Pinnacle Bankshares Corporation Announces 2nd Quarter/Mid-Year 2025 Earnings

ALTAVISTA, Va., July 28, 2025 (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 $2,690,000, or $1.21 per basic and diluted share, for the second quarter of 2025 and $4,951,000, or $2.23 per basic and diluted share, for the six months ended June 30, 2025.   In comparison, net income was $2,208,000, or $1.00 per basic and diluted share, and $4,292,000, or $1.94 per basic and diluted share, respectively, for the same periods of 2024.   Consolidated results for the quarter and the year are unaudited.

Second Quarter & 2025 Year-to-Date Highlights
Income Statement comparisons are to the second quarter and first six months of 2024
Balance Sheet, Capital Ratios, and Stock Price comparisons are to December 31, 2024

Income Statement

• Second Quarter 2025 Net Income increased 22% to $2,690,000.
• Year-to-Date Net Income increased 15% to $4,951,000, while Return on Assets was 0.97%.
  • Net Interest Income increased 13.5% primarily due to higher loan volume and yields on earning assets along with lower cost of funds. Net Interest Margin expanded 40 basis points to 4.05%.
  • Provision for Credit Losses was only $110,000 due to lower loan growth and continued strong Asset Quality.
  • Noninterest Income improved 11.5% primarily due to increased income generated from sales of investment and insurance products as well as mortgage loans.
  • Noninterest Expense increased 14% primarily due to higher salaries and benefits and occupancy expense.

Balance Sheet

• Total Assets decreased $3.4 million, or less than 1%, due to an $11 million decrease in Deposits.
• Securities decreased $30.5 million, or 17%, due to maturities, which funded increases in Loans of $14.6 million, or 2%, and Cash & Cash Equivalents of $9.4 million, or 9%.
• Our Liquidity Ratio remained strong at 30% (13.5% excluding Available for Sale Securities).
  

Capital Ratios and Stock Price

• The Bank’s Leverage Ratio increased to 9.63% and Total Risk-Based Capital Ratio increased to 13.93% due primarily to profitability.
• Our Stock Price ended the quarter at $33.01 per share, based on the last trade, which is an increase of $1.81, or 5.8%.

Net Income and Profitability

Net income generated during the second quarter of 2025 represents a $482,000, or 22%, increase compared to the same quarter of 2024, while net income generated for the first half of 2025 represents a $659,000, or 15%, increase compared to the same time period of 2024. The increase in net income for the second quarter and first half of 2025 was driven by higher net interest income and noninterest income, along with lower provision for credit losses, partially offset by higher noninterest expense.    

Profitability as measured by the Company’s return on average assets (“ROA”) increased to 0.97% for the six months ended June 30, 2025, compared to 0.87% for the same time period of 2024. Return on average equity (“ROE”) was 12.16% for six months ended June 30, 2025, which is equal to the same time period of 2024 due to growth of capital.

“We are pleased with Pinnacle’s improved performance thus far in 2025,” stated Aubrey H. Hall, III, President and Chief Executive Officer for both the Company and the Bank. Mr. Hall further commented, “Higher yields on interest earning assets and lower cost of funds have offset rising overhead expense despite the lack of overall asset growth. Our Company remains in a solid position with ample funding, strong asset quality, and an expanding net interest margin.”

Net Interest Income and Margin

The Company generated $10,067,000 in net interest income for the second quarter of 2025, which represents a $1,249,000, or 14%, increase compared to $8,818,000 for the same quarter of 2024. Interest income increased $1,001,000, or 8.5%, due to higher yields on earning assets and increased loan volume, while interest expense decreased $248,000, or 8.5%, due to lower interest rates paid on deposits and declining time deposit volume.

The Company generated $19,546,000 in net interest income for the first half of 2025, which represents a $2,318,000, or 13.5%, increase compared to $17,228,000 for the same time period of 2024 as net interest margin increased 40 basis points to 4.05%. Interest income increased $2,192,000, or 9.5%, as yield on earning assets increased 34 basis points to 5.20%. Interest expense decreased $126,000, or 2%, due to lower interest rates paid on deposits as cost to fund earning assets decreased 6 basis points to 1.15%.

Reserves for Credit Losses and Asset Quality

The provision for credit losses was $73,000 in the second quarter of 2025 compared to $242,000 in the same quarter of 2024. For the first half of 2025, the provision for credit losses was $110,000 compared to $260,000 for same time period of 2024. Provision expense decreased in the first half of 2025 due to continued strong asset quality and a lower level of loan growth.

The allowance for credit losses (ACL) was $5,156,000 as of June 30, 2025, which represented 0.71% of total loans outstanding.   In comparison, the ACL was $5,084,000 or 0.71% of total loans outstanding as of December 31, 2024. Non-performing loans to total loans decreased to 0.13% as of June 30, 2025, compared to 0.22% as of year-end 2024. ACL coverage of non-performing loans increased to 529% as of June 30, 2025, compared to 321% as of year-end 2024.   Management views the allowance balance as being sufficient to offset potential future losses in the loan portfolio.

Noninterest Income and Expense

Noninterest income for the second quarter of 2025 increased $273,000, or 15%, to $2,085,000 compared to $1,812,000 for the same quarter of 2024. The increase was primarily due to a $160,000 increase in income derived from sales of investment and insurance products and a $42,000 increase in fees generated from sales of mortgage loans.

Noninterest income for the first half of 2025 increased $395,000, or 11.5%, to $3,830,000 as compared to $3,435,000 for the same time period of 2024. The increase was mainly due to a $137,000 increase in commissions and fees from sales of investment and insurance products and a $101,000 increase in fees generated from sales of mortgage loans, along with increases in bank-owned life insurance (“BOLI”) income, debit card interchange fees, wire transfer fees, and fee income for services.  

Noninterest expense for the second quarter of 2025 increased $1,114,000, or 14.5%, to $8,795,000 compared to $7,681,000 for the same quarter of 2024. The increase was primarily due to a $728,000 increase in salaries and benefits and a $231,000 increase in occupancy expense, primarily driven by expansion and new positions.

Noninterest expense for the first half of 2025 increased $2,072,000, or 14%, to $17,155,000 compared to $15,083,000 for the same time period of 2024. The increase was mainly due to a $1,353,000 increase in salaries and benefits, a $381,000 increase in occupancy expense, and a $197,000 increase in core operating system and Visa expenses.  

The Balance Sheet and Liquidity

Total assets as of June 30, 2025, were $1,040,560,000, down less than 1% from $1,043,994,000 as of December 31, 2024. The principal components of the Company’s assets as of June 30, 2025 were $726,539,000 in total loans, $145,290,000 in securities, and $117,574,000 in cash and cash equivalents. For the first half of 2025, total loans increased $14,620,000, or 2%, from $711,918,000 as of December 31, 2024, while securities decreased $30,527,000, or 17%, from $175,816,000.  

The majority of the Company’s securities portfolio is relatively short-term in nature with 40% of the Company’s securities portfolio invested in U.S. Treasuries with an average maturity of 1.20 years and $25,000,000 maturing during the next twelve months. The Company’s entire securities portfolio was classified as available for sale on June 30, 2025, which provides transparency regarding unrealized losses. Unrealized losses associated with the available for sale securities portfolio were $9,190,000 as of June 30, 2025, or six percent (6%) of book value, an improvement from $11,817,000 as of December 31, 2024.

Cash and cash equivalents increased $9,361,000, or 9%, to $117,574,000 from $108,213,000 as of December 31, 2024.    The Company had a strong liquidity ratio of 30% as of June 30, 2025. The liquidity ratio excluding the available for sale securities portfolio was 13.5% providing the opportunity to sell excess funds at an attractive federal funds rate. 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.

Total liabilities as of June 30, 2025, were $956,103,000, down $9,505,000, or 1%, from $965,608,000 as of December 31, 2024, as deposits decreased $11,143,000, or 1%, in the first half of 2025 to $939,776,000 from $950,919,000. The number of deposit accounts grew by 1% during the first half of 2025. The Bank retains and acquires 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 June 30, 2025, was $84,457,000 and consisted primarily of $72,852,000 in retained earnings. In comparison, as of December 31, 2024, total stockholders’ equity was $78,386,000. The increase in stockholders’ equity is due primarily to 2025 profitability and an increase in the market value of the securities portfolio and pension assets.   Both the Company and Bank remain “well capitalized” per all regulatory definitions.

Annual Meeting of Shareholders Results

At the Annual Meeting of Shareholders held on May 13, 2025, Elton W. Blackstock, Jr., Robert L. Finch, Jr., Aubrey H. (Todd) Hall, III, and Dr. Robert L. Johnson, II, were re-elected to the Board of Directors as Class I Directors to serve until the 2028 Annual Meeting of Shareholders.

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, Halifax, and Pittsylvania, and the Cities of Charlottesville, Danville, and Lynchburg. The Company has a total of nineteen 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. A Loan Production Office and a full-service branch have recently been opened in the South Boston area of Halifax County. First National Bank is in its 117^th 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 on the next page.

CONTACT: Pinnacle Bankshares Corporation, Bryan M. Lemley, 434-477-5882 or bryanlemley@1stnatbk.com

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