Prime Meridian Holding (PMHG) 8-K Prime Meridian Holding Company Reports SECOND quarter 2021 Results

Exhibit 99.1

FOR IMMEDIATE RELEASE

Prime Meridian Holding Company Reports

SECOND quarter 2021 Results

TALLAHASSEE, FL – July 23, 2021 (GLOBE NEWSWIRE) – Prime Meridian Holding Company (OTCQX: PMHG), the parent bank holding company for Prime Meridian Bank, today announced unaudited financial results for the three and six months ended June 30, 2021. The Company reported net earnings of $2,262,000, or $0.72 per basic and diluted share, for the quarter ended June 30, 2021, compared to net earnings of $720,000, or $0.23 per basic and diluted share, for the quarter ended June 30, 2020. The Company reported net earnings of $4,496,000, or $1.44 per basic and diluted share, for the six months ended June 30, 2021, compared to net earnings of $1,436,000, or $0.45 per basic and diluted share, for the six months ended June 30, 2020. 

“We are satisfied with where we are right now,” said Sammie D. Dixon, Jr., Vice Chairman, President, and CEO. “Bank deposit growth continues to be strong.  Liquidity levels are good, and, because of our disciplined credit process, nonperforming assets (NPAs) for the quarter are zero, " he continued.  

"Still, challenges persist.  Media report many industries -- from hospitality to manufacturing -- find it difficult to hire and maintain skilled teams, especially in the services sector."  According to Dixon, this problem may be slowing demand for new borrowing until more Floridians return to the workforce.  “It’s not surprising some businesses are postponing investment right now and taking a wait-and-see approach."

Dixon is optimistic that, "As the ripples in the talent pool smooth out, demand on the lending side will return."

The Bank’s mortgage team has continued to deliver impressive volume through the first six months of 2021. Though the percentage of refinances to purchases has decreased, “we see quite a bit more purchase volume,” Dixon said. “Our team doubled new purchase units from 222 to 444 within the first six months of 2021 compared to  the same period in 2020. That's strong," he emphasized.

Mortgage dollar volume closely followed suit with the production of $122.9 million in the first half of 2021 compared to $79.5 million during the first half of 2020.

According to Dixon, “Given all that has happened within the last 18 months, we’re good with where we are. We continue to look for growth opportunities and are grateful for the talented team driving us forward," he said.

Second Quarter 2021 Highlights

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

(dollars in thousands except per share amounts)

	2Q'21			1Q'21			4Q'20			3Q'20			2Q'20
Net earnings	$	2,262		$	2,234		$	1,541		$	1,481		$	720
Book value per share	$	20.40		$	19.56		$	19.32		$	18.81		$	18.30
Earnings per share - Basic	$	0.72		$	0.72		$	0.50		$	0.47		$	0.23
Earnings per share - Diluted	$	0.72		$	0.71		$	0.50		$	0.47		$	0.23
Weighted-average basic shares outstanding		3,126,197			3,123,565			3,119,058			3,117,623			3,116,307
Weighted-average diluted shares outstanding		3,139,179			3,125,249			3,119,058			3,117,680			3,116,370
Return on average assets(1)		1.24	%		1.32	%		0.97	%		0.96	%		0.47	%
Return on average equity(1)		14.40			14.72			10.44			10.27			5.09
Average yield on earning assets(1)		3.40			3.77			3.84			3.66			3.59
Net interest margin(1)		3.11			3.44			3.43			3.18			3.07
Efficiency ratio(2)		53.99			52.85			60.03			51.72			56.57
Nonperforming assets/total assets(3)		-			0.11			0.19			0.25			0.33

⁽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 include other real estate owned and loans greater than 90 days past due.

• The Company reported net earnings above $2.2 million for a second consecutive quarter, boosted primarily by Paycheck Protection Program (PPP) activity and a credit for loan losses. 

• Adjusted pre-tax, pre-provision net earnings for the second quarter were $2.8 million. Adjusted pre-tax, pre-provision annualized returns on average assets and average common equity were 1.53% and 17.79%, respectively, for the second quarter of 2021. (These are considered non-GAAP financial measures. Please refer to "Non-GAAP Measures and Ratio Reconciliation" in the table on page 11 for more detail.)

• Deposits have increased by $102.8 million, or 17.7%, since December 31, 2020, boosted by continued expansion of existing relationships, the addition of new clients, and to a lesser extent, due to PPP activity, all while reducing the average cost of interest-bearing deposits by 18 basis points since the fourth quarter of 2020. 

• Book value per share of $20.40 increased 11.5% year-over-year.

• The Company expects a substantial majority of the balance of PPP loans ($54.6 million at June 30, 2021) will be forgiven by the end of 2021. 

• The Company currently has one remaining COVID-19 loan modification, totaling $411,000.

• At quarter-end, the Company reported loans 30-89 days past due to total loans of 0.21%, compared to 0.37% in the linked quarter and 0.0% a year ago.  Other asset quality metrics were strong with zero nonperforming assets, zero loans that were 90 days or greater past due, zero other real estate owned, and no new troubled debt restructurings (TDRs).

COVID-19 Update

The COVID-19 pandemic has negatively impacted the global economy, disrupted global supply chains, and created significant volatility and disruption in financial markets. The extent to which the COVID-19 pandemic impacts our business, results of operations, and financial condition, as well as our regulatory capital and liquidity ratios, will depend on future developments, the duration of the pandemic, the effectiveness and adoption of available vaccines, and the actions taken by governmental authorities to slow the spread of the disease and mitigate its economic impact.  We continue to monitor and adhere to national guidelines and local safety ordinances to ensure the safety of our clients and employees.  At this time, it is not known how the more contagious Delta variant and the consequential rise in cases nationally may impact the economy, safety protocols or consumer behavior. 

Management believes credit quality deterioration directly related to the pandemic could materialize in the future. Since March of 2020, the Company has reported a peak of 70 requests for payment deferrals or modifications on loans totaling $42.4 million. Approximately 91% of the requests have been for loans secured with real estate.  That number declined to one loan modification totaling $411,000 as of June 30, 2021.  

Earnings Summary (Unaudited)

(dollars in thousands)

								Change 2Q'21 vs.
	2Q'21			1Q'21		2Q'20		1Q'21			2Q'20
Net interest income	$	5,452		$	5,566	$	4,569		(2.0	%)		19.3	%
Provision (credit) for loan losses		(185	)		-		1,227		N/A			(115.1	)
Noninterest income		620			672		414		(7.7	)		49.8
Noninterest expense		3,278			3,297		2,819		(0.6	)		16.3
Income taxes		717			707		217		1.4			230.4
Net earnings	$	2,262		$	2,234	$	720		1.3	%		214.2	%

On a linked quarter basis, net earnings stayed relatively flat, increasing 1.3% to $2.3 million.  The $114,000 decrease in net interest income and $52,000 decrease in noninterest income were offset by a credit for loan losses and slight decrease in noninterest expense.  Compared to the same period a year ago, the increase in net earnings was driven by higher PPP origination fees, higher commercial real estate and residential real estate loan originations, and a credit for loan losses. Lower funding costs on deposits (as illustrated in the margin analysis table on page 3) and higher noninterest income also contributed to higher net earnings in the second quarter of 2021 compared to the same period a year ago.  

	For the Six Months Ended
	June 30, 2021			June 30, 2020		$ Change			% Change
Net interest income	$	11,018		$	8,712	$	2,306			26.5	%
Provision (credit) for loan losses		(185	)		1,863		(2,048	)		(109.9	)
Noninterest income		1,292			781		511			65.4
Noninterest expense		6,575			5,757		818			14.2
Income taxes		1,424			437		987			225.9
Net earnings	$	4,496		$	1,436	$	3,060			213.1	%

Year-to-date net income through June 30, 2021 more than tripled compared to the same period in 2020 due mostly to interest income and origination fees from PPP loans (totaling $1.9 million, net of costs, year-to-date) and a credit for loan losses in 2021.  Also contributing to higher profitability in 2021 was a $511,000, or 65.4%, increase in noninterest income.

Interest income (Unaudited)

(dollars in thousands)

							Change 2Q'21 vs.
	2Q'21		1Q'21		2Q'20		1Q'21			2Q'20
Interest income:
Loans	$	5,632	$	5,805	$	4,844		(3.0	%)		16.3	%
Securities		262		249		428		5.2			(38.8	)
Other		65		49		62		32.7			4.8
Total interest income	$	5,959	$	6,103	$	5,334		(2.4	%)		11.7	%

The $144,000 decrease in total interest income from the first quarter of 2021 is mostly attributed to a 15.6% linked-quarter decline in PPP interest income and origination fees, net of costs.  Compared to the second quarter of 2020, the increase in total interest income is mostly attributed to fee and interest income from a higher volume of commercial real estate and residential real estate loans and PPP loans. The decrease in interest income from securities since the second quarter of 2020 is a function of lower volume and rates.  

	For the Six Months Ended
	June 30, 2021		June 30, 2020		$ Change			% Change
Interest income:
Loans	$	11,437	$	9,273	$	2,164			23.3	%
Securities		511		812		(301	)		(37.1	)
Other		114		294		(180	)		(61.2	)
Total interest income	$	12,062	$	10,379	$	1,683			16.2	%

Comparing the six-month periods, the increase in total interest income from loans in 2021 is primarily attributed to $1.9 million of interest income and fees (net of costs) generated from PPP loans compared to $392,000 for the first half of 2020. A higher volume of commercial real estate and residential real estate loan originations in the first half of 2021 also contributed to increased interest income from loans.  The decrease in interest income from securities is a function of lower volume and rates while the decrease in interest income from other interest-earning assets is a function of lower rates.

2

Interest expense (Unaudited)

(dollars in thousands)

							Change 2Q'21 vs.
	2Q'21		1Q'21		2Q'20		1Q'21			2Q'20
Total interest expense	$	507	$	537	$	765		(5.6	)%		(33.7	)%

Despite higher balances of interest-bearing liabilities, total interest expense declined $30,000 from the first quarter of 2021 and $258,000 from the second quarter of 2020 due to lower funding costs. The average rate paid on deposits declined 7 basis points from the first quarter of 2021 and 35 basis points when compared to the second quarter of 2020.

	For the Six Months Ended
	June 30, 2021		June 30, 2020		$ Change			% Change
Total interest expense	$	1,044	$	1,667	$	(623	)		(37.4	%)

Comparing six-month periods, a $69.8 million increase in the average balance of interest-bearing liabilities was offset by a 42 basis points decrease in the cost of interest-bearing liabilities (please refer to the margin analysis table on page 10 for more detail). 

Margin Analysis (Unaudited)

(dollars in thousands)

	2Q'21							1Q'21							2Q'20
			Interest							Interest							Interest
	Average		and		Yield/			Average		and		Yield/			Average		and		Yield/
	Balance		Dividends		Rate(5)			Balance		Dividends		Rate(5)			Balance		Dividends		Rate(5)
Interest-earning assets:
Loans(1)	$	483,587	$	5,505		4.55	%	$	484,455	$	5,699		4.71	%	$	427,902	$	4,745		4.44	%
Loans held for sale		14,784		127		3.44			13,370		106		3.17			9,788		99		4.05
Debt securities available for sale		60,155		262		1.74			59,629		249		1.67			68,014		428		2.52
Other(2)		141,842		65		0.18			89,646		49		0.22			89,217		62		0.28
Total interest-earning assets		700,368	$	5,959		3.40	%		647,100	$	6,103		3.77	%		594,921	$	5,334		3.59	%
Noninterest-earning assets		31,313							27,743							21,749
Total assets	$	731,681						$	674,843						$	616,670
Interest-bearing liabilities:
Savings, NOW and money-market deposits	$	413,859	$	410		0.40	%	$	379,031	$	401		0.42	%	$	311,237	$	412		0.53	%
Time deposits		51,372		90		0.70			54,456		136		1.00			67,287		325		1.93
Total interest-bearing deposits		465,231		500		0.43			433,487		537		0.50			378,524		737		0.78
Other borrowings		802		7		3.49			17		-		-			33,129		28		0.34
Total interest-bearing liabilities		466,033	$	507		0.44	%		433,504	$	537		0.50	%		411,653	$	765		0.74	%
Noninterest-bearing deposits		196,726							173,997							140,234
Noninterest-bearing liabilities		6,085							6,638							8,220
Stockholders' equity		62,837							60,704							56,563
Total liabilities and stockholders' equity	$	731,681						$	674,843						$	616,670
Net earning assets	$	234,335						$	213,596						$	183,268
Net interest income			$	5,452						$	5,566						$	4,569
Interest rate spread (3)						2.96	%						3.27	%						2.85	%
Net interest margin (4)						3.11	%						3.44	%						3.07	%

⁽¹⁾   Includes nonaccrual loans

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

⁽⁵⁾  Annualized

The Company's net interest margin decreased 33 basis points from the first quarter primarily due to lower PPP fee and interest income generated in the second quarter coupled with the sharp increase in the volume of lower-yielding liquid assets.  Compared to a year ago, the net interest margin increased slightly as interest income and fees on PPP loans and a decrease in funding costs helped offset a 29 basis points decrease in the average loan yield, when adjusted to exclude PPP loans and loans held for sale. (This is a non-GAAP measure.  Please refer to the reconciliation on page 11). 

The following table summarizes year-to-date changes in selected yields and rates.  The impact of lower market interest rates on interest-earning assets was offset by lower funding costs, resulting in slight margin improvement.  

	For the Six Months Ended						Increase
	June 30, 2021			June 30, 2020			(Decrease)
Yield on loans, excluding held for sale		4.63	%		4.67	%		(0.04	)%
Yield on earning assets		3.58			3.85			(0.27	)
Cost of interest-bearing deposits		0.46			0.90			(0.44	)
Cost of total deposits		0.33			0.66			(0.33	)
Cost of interest-bearing liabilities		0.46			0.88			(0.42	)
Net interest margin		3.27			3.23			0.04

3

Provision for Loan Losses

The Company did not record any provision for loan losses during the first quarter of 2021 due to a $7.0 million reduction in total portfolio loan balances (excluding PPP loans) since year-end 2020.  During the second quarter, the Company reported a credit for loan losses of $185,000 due to no specific reserve requirements, loan recoveries, and a decrease in the amount of COVID-19 unallocated reserve. This differed greatly from the six months ended June 30, 2020 when the Company's provision for loan losses increased substantially over prior periods due to $1.0 million in net charge-offs and the creation of an unallocated reserve in anticipation, at that time, of possible COVID-19 related credit deterioration.

Noninterest income (Unaudited)

(dollars in thousands)

							Change 2Q'21 vs.
	2Q'21		1Q'21		2Q'20		1Q'21			2Q'20
Service charges and fees on deposit accounts	$	56	$	53	$	44		5.7	%		27.3	%
Debit card/ATM revenue, net		124		109		79		13.8			57.0
Mortgage banking revenue, net		332		301		219		10.3			51.6
Income from bank-owned life insurance		67		63		40		6.3			67.5
Gain on sale of debt securities available for sale		-		108		-		(100.0	)		N/A
Other income		41		38		32		7.9			28.1
Total noninterest income	$	620	$	672	$	414		(7.7	)%		49.8	%

On a linked quarter basis, the decrease in noninterest income is attributed to a $108,000 gain on sale of debt securities that was realized in the first quarter of 2021.  Compared to the second quarter of 2020, the increase in noninterest income was primarily driven by a $113,000 (51.6%) increase in mortgage banking revenue, $45,000 (57.0%) increase in debit card/ATM income, and $27,000 (67.5%) increase in income from bank-owned life insurance (BOLI). 

	For the Six Months Ended
	June 30, 2021		June 30, 2020		$ Change		% Change
Service charges and fees on deposit accounts	$	109	$	108	$	1		0.9	%
Debit card / ATM revenue, net		233		160		73		45.6
Mortgage banking revenue, net		633		367		266		72.5
Income from bank-owned life insurance		130		80		50		62.5
Gain on sale of securities available for sale		108		-		108		N/A
Other income		79		66		13		19.7
Total noninterest income	$	1,292	$	781	$	511		65.4	%

Comparing the six-month periods, increases in debit card/ATM net revenue, mortgage banking net revenue and BOLI combined with the $108,000 gain on sale of securities led to the $511,000 (65.4%) increase in noninterest income.  The mortgage team has continued to see strong volume through the first half of 2021.  The percentage of refinances to purchases has decreased and a higher purchase volume environment has returned. The mortgage team almost doubled its units in the first six months of 2021 as compared to the same period in 2020 and increased dollar volume by 54.6%.  The Bank's investment in BOLI has nearly doubled since June 2020, resulting in higher income to offset additional compensation expense. Increases in debit card/ATM net revenue are attributed to growth in transaction deposit accounts and the number of debit cards issued.

Noninterest expense (Unaudited)

(dollars in thousands)

							Change 2Q'21 vs.
	2Q'21		1Q'21		2Q'20		1Q'21			2Q'20
Salaries and employee benefits	$	1,805	$	1,852	$	1,546		(2.5	)%		16.8	%
Occupancy and equipment		378		386		381		(2.1	)		(0.8	)
Professional fees		120		130		83		(7.7	)		44.6
Marketing		199		140		100		42.1			99.0
FDIC assessment		49		70		67		(30.0	)		(26.9	)
Software maintenance, amortization and other		251		250		201		0.4			24.9
Other		476		469		441		1.5			7.9
Total noninterest expense	$	3,278	$	3,297	$	2,819		(0.6	)%		16.3	%

Total noninterest expense stayed relatively flat on a linked quarter basis. The $59,000 increase in marketing expense was anticipated as our local communities have resumed in-person gatherings and meetings. The $21,000 decrease in our FDIC assessment reflects a year-to-date reconciliation at a lower assessment rate.  Compared to the second quarter of 2020, higher noninterest expenses, for the most part, reflect a growing bank that has 6 additional full-time equivalents ("FTEs"), expanded software and cybersecurity requirements, and a normalized marketing budget to support in-person gatherings and business development meetings.

4

Balance Sheet

At June 30, 2021 the Company reported $756.6 million in total assets, $683.4 million in deposits, and $470.5 million in net portfolio loans. This compares to $647.3 million in total assets, $580.6 million in deposits, and $476.7 million in net portfolio loans at December 31, 2020.   Excluding the quarter-end balance of PPP loans ($66.8 million at 2020 year-end and $54.6 million at June 30, 2021), the Company's net loan portfolio has increased $6.0 million since December 31, 2020. This was following a high level ($57.5 million) of non-PPP loan payoffs in the first half of the year. 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)

	June 30, 2021						December 31, 2020
	Unaudited						Audited
	Amount			% of Total			Amount			% of Total
Commercial real estate	$	136,514			28.6	%	$	133,473			27.6	%
Residential real estate and home equity		169,977			35.5			158,120			32.7
Construction		44,256			9.3			44,466			9.2
Commercial		121,032			25.3			141,542			29.2
Consumer		6,359			1.3			6,312			1.3
Total loans		478,138			100.0	%		483,913			100.0	%
Net deferred loan fees		(1,751	)					(1,160	)
Allowance for loan losses		(5,899	)					(6,092	)
Loans, net	$	470,488					$	476,661

The $102.8 million increase in deposits since December 31, 2020 is attributed to growth of existing client relationships and the addition of new client relationships, and to a lesser extent due to PPP activity. The Company's round one and round two PPP-sourced deposits were estimated to be $15.6 million at June 30, 2021, compared to $35.2 million at March 31, 2021. Total stockholders’ equity was $63.8 million, or 8.4% of total assets, at June 30, 2021 compared to $60.3 million at December 31, 2020, or 9.3% of total assets. Book value per share increased from $19.32 at December 31, 2020 to $20.40 at June 30, 2021, with 3,126,474 common shares outstanding.

As of June 30, 2021, the Bank was considered to be “well capitalized” with a Tier 1 Leverage Capital Ratio of 9.01%, a 13.87% Common Equity Tier 1 Capital Ratio, a 13.87% Tier 1 Risk-Based Capital Ratio, and a 15.11% Total Risk-Based Capital Ratio.  The Company maintains a $15 million, 5-year revolving line of credit, enhancing its liquidity sources to support the ongoing capital needs of the Bank.  At June 30, 2021, the Company reported a $3,075,000 outstanding loan balance and year-to-date interest expense of $7,000 under this line of credit.

Asset Quality:

At June 30, 2021, the Bank had zero nonaccrual loans and zero nonperforming assets, compared to five nonaccrual loans totaling $1.3 million at December 31, 2020.  At June 30, 2021, the Company reported no loans greater than 90 days past due and accruing and no other real estate owned.  Management believes the allowance for loan losses which was $5.9 million, or 1.39% of gross loans (excluding PPP loans), at June 30, 2021 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 June 30, 2021, the Bank had 95 FTEs. For more information about Prime Meridian Holding Company, please visit www.primemeridianbank.com.

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

About Non-GAAP Financial Measures

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

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

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

Tables Follow

5

Prime Meridian Holding Company and Subsidiary

Condensed Consolidated Statements of Earnings (Unaudited)

(in thousands except per share amounts)

	2Q'21			1Q'21		4Q'20		3Q'20		2Q'20
Interest income:
Loans	$	5,632		$	5,805	$	5,541	$	5,101	$	4,844
Securities		262			249		270		311		428
Other		65			49		39		43		62
Total interest income		5,959			6,103		5,850		5,455		5,334
Interest expense:
Deposits		500			537		628		710		737
Other borrowings		7			-		-		-		28
Total interest expense		507			537		628		710		765
Net interest income		5,452			5,566		5,222		4,745		4,569
Provision (credit) for loan losses		(185	)		-		365		621		1,227
Net interest income after provision for loan losses		5,637			5,566		4,857		4,124		3,342
Noninterest income:
Service charges and fees on deposit accounts		56			53		57		48		44
Debit card/ATM revenue, net		124			109		102		91		79
Mortgage banking revenue, net		332			301		265		224		219
Income from bank-owned life insurance		67			63		64		40		40
Gain on sale of debt securities available for sale		-			108		-		-		-
Other income		41			38		44		167		32
Total noninterest income		620			672		532		570		414
Noninterest expense:
Salaries and employee benefits		1,805			1,852		2,125		1,498		1,546
Occupancy and equipment		378			386		378		377		381
Professional fees		120			130		101		89		83
Marketing		199			140		143		97		100
FDIC assessment		49			70		44		68		67
Software maintenance, amortization and other		251			250		226		205		201
Other		476			469		437		415		441
Total noninterest expense		3,278			3,297		3,454		2,749		2,819
Earnings before income taxes		2,979			2,941		1,935		1,945		937
Income taxes		717			707		394		464		217
Net earnings	$	2,262		$	2,234	$	1,541	$	1,481	$	720
Basic earnings per common share	$	0.72		$	0.72	$	0.50	$	0.47	$	0.23
Diluted earnings per common share	$	0.72		$	0.71	$	0.50		0.47		0.23

6

Prime Meridian Holding Company and Subsidiary

Condensed Consolidated Statements of Earnings 

(in thousands, except per share amounts)

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
	Unaudited						Unaudited
Interest income:
Loans	$	5,632		$	4,844		$	11,437		$	9,273
Securities		262			428			511			812
Other		65			62			114			294
Total interest income		5,959			5,334			12,062			10,379
Interest expense:
Deposits		500			737			1,037			1,636
Other borrowings		7			28			7			31
Total interest expense		507			765			1,044			1,667
Net interest income		5,452			4,569			11,018			8,712
Provision (credit) for loan losses		(185	)		1,227			(185	)		1,863
Net interest income after provision for loan losses		5,637			3,342			11,203			6,849
Noninterest income:
Service charges and fees on deposit accounts		56			44			109			108
Debit card/ATM revenue, net		124			79			233			160
Mortgage banking revenue, net		332			219			633			367
Income from bank-owned life insurance		67			40			130			80
Gain on sale of securities available for sale		-			-			108			-
Other income		41			32			79			66
Total noninterest income		620			414			1,292			781
Noninterest expense:						��
Salaries and employee benefits		1,805			1,546			3,657			3,164
Occupancy and equipment		378			381			764			719
Professional fees		120			83			250			174
Marketing		199			100			339			301
FDIC assessment		49			67			119			119
Software maintenance, amortization and other		251			201			501			394
Other		476			441			945			886
Total noninterest expense		3,278			2,819			6,575			5,757
Earnings before income taxes		2,979			937			5,920			1,873
Income taxes		717			217			1,424			437
Net earnings	$	2,262		$	720		$	4,496		$	1,436
Earnings per common share:
Basic	$	0.72		$	0.23		$	1.44		$	0.45
Diluted		0.72			0.23			1.44			0.45
Cash dividends per common share(1)		-			-			0.14			0.12

⁽¹⁾ Annual cash dividends were paid during the first quarters of 2020 and 2021.

7

Prime Meridian Holding Company and Subsidiary

Condensed Consolidated Balance Sheets

(in thousands)

	2Q'21		1Q'21		4Q'20		3Q'20		2Q'20
	(Unaudited)		(Unaudited)		(Audited)		(Unaudited)		(Unaudited)
Assets
Cash & cash equivalents	$	181,599	$	141,787	$	68,985	$	56,004	$	62,307
Debt securities available for sale		63,306		58,915		61,879		61,060		66,898
Loans, held for sale		13,736		12,532		13,593		14,900		8,949
Loans, net		470,488		480,772		476,661		465,642		442,574
Federal Home Loan Bank stock		366		366		493		493		493
Premises & equipment, net		8,159		8,200		8,248		8,210		8,187
Right of use lease asset		3,363		3,415		3,466		3,517		3,568
Accrued interest receivable		1,751		1,797		1,960		1,879		1,723
Bank-owned life insurance		12,012		10,748		10,685		6,621		6,581
Other real estate owned		-		-		-		234		234
Other assets		1,839		2,371		1,324		2,103		658
Total Assets	$	756,619	$	720,903	$	647,294	$	620,663	$	602,172
Liabilities and Stockholders' Equity
Liabilities:
Noninterest-bearing demand deposits	$	199,662	$	193,061	$	162,013	$	150,494	$	146,542
Savings, NOW and money-market deposits		433,954		406,413		362,147		340,931		323,523
Time deposits		49,744		51,955		56,432		63,822		66,449
Total Deposits		683,360		651,429		580,592		555,247		536,514
Other borrowings		3,075		750		-		-		-
Official checks		965		1,257		1,109		1,577		3,373
Operating lease liability		3,489		3,535		3,580		3,625		3,669
Other liabilities		1,943		2,803		1,758		1,563		1,584
Total Liabilities		692,832		659,774		587,039		562,012		545,140
Total Stockholders' Equity		63,787		61,129		60,255		58,651		57,032
Total Liabilities and Stockholders' Equity	$	756,619	$	720,903	$	647,294	$	620,663	$	602,172

8

Prime Meridian Holding Company and Subsidiary

Financial Highlights (Unaudited)

(dollars in thousands except per share amounts)

	2Q'21			1Q'21			4Q'20			3Q'20			2Q'20
Per Share Data:
Earnings per common share - Basic	$	0.72		$	0.72		$	0.50		$	0.47		$	0.23
Earnings per common share - Diluted	$	0.72		$	0.71		$	0.50		$	0.47		$	0.23
Book value per common share	$	20.40		$	19.56		$	19.32		$	18.81		$	18.30
Common shares outstanding		3,126,474			3,124,794			3,119,471			3,117,842			3,116,499
Weighted-average basic common shares outstanding		3,126,197			3,123,565			3,119,058			3,117,623			3,116,307
Weighted-average diluted common shares outstanding		3,139,179			3,125,249			3,119,058			3,117,680			3,116,370
Selected Performance Ratios and Other Data:
Return on average assets(1)		1.24	%		1.32	%		0.97	%		0.96	%		0.47	%
Return on average equity(1)		14.40			14.72			10.44			10.27			5.09
Average yield on earning assets		3.40			3.77			3.84			3.66			3.59
Net interest margin(2)		3.11			3.44			3.43			3.18			3.07
Efficiency ratio(3)		53.99			52.85			60.03			51.72			56.57
Noninterest expense/average assets(1)		1.79			1.95			2.18			1.78			1.83
Asset Quality Data:
Nonaccrual loans	$	-		$	797		$	1,251		$	1,315		$	1,756
Loans 90 days past due + other real estate owned		-			-			-			234			234
Total nonperforming assets		-			797			1,251			1,549			1,990
Nonperforming assets / total assets		-			0.11	%		0.19	%		0.25	%		0.33	%
Loans 30-89 days past due	$	1,022		$	1,795		$	731		$	-		$	5
Total loans, net of held-for-sale loans		478,138			488,795			483,913			473,089			449,667
Loans 30-89 days past due / total loans		0.21	%		0.37	%		0.15	%		-			-
Net charge-offs / average loans (1)		0.01	%		-			0.09	%		0.03	%		0.64	%
Capital Ratios:
Tier 1 Leverage Capital Ratio (Company)		8.61	%		9.00	%		9.26	%		9.24	%		9.53	%
Tier 1 Leverage Capital Ratio (Bank)		9.01			9.07			9.09			9.06			8.99
Common Equity Tier 1 Capital Ratio (Bank)		13.87			13.72			13.29			13.79			13.80
Tier 1 Risk-Based Capital Ratio (Bank)		13.87			13.72			13.29			13.79			13.80
Total Risk-Based Capital Ratio (Bank)		15.11			14.98			14.54			15.04			15.05

⁽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.

9

Prime Meridian Holding Company and Subsidiary

Margin Analysis (Unaudited)

dollars in thousands

	For the Six Months Ended June 30,
	2021							2020
			Interest							Interest
	Average		and		Yield/			Average		and		Yield/
(dollars in thousands)	Balance		Dividends		Rate(5)			Balance		Dividends		Rate(5)
Interest-earning assets:
Loans(1)	$	483,586	$	11,204		4.63	%	$	390,400	$	9,108		4.67	%
Loans held for sale		14,081		233		3.31			7,919		165		4.17
Debt securities available for sale		59,893		511		1.71			65,798		812		2.47
Other(2)		115,888		114		0.20			75,687		294		0.78
Total interest-earning assets		673,448	$	12,062		3.58	%		539,804	$	10,379		3.85	%
Noninterest-earning assets		29,971							23,647
Total assets	$	703,419						$	563,451
Interest-bearing liabilities:
Savings, NOW and money-market deposits	$	396,541	$	811		0.41	%	$	294,245	$	956		0.65	%
Time deposits		52,906		226		0.85			68,597		680		1.98
Total interest-bearing deposits		449,447		1,037		0.46			362,842		1,636		0.90
Other borrowings		411		7		3.41			17,201		31		0.36
Total interest-bearing liabilities		449,858	$	1,044		0.46	%		380,043	$	1,667		0.88	%
Noninterest-bearing deposits		185,424							120,046
Noninterest-bearing liabilities		6,361							6,954
Stockholders' equity		61,776							56,408
Total liabilities and stockholders' equity	$	703,419						$	563,451
Net earning assets	$	223,590						$	159,761
Net interest income			$	11,018						$	8,712
Interest rate spread (3)						3.12	%						2.97	%
Net interest margin(4)						3.27	%						3.23	%

⁽¹⁾   Includes nonaccrual loans

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

⁽⁵⁾  Annualized

10

Prime Meridian Holding Company and Subsidiary

Non-GAAP Measures and Ratio Reconciliation

Quarterly Pre-Tax Pre-Provision Calculation (Unaudited)

(dollars in thousands except per share amounts)

	2Q'21			1Q'21			4Q'20			3Q'20			2Q'20
Net Income
Net earnings (GAAP)	$	2,262		$	2,234		$	1,541		$	1,481		$	720
Plus: Provision (credit) for loan losses		(185	)		-			365			621			1,227
Plus: income taxes		717			707			394			464			217
PTPP net earnings (non-GAAP)	$	2,794		$	2,941		$	2,300		$	2,566		$	2,164
Earnings per Share (EPS)
Weighted average common shares, diluted		3,139,179			3,125,249			3,119,058			3,117,680			3,116,370
EPS, diluted (GAAP)	$	0.72		$	0.71		$	0.50		$	0.47		$	0.23
PTPP EPS, diluted (non-GAAP)	$	0.89		$	0.94		$	0.74		$	0.82		$	0.69
Return on Average Assets (ROAA)
Average assets	$	731,681		$	674,843		$	635,127		$	618,854		$	616,670
ROAA (GAAP)		1.24	%		1.32	%		0.97	%		0.96	%		0.47	%
PTPP ROAA (non-GAAP)		1.53	%		1.74	%		1.45	%		1.66	%		1.40	%
Return on Average Equity
Average equity	$	62,837		$	60,704		$	59,028		$	57,679		$	56,563
ROAE (GAAP)		14.40	%		14.72	%		10.44	%		10.27	%		5.09	%
PTPP ROAE (non-GAAP)		17.79	%		19.38	%		15.59	%		17.80	%		15.30	%
Adjusted Average Loan Yield:
Net loans, excluding loans held for sale	$	470,488		$	480,772		$	476,661		$	465,642		$	442,574
Less PPP loans		(54,563	)		(78,625	)		(66,774	)		(82,412	)		(81,451	)
Adjusted net loans, excluding loans held for sale and PPP (non-GAAP)	$	415,925		$	402,147		$	409,887		$	383,230		$	361,123
Average loans, excluding loans held for sale	$	483,587		$	484,455		$	477,570		$	459,984		$	427,902
Less average PPP loans		(69,318	)		(70,880	)		(77,367	)		(82,132	)		(62,086	)
Adjusted average loans, excluding loans held for sale and PPP (non-GAAP)	$	414,269		$	413,575		$	400,203		$	377,852		$	365,816
Interest on loans, excluding loans held for sale		5,505			5,699			5,445			5,000			4,745
Less interest income and earned fee income on PPP loans		(874	)		(1,035	)		(803	)		(530	)		(392	)
Adjusted interest on loans, excluding loans held for sale and PPP (non-GAAP)	$	4,631		$	4,664		$	4,642		$	4,470		$	4,353
Average loan yield, excluding loans held for sale (GAAP)		4.55	%		4.71	%		4.56	%		4.35	%		4.44	%
Adjusted average loan yield, excluding loans held for sale and PPP (non-GAAP)		4.47	%		4.51	%		4.64	%		4.73	%		4.76	%

11

Prime Meridian Holding Company and Subsidiary

Non-GAAP Measures and Ratio Reconciliation

YTD Pre-Tax Pre-Provision Calculation (Unaudited)

(dollars in thousands except per share amounts)

	For the Six Months Ended
	June 30, 2021			June 30, 2020
Net Income
Net earnings (GAAP)	$	4,496		$	1,436
Plus: Provision (credit) for loan losses		(185	)		1,863
Plus: income taxes		1,424			437
PTPP net earnings (non-GAAP)	$	5,735		$	3,736
Earnings per Share (EPS)
Weighted average common shares, diluted		3,128,185			3,150,240
EPS, diluted (GAAP)	$	1.44		$	0.45
PTPP EPS, diluted (non-GAAP)	$	1.83		$	1.19
Return on Average Assets (ROAA)
Average assets	$	703,419		$	563,451
ROAA (GAAP)		1.28	%		0.51	%
PTPP ROAA (non-GAAP)		1.63	%		1.33	%
Return on Average Equity (ROAE)
Average equity (GAAP)	$	61,776		$	56,408
ROAE (GAAP)		14.56	%		5.09	%
PTPP ROAE (non-GAAP)		18.57	%		13.25	%

CONTACT:      Clint F. Weber, Chief Financial Officer and Executive Vice President

                         (850) 907-2300

                         Prime Meridian Holding Company

                         Website: www.primemeridianbank.com

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