##### Table of Contents



U.S. SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, DC 20549
 FORM 10-QSB
  þ
    
    Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the quarterly period ended March 31, 2007
 o
    
    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.
  Delaware
    
    72-1370314(State or Other Jurisdiction of 
Incorporation or Organization)
    
    (I.R.S. Employer
Identification No.)
 1811 Second Avenue, Jasper, Alabama 35502-1388
 (205) 221-4111
  þ o
  o þ
   o þ




---



##### Table of Contents



CONTENTS
 PagePART I FINANCIAL INFORMATIONItem 1. Financial StatementsUnaudited Condensed Consolidated Statements of Financial Condition at March 31, 2007
and December 31, 2006.
    
    3Unaudited Condensed Consolidated Statements of Operations for the three months
ended March 31, 2007 and 2006.
    
    4Unaudited Condensed Consolidated Statements of Stockholders Equity for the three months
ended March 31, 2007 and 2006.
    
    5Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended
March 31, 2007 and 2006.
    
    6Notes to Unaudited Condensed Consolidated Financial Statements.
    
    7Item 2. Managements Discussion and Analysis or Plan of Operation
    
    10Item 3. Controls and Procedures
    
    13Part II OTHER INFORMATIONItem 6. Exhibits
    
    15Signatures
    
    16Ex-31.1 Section 302 Certification of the CEO & CFOEx-32.1 Section 906 Certification of the CEO & CFO
 2




---



##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 PINNACLE BANCSHARES, INC.
 
 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
 March 31,
    
    
    December 31,2007
    
    
    2006ASSETS:Cash and cash equivalents
    
    $
    4,276,419
    
    
    $
    4,206,018Interest-bearing deposits in other banks
    
    
    9,267,349
    
    
    
    8,599,278Securities available-for-sale
    
    
    93,368,248
    
    
    
    87,852,495FHLB stock
    
    
    509,400
    
    
    
    532,100First National Bankers Bancshares stock
    
    
    525,000
    
    
    
    525,000Loans held for sale
    
    
    420,901
    
    
    
    975,951Loans receivable, net of allowances for loan losses
of $1,464,674 and $1,382,190 respectively
    
    
    118,867,135
    
    
    
    113,489,632Real estate owned, net
    
    
    248,157
    
    
    
    208,903Premises and equipment, net
    
    
    6,985,706
    
    
    
    7,075,617Goodwill
    
    
    306,488
    
    
    
    306,488Bank owned life insurance
    
    
    5,497,525
    
    
    
    5,413,237Accrued interest receivable
    
    
    1,456,399
    
    
    
    1,535,638Other assets
    
    
    1,379,714
    
    
    
    1,513,250Total assets
    
    $
    243,108,441
    
    
    $
    232,233,607LIABILITIES AND STOCKHOLDERS EQUITY:Deposits
    
    $
    217,021,130
    
    
    $
    206,569,999Subordinated debt
    
    
    3,093,000
    
    
    
    3,093,000Official checks outstanding
    
    
    1,139,853
    
    
    
    1,005,512Accrued interest payable
    
    
    1,297,102
    
    
    
    1,262,887Other liabilities
    
    
    835,639
    
    
    
    896,672Total liabilities
    
    
    223,386,724
    
    
    
    212,828,070STOCKHOLDERS EQUITY:Common stock, par value $.01 per share; 2,400,000 authorized; 1,872,313
issued at March 31, 2007 and December 31, 2006, respectively; 1,464,538
outstanding at March 31, 2007 and December 31, 2006, respectively
    
    
    18,723
    
    
    
    18,723Additional paid-in capital
    
    
    8,923,223
    
    
    
    8,923,223Treasury shares, at cost (407,775 at March 31, 2007 and December 31, 2006,
respectively)
    
    
    (5,285,739
    )
    
    
    (5,285,739
    )Retained earnings
    
    
    17,190,174
    
    
    
    17,103,780Accumulated other comprehensive loss, net of tax
    
    
    (1,124,664
    )
    
    
    (1,354,450
    )Total stockholders equity
    
    
    19,721,717
    
    
    
    19,405,537Total liabilities and stockholders equity
    
    $
    243,108,441
    
    
    $
    232,233,607
  3




---



##### Table of Contents



PINNACLE BANCSHARES, INC.
 
 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 Three Months EndedMarch 31,2007
    
    
    2006INTEREST REVENUE:Interest on loans
    
    $
    2,401,580
    
    
    $
    2,085,144Interest and dividends on securities
    
    
    1,011,676
    
    
    
    839,426Other interest
    
    
    101,587
    
    
    
    201,3813,514,843
    
    
    
    3,125,951INTEREST EXPENSE:Interest on deposits
    
    
    1,873,352
    
    
    
    1,407,263Interest on subordinated debt
    
    
    65,352
    
    
    
    58,107Interest on borrowed funds
    
    
    0
    
    
    
    14,6941,938,704
    
    
    
    1,480,064NET INTEREST INCOME BEFORE PROVISION
FOR LOAN LOSSES
    
    
    1,576,139
    
    
    
    1,645,887PROVISION FOR LOAN LOSSES
    
    
    75,000
    
    
    
    135,000NET INTEREST INCOME AFTER PROVISION FOR
LOAN LOSSES
    
    
    1,501,139
    
    
    
    1,510,887NONINTEREST INCOME:Fees and service charges on deposit accounts
    
    
    198,053
    
    
    
    207,546Service fee income
    
    
    30,954
    
    
    
    34,292Fees and charges on loans
    
    
    30,428
    
    
    
    40,643Bank owned life insurance
    
    
    84,288
    
    
    
    79,270Net gain (loss) on sale or write-down of:Loans held for sale
    
    
    53,108
    
    
    
    66,429Real estate owned
    
    
    (16,888
    )
    
    
    0379,943
    
    
    
    428,180NONINTEREST EXPENSE:Compensation and benefits
    
    
    871,480
    
    
    
    865,623Occupancy
    
    
    283,707
    
    
    
    283,360Marketing and professional
    
    
    112,095
    
    
    
    94,209Other
    
    
    267,228
    
    
    
    277,6251,534,510
    
    
    
    1,520,817INCOME BEFORE INCOME TAXES
    
    
    346,572
    
    
    
    418,250INCOME TAX EXPENSE
    
    
    99,079
    
    
    
    126,592NET INCOME
    
    $
    247,493
    
    
    $
    291,658Basic earnings per share
    
    $
    0.17
    
    
    $
    0.19Diluted earnings per share
    
    $
    0.17
    
    
    $
    0.19Cash dividends per share
    
    $
    0.11
    
    
    $
    0.11Weighted average basic shares outstanding
    
    
    1,464,538
    
    
    
    1,541,178Weighted average diluted shares outstanding
    
    
    1,470,623
    
    
    
    1,569,187
  4




---



##### Table of Contents



PINNACLE BANCSHARES, INC.
 
 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
 FOR THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006
 AccumulatedAdditional
    
    
    
    
    
    
    
    
    
    Other
    
    TotalCommon Stock
    
    Paid-in
    
    Treasury
    
    Retained
    
    Comprehensive
    
    StockholdersShares
    
    Amount
    
    Capital
    
    Stock
    
    Earnings
    
    (Loss) Income
    
    EquityBALANCE, December 31, 2005
    
    
    1,827,813
    
    
    $
    18,278
    
    
    $
    8,479,921
    
    
    $
    (3,488,724
    )
    
    $
    16,405,863
    
    
    $
    (2,005,364
    )
    
    $
    19,409,974Comprehensive income:Net income
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    291,658
    
    
    
    0
    
    
    
    291,658Change in fair value of securities available-
for-sale, net of tax
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    (389,903
    )
    
    
    (389,903
    )Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (98,245
    )Cash dividends declared ($.11 per share)
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    (169,529
    )
    
    
    0
    
    
    
    (169,529
    )BALANCE, March 31, 2006
    
    
    1,827,813
    
    
    $
    18,278
    
    
    $
    8,479,921
    
    
    $
    (3,488,724
    )
    
    $
    16,527,992
    
    
    $
    (2,395,267
    )
    
    $
    19,142,200BALANCE, December 31, 2006
    
    
    1,872,313
    
    
    $
    18,723
    
    
    $
    8,923,223
    
    
    $
    (5,285,739
    )
    
    $
    17,103,780
    
    
    $
    (1,354,450
    )
    
    $
    19,405,537Comprehensive loss:Net income
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    247,493
    
    
    
    0
    
    
    
    247,493Change in fair value of securities available-
for-sale, net of tax
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    229,786
    
    
    
    229,786Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    477,279Cash dividends declared ($.11 per share)
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    (161,099
    )
    
    
    0
    
    
    
    (161,099
    )BALANCE March 31, 2007
    
    
    1,872,313
    
    
    $
    18,723
    
    
    $
    8,923,223
    
    
    $
    (5,285,739
    )
    
    $
    17,190,174
    
    
    $
    (1,124,664
    )
    
    $
    19,721,717
  5




---



##### Table of Contents



PINNACLE BANCSHARES, INC,
 
 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 For the Three Months EndedMarch 31,2007
    
    
    2006CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    247,493
    
    
    $
    291,658Adjustments to reconcile net income to net cash provided by operating activities:Depreciation
    
    
    125,230
    
    
    
    125,697Provision for loan losses
    
    
    75,000
    
    
    
    135,000Accretion, net
    
    
    87,609
    
    
    
    (56,658
    )Increase in cash surrender value of Bank owned life insurance
    
    
    (84,288
    )
    
    
    (79,270
    )Net (gain) loss on sale or write-down of:Loans held for sale
    
    
    (53,108
    )
    
    
    (66,429
    )Real estate owned
    
    
    16,888
    
    
    
    0Proceeds from sale of loans
    
    
    5,746,328
    
    
    
    5,224,852Loans originated for sale
    
    
    (5,138,170
    )
    
    
    (6,471,692
    )Decrease in accrued interest receivable
    
    
    79,239
    
    
    
    187,901Increase in other assets
    
    
    (6,800
    )
    
    
    (16,677
    )Increase in accrued interest payable
    
    
    34,215
    
    
    
    146,477Decrease in other liabilities
    
    
    (61,033
    )
    
    
    (125,288
    )Net cash provided by (used in) operating activities
    
    
    1,068,603
    
    
    
    (704,429
    )CASH FLOWS FROM INVESTING ACTIVITIES:Net loan (originations) repayments
    
    
    (5,503,105
    )
    
    
    3,164,893Net change in interest bearing deposits in other banks
    
    
    (668,071
    )
    
    
    (8,612,473
    )Purchase of securities available-for-sale
    
    
    (7,164,010
    )
    
    
    0Proceeds from maturing, called and payments received on securities available-for-sale
    
    
    1,876,189
    
    
    
    1,408,618Proceeds from sale of Federal Home Loan Bank stock
    
    
    22,700
    
    
    
    0Purchase of Federal Home Loan Bank stock
    
    
    0
    
    
    
    (24,800
    )Purchase of premises and equipment
    
    
    (35,319
    )
    
    
    (74,923
    )Proceeds from sales or capital expenditures related to real estate owned
    
    
    49,041
    
    
    
    (18,421
    )Net cash used in investing activities
    
    
    (11,422,575
    )
    
    
    (4,157,106
    )CASH FLOWS FROM FINANCING ACTIVITIES:Net increase in passbook, NOW and money market deposit accounts
    
    
    3,375,877
    
    
    
    2,389,018Proceeds from sales of time deposits
    
    
    13,058,919
    
    
    
    10,243,340Payments on maturing time deposits
    
    
    (5,983,665
    )
    
    
    (5,802,789
    )Decrease in borrowed funds
    
    
    0
    
    
    
    (2,375,000
    )Increase in official checks outstanding
    
    
    134,341
    
    
    
    354,958Payments of cash dividends
    
    
    (161,099
    )
    
    
    (169,529
    )Net cash provided by financing activities
    
    
    10,424,373
    
    
    
    4,639,998NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    
    
    70,401
    
    
    
    (221,537
    )CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
    
    
    4,206,018
    
    
    
    3,784,867CASH AND CASH EQUIVALENTS AT END OF PERIOD
    
    $
    4,276,419
    
    
    $
    3,563,330SUPPLEMENTAL DISCLOSURES:Cash payments for interest on deposits, borrowed funds, and subordinated debentures
    
    $
    1,904,489
    
    
    $
    1,333,587Cash payments for income taxes
    
    
    0
    
    
    
    60,000Real estate acquired through foreclosure
    
    
    105,183
    
    
    
    12,685
  6




---



##### Table of Contents



PINNACLE
BANCSHARES, INC.
 
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 1. BASIS OF PRESENTATION :
    7




---



##### Table of Contents



2. EARNINGS PER SHARE:
  PerShareFor The Three Months Ended
    
    Net Income
    
    
    Shares
    
    
    AmountMarch 31, 2007Basic earnings per share
    
    $
    247,493
    
    
    
    1,464,538
    
    
    $
    0.17Dilutive securities
    
    
    
    
    
    
    6,085Diluted earnings per share
    
    $
    247,493
    
    
    
    1,470,623
    
    
    $
    0.17
 PerShareFor The Three Months Ended
    
    Net Income
    
    
    Shares
    
    
    AmountMarch 31, 2006Basic earnings per share
    
    $
    291,658
    
    
    
    1,541,178
    
    
    $
    0.19Dilutive securities
    
    
    
    
    
    
    28,009Diluted earnings per share
    
    $
    291,658
    
    
    
    1,569,187
    
    
    $
    0.19
 3. RECENT ACCOUNTING PRONOUNCEMENTS :
    8




---



##### Table of Contents



9




---



##### Table of Contents



Item 2. Managements Discussion and Analysis or Plan of Operation
 Forward-Looking Statements:
  Critical Accounting Policies:
     10




---



##### Table of Contents



Accounting for Sales of Real Estate.
 Comparison of Financial Condition as of December 31, 2006 and March 31, 2007:
      Results of Operations-Comparison of the Three-Months Ended March 31, 2007 and 2006:
 11




---



##### Table of Contents



.
   Asset/Liability
Management: .
 12




---



##### Table of Contents



Stock Repurchases:
 Capital Resources:
 Asset Quality Ratios:
 March 31,
    
    December 31,2007
    
    2006Nonperforming loans as a percent of total loans
    
    
    0.41
    %
    
    
    0.37
    %Nonperforming assets as a percent of total assets
    
    
    0.30
    %
    
    
    0.27
    %Allowance for loan losses as a percent of total loans
    
    
    1.22
    %
    
    
    1.20
    %Allowance for loan losses as a percent of nonperforming loans
    
    
    299.59
    %
    
    
    329.05
    %
 New
Branch Office:
 
 Item 3. Controls and Procedures
  13




---



##### Table of Contents



14




---



##### Table of Contents



PART II  OTHER INFORMATION
 
 ITEM 6. Exhibits
   15




---



##### Table of Contents



SIGNATURES
  PINNACLE BANCSHARES, INCDATE : May 15, 2007
    BY:
    /s/ Robert B. Nolen Jr.Robert B. Nolen, Jr.President and Chief
Executive Officer
(Principal Executive Officer and
Principal Financial Officer) /s/ Marie GuthrieMarie GuthrieTreasurer
(Principal Accounting Officer) 16