U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
(Mark one)
|X| Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the quarterly period ended June 30, 2000
Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from to
------------- -------------
Commission file number 1-12707
Pinnacle Bancshares, Inc.
-------------------------
(Exact Name of Small Business Issuer as Specified in Its Charter)
Delaware 72-1370314
-------------- -------------
(State or Other Jurisdiction of (I.R.S. Employer)
Incorporation or Organization) (Identification No.)
1811 Second Avenue, Jasper, Alabama 35502-1388
----------------------------------------------
(Address of Principal Executive Offices)
(205) 221-4111
--------------
(Issuer's Telephone Number, Including Area Code)
(Former Name, Former Address and Former Fiscal Year, if Changed
Since Last Report)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No
----- -----
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 1,792,086
Transitional Small Business Disclosure Format (check one):
Yes No
------ -----
<PAGE>
PART I
FINANCIAL INFORMATION
PAGE
ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Statements of Financial Condition at June 30, 2000
(Unaudited) and December 31, 1999. 3
Condensed Consolidated Statements of Financial Operations for the three months
ended June 30, 2000 and 1999 and for the six months ended
June 30, 2000 and 1999 (unaudited). 4
Condensed Consolidated Statements of Stockholders Equity for the six
months ended June 30, 2000 and 1999 (Unaudited). 5
Condensed Consolidated Statements of Cash Flows for the six months
ended June 30, 2000 and 1999 (Unaudited). 6
Notes to Unaudited Condensed Consolidated Financial Statements. 7
The Condensed Consolidated Financial Statements furnished have not been audited
by independent certified public accountants, but reflect, in the opinion of
management, all adjustments necessary for a fair presentation of financial
condition and the results for the periods presented.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION 10
PART II
OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 13
ITEM 5. OTHER INFORMATION 13
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 13
SIGNATURES 14
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PINNACLE BANCSHARES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
------------- -------------
ASSETS:
<S> <C> <C>
Cash on hand and in banks $ 4,657,102 $ 5,289,619
Interest-bearing deposits in other banks 1,234,127 2,177,294
Securities available-for-sale 62,763,931 64,599,164
Loans held for sale 2,324,801 893,733
Loans receivable, net of allowance for loan losses
of $1,118,101 and $1,222,978, respectively 146,358,662 146,429,690
Real estate owned, net 2,672,707 1,521,533
Premises and equipment, net 6,764,624 6,995,375
Excess cost over net assets acquired 367,788 388,220
Accrued interest receivable 2,068,602 1,982,134
Other assets 837,205 754,801
------------- -------------
Total assets $ 230,049,549 $ 231,031,563
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY:
Deposits $ 187,764,808 $ 189,174,804
Borrowed funds 21,250,000 21,890,000
Official checks outstanding 2,055,058 1,529,946
Other liabilities 766,238 588,051
------------- -------------
211,836,104 213,182,801
------------- -------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, par value $.01 per share,
no shares issued, 100,000 authorized 0 0
Common stock, par value $.01 per share,
1,792,086 issued and outstanding,
10,000,000 authorized 17,921 17,921
Additional paid-in capital 8,131,746 8,131,746
Retained earnings 10,962,869 10,414,858
Accumulated other comprehensive income, net of tax (899,091) (715,763)
------------- -------------
Total stockholders' equity 18,213,445 17,848,762
------------- -------------
Total liabilities and stockholders' equity $ 230,049,549 $ 231,031,563
============= =============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
PINNACLE BANCSHARES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
2000 1999 2000 1999
---- ---- ---- ----
INTEREST REVENUES:
<S> <C> <C> <C> <C>
Interest on loans $ 3,383,124 $ 2,912,057 6,706,894 $ 5,776,782
Interest and dividends on securities 978,631 970,382 1,952,456 1,773,618
Other interest 28,210 47,832 56,736 276,520
----------- ----------- ----------- -----------
4,389,965 3,930,271 8,716,086 7,826,920
INTEREST EXPENSE:
Interest on deposits 2,263,194 2,197,157 4,448,498 4,451,557
Interest on borrowed funds 326,896 48,235 660,966 95,961
----------- ----------- ----------- -----------
2,590,090 2,245,392 5,109,464 4,547,518
----------- ----------- ----------- -----------
NET INTEREST INCOME BEOFRE PROVISION FOR
LOAN LOSSES 1,799,875 1,684,879 3,606,622 3,279,402
PROVISION FOR LOAN LOSSES 120,000 120,000 240,000 247,000
----------- ----------- ----------- -----------
NET INTEREST INCOME AFTER PROVISION FOR
LOAN LOSSES 1,679,875 1,564,879 3,366,622 3,032,402
----------- ----------- ----------- -----------
NON-INTEREST INCOME:
Fees and service charges 196,577 172,851 358,126 346,867
Service fee income, net 43,220 48,127 87,766 97,256
Real estate operations, net 10,370 40,150 24,236 72,357
Net gain (loss) on sale or write-down of:
Loans held for sale 102,164 79,338 172,406 266,750
Investments 0 (93) 0 (93)
Real estate owned (3,220) 0 (5,552) (1,787)
----------- ----------- ----------- -----------
349,111 340,373 636,982 781,350
----------- ----------- ----------- -----------
NON-INTEREST EXPENSE:
Compensation and benefits 701,544 690,622 1,411,384 1,407,251
Occupancy 313,987 271,678 598,944 564,142
Marketing and professional 34,626 38,787 72,296 73,501
Other 234,238 240,298 465,334 492,002
----------- ----------- ----------- -----------
1,284,395 1,241,385 2,547,958 2,536,896
----------- ----------- ----------- -----------
INCOME BEFORE INCOME TAX EXPENSE 744,591 663,867 1,455,646 1,276,856
INCOME TAX EXPENSE 281,271 253,207 549,233 479,927
----------- ----------- ----------- -----------
NET INCOME 463,320 410,660 906,413 796,929
----------- ----------- ----------- -----------
BASIC EARNINGS PER SHARE $ 0.26 $ 0.23 $ 0.51 $ 0.45
DILUTED EARNINGS PER SHARE $ 0.26 $ 0.23 $ 0.51 $ 0.44
CASH DIVIDENDS PER SHARE $ 0.10 $ 0.10 $ 0.10 $ 0.10
WEIGHTED AVERAGE SHARES OUTSTANDING 1,782,086 1,790,493 1,792,086 1,790,042
WEIGHTED AVERAGE DILUTED SHARES 1,792,086 1,797,164 1,792,086 1,798,192
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
PINNACLE BANCSHARES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 2000
<TABLE>
<CAPTION>
Accumulated
Common Stock Additional Other Total
------------------ Paid-in Retained Comprehensive Stockholders'
Shares Amount Capital Earnings Income Equity
------ ------ ------- -------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, December 31, 1998 1,789,586 $17,895 $8,109,740 $ 9,453,693 $ 30,779 $ 7,612,107
-----------
Comprehensive Income:
Net income 0 0 0 796,929 0 796,929
Change in unrealized gain (loss)
on securities available-
for-sale, net of tax of $413,173 0 0 0 0 (802,041) (802,041)
-----------
Comprehensive Income (5,112)
Exercise of stock options 2,500 26 22,006 22,032
Cash dividends declared ($.10 per share) 0 0 0 (358,153) 0 (358,153)
-----------------------------------------------------------------------------
BALANCE, June 30, 1999 1,792,086 $17,921 $8,131,746 $ 9,892,469 $(771,262) $17,270,874
=================== ========== =========== ========= ===========
BALANCE, December 31, 1999 1,792,086 $17,921 $8,131,746 $10,414,858 $(715,763) $17,848,762
-----------
Comprehensive Income:
Net income 0 0 0 906,413 0 906,413
Change in unrealized gain (loss)
on securities available-
for-sale, net of tax of $124,785 0 0 0 0 (183,328) (183,328)
-----------
Comprehensive Income 723,085
Cash dividends declared ($.10 per share) 0 0 0 (358,402) 0 (358,402)
-----------------------------------------------------------------------------
BALANCE, June 30, 2000 1,792,086 $17,921 $8,131,746 $10,962,869 $(899,091) $18,213,445
=================== ========== =========== ========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE>
PINNACLE BANCSHARES, INC,
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
JUNE 30,
--------
2000 1999
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income $ 906,413 $ 796,929
Adjustment to reconcile net income to net cash provided by (used in)
operating activities:
Depreciation 296,371 281,261
Provision for loan losses 240,000 247,000
Net (gain) loss on sale and write down of:
Loans held for sale (172,406) (266,750)
Securities available for sale 0 93
Real estate owned 5,552 1,787
Amortization, net (200,743) (185,289)
Proceeds from sale of loans 17,465,004 26,284,999
Loans originated for sale (18,723,666) (25,575,561)
(Increase) decrease in accrued interest receivable (86,468) (451,252)
Increase (decrease) in other assets 62,813 61,131
Increase (decrease) in other liabilities 178,187 (452,356)
------------ ------------
Net cash provided by operating activities (28,943) 741,992
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Principal collected on loans and securities 45,685,901 50,382,482
Loans originated for portfolio (45,805,716) (49,049,597)
Net change in interest bearing deposits at other banks 943,167 30,395,840
Purchase of securities available-for-sale (50,000) (43,920,911)
Proceeds from maturing and callable securities 0 8,000,000
Proceeds from the sale of securities available-for-sale 12,017 4,619,700
Purchase of premises and equipment (65,620) (292,212)
Proceeds from sales of real estate owned 559,963 302,707
------------ ------------
Net cash provided by (used in) investing activities 1,279,712 438,009
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in passbook,
NOW and money market deposit accounts (1,210,998) (1,705,620)
Proceeds from sales of time deposits 14,205,140 12,863,795
Payments on maturing time deposits (14,404,138) (13,002,533)
Payments on borrowed funds (15,040,000) (1,630,000)
Proceeds from borrowed funds 14,400,000 1,500,000
Increase(decrease) in official checks outstanding 525,112 526,727
Proceeds from stock options exercised 0 22,032
Payments of cash dividends (358,402) (358,153)
------------ ------------
Net cash used in financing activities (1,883,286) (1,783,752)
------------ ------------
NET DECREASE IN CASH (632,517) (603,751)
CASH AT BEGINNING OF PERIOD 5,289,619 3,960,991
------------ ------------
CASH AT END OF PERIOD $ 4,657,102 $ 3,357,240
============ ============
SUPPLEMENTAL DISCLOSURES:
Cash payments for interest on deposits and borrowed funds $ 4,536,686 4,103,691
Cash payments for income taxes 246,000 707,579
Other real estate acquired through foreclosure 1,716,689 130,088
</TABLE>
See accompanying notes to condensed consolidated financial statements.
6
<PAGE>
PINNACLE BANCSHARES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION:
---------------------
The accompanying unaudited interim condensed consolidated financial statements
include the accounts of Pinnacle Bancshares, Inc. (the "Company") and Pinnacle
Bank (the "Bank"). All significant intercompany transactions and accounts have
been eliminated in consolidation.
In the opinion of management, all adjustments (none of which are other than
normal recurring accruals) necessary for a fair presentation of the results of
such interim periods have been included. The results of operations for the
six-month period ended June 30, 2000, are not necessarily indicative of the
results of operations which may be expected for the entire year.
These condensed consolidated financial statements should be read in conjunction
with the audited financial statements and the notes thereto included in the
Company's Annual Report on Form 10-KSB for the year ended December 31, 1999. The
accounting policies followed by the Company are set forth in the summary of
Significant Accounting Policies in the Company's audited financial statements.
7
<PAGE>
2. EARNINGS PER SHARE:
------------------
The following table represents the earnings per share calculations for the three
and six-month periods ended June 30, 2000:
PER
SHARE
FOR THE THREE MONTHS ENDED NET INCOME SHARES AMOUNT
-------------------------- ---------- ------ ------
JUNE 30, 2000
Basic earnings per share $463,320 1,792,086 $0.26
Dilutive securities --- --- --
Diluted earnings per share $463,320 1,792,086 $0.26
JUNE 30, 1999
Basic earnings per share $410,660 1,790,493 $0.23
Dilutive securities ---- 6,671 --
Diluted earnings per share $410,660 1,797,164 $0.23
PER
SHARE
FOR THE SIX MONTHS ENDED NET INCOME SHARES AMOUNT
-------------------------- ---------- ------ ------
JUNE 30, 2000
Basic earnings per share $906,413 1,792,086 $0.51
Dilutive securities --- --- --
Diluted earnings per share $906,413 1,792,086 $0.51
JUNE 30, 1999
Basic earnings per share $796,929 1,790,042 $0.45
Dilutive securities ---- 8,150 0.01
Diluted earnings per share $796,929 1,798,192 $0.44
Options to purchase 48,500 shares of common stock at $10.125 per share and
options to purchase 54,560 shares of common stock at $8.8125 per share were
outstanding during the first and second quarters of 2000. These options were not
included in the computations of diluted EPS because the options' exercise prices
were greater than the average market price of the common shares. The options,
which expire on August 28, 2006 and May 26, 2009, respectively, were still
outstanding at June 30, 2000.
3. COMPREHENSIVE INCOME:
--------------------
Comprehensive income is the change in equity during a period from transactions
and other events and circumstances from non-owner sources. It includes all
changes in equity during a period except those resulting from investments by
owners and distributions to owners.
In addition to net income, the Company has identified changes related to other
non-owner transactions in the condensed consolidated statements of changes in
stockholders' equity. For the Company, changes in other non-owner transactions
consist entirely of changes in unrealized gains and losses on securities
available-for-sale.
8
<PAGE>
In the calculation of comprehensive income, certain reclassification adjustments
are made to avoid double- counting items that are displayed as part of net
income and accumulated other comprehensive income in that period or earlier
periods. The following table reflects the reclassification amounts and the
related tax effects for the three and six months ended June 30, 2000 and 1999.
<TABLE>
<CAPTION>
For the Three Months Ended June 30,
2000
-------------------------------------------------
Before After
Tax Tax Tax
Amount Effect Amount
------ ------ ------
<S> <C> <C> <C>
Unrealized gains (losses) arising during the $ 82,231 $ 33,304 $ 48,927
period
Less reclassification for adjustments for gains
(losses) included in net income 0 0 0
------------ ----------- ------------
Net change in unrealized gain/(loss) on securities $ 82,231 $ 33,304 $ 48,927
1999
-------------------------------------------------
Before After
Tax Tax Tax
Amount Effect Amount
------ ------ ------
Unrealized gains (losses) arising during the $ (1,070,537) $ 363,983 $ (706,554)
period
Less reclassification for adjustments for gains
(losses) included in net income 0 0 0
------------ ----------- ------------
Net change in unrealized gain/(loss) on securities $ (1,070,537) $ 363,983 $ (706,554)
============ =========== ============
For the Six Months Ended June 30,
2000
-------------------------------------------------
Before After
Tax Tax Tax
Amount Effect Amount
------ ------ ------
Unrealized gains (losses ) arising during the $ (308,113) $ 124,785 $ (183,328)
period
Less reclassification for adjustments for gains
(losses) included in net income 0 0 0
------------ ----------- ------------
Net change in unrealized gain/(loss) on securities $ (308,113) $ 124,785 $ (183,328)
1999
-------------------------------------------------
Before After
Tax Tax Tax
Amount Effect Amount
------ ------ ------
Unrealized gains (losses) arising during the $ (1,215,214) $ 413,173 $ (802,041)
period
Less reclassification for adjustments for gains
(losses) included in net income 0 0 0
------------ ----------- ------------
Net change in unrealized gain/(loss) on securities $ (1,215,214) $ 413,173 $ (802,041)
============ =========== ============
</TABLE>
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
PINNACLE BANCSHARES, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS: This Quarterly Report on Form 10-QSB contains
forward-looking statements. Additional written or oral forward-looking
statements may be made by the Company from time to time in filings with the
Securities and Exchange Commission or otherwise. The words "believe," "expect,"
"seek" and "intend," and similar expressions identify forward-looking
statements, which speak only as of the date the statement is made. Such
forward-looking statements are within the meaning of that term in Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. Such statements may include, but are not
limited to, projections of income or loss, expenditures, acquisitions, plans for
future operations, financing needs or plans relating to services of the Company,
as well as assumptions relating to the foregoing. Forward- looking statements
are inherently subject to risk and uncertainties, some of which cannot be
predicted or qualified. Future events and actual results could differ materially
from those set forth in, contemplated by or underlying the forward-looking
statements.
The Company does not undertake, and specifically disclaims, any obligation to
publicly release the results of revisions which may be made to forward-looking
statements to reflect the occurrence of anticipated or unanticipated events or
circumstances after the date of such statements.
COMPARISON OF FINANCIAL CONDITION AS OF JUNE 30, 2000 AND DECEMBER 31, 1999.
Total deposits decreased to $187.8 million at June 30, 2000 as compared to
$189.2 million at December 31, 1999. This decrease was a result of rate
competition. Total assets decreased to $230.0 million at June 30, 2000 as
compared to $231.0 million at December 31, 1999. This decrease was due primarily
to a decrease in cash and interest-bearing deposits of approximately $1.6
million, a decrease in securities available-for-sale of approximately $1.8
million, and a decrease in other assets of approximately $82,000. This decrease
was offset by an increase in loans and loans held for sale of approximately $1.4
million and an increase in real estate owned of approximately $1.2 million. The
increase of $1.2 million in real estate owned was primarily due to foreclosures
of $1.6 million, less real estate sales of $560,000. The foreclosures were
attributable to 16 residential construction loans to five borrowers.
At June 30, 2000, the Company's investment portfolio of $62.8 million consisted
primarily of U. S. agency securities and mortgage-backed-securities. The entire
investment portfolio is classified as "available-for-sale," which is
marked-to-market with the unrealized gains/losses reflected directly in the
stockholders' equity.
RESULTS OF OPERATIONS-COMPARISON OF THE THREE AND SIX MONTHS ENDED JUNE 30,
2000. Net interest income after the provision for loan losses increased $114,996
or 7.35% for the three-month period ended June 30, 2000, as compared to the
corresponding period in the previous year. This increase was primarily due to an
increase in interest on loans and securities of $479,316 and was offset by a
decrease in other interest of $19,622 and an increase in interest expense of
$344,698. Net interest income after the provision for loan losses increased
$334,221 or 11.02% for the six-month period ended June 30, 2000, as compared to
the corresponding period in the previous year. This increase was primarily due
to an increase in interest on loans and securities of $1,108,950 and a decrease
in the provision for loan loss of
10
<PAGE>
$7,000 and was offset by a decrease in other interest income of $219,784 and an
increase in interest expense of $561,945.
If rates were to rise rapidly, net income may be adversely affected. Under a
scenario simulating a hypothetical 100 basis point rate increase applied to all
fixed rate interest-earning assets and interest-bearing liabilities, the Company
would expect a net loss in the fair value of the underlying instruments of
approximately $801,000. This hypothetical loss is not a precise indicator of
future events. Instead, it is a reasonable estimate of the results anticipated
if the assumptions used in the modeling techniques were to occur.
The Bank's yield on interest-earning assets increased from approximately 7.73%
in the three-month period ended June 30, 1999 to approximately 8.21% in the
current year period. This increase was due to an increase in interest rates as
well as an increase in the average balance of interest-earning assets of
approximately $10.0 million. The Bank's yield on interest-earning assets
increased from approximately 7.65% in the six-month period ended June 30, 1999
to approximately 8.13% in the current year period. This increase was due to an
increase in interest rates as well as an increase in the average balance of
interest-earning assets of approximately $9.3 million. The Bank's cost of funds
increased from 4.57% at June 30, 1999 to 5.08% in the current year period. This
increase was due to an increase in interest rates as well as an increase in the
average balance of interest-bearing liabilities of approximately $11.5 million.
Non-interest income, which includes fees and service charges, real estate
operations, net gain (loss) on sale of loans and other income increased $8,737
in the three-month period ended June 30, 2000. Non-interest income decreased
$144,368 in the six-month period ended June 30, 2000 as compared to the
corresponding prior year period. The increase in the three month period ended
June 30, 2000, was due primarily to an increase in fees and service charges of
$18,819 and an increase in the gain on sale of mortgage loans of $22,826. This
increase was offset by a decrease in real estate operations, net of
approximately $29,780 as well as slight decreases in all other non-interest
income of approximately $3,128. The decrease in the six month period ended June
30, 2000 was due primarily to a decrease in the gain on sale of mortgage loans
of $94,344, a decrease in real estate operations, net of $48,121 and a decrease
in all other non-interest income of $ 1,903.
Provisions for loan losses are made to maintain the allowance for loan losses at
an adequate level. The allowance for loan losses reflects management's
estimates, which took into account historical experience, the amount of
non-performing assets, and general economic conditions. The Bank determined an
additional $120,000 was required for the three month period ended June 30, 2000
and an additional $240,000 was required for the six month period ended June 30,
2000.
Non-interest expense increased $43,009 and $11,064 in the three and six-month
period ended June 30, 2000, as compared to the corresponding prior year periods.
The increase in the three month period ended June 30, 2000 was primarily due to
an increase in compensation expense of approximately $10,922 and an increase in
occupancy expense of $42,309 which was off-set by slight decreases in all other
non-interest expense of $10,222. The increase in non-interest expense for the
six month period ended June 30, 2000 was primarily due to an increase in
compensation expense of approximately $4,133, an increase in occupancy expense
of approximately $34,802 and was off-set by slight decreases in all other
non-interest income of approximately $27,871.
NET INCOME: The company reported net income for the three month period ended
June 30, 2000 of $463,320 or $0.26 per share, compared with net income of
$410,660 or $0.23 per share, for the three
11
<PAGE>
month period ended June 30, 1999. The Company reported net income for the six
month period ended June 30, 2000 of $906,413, or $0.51 per share, compared with
net income of $796,929, or $0.45 per share, for the six month period ended June
30, 1999. The increase in the three-month period ended June 30, 2000 was
primarily attributable to an increase in interest income of $459,694. This
increase exceeded an increase in interest expense of $344,698 and an increase in
non-interest expense of $43,009. The increase in the six-month period ended June
30, 2000 was primarily attributable to an increase in interest income of
$889,166. This increase exceeded an increase in interest expense of $561,945 and
a decrease in non-interest income of $144,368. The decrease in non-interest
income was primarily attributable to a decrease of $94,344 in the net gain on
loans held for sale, which are carried at the lower of aggregate amortized cost
or fair value, and a decrease of $48,121 in income from real estate operations.
CAPITAL RESOURCES: Historically, funds provided by operations, mortgage loan
principal repayments, savings deposits and short-term borrowings have been the
Bank's principal sources of funds. In addition, the Bank has the ability to
obtain funds through the sale of mortgage loans, through borrowings from the
Federal Home Bank of Atlanta and other borrowing sources. At June 30, 2000, the
Bank's total loan commitments, including construction loans in process and
unused lines of credit, were approximately $25.6 million. Management believes
that the Bank's liquidity and other sources of funds are sufficient to fund all
commitments outstanding and other cash needs. The Company and the Bank are
required to maintain certain levels of regulatory capital. At June 30, 3000 the
Company and the Bank exceeded all regulatory capital requirements.
12
<PAGE>
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On May 24, 2000 the Company held its Annual Meeting of Stockholders at
which the following matter was considered voted on.
PROPOSAL I- ELECTION OF DIRECTORS
NOMINEES FOR WITHHELD TERM
-------- --- -------- ----
Robert B, Nolen, Jr. 1,329,354 204,706 3 Years
James W. Cannon 1,329,354 204,706 3 Years
Max W. Perdue 1,329,354 204,706 3 Years
There were no abstentions or broker non-votes.
ITEM 5. OTHER INFORMATION
On August 3, 2000, the Company announced that its Board of Directors had
approved the repurchase of up to 120,000 shares of its common stock, or
approximately 6.7% of the current outstanding shares. The Company's press
release is attached hereto as Exhibit 99.1 and incorporated by reference herein.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 27- Financial Data Schedule (SEC use only)
Exhibit 99.1 - Press Release dated August 3, 2000
(b) No reports on Form 8-K were filed
13
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
PINNACLE BANCSHARES, INC
DATE: August 7, 2000 BY: /s/ Robert B. Nolen Jr.
---------------------------------- -----------------------------------
Robert B. Nolen, Jr.
President and Chief
Executive Officer
(Principal Executive Officer and
Principal Financial Officer)
BY: /s/ Marie Guthrie
-----------------------------------
Marie Guthrie
Treasurer
(Principal Accounting Officer)
14
