8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): October 29, 2010

PINNACLE BANKSHARES CORPORATION

(Exact name of registrant as specified in its charter)

Virginia	000-23909	54-1832714
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

622 Broad Street, Altavista, Virginia	24517
(Address of principal executive offices)	(Zip Code)

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

N/A

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

On October 29, 2010, Pinnacle Bankshares Corporation issued the press release attached hereto as Exhibit 99.1 announcing its third quarter 2010 financial results (unaudited).

The information in this Form 8-K, and Exhibit 99.1 hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

99.1 Press Release dated October 29, 2010 announcing third quarter 2010 financial results (unaudited).

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	PINNACLE BANKSHARES CORPORATION
	(Registrant)
Date: November 1, 2010	By:	/s/ Bryan M. Lemley
		Bryan M. Lemley
		Treasurer and Chief Financial Officer

Exhibit Index

Exhibit
99.1	Press Release dated October 29, 2010 announcing third quarter 2010 financial results (unaudited).

EX-99.1

Exhibit 99.1

Altavista, VA October 29, 2010 - Pinnacle Bankshares Corporation (OTCBB:PPBN), the one-bank holding company (the Company) of First National Bank (the Bank), today reported its quarterly consolidated unaudited results for the third quarter of 2010. Net income was $374,000 or $0.25 per basic and diluted share for the quarter ended September 30, 2010, and $624,000 or $0.42 per basic and diluted share for the nine months ended September 30, 2010 compared to net income of $237,000 or $0.16 per basic and diluted share and $273,000 or $0.18 per basic and diluted share, respectively, for the same periods of 2009.

Profitability as measured by the Company’s annualized return on average assets (“ROA”) was 0.25% for the nine months ended September 30, 2010, compared to 0.11% for the same period in 2009. Annualized return on average equity (“ROE”) for the nine months ended September 30, 2010 was 3.17%, compared to 1.46% for the same period in 2009.

“Net income for the third quarter of 2010 was higher than any other quarter over the past two years. Better performance was driven by margin improvement, lower loan loss provision over the first and second quarters of 2010 and stronger mortgage loan sales income,” commented Bryan M. Lemley, Chief Financial Officer for both the Company and the Bank. “Improved performance gives us guarded optimism that we have turned the corner in this prolonged downturn,” concluded Lemley.

The Company earlier this month announced that it declared an annual cash dividend of $0.05 per share on October 12, 2010 payable November 5, 2010 to shareholders of record October 22, 2010.

Net interest income was $7,821,000 for the nine months ended September 30, 2010 compared to $7,356,000 for the nine months ended September 30, 2009. Net interest income was $2,654,000 for the three months ended September 30, 2010 compared to $2,539,000 for the three months ended September 30, 2009.

The net interest margin increased to 3.34% for the nine months ended September 30, 2010, from 3.21% for the nine months ended September 30, 2009. The net interest margin increased in the third quarter of 2010 to 3.34% as compared to 3.29% in the third quarter of 2009, as the cost to fund earning assets decreased at a faster pace than yield on earning assets.

Interest income decreased 5% for both the nine and three months ended September 30, 2010, compared to the same periods of 2009. Net loans outstanding decreased by $7,708,000 or 3% since September 30, 2009, while the yield on interest-earning assets decreased by 40 basis points in the same time period.

Interest expense decreased 20% for the nine months ended September 30, 2010 and decreased 19% for the three months ended September 30, 2010, compared to the same periods of 2009. While deposits have increased by $8,094,000 or 3% in the past twelve months, the cost to fund earning assets has fallen by 54 basis points in the same time period.

Provision for loan losses was $963,000 for the first nine months of 2010 compared to $1,029,000 in the first nine months of 2009. Provision for loan losses was $191,000 in the third quarter of 2010 compared to $188,000 in the third quarter of 2009.

Noninterest income decreased $129,000 or 5% for the nine months ended September 30, 2010 compared to the same period of 2009. Noninterest income decreased $12,000 or 1% for the three months ended September 30, 2010 compared to the same period of 2009. The decrease in noninterest income for the nine-month period in 2010 as compared to the same period in 2009 was due mainly to a 19% decrease in fees on sales of mortgage loans, although these fees increased 24% when comparing the third quarter of 2010 to the third quarter of 2009.

Noninterest expense decreased $168,000 or 2% for the nine months ended September 30, 2010 compared to the same period of 2009. Noninterest expense decreased $116,000 or 4% for the three months ended September 30, 2010 compared to the same period of 2009. The decrease in noninterest expense for the nine and three-month periods is attributed primarily to a $146,000 and $38,000 decrease in salaries and employee benefits for the nine and three- month periods ending September 30, 2010, respectively, due to fewer employees and lower cost to fund retirement benefits.

Total assets at September 30, 2010 were $334,694,000, up 3% from $325,758,000 at September 30, 2009. The principal components of the Company’s assets at September 30, 2010 were $260,689,000 in net loans, $32,983,000 in cash and cash equivalents and $27,904,000 in securities. Total liabilities at September 30, 2010 were $308,011,000, up 2% from $300,612,000 at September 30, 2009.

Total stockholders’ equity at September 30, 2010 was $26,683,000 representing an equity to assets ratio of 7.97%. None of the Company’s capital includes TARP funds. The Bank’s capital ratios continue to exceed all minimum standards for the Bank to be considered “well capitalized” by its regulators.

At September 30, 2009, total stockholders’ equity was $25,146,000.

The allowance for loan losses was $3,753,000 as of September 30, 2010, representing 1.42% of total loans outstanding compared to an allowance for loan losses of $3,793,000 as of September 30, 2009 representing 1.39% of total loans outstanding.

Nonperforming loans (including nonaccruing loans and accruing loans more than 90 days past due) totaled $7,051,000, or 2.67% of total loans, as of September 30, 2010, versus $2,082,000, or 0.76% of total loans, at September 30, 2009. Nonperforming loans increased only $268,000 in the third quarter of 2010, up from $6,783,000 as of June 30, 2010.

Selected financial highlights are shown below.

Pinnacle Bankshares Corporation is a locally managed community banking organization based in Central Virginia. The one-bank holding company of First National Bank serves an area consisting primarily of all or portions of the Counties of Campbell, Pittsylvania, Franklin, Bedford, Amherst and the City of Lynchburg. The Company operates two branches in the Town of Altavista, one branch in the Town of Amherst, one branch in the Town of Rustburg, two branches in Campbell County, one branch in the City of Lynchburg, one branch in Bedford County at Forest and a loan production office at Smith Mountain Lake in Franklin County at Moneta. First National Bank is celebrating its 102nd year in operation.

This press release may contain “forward-looking statements” within the meaning of federal securities laws that involve significant risks and uncertainties. Any statements contained herein that are not historical facts are forward-looking and are based on current assumptions and analysis by the Company. These forward-looking statements may include, but are not limited to, statements regarding future operating results and business performance. Although we believe our plans and expectations reflected in these forward-looking statements are reasonable, our ability to predict results or the actual effect of future plans or strategies is inherently uncertain, and we can give no assurance that these plans or expectations will be achieved. Factors that could cause actual results to differ materially from management’s expectations include, but are not limited to, changes in: interest rates, general economic and business conditions, the real estate market, the legislative/regulatory climate, including the Dodd-Frank Act and regulations adopted thereunder may have on us, monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Board of Governors of the Federal Reserve System and any policies or programs implemented pursuant to the Emergency Economic Stabilization Act of 2008, the quality or composition of the loan or investment portfolios, demand for loan products, deposit flows and funding costs, competition, demand for financial

services in our market area and accounting principles, policies and guidelines. These risks and uncertainties should be considered in evaluating the forward-looking statements contained herein, and you should not place undue reliance on such statements, which reflect our views as of the date of this release.

Pinnacle Bankshares Corporation

Selected Financial Highlights

(Dollar amounts in thousands)

Income Statement Highlights

	3 Months Ended 9/30/2010			3 Months Ended 6/30/2010			3 Months Ended 9/30/2009
	(Unaudited)			(Unaudited)			(Unaudited)
Interest Income	$	4,124		$	4,107		$	4,360
Interest Expense		1,470			1,505			1,821
Net Interest Income		2,654			2,602			2,539
Provision for Loan Losses		191			509			188
Noninterest Income		855			714			867
Noninterest Expense		2,764			2,711			2,880
Net Income		374			67			237
ROA		0.45	%		0.08	%		0.29	%
ROE		5.65	%		1.02	%		3.79	%
Net Interest Margin		3.34	%		3.32	%		3.29	%

Income Statement Highlights

	9 Months Ended 9/30/2010			Year Ended 12/31/2009			9 Months Ended 9/30/2009
	(Unaudited)			(Audited)			(Unaudited)
Interest Income	$	12,316		$	17,316		$	13,005
Interest Expense		4,495			7,312			5,649
Net Interest Income		7,821			10,004			7,356
Provision for Loan Losses		963			1,530			1,029
Noninterest Income		2,240			3,148			2,369
Noninterest Expense		8,184			11,171			8,352
Net Income		624			351			273
ROA		0.25	%		0.11	%		0.11	%
ROE		3.17	%		1.40	%		1.46	%
Net Interest Margin		3.34	%		3.23	%		3.21	%

Balance Sheet Highlights

	9/30/2010		12/31/2009		9/30/2009
	(Unaudited)		(Audited)		(Unaudited)
Cash and Cash Equivalents	$	32,983	$	32,060	$	23,812
Net Loans		260,689		265,904		268,397
Total Securities		27,904		20,156		21,002
Total Assets		334,694		332,210		325,758
Total Deposits		303,517		302,119		295,423
Total Liabilities		308,011		306,359		300,612
Stockholders’ Equity		26,683		25,851		25,146

Asset Quality Highlights

	9/30/2010			6/30/2010			12/31/2009			9/30/2009
	(Unaudited)			(Unaudited)			(Audited)			(Unaudited)
Nonperforming Loans to Total Loans		2.67	%		2.56	%		1.49	%		0.76	%
Allowance for Loan Losses to Total Loans		1.42	%		1.44	%		1.38	%		1.39	%
Allowance for Loan Losses to Nonperforming Loans		53.23	%		56.08	%		92.68	%		182.18	%
Nonperforming Loans	$	7,051		$	6,783		$	4,017		$	2,082
Other Real Estate Owned (OREO)		599			465			461			125
Allowance For Loan Losses		3,753			3,804			3,723			3,793

CONTACT: Pinnacle Bankshares Corporation, Bryan M. Lemley, 434-477-5882, bryanlemley@1stnatbk.com