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Pinnacle Bancshares Announces Results for Third Quarter Ended September 30, 2023

 

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

$

-

 

 

$

-

 

 

Contacts

Joe B. Adams, III

Chief Financial Officer

(205) 221-8866

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