Pinnacle Bancshares Announces Results for First Quarter Ended March 31, 2023

Rhea-AI Summary

Pinnacle Bancshares, Inc. announces Q1 2023 results with net income of $1.18 million and basic/diluted earnings per share of $1.30. Return on average assets increased to 1.43% compared to the same period in 2022. Net interest margin decreased to 3.56% from 4.06% in Q1 2022. Allowance for loan losses as a percent of total loans decreased slightly to 2.13%.

Positive

• Net income for Q1 2023 was $1.18 million, resulting in basic/diluted earnings per share of $1.30.
• Return on average assets increased to 1.43% in Q1 2023.
• The Company's net interest margin decreased to 3.56% in Q1 2023 compared to 4.06% in Q1 2022.
• The allowance for loan losses as a percent of total loans decreased slightly to 2.13%.

Negative

• None.

JASPER, Ala.--(BUSINESS WIRE)-- Robert B. Nolen, Jr., President and Chief Executive Officer of Pinnacle Bancshares, Inc. (OTCBB: PCLB), today announced the Company’s results of operations for the first quarter ended March 31, 2023:

• For the three months ended March 31, 2023, net income was $1,180,000 which resulted in basic/diluted earnings per share to be $1.30. Net income for the three months ended March 31, 2022 was $1,111,000, which resulted in basic/diluted earnings per share of $1.14 per share. Included in net income for the three months ended March 31, 2022 are Paycheck Protection Program (“PPP”) amortized loan fees of approximately $120,000. There were no PPP amortized loan fees recorded during the three months ended March 31, 2023.
• For the three months ended March 31, 2023, return on average assets was 1.43%, compared to 1.29% in the comparable 2022 period.

The Company’s net interest margin was 3.56% for the three months March 31, 2023, compared to 4.06% for the three months ended March 31, 2022. The Company anticipates interest expense relating to its funding to increase during the remainder of the year as a result of several factors such as increased deposit exception pricing and increased deposit migration to higher yielding deposit products.

Mr. Nolen commented, “In response to concerns about liquidity and capital strength related to recent bank failures, we remain confident in our risk status. Our primary focus is, and will continue to be, the Bank’s safety and soundness, and the protection of our depositors.”

At March 31, 2023, the Company’s allowance for loan losses as a percent of total loans was 2.13%, compared to 2.16% at December 31, 2022. There were no nonperforming assets at March 31, 2023 as well as at December 31, 2022. Effective January 1, 2023, the Company adopted the current expected credit loss (CECL) model to account for credit losses on financial instruments, including loans. The adoption of the CECL model did not have an impact on the Company’s loan loss reserve due to minimal net losses that have occurred during the past five years.

Pinnacle Bank was classified as “well capitalized” at March 31, 2023. All capital ratios are significantly higher than the requirements for a well-capitalized institution. As of March 31, 2023, the Bank’s common equity Tier 1 capital and Tier 1 risk-based capital ratios were each 17.14%. As of March 31, 2023, its total capital ratio was 18.36%, and its Tier 1 leverage ratio was 10.70%.

Management believes that the Company has ample liquidity through its low loan to deposit ratio at March 31, 2023, as well as available funding from outside sources. Our net funding availability, as a percentage of our franchise funding, is 105.37% as compared to our established minimal limit of 25%. In addition, the Bank provides access to additional FDIC insurance coverage for accounts that would otherwise exceed deposit insurance coverage. The Company also retested its Federal Funds line and other borrowing lines during the first quarter 2022.

The Company’s total deposits at March 31, 2023 decreased $5.6 million, or less than 2%, as compared to December 31, 2022. As mentioned previously, pricing of deposits is anticipated to become more competitive during the remainder of the year, and thus deposits could continue to decrease as they did during the first quarter 2023.

Dividends of $.27 per share were paid to shareholders during the first quarter of 2023 and $.25 per share during the first quarter 2022.

Effects of Inflation

Inflation caused a substantial rise in interest rates during 2022 which has had a negative effect in the securities market. As a result of rising interest rates, the Company has recorded an accumulated other comprehensive loss on securities available for sale of approximately $30.2 million as of December 31, 2022. Longer term interest rates have decreased slightly during the first quarter of 2023 which has caused the Company’s other comprehensive loss as of March 31, 2023 to be lowered to $27.6 million. Although these unrealized losses recorded as of March 31, 2023 and December 31, 2022 were significant, management does not anticipate these losses to be other than temporary as these unrealized losses do not currently appear related to any credit deterioration within the portfolio but from higher interest rates. In addition, these losses do not impact our regulatory capital ratios.

The Company conducts monthly internal stress testing scenarios of its liquidity to confirm that the Company continues to maintain ample liquidity.

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. The Company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the Company’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. AND SUBSIDIARY   UNAUDITED FINANCIAL HIGHLIGHTS
	Three Months Ended March 31,
	2023				2022
Net Income	$	1,180,000			$	1,111,000
Weighted average basic shares outstanding		909,534				970,791
Weighted average diluted shares outstanding		909,534				970,791
Dividend per share	$	.27			$	.25
Provision for loan losses	$	-			$	-
Basic and diluted earnings per share	$	1.30			$	1.14
Performance Ratios: (annualized)
Return on average assets		1.43	%			1.29	%
Return on average equity		13.17	%			12.96	%
Interest rate spread		3.40	%			4.01	%
Net interest margin		3.56	%			4.06	%
Operating cost to assets		2.40	%			2.06	%
					(Audited)
	March 31, 2023				December 31, 2022
Total assets	$	334,424,000			$	332,718,000
Loans receivable, net	$	117,246,000			$	115,956,000
Deposits	$	316,620,000			$	322,261,000
Brokered CD’s included in deposits	$	11,759,000			$	11,756,000
Total stockholders’ equity	$	9,267,000			$	5,738,000
Weighted average book value per share (excluding OCI)	$	40.26			$	39.17
Total average stockholders' equity to asset ratio (excluding OCI)		10.83	%			10.47	%
Asset Quality Ratios:
Nonperforming loans as a percent of total loans		.00	%			.00	%
Nonperforming assets as a percent of total loans		.00	%			.00	%
Allowance for loan losses as a percent of total loans		2.13	%			2.16	%

PINNACLE BANCSHARES, INC. AND SUBSIDIARY   CONDENSED CONSOLIDATED STATEMENTS OF CONDITION
	(Unaudited)				(Audited)
	March 31,				December 31,
	2023				2022
Assets
Cash and cash equivalents	$	1,986,894			$	1,742,938
Interest bearing deposits in banks		12,217,148				12,185,982
Securities available for sale		171,648,773				170,580,649
Restricted equity securities		769,800				773,600
Loans		119,802,122				118,516,666
Less allowance for loan losses		2,555,754				2,561,079
Loans, net		117,246,368				115,955,587
Premises and equipment, net		7,345,151				6,926,631
Operating right-of-use lease assets		374,202				398,364
Goodwill		306,488				306,488
Bank owned life insurance		10,305,140				10,206,335
Accrued interest receivable		1,537,460				2,070,895
Deferred tax assets, net		9,801,027				10,594,339
Other assets		885,332				976,361
Total assets	$	334,423,783			$	332,718,169
Liabilities and Stockholders’ Equity
Deposits:
Noninterest-bearing	$	98,227,386			$	94,784,231
Interest-bearing		218,392,427				227,476,410
Total deposits		316,619,813				322,260,641
Subordinated debentures		3,093,000				3,093,000
Other borrowings		3,600,000				-
Accrued interest payable		161,286				111,652
Operating lease liabilities		374,202				398,364
Other liabilities		1,308,928				1,116,596
Total liabilities		325,157,229				326,980,253
Stockholders’ equity
Common stock, $.01 par value, 2,400,000 shares authorized;
1,872,313 shares issued; 909,534 shares outstanding		18,723				18,723
Additional paid-in capital		8,923,223				8,923,223
Treasury stock, at cost (962,779 shares)		(15,588,799	)			(15,588,799	)
Retained earnings		43,208,971				42,274,372
Accumulated other comprehensive loss, net of tax		(27,295,564	)			(29,889,603	)
Total stockholders’ equity		9,266,554				5,737,916
Total liabilities and stockholders’ equity	$	334,423,783			$	332,718,169

PINNACLE BANCSHARES, INC. AND SUBSIDIARY   UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME Three Months Ended March 31, 2023 and 2022
	2023			2022
Interest income
Loans, including fees	$	1,730,118		$	1,654,949
Taxable securities		1,368,748			1,179,914
Nontaxable securities		43,741			34,384
Other interest		143,856			10,321
Total interest income		3,286,463			2,879,568
Interest expense
Deposits		227,051			106,235
Subordinated debentures		39,050			38,600
Other borrowings		2,209			-
Total interest expense		268,310			144,835
Net interest income		3,018,153			2,734,733
Provision for loan losses		-			-
Net interest income after provision for loan losses		3,018,153			2,734,733
Other income
Fees and service charges on deposit accounts		362,295			357,833
Servicing fee income, net		771			886
Bank owned life insurance		98,806			95,973
Mortgage fee income		5,703			14,361
Total other income		467,575			469,053
Other expenses
Salaries and employee benefits		1,135,798			1,025,583
Occupancy expenses		240,161			229,622
Marketing and professional expenses		68,819			64,901
Other operating expenses		542,672			461,841
Total other expenses		1,987,450			1,781,947
Income before income taxes		1,498,278			1,421,839
Income tax expense		318,105			311,079
Net income	$	1,180,173		$	1,110,760
Basic and diluted earnings per share	$	1.30		$	1.14
Cash dividends per share	$	0.27		$	0.25
Weighted-average basic and diluted shares outstanding		909,534			970,791

PINNACLE BANCSHARES, INC. AND SUBSIDIARY   UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY Three Months Ended March 31, 2023 and 2022
																	Accumulated
						Additional											Other				Total
	Common Stock					Paid-in			Treasury				Retained				Comprehensive				Stockholders’
	Shares		Par Value			Capital			Stock				Earnings				Income (Loss)				Equity
Balance, December 31, 2012	1,872,313		$	18,723		$	8,923,223		$	(13,533,621	)		$	38,710,339			$	1,540,479			$	35,659,143
Net income	-			-			-			-				1,110,760				-				1,110,760
Cash dividends declared, $0.25 per share	-			-			-			-				(242,697	)			-				(242,697	)
Other comprehensive loss	-			-			-			-				-				(12,676,357	)			(12,676,357	)
Balance, March 31, 2022	1,872,313		$	18,723		$	8,923,223		$	(13,533,621	)		$	39,578,402			$	(11,135,878	)		$	23,850,849
Balance, December 31, 2022	1,872,313		$	18,723		$	8,923,223		$	(15,588,799	)		$	42,274,372			$	(29,889,603	)		$	5,737,916
Net income	-			-			-			-				1,180,173				-				1,180,173
Cash dividends declared, $0.27 per share	-			-			-			-				(245,574	)			-				(245,574	)
Other comprehensive income	-			-			-			-				-				2,594,039				2,594,039
Balance, March 31, 2023	1,872,313		$	18,723		$	8,923,223		$	(15,588,799	)		$	43,208,971			$	(27,295,564	)		$	9,266,554

PINNACLE BANCSHARES, INC. AND SUBSIDIARY UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Three Months Ended March 31, 2023 and 2022
	2023				2022
OPERATING ACTIVITIES
Net income	$	1,180,173			$	1,110,760
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		99,981				115,917
Net amortization of securities		41,914				71,700
Bank owned life insurance		(98,806	)			(95,973	)
Decrease in accrued interest receivable		533,436				459,021
Increase in accrued interest payable		49,634				14,902
Net other operating activities		86,332				265,363
Net cash provided by operating activities		1,892,664				1,941,690
INVESTING ACTIVITIES
Net (increase) decrease in loans		(1,290,780	)			2,226,066
Net increase in interest-bearing deposits in banks		(31,166	)			(5,964,788	)
Purchase of securities available for sale		-				(20,435,341	)
Proceeds from maturing or callable securities available for sale		2,473,516				1,154,225
Net (purchase) redemption of restricted equity securities		3,800				(32,000	)
Purchase of premises and equipment		(518,500	)			(29,939	)
Net cash provided by (used in) investing activities		636,870				(23,081,777	)
FINANCING ACTIVITIES
Net increase (decrease) in deposits		(5,640,004	)			21,721,580
Net increase in other borrowings		3,600,000				-
Payment of cash dividends		(245,574	)			(242,697	)
Net cash provided by (used in) financing activities		(2,285,578	)			21,478,883
Net increase in cash and cash equivalents		243,956				338,796
Cash and cash equivalents at beginning of year		1,742,938				1,730,327
Cash and cash equivalents at end of year	$	1,986,894			$	2,069,123
SUPPLEMENTAL DISCLOSURE
Cash paid during the year for:
Interest	$	218,676			$	129,933
Taxes	$	-			$	-
OTHER NONCASH TRANSACTIONS
Real estate acquired through foreclosure	$	-			$	-

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20230504005235/en/

Joe B. Adams, III

Chief Financial Officer

(205) 221-8866

Source: Pinnacle Bancshares, Inc.

FAQ

What was the net income for Q1 2023?

The net income for Q1 2023 was $1.18 million.

What was the return on average assets in Q1 2023?

The return on average assets increased to 1.43% in Q1 2023.

What was the net interest margin in Q1 2023?

The net interest margin decreased to 3.56% in Q1 2023 compared to 4.06% in Q1 2022.

What was the allowance for loan losses as a percent of total loans in Q1 2023?

The allowance for loan losses as a percent of total loans decreased slightly to 2.13% in Q1 2023.