Market Overview

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

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Robert B. Nolen, Jr., President and Chief Executive Officer of Pinnacle Bancshares, Inc. (OTC: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.

PINNACLE BANCSHARES, INC.

Unaudited Financial Highlights

(In Thousands, except share and per share data)

 

 

 

Three Months Ended June 30,

 

 

 

2020

 

 

 

2019

 

Net income

 

$

732,000

 

 

$

745,000

 

Basic and diluted earnings per share

 

$

0.74

 

 

$

0.72

 

 

 

 

 

 

Performance ratios (annualized):

 

 

 

 

Return on average assets

 

 

1.11

%

 

 

1.30

%

Return on average equity

 

 

9.95

%

 

 

10.47

%

Interest rate spread

 

 

3.25

%

 

 

3.65

%

Net interest margin

 

 

3.45

%

 

 

3.87

%

Operating cost to assets

 

 

2.41

%

 

 

2.81

%

 

 

 

 

 

Weighted average basic and diluted shares outstanding

 

 

989,670

 

 

 

1,035,378

 

Dividends per share

 

$

0.19

 

 

$

0.19

 

Provision for loan losses

 

$

-

 

 

$

-

 

 

 

 

 

 

 

 

Six Months Ended June 30,

 

 

 

 

2020

 

 

 

2019

 

 

Net income

 

$

1,573,000

 

 

$

1,410,000

 

 

Basic and diluted earnings per share

 

$

1.57

 

 

$

1.36

 

 

 

 

 

 

 

 

Performance ratios (annualized):

 

 

 

 

 

Return on average assets

 

 

1.24

%

 

 

1.24

%

 

Return on average equity

 

 

10.67

%

 

 

9.97

%

 

Interest rate spread

 

 

3.33

%

 

 

3.59

%

 

Net interest margin

 

 

3.55

%

 

 

3.81

%

 

Operating cost to assets

 

 

2.51

%

 

 

2.79

%

 

 

 

 

 

 

 

Weighted average basic and diluted shares outstanding

 

 

1,004,529

 

 

 

1,037,417

 

 

Dividends per share

 

$

0.38

 

 

$

0.38

 

 

Provision for loan losses

 

$

-

 

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

(Audited)

 

 

 

June 30, 2020

 

December 31, 2019

 

Total assets

 

$

273,043,000

 

 

$

230,435,000

 

 

Loans receivable, net (June 30, 2020 includes $17.8M PPP

loans)

 

$

124,764,000

 

 

$

101,500,000

 

 

Deposits

 

$

233,578,000

 

 

$

194,361,000

 

 

Brokered CD's included in deposits

 

$

15,178,000

 

 

$

17,915,000

 

 

Total stockholders' equity

 

$

32,328,000

 

 

$

30,788,000

 

 

Book value per share

 

$

32.77

 

 

$

29.81

 

 

Stockholders' equity to assets ratio

 

 

11.63

%

 

 

12.98

%

 

 

 

 

 

 

 

Asset quality ratios:

 

 

 

 

 

Nonperforming loans as a percent of total loans

 

 

.13

%

 

 

.15

%

 

Nonperforming assets as a percent of total loans

 

 

.13

%

 

 

.15

%

 

Allowance for loan losses as a percent of total loans

 

 

1.74

%

 

 

2.07

%

 

Allowance for loan losses as a percent of nonperforming

 

 

 

 

loans

 

1353.99

%

 

1362.66

%

 

FINANCIAL INFORMATION

 

PINNACLE BANCSHARES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

 

 

(Unaudited)

 

(Audited)

 

June 30,

 

December 31,

 

 

2020

 

 

 

2019

 

 

 

 

 

Assets

 

 

 

Cash and cash equivalents

$

2,162,714

 

 

 

1,814,912

 

Interest bearing deposits in banks

 

9,490,120

 

 

 

5,453,299

 

Securities available for sale

 

116,300,527

 

 

 

101,499,758

 

Restricted equity securities

 

732,300

 

 

 

766,300

 

 

 

 

 

Loans

 

126,971,343

 

 

 

104,101,700

 

Less Allowance for loan losses

 

2,207,480

 

 

 

2,153,304

 

Loans, net

 

124,763,863

 

 

 

101,948,396

 

 

 

 

 

Premises and equipment, net

 

6,411,810

 

 

 

6,420,166

 

Right-of-use lease assets – operating

 

634,603

 

 

 

681,306

 

Goodwill

 

306,488

 

 

 

306,488

 

Bank owned life insurance

 

10,108,505

 

 

 

9,920,133

 

Accrued interest receivable

 

1,544,009

 

 

 

1,280,926

 

Other assets

 

587,704

 

 

 

343,488

 

Total assets

$

273,042,643

 

 

 

230,435,172

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

Deposits

 

 

 

Noninterest-bearing

$

75,909,853

 

 

 

55,071,909

 

Interest-bearing

 

157,669,075

 

 

 

139,289,249

 

Total deposits

 

233,578,928

 

 

 

194,361,158

 

 

 

 

 

Subordinated debentures

 

3,093,000

 

 

 

3,093,000

 

Accrued interest payable

 

225,083

 

 

 

244,875

 

Operating lease liabilities

 

634,603

 

 

 

681,306

 

Other liabilities

 

3,183,290

 

 

 

1,267,281

 

Total liabilities

 

240,714,904

 

 

 

199,647,620

 

 

 

 

 

Stockholders' equity

 

 

 

Common stock, par value $.01 per share; 2,400,000

 

 

 

authorized; 1,872,313 issued; 986,505 shares and

1,032,905 outstanding, respectively

 

18,723

 

 

18,723

 

Additional paid‑in capital

 

8,923,223

 

 

 

8,923,223

 

Treasury stock (885,808 and 839,408 shares, respectively)

 

(13,068,146

)

 

 

(11,730,888

)

Retained earnings

 

33,636,740

 

 

 

32,445,916

 

Accumulated other comprehensive income,

 

 

 

net of tax

 

2,817,199

 

 

1,130,578

 

 

 

 

 

Total stockholders' equity

 

32,327,739

 

 

 

30,787,552

 

 

 

 

 

Total liabilities and stockholders' equity

$

273,042,643

 

 

$

230,435,172

 

PINNACLE BANCSHARES, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

 

 

Three Months Ended

 

Six Months Ended

 

June 30,

 

June 30,

 

 

2020

 

 

2019

 

 

2020

 

 

2019

Interest income

 

 

 

 

 

 

 

Loans, including fees

$

1,443,770

 

$

1,502,254

 

$

2,875,028

 

$

2,931,547

Securities available for sale

 

877,925

 

 

711,002

 

 

1,733,275

 

 

1,433,348

Other interest

 

6,545

 

 

59,159

 

 

25,677

 

 

100,814

Total interest income

 

2,328,240

 

 

2,272,415

 

 

4,633,980

 

 

4,465,709

 

 

 

 

 

 

 

 

Interest expense

 

 

 

 

 

 

 

Deposits

 

194,992

 

 

207,235

 

 

435,029

 

 

395,304

Borrowings and repurchase agreements

 

-

 

 

-

 

 

3,330

 

 

87,690

Subordinated debentures

 

38,210

 

 

43,690

 

 

78,310

 

 

17,312

Total interest expense

 

233,202

 

 

250,925

 

 

516,669

 

 

500,306

 

 

 

 

 

 

 

 

Net interest income

 

2,095,038

 

 

2,021,490

 

 

4,117,311

 

 

3,965,403

Provision for loan losses

 

-

 

 

-

 

 

-

 

 

-

Net interest income after provision

 

 

 

 

 

 

 

for loan losses

 

2,095,038

 

2,021,490

 

4,117,311

 

3,965,403

 

 

 

 

 

 

 

 

Other income

 

 

 

 

 

 

 

Fees and service charges on deposit

 

 

 

 

 

 

 

accounts

 

302,346

 

369,779

 

667,993

 

697,063

Service fee income, net

 

1,370

 

 

1,719

 

 

2,793

 

 

3,433

Bank owned life insurance

 

94,186

 

 

90,009

 

 

188,372

 

 

180,015

Mortgage fee income

 

13,568

 

 

10,803

 

 

25,574

 

 

18,372

Net gain on sale of real estate owned

 

-

 

 

-

 

 

-

 

 

967

Net gain on securities available for sale

 

-

 

 

39,207

 

 

152,658

 

 

39,207

Total other income

 

411,470

 

 

511,517

 

 

1,037,390

 

 

939,057

 

 

 

 

 

 

 

 

Other expense:

 

 

 

 

 

 

 

Salaries and employee benefits

 

934,378

 

 

910,664

 

 

1,874,920

 

 

1,825,488

Occupancy expense

 

216,278

 

 

198,680

 

 

417,983

 

 

395,979

Marketing and professional expense

 

68,815

 

 

66,708

 

 

128,061

 

 

130,685

Other operating expenses

 

377,090

 

 

434,468

 

 

766,330

 

 

818,871

Total other expenses

 

1,596,561

 

 

1,610,520

 

 

3,187,294

 

 

3,171,023

 

 

 

 

 

 

 

 

Income before income taxes

 

909,947

 

 

922,487

 

 

1,967,407

 

 

1,733,437

 

 

 

 

 

 

 

 

Income tax expense

 

177,943

 

 

177,044

 

 

394,792

 

 

323,005

 

 

 

 

 

 

 

 

Net income

$

732,004

 

$

745,443

 

$

1,572,615

 

$

1,410,432

 

 

 

 

 

 

 

 

Cash dividend per share

$

0.19

 

$

0.19

 

$

0.38

 

$

0.38

 

 

 

 

 

 

 

 

Basic and diluted earnings per share

$

0.74

 

$

0.72

 

$

1.57

 

$

1.36

 

 

 

 

 

 

 

 

Weighted –average basic and diluted

 

 

 

 

 

 

 

shares outstanding

 

989,670

 

1,035,378

 

1,004,529

 

1,037,417

PINNACLE BANCSHARES, INC.

 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

Six Months Ended June 30, 2020 and 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

Additional

 

 

 

 

 

Other

 

Total

 

Common Stock

 

Paid-in

 

Treasury

 

Retained

 

Comprehensive

 

Stockholders'

 

Shares

 

Amount

 

Capital

 

Stock

 

Earnings

 

Income

 

Equity

Balance December 31, 2019

1,872,313

 

$ 18,723

 

$ 8,923,223

 

$ (11,730,888)

 

$ 32,445,916

 

$ 1,130,578

 

$ 30,787,552

Net income

-

 

-

 

-

 

-

 

1,572,615

 

-

 

1,572,615

Cash dividends declared

($.38 per share)

-

 

-

 

-

 

-

 

(381,791)

 

-

 

(381,791)

Purchase of treasury stock

-

 

-

 

-

 

(1,337,258)

 

-

 

-

 

(1,337,258)

Other comprehensive income

-

 

-

 

-

 

-

 

-

 

1,686,621

 

1,686,621

Balance June 30, 2020

1,872,313

 

$ 18,723

 

$ 8,923,223

 

$ (13,068,146)

 

$ 33,636,740

 

$ 2,817,199

 

$ 32,327,739

PINNACLE BANCSHARES, INC,

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

For the Six Months Ended

 

June 30,

 

 

2020

 

 

 

2019

 

OPERATING ACTIVITIES:

 

 

 

Net income

$

1,572,615

 

 

$

1,410,432

 

Adjustments to reconcile net income to net cash provided

 

 

 

by operating activities:

Depreciation

 

194,494

 

 

 

178,887

 

Net investment amortization expense

 

135,870

 

 

 

163,476

 

Bank owned life insurance

 

(188,372

)

 

 

(180,015

)

Gain on sale of securities available for sale

 

(152,657

)

 

 

(39,207

)

Gain on sale of or write-down of real estate owned

 

-

 

 

 

(967

)

(Increase) decrease in accrued interest receivable

 

(263,083

)

 

 

108,612

 

Increase (decrease) in accrued interest payable

 

(19,792

)

 

 

17,158

 

Net other operating activities

 

604,568

 

 

 

303,551

 

Net cash provided by operating activities

 

1,883,643

 

 

 

1,961,927

 

 

 

 

 

INVESTING ACTIVITIES:

 

 

 

Net increase in loans

 

(22,815,467

)

 

 

(2,389,837

)

Net increase in interest bearing deposits in other banks

 

(4,036,821

)

 

 

(10,448,796

)

Purchase of securities available for sale

 

(21,737,575

)

 

 

(5,661,467

)

Proceeds from sale of securities available for sale

 

2,732,970

 

 

 

7,466,732

 

Proceeds from maturing, sale and payments received on

 

 

 

securities available for sale

 

6,973,469

 

 

4,136,141

 

Net redemption of restricted equity securities

 

34,000

 

 

 

188,500

 

Purchase of premises and equipment

 

(186,138

)

 

 

(333,509

)

Proceeds from sales of real estate owned

 

-

 

 

 

9,999

 

Net cash used in investing activities

 

(39,035,562

)

 

 

(7,032,237

)

 

 

 

 

FINANCING ACTIVITIES:

 

 

 

Net increase in deposits

 

39,217,770

 

 

 

10,143,306

 

Net decrease in other borrowings

 

-

 

 

 

(4,500,000

)

Purchase of treasury stock

 

(1,337,258

)

 

 

(266,784

)

Payments of cash dividends

 

(381,791

)

 

 

(393,588

)

Net cash provided by financing activities

 

37,498,721

 

 

 

4,982,934

 

 

 

 

 

Net increase (decrease) in cash and cash equivalents

 

346,802

 

 

 

(87,376

)

 

 

 

 

Cash and cash equivalents at beginning of period

 

1,814,912

 

 

 

1,611,283

 

 

 

 

 

Cash and cash equivalents at end of period

$

2,162,714

 

 

$

1,523,907

 

 

 

 

 

SUPPLEMENTAL DISCLOSURES:

 

 

 

Cash paid during the period for:

 

 

 

Interest

$

536,461

 

 

$

483,148

 

Taxes

$

402,131

 

 

$

73,195

 

 

 

 

 

OTHER NONCASH TRANSACTIONS

 

 

 

Real estate acquired through foreclosure

$

-

 

 

$

9,032

 

Internally financed sales of other real estate owned

$

-

 

 

$

-

 

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