CORRECTION — Pinnacle Bankshares Corporation Announces First Quarter 2022 Earnings
ALTAVISTA, Va., April 26, 2022 (GLOBE NEWSWIRE) — In a release issued under the same headline earlier today by Pinnacle Bankshares Corporation (OTCQX:PPBN), please note that the date 3/31/2021 in the first column of the financial table has been corrected to read 3/31/2022. The corrected release follows:
Net income for Pinnacle Bankshares Corporation (OTCQX:PPBN), the one-bank holding company (“Pinnacle” or the “Company”) for First National Bank (the “Bank”), was $1,391,000 or $0.64 per basic and diluted share for the quarter ended March 31, 2022 compared to net income of $1,099,000 or $0.51 per basic and diluted share for the same period of 2021. Quarterly consolidated results are unaudited.
Net income generated during the first quarter of 2022 represents a $292,000, or 27%, increase as compared to the same time period of the prior year, which was driven by higher net interest income due to lower cost of deposits, increased noninterest income primarily due to higher interchange fees derived from check card transactions and lower noninterest expense due to merger-related expenses incurred during the first quarter of 2021.
Profitability as measured by the Company’s return on average assets (“ROA”) was 0.55% for the first quarter of 2022, which is a 5 basis points increase from the 0.50% produced in the first quarter of 2021. Correspondingly, return on average equity (“ROE”) also increased in the first quarter of 2022 to 9.04%, compared to 7.53% for the same time period of the prior year. ROA improvement was hindered to a degree by a year-over-year 11% increase in total assets, driven primarily by an influx of deposits and cash on the balance sheet.
“We are pleased with Pinnacle’s year-over-year net income improvement,” stated Aubrey H. Hall, III, President and Chief Executive Officer for both the Company and the Bank. Mr. Hall further commented, “Our shareholders have been patient as we worked through a transformational partnership with Virginia Bank Bankshares, Inc. (“Virginia Bank”) and moved into the Danville market. With the merger now completely behind us, we are optimistic regarding further enhancement of our performance and ultimately shareholder returns.”
The Company’s net interest income was $6,124,000 for the quarter ended March 31, 2022, an increase of 2% as compared to net interest income of $5,987,000 for the quarter ended March 31, 2021. Interest income decreased $106,000, or approximately 2%, due to a slight decrease in loan volume resulting from Paycheck Protection Program (PPP) loan payoffs, which was partially offset by an increase in our securities portfolio. Yield on earning assets decreased 50 basis points to 2.72%. Interest expense decreased $243,000, or 45%, despite higher deposit volume, as the cost to fund earning assets decreased 14 basis points to 0.12%. Net interest margin decreased from 2.96% for the first quarter of 2021 to 2.60% for the first quarter of 2022.
The provision for loan losses decreased $39,000 to $23,000 in the first quarter of 2022 as a result of stable asset quality. The allowance for loan losses was $3,669,000 as of March 31, 2022, representing 0.64% of total loans outstanding. In comparison, the allowance for loan losses was $3,663,000 as of December 31, 2021, which was 0.66% of total loans outstanding. The net credit mark on loans acquired from Virginia Bank as of March 31, 2022 was $1,662,000. The allowance for loan losses plus the net credit mark was $5,331,000, or 0.93%, of the Company’s total loans as of March 31, 2022. Non-performing loans to total loans decreased to 0.23% as of March 31, 2022, compared to 0.26% as of year-end 2021. Allowance coverage of non-performing loans was 284% as of the end of the quarter compared to 255% as of year-end 2021. Management views the allowance balance as being sufficient to offset potential future losses associated with problem loans.
Noninterest income for the quarter ended March 31, 2022 increased $55,000, or 3%, to $1,993,000 from $1,938,000 for the quarter ended March 31, 2021. The increase was mainly due to a $329,000 increase in interchange fees derived from check card transactions, partially offset by a $53,000 decrease in fees on sales of mortgage loans and a $181,000 decrease in loan fee income as 2021 benefitted from fees associated with the origination of PPP loans.
Noninterest expense for the quarter ended March 31, 2022 decreased $195,000, or approximately 3%, to $6,328,000 from $6,523,000 for the quarter ended March 31, 2021. The decrease was driven by a $294,000 decrease in merger-related expenses, a $105,000 decrease in salaries and benefits and a $36,000 decrease in occupancy expenses partially offset by a $239,000 increase in core processing fees and an $80,000 increase in FDIC premiums attributed to the growth of deposits.
Total assets as of March 31, 2022 were $1,015,124,000, down $740,000, or less than 1% from $1,015,863,000 as of December 31, 2021. The principal components of the Company’s assets as of March 31, 2022 were $570,321,000 in total loans, $189,629,000 in cash and cash equivalents, and $209,541,000 in securities. During the first quarter of 2022, total loans increased $18,085,000, or approximately 3%, from $552,236,000 as of December 31, 2021, while securities increased $88,831,000, or approximately 74%, from $120,709,000. We have accelerated our purchases of securities, specifically United States treasury notes, due to a more favorable interest rate environment than last year. Cash and cash equivalents $108,966,000, or approximately 36%, from $298,595,000 in the first quarter of 2022 due to growth of loans and securities.
Total liabilities as of March 31, 2022 were $957,618,000, up $4,122,000, or less than 1%, from $953,496,000 as of December 31, 2021 as deposits increased $3,236,000, or less than 1%, to $941,316, 000 in the first quarter of 2022. First National Bank’s deposit growth has stabilized in the first quarter of 2022 and excess cash is being used to fund growth of our loan and securities portfolios.
Total stockholders’ equity as of March 31, 2022 was $57,506,000 and consisted primarily of $48,787,000 in retained earnings. In comparison, as of December 31, 2021 total stockholders’ equity was $62,367,000. The decrease in equity is due to an increase in unrealized losses associated with the Bank’s securities portfolio due to the increasing rate environment. Both the Company and Bank remain “well capitalized” per all regulatory definitions.
As a reminder, the Pinnacle Bankshares Corporation Annual Meeting of Shareholders will be held at 11:00 AM Eastern Time on Tuesday, May 10, 2022, at Virginia Technical Institute located at 201 Ogden Road, Altavista VA 24517.
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 nineteen 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, four 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 114th 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
(3/31/2022 and 3/31/2021 results unaudited, 12/31/2021 results audited)
|(In thousands, except ratios, share and per share data)|
|3 Months Ended
||3 Months Ended
||3 Months Ended
|Income Statement Highlights||3/31/2022
|Net Interest Income||6,124||6,284||5,987|
|Provision for Loan Losses||23||104||62|
|Earnings Per Share (Basic)||0.64||0.22||0.51|
|Earnings Per Share (Diluted)||0.64||0.22||0.51|
|Balance Sheet Highlights||3/31/2022
|Cash and Cash Equivalents||$||189,629||$||298,595||$||235,980|
|Ratios and Stock Price||3/31/2022
|Gross Loan-to-Deposit Ratio||60.59||%||58.87||%||68.50||%|
|Net Interest Margin (Year-to-date)||2.60||%||2.86||%||2.96||%|
|Liquidity (Liquid assets to liabilities)||44.73||%||47.46||%||36.96||%|
|Return on Average Assets (ROA)||0.55||%||0.47||%||0.50||%|
|Return on Average Equity (ROE)||9.04||%||7.31||%||7.53||%|
|Leverage Ratio (Bank)||7.26||%||7.37||%||7.75||%|
|Tier 1 Risk-based Capital Ratio (Bank)||12.97||%||12.54||%||11.90||%|
|Total Capital Ratio (Bank)||13.65||%||13.20||%||12.55||%|
|Asset Quality Highlights||3/31/2022
|Loans 90 Days or More Past Due and Accruing||39||0||0|
|Total Nonperforming Loans||1,291||1,434||772|
|Troubled Debt Restructures Accruing||1,085||1,096||1,677|
|Total Impaired Loans||2,376||2,530||2,449|
|Other Real Estate Owned (OREO) (Foreclosed Assets)||0||0||519|
|Total Nonperforming Assets||1,291||1,434||1,291|
|Nonperforming Loans to Total Loans||0.23||%||0.26||%||0.14||%|
|Nonperforming Assets to Total Assets||0.13||%||0.14||%||0.14||%|
|Allowance for Loan Losses||$||3,669||$||3,663||$||3,529|
|Allowance for Loans Losses to Total Loans||0.64||%||0.66||%||0.62||%|
|Allowance for Loan Losses Plus Net Credit Mark to Total Loans (1)||0.93||%||0.99||%||1.11||%|
|Allowance for Loan Losses to Nonperforming Loans||284.18||%||255.41||%||457.12||%|
CONTACT: Pinnacle Bankshares Corporation, Bryan M. Lemley, 434-477-5882 or [email protected]
|(1)||This is a non-GAAP measure calculated by dividing the sum of the allowance for loan losses of $3,669 plus the net credit mark of $1,662 by total loans of $570,321 which equals 0.93% for March 31, 2022. For December 31, 2021, the allowance for loan losses of $3,663 was added to the credit mark of $1,829 and divided by total loans of $552,236 which equals 0.99%. For March 31, 2021 the allowance for loan losses of $3,529 was added to the credit mark of $2,805 and divided by total loans of $571,757 which equals 1.11%.|