<PAGE>   1



                     U.S. SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549
                                   FORM 10-QSB

[X]       Quarterly Report Under Section 13 or 15(d) of the Securities
                              Exchange Act of 1934

                For the quarterly period ended September 30, 1997

[ ]       Transition Report Pursuant to 13 or 15(d) of the Securities
                              Exchange Act of 1934

          For the transition period from               to
                                         -------------    -------------


                         Commission File Number 0-22891.
                                                -------

                            PINNACLE BANCSHARES, INC.
        -----------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)


         GEORGIA                                        58-2326075
         -------                                        ----------
(State or other Jurisdiction of          (I.R.S. Employer Identification Number)
Incorporation or Organization)

                  110 East Hill Street, Thomson, Georgia 30824
                  --------------------------------------------
                    (Address of Principal Executive Offices)


                     Issuers Telephone Number (706) 595-1600
                                              --------------


                                 Not Applicable
              ----------------------------------------------------
              (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    NO X
                                     ---   ---

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date.

            Class                                Outstanding at November 7, 1997
-----------------------------                    -------------------------------
Common Stock, $.001 Par Value                             635,380 shares

Transitional Small Business Disclosure Format:  Yes           No   X
                                                     -----       ----- 

<PAGE>   2



                            PINNACLE BANCSHARES, INC.
                                   Form 10-QSB

                                      Index



<TABLE>
<S>               <C>                                                                        <C>
PART I            FINANCIAL INFORMATION

Item 1.           Financial Statements (Unaudited)

                  Condensed Consolidated Balance Sheet as of September 30, 1997                1

                  Condensed Consolidated Statements of Income for the Three Months
                   Ended September 30, 1997 and 1996, and the Nine Months Ended
                   September 30, 1997 and 1996                                                 2

                  Condensed Consolidated Statement of Cash Flows for the Nine Months
                   Ended September 30, 1997 and 1996                                           3

                  Notes to Condensed Consolidated Financial Statements                       4 - 5

Item 2.           Management's Discussion and Analysis of Financial Condition and Results
                   of Operations                                                             6 - 9

PART II.          OTHER INFORMATION

Item 5.           Other Information                                                           10

Item 6.           Exhibits and Reports on Form 8-K                                            10

                  SIGNATURES                                                                  11

                  Index to Exhibits                                                           12
</TABLE>


<PAGE>   3



                                     PART I
                              FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS
                            PINNACLE BANCSHARES, INC.

                      CONDENSED CONSOLIDATED BALANCE SHEET
                               SEPTEMBER 30, 1997
                                   (UNAUDITED)
                             (dollars in thousands)

<TABLE>
<S>                                                                               <C>    
ASSETS

Cash and due from banks                                                           $ 1,132
Federal funds sold                                                                  5,080
Interest-bearing deposits in banks                                                    199
Securities available for sale                                                      11,219
Loans, net of allowance for loan losses of $883                                    17,887
Bank premises and fixed assets                                                      1,439
Accrued interest receivable                                                           308
Foreclosed real estate, net of allowance                                              452
Deferred tax benefit                                                                  261
Other assets                                                                          100
                                                                                  -------

         TOTAL ASSETS                                                             $38,077
                                                                                  =======
LIABILITIES AND STOCKHOLDERS' EQUITY

DEPOSITS:
     Non-interest bearing                                                         $ 3,786
     Interest-bearing:
         NOW accounts                                                               4,776
         Savings                                                                    1,688
         Money market accounts                                                      2,720
         Time deposits of $100,000, and over                                        4,681
         Other time deposits                                                       12,900
                                                                                  -------
              Total deposits                                                       30,551

Accrued expenses and other liabilities                                                334
                                                                                   ------
         TOTAL LIABILITIES                                                         30,885
                                                                                   ------
STOCKHOLDERS' EQUITY:
     Preferred stock, par value $.001; 1,000,000 shares authorized; none issued        --
     Common stock, par value $.001; 9,000,000 shares authorized;
      635,380 shares issued and outstanding                                             1
     Additional paid-in capital                                                     6,355
     Retained earnings                                                                879
     Unrealized loss on securities available-for-sale, net of tax                     (43)
                                                                                  -------
         TOTAL STOCKHOLDERS' EQUITY                                                 7,192
                                                                                  -------   
         TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                               $38,077
                                                                                  =======
</TABLE>





See notes to condensed consolidated financial statements.

                                       1


<PAGE>   4



                            PINNACLE BANCSHARES, INC.

                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                   (UNAUDITED)
                (dollars in thousands, except per share amounts)


<TABLE>
<CAPTION>
                                                                         Three            Nine         Three            Nine
                                                                         Months          Months        Months          Months
                                                                         Ended           Ended         Ended           Ended
                                                                      September 30,  September 30,  September 30,    September 30,
                                                                          1997            1997          1996            1996
                                                                      -------------  -------------  -------------    -------------
<S>                                                                       <C>            <C>            <C>            <C>   
INTEREST INCOME:                                                                                                  
     Interest and fees on loans                                           $494           $1,513         $556           $1,632
     Interest on taxable securities                                        161              504          181              503
     Interest on nontaxable securities                                      21               67           24               71
     Interest on Federal funds sold                                         57               96           19               76
     Interest on deposits in other banks                                     4                9            7               15
                                                                          ----           ------         ----           ------
         TOTAL INTEREST INCOME                                             737            2,189          787            2,297
                                                                          ----           ------         ----           ------
                                                                                                                  
INTEREST EXPENSE                                                                                                  
     Interest on time deposits of $100,000 or more                          73              206           87              204
     Interest on other deposits                                            234              689          260              839
     Interest on Federal funds purchased                                    --                2           --               --
                                                                          ----           ------         ----           ------
         TOTAL INTEREST EXPENSE                                            307              897          347            1,043
                                                                          ----           ------         ----           ------
                                                                                                                  
         NET INTEREST INCOME                                               430            1,292          440            1,254
                                                                                                                  
PROVISION FOR LOAN LOSSES                                                    3               15            6               53
                                                                          ----           ------         ----           ------
                                                                                                                  
         NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES               427            1,277          434            1,201
                                                                          ----           ------         ----           ------
                                                                                                                  
NONINTEREST INCOME                                                                                                
     Service charges on deposits                                            51              162           64              179
     Other income                                                           13               33           17               37
     Net realized gain (loss), sales of available-for-sale securities        2                2           (7)               1
                                                                          ----           ------         ----           ------
                                                                            66              197           74              217
                                                                          ----           ------         ----           ------
                                                                                                                  
NONINTEREST EXPENSE                                                                                               
     Salaries and employee benefits                                        213              602          179              538
     Occupancy expenses                                                     42              121           68              157
     Other expenses                                                        191              453          129              367
                                                                          ----           ------         ----           ------
                                                                           446            1,176          376            1,062
                                                                          ----           ------         ----           ------
                                                                                                                  
INCOME BEFORE INCOME TAXES                                                  47              298          132              356
                                                                                                                  
INCOME TAX EXPENSE                                                          13               93           41              109
                                                                          ----           ------         ----           ------
                                                                                                                  
     NET INCOME                                                           $ 34           $  205         $ 91           $  247
                                                                          ====           ======         ====           ======
                                                                                                                  
NET INCOME PER SHARE OF COMMON STOCK                                      $.05           $  .32         $.14           $  .39
                                                                          ====           ======         ====           ======
                                                                                                                  
DIVIDENDS PER SHARE OF COMMON STOCK                                       $ --           $  .20         $ --           $  .10
                                                                          ====           ======         ====           ======
</TABLE>


See notes to condensed consolidated financial statements.

                                       2


<PAGE>   5



                            PINNACLE BANCSHARES, INC.

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                             (dollars in thousands)

<TABLE>
<CAPTION>
                                                                                 Nine Months
                                                                              Ended September 30
                                                                              ------------------
                                                                               1997         1996
                                                                              -----         ----
<S>                                                                          <C>          <C>    
CASH FLOWS FROM OPERATING ACTIVITIES
     Net income                                                              $   205      $   247
     Adjustments to reconcile net income to net cash
       provided by operating activities
         Depreciation and amortization                                            62           90
         Provision for loan loss                                                  15           53
         Deferred income tax                                                      32          104
         Adjustment to foreclosed real estate                                      5            2
         Net decrease in accrued interest receivable                             101           14
         Net (increase) decrease in other assets                                 (52)          12
         Net increase in other liabilities                                        95           59
                                                                             -------      -------
              NET CASH PROVIDED BY OPERATING ACTIVITIES                          463          581
                                                                             -------      -------

CASH FLOWS FROM INVESTING ACTIVITIES
     Net (increase) decrease in federal funds sold                            (3,660)       5,950
     Net increase in interest-bearing deposits with banks                        (99)        (398)
     Net (increase) decrease in loans, net                                     2,085       (1,272)
     Purchases of available for sale securities                               (1,726)      (5,360)
     Proceeds from sales and maturities of available-for-sale securities       3,085        3,204
     Net purchases of premises and equipment                                     (61)         (41)
     Proceeds from sale of foreclosed real estate                                188           --
                                                                             -------      -------
              NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES               (188)       2,083
                                                                             -------      -------

CASH FLOWS FROM FINANCING ACTIVITIES
     Net increase in federal funds purchased                                      --          270
     Net decrease in deposits                                                   (104)      (2,783)
     Dividends paid                                                             (127)         (63)
                                                                             -------      -------
              NET CASH USED IN FINANCING ACTIVITIES                             (231)      (2,576)
                                                                             -------      -------

NET INCREASE IN CASH AND DUE FROM BANKS                                           44           88

CASH AND DUE FROM BANKS AT BEGINNING OF PERIOD                                 1,088        2,640
                                                                             -------      -------

CASH AND DUE FROM BANKS AT END OF PERIOD                                     $ 1,132      $ 2,728
                                                                             =======      =======
</TABLE>


See notes to condensed consolidated financial statements.

                                       3
                                        

<PAGE>   6



                            PINNACLE BANCSHARES, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                               SEPTEMBER 30, 1997
                                   (UNAUDITED)

NOTE 1 - BASIS OF PRESENTATION

The accompanying financial statements include the accounts of Pinnacle
Bancshares, Inc. (the "Company") and its wholly-owned subsidiary, McDuffie Bank
& Trust (the "Bank"). Significant intercompany transactions and accounts are
eliminated in consolidation.

The financial statements as of and for the three and nine months ended September
30, 1997 and 1996 are unaudited and have been prepared pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations. These consolidated financial
statements should be read in conjunction with the audited financial statements
and notes thereto included in the Bank's annual report for the year ended
December 31, 1996.

The financial information included herein reflects all adjustments (consisting
of normal recurring adjustments) which are, in the opinion of management,
necessary to a fair presentation of the financial position and results for
interim periods.

NOTE 2 - REORGANIZATION OF THE BUSINESS

On June 6, 1997, the Bank's plan of corporate reorganization (the
"Reorganization"), under which the Bank became a wholly-owned subsidiary of the
Company was consummated. Consummation of the Reorganization was conditioned upon
(i) the approval by the shareholders of the Bank as required by law and (ii) the
receipt of any required regulatory approvals, including approvals from the Board
of Governors of the Federal Reserve System, the Federal Deposit Insurance
Corporation and the Georgia Department of Banking and Finance.

The Reorganization was accomplished by merging Pinnacle Interim Corp.
("Interim") with the Bank under the Bank's charter and with the title of
McDuffie Bank & Trust. On June 6, 1997, each outstanding share of common stock
of the Bank was effectively exchanged for one share of common stock of the
Company. As a result, the shareholders of the Bank became shareholders of the
Company and the Bank became a wholly-owned subsidiary of the Company. Further,
the officers and directors of the Bank became the officers and directors of the
Company.

NOTE 3 - EARNINGS PER SHARE

Earnings per share are calculated on the basis of the weighted average number of
shares outstanding in accordance with Accounting Principles Board "APB" Opinion
No. 15. Fully diluted earnings per share are not presented because stock options
outstanding are not materially dilutive and did not effect presented earnings
per share.

The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standard "SFAS" No. 128, "Earnings Per Share". This Statement
provides for changes in the calculation and presentation of earnings per share
information and is effective for interim and annual financial statements of
periods ending after December 15, 1997. Management of the Company has not yet
determined the effect of the adoption of this Statement on the consolidated
financial statements.


                                       4


<PAGE>   7



                            PINNACLE BANCSHARES, INC.

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               SEPTEMBER 30, 1997
                                   (UNAUDITED)

NOTE 4 - STOCK OPTION PLAN

On April 28, 1997, at the Annual Meeting of shareholders of the Bank, the Bank's
shareholders adopted an employee stock option plan (the "Plan") that provides
incentive stock options and nonqualified stock options to directors and key
employees of the Bank. On the effective date of the Reorganization, the Plan was
transferred to the Company and was renamed the "Pinnacle Bancshares, Inc. 1997
Stock Option Plan". During the quarter ended September 30, 1997, options on
8,500 shares of stock were granted to key employees of the Bank and the Company.

The Company has adopted SFAS 123, "Accounting for Stock-Based Compensation".
SFAS 123 establishes a "fair-value" based method of accounting for stock-based
compensation plans. SFAS 123 encourages entities to adopt the fair-value method
in place of the intrinsic value method currently in effect under the provisions
of APB Opinion No. 25.

Under the fair value method of accounting, all arrangements under which
employees receive shares of stock or other equity instruments or under which
employers incur liabilities to employees in amounts based on the price of its
stock result in the measurement of compensation cost at the grant date of the
award which is recognized over the service period, usually the vesting period.
Under the intrinsic value method, compensation cost is measured by the excess of
the quoted market price of the stock, if any, over the amount the employee must
pay to acquire the stock.

As permitted by SFAS 123, the Company has elected to continue its current method
of using the intrinsic value method. However, the Company will be required to
present pro forma disclosures of net income and earnings per share as if the
Company had adopted the recognition provisions of SFAS 123 beginning with the
1997 Form 10-KSB and related financial statements.


                                        5


<PAGE>   8



                            PINNACLE BANCSHARES, INC.

ITEM 2.       MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
              RESULTS OF OPERATIONS

                              RESULTS OF OPERATIONS

OVERVIEW

In January 1997, the Board of Directors of McDuffie Bank and Trust (the "Bank"),
determined that it was in the best interests of the Bank to reorganize the Bank
into a holding company structure. Accordingly, on January 31, 1997, Pinnacle
Bancshares, Inc. (the "Company") was incorproated under the laws of the State of
Georgia to operate as a bank holding company pursuant to the Federal Bank
Holding Company Act of 1956, as amended, and to purchase 100% of the issued and
outstanding capital stock of the Bank. On April 28, 1997, the shareholders of
the Bank, at the Bank's Annual Meeting of Shareholders, duly approved and
authorized the Reorganization and, after receipt of final regulatory approvals,
the Reorganization was consummated on June 6, 1997.

The Company's net income was $34,000 for the third quarter of 1997, a decrease
of $57,000 (62.6%) compared to net income of $91,000 for the third quarter of
1996. Earnings per share were $0.05 for the third quarter of 1997, a decrease of
$0.09 (64.3%) compared to $0.14 for the third quarter of 1996. Total assets at
September 30, 1997 was $38,077,000. An increase of $51,000 (1.3%) from December
31, 1996 and a decrease of $1,930,000 (4.8%) from September 30, 1996.

The decline in net income resulted from decreases in net interest income (2.2%)
and noninterest income (10.8%), and an increase in noninterest expense (18.6%).
The provision for loan losses for the third quarter of 1997 was $3,000 compared
to $6,000 for the third quarter of 1996. Income before income taxes decreased
$85,000 (64.4%) compared to the third quarter of 1996.

The return on average assets was 0.36% (annualized) for the quarter ended
September 30, 1997, compared to 0.95% (annualized) for the same period in 1996.
The return on average equity for the third quarter of 1997 was 1.8%
(annualized), compared to 5.2% (annualized) for the third quarter of 1996.

Further discussion of significant items affecting net income are discussed in
detail below.

NET INTEREST INCOME

Net interest income is the difference between the interest and fees earned on
loans, securities, and other interest-bearing assets (interest income) and the
interest paid on deposits and borrowed funds (interest expense). Higher net
interest income is a result of the relationship between the interest-earning
assets and the interest-bearing liabilities.

Net interest income decreased $10,000 (2.2%) during the third quarter from the
comparable period in 1996, primarily due to a change in the composition of
interest-earning assets. Interest-earning assets were $34,385,000 at September
30, 1997. Loans, the highest yielding component of interest-earning assets,
decreased $2,229,000 (11.1%) from December 31, 1996 and decreased $3,058,000
(14.6%) from September 30, 1996. At September 30, 1997 loans represented 52.0%
of interest-earning assets compared to 58.8% at December 31, 1996 and 62.9% at
September 30, 1996. The decrease from September 1996 was a result of the
maturity of several large loans and the maturity of term federal funds that were
matched with the expected maturity of the public funds deposits described below.
Investments in securities decreased $1,384,000 (11.0%) from December 31, 1996
and decreased $1,148,000 (9.1%) from September 30, 1996. Interest-bearing
deposits at September 30, 1997 were $26,765,000. This represents a decrease of
$794,000 (2.9%) from December 31, 1996 and a decrease of $2,610,000 (8.9%) from
September 30, 1996. The decrease primarily resulted from a withdrawal of a large
deposit of public funds from the Bank.


                                        6


<PAGE>   9


                            PINNACLE BANCSHARES, INC.

ITEM 2.       MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
              RESULTS OF OPERATIONS (CONTINUED)


INTEREST INCOME

Interest income for the third quarter of 1997 decreased $50,000 (6.4%) from the
comparable quarter in 1996 primarily due to the change in the composition of
interest-earning assets previously described. Interest income on loans decreased
$62,000 (11.2%) and interest income on securities decreased $23,000 (11.2%)
compared to the third quarter of 1996.

INTEREST EXPENSE

Interest expense for the third quarter of 1997 decreased $40,000 (11.5%) from
the third quarter of 1996, primarily as a result of the decline in
interest-bearing deposit accounts as previously discussed.

NONINTEREST INCOME

Noninterest income for the third quarter of 1997 decreased $8,000 (10.8%) from
the comparable quarter in 1996 primarily from a decrease in income from service
charges on deposit accounts.

NONINTEREST EXPENSE

Noninterest expense for the third quarter of 1997 increased $70,000 (18.6%) from
the comparable quarter of 1996. The increase was attributable to an increase in
salaries and benefits of $34,000 (19.0%) and an increase in other operating
expenses of $62,000 (48.1%). The increase in other operating expenses included
approximately $50,000 of non-recurring expenses related to the organization of
the newly-formed bank holding company. Occupancy expenses declined $26,000
(38.2%), primarily from decreased maintenance costs and depreciation expense
estimates.

INCOME TAXES

Income tax expense for the third quarter of 1997 totaled $13,000, representing a
decrease of $28,000 (68.3%) from the comparable quarter in 1996. The decrease
primarily results from lower taxable income attributable to the items previously
discussed.


                          REVIEW OF FINANCIAL CONDITION

OVERVIEW

Management continuously monitors the financial condition of the Bank in order to
protect depositors, increase retained earnings and protect current and future
earnings. Further discussion of significant items affecting the Bank's financial
condition are discussed in detail below.

ASSET QUALITY

A major key to long-term earnings growth is the maintenance of a high-quality
loan portfolio. The Bank's directive in this regard is carried out through its
policies and procedures for extending credit to the Bank's customers. The goal
and result of these policies and procedures is to provide a sound basis for new
credit extensions and an early recognition of problem assets to allow the most
flexibility in their timely disposition.


                                        7


<PAGE>   10

                    PINNACLE BANCSHARES, INC. AND SUBSIDIARY

ITEM 2.       MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
              RESULTS OF OPERATIONS (CONTINUED)


Non-performing assets were $502,000 at September 30, 1997, compared to $659,000
at December 31, 1996 and $695,000 at September 30, 1996. The composition of
non-performing assets for each date is shown below.

<TABLE>
<CAPTION>
                                      September 30,   December 31,   September 30,
                                          1997            1996            1996
                                        --------        --------        --------
<S>                                     <C>             <C>             <C>     
Non-accrual loans                       $ 50,000        $143,000        $ 65,000
OREO, net of valuation allowance         452,000         516,000         630,000
                                        --------        --------        --------

                                        $502,000        $659,000        $695,000
                                        ========        ========        ========
</TABLE>

The ratio of non-performing assets to total loans and other real estate was 2.7%
at September 30, 1997, 3.2% at December 31, 1996, and 3.6% at September 30,
1996.

Reduction of non-performing assets continues to be a management priority.

Additions to the allowance for loan losses are made periodically to maintain the
allowance at an appropriate level based upon management's analysis of potential
risk in the loan portfolio. The amount of the loan loss provision is determined
by an evaluation of the level of loans outstanding, the level of non-performing
loans, historical loan loss experience, delinquency trends, the amount of actual
losses charged to the reserve in a given period, and assessment of present and
anticipated economic conditions. A provision for losses in the amount of $3,000
was charged to expense for the quarter ended September 30, 1997. At September
30, 1997, the ratio of allowance for loan losses to total loans was 4.7%. At
December 31, 1996 the ratio was 4.2%, and was 4.4% at September 30, 1996.
Management considers the current allowance for loan losses appropriate based
upon its analysis of the potential risk in the portfolio, although there can be
no assurance that the assumptions underlying such analysis will continue to be
correct.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity is the ability of an organization to meet its financial commitments
and obligations on a timely basis. These commitments and obligations include
credit needs of customers, withdrawals by depositors, and payment of operating
expenses and dividends. The Bank does not anticipate any events which would
require liquidity beyond that which is available through deposit growth, federal
funds balances, or investment portfolio maturities. The Bank actively manages
the levels, types and maturities of earning assets in relation to the sources
available to fund current and future needs to ensure that adequate funding will
be available at all times.

The Bank's liquidity remains adequate to meet operating and loan funding
requirements. The Bank's liquidity ratio at September 30, 1997 was 56.0%,
compared to 46.4% at December 31, 1996, and 42.0% at September 30, 1996.

Management is committed to maintaining capital at a level sufficient to protect
depositors, provide for reasonable growth, and fully comply with all regulatory
requirements. Management's strategy to achieve this goal is to retain sufficient
earnings while providing a reasonable return on equity. Federal banking
regulations establish certain capital adequacy standards required to be
maintained by banks. These regulations set minimum requirements for risk-based
capital of 4% for core capital ("Tier I"), 8% for total risk-based capital and
3% for the leverage ratio. At September 30, 1997, the Bank's Tier I capital was
31.6% and total risk-based capital was 32.4%, compared to 30.8% and 32.1% at
year-ended December 31, 1996,


                                        8


<PAGE>   11




                    PINNACLE BANCSHARES, INC. AND SUBSIDIARY

ITEM 2.       MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
              RESULTS OF OPERATIONS (CONTINUED)


respectively. At September 30, 1997, the Bank's leverage ratio was 18.3%
compared to 17.4% at December 31, 1996.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

The Company may, from time to time, make written or oral forward-looking
statements, including statements contained in the Company's filings with the
Securities and Exchange Commission (the "Commission") and its reports to
stockholders. Such forward-looking statements are made based on management's
belief as well as assumptions made by, and information currently available to,
management pursuant to "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995. The Company's actual results may differ
materially from the results anticipated in these forward-looking statements due
to a variety of factors, including governmental monetary and fiscal policies,
deposit levels, loan demand, loan collateral values, securities portfolio values
and interest rate risk management; the effects of competition in the banking
business from other commercial banks, savings and loan associations, mortgage
banking firms, consumer finance companies, credit unions, securities brokerage
firms, insurance companies, money market mutual funds and other financial
institutions operating in the Company's market area and elsewhere, including
institutions operating through the Internet; changes in government regulations
relating to the banking industry, including regulations relating to branching
and acquisitions; failure of assumptions underlying the establishment of
reserves for loan losses, including the value of collateral underlying
delinquent loans, and other factors. The Company cautions that such factors are
not exclusive. The Company does not undertake to update any forward-looking
statements that may be made from time to time by, or on behalf of, the Company.


                                       9

<PAGE>   12



                                     PART II
                                OTHER INFORMATION


ITEM 5.       OTHER INFORMATION

On October 7, 1997, the Company entered into an agreement (the "Agreement") with
a group of Augusta, Georgia businessmen including Ray Brown, Arthur J. Gay, Jr.,
J. Randal Hall, George H. Inman, John W. Lee, A. Montague Miller and Julian W.
Osbon (collectively, the "Augusta Group") whereby, subject to approval by the
Company's shareholders and certain other conditions, the Company has agreed to
register a number of shares of its Common Stock having a minimum aggregate value
of $7 million for offering to the public. If the offering conditions are met,
all of the shares in the offering will be offered and sold on a best-efforts
basis by certain officers and directors of the Company, who will receive no
commissions for such sales. The proceeds of the offering will be principally
used to expand the Company's banking operations. Further, subject to required
regulatory approvals and certain other conditions, certain members or
representatives of the Augusta Group will be named to the Board of Directors of
the Company and the Board of Directors of the Bank. Under the Agreement, Patrick
G. Blanchard has been named President and Chief Executive Officer of the
Company. Heyward Horton, Jr., former President and Chief Executive Officer of
the Company, continues to serve the Company as President and Chief Executive
Officer of the Bank.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

     (a)     Exhibit No.   Description

                  10.1     Employment Agreement dated October 6, 1997 by and
                           among McDuffie Bank & Trust, Pinnacle Bancshares,
                           Inc., and Patrick G. Blanchard, Sr.

                  10.2     Agreement dated October 6, 1997 among Ray Brown, RDB
                           Limited Partnership, Arthur J. Gay, Jr., J. Randal
                           Hall, George H. Inman, John W. Lee, A. Montague
                           Miller and Julian W. Osbon as the Augusta Group and
                           Pinnacle Bancshares, Inc.

                  27       Financial Data Schedule (for SEC use only)

     (b)     No reports on Form 8-K were filed during the quarter ended 
             September 30, 1997.



                                       10


<PAGE>   13



                                   SIGNATURES



In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.




                            PINNACLE BANCSHARES, INC.





November 13, 1997                 By:   /s/  Patrick G. Blanchard, Sr.
--------------------------            --------------------------------------
Date                                  Patrick G. Blanchard, Sr.
                                      President and Chief Executive Officer
                                      (principal executive officer)




November 13, 1997                 By:   /s/  J. Harold Ward, Jr.
--------------------------            --------------------------------------
Date                                  J. Harold Ward, Jr.
                                      Senior Vice President, Chief Financial
                                      Officer (principal financial and 
                                      accounting officer)


                                       11


<PAGE>   14



                                INDEX TO EXHIBITS



<TABLE>
<CAPTION>
Exhibit Number             Description                                                  Sequential Page Number


     <S>                   <C>                                                          <C>       
     10.1                  Employment Agreement dated October 6, 1997 by
                           and among McDuffie Bank & Trust, Pinnacle
                           Bancshares, Inc., and Patrick G. Blanchard, Sr.

     10.2                  Agreement dated October 6, 1997 among Ray Brown,
                           RDB Limited Partnership, Arthur J. Gay, Jr., J. Randal
                           Hall, George H. Inman, John W. Lee, A. Montague
                           Miller and Julian W. Osbon as the Augusta Group and
                           Pinnacle Bancshares, Inc.

     27                    Financial Data Schedule (for SEC use only).
</TABLE>


                                       12