Robert B. Nolen, Jr., President and Chief Executive Officer of Pinnacle Bancshares, Inc. (OTCBB: PCLB), today announced the Company’s second quarter results of operations.
- For the three months ended June 30, 2023, net income was $1,145,000 which resulted in basic/diluted earnings per share to be $1.26. Net income for the three months ended June 30, 2022 was $1,210,000, which resulted in basic/diluted earnings per share of $1.25 per share.
- For the six months ended June 30, 2023, Pinnacle reported net income of $2,325,000 which resulted in basic/diluted earnings per share to be $2.56. Net income for the six months ended June 30, 2022 was $2,320,000, which resulted in basic/diluted earnings per share of $2.39 per share. Included in net income for the six months ended June 30, 2022 are Paycheck Protection Program (“PPP”) amortized loan fees of approximately $190,000. There were no PPP amortized loan fees recorded during the six months ended June 30, 2023.
- For the three and six months ended June 30, 2023, return on average assets was 1.36%, and 1.38%, respectively, compared to 1.39% and 1.33%, respectively, in the comparable 2022 period.
The Company’s net interest margin was 3.35 and 3.43% for the three and six months ended June 30, 2023, respectively, as compared to 3.28% for the three and six months ended June 30, 2022. The Company anticipates that interest expense relating to its funding will continue to increase during the remainder of the year 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 June 30, 2023, the Company’s allowance for loan losses as a percent of total loans was 2.13%, compared to 2.16% at December 31, 2022. Nonperforming assets were $482,000 at June 30, 2023, compared to $0 at December 31, 2022. The ratio of nonperforming assets to total loans was .41% and .00% at June 30, 2023. 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 June 30, 2023. All capital ratios are significantly higher than the requirements for a well-capitalized institution. As of June 30, 2023, the Bank’s common equity Tier 1 capital and Tier 1 risk-based capital ratios were each 17.66%. As of June 30, 2023, its total capital ratio was 18.74%, and its Tier 1 leverage ratio was 10.94%.
Management believes that the Company has ample liquidity through its low loan to deposit ratio at June 30, 2023, as well as available funding from outside sources. Our net funding availability, as a percentage of our franchise funding, is 103.75% 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 half of 2023.
The Company’s total deposits at June 30, 2023 decreased $11.7 million, or 3.6%, as compared to December 31, 2022. As mentioned previously, pricing of deposits is anticipated to become more competitive during the remainder of the year, and thus deposits could continue to decrease as they did during the first half of 2023.
Effects of Inflation
Inflation 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 recorded an accumulated other comprehensive loss on securities available for sale of approximately $30.2 million as of December 31, 2022. The Company’s other comprehensive loss as of June 30, 2023 has been lowered to $27.9 million. Although these unrealized losses recorded as of June 30, 2023 and 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. In addition, these losses do not impact our regulatory capital ratios.
The Company conducts monthly internal stress testing scenarios of its liquidity to confirm that the Company continues to maintain ample liquidity.
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 June 30, |
||||||
|
|
2023 |
|
2022 |
||||
Net income |
|
$ |
1,145,000 |
|
|
$ |
1,210,000 |
|
Basic and diluted earnings per share |
|
$ |
1.26 |
|
|
$ |
1.25 |
|
|
|
|
|
|
||||
Performance ratios (annualized): |
|
|
|
|
||||
Return on average assets |
|
|
1.36 |
% |
|
|
1.39 |
% |
Return on average equity (excluding OCI) |
|
|
12.30 |
% |
|
|
13.82 |
% |
Interest rate spread |
|
|
3.04 |
% |
|
|
3.19 |
% |
Net interest margin |
|
|
3.35 |
% |
|
|
3.28 |
% |
Operating cost to assets |
|
|
2.25 |
% |
|
|
2.02 |
% |
|
|
|
|
|
||||
Weighted average basic and diluted shares outstanding |
|
|
909,534 |
|
|
|
969,445 |
|
Dividends per share |
|
$ |
0.27 |
|
|
$ |
0.25 |
|
Provision for loan losses |
|
$ |
- |
|
|
$ |
- |
|
|
|
|
||||||
|
|
Six Months Ended June 30, |
||||||
|
|
2023 |
|
2022 |
||||
Net income |
|
$ |
2,325,000 |
|
|
$ |
2,320,000 |
|
Basic and diluted earnings per share |
|
$ |
2.56 |
|
|
$ |
2.39 |
|
|
|
|
|
|
||||
Performance ratios (annualized): |
|
|
|
|
||||
Return on average assets |
|
|
1.38 |
% |
|
|
1.33 |
% |
Return on average equity (excluding OCI) |
|
|
12.64 |
% |
|
|
13.30 |
% |
Interest rate spread |
|
|
3.20 |
% |
|
|
3.20 |
% |
Net interest margin |
|
|
3.43 |
% |
|
|
3.28 |
% |
Operating cost to assets |
|
|
2.31 |
% |
|
|
2.03 |
% |
|
|
|
|
|
||||
Weighted average basic and diluted shares outstanding |
|
|
909,534 |
|
|
|
970,114 |
|
Dividends per share |
|
$ |
0.54 |
|
|
$ |
0.50 |
|
Provision for loan losses |
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
|
||||
|
|
|
|
(Audited) |
||||
|
|
June 30, 2023 |
|
December 31, 2022 |
||||
Total assets |
|
$ |
338,114,000 |
|
|
$ |
332,718,000 |
|
Loans receivable, net |
|
$ |
116,197,000 |
|
|
$ |
115,956,000 |
|
Deposits |
|
$ |
310,540,000 |
|
|
$ |
322,261,000 |
|
Brokered CD’s included in deposits |
|
$ |
13,694,000 |
|
|
$ |
11,756,000 |
|
Total stockholders’ equity |
|
$ |
9,986,000 |
|
|
$ |
5,738,000 |
|
Book value per share (excluding OCI) |
|
$ |
41.19 |
|
|
$ |
39.17 |
|
Total average stockholders’ equity to assets ratio (excluding OCI) |
|
|
10.95 |
% |
|
|
10.47 |
% |
|
|
|
|
|
||||
Asset quality ratios: |
|
|
|
|
||||
Nonperforming loans as a percent of total loans |
|
|
.41 |
% |
|
|
.00 |
% |
Nonperforming assets as a percent of total loans |
|
|
.41 |
% |
|
|
.00 |
% |
Allowance for loan losses as a percent of total loans |
|
|
2.13 |
% |
|
|
2.16 |
% |
FINANCIAL INFORMATION |
|||||||
|
|||||||
PINNACLE BANCSHARES, INC. |
|||||||
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION |
|||||||
|
(Unaudited) |
|
(Audited) |
||||
|
June 30, |
|
December 31, |
||||
|
2023 |
|
2022 |
||||
|
|
|
|
||||
Assets |
|
|
|
||||
Cash and cash equivalents |
$ |
2,244,095 |
|
|
$ |
1,742,938 |
|
Interest bearing deposits in banks |
|
19,423,428 |
|
|
|
12,185,982 |
|
Securities available for sale |
|
167,661,860 |
|
|
|
170,580,649 |
|
Restricted equity securities |
|
769,800 |
|
|
|
773,600 |
|
|
|
|
|
||||
Loans |
|
118,728,829 |
|
|
|
118,516,666 |
|
Less Allowance for loan losses |
|
2,531,388 |
|
|
|
2,561,079 |
|
Loans, net |
|
116,197,441 |
|
|
|
115,955,587 |
|
|
|
|
|
||||
Premises and equipment, net |
|
7,971,425 |
|
|
|
6,926,631 |
|
Right-of-use lease assets – operating |
|
350,183 |
|
|
|
398,364 |
|
Goodwill |
|
306,488 |
|
|
|
306,488 |
|
Bank owned life insurance |
|
10,402,946 |
|
|
|
10,206,335 |
|
Accrued interest receivable |
|
1,999,655 |
|
|
|
2,070,895 |
|
Deferred tax assets, net |
|
9,884,589 |
|
|
|
10,594,339 |
|
Other assets |
|
902,163 |
|
|
|
976,361 |
|
Total assets |
$ |
338,114,073 |
|
|
$ |
332,718,169 |
|
|
|
|
|
||||
Liabilities and Stockholders’ Equity |
|
|
|
||||
Deposits |
|
|
|
||||
Noninterest-bearing |
$ |
92,050,511 |
|
|
$ |
94,784,231 |
|
Interest-bearing |
|
218,489,024 |
|
|
227,476,410 |
|
|
Total deposits |
|
310,539,535 |
|
|
|
322,260,641 |
|
|
|
|
|
||||
Subordinated debentures |
|
3,093,000 |
|
|
|
3,093,000 |
|
Other borrowings |
|
12,500,000 |
|
|
|
- |
|
Accrued interest payable |
|
474,757 |
|
|
|
111,652 |
|
Operating lease liabilities |
|
350,183 |
|
|
|
398,364 |
|
Other liabilities |
|
1,170,744 |
|
|
|
1,116,596 |
|
Total liabilities |
|
328,128,219 |
|
|
|
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 shares, respectively) |
|
(15,588,799 |
) |
|
|
(15,588,799 |
) |
Retained earnings |
|
44,108,334 |
|
|
|
42,274,372 |
|
Accumulated other comprehensive loss, net of tax |
|
(27,475,627 |
) |
|
|
(29,889,603 |
) |
|
|
|
|
||||
Total stockholders’ equity |
|
9,985,854 |
|
|
|
5,737,916 |
|
|
|
|
|
||||
Total liabilities and stockholders’ equity |
$ |
338,114,073 |
|
|
$ |
332,718,169 |
|
PINNACLE BANCSHARES, INC. |
|||||||||||
|
|||||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME |
|||||||||||
|
Three Months Ended |
|
Six Months Ended |
||||||||
|
June 30, |
|
June 30, |
||||||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||
Interest income |
|
|
|
|
|
|
|
||||
Loans, including fees |
$ |
1,853,182 |
|
$ |
1,590,490 |
|
$ |
3,583,300 |
|
$ |
3,245,439 |
Securities available for sale |
|
1,382,618 |
|
|
1,367,724 |
|
|
2,795,107 |
|
|
2,582,022 |
Other interest |
|
194,438 |
|
|
35,438 |
|
|
338,294 |
|
|
45,759 |
Total interest income |
|
3,430,238 |
|
|
2,993,652 |
|
|
6,716,701 |
|
|
5,873,220 |
|
|
|
|
|
|
|
|
||||
Interest expense |
|
|
|
|
|
|
|
||||
Deposits |
|
382,578 |
|
|
125,070 |
|
|
609,629 |
|
|
231,305 |
Borrowings and repurchase agreements |
|
138,121 |
|
|
- |
|
|
140,330 |
|
|
- |
Subordinated debentures |
|
39,050 |
|
|
36,710 |
|
|
78,100 |
|
|
75,310 |
Total interest expense |
|
559,749 |
|
|
161,780 |
|
|
828,059 |
|
|
306,615 |
|
|
|
|
|
|
|
|
||||
Net interest income |
|
2,870,489 |
|
|
2,831,872 |
|
|
5,888,642 |
|
|
5,566,605 |
Provision for loan losses |
|
- |
|
|
- |
|
|
- |
|
|
- |
Net interest income after provision for loan losses |
|
2,870,489 |
|
|
2,831,872 |
|
|
5,888,642 |
|
|
5,566,605 |
|
|
|
|
|
|
|
|
||||
Other income |
|
|
|
|
|
|
|
||||
Fees and service charges on deposit accounts |
|
389,931 |
|
|
382,786 |
|
|
752,226 |
|
|
740,619 |
Service fee income, net |
|
716 |
|
|
811 |
|
|
1,487 |
|
|
1,697 |
Bank owned life insurance |
|
97,806 |
|
|
95,973 |
|
|
196,612 |
|
|
191,946 |
Mortgage fee income |
|
5,065 |
|
|
12,887 |
|
|
10,768 |
|
|
27,248 |
Total other income |
|
493,518 |
|
|
492,457 |
|
|
961,093 |
|
|
961,510 |
|
|
|
|
|
|
|
|
||||
Other expense: |
|
|
|
|
|
|
|
||||
Salaries and employee benefits |
|
1,100,851 |
|
|
1,026,255 |
|
|
2,236,649 |
|
|
2,051,838 |
Occupancy expense |
|
216,178 |
|
|
203,934 |
|
|
456,339 |
|
|
433,556 |
Marketing and professional expense |
|
67,772 |
|
|
63,764 |
|
|
136,591 |
|
|
128,665 |
Other operating expenses |
|
506,441 |
|
|
467,623 |
|
|
1,049,113 |
|
|
929,464 |
Total other expenses |
|
1,891,242 |
|
|
1,761,576 |
|
|
3,878,692 |
|
|
3,543,523 |
|
|
|
|
|
|
|
|
||||
Income before income taxes |
|
1,472,765 |
|
|
1,562,753 |
|
|
2,971,043 |
|
|
2,984,592 |
|
|
|
|
|
|
|
|
||||
Income tax expense |
|
327,829 |
|
|
353,134 |
|
|
645,934 |
|
|
664,213 |
|
|
|
|
|
|
|
|
||||
Net income |
$ |
1,144,936 |
|
$ |
1,209,619 |
|
$ |
2,325,109 |
|
$ |
2,320,379 |
|
|
|
|
|
|
|
|
||||
Cash dividend per share |
$ |
0.27 |
|
$ |
0.25 |
|
$ |
0.54 |
|
$ |
0.50 |
|
|
|
|
|
|
|
|
||||
Basic and diluted earnings per share |
$ |
1.26 |
|
$ |
1.25 |
|
$ |
2.56 |
|
$ |
2.39 |
|
|
|
|
|
|
|
|
||||
Weighted –average basic and diluted shares outstanding |
|
909,534 |
|
|
969,445 |
|
|
909,534 |
|
|
970,114 |
PINNACLE BANCSHARES, INC. |
|||||||||||||||||||||||
|
|||||||||||||||||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY |
|||||||||||||||||||||||
Six Months Ended June 30, 2023 and 2022 |
|||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|||||||||||
|
|
|
|
Additional |
|
|
|
|
|
Other |
|
Total |
|||||||||||
|
Common Stock |
|
Paid-in |
|
Treasury |
|
Retained |
|
Comprehensive |
|
Stockholders’ |
||||||||||||
|
Shares |
|
Amount |
|
Capital |
|
Stock |
|
Earnings |
|
Income |
|
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 |
- |
|
|
- |
|
|
- |
|
|
- |
|
|
|
2,320,379 |
|
|
|
- |
|
|
|
2,320,379 |
|
Cash dividends declared |
|||||||||||||||||||||||
($.50 per share) |
- |
|
|
- |
|
|
- |
|
|
- |
|
|
|
(485,395 |
) |
|
|
- |
|
|
|
(485,395 |
) |
Purchase of treasury stock |
- |
|
|
- |
|
|
- |
|
|
(2,055,178 |
) |
|
|
- |
|
|
|
- |
|
|
|
(2,055,178 |
) |
Other comprehensive loss |
- |
|
|
- |
|
|
- |
|
|
- |
|
|
|
- |
|
|
|
(24,825,029 |
) |
|
|
(24,825,029 |
) |
Balance June 30, 2022 |
1,872,313 |
|
$ |
18,723 |
|
$ |
8,923,223 |
|
$ |
(15,588,799 |
) |
|
$ |
40,545,323 |
|
|
$ |
(23,284,550 |
) |
|
$ |
10,613,920 |
|
|
|
|
|
|
|
|
|
|
|
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 |
- |
|
|
- |
|
|
- |
|
|
- |
|
|
|
2,325,109 |
|
|
|
- |
|
|
|
2,325,109 |
|
Cash dividends declared |
|||||||||||||||||||||||
($.54 per share) |
- |
|
|
- |
|
|
- |
|
|
- |
|
|
|
(491,147 |
) |
|
|
- |
|
|
|
(491,147 |
) |
Other comprehensive income |
- |
|
|
- |
|
|
- |
|
|
- |
|
|
|
- |
|
|
|
2,413,976 |
|
|
|
2,413,976 |
|
Balance June 30, 2023 |
1,872,313 |
|
$ |
18,723 |
|
$ |
8,923,223 |
|
$ |
(15,588,799 |
) |
|
$ |
44,108,334 |
|
|
$ |
(27,465,627 |
) |
|
$ |
9,985,854 |
|
PINNACLE BANCSHARES, INC, |
|||||||
|
|||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||||||
|
For the Six Months Ended |
||||||
|
June 30, |
||||||
|
2023 |
|
2022 |
||||
OPERATING ACTIVITIES: |
|
|
|
||||
Net income |
$ |
2,325,109 |
|
|
$ |
2,320,379 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
||||
Depreciation |
|
199,301 |
|
|
|
220,219 |
|
Net investment amortization expense |
|
85,736 |
|
|
|
121,027 |
|
Bank owned life insurance |
|
(196,612 |
) |
|
|
(191,946 |
) |
(Increase) decrease in accrued interest receivable |
|
71,241 |
|
|
|
(51,994 |
) |
Increase in accrued interest payable |
|
363,105 |
|
|
|
14,859 |
|
Net other operating activities |
|
(9,928 |
) |
|
|
(128,162 |
) |
Net cash provided by operating activities |
|
2,837,952 |
|
|
|
2,304,382 |
|
|
|
|
|
||||
INVESTING ACTIVITIES: |
|
|
|
||||
Net (increase) decrease in loans |
|
(241,853 |
) |
|
|
3,765,214 |
|
Net (increase) decrease in interest bearing deposits in other banks |
|
(7,237,446 |
) |
|
|
202,984 |
|
Purchase of securities available for sale |
|
- |
|
|
|
(32,299,292 |
) |
Proceeds from maturing, sale and payments received on securities available for sale |
|
6,094,227 |
|
|
|
3,958,469 |
|
Net (purchase) redemption of restricted equity securities |
|
3,800 |
|
|
|
(32,000 |
) |
Purchase of premises and equipment |
|
(1,244,094 |
) |
|
|
(205,952 |
) |
Net cash used in investing activities |
|
(2,625,366 |
) |
|
|
(24,610,577 |
) |
|
|
|
|
||||
FINANCING ACTIVITIES: |
|
|
|
||||
Net increase (decrease) in deposits |
|
(11,720,282 |
) |
|
|
25,142,388 |
|
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 |
|
(491,147 |
) |
|
|
(485,395 |
) |
Net cash provided by financing activities |
|
288,571 |
|
|
|
22,601,815 |
|
|
|
|
|
||||
Net increase in cash and cash equivalents |
|
501,157 |
|
|
|
295,620 |
|
|
|
|
|
||||
Cash and cash equivalents at beginning of period |
|
1,742,938 |
|
|
|
1,730,327 |
|
|
|
|
|
||||
Cash and cash equivalents at end of period |
$ |
2,244,095 |
|
|
$ |
2,025,947 |
|
|
|
|
|
||||
SUPPLEMENTAL DISCLOSURES: |
|
|
|
||||
Cash paid during the period for: |
|
|
|
||||
Interest |
$ |
464,954 |
|
|
$ |
291,756 |
|
Taxes |
$ |
604,928 |
|
|
$ |
677,568 |
|
|
|
|
|
||||
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/20230814464982/en/
Contacts
Joe B. Adams, III
Chief Financial Officer
(205) 221-8866
