Pinnacle Bancshares Announces Results for Third Quarter

JASPER, Ala.--()--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”

“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’ EQUITY

FOR 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

Contacts

Pinnacle Bancshares, Inc.
Robert B. Nolen, Jr., 205-221-4111
President and Chief
Executive Officer

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