Pinnacle Bancshares Announces Results for Second Quarter Ended June 30, 2019 - Pinnacle Bancshares (OTC:PCLB)

Robert B. Nolen, Jr., President and Chief Executive Officer of Pinnacle Bancshares, Inc. PCLB, today announced Pinnacle's second quarter results of operations.

For the three months ended June 30, 2019, Pinnacle reported net income of $745,000 compared to $643,000 for the three months ended June 30, 2018. $39,000 of net gains related to sale of securities available for sale are included in the three months ended June 30, 2019.
For the six months ended June 30, 2019, Pinnacle reported net income of $1,410,000 compared to $1,256,000 for the six months ended June 30, 2018. $39,000 of net gains related to sale of securities available for sale are included in the six months ended June 30, 2019.
Net interest income after the provision for loan losses for the three and six months ended June 30, 2019, was $2,021,000 and $3,965,000, respectively, compared with $1,918,000 and $3,785,000 respectively, in the same periods last year.
Basic and diluted earnings per share for the three and six months ended June 30, 2019 were $0.72 and $1.36 per share, respectively, compared to $0.62 and $1.20 per share, respectively, for the same periods last year.
For the three and six months ended June 30, 2019, return on average assets was 1.30%, and 1.24%, respectively, compared to 1.15% and 1.12%, respectively, in the comparable 2018 period.

Pinnacle's net interest margin was 3.87% and 3.81% for the three and six months ended June 30, 2019, respectively, compared to 3.74% and 3.67% for the three and six months ended June 30, 2018, respectively.

At June 30, 2019, Pinnacle's allowance for loan losses as a percent of total loans was 1.50%, compared to 1.53% at December 31, 2018. At June 30, 2019, the allowance for loan losses as a percent of nonperforming loans was 648.39%, compared to 596.28% at December 31, 2018. Nonperforming assets were $248,000 at June 30, 2019, compared to $269,000 at December 31, 2018. The ratio of nonperforming assets to total loans was .23% at June 30, 2019, compared to .26% at December 31, 2018. In addition, all capital ratios are higher than the requirements for a well-capitalized institution.

Dividends of $.19 and $.38 per share were paid to shareholders during the three and six months ended for both Junes 30, 2019, as compared to $.11 and $.22 per share during the three and six months ended June 30, 2018.

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 June 30,
	2019		2018
Net income	$	745,000	$	643,000
Basic and diluted earnings per share	$	0.72	$	0.62

Performance ratios (annualized):
Return on average assets		1.30%		1.15%
Return on average equity		10.47%		9.45%
Interest rate spread		3.65%		3.61%
Net interest margin		3.87%		3.74%
Operating cost to assets		2.81%		2.84%

Weighted average basic and diluted shares outstanding		1,035,378		1,043,505
Dividends per share	$	0.19	$	0.11
Provision for loan losses	$	-	$	-

	Six Months Ended June 30,
	2019		2018
Net income	$	1,410,000	$	1,256,000
Basic and diluted earnings per share	$	1.36	$	1.20

Performance ratios (annualized):
Return on average assets		1.24%		1.12%
Return on average equity		9.97%		9.44%
Interest rate spread		3.59%		3.55%
Net interest margin		3.81%		3.67%
Operating cost to assets		2.79%		2.80%

Weighted average basic and diluted shares outstanding		1,037,417		1,043,505
Dividends per share	$	0.38	$	0.22
Provision for loan losses	$	-	$	-

			*(Audited)*
	June 30, 2019		December 31, 2018
Total assets	$	230,252,000	$	221,755,000
Loans receivable, net	$	105,663,000	$	103,282,000
Deposits	$	195,472,000	$	185,329,000
Brokered CD's included in deposits	$	2,032,000	$	2,999,000
Other borrowings	$	-	$	4,500,000
Total stockholders' equity	$	29,640,000	$	27,207,000
Book value per share	$	28.70	$	26.07
Stockholders' equity to assets ratio		12.46%		12.17%

Asset quality ratios:
Nonperforming loans as a percent of total loans		.23%		.26%
Nonperforming assets as a percent of total loans		.23%		.26%
Allowance for loan losses as a percent of total loans		1.50%		1.53%
Allowance for loan losses as a percent of nonperforming loans		648.39%		596.28%




FINANCIAL INFORMATION

PINNACLE BANCSHARES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

	*(Unaudited)*			*(Audited)*
	June 30,			December 31,
		2019			2018

Assets
Cash and cash equivalents	$	1,523,907		$	1,611,283
Interest bearing deposits in banks		12,153,368			1,704,572
Securities available for sale		91,455,632			95,246,509
Restricted equity securities		723,800			912,300

Loans		107,270,420			104,885,961
Less Allowance for loan losses		1,607,706			1,604,052
Loans, net		105,662,714			103,281,909

Premises and equipment, net		6,530,520			6,375,898
Right-of-use lease assets – operating		727,589			773,944
Goodwill		306,488			306,488
Bank owned life insurance		9,740,112			9,560,097
Accrued interest receivable		1,176,905			1,285,517
Other assets		251,042			696,784
Total assets	$	230,252,077		$	221,755,301

Liabilities and Stockholders' Equity
Deposits
Noninterest-bearing	$	57,398,396		$	52,221,831
Interest-bearing		138,074,014			133,107,273
Total deposits		195,472,410			185,329,104

Other borrowings		-			4,500,000
Long term lease obligations – operating		727,589			773,944
Subordinated debentures		3,093,000			3,093,000
Accrued interest payable		164,006			146,848
Other liabilities		1,155,063			705,806
Total liabilities		200,612,068			191,548,702

Stockholders' equity
Common stock, par value $.01 per share; 2,400,000 authorized; 1,872,313 issued; 1,032,905 shares and 1,043,505 outstanding, respectively		18,723			18,723
Additional paid‑in capital		8,923,223			8,923,223
Treasury stock (839,408 and 828,808 shares, respectively)		(11,730,888	)		(11,464,104	)
Retained earnings		31,360,319			30,343,475
Accumulated other comprehensive income (loss), net of tax		1,068,632			(614,718	)

Total stockholders' equity		29,640,009			27,206,599

Total liabilities and stockholders' equity	$	230,252,077		$	221,755,301




PINNACLE BANCSHARES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Interest income
Loans, including fees	$	1,502,254	$	1,320,707	$	2,931,547	$	2,578,700
Securities available for sale		711,002		716,643		1,433,348		1,443,025
Other interest		59,159		28,584		100,814		58,646
Total interest income		2,272,415		2,065,934		4,465,709		4,080,371

Interest expense
Deposits		207,235		97,837		395,304		188,585
Borrowings and repurchase agreements		-		10,523		87,690		76,300
Subordinated debentures		43,690		39,800		17,312		30,055
Total interest expense		250,925		148,160		500,306		294,940

Net interest income		2,021,490		1,917,774		3,965,403		3,785,431
Provision for loan losses		-		-		-		-
Net interest income after provision for loan losses		2,021,490		1,917,774		3,965,403		3,785,431

Other income
Fees and service charges on deposit accounts		369,779		339,069		697,063		667,112
Service fee income, net		1,719		2,086		3,433		4,289
Bank owned life insurance		90,009		83,595		180,015		167,190
Mortgage fee income		10,803		10,305		18,372		15,304
Net gain on sale of real estate owned		-		597		967		597
Net gain on securities available for sale		39,207		-		39,207		1,689
Total other income		511,517		435,652		939,057		856,181

Other expense:
Salaries and employee benefits		910,664		917,737		1,825,488		1,806,875
Occupancy expense		198,680		218,110		395,979		441,966
Marketing and professional expense		66,708		44,753		130,685		85,784
Other operating expenses		434,468		402,537		818,871		802,931
Total other expenses		1,610,520		1,583,137		3,171,023		3,137,556

Income before income taxes		922,487		770,289		1,733,437		1,504,056

Income tax expense		177,044		127,646		323,005		247,961

Net income	$	745,443	$	642,643	$	1,410,432	$	1,256,095

Cash dividend per share	$	0.19	$	0.11	$	0.38	$	0.22

Basic and diluted earnings per share	$	0.72	$	0.62	$	1.36	$	1.20

Weighted–average basic and diluted shares outstanding		1,035,378		1,043,505		1,037,417		1,043,505




PINNACLE BANCSHARES, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Six Months Ended June 30, 2019 and 2018

												Accumulated
				Additional								Other			Total
	Common Stock			Paid-in		Treasury			Retained			Comprehensive			Stockholders'
	Shares	Amount		Capital		Stock			Earnings			Income (Loss)			Equity
Balance December 31, 2017	1,872,313	$	18,723	$	8,923,223	$	(11,464,104	)	$	28,206,925		$	328,381		$	26,013,148
Net income	-		-		-		-			1,256,095			-			1,256,095
Cash dividends declared ($.22 per share)	-		-		-		-			(229,571	)		-			(229,571	)
Other comprehensive loss	-		-		-		-			-			(1,100,417	)		(1,100,417	)
Balance June 30, 2018	1,872,313	$	18,723	$	8,923,223	$	(11,464,104	)	$	29,233,449		$	(772,036	)	$	25,939,255

												Accumulated
				Additional								Other			Total
	Common Stock			Paid-in		Treasury			Retained			Comprehensive			Stockholders'
	Shares	Amount		Capital		Stock			Earnings			Income (Loss)			Equity
Balance December 31, 2018	1,872,313	$	18,723	$	8,923,223	$	(11,464,104	)	$	30,343,475		$	(614,718	)	$	27,206,599
Net income	-		-		-		-			1,410,432			-			1,410,432
Cash dividends declared ($.38 per share)	-		-		-		-			(393,588	)		-			(393,588	)
Purchase of treasury stock	-		-		-		(266,784	)		-			-			(266,784	)
Other comprehensive income	-		-		-		-			-			1,683,350			1,683,350
Balance June 30, 2019	1,872,313	$	18,723	$	8,923,223	$	(11,730,888	)	$	31,360,319		$	1,068,632		$	29,640,009




PINNACLE BANCSHARES, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the Six Months Ended
	June 30,
		2019			2018
OPERATING ACTIVITIES:
Net income	$	1,410,432		$	1,256,095
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		178,887			187,033
Net investment amortization expense		163,476			213,976
Bank owned life insurance		(180,015	)		(167,190	)
Gain on sale of securities available for sale		(39,207	)		(1,689	)
Gain on sale of or write-down of real estate owned		(967	)		(597	)
Decrease in accrued interest receivable		108,612			38,136
Increase in accrued interest payable		17,158			38,619
Net other operating activities		303,551			35,443
Net cash provided by operating activities		1,961,927			1,599,826

INVESTING ACTIVITIES:
Net increase in loans		(2,389,837	)		(8,020,709	)
Net increase in interest bearing deposits in other banks		(10,448,796	)		(593,893	)
Purchase of securities available for sale		(5,661,467	)		(3,059,606	)
Proceeds from sale of securities available for sale		7,466,732			501,689
Proceeds from maturing, sale and payments received on securities available for sale		4,136,141			6,306,566
Net redemption of restricted equity securities		188,500			42,000
Purchase of premises and equipment		(333,509	)		(301,340	)
Proceeds from sales of real estate owned		9,999			41,768
Net cash used in investing activities		(7,032,237	)		(5,083,525	)

FINANCING ACTIVITIES:
Net increase in deposits		10,143,306			5,232,125
Net decrease in other borrowings		(4,500,000	)		(1,500,000	)
Net decrease in federal funds purchased		-			(100,000	)
Purchase of treasury stock		(266,784	)		-
Payments of cash dividends		(393,588	)		(229,571	)
Net cash provided by financing activities		4,982,934			3,402,554

Net decrease in cash and cash equivalents		(87,376	)		(81,145	)

Cash and cash equivalents at beginning of period		1,611,283			1,871,452

Cash and cash equivalents at end of period	$	1,523,907		$	1,790,307

SUPPLEMENTAL DISCLOSURES:
Cash paid during the period for:
Interest	$	483,148		$	256,321
Taxes	$	73,195		$	236,436

OTHER NONCASH TRANSACTIONS
Real estate acquired through foreclosure	$	9,032		$	-
Internally financed sales of other real estate owned	$	-		$	-

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