Pinnacle Bancshares Announces Results for Fourth Quarter and Year Ended December 31, 2006

  
    
  
  
    
      Robert B. Nolen, Jr., President and Chief Executive Officer of Pinnacle 
      Bancshares, Inc. (AMEX:PLE), today announced Pinnacle’s 
      results of operations for the fourth quarter and year ended December 31, 
      2006.
    
    
      For the year ended December 31, 2006, net income was $1,351,000, 
      compared with net income of $1,517,000 in the prior year. Net interest 
      income after the provision for loan losses for the year ended December 
      31, 2006, was $6,138,000, compared with $6,267,000 in the prior year.
    
    
      For the three months ended December 31, 2006, net income was $359,000, 
      compared with net income of $322,000 for the three months ended December 
      31, 2005. Net interest income after the provision for loan losses for 
      the three months ended December 31, 2006, was $1,593,000 compared with 
      $1,570,000 in the same period last year.
    
    
      Basic and diluted earnings were $0.90 per share and $0.89 per share, 
      respectively, for the year ended December 31, 2006. In 2005, basic and 
      diluted earnings were $0.98 per share and $0.96 per share, respectively. 
      For the three months ended December 31, 2006, basic and diluted earnings 
      were each $0.24 per share. For the same period last year, basic and 
      diluted earnings were each $0.21 per share.
    
    
      For the year ended December 31, 2006, the Company’s 
      interest income was $13,265,000, compared to $11,560,000 for the year 
      ended December 31, 2005, an increase of 14.7%. However, for the year 
      ended December 31, 2006, the Company’s 
      interest expense on deposits and borrowed funds was $6,469,000, compared 
      to $4,520,000 for the year ended December 31, 2005, an increase of 
      43.1%. As a result, the Company’s net interest 
      margin was 3.20% for the year ended December 31, 2006, compared to 3.43% 
      for the year ended December 31, 2005.
    
    
      Mr. Nolen observed: “A flattening, and 
      ultimately inverting, of the yield curve compressed our net interest 
      margin during 2006. We anticipate that a flat-to-inverted yield curve 
      and a competitive deposit rate environment will continue to exert 
      pressure on our net interest margin in 2007.”
    
    
      Mr. Nolen further noted that deposits grew 7.28% in 2006, to 
      $206,570,000 at December 31, 2006. The loan portfolio continues to shift 
      away from permanent residential mortgages which represented 
      approximately 26% of the loan portfolio at December 31, 2006. Also, the 
      Company’s exposure to losses from subprime 
      loans is very low.
    
    
      In recent years, the Company has expanded its operations in the 
      Birmingham, Alabama metropolitan area. A new full-service branch office 
      in Gardendale, Alabama was opened in August 2006. Additional annual 
      expenses associated with the new branch and additional commercial 
      lending personnel were approximately $300,000 in 2006. The Company 
      currently intends to expand further in the Birmingham market and other 
      markets contiguous with the Company’s current 
      market area as appropriate opportunities become available.
    
    
      Information contained in this press release, other than historical 
      information, may be considered forward-looking in nature and is subject 
      to various risks, uncertainties and assumptions. Should one or more of 
      these risks or uncertainties materialize, or should underlying 
      assumptions prove incorrect, actual results may vary materially from 
      those anticipated, estimated or expected. Among the key factors that may 
      have a direct bearing on Pinnacle’s operating 
      results, performance or financial condition are competition, the demand 
      for its products and services, the ability to expand, and numerous other 
      factors as set forth in filings with the Securities and Exchange 
      Commission.
    
    
      Pinnacle Bancshares, Inc.’s wholly owned 
      subsidiary Pinnacle Bank has seven offices located in central and 
      northwest Alabama.
    
    
      
        
          
            PINNACLE BANCSHARES, INC.
          
        
      
      
        
          
            Unaudited Financial Highlights
          
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
          
            Three Months Ended December 31,
          
        
      
      
        
        
        
        
        
          2006 
        
        
        
        
          2005 
        
      
      
        
          Net income
        
        
        
        
          $ 359,000 
        
        
        
        
          $ 322,000 
        
      
      
        
          Basic earnings per share
        
        
        
        
          $ 0.24 
        
        
        
        
          $ 0.21 
        
      
      
        
          Diluted earnings per share
        
        
        
        
          $ 0.24 
        
        
        
        
          $ 0.21 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Performance ratios (annualized):
        
        
        
        
        
        
        
        
        
      
      
        
          Return on average assets
        
        
        
        
          0.62%
        
        
        
        
          0.59%
        
      
      
        
          Return on average equity
        
        
        
        
          7.50%
        
        
        
        
          6.70%
        
      
      
        
          Interest rate spread
        
        
        
        
          3.01%
        
        
        
        
          3.26%
        
      
      
        
          Net interest margin
        
        
        
        
          3.05%
        
        
        
        
          3.37%
        
      
      
        
          Operating cost to assets
        
        
        
        
          2.58%
        
        
        
        
          2.63%
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          
            Weighted average basic shares outstanding
          
        
        
        
        
          
            1,464,538 
          
        
        
        
        
          
            1,543,026 
          
        
      
      
        
          
            Weighted average diluted shares outstanding
          
        
        
        
        
          
            1,470,285 
          
        
        
        
        
          
            1,570,469 
          
        
      
      
        
          Dividends per share
        
        
        
        
          $ 0.11 
        
        
        
        
          $ 0.11 
        
      
      
        
          Provision for loan losses
        
        
        
        
          $ 22,000 
        
        
        
        
          $ 135,000 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
          
            Year Ended December 31,
          
        
      
      
        
        
        
        
        
          2006 
        
        
        
        
          2005 
        
      
      
        
          Net income
        
        
        
        
          $ 1,351,000 
        
        
        
        
          $ 1,517,000 
        
      
      
        
          Basic earnings per share
        
        
        
        
          $ 0.90 
        
        
        
        
          $ 0.98 
        
      
      
        
          Diluted earnings per share
        
        
        
        
          $ 0.89 
        
        
        
        
          $ 0.96 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Performance ratios:
        
        
        
        
        
        
        
        
        
      
      
        
          Return on average assets
        
        
        
        
          0.60%
        
        
        
        
          0.70%
        
      
      
        
          Return on average equity
        
        
        
        
          7.17%
        
        
        
        
          7.77%
        
      
      
        
          Interest rate spread
        
        
        
        
          3.10%
        
        
        
        
          3.37%
        
      
      
        
          Net interest margin
        
        
        
        
          3.20%
        
        
        
        
          3.43%
        
      
      
        
          Operating cost to assets
        
        
        
        
          2.70%
        
        
        
        
          2.71%
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          
            Weighted average basic shares outstanding
          
        
        
        
        
          
            1,493,234 
          
        
        
        
        
          
            1,547,381 
          
        
      
      
        
          
            Weighted average diluted shares outstanding
          
        
        
        
        
          
            1,510,053 
          
        
        
        
        
          
            1,576,041 
          
        
      
      
        
          Dividends per share
        
        
        
        
          $ 0.44 
        
        
        
        
          $ 0.44 
        
      
      
        
          Provision for loan losses
        
        
        
        
          $ 405,000 
        
        
        
        
          $ 575,000 
        
      
    
    
      
        
        
        
        
        
          December 31,
        
      
      
        
        
        
        
        
          2006 
        
        
        
        
          2005 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Total assets
        
        
        
        
          $ 232,234,000 
        
        
        
        
          $ 220,249,000 
        
      
      
        
          Loans receivable, net
        
        
        
        
          $ 113,490,000 
        
        
        
        
          $ 106,256,000 
        
      
      
        
          Deposits
        
        
        
        
          $ 206,570,000 
        
        
        
        
          $ 192,552,000 
        
      
      
        
          Total stockholders’ equity
        
        
        
        
          $ 19,406,000 
        
        
        
        
          $ 19,410,000 
        
      
      
        
          Book value per share
        
        
        
        
          $ 13.00 
        
        
        
        
          $ 12.54 
        
      
      
        
          Stockholders’ equity to assets ratio
        
        
        
        
          8.36%
        
        
        
        
          8.81%
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Asset quality ratios:
        
        
        
        
        
        
        
        
        
      
      
        
          
            Nonperforming loans as a percent of total loans
          
        
        
        
        
          
            0.37%
          
        
        
        
        
          
            0.22%
          
        
      
      
        
          
            Nonperforming assets as a percent of total assets
          
        
        
        
        
          
            0.27%
          
        
        
        
        
          
            0.28%
          
        
      
      
        
          
            Allowance for loan losses as a percent of total loans
          
        
        
        
        
          
            1.20%
          
        
        
        
        
          
            1.28%
          
        
      
      
        
          
            Allowance for loan losses as a percent of nonperforming loans
          
        
        
        
        
          
            329.05%
          
        
        
        
        
          
            586.02%