Pinnacle Bank Announces Fifth Consecutive Profitable Quarter

GILROY, Calif.--([ BUSINESS WIRE ])--Pinnacle Bank (OTCBB:PBNK), headquartered in Gilroy, California, announced today its fifth consecutive profitable quarter. For the three months ended September 30, 2011, the Bank reported net income of $188,000 compared to $58,000 in the comparable quarter of 2010. Year-to-date net income through September 30, 2011 was $454,000 compared to a loss of $1,388,000 in the same period last year.

"We are very pleased to report 15 straight months of profitability, a solid capital base and an improved balance sheet"

As of September 30, 2011, total assets were $159.3 million, a 9% increase from the $146.1 million at December 31, 2010.

Loans were $126.5 million at September 30, 2011, an increase of $6.2 million (5%) from the December 31, 2010, balance of $120.4 million. The allowance for loan losses at September 30, 2011, was $2.8 million or 2.2% of loans. Nonaccrual loans at September30, 2011 were $1.8 million, a reduction of $4.5 million from $6.3 million at December 31, 2010.

Deposits at September 30, 2011, were $142.0 million compared to $128.5 million at year end, an 11% increase. September 30, 2011 non-interest bearing deposits increased 14% over December 31, 2010 from $29.9 million to $34.1 million.

aWe are very pleased to report 15 straight months of profitability, a solid capital base and an improved balance sheet,a said Susan K. Black, President and CEO. Ms. Black further stated, aWe continue to build the Bank by growing core relationships. More and more businesses and professionals in Santa Clara, Monterey and San Benito counties are choosing to work with our team of professional bankers and are enjoying the Pinnacle brand of community banking. We are committed to expanding our franchise and are optimistic about future opportunities.a

The bankas capital position remains above regulatory guidelines for well capitalized banks. At September 30, 2011, the Bank had a total risk based capital ratio of 11.38%.

In September 2011, Pinnacle Bank completed a value-for-value option exchange under the Bankas 2006 Equity Incentive Plan. Approximately 82% of the holders of eligible options participated in the exchange and surrendered options for 672,650 underlying shares in exchange for the grant of new options for 374,168 underlying shares at $2.71 per share. The Bank will not recognize compensation expense for the exchange in accordance with applicable accounting rules.

For more information please go to [ www.pinnaclebankonline.com ] click on Investor Relations and September 2011 call report.

Summary Balance Sheet							Change
(Unaudited, dollars in thousands)	9/30/2011			12/31/2010			$			%
Total assets	$	159,289		$	146,098		$	13,191		9	%
Gross loans		126,547			120,352			6,195		5	%
Allowance for loan losses		(2,764	)		(2,605	)		(159	)	6	%
Deposits
Non-interest bearing		34,145			29,900			4,245		14	%
Interest-bearing		107,874			98,561			9,313		9	%
Total deposits		142,019			128,461			13,558		11	%
Shareholders' equity		16,268			15,604			664		4	%

Summary Income Statement
(Unaudited, dollars in thousands except per share data)	Quarter ended			Quarter ended			Change
(Unaudited, dollars in thousands except per share data)	9/30/2011			6/30/2011			$			%
Interest income	$	1,826		$	1,750		$	76		4	%
Interest expense		173			192			(19	)	-7	%
Net interest income		1,653			1,558			95		6	%
Provision for loan losses		146			65			81		48	%
Non-interest income		126			165			(39	)	-22	%
Non-interest expense		1,445			1,510			(65	)	-5	%
Net income (loss)	$	188		$	148		$	40		43	%

Earnings (loss) per share	$	0.06		$	0.04
Net interest margin		4.54	%		4.51	%

					Minimum
					required to be
Capital Ratios	9/30/2011		12/31/2010		well-capitalized
Tier 1 leverage ratio	10.54	%	10.26	%	5.00	%
Tier 1 risk-based capital ratio	12.63	%	11.45	%	6.00	%
Total risk-based capital ratio	11.38	%	12.71	%	10.00	%

About Pinnacle Bank

Pinnacle Bank is a full-service business bank dedicated to providing quality depository and credit services in Santa Clara, San Benito and Monterey counties. The bank focuses on commercial banking services for small to medium-sized businesses, offering a variety of products and services that combine the best of personal touch with convenient technology-based client service. Pinnacle Bank has locations in Morgan Hill, Gilroy and Salinas. For more information please go to [ www.pinnaclebankonline.com ] click on Investor Relations and September 2011 call report.

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Pinnacle Bank Announces Fifth Consecutive Profitable Quarter