Pinnacle Bancshares Announces Results for First Quarter Ended March 31, 2023

About this update from Pinnacle Bancshares, Inc.

Robert B. Nolen, Jr., President and Chief Executive Officer of Pinnacle Bancshares, Inc. (OTCBB: PCLB), today announced the Company’s results of operations for the first quarter ended March 31, 2023: For the three months ended March 31, 2023, net income was $1,180,000 which resulted in basic/diluted earnings per share to be $1.30. Net income for the three months ended March 31, 2022 was $1,111,000, which resulted in basic/diluted earnings per share of $1.14 per share. Included in net income for the three months ended March 31, 2022 are Paycheck Protection Program (“PPP”) amortized loan fees of approximately $120,000. There were no PPP amortized loan fees recorded during the three months ended March 31, 2023. For the three months ended March 31, 2023, return on average assets was 1.43%, compared to 1.29% in the comparable 2022 period. The Company’s net interest margin was 3.56% for the three months March 31, 2023, compared to 4.06% for the three months ended March 31, 2022. The Company anticipates interest expense relating to its funding to increase during the remainder of the year as a result of several factors such as increased deposit exception pricing and increased deposit migration to higher yielding deposit products. Mr. Nolen commented, “In response to concerns about liquidity and capital strength related to recent bank failures, we remain confident in our risk status. Our primary focus is, and will continue to be, the Bank’s safety and soundness, and the protection of our depositors.” At March 31, 2023, the Company’s allowance for loan losses as a percent of total loans was 2.13%, compared to 2.16% at December 31, 2022. There were no nonperforming assets at March 31, 2023 as well as at December 31, 2022. Effective January 1, 2023, the Company adopted the current expected credit loss (CECL) model to account for credit losses on financial instruments, including loans. The adoption of the CECL model did not have an impact on the Company’s loan loss reserve due to minimal net losses that have occurred during the past five years. Pinnacle Bank was classified as “well capitalized” at March 31, 2023. All capital ratios are significantly higher than the requirements for a well-capitalized institution. As of March 31, 2023, the Bank’s common equity Tier 1 capital and Tier 1 risk-based capital ratios were each 17.14%. As of March 31, 2023, its total capital ratio was 18.36%, and its Tier 1 leverage ratio was 10.70%. Management believes that the Company has ample liquidity through its low loan to deposit ratio at March 31, 2023, as well as available funding from outside sources. Our net funding availability, as a percentage of our franchise funding, is 105.37% as compared to our established minimal limit of 25%. In addition, the Bank provides access to additional FDIC insurance coverage for accounts that would otherwise exceed deposit insurance coverage. The Company also retested its Federal Funds line and other borrowing lines during the first quarter 2022. The Company’s total deposits at March 31, 2023 decreased $5.6 million, or less than 2%, as compared to December 31, 2022. As mentioned previously, pricing of deposits is anticipated to become more competitive during the remainder of the year, and thus deposits could continue to decrease as they did during the first quarter 2023. Dividends of $.27 per share were paid to shareholders during the first quarter of 2023 and $.25 per share during the first quarter 2022. Effects of Inflation Inflation 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 $30.2 million as of December 31, 2022. Longer term interest rates have decreased slightly during the first quarter of 2023 which has caused the Company’s other comprehensive loss as of March 31, 2023 to be lowered to $27.6 million. Although these unrealized losses recorded as of March 31, 2023 and December 31, 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. In addition, these losses do not impact our regulatory capital ratios. The Company conducts monthly internal stress testing scenarios of its liquidity to confirm that the Company continues to maintain ample liquidity. 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. The Company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the Company’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. AND SUBSIDIARY   UNAUDITED FINANCIAL HIGHLIGHTS     Three Months Ended March 31,   2023   2022 Net Income $ 1,180,000     $ 1,111,000   Weighted average basic shares outstanding   909,534       970,791   Weighted average diluted shares outstanding   909,534       970,791   Dividend per share $ .27     $ .25   Provision for loan losses $ -     $ -   Basic and diluted earnings per share $ 1.30     $ 1.14   Performance Ratios: (annualized)       Return on average assets   1.43 %     1.29 % Return on average equity   13.17 %     12.96 % Interest rate spread   3.40 %     4.01 % Net interest margin   3.56 %     4.06 % Operating cost to assets   2.40 %     2.06 %               (Audited)   March 31, 2023   December 31, 2022 Total assets $ 334,424,000     $ 332,718,000   Loans receivable, net $ 117,246,000     $ 115,956,000   Deposits $ 316,620,000     $ 322,261,000   Brokered CD’s included in deposits $ 11,759,000     $ 11,756,000   Total stockholders’ equity $ 9,267,000     $ 5,738,000   Weighted average book value per share (excluding OCI) $ 40.26     $ 39.17   Total average stockholders' equity to asset ratio (excluding OCI)   10.83 %     10.47 % Asset Quality Ratios:       Nonperforming loans as a percent of total loans   .00 %     .00 % Nonperforming assets as a percent of total loans   .00 %     .00 % Allowance for loan losses as a percent of total loans   2.13 %     2.16 % PINNACLE BANCSHARES, INC. AND SUBSIDIARY   CONDENSED CONSOLIDATED STATEMENTS OF CONDITION     (Unaudited)   (Audited)   March 31,   December 31,   2023   2022 Assets           Cash and cash equivalents $ 1,986,894     $ 1,742,938   Interest bearing deposits in banks   12,217,148       12,185,982   Securities available for sale   171,648,773       170,580,649   Restricted equity securities   769,800       773,600               Loans   119,802,122       118,516,666   Less allowance for loan losses   2,555,754       2,561,079   Loans, net   117,246,368       115,955,587               Premises and equipment, net   7,345,151       6,926,631   Operating right-of-use lease assets   374,202       398,364   Goodwill   306,488       306,488   Bank owned life insurance   10,305,140       10,206,335   Accrued interest receivable   1,537,460       2,070,895   Deferred tax assets, net   9,801,027       10,594,339   Other assets   885,332       976,361               Total assets $ 334,423,783     $ 332,718,169               Liabilities and Stockholders’ Equity           Deposits:           Noninterest-bearing $ 98,227,386     $ 94,784,231   Interest-bearing   218,392,427       227,476,410   Total deposits   316,619,813       322,260,641               Subordinated debentures   3,093,000       3,093,000   Other borrowings   3,600,000       -   Accrued interest payable   161,286       111,652   Operating lease liabilities   374,202       398,364   Other liabilities   1,308,928       1,116,596   Total liabilities   325,157,229       326,980,253               Stockholders’ equity           Common stock, $.01 par value, 2,400,000 shares authorized;           1,872,313 shares issued; 909,534 shares outstanding   18,723       18,723   Additional paid-in capital   8,923,223       8,923,223   Treasury stock, at cost (962,779 shares)   (15,588,799 )     (15,588,799 ) Retained earnings   43,208,971       42,274,372   Accumulated other comprehensive loss, net of tax   (27,295,564 )     (29,889,603 ) Total stockholders’ equity   9,266,554       5,737,916               Total liabilities and stockholders’ equity $ 334,423,783     $ 332,718,169   PINNACLE BANCSHARES, INC. AND SUBSIDIARY   UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME Three Months Ended March 31, 2023 and 2022     2023   2022 Interest income           Loans, including fees $ 1,730,118   $ 1,654,949 Taxable securities   1,368,748     1,179,914 Nontaxable securities   43,741     34,384 Other interest   143,856     10,321 Total interest income   3,286,463     2,879,568             Interest expense           Deposits   227,051     106,235 Subordinated debentures   39,050     38,600 Other borrowings   2,209     - Total interest expense   268,310     144,835             Net interest income   3,018,153     2,734,733 Provision for loan losses   -     - Net interest income after provision for loan losses   3,018,153     2,734,733           Other income           Fees and service charges on deposit accounts   362,295     357,833 Servicing fee income, net   771     886 Bank owned life insurance   98,806     95,973 Mortgage fee income   5,703     14,361 Total other income   467,575     469,053             Other expenses           Salaries and employee benefits   1,135,798     1,025,583 Occupancy expenses   240,161     229,622 Marketing and professional expenses   68,819     64,901 Other operating expenses   542,672     461,841 Total other expenses   1,987,450     1,781,947             Income before income taxes   1,498,278     1,421,839             Income tax expense   318,105     311,079             Net income $ 1,180,173   $ 1,110,760             Basic and diluted earnings per share $ 1.30   $ 1.14             Cash dividends per share $ 0.27   $ 0.25 Weighted-average basic and diluted shares outstanding   909,534     970,791 PINNACLE BANCSHARES, INC. AND SUBSIDIARY   UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY Three Months Ended March 31, 2023 and 2022                               Accumulated                   Additional               Other   Total   Common Stock   Paid-in   Treasury   Retained   Comprehensive   Stockholders’   Shares   Par Value   Capital   Stock   Earnings   Income (Loss)   Equity                                         Balance, December 31, 2012 1,872,313   $ 18,723   $ 8,923,223   $ (13,533,621 )   $ 38,710,339     $ 1,540,479     $ 35,659,143   Net income -     -     -     -       1,110,760       -       1,110,760   Cash dividends declared, $0.25 per share -     -     -     -       (242,697 )     -       (242,697 ) Other comprehensive loss -     -     -     -       -       (12,676,357 )     (12,676,357 ) Balance, March 31, 2022 1,872,313   $ 18,723   $ 8,923,223   $ (13,533,621 )   $ 39,578,402     $ (11,135,878 )   $ 23,850,849                                           Balance, December 31, 2022 1,872,313   $ 18,723   $ 8,923,223   $ (15,588,799 )   $ 42,274,372     $ (29,889,603 )   $ 5,737,916   Net income -     -     -     -       1,180,173       -       1,180,173   Cash dividends declared, $0.27 per share -     -     -     -       (245,574 )     -       (245,574 ) Other comprehensive income -     -     -     -       -       2,594,039       2,594,039   Balance, March 31, 2023 1,872,313   $ 18,723   $ 8,923,223   $ (15,588,799 )   $ 43,208,971     $ (27,295,564 )   $ 9,266,554   PINNACLE BANCSHARES, INC. AND SUBSIDIARY UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Three Months Ended March 31, 2023 and 2022     2023   2022 OPERATING ACTIVITIES           Net income $ 1,180,173     $ 1,110,760   Adjustments to reconcile net income to net cash provided by operating activities:           Depreciation   99,981       115,917   Net amortization of securities   41,914       71,700   Bank owned life insurance   (98,806 )     (95,973 ) Decrease in accrued interest receivable   533,436       459,021   Increase in accrued interest payable   49,634       14,902   Net other operating activities   86,332       265,363   Net cash provided by operating activities   1,892,664       1,941,690   INVESTING ACTIVITIES           Net (increase) decrease in loans   (1,290,780 )     2,226,066   Net increase in interest-bearing deposits in banks   (31,166 )     (5,964,788 ) Purchase of securities available for sale   -       (20,435,341 ) Proceeds from maturing or callable securities available for sale   2,473,516       1,154,225   Net (purchase) redemption of restricted equity securities   3,800       (32,000 ) Purchase of premises and equipment   (518,500 )     (29,939 ) Net cash provided by (used in) investing activities   636,870       (23,081,777 )             FINANCING ACTIVITIES           Net increase (decrease) in deposits   (5,640,004 )     21,721,580   Net increase in other borrowings   3,600,000       -   Payment of cash dividends   (245,574 )     (242,697 ) Net cash provided by (used in) financing activities   (2,285,578 )     21,478,883               Net increase in cash and cash equivalents   243,956       338,796               Cash and cash equivalents at beginning of year   1,742,938       1,730,327               Cash and cash equivalents at end of year $ 1,986,894     $ 2,069,123               SUPPLEMENTAL DISCLOSURE           Cash paid during the year for:           Interest $ 218,676     $ 129,933   Taxes $ -     $ -   OTHER NONCASH TRANSACTIONS           Real estate acquired through foreclosure $ -     $ -     View source version on businesswire.com: https://www.businesswire.com/news/home/20230504005235/en/

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