Pinnacle Bancshares Announces Results for Year Ended and Fourth Quarter December 31, 2022

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 results of operations for the fourth quarter and year ended December 31, 2022: For the year ended December 31, 2022, net income was $4,504,000, which resulted in basic/diluted earnings per share to be $4.79. Net income for the year ended December 31, 2021 was $4,692,00, which resulted in basic/diluted earnings per share of $4.83. Excluding significant unusual items, net income for the years-ended December 31, 2022 and 2021, was approximately $4,327,000 and $3,879,000, respectively and basic/diluted earnings per share was $4.61 and $3.99 for 2022 and 2021, respectively. For the three months ended December 31, 2022, net income was $1,016,000 which resulted in basic/diluted earnings per share to be $1.12. Net income for the three months ended December 31, 2021 was $972,000, which resulted in basic/diluted earnings per share of $1.00 per share. Excluding significant unusual items, net income for the three months ended December 31, 2022 and 2021, was approximately $1,016,000 and $791,000, respectively and basic/diluted earnings per share was $1.12 and $.82. Provision for loan losses was $125,000 for the three months and year ended for December 31, 2022 and $200,000 for the three months and year ended for 2021. Company’s net interest margin was 3.48% and 3.35%, respectively for the three months and year ended December 31, 2022, respectively, compared to 3.48% and 3.49% for both the three months and year ended December 31, 2021, respectively. At December 31, 2022, Pinnacle’s allowance for loan losses as a percent of total loans was 2.16%, compared to 2.02% at December 31, 2021. Net charge-offs were $102,000 during 2022 as compared to net recoveries was $45,000 in the prior year. There were no nonperforming assets at December 31, 2022, compared to $130,000 at December 31, 2021. The ratio of nonperforming assets to total loans was .00% at December 31, 2022, compared to .01% at December 31, 2021. Pinnacle was classified as “well capitalized” at the end of 2022. All capital ratios are significantly higher than the requirements for a well-capitalized institution. Dividends of $.25 and $1.00 per share were paid to shareholders during the three months and year ended for December 31, 2022, as compared to $.22 and $.88 per share during the three months and year ended December 31, 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 million as compared to recording other comprehensive income in the amount of $1.5 million as of December 31, 2021. 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 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. 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 December 31,     2022   2021 Net income   $ 1,016,000     $ 972,000   Basic and diluted earnings per share   $ 1.12     $ 1.00             Performance ratios (annualized):         Return on average assets     1.29 %     1.17 % Return on average equity     11.45 %     11.44 % Interest rate spread     3.35 %     3.39 % Net interest margin     3.48 %     3.48 % Operating cost to assets     2.57 %     2.13 %           Weighted average basic and diluted shares outstanding     909,534       970,791   Dividends per share   $ 0.25     $ 0.22   Provision for loan losses   $ 125,000     $ 200,000             Years Ended December 31,     2022   2021 Net income   $ 4,504,000     $ 4,692,000   Basic and diluted earnings per share   $ 4.79     $ 4.83             Performance ratios (annualized):         Return on average assets     1.35 %     1.48 % Return on average equity     12.88 %     14.49 % Interest rate spread     3.25 %     3.40 % Net interest margin     3.35 %     3.49 % Operating cost to assets     2.22 %     2.26 %           Weighted average basic and diluted shares outstanding     939,575       972,248   Dividends per share   $ 1.00     $ 0.88   Provision for loan losses $ 125,000 $ 200,000           (Audited)     December 31, 2022   December 31, 2021 Total assets   $ 332,905,000     $ 339,710,000   Loans receivable, net   $ 115,956,000     $ 122,659,000   Deposits   $ 322,260,000     $ 298,693,000   Brokered CD’s included in deposits   $ 11,756,000     $ 24,937,000   Total stockholders’ equity   $ 5,738,000     $ 35,659,000   Book value per share (excluding OCI)   $ 39.17     $ 35.15   Average Stockholders’ equity to assets ratio (excluding OCI)     10.47 %     10.19 %           Asset quality ratios:         Nonperforming loans as a percent of total loans     .00 %     .01 % Nonperforming assets as a percent of total loans     .00 %     .01 % Allowance for loan losses as a percent of total loans     2.16 %     2.02 %           FINANCIAL INFORMATION   PINNACLE BANCSHARES, INC. CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION     (Unaudited)   (Audited)   December 31,   December 31,   2022   2021         Assets       Cash and cash equivalents $ 2,054,034       1,730,327   Interest bearing deposits in banks   11,874,886       11,146,497   Securities available for sale   170,580,649       183,516,514   Restricted equity securities   773,600       741,600           Loans   118,516,666       125,196,462   Less Allowance for loan losses   2,561,078       2,537,948   Loans, net   115,955,588       122,658,514           Premises and equipment, net   6,926,632       7,015,537   Right-of-use lease assets – operating   398,364       493,627   Goodwill   306,488       306,488   Bank owned life insurance   10,206,334       9,822,441   Accrued interest receivable   2,070,896       1,917,598   Other assets   11,757,553       361,228   Total assets $ 332,905,024       339,710,371           Liabilities and Stockholders’ Equity       Deposits       Noninterest-bearing $ 94,783,406       88,430,320   Interest-bearing   227,476,411     210,262,213   Total deposits   322,259,817       298,692,533           Subordinated debentures   3,093,000       3,093,000   Accrued interest payable   111,652       77,843   Operating lease liabilities   398,364       493,627   Other liabilities   1,304,275       1,694,225   Total liabilities   327,167,108       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   42,274,372       38,710,339   Accumulated other comprehensive income (loss), net of tax   (29,889,603 )     1,540,479           Total stockholders’ equity   5,737,916       35,659,143           Total liabilities and stockholders’ equity $ 332,905,024 $ 339,710,371 PINNACLE BANCSHARES, INC.   UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME     Three Months Ended   Years Ended     December 31,   December 31,     2022   2021   2022   2021   Interest income                 Loans, including fees $ 1,666,711   $ 1,669,927   $ 6,512,150   $ 6,453,336   Securities available for sale   1,431,684     1,187,083     5,419,511     4,332,287   Other interest   72,494     4,196     170,912     31,000   Total interest income   3,170,889     2,861,206     12,102,573     10,816,623                     Interest expense                 Deposits   184,218     103,069     570,926     386,593   Borrowings   935     1,934     1,745     2,729   Subordinated debentures   38,600     37,550     152,510     151,150   Total interest expense   223,753     142,553     725,181     540,472                     Net interest income   2,947,136     2,718,653     11,377,392     10,276,151   Provision for loan losses   125,000     200,000     125,000     200,000   Net interest income after provision for loan losses   2,822,136     2,518,653     11,252,392     10,076,151                     Other income                 Fees and service charges on deposit accounts   384,999     397,276     1,504,850     1,490,449   Service fee income, net   758     911     3,292     3,962   Bank owned life insurance   95,975     90,625     383,894     1,106,105   Mortgage fee income   2,700     8,263     30,457     37,901   Net gain on securities available for sale   -     -     -     227,237   Total other income   484,432     497,075     1,922,493     2,865,654                     Other expense:                 Salaries and employee benefits   1,095,981     973,561     4,165,501     3,970,530   Occupancy expense   230,977     236,014     891,240     900,124   Marketing and professional expense   88,407     64,551     289,975     262,672   Other operating expenses   609,725     504,497     2,057,305     2,034,747   Total other expenses   2,025,090     1,778,623     7,404,021     7,168,073                     Income before income taxes   1,281,478     1,237,105     5,770,864     5,773,732                     Income tax expense   265,692     265,425     1,266,668     1,081,975                     Net income $ 1,015,786 $ 971,680 $ 4,504,196 $ 4,691,757                   Cash dividend per share $ 0.25   $ 0.22   $ 1.00   $ 0.88                     Basic and diluted earnings per share $ 1.12   $ 1.00   $ 4.79   $ 4.83                     Weighted –average basic and diluted shares outstanding   909,534     970,791     939,575     972,248     PINNACLE BANCSHARES, INC.   UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY Years Ended December 31, 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 -     -     -         4,691,757       -       4,691,757   Cash dividends declared   ($.88 per share) -     -     -     -       (855,490 )     -       (855,490 ) Purchase of treasury stock -     -     -     (92,276 )     -       -       (92,276 ) Other comprehensive loss -     -     -     -       -       (2,416,714 )     (2,416,714 ) Balance December 31, 2021 1,872,313   $ 18,723   $ 8,923,223   $ (13,533,621 )   $ 38,710,339     $ 1,540,479     $ 35,659,143                       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 -     -     -         4,504,196       -       4,504,196   Cash dividends declared   ($1.00 per share) -     -     -     -       (940,163 )     -       (940,163 ) Purchase of treasury stock -     -     -     (2,055,178 )     -       -       (2,055,178 ) Other comprehensive loss -     -     -     -       -       (31,430,082 )     (31,430,082 ) Balance December 31, 2022 1,872,313   $ 18,723   $ 8,923,223   $ (15,588,799 )   $ 42,274,372     $ (29,889,603 )   $ 5,737,916   PINNACLE BANCSHARES, INC,   UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS     For the Years Ended   December 31,   2022   2021 OPERATING ACTIVITIES:       Net income $ 4,504,196     $ 4,691,757   Adjustments to reconcile net income to net cash provided by operating activities:       Depreciation   424,648       446,694   Provision for loan losses   125,000       200,000   Net investment amortization expense   208,429       318,421   Net increase in bank owned life insurance   (383,893 )     (1,106,105 ) Gain on sale of securities available for sale   -       (227,237 ) Decrease in accrued interest receivable   (153,298 )     (426,572 ) Increase (decrease) in accrued interest payable   33,809       (67,983 ) Net other operating activities   (96,419 )     332,950   Net cash provided by operating activities   4,662,472       4,161,925           INVESTING ACTIVITIES:       Net (increase) decrease in loans   6,577,926       (13,429,427 ) Net increase in interest bearing deposits in other banks   (728,389 )     (7,039,836 ) Purchase of securities available for sale   (41,170,098 )     (68,497,441 ) Proceeds from sale of securities available for sale   -       7,752,740   Proceeds from maturing, calls, and payments received on securities available for sale   10,777,596       13,348,008   Net (purchase) redemption of restricted equity securities   (32,000 )     43,900   Proceeds from bank owned life insurance   -       1,580,540   Purchase of premises and equipment   (335,743 )     (906,785 ) Net cash used in investing activities   (24,910,708 )     (67,148,301 )         FINANCING ACTIVITIES:       Net increase in deposits   23,567,284       63,583,802   Purchase of treasury stock   (2,055,178 )     (92,276 ) Payments of cash dividends   (940,163 )     (855,490 ) Net cash provided by financing activities   20,571,943       62,636,078           Net increase (decrease) in cash and cash equivalents   323,707       (350,340 )         Cash and cash equivalents at beginning of period   1,730,327       2,080,667           Cash and cash equivalents at end of period $ 2,054,034     $ 1,730,327           SUPPLEMENTAL DISCLOSURES:       Cash paid during the period for:       Interest $ 691,372     $ 608,455   Taxes $ 1,330,568     $ 1,025,679           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/20230223005189/en/

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