Pinnacle Bancshares Announces Results for Second Quarter Ended June 30, 2022

JASPER, Ala.--(BUSINESS WIRE)-- Robert B. Nolen, Jr., President and Chief Executive Officer of Pinnacle Bancshares, Inc. (OTCBB: PCLB), today announced Pinnacle’s second quarter results of operations.

• For the three months ended June 30, 2022, Pinnacle reported net income of $1,210,000 compared to $984,000 for the three months ended June 30, 2021.
• For the six months ended June 30, 2022, Pinnacle reported net income of $2,320,000 compared to $1,891,000 for the six months ended June 30, 2021. PPP loan fees recognized during the six months ended June 30, 2022 and 2021 were $190,000 and $191,000, respectively.
• Net interest income for the three and six months ended June 30, 2022, was $2,832,000 and $5,567,000, respectively, compared with $2,463,000 and $4,842,000 respectively, in the same periods last year.
• Basic and diluted earnings per share for the three and six months ended June 30, 2022 were $1.25 and $2.39 per share, respectively, compared to $1.01 and $1.94 per share, respectively, for the same periods last year.
• For the three and six months ended June 30, 2022, return on average assets was 1.39%, and 1.33%, respectively, compared to 1.26% and 1.25%, respectively, in the comparable 2021 period.

Pinnacle’s net interest margin was 3.28% for both the three and six months ended June 30, 2022, respectively, compared to 3.41% and 3.48% for the three and six months ended June 30, 2021, respectively.

At June 30, 2022, Pinnacle’s allowance for loan losses as a percent of total loans was 2.08%, compared to 2.02% at December 31, 2021. Excluding PPP loans of $376,000 and $4.3 million dollars, the allowance for loan losses as a percent of total loans as of June 30, 2022 and December 31, 2021, was 2.08% and 2.09%, respectively. Nonperforming assets were $60,000 at June 30, 2022, compared to $30,000 at December 31, 2021. The ratio of nonperforming assets to total loans was .05% and .01% at June 30, 2022 and December 31, 2021, respectively. All capital ratios are higher than the requirements for a well-capitalized institution.

Dividends of $.25 and $.50 were paid to shareholders during the three and six months ended for June 30, 2022, respectively as compared to $.22 and $.44 per share dividends that were paid to shareholders during the three and six months ended June 30, 2021.

Impact of COVID-19 on Our Business

As a result of the spread of the COVID-19 coronavirus, economic uncertainties have arisen which are likely to negatively impact the Company. The extent of COVID-19’s impact on the Company’s operational and financial performance will depend on certain developments, including the duration and spread of the outbreak, the virus’ impact on the Company’s customers, employees and vendors, and vaccination supply and delivery. At this point, the extent to which COVID-19 may impact the Company’s financial condition or results of operations remains uncertain.

Effects of Inflation

We do not believe that inflation has had a material effect on our results of operations for the three- and six-months period ended June 30, 2022 and June 30, 2021; however, our business could be affected by inflation in the future which we plan to mitigate through a combination of pricing actions and operating efficiencies, although these actions could have an adverse impact on demand.

Forward-Looking Statements

Information contained in this press release, other than historical information, may be considered forward-looking in nature and is subject to various risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or expected. Pinnacle undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in Pinnacle’s expectations. Certain tabular presentations may not reconcile because of rounding.

Pinnacle Bancshares, Inc.’s wholly owned subsidiary Pinnacle Bank has seven offices located in central and northwest Alabama.

PINNACLE BANCSHARES, INC. Unaudited Financial Highlights (In Thousands, except share and per share data)
		Three Months Ended June 30,
			2022				2021
Net income		$	1,210,000			$	984,000
Basic and diluted earnings per share		$	1.25			$	1.01
Performance ratios (annualized):
Return on average assets			1.39	%			1.26	%
Return on average equity (excluding OCI)			13.82	%			12.44	%
Interest rate spread			3.19	%			3.31	%
Net interest margin			3.28	%			3.41	%
Operating cost to assets			2.02	%			2.17	%
Weighted average basic and diluted shares outstanding			969,445				973,505
Dividends per share		$	0.25			$	0.22
Provision for loan losses		$	-			$	-
		Six Months Ended June 30,
			2022				2021
Net income		$	2,320,000			$	1,891,000
Basic and diluted earnings per share		$	2.39			$	1.94
Performance ratios (annualized):
Return on average assets			1.33	%			1.25	%
Return on average equity (excluding OCI)			13.30	%			12.09	%
Interest rate spread			3.20	%			3.38	%
Net interest margin			3.28	%			3.48	%
Operating cost to assets			2.03	%			2.24	%
Weighted average basic and diluted shares outstanding			970,114				973,505
Dividends per share		$	0.50			$	0.44
Provision for loan losses		$	-			$	-
						(Audited)
		June 30, 2022				December 31, 2021
Total assets		$	339,113,000			$	339,710,000
Loans receivable, net (includes $376k and $4.3M PPP loans, respectively)		$	118,893,000			$	122,659,000
Deposits		$	323,835,000			$	298,693,000
Brokered CD’s included in deposits		$	11,748,000			$	24,937,000
Total stockholders’ equity		$	10,614,000			$	35,659,000
Book value per share (excluding OCI)		$	35.28			$	35.15
Total average stockholders’ equity to assets ratio (excluding OCI)			9.98	%			10.19	%
Asset quality ratios:
Nonperforming loans as a percent of total loans			.05	%			.01	%
Nonperforming assets as a percent of total loans			.05	%			.01	%
Allowance for loan losses as a percent of total loans			2.08	%			2.02	%
Allowance for loan losses as a percent of nonperforming loans			4,210.00	%			8,460.00	%

FINANCIAL INFORMATION
PINNACLE BANCSHARES, INC. CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
	(Unaudited)				(Audited)
	June 30,				December 31,
		2022				2021
Assets
Cash and cash equivalents	$	2,025,947				1,730,327
Interest bearing deposits in banks		10,943,513				11,146,497
Securities available for sale		177,731,521				183,516,514
Restricted equity securities		773,600				741,600
Loans		121,419,789				125,196,462
Less Allowance for loan losses		2,526,489				2,537,948
Loans, net		118,893,300				122,658,514
Premises and equipment, net		7,001,270				7,015,537
Right-of-use lease assets – operating		445,911				493,627
Goodwill		306,488				306,488
Bank owned life insurance		10,014,387				9,822,441
Accrued interest receivable		1,969,592				1,917,598
Other assets		9,007,475				361,228
Total assets	$	339,113,004				339,710,371
Liabilities and Stockholders’ Equity
Deposits
Noninterest-bearing	$	92,010,352				88,430,320
Interest-bearing		231,824,569				210,262,213
Total deposits		323,834,921				298,692,533
Subordinated debentures		3,093,000				3,093,000
Accrued interest payable		92,702				77,843
Operating lease liabilities		445,911				493,627
Other liabilities		1,032,550				1,694,225
Total liabilities		328,499,084				304,051,228
Stockholders’ equity
Common stock, par value $.01 per share; 2,400,000 authorized; 1,872,313 issued; 909,534 and 970,791 shares outstanding, respectively.		18,723				18,723
Additional paid‑in capital		8,923,223				8,923,223
Treasury stock (962,779 and 901,522 shares, respectively)		(15,588,799	)			(13,533,621	)
Retained earnings		40,545,323				38,710,339
Accumulated other comprehensive income (loss), net of tax		(23,284,550	)			1,540,479
Total stockholders’ equity		10,613,920				35,659,143
Total liabilities and stockholders’ equity	$	339,113,004			$	339,710,371

PINNACLE BANCSHARES, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
	Three Months Ended						Six Months Ended
	June 30,						June 30,
		2022			2021			2022			2021
Interest income
Loans, including fees	$	1,590,490		$	1,526,216		$	3,245,439		$	3,064,459
Securities available for sale		1,367,724			1,060,940			2,582,022			2,031,546
Other interest		35,438			5,420			45,759			11,052
Total interest income		2,993,652			2,592,576			5,873,220			5,107,057
Interest expense
Deposits		125,070			91,510			231,305			188,682
Borrowings and repurchase agreements		-			795			-			795
Subordinated debentures		36,710			37,550			75,310			76,050
Total interest expense		161,780			129,855			306,615			265,527
Net interest income		2,831,872			2,462,721			5,566,605			4,841,530
Provision for loan losses		-			-			-			-
Net interest income after provision for loan losses		2,831,872			2,462,721			5,566,605			4,841,530
Other income
Fees and service charges on deposit accounts		382,786			353,863			740,619			700,051
Service fee income, net		811			1,001			1,697			2,059
Bank owned life insurance		95,973			97,967			191,946			195,935
Mortgage fee income		12,887			14,987			27,248			17,474
Total other income		492,457			467,818			961,510			915,519
Other expense:
Salaries and employee benefits		1,026,255			965,842			2,051,838			1,924,815
Occupancy expense		203,934			212,163			433,556			434,307
Marketing and professional expense		63,764			67,527			128,665			132,164
Other operating expenses		467,623			445,711			929,464			878,612
Total other expenses		1,761,576			1,691,243			3,543,523			3,369,898
Income before income taxes		1,562,753			1,239,296			2,984,592			2,387,151
Income tax expense		353,134			255,536			664,213			496,439
Net income	$	1,209,619		$	983,760		$	2,320,379		$	1,890,712
Cash dividend per share	$	0.25		$	0.22		$	0.50		$	0.44
Basic and diluted earnings per share	$	1.25		$	1.01		$	2.39		$	1.94
Weighted –average basic and diluted shares outstanding		969,445			973,505			970,114			973,505

PINNACLE BANCSHARES, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY Six Months Ended June 30, 2022 and 2021
																	Accumulated
						Additional											Other				Total
	Common Stock					Paid-in			Treasury				Retained				Comprehensive				Stockholders’
	Shares		Amount			Capital			Stock				Earnings				Income				Equity
Balance December 31, 2020	1,872,313		$	18,723		$	8,923,223		$	(13,441,345	)		$	34,874,072			$	3,957,193			$	34,331,866
Net income	-			-			-			-				1,572,615				-				1,572,615
Cash dividends declared ($.44 per share)	-			-			-			-				(428,343	)			-				(428,343	)
Other comprehensive loss	-			-			-			-				-				(1,448,820	)			(1,448,820	)
Balance June 30, 2021	1,872,313		$	18,723		$	8,923,223		$	(13,441,345	)		$	36,336,441			$	2,508,373			$	34,345,415

											Accumulated
					Additional						Other		Total
	Common Stock				Paid-in		Treasury		Retained		Comprehensive		Stockholders’
	Shares		Amount		Capital		Stock		Earnings		Income (Loss)		Equity
Balance December 31, 2021	1,872,313		$ 18,723		$ 8,923,223		$ (13,533,621)		$ 38,710,339		$ 1,540,479		$ 35,659,143
Net income	-		-		-		-		2,320,379		-		2,320,379
Cash dividends declared ($.50 per share)	-		-		-		-		(485,395)		-		(485,395)
Purchase of treasury stock	-		-		-		(2,055,178)		-		-		(2,055,178)
Other comprehensive loss	-		-		-		-		-		(24,825,029)		(24,825,029)
Balance June 30, 2022	1,872,313		$ 18,723		$ 8,923,223		$ (15,588,799)		$ 40,545,323		$ (23,284,550)		$ 10,613,920

PINNACLE BANCSHARES, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
	For the Six Months Ended
	June 30,
		2022				2021
OPERATING ACTIVITIES:
Net income	$	2,320,379			$	1,890,712
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		220,219				214,258
Net investment amortization expense		121,027				161,957
Bank owned life insurance		(191,946	)			(195,935	)
Increase in accrued interest receivable		(51,994	)			(241,911	)
Increase (decrease) in accrued interest payable		14,859				(45,535	)
Net other operating activities		(128,162	)			727,798
Net cash provided by operating activities		2,304,382				2,511,344
INVESTING ACTIVITIES:
Net (increase) decrease in loans		3,765,214				(11,483,330	)
Net (increase) decrease in interest bearing deposits in other banks		202,984				(9,562,744	)
Purchase of securities available for sale		(32,299,292	)			(37,014,405	)
Proceeds from maturing, sale and payments received on securities available for sale		3,958,469				10,460,206
Net (purchase) redemption of restricted equity securities		(32,000	)			69,500
Purchase of premises and equipment		(205,952	)			(774,655	)
Net cash used in investing activities		(24,610,577	)			(48,305,428	)
FINANCING ACTIVITIES:
Net increase in deposits		25,142,388				46,112,054
Purchase of treasury stock		(2,055,178	)			-
Payments of cash dividends		(485,395	)			(428,343	)
Net cash provided by financing activities		22,601,815				45,683,711
Net increase (decrease) in cash and cash equivalents		295,620				(110,373	)
Cash and cash equivalents at beginning of period		1,730,327				2,080,667
Cash and cash equivalents at end of period	$	2,025,947			$	1,970,294
SUPPLEMENTAL DISCLOSURES:
Cash paid during the period for:
Interest	$	291,756			$	311,062
Taxes	$	677,568			$	415,000
OTHER NONCASH TRANSACTIONS
Real estate acquired through foreclosure	$	-			$	-
Internally financed sales of other real estate owned	$	-			$	-

 

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Joe B. Adams, III

Chief Financial Officer

(205) 221-8866

Source: Pinnacle Bancshares, Inc.