Pinnacle Bancshares Announces Results for Second Quarter Ended June 30, 2020

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, 2020, Pinnacle reported net income of $732,000 compared to $745,000 for the three months ended June 30, 2019. $39,000 of net gains related to sale of securities available for sale are included in the three months ended June 30, 2019. There were no net gains on sales of securities available for sale included in the three months ended June 30, 2020.
• For the six months ended June 30, 2020, Pinnacle reported net income of $1,573,000 compared to $1,410,000 for the six months ended June 30, 2019. $153,000 and $39,000 of net gains related to sale of securities available for sale are included in the six months ended June 30, 2020, and 2019, respectively.
• Net interest income after the provision for loan losses for the three and six months ended June 30, 2020, was $2,095,000 and $4,117,000, respectively, compared with $2,021,000 and $3,965,000 respectively, in the same periods last year.
• Basic and diluted earnings per share for the three and six months ended June 30, 2020 were $0.74 and $1.57 per share, respectively, compared to $0.72 and $1.36 per share, respectively, for the same periods last year.
• For the three and six months ended June 30, 2020, return on average assets was 1.11%, and 1.24%, respectively, compared to 1.30% and 1.24%, respectively, in the comparable 2019 period.

Pinnacle's net interest margin was 3.45% and 3.55% for the three and six months ended June 30, 2020, respectively, compared to 3.87% and 3.81% for the three and six months ended June 30, 2019, respectively.

At June 30, 2020, Pinnacle's allowance for loan losses as a percent of total loans was 1.74%, compared to 2.07% at December 31, 2019. The allowance for loan losses as a percent of total loans, excluding PPP loans of approximately $17.8 million dollars, was 2.02% as of June 30, 2020. At June 30, 2020, the allowance for loan losses as a percent of nonperforming loans was 1353.99%, compared to 1362.66% at December 31, 2019. Nonperforming assets were $163,000 at June 30, 2020, compared to $158,000 at December 31, 2019. The ratio of nonperforming assets to total loans was .13% at June 30, 2020, compared to .15% at December 31, 2019. 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 June 30, 2020 and June 30, 2019.

The COVID-19 pandemic and resulting adverse economic conditions have already adversely impacted our business and results. At this time we are not able to estimate the effect of COVID-19 on our business, financial condition and results of operations which will depend on currently uncertain future developments.

The ongoing COVID-19 global and national health emergency has caused significant disruptions in the United States and international economies and financial markets. The spread of COVID-19 in the United States has caused illness, quarantines, cancellation of events and travel, business and school shutdowns, reduction in commercial activity and financial transactions, supply chain interruptions, increased unemployment, and overall economic and financial market instability. Many states, including Alabama, have declared states of public health emergency.

Although banks have generally been permitted to continue operating, the COVID-19 pandemic has caused disruptions to our business and could cause material disruptions to our business and operations in the future. Impacts have included the transition of a significant portion of our workforce to home locations, an increase in costs due to additional health and safety precautions implemented at our branches, and an increase in draws on unfunded loan commitments and requests for forbearance and loan modifications. Clients also may seek additional loans that they may be unable to repay, particularly if businesses remain closed and unemployment levels rise. To the extent that commercial, social or legal and regulatory restrictions remain in place or increase, our uncertainty, expenses, delinquencies, foreclosures and credit losses may materially increase.

In addition, the unprecedented nature of COVID-19 related disruptions heightens the inherent uncertainty of forecasting future economic conditions and their potential impact on our loan portfolio, and therefore increases the risk that the assumptions, judgments and estimates used to determine the appropriate allowance for future credit losses may prove to be incorrect, resulting in actual credit losses that exceed our recorded allowance.

Unfavorable economic conditions may also make it more difficult for us to maintain deposit levels and loan origination volume. Furthermore, such conditions have and may continue to adversely impact accounting estimates that we use to determine our allowance and provisions for credit losses. Such conditions could also impact the value of assets we carry on our balance sheet and cause the value of collateral associated with our existing loans to decline.

Sudden or unexpectedly large changes in interest rates could impact our ability to effectively manage our interest rate risk and could result in maturity imbalances in our assets and liabilities. A prolonged period of very low interest rates or an increase in interest rates that affects our borrowers' ability to repay loans could reduce our net interest income and have a material adverse impact on our cash flows.

While we have taken, and are continuing to take, actions to protect the safety and well-being of our employees and customers, no assurance can be given that the steps being taken will be deemed to be adequate or appropriate, nor can we predict the level of disruption which will occur to our ability to provide customer support and service. The continued or renewed spread of COVID-19 could negatively impact the availability of key personnel necessary to conduct our business, the business and operations of our third-party service providers who perform critical services for our business, or the businesses of many of our customers and borrowers. In addition, as a result of the pandemic and the related increase in remote working by our personnel and personnel of other companies, the risk of cyber-attacks, breaches or similar events, whether through our systems of those of third parties on which we rely, has increased.

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.

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