Prime Meridian Holding (PMHG) 8-K Prime Meridian Holding Company Reports THIRD quarter 2022 Results

Exhibit 99.1

FOR IMMEDIATE RELEASE

Prime Meridian Holding Company Reports

THIRD quarter 2022 Results

TALLAHASSEE, FL – October 28, 2022 (GLOBE NEWSWIRE) – Prime Meridian Holding Company (OTCQX: PMHG), the parent bank holding company for Prime Meridian Bank, today announced unaudited financial results for the three and nine months ended September 30, 2022. The Company reported net earnings of $2,831,000, or $0.90 per basic and $0.89 per diluted share, for the three months ended September 30, 2022, compared to net earnings of $2,099,000 or $0.67 per basic and diluted share, for the three months ended September 30, 2021.  The Company reported net earnings of $7,039,000, or $2.23 per basic and $2.21 per diluted share for the nine months ended September 30, 2022, compared to $6,595,000, or $2.11 per basic and $2.10 per diluted share for the nine months ended September 30, 2021.

"The ability to stay agile and connected with our clients and communities is incredibly important," says Sammie D. Dixon, Jr., Prime Meridian's Vice Chairman, President and CEO. "We are coming off a record quarter of earnings, with a loan pipeline that continues to show momentum. We are mindful, however, of the unique combination of economic headwinds and uncertainties - rising interest rates, high inflation, continued supply chain issues, the war in Ukraine, and increasing cybersecurity threats."

"Our plan is to stay the course," maintains Dixon, "and focus on growing and maintaining our client relationships and future prospects," said Dixon. "We have an unwavering and enduring commitment to both our clients and the communities we serve. It's who we are."

Third Quarter 2022 Highlights

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

(dollars in thousands except per share amounts)

	3Q'22			2Q'22			1Q'22			4Q'21			3Q'21
Net earnings	$	2,831		$	1,967		$	2,241		$	1,752		$	2,099
Book value per share	$	20.20		$	20.48		$	20.87		$	21.42		$	20.99
Earnings per share - Basic	$	0.90		$	0.62		$	0.71		$	0.56		$	0.67
Earnings per share - Diluted	$	0.89		$	0.62		$	0.71		$	0.55		$	0.67
Weighted-average basic shares outstanding		3,159,526			3,151,760			3,138,695			3,128,831			3,127,524
Weighted-average diluted shares outstanding		3,197,282			3,189,319			3,174,697			3,162,746			3,145,017
Return on average assets(1)		1.32	%		0.90	%		1.05	%		0.85	%		1.09	%
Return on average equity(1)		17.19			12.13			12.70			10.11			12.99
Average yield on earning assets(1)		4.04			3.43			3.09			3.11			3.34
Net interest margin(1)		3.71			3.21			2.88			2.85			3.06
Efficiency ratio(2)		50.53			54.32			59.28			63.83			55.90
Nonperforming assets/total assets(3)		0.12			0.04			-			-			-

⁽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, loans greater than 90 days past due, and nonaccrual loans.

• The Company reported record quarterly net earnings of $2.8 million.  Earnings were boosted by strong loan production and rising interest rates.  

• Adjusted pre-tax, pre-provision net earnings for the third quarter of 2022 were $4.0 million and adjusted pre-tax, pre-provision annualized returns on average assets and average common equity were 1.86% and 24.28%, respectively. (These are considered non-GAAP financial measures. Please refer to "Non-GAAP Measures and Ratio Reconciliation" in the Tables on page 11 for more detail.)

• Since December 31, 2021, net loans increased $75.7 million, or 15.4%, while deposits decreased $7.5 million, or 1.0%, as competitive rate pressures and inflationary effects intensified. The Company's loan to deposit ratio was 74.9% at September 30, 2022. 

• Asset quality remained strong with four loans totaling $1 million on nonaccrual status and a nonperforming assets/total assets ratio of 0.12%. 

• Book value per share fell $0.28, or 1.4%, to $20.20 as rising interest rates have caused unrealized market value declines in the Company's investment securities portfolio to outpace earnings per share.  

1

Earnings Summary (Unaudited)

(dollars in thousands)

							Change 3Q'22 vs.						For the Nine Months Ended
	3Q'22		2Q'22		3Q'21		2Q'22			3Q'21			September 30, 2022		September 30, 2021			% Change
Net interest income	$	7,602	$	6,642	$	5,653		14.5	%		34.5	%	$	20,103	$	16,671			20.6	%
Provision (credit) for loan losses		241		731		-		(67.0	)		N/A			601		(185	)		424.9
Noninterest income		483		504		613		(4.2	)		(21.2	)		1,505		1,905			(21.0	)
Noninterest expense		4,085		3,882		3,503		5.2			16.6			11,747		10,078			16.6
Income taxes		928		566		664		64.0			39.8			2,221		2,088			6.4
Net earnings	$	2,831	$	1,967	$	2,099		43.9	%		34.9	%	$	7,039	$	6,595			6.7	%

On a linked quarter basis, the increase in net earnings is mostly attributed to increased interest income earned on loans, securities, and cash (due primarily to higher volume of loans and rising interest rates across the board) and also to a lower provision for loan losses.  These gains were partially offset by decreases in noninterest income, increases in noninterest expense and higher income taxes.  Compared to the third quarter of 2021, higher yields on most categories of interest-earning assets combined with loan growth and higher investment balances drove the 34.9% increase in net earnings. Lower noninterest income, higher noninterest expense and higher income taxes again offset the gains in net interest income. Comparing the nine-month periods, a double digit increase in net interest income was partially offset by a higher provision for loan losses, lower noninterest income, and increased noninterest and income tax expense.

Net Interest Income (Unaudited)

(dollars in thousands)

							Change 3Q'22 vs.						For the Nine Months Ended
	3Q'22		2Q'22		3Q'21		2Q'22			3Q'21			September 30, 2022		September 30, 2021		% Change
Interest income:
Loans	$	6,755	$	6,029	$	5,819		12.0	%		16.1	%	$	18,568	$	17,256		7.6	%
Securities		878		737		283		19.1			210.2			2,000		794		151.9
Other		649		331		78		96.1			732.1			1,104		192		475.0
Total interest income		8,282		7,097		6,180		16.7	%		34.0	%		21,672		18,242		18.8	%
Interest expense:
Deposits		624		415		502		50.4	%		24.3	%		1,442		1,539		(6.3	)%
Other borrowings		56		40		25		40.0			124.0			127		32		296.9
Total interest expense		680		455		527		49.5			29.0			1,569		1,571		(0.1	)
Net interest income	$	7,602	$	6,642	$	5,653		14.5	%		34.5	%	$	20,103	$	16,671		20.6	%

Net interest income of $7.6 million for the third quarter of 2022 represented a $960,000 increase over the second quarter of 2022 and a $1.9 million increase over the third quarter of 2021. The Company's net interest margin was 3.71% in the third quarter of 2022, an increase of 50 basis points over the linked quarter and 65 basis points over the third quarter of 2021. On a linked quarter basis, the Company benefitted from higher interest rates on all categories of interest-earnings assets, growth in average loan and investment balances, and a reduced volume of cash balances within the earning asset mix.  Additionally, the average yield on interest-earning assets (up 61 basis points) outpaced the average cost of interest-bearing liabilities (up 17 basis points) as there was a lag in the rising cost of deposits.

Compared to the third quarter of 2021, higher interest rates combined with growth in loan and investment balances and a reduction of cash balances led to the improvement, partially offset by the near completion of the PPP loan program and its fees.  Furthermore, the yield on interest-earning assets improved 70 basis points compared to a 5-basis-points increase in the average cost of interest-bearing liabilities, again reflecting a lag in the rising cost of deposits. 

Despite a $14.2 million decrease in the average balance of interest-bearing deposit accounts since 2Q22, total interest expense increased due to higher rates on deposits and interest expense incurred on the Company's line of credit.  Compared to the third quarter of 2021, the average balance of interest-bearing deposits increased $81.6 million and the average cost of interest-bearing deposits increased 4 basis points to 0.44% and were the primary contributors to higher interest expense.

Comparing the nine-month periods, the average balance of interest-earnings assets increased 17.9%, or $124.6 million, and was a primary driver of the increase in net interest income along with higher yields on loans (excluding the impact of PPP) and other interest-earning assets.  There was a $2.0 million decrease in interest and fee income from PPP loans as the Bank moved through the forgiveness process of these loans which has impacted average loan yields and the net interest margin for multiple quarters.  The yield on the average balance of interest-earning assets improved slightly to 3.52% while the average cost of interest-bearing liabilities decreased 9 basis points to 0.36%. Total interest expense for the nine-month period stayed flat despite an increase in the average balance of interest-earning liabilities of $110.6 million.  The Company's net interest margin improved 8 basis points to 3.27%. 

2

Provision for Loan Losses

Provision expense was $241,000 for the quarter and $601,000 year-to-date, incurred primarily from funded loan growth during the periods. Also contributing to the volume of provision expense during the period is $286,000 in year-to-date net recoveries, combined with a marginal reduction in the general reserve requirement for commercial loans. The Company is not required to implement the provisions of the Current Expected Credit Losses ("CECL") accounting standard until January 1, 2023 and is continuing to account for the allowance for loan losses under the incurred loss model.

Noninterest income (Unaudited)

(dollars in thousands)

							Change 3Q'22 vs.						For the Nine Months Ended				��
	3Q'22		2Q'22		3Q'21		2Q'22			3Q'21			September 30, 2022		September 30, 2021		% Change
Service charges and fees on deposit accounts	$	78	$	73	$	61		6.8	%		27.9	%	$	219	$	170		28.8	%
Debit card/ATM revenue, net		132		143		108		(7.7	)		22.2			404		341		18.5
Mortgage banking revenue, net		116		139		325		(16.5	)		(64.3	)		420		958		(56.2	)
Income from bank-owned life insurance		96		94		73		2.1			31.5			285		203		40.4
Gain on sale of debt securities available for sale		-		-		-		-			-			-		108		(100.0	)
Other income		61		55		46		10.9			32.6			177		125		41.6
Total noninterest income	$	483	$	504	$	613		(4.2	)%		(21.2	)%	$	1,505	$	1,905		(21.0	)%

For all comparison periods, the decline in noninterest income is predominantly due to lower mortgage banking revenue given the rising rate environment and the high level of refinancing activity that occurred in 2021. Increases in bank-owned life insurance ("BOLI") income and fees on deposit accounts partially offset the decrease in mortgage banking revenue for all comparison periods.  Looking at year-to-date comparisons for 2022 and 2021, fee income from merchant cards, debit cards, and ATM transactions also helped offset the decrease in mortgage banking revenue. 

Noninterest expense (Unaudited)

(dollars in thousands)

							Change 3Q'22 vs.						For the Nine Months Ended
	3Q'22		2Q'22		3Q'21		2Q'22			3Q'21			September 30, 2022		September 30, 2021		% Change
Salaries and employee benefits	$	2,367	$	2,238	$	2,028		5.8	%		16.7	%	$	6,765	$	5,685		19.0	%
Occupancy and equipment		413		396		380		4.3			8.7			1,217		1,144		6.4
Professional fees		124		130		103		(4.6	)		20.4			400		353		13.3
Marketing		195		213		197		(8.5	)		(1.0	)		575		536		7.3
FDIC assessment		95		84		78		13.1			21.8			303		197		53.8
Software maintenance, amortization and other		310		285		237		8.8			30.8			837		738		13.4
Other		581		536		480		8.4			21.0			1,650		1,425		15.8
Total noninterest expense	$	4,085	$	3,882	$	3,503		5.2	%		16.6	%	$	11,747	$	10,078		16.6	%

For all comparison periods, an increase in compensation costs is the primary driver of higher noninterest expense due to a larger employee base (106 FTEs at September 30, 2022 versus 95 at September 30, 2021), annual raises, higher incentive accrual, and lower deferred loan costs. The increase in FDIC assessment expense is assessment rate driven on a linked quarter basis and deposit volume driven when compared to the three and nine months ended September 30, 2021.  Higher software maintenance, amortization and other expense reflects the expanding information technology needs of a growing company while increases in other noninterest expense are largely attributed to higher travel and entertainment and board related expenses. 

3

Balance Sheet

At September 30, 2022, the Company reported $832.3 million in total assets, $755.4 million in deposits, and $565.9 million in net portfolio loans. This compares to $841.1 million in total assets, $762.9 million in deposits, and $490.2 million in net portfolio loans at December 31, 2021. Excluding $15 million in year-to-date PPP loan forgiveness, the Company's net loan portfolio increased $90.7 million, or 19.1%, since year-end.  

Prime Meridian Holding Company and Subsidiary

Loans by Class

(dollars in thousands)

	September 30, 2022						December 31, 2021
	Unaudited						Audited
	Amount			% of Total			Amount			% of Total
Commercial real estate	$	199,044			34.8	%	$	156,306			31.5	%
Residential real estate and home equity		218,909			38.2			183,536			36.9
Construction		70,815			12.4			71,164			14.3
Commercial		76,672			13.4			78,584			15.8
Consumer		7,199			1.2			7,283			1.5
Total loans		572,639			100.0	%		496,873			100.0	%
Net deferred loan costs (fees)		99						(701	)
Allowance for loan losses		(6,861	)					(5,974	)
Loans, net	$	565,877					$	490,198

Deposit balances decreased $29.2 million from June 30, 2022.  The decrease is attributed to several factors - seasonal outflows of public funds, net outflows from attorney trust accounts due to less real estate closing activity and the movement of personal interest-bearing accounts into higher yielding investments outside of the Bank.

Total stockholders’ equity was $63.9 million, or 7.7% of total assets, at September 30, 2022 compared to $67.0 million at December 31, 2021, or 8.0% of total assets.  The $3.1 million decrease in equity from year-end stemmed from a $10.3 million change in accumulated other comprehensive loss on the Company's investment securities portfolio due to the rising interest rate environment, partially offset by earnings for the nine months ended September 30, 2022.  Book value per share decreased from $21.42 at December 31, 2021 with 3,129,046 common shares outstanding to $20.20 at September 30, 2022, with 3,162,975 common shares outstanding.  While rising interest rates have generated unrealized losses in the Company's investment portfolio during the nine months ended September 30, 2022, the Company's balance sheet is expected to respond favorably to the current rate environment.

As of September 30, 2022, the Bank was considered to be “well capitalized” with a Tier 1 Leverage Capital Ratio of 9.07.%, a 12.62% Common Equity Tier 1 Capital Ratio, a 12.62% Tier 1 Risk-Based Capital Ratio, and a 13.73% Total Risk-Based Capital Ratio.  Since December of 2019, the Company has injected $9.7 million into the Bank to support growth.  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.  As of September 30, 2022, the Company had an outstanding loan balance under this line of $4.1 million and year-to-date interest expense of $127,000.  

Asset Quality

At September 30, 2022, the Bank had four nonaccrual loans totaling $1.0 million compared to none at December 31, 2021.  Net recoveries totaled $286,000 for the nine months ended September 30, 2022 and the ratio of nonperforming assets as a percentage of total assets was 0.12%. Management believes that the allowance for loan losses which was $6.9 million, or 1.2% of gross loans, at September 30, 2022 is adequate.

4

About Prime Meridian Holding Company

Headquartered in Tallahassee, Florida, Prime Meridian Holding Company (OTCQX: PMHG) offers a broad range of banking services through its wholly owned subsidiary, Prime Meridian Bank, a Florida state-chartered non-member bank. Founded in 2008, the Bank now serves the Tallahassee and Lakeland/Winter Haven Metropolitan Statistical Areas (MSA), including clients in North and Central Florida as well as South Georgia and South Alabama. The Bank currently has four Florida locations: two in Tallahassee, Florida, one in Crawfordville, Florida, and one in Lakeland, Florida. As of September 30, 2022, the Bank had 106 full-time equivalent employees. For more information about Prime Meridian Holding Company, please visit www.primemeridianbank.com.

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

About Non-GAAP Financial Measures

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

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

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

Tables Follow

5

Prime Meridian Holding Company and Subsidiary

Condensed Consolidated Statements of Earnings (Unaudited)

(in thousands except per share amounts)

	3Q'22		2Q'22		1Q'22			4Q'21		3Q'21
Interest income:
Loans	$	6,755	$	6,029	$	5,784		$	5,794	$	5,819
Securities		878		737		385			292		283
Other		649		331		124			76		78
Total interest income		8,282		7,097		6,293			6,162		6,180
Interest expense:
Deposits		624		415		403			483		502
Other borrowings		56		40		31			26		25
Total interest expense		680		455		434			509		527
Net interest income		7,602		6,642		5,859			5,653		5,653
Provision (credit) for loan losses		241		731		(371	)		81		-
Net interest income after provision for loan losses		7,361		5,911		6,230			5,572		5,653
Noninterest income:
Service charges and fees on deposit accounts		78		73		68			75		61
Debit card/ATM revenue, net		132		143		129			129		108
Mortgage banking revenue, net		116		139		165			216		325
Income from bank-owned life insurance		96		94		95			69		73
Other income		61		55		61			112		46
Total noninterest income		483		504		518			601		613
Noninterest expense:
Salaries and employee benefits		2,367		2,238		2,160			2,408		2,028
Occupancy and equipment		413		396		408			402		380
Professional fees		124		130		146			130		103
Marketing		195		213		167			171		197
FDIC assessment		95		84		124			119		78
Software maintenance, amortization and other		310		285		242			237		237
Other		581		536		533			525		480
Total noninterest expense		4,085		3,882		3,780			3,992		3,503
Earnings before income taxes		3,759		2,533		2,968			2,181		2,763
Income taxes		928		566		727			429		664
Net earnings	$	2,831	$	1,967	$	2,241		$	1,752	$	2,099
Basic earnings per common share	$	0.90	$	0.62	$	0.71		$	0.56	$	0.67
Diluted earnings per common share	$	0.89	$	0.62	$	0.71		$	0.55	$	0.67

6

Prime Meridian Holding Company and Subsidiary

Condensed Consolidated Statements of Earnings 

(in thousands, except per share amounts)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	Unaudited				Unaudited
Interest income:
Loans	$	6,755	$	5,819	$	18,568	$	17,256
Securities		878		283		2,000		794
Other		649		78		1,104		192
Total interest income		8,282		6,180		21,672		18,242
Interest expense:
Deposits		624		502		1,442		1,539
Other borrowings		56		25		127		32
Total interest expense		680		527		1,569		1,571
Net interest income		7,602		5,653		20,103		16,671
Provision (credit) for loan losses		241		-		601		(185	)
Net interest income after provision for loan losses		7,361		5,653		19,502		16,856
Noninterest income:
Service charges and fees on deposit accounts		78		61		219		170
Debit card/ATM revenue, net		132		108		404		341
Mortgage banking revenue, net		116		325		420		958
Income from bank-owned life insurance		96		73		285		203
Gain on sale of debt securities available for sale		-		-		-		108
Other income		61		46		177		125
Total noninterest income		483		613		1,505		1,905
Noninterest expense:
Salaries and employee benefits		2,367		2,028		6,765		5,685
Occupancy and equipment		413		380		1,217		1,144
Professional fees		124		103		400		353
Marketing		195		197		575		536
FDIC assessment		95		78		303		197
Software maintenance, amortization and other		310		237		837		738
Other		581		480		1,650		1,425
Total noninterest expense		4,085		3,503		11,747		10,078
Earnings before income taxes		3,759		2,763		9,260		8,683
Income taxes		928		664		2,221		2,088
Net earnings	$	2,831	$	2,099	$	7,039	$	6,595
Earnings per common share:
Basic	$	0.90	$	0.67	$	2.23	$	2.11
Diluted		0.89		0.67		2.21		2.10
Cash dividends per common share(1)		-		-		0.18		0.14

⁽¹⁾ Annual cash dividends were paid during the first quarters of 2022 and 2021.

7

Prime Meridian Holding Company and Subsidiary

Condensed Consolidated Balance Sheets

(in thousands)

	3Q'22		2Q'22		1Q'22		4Q'21		3Q'21
	(Unaudited)		(Unaudited)		(Unaudited)		(Audited)		(Unaudited)
Assets
Cash & cash equivalents	$	76,017	$	134,122	$	233,789	$	233,473	$	212,652
Debt securities available for sale		131,668		133,382		101,868		73,763		67,124
Debt securities held to maturity		11,794		8,777		6,185		-		-
Loans, held for sale		8,911		10,725		11,241		11,768		10,976
Loans, net		565,877		537,566		479,526		490,198		476,513
Federal Home Loan Bank stock		463		463		463		366		366
Premises & equipment, net		8,169		8,228		7,905		7,962		8,018
Right of use lease asset		3,098		3,151		3,205		3,258		3,310
Accrued interest receivable		2,132		1,933		1,649		1,505		1,478
Bank-owned life insurance		16,438		16,342		16,248		16,153		12,085
Other assets		7,748		6,148		4,087		2,677		1,952
Total Assets	$	832,315	$	860,837	$	866,166	$	841,123	$	794,474
Liabilities and Stockholders' Equity
Liabilities:
Noninterest-bearing demand deposits	$	216,533	$	210,685	$	206,018	$	209,351	$	219,996
Savings, NOW and money-market deposits		500,263		535,359		534,049		503,759		448,528
Time deposits		38,618		38,545		47,876		49,832		49,817
Total Deposits		755,414		784,589		787,943		762,942		718,341
Other borrowings		4,125		4,125		3,975		3,575		3,075
Official checks		1,277		776		1,625		1,141		1,168
Operating lease liability		3,256		3,303		3,350		3,397		3,443
Other liabilities		4,339		3,415		3,512		3,037		2,798
Total Liabilities		768,411		796,208		800,405		774,092		728,825
Total Stockholders' Equity		63,904		64,629		65,761		67,031		65,649
Total Liabilities and Stockholders' Equity	$	832,315	$	860,837	$	866,166	$	841,123	$	794,474

8

Prime Meridian Holding Company and Subsidiary

Condensed Consolidated Average Balance Sheets (Unaudited)

(in thousands)

	3Q'22							2Q'22							3Q'21
			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)	$	555,764	$	6,646		4.78	%	$	514,166	$	5,912		4.60	%	$	477,322	$	5,708		4.78	%
Loans held for sale		9,869		109		4.42			11,174		117		4.19			12,437		111		3.57
Debt securities		144,710		878		2.43			132,562		737		2.22			65,226		283		1.74
Other(2)		108,875		649		2.38			170,320		331		0.78			184,525		78		0.17
Total interest-earning assets		819,218	$	8,282		4.04	%		828,222	$	7,097		3.43	%		739,510	$	6,180		3.34	%
Noninterest-earning assets		38,699							41,391							32,357
Total assets	$	857,917						$	869,613						$	771,867
Interest-bearing liabilities:
Savings, NOW and money-market deposits	$	527,408	$	570		0.43	%	$	536,209	$	357		0.27	%	$	435,213	$	426		0.39	%
Time deposits		38,244		54		0.56			43,611		58		0.53			49,844		76		0.61
Total interest-bearing deposits		565,652		624		0.44			579,820		415		0.29			485,057		502		0.41
Other borrowings		4,125		56		5.43			4,034		40		3.97			3,075		25		3.25
Total interest-bearing liabilities		569,777	$	680		0.48	%		583,854	$	455		0.31	%		488,132	$	527		0.43	%
Noninterest-bearing deposits		214,462							213,521							213,570
Noninterest-bearing liabilities		7,787							7,345							5,529
Stockholders' equity		65,891							64,893							64,636
Total liabilities and stockholders' equity	$	857,917						$	869,613						$	771,867
Net earning assets	$	249,441						$	244,368						$	251,378
Net interest income			$	7,602						$	6,642						$	5,653
Interest rate spread(3)						3.56	%						3.12	%						2.91	%
Net interest margin(4)						3.71	%						3.21	%						3.06	%

	For the Nine Months Ended September 30,
	2022							2021
			Interest							Interest
	Average		and		Yield/			Average		and		Yield/
(dollars in thousands)	Balance		Dividends		Rate(5)			Balance		Dividends		Rate(5)
Interest-earning assets:
Loans(1)	$	519,975	$	18,242		4.68	%	$	481,762	$	16,912		4.68	%
Loans held for sale		10,529		326		4.13			13,527		344		3.39
Debt securities		120,675		2,000		2.21			61,690		794		1.72
Other(2)		169,402		1,104		0.87			139,017		192		0.18
Total interest-earning assets		820,581	$	21,672		3.52	%		695,996	$	18,242		3.49	%
Noninterest-earning assets		39,792							30,490
Total assets	$	860,373						$	726,486
Interest-bearing liabilities:
Savings, NOW and money-market deposits	$	527,077	$	1,263		0.32	%	$	410,799	$	1,243		0.40	%
Time deposits		43,552		179		0.55			51,874		296		0.76
Total interest-bearing deposits		570,629		1,442		0.34			462,673		1,539		0.44
Other borrowings		3,960		127		4.28			1,309		32		3.26
Total interest-bearing liabilities		574,589	$	1,569		0.36	%		463,982	$	1,571		0.45	%
Noninterest-bearing deposits		212,507							194,909
Noninterest-bearing liabilities		7,401							5,128
Stockholders' equity		65,876							62,467
Total liabilities and stockholders' equity	$	860,373						$	726,486
Net earning assets	$	245,992						$	232,014
Net interest income			$	20,103						$	16,671
Interest rate spread (3)						3.16	%						3.04	%
Net interest margin(4)						3.27	%						3.19	%

⁽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

9

Prime Meridian Holding Company and Subsidiary

Financial Highlights (Unaudited)

(dollars in thousands except per share amounts)

	3Q'22			2Q'22			1Q'22			4Q'21			3Q'21
Per Share Data:
Earnings per common share - Basic	$	0.90			0.62		$	0.71		$	0.56		$	0.67
Earnings per common share - Diluted	$	0.89			0.62		$	0.71		$	0.55		$	0.67
Book value per common share	$	20.20			20.48		$	20.87		$	21.42		$	20.99
Common shares outstanding		3,162,975			3,155,308			3,150,261			3,129,046			3,127,730
Weighted-average basic common shares outstanding		3,159,526			3,151,760			3,138,695			3,128,831			3,127,524
Weighted-average diluted common shares outstanding		3,197,282			3,189,319			3,174,697			3,162,746			3,145,017
Selected Performance Ratios and Other Data:
Return on average assets(1)		1.32	%		0.90	%		1.05	%		0.85	%		1.09	%
Return on average equity(1)		17.19			12.13			12.70			10.11			12.99
Average yield on earning assets		4.04			3.43			3.09			3.11			3.34
Net interest margin(2)		3.71			3.21			2.88			2.85			3.06
Efficiency ratio(3)		50.53			54.32			59.28			63.83			55.90
Noninterest expense/average assets(1)		1.90			1.79			1.77			1.93			1.82
Asset Quality Data:
Nonaccrual loans	$	1,006		$	349		$	-		$	-		$	-
Loans 90 days past due + other real estate owned		-			-			-			-			-
Total nonperforming assets		1,006			349			-			-			-
Nonperforming assets/total assets		0.12	%		0.04	%		-			-			-
Loans 30-89 days past due	$	1,024		$	1,597		$	1,546		$	1,121		$	526
Total loans		572,639			544,084			485,573			496,873			483,634
Loans 30-89 days past due/total loans		0.18	%		0.29	%		0.32	%		0.23	%		0.11	%
Net (recoveries) charge-offs/average loans (1)		-			-			(0.23	%)		-			-
Capital Ratios:
Tier 1 Leverage Capital Ratio (Company)		8.59	%		8.16	%		8.10	%		8.12	%		8.45	%
Tier 1 Leverage Capital Ratio (Bank)		9.07			8.61			8.56			8.53			8.82
Common Equity Tier 1 Capital Ratio (Bank)		12.62			12.61			13.60			12.72			13.30
Tier 1 Risk-Based Capital Ratio (Bank)		12.62			12.61			13.60			12.72			13.30
Total Risk-Based Capital Ratio (Bank)		13.73			13.72			14.70			13.80			14.45

⁽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.

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)

	3Q'22			2Q'22			1Q'22			4Q'21			3Q'21
Net Income
Net earnings (GAAP)	$	2,831		$	1,967		$	2,241		$	1,752		$	2,099
Plus: Provision (credit) for loan losses		241			731			(371	)		81			-
Plus: income taxes		928			566			727			429			664
PTPP(1) net earnings (non-GAAP)	$	4,000		$	3,264		$	2,597		$	2,262		$	2,763
Earnings per Share (EPS)
Weighted average common shares, diluted		3,197,282			3,189,319			3,174,697			3,162,746			3,145,017
EPS, diluted (GAAP)	$	0.89		$	0.62		$	0.71		$	0.55		$	0.67
PTPP(1) EPS, diluted (non-GAAP)	$	1.25		$	1.02		$	0.82		$	0.72		$	0.88
Return on Average Assets (ROAA)
Average assets	$	857,917		$	869,613		$	852,848		$	826,027		$	771,867
ROAA (GAAP)		1.32	%		0.90	%		1.05	%		0.85	%		1.09	%
PTPP(1) ROAA (non-GAAP)		1.86	%		1.50	%		1.22	%		1.10	%		1.43	%
Return on Average Equity
Average equity	$	65,891		$	64,893		$	70,584		$	69,336		$	64,636
ROAE (GAAP)		17.19	%		12.13	%		12.70	%		10.11	%		12.99	%
PTPP(1) ROAE (non-GAAP)		24.28	%		20.12	%		14.72	%		13.05	%		17.10	%
Adjusted Average Loan Yield:
Net loans, excluding loans held for sale	$	565,877		$	537,566		$	479,526		$	490,198		$	476,513
Less PPP loans		(199	)		(1,023	)		(4,937	)		(15,172	)		(27,554	)
Adjusted net loans, excluding loans held for sale and PPP (non-GAAP)	$	565,678		$	536,543		$	474,589		$	475,026		$	448,959
Average loans, excluding loans held for sale	$	555,764		$	514,166		$	489,263		$	477,175		$	477,322
Less average PPP loans		(312	)		(2,876	)		(9,652	)		(18,684	)		(43,033	)
Adjusted average loans, excluding loans held for sale and PPP (non-GAAP)	$	555,452		$	511,290		$	479,611		$	458,491		$	434,289
Interest on loans, excluding loans held for sale	$	6,646		$	5,912		$	5,684		$	5,686		$	5,708
Less interest income and earned fee income on PPP loans		(41	)		(237	)		(496	)		(584	)		(865	)
Adjusted interest on loans, excluding loans held for sale and PPP (non-GAAP)	$	6,605		$	5,675		$	5,188		$	5,102		$	4,843
Growth rate over linked quarter		16.4	%		9.4	%		1.7	%		5.3	%		4.6	%
Average loan yield, excluding loans held for sale (GAAP)		4.78	%		4.60	%		4.65	%		4.77	%		4.78	%
Adjusted average loan yield, excluding loans held for sale and PPP (non-GAAP)		4.76	%		4.44	%		4.33	%		4.45	%		4.46	%

⁽¹⁾ Pre-tax, pre-provision

11

Prime Meridian Holding Company and Subsidiary

Non-GAAP Measures and Ratio Reconciliation

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

(dollars in thousands except per share amounts)

	For the Nine Months Ended
	September 30, 2022			September 30, 2021
Net Income
Net earnings (GAAP)	$	7,039		$	6,595
Plus: (credit) provision for loan losses		601			(185	)
Plus: income taxes		2,221			2,088
PTPP(1) net earnings (non-GAAP)	$	9,861		$	8,498
Earnings per Share (EPS)
Weighted average common shares, diluted		3,191,593			3,134,236
EPS, diluted (GAAP)	$	2.21		$	2.10
PTPP(1) EPS, diluted (non-GAAP)	$	3.09		$	2.71
Return on Average Assets (ROAA)
Average assets	$	860,373		$	726,486
ROAA (GAAP)		1.09	%		1.21	%
PTPP(1) ROAA (non-GAAP)		1.53	%		1.56	%
Return on Average Equity (ROAE)
Average equity (GAAP)	$	65,876		$	62,467
ROAE (GAAP)		14.25	%		14.08	%
PTPP(1) ROAE (non-GAAP)		19.96	%		18.14	%

⁽¹⁾ Pre-tax, pre-provision

12

Prime Meridian Holding Company and Subsidiary

Non-GAAP Measures and Ratio Reconciliation

Annual Pre-Tax Pre-Provision Calculation Unaudited)

(dollars in thousands except per share amounts)

	For the Year Ended December 31,
	2021			2020			2019			2018			2017
Net Income
Net earnings (GAAP)	$	8,347		$	4,458		$	3,542		$	4,042		$	2,817
Plus: Provision (credit) for loan losses		(104	)		2,850			1,131			591			256
Plus: income taxes		2,517			1,295			1,092			1,220			1,735
PTPP(1) net earnings (non-GAAP)	$	10,760		$	8,603		$	5,765		$	5,853		$	4,808
Earnings per Share (EPS)
Weighted average common shares, diluted		3,142,482			3,134,124			3,159,635			3,131,546			2,711,699
EPS, diluted (GAAP)	$	2.66		$	1.42		$	1.12		$	1.29		$	1.04
PTPP(1) EPS, diluted (non-GAAP)	$	3.42		$	2.74		$	1.82		$	1.87		$	1.77
Return on Average Assets (ROAA)
Average assets	$	751,576		$	595,363		$	456,797		$	379,288		$	331,682
ROAA (GAAP)		1.11	%		0.75	%		0.78	%		1.07	%		0.85	%
PTPP(1) ROAA (non-GAAP)		1.43	%		1.45	%		1.26	%		1.54	%		1.45	%
Return on Average Equity
Average equity	$	65,179		$	57,386		$	53,172		$	47,932		$	39,283
ROAE (GAAP)		12.81	%		7.77	%		6.66	%		8.43	%		7.17	%
PTPP(1) ROAE (non-GAAP)		16.51	%		14.99	%		10.84	%		12.21	%		12.24	%
Adjusted Average Loan Yield:
Net loans, excluding loans held for sale	$	490,198		$	476,661		$	337,710		$	290,113		$	250,259
Less PPP loans		(15,172	)		(66,774	)		-			-			-
Adjusted net loans, excluding loans held for sale and PPP (non-GAAP)	$	475,026		$	409,887		$	337,710		$	290,113		$	250,259
Average loans, excluding loans held for sale	$	480,606		$	429,802		$	309,350		$	283,967		$	240,875
Less average PPP loans		(50,315	)		(55,529	)		-			-			-
Adjusted average loans, excluding loans held for sale and PPP (non-GAAP)	$	430,291		$	374,273		$	309,350		$	283,967		$	240,875
Interest on loans, excluding loans held for sale	$	22,598		$	19,553		$	15,884		$	14,215		$	11,403
Less interest income and earned fee income on PPP loans		(3,358	)		(1,725	)		-			-			-
Adjusted interest on loans, excluding loans held for sale and PPP (non-GAAP)	$	19,240		$	17,828		$	15,884		$	14,215		$	11,403
Average loan yield, excluding loans held for sale (GAAP)		4.70	%		4.55	%		5.13	%		5.01	%		4.73	%
Adjusted average loan yield, excluding loans held for sale and PPP (non-GAAP)		4.47	%		4.76	%		5.13	%		5.01	%		4.73	%

⁽¹⁾ Pre-tax, pre-provision

CONTACT:	Clint F. Weber, Chief Financial Officer and Executive Vice President
	(850) 907-2300
	Prime Meridian Holding Company
	Website: www.primemeridianbank.com

13