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

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<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.

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<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

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<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)

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