Pinnacle Bancshares Announces Results for Third Quarter Ended September 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 third quarter results of operations.

• For the three months ended September 30, 2022, Pinnacle reported net income of $1,168,000 compared to $1,829,000 for the three months ended September 30, 2021.
• For the nine months ended September 30, 2022, Pinnacle reported net income of $3,488,000 compared to $3,720,000 for the nine months ended September 30, 2021.
• Included in net interest income for each of the three months ended September 30, 2022 and 2021 are Paycheck Protection Program (“PPP”) amortized loan fees of approximately $36,000 and $240,000, respectively. Included in net interest income for each of the nine months ended September 30, 2022 and 2021 are PPP amortized loan fees of approximately $226,000 and $431,000, respectively.
• Bank-owned life insurance income, which is included in non-interest income, was approximately $96,000 and $288,000 for the three months and nine months ended September 30, 2022 as compared to $820,000 and $1,015,000 for the three months and nine months ended September 30, 2021.
• Gain on sale of available for sales of securities in the amount of approximately $227,000 was recorded during both the three and nine months ended September 30, 2021. There were no gains on sale of available for sales of securities recorded during the three months and nine months ended September 30, 2022.
• Basic and diluted earnings per share for the three and nine months ended September 30, 2022 were $1.28 and $3.67 per share, respectively, compared to $1.88 and $3.82 per share, respectively, for the same periods last year.
• For the three and nine months ended September 30, 2022, return on average assets was 1.42%, and 1.37%, respectively, compared to 2.19% and 1.59%, respectively, in the comparable 2021 period.

Pinnacle’s net interest margin was 3.37% and 3.31% for the three and nine months ended September 30, 2022, respectively, compared to 3.52% and 3.49% for the three and nine months ended September 30, 2021, respectively.

At September 30, 2022, Pinnacle’s allowance for loan losses as a percent of total loans was 2.12%, compared to 2.02% at December 31, 2021. Nonperforming assets were $46,000 at September 30, 2022, compared to $30,000 at December 31, 2021. The ratio of nonperforming assets to total loans was .04% and .01% at September 30, 2022 and December 31, 2021, respectively. All capital ratios are higher than the requirements for a well-capitalized institution.

Dividends of $.25 and $.75 per share were paid to shareholders during the three and nine months ended for September 30, 2022 as compared to $.22 and $.66 per share paid during the three and nine months ended for September 30, 2021.

Effects of Inflation

Inflation has caused a substantial rise in interest rates during 2022 which has had a negative effect in the securities market. As a result of rising interest rates, the Company has recorded an accumulated other comprehensive loss on securities available for sale of approximately $30.4 million as compared to recording other comprehensive income in the amount of $1.5 million as of December 31, 2022. Thus, this has caused the decrease in total equity during 2022 even though net earnings has been strong. Although these unrealized losses recorded as of September 30, 2022 were significant, management does not anticipate these losses to be other than temporary as these unrealized losses do not currently appear related to any credit deterioration within the portfolio but from higher interest rates.

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 September 30,
			2022				2021
Net income		$	1,168,000			$	1,829,000
Basic and diluted earnings per share		$	1.28			$	1.88
Performance ratios (annualized):
Return on average assets			1.42	%			2.19	%
Return on average equity			14.18	%			22.21	%
Interest rate spread			3.26	%			3.42	%
Net interest margin			3.37	%			3.52	%
Operating cost to assets			2.23	%			2.42	%
Weighted average basic and diluted shares outstanding			909,534				971,234
Dividends per share		$	0.25			$	0.22
Provision for loan losses		$	-			$	-
		Nine Months Ended September 30,
			2022				2021
Net income		$	3,488,000			$	3,720,000
Basic and diluted earnings per share		$	3.67			$	3.82
Performance ratios (annualized):
Return on average assets			1.37	%			1.59	%
Return on average equity			13.36	%			15.58	%
Interest rate spread			3.22	%			3.40	%
Net interest margin			3.31	%			3.49	%
Operating cost to assets			2.11	%			2.30	%
Weighted average basic and diluted shares outstanding			949,699				972,740
Dividends per share		$	0.75			$	0.66
Provision for loan losses		$	-			$	-
						(Audited)
		September 30, 2022				December 31, 2021
Total assets		$	326,478,000			$	339,710,000
Loans receivable, net		$	114,443,000			$	122,659,000
Deposits		$	317,216,000			$	298,693,000
Brokered CD’s included in deposits		$	11,752,000			$	24,937,000
Total stockholders’ equity		$	4,375,000			$	35,659,000
Book value per share (excluding OCI)		$	38.30			$	35.15
Average Stockholders’ equity to assets ratio (excluding OCI)			10.22	%			10.19	%
Asset quality ratios:
Nonperforming loans as a percent of total loans			.04	%			.01	%
Nonperforming assets as a percent of total loans			.04	%			.01	%
Allowance for loan losses as a percent of total loans			2.12	%			2.02	%
Allowance for loan losses as a percent of nonperforming loans			5,631.82	%			8,460.00	%

FINANCIAL INFORMATION   PINNACLE BANCSHARES, INC. CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
		(Unaudited)				(Audited)
		September 30,				December 31,
			2022				2021
Assets
Cash and cash equivalents		$	1,909,869				1,730,327
Interest bearing deposits in banks			7,040,876				11,146,497
Securities available for sale			170,890,286				183,516,514
Restricted equity securities			773,600				741,600
Loans			116,921,751				125,196,462
Less Allowance for loan losses			2,478,124				2,537,948
Loans, net			114,443,627				122,658,514
Premises and equipment, net			7,044,058				7,015,537
Right-of-use lease assets – operating			422,266				493,627
Goodwill			306,488				306,488
Bank owned life insurance			10,110,360				9,822,441
Accrued interest receivable			1,523,989				1,917,598
Other assets			12,012,997				361,228
Total assets		$	326,478,416				339,710,371
Liabilities and Stockholders’ Equity
Deposits
Noninterest-bearing		$	92,922,609				88,430,320
Interest-bearing			224,292,897				210,262,213
Total deposits			317,215,506				298,692,533
Subordinated debentures			3,093,000				3,093,000
Accrued interest payable			127,749				77,843
Operating lease liabilities			422,266				493,627
Other liabilities			1,244,783				1,694,225
Total liabilities			322,103,304				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			41,485,970				38,710,339
Accumulated other comprehensive income (loss), net of tax			(30,464,005	)			1,540,479
Total stockholders’ equity			4,375,112				35,659,143
Total liabilities and stockholders’ equity		$	326,478,416			$	339,710,371

PINNACLE BANCSHARES, INC.   UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
	Three Months Ended						Nine Months Ended
	September 30,						September 30,
		2022			2021			2022			2021
Interest income
Loans, including fees	$	1,600,000		$	1,718,950		$	4,845,439		$	4,783,409
Securities available for sale		1,405,805			1,113,658			3,987,827			3,145,204
Other interest		52,659			15,752			98,418			26,804
Total interest income		3,058,464			2,848,360			8,931,684			7,955,417
Interest expense
Deposits		155,403			94,842			386,708			283,524
Borrowings		810			-			810			795
Subordinated debentures		38,600			37,550			113,910			113,600
Total interest expense		194,813			132,392			501,428			397,919
Net interest income		2,863,651			2,715,968			8,430,256			7,557,498
Provision for loan losses		-			-			-			-
Net interest income after provision
for loan losses		2,863,651			2,715,968			8,430,256			7,557,498
Other income
Fees and service charges on deposit accounts		379,232			393,121			1,119,851			1,093,172
Service fee income, net		837			992			2,534			3,051
Bank owned life insurance		95,973			819,545			287,919			1,015,480
Mortgage fee income		509			12,164			27,757			29,638
Net gain on securities available for sale		-			227,238			-			227,238
Total other income		476,551			1,453,060			1,438,061			2,368,579
Other expense:
Salaries and employee benefits		1,017,682			1,072,154			3,069,520			2,996,969
Occupancy expense		226,707			229,893			660,263			664,200
Marketing and professional expense		72,903			65,957			201,568			198,121
Other operating expenses		518,116			651,548			1,447,580			1,530,160
Total other expenses		1,835,408			2,019,552			5,378,931			5,389,450
Income before income taxes		1,504,794			2,149,476			4,489,386			4,536,627
Income tax expense		336,763			320,111			1,000,976			816,550
Net income	$	1,168,031		$	1,829,365		$	3,488,410		$	3,720,077
Cash dividend per share	$	0.25		$	0.22		$	0.75		$	0.66
Basic and diluted earnings per share	$	1.28		$	1.88		$	3.67		$	3.82
Weighted –average basic and diluted
shares outstanding		909,534			971,234			949,699			997,740

PINNACLE BANCSHARES, INC.   UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY Nine Months Ended September 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, 2010	1,872,313		$	18,723		$	8,923,223		$	(13,441,345	)		$	34,874,072			$	3,957,193			$	34,331,866
Net income	-			-			-							3,720,077				-				3,720,077
Cash dividends declared
($.66 per share)	-			-			-			-				(641,916	)			-				(641,916	)
Purchase of treasury stock	-			-			-			(92,276	)			-				-				(92,276	)
Other comprehensive loss	-			-			-			-				-				(1,512,090	)			(1,512,090	)
Balance September 30, 2021	1,872,313		$	18,723		$	8,923,223		$	(13,533,621	)		$	37,952,233			$	2,445,103			$	35,805,661
																	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	-			-			-							3,488,410				-				3,488,410
Cash dividends declared
($.75 per share)	-			-			-			-				(712,779	)			-				(712,779	)
Purchase of treasury stock	-			-			-			(2,055,178	)			-				-				(2,055,178	)
Other comprehensive loss	-			-			-			-				-				(32,004,484	)			(32,004,484	)
Balance September 30, 2022	1,872,313		$	18,723		$	8,923,223		$	(15,588,799	)		$	41,485,970			$	(30,464,005	)		$	4,375,112

PINNACLE BANCSHARES, INC,   UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
		For the Nine Months Ended
		September 30,
			2022					2021
OPERATING ACTIVITIES:
Net income		$	3,488,410				$	3,720,077
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation			322,633					332,075
Net investment amortization expense			163,944					239,487
Net (increase) decrease in bank owned life insurance			(287,919	)				565,062
Gain on sale of securities available for sale			-					(227,238	)
Decrease in accrued interest receivable			393,609					90,082
Increase (decrease) in accrued interest payable			49,906					(55,607	)
Net other operating activities			(197,719	)				915,738
Net cash provided by operating activities			3,932,864					5,579,676
INVESTING ACTIVITIES:
Net (increase) decrease in loans			8,214,887					(14,698,376	)
Net (increase) decrease in interest bearing deposits in other banks			4,105,621					(1,537,109	)
Purchase of securities available for sale			(40,160,098	)				(68,497,440	)
Proceeds from sale of securities available for sale			-					7,752,740
Proceeds from maturing, calls, and payments received on securities available for sale			8,714,406					12,328,077
Net (purchase) redemption of restricted equity securities			(32,000	)				69,500
Purchase of premises and equipment			(351,154	)				(841,123	)
Net cash used in investing activities			(19,508,338	)				(65,423,731	)
FINANCING ACTIVITIES:
Net increase in deposits			18,522,973					60,601,325
Purchase of treasury stock			(2,055,178	)				(92,276	)
Payments of cash dividends			(712,779	)				(641,916	)
Net cash provided by financing activities			15,755,016					59,867,133
Net increase in cash and cash equivalents			179,542					23,078
Cash and cash equivalents at beginning of period			1,730,327					2,080,667
Cash and cash equivalents at end of period		$	1,909,869				$	2,103,745
SUPPLEMENTAL DISCLOSURES:
Cash paid during the period for:
Interest		$	451,522				$	453,526
Taxes		$	1,008,568				$	713,000
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.