ALTAVISTA, Va., April 25, 2024 (GLOBE NEWSWIRE) -- Net income for Pinnacle Bankshares Corporation (OTCQX:PPBN), the one-bank holding company (“Pinnacle” or the “Company”) for First National Bank (the “Bank”), was $2,084,000, or $0.95 per basic and diluted share, for the quarter ended March 31, 2024 compared to net income of $2,639,000, or $1.21 per basic and diluted share, for the same period of 2023. Quarterly consolidated results are unaudited.
First Quarter 2024 Highlights
Income Statement comparisons are to the first quarter of 2023
Balance Sheet, Capital Ratios, and Stock Price comparisons are to December 31, 2023
Income Statement
- Net Income was $2,084,000 and Return on Assets was 0.84%.
- Net Interest Income increased 1% due primarily to increased loan volume and yields.
- Net Interest Margin decreased slightly to 3.56%. As compared to the fourth quarter of 2023, net interest margin increased 5 basis points despite continued strong competition for deposits.
- Provision for Credit Losses was only $18,000 as Asset Quality remains strong with low Nonperforming Loans and no Other Real Estate Owned (OREO).
- Noninterest Income decreased 7% due primarily to lower interchange fees from debit card usage and mortgage fees.
- Noninterest Expense was up 9% due to higher core processing expense and salaries and benefits expense.
Balance Sheet
- Total Assets decreased $16.5 million, or 1.63%, which was driven by Deposits decreasing $17.5 million, or 1.88%. Liquidity remained strong at 32%.
- The Securities Portfolio declined $53 million due to maturing U.S. Treasury Securities that yielded less than 2.50%. Approximately $30 million of these securities matured on the last day of March and were carried in accounts receivable, which understated our liquidity ratio.
- The Loan Portfolio grew $10.2 million, or 1.58%.
Capital Ratios and Stock Price
- Capital levels are stable as the Bank’s Leverage Ratio increased to 8.94% and the Total Risk-Based Capital Ratio decreased slightly to 13.61%.
- Our Stock Price ended the quarter at $28.46 per share, based on the last trade, which is an increase of $4.45, or 19%.
Net Income and Profitability
Net income generated during the first quarter of 2024 represents a $555,000, or 21%, decrease as compared to the same time period of the prior year, which was driven by higher interest expense, higher noninterest expense, and lower noninterest income partially offset by higher interest income and lower provision for credit losses.
Profitability as measured by the Company’s return on average assets (“ROA”) was 0.84% for the first quarter of 2024, which is a 25 basis points decrease from the 1.09% produced in the first quarter of 2023. Correspondingly, return on average equity (“ROE”) also decreased in the first quarter of 2024 to 12.02%, compared to 18.38% for the same time period of the prior year.
“Although profitability was down in the first quarter of 2024, Pinnacle remains well positioned with ample liquidity and strong asset quality as we navigate through current economic conditions,” stated Aubrey H. Hall, III, President and Chief Executive Officer for both the Company and the Bank.
Net Interest Income and Margin
The Company generated $8,410,000 in net interest income for the first quarter of 2024, which represents a $77,000, or 1%, increase as compared to the first quarter of 2023 despite net interest margin decreasing 8 basis points to 3.56%. Interest income increased $1,320,000, or approximately 13%, to $11,184,000 due to an increase in average loan volume as well as increased yield on earning assets, which improved 42 basis points to 4.73%. Interest expense increased $1,243,000, or 81%, to $2,774,000 as the cost to fund earning assets increased 50 basis points to 1.17%.
Reserves for Credit Losses and Asset Quality
The provision for credit losses decreased $43,000 to $18,000 in the first quarter of 2024, as compared to the same period of the prior year, due to continued strong asset quality.
The allowance for credit losses was $4,484,000 as of March 31, 2024, representing 0.69% of total loans outstanding. In comparison, the allowance for credit losses was $4,511,000 as of December 31, 2023, which was 0.70% of total loans outstanding. Non-performing loans to total loans were 0.19% as of March 31, 2024, compared to 0.24% at year-end 2023. Allowance coverage of non-performing loans was 353% as of the end of the quarter compared to 290% as of year-end 2023. Management views the allowance balance as being sufficient to offset potential future losses associated with problem loans.
Noninterest Income and Expense
Noninterest income for the quarter ended March 31, 2024 was $1,623,000 representing a $119,000, or 7%, decrease compared to the quarter ended March 31, 2023. The decrease was mainly due to an $80,000 decrease in interchange fees derived from debit card usage as well as ATM network fees and a $60,000 decrease in fees derived from sales of mortgage loans.
Noninterest expense for the quarter ended March 31, 2024 increased $625,000, or approximately 9%, to $7,402,000 from $6,777,000 for the quarter ended March 31, 2023. Higher operating costs were mainly due to a $236,000 increase in core processing expense, a $164,000 increase in salaries and benefits, and a $75,000 increase in dealer loan expenses due to an increase in volume.
The Balance Sheet and Liquidity
Total assets as of March 31, 2024 were $1,000,006,000, down $16,522,000, or 1.63%, from $1,016,528,000 as of December 31, 2023. The principal components of the Company’s assets as of March 31, 2024 were $651,593,000 in total loans, $180,196,000 in securities, and $88,502,000 in cash and cash equivalents. During the first quarter of 2024, total loans increased $10,156,000, or approximately 1.58%, from $641,437,000 as of December 31, 2023, while securities decreased $53,383,000, or approximately 23%, from $233,579,000.
The majority of the Company’s securities portfolio is relatively short-term in nature with 48% invested in U.S. Treasuries with an average maturity of 1.73 years and $41,000,000 maturing within eight to twelve months. All of the Company’s securities were classified as available for sale as of March 31, 2024, which provides transparency regarding unrealized losses. Unrealized losses associated with the available for sale securities portfolio were $14,406,000 as of March 31, 2024 or 8% of book value, an improvement from $14,943,000 as of December 31, 2023.
Cash and cash equivalents increased $913,000, or approximately 1%, to $88,502,000 as of March 31, 2024 from $87,589,000 as of December 31, 2023. Additionally, $30,000,000 from matured U.S. Treasuries was carried in accounts receivables as of quarter-end. These funds were collected and placed in cash and cash equivalents on April 1, 2024. The Company had a strong liquidity ratio of 32% as of March 31, 2024, excluding the referenced funds in accounts receivable. The Company has access to multiple liquidity lines of credit through its correspondent banking relationships and the Federal Home Loan Bank. None of these contingency funding sources have been utilized over the past year.
Total liabilities as of March 31, 2024 were $929,448,000, down $18,675,000, or 1.97%, from $948,123,000 as of December 31, 2023 as deposits decreased $17,521,000, or 1.88%, to $914,923,000 during the first quarter of 2024. Approximately 73% of the Company’s deposits are currently insured or collateralized, resulting in a relatively low level of uninsured deposits. Deposit volume decreased as competition for deposits continues to be elevated within our markets. The number of deposit accounts grew by less than 1% during the first quarter of 2024. The Bank intends to grow customer relationships through providing personalized service and utilization of a community bank approach while capitalizing on market disruption caused by further bank consolidation and large national bank branch closures.
Total stockholders’ equity as of March 31, 2024 was $70,558,000, an increase of $2,153,000, or 3.15%, compared to year-end 2023 and consisted primarily of $63,601,000 in retained earnings. The increase in equity is due to retained earnings and a decrease in unrealized losses associated with the Bank’s securities portfolio. Both the Company and Bank remain “well capitalized” per all regulatory definitions.
Annual Meeting of Shareholders
As a reminder, Pinnacle Bankshares Corporation’s Annual Meeting of Shareholders will be held at 11:00 AM Eastern Time on Tuesday, May 14, 2024, at Virginia Technical Institute located at 201 Ogden Road, Altavista VA 24517. Please plan to join us as we discuss the Company’s performance and direction moving forward.
Company Information
Pinnacle Bankshares Corporation is a locally managed community banking organization serving Central and Southern Virginia. The one-bank holding company of First National Bank serves market areas 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 one branch in Amherst County within the Town of Amherst, two branches in Bedford County; five branches in Campbell County, including two within the Town of Altavista, where the Bank was founded; one branch in the City of Charlottesville, three branches in the City of Danville; three branches in the City of Lynchburg; and three branches in Pittsylvania County, including one within the Town of Chatham. First National Bank is in its 116th year of operation.
Cautionary Statement Regarding Forward-Looking Statements
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 and our growth initiatives. 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: changes in consumer spending and saving habits that may occur, including increased inflation; changes in general business, economic and market conditions; attracting, hiring, training, motivating and retaining qualified employees; changes in fiscal and monetary policies, and laws and regulations; changes in interest rates, inflation rates, deposit flows, loan demand and real estate values; changes in the quality or composition of the Company’s loan portfolio and the value of the collateral securing loans; changes in macroeconomic trends and uncertainty, including liquidity concerns at other financial institutions, and the potential for local and/or global economic recession; changes in demand for financial services in Pinnacle’s market areas; increased competition from both banks and non-banks in Pinnacle’s market areas; a deterioration in credit quality and/or a reduced demand for, or supply of, credit; increased information security risk, including cyber security risk, which may lead to potential business disruptions or financial losses; volatility in the securities markets generally, including in the value of securities in the Company’s securities portfolio or in the market price of Pinnacle common stock specifically; and other factors, which could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. 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 (3/31/2024 and 3/31/2023 results unaudited, 12/31/2023 results audited) (In thousands, except ratios, share and per share data) | |||||||
| 3 Months Ended | 3 Months Ended | 3 Months Ended | |||||
| Income Statement Highlights | 3/31/2024 | 12/31/2023 | 3/31/2023 | ||||
| Interest Income | $11,184 | $11,029 | $9,864 | ||||
| Interest Expense | 2,774 | 2,658 | 1,531 | ||||
| Net Interest Income | 8,410 | 8,371 | 8,333 | ||||
| Provision for Credit Losses | 18 | 4 | 61 | ||||
| Noninterest Income | 1,623 | 2,357 | 1,742 | ||||
| Noninterest Expense | 7,402 | 8,093 | 6,777 | ||||
| Net Income | 2,084 | 2,279 | 2,639 | ||||
| Earnings Per Share (Basic) | 0.95 | 1.04 | 1.21 | ||||
| Earnings Per Share (Diluted) | 0.95 | 1.04 | 1.21 | ||||
| Balance Sheet Highlights | 3/31/2024 | 12/31/2023 | 3/31/2023 | ||||
| Cash and Cash Equivalents | $88,502 | $87,589 | $74,154 | ||||
| Total Loans | 651,593 | 641,437 | 626,060 | ||||
| Total Securities | 180,196 | 233,579 | 246,684 | ||||
| Total Assets | 1,000,006 | 1,016,528 | 993,817 | ||||
| Total Deposits | 914,923 | 932,444 | 918,622 | ||||
| Total Liabilities | 929,448 | 948,123 | 932,658 | ||||
| Stockholders' Equity | 70,558 | 68,405 | 61,159 | ||||
| Shares Outstanding | 2,205,666 | 2,198,158 | 2,184,033 | ||||
| Ratios and Stock Price | 3/31/2024 | 12/31/2023 | 3/31/2023 | ||||
| Gross Loan-to-Deposit Ratio | 71.22 | % | 68.79 | % | 68.15 | % | |
| Net Interest Margin (Year-to-date) | 3.56 | % | 3.52 | % | 3.64 | % | |
| Liquidity (Liquid assets to liabilities) | 32.08 | % | 37.27 | % | 37.17 | % | |
| Efficiency Ratio | 73.64 | % | 71.20 | % | 67.21 | % | |
| Return on Average Assets (ROA) | 0.84 | % | 1.00 | % | 1.09 | % | |
| Return on Average Equity (ROE) | 12.02 | % | 15.69 | % | 18.38 | % | |
| Leverage Ratio (Bank) | 8.94 | % | 8.82 | % | 8.37 | % | |
| Tier 1 Risk-based Capital Ratio (Bank) | 12.93 | % | 12.98 | % | 12.44 | % | |
| Total Risk-Based Capital Ratio (Bank) | 13.61 | % | 13.67 | % | 13.15 | % | |
| Stock Price | $28.46 | $24.01 | $19.92 | ||||
| Book Value | $31.99 | $31.12 | $28.00 | ||||
| Asset Quality Highlights | 3/31/2024 | 12/31/2023 | 3/31/2023 | ||||
| Nonaccruing Loans | $1,270 | $1,557 | $1,689 | ||||
| Loans 90 Days or More Past Due and Accruing | 0 | 0 | 0 | ||||
| Total Nonperforming Loans | 1,270 | 1,557 | 1,689 | ||||
| Loan Modifications | 350 | 357 | 1,047 | ||||
| Loans Individually Evaluated | 1,981 | 2,287 | 2,736 | ||||
| Other Real Estate Owned (OREO) (Foreclosed Assets) | 0 | 0 | 0 | ||||
| Total Nonperforming Assets | 1,270 | 1,557 | 1,689 | ||||
| Nonperforming Loans to Total Loans | 0.19 | % | 0.24 | % | 0.27 | % | |
| Nonperforming Assets to Total Assets | 0.13 | % | 0.15 | % | 0.17 | % | |
| Allowance for Credit Losses | $4,484 | $4,511 | $4,465 | ||||
| Allowance for Credit Losses to Total Loans | 0.69 | % | 0.70 | % | 0.71 | % | |
| Allowance for Credit Losses to Nonperforming Loans | 353 | % | 290 | % | 264 | % | |
CONTACT: Pinnacle Bankshares Corporation, Bryan M. Lemley, 434-477-5882 or bryanlemley@1stnatbk.com
