Pinnacle Bankshares Corporation Announces Record High Fourth Quarter and 2022 Earnings

Altavista, Virginia, UNITED STATES

ALTAVISTA, Va., Feb. 07, 2023 (GLOBE NEWSWIRE) -- Pinnacle Bankshares Corporation (OTCQX:PPBN), the one-bank holding company (“Pinnacle” or the “Company”) for First National Bank (“First National” or the “Bank”), produced record high net income for the fourth quarter and full year 2022.  Net income was $2,562,000, or $1.18, per basic and $1.17, per diluted share, for the quarter ended December 31, 2022, and $8,242,000, or $3.78, per basic and diluted share, for the year ended December 31, 2022.  In comparison, net income was $473,000, or $0.22 per basic and diluted share, and $4,375,000, or $2.02 per basic and diluted share, respectively, for the same periods of 2021.  Consolidated results for the fourth quarter and the full year 2022 are unaudited.

Performance for the quarter and the year improved compared to prior periods due to a significant increase in net interest income as the result of higher volume of loans and securities along with increased yields on earning assets.  Net income generated during the fourth quarter of 2022 was $2,089,000, or 442%, higher than the fourth quarter of 2021, while for 2022, net income was $3,867,000, or 88%, higher than 2021. 

Profitability as measured by the Company’s return on average assets (“ROA”) increased to 0.82% for the year ended December 31, 2022, as compared to 0.47% generated during 2021. Return on average equity (“ROE”) for 2022 increased to 14.62%, compared to 7.31% for the prior year.

“We are pleased with Pinnacle’s improved financial performance during 2022,” stated Aubrey H. Hall, III President and Chief Executive Officer for both the Company and the Bank.  Mr. Hall further commented, “We have doubled the size of the Company since 2019 and are beginning to realize the benefits of our increased scale and capacity.  Executing the moves we made during the pandemic was challenging to say the least, but I am proud of our perseverance.  While economic conditions remain volatile with continued high inflation and rising interest rates, I am confident in Pinnacle’s position and optimistic regarding our future.” 

Pinnacle generated $8,816,000 in net interest income for the fourth quarter of 2022, which represents a $2,532,000, or 40%, increase as compared to the fourth quarter of 2021. For 2022, the Company produced $30,440,000 in net interest income, which represents a $5,351,000, or 21%, increase as compared to 2021.  Again, both periods benefited from higher volumes of loans and securities and increased yields.  For the year, interest income increased $4,971,000, or approximately 19%, while yield on earning assets increased 26 basis points to 3.32% due to the higher interest rate environment.  Interest expense decreased $380,000, or approximately 22%, despite higher average deposit volume, as cost to fund earning assets decreased 6 basis points to 0.14%. However, it should be noted that interest expense increased $180,000, or approximately 53%, in the fourth quarter of 2022 as compared to the same period of the prior year.  Correspondingly, cost of funds increased 8 basis points to 0.22%, due to increased interest rates paid on deposits that occurred during the latter part of the year.  Net interest margin increased to 3.18% in 2022 from 2.86% in 2021.

Provision for loan losses was $114,000 for the fourth quarter of 2022 compared to $104,000 for the same period of 2021.  For 2022, provision for loan losses was $190,000 compared to $233,000 in 2021. The year-over-year decline was the result of Pinnacle’s strong credit quality.  The Company had net recoveries of $51,000 in 2022 and experienced a $6,734,000, or 65%, decrease in criticized and classified loans.   

The allowance for loan losses was $3,853,000 as of December 31, 2022, which represented 0.61% of total loans outstanding. In comparison, the allowance for loan losses was 0.66% of total loans outstanding as of December 31, 2021.  The allowance for loan losses plus the net credit mark on loans acquired through Pinnacle’s merger with Virginia Bank Bankshares, Inc. in 2020 was $5,175,000, or 0.82%, of the Company’s total loans as of December 31, 2022. Non-performing loans to total loans were 0.27% as of December 31, 2022.  Allowance coverage of non-performing loans was 227% as of December 31, 2022, which Management views as being sufficient to offset potential future losses associated with problem loans.  Pinnacle is prepared to fully implement Current Expected Credit Losses allowance methodology during the first quarter of 2023.

Pinnacle produced $1,639,000 in noninterest income for the fourth quarter of 2022, which was approximately 1% lower than the fourth quarter of 2021.  For 2022, $7,024,000 in noninterest income was generated, which was a decrease of $163,000, or approximately 2%, compared to 2021. The decline was mainly due to a $641,000 decrease in fees generated from sales of mortgage loans and a $209,000 decrease in loan fee income primarily associated with the origination Paycheck Protection Program (“PPP”) loans.  Mortgage loan volume decreased significantly in 2022 due to rising interest rates and housing inventory shortages across markets served, while the Company ceased originating PPP loans in 2021.  These decreases were partially offset by a $392,000 increase in debit card interchange fees, resulting from higher customer transaction activity, and a $219,000 increase in overdraft fees. 

Noninterest expense for the fourth quarter of 2022 was $7,495,000, which was only a $6,000 increase compared to the fourth quarter of 2021.  For 2022, noninterest expense was $27,237,000, which was an increase of $411,000, or 2%, compared to 2021 as core operating system expenses increased $606,000 due to higher levels of customer transactions, dealer loan expenses increased $165,000 due to a significant increase in volume and FDIC insurance increased $114,000 as a result of higher levels of average deposits.  These increases were partially offset by a $202,000 decrease in legal expenses, a $149,000 decrease in occupancy expense and a $123,000 decrease in debit card fees.

Total assets as of December 31, 2022 were $969,931,000, down $45,932,000, or 5%, from $1,015,863,000 as of December 31, 2021.  The principal components of the Company’s assets as of December 31, 2022 were $632,896,000 in total loans, $251,114,000 in securities and $36,521,000 in cash and cash equivalents.  During 2022, cash and cash equivalents decreased $262,074,000, or 88%, from $298,595,000 as of December 31, 2021 as funds were deployed into loans and investments and overall deposit volume declined. Total loans increased $80,660,000, or 15%, as compared to December 31, 2021 with the increase primarily driven by higher volumes of commercial and dealer automobile loans.  Securities increased $130,405,000, or 108%, due primarily to the purchase of over $100,000,000 in one- to three-year U.S. Treasury notes during the first four months of 2022 as the Company sought to capitalize on its liquidity position and higher interest rates, while mitigating credit and interest rate risks.

Total liabilities as of December 31, 2022 were $912,923,000, down $40,573,000, or 4%, from $953,496,000 as of December 31, 2021.  Deposits  decreased $38,841,000, or 4%, to $899,238,000 as compared to year-end 2021.  Significant liquidity built up in the banking industry during 2020 and 2021 as a result of federal government stimulus in response to the Covid-19 pandemic.  The winding down of stimulus combined with the Federal Open Market Committee’s actions to combat inflation have “tightened” the money supply, creating lower levels of bank deposits and increased deposit competition, which has impacted Pinnacle.    

Total stockholders’ equity as of December 31, 2022 was $57,008,000 and consisted primarily of $54,614,000 in retained earnings.  In comparison, total stockholders’ equity was $62,367,000 as of December 31, 2021. The $5,359,000 decrease in equity is due to a $15,256,000 increase in the Company’s unrealized accumulated other comprehensive losses on available for sale securities portfolio resulting from the rapid increase in interest rates, which is impacting bank balance sheets across the industry.  Pinnacle has a significant amount of U.S. Treasury notes maturing in approximately one to two years.  Both the Company and Bank remain “well capitalized” per all regulatory definitions as these unrealized losses are excluded from regulatory capital ratio calculations. 


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 Amherst, Bedford, Campbell and Pittsylvania, and the Cities of Charlottesville, Danville and Lynchburg.  The Company has a total of eighteen branches with two located in the Town of Altavista in Campbell County, where the Bank was founded, one branch in the Town of Amherst in Amherst County, two branches in Bedford County, one branch in the Town of Chatham in Pittsylvania County, three additional branches in Campbell County, three branches in the City of Danville, three branches in the City of Lynchburg, two additional branches in Pittsylvania County and one branch in the City of Charlottesville. First National Bank is in its 115th year of 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, including statements made in Mr. Hall’s quotes 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, our cost of funds, the maintenance of our net interest margin, future operating results and business performance,  our growth initiatives, results of the Company’s merger with Virginia Bank, and the potential effects of the COVID-19 Pandemic and related impacts on the Company’s financial condition and results of operations.  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, the Company’s branch expansions, cyber threats, attacks or similar events, the potential adverse effects of the ongoing COVID-19 Pandemic on local and national economies and markets and any governmental or societal responses thereto, the effect of steps taken by the Company in response to the COVID-19 Pandemic, the severity and duration of the pandemic, the impacts of tightening or loosening of governmental restrictions, the ability of the Company and the Bank to realize the anticipated benefits of the merger with Virginia Bank, changes in: interest rates, general economic and business conditions, including unemployment levels and slowdowns in economic growth, declining collateral values, especially real estate, the real estate market, the legislative/regulatory climate, including laws and regulations concerning taxes, banking, securities, insurance, and healthcare with which the Company and its subsidiaries must comply, including recent and potential legislative and regulatory changes in response to the COVID-19 Pandemic such as the CARES Act and the rules and regulations that may be promulgated thereunder, 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 CARES Act, including PPP, 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 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.

Selected financial highlights are shown below.

Pinnacle Bankshares Corporation
Selected Financial Highlights
(12/31/2022 and 9/30/2022 results unaudited)
(In thousands, except ratios, share and per share data)
  3 Months Ended 3 Months Ended 3 Months Ended
Income Statement Highlights 12/31/2022 9/30/2022 12/31/2021
Interest Income$9,335 $8,432 $6,623 
Interest Expense 519  254  339 
Net Interest Income 8,816  8,178  6,284 
Provision for Loan Losses 114  40  104 
Noninterest Income 1,639  1,727  1,659 
Noninterest Expense 7,495  6,820  7,489 
Net Income 2,562  2,398  473 
Earnings Per Share (Basic) 1.18  1.10  0.22 
Earnings Per Share (Diluted) 1.17  1.10  0.22 
  Year Ended Year Ended Year Ended
Income Statement Highlights 12/31/2022 12/31/2021 12/31/2020
Interest Income$31,788 $26,817 $20,788 
Interest Expense 1,348  1,728  2,519 
Net Interest Income 30,440  25,089  18,269 
Provision for Loan Losses 190  233  252 
Noninterest Income 7,024  7,187  8,672 
Noninterest Expense 27,237  26,826  22,513 
Net Income 8,242  4,375  3,062 
Earnings Per Share (Basic) 3.78  2.02  1.85 
Earnings Per Share (Diluted) 3.78  2.02  1.84 
Balance Sheet Highlights 12/31/2022 12/31/2021 12/31/2020
Cash and Cash Equivalents$36,521 $298,595 $210,814 
Total Loans 632,896  552,236  564,316 
Total Securities 251,114  120,709  46,741 
Total Assets 969,931  1,015,863  860,514 
Total Deposits 899,238  938,079  781,336 
Total Liabilities 912,923  953,496  802,184 
Stockholders' Equity 57,008  62,367  58,330 
Shares Outstanding 2,178,486  2,170,311  2,158,379 
Ratios and Stock Price 12/31/2022 12/31/2021 12/31/2020
Gross Loan-to-Deposit Ratio 70.38% 58.87% 72.22%
Net Interest Margin (Year-to-date) 3.18% 2.86% 3.34%
Liquidity 32.68% 47.46% 34.12%
Efficiency Ratio 72.71% 83.14% 83.52%
Return on Average Assets (ROA) 0.82% 0.47% 0.52%
Return on Average Equity (ROE) 14.62% 7.31% 6.36%
Leverage Ratio (Bank) 8.06% 7.37% 8.92%
Tier 1 Capital Ratio (Bank) 12.03% 12.54% 11.84%
Total Capital Ratio (Bank) 12.63% 13.20% 12.48%
Stock Price$19.20 $24.70 $23.00 
Book Value$26.17 $28.74 $27.03 
Asset Quality Highlights 12/31/2022 12/31/2021 12/31/2020
Nonaccruing Loans$1,474 $1,434 $891 
Loans 90 Days or More Past Due and Accruing 221  0  59 
Total Nonperforming Loans 1,695  1,434  950 
Troubled Debt Restructures Accruing 1,056  1,096  1,714 
Total Impaired Loans 2,751  2,530  2,664 
Other Real Estate Owned (Foreclosed Assets) 0  0  519 
Total Nonperforming Assets 1,695  1,434  1,469 
Nonperforming Loans to Total Loans 0.27% 0.26% 0.17%
Nonperforming Assets to Total Assets 0.17% 0.14% 0.17%
Allowance for Loan Losses (ALLL)$3,853 $3,663 $3,478 
ALLL to Total Loans 0.61% 0.66% 0.62%
ALLL Plus Net Credit Mark to Total Loans (1) 0.82% 0.99% 1.14%
ALLL to Nonperforming Loans 227% 255% 366%

(1)This is a non-GAAP measure calculated by dividing the sum of the allowance for loan losses of $3,853 plus the net credit mark of $1,332 by total loans $632,896 which equals 0.82% for December 31, 2022. For December 31, 2021, the allowance for loan of $3,663 was added to the credit mark of $1,829 and divided by total loans of $552,236 which equals 0.99%

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