PMHG Prime Meridian Holding Company (QX)

Florida	333-191801	27-2980805
(State or other jurisdiction of incorporation)	(Commission file number)	(IRS employer identification no.)

1471 Timberlane Road FLTallahassee,	32312
(Address of principal executive offices)	(Zip Code)

☐	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))
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1933 (§240.12b-2 of this chapter)   Emerging growth company            ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐

Title of each class			Trading Symbol(s)	Name of exchange on which registered
None			N/A	N/A

	(d)	Exhibits.
		99.1               Press release dated January 29, 2024
		104                Cover Page Interactive Data File (embedded within the Inline XBRL document)

	PRIME MERIDIAN HOLDING COMPANY
	By:	/s/ Clint F. Weber
		Clint F. Weber
		Chief Financial Officer and Executive Vice President

Exhibit 99.1

 

 

FOR IMMEDIATE RELEASE

 

Prime Meridian Holding Company Reports

FOURTH QUARTER AND yEAR END 2023 RESULTS

 

Fourth Quarter and Year End Highlights - Prime Meridian Holding Company and Subsidiary (Unaudited)

(dollars in thousands except per share amounts)

 

		2023				2022				4Q'23				3Q'23				2Q'23				1Q'23				4Q'22
Net earnings		$	8,708			$	9,681			$	1,830			$	2,120			$	2,257			$	2,501			$	2,642
Book value per share		$	24.53			$	21.19			$	24.53			$	22.91			$	23.25			$	22.81			$	21.19
Earnings per share - Basic		$	2.71			$	3.07			$	0.56			$	0.66			$	0.71			$	0.79			$	0.83
Earnings per share - Diluted		$	2.68			$	3.03			$	0.55			$	0.66			$	0.70			$	0.78			$	0.83
Weighted-average basic shares outstanding			3,209,924				3,154,866				3,259,247				3,214,323				3,189,353				3,175,807				3,164,211
Weighted-average diluted shares outstanding			3,251,080				3,193,774				3,299,212				3,235,920				3,201,531				3,210,012				3,198,744
Return on average assets(1)			1.07	%			1.14	%			0.87	%			1.03	%			1.10	%			1.23	%			1.27	%
Return on average equity(1)			11.91				14.77				9.85				11.31				12.31				14.20				16.36
Average yield on earning assets(1)			5.15				3.78				5.40				5.21				4.98				4.78				4.59
Net interest margin(1)			3.79				3.44				3.61				3.68				3.78				3.92				3.98
Efficiency ratio(2)			58.72				54.42				59.99				61.45				57.84				55.72				54.56
Nonperforming assets/total assets(3)			0.40				0.09				0.40				0.19				0.17				0.17				0.09

 

(1) Quarterly ratios have been annualized on a 30/360 basis.

(2) Efficiency Ratio represents noninterest expense divided by the sum of net interest income plus noninterest income. (3) Nonperforming assets include loans greater than 90 days past due and nonaccrual loans.

 

•	Book value per share increased $1.62, or 7.1%, since the linked quarter and $3.34, or 15.8%, since the fourth quarter of 2022.
•	For 2023, the return on average assets was 1.07% and the return on average equity was 11.91%, compared to 1.14% and 14.77%, respectively, in 2022.
•	Pre-tax pre-provision return on assets was 1.58% and pre-tax pre-provision return on equity was 17.65% in 2023, compared to 1.60% and 20.79%, respectively, in 2022.  This is considered a non-GAAP financial measure and additional information, including a reconciliation, can be found on page 12.
•	Historically, the Company has maintained a stable efficiency ratio and reported an efficiency ratio of 58.72% for the full year 2023.
•	Gross loan balances increased $56.3 million, or 9.5%, since December 31, 2022 with most growth occurring in commercial real estate and residential real estate loans.
•	Total deposits increased 2.3%, or $17.2 million, to $748.7 million in 2023.  Growth in time deposits offset decreases in other account categories.
•	At December 31, 2023, available secured and unsecured borrowing capacity was $176.1 million through various sources including the Federal Home Loan Bank of Atlanta (FHLB) and lines of credit with several banks. When combined with maximum available brokered and wholesale funding capacity of $213.6 million, off-balance sheet funding sources total $389.7 million.
•	At December 31, 2023, on balance sheet liquidity was $146.8 million, consisting of cash and cash equivalents and unpledged debt securities at fair value. Total liquidity sources of $536.5 million represent 71.7% of total deposits.
•	The Bank remains well capitalized with a Tier 1 Leverage ratio of 10.15% and a Total Risk Based Capital Ratio of 14.03%.
•	At December 31, 2023, if all held-to-maturity securities are adjusted to fair value, the tangible common equity ratio decreases from 9.36% to 9.24%.  This is considered a non-GAAP financial measure and additional information, including a reconciliation, can be found on page 13.

 

 

Earnings Summary (Unaudited)

(dollars in thousands)

														Change 4Q'23 vs.								For the Year Ended December 31,
		4Q'23				3Q'23				4Q'22				3Q'23				4Q'22				2023				2022				% Change
Net interest income		$	7,253			$	7,187			$	7,858				0.9	%			(7.7	)%		$	29,348			$	27,961				5.0	%
Credit loss expense			707				175				289				304.0				144.6				1,450				890				62.9
Noninterest income			492				499				429				(1.4	)			14.7				1,895				1,934				(2.0	)
Noninterest expense			4,646				4,723				4,521				(1.6	)			2.8				18,345				16,268				12.8
Income taxes			562				668				835				(15.9	)			(32.7	)			2,740				3,056				(10.3	)
Net earnings		$	1,830			$	2,120			$	2,642				(13.7	)%			(30.7	)%		$	8,708			$	9,681				(10.1	)%

 

Net Interest Income (Unaudited)

(dollars in thousands)

 

														Change 4Q'23 vs.								For the Year Ended December 31,
		4Q'23				3Q'23				4Q'22				3Q'23				4Q'22				2023				2022				% Change
Interest income:
Loans		$	9,658			$	9,019			$	7,653				7.1	%			26.2	%		$	35,291			$	26,221				34.6	%
Debt securities			921				919				938				0.2				(1.8	)			3,698				2,938				25.9
Other			287				244				477				17.6				(39.8	)			937				1,581				(40.7	)
Total interest income			10,866				10,182				9,068				6.7	%			19.8	%			39,926				30,740				29.9	%
Interest expense:
Deposits			3,351				2,691				1,137				24.5	%			194.7	%			9,492				2,579				268.0	%
FHLB advances and other borrowings			262				304				73				(13.8	)			258.9				1,086				200				443.0
Total interest expense			3,613				2,995				1,210				20.6				198.6				10,578				2,779				280.6
Net interest income		$	7,253			$	7,187			$	7,858				0.9	%			(7.7	)%		$	29,348			$	27,961				5.0	%

 

Since March 2022, the Federal Open Market Committee ("FOMC") has raised the target federal funds rate eleven times, or 525 basis points.  This rising rate environment was a key contributing factor to the financial performance of the Company and the banking industry in general in 2023. The Company reported net interest income of $7.3 million for the fourth quarter of 2023, an increase of $66,000, or 0.9%, from the linked quarter as revenue generated from loan growth and loan repricing outpaced higher interest expense. Compared to the fourth quarter of 2022, net interest income decreased $605,000, or 7.7%, as higher yields on interest-earning assets and loan growth were more than offset by a higher cost of funds.  Average earnings assets were up 3.0% over the linked quarter and 1.8% over the fourth quarter of 2022 while the yield on average earning assets was 5.40% (4Q'23), compared to 5.21% (3Q'23) and 4.59% (4Q'22). The average cost of funds has risen from 0.64% in 4Q'22 to 1.90% in 4Q'23, reflecting the rising rate environment and a change in funding mix.  Over the past twelve months, there has been a shift away from noninterest-bearing and lower cost deposits toward higher cost money-market and time deposit accounts and other funding sources such as FHLB advances. The Company's net interest margin ("NIM") for the fourth quarter of 2023 was 3.61%, compared to 3.68% (3Q'23) and 3.98% (4Q'22). 

 

Net interest income in 2023 increased 5.0%, or $1.4 million, as higher yields on interest-earning assets and loan growth during the year outpaced the impact of a higher cost of funds and a higher level of borrowings.  Average earning assets decreased 4.7%, or $37.9 million, year-over-year, while average total deposits declined $62.8 million, or 8.1%. The decrease in average deposits reflects both a migration of deposits to higher paying investment alternatives outside the Bank and a general reduction in excess liquidity in the banking system. The Company's cost of funds for 2023 was 1.44% compared to 0.36% in 2022.  The Company's NIM for 2023 was 3.79% compared to 3.44% for the same period a year ago. 

 

Provision for Credit Losses

 

The provision for credit loss expense was $707,000 for the quarter and $1.45 million for the year ending December 31, 2023.  The allowance for credit losses to total loans was 0.86% at December 31, 2023 compared to 1.20% at December 31, 2022.  The Company adopted ASC 326 Current Expected Credit Losses ("CECL") January 1, 2023 which resulted in a $2.6 million decrease to the allowance for credit losses at the time of adoption.  Provision expense for both the quarter and year ended December 31, 2023 primarily reflects specific reserves required by several new individually evaluated loans, followed by loan growth of $17.9 million during the fourth quarter and $56.3 million during the year, and environmental factors reflecting a greater number of past due loans in the residential mortgage sector during the fourth quarter. 

 

 

Noninterest income (Unaudited)

(dollars in thousands)

 

														Change 4Q'23 vs.								For the Year Ended December 31,
		4Q'23				3Q'23				4Q'22				3Q'23				4Q'22				2023				2022				% Change
Service charges and fees on deposit accounts		$	96			$	92			$	83				4.3	%			15.7	%		$	357			$	302				18.2	%
Debit card/ATM revenue, net			136				137				136				(0.7	)			-				573				540				6.1
Mortgage banking revenue, net			102				121				53				(15.7	)			92.5				352				473				(25.6	)
Income from bank-owned life insurance			99				100				94				(1.0	)			5.3				389				379				2.6
Other income			59				49				63				20.4				(6.3	)			224				240				(6.7	)
Total noninterest income		$	492			$	499			$	429				(1.4	)%			14.7	%		$	1,895			$	1,934				(2.0	)%

 

Noninterest income remained relatively flat with the linked quarter and was up $63,000, or 14.7%, over the fourth quarter of 2022.  Compared to the same period a year ago, a $49,000, or 92.5%, increase in mortgage banking revenue and a $13,000, or 15.7%, increase in service charges and fees on deposit accounts were the key drivers of the 14.7% increase in noninterest income  Comparing the full years of 2023 and 2022, the $121,000, or 25.6%, decline in mortgage banking revenue, partially offset by a $55,000, or 18.2%, increase in service charges and fees on deposit account were the primary drivers of a 2.0% overall decline in noninterest income.

 

Noninterest expense (Unaudited)

(dollars in thousands)

 

														Change 4Q'23 vs.								For the Year Ended December 31,
		4Q'23				3Q'23				4Q'22				3Q'23				4Q'22				2023				2022				% Change
Salaries and employee benefits		$	2,813			$	2,864			$	2,862				(1.8	)%			(1.7	)%		$	11,172			$	9,627				16.0	%
Occupancy and equipment			412				427				404				(3.5	)			2.0				1,647				1,621				1.6
Professional fees			143				149				114				(4.0	)			25.4				559				514				8.8
Marketing			215				215				218				-				(1.4	)			903				793				13.9
FDIC assessment			85				104				57				(18.3	)			49.1				360				360				-
Software maintenance, amortization and other			302				341				325				(11.4	)			(7.1	)			1,214				1,162				4.5
Other			676				623				541				8.5				25.0				2,490				2,191				13.6
Total noninterest expense		$	4,646			$	4,723			$	4,521				(1.6	)%			2.8	%		$	18,345			$	16,268				12.8	%

 

Operating expenses were down $77,000, or 1.6%, from the linked quarter, mostly attributed to lower expenses for salaries and employee benefits, FDIC assessment, and software, maintenance, amortization and other, partially offset by higher other noninterest expense, which is mostly deposit related operating and fraud expenses.  Compared to the fourth quarter a year ago, the $125,000, or 2.8%, increase in noninterest expense is mostly due to higher other noninterest expense (mainly deposit related operating and fraud expenses), higher professional fees, and higher FDIC assessment expense, partially offset by slightly lower salaries and employee benefits expense. 

 

Operating expenses increased $2.1 million, or 12.8%, in 2023 over the prior year with 74.4% of that increase driven by the $1.5 million increase in salaries and employee benefits.  The Company reported 110 FTEs at December 31, 2023 compared to 107 FTEs at December 31, 2022.  In addition to slightly higher headcount, the increase in salaries is attributed to annual raises that were effective March 1, 2023, general wage inflation, and a decline in deferred loan costs due to lower loan production in 2023. The $110,000 increase in marketing stems primarily from business development activities including a client appreciation campaign in the fourth quarter.  Nearly a third of the $299,000, or 13.6%, increase in other noninterest expense is attributed to the aforementioned deposit related operating and fraud expenses. 

 

 

 

Financial Condition

 

At December 31, 2023, the Company reported $854.5 million in total assets, $748.7 million in deposits, and $646.1 million in net portfolio loans. This compares to $815.2 million in total assets, $731.5 million in deposits, and $588.7 million in net portfolio loans at December 31, 2022. 

 

The majority of the Company's debt securities are categorized as available-for-sale ("AFS") and carried on the balance sheet at fair value.  At December 31, 2023, the $10.5 million in unrealized losses on these AFS securities are fully reflected on the balance sheet as an after-tax reduction to equity capital of $7.8 million. The portfolio also includes $11.9 million in securities classified as held-to-maturity ("HTM") with a fair value of $10.4 million. HTM securities consist of U.S. agency mortgage-backed securities and municipal securities, each of which is expected to recoup any unrealized losses over its holding period as the debt securities move to maturity. Management believes that the Company has ample liquidity and available borrowing capacity to support holding these securities until maturity. 

 

Gross loans increased $56.3 million, or 9.5%, since December 31, 2022 with commercial real estate and residential real estate loans reporting the largest dollar volume increases.  At December 31, 2023, the allowance for credit losses of $5.6 million, represented 0.86% of gross loans compared to $7.1 million, or 1.20% of gross loans, at December 31, 2022.  The adoption of CECL on January 1, 2023 resulted in a $2.6 million decrease in the allowance for credit losses in the first quarter of 2023. 

 

Prime Meridian Holding Company and Subsidiary

Loans by Class

(dollars in thousands)

 

		December 31, 2023								December 31, 2022
		Unaudited								Audited
		Amount				% of Total				Amount				% of Total
Commercial real estate		$	223,795				34.3	%		$	202,263				34.0	%
Residential real estate and home equity			254,574				39.1				224,211				37.6
Construction			81,640				12.5				75,151				12.6
Commercial			85,983				13.2				86,308				14.5
Consumer			5,936				0.9				7,698				1.3
Total loans			651,928				100.0	%			595,631				100.0	%
Net deferred loan (fees) costs			(192	)							229
Allowance for credit losses			(5,609	)							(7,145	)
Loans, net		$	646,127							$	588,715

 

 

Deposit balances increased $17.2 million, or 2.3%, since December 31, 2022, with declining balances in all categories, except time deposits.  Time deposit account balances increased $42.3 million since December 31, 2022, with $20 million of that increase attributed to public funds.  We continue to monitor our deposits closely in this challenging rate environment.

 

Federal Home Loan Bank advances totaled $15.0 million at December 31, 2023 with a weighted average interest rate of 4.5%. Deposit inflows during the third and fourth quarter enabled the $20.0 million reduction in FHLB borrowings from the highpoint ($35.0 million) reported at June 30, 2023. 

 

Total stockholders’ equity was $80.0 million, or 9.36% of total assets, at December 31, 2023, compared to $67.1 million at December 31, 2022, or 8.23% of total assets.  Retained earnings, a $2.2 million favorable change in the accumulated other comprehensive loss balance, and a $1.9 million tax-effected change resulting from the adoption of CECL were the primary contributors to higher equity and offset common stock dividends of $698,000 ($0.22 per common share).  At December 31, 2023, book value per share was $24.53 with 3,259,881 common shares outstanding.

 

As of December 31, 2023, the Bank was considered to be “well capitalized” with a Tier 1 Leverage Capital Ratio of 10.15%, a 13.18% Common Equity Tier 1 Capital Ratio, a 13.18% Tier 1 Risk-Based Capital Ratio, and a 14.03% Total Risk-Based Capital Ratio.  The Company maintains a $15 million, 5-year revolving Line of Credit, enhancing its liquidity sources to support the ongoing capital needs of the Bank. The Line of Credit matures in August 2025 and currently has a zero outstanding balance.  As of December 31, 2023, the Company reported $15 million in FHLB advances, a $10 million decrease from September 30, 2023. Borrowed funds represented only 1.9% of total liabilities at December 31, 2023 and interest expense totaled $1.1 million for FHLB advances and other borrowings in 2023.

 

Asset Quality

 

At December 31, 2023, the Bank had twelve nonperforming loans totaling $3.4 million. The balance of nonperforming loans at December 31, 2023 was divided among residential and home equity loans (60%); commercial loans (23%) and construction loans (17%). During 2023, charge-offs totaled $433,000 while recoveries totaled $53,000. The ratio of nonperforming assets as a percentage of total assets was 0.40%.   The Company adopted CECL effective January 1, 2023 which resulted in a $2.6 million ($1.9 million tax-effected) decrease in the allowance for credit losses.  Management believes that the allowance for credit losses which was $5.6 million, or 0.86% of gross loans, at December 31, 2023 is adequate. 

 

 

 

About Prime Meridian Holding Company

 

Headquartered in Tallahassee, Florida, Prime Meridian Holding Company (OTCQX: PMHG) offers a broad range of banking services through its wholly owned subsidiary, Prime Meridian Bank, a Florida state-chartered non-member bank. Founded in 2008, the Bank now serves the Tallahassee and Lakeland/Winter Haven Metropolitan Statistical Areas (MSA), including clients in North and Central Florida as well as South Georgia and South Alabama. The Bank currently has four Florida locations: two in Tallahassee, Florida, one in Crawfordville, Florida, and one in Lakeland, Florida. As of December 31, 2023, the Bank had 110 full-time equivalent employees. For more information about Prime Meridian Holding Company, please visit www.primemeridianbank.com.

 

This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “may,” “could,” “should,” “would,” “believe,” “anticipate,” “estimate,” “expect,” “intend,” “plan,” “project,” “is confident that” and similar expressions are intended to identify these forward-looking statements. These forward-looking statements involve risk and uncertainty and a variety of factors could cause our actual results and experience to differ materially from the anticipated results or other expectations expressed in these forward-looking statements. We do not have a policy of updating or revising forward-looking statements except as otherwise required by law, and silence by management over time should not be construed to mean that actual events are occurring as estimated in such forward-looking statements.

 

About Non-GAAP Financial Measures

 

Certain financial measures and ratios we present including "pre-tax, pre-provision ("PTPP") net earnings," "PTPP return on average common equity," "PTPP return on average assets," and "adjusted average loan yield" are supplemental measures that are not required by, or are not presented in accordance with, accounting principles generally accepted in the United States of America ("GAAP"). We refer to those financial measures and ratios as "non-GAAP financial measures." We consider the use of select non-GAAP financial measures and ratios to be useful for financial and operational decision making and useful in evaluating period-to-period comparisons. We believe that these non-GAAP financial measures provide meaningful supplemental information regarding our performance by excluding certain expenditures or assets that we believe are not indicative of our primary business operating results.

 

We believe that management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting, analyzing and comparing past, present, and future periods.

 

These non-GAAP measures should not be considered a substitute for financial information presented in accordance with GAAP and you should not rely on non-GAAP financial measures alone as measures of our performance. The non-GAAP financial measures we present may differ from non-GAAP financial measures used by our peers or other companies. We compensate for these limitations by providing the equivalent GAAP measures whenever we present the non-GAAP financial measures and by including a reconciliation of the impact of the components adjusted for in the non-GAAP financial measure so that both measures and the individual components may be considered when analyzing our performance. A reconciliation of non-GAAP financial measures is included at the end of the financial statement tables.

 

 

 

Tables Follow

 

 

 

 

 

 

Prime Meridian Holding Company and Subsidiary

Condensed Consolidated Statements of Earnings (Unaudited)

(in thousands except per share amounts)

 

		4Q'23				3Q'23				2Q'23				1Q'23				4Q'22
Interest income:
Loans		$	9,658			$	9,019			$	8,570			$	8,044			$	7,653
Debt securities			921				919				925				933				938
Other			287				244				184				222				477
Total interest income			10,866				10,182				9,679				9,199				9,068
Interest expense:
Deposits			3,351				2,691				1,917				1,533				1,137
FHLB advances and other borrowings			262				304				409				111				73
Total interest expense			3,613				2,995				2,326				1,644				1,210
Net interest income			7,253				7,187				7,353				7,555				7,858
Credit loss expense			707				175				325				243				289
Net interest income after credit loss expense			6,546				7,012				7,028				7,312				7,569
Noninterest income:
Service charges and fees on deposit accounts			96				92				84				85				83
Debit card/ATM revenue, net			136				137				149				151				136
Mortgage banking revenue, net			102				121				75				54				53
Income from bank-owned life insurance			99				100				96				94				94
Other income			59				49				59				57				63
Total noninterest income			492				499				463				441				429
Noninterest expense:
Salaries and employee benefits			2,813				2,864				2,743				2,752				2,862
Occupancy and equipment			412				427				399				409				404
Professional fees			143				149				132				135				114
Marketing			215				215				250				223				218
FDIC assessment			85				104				87				84				57
Software maintenance, amortization and other			302				341				294				277				325
Other			676				623				616				575				541
Total noninterest expense			4,646				4,723				4,521				4,455				4,521
Earnings before income taxes			2,392				2,788				2,970				3,298				3,477
Income taxes			562				668				713				797				835
Net earnings		$	1,830			$	2,120			$	2,257			$	2,501			$	2,642
Basic earnings per common share		$	0.56			$	0.66			$	0.71			$	0.79			$	0.83
Diluted earnings per common share			0.55				0.66				0.70				0.78				0.83

 

 

Prime Meridian Holding Company and Subsidiary

Condensed Consolidated Statements of Earnings

(in thousands, except per share amounts)

 

 

		Year Ended December 31,
		2023				2022
			Unaudited				Audited
Interest income:
Loans		$	35,291			$	26,221
Debt securities			3,698				2,938
Other			937				1,581
Total interest income			39,926				30,740
Interest expense:
Deposits			9,492				2,579
FHLB advances and other borrowings			1,086				200
Total interest expense			10,578				2,779
Net interest income			29,348				27,961
Credit loss expense			1,450				890
Net interest income after credit loss expense			27,898				27,071
Noninterest income:
Service charges and fees on deposit accounts			357				302
Debit card/ATM revenue, net			573				540
Mortgage banking revenue, net			352				473
Income from bank-owned life insurance			389				379
Other income			224				240
Total noninterest income			1,895				1,934
Noninterest expense:
Salaries and employee benefits			11,172				9,627
Occupancy and equipment			1,647				1,621
Professional fees			559				514
Marketing			903				793
FDIC assessment			360				360
Software maintenance, amortization and other			1,214				1,162
Other			2,490				2,191
Total noninterest expense			18,345				16,268
Earnings before income taxes			11,448				12,737
Income taxes			2,740				3,056
Net earnings		$	8,708			$	9,681
Earnings per common share:
Basic		$	2.71			$	3.07
Diluted			2.68				3.03
Cash dividends per common share(1)			0.22				0.18

 

 

⁽¹⁾ Annual cash dividends were paid during the first quarters of 2023 and 2022.

 

 

Prime Meridian Holding Company and Subsidiary

Condensed Consolidated Balance Sheets

(in thousands)

 

		4Q'23				3Q'23				2Q'23				1Q'23				4Q'22
		(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)				(Audited)
Assets
Cash & cash equivalents		$	28,416			$	22,404			$	21,799			$	22,714			$	39,788
Debt securities available for sale			124,475				123,838				126,792				129,748				129,436
Debt securities held to maturity			11,850				11,838				11,827				11,816				11,805
Loans, held for sale			5,288				5,182				6,614				8,105				7,058
Loans, net			646,127				628,974				614,744				606,128				588,715
Federal Home Loan Bank stock			1,283				1,758				1,895				1,045				463
Premises & equipment, net			7,476				7,613				7,746				7,893				8,022
Right of use lease asset			2,823				2,879				2,934				2,989				3,044
Accrued interest receivable			3,114				2,671				2,713				2,623				2,385
Bank-owned life insurance			16,921				16,822				16,722				16,626				16,532
Other real estate owned			-				117				-				-				-
Other assets			6,755				7,889				7,253				6,570				7,924
Total Assets		$	854,528			$	831,985			$	821,039			$	816,257			$	815,172
Liabilities and Stockholders' Equity
Liabilities:
Noninterest-bearing demand deposits		$	189,426			$	193,439			$	189,362			$	199,492			$	197,987
Savings, NOW and money-market deposits			476,826				451,492				450,820				466,202				493,439
Time deposits			82,436				77,876				62,646				51,542				40,109
Total Deposits			748,688				722,807				702,828				717,236				731,535
Other borrowings			-				-				-				1,725				4,275
FHLB Advances			15,000				25,000				35,000				15,000				-
Official checks			2,377				717				1,114				1,671				4,090
Operating lease liability			3,013				3,062				3,111				3,159				3,208
Other liabilities			5,474				5,612				4,816				4,790				5,011
Total Liabilities			774,552				757,198				746,869				743,581				748,119
Total Stockholders' Equity			79,976				74,787				74,170				72,676				67,053
Total Liabilities and Stockholders' Equity		$	854,528			$	831,985			$	821,039			$	816,257			$	815,172

 

Prime Meridian Holding Company and Subsidiary

Condensed Consolidated Average Balance Sheets (Unaudited)

(in thousands)

		4Q'23											3Q'23												4Q'22
						Interest											Interest												Interest
		Average				and			Yield/				Average				and				Yield/				Average				and				Yield/
		Balance				Dividends			Rate(5)				Balance				Dividends				Rate(5)				Balance				Dividends				Rate(5)
Interest-earning assets:
Loans(1)		$	643,222			$	9,577			5.96	%		$	620,297			$	8,939				5.76	%		$	588,727			$	7,561				5.14	%
Loans held for sale			5,730				81			5.65				5,850				80				5.47				7,845				92				4.69
Debt securities			134,694				921			2.74				137,731				919				2.67				142,205				938				2.64
Other(2)			20,901				287			5.49				17,398				244				5.61				51,585				477				3.70
Total interest-earning assets			804,547			$	10,866			5.40	%			781,276			$	10,182				5.21	%			790,362			$	9,068				4.59	%
Noninterest-earning assets			40,288											42,065												38,550
Total assets		$	844,835										$	823,341											$	828,912
Interest-bearing liabilities:
Savings, NOW and money-market deposits		$	459,949			$	2,620			2.28	%		$	449,396			$	2,089				1.86	%		$	494,146			$	1,052				0.85	%
Time deposits			79,937				731			3.66				73,071				602				3.30				39,519				85				0.86
Total interest-bearing deposits			539,886				3,351			2.48				522,467				2,691				2.06				533,665				1,137				0.85
FHLB advances and other borrowings			21,361				262			4.91				24,582				304				4.95				4,180				73				6.99
Total interest-bearing liabilities			561,247			$	3,613			2.57	%			547,049			$	2,995				2.19	%			537,845			$	1,210				0.90	%
Noninterest-bearing deposits			198,669											192,686												217,401
Noninterest-bearing liabilities			10,601											8,644												9,088
Stockholders' equity			74,318											74,962												64,578
Total liabilities and stockholders' equity		$	844,835										$	823,341											$	828,912
Net earning assets		$	243,300										$	234,227											$	252,517
Net interest income						$	7,253										$	7,187											$	7,858
Interest rate spread(3)										2.83	%											3.02	%											3.69	%
Net interest margin(4)										3.61	%											3.68	%											3.98	%

 

		For the Year Ended December 31,
		2023												2022
						Interest												Interest
		Average				and				Yield/				Average				and				Yield/
(dollars in thousands)		Balance				Dividends				Rate				Balance				Dividends				Rate
Interest-earning assets:
Loans(1)		$	613,059			$	34,938				5.70	%		$	537,304			$	25,803				4.80	%
Loans held for sale			6,769				353				5.21				9,852				418				4.24
Debt securities			137,066				3,698				2.70				126,102				2,938				2.33
Other(2)			18,106				937				5.18				139,614				1,581				1.13
Total interest-earning assets			775,000			$	39,926				5.15	%			812,872			$	30,740				3.78	%
Noninterest-earning assets			40,813												39,400
Total assets		$	815,813											$	852,272
Interest-bearing liabilities:
Savings, NOW and money-market deposits		$	456,263			$	7,681				1.68	%		$	518,777			$	2,315				0.45	%
Time deposits			61,893				1,811				2.93				42,536				264				0.62
Total interest-bearing deposits			518,156				9,492				1.83				561,313				2,579				0.46
FHLB advances and other borrowings			20,127				1,086				5.40				4,016				200				4.98
Total interest-bearing liabilities			538,283			$	10,578				1.97	%			565,329			$	2,779				0.49	%
Noninterest-bearing deposits			193,896												213,570
Noninterest-bearing liabilities			10,540												7,824
Stockholders' equity			73,094												65,549
Total liabilities and stockholders' equity		$	815,813											$	852,272
Net earning assets		$	236,717											$	247,543
Net interest income						$	29,348											$	27,961
Interest rate spread (3)											3.18	%											3.29	%
Net interest margin(4)											3.79	%											3.44	%

 

⁽¹⁾ Includes nonaccrual loans

⁽²⁾ Other interest-earning assets includes federal funds sold, interest-bearing deposits and Federal Home Loan Bank stock.

⁽³⁾ Interest rate spread is the difference between total interest-earning asset yield and the rate paid on total interest-bearing liabilities.

⁽⁴⁾ Net interest margin is net interest income divided by total average interest-earning assets, annualized on a 30/360 basis.

⁽⁵⁾ Annualized on a 30/360 basis

 

Prime Meridian Holding Company and Subsidiary

Financial Highlights (Unaudited)

(dollars in thousands except per share amounts)

 

		4Q'23				3Q'23				2Q'23				1Q'23				4Q'22
Per Share Data:
Earnings per common share - Basic		$	0.56			$	0.66			$	0.71			$	0.79			$	0.83
Earnings per common share - Diluted		$	0.55			$	0.66			$	0.70			$	0.78			$	0.83
Book value per common share		$	24.53			$	22.91			$	23.25			$	22.81			$	21.19
Common shares outstanding			3,259,881				3,263,733				3,190,052				3,185,765				3,164,491
Weighted-average basic common shares outstanding			3,259,247				3,214,323				3,189,353				3,175,807				3,164,211
Weighted-average diluted common shares outstanding			3,299,212				3,235,920				3,201,531				3,210,012				3,198,744
Selected Performance Ratios and Other Data:
Return on average assets(1)			0.87	%			1.03	%			1.10	%			1.23	%			1.27	%
Return on average equity(1)			9.85				11.31				12.31				14.20				16.36
Average yield on earning assets			5.40				5.21				4.98				4.78				4.59
Net interest margin(2)			3.61				3.68				3.78				3.92				3.98
Efficiency ratio(3)			59.99				61.45				57.84				55.72				54.56
Noninterest expense/average assets(1)			2.20				2.29				2.21				2.20				2.18
Asset Quality Data:
Nonaccrual loans		$	2,335			$	1,112			$	1,391			$	1,348			$	343
Loans 90 days past due and still accruing			1,110				367				-				-				404
Other real estate owned			-				117				-				-				-
Total nonperforming assets			3,445				1,596				1,391				1,348				747
Nonperforming assets/total assets			0.40	%			0.19	%			0.17	%			0.17	%			0.09	%
Loans 30-89 days past due		$	5,353			$	1,060			$	826			$	2,414			$	2,900
Total loans			651,928				633,982				619,465				610,792				595,631
Loans 30-89 days past due/total loans			0.82	%			0.17	%			0.13	%			0.40	%			0.49	%
Net charge-offs/average loans (1)			-				0.03				0.23				-				-
Capital Ratios:
Tier 1 Leverage Capital Ratio (Company)			10.29	%			10.34	%			10.14	%			9.93	%			9.09	%
Common Equity Tier 1 Capital Ratio (Company)			13.37				13.42				13.22				12.82				12.25
Tier 1 Risk-Based Capital Ratio (Company)			13.37				13.42				13.22				12.82				12.25
Total Risk-Based Capital Ratio (Company)			14.22				14.19				13.97				13.58				13.39
Tangible Common Equity Ratio(4) (Company)			9.36				8.99				9.03				8.90				8.23
Tier 1 Leverage Capital Ratio (Bank)			10.15				10.18				9.98				10.13				9.70
Common Equity Tier 1 Capital Ratio (Bank)			13.18				13.23				13.00				13.07				12.90
Tier 1 Risk-Based Capital Ratio (Bank)			13.18				13.23				13.00				13.07				12.90
Total Risk-Based Capital Ratio (Bank)			14.03				13.99				13.76				13.83				14.04
Tangible Common Equity Ratio(4) (Bank)			9.22				8.84				8.87				9.10				8.73

 

(1) Annualized on a 30/360 basis

(2) Net interest margin is net interest income divided by total average interest-earning assets, annualized.

(3) Efficiency Ratio represents noninterest expense divided by the sum of net interest income plus noninterest income.

(4) Tangible Common Equity Ratio is a non-GAAP financial measure.  For additional information, including a reconciliation to GAAP, please refer to page 13.

 

 

Prime Meridian Holding Company and Subsidiary

Non-GAAP Measures and Ratio Reconciliation (Unaudited)

(dollars in thousands except per share amounts)

 

		4Q'23				3Q'23				2Q'23				1Q'23				4Q'22
Net Income
Net earnings (GAAP)		$	1,830			$	2,120			$	2,257			$	2,501			$	2,642
Plus: Provision (credit) for credit losses			707				175				325				243				289
Plus: income taxes			562				668				713				797				835
PTPP(1) net earnings (non-GAAP)		$	3,099			$	2,963			$	3,295			$	3,541			$	3,766
Earnings per Share (EPS)
Weighted average common shares, diluted			3,299,212				3,235,920				3,201,531				3,210,012				3,198,744
EPS, diluted (GAAP)		$	0.55			$	0.66			$	0.70			$	0.78			$	0.83
PTPP(1) EPS, diluted (non-GAAP)		$	0.94			$	0.92			$	1.03			$	1.10			$	1.18
Return on Average Assets (ROAA)(2)
Average assets		$	844,835			$	823,341			$	817,669			$	810,508			$	828,912
ROAA (GAAP)			0.87	%			1.03	%			1.10	%			1.23	%			1.27	%
PTPP(1) ROAA (non-GAAP)			1.47	%			1.44	%			1.61	%			1.75	%			1.82	%
Return on Average Equity (ROAE)(2)
Average equity		$	74,318			$	74,962			$	73,347			$	70,456			$	64,578
ROAE (GAAP)			9.85	%			11.31	%			12.31	%			14.20	%			16.36	%
PTPP(1) ROAE (non-GAAP)			16.68	%			15.81	%			17.97	%			20.10	%			23.33	%

 

⁽¹⁾Pre-tax, pre-provision

⁽²⁾ Annualized on a 30/360 basis

 

 

 

Prime Meridian Holding Company and Subsidiary

Non-GAAP Measures and Ratio Reconciliation (Unaudited)

(dollars in thousands except per share amounts)

 

		4Q'23				3Q'23				2Q'23				1Q'23				4Q'22
Adjusted Average Loan Yield:
Net loans, excluding loans held for sale		$	646,127			$	628,974			$	614,744			$	606,128			$	588,715
Less PPP loans			(36	)			(41	)			(48	)			(181	)			(191	)
Adjusted net loans, excluding loans held for sale and PPP (non-GAAP)		$	646,091			$	628,933			$	614,696			$	605,947			$	588,524
Average loans, excluding loans held for sale		$	643,222			$	620,297			$	613,318			$	602,022			$	588,727
Less average PPP loans			(38	)			(45	)			(175	)			(185	)			(195	)
Adjusted average loans, excluding loans held for sale and PPP (non-GAAP)		$	643,184			$	620,252			$	613,143			$	601,837			$	588,532
Interest on loans, excluding loans held for sale		$	9,577			$	8,939			$	8,465			$	7,958			$	7,561
Less interest income and earned fee income on PPP loans			-				-				(4	)			3				(1	)
Adjusted interest on loans, excluding loans held for sale and PPP (non-GAAP)		$	9,577			$	8,939			$	8,461			$	7,961			$	7,560
Growth rate over linked quarter			7.1	%			5.6	%			6.3	%			5.3	%			14.5	%
Average loan yield, excluding loans held for sale (GAAP)			5.96	%			5.76	%			5.52	%			5.29	%			5.14	%
Adjusted average loan yield, excluding loans held for sale and PPP (non-GAAP)			5.96	%			5.76	%			5.52	%			5.29	%			5.14	%
Tangible Common Equity Ratio (Company)
Stockholders' Equity (GAAP)		$	79,976			$	74,787			$	74,170			$	72,676			$	67,053
Less: Intangibles			-				-				-				-				-
Tangible Stockholders' Equity (non-GAAP)		$	79,976			$	74,787			$	74,170			$	72,676			$	67,053
Total Assets (GAAP)		$	854,528			$	831,985			$	821,039			$	816,257			$	815,172
Less: Intangibles			-				-				-				-				-
Tangible Assets (non-GAAP)		$	854,528			$	831,985			$	821,039			$	816,257			$	815,172
Tangible Common Equity Ratio (non-GAAP)			9.36	%			8.99	%			9.03	%			8.90	%			8.23	%
Tax-effected adjustment of losses in HTM securities portfolio (non-GAAP)		$	1,114			$	1,624			$	1,063			$	1,118			$	1,409
Tangible Assets adjusted for HTM securities at fair value (non-GAAP)			853,414				830,361				819,976				815,139				813,763
Tangible Equity adjusted for HTM securities at fair value (non-GAAP)			78,862				73,163				73,107				71,558				65,644
Tangible Common Equity Ratio Adjusted (non-GAAP)			9.24	%			8.81	%			8.92	%			8.78	%			8.07	%
Tangible Common Equity Ratio (Bank)
Stockholders' Equity (GAAP)		$	78,763			$	73,514			$	72,816			$	74,287			$	71,125
Less: Intangibles			-				-				-				-				-
Tangible Stockholders' Equity (non-GAAP)		$	78,763			$	73,514			$	72,816			$	74,287			$	71,125
Total Assets (GAAP)		$	854,494			$	831,830			$	820,921			$	816,173			$	815,142
Less: Intangibles			-				-				-				-				-
Tangible Assets (non-GAAP)		$	854,494			$	831,830			$	820,921			$	816,173			$	815,142
Tangible Common Equity Ratio (non-GAAP)			9.22	%			8.84	%			8.87	%			9.10	%			8.73	%

 

 

 

 

Prime Meridian Holding Company and Subsidiary

Non-GAAP Measures and Ratio Reconciliation Annual Pre-Tax Pre-Provision Calculation Unaudited)

(dollars in thousands except per share amounts)

 

		For the Year Ended December 31,
		2023				2022				2021				2020				2019
Net Income
Net earnings (GAAP)		$	8,708			$	9,681			$	8,347			$	4,458			$	3,542
Plus: Provision (credit) for credit losses			1,450				890				(104	)			2,850				1,131
Plus: income taxes			2,740				3,056				2,517				1,295				1,092
PTPP(1) net earnings (non-GAAP)		$	12,898			$	13,627			$	10,760			$	8,603			$	5,765
Earnings per Share (EPS)
Weighted average common shares, diluted			3,251,080				3,193,774				3,142,482				3,134,124				3,159,635
EPS, diluted (GAAP)		$	2.68			$	3.03			$	2.66			$	1.42			$	1.12
PTPP(1) EPS, diluted (non-GAAP)		$	3.97			$	4.27			$	3.42			$	2.74			$	1.82
Return on Average Assets (ROAA)
Average assets		$	815,813			$	852,272			$	751,576			$	595,363			$	456,797
ROAA (GAAP)			1.07	%			1.14	%			1.11	%			0.75	%			0.78	%
PTPP(1) ROAA (non-GAAP)			1.58	%			1.60	%			1.43	%			1.45	%			1.26	%
Return on Average Equity (ROAE)
Average equity		$	73,094			$	65,549			$	65,179			$	57,386			$	53,172
ROAE (GAAP)			11.91	%			14.77	%			12.81	%			7.77	%			6.66	%
PTPP(1) ROAE (non-GAAP)			17.65	%			20.79	%			16.51	%			14.99	%			10.84	%
Adjusted Average Loan Yield:
Net loans, excluding loans held for sale		$	646,127			$	588,715			$	490,198			$	476,661			$	337,710
Less PPP loans			(36	)			(191	)			(15,172	)			(66,774	)			-
Adjusted net loans, excluding loans held for sale and PPP (non-GAAP)		$	646,091			$	588,524			$	475,026			$	409,887			$	337,710
Average loans, excluding loans held for sale		$	613,059			$	537,304			$	480,606			$	429,802			$	309,350
Less average PPP loans			(108	)			(3,061	)			(50,315	)			(55,529	)			-
Adjusted average loans, excluding loans held for sale and PPP (non-GAAP)		$	612,951			$	534,243			$	430,291			$	374,273			$	309,350
Interest on loans, excluding loans held for sale		$	34,938			$	25,803			$	22,598			$	19,553			$	15,884
Less interest income and earned fee income on PPP loans			(2	)			(776	)			(3,358	)			(1,725	)			-
Adjusted interest on loans, excluding loans held for sale and PPP (non-GAAP)		$	34,936			$	25,027			$	19,240			$	17,828			$	15,884
Average loan yield, excluding loans held for sale (GAAP)			5.70	%			4.80	%			4.70	%			4.55	%			5.13	%
Adjusted average loan yield, excluding loans held for sale and PPP (non-GAAP)			5.70	%			4.68	%			4.47	%			4.76	%			5.13	%

 

⁽¹⁾ Pre-tax, pre-provision

 

 

 

CONTACT:	Clint F. Weber, Chief Financial Officer and Executive Vice President
	(850) 907-2300
	Prime Meridian Holding Company
	Website: www.primemeridianbank.com

 

 

14

 Exhibit 99.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

v3.24.0.1

Document And Entity Information	Jan. 29, 2024
Document Information [Line Items]
Entity, Registrant Name	PRIME MERIDIAN HOLDING COMPANY
Document, Type	8-K
Document, Period End Date	Jan. 29, 2024
Entity, Incorporation, State or Country Code	FL
Entity, File Number	333-191801
Entity, Tax Identification Number	27-2980805
Entity, Address, Address Line One	1471 Timberlane Road
Entity, Address, State or Province	FL
Entity, Address, City or Town	Tallahassee
Entity, Address, Postal Zip Code	32312
City Area Code	850
Local Phone Number	907-2300
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity, Emerging Growth Company	false
Amendment Flag	false
Entity, Central Index Key	0001586454

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