Pinnacle Bancshares Announces Results for First Quarter Ended March 31, 2024

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, 2024: For the three months ended March 31, 2024, Pinnacle’s basic/diluted earnings per share was $1.06 as compared to $1.30 per share for the three months ended March 31, 2023 and $1.08 per share for the three months ended December 31, 2023. Net income for the three months ended March 31, 2024 was $964,000 as compared to $1,180,000 for the three months ended March 31, 2023 and $981,000 for the three months ended December 31, 2023. For the three months ended March 31, 2024, return on average assets was 1.14%, compared to 1.43% for the three months ended March 31, 2023 and 1.18% for the three months ended December 31, 2023. The Company’s net interest margin was 3.11% for the three months March 31, 2024, compared to 3.56% for the three months ended March 31, 2023. The Company anticipates that interest expense relating to its funding will continue to increase during 2024 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, 2024, the Company’s allowance for loan losses as a percent of total loans was 2.02%, compared to 1.96% at December 31, 2023. There were no nonperforming assets at March 31, 2024 as well as at December 31, 2023. Pinnacle Bank was classified as “well capitalized” at March 31, 2024. All capital ratios are significantly higher than the requirements for a well-capitalized institution. As of March 31, 2024, the Bank’s common equity Tier 1 capital and Tier 1 risk-based capital ratios were each 18.68% and its total capital ratio and Tier 1 leverage was 19.84% and 11.34%, respectively. Management believes that the Company has sufficient liquidity through its low loan to deposit ratio at March 31, 2024, as well as available funding from outside sources. Our net funding availability, as a percentage of our franchise funding, is 109.25% 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’s total deposits at March 31, 2024 decreased $2.1 million, or less than 1%, as compared to December 31, 2023. As mentioned previously, pricing of deposits is anticipated to become more competitive and thus deposits could continue to decrease as they did during the first quarter 2024. Dividends of $.27 per share were paid to shareholders during the first quarter of 2024 as well as the first quarter 2023. Effects of Inflation Inflation caused a substantial rise in interest rates during 2023 and 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 $28.1 million as of March 31, 2024 as compared to $26.7 million as of December 31, 2023. Although these unrealized losses recorded as of March 31, 2024 and December 31, 2023 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. 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,   2024     2023   Net Income $ 964,000     $ 1,180,000   Weighted average basic shares outstanding   909,534       909,534   Weighted average diluted shares outstanding   909,534       909,534   Dividend per share $ .27     $ .27   Provision for loan losses $ -     $ -   Basic and diluted earnings per share $ 1.06     $ 1.30   Performance Ratios: (annualized)           Return on average assets   1.14 %     1.43 % Return on average equity   9.85 %     13.17 % Interest rate spread   2.58 %     3.40 % Net interest margin   3.11 %     3.56 % Operating cost to assets   2.36 %     2.40 %                     (Audited)   March 31, 2024   December 31, 2023 Total assets $ 339,346,000     $ 342,578,000   Loans receivable, net $ 119,774,000     $ 122,973,000   Deposits $ 309,164,000     $ 311,339,000   Brokered CD’s included in deposits $ 11,907,000     $ 11,907,000   Total stockholders’ equity $ 12,126,000     $ 12,787,000   Weighted average book value per share (excluding OCI) $ 43.81     $ 43.02   Total average stockholders' equity to asset ratio (excluding OCI)   11.54 %     11.25 % 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   2.02 %     1.96 % PINNACLE BANCSHARES, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF CONDITION     (Unaudited)   (Audited)   March 31,   December 31,   2024   2023 Assets             Cash and cash equivalents $ 1,978,413   $ 2,190,793   Interest bearing deposits in banks   22,825,755     19,518,942   Securities available for sale   162,136,170     165,520,025   Restricted equity securities   843,100     836,200                 Loans   122,199,276     125,433,112   Less allowance for loan losses   2,425,315     2,459,372   Loans, net   119,773,961     122,973,740                 Premises and equipment, net   8,486,996     8,421,289   Operating right-of-use lease assets   291,700     302,171   Goodwill   306,488     306,488   Bank owned life insurance   10,705,511     10,601,839   Accrued interest receivable   1,532,754     2,107,189   Deferred tax assets, net   9,584,001     8,951,799   Other assets   881,605     847,912                 Total assets $ 339,346,454   $ 342,578,387                 Liabilities and Stockholders’ Equity             Deposits:             Noninterest-bearing $ 90,107,848   $ 89,518,619   Interest-bearing   219,056,319     221,820,527   Total deposits   309,164,167     311,339,146                 Subordinated debentures   3,093,000     3,093,000   Other borrowings   12,500,000     12,500,000   Accrued interest payable   864,537     1,392,273   Operating lease liabilities   291,700     302,171   Other liabilities   1,307,084     1,165,256   Total liabilities   327,220,488     329,791,846                 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   46,490,252     45,772,256   Accumulated other comprehensive loss, net of tax   (27,717,433)     (26,338,862)   Total stockholders’ equity   12,125,966     12,786,541                 Total liabilities and stockholders’ equity $ 339,346,454   $ 342,578,387   PINNACLE BANCSHARES, INC. AND SUBSIDIARY UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME Three Months Ended March 31, 2024 and 2023     2024   2023 Interest income           Loans, including fees $ 2,026,371   $ 1,730,118 Taxable securities   1,296,269     1,368,748 Nontaxable securities   40,019     43,741 Other interest   308,824     143,856 Total interest income   3,671,483     3,286,463             Interest expense           Deposits   760,947     227,051 Subordinated debentures   39,050     39,050 Other borrowings   178,803     2,209 Total interest expense   978,800     268,310             Net interest income   2,962,683     3,018,153 Provision for loan losses   -     - Net interest income after provision for loan losses   2,962,683     3,018,153           Other income           Fees and service charges on deposit accounts   424,843     362,295 Servicing fee income, net   743     771 Bank owned life insurance   103,672     98,806 Mortgage fee income   2,131     5,703 Total other income   531,389     467,575             Other expenses           Salaries and employee benefits   1,137,415     1,135,798 Occupancy expenses   312,671     240,161 Marketing and professional expenses   74,863     68,819 Other operating expenses   479,823     542,672 Total other expenses   2,004,772     1,987,450             Income before income taxes   1,219,300     1,498,278             Income tax expense   255,730     318,105             Net income $ 963,570   $ 1,180,173             Basic and diluted earnings per share $ 1.06   $ 1.30             Cash dividends per share $ 0.27   $ 0.27 Weighted-average basic and diluted shares outstanding   909,534     909,534 PINNACLE BANCSHARES, INC. AND SUBSIDIARY UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY Three Months Ended March 31, 2024 and 2023                     Accumulated             Additional         Other Total   Common Stock Paid-in Treasury Retained Comprehensive Stockholders’   Shares Par Value Capital Stock Earnings Loss Equity                             Balance, December 31, 2012 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                             Balance, December 31, 2023 1,872,313 $ 18,723 $ 8,923,223 $ (15,588,799) $ 45,772,256 $ (26,338,862) $ 12,786,541 Net income -   -   -   -   963,570   -   963,570 Cash dividends declared,                           $0.27 per share -   -   -   -   (245,574)   -   (245,574) Other comprehensive loss -   -   -   -   -   (1,378,571)   (1,378,571) Balance, March 31, 2024 1,872,313 $ 18,723 $ 8,923,223 $ (15,588,799) $ 46,490,252 $ (27,717,433) $ 12,125,966 PINNACLE BANCSHARES, INC. AND SUBSIDIARY UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Three Months Ended March 31, 2024 and 2023     2024   2023 OPERATING ACTIVITIES           Net income $ 963,570   $ 1,180,173 Adjustments to reconcile net income to net cash           provided by operating activities:           Depreciation   128,826     99,981 Net amortization of securities   50,376     41,914 Bank owned life insurance   (103,672)     (98,806) Decrease in accrued interest receivable   574,435     533,436 Increase (decrease) in accrued interest payable   (527,736)     49,634 Net other operating activities   31,716     86,332 Net cash provided by operating activities   1,117,515     1,892,664 INVESTING ACTIVITIES           Net (increase) decrease in loans   3,199,779     (1,290,780) Net increase in interest-bearing deposits in banks   (3,306,813)     (31,166) Proceeds from maturing or callable securities available for sale   1,399,125     2,473,516 Net (purchase) redemption of restricted equity securities   (6,900)     3,800 Purchase of premises and equipment   (194,533)     (518,500) Net cash provided by investing activities   1,090,658     636,870             FINANCING ACTIVITIES           Net decrease in deposits   (2,174,979)     (5,640,004) Net increase in other borrowings   -     3,600,000 Payment of cash dividends   (245,574)     (245,574) Net cash used in financing activities   (2,420,553)     (2,285,578)             Net increase (decrease) in cash and cash equivalents   (212,380)     243,956             Cash and cash equivalents at beginning of year   2,190,793     1,742,938             Cash and cash equivalents at end of year $ 1,978,413   $ 1,986,894             SUPPLEMENTAL DISCLOSURE           Cash paid during the year for:           Interest $ 1,506,536   $ 218,676 Taxes $ -   $ - OTHER NONCASH TRANSACTIONS           Real estate acquired through foreclosure $ -   $ -   View source version on businesswire.com: https://www.businesswire.com/news/home/20240423128258/en/

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