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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.
PINNACLE BANCSHARES, INC.
Unaudited Financial Highlights
(In Thousands, except share and per share data)
Three Months Ended June 30,
2009 2008
Net income $ (905,000 ) $ 299,000
Basic earnings per share $ (0.71 ) $ 0.22
Diluted earnings per share $ (0.71 ) $ 0.22
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 %
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
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
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 %
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
June 30, 2009 December 31, 2008
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 %
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 %
FINANCIAL INFORMATION
PINNACLE BANCSHARES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL
CONDITION
June 30, December 31,
2009 2008
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 $3,664,955 126,381,689 137,000,890
and $1,650,705 respectively
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 6,276,234 6,108,755
Accrued interest receivable
Other assets
983,408 1,065,640
611,073 702,391
Total assets $ 213,575,899 $ 225,782,572
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 424,494 1,072,441
Total liabilities 193,692,852 205,210,181
STOCKHOLDERS' EQUITY:
Common stock, par value $.01 per share; 2,400,000 authorized; 18,723 18,723
1,872,313 issued at June 30, 2009 and December 31, 2008,
respectively; 1,270,128 outstanding at June 30, 2009 and December
31, 2008, respectively
Additional paid in capital 8,923,223 8,923,223
Treasury shares, at cost (602.185 shares outstanding at June 30, (7,320,909 ) (7,320,909 )
2009 and December 31, 2008, respectively)
Retained earnings 17,347,777 18,194,136
Accumulated other comprehensive loss, net of tax 914,233 757,218
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.
PINNACLE BANCSHARES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended Six Months Ended
June 30, June 30,
2009 2008 2009 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
PINNACLE BANCSHARES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS'
EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2009 AND 2008
Accumulated
Additional Other Total
Common Stock Paid-in Treasury Retained Comprehensive Stockholders'
Shares Amount Capital Stock Earnings (Loss) Income Equity
BALANCE, December 31, 2007 1,872,313 $ 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 ) (683,354 )
Comprehensive income (102,897 )
Cash dividends declared ($.22 per share) 0 0 0 0 (300,701 ) 0 (300,701 )
BALANCE, June 30, 2008 1,872,313 $ 18,723 $ 8,923,223 $ (6,790,413 ) $ 17,833,841 $ (927,905 ) $ 19,057,469
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 0 157,015 157,015
Comprehensive income (409,917 )
Cash dividends declared ($.22 per share) 0 0 0 0 (279,427 ) 0 (279,427 )
BALANCE June 30, 2009 1,872,313 $ 18,723 $ 8,923,223 $ (7,320,909 ) $ 17,347,777 $ 914,233 $ 19,883,047
PINNACLE BANCSHARES, INC,
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended
June 30,
2009 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 (744,183 ) 273,422
Net cash used in provided by (used in) operating activities 1,297,506 (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 6,616,965 49,768,755
available-for-sale
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 1,259,720 847,843
owned
Net cash provided by investing activities 9,403,322 8,484,650
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 (279,427 ) (300,701 )
Net cash used in financing activities (10,866,571 ) (7,000,654 )
NET DECREASE (INCREASE) IN CASH AND CASH EQUIVALENTS (185,743 ) 1,415,979
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 3,896,727 4,783,834
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 3,710,984 $ 6,199,813
SUPPLEMENTAL DISCLOSURES:
Cash payments for interest on deposits, borrowed funds, and $ 2,002,212 $ 3,222,024
subordinated debentures
Cash payments for income taxes 150,000 363,000
Real estate acquired through foreclosure 44,537 1,992,179
SOURCE: Pinnacle Bancshares, Inc.
Pinnacle Bancshares, Inc. Robert B. Nolen, Jr., 205-221-4111 President and Chief Executive Officer
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