Pinnacle Bancshares Announces Results For Third Quarter

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, 2013, net income was $494,000, compared with net income of $551,000 for the three months ended September 30, 2012.

For the nine months ended September 30, 2013, net income was $1,458,000, compared with net income of $1,448,000 for the nine months ended September 30, 2012.

Basic and diluted earnings per share for the three and nine month periods ended September 30, 2013, were $0.41 and $1.21 per share, respectively, compared to $0.46 and $1.17 per share, respectively, for the same periods last year.

For the three and nine months ended September 30, 2013, return on average assets was 0.89%, and 0.91%, respectively, compared to 1.08% and 0.94%, respectively, in the comparable 2012 periods.

Net interest margin was 3.42% and 3.51% for the three months and nine months ended September 30, 2013, respectively, compared to 3.98% and 3.96% for the three months and nine months ended September 30, 2012, respectively.

In the three and nine months ended September 30, 2013, Pinnacle’s net interest margin declined primarily due to lower loan volumes. Lower provision for loan losses and operating expenses helped offset the decline in net interest income.

Mr. Nolen commented: “Our strategy is to continue to provide high quality products and services to, and relationship banking with, our customers who live and conduct businesses in our market area. We focus on loan quality and closely monitor our expenses. Although loan growth continues to be challenged, our core deposits, asset quality and regulatory capital ratios remain strong. We conservatively manage our investments, which we expect will provide significant flexibility if and when loan volumes begin to increase in an improving economy.”

At September 30, 2013, the Company’s allowance for loan losses as a percent of total loans was 1.62%, compared to 1.90% at September 30, 2012. At September 30, 2013, the Company’s allowance for loan losses as a percent of non-performing loans was 255.25%, compared to 240.37%, at September 30, 2012. Based on current real estate valuations, Pinnacle believes its allowance for loan losses is adequate.

Charge-offs, net of recoveries, were $177,000 and $630,000 for the three and nine months ended September 30, 2013, respectively, compared to $165,000 and $619,000 for the three and nine months ended September 30, 2012, respectively. The ratio of non-performing loans to total loans was 0.63% at September 30, 2013, compared to .76% at September 30, 2012 and .20% at December 31, 2012.

The decrease in provision for loan losses during the first nine months of 2013 was primarily due to the reduced amount of classified loans as well as the shrinking of the overall loan portfolio.

Pinnacle was classified as “well capitalized” at the end of the third quarter of 2013. At September 30, 2013, total risk-based capital was 18.83% for the subsidiary bank. Tier 1 risk-based capital and Tier 1 leverage capital ratios for the subsidiary bank were 17.73% and 11.03%, respectively. All capital ratios are significantly higher than the requirements for a well capitalized institution.

Mr. Nolen again reminded investors that, although Pinnacle remains well capitalized and has been able to avoid liquidity issues, 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

(In Thousands, except share and per share data)
 
Three Months Ended September 30,
2013     2012
Net income $ 494,000 $ 551,000
Basic and diluted earnings per share $ 0.41 $ 0.46
 
Performance ratios (annualized):
Return on average assets .89 % 1.08 %
Return on average equity 9.72 % 9.71 %
Interest rate spread 3.40 % 3.97 %
Net interest margin 3.42 % 3.98 %
Operating cost to assets 2.70 % 2.99 %
 
Weighted average basic and diluted shares outstanding 1,205,128 1,205,128
Dividends per share $ 0.11 $ 0.11
Provision for loan losses $ 25,000 $ 0
 
Nine Months Ended September 30,
2013 2012
Net income $ 1,458,000 $ 1,448,000
Basic and diluted earnings per share $ 1.21 $ 1.17
 
Performance ratios (annualized):
Return on average assets 0.91 % 0.94 %
Return on average equity 10.44 % 8.57 %
Interest rate spread 3.50 % 3.94 %
Net interest margin 3.51 % 3.96 %
Operating cost to assets 2.71 % 2.94 %
 

Weighted average basic and diluted shares outstanding
1,205,128 1,251,557
Dividends per share $ 0.22 $ 0.33
Provision for loan losses $ 100,000 $ 200,000
 
September 30, 2013 December 31, 2012
Total assets $ 224,131,000 $ 208,391,000
Loans receivable, net $ 92,991,000 $ 95,963,000
Deposits $ 197,258,000 $ 177,313,000
Total stockholders’ equity $ 21,896,000 $ 22,770,000
Book value per share $ 18.17 $ 18.54
Stockholders’ equity to assets ratio 9.77 % 10.93 %
 
Asset quality ratios:
Non-performing loans as a percent of total loans 0.63 % 0.20 %
Non-performing assets as a percent of total assets 0.51 % 0.56 %
Allowance for loan losses as a percent of total loans 1.62 % 2.07 %

Allowance for loan losses as a percent of Non-performing loans

 
255.25 % 1018.00 %
       

FINANCIAL INFORMATION

PINNACLE BANCSHARES, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
 
September 30, 2013 December 31, 2013

Assets
Cash and cash equivalents $ 1,444,680 $ 1,332,968
Interest bearing deposits in banks 12,754,548 2,234,882
Securities available for sale 100,062,098 91,693,374
Restricted equity securities 855,900 994,800
Loans held for sale 0 395,801
Loans 94,496,931 97,998,866
Less Allowance for loan Losses 1,506,355 2,036,110
Loans, net 92,990,576 95,962,756
Other real estate owned 480,258 347,824
Premises and equipment, net 5,731,489 6,039,211
Goodwill 306,488 306,488
Bank owned life insurance 7,723,201 7,463,963
Accrued interest receivable 896,848 901,784
Other assets   885,284     716,917  
Total assets $ 224,131,370   $ 208,390,768  
 

Liabilities and Stockholders’ Equity
Deposits
Noninterest-bearing $ 42,433,399 $ 39,594,246
Interest-bearing $ 154,824,536   $ 137,719,659  
Total deposits $ 197,257,935 $ 177,313,905
Repurchase agreements 1,274,289 118,793
Other borrowings 0 3,800,000
Subordinated debentures 3,093,000 3,093,000
Accrued interest payable 112,164 110,311
Other liabilities   497,616     1,184,534  
Total liabilities   202,235,004     185,620,543  
 
Stockholders’ equity
Common stock, par value $.01 per share; 2,400,000 authorized; 1,872,313 issued at September 30, 2013 and December 31, 2012; 1,205,128 outstanding at September 30, 2013 and December 31, 2012 18,723 18,723
Additional paid-in capital 8,923,223 8,923,223
Treasury stock, at cost (667,185 shares outstanding at September 30, 2013 and December 31, 2012)

(7,974,814

)
(7,974,814 )
Retained earnings 21,087,046 19,894,190
Accumulated other comprehensive income (loss), net of tax   (157,812 )   1,908,903  
Total stockholders’ equity   21,896,366       22,770,225  
Total liabilities and stockholders’ equity $ 224,131,370     $ 208,390,768  
       

PINNACLE BANCSHARES, INC.

 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
Three Months Ended Nine Months Ended
September 30, September 30
2013     2012 2013     2012
INTEREST REVENUE:
Interest & fee income on loans $ 1,208,592 $ 1,417,472 $ 3,707,738 $ 4,381,122
Interest and dividends on securities 667,297 615,610 1,964,337 1,829,374
Other interest   15,336   12,781   26,509   29,250
1,891,225 2,045,863 5,698,584 6,239,746
INTEREST EXPENSE:
Interest on deposits 137,517 167,143 423,550 577,577
Interest on subordinated debt 24,877 26,624 74,986 80,306
Interest on borrowed funds   1   89   1,653   463
  162,395   193,856   500,189   658,346

NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES
1,728,830 1,852,007 5,198,395 5,581,400
PROVISION FOR LOAN LOSSES   25,000   0   100,000   200,000

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES
  1,703,830   1,852,007   5,098,395   5,381,400
NONINTEREST INCOME:
Fees and service charges on deposit accounts 254,730 248,174 762,124 657,273
Service fee income 8,260 10,053 24,870 32,149
Bank owned life insurance 86,413 86,640 259,239 259,920
Net gain (loss) on sale or write-down of:
Loans held for sale 33,498 13,987 75,705 57,892
Real estate owned   3,621   43,377   (90,031)   52,667
  386,522   402,231   1,031,907   1,059,901
NONINTEREST EXPENSE:
Compensation and benefits 711,255 686,968 2,019,526 2,117,317
Occupancy 257,335 267,978 769,725 820,063
Marketing and professional 107,802 120,911 346,127 346,671
Other   416,065   443,988   1,231,797   1,254,288
  1,492,457   1,519,845   4,367,175   4,538,339
INCOME BEFORE INCOME TAXES 597,895 734,393 1,763,127 1,902,962
INCOME TAX EXPENSE   103,558   183,768   305,143   454,596
NET INCOME $ 494,337 $ 550,625 $ 1,457,984 $ 1,448,366
Cash dividend per share $0.11 $0.22 $0.22 $0.33
Basic and diluted earnings per share $0.41 $0.46 $1.21 $1.17
Weighted –average basic and diluted shares outstanding 1,205,128 1,205,128 1,205,128 1,235,967
             

PINNACLE BANCSHARES, INC.

 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2013 AND 2012
 
Accumulated
Additional Other Total
Common Stock Paid-in Treasury Retained Comprehensive Stockholders’
Shares   Amount Capital Stock Earnings Income Equity
Balance December 31, 2011 1,872,313 $ 18,723 $ 8,923,223 $ (7,320,909 ) $ 18,609,374 $ 2,103,992 $ 22,334,403
Net income 0 0 0 0 1,448,366 0 1,448,366
Cash dividends declared ($.33 per share) 0 0 0 0 (404,835 ) 0 (404,835 )
Repurchase of 65,000 shares of common stock 0 0 0 (653,905 ) 0 0 (653,905 )
Other comprehensive income 0     0     0     0       0       253,329       253,329  
Balance September 30, 2012 1,872,313   $ 18,723   $ 8,923,223   $ (7,974,814 )   $ 19,652,905     $ 2,357,321     $ 22,977,358  
 
Accumulated
Additional Other Total
Common Stock Paid-in Treasury Retained Comprehensive Stockholders’
Shares Amount Capital Stock Earnings

Income (Loss)
Equity
Balance December 31, 2012 1,872,313 $ 18,723 $ 8,923,223 $ (7,974,814 ) $ 19,894,190 $ 1,908,903 $ 22,770,225
Net income 0 0 0 0 1,457,984 0 1,457,984
Cash dividends declared ($.22 per share) 0 0 0 0 (265,128 ) 0 (265,128 )
Other comprehensive loss 0     0     0     0       0       (2,066,715 )     (2,066,715 )
Balance September 30, 2013 1,872,313   $ 18,723   $ 8,923,223   $ (7,974,814 )   $ 21,087,046     $ (157,812 )   $ 21,896,366  
   

PINNACLE BANCSHARES, INC,

 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
For the Nine Months Ended
September 30
2013     2012
OPERATING ACTIVITIES:
Net income $ 1,457,984 $ 1,448,366
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 354,949 358,666
Provision for loan losses 100,000 200,000
Amortization expense, net 355,166 179,235
Bank owned life insurance (259,239 ) (259,921 )
Gain on sale of loans held for sale (75,705 ) (57,892 )
(Gain) loss on sale of or write-down of real estate owned, net 90,031 (43,377 )
Gain on sale of assets (5,151 ) 0
Net change in loans held for sale 471,506 (539,066 )
Decrease in accrued interest receivable 4,936 193,764
Proceeds from refund of FDIC prepaid assessment 393,050 0
Increase (decrease) in accrued interest payable 1,853 (36,697 )
Net other operating activities   32,999     301,767  
Net provided by operating activities   2,922,379     1,744,845  
INVESTING ACTIVITIES:
Net loan repayments 2,544,229 8,125,238
Net increase in interest bearing deposits in other banks (10,519,666 ) (4,305,718 )
Purchase of securities available-for-sale (24,856,887 ) (19,600,681 )
Proceeds from maturing, calls, and payments received on securities available-for-sale 12,784,949 9,231,018
Purchase of correspondent bank stock 0 (163,900 )
Proceeds from sales of correspondent bank stock 138,900 135,900
Purchase of premises and equipment (47,227 ) (266,259 )
Proceeds from sales of premises and equipment 5,151 0
Proceeds from sales or capital expenditures related to real estate owned   105,486     343,507  
Net cash used in investing activities   (19,845,065 )   (6,500,895 )
FINANCING ACTIVITIES:
Net increase in deposits 19,944,030 4,323,656
Increase in repurchase agreements 1,155,496 128,226
Repayment of other borrowings (3,800,000 ) 0
Repurchase of common stock 0 (653,905 )
Payments of cash dividends   (265,128 )   (404,835 )
Net cash provided by financing activities   17,034,398     3,393,142  
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 111,712 (1,362,908 )
 
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD   1,332,968     2,510,642  
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,444,680   $ 1,147,734  
 
SUPPLEMENTAL DISCLOSURES:
Cash payments for interest on deposits, borrowed funds, and subordinated debentures $ 498,336 $ 695,043
Cash payments for income taxes $ 182,458 $ 354,000
OTHER NONCASH TRANSACTIONS
Real estate acquired through foreclosure $ 327,951 $ 694,151

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