Pinnacle Bancshares Announces Results For Fourth Quarter And Year Ended December 31, 2012

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, 2012:
  • For the three months ended December 31, 2012, Pinnacle reported net income of $506,000, compared to $461,000 for the three months ended December 31, 2011.
  • Net interest income before the provision for loan losses for the three months ended December 31, 2012 was $1,803,000, compared with $1,896,000 in the same period last year.
  • For the year ended December 31, 2012, net income was $1,955,000, compared with net income of $1,236,000 in the prior year.
  • Net interest income before the provision for loan losses for the year ended December 31, 2012, was $7,374,000, compared with $7,817,000 in the prior year.
  • For the three months ended December 31, 2012, basic and diluted earnings were each $0.42 per share. For the same period in 2011, basic and diluted earnings were each $0.36 per share.
  • Basic and diluted earnings were each $1.59 per share for the year ended December 31, 2012. For 2011, basic and diluted earnings were each $0.97 per share.

Mr. Nolen commented: “Our strategy is to continue to provide high quality products and services to, and practice relationship banking with, our customers who live and conduct business in our market area. We focus on loan quality which should enhance our performance in a challenging environment. Although loan growth has been limited, our core deposits and asset quality ratios have remained strong, and we have conservatively managed our investment portfolio, which we expect will provide significant flexibility if loan volumes begin to increase.”

The Company’s net interest margin was 3.82% and 3.92% for the three months and year ended December 31, 2012, respectively, compared to 4.11% and 4.13% for the three months and year ended December 31, 2011, respectively.

Other income remained stable. Fees and service charges declined slightly from 2011 to 2012 as rule changes implemented from the Dodd-Frank Act reduced certain fees Pinnacle charges. This was offset by gain on sale of loans held for sale as home mortgage production improved from 2011 to 2012.

Other expenses decreased $619,000 from 2011 to 2012. This was due to a $211,000 reduction in compensation and benefits from staff reduction, and a $136,000 reduction in net loss on sales of real estate. In addition there was an approximately $240,000 reduction in other expenses, primarily FDIC insurance, legal fees and supplies.

At December 31, 2012, Pinnacle’s allowance for loan losses as a percent of total loans was 2.07%, compared to 2.13% at December 31, 2011. At December 31, 2012, the allowance for loan losses as a percent of nonperforming loans was 1018.00%, compared to 211.68% at December 31, 2011. Based on current real estate valuations, Pinnacle believes its allowance for loan losses is adequate.

Charge-offs, net of recoveries, were $393,000 in 2012, compared to $1,315,000 in the prior year. Nonperforming assets were $548,000 at December 31, 2012, compared to $1,457,000 at December 31, 2011. The ratio of nonperforming assets to total loans was .56% at December 31, 2012, compared to 1.39% at December 31, 2011. “The declining levels of charge-offs and non-performing assets reflect our continued efforts to address and resolve problem loan issues aggressively. These improvements allowed us to reduce the provision for loan losses to $200,000 in 2012 compared to $1,100,000 in 2011,” said Mr. Nolen.

Despite recent improvements, Mr. Nolen cautioned investors that economic conditions and financial stresses including job losses, have had and could continue to have an adverse affect on Pinnacle’s borrowers and their customers, which could adversely affect Pinnacle’s financial condition and results of operations.

Deterioration in local economic conditions in Pinnacle’s markets could drive losses beyond those which are provided for in the allowance for loan losses and result in a number of adverse consequences, including increases in loan delinquencies; increases in nonperforming assets; decreases in demand for Pinnacle’s products and services, which could affect Pinnacle’s liquidity position; and decreases in the value of the collateral securing Pinnacle’s loans, which could reduce customers’ borrowing power.

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 Bancshares, Inc.’s wholly owned subsidiary Pinnacle Bank has seven offices located in central and northwest Alabama.
       
PINNACLE BANCSHARES, INC
Unaudited Financial Highlights
 
Three Months Ended December 31,
2012 2011
Net Income (loss) $ 506,000 $ 461,000
Weighted average basic shares outstanding

1,205,128
1,270,128
Weighted average diluted shares outstanding 1,205,128 1,270,128
Dividend per share $ 0.22 $ 0.11
Provision for loan losses $ 50,000 $ 50,000
Basic earnings (loss) per share $ 0.42 $ .0.36
Diluted earnings (loss) per share $ 0.42 $ 0.36
Performance Ratios: (annualized)
Return on average assets 0.99 % 0.90 %
Return on average equity 8.80 % 8.34 %
Interest rate spread 3.81 % 4.10 %
Net interest margin 3.82 % 4.11 %
Operating cost to assets 3.09 % 3.24 %
 
At December 31,
2012 2011
Net Income $ 1,955,000 $ 1,236,000
Weighted average basic shares outstanding 1,228,279 1,270,128
Weighted average diluted shares outstanding 1,228,279 1,270,128
Dividend per share $ 0.55 $ 0.44
Provision for loan losses $ 200,000 $ 1,100,000
Basic earnings per share $ 1.59 $ 0.97
Diluted earnings per share $ 1.59 $ 0.97
Performance Ratios:
Return on average assets 0.95 % 0.60 %
Return on average equity 8.49 % 5.59 %
Interest rate spread 3.90 % 4.12 %
Net interest margin 3.92 % 4.13 %
Operating cost to assets 2.98 % 3.28 %
 
At December 31,
2012 2011
Total assets $ 208,391,000 $ 199,231,000
Loans receivable, net $ 96,359,000 $ 102,446,000
Deposits $ 177,313,000 $ 170,577,000

Total stockholders’ equity
$ 22,770,000 $ 22,334,000
Weighted average book value per share $ 18.54 $ 17.58

Total stockholders’ equity to asset ratio
10.93 % 11.21 %
Asset Quality Ratios:
Nonperforming loans as a percent of total loans .20 % 1.01 %
Nonperforming assets as a percent of total Loans .56 % 1.39 %
Allowance for loan losses as a percent of total loans 2.07 % 2.13

Allowance for loan losses as a percent of nonperforming loans
1018.00 % 211.68 %

 
 

PINNACLE BANCSHARES, INC. AND SUBSIDIARY

 

CONSOLIDATED STATEMENTS OF CONDITION December 31, 2012 and 2011
 
    2012     2011

Assets
Cash and cash equivalents $ 1,332,968 $ 2,510,642
Interest bearing deposits in banks 2,234,882 1,613,466
Securities available for sale 91,693,374 75,734,778
Restricted equity securities 994,800 957,800
Loans held for sale 395,801 -
 
Loans 97,998,866 104,674,158
Less allowance for loan losses   2,036,110     2,228,664  
Loans, net   95,962,756    

102,445,514
 
 
Other real estate owned 347,824 403,881
Premises and equipment, net 6,039,211 6,186,794
Goodwill 306,488 306,488
Bank owned life insurance 7,463,963 7,117,402
Accrued interest receivable 901,784 1,018,331
Other assets   716,917     935,476  
Total assets $ 208,390,768   $ 199,230,572  
 

Liabilities and Stockholders’ Equity
Deposits:
Noninterest-bearing $ 39,594,246 $ 32,080,544
Interest-bearing   137,719,659     139,267,444  
Total deposits 177,313,905 171,347,988
 
Repurchase agreements 118,793 984,957
Other borrowings 3,800,000 -
Subordinated debentures 3,093,000 3,093,000
Accrued interest payable 110,311 182,020
Other liabilities   1,184,534     1,288,204  
Total liabilities   185,620,543     176,896,169  
 
Stockholders’ equity

Common stock, $.01 par value, 2,400,000 shares authorized; 1,872,313 shares issued; 1,205,128 and 1,270,128 shares outstanding
18,723 18,723
Additional paid-in capital 8,923,223 8,923,223
Treasury stock, at cost (667,185 and 602,185 shares, respectively) (7,974,814 ) (7,320,909 )
Retained earnings 19,894,190 18,609,374
Accumulated other comprehensive income, net of tax   1,908,903     2,103,992  
Total stockholders’ equity   22,770,225     22,334,403  
 
Total liabilities and stockholders’ equity $ 208,390,768   $ 199,230,572  
 
 

PINNACLE BANCSHARES, INC. AND SUBSIDIARY

 

CONSOLIDATED STATEMENTS OF INCOME Years Ended December 31, 2012 and 2011
 
    2012     2011
Interest income
Loans, including fees $ 5,716,220 $ 6,555,597
Taxable securities 1,769,705 1,899,623
Nontaxable securities 692,190 601,355
Other interest   35,247   36,875
Total interest income   8,213,362   9,093,450
 
Interest expense
Deposits 732,827 1,174,552
Borrowings and repurchase agreements 2,635 2,097
Subordinated debentures   103,475   99,607
Total interest expense

 

838,937

 

1,276,256
 
Net interest income 7,374,425 7,817,194
Provision for loan losses   200,000   1,100,000
Net interest income after provision for loan losses   7,174,425   6,717,194
 
Other income
Fees and service charges on deposit accounts 950,616 963,962
Servicing fee income, net 41,979 51,440
Bank owned life insurance 346,561 340,302
Net gain on loans held for sale 86,254 40,061
Net gain on sales of other real estate owned 21,240 -
Net gain on sales of securities available for sale   -   47,316
Total other income   1,446,650   1,443,081
 
Other expenses
Salaries and employee benefits 2,870,620 3,081,447
Occupancy expenses 1,286,615 1,554,028
Marketing and professional expenses 298,269 353,188
Net loss on sales of other real estate owned - 136,552
Other operating expenses   1,641,149   1,590,515
Total other expenses   6,096,653   6,715,730
 
Income before income taxes 2,524,422 1,444,545
 
Income tax expense   569,636   208,302
 
Net income $ 1,954,786 $ 1,236,243
 
Basic and diluted earnings per share $ 1.59 $ 0.97
 
Cash dividends per share $ 0.55 $ 0.44
Weighted-average basic and diluted shares outstanding   1,228,279   1,270,128
 
 

PINNACLE BANCSHARES, INC. AND SUBSIDIARY

 

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY Years Ended December 31, 2012 and 2011
 
                        Accumulated    
Additional Other Total

 

Common Stock
Paid-in Treasury Retained Comprehensive Stockholders’

 

Shares
Par Value Capital Stock Earnings Income Equity
 
Balance, December 31, 2010 1,872,313 $ 18,723 $ 8,923,223 $ (7,320,909 ) $ 17,931,987 $ 1,099,934 $ 20,652,958
Net income - - - - 1,236,243 - 1,236,243

Cash dividends declared, $0.44 per share
- - - - (558,856 ) - (558,856 )
Other comprehensive income -   -   -   -     -     1,004,057     1,004,057  
Balance, December 31, 2011

1,872,313
18,723 8,923,223 (7,320,909 ) 18,609,374 2,103,991 22,334,402
Net income - - - - 1,954,786 - 1,954,786

Cash dividends declared, $0.55 per share
- - - - (669,970 ) - (669,970 )
Treasury stock purchase - - - (653,905 ) - - (653,905 )
Other comprehensive income -   -   -   -     -     (195,089 )   (195,089 )
Balance, December 31, 2012 1,872,313 $ 18,723 $ 8,923,223 $ (7,974,814 ) $ 19,894,190   $ 1,908,903   $ 22,770,225  
 
 

PINNACLE BANCSHARES, INC. AND SUBSIDIARY

 

CONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended December 31, 2012 and 2011
 
    2012     2011
OPERATING ACTIVITIES
Net income $ 1,954,786 $ 1,236,243
Adjustments to reconcile net income to net cash
Provided by operating activities:
Depreciation 481,321 484,254
Provision for loan losses 200,000 1,100,000
Deferred tax expense (benefit) 142,138 (86,761 )
Net amortization and accretion of securities 274,185 2,578
Bank owned life insurance (346,561 ) (340,302 )
Gain on sale of loans held for sale (86,254 ) (40,061 )
Gain on sale of securities available for sale - (47,316 )
(Gain) loss on sale or write-down of other real estate owned, net (21,240 ) 136,552
Proceeds from sales of loans held for sale (395,801 ) 251,141
Decrease in accrued interest receivable 116,547 16,208
Decrease in accrued interest payable (71,709 ) (171,544 )
Net other operating activities   574,379    

(102,224
)
Net cash provided by operating activities   2,821,791  

 

2,438,768
 
INVESTING ACTIVITIES
Net decrease in loans 5,192,805 9,184,171
Net (increase) decrease in interest-bearing deposits in banks (621,416 ) 1,535,417
Purchase of securities available for sale (30,795,326 ) (29,862,416 )
Proceeds from sales of securities available for sale - 4,011,875
Proceeds from maturing or callable securities available for sale 14,247,883 14,920,077
Purchase (redemption) of restricted equity securities (37,000 ) 297,400
Purchase of premises and equipment (333,738 ) (206,339 )
Proceeds from sales of other real estate owned   771,449     728,897  
Net cash provided by investing activities   (11,575,343 )   609,082  
 
FINANCING ACTIVITIES
Net decrease in deposits 5,965,917 (2,988,101 )
Increase in other borrowings 3,800,000 -
Decrease in repurchase agreements (866164 ) (476,910 )
Purchase of treasury stock (653,905 ) -
Payments of cash dividends   (669,970 )   (558,856 )
Net cash used in financing activities   7,575,878     (4,023,867 )
 
Net decrease in cash and cash equivalents (1,177,674 ) (976,017 )
 
Cash and cash equivalents at beginning of year   2,510,642     3,486,659  
 
Cash and cash equivalents at end of year $ 1,332,968   $ 2,510,642  
 
SUPPLEMENTAL DISCLOSURE
Cash paid (received) during the year for:
Interest $ 910,646 $ 1,447,800
Taxes $ 488,717 $ (35,697 )
OTHER NONCASH TRANSACTIONS
Other real estate owned acquired in settlement of loans $ 694,152 $ 705,632
 

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