Pinnacle Bank of Oregon Reports Third Quarter 2006 Earnings.

BEAVERTON, Ore. -- Pinnacle Bank (OTCBB:PNNB) announces third quarter results impacted by large addition to loan loss provision. Pinnacle Bank reported a net loss for the quarter ended September 30, 2006 of $352,993 compared to a net loss of $111,654 for the quarter ended September 30, 2005.

The Bank reported that it has added a significant provision for potential loan losses during the third quarter of 2006 of $946,721, related to additional credit risk identified in the period on the loan portfolio. The Bank identified $947,171 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 10.61% as of September 30, 2006.

The loan loss provision recorded in third quarter of 2006 and the loan balances charged off in the period are a result of an on-going review of the loan portfolio started in the third quarter to further identify the risk inherent in the portfolio, to provide for this risk with an appropriate reserve for loan losses and to recognize potential losses. This review resulted in charging off partial loan amounts due to a decline in the collateral values supporting the problem loans. The review has also identified additional credits that required being placed on a non-accruing interest status, as well as the need for improved analysis and reporting on loan risk rating classifications.

In addition to recognizing the risk present in the loan portfolio from this review, several other borrowers also experienced financial deterioration during the third quarter. These changes in their business outlook also required an increase in related loan loss reserves.

"More precise evaluation of the risk profile of our loan portfolio allows us to appropriately reserve for the related risk and to actively manage the higher risk loans," said Ron May, President and CEO. "Should our further review identify additional credit risk, the Bank will appropriately reserve for such risk as it is identified. At the same time, we are implementing a strong credit culture which should lower the risk profile of new loans originated by the Bank and provide for more consistent future operating results. With the addition of Chief Credit Officer Rich Brittain in August, we look forward to more actively managing our existing loans and prudently expanding our customer base. In the short time Rich has been with us, he has demonstrated his knowledge and ability to have a positive influence on the Bank," said Ron May, President and CEO.

Jeff Dulcich, Chairman of the Pinnacle Bank Board of Directors said, "Establishing prudent credit standards for new loans and appropriately recognizing the risk in our current portfolio is an important step in the development of our Bank. These actions will allow us to better serve our target markets and communities into the future."

The Bank reported a 41% increase in net interest income earning $1.225 million in the third quarter of 2006, compared to $866,000 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 $946,721 in the quarter up from $567,676 in the same period in 2005. Noninterest expenses grew in the third quarter over the prior year to $878,467, up from $532,096 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. Professional fees increased in the period as the Bank has utilized the services of several professional and consulting groups in 2006 to help organize, plan and develop the Bank for the future including legal, compliance, recruiting and strategic planning services.

The loan portfolio ended September 30, 2006 at $85.6 million, up from $60.2 million on September 30, 2005. The Bank's total deposits grew to $84.9 million from $62.7 million over the same period in 2005. As of September 30, 2006 the Bank reported non-accrual loans of $2.771 million.

Pinnacle Bank also reported net income for the nine months ended September 30, 2006 of $22,949 an increase over net losses of $55,893 reported in the same period in 2005. The overall financial performance for the nine months ended September 30, 2006 was impacted by the substantial addition to the loan loss reserve to cover credit risk identified in the loan portfolio. The Bank did experience growth in loans, deposits, equity, net interest income and noninterest expenses. These increases are mainly due to the Bank's growth as reported previously in the quarterly results.

Pinnacle Bank, in its fourth 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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