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

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	$	-		$	-

 

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