Pinnacle Bancshares Announces Results for Year Ended and Fourth Quarter December 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 Pinnacle’s results of operations for the fourth quarter and year ended December 31, 2023: For the three months ended December 31, 2023, Pinnacle’s basic/diluted earnings per share was $1.08 as compared to $1.12 per share for the three months ended December 31, 2022. Net income for the three months ended December 31, 2023 was $981,000 as compared to $1,016,000 for the three months ended December 31, 2022. For the year ended December 31, 2023, Pinnacle’s basic/diluted earnings per share was $4.93 as compared to $4.79 per share for the year ended December 31, 2022. Pinnacle reported net income of $4,480,000 for the year ended December 31, 2023 as compared to $4,504,000, for the year ended December 31, 2022. For the three and nine months ended December 31, 2023, return on average assets was 1.18%, and 1.34%, respectively, compared to 1.29% and 1.35%, respectively, in the comparable 2022 period. Company’s net interest margin was 3.18% and 3.32%, respectively for the three months and year ended December 31, 2023, respectively, compared to 3.48% and 3.35% for both the three months and year ended December 31, 2022, respectively. 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 bank failures that occurred earlier in the year, 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 December 31, 2023, Pinnacle’s allowance for loan losses as a percent of total loans was 1.96%, compared to 2.16% at December 31, 2022. Net charge-offs were $102,000 during 2023 as well as for 2022. There were no nonperforming assets at December 31, 2023 as well as 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. Pinnacle was classified as “well capitalized” at the end of 2023. All capital ratios are higher than the requirements for a well-capitalized institution. As of December 31, 2023, the Bank’s common equity Tier 1 capital and Tier 1 risk-based capital ratios were each 18.12%. As of December 31, 2023, its total capital ratio was 19.29%, and its Tier 1 leverage ratio was 11.56%. Dividends of $.27 and $1.08 per share were paid to shareholders during the three months and year ended for December 31, 2023, as compared to $.25 and $1.00 per share during the three months and year ended December 31, 2022. Management believes that the Company has sufficient liquidity through its low loan to deposit ratio at December 31, 2023, as well as available funding from outside sources. Our net funding availability, as a percentage of our franchise funding, is 101.50% 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 December 31, 2023 decreased $10.9 million, or 3.4%, as compared to December 31, 2022. As mentioned previously, pricing of deposits is anticipated to remain competitive during 2024 and thus deposits could continue to decrease as they did during 2023. Effects of Inflation Inflation has 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 $26.3 million and $29.9 million as of December 31, 2023 and 2022, respectively. Thus, while the accumulated other comprehensive loss on securities available for sale have had a negative effect on total equity during 2023 and 2022, net earnings has continued to be strong. Although these unrealized losses recorded as of 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. 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,       2023       2022   Net income   $ 981,000     $ 1,016,000   Basic and diluted earnings per share   $ 1.08     $ 1.12             Performance ratios (annualized):         Return on average assets     1.18 %     1.29 % Return on average equity     10.07 %     11.45 % Interest rate spread     2.70 %     3.35 % Net interest margin     3.18 %     3.48 % Operating cost to assets     2.40 %     2.57 %           Weighted average basic and diluted shares outstanding     909,534       909,534   Dividends per share   $ 0.27     $ 0.25   Provision for loan losses   $ -     $ 125,000             Years Ended December 31,       2023       2022   Net income   $ 4,480,000     $ 4,504,000   Basic and diluted earnings per share   $ 4.93     $ 4.79             Performance ratios (annualized):         Return on average assets     1.34 %     1.35 % Return on average equity     11.89 %     12.88 % Interest rate spread     2.98 %     3.25 % Net interest margin     3.32 %     3.35 % Operating cost to assets     2.31 %     2.22 %           Weighted average basic and diluted shares outstanding     909,534       939,575   Dividends per share   $ 1.08     $ 1.00   Provision for loan losses   $ -     $ 125,000           (Audited)     December 31, 2023   December 31, 2022 Total assets   $ 342,708,000     $ 332,718,000   Loans receivable, net   $ 122,974,000     $ 115,956,000   Deposits   $ 311,341,000     $ 322,261,000   Brokered CD’s included in deposits   $ 11,903,000     $ 11,756,000   Total stockholders’ equity   $ 12,787,000     $ 5,738,000   Book value per share (excluding OCI)   $ 43.02     $ 39.17   Average Stockholders’ equity to assets ratio (excluding OCI)     11.25 %     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     1.96 %     2.16 %             FINANCIAL INFORMATION   PINNACLE BANCSHARES, INC. CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION     (Unaudited)   (Audited)   December 31,   December 31,     2023       2022           Assets       Cash and cash equivalents $ 2,190,793     $ 1,742,938   Interest bearing deposits in banks   19,518,942       12,185,982   Securities available for sale   165,520,025       170,580,649   Restricted equity securities   836,200       773,600           Loans   125,433,112       118,516,666   Less Allowance for loan losses   2,459,372       2,561,079   Loans, net   122,973,740       115,955,587           Premises and equipment, net   8,421,290       6,926,631   Right-of-use lease assets – operating   302,171       398,364   Goodwill   306,488       306,488   Bank owned life insurance   10,601,839       10,206,335   Accrued interest receivable   2,107,188       2,070,895   Deferred tax assets, net   9,081,069       10,594,339   Other assets   847,912       976,361   Total assets $ 342,707,657     $ 332,718,169           Liabilities and Stockholders’ Equity       Deposits       Noninterest-bearing $ 89,520,410     $ 94,784,231   Interest-bearing   221,820,527     227,476,410   Total deposits   311,340,937       322,260,641           Subordinated debentures   3,093,000       3,093,000   Other borrowings   12,500,000       -   Accrued interest payable   1,392,272       111,652   Operating lease liabilities   302,171       398,364   Other liabilities   1,292,736       1,116,596   Total liabilities   329,921,116       326,980,253           Stockholders’ equity       Common stock, par value $.01 per share; 2,400,000 authorized; 1,872,313 issued; 909,534 shares outstanding, respectively   18,723       18,723   Additional paid‑in capital   8,923,223       8,923,223   Treasury stock (962,779)   (15,588,799 )     (15,588,799 ) Retained earnings   45,772,256       42,274,372   Accumulated other comprehensive loss, net of tax   (26,338,862 )     (29,889,603 )         Total stockholders’ equity   12,786,541       5,737,916           Total liabilities and stockholders’ equity $ 342,707,657     $  332,718,169         PINNACLE BANCSHARES, INC.   UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME     Three Months Ended   Years Ended   December 31,   December 31,     2023     2022     2023     2022 Interest income               Loans, including fees $ 2,003,295   $ 1,666,711   $ 7,527,937   $ 6,512,150 Securities available for sale   1,347,416     1,431,684     5,504,358     5,419,511 Other interest   266,587     72,494     840,501     170,912 Total interest income   3,617,298     3,170,889     13,872,796     12,102,573                 Interest expense               Deposits   692,818     184,218     1,859,046     570,926 Borrowings   148,910     935     438,088     1,745 Subordinated debentures   39,050     38,600     156,200     152,510 Total interest expense   880,778     223,753     2,453,334     725,181                 Net interest income   2,736,520     2,947,136     11,419,462     11,377,392 Provision for loan losses   -     125,000     -     125,000 Net interest income after provision for loan losses   2,736,520     2,822,136     11,419,462     11,252,392                 Other income               Fees and service charges on deposit accounts   426,111     384,999     1,681,484     1,504,850 Service fee income, net   746     758     2,910     3,292 Bank owned life insurance   101,087     95,975     395,505     383,894 Mortgage fee income   -     2,700     12,113     30,457 Total other income   527,944     484,432     2,092,012     1,922,493                 Other expense:               Salaries and employee benefits   1,041,716     1,095,981     4,382,725     4,165,501 Occupancy expense   271,628     230,977     943,058     891,240 Marketing and professional expense   131,811     88,407     338,524     289,975 Other operating expenses   541,429     609,725     2,085,710     2,057,305 Total other expenses   1,986,584     2,025,090     7,750,017     7,404,021                 Income before income taxes   1,277,880     1,281,478     5,761,457     5,770,864                 Income tax expense   296,737     265,692     1,281,278     1,266,668                 Net income $ 981,143   $ 1,015,786   $ 4,480,179   $ 4,504,196                 Cash dividend per share $ 0.27   $ 0.25   $ 1.08   $ 1.00                 Basic and diluted earnings per share $ 1.08   $ 1.12   $ 4.93   $ 4.79                 Weighted –average basic and diluted shares outstanding   909,534     909,534     909,534     939,575     PINNACLE BANCSHARES, INC.   UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY Years Ended December 31, 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 -     -     -         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                       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 -     -     -         4,480,179       -       4,480,179   Cash dividends declared ($1.08 per share) -     -     -     -       (982,295 )     -       (982,295 ) Other comprehensive income -     -     -     -       -       3,550,741       3,550,741   Balance December 31, 2023 1,872,313   $ 18,723   $ 8,923,223   $ (15,588,799 )   $ 45,772,256     $ (26,338,862 )   $ 12,786,541       PINNACLE BANCSHARES, INC.   UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS     For the Years Ended   December 31,     2023       2022   OPERATING ACTIVITIES:       Net income $ 4,480,179     $ 4,504,196   Adjustments to reconcile net income to net cash provided by operating activities:       Depreciation   418,815       424,648   Provision for loan losses   -       125,000   Net investment amortization expense   180,496       208,429   Net increase in bank owned life insurance   (395,505 )     (383,894 ) Decrease in accrued interest receivable   (36,292 )     (153,297 ) Increase in accrued interest payable   1,280,620       33,809   Net other operating activities   535,306       (97,246 ) Net cash provided by operating activities   6,463,619       4,661,645           INVESTING ACTIVITIES:       Net (increase) decrease in loans   (7,018,152 )     6,577,927   Net increase in interest bearing deposits in other banks   (7,332,960 )     (1,039,485 ) Purchase of securities available for sale   -       (41,170,098 ) Proceeds from maturing, calls, and payments received on securities available for sale   9,712,596       10,777,597   Net purchase of restricted equity securities   (62,600 )     (32,000 ) Purchase of premises and equipment   (1,913,473 )     (335,742 ) Net cash used in investing activities   (6,614,589 )     (25,221,801 )         FINANCING ACTIVITIES:       Net increase (decrease) in deposits   (10,918,880 )     23,568,108   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   (982,295 )     (940,163 ) Net cash provided by financing activities   598,825       20,572,767           Net increase in cash and cash equivalents   447,855       12,611           Cash and cash equivalents at beginning of period   1,742,938       1,730,327           Cash and cash equivalents at end of period $ 2,190,793     $ 1,742,938           SUPPLEMENTAL DISCLOSURES:       Cash paid during the period for:       Interest $ 1,172,714     $ 687,479   Taxes $ 945,928     $ 1,330,569           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/20240130550059/en/

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