Pinnacle Bancshares Announces Results for Second Quarter

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

For full details on (PCLB) PCLB. (PCLB) has Short Term PowerRatings at TradingMarkets. Details on (PCLB) Short Term PowerRatings is available at This Link.