Prime Meridian Holding (PMHG) 8-K Prime Meridian Holding Company Reports Fourth Quarter AND FULL YEAR 2019 Results

Exhibit 99.1

FOR IMMEDIATE RELEASE

Prime Meridian Holding Company Reports

Fourth Quarter AND FULL YEAR 2019 Results

TALLAHASSEE, FL – January 30, 2020 (GLOBE NEWSWIRE) – Prime Meridian Holding Company (OTCQX: PMHG) the parent bank holding company for Prime Meridian Bank today announced unaudited financial results for the quarter and year ended December 31, 2019. The Company reported net earnings of $947,000, or $0.29 per basic and diluted share, for the quarter ended December 31, 2019, compared to net earnings of $1,268,000, or $0.40 per basic and diluted share, for the quarter ended December 31, 2018. The Company reported net earnings of $3,542,000 or $1.12 per basic and diluted share, for the year ended December 31, 2019, compared to net earnings of $4,042,000 or $1.29 per basic and diluted share, for the year ended December 31, 2018.

The Company also announced today that its Board of Directors declared an annual cash dividend of $0.12 per share of the Company's common stock.  The dividend is payable on March 3, 2020 to shareholders of record on February 13, 2020.

"Exceptional loan growth in the third and fourth quarters of 2019, coupled with already-strong deposit growth, are providing strong momentum heading into 2020 as assets rose just over $500 million, as of December 31, 2019," said Sammie D. Dixon, Jr., Vice Chairman, President, and CEO of the Bank. "We completed our first out-of-market expansion last year and expect the Lakeland office to establish our brand and increase market share in Polk County in 2020."

Mortgage revenue continued to be a bright spot, with year-over-year net revenue up 49.2%. "Traditionally, mortgage lending is weaker during the fourth quarter," added Dixon, "However, our mortgage team exceeded performance expectations posting record numbers for October and November, increasing net mortgage revenue 97.2% over the fourth quarter of 2018. Debit card/ATM net revenue increased 31.9% year over year as well and continues to be a growing source of noninterest income."

The Board recently approved the Company's fifth consecutive annual dividend. "Our outlook is as positive as it's ever been," said Dixon. "We are looking forward to steady growth in all markets."

Fourth Quarter 2019 Highlights

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

(dollars in thousands except per share amounts)

	4Q'19			3Q'19			2Q'19			1Q'19			4Q'18
Net earnings	$	947		$	964		$	764		$	867		$	1,268
Book value per share	$	17.51		$	17.25		$	16.85		$	16.44		$	16.19
Earnings per share - Basic	$	0.29		$	0.31		$	0.24		$	0.28		$	0.40
Earnings per share - Diluted	$	0.29		$	0.31		$	0.24		$	0.28		$	0.40
Weighted-average basic shares outstanding		3,190,933			3,147,696			3,144,068			3,140,401			3,131,379
Weighted-average diluted shares outstanding		3,195,793			3,151,321			3,150,136			3,144,071			3,136,048
Return on average assets(1)		0.75	%		0.83	%		0.70	%		0.82	%		1.07	%
Return on average equity(1)		6.84			7.14			5.85			6.79			8.43
Average yield on earning assets(1)		4.17			4.48			4.49			4.48			4.52
Net interest margin(1)		3.36			3.63			3.66			3.67			3.75
Efficiency ratio(2)		60.40			65.03			71.52			67.45			59.02
Nonperforming assets/total assets(3)		0.52			0.54			0.44			0.14			0.09

⁽¹⁾ Ratio has been annualized

⁽²⁾ Efficiency Ratio represents noninterest expense divided by the sum of net interest income plus noninterest income.

⁽³⁾ Nonperforming assets exclude troubled debt restructuring loans (TDRs)

Earnings Summary (Unaudited)

(dollars in thousands)

							Change 4Q'19 vs.
	4Q'19		3Q'19		4Q'18		3Q'19			4Q'18
Net Interest Income	$	3,991	$	3,980	$	3,666		0.3	%		8.9	%
Provision for Loan Losses		546		241		47		126.6			1,061.7
Noninterest income		428		370		302		15.7			41.7
Noninterest expense		2,669		2,829		2,342		(5.7	)		14.0
Income Taxes		257		316		311		(18.7	)		(17.4	)
Net earnings	$	947	$	964	$	1,268		(1.8	)%		(25.3	)%

On a linked quarter basis, the Company’s net income in the fourth quarter of 2019 benefited from a 15.7% increase in noninterest income and lower noninterest expense and income tax expense. These results were offset by a $305,000 increase in the provision for loan losses, resulting in a $17,000 decrease in net income. 

Compared to the same period a year ago, the decrease in the Company's fourth quarter net income is primarily attributed to a $499,000 increase in the provision for loan losses and a $327,000 increase in noninterest expense.  These increases were partially offset by the $325,000 increase in net interest income, $126,000 increase in noninterest income and lower income tax expense. 

	For the Year Ended December 31,
	2019		2018		$ Change			% Change
Net interest income	$	15,417	$	13,927	$	1,490			10.7	%
Provision for loan losses		1,131		591		540			91.4
Noninterest income		1,534		1,155		379			32.8
Noninterest expense		11,186		9,229		1,957			21.2
Income taxes		1,092		1,220		(128	)		(10.5	)
Net earnings	$	3,542	$	4,042	$	(500	)		(12.4	)%

Year over year, the Company's $500,000 decrease in net income is attributed to increases in the provision for loan losses and noninterest expense. Increases in net interest income and noninterest income and a decrease in income tax expense helped offset the impact of the increased provision and noninterest expense. 

Interest income (Unaudited)

(dollars in thousands)

							Change 4Q'19 vs.
	4Q'19		3Q'19		4Q'18		3Q'19			4Q'18
Interest income:
Loans	$	4,237	$	4,179	$	3,854		1.4	%		9.9	%
Securities		342		338		280		1.2			22.1
Other		378		402		280		(6.0	)		35.0
Total interest income	$	4,957	$	4,919	$	4,414		0.8	%		12.3	%

The increase in total interest income in the fourth quarter of 2019 compared to the fourth quarter of 2018 primarily reflects the Company's loan growth, with the average balance of loans growing 11.7% since the fourth quarter of 2018.  Net loan growth during the first half of 2019 was negatively impacted by a high level of loan participation payoffs, but the Company saw an increase in loan origination activity in the  second half of the year with net loans increasing $47.6 million, or 16.4%, since December 31, 2018. Despite a decrease in yields on securities and other interest-earning assets since the fourth quarter of last year, higher average balances of securities and other interest-earning assets also helped drive higher interest income.  

	For the Year Ended December 31,
	2019		2018		$ Change		% Change
Interest income:
Loans	$	16,188	$	14,469	$	1,719		11.9	%
Securities		1,309		1,131		178		15.7
Other		1,489		634		855		134.9
Total interest income	$	18,986	$	16,234	$	2,752		17.0	%

Year over year, a higher volume of loans and other interest-earnings assets was the key driver of the increase in total interest income.  

2

Interest expense: (Unaudited)

(dollars in thousands)

							Change 4Q'19 vs.
	4Q'19		3Q'19		4Q'18		3Q'19			4Q'18
Total interest expense	$	966	$	939	$	748		2.9	%		29.1	%

The increase in total interest expense on a linked quarter basis and compared to the fourth quarter of 2018 was driven by growing balances of time deposits and money-market accounts, with the average balance of total interest-bearing deposits up 8.9% since the third quarter of 2019 and up 24.6% since the fourth quarter of 2018. 

	For the Year Ended December 31,
	2019		2018		$ Change		% Change
Total interest expense	$	3,569	$	2,307	$	1,262		54.7	%

Year over year, the average balance of interest-bearing deposits increased $55.7 million in 2019, while the average rate paid on these deposits increased 24 basis points, leading to the 54.7% increase in total interest expense year over year. Management strategically began reducing rates in the fourth quarter of 2019 in tandem with the three rate cuts by the Federal Reserve in the latter part of 2019.

Margin Analysis (Unaudited)

dollars in thousands

	4Q'19							3Q'19							4Q'18
			Interest							Interest							Interest
	Average		and		Yield/			Average		and		Yield/			Average		and		Yield/
	Balance		Dividends		Rate			Balance		Dividends		Rate			Balance		Dividends		Rate
Interest-earning assets:
Loans(1)	$	329,980	$	4,160		5.04	%	$	313,595	$	4,093		5.22	%	$	295,516	$	3,793		5.13	%
Mortgage loans held for sale		7,026		77		4.38			7,164		86		4.80			4,850		61		5.03
Securities		57,203		342		2.39			53,507		338		2.53			44,872		280		2.50
Other(2)		81,169		378		1.86			64,794		402		2.48			45,629		280		2.45
Total interest-earning assets		475,378	$	4,957		4.17	%		439,060	$	4,919		4.48	%		390,867	$	4,414		4.52	%
Noninterest-earning assets		26,500							26,699							16,126
Total assets	$	501,878						$	465,759						$	406,993
Interest-bearing liabilities:
Savings, NOW and money-market deposits	$	274,903	$	617		0.90	%	$	255,563	$	629		0.98	%	$	231,299	$	563		0.97	%
Time deposits		64,305		345		2.15			56,000		305		2.18			40,944		185		1.81
Total interest-bearing deposits		339,208		962		1.13			311,563		934		1.20			272,243		748		1.10
Other borrowings		1,307		4		1.22			1,249		5		1.60			-		-		-
Total interest-bearing liabilities		340,515		966		1.13	%		312,812	$	939		1.20	%		272,243	$	748		1.10	%
Noninterest-bearing deposits		100,151							93,981							83,029
Noninterest-bearing liabilities		5,872							4,981							2,351
Stockholders' equity		55,340							53,985							49,370
Total liabilities and stockholders' equity	$	501,878						$	465,759						$	406,993
Net earning assets	$	134,863						$	126,248						$	118,624
Net interest income			$	3,991						$	3,980						$	3,666
Interest rate spread						3.04	%						3.28	%						3.42	%
Net interest margin(3)						3.36	%						3.63	%						3.75	%

⁽¹⁾   Includes nonaccrual loans

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

⁽³⁾    Net interest margin is net interest income divided by total average interest-earning assets, annualized 

Pressure on the Company's net interest margin continued into the fourth quarter of 2019.  The impact from three rate cuts by the Federal Reserve in the latter half of the year materialized during the fourth quarter and negatively impacted the loan yield.  In addition, liquidity levels continued to increase in 2019 as deposit growth outpaced loan growth which further lowered the margin. 

3

	For the Year Ended
	December 31, 2019							December 31, 2018
			Interest							Interest
	Average		and		Yield/			Average		and		Yield/
	Balance		Dividends		Rate			Balance		Dividends		Rate
Interest-earning assets:
Loans(1)	$	309,350	$	15,884		5.13	%	$	283,967	$	14,215		5.01	%
Mortgage loans held for sale		6,677		304		4.55			5,385		254		4.72
Securities		51,951		1,309		2.52			46,866		1,131		2.41
Other(2)		64,058		1,489		2.32			29,625		634		2.14
Total interest-earning assets		432,036	$	18,986		4.39	%		365,843	$	16,234		4.44	%
Noninterest-earning assets		24,761							13,445
Total assets	$	456,797						$	379,288
Interest-bearing liabilities:
Savings, NOW and money-market deposits	$	254,287	$	2,445		0.96	%	$	218,921	$	1,824		0.83	%
Time deposits		52,962		1,115		2.11			32,665		483		1.48
Total interest-bearing deposits		307,249		3,560		1.16			251,586		2,307		0.92
Other borrowings		653		9		1.38			-		-		-
Total interest-bearing liabilities		307,902	$	3,569		1.16	%		251,586	$	2,307		0.92	%
Noninterest-bearing deposits		91,016							78,061
Noninterest-bearing liabilities		4,707							1,709
Stockholders' equity		53,172							47,932
Total liabilities and stockholders' equity	$	456,797						$	379,288
Net earning assets	$	124,134						$	114,257
Net interest income			$	15,417						$	13,927
Interest rate spread						3.23	%						3.52	%
Net interest margin(3)						3.57	%						3.81	%

⁽¹⁾   Includes nonaccrual loans

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

⁽³⁾    Net interest margin is net interest income divided by total average interest-earning assets

With the exception of mortgage loans held for sale, the yields on all categories of interest-earning assets increased year over year.  However, the change in the interest-earning assets mix from 2018 to 2019 impacted the overall yield of total interest-earning assets as other interest-earning assets comprised a larger percentage of the total.  This combined with higher average balances and yields on total interest-bearing deposits resulted in the lower net interest margin. 

Provision for Loan Losses

The provision for loan losses for the fourth quarter of 2019 was $546,000, compared to $241,000 for the third quarter of 2019 and $47,000 for the fourth quarter of 2018.  For the year 2019, the provision for loan losses was $1.1 million compared to $591,000 in 2018.  Approximately $272,000 of the increase in the quarterly provision is attributed to loan growth while $274,000 is attributed to higher specific reserves on several impaired and charged-off loans and overdrafts. For the year 2019, approximately 48.6% (or $550,000) is attributed to loan growth and 51.4% (or $581,000) is attributed to higher specific reserves on impaired and charged-off loans and overdrafts.

4

Noninterest income (Unaudited)

(dollars in thousands)

							Change 4Q'19 vs.
	4Q'19		3Q'19		4Q'18		3Q'19			4Q'18
Service charges and fees on deposit accounts	$	75	$	74	$	74		1.4	%		1.4	%
Debit card/ATM revenue, net		60		67		52		(10.4	)		15.4
Mortgage banking revenue		213		151		108		41.1			97.2
Income from bank-owned life insurance		42		46		34		(8.7	)		23.5
Other income		38		32		34		18.8			11.8
Total noninterest income	$	428	$	370	$	302		15.7	%		41.7	%

The increase in total noninterest income for the fourth quarter of 2019, when compared to the linked quarter and the same period last year, is primarily attributed to an increase in mortgage banking revenue.  The Company defines mortgage banking revenue as gains and losses on the sale of mortgage loans originated for sale, net of direct origination costs, and wholesale brokerage fees.  Due to lower mortgage rates, the Company experienced an increase in both mortgages for purchase and for refinancing during the fourth quarter of 2019.

Service charges and fees remained steady compared to the linked quarter and the fourth quarter of 2018.  Despite the 8.7% decrease in income from bank-owned life insurance from the third quarter of 2019, the Company has profited favorably year-over-year following the increased investment in this asset that occurred in the fourth quarter of 2018.  This income is market-driven and experiences small fluctuations at the current investment level.

With the exception of the most recent quarter, debit card/ATM net revenue has seen a steady increase each quarter since the fourth quarter of 2017.  Management anticipates that it will continue to be a growing source of noninterest income. 

	For the Year Ended December 31,
	2019		2018		$ Change			% Change
Service charges and fees on deposit accounts	$	288	$	333	$	(45	)		(13.5	)%
Debit card/ATM revenue, net		252		191		61			31.9
Mortgage banking revenue		667		447		220			49.2
Income from bank-owned life insurance		178		66		112			169.7
Gain on sale of securities available for sale		7		-		7			N/A
Other income		142		118		24			20.3
Total noninterest income	$	1,534	$	1,155	$	379			32.8	%

With the exception of service charges and fees on deposit accounts, all categories of noninterest income reported year-over-year increases.  The decrease in service charges and fees on deposit accounts is primarily explained by lower overdraft activity. Debit card/ATM net revenue increased 31.9% in 2019 and accounts for roughly 16% of total noninterest income.  In 2019, the mortgage department increased the number of loans originated, the average balance per loan originated, and the average profitability per loan originated. Higher income from bank-owned life insurance followed the Company's increased investment in this asset during the fourth quarter of 2018.  Both mortgage banking revenue and income from bank-owned life insurance accounted for a larger percentage of total noninterest income in 2019 when compared to 2018. 

Noninterest expense (Unaudited)

(dollars in thousands)

							Change 4Q'19 vs.
	4Q'19		3Q'19		4Q'18		3Q'19			4Q'18
Salaries and employee benefits	$	1,384	$	1,575	$	1,319		(12.1	)%		4.9	%
Occupancy and equipment		330		373		234		(11.5	)		41.0
Professional fees		112		79		107		41.8			4.7
Marketing		178		172		144		3.5			23.6
FDIC Assessment		26		6		51		333.3			(49.0	)
Software maintenance, amortization and other		185		188		160		(1.6	)		15.6
Other		454		436		327		4.1			38.8
Total noninterest expense	$	2,669	$	2,829	$	2,342		(5.7	)%		14.0	%

On a linked quarter basis, the $160,000 decrease in noninterest expense is mostly explained by the $191,000 decrease in salaries and employee benefits.  A net increase in salaries and commissions was offset by higher deferred loan costs and a reversal of a portion of incentive pay that had been accrued during the year.  Also contributing was a $43,000 decrease in occupancy expense which is attributed to lower amortization expense on leasehold improvements during the fourth quarter of 2019.      

Compared to the fourth quarter of 2018, the $327,000 increase in noninterest expense is mostly attributed to higher salaries and employee benefits, increased occupancy cost due to higher depreciation and lease expense, and increased other noninterest expense (namely due to increases in software expense, loan related expense and travel and entertainment expense). These increases were partially offset by a $36,000 credit towards the Company's FDIC assessment cost in the fourth quarter of 2019 which resulted from the Deposit Insurance Fund Reserve Ratio exceeding its 1.38% threshold on June 30, 2019.  

5

	For the Year Ended December 31,
	2019		2018		$ Change			% Change
Salaries and employee benefits	$	6,095	$	5,106	$	989			19.4	%
Occupancy and equipment		1,405		932		473			50.8
Professional fees		374		374		-			-
Marketing		743		677		66			9.7
FDIC Assessment		119		163		(44	)		(27.0	)
Software maintenance, amortization and other		692		634		58			9.1
Other		1,758		1,343		415			30.9
Total noninterest expense	$	11,186	$	9,229	$	1,957			21.2	%

Year over year, more than half of the increase in total noninterest expense is attributed to the Company's new office in Lakeland, Florida which opened in April, 2019.   The Company has expanded from 79 full-time equivalents (FTEs) at December 31, 2018 to 88 FTEs  at December 31, 2019, with 8 FTEs located in Lakeland at December 31, 2019.   Approximately $234,000 of the $473,000 increase in occupancy expense is attributed to higher depreciation expense and higher lease expense associated with the new lease for our expanded Timberlane office. The new office in Lakeland accounted for approximately $216,000 of the $473,000 increase in occupancy expense.   Other noninterest expense increased $415,000 for a variety of reasons, most notably due to higher printing and supplies expense, travel and entertainment expense and software expense. These increases were partially offset by a credit towards the Company's FDIC assessment. With the credits, the FDIC total assessment decreased $44,000 year over year, or 27.0%.  

Balance Sheet

At December 31, 2019, the Company reported $500.9 million in total assets, $438.3 million in deposits, and $337.7 million in net portfolio loans. This compares to $401.7 million in total assets, $349.1 million in deposits, and $290.1 million in net portfolio loans at December 31, 2018. Loan growth occurred in all categories with the exception of consumer loans which remained relatively flat.   The composition of the Bank’s loan portfolio was as follows on the indicated dates:

Prime Meridian Holding Company and Subsidiary

Loans by Class

(dollars in thousands)

	December 31, 2019						December 31, 2018
	Unaudited						Audited
	Amount			% of Total			Amount			% of Total
Commercial real estate	$	94,728			27.7	%	$	82,494			28.1	%
Residential real estate and home equity		135,913			39.8			121,454			41.4
Construction		33,583			9.8			31,601			10.8
Commercial		69,770			20.4			51,018			17.4
Consumer		7,631			2.3			6,747			2.3
Total Loans		341,625			100.0	%		293,314			100.0	%
Net deferred loan costs		499						460
Allowance for loan losses		(4,414	)					(3,661	)
Loans, net	$	337,710					$	290,113

Total stockholders’ equity was $55.9 million, or 11.2% of total assets, at December 31, 2019, compared to $50.8 million, or 12.7% of total assets, at December 31, 2018.  Retained earnings, a $756,000 positive change in accumulated other comprehensive income and a small stock offering in Lakeland, Florida drove the increase in equity. Book value per share increased from $16.19 at December 31, 2018 to $17.51 at December 31, 2019, with 3,191,288 common shares outstanding.

As of December 31, 2019, the Bank was considered to be “well capitalized” with a Tier 1 Leverage Capital Ratio of 9.31%, a 13.24% Common Equity Tier 1 Risk-Based Capital Ratio, a 13.24% Tier 1 Risk-Based Capital Ratio, and a 14.49% Total Risk-Based Capital Ratio.

Asset Quality

Loans totaling $3.2 million were deemed to be impaired under the Bank’s policy at December 31, 2019, while loans totaling $1.2 million were deemed to be impaired under the Bank’s policy at December 31, 2018. At December 31, 2019, the Bank had twelve nonaccrual loans in the aggregate amount of $2.6 million compared to six nonaccrual loans totaling $342,000 at December 31, 2018. At December 31, 2019, the Company reported no accruing loans greater than 90 days past due. Net charge-offs totaled $378,000 for the year  ended December 31, 2019 and nonperforming assets as a percentage of total assets was 0.52%. Management believes that the allowance for loan losses which was $4.4 million, or 1.29% of gross loans, at December 31, 2019 is adequate.

About Prime Meridian Holding Company

Headquartered in Tallahassee, Florida, Prime Meridian Holding Company (OTCQX: PMHG) offers a broad range of banking services through its wholly owned subsidiary, Prime Meridian Bank, a Florida state-chartered non-member bank. Founded in 2008, the Bank now serves the Tallahassee and Lakeland/Winter Haven Metropolitan Statistical Areas (MSA), including clients in North and Central Florida as well as South Georgia and South Alabama. The Bank currently has four Florida locations: two in Tallahassee, Florida, one in Crawfordville, Florida, and one in Lakeland, Florida. As of December 31, 2019, the Bank had 88 full-time equivalent employees. For more information about Prime Meridian Holding Company, please visit www.primemeridianbank.com.

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

Tables Follow

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Prime Meridian Holding Company and Subsidiary

Condensed Consolidated Statements of Earnings (Unaudited)

(in thousands except per share amounts)

	4Q'19		3Q'19		2Q'19		1Q'19		4Q'18
Interest income:
Loans	$	4,237	$	4,179	$	3,916	$	3,856	$	3,854
Securities		342		338		333		296		280
Other		378		402		361		348		280
Total interest income		4,957		4,919		4,610		4,500		4,414
Interest Expense:
Deposits		962		934		851		813		748
Other Borrowings		4		5		-		-		-
Total interest expense		966		939		851		813		748
Net interest income		3,991		3,980		3,759		3,687		3,666
Provision for loan losses		546		241		179		165		47
Net interest income after provision for loan losses		3,445		3,739		3,580		3,522		3,619
Noninterest income:
Service charges and fees on deposit accounts		75		74		68		71		74
Debit card/ATM revenue, net		60		67		64		62		52
Mortgage banking revenue		213		151		197		106		108
Income from bank-owned life insurance		42		46		45		45		34
Other income		38		32		38		41		34
Total noninterest income		428		370		412		325		302
Noninterest expense:
Salaries and employee benefits		1,384		1,575		1,579		1,557		1,319
Occupancy and equipment		330		373		427		275		234
Professional fees		112		79		106		77		107
Marketing		178		172		194		199		144
FDIC Assessment		26		6		44		43		51
Software maintenance, amortization and other		185		188		167		152		160
Other		454		436		466		403		327
Total noninterest expense		2,669		2,829		2,983		2,706		2,342
Earnings before income taxes		1,204		1,280		1,009		1,141		1,579
Income taxes		257		316		245		274		311
Net earnings	$	947	$	964	$	764	$	867	$	1,268
Basic earnings per share	$	0.29	$	0.31	$	0.24	$	0.28	$	0.40
Diluted earnings per share		0.29		0.31		0.24		0.28		0.40

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Prime Meridian Holding Company and Subsidiary

Condensed Consolidated Statements of Earnings 

(in thousands, except per share amounts)

	Three Months Ended December 31,				Year Ended December 31,
	2019		2018		2019		2018
		Unaudited		Unaudited		Unaudited		Audited
Interest income:
Loans	$	4,237	$	3,854	$	16,188	$	14,469
Securities		342		280		1,309		1,131
Other		378		280		1,489		634
Total interest income		4,957		4,414		18,986		16,234
Interest expense:
Deposits		962		748		3,560		2,307
Other borrowings		4		-		9		-
Total interest expense		966		748		3,569		2,307
Net interest income		3,991		3,666		15,417		13,927
Provision for loan losses		546		47		1,131		591
Net interest income after provision for loan losses		3,445		3,619		14,286		13,336
Noninterest income:
Service charges and fees on deposit accounts		75		74		288		333
Debit card/ATM revenue, net		60		52		252		191
Mortgage banking revenue		213		108		667		447
Income from bank-owned life insurance		42		34		178		66
Gain on sale of securities available for sale		-		-		7		-
Other income		38		34		142		118
Total noninterest income		428		302		1,534		1,155
Noninterest expense:
Salaries and employee benefits		1,384		1,319		6,095		5,106
Occupancy and equipment		330		234		1,405		932
Professional fees		112		107		374		374
Marketing		178		144		743		677
FDIC assessment		26		51		119		163
Software maintenance, amortization and other		185		160		692		634
Other		454		327		1,758		1,343
Total noninterest expense		2,669		2,342		11,186		9,229
Earnings before income taxes		1,204		1,579		4,634		5,262
Income taxes		257		311		1,092		1,220
Net earnings	$	947	$	1,268	$	3,542	$	4,042
Earnings per common share:
Basic	$	0.29	$	0.40	$	1.12	$	1.29
Diluted		0.29		0.40		1.12		1.29
Cash dividends per common share(1)		-		-		0.12		0.10

⁽¹⁾ Annual cash dividends were paid during the first quarters of 2019 and 2018.

8

Prime Meridian Holding Company and Subsidiary

Condensed Consolidated Balance Sheets

(in thousands)

	4Q'19		3Q'19		2Q'19		1Q'19		4Q'18
	Unaudited		Unaudited		Unaudited		Unaudited		Audited
Assets
Cash & cash equivalents	$	75,082	$	84,278	$	72,042	$	66,805	$	48,038
Securities available for sale		61,333		55,773		52,431		48,205		45,384
Loans, held for sale		6,193		7,907		6,223		5,808		4,767
Loans, net		337,710		315,807		299,949		289,900		290,113
Federal Home Loan Bank stock		404		404		404		404		355
Premises & equipment, net		7,744		7,787		7,311		7,055		4,656
Right of use asset		3,669		3,719		3,768		-		-
Accrued interest receivable		1,137		1,073		1,100		1,023		1,034
Bank-owned life insurance		6,501		6,459		6,413		6,368		6,323
Other assets		1,088		859		1,086		1,281		1,032
Total Assets	$	500,861	$	484,066	$	450,727	$	426,849	$	401,702
Liabilities and Stockholders' Equity
Noninterest-bearing demand deposits	$	96,807	$	96,732	$	89,608	$	83,186	$	80,097
Savings, NOW and money-market deposits		272,283		265,518		247,804		244,584		227,674
Time deposits		69,174		58,947		52,912		45,743		41,296
Total Deposits		438,264		421,197		390,324		373,513		349,067
Other borrowings		1,254		2,053		770		-		-
Official checks		606		900		1,496		495		837
Lease liability		3,758		3,801		3,827		-		-
Other liabilities		1,111		1,088		1,314		1,157		978
Total Liabilities		444,993		429,039		397,731		375,165		350,882
Total Stockholders' Equity		55,868		55,027		52,996		51,684		50,820
Total Liabilities and Stockholders' Equity	$	500,861	$	484,066	$	450,727	$	426,849	$	401,702

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Prime Meridian Holding Company and Subsidiary

Financial Highlights (Unaudited)

(dollars in thousands, except per share amounts)

	4Q'19			3Q'19			2Q'19			1Q'19			4Q'18
Per Share Data:
Earnings per share - Basic	$	0.29		$	0.31		$	0.24		$	0.28		$	0.40
Earnings per share - Diluted	$	0.29		$	0.31		$	0.24		$	0.28		$	0.40
Book value per share	$	17.51		$	17.25		$	16.85		$	16.44		$	16.19
Shares outstanding		3,191,288			3,190,031			3,144,456			3,143,140			3,138,945
Weighted-average basic shares outstanding		3,190,933			3,147,696			3,144,068			3,140,401			3,131,379
Weighted-average diluted shares outstanding		3,195,793			3,151,321			3,150,136			3,144,071			3,136,048
Selected Performance Ratios and Other Data:
Return on average assets(1)		0.75	%		0.83	%		0.70	%		0.82	%		1.07	%
Return on average equity(1)		6.84			7.14			5.85			6.79			8.43
Average yield on earning assets		4.17			4.48			4.49			4.48			4.52
Net interest margin(2)		3.36			3.63			3.66			3.67			3.75
Efficiency ratio(3)		60.40			65.03			71.52			67.45			59.02
Noninterest expense/average assets(1)		2.13			2.43			2.73			2.56			2.30
Asset Quality Data:
Nonaccrual loans	$	2,591		$	2,603		$	1,962		$	365		$	342
Total nonperforming assets		2,591			2,603			1,962			608			342
Nonperforming assets/total assets		0.52	%		0.54	%		0.44	%		0.14	%		0.09	%
Capital Ratios:
Tier 1 Leverage Capital Ratio (Company)		11.08	%		11.73	%		12.08	%		12.28	%		12.61	%
Tier 1 Leverage Capital Ratio (Bank)		9.31			9.24			9.10			9.18			9.28
Common Equity Tier I Capital Ratio (Bank)		13.24			12.95			12.69			13.00			12.90
Tier I Risk-Based Capital Ratio (Bank)		13.24			12.95			12.69			13.00			12.90
Total Capital Ratio (Bank)		14.49			14.15			13.94			14.25			14.15

⁽¹⁾   Annualized

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

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

CONTACT:	Clint F. Weber, Chief Financial Officer and Executive Vice President
	(850) 907-2301
	Prime Meridian Holding Company
	Website: www.primemeridianbank.com

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