Pinnacle Bankshares Corporation Announces 2nd Quarter/Mid-Year 2024 Earnings

Rhea-AI Summary

Pinnacle Bankshares (OTCQX:PPBN) reported net income of $2,208,000 ($1.00 per share) for Q2 2024, an 8% increase from Q2 2023. Year-to-date net income was $4,292,000 ($1.94 per share), down 8% from the same period in 2023. Key highlights include:

- Net interest income increased 4% due to higher loan volume and yields
- Net interest margin rose 9 basis points to 3.65%
- Loans grew 4.5% to $670,131,000
- Deposits decreased 2% but deposit accounts increased 3%
- Return on Assets was 0.87%
- Stock price increased 15% to $27.50 per share

The company maintains strong liquidity and asset quality, with a liquidity ratio of 34% and non-performing loans at 0.20% of total loans. The allowance for credit losses stands at 0.69% of total loans.

Positive

• Net income for Q2 2024 increased 8% to $2,208,000
• Net interest income rose 4% due to higher loan volume and yields
• Net interest margin improved by 9 basis points to 3.65%
• Loans grew 4.5% to $670,131,000
• Deposit accounts increased by 3%
• Stock price rose 15% to $27.50 per share
• Strong liquidity ratio of 34%
• Low non-performing loans at 0.20% of total loans

Negative

• Year-to-date net income decreased 8% to $4,292,000
• Return on Assets declined to 0.87% from 0.96% in the previous year
• Return on Equity decreased to 12.16% from 15.65% in the previous year
• Total deposits decreased by 2% to $910,325,000
• Noninterest expense increased 8% to $15,083,000 for the first half of 2024

ALTAVISTA, Va., July 26, 2024 (GLOBE NEWSWIRE) -- Net income for Pinnacle Bankshares Corporation (OTCQX:PPBN), the one-bank holding company (the “Company” or “Pinnacle”) for First National Bank (the “Bank”), was $2,208,000, or $1.00 per basic and diluted share, for the second quarter of 2024. Net income for the six months ended June 30, 2024 was $4,292,000, or $1.94 per basic and diluted share. In comparison, net income was $2,051,000, or $0.93 per basic and diluted share, and $4,690,000, or $2.14 per basic and diluted share, respectively, for the same periods of 2023. Consolidated results for the quarter and the year are unaudited.

Second Quarter & 2024 Year-to-Date Highlights Income Statement comparisons are to the second quarter and first six months of 2023 Balance Sheet, Capital Ratios, and Stock Price comparisons are to December 31, 2023

Income Statement

• Second Quarter 2024 Net Income increased 8% to $2,208,000.
• Year-to-Date Net Income decreased 8% to $4,292,000. Return on Assets was 0.87%.
  • Net Interest Income increased 4% due primarily to higher loan volume and yields.
  • Net Interest Margin increased 9 basis points to 3.65%.
  • Provision for Credit Losses was $260,000 due to higher loan volume. Asset Quality remains strong with low Nonperforming Loans and no Other Real Estate Owned (OREO).
  • Noninterest Income increased 4% due primarily to higher merchant card fees and commissions on investment and insurance products sold.
  • Noninterest Expense increased 8% due primarily to higher core operating system expenses.
    

Balance Sheet

• Cash and Cash Equivalents increased $10.6 million, or 12%.
• Loans increased $28.7 million, or 4.5%.
• Securities decreased $54 million, or 23%, due to maturing U.S. Treasury notes. The Securities Portfolio is relatively short term in nature with $68 million in U.S. Treasuries maturing during the next 12 months, providing funding and optionality.
• Total Assets and Deposits decreased 2%; however, Deposit Accounts have grown 3%.
• Liquidity is strong at 34% and 12% excluding Available for Sale Securities.
  

Capital Ratios and Stock Price

• The Bank’s Leverage Ratio increased to 9.14% from 8.82% due primarily to profitability. Total Risk Based Capital Ratio decreased slightly to 13.47% from 13.67% due to loan growth.
• Pinnacle’s Stock Price ended the quarter at $27.50 per share, based on the last trade, which is an increase of $3.49, or 15%.

Net Income and Profitability

Net income generated during the second quarter of 2024 represents a $157,000, or 8%, increase as compared to the same time period of 2023, while net income generated for the first half of 2024 represents a $398,000, or 8%, decrease as compared to the prior year. The increase in net income for the second quarter of 2024 was driven by higher net interest income and noninterest income partially offset by higher noninterest expense and provision for credit losses. The decrease in net income for the first half of 2024 was driven by higher noninterest expense and provision for credit losses partially offset by higher net interest income and noninterest income.

Profitability as measured by the Company’s return on average assets (“ROA”) decreased to 0.87% for the six months ended June 30, 2024, as compared to 0.96% for the same time period of 2023. Correspondingly, return on average equity (“ROE”) decreased to 12.16% for six months ended June 30, 2024, as compared to 15.65% for the same time period of 2023.

“We are pleased with Pinnacle’s second quarter and year-to-date performance in 2024,” stated Aubrey H. Hall, III, President and Chief Executive Officer for both the Company and the Bank. Mr. Hall further commented, “Second quarter net income increased compared to the first quarter of 2024 and the second quarter of last year due to increased loan volume and expansion of our net interest margin. Our Company is in a solid position with ample funding, strong asset quality, and an expanding net interest margin.”

Net Interest Income and Margin

The Company generated $8,818,000 in net interest income for the second quarter of 2024, which represents a $584,000, or 7%, increase as compared to $8,234,000 for the second quarter of 2023. Interest income increased $1,406,000, or 14%, due to higher yields on earning assets and increased loan volume, while interest expense increased $822,000, or 39%, due to higher interest rates paid on deposits.

The Company generated $17,228,000 in net interest income for the first half of 2024, which represents a $661,000, or 4%, increase as compared to $16,567,000 for the same time period of 2023. Interest income increased $2,726,000, or 13%, as yield on earning assets increased 52 basis points to 4.86%. Interest expense increased $2,065,000, or 57%, due to higher interest rates paid on deposits as cost to fund earning assets increased 43 basis points to 1.21%. Net interest margin increased to 3.65% for the first half of 2024 from 3.56% for the first half of 2023.

Reserves for Credit Losses and Asset Quality

The provision for credit losses was $242,000 in the second quarter of 2024 as compared to $1,000 in the second quarter of 2023. For the first half of 2024, the provision for credit losses was $260,000 as compared to $62,000 for the first half of 2023. Provision expense increased in the first half of 2024 as a result of increased loan volume.

The allowance for credit losses (ACL) was $4,622,000 as of June 30, 2024, which represented 0.69% of total loans outstanding. In comparison, the ACL was $4,511,000 or 0.70% of total loans outstanding as of December 31, 2023. Non-performing loans to total loans decreased to 0.20% as of June 30, 2024, compared to 0.24% as of year-end 2023. ACL coverage of non-performing loans was 351% as of June 30, 2024, compared to 290% as of year-end 2023. Management views the allowance balance as being sufficient to offset potential future losses in the loan portfolio.

Noninterest Income and Expense

Noninterest income for the second quarter of 2024 increased $254,000, or 16%, to $1,812,000 as compared to $1,558,000 for the second quarter of 2023. The increase was primarily due mainly to a $72,000 increase in commissions and fees from sales of investment and insurance products, a $55,000 increase in merchant card fees, and a $38,000 increase in fees generated from sales of mortgage loans.

Noninterest income for the first half of 2024 increased $135,000, or 4%, to $3,435,000 as compared to $3,300,000 for the same time period in 2023. The increase was mainly due to a $75,000 increase in merchant card fees, a $90,000 increase in commissions and fees from sales of investment and insurance products, and a $47,000 increase in bank-owned life insurance returns. These increases were partially offset by a $74,000 decrease in interchange fees from debit card transactions and a $22,000 decrease in fees generated from sales of mortgage loans.

Noninterest expense for the second quarter of 2024 increased $479,000, or 7%, to $7,681,000 as compared to $7,202,000 for the second quarter of 2023. The increase was primarily due to a $279,000 increase in core operating system expenses and a $48,000 increase in dealer loan expenses due to higher volume.

Noninterest expense for the first half of 2024 increased $1,104,000, or 8%, to $15,083,000 as compared to $13,979,000 for the same time period of 2023. The increase was mainly due to a $515,000 increase in core operating system expenses, a $123,000 increase in dealer loan expenses, and a $116,000 increase in salaries and employee benefits.

The Balance Sheet and Liquidity

Total assets as of June 30, 2024, were $998,247,000, down 2% from $1,016,528,000 as of December 31, 2023. The principal components of the Company’s assets as of June 30, 2024, were $670,131,000 in total loans, $179,823,000 in securities, and $98,172,000 in cash and cash equivalents. For the first half of 2024, total loans increased $28,694,000, or 4.5%, from $641,437,000, securities decreased $53,756,000, or 23%, from $233,579,000, and cash and cash equivalents increased $10,583,000, or 12%, from $87,589,000.00.

The majority of the Company’s securities portfolio is relatively short-term in nature. Forty-eight percent (48%) of the Company’s securities portfolio is invested in U.S. Treasuries having an average maturity of 1.48 years with $64,000,000 maturing during the next twelve months. The Company’s entire securities portfolio was classified as available for sale on June 30, 2024, which provides transparency regarding unrealized losses. Unrealized losses associated with the available for sale securities portfolio were $13,716,000 as of June 30, 2024, or seven percent (7%) of book value, an improvement from $14,943,000 as of December 31, 2023.

The Company had a strong liquidity ratio of 34% as of June 30, 2024. The liquidity ratio excluding the available for sale securities portfolio was 12% providing the opportunity to sell excess funds at an attractive federal funds rate. The Company has access to multiple liquidity lines of credit through its correspondent banking relationships and the Federal Home Loan Bank. None of these contingency funding sources have been utilized.

Total liabilities as of June 30, 2024, were $925,484,000, down $22,639,000, or 2%, from $948,123,000 as of December 31, 2023, as deposits decreased $22,119,000, or 2%, in the first half of 2024 to $910,325,000 from $932,444,000. First National Bank’s number of deposit accounts increased 3% during the same time period as the Bank has benefitted from the closures of large national bank branches within markets served and its reputation for providing extraordinary customer service.

Total stockholders’ equity as of June 30, 2024, was $72,763,000 and consisted primarily of $65,255,000 in retained earnings. In comparison, as of December 31, 2023, total stockholders’ equity was $68,405,000. The increase in stockholders’ equity is due primarily to 2024 profitability and an increase in the market value of the securities portfolio and pension assets. Both the Company and Bank remain “well capitalized” per all regulatory definitions.

Company Information

Pinnacle Bankshares Corporation is a locally managed community banking organization serving Central and Southern Virginia. The one-bank holding company of First National Bank serves market areas consisting primarily of all or portions of the Counties of Amherst, Bedford, Campbell and Pittsylvania, and the Cities of Charlottesville, Danville and Lynchburg. The Company has a total of eighteen branches with one branch in Amherst County within the Town of Amherst, two branches in Bedford County; five branches in Campbell County, including two within the Town of Altavista, where the Bank was founded; one branch in the City of Charlottesville, three branches in the City of Danville; three branches in the City of Lynchburg; and three branches in Pittsylvania County, including one within the Town of Chatham. First National Bank is in its 116^th year of operation.

Cautionary Statement Regarding Forward-Looking Statements

This press release may contain “forward-looking statements” within the meaning of federal securities laws that involve significant risks and uncertainties. Any statements contained herein that are not historical facts are forward-looking and are based on current assumptions and analysis by the Company. These forward-looking statements, including statements made in Mr. Hall’s quotes may include, but are not limited to, statements regarding the credit quality of our asset portfolio in future periods, the expected losses of nonperforming loans in future periods, returns and capital accretion during future periods, our cost of funds, the maintenance of our net interest margin, future operating results and business performance and our growth initiatives. Although we believe our plans and expectations reflected in these forward-looking statements are reasonable, our ability to predict results or the actual effect of future plans or strategies is inherently uncertain, and we can give no assurance that these plans or expectations will be achieved. Factors that could cause actual results to differ materially from management's expectations include, but are not limited to: changes in consumer spending and saving habits that may occur, including increased inflation; changes in general business, economic and market conditions; attracting, hiring, training, motivating and retaining qualified employees; changes in fiscal and monetary policies, and laws and regulations; changes in interest rates, inflation rates, deposit flows, loan demand and real estate values; changes in the quality or composition of the Company’s loan portfolio and the value of the collateral securing loans; changes in macroeconomic trends and uncertainty, including liquidity concerns at other financial institutions, and the potential for local and/or global economic recession; changes in demand for financial services in Pinnacle’s market areas; increased competition from both banks and non-banks in Pinnacle’s market areas; a deterioration in credit quality and/or a reduced demand for, or supply of, credit; increased information security risk, including cyber security risk, which may lead to potential business disruptions or financial losses; volatility in the securities markets generally, including in the value of securities in the Company’s securities portfolio or in the market price of Pinnacle common stock specifically; and other factors, which could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. These risks and uncertainties should be considered in evaluating the forward-looking statements contained herein, and you should not place undue reliance on such statements, which reflect our views as of the date of this release.

Selected Financial Highlights are shown on the next page.

Pinnacle Bankshares Corporation Selected Financial Highlights (6/30/24, 3/31/24, and 6/30/23 results unaudited) (In thousands, except rations, share, and per share data)
	3 Months Ended			3 Months Ended			3 Months Ended
Income Statement Highlights		6/30/2024			3/31/2024			6/30/2023
Interest Income	$	11,754		$	11,184		$	10,348
Interest Expense		2,936			2,774			2,114
Net Interest Income		8,818			8,410			8,234
Provision for Credit Losses		242			18			1
Noninterest Income		1,812			1,623			1,558
Noninterest Expense		7,681			7,402			7,202
Net Income		2,208			2,084			2,051
Earnings Per Share (Basic)		1.00			0.95			0.93
Earnings Per Share (Diluted)		1.00			0.95			0.93
	6 Months Ended			Year Ended			6 Months Ended
Income Statement Highlights		6/30/2024			12/31/2023			6/30/2023
Interest Income	$	22,938		$	41,888		$	20,212
Interest Expense		5,710			8,716			3,645
Net Interest Income		17,228			33,172			16,567
Provision for Credit Losses		260			70			62
Noninterest Income		3,435			7,964			3,300
Noninterest Expense		15,083			29,280			13,979
Net Income		4,292			9,762			4,690
Earnings Per Share (Basic)		1.94			4.45			2.14
Earnings Per Share (Diluted)		1.94			4.45			2.14
Balance Sheet Highlights		6/30/2024			12/31/2023			6/30/2023
Cash and Cash Equivalents	$	98,172		$	87,589		$	93,218
Total Loans		670,131			641,437			622,794
Total Securities		179,823			233,579			238,020
Total Assets		998,247			1,016,528			1,002,886
Total Deposits		910,325			932,444			926,646
Total Liabilities		925,484			948,123			941,210
Stockholders' Equity		72,763			68,405			61,677
Shares Outstanding		2,214,685			2,198,158			2,198,043
Ratios and Stock Price		6/30/2024			12/31/2023			6/30/2023
Gross Loan-to-Deposit Ratio		73.61	%		68.79	%		67.21	%
Net Interest Margin (Year-to-date)		3.65	%		3.52	%		3.56	%
Liquidity		33.58	%		37.27	%		39.12	%
Efficiency Ratio		73.03	%		71.20	%		70.35	%
Return on Average Assets (ROA)		0.87	%		1.00	%		0.96	%
Return on Average Equity (ROE)		12.16	%		15.69	%		15.65	%
Leverage Ratio (Bank)		9.14	%		8.82	%		8.40	%
Tier 1 Capital Ratio (Bank)		12.80	%		12.98	%		12.73	%
Total Capital Ratio (Bank)		13.47	%		13.67	%		13.44	%
Stock Price	$	27.50		$	24.01		$	19.00
Book Value	$	31.14		$	31.12		$	28.06
Asset Quality Highlights		6/30/2024			12/31/2023			6/30/2023
Nonaccruing Loans	$	1,315		$	1,557		$	1,415
Loans 90 Days or More Past Due and Accruing		0			0			0
Total Nonperforming Loans		1,315			1,557			1,415
Loan Modifications		346			357			1,035
Loans Individually Evaluated		1,661			2,287			2,450
Other Real Estate Owned (OREO) (Foreclosed Assets)		0			0			42
Total Nonperforming Assets		1,315			1,557			1,457
Nonperforming Loans to Total Loans		0.20	%		0.24	%		0.23	%
Nonperforming Assets to Total Assets		0.13	%		0.15	%		0.15	%
Allowance for Credit Losses	$	4,622		$	4,511		$	4,439
Allowance for Credit Losses to Total Loans		0.69	%		0.70	%		0.71	%
Allowance for Credit Losses to Nonperforming Loans		351	%		290	%		314	%
CONTACT: Pinnacle Bankshares Corporation, Bryan M. Lemley, 434-477-5882 or bryanlemley@1stnatbk.com

FAQ

What was Pinnacle Bankshares 's (PPBN) net income for Q2 2024?

Pinnacle Bankshares (PPBN) reported net income of $2,208,000, or $1.00 per basic and diluted share, for Q2 2024.

How did PPBN's year-to-date net income in 2024 compare to 2023?

PPBN's year-to-date net income for 2024 was $4,292,000, which represents an 8% decrease compared to the same period in 2023.

What was the growth in PPBN's loan portfolio as of June 30, 2024?

PPBN's loan portfolio grew by 4.5%, increasing to $670,131,000 as of June 30, 2024, compared to December 31, 2023.

How did PPBN's net interest margin change in the first half of 2024?

PPBN's net interest margin increased to 3.65% for the first half of 2024, up from 3.56% for the same period in 2023.

What was PPBN's stock price at the end of Q2 2024?

PPBN's stock price ended Q2 2024 at $27.50 per share, representing an increase of $3.49 or 15% from the end of 2023.