Pinnacle Bankshares Corporation Announces 2nd Quarter/Mid-Year 2021 Earnings
ALTAVISTA, Va., July 27, 2021 (GLOBE NEWSWIRE) — Net income for Pinnacle Bankshares Corporation (OTCQX:PPBN), the one-bank holding company (the “Company” or “Pinnacle”) for First National Bank (the “Bank”), was $1,056,000, or $0.49 per basic and $0.48 per diluted share, for the quarter ended June 30, 2021, and $2,155,000, or $1.00 per basic and $0.99 per diluted share, for the six months ended June 30, 2021. Net income was $667,000, or $0.43 per basic and diluted share, and $1,115,000, or $0.72 per basic and $0.71 per diluted share, respectively, for the same periods of 2020. Consolidated results for the quarter and six month periods are unaudited.
Net income generated during the first half of 2021 represents a $1,040,000, or 93%, increase as compared to the same time period of the prior year, which was mainly driven by higher net interest income and higher noninterest income as the Company’s assets and customer base have increased due to its merger with Virginia Bank Bankshares, Inc. (“Virginia Bank”) in the fourth quarter of 2020. These increases were partially offset by an increase in noninterest expense, which was also associated with the merger.
Net income of $1,056,000 generated during the second quarter of 2021 represents a $389,000, or 58%, increase as compared to the second quarter of 2020, due to the same factors impacting year-to-date performance through June 30, 2021.
Profitability as measured by the Company’s return on average assets (“ROA”) increased to 0.48% for the six months ended June 30, 2021, as compared to 0.43% generated during the first six months of 2020. Correspondingly, return on average equity (“ROE”) increased for the six month period of 2021 to 7.34%, compared to 4.86% for the same time period of the prior year.
“We are pleased that net income has improved though the first half of 2021 compared to the prior year, which has been largely driven by our partnership with Virginia Bank,” stated Aubrey H. Hall, III, President and Chief Executive Officer for both the Company and the Bank. Mr. Hall further commented, “Management continues to focus on integration, non-interest expense control and non-interest income revenue sources in this challenging interest rate environment.”
The Company produced $12,148,000 in net interest income for the first half of 2021, which represents a 46% increase as compared to the $8,304,000 generated for the same time period of 2020. Interest income increased $3,548,000, or approximately 37%, due to increased loan and investment volume, while interest expense decreased $296,000, or approximately 22%, despite higher deposit volume, as cost to fund earning assets decreased 31 basis points to 0.24%. Yield on earning assets decreased 90 basis points to 3.14% as net interest margin decreased from 3.49% for the first half of 2020 to 2.90% for the first half of 2021.
The Company produced $6,161,000 in net interest income for the second quarter of 2021, which represents a $1,987,000, or 48%, increase as compared to the $4,174,000 generated in the second quarter of 2020. Interest income increased $1,852,000, or approximately 39%, due to increased loan and investment volume, while interest expense decreased $135,000, or approximately 22%, despite higher deposit volume, as cost of funds decreased.
The provision for loan losses was $85,000 for the first half of 2021 as compared to $226,000 for the first half of 2020. Provision for the second quarter of 2021 was $23,000 compared to $111,000 for the second quarter of 2020. The decline in provision expense has been the result of strong credit quality and the pandemic’s limited impact on the loan portfolio. As of June 30, 2021, the Bank did not have any loans with payment deferrals as a result of the pandemic.
The allowance for loan losses was $3,551,000 as of June 30, 2021, which represented 0.64% of total loans outstanding. In comparison, the allowance for loan losses was $3,478,000 or 0.62% of total loans outstanding as of December 31, 2020. The net credit mark on loans purchased from Virginia Bank as of June 30, 2021 was $2,747,000. The allowance for loan losses plus the net credit mark was $6,298,000, or 1.14%, of the Company’s total loans as of June 30, 2021. Non-performing loans to total loans increased slightly to 0.18% as of June 30, 2021, compared to 0.17% as of year-end 2020. Allowance coverage of non-performing loans was 363% as of the end of the quarter compared to 366% as of year-end 2020. Management views the allowance balance as being sufficient to offset potential future losses associated with problem loans.
Noninterest income for the first half of 2021 increased $1,208,000, or approximately 48%, to $3,747,000, from $2,539,000 for the first half of 2020. The increase was mainly due to a $379,000 increase in ATM and debit card interchange fees primarily due to the additional customers and accounts from Virginia Bank, a $360,000 increase in fees generated from sales of mortgage loans, a $142,000 increase in loan fee income due mainly to the origination of Paycheck Protection Program (“PPP”) loans, a $65,000 increase in income derived from the Bank’s investment in Bankers Insurance, LLC and a $58,000 increase in commissions and fees on investment and insurance sales.
Noninterest income for the second quarter of 2021 increased $610,000, or approximately 51%, to $1,809,000, from $1,199,000 for the second quarter of 2020 as ATM and debit card interchange fees increased by $292,000, or 65%, and fees generated from sales of mortgage loans fees increased by $239,000, or 126%.
Noninterest expense for the first half of 2021 increased $3,912,000, or approximately 42%, to $13,153,000, from $9,241,000 for the first half 2020. The increase is attributed to the growth of the Company, including the merger with Virginia Bank, and was driven by a $2,528,000 increase in salaries and benefits, a $680,000 increase in occupancy expense and $315,000 in merger related expenses. Management expects merger related expenses to level out throughout the second half of 2021.
Noninterest expense for the second quarter of 2021 increased $2,211,000, or approximately 50%, to $6,630,000 from $4,419,000 for the second quarter of 2020. The increase is due to the same factors impacting year-to-date performance through June 30, 2021.
Total assets as of June 30, 2021 were $933,110,000, up 8% from $860,514,000 as of December 31, 2020. The principal components of the Company’s assets as of June 30, 2021 were $554,101,000 in total loans, $250,158,000 in cash and cash equivalents and $90,087,000 in securities. During the first half of 2021, total loans decreased approximately 2%, or $10,215,000, from $564,316,000 as of December 31, 2020. The decline was primarily due to payoffs associated with forgiven PPP loans as outstanding PPP loan balances decreased $7,340 during the first half of 2021 to $20,868,000. Cash and cash equivalents increased $39,094,000, or 19%, during in the first half of 2021, while securities increased $43,346,000, or 93%. A large part of the securities increase has been driven by the reinvestment of Virginia Bank’s securities portfolio, which was liquidated last year immediately following the merger. While the Bank will continue to purchase securities in an effort to further deploy available cash and enhance its return on earning assets, a “cautious approach” will be taken due to the current low interest rate environment.
Total liabilities as of June 30, 2021 were $873,685,000, up $71,501,000, or 9%, from $802,184,000 as of December 31, 2020 as deposits increased 10%, or $74,699,000, to $856,035,000 during the first half of 2021. First National Bank continues to experience strong deposit growth as a result of federal government stimulus in response to the pandemic, an overall “flight to safety” by depositors and relationships moved to the Bank from larger national financial institutions.
Total stockholders’ equity as of June 30, 2021 was $59,425,000 and consisted primarily of $46,088,000 in retained earnings. In comparison, as of December 31, 2020 total stockholders’ equity was $58,330,000. Both the Company and Bank remain “well capitalized” per all regulatory definitions.
In other news, at the Annual Meeting of Shareholders (“Annual Meeting”) held on May 11, 2021, four prior Virginia Bank directors appointed to the Board of Directors as a result of the merger were elected to the Board by the Company’s shareholders. These directors included: George W. Davis, III, Class I Director serving until the 2022 Annual Meeting, Donald W. Merricks and Dr. Albert L. Payne, Class II Directors serving until the 2023 Annual Meeting, and L. Frank King, Jr., Class III Director serving until the 2024 Annual Meeting. Connie C. Burnette, Carroll E. Shelton, C. Bryan Stott, Michael E. Watson and James O. Watts. IV, Esq., were re-elected to the Board of Directors as Class III Directors serving until the 2024 Annual Meeting.
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, four branches in the City of Danville, three branches in the City of Lynchburg, and two additional branches in Pittsylvania County. The Company also operates a loan production office located in the City of Charlottesville. First National Bank is in its 113th 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
(6/30/21, 3/31/2021 and 6/30/2020 results unaudited)
|(In thousands, except ratios, share and per share data)|
|3 Months Ended
||3 Months Ended
||3 Months Ended
|Income Statement Highlights||06/30/2021
|Net Interest Income||6,161||5,987||4,174|
|Provision for Loan Losses||23||62||111|
|Earnings Per Share (Basic)||0.49||0.51||0.43|
|Earnings Per Share (Diluted)||0.48||0.51||0.43|
|6 Months Ended
||6 Months Ended
|Income Statement Highlights||06/30/2021
|Net Interest Income||12,148||18,269||8,304|
|Provision for Loan Losses||85||252||226|
|Earnings Per Share (Basic)||1.00||1.85||0.72|
|Earnings Per Share (Diluted)||0.99||1.84||0.71|
|Balance Sheet Highlights||06/30/2021
|Cash and Cash Equivalents||$||250,158||$||211,064||$||72,703|
|Ratios and Stock Price||06/30/2021
|Gross Loan-to-Deposit Ratio||64.73||%||72.22||%||81.23||%|
|Net Interest Margin (Year-to-date)||2.90||%||3.34||%||3.49||%|
|Return on Average Assets (ROA)||0.48||%||0.52||%||0.43||%|
|Return on Average Equity (ROE)||7.34||%||6.36||%||4.86||%|
|Leverage Ratio (Bank)||7.66||%||8.92||%||8.81||%|
|Tier 1 Capital Ratio (Bank)||12.36||%||11.84||%||11.62||%|
|Total Capital Ratio (Bank)||13.02||%||12.48||%||12.48||%|
|Asset Quality Highlights||6/30/2021
|Loans 90 Days or More Past Due and Accruing||43||59||0|
|Total Nonperforming Loans||979||950||1,551|
|Troubled Debt Restructures Accruing||1,598||1,714||190|
|Total Impaired Loans||2,577||2,664||1,741|
|Other Real Estate Owned (OREO) (Foreclosed Assets)||519||519||0|
|Total Nonperforming Assets||1,498||1,469||1,551|
|Nonperforming Loans to Total Loans||0.18||%||0.17||%||0.37||%|
|Nonperforming Assets to Total Assets||0.16||%||0.17||%||0.27||%|
|Allowance for Loan Losses||$||3,551||$||3,478||$||3,494|
|Allowance for Loan Losses to Total Loans||0.64||%||0.62||%||0.84||%|
|Allowance for Loan Losses Plus Net Credit Mark to Total Loans (1)||1.14||%||1.14||%||NA|
|Allowance for Loan Losses to Nonperforming Loans||362.74||%||366.11||%||225.31||%|
CONTACT: Pinnacle Bankshares Corporation, Bryan M. Lemley, 434-477-5882 or
|(1)||This is a non-GAAP measure calculated by dividing the sum of the allowance for loan losses of $3,551 plus the net credit mark of $2,747 by total loans $554,101 which equals 1.14% for 6/30/2021. For 12/31/2020, the measure was the allowance for loan losses of $3,478 plus the net credit mark of $2,952 by total loans $564,316 which equals 1.14%.|