Pinnacle Bancorp ratings affirmed by KBRA with stable outlook

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Pinnacle Bancorp ratings affirmed

Highlights

KBRA affirms Pinnacle Bancorp's senior unsecured debt at BBB+, subordinated debt at BBB, and short-term debt at K2 with a Stable outlook for all long-term ratings.
Net interest margin declined from about 3% in 2022 to roughly 2.3% in 2024 due to higher deposit costs and $6 billion in low-yielding securities, before rebounding to 3.4% in Q1 2026 as average deposit costs decrease.
Pinnacle's strong core capital base includes a common equity tier 1 ratio above 13%, and net charge-off ratios remain below 10 basis points since 2013 despite past market stress.

Rating affirmation and financial drivers

As reported by Kroll Bond Rating Agency, KBRA affirms Pinnacle Bancorp's senior unsecured debt rating at BBB+, subordinated debt at BBB, and short-term debt at K2. The agency also affirms ratings for Pinnacle Bank (NE), Bank of Colorado, Pinnacle Bank (TX), and Pinnacle Bank - Wyoming, while maintaining a Stable outlook for all long-term ratings.

KBRA says the ratings are supported by the Omaha, Nebraska-based group's long-term operating record, very low credit costs, and a robust core deposit base. The agency points to recent returns that move back toward historic levels, including about 1.3% core return on assets in each of the past two quarters, after a net interest margin-driven decline in 2023 and 2024 pushed ROA into the 0.7% to 0.8% range.

Pinnacle's net interest margin declines from about 3% in 2022 to roughly 2.3% in 2024, mainly because of higher deposit costs and an earning asset mix that includes more than $6 billion of low-yielding securities. For the first quarter of 2026, KBRA says the margin is back up to about 3.4%, while the average cost of total deposits falls to about 1.7% from a mid-2024 peak near 2.3%.

Capital strength and rating sensitivities

KBRA says Pinnacle's creditor profile continues to benefit from a strong core capital base, including a recent common equity tier 1 ratio above 13%. While tangible common equity is affected in 2022 by negative accumulated other comprehensive income on the securities portfolio, the CET1 ratio remains above the mid-12% range.

Over a longer period, the agency highlights that Pinnacle's annual returns during the global financial crisis never fall below 1% ROA, supported by strong credit quality and a peak annual net charge-off ratio of 0.46% in 2010. Since then, asset quality metrics remain pristine, with net charge-off ratios below 10 basis points since 2013, including through the pandemic and more recent periods of mixed economic conditions.

KBRA says broader development of existing fee income streams or diversification into other fee revenue sources would be viewed favorably. It adds that continued conservative financial management remains important, while an unexpected deterioration in asset quality, a clear reversal in core earnings trends, or a material change in capital management could affect the ratings.

In our earlier report on KBRA’s rating action on The ANB Corporation, we covered the downgrade of its senior and subordinated debt ratings as weaker earnings and thinning capital buffers weighed on the company’s financial profile. We also noted that KBRA maintained a Stable outlook, citing solid asset quality, a durable deposit franchise, and improving (though still constrained) net interest margin trends as key offsets to the profitability headwinds.

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