Pinnacle Bankshares Corporation (OTCBB:PPBN), the one-bank holding company (the “Company”) for First National Bank (the “Bank”), reported net income today of $212,000 or $0.14 per basic and diluted share for the quarter ended June 30, 2012, and $690,000 or $0.46 per basic and diluted share for the six months ended June 30, 2012. These 2012 net income levels represent an improvement over net income generated of $107,000 or $0.07 per basic and diluted share and $233,000 or $0.16 per basic and diluted share, respectively, for the same periods of 2011. Quarterly consolidated results are unaudited.
Profitability as measured by the Company’s return on average assets (“ROA”) was 0.40% for the six months ended June 30, 2012, which is an increase over the 0.14% generated during the first six months of 2011. Correspondingly, return on average equity (“ROE”) for the six months ended June 30, 2012 improved to 5.04% as compared to 1.75% generated for the same time period of the prior year.
“We are pleased to report improved earnings for the first half of 2012 as net income rose 196% compared to the first half of 2011. The increase was primarily due to lower provision for loan losses, which was made possible by a significant decrease in net charge-offs associated with problem loans,” stated Aubrey H. Hall, III, President and Chief Executive Officer for both the Company and the Bank.
The company produced net interest income of $5,848,000 for the first half of 2012, which was below the $5,904,000 generated for the same period of 2011. Interest income decreased approximately 5% or $391,000 to $7,847,000, while interest expense was down an estimated 14% or $335,000 to $1,999,000. The decreases in interest income and expense were attributable to decreases in yields, as loan and deposit volume are up slightly from 2011. Consequently, the net interest margin decreased nine basis points to 3.60% for the first half of 2012 compared to the first half of 2011. Over the past twelve months, the cost to fund earning assets has fallen 23 basis points to 1.22% while yield on earning assets has fallen 32 basis points to 4.82%, resulting in a slightly decreased net interest margin and net interest income. Per Mr. Hall, “We continue to focus on achieving a balance between being fair to our loyal deposit base, while managing lower yields on loans and investments available in this environment.”