Pinnacle Bank of Oregon Reports Fourth Quarter 2006 Loss.

BEAVERTON, Ore. -- Pinnacle Bank (OTCBB:PNNB) announces fourth quarter 2006 results impacted by large addition to loan loss provision. Pinnacle Bank reported a net loss for the quarter ended December 31, 2006 of $402,265 compared to a net income of $220,397 for the quarter ended December 31, 2005.

The Bank reported that it has made further significant additions in the quarter to its provision for potential loan losses of $1,002,245, related to additional credit risk identified in the period on the loan portfolio. The Bank identified $184,985 in loan balances management feels may ultimately be uncollectible, and are unsupportable at this time by proper repayment sources or collateral; accordingly these balances were charged off in the current period. The Bank remains well capitalized with a Tier One Risk Based Capital Ratio of 10.08% as of December 31, 2006.

The loan loss provision recorded in fourth quarter of 2006 and the loan balances charged off in the period are primarily the result of an independent review of the loan portfolio which began in the third quarter of 2006. This review was used to further identify the risk inherent in the current portfolio and thus allow us to provide for this risk with an appropriate reserve for loan losses and to recognize potential losses. The financial deterioration of certain borrowers during the quarter also contributed to the increase in loan loss reserves, and charge off activity. The review further helped identify additional credits that required being placed on a non-accruing interest status.

"The process we began in the third quarter of 2006 to have an independent review of the loan portfolio for accurate risk rating and for potential credit weakness was completed in early 2007. Our reported results have taken the independent review into consideration and we believe our reserve for loan losses reasonably provides for the current risk inherent in our loan portfolio. We are actively managing the identified higher risk loan relationships in order to correct any existing problems," said Ron May, President & CEO.

"We lost our Chief Credit Officer in December 2006 to another bank, but I am pleased to announce that Greg Froman will take on the role of the Bank's Chief Credit Officer in February 2007. Mr. Froman will continue our efforts on building a strong credit culture at Pinnacle Bank. Mr. Froman has previous experience as a Chief Credit Officer and 31 years of experience in commercial lending and credit administration, which will serve the Bank well as we continue to address our credit problems and prudently add to our loans. It is our intent to continue to conduct periodic independent reviews of our loan portfolio to ensure that we are employing appropriate risk management practices," concluded Mr. May.

The Bank reported an 11% increase in net interest income earning $1.237 million in the fourth quarter of 2006, compared to $1.114 million in the same period in 2005. The increase in net interest income is due mainly to loan and core deposit growth. The Bank's loan loss provision was $1,002,245 in the quarter up from $115,712 in the same period in 2005. Noninterest expenses grew in the fourth quarter over the prior year to $917,164, up from $667,969 in the same period in 2005. The increases in noninterest expenses are mainly due to staff and occupancy costs to generate and support the Bank's continued growth as well as added costs associated with problem credits. Professional fees increased in the period as the Bank has utilized the services of several professional and consulting groups in 2006 including legal, compliance, recruiting and strategic planning services.

The loan portfolio ended December 31, 2006 at $86.2 million, up from $70.9 million on December 31, 2005. The Bank's total deposits grew to $77.7 million from $59.5 million over the same period in 2005. As of December 31, 2006 the Bank reported non-accrual loans of $3.882 million.

Pinnacle Bank also reported a net loss for the year ended December 31, 2006 of $379,318 compared to net income of $164,504 reported in the same period in 2005. The overall financial performance for the year ended December 31, 2006 was impacted by the substantial addition to the loan loss reserve to cover credit risk identified in the loan portfolio. During the year the Bank experienced growth in loans, deposits, net interest income and noninterest expenses. These increases are mainly due to the Bank's growth and the impacts of costs associated with problem credits as reported previously in the quarterly results.

Pinnacle Bank, in its fifth year of operation, is focused on building sustainable relationships with small to medium-sized businesses, business owners and professionals in the Portland Metropolitan area. The Bank is located in Beaverton, Oregon at 8880 SW Nimbus Avenue, Suite D Beaverton OR. Phone number: 503.644.3000. Fax: [phone]. Email: [e-mail]. Website: www.pinnaclebankoregon.com. Pinnacle Bank is FDIC insured, and an Equal Housing Lender.

Forward Looking Statements:

Statements in this release regarding future events, performance or results are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 ("PSLRA") and are made pursuant to the safe harbors of the PSLRA. Actual results could be quite different from those expressed or implied by the forward-looking statements. Do not unduly rely on forward-looking statements. They give our expectations about the future and are not guarantees. Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update them to reflect changes that occur after that date. A number of factors could cause results to differ significantly from our expectations.

(Balance Sheet and Statements of Operations following)

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