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Pinnacle Bankshares Corporation Announces Record High Net Income for the First Half of 2019

ALTAVISTA, Va., July 10, 2019 (GLOBE NEWSWIRE) -- Net income for Pinnacle Bankshares Corporation (OTCQX:PPBN), the one-bank holding company (the “Company”) for First National Bank (the “Bank”), was $1,368,000 or $0.89 per basic and $0.87 per diluted share for the quarter ended June 30, 2019, and $2,669,000 or $1.73 per basic and $1.71 per diluted share for the six months ended June 30, 2019.  Net income was $1,115,000 or $0.72 per basic and diluted share and $2,187,000 or $1.42 per basic share and $1.41 per diluted share, respectively, for the same periods of 2018.  Consolidated results for the quarter and six month periods are unaudited.

Net income generated during the first six months of 2019 represents a $482,000 or 22% increase as compared to the same time period of the previous year, which was driven by higher net interest income and noninterest income combined with lower provision for loan losses, all offsetting higher noninterest expense.  The net interest income improvement was due to the growth of loans and investments from June 30, 2018 to June 30, 2019 and higher yields on these earning assets.  Asset quality continued to be strong over the past year, which has resulted in a lower provision for loan losses.

Profitability as measured by the Company’s return on average assets (“ROA”) improved to 1.12% for the six months ended June 30, 2019, as compared to 0.96% generated during the first six months of 2018.  Correspondingly, return on average equity (“ROE”) increased for the six month period of 2019 to 12.21%, compared to 11.06% for the same time period of the prior year. 

“We are pleased to report the highest six month net income in Pinnacle’s history,” stated Aubrey H. Hall, III, President and Chief Executive Officer for both the Company and the Bank.  Mr. Hall further commented, “Growth of our interest earning assets, higher net interest margin and strong credit quality have contributed to solid financial results thus far in 2019.”

The Company produced $8,957,000 in net interest income for the first half of 2019, which represents a 14% increase as compared to the $7,825,000 generated for the same time period of 2018.  Interest income increased $1,362,000, or approximately 16%, due to higher volume of loans and investments and increased yields, while interest expense increased $230,000, or approximately 26%, due mainly to the continued growth of deposits.  As a result of a 46 basis points increase in yield on average earning assets, which was partially offset by a 9 basis points increase in the cost to fund earning assets, the Company’s net interest margin increased to 4.12% for the first half of 2019 as compared to 3.75% for the first half of 2018.

The provision for loan losses was only $1,000 for the first half of 2019 as compared to $72,000 for the first half of 2018.  The allowance for loan losses was $3,356,000 as of June 30, 2019, which represented 0.88% of total loans outstanding.  In comparison, the allowance for loan losses was $3,372,000 or 0.90% of total loans outstanding as of December 31, 2018.  Non-performing loans to total loans decreased slightly to 0.23% as of June 30, 2019 compared to 0.24% as of year-end 2018, and was down from 0.28% as of June 30, 2018. Allowance coverage of non-performing loans as of June 30, 2019 increased to 391% from 367% as of year-end 2018.  Management continues to view the allowance balance as being sufficient to offset potential future losses associated with problem loans. 

Noninterest income for the first half of 2019 increased $215,000 or approximately 10% to $2,268,000 from $2,053,000 for the first half of 2018. This increase was mainly driven by an increase in fees on sales of mortgage loans and commissions on investments sales as the Bank’s Mortgage Division and First National Advisors have completed restructures and are now focused on growth of business.

Noninterest expense for the first half of 2019 increased $806,000 or approximately 11% to $7,920,000 from $7,114,000 for the first half 2018.  The increase is primarily attributed to increases in salaries and employee benefits and other expenses associated with the overall growth of the Company. 

Total assets as of June 30, 2019 were $481,227,000, up $10,616,000 or 2% from $470,611,000 as of December 31, 2018.  The principal components of the Company’s assets as of June 30, 2019 were $381,123,000 in total loans, $46,858,000 in securities and $23,929,000 in cash and cash equivalents. During the first half of 2019, total loans increased $5,057,000, or 1%, from $376,066,000 as of December 31, 2018, while securities decreased $2,968,000, or approximately 6%, from $49,826,000.  As compared to June 30, 2018, loans and investments increased 6% and 4%, respectively.

Total liabilities as of June 30, 2019 were $435,899,000, up $7,399,000 or 2% from $428,500,000 as of December 31, 2018.  The growth of liabilities was driven by an $11,311,000, or approximately 14%, increase in demand deposits since year-end.  The Company continues to focus on the expansion of core deposit relationships, which has helped the Company maintain a low cost of funds, decrease its dependency on time deposits and provide relationship expansion opportunities. 

Total stockholders’ equity as of June 30, 2019 was $45,328,000 and consisted primarily of $41,111,000 in retained earnings.  In comparison, as of December 31, 2018, total stockholders’ equity was $42,111,000.  The Company has continued to increase capital and improve its capital ratios while also paying a cash dividend to shareholders in each of the last twenty-seven quarters.  Both the Company and Bank remain “well capitalized” per all regulatory definitions. 

Pinnacle Bankshares Corporation is a locally managed community banking organization based in Central Virginia.  The one-bank holding company of First National Bank serves an area consisting primarily of all or portions of the Counties of Campbell, Pittsylvania, Bedford, Amherst and the City of Lynchburg.  The Company has a total of ten branches with two located in the Town of Altavista, where the Bank was founded.  Other branch locations include Village Highway in Rustburg, Wards Road near the Lynchburg Regional Airport, Timberlake Road in Campbell County, South Main Street in the Town of Amherst, Old Forest Road, Odd Fellows Road and our newly opened Downtown Main Street Branch in the City of Lynchburg and Forest Road in Bedford County.  First National Bank is in its 111th year of operation.

Various securities laws regulate the use of financial measures that are not prepared in accordance with GAAP. We believe these non-GAAP measures provide important supplemental information to investors. We use these measures, together with GAAP measures, for internal managerial purposes and as a means to evaluate period-to-period comparisons. However, we do not, and you should not, rely on non-GAAP financial measures alone as measures of our performance. We believe that non-GAAP financial measures reflect an additional way of viewing aspects of our operations that - when taken together with GAAP results as presented in this press release- provide a more complete understanding of factors and trends affecting our business. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures, even if they have similar names.

These forward-looking statements 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, the lowering or increasing of our cost of funds, the maintenance of our net interest margin, the continuation of improved returns, and future operating results and business performance. Although we believe our plans, intentions and expectations reflected in these forward‑looking statements are reasonable, we can give no assurance that these plans, intentions, or expectations will be achieved. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain, and actual results, performance or achievements could differ materially from those contemplated in any forward-looking statements. Factors that could have a material adverse effect on our operations and future prospects include, but are not limited to, changes in: the effectiveness of management’s efforts to maintain asset quality and control operating expenses; the quality, composition and growth of the loan and investment portfolios; interest rates; decrease in net interest margin; real estate values in our market area; general economic and financial market conditions;  levels of unemployment in our market area; the legislative/regulatory climate, including regulatory initiatives with respect to financial institutions, products and services in accordance with the Dodd Frank Wall Street Reform Act (the “Dodd Frank Act”) and otherwise; the Consumer Financial Protection Bureau and its regulatory and enforcement activities; and the application of the Basel III capital standards to the Company and the Bank; monetary and fiscal policies of the U.S. government, including policies of the U.S. Treasury and the Board of Governors of the Federal Reserve System; the impact of the Tax Cuts and Jobs Act of 2017 (the “Tax Act”); demand for loan products; deposit flows; competition and demand for financial services in our market area; regulatory compliance costs; accounting principles, policies and guidelines; technological risks and developments and cyber threats, attacks or events; and an increase in shareholders that would require the Company to be subject to the reporting obligations of the Securities Exchange Act of 1934, as amended. These risks and uncertainties should be considered in evaluating forward‑looking statements contained herein.  We base our forward-looking statements on management's beliefs and assumptions based on information available as of the date of this report. You should not place undue reliance on such statements, because the assumptions, beliefs, expectations and projections about future events on which they are based may, and often do, differ materially from actual events and, in many cases, are outside of our control.  We undertake no obligation to update any forward-looking statement to reflect developments occurring after the statement is made.

Selected financial highlights are shown below.

Pinnacle Bankshares Corporation
Selected Financial Highlights
(6/30/19, 3/31/2019 and 6/30/2018 results unaudited)
(In thousands, except ratios, share and per share data)
  3 Months Ended
  3 Months Ended
  3 Months Ended
Income Statement Highlights 06/30/2019
Interest Income  $5,133     $4,943     $4,434  
Interest Expense 568     551     445  
Net Interest Income 4,565     4,392     3,989  
Provision for Loan Losses  7     (6 )    71  
Noninterest Income 1,223     1,045     1,070  
Noninterest Expense 4,087     3,833     3,620  
Net Income 1,368     1,301     1,115  
Earnings Per Share (Basic) 0.89     0.84     0.72  
Earnings Per Share (Diluted) 0.87     0.84     0.72  
  6 Months Ended
  Year Ended
  6 Months Ended
Income Statement Highlights 06/30/2019
Interest Income $10,076     $18,270     $8,714  
Interest Expense 1,119     1,888     889  
Net Interest Income 8,957     16,382     7,825  
Provision for Loan Losses 1     607     72  
Noninterest Income 2,268     4,202     2,053  
Noninterest Expense 7,920     14,928     7,114  
Net Income 2,669     4,160     2,187  
Earnings Per Share (Basic) 1.73     2.71     1.42  
Earnings Per Share (Diluted) 1.71     2.68     1.41  
Balance Sheet Highlights 06/30/2019
    12/31/2018     06/30/2018  
Cash and Cash Equivalents $23,929     $15,717     $25,865  
Total Loans 381,123     376,066     360,276  
Total Securities 46,858     49,826     45,238  
Total Assets 481,227     470,611     461,058  
Total Deposits 432,807     425,278     417,684  
Total Liabilities 435,899     428,500     420,713  
Stockholders' Equity 45,328     42,111     40,346  
Shares Outstanding 1,553,742     1,540,054     1,538,688  
Ratios and Stock Price 06/30/2019     12/31/2018     06/30/2018  
Gross Loan-to-Deposit Ratio 88.06 %   88.38 %   86.26 %
Net Interest Margin (Year-to-date) 4.12 %   3.83 %   3.75 %
Liquidity 14.93 %   13.63 %   15.42 %
Efficiency Ratio 70.53 %   72.56 %   72.07 %
Return on Average Assets (ROA) 1.12 %   0.90 %   0.96 %
Return on Average Equity (ROE) 12.21 %   10.33 %   11.06 %
Leverage Ratio (Bank) 9.62 %   9.15 %   9.13 %
Tier 1 Capital Ratio (Bank) 11.53 %   11.14 %   11.15 %
Total Capital Ratio (Bank) 12.40 %   12.04 %   11.97 %
Stock Price $31.00     $27.45     $29.60  
Book Value $29.17     $27.34     $26.22  
Asset Quality Highlights                
  06/30/2019     12/31/2018     06/30/2018  
Nonaccruing Loans $641     $839     $1,013  
Loans 90 Days or More Past Due and Accruing 219     80     0  
Total Nonperforming Loans 859     919     1,013  
Troubled Debt Restructures Accruing 263     267     474  
Total Impaired Loans 1,122     1,186     1,487  
Other Real Estate Owned (OREO) (Foreclosed Assets) 749     627     98  
Total Nonperforming Assets 1,608     1,546     1,111  
Nonperforming Loans to Total Loans 0.23 %   0.24 %   0.28 %
Nonperforming Assets to Total Assets 0.33 %   0.33 %   0.24 %
Allowance for Loan Losses $3,356     $3,372     $2,984  
Allowance for Loan Losses to Total Loans 0.88 %   0.90 %   0.83 %
Allowance for Loan Losses to Nonperforming Loans 390.52 %   366.87 %   294.53 %

CONTACT:  Pinnacle Bankshares Corporation, Bryan M. Lemley, 434-477-5882 or

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