PCLB Pinnacle Bancshares Inc (PK)

Robert B. Nolen, Jr., President and Chief Executive Officer of Pinnacle Bancshares, Inc. (OTCBB:PCLB), today announced Pinnacle’s third quarter results of operations.

“We are pleased with the strength and stability of our Company,” said Mr. Nolen. “Our earnings and asset quality have continued to improve, and our capital ratios remain strong.”

For the three months ended September 30, 2012, net income was $551,000, compared with net income of $429,000 for the three months ended September 30, 2011.

For the nine months ended September 30, 2012, net income was $1,448,000, compared with net income of $776,000 for the nine months ended September 30, 2011.

Basic and diluted earnings per share for the three and nine month periods ended September 30, 2012, were $0.46 and $1.17 per share, respectively, compared to $0.34 and $0.61 per share, respectively, for the same periods last year.

The Company’s net interest margin was 3.98% and 3.96% for the three months and nine months ended September 30, 2012, respectively, compared to 4.09% and 4.14% for the three months and nine months ended September 30, 2011, respectively.

Mr. Nolen commented: “Our positive results for the third quarter were primarily due to improvements in credit quality, a significant decline in provisions to the loans loss reserve, and a reduction in charge-offs.”

Pinnacle’s provision for loan losses decreased from $100,000 and $1,050,000 in the three and nine months ended September 30, 2011, respectively, to no provision in the three months ended September 30, 2012, and $200,000 in the nine months ended September 30, 2012.

Charge-offs, net of recoveries, were $165,000 and $619,000 for the three and nine months ended September 30, 2012, respectively, compared to $286,000 and $837,000 for the three and nine months ended September 30, 2011, respectively. The ratio of non-performing assets to total loans was 0.76% at September 30, 2012, compared to 1.14% at September 30, 2011 and 1.01% December 31, 2011. “Declines in charge-offs and non-performing asset ratios reflect our continued success in resolving problems loan issues aggressively,” said Mr. Nolen.

For the three and nine months ended September 30, 2012, recoveries were $13,000 and $126,000, respectively, compared to $134,000 and $188,000 for the three and nine months ended September 30, 2011, respectively.

At September 30, 2012, the Company’s allowance for loan losses as a percent of total loans was 1.90%, compared to 1.14% at September 30, 2011 and 2.13% at December 31, 2011. At September 30, 2012, the Company’s allowance for loan losses as a percent of non-performing loans was 240.37%, compared to 223.09%, at September 30, 2011 and 211.68% at December 31, 2011. Based on current real estate valuations, Pinnacle believes its allowance for loan losses is adequate. If economic conditions do not improve, additional charge-offs and further significant increases in the allowance may be necessary.

Pinnacle was classified as “well capitalized” at the end of the third quarter of 2012. At September 30, 2012, total risk-based capital was 18.58% for the holding company and 18.26% for the bank, compared with a regulatory requirement of 10.0% for a well capitalized institution. Tier 1 risk-based capital was 17.41% for the holding company and 17.10% for the bank; both ratios were significantly higher than the 6.0% requirement for a well capitalized institution.

In June 2012, the Federal Reserve Board issued proposed new rules to implement revised capital requirements under the Dodd-Frank Act and the Based III international capital standards. Management will evaluate the potential impact of these rules to ensure the capital levels of both the holding company and the bank continue to exceed amounts required to be deemed “well capitalized.”

Mr. Nolen again reminded investors that, although Pinnacle remains well capitalized and has been able to avoid liquidity issues, Pinnacle continues to operate in a challenging and uncertain economic and regulatory environment. Financial institutions in Alabama and throughout the U. S. have been, and continue to be, affected by significant declines in economic conditions and constrained financial markets. Pinnacle retains direct exposure to the residential and commercial real estate markets.

The Company believes declines in economic conditions and financial stresses as a result of the uncertain economic environment, including job losses, have had and could continue to have an adverse affect on Pinnacle’s borrowers or 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 non-performing 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, 2012   2011 Net income $ 551,000

 

$ 429,000 Basic and diluted earnings per share $ 0.46 $ 0.34   Performance ratios (annualized): Return on average assets 1.08 % 0.83 % Return on average equity 9.71 % 7.89 % Interest rate spread 3.97 % 4.08 % Net interest margin 3.98 % 4.09 % Operating cost to assets 2.99 % 3.28 %   Weighted average basic and diluted shares outstanding

1,205,128

1,270,128

Dividends per share $ 0.11 $ 0.11 Provision for loan losses $ 0 $ 100,000   Nine Months Ended September 30, 2012 2011 Net income $ 1,448,000

 

$ 776,000 Basic and diluted earnings per share $ 1.17 $ 0.61   Performance ratios (annualized): Return on average assets 0.94 % 0.50 % Return on average equity 8.57 % 4.87 % Interest rate spread 3.94 % 4.13 % Net interest margin 3.96 % 4.14 % Operating cost to assets 2.94 % 3.29 %   Weighted average basic and diluted shares outstanding

1,251,557

1,270,128

Dividends per share $ 0.33 $ 0.33 Provision for loan losses $ 200,000 $ 1,050,000   September 30, 2012 December 31, 2011 Total assets $ 204,698,000 $ 199,231,000 Loans receivable, net $ 93,426,000 $ 102,446,000 Deposits $ 174,641,000 $ 170,577,000 Total stockholders’ equity $ 22,977,000 $ 22,334,000 Book value per share $ 19.07 $ 17.58 Stockholders’ equity to assets ratio 11.22 % 11.21 %   Asset quality ratios:

Nonperforming loans as a percent of total loans

0.79 % 1.01 %

Nonperforming assets as a percent of total assets

0.76 % 1.39 %

Allowance for loan losses as a percent of total loans

1.90 % 2.13 %

Allowance for loan losses as a percent of nonperforming loans

240.37 % 211.68 %          

FINANCIAL INFORMATION

 

PINNACLE BANCSHARES, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

  September 30, December 31, 2012 2011   Assets Cash and cash equivalents $ 1,147,734 $ 2,510,642 Interest bearing deposits in banks 5,919,184 1,613,466 Securities available-for-sale 86,333,800 75,734,778 Restricted equity securities 985,800 957,800 Loans held for sale 596,958 0

Loans receivable, net of allowances for loan losses of $1,810,117 and $2,228,644 respectively

93,426,125 102,445,514 Foreclosed Assets 797,902 403,881 Premises and equipment, net 6,094,387 6,186,794 Goodwill 306,488 306,488

Bank owned life insurance

Accrued interest receivable

Other assets

7,377,323 7,117,402 824,567 1,018,331   887,386     935,476   Total assets $ 204,697,654   $ 199,230,572     Liabilities and stockholders’ equity Deposits $ 174,640,872 $ 170,576,626 Subordinated debt 3,093,000 3,093,000 Repurchase agreements 1,113,183 984,957 Official checks outstanding 1,030,772 771,362 Accrued interest payable 145,323 182,020 Other liabilities   1,697,146     1,288,204   Total liabilities   181,720,296     176,896,169     Stockholders’ equity

Common stock, par value $.01 per share; 2,400,000 authorized; 1,872,313 issued at September 30, 2012 and December 31, 2011, respectively; 1,205,125 and 1,270,128 outstanding at September 30, 2012 and December 31, 2011, respectively

18,723

18,723

Additional paid-in capital

8,923,223

8,923,223

Treasury shares, at cost (667,185 and 602,185 shares outstanding at September 30, 2012 and December 31, 2011, respectively)

(7,974,814

)

(7,320,909

)

Retained earnings 19,652,905 18,609,374 Accumulated other comprehensive loss, net of tax   2,357,321     2,103,992   Total stockholders’ equity   22,977,358     22,334,403   Total liabilities and stockholders’ equity $ 204,697,654   $ 199,230,572                

PINNACLE BANCSHARES, INC.

 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

Three Months Ended

September 30,

   

Nine Months Ended

September 30,

2012 2011 2012 2011 INTEREST REVENUE: Interest & fee Income on loans $ 1,417,472 $ 1,627,091 $ 4,381,122 $ 4,994,665 Interest and dividends on securities 615,610 625,105 1,829,374 1,855,726 Other interest   12,781   16,744     29,250   28,396   2,045,863 2,268,940 6,239,746 6,878,787 INTEREST EXPENSE: Interest on deposits 167,143 280,957 577,577 935,453 Interest on subordinated debt 26,624 24,997 80,306 74,835 Interest on borrowed funds   89   0     463   72     193,856   305,954     658,346   1,010,360  

NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES

1,852,007 1,962,986 5,581,400 5,868,427 PROVISION FOR LOAN LOSSES   0   100,000     200,000   1,050,000  

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES

 

1,852,007

 

1,862,986

   

5,381,400

 

4,818,427

  NONINTEREST INCOME: Fees and service charges on deposit accounts 248,174 224,598 657,273 710,563 Service fee income 10,053 12,453 32,149 39,476 Bank owned life insurance 86,640 85,075 259,920 255,225 Net gain (loss)on sale or write-down of: Loans held for sale 13,987 47,316 57,892 47,316 Real estate owned   43,377   (120,049 )   52,667   (106,663 )   402,231   249,393     1,059,901   945,917   NONINTEREST EXPENSE: Compensation and benefits 686,968 746,522 2,117,317 2,460,832 Occupancy 267.978 367,239 820,063 1,046,051 Marketing and professional 120,911 100,516 346,671 284,312 Other   443,988   350,571     1,254,288   1,126,547     1,519,845   1,564,848     4,538,339   4,917,742   INCOME BEFORE INCOME TAXES 734,393 547,531 1,902,962 846,602 INCOME TAX EXPENSE (BENEFIT)   183,768   118,111     454,596   71,040   NET INCOME $ 550,625 $ 429,420     1,448,366 $ 775,562   Cash dividend per share $ 0.11 $ 0.11 $ 0.11 $ 0.33 Basic and diluted earnings per share $ 0.46 $ 0.34 $ 1.17 $ 0.61 Weighted –average basic and diluted shares outstanding 1,205,128 1,270,128 1,235,967 1,270,128                          

PINNACLE BANCSHARES, INC.UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITYFOR THE SIX MONTHS ENDED SEPTEMBER 30 2012 AND 2011

  Accumulated Additional Other Total Common Stock Paid-in Treasury Retained Comprehensive Stockholders’ Shares     Amount Capital Stock Earnings Income Equity Balance December 31, 2010 1,872,313 $ 18,723 $ 8,923,223 $ (7,320,909 ) $ 17,836,009 $ 1 ,185,580 $ 20,642,626 Net income 0 0 0 0 657,806 0 657,806 Cash dividends declared ($.22 per share) 0 0 0 0 (419,143 ) 0 (419,143 ) Other comprehensive income 0       0       0       0         0         830,188       830,188   Balance September 30, 2011 1 ,872,313     $ 18,723     $ 8,923,223     $ (7,320,909 )     $ 18,074,672       $ 2,015,768     $ 21,711,477     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 ($.22 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        

PINNACLE BANCSHARES, INC,

 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

For the Nine Months Ended

September 30, 2012     2011 OPERATING ACTIVITIES: Net income $ 1,448,366 $ 775,562 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 358,666 369,537 Provision for loan losses 200,000 1,050,000 Provision for losses on real estate owned (139,215 ) Amortization expense, net 179,235 (26,727 ) Bank owned life insurance (259,921 ) (255,226 ) Gain on sale of loans held for sale (57,892 ) (30,996 )) Loss on sale of or write-down of real estate owned, net (43,377 ) 137,659 Gain on securities held for sale (47,316 ) Proceeds from sales of loans held for sale 4,282,359 2,959,141 Origination of loans held for sale (4,821,425 ) (2,947,438 ) Decrease (increase)in accrued interest receivable 193,764 (55,340 ) Decrease in other assets 48,090 337,473 Decrease in accrued interest payable (36,697 ) (139,265 ) Increase (decrease) in other liabilities   253,677     (228,365 ) Net provided by operating activities   1,744,845     1,759,484   INVESTING ACTIVITIES: Net loan repayments 8,125,238 9,534,398 Net increase in interest bearing deposits in other banks (4,305,718 ) (14,179,054 ) Purchase of securities available-for-sale (19,600,681 ) (17,678,133 ) Proceeds from maturing, sale and payments received on securities available-for-sale 9,231,018 14,324,847 Purchase of correspondent bank stock (163,900 ) 0 Proceeds from sales of correspondent bank stock 135,900 219,300 Purchase of premises and equipment (266,259 ) (60,574 ) Proceeds from sales or capital expenditures related to real estate owned   343,507     590,808   Net cash used in investing activities   (6,500,895 )   (7,248,408 ) FINANCING ACTIVITIES: Net increase in deposits 4,064,246 5,195,539 Increase in official checks outstanding 259,410 259,252 Increase in repurchase agreements 128,226 0 Repurchase of common stock (653,905 ) 0 Payments of cash dividends   (404,835 )   (419,138 ) Net cash provided by financing activities   3,393,142     5,035,653   NET DECREASE IN CASH AND CASH EQUIVALENTS (1,362,908 ) (453,271 ) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD   2,510,642     3,486,659   CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,147,734   $ 3,033,388   SUPPLEMENTAL DISCLOSURES: Cash payments for interest on deposits, borrowed funds, and subordinated debentures $ 695,043 $ 1,149,625 Cash payments for income taxes $ 354,000 $ 6,000 OTHER NONCASH TRANSACTIONS Real estate acquired through foreclosure $ 694,151 705,632