Pinnacle Bank of Oregon (OTCBB:PNNB) reports a loss for the quarter ended June 30, 2008 of $653,000 compared to net income of $5,000 for the prior quarter ended March 31, 2008. Total loans on June 30, 2008 were $67.7 million versus $66.5 million at the end of the prior quarter. Total deposits on June 30, 2008 were $73.2 million, which represented a decrease of 12% from the prior quarter when deposits totaled $82.8 million. Total assets ended the period at $81.9 million. The Bank is "adequately capitalized" with a Tier One Leverage ratio of 8.68% and a Total Risk-based Capital ratio of 11.12%.
The Bank reported $747,000 in net interest income for the second quarter versus $661,000 for the prior quarter due primarily to maturing high-rate CDs. Non-interest income rose to $75,000 during the quarter versus $45,000 during the prior period due to the Bank collecting fees from delinquent loan customers. Non-interest expense fell to $915,000 in the second quarter of 2008 from $948,000 during the prior quarter due to decreased staffing costs and problem loan expense.
The bank took a loan loss provision of $960,000 in the second quarter. This brings total provision expense for the year to $710,000 since the Bank reported a negative provision of $250,000 in the first quarter. The second quarter provision was used to fund loan charge-offs during the period and increase the allowance for loan and lease losses from $1.4 million to $1.7 million. The second quarter charge-off is composed of a loss taken on a foreclosed property ($157,000) and the balance on loans to a real estate investor ($469,000). In the second case, the charge-off represents the remaining balance on loans that once exceeded $2.5 million. That exposure was reduced over the past year due to the efforts of the Bank's workout group. Charge-offs total $626,000 and recoveries of previously charged-off loans total $581,000 so far this year.
Pinnacle Bank President Ron May said, "While it was necessary to take a loan loss provision due to the deterioration of several credits, I am pleased at the progress the Bank's lending staff has made in reducing the concentration in construction lending. This change reduces our shareholders' exposure to that type of credit risk." Mr. May added, "The staff of the Bank continues to provide superior customer service during these trying economic times and we are encouraged by the quality of the business loans being made in 2008." The Bank has booked $14.7 million in new loans so far this year.
Pinnacle Bank, in its sixth year of operation, is focused on building sustainable relationships with small to medium-sized businesses, business owners and professionals in the Portland metropolitan area. The Bank's twenty employees serve the community by providing quality business banking services and volunteerism throughout the area.
Pinnacle Bank is FDIC insured and an Equal Housing Lender.
Forward Looking Statements:
Statements in this release regarding future events, performance or results are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 ("PSLRA") and are made pursuant to the safe harbors of the PSLRA. Actual results could be quite different from those expressed or implied by the forward-looking statements. Do not unduly rely on forward-looking statements. They give our expectations about the future and are not guarantees. Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update them to reflect changes that occur after that date. A number of factors could cause results to differ significantly from our expectations.
(Balance Sheet and Statements of Income following)
| PINNACLE BANK OF OREGON | ||||||||
| Comparative Balance Sheets | ||||||||
| (unaudited) | ||||||||
|  |  | |||||||
|  | 6/30/2008 |  |  | 3/31/2008 |  | |||
ASSETS (in 000s) | ||||||||
| Cash and due from banks | $ | 2,083 | $ | 1,743 | ||||
| Federal funds sold | 2,260 | 14,850 | ||||||
| Other short-term deposits and investments |  | 7,500 |  |  | 5,925 |  | ||
| Cash and cash equivalents | 11,843 | 22,518 | ||||||
|  | ||||||||
| Loans | 67,659 | 66,532 | ||||||
| Reserve for loan losses |  | (1,735 | ) |  | (1,366 | ) | ||
| Loans, net | 65,924 | 65,166 | ||||||
|  | ||||||||
| Premises and equipment, net | 1,001 | 1,053 | ||||||
| Other assets |  | 3,100 |  |  | 3,124 |  | ||
| Total assets | $ | 81,868 |  | $ | 91,861 |  | ||
|  | ||||||||
LIABILITIES & STOCKHOLDERS' EQUITY | ||||||||
| Deposits: | ||||||||
| Demand | $ | 17,485 | $ | 18,185 | ||||
| Money market & savings | 19,166 | 23,802 | ||||||
| Time |  | 36,571 |  |  | 40,770 |  | ||
Total deposits | 73,222 | 82,757 | ||||||
|  | ||||||||
| Other liabilities |  | 435 |  |  | 222 |  | ||
| Total liabilities | 73,657 | 82,979 | ||||||
|  | ||||||||
| Total stockholders' equity |  | 8,211 |  |  | 8,882 |  | ||
| Total liabilities and stockholders' equity | $ | 81,868 |  | $ | 91,861 |  | ||
|  | ||||||||
| Ratios: | ||||||||
| Book value per common share | $ | 8.22 | $ | 8.89 | ||||
| Nonaccrual loans (in 000s) | $ | 3,867 | $ | 4,582 | ||||
| Loan recoveries year to date (in 000s) | $ | 581 | $ | 546 | ||||
| Loans charged-off year to date (in 000s) | $ | 626 | $ | 0 | ||||
| Outstanding common shares | 999,084 | 999,084 | ||||||
|  | ||||||||
| Tier One Leverage Ratio | 8.68 | % | 8.89 | % | ||||
| PINNACLE BANK OF OREGON | ||||||||
| Statements of Income | ||||||||
| (Unaudited) | ||||||||
|  |  | |||||||
| Quarter ended | ||||||||
| in (000s) |  | 6/30/2008 |  |  | 3/31/2008 |  | ||
| Interest income | $ | 1,320 | $ | 1,375 | ||||
| Interest expense |  | 572 |  |  | 715 |  | ||
| Net interest income | 747 | 661 | ||||||
|  | ||||||||
| Loan loss provision | 960 | (250 | ) | |||||
| Non-interest income | 75 | 45 | ||||||
|  | ||||||||
| Non-interest expense |  | 915 |  |  | 948 |  | ||
|  | ||||||||
| Income before income tax | (1,052 | ) | 7 | |||||
| Income tax provision |  | (400 | ) |  | 2 |  | ||
| Net income | $ | (653 | ) | $ | 5 |  | ||
|  | ||||||||
| Basic earnings per common share | $ | (0.65 | ) | $ | 0.01 |  | ||
| Diluted earnings per common share | $ | (0.65 | ) | $ | 0.01 |  | ||
|  | ||||||||
| Ratios: | ||||||||
| Return on average total assets | N/M | 0.02 | % | |||||
| Return on average total stockholders' equity | N/M | 0.24 | % | |||||
| PINNACLE BANK OF OREGON | ||||||||
| Statements of Income | ||||||||
| (Unaudited) | ||||||||
|  |  | |||||||
| The six months ended | ||||||||
| in (000s) |  | 6/30/2008 |  |  | 6/30/2007 |  | ||
| Interest income | $ | 2,695 | $ | 4,071 | ||||
| Interest expense |  | 1,287 |  |  | 1,680 |  | ||
| Net interest income | 1,408 | 2,391 | ||||||
|  | ||||||||
| Loan loss provision | 710 | - | ||||||
| Non-interest income | 120 | 58 | ||||||
|  | ||||||||
| Non-interest expense |  | 1,863 |  |  | 2,092 |  | ||
|  | ||||||||
| Income before income tax | (1,045 | ) | 358 | |||||
| Income tax provision |  | (398 | ) |  | 116 |  | ||
| Net income | $ | (648 | ) | $ | 242 |  | ||
|  | ||||||||
| Basic earnings per common share | $ | (0.65 | ) | $ | 0.25 |  | ||
| Diluted earnings per common share | $ | (0.65 | ) | $ | 0.23 |  | ||
|  | ||||||||
| Ratios: | ||||||||
| Return on average total assets | N/M | 0.51 | % | |||||
| Return on average total stockholders' equity | N/M | 4.8 | % | |||||
