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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-K





(Mark One)

|x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ------------------------------------------------------------------------------------

For the fiscal year ended December 31, 2008

or



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from  to

Commission file number: 000-23909





PINNACLE BANKSHARES CORPORATION

(Exact name of registrant as specified in its charter)







|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Virginia                                                       |  | 54-1832714                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)



|                                         |  |           
|---------------------------------------- |  | ----------
|P.O. Box 29, Altavista, Virginia         |  | 24517-0029
|(Address of principal executive offices) |  | (Zip Code)

Registrants telephone number, including area code (434) 369-3000





Securities registered pursuant to Section 12(b) of the Act:



|                    |  |                                          
|------------------- |  | -----------------------------------------
|Title of each class |  | Name of each exchange on which registered
|n/a                 |  | n/a                                      

Securities registered pursuant to Section 12(g) of the Act:

Common stock, par value $3.00





Indicate by check mark if the registrant is a
well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes   ̈    No  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act.    Yes   ̈    No  x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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   ̈

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of
this chapter) is not contained herein, and will not be contained, to the best of registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form
10-K.   ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):



|                        |  |                                                  |  |                           |  |  
|----------------------- |  | ------------------------------------------------ |  | ------------------------- |  | -
|Large accelerated filer |  |  ̈                                                |  | Accelerated filer         |  |  ̈
|                        |  |                                                  | 
|Non-accelerated filer   |  |  ̈  (Do not check if a smaller reporting company) |  | Smaller reporting company |  | x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Act).    Yes   ̈    No  x

The aggregate market value of the issuers common stock held by non-affiliates as of June 30, 2008 was $26,063,312.

There were
1,485,089 shares of common stock of the issuer outstanding as of March 27, 2009.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the 2008 Annual Report to Shareholders, which is attached hereto as Exhibit 13, are incorporated by reference in Part II of this report. Portions of the
Proxy Statement for the Companys Annual Meeting of Shareholders to be held on April 14, 2009 are incorporated by reference in Part III of this report.









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PINNACLE BANKSHARES CORPORATION

2008 FORM 10-K ANNUAL REPORT

TABLE
OF CONTENTS



|           |  |                                                                                                              |  |   
|---------- |  | ------------------------------------------------------------------------------------------------------------ |  | --
|           |  | PART I                                                                                                       |  |   
|Item 1.    |  | Business                                                                                                     |  | 3 
|           |  | General Development of Business                                                                              |  | 3 
|           |  | Competition                                                                                                  |  | 3 
|           |  | Regulation and Supervision                                                                                   |  | 4 
|           |  | Employees                                                                                                    |  | 10
|           |  | Executive Officers of the Registrant                                                                         |  | 10
|Item 1A.   |  | Risk Factors                                                                                                 |  | 11
|Item 1B.   |  | Unresolved Staff Comments                                                                                    |  | 11
|Item 2.    |  | Properties                                                                                                   |  | 11
|Item 3.    |  | Legal Proceedings                                                                                            |  | 11
|Item 4.    |  | Submission of Matters to a Vote of Security Holders                                                          |  | 12
|           |  |                                                                                                             
|           |  | PART II                                                                                                      |  |   
|Item 5.    |  | Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |  | 12
|Item 6.    |  | Selected Financial Data                                                                                      |  | 12
|Item 7.    |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                        |  | 12
|Item 7A.   |  | Quantitative and Qualitative Disclosures About Market Risk                                                   |  | 12
|Item 8.    |  | Financial Statements and Supplementary Data                                                                  |  | 12
|Item 9.    |  | Changes In and Disagreements With Accountants on Accounting and Financial Disclosure                         |  | 12
|Item 9A.   |  | Controls and Procedures                                                                                      |  | 12
|Item 9B.   |  | Other Information                                                                                            |  | 13
|           |  |                                                                                                             
|           |  | PART III                                                                                                     |  |   
|Item 10.   |  | Directors, Executive Officers and Corporate Governance                                                       |  | 14
|Item 11.   |  | Executive Compensation                                                                                       |  | 14
|Item 12.   |  | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters               |  | 14
|Item 13.   |  | Certain Relationships and Related Transactions, and Director Independence                                    |  | 15
|Item 14.   |  | Principal Accountant Fees and Services                                                                       |  | 15
|           |  |                                                                                                             
|           |  | PART IV                                                                                                      |  |   
|Item 15.   |  | Exhibits, Financial Statement Schedules                                                                      |  | 15
|           | 
|SIGNATURES |  | 17                                                                                                          



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PART I



|Item 1. | Business.
|------- | ---------

General Development of
Business

Pinnacle Bankshares Corporation, a Virginia corporation (the Company), was organized in 1997 and is registered as
a bank holding company under the Bank Holding Company Act of 1956, as amended. The Company is headquartered in Altavista, Virginia. The Company conducts all of its business activities through the branch offices of its wholly-owned subsidiary bank,
First National Bank (the Bank). The Company exists primarily for the purpose of holding the stock of its subsidiary, the Bank, and of such other subsidiaries as it may acquire or establish. The Companys administrative offices are
located at 622 Broad Street, Altavista, Virginia.

The Bank was organized as a national bank in 1908 and commenced general banking
operations in December of that year, providing services to commercial and agricultural businesses and individuals in the Altavista area. With an emphasis on personal service, the Bank today offers a broad range of commercial and retail banking
products and services including checking, savings and time deposits, individual retirement accounts, merchant bankcard processing, residential and commercial mortgages, home equity loans, consumer installment loans, agricultural loans, investment
loans, small business loans, commercial lines of credit and letters of credit. The Bank also offers a full range of investment, insurance and annuity products through its association with Infinex Investments, Inc. and Bankers Insurance, LLC.

The Bank serves a trade area consisting primarily of Campbell County, northern Pittsylvania County, eastern Bedford County, northern
Franklin County, Amherst County and the city of Lynchburg from facilities located in Campbell County, Bedford County, Franklin County, the town of Altavista, the town of Amherst, the town of Rustburg and the city of Lynchburg, Virginia. In June 1999
the Company opened the Airport facility, located just outside the Lynchburg city limits, and in August 2000, opened the Old Forest Road facility, located on Old Forest Road in Lynchburg, and the Brookville Plaza facility, located on Timberlake Road
in Lynchburg. In August 2004 the Company opened the Forest facility, located in Forest, Bedford County, Virginia. In July 2005 the Company opened the Smith Mountain Lake loan production facility, located in Moneta, Franklin County, Virginia. In May
2006 the Company relocated the Brookville Plaza facility to Timberlake Road in Campbell County. In November 2006, the Company opened a temporary Amherst facility located in the town of Amherst. The Company opened a permanent Amherst facility on
South Main Street in Amherst in March 2008. In February 2009, the Company opened the Rustburg facility, located on Village Highway in the Rustburg Marketplace Shopping Center, which further increases our presence in Campbell County.

The Bank has two wholly-owned subsidiaries. FNB Property Corp., which is a Virginia corporation, was formed to hold title to Bank premises real estate.
FNB Property Corp. sold land held for sale in 2003 and purchased land in Forest, Virginia that was used to build the Forest facility. First Properties, Inc., also a Virginia corporation, was formed to hold title to other real estate owned. One
property valued at $300,000 is being held in other real estate owned as of December 31, 2008.

Competition

The banking business in central Virginia is highly competitive with respect to both loans and deposits and is dominated by a number of major banks that
have offices operating throughout the state and in the Companys market area. The Company actively competes for all types of deposits and loans with other banks and with nonbank financial institutions, including savings and loan associations,
finance companies, credit unions, mortgage companies, insurance companies and other lending institutions.

Institutions such as brokerage
firms, credit card companies and even retail establishments offer alternative investment vehicles such as money market funds as well as traditional banking services. Other entities (both public and private) seeking to raise



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capital through the issuance and sale of debt or equity securities also represent a source of competition for the Company with respect to the acquisition of
deposits. Among the advantages that the major banks have over the Company is their ability to finance extensive advertising campaigns and to allocate their investment assets to regions of highest yield and demand over a more diverse geographic area.
Although major banks have these competitive advantages over small independent banks, the Company actively tries to turn the loss of local independent banks to its competitive advantage by soliciting customers who prefer the personal service offered
by a small independent bank.

The Company does not depend upon a single customer or industry, the loss of which would have a material
adverse effect on the Companys financial condition. Two industries in the Companys market area that have been adversely affected in recent years are the textile and furniture industries. Cheaper production costs overseas have led to job
layoffs and a few plant closings in the immediate area but have not affected the Companys overall profitability.

The Company
believes that its prompt response to lending requests is a key factor to the Companys competitive position in its primary service area. In addition, local decision-making and the accessibility of senior management to customers also distinguish
the Company from other area financial institutions.

In order to compete with the other financial institutions in its primary service area,
the Company relies principally upon local promotional activities, personal contact by its officers, directors, employees and stockholders and its ability to offer specialized services to customers. The Companys promotional activities emphasize
the advantages of dealing with a local bank attuned to the particular needs of the community.

Regulation and Supervision

Set forth below is a brief description of the material laws and regulations that affect the Company. The description of these statutes and
regulations is only a summary and does not purport to be complete. This discussion is qualified in its entirety by reference to the statutes and regulations summarized below. No assurance can be given that these statutes or regulations will not
change in the future.

General. The Company is subject to the periodic reporting requirements of the Securities Exchange Act
of 1934, as amended (the Exchange Act), which include, but are not limited to, the filing of annual, quarterly and other reports with the Securities and Exchange Commission (the SEC). As an Exchange Act reporting company, the
Company is directly affected by the Sarbanes-Oxley Act of 2002 (the SOX), which is aimed at improving corporate governance and reporting procedures and requires additional corporate governance measures and expanded disclosure with
respect to the Companys corporate operations and internal controls. The Company is complying with the SEC and other rules and regulations implemented pursuant to the SOX and intends to comply with any applicable rules and regulations
implemented in the future. Although the Company has incurred and will continue to incur additional expense in complying with the provisions of the SOX and the resulting regulations, this compliance has not had, and is not expected to have, a
material impact on the Companys financial condition or results of operations.

The Company is a bank holding company within the
meaning of the Bank Holding Company Act of 1956, and is registered as such with, and subject to the supervision of, the Board of Governors of the Federal Reserve System (the FRB). Generally, a bank holding company is required to obtain
the approval of the FRB before it may acquire all or substantially all of the assets of any bank, and before it may acquire ownership or control of the voting shares of any bank if, after giving effect to the acquisition, the bank holding company
would own or control more than 5% of the voting shares of such bank. The FRBs approval is also required for the merger or consolidation of bank holding companies.

The Company is required to file periodic reports with the FRB and provide any additional information the FRB may require. The FRB also has the authority to examine the Company and the Bank, as well as any arrangements
between the Company and the Bank, with the cost of any such examinations to be borne by the Company.

Banking subsidiaries of bank holding
companies are also subject to certain restrictions imposed by Federal law in dealings with their holding companies and other affiliates. Subject to certain restrictions set forth in the Federal Reserve Act, a bank



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can loan or extend credit to an affiliate, purchase or invest in the securities of an affiliate, purchase assets from an affiliate or issue a guarantee,
acceptance or letter of credit on behalf of an affiliate, as long as the aggregate amount of such transactions of a bank and its subsidiaries with its affiliates does not exceed 10% of the capital stock and surplus of the bank on a per affiliate
basis or 20% of the capital stock and surplus of the bank on an aggregate affiliate basis. In addition, such transactions must be on terms and conditions that are consistent with safe and sound banking practices. In particular, a bank and its
subsidiaries generally may not purchase from an affiliate a low-quality asset, as defined in the Federal Reserve Act. These restrictions also prevent a bank holding company and its other affiliates from borrowing from a banking subsidiary of the
bank holding company unless the loans are secured by marketable collateral of designated amounts. Additionally, the Company and the Bank are prohibited from engaging in certain tie-in arrangements in connection with any extension of credit, sale or
lease of property or furnishing of services.

A bank holding company is prohibited from engaging in or acquiring direct or indirect
ownership or control of more than 5% of the voting shares of any company engaged in nonbanking activities. A bank holding company may, however, engage in or acquire an interest in a company that engages in activities which the FRB has determined by
regulation or order are so closely related to banking as to be a proper incident to banking. In making these determinations, the FRB considers whether the performance of such activities by a bank holding company would offer advantages to the public
that outweigh possible adverse effects.

As a national bank, the Bank is also subject to regulation, supervision and regular examination by
the Office of the Comptroller of the Currency (the Comptroller). Each depositors account with the Bank is insured by the Federal Deposit Insurance Corporation (the FDIC) to the maximum amount permitted by law, which is
currently $250,000 for each depositor for interest bearing accounts. For non-interest-bearing accounts the Bank is insured by the FDIC to the maximum amount permitted by law which is currently unlimited. The Bank is also subject to certain
regulations promulgated by the FRB and applicable provisions of Virginia law, insofar as they do not conflict with or are not preempted by Federal banking law.

The regulations of the FDIC, the Comptroller and the FRB govern most aspects of the Companys business, including deposit reserve requirements, investments, loans, certain check clearing activities, issuance of
securities, payment of dividends, branching, deposit interest rate ceilings and numerous other matters. As a consequence of the extensive regulation of commercial banking activities in the United States, the Companys business is particularly
susceptible to changes in state and Federal legislation and regulations, which may have the effect of increasing the cost of doing business, limiting permissible activities or increasing competition.

Governmental Policies and Legislation. Banking is a business that depends primarily on interest rate differentials. In general, the
difference between the interest rates paid by the Company on its deposits and its other borrowings and the interest rates received by the Company on loans extended to its customers and securities held in its portfolio comprise the major portion of
the Companys earnings. These rates are highly sensitive to many factors that are beyond the Companys control. Accordingly, the Companys growth and earnings are subject to the influence of domestic and foreign economic conditions,
including inflation, recession and unemployment.

The commercial banking business is affected not only by general economic conditions, but
is also influenced by the monetary and fiscal policies of the Federal government and the policies of its regulatory agencies, particularly the FRB. The FRB implements national monetary policies (with objectives such as curbing inflation and
combating recession) by its open-market operations in U.S. Government securities, by adjusting the required level of reserves for financial institutions subject to its reserve requirements and by varying the discount rates applicable to borrowings
by depository institutions. The actions of the FRB in these areas influence the growth of bank loans, investments and deposits, and also affect interest rates charged on loans and paid on deposits. The nature and impact of any future changes in
monetary policies cannot be predicted.

From time to time, legislation is enacted which has the effect of increasing the cost of doing
business, limiting or expanding permissible activities or affecting the competitive balance between banks and other financial institutions. Proposals to change



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the laws and regulations governing the operations and taxation of bank holding companies, banks and other financial institutions are frequently made in
Congress, in the Virginia legislature and brought before various bank holding company and bank regulatory agencies. The likelihood of any major changes and the impact such changes might have are impossible to predict.

It is also not clear at this time what impact the Emergency Economic Stabilization Act of 2008, enacted October 3, 2008, as amended by the American
Recovery and Reinvestment Act of 2009, enacted February 17, 2009, or other initiatives of the United States Treasury and other bank regulatory agencies that have been announced, or any additional programs that may be initiated in the future,
will have on the financial markets, the financial services industry, the Company or the Bank.

Dividends.There are
regulatory restrictions on dividend payments by both the Bank and the Company that may affect the Companys ability to pay dividends on its common stock. See Item 5. Market for Registrants Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities.

Capital Requirements. The FRB, the Comptroller and the FDIC have adopted
risk-based capital adequacy guidelines for bank holding companies and banks. These capital adequacy regulations are based upon a risk-based capital determination, whereby a bank holding companys capital adequacy is determined in light of the
risk, both on- and off-balance sheet, contained in the companys assets. Different categories of assets are assigned risk weightings and are counted as a percentage of their book value.

The regulations divide capital between Tier 1 capital (core capital) and Tier 2 capital. For a bank holding company, Tier 1 capital consists
primarily of common stock, related surplus, noncumulative perpetual preferred stock, minority interests in consolidated subsidiaries and a limited amount of qualifying cumulative preferred securities. Goodwill and certain other intangibles are
excluded from Tier 1 capital. Tier 2 capital consists of an amount equal to the allowance for loan losses up to a maximum of 1.25% of risk weighted assets, limited other types of preferred stock not included in Tier 1 capital, hybrid capital
instruments and term subordinated debt. Investments in and loans to unconsolidated banking and finance subsidiaries that constitute capital of those subsidiaries are excluded from capital. The sum of Tier 1 and Tier 2 capital constitutes qualifying
total capital. The guidelines generally require banks to maintain a total qualifying capital to weighted risk assets ratio of 8% (the Risk-based Capital Ratio). At least 4% of the total qualifying capital to weighted risk assets (the
Tier 1 Risk-based Capital Ratio) must be Tier 1 capital.

The FRB, the Comptroller and the FDIC have adopted leverage
requirements that apply in addition to the risk-based capital requirements. Banks and bank holding companies are required to maintain a minimum leverage ratio of Tier 1 capital to average total consolidated assets (the Leverage Ratio) of
at least 3.0% for the most highly-rated, financially sound banks and bank holding companies and a minimum Leverage Ratio of at least 4.0% for all other banks. The FDIC and the FRB define Tier 1 capital for banks in the same manner for both the
Leverage Ratio and the Risk-based Capital Ratio. However, the FRB defines Tier 1 capital for bank holding companies in a slightly different manner. An institution may be required to maintain Tier 1 capital of at least 4% or 5%, or possibly higher,
depending upon the activities, risks, rate of growth, and other factors deemed material by regulatory authorities. As of December 31, 2008, the Company and Bank both met all applicable capital requirements imposed by regulation.

Federal Deposit Insurance Corporation Improvement Act of 1991. There are five capital categories applicable to insured institutions, each
with specific regulatory consequences. If the appropriate Federal banking agency determines, after notice and an opportunity for hearing, that an insured institution is in an unsafe or unsound condition, it may reclassify the institution to the next
lower capital category (other than critically undercapitalized) and require the submission of a plan to correct the unsafe or unsound condition. The Comptroller has issued regulations to implement these provisions. Under these regulations, the
categories are:

a. Well Capitalized  The institution exceeds the required minimum level for each relevant capital measure. A well
capitalized institution is one (i) having a Risk-based Capital Ratio of 10% or greater, (ii) having a Tier 1 Risk-based Capital Ratio of 6% or greater, (iii) having a Leverage Ratio of 5% or greater and (iv) that is not subject
to any order or written directive to meet and maintain a specific capital level for any capital measure.



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b. Adequately Capitalized  The institution meets the required minimum level for each relevant
capital measure. No capital distribution may be made that would result in the institution becoming undercapitalized. An adequately capitalized institution is one (i) having a Risk-based Capital Ratio of 8% or greater, (ii) having a Tier 1
Risk-based Capital Ratio of 4% or greater and (iii) having a Leverage Ratio of 4% or greater or a Leverage Ratio of 3% or greater if the institution is rated composite 1 under the CAMELS (Capital, Assets, Management, Earnings, Liquidity and
Sensitivity to market risk) rating system.

c. Undercapitalized  The institution fails to meet the required minimum level for any
relevant capital measure. An undercapitalized institution is one (i) having a Risk-based Capital Ratio of less than 8% or (ii) having a Tier 1 Risk-based Capital Ratio of less than 4% or (iii) having a Leverage Ratio of less than 4%,
or if the institution is rated a composite 1 under the CAMEL rating system, a Leverage Ratio of less than 3%.

d. Significantly
Undercapitalized  The institution is significantly below the required minimum level for any relevant capital measure. A significantly undercapitalized institution is one (i) having a Risk-based Capital Ratio of less than 6% or
(ii) having a Tier 1 Risk-based Capital Ratio of less than 3% or (iii) having a Leverage Ratio of less than 3%.

e. Critically
Undercapitalized  The institution fails to meet a critical capital level set by the appropriate Federal banking agency. A critically undercapitalized institution is one having a ratio of tangible equity to total assets that is equal to or less
than 2%.

An institution which is less than adequately capitalized must adopt an acceptable capital restoration plan, is subject to
increased regulatory oversight, and is increasingly restricted in the scope of its permissible activities. Each company having control over an undercapitalized institution must provide a limited guarantee that the institution will comply with its
capital restoration plan. Except under limited circumstances consistent with an accepted capital restoration plan, an undercapitalized institution may not grow. An undercapitalized institution may not acquire another institution, establish
additional branch offices or engage in any new line of business unless determined by the appropriate Federal banking agency to be consistent with an accepted capital restoration plan, or unless the FDIC determines that the proposed action will
further the purpose of prompt corrective action. The appropriate Federal banking agency may take any action authorized for a significantly undercapitalized institution if an undercapitalized institution fails to submit an acceptable capital
restoration plan or fails in any material respect to implement a plan accepted by the agency. A critically undercapitalized institution is subject to having a receiver or conservator appointed to manage its affairs and for loss of its charter to
conduct banking activities.

An insured depository institution may not pay a management fee to a bank holding company controlling that
institution or any other person having control of the institution if, after making the payment, the institution would be undercapitalized. In addition, an institution cannot make a capital distribution, such as a dividend or other distribution that
is in substance a distribution of capital to the owners of the institution, if following such a distribution the institution would be undercapitalized. Thus, if payment of such a management fee or the making of such would cause the Bank to become
undercapitalized, it could not pay a management fee or dividend to the Company.

As of December 31, 2008, both the Company and the
Bank were considered well capitalized.

Deposit Insurance Assessments. The Banks deposits are insured up to
applicable limits by the Deposit Insurance Fund (DIF) of the FDIC. The DIF is the successor to the Bank Insurance Fund and the Savings Association Insurance Fund, which were merged in 2006. The FDIC amended its risk-based assessment
system for 2008 to implement authority granted by the Federal Deposit Insurance Reform Act of 2005 (FDIRA). Under the revised system, insured institutions are assigned to one of four risk categories based on supervisory evaluations,
regulatory capital levels and certain other factors. An institutions assessment rate depends upon the category to which it is assigned. Unlike the other categories, Risk Category 1, which contains the least risky depository institutions,



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contains further risk differentiation based on the FDICs analysis of financial ratios, examination component ratings and other information. FDIRA also
provided for the possibility that the FDIC may pay dividends to insured institutions if the DIF reserve ratio equals or exceeds 1.35% of estimated insured deposits.

In an effort to restore capitalization levels and to ensure the DIF will adequately cover projected losses from future bank failures, the FDIC, in October 2008, proposed a rule to alter the way in which it
differentiates for risk in the risk-based assessment system and to revise deposit insurance assessment rates, including base assessment rates. The FDIC also proposed to introduce three adjustments that could be made to an institutions initial
base assessment rate, as well as a uniform 7 basis point increase in rates for the first quarter of 2009. The proposal for first quarter 2009 assessment rates was adopted as a final rule in December 2008, resulting in annualized assessment
rates for Risk Category 1 institutions ranging from 12 to 14 basis points. A final rule related to the rest of the proposal was adopted on March 4, 2009 and will become effective on April 1, 2009, applying to
assessments for the second quarter of 2009 and thereafter. The new rule provides for initial base assessment rates for Risk Category 1 institutions of 12 to 16 basis points, subject to potential base-rate adjustments, including (i) a
potential decrease of up to 5 basis points for long-term unsecured debt, including senior and subordinated debt, (ii) a potential increase for secured liabilities in excess of 25% of domestic deposits and (iii) for non-Risk
Category 1 institutions, a potential increase for brokered deposits in excess of 10% of domestic deposits. Taking into account these potential base-rate adjustments, the annualized assessment rate for Risk Category 1 institutions would
range from 7 to 24 basis points.

Temporary Liquidity Guarantee Program.On October 13, 2008, the FDIC
adopted the Temporary Liquidity Guarantee Program (TLGP) because of disruptions in the credit market, particularly the interbank lending market, which reduced banks liquidity and impaired their ability to lend. The goal of the TLGP
is to decrease the cost of bank funding so that bank lending to consumers and businesses will normalize. The TLGP is industry funded and does not rely on the FDICs Deposit Insurance Fund to achieve its goals. The final rule implementing the
TLGP was approved by the FDIC Board of Directors on November 21, 2008. The TLGP consists of two components: a temporary guarantee of newly-issued senior unsecured debt between October 14, 2008 and June 30, 2009 (the Debt
Guarantee Program) and a temporary unlimited guarantee of funds in noninterest-bearing transaction accounts at FDIC-insured institutions (the Transaction Account Guarantee Program). The Bank is participating in both of these
programs and will be required to pay assessments associated with the TLGP as follows:



| |  |  | Under the Debt Guarantee Program, all newly-issued senior unsecured debt (as defined in the regulation) between October 14, 2008 and June 30, 2009 will be
charged an annualized assessment of up to 100 basis points (depending on debt term) on the amount of debt issued, and calculated through the maturity date of that debt or June 30, 2012, whichever is earlier. The Bank has thus far issued no such
senior unsecured debt and has incurred no assessments under the Debt Guarantee Program.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Under the Transaction Account Guarantee Program, amounts exceeding the existing deposit insurance limit of $250,000 in any noninterest-bearing transaction accounts
(as defined in the regulation) will be assessed an annualized 10 basis points collected quarterly for coverage through December 31, 2009. The Bank has customer accounts that qualify for this coverage with respect to which it has and will incur
assessment charges.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Mortgage Banking Regulation. The Banks mortgage banking operation is subject
to the rules and regulations of, and examination by the U.S. Department of Housing and Urban Development (HUD), the Federal Housing Administration (FHA), the Veterans Administration (VA) and state regulatory
authorities with respect to originating, processing and selling mortgage loans. Those rules and regulations, among other things, establish standards for loan origination, prohibit discrimination, provide for inspections and appraisals of property,
require credit reports on prospective borrowers and, in some cases, restrict certain loan features, and fix maximum interest rates and fees. In addition to other Federal laws, mortgage origination activities are subject to the Equal Credit
Opportunity Act, Truth-in-Lending Act, Home Mortgage Disclosure Act, the Real Estate Settlement Procedures Act, and the Home Ownership Equity Protection Act, and the regulations promulgated thereunder. These laws prohibit discrimination, require the
disclosure of certain basic information to mortgagors concerning credit and settlement costs, limit payment for settlement services to the reasonable value of the services rendered and require the maintenance and disclosure of information regarding
the disposition of mortgage applications based on race, gender, geographical distribution and income level.

Gramm-Leach-Bliley Act
of 1999. The Gramm-Leach-Bliley Act of 1999 (the GLBA) implemented major changes to the statutory framework for providing banking and other financial services in the United States. The GLBA, among other things, eliminated many of
the restrictions on affiliations among banks and securities firms, insurance firms and other financial service providers. A bank holding company that qualifies and elects to be a financial holding company will be permitted to engage in activities
that are financial in nature or incidental or complimentary to financial activities. The activities that the GLBA expressly lists as financial in nature include insurance underwriting, sales and brokerage activities, providing financial and
investment advisory services, underwriting services and limited merchant banking activities.

To become eligible for these
expanded activities, a bank holding company must qualify and elect to be a financial holding company. To qualify as a financial holding company, each insured depository institution controlled by the bank holding company must be well-capitalized,
well-managed and have at least a satisfactory rating under the CRA (discussed below). In addition, the bank holding company must file with the FRB a declaration of its intention to become a financial holding company. While the Company satisfies
these requirements, the Company has not elected for various reasons to be treated as a financial holding company under the GLBA.

The GLBA
has not had a material adverse impact on the Companys or the Banks operations. To the extent that it allows banks, securities firms and insurance firms to affiliate, the financial services industry has experienced further consolidation.
The GLBA probably has the result of increasing competition that we face from larger institutions and other companies offering financial products and services, many of which may have substantially greater financial resources.

The GLBA and other regulations issued by Federal banking agencies also provide protections against the transfer and use by financial institutions of
consumer nonpublic personal information. A financial institution must provide to its customers, at the beginning of the customer relationship and annually thereafter, the institutions policies and procedures regarding the handling of
customers nonpublic personal financial information. These privacy provisions generally prohibit a financial institution from providing a customers personal financial information to unaffiliated third parties unless the institution
discloses to the customer that the information may be so provided and the customer is given the opportunity to opt out of such disclosure.

Community Reinvestment Act. The Bank is subject to the requirements of the Community Reinvestment Act (the CRA). The CRA imposes on financial institutions an affirmative and ongoing obligation to meet the credit
needs of their local communities, including low and moderate-income neighborhoods, consistent with the safe and sound operation of those institutions. A financial institutions efforts in meeting community credit needs is evaluated as part of
the examination process pursuant to twelve assessment factors and then given a rating of Outstanding, Satisfactory, Needs to improve or Substantial noncompliance. These factors also are considered in
evaluating mergers, acquisitions and applications to open a branch or facility. The Bank received a rating of Satisfactory in its most recent CRA performance evaluation as of December 8, 2007.



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USA PATRIOT Act.The USA PATRIOT Act became effective on October 26, 2001 and provides
for the facilitation of information sharing among governmental entities and financial institutions for the purpose of combating terrorism and money laundering. Among other provisions, the USA PATRIOT Act permits financial institutions, upon
providing notice to the United States Treasury, to share information with one another in order to better identify and report to the Federal government concerning activities that may involve money laundering or terrorists activities. The USA
PATRIOT Act is considered a significant banking law in terms of information disclosure regarding certain customer transactions. Certain provisions of the USA Patriot Act impose the obligation to establish anti-money laundering programs, including
the development of a customer identification program, and the screening of all customers against any government lists of known or suspected terrorists. Although it created a reporting obligation, the USA PATRIOT Act has not materially affected and
is not expected to materially affect the Banks products, services or other business activities.

Reporting Terrorist
Activities.The Federal Bureau of Investigation (FBI) has sent, and will send, our banking regulatory agencies lists of the names of persons suspected of involvement in terrorism. The Bank has been requested, and will be
requested, to search its records for any relationships or transactions with persons on those lists. If the Bank finds any relationships or transactions, it must file a suspicious activity report and contact the FBI.

The Office of Foreign Assets Control (OFAC), which is a division of the Department of the Treasury, is responsible for helping to insure that
United States entities do not engage in transactions with enemies of the United States, as defined by various Executive Orders and Acts of Congress. OFAC has sent, and will send, our banking regulatory agencies lists of names of persons
and organizations suspected of aiding, harboring or engaging in terrorist acts. If the Bank finds a name on any transaction, account or wire transfer that is on an OFAC list, it must freeze such account, file a suspicious activity report and notify
the FBI. The Bank has appointed an OFAC compliance officer to oversee the inspection of its accounts and the filing of any notifications. The Bank actively checks high-risk OFAC areas such as new accounts, wire transfers and customer files. The Bank
performs these checks utilizing software, which is updated each time a modification is made to the lists provided by OFAC and other agencies of Specially Designated Nationals and Blocked Persons.

Consumer Laws and Regulations. The Bank is also subject to certain consumer laws and regulations that are designed to protect consumers in
transactions with banks. While the list set forth herein is not exhaustive, these laws and regulations include the Truth in Lending Act, the Truth in Savings Act, the Electronic Funds Transfer Act, the Expedited Funds Availability Act, the Equal
Credit Opportunity Act, the Fair Credit Reporting Act and the Fair Housing Act, among others. These laws and regulations mandate certain disclosure requirements and regulate the manner in which financial institutions transact business with
customers. The Bank must comply with the applicable provisions of these consumer protection laws and regulations as part of its ongoing customer relations.

Employees

As of December 31, 2008, the Company had 117 full-time and part-time employees. The
Companys management believes that its employee relations are good.

Executive Officers of the Registrant



|                            |  |                                                                                                                                                                                                                         
|--------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Name (Age)                  |  | Principal Occupation During Past Five Years                                                                                                                                                                             
|Robert H. Gilliam, Jr. (63) |  | President & Chief Executive Officer of Pinnacle Bankshares Corporation and President, Chief Executive Officer and Trust Officer of First National Bank since 1980; Director, Pinnacle
Bankshares Corporation since 1980.
|                            | 
|Carroll E. Shelton (58)     |  | Senior Vice President of Pinnacle Bankshares Corporation and Senior Vice President and Chief Lending Officer of First National Bank since 1990; Director, Pinnacle Bankshares Corporation since
1990.                   



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##### Table of Contents

|                     |  |                                                                                                                                                                                               
|-------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Bryan M. Lemley (37) |  | Secretary, Treasurer and Chief Financial Officer of Pinnacle Bankshares Corporation since 2000 and Vice President, Cashier and Chief Financial Officer of First National Bank since June 2000.



|Item 1A. | Risk Factors.
|-------- | -------------

Not required.



|Item 1B. | Unresolved Staff Comments.
|-------- | --------------------------

Not required.



|Item 2. | Properties.
|------- | -----------

The Companys main office
and corporate headquarters, located at 622 Broad Street in downtown Altavista, Virginia, is owned and principally occupied by the Bank.

The Vista Office, located at 1301 N. Main Street in Altavista, Virginia, consists of a single-story building owned by the Bank.

The Airport Office, located at 14580 Wards Road in Campbell County, Virginia, consists of a single-story building owned by the Bank.

The Old Forest Road Office, located at 3309 Old Forest Road in Lynchburg, Virginia, consists of a single-story building owned by the Bank.

The Timberlake Office, located at 20865 Timberlake Road in Campbell County, Virginia, consists of a single-story building leased for $4,042 per month through April 2011.

The Forest Office, located at 14417 Forest Road in Forest, Virginia, consists of a single-story building owned by the Bank.

The Amherst Office, located at 130 South Main Street in Amherst, Virginia, consists of a single-story building leased for $11,233 per month through March
2012.

The Rustburg Office, located at 1033 Village Highway in Rustburg, Virginia, consists of a single-story building owned by the Bank.

The Wyndhurst Administrative and Training Office, located at 201 Archway Court in Lynchburg, Virginia, consists of a single-story building
leased for $3,734 per month through January 2011.

The Smith Mountain Lake loan production office, located at 74 Scruggs Road, Suite 102,
in Moneta, Virginia, consists of office space leased for $1,485 per month on a month to month basis by the Bank. The Bank does not expect to terminate the lease in the near future.

The Company believes all of these properties are in good operating condition and are adequate for the Companys present and anticipated future
needs. The Company maintains comprehensive general liability and casualty loss insurance covering its properties and activities conducted in or about its properties. The Company believes this insurance provides adequate protection for liabilities or
losses that might arise out of the ownership and use of such properties.



|Item 3. | Legal Proceedings.
|------- | ------------------

Neither the Company nor
the Bank nor any of their properties is involved in any pending legal proceedings, nor are any such proceedings threatened, other than nonmaterial proceedings arising in the ordinary course of the Companys and the Banks business.



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##### Table of Contents

|Item 4. | Submission of Matters to a Vote of Security Holders.
|------- | ----------------------------------------------------

No matters were submitted to a vote of security holders during the fourth quarter of the Companys fiscal year ended December 31, 2008.

PART II



|Item 5. | Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
|------- | -------------------------------------------------------------------------------------------------------------

The information contained on the inside back cover of the 2008 Annual Report to Shareholders, under the caption Market for Common Equity and Related
Stockholder Matters is incorporated herein by reference.



|Item 6. | Selected Financial Data.
|------- | ------------------------

The information
presented under the caption Selected Consolidated Financial Information on page 6 of the 2008 Annual Report to Shareholders is incorporated herein by reference.



|Item 7. | Managements Discussion and Analysis of Financial Condition and Results of Operations.
|------- | --------------------------------------------------------------------------------------

The information presented under the caption Managements Discussion and Analysis of Financial Condition and Results of Operations on
pages 7 through 27 of the 2008 Annual Report to Shareholders is incorporated herein by reference.



|Item 7A. | Quantitative and Qualitative Disclosures About Market Risk.
|-------- | -----------------------------------------------------------

Not required.



|Item 8. | Financial Statements and Supplementary Data.
|------- | --------------------------------------------

The consolidated financial statements of the Company and its subsidiary, including the accompanying notes, and independent auditors report thereon, contained on pages 28 through 60 and 62 of the 2008 Annual Report to Shareholders, are
incorporated herein by reference.



|Item 9. | Changes In and Disagreements With Accountants on Accounting and Financial Disclosure.
|------- | -------------------------------------------------------------------------------------

None.



|Item 9A. | Controls and Procedures.
|-------- | ------------------------

Disclosure Controls and
Procedures.The Companys management evaluated, with the participation of the Chief Executive Officer and Chief Financial Officer, the effectiveness of the Companys disclosure controls and procedures (as defined in Rule 13a-15(e)
under the Exchange Act) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Companys disclosure controls and procedures are effective as of
the end of the period covered by this report to ensure that information required to be disclosed in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods
specified in the SECs rules and forms, and that such information is accumulated and communicated to the Companys management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions
regarding required disclosure.

Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute
assurance that the Companys disclosure controls and procedures will detect or uncover every situation involving the failure of persons within the Company to disclose material information required to be set forth in the Companys periodic
reports.



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##### Table of Contents

Managements Report on Internal Control over Financial Reporting. The Companys
management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance
with respect to financial statement preparation and presentation.

Management assessed the effectiveness of the Companys internal
control over financial reporting as of December 31, 2008. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control  Integrated
Framework. Based on this assessment, the Companys management concluded that, as of December 31, 2008, the Companys internal control over financial reporting was effective based on those criteria.

This annual report does not include an attestation report of the Companys registered public accounting firm regarding internal control over
financial reporting. Managements report was not subject to attestation by the Companys registered public accounting firm pursuant to temporary rules of the SEC that permit the Company to provide only managements report in this
annual report.

Changes in Internal Controls. No changes in the Companys internal control over financial reporting
occurred during the quarter ended December 31, 2008 that have materially affected, or are reasonably likely to materially affect, the Companys internal control over financial reporting.



|Item 9B. | Other Information.
|-------- | ------------------

On December 31,
2008, the Company entered into amended and restated change in control agreements (the Amended Agreements) with the following executive officers: Robert H. Gilliam, Jr., President and Chief Executive Officer of the Company; Carroll E.
Shelton, Vice President of the Company; and Bryan M. Lemley, Secretary, Treasurer and Chief Financial Officer of the Company. The Amended Agreements replace the change in control agreements previously entered into with Messrs. Gilliam, Shelton and
Lemley on May 26, 2006.

The agreements were amended and restated to bring the agreements into compliance with Section 409A of
the Internal Revenue Code of 1986, as amended, and the regulations and other guidance promulgated thereunder (Section 409A) relating to the timing and form of payment under the agreements. The Amended Agreements provide for severance
payments and the continuation of certain employee benefits if the employment of these executive officers terminates under specified conditions in connection with a change in control (as defined therein) of the Company. Generally, the
payments and benefits will be paid under each agreement if, within two years and 60 days following a change in control, the executive officer (i) is terminated involuntarily without cause (as defined therein) and not as a result of
death or disability, or (ii) terminates his employment voluntarily for good reason (as defined therein), including the executive officers unilateral decision to leave during any of three 60 day window periods (beginning on the
date of the change in control and the first and second anniversaries thereof). Payments and benefits will also be paid if the executive officers employment is terminated prior to a change in control if the executive officer can reasonably
demonstrate that the termination was in connection with or in anticipation of a change in control or was at the request of a third party who has taken steps reasonably calculated to effect a change in control. Change in control is
defined in the Amended Agreements generally to include (i) the acquisition of stock by a person or group that constitutes more than 50% of the Companys common or voting stock, (ii) the acquisition of 30% of the Companys voting
stock over a 12-month period, (iii) certain changes in the composition of the Companys Board of Directors over a 12-month period, or (iv) an acquisition of 40% or more of the Companys assets.

The foregoing description of the Amended Agreements is qualified in its entirety by reference to the full text of such Amended Agreements with Messrs.
Gilliam, Shelton and Lemley, which are filed as Exhibits 10.2, 10.8 and 10.7, respectively, hereto and are incorporated herein by reference.



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##### Table of Contents

PART III

Except as otherwise indicated, information called for by the following items under Part III is contained in the Proxy Statement for the Companys
2009 Annual Meeting of Shareholders (2009 Proxy Statement) to be held on April 14, 2009.



|Item 10. | Directors, Executive Officers and Corporate Governance.
|-------- | -------------------------------------------------------

The information with respect to the directors of the Company required by this item is contained on pages 3 through 8 of the 2009 Proxy Statement under the caption Election of Directors, and is incorporated
herein by reference. The information regarding the Section 16(a) reporting requirements of the directors and executive officers is contained on page 13 of the 2009 Proxy Statement under the caption Section 16(a) Beneficial Ownership
Reporting Compliance, and is incorporated herein by reference. The information concerning the executive officers of the Company required by this item is included in Part I of this Form 10-K under the caption Executive Officers of the
Registrant. The information regarding the Companys Audit Committee required by this item is contained on page 5 of the 2009 Proxy Statement under the caption Meetings and Committees of the Board of Directors-Audit Committee,
and is incorporated herein by reference.

The Company has adopted a Code of Conduct and Conflict of Interest Policy that applies to the
directors, executives and employees of the Company and the Bank, including the Companys Chief Executive Officer, Chief Financial Officer, Controller and other persons performing similar functions. We have posted this Code on our internet
website at www.1stnatbk.com under Investor Relations. We intend to provide any required disclosure of any amendment to or waiver from the Code that applies to our Chief Executive Officer, Chief Financial Officer, Controller, or
persons performing similar functions, on www.1stnatbk.com promptly following the amendment or waiver. We may elect to disclose any such amendment or waiver in a report on Form 8-K filed with the SEC either in addition to or in lieu of the
website disclosure. The information contained on or connected to our internet website is not incorporated by reference into this report and should not be considered part of this or any other report that we file with or furnish to the SEC.



|Item 11. | Executive Compensation.
|-------- | -----------------------

The information on
Executive Compensation required by this item is contained on pages 9 through 13 of the 2009 Proxy Statement under the caption Executive Compensation and is incorporated herein by reference. Information on compensation of directors is
contained on pages 7 and 8 of the 2009 Proxy Statement under the caption Directors Fees and is incorporated herein by reference.



|Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
|-------- | -----------------------------------------------------------------------------------------------

The information on security ownership of certain beneficial owners and management required by this item is contained on page 2 and 3 of the 2009 Proxy
Statement under the caption Security Ownership of Certain Beneficial Owners and Management and is incorporated herein by reference.

The following table sets forth information as of December 31, 2008 with respect to certain compensation plans under which equity securities of the Company are authorized for issuance.



14



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##### Table of Contents

Equity Compensation Plan Information



|                                                       |  |                                                                                          |     |  |                                                                           |       |                                                                                                                                          |         |    
|------------------------------------------------------ |  | ---------------------------------------------------------------------------------------- | --- |  | ------------------------------------------------------------------------- | ----- | ---------------------------------------------------------------------------------------------------------------------------------------- | ------- | ---
|Plan Category                                          |  | Number ofsecurities to beissued uponexercise ofoutstandingoptions, warrantsand
rights(a) |     |  | Weighted-averageexercise priceof outstandingoptions,warrants andrights(b) |       | Number of securitiesremaining availablefor future issuanceunder equitycompensation plans(excluding securitiesreflected in column(a)) (c) |        
|Equity compensation plans approved by shareholders     |  | 17,000                                                                                   | (1) |  | $                                                                         | 14.33 |                                                                                                                                          | 100,000 | (2)
|Equity compensation plans not approved by shareholders |  |                                                                                         |     |  |                                                                           |      |                                                                                                                                          |        |    
|Total                                                  |  | 17,000                                                                                   |     |  | $                                                                         | 14.33 |                                                                                                                                          | 100,000 |    



|(1) | Reflects shares to be issued pursuant to outstanding options granted under the Companys 1997 Incentive Stock Plan and 2004 Incentive Stock Plan.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Reflects shares available to be granted in the form of options, restricted stock or stock appreciation rights under the Companys 2004 Incentive Stock Plan. The Companys
1997 Incentive Stock Plan expired May 1, 2007, and no additional awards may be granted under the plan.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Item 13. | Certain Relationships and Related Transactions, and Director Independence.
|-------- | --------------------------------------------------------------------------

The information on the interest of management in certain transactions and certain committees of the board of directors required by this item is contained on pages 5 through 8 of the 2009 Proxy Statement under the
captions Meetings and Committees of the Board of Directors and Interest of Management in Certain Transactions, and is incorporated herein by reference.



|Item 14. | Principal Accountant Fees and Services.
|-------- | ---------------------------------------

The information contained on page 15 of the 2009 Proxy Statement under the captions Principal Accountant Fees and Pre-Approval Policies is incorporated herein by reference.

PART IV



|Item 15. | Exhibits, Financial Statement Schedules.
|-------- | ----------------------------------------



|(a)(1) | The response to this portion of Item 15 is included in Item 8 above.
|------ | --------------------------------------------------------------------



|(a)(2) | All schedules are omitted because they are not applicable, or the required information is either not material or is shown in the financial statements or the related notes.
|------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(a)(3) | Exhibits
|------ | --------



|              |  |                                                                                                                                                                                                                        
|------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description                                                                                                                                                                                                            
|              | 
|3.1           |  | Amended and Restated Articles of Incorporation (incorporated by reference to Appendix I to registrants amended registration statement on Form S-4 filed on January 30,
1997)                                          
|              | 
|3.2           |  | Bylaws (incorporated by reference to Exhibit 3(ii) to registrants registration statement on Form S-4 filed on January 24, 1997)                                                                                       
|              | 
|10.1*         |  | 1997 Incentive Stock Plan (incorporated by reference to Exhibit 4.3 to registrants registration statement on Form S-8 filed September 14, 1998)                                                                       
|              | 
|10.2*         |  | Amended and Restated Change in Control Agreement between Pinnacle Bankshares Corporation and Robert H. Gilliam, Jr., dated December 31, 2008                                                                           
|              | 
|10.3*         |  | VBA Directors Deferred Compensation Plan for Pinnacle Bankshares Corporation, effective December 1, 1997 (incorporated by reference to Exhibit 10.3 to registrants annual report on
Form 10-KSB filed March 25, 2003)



15



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##### Table of Contents

|      |  |                                                                                                                                                                                                                                
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      | 
|10.4* |  | 2004 Incentive Stock Plan (incorporated by reference to Exhibit 10.4 to registrants quarterly report on Form 10-QSB filed May 10, 2004)                                                                                       
|      | 
|10.5* |  | Directors Annual Compensation                                                                                                                                                                                                 
|      | 
|10.6* |  | Base Salaries of Executive Officers of the Registrant                                                                                                                                                                          
|      | 
|10.7* |  | Amended and Restated Change in Control Agreement between Pinnacle Bankshares Corporation and Bryan M. Lemley, dated December 31, 2008                                                                                          
|      | 
|10.8* |  | Amended and Restated Change in Control Agreement between Pinnacle Bankshares Corporation and Carroll E. Shelton, dated December 31, 2008                                                                                       
|      | 
|10.9  |  | Pinnacle Bankshares Corporation Promissory Note, effective December 31, 2008, delivered to Community Bankers Bank (incorporated by reference to Exhibit 10.9 to registrants current
report on Form 8-K filed January 7, 2009)
|      | 
|13    |  | 2008 Annual Report to Shareholders                                                                                                                                                                                             
|      | 
|21    |  | Subsidiaries of Registrant                                                                                                                                                                                                     
|      | 
|23.1  |  | Consent of Cherry, Bekaert & Holland, L.L.P.                                                                                                                                                                                   
|      | 
|31.1  |  | CEO Certification Pursuant to Rule 13a-14(a)                                                                                                                                                                                   
|      | 
|31.2  |  | CFO Certification Pursuant to Rule 13a-14(a)                                                                                                                                                                                   
|      | 
|32.1  |  | CEO/CFO Certification Pursuant to § 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1350)                                                                                                                                   



|* | Denotes management contract.
|- | ----------------------------

|(b) | Exhibits  See exhibit index included in Item 15(a)(3) above.
|--- | -------------------------------------------------------------

|(c) | Financial Statement Schedules  See Item 15(a)(2) above.
|--- | --------------------------------------------------------



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##### Table of Contents

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.



|               |  |                                      
|-------------- |  | -------------------------------------
|               |  | PINNACLE BANKSHARES CORPORATION      
|               |  | (Registrant)                         
|               | 
|March 27, 2009 |  | /s/ Robert H. Gilliam, Jr.           
|Date           |  | Robert H. Gilliam, Jr., President and
|               |  | Chief Executive Officer              

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed
below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.



|                           |  |                                                                |  |               
|-------------------------- |  | -------------------------------------------------------------- |  | --------------
|Signature                  |  | Title                                                          |  | Date          
|/s/ Robert H. Gilliam, Jr. |  | President, Chief Executive                                     |  | March 27, 2009
|Robert H. Gilliam, Jr.     |  | Officer and Director (principal executive officer)             |  |               
|                           |  |                                                               
|/s/ Bryan M. Lemley        |  | Secretary, Treasurer and Chief                                 |  | March 27, 2009
|Bryan M. Lemley            |  | Financial Officer (principal financial and accounting officer) |  |               
|                           |  |                                                               
|/s/ A. Willard Arthur      |  | Director                                                       |  | March 27, 2009
|A. Willard Arthur          |  |                                                                |  |               
|                           |  |                                                               
|/s/ James E. Burton, IV    |  | Director                                                       |  | March 27, 2009
|James E. Burton, IV        |  |                                                                |  |               
|                           |  |                                                               
|/s/ John P. Erb            |  | Director                                                       |  | March 27, 2009
|John P. Erb                |  |                                                                |  |               
|                           |  |                                                               
|/s/ R.B. Hancock, Jr.      |  | Director                                                       |  | March 27, 2009
|R.B. Hancock, Jr.          |  |                                                                |  |               
|                           |  |                                                               
|/s/ Thomas F. Hall         |  | Director                                                       |  | March 27, 2009
|Thomas F. Hall             |  |                                                                |  |               
|                           |  |                                                               
|/s/ James P. Kent, Jr.     |  | Director                                                       |  | March 27, 2009
|James P. Kent, Jr.         |  |                                                                |  |               
|                           |  |                                                               
|/s/ William F. Overacre    |  | Director                                                       |  | March 27, 2009
|William F. Overacre        |  |                                                                |  |               
|                           |  |                                                               
|/s/ Carroll E. Shelton     |  | Director                                                       |  | March 27, 2009
|Carroll E. Shelton         |  |                                                                |  |               
|                           |  |                                                               
|/s/ John L. Waller         |  | Director                                                       |  | March 27, 2009
|John L. Waller             |  |                                                                |  |               
|                           |  |                                                               
|/s/ Michael E. Watson      |  | Director                                                       |  | March 27, 2009
|Michael E. Watson          |  |                                                                |  |               



17