Form 8-K - Current report

 

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported) October 30, 2023

 

 

 

PRIME MERIDIAN HOLDING COMPANY 

(Exact name of registrant as specified in its charter)

 

 

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

 

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

 

Registrant’s telephone number, including area code: [phone]

 

Not Applicable

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

☐	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))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

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.☐

Securities Registered pursuant to Section 12(b) of the Act:

 

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

 

 

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Item 2.02.    Results of Operations and Financial Condition.

 

On October 27, 2023, Prime Meridian Holding Company issued and posted to its website a press release and investor presentation announcing financial results for the three and six months ended September 30, 2023.   Copies of the press release and investor presentaion are attached as Exhibit 99.1 and 99.2 to this Form 8-K.

 

Item 9.01     Financial Statements and Exhibits.

 

	(d)	Exhibits.
		99.1               Press release dated October 30, 2023
		104                Cover Page Interactive Data File (embedded within the Inline XBRL document)

          

The information in this report (including the exhibits) shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

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

 

Date: October 30, 2023

 

Exhibit 99.1

 

 

FOR IMMEDIATE RELEASE

 

Prime Meridian Holding Company Reports

THIRD QUARTER 2023 RESULTS

 

TALLAHASSEE, FL – October 30, 2023 (GLOBE NEWSWIRE) – Prime Meridian Holding Company (OTCQX: PMHG), the parent bank holding company for Prime Meridian Bank, today announced unaudited financial results for the three and nine months ended September 30, 2023. The Company reported net earnings of $2,120,000, or $0.66 per basic and diluted share, for the three months ended September 30, 2023 compared to net earnings of $2,831,000 or $0.90 per basic and $0.89 per diluted share, for the three months ended September 30, 2022.  The Company reported net earnings of $6,878,000, or $2.15 per basic and $2.13 per diluted share, for the nine months ended September 30, 2023 compared to net earnings of $7,039,000 or $2.23 per basic and $2.21 per diluted share, for the nine months ended September 30, 2022.  

 

“Prime Meridian Bank continues to focus on the fundamentals of its balance sheet and income statement,” said Sammie D. Dixon, Jr., Vice Chairman, President, and CEO. “Watching interest rates and the Bank’s cost of funds has become a major priority,” he continued.  “Our team is engaged in providing for the needs of our clients every day, bringing in new relationships, and growing the Bank. Despite the uncertainty in the world and a U.S. economy in flux, we continue moving forward.  There are a lot of good things going on right now and we are excited about the opportunities ahead,” he concluded.  

 

Third Quarter 2023 Highlights

 

Financial Highlights - Prime Meridian Holding Company and Subsidiary (Unaudited)

(dollars in thousands except per share amounts)

 

		3Q'23				2Q'23				1Q'23				4Q'22				3Q'22
Net earnings		$	2,120			$	2,257			$	2,501			$	2,642			$	2,831
Book value per share		$	22.91			$	23.25			$	22.81			$	21.19			$	20.20
Earnings per share - Basic		$	0.66			$	0.71			$	0.79			$	0.83			$	0.90
Earnings per share - Diluted		$	0.66			$	0.70			$	0.78			$	0.83			$	0.89
Weighted-average basic shares outstanding			3,214,323				3,189,353				3,175,807				3,164,211				3,159,526
Weighted-average diluted shares outstanding			3,235,920				3,201,531				3,210,012				3,198,744				3,197,282
Return on average assets(1)			1.03	%			1.10	%			1.23	%			1.27	%			1.32	%
Return on average equity(1)			11.31				12.31				14.20				16.36				17.19
Average yield on earning assets(1)			5.21				4.98				4.78				4.59				4.04
Net interest margin(1)			3.68				3.78				3.92				3.98				3.71
Efficiency ratio(2)			61.45				57.84				55.72				54.56				50.53
Nonperforming assets/total assets(3)			0.19				0.17				0.17				0.09				0.12

 

(1) Ratio has 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.

 

•	Compared to the linked quarter, book value per share decreased $0.34 per share, or 1.5%, to $22.91 due primarily to the issuance of 73,681 restricted stock shares in the third quarter. Excluding accumulated other comprehensive gains/losses ("AOCI"), the Company's book value was $26.29 at September 30, 2023 compared to $26.20 at June 30, 2023 and $24.34 at December 31, 2022.
•	For the third quarter of 2023, the annualized return on average assets was 1.03% and the annualized return on average equity was 11.31%, compared to 1.10% and 12.31%, respectively, in the linked quarter and 1.32% and 17.19%, respectively, in the prior year third quarter. Pre-tax pre-provision annualized return on assets was 1.44% and pre-tax pre-provision annualized return on equity was 15.81% for the third quarter of 2023.  This is considered a non-GAAP financial measure and additional information, including a reconciliation, can be found on page 11.
•	Gross loan balances increased $38.4 million, or 6.4%, since December 31, 2022 with most growth occurring in commercial and residential real estate loans.  Gross loan balances are up $61.3 million over the third quarter of 2022, or 10.7%.
•	Since December 31, 2022, period-end deposit balances have decreased 1.2%, or $8.7 million. The Company, however, opened 378 net new non-maturity deposit accounts ($15.1 million in average balances) during the third quarter of 2023 and 915 net new non-maturity deposit accounts since December 31, 2022.
•	At September 30, 2023, the Bank's estimated uninsured deposits were $253.1 million, or 35.0% of deposits, including collateralized public funds accounts and $192.5 million, or 29.2% of total deposits, excluding collateralized public funds accounts.
•	At September 30, 2023, available secured and unsecured borrowing capacity was $176.6 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 $208.0 million, off-balance sheet funding sources total $384.6 million.
•	At September 30, 2023, on balance sheet liquidity was $140.2 million, consisting of cash and cash equivalents and unpledged debt securities at fair value. Total liquidity sources of $524.8 million, or 72.6% of total deposits, represents 207% of estimated uninsured deposits, excluding collateralized public fund accounts.
•	At September 30, 2023, if all held-to-maturity securities are adjusted to fair value, the tangible common equity ratio decreases from 8.99% to 8.81%.  This is considered a non-GAAP financial measure and additional information, including a reconciliation, can be found on page 11.

 

 

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Earnings Summary (Unaudited)

(dollars in thousands)

 

														Change 3Q'23 vs.								For the Nine Months Ended
		3Q'23				2Q'23				3Q'22				2Q'23				3Q'22				September 30, 2023				September 30, 2022				% Change
Net interest income		$	7,187			$	7,353			$	7,602				(2.3	)%			(5.5	)%		$	22,095			$	20,103				9.9	%
Credit loss expense			175				325				241				(46.2	)			(27.4	)			743				601				23.6
Noninterest income			499				463				483				7.8				3.3				1,403				1,505				(6.8	)
Noninterest expense			4,723				4,521				4,085				4.5				15.6				13,699				11,747				16.6
Income taxes			668				713				928				(6.3	)			(28.0	)			2,178				2,221				(1.9	)
Net earnings		$	2,120			$	2,257			$	2,831				(6.1	)%			(25.1	)%		$	6,878			$	7,039				(2.3	)%

 

 

 

Net Interest Income (Unaudited)

(dollars in thousands)

 

														Change 3Q'23 vs.								For the Nine Months Ended
		3Q'23				2Q'23				3Q'22				2Q'23				3Q'22				September 30, 2023				September 30, 2022				% Change
Interest income:
Loans		$	9,019			$	8,570			$	6,755				5.2	%			33.5	%		$	25,633			$	18,568				38.0	%
Debt securities			919				925				878				(0.6	)			4.7				2,777				2,000				38.9
Other			244				184				649				32.6				(62.4	)			650				1,104				(41.1	)
Total interest income			10,182				9,679				8,282				5.2	%			22.9	%			29,060				21,672				34.1	%
Interest expense:
Deposits			2,691				1,917				624				40.4	%			331.3	%			6,141				1,442				325.9	%
Other borrowings			304				409				56				(25.7	)			442.9				824				127				548.8
Total interest expense			2,995				2,326				680				28.8				340.4				6,965				1,569				343.9
Net interest income		$	7,187			$	7,353			$	7,602				(2.3	)%			(5.5	)%		$	22,095			$	20,103				9.9	%

 

The Company reported net interest income of $7.2 million for the third quarter of 2023, a decrease of $166,000, or 2.3%, from the linked quarter and a decrease of $415,000, or 5.5%, from the third quarter of 2022.  In both instances, net interest income was negatively impacted by a narrowing net interest spread due to rising interest rates. Average earnings assets were up 0.4% over the linked quarter and were down 4.6% from the third quarter of 2022. The Company's net interest margin ("NIM") for the third quarter of 2023 was 3.68%, compared to 3.78% (2Q'23) and 3.71% (3Q'22). Year-to-date net interest income is up $2.0 million, or 9.9%, as an improved earning asset yield outpaced higher funding costs. The Company's NIM for the first nine months of September 30, 2023 was 3.78% compared to 3.27% for the same period a year ago. 

 

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Provision for Credit Losses

 

The provision for credit loss expense was $175,000 and $743,000 for the three and nine-month periods ending September 30, 2023.  The allowance for credit losses to total loans was 0.77% at September 30, 2023 compared to 1.20% at December 31, 2022.

 

Noninterest income (Unaudited)

(dollars in thousands)

 

														Change 3Q'23 vs.								For the Nine Months Ended
		3Q'23				2Q'23				3Q'22				2Q'23				3Q'22				September 30, 2023				September 30, 2022				% Change
Service charges and fees on deposit accounts		$	92			$	84			$	78				9.5	%			17.9	%		$	261			$	219				19.2	%
Debit card/ATM revenue, net			137				149				132				(8.1	)			3.8				437				404				8.2
Mortgage banking revenue, net			121				75				116				61.3				4.3				250				420				(40.5	)
Income from bank-owned life insurance			100				96				96				4.2				4.2				290				285				1.8
Other income			49				59				61				(16.9	)			(19.7	)			165				177				(6.8	)
Total noninterest income		$	499			$	463			$	483				7.8	%			3.3	%		$	1,403			$	1,505				(6.8	)%

 

Noninterest income was up $36,000 (7.8%) over the linked quarter and $16,000 (3.3%) over the third quarter of 2022.  Compared to the linked quarter, increased mortgage banking revenue was the key contributor to higher noninterest income, partially offset by a decline in debit card/ATM revenue and other income. Compared to the same period a year ago, all categories of noninterest income increased, with the exception of other income which decreased due to a drop in various fee accounts, including wire fees, custodial services and Certificate of Deposit Account Registry Service ("CDAR") fees.  Comparing the nine-month periods, the 40.5%, or $170,000 decline in mortgage banking revenue was the key driver of a 6.8% decline in noninterest income.

 

Noninterest expense (Unaudited)

(dollars in thousands)

 

														Change 3Q'23 vs.								For the Nine Months Ended
		3Q'23				2Q'23				3Q'22				2Q'23				3Q'22				September 30, 2023				September 30, 2022				% Change
Salaries and employee benefits		$	2,864			$	2,743			$	2,367				4.4	%			21.0	%		$	8,359			$	6,765				23.6	%
Occupancy and equipment			427				399				413				7.0				3.4				1,235				1,217				1.5
Professional fees			149				132				124				12.9				20.2				416				400				4.0
Marketing			215				250				195				(14.0	)			10.3				688				575				19.7
FDIC assessment			104				87				95				19.5				9.5				275				303				(9.2	)
Software maintenance, amortization and other			341				294				310				16.0				10.0				912				837				9.0
Other			623				616				581				1.1				7.2				1,814				1,650				9.9
Total noninterest expense		$	4,723			$	4,521			$	4,085				4.5	%			15.6	%		$	13,699			$	11,747				16.6	%

 

Compared to the linked quarter, the increase in noninterest expense is predominantly attributed to higher salaries and employee benefits and expense related to the issuance of restricted stock awards. Comparing the three and nine-month periods ending September 30, 2023 and 2022, the primary driver of higher noninterest expense in 2023 is also salaries and employee benefits. The Company reported 109 FTEs at September 30, 2023 compared to 106 FTEs at September 30, 2022.  In addition to higher headcount, the impact of annual raises that were effective March 1, 2023, lower deferred loan costs and higher incentive accrual were primary contributors to the overall increase.  Although loan balances have increased when comparing both the three-month and nine-month periods, the number of loan originations and renewals are down in 2023 explaining the decrease in deferred loan costs. 

 

 

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Financial Condition

 

At September 30, 2023, the Company reported $832.0 million in total assets, $722.8 million in deposits, and $629.0 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. 

 

Debt securities totaled $135.7 million at September 30, 2023, a decrease of $5.6 million from December 31, 2022. Debt securities include approximately $123.8 million of securities held at fair value and classified as available for sale.  The $14.8 million in unrealized losses on these securities is fully reflected on the balance sheet. The portfolio also includes $11.8 million in securities classified as held to maturity with a fair value of $9.7 million. Held to maturity securities consist of U.S. agency mortgage-backed securities and municipal securities, each of which is expected to recoup any price depreciation 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 $38.4 million, or 6.4%, since December 31, 2022 with commercial and residential real estate loans reporting the largest dollar volume increases.  At September 30, 2023, the allowance for credit losses of $4.9 million, represented 0.77% 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. 

 

Prime Meridian Holding Company and Subsidiary

Loans by Class

(dollars in thousands)

 

		September 30, 2023								December 31, 2022
		Unaudited								Audited
		Amount				% of Total				Amount				% of Total
Commercial real estate		$	216,266				34.1	%		$	202,263				34.0	%
Residential real estate and home equity			249,448				39.3				224,211				37.6
Construction			74,708				11.8				75,151				12.6
Commercial			87,881				13.9				86,308				14.5
Consumer			5,679				0.9				7,698				1.3
Total loans			633,982				100.0	%			595,631				100.0	%
Net deferred loan (fees) costs			(109	)							229
Allowance for credit losses			(4,899	)							(7,145	)
Loans, net		$	628,974							$	588,715

 

 

Deposit balances decreased $8.7 million, or 1.2%, since December 31, 2022, and $32.6 million, or 4.3% since September 30, 2022, with declining balances in all categories, except time deposits.  Time deposit account balances increased $37.8 million, or 94.2%, since year-end, with $20.0 million of that increase attributed to public funds.  We continue to monitor our deposits closely as we manage through this rising rate environment.

 

Federal Home Loan Bank advances totaled $25.0 million at September 30, 2023 with a weighted average interest rate of 4.9%. Deposit inflows during the third quarter enabled the $10 million reduction in FHLB borrowings from June 30, 2023. 

 

Total stockholders’ equity was $74.8 million, or 8.99% of total assets, at September 30, 2023, compared to $67.1 million at December 31, 2022, or 8.23% of total assets.  Year-to-date earnings and a $1.9 million tax-effected change resulting from the adoption of CECL were the primary contributors to higher equity and offset a $1.1 million unfavorable change in the Company's AOCI and common stock dividends of $698,000 ($0.22 per common share).  At September 30, 2023, book value per share was $22.91 with 3,263,733 common shares outstanding, a slight decrease from book value at June 30, 2023 primarily due to the dilutive effect of issuing restricted stock during the quarter. 

 

As of September 30, 2023, the Bank was considered to be “well capitalized” with a Tier 1 Leverage Capital Ratio of 10.18%, a 13.23% Common Equity Tier 1 Capital Ratio, a 13.23% Tier 1 Risk-Based Capital Ratio, and a 13.99% 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 September 30, 2023, the Company reported $25 million in FHLB advances, a $10 million decrease from June 30, 2023. Borrowed funds represented only 3.3% of total liabilities at September 30, 2023 and year-to-date interest expense totaled $824,000 for FHLB advances and other borrowings.

 

Asset Quality

 

Credit metrics remain strong despite an uptick in nonaccrual loans since year-end. At September 30, 2023, the Bank had five nonaccrual loans totaling $1.11 million compared to two nonaccrual loans totaling $343,000 at December 31, 2022.  Net charge-offs totaled $379,000 year to date through September 30, 2023 and the ratio of nonperforming assets as a percentage of total assets was 0.19%. 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 $4.9 million, or 0.77% of gross loans, at September 30, 2023 is adequate. 

 

 

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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 September 30, 2023, the Bank had 109 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

 

 

 

 

 

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Prime Meridian Holding Company and Subsidiary

Condensed Consolidated Statements of Earnings (Unaudited)

(in thousands except per share amounts)

 

		3Q'23				2Q'23				1Q'23				4Q'22				3Q'22
Interest income:
Loans		$	9,019			$	8,570			$	8,044			$	7,653			$	6,755
Debt securities			919				925				933				938				878
Other			244				184				222				477				649
Total interest income			10,182				9,679				9,199				9,068				8,282
Interest expense:
Deposits			2,691				1,917				1,533				1,137				624
Other borrowings			304				409				111				73				56
Total interest expense			2,995				2,326				1,644				1,210				680
Net interest income			7,187				7,353				7,555				7,858				7,602
Credit loss expense			175				325				243				289				241
Net interest income after credit loss expense			7,012				7,028				7,312				7,569				7,361
Noninterest income:
Service charges and fees on deposit accounts			92				84				85				83				78
Debit card/ATM revenue, net			137				149				151				136				132
Mortgage banking revenue, net			121				75				54				53				116
Income from bank-owned life insurance			100				96				94				94				96
Other income			49				59				57				63				61
Total noninterest income			499				463				441				429				483
Noninterest expense:
Salaries and employee benefits			2,864				2,743				2,752				2,862				2,367
Occupancy and equipment			427				399				409				404				413
Professional fees			149				132				135				114				124
Marketing			215				250				223				218				195
FDIC assessment			104				87				84				57				95
Software maintenance, amortization and other			341				294				277				325				310
Other			623				616				575				541				581
Total noninterest expense			4,723				4,521				4,455				4,521				4,085
Earnings before income taxes			2,788				2,970				3,298				3,477				3,759
Income taxes			668				713				797				835				928
Net earnings		$	2,120			$	2,257			$	2,501			$	2,642			$	2,831
Basic earnings per common share		$	0.66			$	0.71			$	0.79			$	0.83			$	0.90
Diluted earnings per common share			0.66				0.70				0.78				0.83				0.89

 

6

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Prime Meridian Holding Company and Subsidiary

Condensed Consolidated Statements of Earnings

(in thousands, except per share amounts)

 

		Three Months Ended September 30,								Nine Months Ended September 30,
		2023				2022				2023				2022
		Unaudited								Unaudited
Interest income:
Loans		$	9,019			$	6,755			$	25,633			$	18,568
Debt securities			919				878				2,777				2,000
Other			244				649				650				1,104
Total interest income			10,182				8,282				29,060				21,672
Interest expense:
Deposits			2,691				624				6,141				1,442
Other borrowings			304				56				824				127
Total interest expense			2,995				680				6,965				1,569
Net interest income			7,187				7,602				22,095				20,103
Credit loss expense			175				241				743				601
Net interest income after credit loss expense			7,012				7,361				21,352				19,502
Noninterest income:
Service charges and fees on deposit accounts			92				78				261				219
Debit card/ATM revenue, net			137				132				437				404
Mortgage banking revenue, net			121				116				250				420
Income from bank-owned life insurance			100				96				290				285
Other income			49				61				165				177
Total noninterest income			499				483				1,403				1,505
Noninterest expense:
Salaries and employee benefits			2,864				2,367				8,359				6,765
Occupancy and equipment			427				413				1,235				1,217
Professional fees			149				124				416				400
Marketing			215				195				688				575
FDIC assessment			104				95				275				303
Software maintenance, amortization and other			341				310				912				837
Other			623				581				1,814				1,650
Total noninterest expense			4,723				4,085				13,699				11,747
Earnings before income taxes			2,788				3,759				9,056				9,260
Income taxes			668				928				2,178				2,221
Net earnings		$	2,120			$	2,831			$	6,878			$	7,039
Earnings per common share:
Basic		$	0.66			$	0.90			$	2.15			$	2.23
Diluted			0.66				0.89				2.13				2.21
Cash dividends per common share(1)			-				-				0.22				0.18

 

 

 

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

 

7

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Prime Meridian Holding Company and Subsidiary

Condensed Consolidated Balance Sheets

(in thousands)

 

		3Q'23				2Q'23				1Q'23				4Q'22				3Q'22
		(Unaudited)				(Unaudited)				(Unaudited)				(Audited)				(Unaudited)
Assets
Cash & cash equivalents		$	22,404			$	21,799			$	22,714			$	39,788			$	76,017
Debt securities available for sale			123,838				126,792				129,748				129,436				131,668
Debt securities held to maturity			11,838				11,827				11,816				11,805				11,794
Loans, held for sale			5,182				6,614				8,105				7,058				8,911
Loans, net			628,974				614,744				606,128				588,715				565,877
Federal Home Loan Bank stock			1,758				1,895				1,045				463				463
Premises & equipment, net			7,613				7,746				7,893				8,022				8,169
Right of use lease asset			2,879				2,934				2,989				3,044				3,098
Accrued interest receivable			2,671				2,713				2,623				2,385				2,132
Bank-owned life insurance			16,822				16,722				16,626				16,532				16,438
Other real estate owned			117				-				-				-				-
Other assets			7,889				7,253				6,570				7,924				7,748
Total Assets		$	831,985			$	821,039			$	816,257			$	815,172			$	832,315
Liabilities and Stockholders' Equity
Liabilities:
Noninterest-bearing demand deposits		$	193,439			$	189,362			$	199,492			$	197,987			$	216,533
Savings, NOW and money-market deposits			451,492				450,820				466,202				493,439				500,263
Time deposits			77,876				62,646				51,542				40,109				38,618
Total Deposits			722,807				702,828				717,236				731,535				755,414
Other borrowings			-				-				1,725				4,275				4,125
FHLB Advances			25,000				35,000				15,000				-				-
Official checks			717				1,114				1,671				4,090				1,277
Operating lease liability			3,062				3,111				3,159				3,208				3,256
Other liabilities			5,612				4,816				4,790				5,011				4,339
Total Liabilities			757,198				746,869				743,581				748,119				768,411
Total Stockholders' Equity			74,787				74,170				72,676				67,053				63,904
Total Liabilities and Stockholders' Equity		$	831,985			$	821,039			$	816,257			$	815,172			$	832,315

 

8

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Prime Meridian Holding Company and Subsidiary

Condensed Consolidated Average Balance Sheets (Unaudited)

(in thousands)

		3Q'23											2Q'23												3Q'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)		$	620,297			$	8,939			5.76	%		$	613,318			$	8,465				5.52	%		$	555,764			$	6,646				4.78	%
Loans held for sale			5,850				80			5.47				8,466				105				4.96				9,869				109				4.42
Debt securities			137,731				919			2.67				140,699				925				2.63				144,710				878				2.43
Other(2)			17,398				244			5.61				15,646				184				4.70				108,875				649				2.38
Total interest-earning assets			781,276			$	10,182			5.21	%			778,129			$	9,679				4.98	%			819,218			$	8,282				4.04	%
Noninterest-earning assets			42,065											39,540												38,699
Total assets		$	823,341										$	817,669											$	857,917
Interest-bearing liabilities:
Savings, NOW and money-market deposits		$	449,396			$	2,089			1.86	%		$	453,129			$	1,585				1.40	%		$	527,408			$	570				0.43	%
Time deposits			73,071				602			3.30				55,192				332				2.41				38,244				54				0.56
Total interest-bearing deposits			522,467				2,691			2.06				508,321				1,917				1.51				565,652				624				0.44
Other borrowings			24,582				304			4.95				32,113				409				5.09				4,125				56				5.43
Total interest-bearing liabilities			547,049			$	2,995			2.19	%			540,434			$	2,326				1.72	%			569,777			$	680				0.48	%
Noninterest-bearing deposits			192,686											195,657												214,462
Noninterest-bearing liabilities			8,644											8,231												7,787
Stockholders' equity			74,962											73,347												65,891
Total liabilities and stockholders' equity		$	823,341										$	817,669											$	857,917
Net earning assets		$	234,227										$	237,695											$	249,441
Net interest income						$	7,187										$	7,353											$	7,602
Interest rate spread(3)										3.02	%											3.26	%											3.56	%
Net interest margin(4)										3.68	%											3.78	%											3.71	%

 

		For the Nine Months Ended September 30,
		2023												2022
						Interest												Interest
		Average				and				Yield/				Average				and				Yield/
(dollars in thousands)		Balance				Dividends				Rate(5)				Balance				Dividends				Rate(5)
Interest-earning assets:
Loans(1)		$	611,946			$	25,361				5.53	%		$	519,975			$	18,242				4.68	%
Loans held for sale			7,215				272				5.03				10,529				326				4.13
Debt securities			139,886				2,777				2.65				120,675				2,000				2.21
Other(2)			21,271				650				4.07				169,402				1,104				0.87
Total interest-earning assets			780,318			$	29,060				4.97	%			820,581			$	21,672				3.52	%
Noninterest-earning assets			36,898												39,792
Total assets		$	817,216											$	860,373
Interest-bearing liabilities:
Savings, NOW and money-market deposits		$	461,649			$	5,061				1.46	%		$	527,077			$	1,263				0.32	%
Time deposits			56,901				1,080				2.53				43,552				179				0.55
Total interest-bearing deposits			518,550				6,141				1.58				570,629				1,442				0.34
Other borrowings and FHLB advances			20,034				824				5.48				3,960				127				4.28
Total interest-bearing liabilities			538,584			$	6,965				1.72	%			574,589			$	1,569				0.36	%
Noninterest-bearing deposits			195,689												212,507
Noninterest-bearing liabilities			10,005												7,401
Stockholders' equity			72,938												65,876
Total liabilities and stockholders' equity		$	817,216											$	860,373
Net earning assets		$	241,734											$	245,992
Net interest income						$	22,095											$	20,103
Interest rate spread (3)											3.24	%											3.16	%
Net interest margin(4)											3.78	%											3.27	%

 

⁽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

 

9

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Prime Meridian Holding Company and Subsidiary

Financial Highlights (Unaudited)

(dollars in thousands except per share amounts)

 

		3Q'23				2Q'23				1Q'23				4Q'22				3Q'22
Per Share Data:
Earnings per common share - Basic		$	0.66			$	0.71			$	0.79			$	0.83			$	0.90
Earnings per common share - Diluted		$	0.66			$	0.70			$	0.78			$	0.83			$	0.89
Book value per common share		$	22.91			$	23.25			$	22.81			$	21.19			$	20.20
Common shares outstanding			3,263,733				3,190,052				3,185,765				3,164,491				3,162,975
Weighted-average basic common shares outstanding			3,214,323				3,189,353				3,175,807				3,164,211				3,159,526
Weighted-average diluted common shares outstanding			3,235,920				3,201,531				3,210,012				3,198,744				3,197,282
Selected Performance Ratios and Other Data:
Return on average assets(1)			1.03	%			1.10	%			1.23	%			1.27	%			1.32	%
Return on average equity(1)			11.31				12.31				14.20				16.36				17.19
Average yield on earning assets			5.21				4.98				4.78				4.59				4.04
Net interest margin(2)			3.68				3.78				3.92				3.98				3.71
Efficiency ratio(3)			61.45				57.84				55.72				54.56				50.53
Noninterest expense/average assets(1)			2.29				2.21				2.20				2.18				1.90
Asset Quality Data:
Nonaccrual loans		$	1,112			$	1,391			$	1,348			$	343			$	1,006
Loans 90 days past due and still accruing			367				-				-				404				-
Other real estate owned			117				-				-				-				-
Total nonperforming assets			1,596				1,391				1,348				747				1,006
Nonperforming assets/total assets			0.19	%			0.17	%			0.17	%			0.09	%			0.12	%
Loans 30-89 days past due		$	1,060			$	826			$	2,414			$	2,900			$	1,024
Total loans			633,982				619,465				610,792				595,631				572,639
Loans 30-89 days past due/total loans			0.17	%			0.13	%			0.40	%			0.49	%			0.18	%
Net charge-offs/average loans (1)			0.03				0.23				-				-				-
Capital Ratios:
Tier 1 Leverage Capital Ratio (Company)			10.34	%			10.14	%			9.93	%			9.09	%			8.59	%
Common Equity Tier 1 Capital Ratio (Company)			13.42				13.22				12.82				12.25				11.98
Tier 1 Risk-Based Capital Ratio (Company)			13.42				13.22				12.82				12.25				11.98
Total Risk-Based Capital Ratio (Company)			14.19				13.97				13.58				13.39				13.09
Tangible Common Equity Ratio(4) (Company)			8.99				9.03				8.90				8.23				7.68
Tier 1 Leverage Capital Ratio (Bank)			10.18				9.98				10.13				9.70				9.07
Common Equity Tier 1 Capital Ratio (Bank)			13.23				13.00				13.07				12.90				12.62
Tier 1 Risk-Based Capital Ratio (Bank)			13.23				13.00				13.07				12.90				12.62
Total Risk-Based Capital Ratio (Bank)			13.99				13.76				13.83				14.04				13.73
Tangible Common Equity Ratio(4) (Bank)			8.84				8.87				9.10				8.73				8.15

 

(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 11.

 

10

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Prime Meridian Holding Company and Subsidiary

Non-GAAP Measures and Ratio Reconciliation (Unaudited)

(dollars in thousands except per share amounts)

 

		3Q'23				2Q'23				1Q'23				4Q'22				3Q'22
Net Income
Net earnings (GAAP)		$	2,120			$	2,257			$	2,501			$	2,642			$	2,831
Plus: Provision (credit) for credit losses			175				325				243				289				241
Plus: income taxes			668				713				797				835				928
PTPP(1) net earnings (non-GAAP)		$	2,963			$	3,295			$	3,541			$	3,766			$	4,000
Earnings per Share (EPS)
Weighted average common shares, diluted			3,235,920				3,201,531				3,210,012				3,198,744				3,197,282
EPS, diluted (GAAP)		$	0.66			$	0.70			$	0.78			$	0.83			$	0.89
PTPP(1) EPS, diluted (non-GAAP)		$	0.92			$	1.03			$	1.10			$	1.18			$	1.25
Return on Average Assets (ROAA)(2)
Average assets		$	823,341			$	817,669			$	810,508			$	828,912			$	857,917
ROAA (GAAP)			1.03	%			1.10	%			1.23	%			1.27	%			1.32	%
PTPP(1) ROAA (non-GAAP)			1.44	%			1.61	%			1.75	%			1.82	%			1.86	%
Return on Average Equity (ROAE)(2)
Average equity		$	74,962			$	73,347			$	70,456			$	64,578			$	65,891
ROAE (GAAP)			11.31	%			12.31	%			14.20	%			16.36	%			17.19	%
PTPP(1) ROAE (non-GAAP)			15.81	%			17.97	%			20.10	%			23.33	%			24.28	%
Adjusted Average Loan Yield:
Net loans, excluding loans held for sale		$	628,974			$	614,744			$	606,128			$	588,715			$	565,877
Less PPP loans			(41	)			(48	)			(181	)			(191	)			(199	)
Adjusted net loans, excluding loans held for sale and PPP (non-GAAP)		$	628,933			$	614,696			$	605,947			$	588,524			$	565,678
Average loans, excluding loans held for sale		$	620,297			$	613,318			$	602,022			$	588,727			$	555,764
Less average PPP loans			(45	)			(175	)			(185	)			(195	)			(312	)
Adjusted average loans, excluding loans held for sale and PPP (non-GAAP)		$	620,252			$	613,143			$	601,837			$	588,532			$	555,452
Interest on loans, excluding loans held for sale		$	8,939			$	8,465			$	7,958			$	7,561			$	6,646
Less interest income and earned fee income on PPP loans			-				(4	)			3				(1	)			(41	)
Adjusted interest on loans, excluding loans held for sale and PPP (non-GAAP)		$	8,939			$	8,461			$	7,961			$	7,560			$	6,605
Growth rate over linked quarter			5.6	%			6.3	%			5.3	%			14.5	%			16.4	%
Average loan yield, excluding loans held for sale (GAAP)			5.76	%			5.52	%			5.29	%			5.14	%			4.78	%
Adjusted average loan yield, excluding loans held for sale and PPP (non-GAAP)			5.76	%			5.52	%			5.29	%			5.14	%			4.76	%
Tangible Common Equity Ratio (Company)
Stockholders' Equity (GAAP)		$	74,787			$	74,170			$	72,676			$	67,053			$	63,904
Less: Intangibles			-				-				-				-				-
Tangible Stockholders' Equity (non-GAAP)		$	74,787			$	74,170			$	72,676			$	67,053				63,904
Total Assets (GAAP)		$	831,985			$	821,039			$	816,257			$	815,172			$	832,315
Less: Intangibles			-				-				-				-				-
Tangible Assets (non-GAAP)		$	831,985			$	821,039			$	816,257			$	815,172			$	832,315
Tangible Common Equity Ratio (non-GAAP)			8.99	%			9.03	%			8.90	%			8.23	%			7.68	%
Tax-effected adjustment of losses in held-to-maturity securities portfolio (non-GAAP)		$	1,624			$	1,063			$	1,118			$	1,409			$	1,205
Tangible Assets adjusted for held-to-maturity securities at fair value (non-GAAP)			830,361				819,976				815,139				813,763				831,110
Tangible Equity adjusted for held-to-maturity securities at fair value (non-GAAP)			73,163				73,107				71,558				65,644				62,699
Tangible Common Equity Ratio Adjusted (non-GAAP)			8.81	%			8.92	%			8.78	%			8.07	%			7.54	%
Tangible Common Equity Ratio (Bank)
Stockholders' Equity (GAAP)		$	73,514			$	72,816			$	74,287			$	71,125			$	67,860
Less: Intangibles			-				-				-				-				-
Tangible Stockholders' Equity (non-GAAP)		$	73,514			$	72,816			$	74,287			$	71,125			$	67,860
Total Assets (GAAP)		$	831,830			$	820,921			$	816,173			$	815,142			$	832,170
Less: Intangibles			-				-				-				-				-
Tangible Assets (non-GAAP)		$	831,830			$	820,921			$	816,173			$	815,142			$	832,170
Tangible Common Equity Ratio (non-GAAP)			8.84	%			8.87	%			9.10	%			8.73	%			8.15	%

 

 

⁽¹⁾Pre-tax, pre-provision

⁽²⁾ Annualized

11

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Prime Meridian Holding Company and Subsidiary

Non-GAAP Measures and Ratio Reconciliation

Year-to-Date Pre-Tax Pre-Provision Calculation (Unaudited)

(dollars in thousands except per share amounts)

 

		For the Nine Months Ended
		September 30, 2023				September 30, 2022
Net Income
Net earnings (GAAP)		$	6,878			$	7,039
Plus: (credit) provision for loan losses			743				601
Plus: income taxes			2,178				2,221
PTPP(1) net earnings (non-GAAP)		$	9,799			$	9,861
Earnings per Share (EPS)
Weighted average common shares, diluted			3,221,952				3,191,593
EPS, diluted (GAAP)		$	2.13			$	2.21
PTPP(1) EPS, diluted (non-GAAP)			3.04				3.09
Return on Average Assets (ROAA)(2)
Average assets		$	817,216			$	860,373
ROAA (GAAP)			1.12	%			1.09	%
PTPP(1) ROAA (non-GAAP)			1.60	%			1.53	%
Return on Average Equity (ROAE)(2)
Average equity (GAAP)		$	72,938			$	65,876
ROAE (GAAP)			12.57	%			14.25	%
PTPP(1) ROAE (non-GAAP)			17.91	%			19.96	%

 

 

⁽¹⁾ Pre-tax, pre-provision

⁽²⁾ Annualized

 

12

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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,
		2022				2021				2020				2019				2018
Net Income
Net earnings (GAAP)		$	9,681			$	8,347			$	4,458			$	3,542			$	4,042
Plus: Provision (credit) for credit losses			890				(104	)			2,850				1,131				591
Plus: income taxes			3,056				2,517				1,295				1,092				1,220
PTPP(1) net earnings (non-GAAP)		$	13,627			$	10,760			$	8,603			$	5,765			$	5,853
Earnings per Share (EPS)
Weighted average common shares, diluted			3,193,774				3,142,482				3,134,124				3,159,635				3,131,546
EPS, diluted (GAAP)		$	3.03			$	2.66			$	1.42			$	1.12			$	1.29
PTPP(1) EPS, diluted (non-GAAP)		$	4.27			$	3.42			$	2.74			$	1.82			$	1.87
Return on Average Assets (ROAA)
Average assets		$	852,272			$	751,576			$	595,363			$	456,797			$	379,288
ROAA (GAAP)			1.14	%			1.11	%			0.75	%			0.78	%			1.07	%
PTPP(1) ROAA (non-GAAP)			1.60	%			1.43	%			1.45	%			1.26	%			1.54	%
Return on Average Equity (ROAE)
Average equity		$	65,549			$	65,179			$	57,386			$	53,172			$	47,932
ROAE (GAAP)			14.77	%			12.81	%			7.77	%			6.66	%			8.43	%
PTPP(1) ROAE (non-GAAP)			20.79	%			16.51	%			14.99	%			10.84	%			12.21	%
Adjusted Average Loan Yield:
Net loans, excluding loans held for sale		$	588,715			$	490,198			$	476,661			$	337,710			$	290,113
Less PPP loans			(191	)			(15,172	)			(66,774	)			-				-
Adjusted net loans, excluding loans held for sale and PPP (non-GAAP)		$	588,524			$	475,026			$	409,887			$	337,710			$	290,113
Average loans, excluding loans held for sale		$	537,304			$	480,606			$	429,802			$	309,350			$	283,967
Less average PPP loans			(3,061	)			(50,315	)			(55,529	)			-				-
Adjusted average loans, excluding loans held for sale and PPP (non-GAAP)		$	534,243			$	430,291			$	374,273			$	309,350			$	283,967
Interest on loans, excluding loans held for sale		$	25,803			$	22,598			$	19,553			$	15,884			$	14,215
Less interest income and earned fee income on PPP loans			(776	)			(3,358	)			(1,725	)			-				-
Adjusted interest on loans, excluding loans held for sale and PPP (non-GAAP)		$	25,027			$	19,240			$	17,828			$	15,884			$	14,215
Average loan yield, excluding loans held for sale (GAAP)			4.80	%			4.70	%			4.55	%			5.13	%			5.01	%
Adjusted average loan yield, excluding loans held for sale and PPP (non-GAAP)			4.68	%			4.47	%			4.76	%			5.13	%			5.01	%

 

⁽¹⁾ Pre-tax, pre-provision

 

 

 

CONTACT:	Clint F. Weber, Chief Financial Officer and Executive Vice President
	[phone]
	Prime Meridian Holding Company
	Website: www.primemeridianbank.com

 

 

 

13

Document And Entity Information	Oct. 30, 2023
Document Information [Line Items]
Entity, Registrant Name	PRIME MERIDIAN HOLDING COMPANY
Document, Type	8-K
Document, Period End Date	Oct. 30, 2023
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, City or Town	Tallahassee
Entity, Address, State or Province	FL
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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