PMHG Prime Meridian Holding Company (QX)

Exhibit 99.1

FOR IMMEDIATE RELEASE

Prime Meridian Holding Company Reports

THIRD QUARTER 2023 RESULTS

Earnings Summary (Unaudited)

(dollars in thousands)

Net Interest Income (Unaudited)

(dollars in thousands)

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. 

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)

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)

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. 

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)

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. 

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

Prime Meridian Holding Company and Subsidiary

Condensed Consolidated Statements of Earnings (Unaudited)

(in thousands except per share amounts)

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

⁽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