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Note 1 - General
9 Months Ended
Sep. 30, 2018
Notes to Financial Statements  
Significant Accounting Policies [Text Block]
(
1
)    General
 
Prime Meridian Holding Company (“PMHG”) owns
100%
of the outstanding common stock of Prime Meridian Bank (the "Bank") (collectively the "Company"). PMHG’s primary activity is the operation of the Bank. The Bank is a Florida state-chartered commercial bank, and the deposit accounts of the Bank are insured up to the applicable limits by the Federal Deposit Insurance Corporation ("FDIC"). The Bank offers a variety of community banking services to individual and corporate clients through its
three
banking offices located in Tallahassee and Crawfordville, Florida and its online banking platform.
 
The accounting and financial reporting policies of the Company conform, in all material respects, to accounting principles generally accepted in the United States (“GAAP”) and to general practices within the banking industry. The condensed consolidated financial statements in the Quarterly Report on Form
10
-Q have
not
been audited by an independent registered public accounting firm, but in the opinion of management, reflect all necessary adjustments for a fair presentation of the Company’s financial position and results of operations. All adjustments were of a normal and recurring nature. The condensed consolidated financial statements have been prepared in accordance with GAAP and with the instructions to Form
10
-Q adopted by the Securities and Exchange Commission (the “SEC”). Accordingly, the condensed consolidated financial statements do
not
include all information and footnotes required by GAAP for complete financial presentation and should be read in conjunction with our consolidated financial statements, and notes thereto, for the year ended
December 31, 2017,
included in our Annual Report on Form
10
-K filed with the SEC on
March 20, 2018.
The results of operations for the
three
and
nine
months ended
September 30, 2018
are
not
necessarily indicative of the results to be expected for the full year or any future period.
 
Comprehensive
Incom
e
.
GAAP generally requires that recognized revenue, expenses, gains and losses be included in earnings. Although certain changes in assets and liabilities, such as unrealized gains and losses on available-for-sale securities, are reported as a separate component of the equity section of the condensed consolidated balance sheet, such items along with net earnings, are components of comprehensive income. The only component of other comprehensive (loss) income is the net change in the unrealized (loss) gain on securities available for sale.
 
S
tock
-
Based Compensation.
The Company expenses the fair value of stock options granted. The Company recognizes stock option compensation expense in the condensed consolidated statements of earnings as the options vest.
 
Mortgage Banking Revenue.
Mortgage banking revenue includes gains and losses on the sale of mortgage loans originated for sale and wholesale brokerage fees, net of commissions and deferred loan costs. The Company recognizes mortgage banking revenue from mortgage loans originated in the condensed consolidated statements of earnings upon sale of the loans.
 
Reclassifications.
Certain reclassifications of prior period amounts have been made to conform to the current period presentation.
 
Recent Accounting Standards Update.
In
January 2016,
the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU")
No.
2016
-
01,
Financial Instruments-Overall
(Subtopic
825
-
10
):
Recognition and Measurement of Financial Assets and Financial Liabilities,
which is intended to enhance the reporting model for financial instruments to provide users of financial statements with more decision-useful information. The ASU requires equity investments to be measured at fair value with changes in fair values recognized in net earnings, (public entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes), simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment and eliminates the requirement to disclose fair values, the methods and significant assumptions used to estimate the fair value of financial instruments measured at amortized cost. The ASU also clarifies that the Company should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale debt securities in combination with the Company's other deferred tax assets. For public business entities, the ASU is effective for fiscal years beginning after
December 15, 2017,
including interim periods within those fiscal years. The adoption of this guidance did
not
have a material impact on the Company's condensed consolidated financial statements.
 
In
February 2016,
the FASB issued ASU
No.
2016
-
2,
Leases (Topic
842
)
which will require lessees to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases with terms of more than
twelve
months. Consistent with current GAAP, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease. The new ASU will require both types of leases to be recognized on the balance sheet. The ASU also will require disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. These disclosures include qualitative and quantitative requirements, providing additional information about the amounts recorded in the financial statements. For public companies, the ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after
December 15, 2018.
The Company is in the process of determining the effect of the ASU on its condensed consolidated financial statements. Early adoption is permitted.
 
In
June 2016,
the FASB issued ASU
No.
2016
-
13,
Financial Instruments-Credit Losses (Topic
326
)
. The ASU improves financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by the Company. The ASU requires the Company to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. The Company will continue to use judgment to determine which loss estimation method is appropriate for its circumstances. The ASU requires enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization's portfolio. These disclosures include qualitative and quantitative requirements that provide additional information about the amounts recorded in the financial statements. Additionally, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration.
 
The new guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after
December 15, 2019.
Early adoption is permitted. The Company is in the process of determining the effect of the ASU on its condensed consolidated financial statements.
 
In
January 2017,
the FASB issued ASU 
No.
 
2017
-
01,
 Business Combinations (Topic
805
): Clarifying the Definition of a Business. The amendments in this update provide a more robust framework to use in determining when a set of assets and activities is a business. Because the current definition of a business is interpreted broadly and can be difficult to apply, stakeholders indicated that analyzing transactions is inefficient and costly and that the definition does
not
permit the use of reasonable judgment. The amendments provide more consistency in applying the guidance, reduce the costs of application, and make the definition of a business more operable. The amendments in this update become effective for annual periods and interim periods within those annual periods beginning after
December 
15,
2017.
The adoption of this guidance did
not
have any impact on the Company’s condensed consolidated financial statements.
 
In
March 2017,
the FASB issued ASU
No.
2017
-
08,
“Premium Amortization on Purchased Callable Debt Securities”, to amend the amortization period for certain purchased callable debt securities held at a premium.  Under current GAAP, entities generally amortize the premium as an adjustment of yield over the contractual life of the instrument.  The amendments in this update require the premium to be amortized to the earliest call date.  
No
accounting change is required for securities held at a discount.  For public business entities, the amendments in this update become effective for annual periods, and interim periods within those annual periods, beginning after
December 
15,
2018.
Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity should apply the amendments in this update on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The Company has adhered to this practice since its inception.
 
 
In
June 2018,
the FASB issued ASU
No.
2018
-
07,
Stock Compensation (Topic
718
): Improvements to Nonemployee Share-Based Payment Accounting. The ASU is intended to reduce the cost and complexity and to improve financial reporting for nonemployee share-based payments. The ASU expands the scope of Topic
718.
Compensation Stock Compensation (which currently only includes share-based payments to employees) to include share-based payments issued to nonemployees for goods or services.
 
Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned. The ASU supersedes Subtopic
505
-
50,
Equity-Equity-Based payments to Non-Employees. The ASU is effective for the Company for fiscal years beginning after
December 15, 2018,
including interim periods within that fiscal year. Early adoption is permitted, but
no
earlier than a company’s adoption date of Topic
606,
Revenue from Contracts with Customers. The Company is currently evaluating the impact of the ASU, if any, on its condensed consolidated financial statements.