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Pinnacle Bancshares Announces Results for Year Ended and Fourth Quarter December 31, 2023

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, 2023:

  • For the three months ended December 31, 2023, Pinnacle’s basic/diluted earnings per share was $1.08 as compared to $1.12 per share for the three months ended December 31, 2022. Net income for the three months ended December 31, 2023 was $981,000 as compared to $1,016,000 for the three months ended December 31, 2022.
  • For the year ended December 31, 2023, Pinnacle’s basic/diluted earnings per share was $4.93 as compared to $4.79 per share for the year ended December 31, 2022. Pinnacle reported net income of $4,480,000 for the year ended December 31, 2023 as compared to $4,504,000, for the year ended December 31, 2022.
  • For the three and nine months ended December 31, 2023, return on average assets was 1.18%, and 1.34%, respectively, compared to 1.29% and 1.35%, respectively, in the comparable 2022 period.

Company’s net interest margin was 3.18% and 3.32%, respectively for the three months and year ended December 31, 2023, respectively, compared to 3.48% and 3.35% for both the three months and year ended December 31, 2022, respectively. The Company anticipates that interest expense relating to its funding will continue to increase during 2024 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 December 31, 2023, Pinnacle’s allowance for loan losses as a percent of total loans was 1.96%, compared to 2.16% at December 31, 2022. Net charge-offs were $102,000 during 2023 as well as for 2022. There were no nonperforming assets at December 31, 2023 as well as 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.

Pinnacle was classified as “well capitalized” at the end of 2023. All capital ratios are higher than the requirements for a well-capitalized institution. As of December 31, 2023, the Bank’s common equity Tier 1 capital and Tier 1 risk-based capital ratios were each 18.12%. As of December 31, 2023, its total capital ratio was 19.29%, and its Tier 1 leverage ratio was 11.56%.

Dividends of $.27 and $1.08 per share were paid to shareholders during the three months and year ended for December 31, 2023, as compared to $.25 and $1.00 per share during the three months and year ended December 31, 2022.

Management believes that the Company has sufficient liquidity through its low loan to deposit ratio at December 31, 2023, as well as available funding from outside sources. Our net funding availability, as a percentage of our franchise funding, is 101.50% 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’s total deposits at December 31, 2023 decreased $10.9 million, or 3.4%, as compared to December 31, 2022. As mentioned previously, pricing of deposits is anticipated to remain competitive during 2024 and thus deposits could continue to decrease as they did during 2023.

Effects of Inflation

Inflation has caused a substantial rise in interest rates during 2023 and 2022 which has had a negative effect in the securities market. As a result of rising interest rates, the Company has recorded an accumulated other comprehensive loss on securities available for sale of approximately $26.3 million and $29.9 million as of December 31, 2023 and 2022, respectively. Thus, while the accumulated other comprehensive loss on securities available for sale have had a negative effect on total equity during 2023 and 2022, net earnings has continued to be strong. Although these unrealized losses recorded as of December 31, 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 December 31,

 

 

 

2023

 

 

 

2022

 

Net income

 

$

981,000

 

 

$

1,016,000

 

Basic and diluted earnings per share

 

$

1.08

 

 

$

1.12

 

 

 

 

 

 

Performance ratios (annualized):

 

 

 

 

Return on average assets

 

 

1.18

%

 

 

1.29

%

Return on average equity

 

 

10.07

%

 

 

11.45

%

Interest rate spread

 

 

2.70

%

 

 

3.35

%

Net interest margin

 

 

3.18

%

 

 

3.48

%

Operating cost to assets

 

 

2.40

%

 

 

2.57

%

 

 

 

 

 

Weighted average basic and diluted shares outstanding

 

 

909,534

 

 

 

909,534

 

Dividends per share

 

$

0.27

 

 

$

0.25

 

Provision for loan losses

 

$

-

 

 

$

125,000

 

 

 

 

 

 

Years Ended December 31,

 

 

 

2023

 

 

 

2022

 

Net income

 

$

4,480,000

 

 

$

4,504,000

 

Basic and diluted earnings per share

 

$

4.93

 

 

$

4.79

 

 

 

 

 

 

Performance ratios (annualized):

 

 

 

 

Return on average assets

 

 

1.34

%

 

 

1.35

%

Return on average equity

 

 

11.89

%

 

 

12.88

%

Interest rate spread

 

 

2.98

%

 

 

3.25

%

Net interest margin

 

 

3.32

%

 

 

3.35

%

Operating cost to assets

 

 

2.31

%

 

 

2.22

%

 

 

 

 

 

Weighted average basic and diluted shares outstanding

 

 

909,534

 

 

 

939,575

 

Dividends per share

 

$

1.08

 

 

$

1.00

 

Provision for loan losses

 

$

-

 

 

$

125,000

 

 

 

 

 

(Audited)

 

 

December 31, 2023

 

December 31, 2022

Total assets

 

$

342,708,000

 

 

$

332,718,000

 

Loans receivable, net

 

$

122,974,000

 

 

$

115,956,000

 

Deposits

 

$

311,341,000

 

 

$

322,261,000

 

Brokered CD’s included in deposits

 

$

11,903,000

 

 

$

11,756,000

 

Total stockholders’ equity

 

$

12,787,000

 

 

$

5,738,000

 

Book value per share (excluding OCI)

 

$

43.02

 

 

$

39.17

 

Average Stockholders’ equity to assets ratio (excluding OCI)

 

 

11.25

%

 

 

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

 

 

1.96

%

 

 

2.16

%

 

 

 

 

 

 

FINANCIAL INFORMATION

 

PINNACLE BANCSHARES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

 

 

(Unaudited)

 

(Audited)

 

December 31,

 

December 31,

 

 

2023

 

 

 

2022

 

 

 

 

 

Assets

 

 

 

Cash and cash equivalents

$

2,190,793

 

 

$

1,742,938

 

Interest bearing deposits in banks

 

19,518,942

 

 

 

12,185,982

 

Securities available for sale

 

165,520,025

 

 

 

170,580,649

 

Restricted equity securities

 

836,200

 

 

 

773,600

 

 

 

 

 

Loans

 

125,433,112

 

 

 

118,516,666

 

Less Allowance for loan losses

 

2,459,372

 

 

 

2,561,079

 

Loans, net

 

122,973,740

 

 

 

115,955,587

 

 

 

 

 

Premises and equipment, net

 

8,421,290

 

 

 

6,926,631

 

Right-of-use lease assets – operating

 

302,171

 

 

 

398,364

 

Goodwill

 

306,488

 

 

 

306,488

 

Bank owned life insurance

 

10,601,839

 

 

 

10,206,335

 

Accrued interest receivable

 

2,107,188

 

 

 

2,070,895

 

Deferred tax assets, net

 

9,081,069

 

 

 

10,594,339

 

Other assets

 

847,912

 

 

 

976,361

 

Total assets

$

342,707,657

 

 

$

332,718,169

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

Deposits

 

 

 

Noninterest-bearing

$

89,520,410

 

 

$

94,784,231

 

Interest-bearing

 

221,820,527

 

 

227,476,410

 

Total deposits

 

311,340,937

 

 

 

322,260,641

 

 

 

 

 

Subordinated debentures

 

3,093,000

 

 

 

3,093,000

 

Other borrowings

 

12,500,000

 

 

 

-

 

Accrued interest payable

 

1,392,272

 

 

 

111,652

 

Operating lease liabilities

 

302,171

 

 

 

398,364

 

Other liabilities

 

1,292,736

 

 

 

1,116,596

 

Total liabilities

 

329,921,116

 

 

 

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)

 

(15,588,799

)

 

 

(15,588,799

)

Retained earnings

 

45,772,256

 

 

 

42,274,372

 

Accumulated other comprehensive loss, net of tax

 

(26,338,862

)

 

 

(29,889,603

)

 

 

 

 

Total stockholders’ equity

 

12,786,541

 

 

 

5,737,916

 

 

 

 

 

Total liabilities and stockholders’ equity

$

342,707,657

 

 

332,718,169

 

 

 
 

PINNACLE BANCSHARES, INC.

 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

 

 

Three Months Ended

 

Years Ended

 

December 31,

 

December 31,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

Interest income

 

 

 

 

 

 

 

Loans, including fees

$

2,003,295

 

$

1,666,711

 

$

7,527,937

 

$

6,512,150

Securities available for sale

 

1,347,416

 

 

1,431,684

 

 

5,504,358

 

 

5,419,511

Other interest

 

266,587

 

 

72,494

 

 

840,501

 

 

170,912

Total interest income

 

3,617,298

 

 

3,170,889

 

 

13,872,796

 

 

12,102,573

 

 

 

 

 

 

 

 

Interest expense

 

 

 

 

 

 

 

Deposits

 

692,818

 

 

184,218

 

 

1,859,046

 

 

570,926

Borrowings

 

148,910

 

 

935

 

 

438,088

 

 

1,745

Subordinated debentures

 

39,050

 

 

38,600

 

 

156,200

 

 

152,510

Total interest expense

 

880,778

 

 

223,753

 

 

2,453,334

 

 

725,181

 

 

 

 

 

 

 

 

Net interest income

 

2,736,520

 

 

2,947,136

 

 

11,419,462

 

 

11,377,392

Provision for loan losses

 

-

 

 

125,000

 

 

-

 

 

125,000

Net interest income after provision

for loan losses

 

2,736,520

 

 

2,822,136

 

 

11,419,462

 

 

11,252,392

 

 

 

 

 

 

 

 

Other income

 

 

 

 

 

 

 

Fees and service charges on deposit accounts

 

426,111

 

 

384,999

 

 

1,681,484

 

 

1,504,850

Service fee income, net

 

746

 

 

758

 

 

2,910

 

 

3,292

Bank owned life insurance

 

101,087

 

 

95,975

 

 

395,505

 

 

383,894

Mortgage fee income

 

-

 

 

2,700

 

 

12,113

 

 

30,457

Total other income

 

527,944

 

 

484,432

 

 

2,092,012

 

 

1,922,493

 

 

 

 

 

 

 

 

Other expense:

 

 

 

 

 

 

 

Salaries and employee benefits

 

1,041,716

 

 

1,095,981

 

 

4,382,725

 

 

4,165,501

Occupancy expense

 

271,628

 

 

230,977

 

 

943,058

 

 

891,240

Marketing and professional expense

 

131,811

 

 

88,407

 

 

338,524

 

 

289,975

Other operating expenses

 

541,429

 

 

609,725

 

 

2,085,710

 

 

2,057,305

Total other expenses

 

1,986,584

 

 

2,025,090

 

 

7,750,017

 

 

7,404,021

 

 

 

 

 

 

 

 

Income before income taxes

 

1,277,880

 

 

1,281,478

 

 

5,761,457

 

 

5,770,864

 

 

 

 

 

 

 

 

Income tax expense

 

296,737

 

 

265,692

 

 

1,281,278

 

 

1,266,668

 

 

 

 

 

 

 

 

Net income

$

981,143

 

$

1,015,786

 

$

4,480,179

 

$

4,504,196

 

 

 

 

 

 

 

 

Cash dividend per share

$

0.27

 

$

0.25

 

$

1.08

 

$

1.00

 

 

 

 

 

 

 

 

Basic and diluted earnings per share

$

1.08

 

$

1.12

 

$

4.93

 

$

4.79

 

 

 

 

 

 

 

 

Weighted –average basic and diluted

shares outstanding

 

909,534

 

 

909,534

 

 

909,534

 

 

939,575

 
 

PINNACLE BANCSHARES, INC.

 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Years Ended December 31, 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

-

 

 

-

 

 

-

 

 

 

 

4,504,196

 

 

 

-

 

 

 

4,504,196

 

Cash dividends declared

($1.00 per share)

-

 

 

-

 

 

-

 

 

-

 

 

 

(940,163

)

 

 

-

 

 

 

(940,163

)

Purchase of treasury stock

-

 

 

-

 

 

-

 

 

(2,055,178

)

 

 

-

 

 

 

-

 

 

 

(2,055,178

)

Other comprehensive loss

-

 

 

-

 

 

-

 

 

-

 

 

 

-

 

 

 

(31,430,082

)

 

 

(31,430,082

)

Balance December 31, 2022

1,872,313

 

$

18,723

 

$

8,923,223

 

$

(15,588,799

)

 

$

42,274,372

 

 

$

(29,889,603

)

 

$

5,737,916

 

 

 

 

 

 

 

 

 

 

 

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

-

 

 

-

 

 

-

 

 

 

 

4,480,179

 

 

 

-

 

 

 

4,480,179

 

Cash dividends declared

($1.08 per share)

-

 

 

-

 

 

-

 

 

-

 

 

 

(982,295

)

 

 

-

 

 

 

(982,295

)

Other comprehensive income

-

 

 

-

 

 

-

 

 

-

 

 

 

-

 

 

 

3,550,741

 

 

 

3,550,741

 

Balance December 31, 2023

1,872,313

 

$

18,723

 

$

8,923,223

 

$

(15,588,799

)

 

$

45,772,256

 

 

$

(26,338,862

)

 

$

12,786,541

 

 
 

PINNACLE BANCSHARES, INC.

 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

For the Years Ended

 

December 31,

 

 

2023

 

 

 

2022

 

OPERATING ACTIVITIES:

 

 

 

Net income

$

4,480,179

 

 

$

4,504,196

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

Depreciation

 

418,815

 

 

 

424,648

 

Provision for loan losses

 

-

 

 

 

125,000

 

Net investment amortization expense

 

180,496

 

 

 

208,429

 

Net increase in bank owned life insurance

 

(395,505

)

 

 

(383,894

)

Decrease in accrued interest receivable

 

(36,292

)

 

 

(153,297

)

Increase in accrued interest payable

 

1,280,620

 

 

 

33,809

 

Net other operating activities

 

535,306

 

 

 

(97,246

)

Net cash provided by operating activities

 

6,463,619

 

 

 

4,661,645

 

 

 

 

 

INVESTING ACTIVITIES:

 

 

 

Net (increase) decrease in loans

 

(7,018,152

)

 

 

6,577,927

 

Net increase in interest bearing deposits in other banks

 

(7,332,960

)

 

 

(1,039,485

)

Purchase of securities available for sale

 

-

 

 

 

(41,170,098

)

Proceeds from maturing, calls, and payments received on securities available for sale

 

9,712,596

 

 

 

10,777,597

 

Net purchase of restricted equity securities

 

(62,600

)

 

 

(32,000

)

Purchase of premises and equipment

 

(1,913,473

)

 

 

(335,742

)

Net cash used in investing activities

 

(6,614,589

)

 

 

(25,221,801

)

 

 

 

 

FINANCING ACTIVITIES:

 

 

 

Net increase (decrease) in deposits

 

(10,918,880

)

 

 

23,568,108

 

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

 

(982,295

)

 

 

(940,163

)

Net cash provided by financing activities

 

598,825

 

 

 

20,572,767

 

 

 

 

 

Net increase in cash and cash equivalents

 

447,855

 

 

 

12,611

 

 

 

 

 

Cash and cash equivalents at beginning of period

 

1,742,938

 

 

 

1,730,327

 

 

 

 

 

Cash and cash equivalents at end of period

$

2,190,793

 

 

$

1,742,938

 

 

 

 

 

SUPPLEMENTAL DISCLOSURES:

 

 

 

Cash paid during the period for:

 

 

 

Interest

$

1,172,714

 

 

$

687,479

 

Taxes

$

945,928

 

 

$

1,330,569

 

 

 

 

 

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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