Pinnacle Bank's 2024 Earnings: Navigating Inflation and Economic Uncertainties

Pinnacle Bank, a full-service business bank headquartered in Gilroy, California, recently announced its earnings for the year ended December 31, 2024. The bank's financial performance in 2024 was marked by a decrease in net income compared to previous years, as well as strategic initiatives aimed at navigating inflation and economic uncertainties. This article will delve into Pinnacle Bank's 2024 earnings, the factors contributing to the decrease in net income, and the strategic initiatives implemented by the bank to drive loan and deposit growth.



2024 Earnings Performance and Key Metrics

Pinnacle Bank reported unaudited net income of $8.846 million for 2024, down from $11.771 million in 2023. Fourth quarter 2024 net income was $3.421 million, up from $3.251 million in Q4 2023. Total assets grew 4% to $846.8 million, while gross loans increased 6% to $600.6 million. The allowance for loan losses rose to $7.352 million (1.23% of net loans) from $5.952 million (1.06%). Nonperforming loans reached $12.0 million, up from zero in 2023. Total deposits increased 2% to $732.2 million. The bank maintained a strong capital position with a total capital ratio of 16.34% and book value per share of $16.87. Pinnacle Bank received top ratings from Bauer Financial and DepositAccounts.com, serving Santa Clara, San Benito, and Monterey counties.

Factors Contributing to the Decrease in Net Income

1. Increase in nonperforming loans (NPLs): Pinnacle Bank experienced an increase in NPLs, which reached $12.0 million in 2024, up from zero in 2023. This increase in NPLs likely contributed to the decrease in net income, as the bank had to provision for these loans, reducing its net income.
2. Increase in allowance for loan losses (ALLL): The bank's ALLL rose to $7.352 million (1.23% of net loans) in 2024, up from $5.952 million (1.06%) in 2023. This increase in ALLL is another indication that the bank is provisioning for potential loan losses, which negatively impacts net income.
3. Economic uncertainties and inflation: In the press release, Jeffrey Payne, President and CEO, mentioned that the bank navigated inflation and economic uncertainties during 2024. These factors may have contributed to the decrease in net income, as they can negatively impact the bank's loan portfolio and overall financial performance.

Strategic Initiatives to Drive Loan and Deposit Growth

In 2024, Pinnacle Bank implemented strategic initiatives to navigate inflation and economic uncertainties, which contributed to loan and deposit growth. These initiatives included:

1. Building strong relationships: The bank focused on building strong relationships with its clients, which helped drive loan and deposit growth. This approach was highlighted by Jeffrey Payne, President and CEO, who stated, "During 2024, loans and deposits continued to grow while navigating inflation and economic uncertainties. These results reflect the importance of our approach to building strong relationships."
2. Expanding loan portfolio: Pinnacle Bank successfully expanded its loan portfolio in 2024. Gross loans increased by 6% to $600.6 million, up from $564.5 million in 2023. This growth can be attributed to the bank's strategic initiatives and strong relationships with clients.
3. Increasing deposits: The bank also saw an increase in deposits in 2024. Total deposits grew by 2% to $732.2 million, up from $714.7 million in 2023. This growth indicates that the bank's strategic initiatives resonated with its clients, leading to increased trust and confidence in the bank.



In conclusion, Pinnacle Bank's 2024 earnings performance was marked by a decrease in net income compared to previous years, primarily due to an increase in nonperforming loans and the bank's provision for potential loan losses. Despite these challenges, the bank implemented strategic initiatives to navigate inflation and economic uncertainties, driving loan and deposit growth. Pinnacle Bank's strong capital position and top ratings from independent financial rating firms indicate that the bank is well-positioned to continue serving its clients and contributing to the success of its communities.