Pinnacle Bancshares Announces Results for First Quarter Ended March 31, 2023

Robert B. Nolen, Jr., President and Chief Executive Officer of Pinnacle Bancshares, Inc. (OTCBB: PCLB), today announced the Company's results of operations for the first quarter ended March 31, 2023:

• For the three months ended March 31, 2023, net income was $1,180,000 which resulted in basic/diluted earnings per share to be $1.30. Net income for the three months ended March 31, 2022 was $1,111,000, which resulted in basic/diluted earnings per share of $1.14 per share. Included in net income for the three months ended March 31, 2022 are Paycheck Protection Program ("PPP") amortized loan fees of approximately $120,000. There were no PPP amortized loan fees recorded during the three months ended March 31, 2023.
• For the three months ended March 31, 2023, return on average assets was 1.43%, compared to 1.29% in the comparable 2022 period.

The Company's net interest margin was 3.56% for the three months March 31, 2023, compared to 4.06% for the three months ended March 31, 2022. The Company anticipates interest expense relating to its funding to increase during the remainder of the year as a result of several factors such as increased deposit exception pricing and increased deposit migration to higher yielding deposit products.

Mr. Nolen commented, "In response to concerns about liquidity and capital strength related to recent bank failures, we remain confident in our risk status. Our primary focus is, and will continue to be, the Bank's safety and soundness, and the protection of our depositors."

At March 31, 2023, the Company's allowance for loan losses as a percent of total loans was 2.13%, compared to 2.16% at December 31, 2022. There were no nonperforming assets at March 31, 2023 as well as at December 31, 2022. Effective January 1, 2023, the Company adopted the current expected credit loss (CECL) model to account for credit losses on financial instruments, including loans. The adoption of the CECL model did not have an impact on the Company's loan loss reserve due to minimal net losses that have occurred during the past five years.

Pinnacle Bank was classified as "well capitalized" at March 31, 2023. All capital ratios are significantly higher than the requirements for a well-capitalized institution. As of March 31, 2023, the Bank's common equity Tier 1 capital and Tier 1 risk-based capital ratios were each 17.14%. As of March 31, 2023, its total capital ratio was 18.36%, and its Tier 1 leverage ratio was 10.70%.

Management believes that the Company has ample liquidity through its low loan to deposit ratio at March 31, 2023, as well as available funding from outside sources. Our net funding availability, as a percentage of our franchise funding, is 105.37% as compared to our established minimal limit of 25%. In addition, the Bank provides access to additional FDIC insurance coverage for accounts that would otherwise exceed deposit insurance coverage. The Company also retested its Federal Funds line and other borrowing lines during the first quarter 2022.

The Company's total deposits at March 31, 2023 decreased $5.6 million, or less than 2%, as compared to December 31, 2022. As mentioned previously, pricing of deposits is anticipated to become more competitive during the remainder of the year, and thus deposits could continue to decrease as they did during the first quarter 2023.

Dividends of $.27 per share were paid to shareholders during the first quarter of 2023 and $.25 per share during the first quarter 2022.

Effects of Inflation

Inflation caused a substantial rise in interest rates during 2022 which has had a negative effect in the securities market. As a result of rising interest rates, the Company has recorded an accumulated other comprehensive loss on securities available for sale of approximately $30.2 million as of December 31, 2022. Longer term interest rates have decreased slightly during the first quarter of 2023 which has caused the Company's other comprehensive loss as of March 31, 2023 to be lowered to $27.6 million. Although these unrealized losses recorded as of March 31, 2023 and December 31, 2022 were significant, management does not anticipate these losses to be other than temporary as these unrealized losses do not currently appear related to any credit deterioration within the portfolio but from higher interest rates. In addition, these losses do not impact our regulatory capital ratios.

The Company conducts monthly internal stress testing scenarios of its liquidity to confirm that the Company continues to maintain ample liquidity.

Forward-Looking Statements

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. The Company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the Company's expectations. Certain tabular presentations may not reconcile because of rounding.

Pinnacle Bancshares, Inc.'s wholly owned subsidiary Pinnacle Bank has seven offices located in central and northwest Alabama.