Pinnacle Bankshares Corporation Announces First Quarter 2021 Earnings
ALTAVISTA, Va., April 30, 2021 (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 $1,099,000 or $0.51 per basic and diluted share for the quarter ended March 31, 2021 compared to net income of $448,000 or $0.29 per basic and diluted share for the same period of 2020. Quarterly consolidated results are unaudited.
Net income generated during the first quarter of 2021 represents a $651,000 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 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 is also associated with the merger.
Profitability as measured by the Company’s return on average assets (“ROA”) was 0.50% for the first quarter of 2021, which is a 13 basis points increase from the 0.37% produced in the first quarter of 2020. Correspondingly, return on average equity (“ROE”) also increased in the first quarter of 2021 to 7.53%, compared to 3.95% for the same time period of the prior year.
“We are pleased with First Quarter 2021 net income as compared to the prior year, which was driven by asset growth resulting largely from 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, “Increased net interest income and noninterest income have outpaced higher noninterest expense associated with the merger, which we expect to level out in coming quarters. With the successful conversion of Virginia Bank’s core operating system in February, we are now focused on full integration and safely reopening branch lobbies to better serve our customers.”
The Company’s net interest income was $5,987,000 for the quarter ended March 31, 2021, an increase of 45% as compared to net interest income of $4,130,000 for the quarter ended March 31, 2020. Interest income increased $1,696,000, or approximately 35%, due to increased loan and investment volume, while interest expense decreased $161,000, or 23%, despite higher deposit volume as cost to fund earning assets decreased 35 basis points to 0.26%. Yield on earning assets decreased 104 basis points to 3.22% as net interest margin decreased from 3.65% for the first quarter of 2020 to 2.96% for the first quarter of 2021.
The provision for loan losses decreased $53,000 to $62,000 in the first quarter of 2021 as result of stable asset quality. The allowance for loan losses was $3,529,000 as of March 31, 2021, representing 0.62% of total loans outstanding. In comparison, the allowance for loan losses was $3,478,000 as of December 31, 2020, which was also 0.62% of total loans outstanding. The net credit mark on loans purchased from Virginia Bank as of March 31, 2021 was $2,805,000. The allowance for loan losses plus the net credit mark was $6,334,000, or 1.11%, of the Company’s total loans as of March 31, 2021. Non-performing loans to total loans decreased to 0.14% as of March 31, 2021, compared to 0.20% as of year-end 2020. Allowance coverage of non-performing loans was 457% 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 quarter ended March 31, 2021 increased $598,000, or 45%, to $1,938,000 from $1,340,000 for the quarter ended March 31, 2020. The increase was mainly due to a $206,000 increase in loan fee income due mainly to the origination of Paycheck Protection Program loans, a $144,000 increase in ATM and debit card interchange fees primarily due to the additional customers and accounts from Virginia Bank, a $121,000 increase in fees generated from sales of mortgage loans and a $65,000 increase in income derived from the Bank’s investment in Bankers Insurance, LLC.
Noninterest expense for the quarter ended March 31, 2021 increased $1,701,000, or approximately 35%, to $6,523,000 from $4,822,000 for the quarter ended March 31, 2020. The increase is attributed to the growth of the Company, including the merger with Virginia Bank, and was driven by a $1,151,000 increase in salaries and benefits, a $305,000 increase in occupancy expense and $294,000 in merger related expenses.
Total assets as of March 31, 2021 were $910,708,000, up 6% from $860,514,000 as of December 31, 2020. The principal components of the Company’s assets as of March 31, 2021 were $571,757,000 in total loans, $235,980 in cash and cash equivalents and $64,007,000 in securities. During the first quarter of 2021, total loans increased approximately 1%, or $7,441,000, from $564,316,000 as of December 31, 2020, while securities increased approximately 37%, or $17,266,000, from $46,741,000. Cash and cash equivalents increased 12%, or $24,916,000, from $211,064,000 in the first quarter of 2021 due to growth of deposits.
Total liabilities as of March 31, 2021 were $852,346,000, up $50,162,000, or 6%, from $802,184,000 as of December 31, 2020 as deposits increased 7%, or $53,331,000 to $834,667,000 in the first quarter 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 March 31, 2021 was $58,362,000 and consisted primarily of $45,335,000 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.
First National Bank opened it eighteenth branch on March 18, 2021 located at 18077 Graves Mill Road, Forest, VA in front of the Graves Mill Plaza. Additionally, the Bank reopened the majority of its branch lobbies on April 20, 2021, while still following numerous COVID-19 protocols. All branch lobbies are expected to be open by May 25, 2021.
As a reminder, the Pinnacle Bankshares Corporation Annual Meeting of Shareholders will be held at 10:00 Eastern Time on Tuesday, May 11, 2021, 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 eighteen branches with two located in the Town of Altavista in Campbell County, where the Bank was founded. Other branch locations include one branch in the Town of Amherst in Amherst County, two branches in Bedford County, three additional branches in Campbell County, four branches in the City of Danville, three branches in the City of Lynchburg, and three branches in Pittsylvania County. The Company also operates a loan production office located in 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|
|(3/31/2021 and 3/31/2020 results unaudited, 12/31/2020 results audited)|
|(In thousands, except ratios, share and per share data)|
|3 Months Ended
||3 Months Ended
||3 Months Ended|
|Income Statement Highlights||3/31/2021
|Net Interest Income||5,987||5,706||4,130|
|Provision for Loan Losses||62||(5)||115|
|Earnings Per Share (Basic)||0.51||0.76||0.29|
|Earnings Per Share (Diluted)||0.51||0.76||0.29|
|Balance Sheet Highlights||3/31/2021
|Cash and Cash Equivalents||$235,980||$211,064||$42,250|
|Ratios and Stock Price||3/31/2021
|Gross Loan-to-Deposit Ratio||68.50%||72.22%||85.62%|
|Net Interest Margin (Year-to-date)||2.96%||3.34%||3.65%|
|Liquidity (Liquid assets to liabilities)||36.96%||34.12%||18.35%|
|Return on Average Assets (ROA)||0.50%||0.52%||0.37%|
|Return on Average Equity (ROE)||7.53%||6.36%||3.95%|
|Leverage Ratio (Bank)||7.75%||8.92%||9.61%|
|Tier 1 Risk-based Capital Ratio (Bank)||11.90%||11.84%||11.62%|
|Total Capital Ratio (Bank)||12.55%||12.48%||12.47%|
|Asset Quality Highlights||3/31/2021
|Loans 90 Days or More Past Due and Accruing||0||59||162|
|Total Nonperforming Loans||772||950||1,661|
|Troubled Debt Restructures Accruing||1,677||1,714||190|
|Total Impaired Loans||2,449||2,664||1,851|
|Other Real Estate Owned (OREO) (Foreclosed Assets)||519||519||47|
|Total Nonperforming Assets||1,291||1,469||1,708|
|Nonperforming Loans to Total Loans||0.14%||0.17%||0.43%|
|Nonperforming Assets to Total Assets||0.14%||0.17%||0.34%|
|Allowance for Loan Losses||$3,529||$3,478||$3,433|
|Allowance for Loans Losses to Total Loans||0.62%||0.62%||0.89%|
|Allowance for Loan Losses Plus Net Credit Mark to Total Loans (1)||1.11%||1.14%||NA|
|Allowance for Loan Losses to Nonperforming Loans||457.12%||366.11%||206.68%|
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 $3,529 plus the net credit mark of $2,805 by total loans $571,757 which equals 1.11%