Pinnacle Bankshares Corporation Announces Third Quarter 2017 Earnings  

ALTAVISTA, Va., Oct. 18, 2017 (GLOBE NEWSWIRE) -- Net income for Pinnacle Bankshares Corporation (OTCQX:PPBN), the one-bank holding company (the “Company”) for First National Bank (the “Bank”), was $909,000 or $0.59 per basic and $0.58 per diluted share for the quarter ended September 30, 2017, and $2,420,000 or $1.58 per basic share and $1.57 per diluted share for the nine months ended September 30, 2017.  Net income was $913,000 or $0.60 per basic and $0.59 per diluted share and $2,270,000 or $1.49 per basic share and $1.47 per diluted share, respectively, for the same periods of 2016.  Consolidated results for the quarter and nine month periods are unaudited.

The decrease of less than 1% in net income for the third quarter of 2017 as compared to the same time period of the previous year was due to an after tax gain of $176,000 realized in July of 2016 that resulted from the sale of the prior Old Forest Road branch.  Excluding the gain, net income increased $172,000 or 23%.  Net income generated during the first nine months of 2017 represents a 7% increase as compared to the same time period of 2016.  Excluding the 2016 gain on sale of real estate, year-to-date net income has increased $327,000 or 16% due to higher net interest income and noninterest income.

Profitability as measured by the Company’s return on average assets (“ROA”) was 0.73% for the nine months ended September 30, 2017, compared to 0.78% generated during the first nine months of 2016.  Return on average equity (“ROE”) increased for the nine month period of 2017 to 8.56%, compared to 8.48% for the same time period of the prior year.  Asset growth of 5% from September 30, 2016 to September 30, 2017 contributed to the lower ROA, while higher earnings increased ROE.          

“We are pleased to report that net income generated for the third quarter of 2017 was the highest level of quarterly core net income in Pinnacle’s history,” stated Aubrey H. Hall, III, President and Chief Executive Officer for both the Company and the Bank.  He further commented, “The growth of our loan and investment portfolios has led to material improvement in our year-over-year performance through nine months.”     

The Company produced $11,025,000 in net interest income for the first nine months of 2017, which represents a $911,000 or 9% increase as compared to the $10,114,000 generated for the same time period of 2016.  Interest income increased $1,041,000 or approximately 9% due to higher loan and investment volume, while interest expense increased $130,000 or approximately 12%, due to the continued growth of deposits. 

The Company’s net interest margin declined to 3.56% for the first nine months of 2017 as compared to 3.74% for the first nine months of 2016 with yield on earning assets decreasing by 19 basis points and the cost to fund earning assets decreasing by 1 basis point.  The decline in net interest margin was caused by a decrease in loan yields and an increase in excess funds that have taken the majority of the year thus far to deploy into loans and investments.

The provision for loan losses increased to $226,000 in the first nine months of 2017 as compared to $87,000 in the first nine months of 2016.  The allowance for loan losses was $2,998,000 as of September 30, 2017, which represented 0.84% of total loans outstanding.  In comparison, the allowance for loan losses was $2,898,000 or 0.85% of total loans outstanding as of December 31, 2016.  Non-performing loans to total loans decreased to 0.21% as of September 30, 2017 compared to 0.23% as of year-end 2016. Allowance coverage of non-performing loans as of the end of the quarter increased to 394% from 377% as of year-end 2016.  Management views the allowance balance as being sufficient to offset potential future losses associated with problem loans. 

Noninterest income for the first nine months of 2017 decreased $9,000 or less than 1% to $2,940,000 from $2,949,000 for the first nine months of 2016. This slight decrease was mainly driven by a $266,000 pre-tax gain on sale of real estate realized in 2016.  Excluding the gain, noninterest income increased $257,000 or 10% due primarily to an $87,000 increase in fees derived from check card and ATM usage, a $60,000 increase in investment commissions and a $39,000 increase in fees generated from the sale of mortgage loans.

Noninterest expense for the first nine months of 2017 increased $613,000 or approximately 6% to $10,271,000 from $9,658,000 for the first nine months of 2016.  The increase is primarily attributed to a $306,000 increase in retirement plan expenses as a result of settlement accounting associated with recent retirements.  Higher core operating system expenses, deposit insurance and occupancy expenses were also contributing factors to the increase. 

Total assets as of September 30, 2017 were $442,601,000, up $2,497,000 or less than 1% from $440,104,000 as of December 31, 2016.  The principal components of the Company’s assets as of September 30, 2017 were $355,310,000 in total loans, $44,260,000 in securities and $13,659,000 in cash and cash equivalents. During the first nine months of 2017, total loans increased approximately 4% or $14,069,000 from $341,241,000 as of December 31, 2016, while securities increased approximately 61% or $16,691,000 from $27,569,000 as the Company has proactively sought opportunities to deploy excess funds.

Total liabilities as of September 30, 2017 were $403,851,000, up $296,000 or less than 1% from $403,555,000 as of December 31, 2016.  The slight growth of liabilities was driven by a $3,680,000 or approximately 2% increase in savings and interest checking balances.  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 September 30, 2017 was $38,750,000 and consisted primarily of $34,827,000 in retained earnings.  In comparison, as of December 31, 2016, total stockholders’ equity was $36,549,000.  The Company has continued to increase capital while also paying a cash dividend to shareholders in each of the last twenty quarters.  Both the Company and Bank remain “well capitalized” per all regulatory definitions. 

In other news, construction of First National Bank’s new Odd Fellows Road Branch/Lynchburg Headquarters facility is complete and the Branch is scheduled to open in November of 2017. The new facility is intended to increase the Bank’s presence and visibility in the Lynchburg market in an effort to further grow assets and enhance shareholder returns.


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 eight 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 in the City of Lynchburg and Forest Road in Bedford County.  The new Odd Fellows Road Branch and Lynchburg Headquarters facility is scheduled to be open in November of 2017 and will increase the number of branches to nine.  First National Bank is in its 109th 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.

Cautionary Statement Regarding Forward-Looking Statements

In addition to the historical information contained herein, this Earnings Press Release contains statements that may constitute “forward‑looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that include projections, predictions, expectations, or beliefs about future events or results or otherwise are not statements of historical fact, are based on certain assumptions as of the time they are made, and are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. Forward‑looking statements are generally identifiable by use of words such as “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project,” “may,” “will” or similar expressions. These forward-looking statements may include, but are not limited to, anticipated future financial performance, impairment of goodwill, funding sources including cash generated by banking operations, loan portfolio composition, trends in asset quality and strategies to address nonperforming assets and nonaccrual loans, adequacy of the allowance for loan losses and future provisions for loan losses, securities portfolio composition and future performance, interest rate environments, deposit insurance assessments, and strategic business initiatives.

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 actually 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, the effects of or changes in:

  • management’s efforts to maintain asset quality and control operating expenses;
  • the quality, composition and growth of the loan and investment portfolios;
  • interest rates;
  • general economic and financial market conditions;
  • net interest margin;
  • real estate values in our market area;
  • 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;
  • 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;
  • our ability to timely implement the Lynchburg Market Plan;
  • demand for loan products;
  • deposit flows;
  • competition and demand for financial services in our market area;
  • regulatory compliance costs;
  • accounting principles, policies and guidelines; 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 have based our forward-looking statements on management’s beliefs, assumptions, expectations and projections based on information available as of the date of this Earnings Press Release. You should not place undue reliance on such statements, because the beliefs, assumptions, 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
(9/30/17, 6/30/17 and 9/30/2016 results unaudited)
(In thousands, except ratios, share and per share data)
 3 Months Ended
 3 Months Ended
 3 Months Ended
Income Statement Highlights09/30/2017
Interest Income $4,243  $4,077  $3,866 
Interest Expense 417  416  394 
Net Interest Income 3,826  3,661  3,472 
Provision for Loan Losses  34  88  62 
Noninterest Income 1,017  938  1,218 
Noninterest Expense 3,504  3,526  3,283 
Net Income 909  694  913 
Earnings Per Share (Basic) 0.59  0.45  0.60 
Earnings Per Share (Diluted) 0.58  0.45  0.59 
 9 Months Ended
 Year Ended
 9 Months Ended
Income Statement Highlights09/30/2017
Interest Income $12,265  15,153  $11,224 
Interest Expense 1,240  1,518  1,110 
Net Interest Income 11,025  13,635  10,114 
Provision for Loan Losses 226  87  87 
Noninterest Income 2,940  3,896  2,949 
Noninterest Expense 10,271  13,043  9,658 
Net Income 2,420  3,004  2,270 
Earnings Per Share (Basic) 1.58  1.97  1.49 
Earnings Per Share (Diluted) 1.57  1.96  1.47 
Balance Sheet Highlights09/30/2017
Cash and Cash Equivalents $13,659  $48,174  $37,711 
Total Loans 355,310  341,241  338,391 
Total Securities 44,260  27,569  22,299 
Total Assets 442,601  440,104  422,053 
Total Deposits 400,192  399,743  381,506 
Total Liabilities 403,851  403,555  385,417 
Stockholders' Equity 38,750  36,549  36,636 
Shares Outstanding 1,529,033  1,522,351  1,523,794 
Ratios and Stock Price09/30/2017
Gross Loan-to-Deposit Ratio 85.78%  85.39%  88.70% 
Net Interest Margin (Year-to-date) 3.56%  3.70%  3.74% 
Liquidity 13.08%  17.68%  13.44% 
Efficiency Ratio 73.52%  74.66%  74.26% 
Return on Average Assets (ROA) 0.73%  0.76%  0.78% 
Return on Average Equity (ROE) 8.56%  8.36%  8.48% 
Leverage Ratio (Bank) 8.95%  8.94%  9.16% 
Common Equity Tier 1 Capital Ratio (Bank) 10.70%  10.81%  10.85% 
Total Capital Ratio (Bank) 11.53%  11.67%  11.71% 
Stock Price $27.55  $28.88  $20.44 
Book Value $25.34  $24.01  $24.04 
 Asset Quality Highlights09/30/2017
Nonaccruing Loans $761  $769  $1,301 
Loans 90 Days or More Past Due and Accruing 0  0  0 
Total Nonperforming Loans 761  769  1,301 
Troubled Debt Restructures Accruing 341  347  348 
Total Impaired Loans 1,102  1,116  1,649 
Other Real Estate Owned (OREO) (Foreclosed Assets) 246  642  705 
Total Nonperforming Assets 1,007  1,411  2,006 
Nonperforming Loans to Total Loans 0.21%  0.23%  0.38% 
Nonperforming Assets to Total Assets 0.23%  0.32%  0.48% 
Allowance for Loan Losses $2,998  $2,898  $2,867 
Allowance for Loan Losses to Total Loans 0.84%  0.85%  0.85% 
Allowance for Loan Losses to Nonperforming Loans 393.78%  376.85%  220.37% 

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