Robert B. Nolen, Jr., President and Chief Executive Officer of Pinnacle Bancshares, Inc. (OTCBB:PCLB), today announced Pinnacle’s second quarter results of operations.
For the three months ended June 30, 2009, net loss was $(905,000), compared with net income of $299,000 for the three months ended June 30, 2008. Net interest income before the provision for loan losses for the three months ended June 30, 2009, was $1,901,000, compared with $1,739,000 in the same period last year.
For the six months ended June 30, 2009, net loss was $(567,000), compared with net income of $580,000 for the six months ended June 30, 2008. Net interest income before the provision for loan losses for the three months ended June 30, 2009, was $3,716,000, compared with $3,385,000 in the same period last year.
Basic and diluted earnings (loss) per share for the three months ended June 30, 2009 were each $(0.71) per share, compared to $0.22 each for the same period last year. Basic and diluted earnings (loss) per share for the six months ended June 30, 2009 were each $(0.45) per share, compared to $0.42 each for the same period last year.
Mr. Nolen disclosed that the provision for loan losses increased from $293,000 and $501,000 in the three and six months ended June 30, 2008, respectively, to $2,051,000 and $2,271,000 in the three and six months ended June 30, 2009, respectively. The increase in the provision is primarily related to three credits totaling approximately $6,000,000 which represent participations in commercial real estate loans. Although each of these loans is currently performing, management determined that weaknesses in these credits, due principally to significant declines is real estate values, supported a decision to establish these additional reserves.
Net charge-offs were $132,000 and $156,000 for the three and six months ended June 30, 2009, respectively, compared to $56,000 and $626,000 in the three and six months ended June 30, 2008, respectively. Non-performing loans were .26% of loans at June 30, 2009, compared to .40% at June 30, 2008 and .12% at December 31, 2008. Non-performing assets were 0.64% of total assets at June 30, 2009, compared to 1.84% as of June 30, 2008 and 1.20% as of December 31, 2008.
At June 30, 2009, the Company’s allowance for loan losses as a percent of total loans was 2.82%, compared to 1.08% at June 30, 2008 and 1.19% at December 31, 2008. At June 30, 2009, the Company’s allowance for loan losses as a percent of nonperforming loans was 1074.78%, compared to 270.25% at June 30, 2008 and 971.18% at December 31, 2008. Based on current real estate valuations, Pinnacle believes its allowance for loan losses is adequate. If economic conditions do not improve, additional charge-offs and increases in the allowance may be necessary.
Mr. Nolen noted that net interest margin was 3.86% and 3.73% for the three and six months ended June 30, 2009, respectively, compared to 3.39% and 3.26% for the three and six months ended June 30, 2008, respectively.
At June 30, 2009, total stockholders’ equity and book value per share were $19,883,000 and $15.65 per share, respectively, compared to $20,572,000 and $15.35 per share, respectively, at December 31, 2008. Total assets at June 30, 2009, were $213,576,000, compared to total assets at December 31, 2008, of $225,783,000. Pinnacle’s strong equity to assets ratio was 9.31% at June 30, 2009.
Mr. Nolen reminded investors that, although Pinnacle remains well capitalized and has been able to avoid liquidity issues, Pinnacle is operating in a challenging and uncertain economic environment. Financial institutions have been, and continue to be, affected by significant declines in economic conditions and constrained financial markets. Pinnacle retains direct exposure to the residential and commercial real estate markets.
The Company believes declines in economic conditions and financial stresses on borrowers as a result of the uncertain economic environment, including job losses, could have an adverse affect on Pinnacle’s borrowers or their customers, which could adversely affect Pinnacle’s financial condition and results of operations. In addition, deterioration in local economic conditions in Pinnacle’s markets could drive losses beyond those which are provided for in the allowance for loan losses and result in a number of adverse consequences, including increases in loan delinquencies; increases in nonperforming assets; decreases in demand for Pinnacle’s products and services, which could affect Pinnacle’s liquidity position; and decreases in the value of the collateral securing Pinnacle’s loans, which could reduce customers’ borrowing power.
In addition, Mr. Nolen noted that Pinnacle’s FDIC premiums in 2009 are expected to increase approximately $75,000 per quarter and approximately $300,000 on an annual basis, compared to $29,000 in 2008. The FDIC also has adopted a final rule imposing a 5 basis point special assessment on each insured depository institution’s assets minus Tier one capital as of June 30, 2009. This assessment of approximately $96,000 will be collected on September 30, 2009. The FDIC also has proposed an additional special assessment of up to 5 basis points later in 2009 as part of the restoration plan for the Deposit Insurance Fund.
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 Bancshares, Inc.’s wholly owned subsidiary Pinnacle Bank has seven offices located in central and northwest Alabama.
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PINNACLE BANCSHARES, INC. Unaudited Financial Highlights (In Thousands, except share and per share data) | ||||||||||
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 |  | Three Months Ended June 30, | ||||||||
2009 | Â | Â | 2008 | |||||||
Net income | $ | (905,000 | ) | $ | 299,000 | |||||
Basic earnings per share | $ | (0.71 | ) | $ | 0.22 | |||||
Diluted earnings per share | $ | (0.71 | ) | $ | 0.22 | |||||
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Performance ratios (annualized): | ||||||||||
Return on average assets | (1.65 | %) | 0.53 | % | ||||||
Return on average equity | (17.23 | %) | 6.09 | % | ||||||
Interest rate spread | 3.80 | % | 3.35 | % | ||||||
Net interest margin | 3.86 | % | 3.39 | % | ||||||
Operating cost to assets | 3.06 | % | 2.60 | % | ||||||
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Weighted average basic shares Outstanding | 1,270,128 | 1,338,674 | ||||||||
Weighted average diluted shares Outstanding | 1,270,128 | 1,334,469 | ||||||||
Dividends per share | $ | 0.11 | $ | 0.11 | ||||||
Provision for loan losses | $ | 2,051,000 | $ | 293,000 | ||||||
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Six Months ended June 30, | ||||||||||
2009 | 2008 | |||||||||
Net income | $ | (567,000 | ) | $ | 580,000 | |||||
Basic earnings per share | $ | (0.45 | ) | $ | 0.42 | |||||
Diluted earnings per share | $ | (0.45 | ) | $ | 0.42 | |||||
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Performance ratios (annualized): | ||||||||||
Return on average assets | (0.51 | %) | 0.51 | % | ||||||
Return on average equity | (5.42 | %) | 5.69 | % | ||||||
Interest rate spread | 3.71 | % | 3.25 | % | ||||||
Net interest margin | 3.73 | % | 3.26 | % | ||||||
Operating cost to assets | 2.94 | % | 2.61 | % | ||||||
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Weighted average basic shares Outstanding | 1,270,128 | 1,389,404 | ||||||||
Weighted average diluted shares Outstanding | 1,270,128 | 1,389,199 | ||||||||
Dividends per share | $ | 0.22 | $ | 0.22 | ||||||
Provision for loan losses | $ | 2,271,000 | $ | 501,000 |
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 |  | June 30, 2009 |  |  | December 31, 2008 | |||||
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Total assets | $ | 213,576,000 | $ | 225,783,000 | ||||||
Loans receivable, net | $ | 126,382,000 | $ | 137,001,000 | ||||||
Deposits | $ | 186,047,000 | $ | 197,479,000 | ||||||
Total stockholders’ equity | $ | 19,883,000 | $ | 20,572,000 | ||||||
Book value per share | $ | 15.65 | $ | 15.35 | ||||||
Stockholders’ equity to assets ratio | 9.31 | % | 9.11 | % | ||||||
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Asset quality ratios: | ||||||||||
Nonperforming loans as a percent of total loans | 0.26 | % | 0.12 | % | ||||||
Nonperforming assets as a percent of total assets | 0.64 | % | 1.20 | % | ||||||
Allowance for loan losses as a percent of total loans | 2.82 | % | 1.19 | % | ||||||
Allowance for loan losses as a percent of nonperforming loans | 1074.78 | % | 971.18 | % |
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FINANCIAL INFORMATION Â Â Â PINNACLE BANCSHARES, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION | ||||||||||
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 |  | June 30, |  |  | December 31, | |||||
2009 | 2008 | |||||||||
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ASSETS: | ||||||||||
Cash and cash equivalents | $ | 3,710,984 | $ | 3,896,727 | ||||||
Interest-bearing deposits in other banks | 3,956,295 | 88 | ||||||||
Securities available-for-sale | 61,334,349 | 65,495,201 | ||||||||
FHLB stock | 817,500 | 424,200 | ||||||||
First National Bankers Bancshares stock | 525,000 | 525,000 | ||||||||
Loans held for sale | 808,777 | 801,390 | ||||||||
Loans receivable, net of allowances for loan losses of $3,664,955 and $1,650,705 respectively | 126,381,689 | 137,000,890 | ||||||||
Real estate owned, net | 1,024,799 | 2,542,249 | ||||||||
Premises and equipment, net | 6,839,303 | 6,913,553 | ||||||||
Goodwill | 306,488 | 306,488 | ||||||||
   Bank owned life insurance    Accrued interest receivable    Other assets | 6,276,234 | 6,108,755 | ||||||||
983,408 | 1,065,640 | |||||||||
 | 611,073 |  |  | 702,391 |  | |||||
Total assets | $ | 213,575,899 | Â | $ | 225,782,572 | Â | ||||
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LIABILITIES AND STOCKHOLDERS’ EQUITY: | ||||||||||
Deposits | $ | 186,046,535 | $ | 197,478,504 | ||||||
Subordinated debt | 3,093,000 | 3,093,000 | ||||||||
Borrowed funds | 3,000,000 | 2,025,000 | ||||||||
Official checks outstanding | 546,149 | 696,324 | ||||||||
Accrued interest payable | 582,674 | 844,912 | ||||||||
Other liabilities | Â | 424,494 | Â | Â | 1,072,441 | Â | ||||
Total liabilities | Â | 193,692,852 | Â | Â | 205,210,181 | Â | ||||
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STOCKHOLDERS’ EQUITY: | ||||||||||
Common stock, par value $.01 per share; 2,400,000 authorized; 1,872,313issued at June 30, 2009 and December 31, 2008, respectively; 1,270,128 outstanding at June 30, 2009 and December 31, 2008, respectively | 18,723 | 18,723 | ||||||||
Additional paid in capital | 8,923,223 | 8,923,223 | ||||||||
Treasury shares, at cost (602.185 shares outstanding at June 30, 2009 and December 31, 2008, respectively) | (7,320,909 | ) | (7,320,909 | ) | ||||||
Retained earnings | 17,347,777 | 18,194,136 | ||||||||
Accumulated other comprehensive loss, net of tax | Â | 914,233 | Â | Â | 757,218 | Â | ||||
Total stockholders’ equity |  | 19,883,047 |  |  | 20,572,391 |  | ||||
Total liabilities and stockholders’ equity | $ | 213,575,899 |  | $ | 225,782,572 |  | ||||
See accompanying notes to these condensed consolidated financial statements. |
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PINNACLE BANCSHARES, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||
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 |  | Three Months Ended June 30, |  |  | Six Months Ended June 30, | ||||||||
2009 | Â | Â | 2008 | 2009 | Â | Â | 2008 | ||||||
INTEREST REVENUE: | |||||||||||||
Interest on loans | $1,997,465 | $2,357,521 | $4,033,597 | $4,851,159 | |||||||||
Interest and dividends on securities | 693,593 | 730,923 | 1,419,069 | 1,541,387 | |||||||||
Other interest | 1,481 | 15,672 | 3,282 | 31,597 | |||||||||
2,692,539 | 3,104,116 | 5,455,948 | 6,424,143 | ||||||||||
INTEREST EXPENSE: | |||||||||||||
Interest on deposits | 754,455 | 1,286,478 | 1,670,284 | 2,851,903 | |||||||||
Interest on subordinated debt | 31,627 | 43,995 | 62,627 | 100,064 | |||||||||
Interest on borrowed funds | 5,551 | 34,297 | 7,029 | 87,137 | |||||||||
791,633 | 1,364,770 | 1,739,940 | 3,039,104 | ||||||||||
NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES | 1,900,906 | 1,739,346 | 3,716,008 | 3,385,039 | |||||||||
PROVISION FOR LOAN LOSSES | 2,051,400 | 292,800 | 2,270,900 | 501,300 | |||||||||
NET INTEREST INCOME (LOSS) AFTER PROVISION FOR LOAN LOSSES | (150,494) | 1,446,546 | 1,445,108 | 2,883,739 | |||||||||
NONINTEREST INCOME: | |||||||||||||
Fees and service charges on deposit accounts | 299,664 | 252,360 | 533,719 | 473,576 | |||||||||
Service fee income | 21,134 | 24,953 | 43,688 | 51,263 | |||||||||
Fees and charges on loans | 55,821 | 33,164 | 89,638 | 114,563 | |||||||||
Bank owned life insurance | 83,740 | 89,591 | 167,480 | 179,182 | |||||||||
Net gain (loss) on sale or write-down of: | |||||||||||||
Securities available for sale | 0 | 166 | 0 | 13,598 | |||||||||
Loans held for sale | 97,546 | 58,268 | 180,968 | 88,973 | |||||||||
Real estate owned | (280,867) | (17,193) | (302,267) | (43) | |||||||||
277,038 | 441,309 | 713,226 | 921,112 | ||||||||||
NONINTEREST EXPENSE: | |||||||||||||
Compensation and benefits | 821,351 | 797,241 | 1,678,811 | 1,628,547 | |||||||||
Occupancy | 336,073 | 283,063 | 685,406 | 585,310 | |||||||||
Marketing and professional | 98,934 | 102,071 | 202,905 | 201,178 | |||||||||
Other | 421,583 | 291,183 | 701,232 | 577,642 | |||||||||
1,677,941 | 1,473,558 | 3,268,354 | 2,992,677 | ||||||||||
INCOME (LOSS) BEFORE INCOME TAXES | (1,551,397) | 414,297 | (1,110,020) | 812,174 | |||||||||
INCOME TAX EXPENSE (CREDIT) | (646,673) | 115,564 | (543,088) | 231,717 | |||||||||
NET INCOME (LOSS) | $(904,724) | $298,733 | $(566,932) | $580,457 | |||||||||
Basic earnings per share | $(0.71) | $0.22 | $(0.45) | $0.42 | |||||||||
Diluted earnings per share | $(0.71) | $0.22 | $(0.45) | $0.42 | |||||||||
Cash dividends per share | $0.11 | $0.11 | $0.22 | $0.22 | |||||||||
Weighted average basic shares outstanding | 1,270,128 | 1,338,674 | 1,270,128 | 1,389,404 | |||||||||
Weighted average diluted shares outstanding | 1,270,128 | 1,334,469 | 1,270,128 | 1,389,199 |
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PINNACLE BANCSHARES, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY FOR THE SIX MONTHS ENDED JUNE 30, 2009 AND 2008 | |||||||||||||||||||||||||||||||
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 |  |  |  |  |  |  |  |  |  | Accumulated |  |  | |||||||||||||||||||
Additional | Other | Total | |||||||||||||||||||||||||||||
Common Stock | Paid-in | Treasury | Retained | Comprehensive | Stockholders’ | ||||||||||||||||||||||||||
Shares | Â | Â | Amount | Â | Â | Capital | Â | Â | Stock | Â | Â | Earnings | Â | Â | (Loss) Income | Â | Â | Equity | |||||||||||||
BALANCE, December 31, 2007 | 1,872,313 | Â | Â | $ | 18,723 | $ | 8,923,223 | $ | (5,317,798 | ) | $ | 17,554,085 | $ | (244,551 | ) | $ | 20,933,682 | ||||||||||||||
Comprehensive income (loss) | |||||||||||||||||||||||||||||||
Net income | 0 | 0 | 0 | 0 | 580,457 | 0 | 580,457 | ||||||||||||||||||||||||
Change in fair value of securities available-for-sale, net of tax | 0 | 0 | 0 | 0 | 0 | (683,354 | ) | Â | (683,354 | ) | |||||||||||||||||||||
Comprehensive income | (102,897 | ) | |||||||||||||||||||||||||||||
Cash dividends declared ($.22 per share) | 0 | Â | Â | Â | 0 | Â | Â | Â | 0 | Â | Â | Â | 0 | Â | Â | Â | Â | (300,701 | ) | Â | Â | Â | 0 | Â | Â | Â | Â | (300,701 | ) | ||
BALANCE, June 30, 2008 | 1,872,313 | Â | Â | $ | 18,723 | Â | Â | $ | 8,923,223 | Â | Â | $ | (6,790,413 | ) | Â | Â | $ | 17,833,841 | Â | Â | Â | $ | (927,905 | ) | Â | Â | $ | 19,057,469 | Â | ||
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BALANCE, December 31, 2008 | 1,872,313 | $ | 18,723 | $ | 8,923,223 | $ | (7,320,909 | ) | $ | 18,194,136 | $ | 757,218 | $ | 20,572,391 | |||||||||||||||||
Comprehensive income (loss): | |||||||||||||||||||||||||||||||
Net income | 0 | 0 | 0 | 0 | (566,932 | ) | 0 | (566,932 | ) | ||||||||||||||||||||||
Change in fair value of securities available-for-sale, net of tax | 0 | 0 | 0 | 0 | 0 | 157,015 | Â | 157,015 | Â | ||||||||||||||||||||||
Comprehensive income | (409,917 | ) | |||||||||||||||||||||||||||||
Cash dividends declared ($.22 per share) | 0 | Â | Â | Â | 0 | Â | Â | Â | 0 | Â | Â | Â | 0 | Â | Â | Â | Â | (279,427 | ) | Â | Â | Â | 0 | Â | Â | Â | Â | (279,427 | ) | ||
BALANCE June 30, 2009 | 1,872,313 | Â | Â | $ | 18,723 | Â | Â | $ | 8,923,223 | Â | Â | $ | (7,320,909 | ) | Â | Â | $ | 17,347,777 | Â | Â | Â | $ | 914,233 | Â | Â | Â | $ | 19,883,047 | Â |
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PINNACLE BANCSHARES, INC, UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS For the Six Months Ended | ||||||||||
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 |  | June 30, | ||||||||
2009 | Â | Â | 2008 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||
Net income (loss) | $ | (566,932 | ) | $ | 580,457 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||
Depreciation | 246,230 | 230,420 | ||||||||
Provision for loan losses | 2,270,900 | 501,300 | ||||||||
Amortization , net | 51,776 | (97,840 | ) | |||||||
Bank owned life insurance income | (167,479 | ) | (179,182 | ) | ||||||
Net (gain) loss on sale or write-down of: | ||||||||||
Securities available for sale | (0 | ) | (13,598 | ) | ||||||
Loans held for sale | (83,422 | ) | (58,268 | ) | ||||||
Real estate owned | 302,267 | 43 | ||||||||
Proceeds from sale of loans | 15,163,577 | 11,927,318 | ||||||||
Loans originated for sale | (15,087,542 | ) | (13,080,575 | ) | ||||||
Decrease in accrued interest receivable | 82,232 | 340,270 | ||||||||
(Increase) decrease) in other assets | 92,320 | (308,634 | ) | |||||||
Decrease (increase) in accrued interest payable | (262,238 | ) | (183,150 | ) | ||||||
Decrease (increase) in other liabilities | Â | (744,183 | ) | Â | 273,422 | Â | ||||
Net cash used in provided by (used in) operating activities | Â | 1,297,506 | Â | Â | (68,017 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||
Net loan (originations) repayments | 8,338,124 | (9,626,033 | ) | |||||||
Net change in interest bearing deposits in other banks | (3,956,207 | ) | (174,159 | ) | ||||||
Purchase of securities available-for-sale | (2,290,000 | ) | (32,080,067 | ) | ||||||
Proceeds from maturing, called and payments received on securities available-for-sale | 6,616,965 | 49,768,755 | ||||||||
Proceeds from sale of Federal Home Loan Bank stock | 369,300 | 1,633,500 | ||||||||
Purchase of Federal Home Loan Bank stock | (762,600 | ) | (1,725,600 | ) | ||||||
Purchase of premises and equipment | (171,980 | ) | (159,589 | ) | ||||||
Proceeds from sales or capital expenditures related to real estate owned | Â | 1,259,720 | Â | Â | 847,843 | Â | ||||
Net cash provided by investing activities | Â | 9,403,322 | Â | Â | 8,484,650 | Â | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||
Net increase in passbook, NOW and money market deposit accounts | 3,308,145 | 1,559,214 | ||||||||
Proceeds from sales of time deposits | 11,911,455 | 6,918,621 | ||||||||
Payments on maturing time deposits | (26,651,569 | ) | (14,733,659 | ) | ||||||
Increase in borrowed funds | 975,000 | 1,900,000 | ||||||||
Decrease (increase) in official checks outstanding | (150,175 | ) | (871,514 | ) | ||||||
Repurchase of common stock | (0 | ) | (1,472,615 | ) | ||||||
Payments of cash dividends | Â | (279,427 | ) | Â | (300,701 | ) | ||||
Net cash used in financing activities | Â | (10,866,571 | ) | Â | (7,000,654 | ) | ||||
NET DECREASE (INCREASE) IN CASH AND CASH EQUIVALENTS | (185,743 | ) | 1,415,979 | |||||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | Â | 3,896,727 | Â | Â | 4,783,834 | Â | ||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 3,710,984 | Â | $ | 6,199,813 | Â | ||||
SUPPLEMENTAL DISCLOSURES: | ||||||||||
Cash payments for interest on deposits, borrowed funds, and subordinated debentures | $ | 2,002,212 | $ | 3,222,024 | ||||||
Cash payments for income taxes | 150,000 | 363,000 | ||||||||
Real estate acquired through foreclosure | 44,537 | 1,992,179 |
Contacts:
Pinnacle Bancshares, Inc.
Robert B. Nolen, Jr., 205-221-4111
President
and Chief Executive Officer