333,440 342,523

Return on Average
Equity 11.9% 14.1% 15.1%
Return on Average
Assets .84 .99 1.07
Net Interest Margin
(tax equivalent) 3.66 3.63 3.71
Allowance as a Percent
of Total Loans 1.0 1.1 1.0
*T

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

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