SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) July 21, 2016
PRIME MERIDIAN HOLDING COMPANY
(Exact name of registrant as specified in its charter)
Florida | 333-191801 | 27-2980805 | ||
(State or other jurisdiction of incorporation) |
(Commission file number) |
(IRS employer identification no.) |
1897 Capital Circle NE, Second Floor, Tallahassee, FL |
32308 | |
(Address of principal executive offices) | (Zip Code) |
Registrants telephone number, including area code: (850) 907-2301
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. | Results of Operations and Financial Condition. |
On July 21, 2016, Prime Meridian Holding Company (the Company) issued a press release announcing financial results for the three and six month periods ended June 30, 2016. A copy of the press release is attached as Exhibit 99.1 to this Form 8-K.
Item 9.01 | Financial Statements and Exhibits. |
(d) | Exhibits. |
99.1 | Press release dated July 21, 2016 |
The information in this report (including the exhibits) shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
PRIME MERIDIAN HOLDING COMPANY | ||
By: | /s/ R. Randy Guemple | |
R. Randy Guemple Chief Financial Officer and Executive Vice President |
Date: July 21, 2016
EXHIBIT 99.1
FOR IMMEDIATE RELEASE
PRIME MERIDIAN HOLDING COMPANY REPORTS
SECOND QUARTER 2016 RESULTS
TALLAHASSEE, FL, July 21, 2016 (GLOBE NEWSWIRE) Prime Meridian Holding Company (OTCQX: PMHG) the parent holding company for Prime Meridian Bank today announced unaudited financial results for the three-month and six-month periods ended June 30, 2016. The Company reported net earnings of $582,000, or $0.29 per basic and diluted share, for the quarter ended June 30, 2016, compared to net earnings of $376,000 or $0.19 per basic and diluted share, for the quarter ended June 30, 2015. For the first six months of 2016, the Company reported net earnings of $964,000 or $0.49 per basic and diluted share, compared to net earnings of $825,000, or $0.42 per basic and diluted share for the same period in 2015.
We continue to be proud of the results our team is delivering, says President and CEO Sammie D. Dixon, Jr. From the front line employees to operations, there is a confidence and competence that is getting it done.
A consistent and persistent effort in business development helped produce a 54.8% increase in second quarter earnings this year compared to the same period in 2015. We attribute this growth to our teams solid performance in growing our mortgage business and a general increase in commercial lending as area businesses expand and reinvest, he continued.
Plans are becoming a reality in Crawfordville, as well, as construction is underway on our permanent building in that market. We anticipate continued strong growth in new accounts and deposits there as the new facility approaches completion later this year.
Highlights
| Net interest income grew $341,000 or 16.2% to $2.5 million over the prior years second quarter and $634,000, or 15.4%, to $4.8 million over the prior years six-month period, due primarily to increased loan production. |
| Total assets increased $27.9 million, or 11.4%, from December 31, 2015, to $271.9 million. |
| Since December 31, 2015, the Company has grown its net loan portfolio $26.4 million, or 14.1%, to $213.5 million. |
| Mortgage banking revenue continued its strong upward trend, increasing 50.7% and 78.7%, respectively, for the three and six months ended June 30, 2016, compared to the same periods in 2015. The increase is primarily due to a higher volume of mortgage loans. |
| For the six months ended June 30, 2016, the annualized Return on Average Assets was 0.73%, the annualized Return on Average Equity was 7.56% and the net interest margin was 3.76%. |
| The Company began construction on a permanent branch office in Crawfordville, Florida in June 2016 with an expected completion by year-end. This market continues to be a strong source of deposits for the Company. |
Earnings Summary
For the quarter ended June 30, 2016, the Company reported net interest income of $2.5 million compared to $2.1 million for the same period a year ago. The $341,000, or 16.2%, increase was driven by increased loan production as the Company reported average loans of $206.3 million for the three months ended June 30, 2016, compared to $164.9 million for the three months ended June 30, 2015. The increase in interest income from loans was partially offset by a $61,000, or 25.1%, decrease in interest income from securities due to lower yields and balances. Also during this period, the Companys net interest margin declined 13 basis points to 3.78%, due in part, to new loans being originated at lower yields.
For the six months ended June 30, 2016, the Company reported net interest income of $4.8 million compared to $4.1 million for the same period a year ago. The $634,000, or 15.4%, increase was driven by increased loan production as the Company reported average loans of $200.0 million for the six months ended June 30, 2016, compared to $160.1 million for the six months ended June 30, 2015. The increase in interest income from loans was partially offset by an $83,000, or 17.8%, decrease in interest income from securities due to lower yields and balances. Also during this period, the Companys net interest margin declined 15 basis points to 3.76%, due in part, to new loans being originated at lower yields.
Interest expense was $201,000 for the quarter, an increase of $27,000, or 15.5%, as compared to the same period in 2015. For the six-month period, interest expense increased $51,000 or 14.9%. In both cases, the increase resulted primarily from higher average balances of interest-bearing deposits in 2016.
The provision for loan loss was $170,000 in the second quarter of 2016 compared to $191,000 in the second quarter of 2015. The lower provision stems from an adjustment in the second quarter of our historical loss factors as used in our allowance for loan loss methodology. For the six months ended June 30, 2016, the provision for loan losses was $304,000 compared to $209,000 for the same period a year ago.
Noninterest income increased $203,000, or 82.2%, from the second quarter of 2015 to the second quarter of 2016 and $305,000, or 70.0%, from the first six months of 2015 to the first six months of 2016. Largely driving this growth was mortgage banking revenue, which increased 50.7%, or $76,000, from the second quarter of 2015 to the second quarter of 2016 and which increased $166,000, or 78.7%, in the first six months of 2016 compared to the same period a year ago. Also strongly contributing to the growth in noninterest income was an $87,000 gain from the sale of securities during the second quarter of 2016. Modest gains in service charges and fees on deposit accounts and gains in other income from higher merchant card services and credit card fee income also contributed to growth in noninterest income in both periods.
Noninterest expense increased $242,000, or 15.3%, for the second quarter of 2016 and $629,000, or 20.4%, for the first six months of 2016 compared to the same periods a year ago. With the exception of professional fees, noninterest expenses were up across all categories, partially due to the opening of our Crawfordville office in September, 2015. Also, the majority of the increase occurred in overall bank salaries and employee benefits as full-time equivalent employees increased from 47 at June 30, 2015 to 56 at June 30, 2016.
Balance Sheet
As of June 30, 2016, the Company had grown to $271.9 million in total assets, $240.4 million in deposits, and $213.5 million in portfolio net loans. This compares to $244.0 million in total assets, $217.6 million in deposits, and $187.1 million in portfolio net loans as of December 31, 2015. Loan growth was strong in the second quarter across all sectors. The composition of the Banks loan portfolio is as follows:
As of June 30, 2016 |
As of December 31, 2015 |
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Amount | % of Total | Amount | % of Total | |||||||||||||
Commercial real estate |
$ | 63,992 | 29.6 | % | $ | 57,847 | 30.6 | % | ||||||||
Residential real estate and home equity |
83,208 | 38.6 | % | 69,817 | 36.9 | % | ||||||||||
Construction |
18,691 | 8.7 | % | 17,493 | 9.2 | % | ||||||||||
Commercial |
45,383 | 21.0 | % | 40,229 | 21.3 | % | ||||||||||
Consumer |
4,615 | 2.1 | % | 3,877 | 2.0 | % | ||||||||||
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Total Loans |
$ | 215,889 | 100.00 | % | $ | 189,263 | 100.00 | % | ||||||||
Deferred loan costs |
341 | 286 | ||||||||||||||
Allowance for loan and lease losses |
(2,775 | ) | (2,473 | ) | ||||||||||||
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Loans, net |
$ | 213,455 | $ | 187,076 | ||||||||||||
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Total stockholders equity was $26.2 million, or 9.6% of total assets at June 30, 2016, compared to $24.9 million, or 10.2% of total assets, at December 31, 2015. Book value per share increased from $12.62 at December 31, 2015 to $13.24 at June 30, 2016, with 1,980,472 common shares outstanding. Equity capital and book value per share increased in the first half of 2016 due to earnings and higher accumulated other comprehensive income, the latter of which measures unrealized holding gains or losses (net of income taxes) on investments that are classified as available for sale. As of June 30, 2016, the Bank was considered to be well capitalized with a Tier 1 Leverage Capital Ratio of 9.16%, an 11.70% Common Equity Tier 1 Risk-Based Capital Ratio, an 11.70% Tier 1 Risk-Based Capital Ratio, and a 12.95% Total Risk-Based Capital Ratio.
Asset Quality
Loans totaling $90,000 were deemed to be impaired under the Banks policy at June 30, 2016, while loans totaling $144,000 were deemed to be impaired under the Banks policy at December 31, 2015. At June 30, 2016, we had three non-accruing loans in the aggregate amount of $439,000, compared to two non-accruing loans totaling $137,000 at December 31, 2015. We had no net charge-offs for the quarter ended June 30, 2016 and $2,000 in net charge-offs for the six-month period ending June 30, 2016.
Management believes that the allowance for loan losses (ALLL), which was $2.8 million, or 1.28% of gross loans at June 30, 2016, is adequate.
About Prime Meridian Holding Company
Headquartered in Tallahassee, Florida, Prime Meridian Holding Company 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 serves its primary market of the Tallahassee Metropolitan Statistical Area, but also serves clients in the North Florida and South Georgia markets. The Bank currently has three office locations, two in Tallahassee, and a third branch in Crawfordville, Florida. As of June 30, 2016, the consolidated Company had 56 full-time equivalent employees. For more information about Prime Meridian Holding Company, please visit the investor relations section of our website at www.primemeridianbank.com.
Forward-Looking Statements
This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect the Companys current views with respect to, among other things, future events and financial performance. 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. Any forward-looking statements contained in this press release are based on the historical performance of the Company and its subsidiary or on the Companys current plans, estimates, and expectations. 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. Factors that could have a material adverse effect on our operations and the operations of our subsidiary, Prime Meridian Bank, include, but are not limited to various risks, uncertainties, and assumptions relating to the Companys operations, financial results, financial condition, business prospects, growth strategy, and liquidity. These factors should not be construed as exhaustive. A number of important factors could cause actual results to differ materially from those indicated by the forward-looking statements. Information on these factors can be found in the Companys Annual Report on Form 10-K for the year ended December 31, 2015, and other reports and statements the Company has filed with Securities and Exchange Commission which is available at the SECs website (www.sec.gov). 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
Prime Meridian Holding Company and Subsidiary
Consolidated Statements of Earnings (unaudited)
(Dollars in thousands except per share data)
For the Three Months Ended June 30, |
For the Six Months Ended June 30, |
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2016 | 2015 | 2016 | 2015 | |||||||||||||
Interest income: |
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Loans |
$ | 2,447 | $ | 2,033 | $ | 4,721 | $ | 3,980 | ||||||||
Securities |
182 | 243 | 382 | 465 | ||||||||||||
Other |
23 | 8 | 48 | 21 | ||||||||||||
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Total interest income |
2,652 | 2,284 | 5,151 | 4,466 | ||||||||||||
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Interest Expense: |
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Deposits |
201 | 166 | 393 | 328 | ||||||||||||
Other borrowings |
| 8 | | 14 | ||||||||||||
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Total interest expense |
201 | 174 | 393 | 342 | ||||||||||||
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Net interest income |
2,451 | 2,110 | 4,758 | 4,124 | ||||||||||||
Provision for loan losses |
170 | 191 | 304 | 209 | ||||||||||||
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Net interest income after provision for loan losses |
2,281 | 1,919 | 4,454 | 3,915 | ||||||||||||
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Noninterest income: |
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Service charges and fees on deposit accounts |
52 | 39 | 100 | 73 | ||||||||||||
Mortgage banking revenue |
226 | 150 | 377 | 211 | ||||||||||||
Income from bank-owned life insurance |
13 | 13 | 25 | 25 | ||||||||||||
Gain on sale of securities available for sale |
87 | | 102 | 42 | ||||||||||||
Other income |
72 | 45 | 137 | 85 | ||||||||||||
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Total noninterest income |
450 | 247 | 741 | 436 | ||||||||||||
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Noninterest expense: |
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Salaries and employee benefits |
959 | 804 | 1,944 | 1,612 | ||||||||||||
Occupancy and equipment* |
212 | 183 | 415 | 357 | ||||||||||||
Professional fees |
99 | 161 | 204 | 237 | ||||||||||||
Advertising |
108 | 96 | 267 | 209 | ||||||||||||
FDIC Assessment |
34 | 29 | 66 | 55 | ||||||||||||
Software maintenance, amortization and other* |
124 | 97 | 250 | 205 | ||||||||||||
Other |
290 | 214 | 559 | 401 | ||||||||||||
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Total noninterest expense |
1,826 | 1,584 | 3,705 | 3,076 | ||||||||||||
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Earnings before income taxes |
905 | 582 | 1,490 | 1,275 | ||||||||||||
Income taxes |
323 | 206 | 526 | 450 | ||||||||||||
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Net earnings |
$ | 582 | 376 | $ | 964 | 825 | ||||||||||
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Basic earnings per share |
$ | 0.29 | $ | 0.19 | $ | 0.49 | $ | 0.42 | ||||||||
Diluted earnings per share |
$ | 0.29 | $ | 0.19 | $ | 0.49 | $ | 0.42 |
*Certain noninterest expenses were reclassified from occupancy and equipment to software maintence, amortization, and other for the three months and six months ended June 30, 2015 to conform to 2016 presentation. The reclassification of expenses had no effect on net earnings.
Prime Meridian Holding Company and Subsidiary
Condensed Consolidated Balance Sheets
(Dollars in thousands)
June 30, 2016 |
December 31, 2015 |
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(unaudited) | (audited) | |||||||
Assets |
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Cash & cash equivalents |
$ | 10,799 | 8,429 | |||||
Securities available for sale |
35,939 | 38,063 | ||||||
Loans, held for sale |
4,125 | 2,722 | ||||||
Loans, net |
213,455 | 187,076 | ||||||
Federal Home Loan Bank stock |
390 | 189 | ||||||
Premises & equipment, net |
4,221 | 4,222 | ||||||
Accrued interest receivable |
721 | 692 | ||||||
Bank-owned life insurance |
1,687 | 1,662 | ||||||
Other assets |
601 | 989 | ||||||
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Total Assets |
$ | 271,938 | 244,044 | |||||
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Liabilities and Stockholders Equity |
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Noninterest-bearing demand deposits |
55,951 | 50,158 | ||||||
Savings, NOW and money-market deposits |
162,908 | 144,801 | ||||||
Time deposits |
21,524 | 22,614 | ||||||
Federal Home Loan Bank advance |
4,000 | | ||||||
Official checks |
767 | 744 | ||||||
Other liabilities |
574 | 794 | ||||||
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Total Liabilities |
245,724 | 219,111 | ||||||
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Total Stockholders Equity |
26,214 | 24,933 | ||||||
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Total Liabilities and Stockholders Equity |
$ | 271,938 | 244,044 | |||||
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Prime Meridian Holding Company and Subsidiary
Financial Highlights (unaudited)
Three Months Ended | Six Months Ended | Year Ended | ||||||||||||||||||||||
June 30, 2016 | June 30, 2015 | June 30, 2016 | June 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | |||||||||||||||||||
Per Share Data: |
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Earnings per share Basic |
$ | 0.29 | $ | 0.19 | $ | 0.49 | $ | 0.42 | $ | 0.88 | $ | 0.59 | ||||||||||||
Earnings per share Diluted |
$ | 0.29 | $ | 0.19 | $ | 0.49 | $ | 0.42 | $ | 0.87 | $ | 0.58 | ||||||||||||
Book value per share |
$ | 13.24 | $ | 12.19 | $ | 13.24 | $ | 12.19 | $ | 12.62 | $ | 11.78 | ||||||||||||
Selected Performance Ratios and Other Data: |
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Return on average assets(1) |
0.87 | % | 0.67 | % | 0.73 | % | 0.75 | % | 0.74 | % | 0.48 | % | ||||||||||||
Return on average equity(1) |
9.04 | % | 6.37 | % | 7.56 | % | 7.05 | % | 7.15 | % | 5.21 | % | ||||||||||||
Average yield on earning assets |
4.09 | % | 4.23 | % | 4.07 | % | 4.23 | % | 4.19 | % | 4.02 | % | ||||||||||||
Net interest margin |
3.78 | % | 3.91 | % | 3.76 | % | 3.91 | % | 3.87 | % | 3.70 | % | ||||||||||||
Efficiency ratio(2) |
62.94 | % | 67.20 | % | 67.38 | % | 67.46 | % | 69.08 | % | 72.24 | % | ||||||||||||
Asset Quality Data: | ||||||||||||||||||||||||
Nonaccrual loans |
$ | 439,000 | $ | 168,000 | $ | 439,000 | 168,000 | $ | 137,000 | $ | 171,000 | |||||||||||||
Total non-performing assets |
$ | 439,000 | $ | 168,000 | $ | 439,000 | 168,000 | $ | 137,000 | $ | 171,000 | |||||||||||||
Non-peforming assets/total assets |
0.16 | % | 0.07 | % | 0.16 | % | 0.07 | % | 0.06 | % | 0.08 | % | ||||||||||||
Regulatory Capital Ratios (Bank): | ||||||||||||||||||||||||
Tier 1 Leverage Capital Ratio |
9.16 | % | 10.04 | % | 9.16 | % | 10.04 | % | 9.48 | % | 9.52 | % | ||||||||||||
Common Equity Tier I Capital Ratio |
11.70 | % | 13.10 | % | 11.70 | % | 13.10 | % | 12.79 | % | 12.84 | % | ||||||||||||
Tier I Risk Based Capital Ratio |
11.70 | % | 13.10 | % | 11.70 | % | 13.10 | % | 12.79 | % | 12.84 | % | ||||||||||||
Total Capital Ratio |
12.95 | % | 14.35 | % | 12.95 | % | 14.35 | % | 14.05 | % | 14.09 | % |
1 ROAA and ROAE are annualized
2 Efficiency Ratio represents noninterest expense divided by the sum of net interest income plus noninterest income.
CONTACT: | R. Randy Guemple, Chief Financial Officer (850) 907-2301 Prime Meridian Holding Company Website: www.primemeridianbank.com |