<PAGE>   1

                     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, 2001

[ ]      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: 1,775,384

         Transitional Small Business Disclosure Format (check one):

Yes   [X]         No   [ ]


<PAGE>   2


                                     PART I
                              FINANCIAL INFORMATION


<TABLE>
<CAPTION>
                                                                                            PAGE
<S>                                                                                         <C>
ITEM 1.  FINANCIAL STATEMENTS

Condensed Consolidated Statements of Financial Condition at June 30, 2001
(Unaudited) and December 31, 2000.                                                           3

Condensed Consolidated Statements of Financial Operations for the three months
ended June 30, 2001 and 2000 and for the six months ended
June 30, 2001 and 2000 (unaudited).                                                          4

Condensed Consolidated Statements of Stockholders Equity for the six
months ended  June 30, 2001 and 2000 (Unaudited).                                            5

Condensed Consolidated Statements of Cash Flows for the six months
ended June 30, 2001 and 2000 (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

SIGNATURES                                                                                  14
</TABLE>


                                       2
<PAGE>   3



                         PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                            PINNACLE BANCSHARES, INC.
       UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION



<TABLE>
<CAPTION>
                                                                                 June 30,             December 31,
                                                                                  2001                    2000
                                                                              -------------           -------------
<S>                                                                           <C>                     <C>
ASSETS:
    Cash on hand and in banks                                                 $   3,943,873           $   3,480,036
    Interest-bearing deposits in other banks                                      2,388,743               1,135,957
    Securities available-for-sale                                                57,859,779              61,068,531
    Loans held for sale                                                           2,765,293               1,337,032
    Loans receivable, net of allowance for loan losses
       of $1,817,175 and $1,338,631, respectively                               141,987,145             152,020,585
    Real estate owned, net                                                        1,494,988               1,420,143
    Premises and equipment, net                                                   6,238,720               6,463,478
    Goodwill                                                                        326,922                 347,355
    Bank owned life insurance                                                     3,819,659                       0
    Accrued interest receivable                                                   1,803,491               2,331,537
    Other assets                                                                    550,221                 664,373
                                                                              -------------           -------------
              Total assets                                                    $ 223,178,834           $ 230,269,027
                                                                              =============           =============

LIABILITIES AND STOCKHOLDERS' EQUITY:
    Deposits                                                                  $ 190,041,530           $ 187,470,754
    Borrowed funds                                                                9,800,000              20,500,000
    Official checks outstanding                                                   1,554,921                 964,038
    Accrued interest payable                                                      1,321,503               1,431,604
    Other liabilities                                                               806,393                 672,306
                                                                              -------------           -------------
                                                                                203,524,347             211,038,702
                                                                              -------------           -------------
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 shares issued,
       2,400,000 shares authorized                                                   17,921                  17,921
    Additional paid-in capital                                                    8,131,746               8,131,746
    Treasury stock, at cost (16,702 shares at June 30, 2001 and                    (128,075)               (128,075)
        December 31, 2000)
    Retained earnings                                                            11,521,532              11,440,810
    Accumulated other comprehensive income (loss), net of tax                       111,363                (232,077)
                                                                              -------------           -------------
    Total stockholders' equity                                                   19,654,487              19,230,325
                                                                              -------------           -------------
              Total liabilities and stockholders' equity                      $ 223,178,834           $ 230,269,027
                                                                              =============           =============
</TABLE>

See accompanying notes to condensed consolidated financial statements.


                                       3
<PAGE>   4



                            PINNACLE BANCSHARES, INC.
       UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL OPERATIONS

<TABLE>
<CAPTION>
                                                       Three Months Ended                 Six Months Ended
                                                            June 30,                          June 30,
                                                            --------                          --------
                                                     2001              2000              2001              2000
                                                 -----------       -----------       -----------       -----------
<S>                                              <C>               <C>               <C>               <C>
INTEREST REVENUES:
  Interest on loans                              $ 3,145,662       $ 3,383,124       $ 6,539,510       $ 6,706,894
  Interest and dividends on securities               844,470           978,631         1,631,004         1,952,456
  Other interest                                      28,684            28,210           155,254            56,736
                                                 -----------       -----------       -----------       -----------
                                                   4,018,816         4,389,965         8,325,768         8,716,086
INTEREST EXPENSE:
  Interest on deposits                             2,320,750         2,263,194         4,735,856         4,448,498
  Interest on borrowed funds                          62,034           326,896           293,026           660,966
                                                 -----------       -----------       -----------       -----------
                                                   2,382,784         2,590,090         5,028,882         5,109,464
                                                 -----------       -----------       -----------       -----------
NET INTEREST INCOME BEFORE PROVISION FOR
    LOAN LOSSES                                    1,636,032         1,799,875         3,296,886         3,606,622
PROVISION FOR LOAN LOSSES                            670,000           120,000           790,000           240,000
                                                 -----------       -----------       -----------       -----------

NET INTEREST INCOME AFTER PROVISION FOR
    LOAN LOSSES                                      966,032         1,679,875         2,506,886         3,366,622
NON-INTEREST INCOME:
  Fees and service charges                           210,757           196,577           396,317           358,126
  Service fee income, net                             40,096            43,220            80,869            87,766
  Bank owned life insurance                            5,157                 0             5,157                 0
  Real estate operations, net                         34,151            10,370            69,480            24,236
  Net gain (loss) on sale or write-down of:
     Loans held for sale                             164,757           102,164           311,796           172,406
     Investments                                           0                 0            60,313                 0
     Assets                                            2,938                 0             2,938                 0
     Real estate owned                                (8,536)           (3,220)           (4,148)           (5,552)
                                                 -----------       -----------       -----------       -----------
                                                     449,320           349,111           922,722           636,982
                                                 -----------       -----------       -----------       -----------
NON-INTEREST EXPENSE:
Compensation and benefits                            749,238           701,544         1,488,834         1,411,384
Occupancy                                            300,380           313,987           619,365           598,944
Marketing and professional                            46,281            34,626            81,032            72,296
Other                                                231,250           234,238           620,404           465,334
                                                 -----------       -----------       -----------       -----------
                                                   1,327,149         1,284,395         2,809,635         2,547,958
                                                 -----------       -----------       -----------       -----------
INCOME BEFORE INCOME TAX EXPENSE                      88,203           744,591           619,973         1,455,646

INCOME TAX (BENEFIT) PROVISION                       (17,368)          281,271           184,174           549,233
                                                 -----------       -----------       -----------       -----------
NET INCOME                                       $   105,571       $   463,320       $   435,799       $   906,413
                                                 ===========       ===========       ===========       ===========
BASIC EARNINGS PER SHARE                         $      0.06       $      0.26       $      0.25       $      0.51
DILUTED EARNINGS PER SHARE                       $      0.06       $      0.26       $      0.25       $      0.51
CASH DIVIDENDS PER SHARE                         $      0.10       $      0.10       $      0.10       $      0.10
WEIGHTED AVERAGE SHARES OUTSTANDING                1,775,384         1,792,086         1,775,384         1,792,086
WEIGHTED AVERAGE DILUTED SHARES                    1,775,384         1,792,086         1,775,384         1,792,086
</TABLE>

See accompanying notes to condensed consolidated financial statements.


                                       4
<PAGE>   5




                            PINNACLE BANCSHARES, INC.

       UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                 FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 2001


<TABLE>
<CAPTION>
                                                                                                   Accumulated
                                                       Additional                                     Other           Total
                                   Common Stock         Paid-in       Treasury       Retained     Comprehensive   Stockholders'
                                Shares      Amount      Capital        Stock         Earnings      Gain (Loss)       Equity
                               ---------    -------    ----------    ---------     ------------   -------------   -------------
<S>                            <C>          <C>        <C>           <C>           <C>            <C>             <C>
BALANCE, December 31, 1999     1,792,086    $17,921    $8,131,746    $       0     $ 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                         0          0             0                             0      (183,328)        (183,328)
                                                                                                                  ------------
  Comprehensive Income                                                                                                 723,085
  Cash dividends declared
    ($.20 per share)                   0          0             0                      (358,402)            0         (358,402)
                               ---------    -------    ----------    ---------     ------------     ---------     ------------
BALANCE, June 30, 2000         1,792,086    $17,921    $8,131,746    $       0     $ 10,962,869     $(899,091)    $ 18,213,445
                               =========    =======    ==========    =========     ============     =========     ============

BALANCE, December 31, 2000     1,775,384    $17,921    $8,131,746    $(128,075)    $ 11,440,810     $(232,077)    $ 19,230,325
                                                                                                                  ------------
  Comprehensive Income:
  Net income                           0          0             0            0          435,799             0          435,799

  Change in unrealized gain
    (loss) on securities
    available-for-sale,
    net of tax                         0          0             0            0                0       343,440          343,440
                                                                                                                  ------------
  Comprehensive Income
                                                                                                                       779,239
  Cash dividends declared
    ($.20 per share)                   0          0             0            0         (355,077)            0         (355,077)
                               ---------    -------    ----------    ---------     ------------     ---------     ------------
BALANCE, June 30, 2001         1,775,384    $17,921    $8,131,746    $(128,075)    $ 11,521,532     $ 111,363     $ 19,654,487
                               =========    =======    ==========    =========     ============     =========     ============
</TABLE>


See accompanying notes to condensed consolidated financial statements.


                                       5
<PAGE>   6


                            PINNACLE BANCSHARES, INC,
            UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                             FOR THE SIX MONTHS ENDED
                                                                                    JUNE 30,
                                                                                    --------
                                                                            2001                 2000
                                                                        ------------         ------------
<S>                                                                     <C>                  <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income                                                           $    435,799         $    906,413
   Adjustment to reconcile net income to net cash
      provided by (used in) operating
      activities:
      Depreciation                                                           290,103              296,371
      Provision for loan losses                                              790,000              240,000
      Amortization, net                                                     (166,136)            (200,743)
      Gain on Bank owned life insurance                                       (5,157)                   0
   Net (gain) loss on sale and write down of:
         Loans held for sale                                                (311,796)            (172,406)
         Securities available for sale                                       (60,313)                   0
         Assets                                                               (2,938)                   0
         Real estate owned                                                     4,148                5,552
   Proceeds from sale of loans                                            27,130,419           17,465,004
   Loans originated for sale                                             (28,246,884)         (18,723,666)
   (Increase) decrease in accrued interest receivable                        528,046              (86,468)
   (Increase) decrease in other assets                                       134,584               62,813
   Increase (decrease) in other liabilities                                 (210,449)             178,187
                                                                        ------------         ------------
             Net cash provided by (used in) operating activities             309,426              (28,943)
                                                                        ------------         ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Principal collected on loans and securities                            49,941,252           45,685,901
   Loans originated for portfolio                                        (39,406,384)         (45,805,716)
   Net change in interest bearing deposits at other banks                 (1,252,786)             943,167
   Purchase of Bank owned life insurance                                  (3,814,502)                   0
   Purchase of securities available-for-sale                             (28,000,000)             (50,000)
   Proceeds from maturing and callable securities                         27,000,000                    0
   Proceeds from the sale of securities available-for-sale                 3,060,313               12,017
   Purchase of premises and equipment                                        (67,907)             (65,620)
   Sales of premises and equipment                                             5,500                    0
   Proceeds from sales of real estate owned                                  582,343              559,963
                                                                        ------------         ------------
             Net cash provided by investing activities                     8,047,829            1,279,712
                                                                        ------------         ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Net increase (decrease) in passbook, NOW and money market
     deposit accounts                                                      2,134,528           (1,210,998)
   Proceeds from sales of time deposits                                   11,814,499           14,205,140
   Payments on maturing time deposits                                    (11,378,251)         (14,404,138)
   Payments on borrowed funds                                            (25,000,000)         (15,040,000)
   Proceeds from borrowed funds                                           14,300,000           14,400,000
   Increase (decrease) in official checks outstanding                        590,883              525,112
   Payments of cash dividends                                               (355,077)            (358,402)
                                                                        ------------         ------------
             Net cash used in financing activities                        (7,893,418)          (1,883,286)
                                                                        ------------         ------------
NET INCREASE (DECREASE) IN CASH                                              463,837             (632,517)

cash at beginning of period                                                3,480,036            5,289,619
                                                                        ------------         ------------
cash at end of period                                                   $  3,943,873         $  4,657,102
                                                                        ============         ============
supplemental disclosures:
   Cash payments for interest on deposits and borrowed funds            $  5,138,983         $  4,536,686
   Cash payments for income taxes                                            361,281              246,000
   Real estate acquired through foreclosure                                  661,336            1,716,689
</TABLE>

See accompanying notes to condensed consolidated financial statements.


                                       6
<PAGE>   7

                            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, 2001, 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, 2000. 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>   8



2.       EARNINGS PER SHARE:

The following table represents the earnings per share calculations for the three
and six-month periods ended June 30, 2001 and 2000:

<TABLE>
<CAPTION>
                                                                             PER
                                                                            SHARE
FOR THE THREE MONTHS ENDED               NET INCOME        SHARES           AMOUNT
--------------------------               ----------        ------           ------
<S>                                      <C>              <C>              <C>
 JUNE 30, 2001
    Basic earnings per share              $105,571        1,775,384        $   0.06
    Dilutive securities                         --               --              --
                                          --------        ---------        --------
    Diluted earnings per share            $105,571        1,775,384        $   0.06
                                          ========        =========        ========

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
                                          ========        =========        ========
</TABLE>


<TABLE>
<CAPTION>
                                                                             PER
                                                                            SHARE
FOR THE SIX MONTHS ENDED                 NET INCOME        SHARES           AMOUNT
------------------------                 ----------        ------           ------
<S>                                      <C>              <C>              <C>
 JUNE 30, 2001
    Basic earnings per share              $435,799        1,775,384        $   0.25
    Dilutive securities                         --               --              --
                                          --------        ---------        --------
    Diluted earnings per share            $435,799        1,775,384        $   0.25
                                          ========        =========        ========

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
                                          ========        =========        ========
</TABLE>

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 three and six-months ended June 30, 2001 and 2000,
respectively. 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 outstanding at June 30, 2001 and 2000.


                                       8
<PAGE>   9


3.       PENDING ACCOUNTING PRONOUNCEMENTS:

In June 1998, the Financial Accounting Standard Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 133, Accounting for Derivative
Instruments and Hedging Activities. This Statement establishes accounting and
reporting standards for derivative instruments embedded in other contracts
(collectively referred to as derivatives) and for hedging activities. It
requires that an entity recognize all derivatives as either assets or
liabilities in the balance sheet and measure those instruments at fair value.
Under certain conditions, a derivative may be specifically designated as a
hedge. Accounting for changes in fair value of derivatives will depend on their
designation. In June 1999, the FASB issued SFAS No. 137 Accounting for
Derivative Instruments and Hedging Activities-A Deferral of the Effective Date
of FASB Statement No. 133. This Statement amends the effective date of SFAS No.
133, which will now be effective for all fiscal quarters of all fiscal years
beginning June 15, 2000. In June 2000, the FASB issued SFAS No. 138, Accounting
for Certain Derivative Instruments and Certain Hedging Activities-An Amendment
to FASB Statement No. 133. This Statement addresses a limited number of issues
causing implementation difficulties for numerous entities that apply SFAS133 and
amends the accounting and reporting standards of SFAS No. 133 for certain
derivative instruments and certain hedging activities.

The Bank uses derivatives to hedge interest rate exposures by mitigating the
interest rate risk of mortgage loans held for sale and mortgage loans in
process. The Bank regularly enters into derivative financial instruments in the
form of forward contracts, as part of its normal asset/liability management
strategies. The Bank's obligations under forward contracts consist of "best
effort" commitments to deliver mortgage loans originated into the secondary
market at a future date. In addition, the FASB's Derivatives Implementation
Group ("DIG") recently announced that interest rate lock commitments related to
loans that are originated for later sale are to be classified as derivatives. In
the normal course of business, the Bank regularly extends these rate lock
commitments to customers during the loan origination process.

On January 1, 2001, the Bank adopted SFAS No. 133, as amended. Management
completed its assessment of the impact of this Statement on the Bank's financial
position and results of operations and such impact is immaterial.

In September 2000, the FASB issued SFAS No.140, Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities, a replacement
of FASB Statement No.125. This Statement revises the standards for accounting
for securitizations and other transfers of financial assets and collateral and
requires certain disclosures. The Statement is effective for transfers and
servicing of financial assets and extinguishments of liabilities occurring after
March 31, 2001. However, the Statement is currently effective for recognition
and reclassification of collateral and for disclosures relating to
securitization transactions and collateral.

In July 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard (SFAS) No. 142, Goodwill and Other Intangible
Assets, SFAS No. 142 addresses the initial recognition and measurement of
intangible assets acquired outside of a business combination and the accounting
for goodwill and other intangible assets subsequent to their acquisition. SAFS
No.142 provides that intangible assets with definite lives will be amortized and
that goodwill with indefinite lives will not be amortized, but rather will be
tested at lest annually for impairment. The Company will adopt SFAS No.142 for
its fiscal year beginning January 1, 2002. Upon adoption of SFAS No.142, the
Company will stop the amortization of goodwill that resulted from business
combinations initiated prior to the adoption of SFAS 141, Business Combinations.
The Company will evaluate goodwill under SFAS 142 transitional impairment test
and determine whether or not there will be an impairment loss. Any transitional
impairment loss will be recognized as a change in accounting principle. The
Company is currently incurring goodwill amortization annually of approximately
$40,000, which would no longer be amortized pursuant to Statement 142.

4.        BANK OWNED LIFE INSURANCE:

During the second quarter of 2001, the Company purchased approximately $3.8
million of Bank owned life insurance ("BOLI") on certain key officers. The life
insurance policies were purchased to offset liabilities associated with certain
existing employee benefits. Income earned on the policies will offset the
corresponding benefit expenses on these employees as the Company is the
beneficiary of the insurance policies. Increases in the cash surrender value of
the policies, as well as insurance proceeds received, are recorded as a
component of non-interest income.


                                       9
<PAGE>   10



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, 2001 AND DECEMBER 31, 2000.
Total assets decreased $7.1 million, to $223.2 million at June 30, 2001, as
compared to $230.3 million at December 31, 2000. Total loans receivable, net
decreased approximately $10.0 million primarily due to refinancing activities
and principal repayments. Available-for-sale securities decreased approximately
$3.2 million due to calls and sales exceeding purchases. During the six-month
period ended June 30, 2001 the Bank had $27.0 million in agency securities
called. The Bank purchased $28.0 million in agency securities during the
six-month period ended June 30, 2001. Also during the six-month period ended
June 30, 2001 the Bank sold $3.0 million in agency securities. Gross gains of
$60,313 were realized on these sales. Total cash and interest bearing deposits
increased approximately $1.7 million during the six-month period ended June 30,
2001.

At June 30, 2001, the Company's investment portfolio of $57.9 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
stockholders' equity.

During the six-month period ended June 30, 2001, the Company paid down $10.7
million of borrowed funds, to $9.8 million at June 30, 2001 from $20.5 million
at December 31, 2000.

During the six-month period ended June 30, 2001 the Bank purchased $3.8 million
in Bank owned life insurance on certain key officers.


                                       10
<PAGE>   11

Total deposits increased $2.6 million, to $190.0 million at June 30, 2001 as
compared to $187.5 million at December 31, 2000. This increase was primarily due
to an increase in passbook, NOW and money market deposit accounts of $2.2
million and an increase in time deposits of $400,000.

RESULTS OF OPERATIONS-COMPARISON OF THE THREE AND SIX MONTHS ENDED JUNE 30, 2001
AND 2000. Net interest income after the provision for loan losses decreased
$713,843 or 42.5% for the three-month period ended June 30, 2001, as compared to
the corresponding period in the previous year. This decrease was primarily due
to a decrease in interest on loans and securities and other interest of $371,149
and an increase in the provision for loan losses of $550,000 and was offset by a
decrease in interest expense of $207,306. Net interest income after the
provision for loan losses decreased $859,736 or 25.5% for the six-month period
ended June 30, 2001, as compared to the corresponding period in the previous
year. This decrease was primarily due to a decrease in interest on loans and
securities and other interest of $390,318 and an increase in the provision for
loan losses of $550,000 and was offset by a decrease in interest expense of
$80,582.

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 $373,000. 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 decreased from approximately 8.21%
in the three-month period ended June 30, 2000 to approximately 7.84% in the
current year period. This decrease was due to a decrease in interest rates as
well as a decrease in the average balance of interest-earning assets of
approximately $7.9 million. The Bank's yield on interest-earning assets
decreased from approximately 8.13% in the six-month period ended June 30, 2000
to approximately 7.97% in the current year period. This decrease was due to a
decrease in interest rates as well as a decrease in the average balance of
interest-earning assets of approximately $4.5 million. The Bank's cost of funds
decreased from 5.08% at June 30, 2000 to 4.75% in the current year period. This
decrease was due to a decrease in interest rates as well as a decrease in the
average balance of interest-bearing liabilities of approximately $8.7 million.

Non-interest income, which includes fees and service charges, real estate
operations, net gain (loss) on sale of loans and other income increased $100,209
in the three-month period ended June 30, 2001, as compared to the three-month
period ended June 30, 2000. Non-interest income increased $285,740 in the
six-month period ended June 30, 2001 as compared to the corresponding prior year
period. The increase in the three-month period ended June 30, 2001, was due
primarily to an increase in fees and service charges of $14,180, an increase in
the gain on sale of mortgage loans of $62,593, and slight increases in all other
non-interest income of $23,436. The increase in the six-month period ended June
30, 2001, was due primarily to an increase in real estate operations, net of
$45,244, an increase in the gain on sale of mortgage loans of $139,390, an
increase in the sale of securities available-for-sale of $60,313, and slight
increases in all other non-interest income of $40,793.

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 take into account historical experience, the amount of
non-performing assets, and general economic conditions. The Bank determined an
additional $670,000 was required for the three-month period ended June 30, 2001
and an additional $790,000 was required for the six-month period ended June 30,
2001. The increases in


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<PAGE>   12

the provision for the three and six-month periods ended June 30, 2001 were
principally due to non-performing construction credits. Management has
identified certain construction loans aggregating approximately $2.9 million at
June 30, 2001, which it has determined require special attention due to
potential weaknesses. It is management's opinion that the increase in the
allowance for loan losses at June 30, 2001 is adequate to absorb potential
losses related to these loans. Management will continue to analyze the Bank's
exposure to potential losses and may increase the allowance for loan losses in
the future if it deems necessary.

Non-interest expense increased $42,754 and $261,677 in the three and six-month
periods ended June 30, 2001, respectively, as compared to the corresponding
prior year periods. The increase in the three-month period ended June 30, 2001
was primarily due to an increase in compensation expense of $47,694 and was
offset by slight decreases in all other non-interest expense of $4,940. The
increase in the six-month period ended June 30, 2001 was primarily due to an
increase in compensation expense of $77,450, an increase in occupancy expense of
$20,421, and an increase in other non-interest income of $163,806. The increase
in other non-interest expense was primarily a result of prepayment penalties on
Federal Home Loan Bank advances.

NET INCOME: The Company reported net income for the three-month period ended
June 30, 2001 of $105,571 or $0.06 per share, compared with net income of
$463,320 or $0.26 per share, for the three- month period ended June 30, 2000.
The Company reported net income for the six- month period ended June 30, 2001 of
$435,799, or $0.25 per share, compared with net income of $906,413, or $0.51 per
share, for the six-month period ended June 30, 2000. The decreases in the three
and six -months period ended June 30, 2001 were primarily attributable to a
$550,000 increase in the provision for loan losses for the three-month period
ended June 30, 2001, described above.

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, 2001, the
Bank's total loan commitments, including construction loans in process and
unused lines of credit, were approximately $22.4 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, 2001 the
Company and the Bank exceeded all regulatory capital requirements.


                                       12
<PAGE>   13


                           PART II - OTHER INFORMATION


ITEM 4.       SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

    On May 23, 2001 the Company held its Annual Meeting of Stockholders at which
the following matter was considered voted on.

         PROPOSAL I- ELECTION OF DIRECTORS

<TABLE>
<CAPTION>
         NOMINEES          FOR              WITHHELD          TERM
         --------          ---              --------          ----
         <S>               <C>              <C>               <C>

         Greg Batchelor.   1,334,189        211,939           3 Years
         J. T. Waggoner    1,341,189        213,939           3 Years
</TABLE>


There were no abstentions or broker non-votes.


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<PAGE>   14



                                   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 13, 2001                  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