0001586454 Prime Meridian Holding Co false --12-31 Q1 2024 128,268 134,940 10,328 10,358 5,796 5,609 1,000,000 1,000,000 0 0 0 0 0.01 0.01 9,000,000 9,000,000 3,295,265 3,295,265 3,259,881 3,259,881 4 0 0 0 0 0 5 3 3 5 5 1 2 1 10 5 556,000 0 3 5 0 0 http://fasb.org/us-gaap/2024#OtherAssets http://fasb.org/us-gaap/2024#OtherAssets http://fasb.org/us-gaap/2024#OtherAssets http://fasb.org/us-gaap/2024#OtherAssets http://fasb.org/us-gaap/2024#OtherLiabilities http://fasb.org/us-gaap/2024#OtherLiabilities http://fasb.org/us-gaap/2024#OtherLiabilities http://fasb.org/us-gaap/2024#OtherLiabilities 1 0 0 false false false false 00015864542024-01-012024-03-31 xbrli:shares 00015864542024-05-02 iso4217:USD 00015864542024-03-31 00015864542023-12-31 iso4217:USDxbrli:shares 00015864542023-01-012023-03-31 0001586454us-gaap:DepositAccountMember2024-01-012024-03-31 0001586454us-gaap:DepositAccountMember2023-01-012023-03-31 0001586454us-gaap:DebitCardMember2024-01-012024-03-31 0001586454us-gaap:DebitCardMember2023-01-012023-03-31 0001586454us-gaap:CommonStockMember2022-12-31 0001586454us-gaap:AdditionalPaidInCapitalMember2022-12-31 0001586454us-gaap:RetainedEarningsMember2022-12-31 0001586454us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-12-31 00015864542022-12-31 0001586454srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:CommonStockMember2022-12-31 0001586454srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:AdditionalPaidInCapitalMember2022-12-31 0001586454srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:RetainedEarningsMember2022-12-31 0001586454srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:AccumulatedOtherComprehensiveIncomeMember2022-12-31 0001586454srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2022-12-31 0001586454us-gaap:CommonStockMember2023-01-012023-03-31 0001586454us-gaap:AdditionalPaidInCapitalMember2023-01-012023-03-31 0001586454us-gaap:RetainedEarningsMember2023-01-012023-03-31 0001586454us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-01-012023-03-31 0001586454us-gaap:CommonStockMember2023-03-31 0001586454us-gaap:AdditionalPaidInCapitalMember2023-03-31 0001586454us-gaap:RetainedEarningsMember2023-03-31 0001586454us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-03-31 00015864542023-03-31 0001586454us-gaap:CommonStockMember2023-12-31 0001586454us-gaap:AdditionalPaidInCapitalMember2023-12-31 0001586454us-gaap:RetainedEarningsMember2023-12-31 0001586454us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-12-31 0001586454us-gaap:CommonStockMember2024-01-012024-03-31 0001586454us-gaap:AdditionalPaidInCapitalMember2024-01-012024-03-31 0001586454us-gaap:RetainedEarningsMember2024-01-012024-03-31 0001586454us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-01-012024-03-31 0001586454us-gaap:CommonStockMember2024-03-31 0001586454us-gaap:AdditionalPaidInCapitalMember2024-03-31 0001586454us-gaap:RetainedEarningsMember2024-03-31 0001586454us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-03-31 xbrli:pure 0001586454us-gaap:USTreasuryAndGovernmentMember2024-03-31 0001586454us-gaap:USStatesAndPoliticalSubdivisionsMember2024-03-31 0001586454us-gaap:MortgageBackedSecuritiesMember2024-03-31 0001586454us-gaap:AssetBackedSecuritiesMember2024-03-31 0001586454us-gaap:USTreasuryAndGovernmentMember2023-12-31 0001586454us-gaap:USStatesAndPoliticalSubdivisionsMember2023-12-31 0001586454us-gaap:MortgageBackedSecuritiesMember2023-12-31 0001586454us-gaap:AssetBackedSecuritiesMember2023-12-31 0001586454us-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasuryAndGovernmentMember2024-03-31 0001586454us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasuryAndGovernmentMember2024-03-31 0001586454us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasuryAndGovernmentMember2024-03-31 0001586454us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasuryAndGovernmentMember2024-03-31 0001586454us-gaap:FairValueMeasurementsRecurringMemberus-gaap:USStatesAndPoliticalSubdivisionsMember2024-03-31 0001586454us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USStatesAndPoliticalSubdivisionsMember2024-03-31 0001586454us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USStatesAndPoliticalSubdivisionsMember2024-03-31 0001586454us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USStatesAndPoliticalSubdivisionsMember2024-03-31 0001586454us-gaap:FairValueMeasurementsRecurringMemberus-gaap:MortgageBackedSecuritiesMember2024-03-31 0001586454us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MortgageBackedSecuritiesMember2024-03-31 0001586454us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MortgageBackedSecuritiesMember2024-03-31 0001586454us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MortgageBackedSecuritiesMember2024-03-31 0001586454us-gaap:FairValueMeasurementsRecurringMemberus-gaap:AssetBackedSecuritiesMember2024-03-31 0001586454us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:AssetBackedSecuritiesMember2024-03-31 0001586454us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:AssetBackedSecuritiesMember2024-03-31 0001586454us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:AssetBackedSecuritiesMember2024-03-31 0001586454us-gaap:FairValueMeasurementsRecurringMember2024-03-31 0001586454us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2024-03-31 0001586454us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2024-03-31 0001586454us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2024-03-31 0001586454us-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasuryAndGovernmentMember2023-12-31 0001586454us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasuryAndGovernmentMember2023-12-31 0001586454us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasuryAndGovernmentMember2023-12-31 0001586454us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasuryAndGovernmentMember2023-12-31 0001586454us-gaap:FairValueMeasurementsRecurringMemberus-gaap:USStatesAndPoliticalSubdivisionsMember2023-12-31 0001586454us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USStatesAndPoliticalSubdivisionsMember2023-12-31 0001586454us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USStatesAndPoliticalSubdivisionsMember2023-12-31 0001586454us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USStatesAndPoliticalSubdivisionsMember2023-12-31 0001586454us-gaap:FairValueMeasurementsRecurringMemberus-gaap:MortgageBackedSecuritiesMember2023-12-31 0001586454us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MortgageBackedSecuritiesMember2023-12-31 0001586454us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MortgageBackedSecuritiesMember2023-12-31 0001586454us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MortgageBackedSecuritiesMember2023-12-31 0001586454us-gaap:FairValueMeasurementsRecurringMemberus-gaap:AssetBackedSecuritiesMember2023-12-31 0001586454us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:AssetBackedSecuritiesMember2023-12-31 0001586454us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:AssetBackedSecuritiesMember2023-12-31 0001586454us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:AssetBackedSecuritiesMember2023-12-31 0001586454us-gaap:FairValueMeasurementsRecurringMember2023-12-31 0001586454us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-31 0001586454us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-31 0001586454us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-31 0001586454us-gaap:MortgageReceivablesMemberus-gaap:CommercialRealEstatePortfolioSegmentMember2024-03-31 0001586454us-gaap:MortgageReceivablesMemberus-gaap:CommercialRealEstatePortfolioSegmentMember2023-12-31 0001586454us-gaap:MortgageReceivablesMemberus-gaap:ResidentialPortfolioSegmentMember2024-03-31 0001586454us-gaap:MortgageReceivablesMemberus-gaap:ResidentialPortfolioSegmentMember2023-12-31 0001586454us-gaap:MortgageReceivablesMemberpmhg:RealEstateConstructionLoanMember2024-03-31 0001586454us-gaap:MortgageReceivablesMemberpmhg:RealEstateConstructionLoanMember2023-12-31 0001586454us-gaap:MortgageReceivablesMember2024-03-31 0001586454us-gaap:MortgageReceivablesMember2023-12-31 0001586454us-gaap:LoansAndFinanceReceivablesMemberus-gaap:CommercialPortfolioSegmentMember2024-03-31 0001586454us-gaap:LoansAndFinanceReceivablesMemberus-gaap:CommercialPortfolioSegmentMember2023-12-31 0001586454us-gaap:LoansAndFinanceReceivablesMemberus-gaap:ConsumerPortfolioSegmentMember2024-03-31 0001586454us-gaap:LoansAndFinanceReceivablesMemberus-gaap:ConsumerPortfolioSegmentMember2023-12-31 0001586454pmhg:RealEstateMortgageLoansMember2024-03-31 utr:Y 0001586454us-gaap:CommercialRealEstatePortfolioSegmentMembersrt:MinimumMember2024-01-012024-03-31 0001586454us-gaap:CommercialRealEstatePortfolioSegmentMembersrt:MaximumMember2024-01-012024-03-31 0001586454us-gaap:CommercialRealEstatePortfolioSegmentMember2024-01-012024-03-31 0001586454pmhg:Period1Memberus-gaap:ResidentialPortfolioSegmentMember2024-01-012024-03-31 0001586454pmhg:Period2Memberus-gaap:ResidentialPortfolioSegmentMember2024-01-012024-03-31 0001586454pmhg:Period3Memberus-gaap:ResidentialPortfolioSegmentMember2024-01-012024-03-31 0001586454pmhg:Period4Memberus-gaap:ResidentialPortfolioSegmentMember2024-01-012024-03-31 0001586454pmhg:RealEstateConstructionLoanMembersrt:MinimumMember2024-01-012024-03-31 0001586454pmhg:RealEstateConstructionLoanMembersrt:MaximumMember2024-01-012024-03-31 0001586454us-gaap:LoansReceivableMembersrt:MinimumMember2024-01-012024-03-31 0001586454us-gaap:LoansReceivableMembersrt:MaximumMember2024-01-012024-03-31 0001586454pmhg:EquipmentLoansMemberus-gaap:CommercialPortfolioSegmentMembersrt:MaximumMember2024-01-012024-03-31 0001586454us-gaap:MortgageReceivablesMemberus-gaap:CommercialRealEstatePortfolioSegmentMemberus-gaap:PassMember2024-03-31 0001586454us-gaap:MortgageReceivablesMemberus-gaap:CommercialRealEstatePortfolioSegmentMemberus-gaap:SpecialMentionMember2024-03-31 0001586454us-gaap:MortgageReceivablesMemberus-gaap:CommercialRealEstatePortfolioSegmentMemberus-gaap:SubstandardMember2024-03-31 0001586454us-gaap:MortgageReceivablesMemberus-gaap:CommercialRealEstatePortfolioSegmentMember2024-01-012024-03-31 0001586454us-gaap:MortgageReceivablesMemberus-gaap:ResidentialPortfolioSegmentMemberus-gaap:PassMember2024-03-31 0001586454us-gaap:MortgageReceivablesMemberus-gaap:ResidentialPortfolioSegmentMemberus-gaap:SpecialMentionMember2024-03-31 0001586454us-gaap:MortgageReceivablesMemberus-gaap:ResidentialPortfolioSegmentMemberus-gaap:SubstandardMember2024-03-31 0001586454us-gaap:MortgageReceivablesMemberus-gaap:ResidentialPortfolioSegmentMember2024-01-012024-03-31 0001586454us-gaap:MortgageReceivablesMemberpmhg:RealEstateConstructionLoanMemberus-gaap:PassMember2024-03-31 0001586454us-gaap:MortgageReceivablesMemberpmhg:RealEstateConstructionLoanMemberus-gaap:SpecialMentionMember2024-03-31 0001586454us-gaap:MortgageReceivablesMemberpmhg:RealEstateConstructionLoanMemberus-gaap:SubstandardMember2024-03-31 0001586454us-gaap:MortgageReceivablesMemberpmhg:RealEstateConstructionLoanMember2024-01-012024-03-31 0001586454us-gaap:LoansAndFinanceReceivablesMemberus-gaap:CommercialPortfolioSegmentMemberus-gaap:PassMember2024-03-31 0001586454us-gaap:LoansAndFinanceReceivablesMemberus-gaap:CommercialPortfolioSegmentMemberus-gaap:SpecialMentionMember2024-03-31 0001586454us-gaap:LoansAndFinanceReceivablesMemberus-gaap:CommercialPortfolioSegmentMemberus-gaap:SubstandardMember2024-03-31 0001586454us-gaap:LoansAndFinanceReceivablesMemberus-gaap:CommercialPortfolioSegmentMember2024-01-012024-03-31 0001586454us-gaap:LoansAndFinanceReceivablesMemberus-gaap:ConsumerPortfolioSegmentMemberus-gaap:PassMember2024-03-31 0001586454us-gaap:LoansAndFinanceReceivablesMemberus-gaap:ConsumerPortfolioSegmentMemberus-gaap:SpecialMentionMember2024-03-31 0001586454us-gaap:LoansAndFinanceReceivablesMemberus-gaap:ConsumerPortfolioSegmentMemberus-gaap:SubstandardMember2024-03-31 0001586454us-gaap:LoansAndFinanceReceivablesMemberus-gaap:ConsumerPortfolioSegmentMember2024-01-012024-03-31 0001586454us-gaap:MortgageReceivablesMemberus-gaap:CommercialRealEstatePortfolioSegmentMemberus-gaap:PassMember2023-12-31 0001586454us-gaap:MortgageReceivablesMemberus-gaap:CommercialRealEstatePortfolioSegmentMemberus-gaap:SpecialMentionMember2023-12-31 0001586454us-gaap:MortgageReceivablesMemberus-gaap:CommercialRealEstatePortfolioSegmentMemberus-gaap:SubstandardMember2023-12-31 0001586454us-gaap:MortgageReceivablesMemberus-gaap:CommercialRealEstatePortfolioSegmentMember2023-01-012023-12-31 0001586454us-gaap:MortgageReceivablesMemberus-gaap:ResidentialPortfolioSegmentMemberus-gaap:PassMember2023-12-31 0001586454us-gaap:MortgageReceivablesMemberus-gaap:ResidentialPortfolioSegmentMemberus-gaap:SpecialMentionMember2023-12-31 0001586454us-gaap:MortgageReceivablesMemberus-gaap:ResidentialPortfolioSegmentMemberus-gaap:SubstandardMember2023-12-31 0001586454us-gaap:MortgageReceivablesMemberus-gaap:ResidentialPortfolioSegmentMember2023-01-012023-12-31 0001586454us-gaap:MortgageReceivablesMemberpmhg:RealEstateConstructionLoanMemberus-gaap:PassMember2023-12-31 0001586454us-gaap:MortgageReceivablesMemberpmhg:RealEstateConstructionLoanMemberus-gaap:SpecialMentionMember2023-12-31 0001586454us-gaap:MortgageReceivablesMemberpmhg:RealEstateConstructionLoanMemberus-gaap:SubstandardMember2023-12-31 0001586454us-gaap:MortgageReceivablesMemberpmhg:RealEstateConstructionLoanMember2023-01-012023-12-31 0001586454us-gaap:LoansAndFinanceReceivablesMemberus-gaap:CommercialPortfolioSegmentMemberus-gaap:PassMember2023-12-31 0001586454us-gaap:LoansAndFinanceReceivablesMemberus-gaap:CommercialPortfolioSegmentMemberus-gaap:SpecialMentionMember2023-12-31 0001586454us-gaap:LoansAndFinanceReceivablesMemberus-gaap:CommercialPortfolioSegmentMemberus-gaap:SubstandardMember2023-12-31 0001586454us-gaap:LoansAndFinanceReceivablesMemberus-gaap:CommercialPortfolioSegmentMember2023-01-012023-12-31 0001586454us-gaap:LoansAndFinanceReceivablesMemberus-gaap:ConsumerPortfolioSegmentMemberus-gaap:PassMember2023-12-31 0001586454us-gaap:LoansAndFinanceReceivablesMemberus-gaap:ConsumerPortfolioSegmentMemberus-gaap:SpecialMentionMember2023-12-31 0001586454us-gaap:LoansAndFinanceReceivablesMemberus-gaap:ConsumerPortfolioSegmentMemberus-gaap:SubstandardMember2023-12-31 0001586454us-gaap:LoansAndFinanceReceivablesMemberus-gaap:ConsumerPortfolioSegmentMember2023-01-012023-12-31 0001586454us-gaap:MortgageReceivablesMemberus-gaap:CommercialRealEstatePortfolioSegmentMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2024-03-31 0001586454us-gaap:MortgageReceivablesMemberus-gaap:CommercialRealEstatePortfolioSegmentMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2024-03-31 0001586454us-gaap:MortgageReceivablesMemberus-gaap:CommercialRealEstatePortfolioSegmentMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2024-03-31 0001586454us-gaap:MortgageReceivablesMemberus-gaap:CommercialRealEstatePortfolioSegmentMemberus-gaap:FinancialAssetPastDueMember2024-03-31 0001586454us-gaap:MortgageReceivablesMemberus-gaap:CommercialRealEstatePortfolioSegmentMemberus-gaap:FinancialAssetNotPastDueMember2024-03-31 0001586454us-gaap:MortgageReceivablesMemberus-gaap:ResidentialPortfolioSegmentMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2024-03-31 0001586454us-gaap:MortgageReceivablesMemberus-gaap:ResidentialPortfolioSegmentMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2024-03-31 0001586454us-gaap:MortgageReceivablesMemberus-gaap:ResidentialPortfolioSegmentMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2024-03-31 0001586454us-gaap:MortgageReceivablesMemberus-gaap:ResidentialPortfolioSegmentMemberus-gaap:FinancialAssetPastDueMember2024-03-31 0001586454us-gaap:MortgageReceivablesMemberus-gaap:ResidentialPortfolioSegmentMemberus-gaap:FinancialAssetNotPastDueMember2024-03-31 0001586454us-gaap:MortgageReceivablesMemberpmhg:RealEstateConstructionLoanMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2024-03-31 0001586454us-gaap:MortgageReceivablesMemberpmhg:RealEstateConstructionLoanMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2024-03-31 0001586454us-gaap:MortgageReceivablesMemberpmhg:RealEstateConstructionLoanMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2024-03-31 0001586454us-gaap:MortgageReceivablesMemberpmhg:RealEstateConstructionLoanMemberus-gaap:FinancialAssetPastDueMember2024-03-31 0001586454us-gaap:MortgageReceivablesMemberpmhg:RealEstateConstructionLoanMemberus-gaap:FinancialAssetNotPastDueMember2024-03-31 0001586454us-gaap:LoansAndFinanceReceivablesMemberus-gaap:CommercialPortfolioSegmentMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2024-03-31 0001586454us-gaap:LoansAndFinanceReceivablesMemberus-gaap:CommercialPortfolioSegmentMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2024-03-31 0001586454us-gaap:LoansAndFinanceReceivablesMemberus-gaap:CommercialPortfolioSegmentMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2024-03-31 0001586454us-gaap:LoansAndFinanceReceivablesMemberus-gaap:CommercialPortfolioSegmentMemberus-gaap:FinancialAssetPastDueMember2024-03-31 0001586454us-gaap:LoansAndFinanceReceivablesMemberus-gaap:CommercialPortfolioSegmentMemberus-gaap:FinancialAssetNotPastDueMember2024-03-31 0001586454us-gaap:LoansAndFinanceReceivablesMemberus-gaap:ConsumerPortfolioSegmentMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2024-03-31 0001586454us-gaap:LoansAndFinanceReceivablesMemberus-gaap:ConsumerPortfolioSegmentMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2024-03-31 0001586454us-gaap:LoansAndFinanceReceivablesMemberus-gaap:ConsumerPortfolioSegmentMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2024-03-31 0001586454us-gaap:LoansAndFinanceReceivablesMemberus-gaap:ConsumerPortfolioSegmentMemberus-gaap:FinancialAssetPastDueMember2024-03-31 0001586454us-gaap:LoansAndFinanceReceivablesMemberus-gaap:ConsumerPortfolioSegmentMemberus-gaap:FinancialAssetNotPastDueMember2024-03-31 0001586454us-gaap:LoansAndFinanceReceivablesMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2024-03-31 0001586454us-gaap:LoansAndFinanceReceivablesMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2024-03-31 0001586454us-gaap:LoansAndFinanceReceivablesMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2024-03-31 0001586454us-gaap:LoansAndFinanceReceivablesMemberus-gaap:FinancialAssetPastDueMember2024-03-31 0001586454us-gaap:LoansAndFinanceReceivablesMemberus-gaap:FinancialAssetNotPastDueMember2024-03-31 0001586454us-gaap:LoansAndFinanceReceivablesMember2024-03-31 0001586454us-gaap:MortgageReceivablesMemberus-gaap:CommercialRealEstatePortfolioSegmentMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2023-12-31 0001586454us-gaap:MortgageReceivablesMemberus-gaap:CommercialRealEstatePortfolioSegmentMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2023-12-31 0001586454us-gaap:MortgageReceivablesMemberus-gaap:CommercialRealEstatePortfolioSegmentMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2023-12-31 0001586454us-gaap:MortgageReceivablesMemberus-gaap:CommercialRealEstatePortfolioSegmentMemberus-gaap:FinancialAssetPastDueMember2023-12-31 0001586454us-gaap:MortgageReceivablesMemberus-gaap:CommercialRealEstatePortfolioSegmentMemberus-gaap:FinancialAssetNotPastDueMember2023-12-31 0001586454us-gaap:MortgageReceivablesMemberus-gaap:ResidentialPortfolioSegmentMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2023-12-31 0001586454us-gaap:MortgageReceivablesMemberus-gaap:ResidentialPortfolioSegmentMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2023-12-31 0001586454us-gaap:MortgageReceivablesMemberus-gaap:ResidentialPortfolioSegmentMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2023-12-31 0001586454us-gaap:MortgageReceivablesMemberus-gaap:ResidentialPortfolioSegmentMemberus-gaap:FinancialAssetPastDueMember2023-12-31 0001586454us-gaap:MortgageReceivablesMemberus-gaap:ResidentialPortfolioSegmentMemberus-gaap:FinancialAssetNotPastDueMember2023-12-31 0001586454us-gaap:MortgageReceivablesMemberpmhg:RealEstateConstructionLoanMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2023-12-31 0001586454us-gaap:MortgageReceivablesMemberpmhg:RealEstateConstructionLoanMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2023-12-31 0001586454us-gaap:MortgageReceivablesMemberpmhg:RealEstateConstructionLoanMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2023-12-31 0001586454us-gaap:MortgageReceivablesMemberpmhg:RealEstateConstructionLoanMemberus-gaap:FinancialAssetPastDueMember2023-12-31 0001586454us-gaap:MortgageReceivablesMemberpmhg:RealEstateConstructionLoanMemberus-gaap:FinancialAssetNotPastDueMember2023-12-31 0001586454us-gaap:LoansAndFinanceReceivablesMemberus-gaap:CommercialPortfolioSegmentMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2023-12-31 0001586454us-gaap:LoansAndFinanceReceivablesMemberus-gaap:CommercialPortfolioSegmentMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2023-12-31 0001586454us-gaap:LoansAndFinanceReceivablesMemberus-gaap:CommercialPortfolioSegmentMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2023-12-31 0001586454us-gaap:LoansAndFinanceReceivablesMemberus-gaap:CommercialPortfolioSegmentMemberus-gaap:FinancialAssetPastDueMember2023-12-31 0001586454us-gaap:LoansAndFinanceReceivablesMemberus-gaap:CommercialPortfolioSegmentMemberus-gaap:FinancialAssetNotPastDueMember2023-12-31 0001586454us-gaap:LoansAndFinanceReceivablesMemberus-gaap:ConsumerPortfolioSegmentMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2023-12-31 0001586454us-gaap:LoansAndFinanceReceivablesMemberus-gaap:ConsumerPortfolioSegmentMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2023-12-31 0001586454us-gaap:LoansAndFinanceReceivablesMemberus-gaap:ConsumerPortfolioSegmentMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2023-12-31 0001586454us-gaap:LoansAndFinanceReceivablesMemberus-gaap:ConsumerPortfolioSegmentMemberus-gaap:FinancialAssetPastDueMember2023-12-31 0001586454us-gaap:LoansAndFinanceReceivablesMemberus-gaap:ConsumerPortfolioSegmentMemberus-gaap:FinancialAssetNotPastDueMember2023-12-31 0001586454us-gaap:LoansAndFinanceReceivablesMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2023-12-31 0001586454us-gaap:LoansAndFinanceReceivablesMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2023-12-31 0001586454us-gaap:LoansAndFinanceReceivablesMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2023-12-31 0001586454us-gaap:LoansAndFinanceReceivablesMemberus-gaap:FinancialAssetPastDueMember2023-12-31 0001586454us-gaap:LoansAndFinanceReceivablesMemberus-gaap:FinancialAssetNotPastDueMember2023-12-31 0001586454us-gaap:LoansAndFinanceReceivablesMember2023-12-31 0001586454us-gaap:LoansAndFinanceReceivablesMember2024-01-012024-03-31 0001586454us-gaap:MortgageReceivablesMemberus-gaap:CommercialRealEstatePortfolioSegmentMember2022-12-31 0001586454us-gaap:MortgageReceivablesMemberus-gaap:ResidentialPortfolioSegmentMember2022-12-31 0001586454us-gaap:MortgageReceivablesMemberpmhg:RealEstateConstructionLoanMember2022-12-31 0001586454us-gaap:LoansAndFinanceReceivablesMemberus-gaap:CommercialPortfolioSegmentMember2022-12-31 0001586454us-gaap:LoansAndFinanceReceivablesMemberus-gaap:ConsumerPortfolioSegmentMember2022-12-31 0001586454us-gaap:LoansAndFinanceReceivablesMember2022-12-31 0001586454us-gaap:MortgageReceivablesMemberus-gaap:AccountingStandardsUpdate201613Membersrt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:CommercialRealEstatePortfolioSegmentMember2022-12-31 0001586454us-gaap:MortgageReceivablesMemberus-gaap:AccountingStandardsUpdate201613Membersrt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:ResidentialPortfolioSegmentMember2022-12-31 0001586454us-gaap:MortgageReceivablesMemberus-gaap:AccountingStandardsUpdate201613Membersrt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberpmhg:RealEstateConstructionLoanMember2022-12-31 0001586454us-gaap:LoansAndFinanceReceivablesMemberus-gaap:AccountingStandardsUpdate201613Membersrt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:CommercialPortfolioSegmentMember2022-12-31 0001586454us-gaap:LoansAndFinanceReceivablesMemberus-gaap:AccountingStandardsUpdate201613Membersrt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:ConsumerPortfolioSegmentMember2022-12-31 0001586454us-gaap:LoansAndFinanceReceivablesMemberus-gaap:AccountingStandardsUpdate201613Membersrt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2022-12-31 0001586454us-gaap:MortgageReceivablesMemberus-gaap:CommercialRealEstatePortfolioSegmentMember2023-01-012023-03-31 0001586454us-gaap:MortgageReceivablesMemberus-gaap:ResidentialPortfolioSegmentMember2023-01-012023-03-31 0001586454us-gaap:MortgageReceivablesMemberpmhg:RealEstateConstructionLoanMember2023-01-012023-03-31 0001586454us-gaap:LoansAndFinanceReceivablesMemberus-gaap:CommercialPortfolioSegmentMember2023-01-012023-03-31 0001586454us-gaap:LoansAndFinanceReceivablesMemberus-gaap:ConsumerPortfolioSegmentMember2023-01-012023-03-31 0001586454us-gaap:LoansAndFinanceReceivablesMember2023-01-012023-03-31 0001586454us-gaap:MortgageReceivablesMemberus-gaap:CommercialRealEstatePortfolioSegmentMember2023-03-31 0001586454us-gaap:MortgageReceivablesMemberus-gaap:ResidentialPortfolioSegmentMember2023-03-31 0001586454us-gaap:MortgageReceivablesMemberpmhg:RealEstateConstructionLoanMember2023-03-31 0001586454us-gaap:LoansAndFinanceReceivablesMemberus-gaap:CommercialPortfolioSegmentMember2023-03-31 0001586454us-gaap:LoansAndFinanceReceivablesMemberus-gaap:ConsumerPortfolioSegmentMember2023-03-31 0001586454us-gaap:LoansAndFinanceReceivablesMember2023-03-31 0001586454us-gaap:EmployeeStockOptionMemberpmhg:The2015StockIncentiveCompensationPlanMember2015-05-20 0001586454us-gaap:EmployeeStockOptionMemberpmhg:The2015StockIncentiveCompensationPlanMember2015-05-202015-05-20 0001586454pmhg:The2015StockIncentiveCompensationPlanMember2024-03-31 0001586454pmhg:The2015StockIncentiveCompensationPlanMember2022-12-31 0001586454pmhg:The2015StockIncentiveCompensationPlanMember2023-01-012023-03-31 0001586454pmhg:The2015StockIncentiveCompensationPlanMember2023-03-31 0001586454pmhg:The2015StockIncentiveCompensationPlanMember2023-04-012023-12-31 0001586454pmhg:The2015StockIncentiveCompensationPlanMember2023-12-31 0001586454pmhg:The2015StockIncentiveCompensationPlanMember2024-01-012024-03-31 0001586454us-gaap:RestrictedStockMemberpmhg:The2015StockIncentiveCompensationPlanMember2024-01-012024-03-31 0001586454us-gaap:RestrictedStockMemberpmhg:The2015StockIncentiveCompensationPlanMember2023-01-012023-03-31 0001586454us-gaap:EmployeeStockOptionMemberpmhg:The2015StockIncentiveCompensationPlanMember2024-01-012024-03-31 0001586454us-gaap:EmployeeStockOptionMemberpmhg:The2015StockIncentiveCompensationPlanMember2023-01-012023-03-31 0001586454us-gaap:EmployeeStockOptionMemberpmhg:The2015StockIncentiveCompensationPlanMember2024-03-31 0001586454us-gaap:RestrictedStockMember2024-01-012024-03-31 0001586454us-gaap:RestrictedStockMember2023-01-012023-03-31 0001586454us-gaap:RestrictedStockMembersrt:MinimumMember2024-01-012024-03-31 0001586454us-gaap:RestrictedStockMembersrt:MaximumMember2024-01-012024-03-31 0001586454us-gaap:RestrictedStockMember2022-12-31 0001586454us-gaap:RestrictedStockMember2023-03-31 0001586454us-gaap:RestrictedStockMember2023-04-012023-12-31 0001586454us-gaap:RestrictedStockMember2023-12-31 0001586454us-gaap:RestrictedStockMember2024-03-31 0001586454pmhg:DirectorsPlanMember2024-03-31 0001586454pmhg:DirectorsPlanMember2024-01-012024-03-31 0001586454pmhg:DirectorsPlanMember2023-01-012023-03-31 0001586454us-gaap:RevolvingCreditFacilityMemberpmhg:ThomasvilleNationalBankMember2020-12-31 0001586454us-gaap:RevolvingCreditFacilityMemberpmhg:ThomasvilleNationalBankMember2020-01-012020-12-31 0001586454us-gaap:RevolvingCreditFacilityMemberpmhg:ThomasvilleNationalBankMember2024-03-31 0001586454us-gaap:RevolvingCreditFacilityMemberpmhg:ThomasvilleNationalBankMember2023-12-31 0001586454us-gaap:RevolvingCreditFacilityMemberpmhg:ThomasvilleNationalBankMember2024-01-012024-03-31 0001586454us-gaap:RevolvingCreditFacilityMemberpmhg:ThomasvilleNationalBankMember2023-01-012023-03-31 0001586454srt:MinimumMember2024-03-31 0001586454srt:MaximumMember2024-03-31 0001586454us-gaap:InterestRateSwapMemberus-gaap:NondesignatedMember2024-03-31 0001586454us-gaap:InterestRateSwapMemberus-gaap:NondesignatedMember2023-12-31 0001586454us-gaap:InterestRateSwapMemberus-gaap:NondesignatedMember2024-01-012024-03-31 0001586454us-gaap:InterestRateSwapMemberus-gaap:NondesignatedMember2023-01-012023-12-31 0001586454us-gaap:FairValueInputsLevel1Memberus-gaap:CarryingReportedAmountFairValueDisclosureMember2024-03-31 0001586454us-gaap:FairValueInputsLevel1Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2024-03-31 0001586454us-gaap:FairValueInputsLevel1Memberus-gaap:CarryingReportedAmountFairValueDisclosureMember2023-12-31 0001586454us-gaap:FairValueInputsLevel1Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2023-12-31 0001586454us-gaap:FairValueInputsLevel2Memberus-gaap:CarryingReportedAmountFairValueDisclosureMember2024-03-31 0001586454us-gaap:FairValueInputsLevel2Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2024-03-31 0001586454us-gaap:FairValueInputsLevel2Memberus-gaap:CarryingReportedAmountFairValueDisclosureMember2023-12-31 0001586454us-gaap:FairValueInputsLevel2Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2023-12-31 0001586454us-gaap:FairValueInputsLevel3Memberus-gaap:CarryingReportedAmountFairValueDisclosureMember2024-03-31 0001586454us-gaap:FairValueInputsLevel3Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2024-03-31 0001586454us-gaap:FairValueInputsLevel3Memberus-gaap:CarryingReportedAmountFairValueDisclosureMember2023-12-31 0001586454us-gaap:FairValueInputsLevel3Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2023-12-31 thunderdome:item 0001586454pmhg:StandbyFinancialLettersOfCreditMember2024-01-012024-03-31 0001586454pmhg:StandbyFinancialLettersOfCreditMember2024-03-31 0001586454pmhg:SwapLiabilitiesMemberus-gaap:CreditAvailabilityConcentrationRiskMemberpmhg:StandbyFinancialLettersOfCreditMember2024-01-012024-03-31 0001586454us-gaap:CommitmentsToExtendCreditMember2024-01-012024-03-31 0001586454pmhg:ConstructionLoansInProcessMember2024-01-012024-03-31 0001586454us-gaap:UnusedLinesOfCreditMember2024-01-012024-03-31 0001586454pmhg:StandbyFinancialLettersOfCreditMember2024-01-012024-03-31 0001586454pmhg:PerformanceStandbyLettersOfCreditMember2024-01-012024-03-31 0001586454pmhg:GuaranteedAccountsMember2024-01-012024-03-31

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended

 March 31, 2024

 

or

 

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from

 

to

 

 

Commission File Number:

        333-191801

 

PRIME MERIDIAN HOLDING COMPANY

(Exact Name of registrant as specified in its charter)

 

Florida

 

27-2980805                         

 

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification Number) 

  

1471 Timberlane Road; Tallahassee, Florida

 

32312              

 

(Address of principal executive offices)

(Zip Code)           

 

(850) 907-2300

(Registrant’s telephone number, including area code)

 

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

 

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

 

Title of each class

None.

Trading Symbol(s)

N/A

Name of exchange on which registered

N/A

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☐ Yes☑ No

 

Explanatory Note: Prime Meridian Holding Company has filed, on a voluntary basis, all Securities Exchange Act of 1934 reports for the preceding 12 months.

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☑ Yes ☐ No

 

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer:     ☐Accelerated filer:                       ☐
Non-accelerated filer:         ☒ Smaller reporting company:     ☒
 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.    ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☑ No

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of May 2, 2024: 3,297,063

 

 
 

 

 

INDEX

 

PART I. FINANCIAL INFORMATION

PAGE
   

Item 1. Financial Statements

  
   

Condensed Consolidated Balance Sheets March 31, 2024 (unaudited) and December 31, 2023

2
   

Condensed Consolidated Statements of Earnings Three Months ended March 31, 2024 and 2023 (unaudited)

3
   

Condensed Consolidated Statements of Comprehensive Income Three Months ended March 31, 2024 and 2023 (unaudited)

4
   

Condensed Consolidated Statements of Stockholders’ Equity Three Months ended March 31, 2024 and 2023 (unaudited)

5
   

Condensed Consolidated Statements of Cash Flows Three Months ended March 31, 2024 and 2023 (unaudited)

6
   

Notes to Condensed Consolidated Financial Statements (unaudited)

7-25
   

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

26-33
   

Item 3. Quantitative and Qualitative Disclosures About Market Risk

33
   

Item 4. Controls and Procedures

34
 

PART II. OTHER INFORMATION
 

Item 1. Legal Proceedings

35
   

Item 1A. Risk Factors

35
   

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 35
   

Item 3. Defaults Upon Senior Securities

35
   

Item 4. Mine Safety Disclosures

35
   

Item 5. Other Information

35
   

Item 6. Exhibits

36
   

Signatures

37
   

Certifications

  

 

 
 

 

 

PRIME MERIDIAN HOLDING COMPANY AND SUBSIDIARY

 

Condensed Consolidated Balance Sheets

 

  

March 31,

  

December 31,

 
  

2024

  

2023

 

(in thousands)

 

(Unaudited)

     

Assets

        

Cash and due from banks

 $9,600  $9,003 

Federal funds sold

  8,595   14,856 

Interest-bearing deposits

  5,279   4,557 

Total cash and cash equivalents

  23,474   28,416 

Debt securities available for sale at fair value (amortized cost of $128,268 and $134,940)

  117,413   124,475 

Debt securities held to maturity (fair value of $10,328 and $10,358)

  11,861   11,850 

Loans held for sale

  3,583   5,288 

Loans, net of allowance for credit losses of $5,796 and $5,609

  666,826   646,127 

Federal Home Loan Bank stock

  1,548   1,283 

Premises and equipment, net

  7,406   7,476 

Right of use operating lease asset

  2,767   2,823 

Accrued interest receivable

  3,465   3,114 

Bank-owned life insurance

  17,021   16,921 

Other assets

  7,296   6,755 

Total assets

 $862,660  $854,528 
         

Liabilities and Stockholders' Equity

        

Liabilities:

        

Noninterest-bearing demand deposits

 $201,083  $189,426 

Savings, NOW and money-market deposits

  462,601   476,826 

Time deposits

  88,029   82,436 

Total deposits

  751,713   748,688 

Federal Home Loan Bank advances

  20,000   15,000 

Official checks

  831   2,377 

Operating lease liability

  2,963   3,013 

Other liabilities, net

  5,714   5,474 

Total liabilities

  781,221   774,552 

Stockholders' equity:

        

Preferred stock, undesignated; 1,000,000 shares authorized, none issued or outstanding

  -   - 

Common stock, $.01 par value; 9,000,000 shares authorized, 3,295,265 and 3,259,881 issued and outstanding

  33   33 

Additional paid-in capital

  41,163   40,522 

Retained earnings

  48,347   47,234 

Accumulated other comprehensive loss

  (8,104)  (7,813)

Total stockholders' equity

  81,439   79,976 

Total liabilities and stockholders' equity

 $862,660  $854,528 

 

See Accompanying Notes to Condensed Consolidated Financial Statements.

 

 

2
 

 

 

PRIME MERIDIAN HOLDING COMPANY AND SUBSIDIARY

 

Condensed Consolidated Statements of Earnings (Unaudited)

 

 

   

Three Months Ended

  
   

March 31,

  

(in thousands, except per share amounts)

  

2024

    

2023

  

Interest income:

                

Loans

   $ 9,962     $ 8,044  

Debt securities

     896       933  

Other

     207       222  

Total interest income

     11,065       9,199  

Interest expense:

                

Deposits

     3,677       1,533  

Other borrowings and FHLB advances

     255       111  

Total interest expense

     3,932       1,644  

Net interest income

     7,133       7,555  

Credit loss expense

     211       243  

Net interest income after credit loss expense

     6,922       7,312  

Noninterest income:

                

Service charges and fees on deposit accounts

     69       85  

Debit card/ATM revenue, net

     158       151  

Mortgage banking revenue, net

     71       54  

Income from bank-owned life insurance

     100       94  

Other income

     55       57  

Total noninterest income

     453       441  

Noninterest expense:

                

Salaries and employee benefits

     2,865       2,752  

Occupancy and equipment

     405       409  

Professional fees

     154       135  

Marketing

     274       223  

FDIC assessment

     108       84  

Software maintenance, amortization and other

     404       277  

Other

     631       575  

Total noninterest expense

     4,841       4,455  

Earnings before income taxes

     2,534       3,298  

Income taxes

     603       797  

Net earnings

   $ 1,931     $ 2,501  
                 

Earnings per common share:

                

Basic

   $ 0.59     $ 0.79  

Diluted

     0.59       0.78  

Cash dividends per common share

     0.25       0.22  

 

 

See Accompanying Notes to Condensed Consolidated Financial Statements.

 

3
 

 

 

PRIME MERIDIAN HOLDING COMPANY AND SUBSIDIARY

 

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

 

 

 

   

Three Months Ended

  
   

March 31,

  

(in thousands)

  

2024

    

2023

  

Net earnings

   $ 1,931     $ 2,501  

Other comprehensive (loss) income:

                

Change in unrealized loss on debt securities available for sale-

                

Unrealized (loss) income arising during the period

     (390 )     1,980  

Deferred income tax benefit (expense) on above change

     99       (502 )

Total other comprehensive (loss) income

     (291 )     1,478  

Comprehensive income

   $ 1,640     $ 3,979  

 

See Accompanying Notes to Condensed Consolidated Financial Statements.

 

 

 

 

4
 

 

 

PRIME MERIDIAN HOLDING COMPANY AND SUBSIDIARY

 

Condensed Consolidated Statements of Stockholders' Equity

 

Three Months ended March 31, 2024 and 2023

 

                                   

Accumulated

          
                   

Additional

            

Other

    

Total

  
   

Common Stock

    

Paid-in

    

Retained

    

Comprehensive

    

Stockholders'

  
   

Shares

    

Amount

    

Capital

    

Earnings

    

Loss

    

Equity

  

(dollars in thousands)

                                                

Balance at December 31, 2022

     3,164,491     $ 32     $ 39,718     $ 37,278     $ (9,975 )   $ 67,053  

Impact of adopting ASC 326 (net of tax)

                   -       1,946       -       1,946  

Net earnings for the three months ended March 31, 2023 (unaudited)

     -       -       -       2,501       -       2,501  

Dividends paid (unaudited)

     -       -       -       (698 )     -       (698 )

Net change in unrealized loss on debt securities available for sale, net of income tax expense (unaudited)

     -       -       -       -       1,478       1,478  

Stock options exercised (unaudited)

     15,867       -       273       -       -       273  

Common stock issued as compensation to directors (unaudited)

     1,573       -       40       -       -       40  

Issuance of restricted stock (unaudited)

     3,834       -       -       -       -       -  

Stock-based compensation (unaudited)

     -       -       83       -       -       83  

Balance at March 31, 2023 (unaudited)

     3,185,765     $ 32     $ 40,114     $ 41,027     $ (8,497 )   $ 72,676  

 

                                   

Accumulated

          
                   

Additional

            

Other

    

Total

  
   

Common Stock

    

Paid-in

    

Retained

    

Comprehensive

    

Stockholders'

  
   

Shares

    

Amount

    

Capital

    

Earnings

    

Loss

    

Equity

  

Balance at December 31, 2023

     3,259,881     $ 33     $ 40,522     $ 47,234     $ (7,813 )   $ 79,976  

Net earnings for the three months ended March 31, 2024 (unaudited)

     -       -       -       1,931       -       1,931  

Dividends paid (unaudited)

     -       -       -       (818 )     -       (818 )

Net change in unrealized loss on debt securities available for sale, net of income tax benefit (unaudited)

     -       -       -       -       (291 )     (291 )

Stock options exercised (unaudited)

     23,940       -       481       -       -       481  

Common stock issued as compensation to directors (unaudited)

     1,654       -       41       -       -       41  

Issuance of restricted stock (unaudited)

     9,790       -       113       -       -       113  

Stock-based compensation (unaudited)

     -       -       6       -       -       6  

Balance at March 31, 2024 (unaudited)

     3,295,265     $ 33     $ 41,163     $ 48,347     $ (8,104 )   $ 81,439  

 

 

5
 

 

 

PRIME MERIDIAN HOLDING COMPANY AND SUBSIDIARY 

 

Condensed Consolidated Statements of Cash Flow (Unaudited)

 

   

Three Months Ended March 31,

  

(in thousands)

  

2024

    

2023

  

Cash flows from operating activities:

                

Net earnings

   $ 1,931     $ 2,501  

Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:

                

Depreciation and amortization

     180       181  

Credit loss expense

     211       243  

Net amortization of deferred loan fees

     30       50  

Net accretion of discounts on debt securities

     (78 )     (69 )

Gain on sale of loans held for sale

     (71 )     (54 )

Proceeds from the sale of loans held for sale

     13,396       13,681  

Loans originated as held for sale

     (11,620 )     (14,674 )

Stock issued as compensation to directors

     41       40  

Stock-based compensation expense

     119       83  

Income from bank-owned life insurance

     (100 )     (94 )

Net increase in accrued interest receivable

     (351 )     (238 )

Net change in operating leases

     6       6  

Net (increase) decrease in other assets

     (442 )     192  

Net decrease in other liabilities and official checks

     (1,306 )     (2,640 )

Net cash provided by (used in) operating activities

     1,946       (792 )

Cash flows from investing activities:

                

Loan originations, net of principal repayments

     (20,940 )     (15,100 )

Principal repayments of debt securities available for sale

     1,679       1,720  

Maturities and calls of debt securities available for sale

     5,060       6  

Purchase of Federal Home Loan Bank stock

     (265 )     (582 )

Purchase of premises and equipment

     (110 )     (52 )

Net cash used in investing activities

     (14,576 )     (14,008 )

Cash flows from financing activities:

                

Net increase (decrease) in deposits

     3,025       (14,299 )

Change in other borrowings

     -       (2,550 )

Increase in Federal Home Loan Bank advances

     5,000       15,000  

Proceeds from stock options exercised

     481       273  

Common stock dividends paid

     (818 )     (698 )

Net cash provided by (used in) financing activities

     7,688       (2,274 )

Net decrease in cash and cash equivalents

     (4,942 )     (17,074 )

Cash and cash equivalents at beginning of period

     28,416       39,788  

Cash and cash equivalents at end of period

   $ 23,474     $ 22,714  

Supplemental disclosure of cash flow information

                

Cash paid during the period:

                

Interest

   $ 3,948     $ 1,580  

Income taxes

   $ -     $ -  

Noncash transactions:

                

Accumulated other comprehensive (loss) income, net change in unrealized loss on debt securities available for sale, net of income tax benefit (expense)

   $ (291 )   $ 1,478  

Impact of adopting ASC 326 (net of tax)

   $ -     $ 1,946  

 

See Accompanying Notes to Condensed Consolidated Financial Statements.

 

6
 

 

PRIME MERIDIAN HOLDING COMPANY AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (unaudited)

 

 

(1)

General

 

Prime Meridian Holding Company (“PMHG”) owns 100% of the outstanding common stock of Prime Meridian Bank (the "Bank") (collectively the "Company"). PMHG’s primary activity is the operation of the Bank. The Bank is a Florida state-chartered commercial bank, and the deposit accounts of the Bank are insured up to the applicable limits by the Federal Deposit Insurance Corporation ("FDIC"). The Bank offers a variety of community banking services to individual and corporate clients through its four banking offices located in Tallahassee, Crawfordville, and Lakeland, Florida and its online banking platform.

 

The accounting and financial reporting policies of the Company conform, in all material respects, to accounting principles generally accepted in the United States of America (“GAAP”) and to general practices within the banking industry. The condensed consolidated financial statements in the Quarterly Report on Form 10-Q have not been audited by an independent registered public accounting firm, but in the opinion of management, reflect all necessary adjustments for a fair presentation of the Company’s condensed consolidated financial position and condensed consolidated results of operations. All adjustments were of a normal and recurring nature. The condensed consolidated financial statements have been prepared in accordance with GAAP and with the instructions to Form 10-Q adopted by the Securities and Exchange Commission (the “SEC”). Accordingly, the condensed consolidated financial statements do not include all information and footnotes required by GAAP for complete financial presentation and should be read in conjunction with our consolidated financial statements, and notes thereto, for the year ended December 31, 2023, included in our Annual Report on Form 10-K filed with the SEC on March 21, 2024. The results of operations for the three months ended March 31, 2024 are not necessarily indicative of the results to be expected for the full year or any future period.

 

Comprehensive Income. GAAP generally requires that recognized revenue, expenses, gains and losses be included in earnings. Although certain changes in assets and liabilities, such as unrealized gains and losses on debt securities available for sale, are reported as a separate component of the equity section of the condensed consolidated balance sheet, such items along with net earnings, are components of comprehensive income. The only component of other comprehensive (loss) income is the net change in the unrealized loss on debt securities available for sale.

 

Stock-Based Compensation. The Company expenses the fair value of stock options and restricted stock granted. The Company recognizes stock-based compensation expense in the condensed consolidated statements of earnings over the vesting period.

 

Derivatives. The Company enters into interest rate swaps in order to provide commercial loan clients the ability to swap from variable to fixed interest rates.  Under these agreements, the Company enters into a variable rate loan with a client in addition to a swap agreement.  This swap agreement effectively converts the client’s variable rate loan into a fixed rate.  The Company then enters into a matching swap agreement with a third-party dealer in order to offset its exposure on the client swap.  The Company does not use derivatives for trading purposes. The derivative transactions are considered instruments with no hedging designation, otherwise known as stand-alone derivatives. 

 

 

(continued)

 

7
 

 

PRIME MERIDIAN HOLDING COMPANY AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (unaudited), Continued
 

 

(2)

Debt Securities 

 

Debt securities are classified according to management's intent. Our investments in U.S. agency mortgage-backed securities are with government-sponsored enterprises (GSEs) such as Federal National Mortgage Association, Government National Mortgage Association, Federal Home Loan Bank, and Federal Home Loan Mortgage Corporation. The amortized cost of debt securities and fair values are as follows:

 

      

Gross

  

Gross

     
  

Amortized

  

Unrealized

  

Unrealized

  

Fair

 
  

Cost

  

Gains

  

Losses

  

Value

 

(in thousands)

                

At March 31, 2024

                

Debt Securities Available for Sale

                

U.S. Government treasury and agency securities

 $41,585  $-  $(1,053) $40,532 

Municipal securities

  22,183   -   (2,198)  19,985 

U.S. agency mortgage-backed securities

  61,623   26   (7,580)  54,069 

Asset-backed securities

  2,877   6   (56)  2,827 

Total

 $128,268  $32  $(10,887) $117,413 
                 

Debt Securities Held to Maturity

                

Municipal securities

 $9,267  $23  $(1,364) $7,926 

U.S. agency mortgage-backed securities

  2,594   -   (192)  2,402 

Total

 $11,861  $23  $(1,556) $10,328 
                 

At December 31, 2023

                

Debt Securities Available for Sale

                

U.S. Government treasury and agency securities

 $46,492  $-  $(1,234) $45,258 

Municipal securities

  22,259   -   (2,151)  20,108 

U.S. agency mortgage-backed securities

  63,165   7   (7,013)  56,159 

Asset-backed securities

  3,024   -   (74)  2,950 

Total

 $134,940  $7  $(10,472) $124,475 
                 

Debt Securities Held to Maturity

                

Municipal securities

 $9,257  $39  $(1,378) $7,918 

U.S. agency mortgage-backed securities

  2,593   -   (153)  2,440 

Total

 $11,850  $39  $(1,531) $10,358 

 

There were no debt securities available for sale sold during the three months ended March 31, 2024 and 2023. 

 

 

(continued)

8
 

 

 

PRIME MERIDIAN HOLDING COMPANY AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (unaudited), Continued

 

(2)

Debt Securities, Continued

 

Debt securities with gross unrealized losses, aggregated by investment category and length of time that individual securities have been in a continuous loss position, are as follows:

 

  

Less Than Twelve Months

  

More Than Twelve Months

 
  

Gross

      

Gross

     
  

Unrealized

  

Fair

  

Unrealized

  

Fair

 
  

Losses

  

Value

  

Losses

  

Value

 

(in thousands)

                

At March 31, 2024

                

Debt Securities Available for Sale

                

U.S. Government treasury and agency securities

 $-  $-  $(1,053) $40,532 

Municipal securities

  -   -   (2,198)  19,985 

U.S. agency mortgage-backed securities

  -   -   (7,580)  52,896 

Asset-backed securities

  -   -   (56)  1,968 

Total

 $-  $-  $(10,887) $115,381 
                 

Debt Securities Held to Maturity

                

Municipal securities

 $-  $-  $(1,364) $6,908 

U.S. agency mortgage-backed securities

  -   -   (192)  2,402 

Total

 $-  $-  $(1,556) $9,310 
                 

At December 31, 2023

                

Debt Securities Available for Sale

                

U.S. Government treasury and agency securities

 $-  $-  $(1,234) $45,258 

Municipal securities

  (2)  386   (2,149)  19,722 

U.S. agency mortgage-backed securities

  -   -   (7,013)  54,987 

Asset-backed securities

  -   -   (74)  2,950 

Total

 $(2) $386  $(10,470) $122,917 
                 

Debt Securities Held to Maturity

                

Municipal securities

 $-  $-  $(1,378) $6,884 

U.S. agency mortgage-backed securities

  -   -   (153)  2,440 

Total

 $-  $-  $(1,531) $9,324 

 

The unrealized losses at March 31, 2024 and December 31, 2023 on 100 and 103 debt securities, respectively, were caused by market conditions such as interest rate movements, and not changes in credit quality. It is expected that the debt securities would not be settled at a price less than the par value of the debt securities. Because the decline in fair value is attributable to market conditions and not credit quality, and because the Company has the ability and intent to hold these debt securities until a market price recovery or maturity, these debt securities are not considered other-than-temporarily impaired. Therefore, at March 31, 2024 and December 31, 2023, no ACL on debt securities has been recorded.

 

Management evaluates debt securities for impairment where there has been a decline in fair value below the amortized cost basis of a debt security to determine whether there is a credit loss associated with the decline in fair value on at least a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Credit losses are calculated individually and collectively, using a discounted cash flow method, whereby management compares the present value of expected cash flows with the amortized cost basis of the debt security.

 

Any credit loss component would be recognized through a credit loss expense. Consideration is given to (1) the financial condition and near-term prospects of the issuer including looking at default and delinquency rates, (2) the outlook for receiving the contractual cash flows of the debt securities, (3) the length of time and the extent to which the fair value has been less than cost, (4) our intent and ability to retain our investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value or for a debt security whether it is more-likely-than-not that we will be required to sell the debt security prior to recovering its fair value, (5) the anticipated outlook for changes in the general level of interest rates, (6) credit ratings, (7) third party guarantees, and (8) collateral values. In analyzing an issuer's financial condition, management considers whether the debt securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred, the results of reviews of the issuer's financial condition, and the issuer's anticipated ability to pay the contractual cash flows of the debt securities. The Company determined that the U.S. government agency and treasury securities (including mortgage-backed securities) have a zero expected credit loss. All of the government agency securities have the full faith and credit backing of the United States government or one of its agencies. Municipal securities and asset-backed securities that do not have a zero expected credit loss are evaluated quarterly by a third-party resource to determine whether there is a credit loss associated with a decline in fair value. At March 31, 2024 and December 31, 2023, all municipal and asset-backed securities were rated as investment grade. All debt securities in an unrealized loss position as of  March 31, 2024 continue to perform as scheduled and we do not believe that there is a credit loss or that a credit loss expense is necessary. At March 31, 2024 and December 31, 2023, no debt securities are on nonaccrual. Also, as part of our evaluation of our intent and ability to hold investments for a period of time sufficient to allow for any anticipated recovery in the market, we consider our investment strategy, cash flow needs, liquidity position, capital adequacy and interest rate risk position. We do not currently intend to sell the debt securities within the portfolio, and it is not more-likely-than-not that we will be required to sell the debt securities.

 

 

 

(continued)

9
 

 

PRIME MERIDIAN HOLDING COMPANY AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (unaudited), Continued

 

(2)

Debt Securities, Continued

 

Debt securities available for sale measured at fair value on a recurring basis are summarized below:

 

      

Fair Value Measurements Using

 
      

Quoted Prices

         
      

In Active

  

Significant

     
      

Markets for

  

Other

  

Significant

 
      

Identical

  

Observable

  

Unobservable

 
  

Fair

  

Assets

  

Inputs

  

Inputs

 
  

Value

  

(Level 1)

  

(Level 2)

  

(Level 3)

 

(in thousands)

                

At March 31, 2024

                

Debt Securities Available for Sale

                

U.S. Government treasury and agency securities

 $40,532  $-  $40,532  $- 

Municipal securities

  19,985   -   19,985   - 

U.S. agency mortgage-backed securities

  54,069   -   54,069   - 

Asset-backed securities

  2,827   -   2,827   - 

Total

 $117,413  $-  $117,413  $- 
                 

At December 31, 2023

                

Debt Securities Available for Sale

                

U.S. Government treasury and agency securities

 $45,258  $-  $45,258  $- 

Municipal securities

  20,108   -   20,108   - 

U.S. agency mortgage-backed securities

  56,159   -   56,159   - 

Asset-backed securities

  2,950   -   2,950   - 

Total

 $124,475  $-  $124,475  $- 

 

The scheduled maturities of debt securities are as follows:

 

  

Debt Securities Available for Sale

  

Debt Securities Held to Maturity

 
  

Amortized

  

Fair

  

Amortized

  

Fair

 
  

Cost

  

Value

  

Cost

  

Value

 

(in thousands)

                

Due in less than one year

 $30,816  $30,612  $-  $- 

Due in one to five years

  17,825   16,677   -   - 

Due in five to ten years

  12,880   11,305   2,056   1,940 

Due after ten years

  5,124   4,750   7,211   5,986 

U.S. agency mortgage-backed securities

  61,623   54,069   2,594   2,402 

Total

 $128,268  $117,413  $11,861  $10,328 
                 

 

 

At March 31, 2024 and  December 31, 2023 debt securities with a fair value of $16.3 million and $16.4 million, respectively, were pledged as collateral for public deposits.  

 

 

 

 

(continued)

 

10
 

 

PRIME MERIDIAN HOLDING COMPANY AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (unaudited), Continued

 

 

(3)

Loans

 

Segments and classes of loans, excluding loans held for sale, are as follows:

 

         

(in thousands)

 

At March 31, 2024

  

At December 31, 2023

 

Real estate mortgage loans:

        

Commercial

 $226,634  $223,795 

Residential and home equity

  264,638   254,574 

Construction

  87,593   81,640 

Total real estate mortgage loans

  578,865   560,009 
         

Commercial loans

  88,426   85,983 

Consumer and other loans

  5,545   5,936 

Total loans

  672,836   651,928 
         

Add (deduct):

        

Net deferred loan fees

  (214)  (192)

Allowance for credit losses

  (5,796)  (5,609)

Loans, net

 $666,826  $646,127 

 

 

 

(continued)

 

11
 

 

PRIME MERIDIAN HOLDING COMPANY AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (unaudited), Continued

 

(3)

Loans, Continued

 

The Company has divided the loan portfolio into three portfolio segments and five portfolio classes, each with different risk characteristics and methodologies for assessing risk. All loans are underwritten based upon standards set forth in the policies approved by the Company’s Board of Directors. The Company identifies the portfolio segments and classes as follows:

 

Real Estate Mortgage Loans. Real estate mortgage loans are typically divided into three classes: commercial, residential and home equity, and construction loans.

 

Commercial. Loans of this type are typically our more complex loans. This category of real estate loans is comprised of loans secured by mortgages on commercial property that are typically owner-occupied, but also includes nonowner-occupied investment properties. Commercial loans that are secured by owner-occupied commercial real estate are repaid through operating cash flows of the borrower. Commercial loans that are secured by nonowner-occupied commercial real estate are underwritten by assessing the property’s current and future income potential and appraised value.  For both owner-occupied and nonowner-occupied commercial loans, the maturity is generally limited to three to five years; however, payments may be structured on a longer amortization basis. Typically, interest rates on these types of loans are fixed for five years or less after which they may adjust based upon a predetermined spread over a market index rate. At times, a rate may be fixed for longer than five years.  As part of our credit underwriting standards, the Company typically requires personal guarantees from the principal owners of the business supported by a review of the principal owners’ personal financial statements and tax returns. As part of the enterprise risk management process, it is understood that risks associated with commercial real estate loans include fluctuations in real estate values, the overall strength of the borrower and the economy, new job creation trends, tenant vacancy rates, environmental contamination, and the quality of the borrowers’ management. In order to mitigate and limit these risks, we analyze the borrowers’ cash flows and evaluate collateral value. Currently, the collateral securing our commercial real estate loans includes a variety of property types, such as office, warehouse, and retail facilities. Other types include multifamily properties, hotels, mixed-use residential and commercial properties. Generally, commercial real estate loans present a higher risk profile than our consumer real estate loan portfolio.

 

Residential and Home Equity. The Company offers first and second one-to-four family mortgage loans and home equity lines of credit; the collateral for these loans is generally the clients' owner-occupied residences. Although these types of loans present lower levels of risk than commercial real estate loans, risks do still exist because of possible fluctuations in the value of the real estate collateral securing the loan, as well as changes in the borrowers' financial condition. The nonowner-occupied investment properties are more similar in risk to commercial real estate loans, and therefore, are underwritten by assessing the property’s income potential and appraised value. In both cases, we underwrite the borrower’s financial condition and evaluate his or her global cash flow position. Borrowers may be affected by numerous factors, including job loss, illness, or other personal hardship. As part of our product mix, the Bank offers both portfolio and secondary market mortgages; portfolio loans generally are based on a 1-year, 3-year, 5-year, or 7-year adjustable rate mortgage; while 15-year or 30-year fixed-rate loans are generally sold in the secondary market.

 

Construction. Typically, these loans have a construction period of one to two years and the interest is paid monthly. Once the construction period terminates, some of these loans convert to a term loan with a maturity of one to ten years. This portion of our loan portfolio includes loans to small and midsized businesses to construct owner-user properties, loans to developers of commercial real estate investment properties, and residential developments. This type of loan is also made to individual clients for construction of single-family homes in our market area. An independent appraisal is used to determine the value of the collateral and confirm that the ratio of the loan principal to the value of the collateral will not exceed policies of the Bank. As the construction project progresses, loan proceeds are requested by the borrower to complete phases of construction and funding is only disbursed after the project has been inspected by a third-party inspector or experienced construction lender. Risks associated with construction loans include fluctuations in the value of real estate, project completion risk, and changes in market trends. The ability of the construction loan borrower to finance the loan or sell the property upon completion of the project is another risk factor that also may be affected by changes in market trends since the initial funding of the loan.

 

Commercial Loans. The Company offers a wide range of commercial loans, including business term loans, equipment financing, lines of credit, and U.S. Small Business Administration (SBA) loans. Small-to-medium sized businesses, retail, and professional establishments, make up our target market for commercial loans. Our Relationship Managers primarily underwrite these loans based on the borrower's ability to service the loan from cash flow. Lines of credit and loans secured by accounts receivable and/or inventory are monitored periodically by our staff. Loans secured by "all business assets," or a "blanket lien" are typically only made to highly qualified borrowers due to the nonspecific nature of the collateral and do not require a formal valuation of the business collateral. When commercial loans are secured by specifically identified collateral, then the valuation of the collateral is generally supported by an appraisal, purchase order, or third-party physical inspection. Personal guarantees of the principals of business borrowers are usually required. Equipment loans generally have a term of five years or less and may have a fixed or variable rate; we use conservative margins when pricing these loans. Working capital loans generally do not exceed one year and typically, they are secured by accounts receivable, inventory, and personal guarantees of the principals of the business. The Bank currently offers SBA 504 and SBA 7A loans. SBA 504 loans provide financing for major fixed assets such as real estate and equipment while SBA 7A loans are generally used to establish a new business or assist in the acquisition, operation, or expansion of an existing business. With both SBA loan programs, there are set eligibility requirements and underwriting standards outlined by SBA that can change as the government alters its fiscal policy. Significant factors affecting a commercial borrower's creditworthiness include the quality of management and the ability both to evaluate changes in the supply and demand characteristics affecting the business' markets for products and services and to respond effectively to such changes. These loans may be made unsecured or secured, but most are made on a secured basis. Risks associated with our commercial loan portfolio include local, regional, and national market conditions. Other factors of risk could include changes in the borrower's management and fluctuations in collateral value. Additionally, there may be refinancing risk if a commercial loan includes a balloon payment which must be refinanced or paid off at loan maturity. In reference to our risk management process, our commercial loan portfolio presents a higher risk profile than our consumer real estate and consumer loan portfolios. Therefore, we require that all loans to businesses must have a clearly stated and reasonable payment plan to allow for timely retirement of debt, unless secured by liquid collateral or as otherwise justified. 

 

 

(continued)

 

12
 

 

PRIME MERIDIAN HOLDING COMPANY AND SUBSIDIARY

 

 Notes to Condensed Consolidated Financial Statements (unaudited), Continued

 

(3)

Loans, Continued

 

Consumer and Other Loans. These loans are made for various consumer purposes, such as the financing of automobiles, boats, and recreational vehicles. The payment structure of these loans is normally on an installment basis. The risk associated with this category of loans stems from the reduced collateral value for a defaulted loan; the collateral may not provide an adequate source of repayment of the principal. The underwriting on these loans is primarily based on the borrower's financial condition. In many cases, these are unsecured credits that subject us to risk when the borrower's financial condition declines or deteriorates. Based upon our current trend in consumer loans, management does not anticipate consumer loans will become a substantial component of our loan portfolio at any time in the foreseeable future. Consumer loans are made at fixed and variable interest rates and are based on the appropriate amortization for the asset and purpose.

 

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. Loans classified as substandard or special mention are reviewed quarterly by the Company for further deterioration or improvement to determine if they are appropriately classified and whether there is any impairment. All loans are graded upon initial issuance. Furthermore, construction loans, owner-occupied and nonowner-occupied commercial real estate loans, and commercial loan relationships in excess of $1 million are reviewed at least annually. The Company determines the appropriate loan grade during the renewal process and reevaluates the loan grade in situations when a loan becomes past due.

 

Loans excluded from the review process above are generally classified as pass credits until: (a) they become past due; (b) management becomes aware of deterioration in the credit worthiness of the borrower; or (c) the client contacts the Company for a modification. In these circumstances, the loan is specifically evaluated for potential classification as to special mention, substandard or even charged-off. The Company uses the following definitions for risk ratings:

 

Pass – A Pass loan's primary source of loan repayment is satisfactory, with secondary sources very likely to be realized if necessary.

 

Special Mention – A Special Mention loan has potential weaknesses that deserve management's close attention. If left uncorrected, these potential weaknesses may result in the deterioration of the repayment prospects for the asset or the Company's credit position at some future date. Special Mention loans are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification.

 

Substandard – A Substandard loan is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

 

Doubtful – A loan classified Doubtful has all the weaknesses inherent in one classified Substandard with the added characteristics that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

 

Loss – A loan classified Loss is considered uncollectible and of such little value that continuance as a bankable asset is not warranted. This classification does not necessarily preclude the potential for recovery, but rather signifies it is no longer practical to defer writing off the asset.

 

 

 

 

(continued)

 

13
 

PRIME MERIDIAN HOLDING COMPANY AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (unaudited), Continued

 

(3)

Loans, Continued

 

Loan balances classified by credit quality indicator, loan type and based on year of origination are as follows:

 

(in thousands)

 Term Loans by Origination Year       

At March 31, 2024

 2024  2023  2022  2021  2020  Prior  Revolving Loans  Total 

Commercial Real Estate Loans

                                

Pass

 $5,465  $27,806  $61,765  $32,398  $40,843  $49,414  $7,126  $224,817 

Special mention

  -   -   -   -   -   1,761      1,761 

Substandard

  -   -   -   -   -   56   -   56 

Total commercial real estate loans

 $5,465  $27,806  $61,765  $32,398  $40,843  $51,231  $7,126  $226,634 

Year-to-date gross charge-offs

 $-  $-  $-  $-  $-  $-  $-  $- 
                                 

Residential and Home Equity Loans

                                

Pass

 $5,957  $44,589  $51,923  $56,490  $29,625  $39,049  $32,789  $260,422 

Special mention

  -   -   -   1,384   275   202   536   2,397 

Substandard

  -   -   -   1,408   367   -   44   1,819 

Total residential loans

 $5,957  $44,589  $51,923  $59,282  $30,267  $39,251  $33,369  $264,638 

Year-to-date gross charge-offs

 $-  $-  $-  $-  $-  $-  $-  $- 
                                 

Construction Loans

                                

Pass

 $7,327  $32,003  $17,762  $19,056  $759  $3,321  $6,790  $87,018 

Special mention

  -   -   -   -   -   -   -   - 

Substandard

  -   -   190   -   -   -   385   575 

Total construction loans

 $7,327  $32,003  $17,952  $19,056  $759  $3,321  $7,175  $87,593 

Year-to-date gross charge-offs

 $-  $-  $-  $-  $-  $-  $-  $- 
                                 

Commercial Loans

                                

Pass

 $2,329  $11,846  $11,672  $6,353  $3,373  $7,777  $44,297  $87,647 

Special mention

  -   14   -   -   -   -   -   14 

Substandard

  -   -   -   -   -   -   765   765 

Total commercial loans

 $2,329  $11,860  $11,672  $6,353  $3,373  $7,777  $45,062  $88,426 

Year-to-date gross charge-offs

 $-  $-  $-  $-  $-  $-  $-  $- 
                                 

Consumer & Other Loans

                                

Pass

 $488  $1,107  $566  $246  $115  $488  $2,486  $5,496 

Special mention

  49   -   -   -   -   -   -   49 

Substandard

  -   -   -   -   -   -   -   - 

Total consumer & other loans

 $537  $1,107  $566  $246  $115  $488  $2,486  $5,545 

Year-to-date gross charge-offs

 $27  $-  $-  $-  $-  $-  $-  $27 

 

 

 

 

(continued)

14
 

 

PRIME MERIDIAN HOLDING COMPANY AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (unaudited), Continued

 

(3)   Loans, Continued

 

(in thousands)

 Term Loans by Origination Year       

At December 31, 2023

 

2023

  

2022

  

2021

  

2020

  

2019

  

Prior

  

Revolving Loans

  

Total

 

Commercial Real Estate Loans

                                

Pass

 $27,756  $62,149  $32,799  $42,079  $12,492  $38,271  $6,482  $222,028 

Special mention

  -   -   -   -   -   1,767      1,767 

Substandard

  -   -   -   -   -   -   -   - 

Total commercial real estate loans

 $27,756  $62,149  $32,799  $42,079  $12,492  $40,038  $6,482  $223,795 

Year-to-date gross charge-offs

 $-  $-  $-  $-  $-  $-  $-  $- 
                                 

Residential and Home Equity Loans

                                

Pass

 $43,809  $51,060  $56,802  $29,979  $11,717  $28,188  $29,794  $251,349 

Special mention

  -   -   1,391   278   -   203   357   2,229 

Substandard

  -   -   585   367   -   -   44   996 

Total residential loans

 $43,809  $51,060  $58,778  $30,624  $11,717  $28,391  $30,195  $254,574 

Year-to-date gross charge-offs

 $-  $-  $-  $-  $-  $-  $-  $- 
                                 

Construction Loans

                                

Pass

 $33,713  $18,797  $16,717  $1,425  $1,611  $1,837  $6,958  $81,058 

Special mention

  -   -   -   -   -   -   -   - 

Substandard

  -   198   -   384   -   -   -   582 

Total construction loans

 $33,713  $18,995  $16,717  $1,809  $1,611  $1,837  $6,958  $81,640 

Year-to-date gross charge-offs

 $-  $-  $-  $386  $-  $-  $-  $386 
                                 

Commercial Loans

                                

Pass

 $12,024  $12,130  $7,247  $3,543  $4,823  $5,250  $40,064  $85,081 

Special mention

  24   -   -   45   -   32   -   101 

Substandard

  -   -   -   36   -   -   765   801 

Total commercial loans

 $12,048  $12,130  $7,247  $3,624  $4,823  $5,282  $40,829  $85,983 

Year-to-date gross charge-offs

 $-  $-  $-  $-  $-  $1  $-  $1 
                                 

Consumer & Other Loans

                                

Pass

 $1,317  $688  $275  $122  $348  $176  $3,010  $5,936 

Special mention

  -   -   -   -   -   -   -   - 

Substandard

  -   -   -   -   -   -   -   - 

Total consumer & other loans

 $1,317  $688  $275  $122  $348  $176  $3,010  $5,936 

Year-to-date gross charge-offs

 $46  $-  $-  $-  $-  $-  $-  $46 

 

 

 

 

(continued)

15
 

 

PRIME MERIDIAN HOLDING COMPANY AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (unaudited), Continued

 

(3)

Loans, Continued

 

A loan is defined as a past due loan when one full or partial payment is past due or a contractual maturity is over 30 days past due.  Age analysis of past due loans is as follows:

 

  

Accruing Loans

         
          

Greater Than

                 
  

30-59 Days

  

60-89 Days

  

90 Days

  

Total Past

      

Nonaccrual

  

Total

 

(in thousands)

 

Past Due

  

Past Due

  

Past Due

  

Due

  

Current

  

Loans

  

Loans

 

At March 31, 2024

                            

Real estate mortgage loans:

                            

Commercial

 $596  $-  $-  $596  $225,982  $56  $226,634 

Residential and home equity

  3,459   19   -   3,478   259,110   2,050   264,638 

Construction

  373   -   -   373   86,645   575   87,593 

Commercial loans

  -   -   -   -   87,661   765   88,426 

Consumer and other loans

  -   -   -   -   5,545   -   5,545 

Total

 $4,428  $19  $-  $4,447  $664,943  $3,446  $672,836 
                             

At December 31, 2023

                            

Real estate mortgage loans:

                            

Commercial

 $57  $-  $-  $57  $223,738  $-  $223,795 

Residential and home equity

  3,792   492   1,110   5,394   248,227   953   254,574 

Construction

  648   -   -   648   80,410   582   81,640 

Commercial loans

  18   318   -   336   84,847   800   85,983 

Consumer and other loans

  28   -   -   28   5,908   -   5,936 

Total

 $4,543  $810  $1,110  $6,463  $643,130  $2,335  $651,928 

 

 

 

 

(continued)

16
 

PRIME MERIDIAN HOLDING COMPANY AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (unaudited), Continued

 

(3)

Loans, Continued

 

Loans are generally placed on nonaccrual status if principal or interest payments become 90 days past due and/or management deems the collectability of the principal and/or interest to be doubtful.  Loans are returned to accrual status when the principal and interest amounts contractually due are brought current or when future payments are reasonably assured. The following tables present the amortized cost basis of loans in nonaccrual status and loans past due over 90 days and still on accrual by class of loans and the related ACL, if any.  The amount of ACL attributed to the $765,000 commercial loan on nonaccrual was $556,000 at March 31, 2024 and December 31, 2023. 

 

                 
                 

(in thousands)

 

Total Nonaccrual Loans

  

Nonaccrual Loans with No ACL

  

Nonaccrual Loans with ACL

  

90+ Days Still Accruing

 

At March 31, 2024

                

Commercial real estate

 $56  $56  $-  $- 

Residential and home equity

  2,050   2,050   -   - 

Construction

  575   575   -   - 

Commercial

  765   -   765   - 

Total

 $3,446  $2,681  $765  $- 
                 
                 

At December 31, 2023

                

Residential and home equity

 $953  $953  $-  $1,110 

Construction

  582   582   -   - 

Commercial

  800   36   764   - 

Total

 $2,335  $1,571  $764  $1,110 

 

The restructuring of a loan exists if the creditor grants a modification as a result of financial hardship. A loan modification  may include an extension of repayment terms which would not normally be granted, a reduction in interest rate or the forgiveness of principal and/or accrued interest. The Company entered into no new restructured loans during the three months ended March 31, 2024 and 2023.

 

 

(continued)

 

17
 

 

PRIME MERIDIAN HOLDING COMPANY AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (unaudited), Continued

 

 

 

 

(4)

Allowance for Credit Losses

 

Activity in the ACL is summarized as follows:

 

  

Loans

 
  

Real Estate Mortgage Loans

             

(in thousands)

 

Commercial

  

Residential and Home Equity

  

Construction

  

Commercial Loans

  

Consumer and Other Loans

  

Total Funded Loans

 

Three Month Period Ended March 31, 2024

                        

Beginning balance

 $1,713  $2,034  $559  $1,272  $31  $5,609 

Credit loss expense

  23   84   40   53   11   211 

Charge-offs

  -   -       -   (27)  (27)

Recoveries

  -   -   -   -   3   3 

Ending balance

 $1,736  $2,118  $599  $1,325  $18  $5,796 
                         

Three Month Period Ended March 31, 2023

                        

Beginning balance

 $2,303  $2,607  $922  $1,223  $90  $7,145 

Impact of adopting ASC 326

  (740)  (892)  (403)  (504)  (67) $(2,606)

Credit loss expense

  43   27   21   143   9   243 

Charge-offs

  -   -   -   -   (15)  (15)

Recoveries

  -   -   -   33   2   35 

Ending balance

 $1,606  $1,742  $540  $895  $19  $4,802 

 

 

 

 

 

(continued)

18
 

PRIME MERIDIAN HOLDING COMPANY AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (unaudited), Continued

 

 

(5)

Regulatory Capital

 

The Bank is subject to various regulatory capital requirements administered by the banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s and the Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

 

The Bank is subject to the Basel III capital level threshold requirements under the Prompt Corrective Action regulations. These regulations were designed to ensure that banks maintain strong capital positions even in the event of severe economic downturns or unforeseen losses.

 

The Bank is subject to the capital conservation buffer rules which place limitations on distributions, including dividend payments, and certain discretionary bonus payments to executive officers. In order to avoid these limitations, a bank must hold a capital conservation buffer above its minimum risk-based capital requirements. As of March 31, 2024, the Bank’s capital conservation buffer exceeded the minimum requirement.

 

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and percentages (set forth in the table below) of total and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier 1 capital (as defined) to average assets (as defined). Management believes, as of  March 31, 2024, that the Bank meets all capital adequacy requirements to which it is subject.

 

As of March 31, 2024, the Bank is well capitalized under the regulatory framework for prompt corrective action. To be categorized as adequately capitalized, the Bank must maintain minimum total risk-based, Tier 1 risk-based, and Tier 1 leverage percentages as set forth in the table. There are no conditions or events since that notification that management believes have changed the Bank’s category. The Bank’s actual capital amounts and percentages are also presented in the following table.

 

          

For Capital Adequacy

  

For Well Capitalized

 
  

Actual

  

Purposes

  

Purposes

 

(dollars in thousands)

 

Amount

  

Percentage

  

Amount

  

Percentage

  

Amount

  

Percentage

 

As of March 31, 2024

                        

Tier 1 Leverage Capital

 $88,744   10.35%  34,301   4.00%  42,876   5.00%

Common Equity Tier 1 Risk-based Capital

  88,744   13.16   30,352   4.50   43,842   6.50 

Tier 1 Risk-based Capital

  88,744   13.16   40,470   6.00   53,960   8.00 

Total Risk-based Capital

  94,540   14.02   53,960   8.00   67,450   10.00 
                         

As of December 31, 2023

                        

Tier 1 Leverage Capital

 $86,576   10.15% $34,133   4.00% $42,666   5.00%

Common Equity Tier 1 Risk-based Capital

  86,576   13.18   29,566   4.50   42,706   6.50 

Tier 1 Risk-based Capital

  86,576   13.18   39,421   6.00   52,561   8.00 

Total Risk-based Capital

  92,185   14.03   52,561   8.00   65,702   10.00 

 

 

(continued)

 

19
 

 

PRIME MERIDIAN HOLDING COMPANY AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (unaudited), Continued

 

 

(6)

Earnings Per Share

 

Earnings per share, (“EPS”) have been computed on the basis of the weighted-average number of shares of common stock outstanding. For the three months ended March 31, 2024 and 2023, outstanding stock options are considered dilutive securities for purposes of calculating diluted EPS which was computed using the treasury stock method.

 

  

2024

  

2023

 
      

Weighted-

  

Per

      

Weighted-

  

Per

 
      

Average

  

Share

      

Average

  

Share

 

(dollars in thousands, except per share amounts)

 

Earnings

  

Shares

  

Amount

  

Earnings

  

Shares

  

Amount

 

Three Months Ending March 31:

                        

Basic EPS:

                        

Net earnings

 $1,931   3,275,401  $0.59  $2,501   3,175,807  $0.79 

Effect of dilutive securities-incremental shares from assumed conversion of stock options

      23,154           34,205     

Diluted EPS:

                        

Net earnings

 $1,931   3,298,555  $0.59  $2,501   3,210,012  $0.78 

 

 

 

 

 

(continued)

 

20
 

 

PRIME MERIDIAN HOLDING COMPANY AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (unaudited), Continued

 
 

(7)

Stock Benefit Plans

 

2015 Stock Incentive Compensation Plan 

 

The 2015 Stock Incentive Compensation Plan (the “2015 Plan”) permits the Company to grant the Company’s key employees and directors stock options, restricted stock, stock appreciation rights, performance shares, and phantom stock. Under the 2015 Plan, the number of shares which may be issued is 500,000 and limited to no more than 15% of the issued and outstanding shares of the Company's common stock at that time.  This is determined annually.

 

As of March 31, 2024, 127,349 shares are available to be issued under the 2015 Stock Plan as restricted stock, underlying options, or otherwise. A summary of the stock option activity for the three months ended March 31, 2024 and 2023 is as follows:

 

          

Weighted-

     
      

Weighted-

  

Average

     
      

Average

  

Remaining

  

Aggregate

 
  

Number of

  

Exercise

  

Contractual

  

Intrinsic

 
  

Options

  

Price

  

Term (years)

  

Value

 

Outstanding at December 31, 2022

  251,367  $19.99         

Options exercised

  (15,867)  17.25         

Options forfeited

  (50)  (20.09)        

Outstanding at March 31, 2023

  235,450  $20.67         

Options exercised

  (3,350)  (20.09)        

Options forfeited

  (10,000)  28.40         

Outstanding at December 31, 2023

  222,100  $20.33         

Options exercised

  (23,940)  (20.09)        

Options forfeited

  (250)  (20.09)        

Outstanding at March 31, 2024

  197,910  $20.36   2.4  $287,000 

Exercisable at March 31, 2024

  188,710  $20.19   2.3  $281,000 

 

The fair value of shares vested and recognized as compensation expense was $119,000 and $83,000 for the three months ended March 31, 2024 and 2023, respectively. These amounts include expense recognized on restricted common stock shares of $113,000 and $38,000 for the three months ended March 31, 2024 and 2023, respectively. The deferred tax benefit related to stock options was $1,000 and $5,000 for the three months ended March 31, 2024 and 2023, respectively. At March 31, 2024, there was $42,000 in unrecognized compensation expense related to unvested stock options granted under the 2015 Plan, with an average remaining vesting period of 2.3 years.  

 

 

(continued) 

 

21
 

 

PRIME MERIDIAN HOLDING COMPANY AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (unaudited), Continued

 

(7)

Stock Benefit Plans, Continued

 

Restricted Stock   

 

During the three months ended March 31, 2024 and 2023, the Company issued 9,790 and 3,834 restricted common stock shares, respectively, to some of its executives and employees. The restricted stock awards are on a three to five year vesting schedule.  Holders of restricted stock have the right to vote and the right to receive dividends declared on common stock, if any. A summary of restricted stock transactions follows:

 

 

      

Wtd-Avg

     
      

Grant-Date

     
  

Number of

  

Fair Value

  

Grant-Date Fair

 
  

Shares

  

per Share

  

Value

 

Non-vested restricted stock outstanding at December 31, 2022

  14,203  $25.30  $359,000 

Non-vested restricted stock granted

  3,834  $26.08   100,000 

Restricted stock shares vested

  (5,234)  (23.71)  (124,000)

Non-vested restricted stock outstanding at March 31, 2023

  12,803  $26.18  $335,000 

Non-vested restricted stock granted

  71,917  $22.50  $1,618,000 

Restricted stock shares vested

  (806)  (26.06)  (21,000)

Forfeited

  (6,278)  (23.42)  (147,000)

Non-vested restricted stock outstanding at December 31, 2023

  77,636  $22.99  $1,785,000 

Non-vested restricted stock granted

  9,790  $23.21  $227,000 

Restricted stock shares vested

  (5,234)  (25.10)  (131,000)

Non-vested restricted stock outstanding at March 31, 2024

  82,192  $22.88  $1,881,000 
             

 

At March 31, 2024, the Company had $1,776,000 in unrecognized expense related to unvested restricted shares to be recognized over a weighted-average period of 4.2 years.

 

Director s’ Plan
 
In 2012, the Company’s Board of Directors and shareholders adopted the Directors’ Plan. The Directors’ Plan permits the Company’s and the Bank’s non-employee directors to elect to receive any compensation to be paid to them in shares of the Company’s common stock. Pursuant to the Directors’ Plan, each non-employee director is permitted to make an election to receive shares of stock instead of cash. To encourage directors to elect to receive stock, the Directors’ Plan provides that if a director elects to receive stock, he or she will receive in common stock 110% of the amount of cash fees set by the Board or the Compensation Committee. The value of stock to be awarded pursuant to the Directors’ Plan will be the closing price of a share of common stock as traded on the Over-the-Counter Bulletin Board, or a price set by the Board or its Compensation Committee, acting in good faith, but in no case less than fair market value. The maximum number of shares to be issued pursuant to the Directors’ Plan is limited to 74,805 shares. For the three months ended March 31, 2024 and 2023  our directors received 1,654 and 1,573 shares of common stock, respectively, in lieu of cash fees calculated at 110% to be $41,000 and $40,000, respectively. At   March 31, 2024, 28,008 shares remained available for grant.  
 
 

(8)

Other Borrowings

 

In 2020, the Company entered into a Promissory Note (the "Note") and a Security Agreement with Thomasville National Bank ("TNB"). Pursuant to the Note, the Company obtained a $15 million revolving line of credit with a 5-year term. The interest rate on the line of credit adjusts daily to the then-current Wall Street Journal Prime Rate. At March 31, 2024, the interest rate was 8.50%. Pursuant to the Security Agreement, the Company has pledged to TNB all of the outstanding shares of common stock of the Company's wholly-owned subsidiary, the Bank. At March 31, 2024 and December 31, 2023, the Company had a zero outstanding loan balance under this line of credit.

 

The Company incurred $0 in interest expense related to the $15 million revolving line of credit for the three months ended March 31, 2024, compared to $111,000 for the three months ended March 31, 2023. 

 

22
 
 
 

(9)

Federal Home Loan Bank Advances

 

Federal Home Loan Bank of Atlanta (“FHLB”) advances are collateralized by a blanket lien on qualifying residential real estate, commercial real estate, home equity lines of credit and multi-family loans. Under this blanket lien, the Company could borrow up to $96.9 million at  March 31, 2024.   The following table details rate and maturity information for FHLB advances:

 

(dollars in thousands)

            

Maturity Year

 

Interest Rate

  

At March 31, 2024

  

At December 31, 2023

 

2024

  4.48% - 5.48%  $15,000  $10,000 

2025

  4.18%  5,000   5,000 
      $20,000  $15,000 

 

The Company incurred $255,000 and $0 in interest expense related to FHLB advances for the three months ended March 31, 2024 and 2023, respectively.
 

(10)

Derivative Financial Instruments

 

The Company has entered into interest rate swaps in order to provide commercial real estate loan clients the ability to swap from variable to fixed interest rates.  Under these agreements, the Company enters into a variable rate loan with a client at a specified index (Wall Street Journal Prime Lending Rate) in addition to a borrower swap agreement.  This swap agreement effectively converts the client’s variable rate loan into a fixed rate.  The Company then enters into a matching swap agreement with a third-party dealer counterparty in order to offset its exposure on the borrower swap. These interest rate swaps are considered derivative financial instruments.  These derivative instruments involve both credit and market risk.  The notional amounts are amounts on which calculations, payments, and the value of the derivatives are based.  Notional amounts do not represent direct credit exposures.  Direct credit exposure is limited to the net difference between the calculated amounts to be received and paid, if any, over the life of the contract.  Such differences, which represent the fair value of the derivative instruments, are included in “other assets” and “other liabilities” on the Company’s condensed consolidated balance sheets, and the net change in each of these financial statement line items in the accompanying condensed consolidated statements of cash flows.  The derivative transactions are considered instruments with no hedging designation, otherwise known as stand-alone derivatives.   

 

         
  

At March 31, 2024

  

At December 31, 2023

 

(dollars in thousands)

        

Notional amount - interest rate swaps:

        

Stand-alone derivatives

 $19,456  $19,548 
         

Weighted-average pay rate - interest rate swaps

  3.68%  3.68%

Weighted-average receive rate - interest rate swaps

  7.75%  7.75%

Weighted-average maturity (in years) - interest rate swaps

  11.3   11.6 
         

Net realized fair value adjustments:

        

Stand-alone derivatives - interest rate swaps (other assets)

 $2,509  $2,253 

Stand-alone derivatives - interest rate swaps (other liabilities)

 $(2,509) $(2,253)

 

The Company is party to a collateral support agreement with its dealer counterparty.  Such agreement requires that the Company or the dealer counterparty to maintain collateral based on the fair values of derivative instruments.  In the event of default by a counterparty the non-defaulting counterparty would be entitled to the collateral. The Company does not require borrower counterparties to post cash collateral based on the fair values of borrower interest rate swaps.  In the event of default of a borrower counterparty wherein the fair value of the derivative instrument is owed to the Company, the fair value is collected through a real property foreclosure or liquidation.     

 

23
 

 

PRIME MERIDIAN HOLDING COMPANY AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (unaudited), Continued

 

 

(11)

Fair Value of Financial Instruments

 

The estimated fair values and fair value measurement method with respect to the Company's financial instruments were as follows:

 

      

At March 31, 2024

  

At December 31, 2023

 
      

Carrying

  

Fair

  

Carrying

  

Fair

 

(in thousands)

 

Level

  

Amount

  

Value

  

Amount

  

Value

 

Financial assets:

                    

Cash and cash equivalents

  1  $23,474  $23,474   28,416   28,416 

Debt securities available for sale

  2   117,413   117,413   124,475   124,475 

Debt securities held to maturity

  2   11,861   10,328   11,850   10,358 

Loans held for sale

  3   3,583   3,640   5,288   5,371 

Loans, net

  3   666,826   580,748   646,127   557,847 

Federal Home Loan Bank stock

  3   1,548   1,548   1,283   1,283 

Accrued interest receivable

  3   3,465   3,465   3,114   3,114 

Bank-owned life insurance

  3   17,021   17,021   16,921   16,921 

Derivative contract assets

  2   2,509   2,509   2,253   2,253 
                     

Financial liabilities:

                    

Deposits

  3   751,713   752,561   748,688   749,411 

FHLB Advances

  3   20,000   19,881   15,000   14,848 

Derivative contract liabilities

  2   2,509   2,509   2,253   2,253 
                     

Off-Balance Sheet Items

  3   -   -      - 

 

Discussion regarding the assumptions used to compute the estimated fair values of financial instruments can be found in Note 1 to the consolidated financial statements included in the Company’s annual report on Form 10-K for the year ended  December 31, 2023.

 

24
 
 

 

PRIME MERIDIAN HOLDING COMPANY AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (unaudited), Continued

 

 

(12)

Off-Balance Sheet Financial Instruments

 

The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its clients. These financial instruments are commitments to extend credit, construction loans in process, unused lines of credit, standby letters of credit, and guaranteed accounts and may involve, to varying degrees, elements of credit and interest-rate risk in excess of the amount recognized in the condensed consolidated balance sheets. The contract amounts of these instruments reflect the extent of involvement the Company has in these financial instruments.

 

The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for available lines of credit, construction loans in process and standby letters of credit is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments as it does for on-balance sheet instruments.

 

Commitments to extend credit, construction loans in process and unused lines of credit are agreements to lend to a client as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since some of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each client’s credit worthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation of the counterparty.

 

Standby letters of credit are written conditional commitments issued by the Company to guarantee the performance of a client to a third party. These letters of credit are primarily issued to support third-party borrowing arrangements and generally have expiration dates within one year of issuance. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to clients. In the event the client does not perform in accordance with the terms of the agreement with the third party, we would be required to fund the commitment. The maximum potential amount of future payments we could be required to make is represented by the contractual amount of the commitment. If the commitment is funded, we would be entitled to seek recovery from the client. Some of the Company’s standby letters of credit are secured by collateral and those secured letters of credit totaled $642,000 at  March 31, 2024.

 

Guaranteed accounts are irrevocable standby letters of credit issued by us to guarantee a client’s credit line with our third-party credit card company, Card Assets and its issuing bank, First Arkansas Bank & Trust. As a part of this agreement, we are responsible for the established credit limit on certain accounts plus 10%. The maximum potential amount of future payments we could be required to make is represented by the dollar amount disclosed in the table below.

 

Standby letters of credit and commitments to extend credit typically result in loans with a market interest rate when funded.

 

As of March 31, 2024 and December 31, 2023, there was no credit loss expense included in the ACL for an unfunded loan commitment. 

 

The maximum potential amount of future payments we could be required to make for off-balance sheet financial instruments is represented by the dollar amount disclosed in the table below.

 

  

At March 31, 2024

 

(in thousands)

    

Commitments to extend credit

 $8,885 

Construction loans in process

 $34,733 

Unused lines of credit

 $81,806 

Standby financial letters of credit

 $2,230 

Standby performance letters of credit

 $89 

Guaranteed accounts

 $1,276 

 

 

(continued)

 

25
 

 

PRIME MERIDIAN HOLDING COMPANY AND SUBSIDIARY

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Management’s discussion and analysis is presented to aid the reader in understanding and evaluating the financial condition and results of operations of Prime Meridian Holding Company, and its wholly-owned subsidiary, Prime Meridian Bank. This discussion and analysis should be read with the condensed consolidated financial statements, the footnotes thereto, and the other financial data included in this report and in our annual report on Form 10-K for the year ended December 31, 2023. Results of operations for the three months ended March 31, 2024 are not necessarily indicative of results that may be attained for any other period. The following discussion and analysis present our financial condition and results of operations on a consolidated basis, however, because we conduct all of our material business operations through the Bank, the discussion and analysis relate to activities primarily conducted at the subsidiary level.

 

Certain information in this report may include “forward-looking statements” as defined by federal securities law. 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.

 

Our ability to predict results or the effect of future plans or strategies is inherently uncertain. Factors that could have a material adverse effect on our and our subsidiary’s operations include, but are not limited to, changes in:

 

 

•

local, regional, and national economic and business conditions;
 

•

banking laws, compliance, and the regulatory environment;
 

•

U.S. and global securities markets, public debt markets, and other capital markets;
 

•

monetary and fiscal policies of the U.S. Government;
 

•

litigation, tax, and other regulatory matters;
 

•

demand for banking services, both loan and deposit products in our market area;
 

•

quality and composition of our loan or investment portfolios;
 

•

risks inherent in making loans such as repayment risk and fluctuating collateral values;
 

•

competition;
 

•

attraction and retention of key personnel, including our management team and directors;
 

•

technology, product delivery channels, and end user demands and acceptance of new products;
 

•

consumer spending, borrowing and savings habits;
 

•

any failure or breach of our operational systems, information systems or infrastructure, or those of our third-party vendors and other service providers; including cyber-attacks;
 

•

natural disasters, public unrest, adverse weather, pandemics, public health, and other conditions impacting our or our clients’ operations;
 

•

other economic, competitive, governmental, regulatory, or technological factors affecting us; and
 

•

application and interpretation of accounting principles and guidelines.

 

26
 

 

GENERAL

 

Prime Meridian Holding Company (“PMHG”) was incorporated as a Florida corporation on May 25, 2010, and is the one-bank holding company for, and sole shareholder of, Prime Meridian Bank (the “Bank”) (collectively, the “Company”). The Bank opened for business on February 4, 2008 and was acquired by PMHG on September 16, 2010. PMHG has no significant operations other than owning the stock of the Bank. The Bank offers a broad array of commercial and retail banking services through four full-service offices located in Tallahassee, Crawfordville, and Lakeland, Florida and through its online banking platform. 

 

As a one-bank holding company, we generate most of our revenue from interest on loans and investments. Our primary source of funding for our loans is deposits. Our largest expenses are interest on those deposits and salaries and employee benefits. We measure our performance through our net interest margin, return on average assets, and return on average equity, while maintaining appropriate regulatory leverage and risk-based capital ratios.

 

The following table shows selected information for the periods ended or at the dates indicated:

 

   

At or for the

  
   

Three Months

    

Year

    

Three Months

  
   

Ended

    

Ended

    

Ended

  
   

March 31, 2024

    

December 31, 2023

    

March 31, 2023

  

Average equity as a percentage of average assets

     9.43 %     8.96 %     8.69 %

Equity to total assets at end of period

     9.44       9.36       8.90  

Return on average assets(1)

     0.91       1.07       1.23  

Return on average equity(1)

     9.61       11.91       14.20  

Noninterest expense to average assets(1)

     2.27       2.25       2.20  

Nonperforming loans to total loans at end of period

     0.51       0.53       0.22  

Nonperforming assets to total assets at end of period

     0.40       0.40       0.17  

 

(1) Annualized for the three months ended March 31, 2024 and 2023.

 

CRITICAL ACCOUNTING POLICIES

 

The preparation of our Consolidated Financial Statements in accordance with GAAP and reporting practices applicable to the Banking industry requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and to disclose contingent assets and liabilities. Actual results could differ from these estimates and result in material changes in our consolidated financial position and consolidated results of operations and related disclosures. Understanding our accounting policies is fundamental to understanding our consolidated financial position and consolidated results of operations. Accordingly, our significant accounting policies and changes in accounting principles and effects of new accounting pronouncements are discussed in Note 1 in this Quarterly Report on Form 10-Q and in Note 1 of our Annual Report on Form 10-K for the year ended December 31, 2023. As discussed in Note 1 of this Form 10-Q, our policy related to the allowance for credit losses "ACL" changed on January 1, 2023 in connection with adoption of ASC 326. The amount of the ACL represents management's best estimates of current expected credit losses considering available information relevant to assessing exposure to credit loss over the contractual term of the instrument. Management considers the effects of past events, current conditions, and reasonable and supportable forecasts of the collectability of the loan portfolio. The CECL model differs from the incurred loss model previously required in that the measurement of potential loss is required to be the life of the loan and is largely based on historical loss experience by loan type. Adjustments to historical loss information may be made based on an assessment of internal and external influences on credit quality not fully reflected in the quantitative components of the allowance model. These influences may include macroeconomic conditions, recent observable asset quality trends, regional market conditions, employment levels, and loan growth. Based upon management's assessment of these factors, the Company may apply qualitative adjustments to the allowance. While management utilizes its best judgment and information available, the adequacy of our allowance accounts is dependent upon a variety of factors beyond our control, including the performance of our portfolios, the economy, changes in interest rates and the view of the regulatory authorities toward classification of assets.

 

FINANCIAL CONDITION

 

Average interest-earning assets totaled $813.0 million and $770.0 million for the  three months ended March 31, 2024 and 2023, respectively, representing a period over period increase of $43.0 million, or 5.6%, due to a $58.0 million increase in the average balance of loans. The increase in loans was offset by decreases in the average balances of mortgage loans held for sale, debt securities and other interest-earning assets.  

 

Investment Securities . Our primary objective in managing our investment portfolio is to maintain a portfolio of high quality, highly liquid investments yielding competitive returns. We use the investment securities portfolio for several purposes. It serves as a vehicle to manage interest rate and prepayment risk, to generate interest income, to provide liquidity to meet funding requirements, and to provide collateral for pledging to secure the deposit of public funds at the Bank. At  March 31, 2024, our debt securities available for sale and held to maturity investment portfolios included highly rated U.S. government treasury and agency securities, U.S. agency mortgage-backed securities, asset-backed securities, and municipal securities.  As of the same date, the combined portfolio had a fair market value of $127.7 million and an amortized cost value of $140.1 million. At  March 31, 2024 and December 31, 2023, our investment securities portfolio represented approximately 15.0% and 16.0% of our total assets, respectively. The average yield on the average balance of investment securities for the three months ended March 31, 2024 was 2.68%, compared to 2.64% for the comparable period in 2023.   
 

Loans. Our primary interest-earning asset is our loan portfolio and our primary source of income is the interest earned on the loan portfolio. Our loan portfolio consists of commercial real estate loans, construction loans, and commercial loans made to small-to-medium sized companies and their owners, as well as residential real estate and home equity loans, including first and second mortgages, and consumer and other loans. Our goal is to maintain a high-quality portfolio of loans through sound underwriting and lending practices. We work diligently to attract new lending clients through direct solicitation by our loan officers, utilizing relationship networks from existing clients, competitive pricing, and innovative structure. Our loans are priced based upon the degree of risk, collateral, loan amount, and maturity.  At March 31, 2024 our net loan portfolio totaled $666.8 million compared to $646.1 million at December 31, 2023.

 

27
 

 

Commercial real estate ("CRE") loans represent the Company's second largest loan category.  Commercial real estate loans generally carry larger loan balances and can involve a greater degree of financial and credit risk than other loans.  The Company regularly monitors its CRE portfolio against regulatory concentration thresholds.  Additionally, the Company manages its risk in the CRE portfolio through, but no limited to, established policy limits on loan-to-value or loan-to-cost, the use of internal lending limits, annual reviews on borrowers and guarantors above certain total credit exposure thresholds, and minimum required debt service coverage ratios and borrower equity levels.

 

A summary of the Company's CRE portfolio by collateral type is as follows:

 

(dollars in thousands)

                        

At March 31, 2024

                        

Owner Occupied CRE

  

Amount

    

% of Total

    

Average Loan Size

  

Office

   $ 26,291       24.4 %   $ 325  

Retail

     42,208       39.2       1,005  

Warehouse

     18,663       17.3       667  

Restaurant

     7,050       6.5       705  

Other

     13,521       12.6       676  

Total

   $ 107,733       100.0 %   $ 595  
                         

Non-Owner Occupied CRE

                        

Office

   $ 15,846       13.3 %   $ 1,157  

Retail

     47,457       39.9       528  

Warehouse

     12,239       10.3       556  

Restaurant

     1,819       1.5       455  

Hotel

     20,837       17.5       3,473  

Other

     20,703       17.5       1,479  

Total

   $ 118,901       100.0 %   $ 1,016  
                         

At December 31, 2023

                        

Owner Occupied CRE

  

Amount

    

% of Total

    

Average Loan Size

  

Office

   $ 27,388       27.0 %   $ 334  

Retail

     39,007       38.4       1,011  

Warehouse

     19,014       18.7       656  

Restaurant

     5,998       5.9       666  

Other

     10,137       10.0       641  

Total

   $ 101,544       100.0 %   $ 591  
                         

Non-Owner Occupied CRE

                        

Office

   $ 49,377       40.4 %   $ 1,178  

Retail

     17,267       14.1       540  

Warehouse

     12,366       10.1       563  

Restaurant

     1,853       1.5       463  

Hotel

     20,982       17.2       3,497  

Other

     20,406       16.7       1,582  

Total

   $ 122,251       100.0 %   $ 1,021  

 

Nonperforming assets.  At March 31, 2024 and December 31, 2023, the Company had eleven nonperforming loans totaling $3.4 million. We generally place loans on nonaccrual status when they become 90 days or more past due, unless they are well secured and in the process of collection. We also place loans on nonaccrual status if they are less than 90 days past due if the collection of principal or interest is in doubt. When a loan is placed on nonaccrual status, any interest previously accrued, but not collected, is reversed from income. 

 

Allowance for Credit Losses. Management’s policy is to maintain the ACL at a level sufficient to absorb expected credit losses in the loan and debt securities portfolio as of the balance sheet date. The allowance is increased by credit loss expense and decreased by charge-offs, net of recoveries. The Bank reported credit loss expense of $211,000 for the quarter ended March 31, 2024. The Company implemented the provisions of the Current Expected Credit Losses ("CECL") accounting standard January 1, 2023, resulting in a $2.6 million decrease to the ACL.  Management believes the ACL, which was $5.8 million, or 0.86%, of gross loans at March 31, 2024 is adequate to cover expected credit losses in the loan portfolio.  

 

Deposits. Deposits are the major source of the Company’s funds for lending and other investment purposes. Total deposits at March 31, 2024 were $751.7 million, an increase of $3.0 million, or 0.40%, from December 31, 2023. Average deposit balances for the three-month period ending March 31, 2024 were up $17.4 million, or 2.4%, from the same period a year ago. The average balance of noninterest-bearing deposits accounted for 25.8% of the average balance of total deposits for the three months ended March 31, 2024, compared to 27.5% for the three months ended March 31, 2023.  The Bank's core deposit base is well diversified with a fairly balanced volume distribution between commercial (44%) and retail (48%) deposit accounts at March 31, 2024. Consumer accounts make up the remaining 8%. The Bank's estimated uninsured deposits were $300.2 million, or 39.9% of total deposits, including collateralized public fund accounts and $245.3 million, or 35.2% of total deposits, at March 31, 2024, excluding collateralized public fund accounts.  Given the current interest rate environment, management is closely monitoring potential future volatility in deposit balances. 

 

Borrowings. The Bank has an agreement with FHLB and pledges its qualified loans as collateral which would allow the Bank, as of March 31, 2024, to borrow up to $96.9 million. At March 31, 2024, the Bank had $20 million in FHLB advances. In addition, the Bank maintains unsecured lines of credit with correspondent banks that totaled $59.0 million at March 31, 2024. There were no outstanding balances under these unsecured lines of credit at March 31, 2024. 

 

In 2020, the Company entered into a Promissory Note and a Security Agreement with TNB. Pursuant to the Note, the Company obtained a $15 million revolving line of credit with a 5-year term. The interest rate adjusts daily to the then-current Wall Street Journal Prime Rate. Pursuant to the Security Agreement, the Company has pledged to TNB all of the outstanding shares of common stock of the Bank. At March 31, 2024, the Company had a zero balance under this line.

 

 

28
 

 

RESULTS OF OPERATIONS

 

Net interest income constitutes the principal source of income for the Bank and results from the excess of interest income on interest-earning assets over interest expense on interest-bearing liabilities. The principal interest-earning assets are investment securities and loans. Interest-bearing liabilities primarily consist of time deposits, interest-bearing checking accounts, savings deposits, and money-market accounts. Funds attracted by these interest-bearing liabilities are invested in interest-earning assets. Accordingly, net interest income depends upon the volume of average interest-earning assets and average interest-bearing liabilities as well as the interest rates earned or paid on these assets and liabilities. The following tables set forth information regarding: (i) the total dollar amount of interest and dividend income of the Company from interest-earning assets and the resultant average yields; (ii) the total dollar amount of interest expense on interest-bearing liabilities and the resultant average costs; (iii) net interest income; (iv) interest-rate spread; (v) net interest margin; and (vi) weighted-average yields and rates. Yields and costs were derived by dividing annualized income or expense by the average balance of assets or liabilities. The yields and costs depicted in the table include the amortization of fees, which are considered to constitute adjustments to yields.

 

As shown in the following tables, for the three months ended March 31, 2024, the Company's net interest margin declined 41 basis points to 3.51% when compared to the same period last year as the increase in cost of funds outpaced the increase in asset yields.  

 

   

For the Three Months Ended March 31,

  
   

2024

    

2023

  
           

Interest

                    

Interest

          
   

Average

    

and

    

Yield/

    

Average

    

and

    

Yield/

  

(dollars in thousands)

  

Balance

    

Dividends

    

Rate(5)

    

Balance

    

Dividends

    

Rate(5)

  

Interest-earning assets:

                                                

Loans(1)

   $ 660,024     $ 9,891       5.99 %   $ 602,022     $ 7,958       5.29 %

Loans held for sale

     4,878       71       5.82       7,345       86       4.68  

Debt securities

     133,588       896       2.68       141,268       933       2.64  

Other(2)

     14,538       207       5.70       19,335       222       4.59  

Total interest-earning assets

     813,028     $ 11,065       5.44 %     769,970     $ 9,199       4.78 %

Noninterest-earning assets

     39,534                       40,538                  

Total assets

   $ 852,562                     $ 810,508                  
                                                 

Interest-bearing liabilities:

                                                

Savings, NOW and money-market deposits

   $ 464,991     $ 2,828       2.43 %   $ 482,788     $ 1,387       1.15 %

Time deposits

     84,832       849       4.00       42,099       146       1.39  

Total interest-bearing deposits

     549,823       3,677       2.68       524,887       1,533       1.17  

Other borrowings and FHLB advances

     21,131       255       4.83       7,301       111       6.08  

Total interest-bearing liabilities

     570,954     $ 3,932       2.75 %     532,188     $ 1,644       1.24 %

Noninterest-bearing deposits

     191,302                       198,790                  

Noninterest-bearing liabilities

     9,948                       9,074                  

Stockholders' equity

     80,358                       70,456                  

Total liabilities and stockholders' equity

   $ 852,562                     $ 810,508                  
                                                 

Net earning assets

   $ 242,074                     $ 237,782                  

Net interest income

           $ 7,133                     $ 7,555          

Interest rate spread (3)

                     2.69 %                     3.54 %

Net interest margin(4)

                     3.51 %                     3.92 %
                                                 

Ratio of interest-earning assets to average interest-bearing liabilities

     142.40 %                     144.68 %                

 

(1) Includes nonaccrual loans

(2) Other interest-earning assets includes federal funds sold, interest-bearing deposits and FHLB stock.

(3) Interest rate spread is the difference between the 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

 

29
 

 

Comparison of Operating Results for the THREE MONTHS ENDED mARCH 31, 2024 AND 2023

 

Earnings Summary

                                

(dollars in thousands)

                                
                   

Change 1Q'24 vs. 1Q'23

  
   

1Q'24

    

1Q'23

    

Amount

    

Percentage

  

Net Interest Income

   $ 7,133     $ 7,555     $ (422 )     (5.6 )%

Credit loss expense

     211       243       (32 )     (13.2 )

Noninterest income

     453       441       12       2.7  

Noninterest expense

     4,841       4,455       386       8.7  

Income Taxes

     603       797       (194 )     (24.3 )

Net earnings

   $ 1,931     $ 2,501     $ (570 )     (22.8 )%

 

Net Interest Income

 

Our operating results depend primarily on our net interest income, which is the difference between interest and dividend income on interest-earning assets such as loans and debt securities, and interest expense on interest-bearing liabilities such as deposits, other borrowings, and FHLB advances.

 

Interest income

                                

(dollars in thousands)

                                
                   

Change 1Q'24 vs. 1Q'23

  
   

1Q'24

    

1Q'23

    

Amount

    

Percentage

  

Interest income:

                                

Loans

   $ 9,962     $ 8,044     $ 1,918       23.8 %

Debt securities

     896       933       (37 )     (4.0 )

Other

     207       222       (15 )     (6.8 )

Total interest income

     11,065       9,199       1,866       20.3 %

Interest expense:

                                

Deposits

     3,677       1,533       2,144       139.9 %

Other borrowings and FHLB advances

     255       111       144       129.7  

Total interest expense

     3,932       1,644       2,288       139.2  

Net interest income

   $ 7,133     $ 7,555     $ (422 )     (5.6 )%

 

Net interest income for the first quarter of 2024 was negatively impacted by a higher cost of funds, narrowing net interest rate spread, and change in funding mix. From the first quarter of 2023, the average balance of interest-earnings assets increased $43.1 million (5.6%) and the average yield increased 66 basis points to 5.44%, while the average balance of interest-bearing liabilities increased $38.8 million (7.3%) and the average cost of interest-bearing liabilities expanded from 1.24% to 2.75%.  The Company's net interest margin ("NIM") was 3.51% for the first quarter of 2024 compared to 3.92% for the same period a year ago.

 

Credit Loss Expense

 

Credit loss expense is charged to earnings to increase the ACL to a level deemed appropriate by management. The expense is based upon the volume and type of lending conducted by the Company, industry standards, general economic conditions, particularly as they relate to our market areas, and other factors related to our historic loss experience and the collectability of the loan portfolio. The Company recorded credit loss expense of $211,000 for the first quarter of 2024 due primarily to funded loan growth during the quarter compared to $243,000 for the first quarter of 2023 due to fully reserving for a $125,000 PPP loan and funded loan growth during the quarter. 

 

The ACL to total loans was 0.86% at  March 31, 2024. While management believes the estimates and assumptions used in its determination of the adequacy of the ACL are reasonable, there can be no assurance that such estimates and assumptions will not be proven incorrect in the future, or that the actual amount of future losses will not exceed the amount of the established ACL, or that any increases to the ACL that may be required will not adversely impact our financial condition and results of operations. In addition, the determination of the amount of our ACL is subject to review by bank regulators, as part of the routine examination process, which may result in additions to our ACL based upon their judgment of information available to them at the time of examination.     

 

30
 

 

Noninterest income

                                

(dollars in thousands)

                  

Change 1Q'24 vs. 1Q'23

  
   

1Q'24

    

1Q'23

    

Amount

    

Percentage

  

Service charges and fees on deposit accounts

   $ 69     $ 85     $ (16 )     (18.8 )%

Debit card/ATM revenue, net

     158       151       7       4.6  

Mortgage banking revenue, net

     71       54       17       31.5  

Income from bank-owned life insurance

     100       94       6       6.4  

Other income

     55       57       (2 )     (3.5 )

Total noninterest income

   $ 453     $ 441     $ 12       2.7 %

 

Compared to the same period a year ago, a $17,000, or 31.5% increase, in mortgage banking revenue was primarily offset by a $16,000, or 18.8%, decrease in services charges and fees on deposit accounts mostly due to lower nonsufficient funds fees. 

 

Noninterest expense

                                

(dollars in thousands)

                  

Change 1Q'24 vs. 1Q'23

  
   

1Q'24

    

1Q'23

    

Amount

    

Percentage

  

Salaries and employee benefits

   $ 2,865     $ 2,752     $ 113       4.1 %

Occupancy and equipment

     405       409       (4 )     (1.0 )

Professional fees

     154       135       19       14.1  

Marketing

     274       223       51       22.9  

FDIC Assessment

     108       84       24       28.6  

Software maintenance, amortization and other

     404       277       127       45.8  

Other

     631       575       56       9.7  

Total noninterest expense

   $ 4,841     $ 4,455     $ 386       8.7 %

 

Operating expenses are up 8.7% over the same period a year ago and mostly attributed to higher expense for software maintenance, amortization and other (due to a core conversion in the fourth quarter of 2023) and salaries and employee benefits. Higher salaries, insurance and stock option expense were partially offset by lower incentive payout. This was followed by increases in marketing, FDIC deposit insurance, and other noninterest expense (mostly travel).  FTEs have increased from 109 at March 31, 2023 to 114 at March 31, 2024.

 

Income Taxes

 

Income taxes are based on amounts reported in the condensed consolidated statements of earnings after adjustments for nontaxable income and nondeductible expenses and consist of taxes currently due plus deferred taxes on temporary differences in the recognition of income and expense for tax and financial statement purposes. Income taxes were $603,000 for the three months ended March 31, 2024, compared to income taxes of $797,000 for the three months ended March 31, 2023 with the decrease attributed to lower pre-tax earnings. 

 

31
 

 

LIQUIDITY

 

Liquidity describes our ability to meet financial obligations, including lending commitments and contingencies, which arise during the normal course of business. Liquidity is primarily needed to meet the borrowing and deposit withdrawal requirements of the Company’s clients, as well as meet current and planned expenditures. Management monitors the liquidity position daily.

 

Our liquidity is derived primarily from our deposit base, scheduled amortization and prepayments of loans and debt securities, funds provided by operations, and capital. Additionally, as a commercial bank, we are expected to maintain an adequate liquidity position. The liquidity position may consist of cash on hand, cash on demand deposit with correspondent banks, federal funds sold, and unpledged debt securities such as United States government treasury and agency securities, U.S. agency mortgage-backed securities, asset-backed securities, and municipal securities. Some of our securities are pledged to collateralize certain deposits through our participation in the State of Florida’s QPD program. The market value of debt securities pledged to the QPD program was $16.3 million at March 31, 2024 and $16.4 million at December 31, 2023. At March 31, 2024, on-balance sheet liquidity (consisting of cash and cash equivalents and debt securities at fair value eligible for pledging) was $134.9 million compared to $146.8 million at December 31, 2023. 

 

The Bank also has external sources of funds through the FHLB and unsecured lines of credit with correspondent banks. At March 31, 2024, the Bank had access to approximately $96.9 million of available lines of credit secured by qualifying collateral with the FHLB, in addition to $59.0 million in unsecured lines of credit maintained with correspondent banks.  The Bank had $20 million in FHLB advances at March 31, 2024. The Company also has a $15 million revolving line of credit with TNB that matures in August 2025. As of March 31, 2024, the Company had a zero outstanding balance under this line. At March 31, 2024, available secured and unsecured borrowing capacity was $170.9 million.  When combined with maximum available brokered and wholesale funding capacity of $215.7 million, off balance sheet funding sources totaled $386.6 million.

 

Our core deposits consist of noninterest-bearing accounts, NOW accounts, money-market accounts, time deposits $250,000 or less, and savings accounts. We closely monitor our level of certificates of deposit greater than $250,000 and other large deposits. At March 31, 2024, total deposits were $751.7 million, of which $41.0 million were in certificates of deposits greater than $250,000. Deposit balances increased $3.0 million, or 0.40%, since December 31, 2023.  The Bank's estimated uninsured deposits were $300.2 million, or 39.9% of total deposits, including collateralized public fund accounts and $245.3 million, or 35.2% of total deposits, excluding collateralized public fund accounts.   

 

At March 31, 2024, total liquidity sources of $521.5 million, or 69.4% of total deposits, represent 174% of estimated uninsured deposits, including collateralized public fund accounts. 

 

We maintain a Contingency Funding Plan (“CFP”) that identifies liquidity needs and weighs alternate courses of action designed to address those needs in emergency situations. We perform a monthly cash flow analysis and stress test the CFP to evaluate the expected funding needs and funding capacity during a liquidity stress event. We believe that the sources of available liquidity are adequate to meet all reasonably immediate short-term and intermediate-term demands and do not know of any trends, events, or uncertainties that may result in a significant adverse effect on our liquidity position.

 

CAPITAL RESOURCES

 

Stockholders’ equity was $81.4 million at March 31, 2024 compared to $80.0 million at December 31, 2023. Retained earnings and the exercise of employee and director stock options during the first quarter were the main reasons for the $1.5 million increase in equity.  In 2020, the Company obtained a $15 million 5-year revolving line of credit with TNB. At its discretion, the Company may take draws on that line and may contribute the proceeds as capital to the Bank.  At March 31, 2024, the Company had a zero balance under this line of credit.  

 

At March 31, 2024, the Bank was considered to be “well capitalized” under the FDIC’s Prompt Corrective Action regulations.

 

The following is a summary at March 31, 2024 and December 31, 2023 of the regulatory capital requirements to be “well capitalized” and the Bank’s capital position.

 

                   

For Capital Adequacy

    

For Well Capitalized

  
   

Actual

    

Purposes

    

Purposes

  

(dollars in thousands)

  

Amount

    

Percentage

    

Amount

    

Percentage

    

Amount

    

Percentage

  

As of March 31, 2024

                                                

Tier 1 Leverage Capital

   $ 88,744       10.35 %     34,301       4.00 %     42,876       5.00 %

Common Equity Tier 1 Risk-based Capital

     88,744       13.16       30,352       4.50       43,842       6.50  

Tier 1 Risk-based Capital

     88,744       13.16       40,470       6.00       53,960       8.00  

Total Risk-based Capital

     94,540       14.02       53,960       8.00       67,450       10.00  
                                                 

As of December 31, 2023

                                                

Tier 1 Leverage Capital

   $ 86,576       10.15 %   $ 34,133       4.00 %   $ 42,666       5.00 %

Common Equity Tier 1 Risk-based Capital

     86,576       13.18       29,566       4.50       42,706       6.50  

Tier 1 Risk-based Capital

     86,576       13.18       39,421       6.00       52,561       8.00  

Total Risk-based Capital

     92,185       14.03       52,561       8.00       65,702       10.00  

 

 

32
 

 

The Bank is also subject to the following capital level threshold requirements under the FDIC’s Prompt Corrective Action regulations.

 

   

Threshold Ratios

Capital Category

  

Total Risk-Based Capital Ratio

  

Tier 1 Risk-Based Capital Ratio

  

Common Equity Tier 1 Risk-Based Capital Ratio

  

Tier 1 Leverage Capital Ratio
                 

Well capitalized

  

10.00%

  

8.00%

  

6.50%

  

5.00%
                 

Adequately Capitalized

  

8.00%

  

6.00%

  

4.50%

  

4.00%
                 

Undercapitalized

  

< 8.00%

  

< 6.00%

  

< 4.50%

  

< 4.00%
                 

Significantly Undercapitalized

  

< 6.00%

  

< 4.00%

  

< 3.00%

  

< 3.00%
                 

Critically Undercapitalized

  

Tangible Equity/Total Assets ≤ 2%

 

Until such time as PMHG has $3 billion in total consolidated assets, it will not be subject to any consolidated capital requirements.

 

OFF-BALANCE SHEET ARRANGEMENTS

 

Refer to Note 12 in the notes to condensed consolidated financial statements included in this Form 10-Q for the period ending March 31, 2024 for a discussion of off-balance sheet arrangements.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

Not applicable

 

33
 

 

Item 4. Controls and Procedures

 

(a) Evaluation of Disclosure Controls and Procedures

 

We maintain controls and procedures designed to ensure that information required to be disclosed in the reports that the Company files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. Based upon management’s evaluation of those controls and procedures performed within the 90 days preceding the filing of this Report, our Principal Executive Officer and Principal Financial Officer concluded that, subject to the limitations noted below, the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) are effective to ensure that the information required to be disclosed by PMHG in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the U.S. Securities and Exchange Commission’s rules and forms.

 

We intend to continually review and evaluate the design and effectiveness of the Company’s disclosure controls and procedures and to improve the Company’s controls and procedures over time and to correct any deficiencies that we may discover in the future. The goal is to ensure that senior management has timely access to all material financial and nonfinancial information concerning the Company’s business. While we believe the present design of the disclosure controls and procedures is effective to achieve its goal, future events affecting its business may cause the Company to modify its disclosure controls and procedures.

 

(b) Changes in Internal Controls

 

We have made no significant changes in our internal controls over financial reporting during the quarter ended March 31, 2024 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

 

(c) Limitations on the Effectiveness of Controls

 

Our management, including our Principal Executive Officer and Principal Financial Officer, does not expect that our disclosure controls and internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control.

 

The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

 

34
 

 

PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings

 

From time to time, we are a party to various matters incidental to the conduct of a banking business. Presently, we believe that we are not a party to any legal proceedings in which resolution would have a material adverse effect on our business, prospects, financial condition, liquidity, results of operation, cash flows, or capital levels.

 

Item 1A. Risk Factors

 

While the Company attempts to identify, manage, and mitigate risks and uncertainties associated with its business to the extent practical under the circumstances, some level of risk and uncertainty will always be present. Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023 describes some of the risks and uncertainties associated with our business. These risks and uncertainties have the potential to materially affect our cash flows, results of operations, and financial condition.  The Company has updated one risk factor since the publication of our Form 10-K for the year ended December 31, 2023.

 

The Florida property insurance market is in crises and the inability of our borrowers to obtain insurance on properties securing our loans may adversely affect the value of the collateral, the performance of our loan portfolio, and our ability to make loans secured by real estate.

Florida is susceptible to hurricanes, tropical storms and related flooding and wind damage and other similar weather events. Such events can disrupt operations, result in damage to properties and negatively affect the local economies in our markets. As a result of the potential for such weather events, many of our clients have incurred significantly higher insurance premiums, or been unable to secure insurance, on their properties. This may adversely affect real estate sales and values in our markets and leave our borrowers without funds to repay their loans in the event of destructive weather events. Such events could result in a decline in loan originations, a decline in the value or destruction of properties securing loans and a decrease in credit quality, negatively impacting our business and results of operations.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

During the first quarter of 2024, the Company issued 1,654 shares to members of its Board of Directors in lieu of cash fees calculated at 110% to be $41,000.  Additionally, the Company issued 9,790 restricted stock shares to certain employees. These shares were all issued in accordance with SEC Rule 701 and the intrastate exemption from registration pursuant to Section 3(a)(11) of the Securities Act of 1933, because the Company is doing business within the State of Florida and each acquirer and offeree of securities is a director of the Company and resides within the State of Florida. 

 

Item 3. Defaults Upon Senior Securities

 

Not applicable.

 

Item 4. Mine Safety Disclosures

 

Not applicable.

 

 

Item 5. Other Information

 

Not applicable.

 

35
 
 
 

Item 6. Exhibits

 

The following exhibits are filed with or incorporated by reference into this Report.

 

Exhibit
Number

  

Description of Exhibit

  

Incorporated by Reference From or Filed Herewith
         

3.1

  

Articles of Incorporation

  

Exhibit 3.1 to Registration Statement on Form S-1 filed on October 18, 2013
         

3.2

  

Bylaws

  

Exhibit 3.2 to Registration Statement on Form S-1 filed on October 18, 2013
         
3.3   First Amendment to Bylaws dated December 17, 2015   Exhibit 3.3 to Form 10-Q filed on August 11, 2016
         
3.4   Second Amendment to Bylaws dated January 17, 2019   Exhibit 3.4 to Form 8-K filed on January 18, 2019
         
    3.5   Third Amendment to Bylaws dated February 18, 2021   Exhibit 3.5 to Form 8-K filed on February 18, 2021
         

4.1

  

Specimen Common Stock Certificate

  

Exhibit 4.1 to Registration Statement on Form S-1 filed on October 18, 2013
         

31.1

  

Certification Under Section 302 of Sarbanes-Oxley by Sammie D. Dixon, Jr., Principal Executive Officer

  

Filed herewith
         

31.2

  

Certification Under Section 302 of Sarbanes-Oxley by Clint F. Weber, Principal Financial Officer

  

Filed herewith
         

32.1

  

Certification by the Chief Executive Officer and the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of Sarbanes-Oxley

  

Filed herewith
         

101.INS

  

Inline XBRL Instance Document

  

Filed herewith
         

101.SCH

  

Inline XBRL Taxonomy Extension Schema Document

  

Filed herewith
         

101.CAL

  

Inline XBRL Taxonomy Extension Calculation Linkbase Document

  

Filed herewith
         

101.DEF

  

Inline XBRL Taxonomy Extension Definitions Linkbase  Document

  

Filed herewith
         

101.LAB

  

Inline XBRL Taxonomy Extension Label Linkbase Document

  

Filed herewith
         

101.PRE

  

Inline XBRL Taxonomy Extension Presentation Linkbase  Document

  

Filed herewith
         
104   Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).    

 

*     Furnished, not filed, for purposes of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934.

 

36
 

 

SIGNATURES

 

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 thereunto duly authorized.

 

 

PRIME MERIDIAN HOLDING COMPANY
   
   

May 9, 2024

    

 

   /s/ Sammie. D. Dixon, Jr.
     

Date

  

Sammie D. Dixon, Jr.

 

  

Vice Chairman, Chief Executive Officer, President,

 

  

and Principal Executive Officer
May 9, 2024    

 

By:

/s/ Clint F. Weber
     

Date

 

Clint F. Weber

 

  

Chief Financial Officer, Executive Vice President,

Principal Accounting Officer and Principal Financial Officer

 

 

 

 

 

 

 

 

37
ATTACHMENTS / EXHIBITS

ATTACHMENTS / EXHIBITS

EXHIBIT 31.1

EXHIBIT 31.2

EXHIBIT 32.1

XBRL TAXONOMY EXTENSION SCHEMA

XBRL TAXONOMY EXTENSION CALCULATION LINKBASE

XBRL TAXONOMY EXTENSION DEFINITION LINKBASE

XBRL TAXONOMY EXTENSION LABEL LINKBASE

XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE

IDEA: R1.htm

IDEA: R2.htm

IDEA: R3.htm

IDEA: R4.htm

IDEA: R5.htm

IDEA: R6.htm

IDEA: R7.htm

IDEA: R8.htm

IDEA: R9.htm

IDEA: R10.htm

IDEA: R11.htm

IDEA: R12.htm

IDEA: R13.htm

IDEA: R14.htm

IDEA: R15.htm

IDEA: R16.htm

IDEA: R17.htm

IDEA: R18.htm

IDEA: R19.htm

IDEA: R20.htm

IDEA: R21.htm

IDEA: R22.htm

IDEA: R23.htm

IDEA: R24.htm

IDEA: R25.htm

IDEA: R26.htm

IDEA: R27.htm

IDEA: R28.htm

IDEA: R29.htm

IDEA: R30.htm

IDEA: R31.htm

IDEA: R32.htm

IDEA: R33.htm

IDEA: R34.htm

IDEA: R35.htm

IDEA: R36.htm

IDEA: R37.htm

IDEA: R38.htm

IDEA: R39.htm

IDEA: R40.htm

IDEA: R41.htm

IDEA: R42.htm

IDEA: R43.htm

IDEA: R44.htm

IDEA: R45.htm

IDEA: R46.htm

IDEA: R47.htm

IDEA: R48.htm

IDEA: R49.htm

IDEA: R50.htm

IDEA: R51.htm

IDEA: R52.htm

IDEA: R53.htm

IDEA: R54.htm

IDEA: R55.htm

IDEA: Financial_Report.xlsx

IDEA: FilingSummary.xml

IDEA: MetaLinks.json

IDEA: pmhg20240331_10q_htm.xml