Pinnacle Bankshares Corporation Reports First Quarter Earnings

ALTAVISTA, Va.--()--Pinnacle Bankshares Corporation (OTCQB:PPBN), the one-bank holding company (the “Company”) for First National Bank (the “Bank”), reported net income today of $397,000 or $0.26 per basic and diluted share for the quarter ended March 31, 2013 compared to net income of $478,000 or $0.32 per basic and diluted share for the same period of 2012. Quarterly consolidated results are unaudited.

Profitability as measured by the Company’s return on average assets (“ROA”) was 0.45% for the first quarter of 2013, which is lower than the 0.56% generated during the same time period of 2012. Correspondingly, return on average equity (“ROE”) declined as well to 5.62% for the first quarter of 2013, compared to 7.03% for the first quarter of the prior year.

“Net interest margin compression and an increase in other losses associated with the sale of foreclosed properties resulted in lower earnings for the first quarter of 2013 as compared to first quarter of 2012. However, our lower provision for loan losses combined with increased noninterest income and our ability to control operating expenses, exclusive of foreclosures, leads us to remain optimistic regarding future performance,” stated Aubrey H. Hall, III, President and Chief Executive Officer for both the Company and the Bank.

For the three months ended March 31, 2013, net interest income was $2,797,000 compared to $2,942,000 for the same period in 2012. The Company’s net interest margin was 3.38% for the quarter ended March 31, 2013 compared to 3.66% for the quarter ended March 31, 2012. Net interest margin was 3.48% for the quarter ended December 31, 2012. Yield on earning assets for the first quarter of 2013 decreased to 4.51% from 4.90% for the first quarter of 2012 and 4.65% for the fourth quarter of 2012. The cost to fund earning assets declined to 1.13% from 1.24% for the first quarter of 2012 and 1.17% for the fourth quarter of 2012.

“The decrease in our yield on earning assets outpacing the decline in our cost of funds has caused the margin compression we are experiencing,” stated Hall. He further commented, “However, we do expect to benefit on the cost side of the equation from a significant amount of longer term time deposits re-pricing throughout the course of 2013.”

The Company’s provision for loan losses was $78,000 in the first quarter of 2013 compared to $168,000 in the first quarter of 2012. The decrease in provision was mainly due to lower charge-offs incurred in the first quarter of 2013 compared to the first quarter of 2012 as the Bank continues to improve asset quality.

Noninterest income for the quarter ended March 31, 2013 increased $27,000, or approximately 3.5%, compared to the same period in 2012. This increase was due mainly to a 13.5% or $17,000 increase in fees generated from the sale of mortgage loans and a $24,000 increase in income derived from bank owned life insurance. These increases were partially offset by an $18,000 or 11% decrease in commissions from investment sales.

Noninterest expense for the quarter ended March 31, 2013 increased by $108,000, or approximately 4%, compared to the same period in 2012. The increase in noninterest expense was attributed primarily to a $20,000 or 1% increase in salaries and benefits and a $77,000 or 126% increase in losses on the sale of foreclosed real estate.

Total assets as of March 31, 2013 were $362,826,000, up approximately 4% from $348,694,000 as of December 31, 2012. The principal components of the Company’s assets as of the end of the period were $271,022,000 in net loans, $52,549,000 in cash and cash equivalents and $22,918,000 in investments. During the first quarter of 2013 net loans decreased by less than 1% or $2,605,000 from December 31, 2012, while investments increased approximately 3% or $712,000.

Total liabilities as of March 31, 2013 were $334,420,000, up approximately 4% from $320,605,000 as of December 31, 2012, primarily as a result of an increase in savings and NOW accounts of $9,570,000, or approximately 7%, and an increase in demand accounts of $6,917,000 or approximately 18%. Additionally, time deposits increased by $372,000 or less than 1%. The increase in checking and savings deposits represents the expansion of core relationships and has helped lower the Company’s cost of funds, decrease its dependency on time deposits and could potentially lead to higher noninterest income from opportunities to cross-sell ancillary products.

Total stockholders’ equity as of March 31, 2013 was $28,406,000, consisting primarily of $24,565,000 in retained earnings. As of December 31, 2012, total stockholders’ equity was $28,089,000. The Company and the Bank continue to exceed all minimums to satisfy “well capitalized” regulatory status.

The Bank’s allowance for loan losses was $3,606,000 as of March 31, 2013, which represents 1.31% of total loans outstanding, compared to $3,646,000, or 1.31% of total loans outstanding, as of December 31, 2012.

Nonperforming assets (including nonaccruing loans, accruing loans more than 90 days past due and foreclosed assets) totaled $4,379,000, or 1.21% of total assets, as of March 31, 2013, an improvement from $5,407,000, or 1.55% of total assets, as of December 31, 2012.

“We are very pleased that our nonperforming assets have decreased 41% over the last twelve months, which has helped lower our provision expense and relieved pressure on our allowance for loan losses. We are well aware of the fact that sound asset quality is a prerequisite to improved financial performance,” stated Bryan M. Lemley, Chief Financial Officer of both the Company and the Bank.

The Company filed a Form 15 with the Securities and Exchange Commission (the “SEC”) and has deregistered the Company’s common stock under section 12(g) of the Securities Exchange Act of 1934. The Company has now ceased its reporting obligations with the SEC. The Company expects the Section 12(g) deregistration and elimination of reporting obligations will provide substantial cost savings. Despite the elimination of these reporting obligations, management remains committed to providing quarterly and annual updates on the Company’s performance to its shareholders by mailing such information to shareholders and posting such information on the Bank’s website at www.1stnatbk.com under the Investor Relations tab. Additionally, quarterly call reports will continue to be filed with the Bank’s primary regulatory, the Office of the Comptroller of the Currency. Call reports are available for review on the Federal Deposit Insurance Corporation’s website at www.fdic.gov.

The Bank expects its new Vista Branch Office located in Altavista, which will replace the one destroyed by fire last year, to be completed and open for business on May 6, 2013. A temporary location behind the office site in the Town and Country Shopping Plaza has been established for customer convenience during the rebuilding process.

Selected financial highlights are shown below.

_______________________________

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 operates two branches in the Town of Altavista, one branch in the Village of Rustburg, two other branches in Campbell County, one branch in the Town of Amherst, one branch in the City of Lynchburg and one branch in the Forest section of Bedford County. First National Bank is in its 105th year in operation.

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 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 of our cost of funds, the maintenance of our net interest margin, the continuation of improved returns, the cost savings related to the deregistration of our common stock, and future operating results and business performance. 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, the effectiveness of management’s efforts to improve asset quality, returns, net interest margin and collections and control operating expenses, management’s efforts to minimize losses related to nonperforming loans, management’s efforts to lower our cost of funds, changes in: interest rates, general economic and business conditions, declining collateral values, especially real estate, the real estate market, the legislative/regulatory climate, including the effect that the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and regulations adopted thereunder may have on us, 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 and any policies or programs implemented pursuant to the Emergency Economic Stabilization Act of 2008, the quality or composition of the loan or investment portfolios, demand for loan products, deposit flows and funding costs, competition, demand for financial services in our market area, actual savings related to the deregistration of our common stock and accounting principles, policies and guidelines. 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.

 

Pinnacle Bankshares Corporation

 

Selected Financial Highlights

(3/31/2013 and 3/31/2012 results unaudited)
(In thousands, except ratios, share and per share data)
 
           
3 Months Ended Year Ended 3 Months Ended
Income Statement Highlights

3/31/2013

12/31/2012

3/31/2012

Interest Income $3,741 $15,573 $3,943
Interest Expense 944 3,972 1,001
Net Interest Income 2,797 11,601 2,942
Provision for Loan Losses 78 1,177 168
Noninterest Income 804 3,443 777
Noninterest Expense 2,947 11,910 2,839
Net Income 397 1,338 478
Earnings Per Share (Basic and Diluted) 0.26 0.89 0.32
 
 
Balance Sheet Highlights

3/31/2013

12/31/2012

3/31/2012

Cash and Cash Equivalents $52,549 $35,790 $37,721
Total Loans 274,628 277,318 271,874
Total Investments 22,918 22,206 27,808
Total Assets 362,826 348,694 346,595
Total Deposits 332,016 315,157 314,433
Total Liabilities 334,420 320,605 319,177
Stockholders' Equity 28,406 28,089 27,418
Shares Outstanding 1,507,503 1,507,589 1,496,589
 
 

Ratios and Stock Price

3/31/2013

12/31/2012

3/31/2012

Gross Loan-to-Deposit Ratio 82.72% 87.99% 86.46%
Net Interest Margin (Year-to-date) 3.38% 3.55% 3.66%
Liquidity 20.08% 15.30% 18.05%
Efficiency Ratio 81.71% 79.23% 76.07%
Return on Average Assets (ROA) 0.45% 0.39% 0.56%
Return on Average Equity (ROE) 5.62% 4.83% 7.03%
Leverage Ratio (Bank) 8.71% 8.86% 8.67%
Tier 1 Risk-based Capital Ratio (Bank) 10.89% 10.60% 10.65%
Total Capital Ratio (Bank) 12.14% 11.85% 11.90%
Stock Price $13.00 $8.31 $9.48
Book Value $18.84 $18.63 $18.32
 
 

Asset Quality Highlights

3/31/2013

12/31/2012

3/31/2012

Nonaccruing Loans $2,483 $2,843 $6,160
Loans 90 Days or More Past Due and Accruing 0 171 0
Total Nonperforming Loans (Impaired Loans) 2,483 3,014 6,160
Other Real Estate Owned (OREO) (Foreclosed Assets) 1,896 2,393 1,237
Total Nonperforming Assets 4,379 5,407 7,415
Nonperforming Loans to Total Loans 0.90% 1.09% 2.27%
Nonperforming Assets to Total Assets 1.21% 1.55% 2.14%
Allowance for Loan Losses $3,606 $3,646 $4,047
Allowance for Loan Losses to Total Loans 1.31% 1.31% 1.49%
Allowance for Loan Losses to Nonperforming Loans 145.23% 120.97% 65.69%
 

Contacts

Pinnacle Bankshares Corporation
Bryan M. Lemley, 434-477-5882
bryanlemley@1stnatbk.com

Sharing

Contacts

Pinnacle Bankshares Corporation
Bryan M. Lemley, 434-477-5882
bryanlemley@1stnatbk.com