Pinnacle Bancshares Announces Results for Third Quarter Ended September 30, 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 Pinnacle’s third quarter results of operations. For the three months ended September 30, 2023, net income of $1,174,000 which resulted in basic/diluted earnings per share to be $1.29. Net income for the three months ended September 30, 2022 was $1,168,000, which resulted in basic/diluted earnings per share of $1.28. For the nine months ended September 30, 2023, Pinnacle reported net income of $3,499,000 which resulted in basic/diluted earnings per share to be $3.85. Net income for the nine months ended September 30, 2022 was $3,488,000, which resulted in basic/diluted earnings per share of $3.67 per share. For the three and nine months ended September 30, 2023, return on average assets was 1.40%, and 1.39%, respectively, compared to 1.42% and 1.37%, respectively, in the comparable 2022 period. Pinnacle’s net interest margin was 3.25% and 3.37% for the three and nine months ended September 30, 2023, respectively, compared to 3.37% and 3.31% for the three and nine months ended September 30, 2022, respectively. The Company anticipates that interest expense relating to its funding will continue to significantly increase during the remainder of the year as well as next year as a result of several factors such as increased deposit exception pricing and increased deposit migration to higher yielding deposit products. At September 30, 2023, Pinnacle’s allowance for loan losses as a percent of total loans was 2.02%, compared to 2.16% at December 31, 2022. There were no nonperforming assets at September 30, 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 September 30, 2023. All capital ratios are higher than the requirements for a well-capitalized institution. As of September 30, 2023, the Bank’s common equity Tier 1 capital and Tier 1 risk-based capital ratios were each 17.82%. As of June 30, 2023, its total capital ratio was 18.74%, and its Tier 1 leverage ratio was 11.20%. Dividends of $.27 and $.81 per share were paid to shareholders during the three and nine months ended for September 30, 2023 as compared to $.25 and $.75 per share paid during the three and nine months ended for September 30, 2022. Management believes that the Company has adequate liquidity through its low loan to deposit ratio at September 30, 2023, as well as available funding from outside sources. Our net funding availability, as a percentage of our franchise funding, is 95.56% 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 nine months of 2023. The Company’s total deposits at September 30, 2023 decreased $8.9 million, or 2.8%, as compared to December 31, 2022. As mentioned previously, pricing of deposits is anticipated to become more competitive during the remainder of the year as well as next year, and thus deposits could continue to decrease as they did during the first nine months of 2023. Effects of Inflation Inflation has caused a substantial rise in interest rates during 2023 which has had a negative effect in the securities market. As a result of the continued rise in interest rates, the Company has recorded an accumulated other comprehensive loss on securities available for sale of approximately $35.1 million as compared to recording other comprehensive loss in the amount of $30.3 million as of December 31, 2022. Thus, this has caused the decrease in total equity during 2023 even though net earnings has been strong. Although these unrealized losses recorded as of September 30, 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. 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,     2023   2022 Net income   $ 1,174,000     $ 1,168,000   Basic and diluted earnings per share   $ 1.29     $ 1.28             Performance ratios (annualized):         Return on average assets     1.40 %     1.42 % Return on average equity (excluding OCI)     12.30 %     14.18 % Interest rate spread     2.84 %     3.26 % Net interest margin     3.25 %     3.37 % Operating cost to assets     2.24 %     2.23 %           Weighted average basic and diluted shares outstanding     909,534       909,534   Dividends per share   $ 0.27     $ 0.25   Provision for loan losses   $ -     $ -             Nine Months Ended September 30,     2023   2022 Net income   $ 3,499,000     $ 3,488,000   Basic and diluted earnings per share   $ 3.85     $ 3.67             Performance ratios (annualized):         Return on average assets     1.39 %     1.37 % Return on average equity (excluding OCI)     12.52 %     13.36 % Interest rate spread     3.07 %     3.22 % Net interest margin     3.37 %     3.31 % Operating cost to assets     2.29 %     2.11 %           Weighted average basic and diluted shares outstanding     909,534       949,699   Dividends per share   $ 0.81     $ 0.75   Provision for loan losses   $ -     $ -           (Audited)     September 30, 2023   December 31, 2022 Total assets   $ 335,492,000     $ 332,718,000   Loans receivable, net   $ 119,256,000     $ 115,956,000   Deposits   $ 313,355,000     $ 322,261,000   Brokered CD’s included in deposits   $ 11,899,000     $ 11,756,000   Total stockholders’ equity   $ 3,849,000     $ 5,738,000   Book value per share (excluding OCI)   $ 42.21     $ 39.17   Average Stockholders’ equity to assets ratio (excluding OCI)     11.09 %     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     2.02 %     2.16 %           FINANCIAL INFORMATION PINNACLE BANCSHARES, INC. CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION   (Unaudited)   (Audited)   September 30,   December 31,   2023   2022         Assets       Cash and cash equivalents $ 1,738,471     $ 1,742,938   Interest bearing deposits in banks   23,471,237       12,185,982   Securities available for sale   155,711,014       170,580,649   Restricted equity securities   836,200       773,600           Loans   121,719,199       118,516,666   Less Allowance for loan losses   2,463,182       2,561,079   Loans, net   119,256,017       115,955,587           Premises and equipment, net   8,356,209       6,926,631   Right-of-use lease assets – operating   326,309       398,364   Goodwill   306,488       306,488   Bank owned life insurance   10,500,752       10,206,335   Accrued interest receivable   1,530,590       2,070,895   Deferred tax assets, net   12,407,709       10,594,339   Other assets   1,051,320       976,361   Total assets $ 335,492,316     $ 332,718,169           Liabilities and Stockholders’ Equity       Deposits       Noninterest-bearing $ 93,967,289     $ 94,784,231   Interest-bearing   219,387,746     227,476,410   Total deposits   313,355,035       322,260,641           Subordinated debentures   3,093,000       3,093,000   Other borrowings   12,500,000       -   Accrued interest payable   953,149       111,652   Operating lease liabilities   326,309       398,364   Other liabilities   1,415,535       1,116,596   Total liabilities   331,643,028       326,980,253           Stockholders’ equity       Common stock, par value $.01 per share; 2,400,000 authorized; 1,872,313 issued; 909,534 shares outstanding   18,723       18,723   Additional paid‑in capital   8,923,223       8,923,223   Treasury stock, 962,779 shares at cost   (15,588,799 )     (15,588,799 ) Retained earnings   45,036,693       42,274,372   Accumulated other comprehensive loss, net of tax   (34,540,552 )     (29,889,603 )         Total stockholders’ equity   3,849,288       5,737,916           Total liabilities and stockholders’ equity $ 335,492,316     $ 332,718,169   PINNACLE BANCSHARES, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME   Three Months Ended   Nine Months Ended   September 30,   September 30,   2023   2022   2023   2022 Interest income               Loans, including fees $ 1,941,342   $ 1,600,000   $ 5,524,642   $ 4,845,439 Securities available for sale   1,361,835     1,405,805     4,156,942     3,987,827 Other interest   235,620     52,659     573,914     98,418 Total interest income   3,538,797     3,058,464     10,255,498     8,931,684                 Interest expense               Deposits   556,599     155,403     1,166,228     386,708 Borrowings   148,848     810     289,178     810 Subordinated debentures   39,050     38,600     117,150     113,910 Total interest expense   744,497     194,813     1,572,556     501,428                 Net interest income   2,794,300     2,863,651     8,682,942     8,430,256 Provision for loan losses   -     -     -     - Net interest income after provision for loan losses   2,794,300     2,863,651     8,682,942     8,430,256                 Other income               Fees and service charges on deposit accounts   503,147     379,232     1,255,373     1,119,851 Service fee income, net   677     837     2,164     2,534 Bank owned life insurance   97,806     95,973     294,418     287,919 Mortgage fee income   1,345     509     12,113     27,757 Total other income   602,975     476,551     1,564,068     1,438,061                 Other expense:               Salaries and employee benefits   1,104,360     1,017,682     3,341,009     3,069,520 Occupancy expense   215,091     226,707     671,430     660,263 Marketing and professional expense   70,122     72,903     206,713     201,568 Other operating expenses   495,168     518,116     1,544,281     1,447,580 Total other expenses   1,884,741     1,835,408     5,763,433     5,378,931                 Income before income taxes   1,512,534     1,504,794     4,483,577     4,489,386                 Income tax expense   338,607     336,763     984,541     1,000,976                 Net income $ 1,173,927   $ 1,168,031   $ 3,499,036   $ 3,488,410                 Cash dividend per share $ 0.27   $ 0.25   $ 0.81   $ 0.75                 Basic and diluted earnings per share $ 1.29   $ 1.28   $ 3.85   $ 3.67                 Weighted –average basic and diluted shares outstanding   909,534     909,534     909,534     949,699 PINNACLE BANCSHARES, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY Nine Months Ended September 30, 2023 and 2022                                               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 -     -     -     -       (712,779 )     -       (712,779 ) ($.75 per share) 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                       Accumulated             Additional           Other   Total   Common Stock   Paid-in   Treasury   Retained   Comprehensive   Stockholders’   Shares   Amount   Capital   Stock   Earnings   Loss   Equity 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 -     -     -         3,499,036       -       3,499,036   Cash dividends declared -     -     -     -       (736,715 )     -       (736,715 ) ($.81 per share) Other comprehensive loss -     -     -     -       -       (4,650,949 )     (4,650,949 ) Balance September 30, 2023 1,872,313   $ 18,723   $ 8,923,223   $ (15,588,799 )   $ 45,036,693     $ (34,540,552 )   $ 3,849,288   PINNACLE BANCSHARES, INC, UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS   For the Nine Months Ended   September 30,   2023   2022 OPERATING ACTIVITIES:       Net income $ 3,499,036     $ 3,488,410   Adjustments to reconcile net income to net cash provided by operating activities:       Depreciation   296,162       322,633   Net investment amortization expense   130,812       163,944   Net increase in bank owned life insurance   (294,418 )     (287,919 ) Decrease in accrued interest receivable   540,306       393,609   Increase in accrued interest payable   841,497       49,906   Net other operating activities   201,969       (197,719 ) Net cash provided by operating activities   5,215,364       3,932,864           INVESTING ACTIVITIES:       Net (increase) decrease in loans   (3,300,429 )     8,214,887   Net (increase) decrease in interest bearing deposits in other banks   (11,285,255 )     4,105,621   Purchase of securities available for sale   -       (40,160,098 ) Proceeds from maturing, calls, and payments received on securities available for sale   8,295,689       8,714,406   Net purchase of restricted equity securities   (62,600 )     (32,000 ) Purchase of premises and equipment   (1,725,739 )     (351,154 ) Net cash used in investing activities   (8,078,334 )     (19,508,338 )         FINANCING ACTIVITIES:       Net increase (decrease) in deposits   (8,904,782 )     18,522,973   Proceeds from other borrowings   16,100,000       -   Repayments of other borrowings   (3,600,000 )     -   Purchase of treasury stock   -       (2,055,178 ) Payments of cash dividends   (736,715 )     (712,779 ) Net cash provided by financing activities   2,858,503       15,755,016           Net increase (decrease) in cash and cash equivalents   (4,467 )     179,542           Cash and cash equivalents at beginning of period   1,742,938       1,730,327           Cash and cash equivalents at end of period $ 1,738,471     $ 1,909,869           SUPPLEMENTAL DISCLOSURES:       Cash paid during the period for:       Interest $ 731,059     $ 451,522   Taxes $ 945,928     $ 1,008,568           OTHER NONCASH TRANSACTIONS       Real estate acquired through foreclosure $ -     $ -   Internally financed sales of other real estate owned $ -     $ -     View source version on businesswire.com: https://www.businesswire.com/news/home/20231031828567/en/

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