Day: October 24, 2024

ALTAVISTA, Va., Oct. 24, 2024 (GLOBE NEWSWIRE) — Net income for Pinnacle Bankshares Corporation PPBN, the one-bank holding company (the “Company” or “Pinnacle”) for First National Bank (the “Bank”), was $2,085,000, or $0.94 per basic and diluted share, for the third quarter of 2024, while net income for the nine months ended September 30, 2024 was $6,377,000, or $2.88 per basic and diluted share. In comparison, net income was $2,794,000, or $1.27 per basic and diluted share, and $7,483,000, or $3.41 per basic and diluted share, respectively, for the same periods of 2023. Consolidated results for the quarter and the nine-month periods are unaudited.

Income Statement

• Third Quarter Net Income decreased 3% and Year-to-Date Net Income decreased 7%, excluding Bank Owned Life Insurance (BOLI) proceeds of $638,000 received in 2023.

Through nine months:

• Return on Assets was 0.86%.
• Net Interest Margin increased 15 basis points to 3.68%.
• Net Interest Income increased $1,368,000, or 5.5%.
• Provision for Credit Losses increased $330,000 due primarily to loan growth. Asset Quality remains strong with low Nonperforming Loans and no Other Real Estate Owned (OREO).
• Noninterest Income increased $229,000, or 4.6%, excluding BOLI proceeds, driven by higher fees from Merchant Card Processing and Sales of Mortgage Loans.
• Noninterest Expense increased $1,857,000, or 9%, due primarily to higher Core Operating System expenses and Salaries and Employee Benefits.

Balance Sheet

• Cash and Cash Equivalents increased $18.4 million, or 21%.
• Loans increased $37.5 million, or 6%.
• Securities decreased $51.6 million, or 22%, due to maturing U.S. Treasury Notes. The Securities Portfolio is relatively short term in nature with $61 million in U.S. Treasury Notes maturing during the next seven months providing liquidity, funding, and optionality.
• Total Assets decreased less than 1% due to a decline in Deposits.
• Deposits decreased 1%; however, Deposit Accounts have grown 3.5%.
• Liquidity is strong at 34% and 12% excluding Available for Sale Securities.

Capital Ratios & Stock Price

• The Bank’s Leverage Ratio increased to 9.21% due primarily to profitability.
• Total Risk Based Capital Ratio decreased slightly to 13.53% due to loan growth.
• Pinnacle’s Stock Price ended the quarter at $29.73 per share, based on the last trade, which is an increase of $5.72, or 24%. Total Return was 26.95% through nine months.  

Net Income and Profitability

Net income generated during the third quarter of 2024 represents a $71,000, or 3%, decrease as compared to the same time period of 2023, net of $638,000 in BOLI proceeds, while net income generated for the nine months of 2024 represents a $468,000, or 7%, decrease as compared to the prior year, net of BOLI proceeds. The decrease in net income for the third quarter and year-to-date 2024 was driven by higher provision for loan losses and noninterest expense, partially offset by higher net interest income and noninterest income, net of BOLI proceeds.  

Profitability as measured by the Company’s return on average assets (“ROA”) decreased to 0.86% for the nine months ended September 30, 2024, as compared to 1.02% for the same time period of 2023. Correspondingly, return on average equity (“ROE”) decreased to 11.76% for the nine months ended September 30, 2024, as compared to 16.44% for the same time period of 2023.

“We are pleased that Pinnacle’s performance through nine months of 2024 is tracking closely to 2023,” stated Aubrey H. Hall, III, President and Chief Executive Officer for both the Company and the Bank. He further commented, “Our Company is in a solid position with ample funding, an expanding net interest margin, and strong asset quality.”  

Net Interest Income and Margin

The Company generated $8,941,000 in net interest income for the third quarter of 2024, which represents a $707,000, or 8.5%, increase as compared to $8,234,000 for the third quarter of 2023. Interest income increased $1,615,000, or 15%, due to higher yields on earning assets and increased loan volume, while interest expense increased $908,000, or 38%, due to higher interest rates paid on deposits and increased certificates of deposit volume.

The Company generated $26,169,000 in net interest income through nine months of 2024, which represents a $1,368,000, or 5.5%, increase as compared to $24,801,000 for the same time period of 2023. Interest income increased $4,341,000, or 14%, as yield on earning assets increased 55 basis points to 4.94%. Interest expense increased $2,973,000, or 49%, due to higher interest rates paid on deposits as cost to fund earning assets increased 40 basis points to 1.26%. Net interest margin increased to 3.68% for the nine months of 2024 from 3.53% for the same time period of 2023.

Reserves for Credit Losses and Asset Quality

The provision for credit losses was $136,000 in the third quarter of 2024 as compared to $4,000 in the third quarter of 2023. Through nine months of 2024, the provision for credit losses was $396,000 as compared to $66,000 for the same time period of 2023. Provision expense has increased as a result of higher loan volume and recent trends in economic indicators.

The allowance for credit losses (ACL) was $4,795,000 as of September 30, 2024, which represented 0.71% of total loans outstanding. In comparison, the ACL was $4,511,000 or 0.70% of total loans outstanding as of December 31, 2023. Non-performing loans to total loans decreased to 0.14% as of September 30, 2024, compared to 0.24% as of year-end 2023. ACL coverage of non-performing loans was 502% as of September 30, 2024, compared to 290% as of year-end 2023. 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 third quarter of 2024 increased $94,000, or 5.6%, to $1,763,000 as compared to $1,669,000, net of BOLI proceeds, for the third quarter of 2023. The increase was primarily due to a $76,000 increase in fees generated from sales of mortgage loans, a $30,000 increase in merchant card fees, and a $16,000 increase in service charges on loan accounts.

Noninterest income through nine months of 2024 increased $229,000, or 4.6%, to $5,198,000 as compared to $4,969,000 for the same time period in 2023, net of BOLI proceeds. The increase was mainly due to a $103,000 increase in merchant card processing fees, a $53,000 increase in fees generated from sales of mortgage loans, a $41,000 increase in service charges on loan accounts, and a $33,000 increase in in commissions and fees from sales of investment and insurance products.  

Noninterest expense for the third quarter of 2024 increased $753,000, or 10%, to $7,961,000 as compared to $7,208,000 for the third quarter of 2023. The increase was primarily due to a $332,000 increase in salary and benefits, a $179,000 increase in core operating system expenses, and an $81,000 increase in occupancy expense.

Noninterest expense through nine months of 2024 increased $1,857,000, or 9%, to $23,044,000 as compared to $21,187,000 for the same time period of 2023. The increase was mainly due to a $694,000 increase in core operating system expenses, a $448,000 increase in salary and benefits, a $138,000 increase in occupancy expense, and a $109,000 increase dealer loan expenses.  

The Balance Sheet and Liquidity

Total assets as of September 30, 2024, were $1,015,994,000, down less than 1% from $1,016,528,000 as of December 31, 2023. The principal components of the Company’s assets as of September 30, 2024, were $678,893,000 in total loans, $182,010,000 in securities, and $106,009,000 in cash and cash equivalents. Through nine months of 2024, total loans have increased $37,456,000, or 6%, from $641,437,000, securities have decreased $51,569,000, or 22%, from $233,579,000, and cash and cash equivalents have increased $18,420,000, or 21%, from $87,589,000.00.  

The majority of the Company’s securities portfolio is relatively short-term in nature. Forty-eight percent (48%) of the Company’s securities portfolio is invested in U.S. Treasury Notes having an average maturity of 1.22 years with $61,000,000 maturing during the next seven months. The Company’s entire securities portfolio was classified as available for sale on September 30, 2024, which provides transparency regarding unrealized losses. Unrealized losses associated within the available for sale securities portfolio were $9,915,000 as of September 30, 2024, or five percent (5%) of book value, an improvement from $14,943,000 as of December 31, 2023.  

The Company had a strong liquidity ratio of 34% as of September 30, 2024. The liquidity ratio excluding the available for sale securities portfolio was 12% 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 September 30, 2024, were $938,622,000, down $9,501,000, or 1%, from $948,123,000 as of December 31, 2023, as deposits have decreased $11,081,000, or 1%, through nine months of 2024 to $921,363,000 from $932,444,000. First National Bank’s number of deposit accounts increased 3.5% during the same time period as the Bank has benefited from the closures of large national bank branches and bank mergers within markets served along with its reputation for providing extraordinary customer service.

Total stockholders’ equity as of September 30, 2024, was $77,372,000 and consisted primarily of $66,787,000 in retained earnings. In comparison, as of December 31, 2023 total stockholders’ equity was $68,405,000. The increase in stockholders’ equity is due primarily to 2024 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.

Loan Production Office and New Branch in South Boston

On July 15, 2024, First National Bank announced plans to open a Loan Production Office (LPO) and a Full-Service Branch in Halifax County, Virginia. Since this announcement, an experienced team of bankers has been hired and the LPO has opened at 97A Main Street, South Boston, Virginia. Additionally, regulatory approval has been received for the branch, which has temporarily opened at the same location. The permanent branch will open at 4027 Halifax Road, South Boston, Virginia later this year.

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 eighteen 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 temporary full-service branch have been opened in South Boston, with the Bank having plans to open a permanent full-service branch location in the near future to serve South Boston and the greater Halifax County market. First National Bank is in its 116^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.

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WILLIAMSPORT, Pa., Oct. 24, 2024 (GLOBE NEWSWIRE) — Penns Woods Bancorp, Inc. PWOD

Penns Woods Bancorp, Inc. achieved net income of $14.0 million for the nine months ended September 30, 2024, resulting in basic and diluted earnings per share of $1.86.

Highlights

• Net income, as reported under generally accepted accounting principles (GAAP), for the three and nine months ended September 30, 2024 was $4.8 million and $14.0 million, respectively, compared to $2.2 million and $11.1 million for the same periods of 2023. Results for the three and nine months ended September 30, 2024 compared to 2023 were impacted by an increase in net interest income of $1.7 million and $2.3 million, respectively, as the cost of funds has stabilized. The disposal of assets related to two former branch properties resulted in a one time after-tax loss of $261,000 for the nine month period ended September 30, 2024.
• The allowance for credit losses was impacted for the three and nine months ended September 30, 2024 by a provision for credit losses of $740,000 and a negative provision of $299,000, respectively, compared to provisions for credit losses of $1.4 million and $263,000 for the 2023 periods. The recognition of a negative provision for credit losses for the nine months ended September 30, 2024 is due primarily to recoveries during the second quarter of 2024 on a commercial loan. In addition, a minimal level of loan charge-offs of $312,000 contributed to the recognition of the negative provision for credit losses for the nine months ended September 30, 2024.
• Basic and diluted earnings per share for the three and nine months ended September 30, 2024 were $0.64 and $1.86, respectively, compared to basic and diluted earnings per share of $0.31 and $1.56 basic and $1.53 diluted for the three and nine month periods ended September 30, 2023.
• Annualized return on average assets was 0.86% for the three months ended September 30, 2024, compared to 0.41% for the corresponding period of 2023. Annualized return on average assets was 0.84% for the nine months ended September 30, 2024, compared to 0.70% for the corresponding period of 2023.
• Annualized return on average equity was 9.60% for the three months ended September 30, 2024, compared to 5.06% for the corresponding period of 2023. Annualized return on average equity was 9.74% for the nine months ended September 30, 2024, compared to 8.58% for the corresponding period of 2023.

Net Income

Net income from core operations (“core earnings”), which is a non-GAAP measure of net income excluding net securities gains or losses, was $4.8 million and $14.0 million, respectively, for the three and nine months ended September 30, 2024 compared to $2.3 million and $11.2 million for the same periods of 2023. Basic and diluted core earnings per share (non-GAAP) for the three and nine months ended September 30, 2024 were $0.63 and $1.86, respectively, while basic and diluted core earnings per share for the three month period of 2023 were $0.32 and for the nine month period of 2023 were $1.58 basic and $1.55 diluted. Annualized core return on average assets and core return on average equity (non-GAAP) were 0.85% and 9.54%, respectively, for the three months ended September 30, 2024, compared to 0.42% and 5.20% for the corresponding period of 2023. Annualized core return on average assets and core return on average equity (non-GAAP) were 0.84% and 9.75%, respectively, for the nine months ended September 30, 2024, compared to 0.71% and 8.67% for the corresponding period of 2023. A reconciliation of the non-GAAP financial measures of core earnings, core return on assets, core return on equity, core earnings per share and tangible book value per share to the comparable GAAP financial measures is included at the end of this press release.

Net Interest Margin

The net interest margin for the three and nine months ended September 30, 2024 was 2.88% and 2.79% respectively, compared to 2.65% and 2.82% for the corresponding periods of 2023. The increase in the net interest margin for the three month period was driven by an increase in the rate paid on interest-earning assets of 64 basis points (“bps”), while the decrease in the net interest margin for the nine month period was driven by a 96 bps increase in the rate paid on interest-bearing liabilities. The overall increase in interest rates over the periods resulted in increases to both the yield on the earnings asset portfolio and the rate paid on interest bearing liabilities. Driving the increase in the yield and interest income on the earning assets portfolio was the repricing of legacy assets coupled with portfolio growth. The average loan portfolio balance increased $76.0 million and $127.0 million, respectively, for the three and nine month periods ended September 30, 2024 compared to the same periods of 2023 as the average yield on the portfolio increased 65 bps and 72 bps, resulting in an increase in taxable equivalent interest income of $3.9 million and $14.5 million, for the periods. The three and nine month periods ended September 30, 2024 were impacted by an increase of 55 bps and 70 bps in the yield earned on the securities portfolio as legacy securities matured with the funds reinvested at higher rates, which resulted in an increase in taxable equivalent interest income of $343,000 and $1.2 million, respectively. Short-term borrowings decreased in volume, which offset the impact of an increase in rate paid, resulting in a decrease of $1.5 million and $2.1 million in expense for the three and nine month periods ended September 30, 2024 compared to the same periods of 2023. The rate paid on interest-bearing deposits increased 76 bps and 116 bps, respectively, or $3.1 million and $11.8 million in expense, for the three and nine month periods ended September 30, 2024 compared to the corresponding periods of 2023 due to the rate environment, an increase in competition for deposits, and a migration of deposit balances from core deposits to higher rate time deposits. The rates paid on time deposits significantly contributed to the increase in funding costs as rates paid for the three and nine month periods ended September 30, 2024 compared to the same periods of 2023 increased 70 bps and 114 bps, respectively, or $2.2 million and $8.2 million in expense, as deposit gathering campaigns continued to focus on time deposits with a maturity of five months. In addition, brokered deposits have been utilized to assist with funding the loan portfolio growth and contributed to the increase in time deposit funding costs, while lowering the reliance on higher cost short-term borrowings.

Assets

Total assets increased to $2.3 billion at September 30, 2024, an increase of $82.8 million compared to September 30, 2023.  Net loans increased $58.0 million to $1.9 billion at September 30, 2024 compared to September 30, 2023, as continued emphasis was placed on commercial loan growth and indirect auto lending. The investment portfolio increased $8.8 million from September 30, 2023 to September 30, 2024. Investment debt securities increased $12.8 million from September 30, 2023 to September 30, 2024 as fixed rate instruments with maturities of approximately ten years were added to the portfolio to lock in yields.

Non-performing Loans

The ratio of non-performing loans to total loans ratio increased to 0.42% at September 30, 2024 from 0.20% at September 30, 2023, as non-performing loans increased to $7.9 million at September 30, 2024 from $3.7 million at September 30, 2023. The majority of non-performing loans involve loans that are either in a secured position and have sureties with a strong underlying financial position or have been classified as individually evaluated loans that have a specific allocation recorded within the allowance for credit losses. Net loan charge offs of $328,000 and $312,000 for the three and nine months ended September 30, 2024, respectively, impacted the allowance for credit losses, which was 0.62% of total loans at September 30, 2024 compared to 0.71% at September 30, 2023. Exposure to non-owner occupied office space is minimal at $13.9 million at September 30, 2024 with none of these loans being delinquent.

Deposits

Deposits increased $133.1 million to $1.7 billion at September 30, 2024 compared to September 30, 2023. Noninterest-bearing deposits decreased $18.6 million to $452.9 million at September 30, 2024 compared to September 30, 2023.  Core deposits declined $6.6 million as deposits migrated from core deposit accounts into time deposits as market rates and competition for deposits increased. Core deposit gathering efforts remained focused on increasing the utilization of electronic (internet and mobile) deposit banking by our customers. Core deposits have remained stable at $1.2 billion over the past five quarters. Interest-bearing deposits increased $151.6 million from September 30, 2023 to September 30, 2024 due to growth in the time deposit portfolio of $78.7 million as customers sought a higher rate of interest. Brokered deposit balances increased $61.0 million to $167.7 million at September 30, 2024 as this funding source was utilized to supplement funding loan portfolio growth, while reducing the need to draw upon available borrowing lines. A campaign to attract time deposits with a maturity of five to twenty-four months commenced during the latter part of 2022 and has continued throughout 2023 and 2024 with current efforts centered on five months.

Shareholders’ Equity

Shareholders’ equity increased $29.2 million to $203.7 million at September 30, 2024 compared to September 30, 2023 due in part to a registered at-the-market offering that generated $7.5 million in capital during the fourth quarter of 2023.  During the three and nine months ended September 30, 2024 there were no shares issued as part of the registered at-the-market offering. A total of 9,074 and 31,050 shares for net proceeds of $205,000 and $632,000 were issued as part of the Dividend Reinvestment Plan during the three and nine months ended September 30 2024. Accumulated other comprehensive loss of $5.3 million at September 30, 2024 decreased from a loss of $14.9 million at September 30, 2023 as a result of a decrease in net unrealized loss on available for sale securities to $2.6 million at September 30, 2024 from a net unrealized loss of $10.9 million at September 30, 2023, coupled with a decrease in loss of $1.3 million in the defined benefit plan obligation. The current level of shareholders’ equity equates to a book value per share of $26.96 at September 30, 2024 compared to $24.55 at September 30, 2023, and an equity to asset ratio of 9.02% at September 30, 2024 and 8.02% at September 30, 2023. Tangible book value per share (a non-GAAP measure) increased to $24.77 at September 30, 2024 compared to $22.20 at September 30, 2023. Dividends declared for the three and nine months ended September 30, 2024 and 2023 were $0.32 and $0.96 per share.

Penns Woods Bancorp, Inc. is the parent company of Jersey Shore State Bank, which operates sixteen branch offices providing financial services in Lycoming, Clinton, Centre, Montour, Union, and Blair Counties, and Luzerne Bank, which operates eight branch offices providing financial services in Luzerne County, and United Insurance Solutions, LLC, which offers insurance products.  Investment and insurance products are offered through Jersey Shore State Bank’s subsidiary, The M Group, Inc. D/B/A The Comprehensive Financial Group.

NOTE:  This press release contains financial information determined by methods other than in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”).  Management uses the non-GAAP measure of net income from core operations in its analysis of the company’s performance. This measure, as used by the Company, adjusts net income determined in accordance with GAAP to exclude the effects of special items, including significant gains or losses that are unusual in nature such as net securities gains and losses. Because these certain items and their impact on the Company’s performance are difficult to predict, management believes presentation of financial measures excluding the impact of such items provides useful supplemental information in evaluating the operating results of the Company’s core businesses. These disclosures should not be viewed as a substitute for net income determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.

This press release may contain certain “forward-looking statements” including statements concerning plans, objectives, future events or performance and assumptions and other statements, which are statements other than statements of historical fact.  The Company cautions readers that the following important factors, among others, may have affected and could in the future affect actual results and could cause actual results for subsequent periods to differ materially from those expressed in any forward-looking statement made by or on behalf of the Company herein: (i) the effect of changes in laws and regulations, including federal and state banking laws and regulations, and the associated costs of compliance with such laws and regulations either currently or in the future as applicable; (ii) the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies as well as by the Financial Accounting Standards Board, or of changes in the Company’s organization, compensation and benefit plans; (iii) the effect on the Company’s competitive position within its market area of the increasing consolidation within the banking and financial services industries, including the increased competition from larger regional and out-of-state banking organizations as well as non-bank providers of various financial services; (iv) the effect of changes in interest rates; (v) the effects of health emergencies, including the spread of infectious diseases or pandemics; or (vi) the effect of changes in the business cycle and downturns in the local, regional or national economies.  For a list of other factors which could affect the Company’s results, see the Company’s filings with the Securities and Exchange Commission, including “Item 1A.  Risk Factors,” set forth in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

You should not place undue reliance on any forward-looking statements.  These statements speak only as of the date of this press release, even if subsequently made available by the Company on its website or otherwise.  The Company undertakes no obligation to update or revise these statements to reflect events or circumstances occurring after the date of this press release.

Previous press releases and additional information can be obtained from the Company’s website at www.pwod.com.

1.  Information on this table has been calculated using average daily balance sheets to obtain average balances.
2.  Non-accrual loans have been included with loans for the purpose of analyzing net interest earnings.
3.  Income and rates on fully taxable equivalent basis include an adjustment for the difference between annual income         
from tax-exempt obligations and the taxable equivalent of such income at the standard tax rate of 21%

1.  Information on this table has been calculated using average daily balance sheets to obtain average balances.
2.  Non-accrual loans have been included with loans for the purpose of analyzing net interest earnings.
3.  Income and rates on fully taxable equivalent basis include an adjustment for the difference between annual income         
from tax-exempt obligations and the taxable equivalent of such income at the standard tax rate of 21%

* Core deposits are defined as total deposits less time deposits and brokered deposits.