ex_142283.htm

EX-99.1 2 ex_142283.htm EXHIBIT 99.1 ex_142283.htm

Exhibit 99.1

FOR IMMEDIATE RELEASE

Prime Meridian Holding Company Reports

fIRST Quarter 2019 Results

TALLAHASSEE, FL -- April 30, 2019 (GLOBE NEWSWIRE) – Prime Meridian Holding Company (OTCQX: PMHG) the parent bank holding company for Prime Meridian Bank today announced unaudited financial results for the quarter ended March 31, 2019. The Company reported net earnings of $867,000, or $0.28 per basic and diluted share, for the quarter ended March 31, 2019, compared to net earnings of $754,000, or $0.24 per basic and diluted share, for the quarter ended March 31, 2018.

First Quarter 2019 Highlights

Financial Highlights - Prime Meridian Holding Company and Subsidiary

(dollars in thousands except per share amounts)


	1Q'19			4Q'18			1Q'18
Net Earnings	$	867		$	1,268		$	754
Book value per share	$	16.44		$	16.19		$	15.03
Earnings per share - Basic	$	0.28		$	0.40		$	0.24
Earnings per share - Diluted	$	0.28		$	0.40		$	0.24
Weighted-average basic shares outstanding		3,140,401			3,131,379			3,120,613
Weighted-average diluted shares outstanding		3,144,071			3,136,048			3,123,505
Return on average assets⁽¹⁾		0.82	%		1.07	%		0.86	%
Return on average equity⁽¹⁾		6.79			8.43			6.45
Average yield on earning assets⁽¹⁾		4.48			4.52			4.30
Net interest margin⁽¹⁾		3.67			3.75			3.83
Efficiency ratio⁽²⁾		67.75			59.45			64.72
Nonpeforming assets/total assets		0.14			0.09			0.10

¹Ratio has been annualized
²Efficiency Ratio represents noninterest expense divided by the sum of net interest income plus noninterest income.

During the first quarter of 2019, the Bank completed the next step of a planned expansion as it put in place a new team and location in Lakeland, Florida.

Lakeland is a growth market situated in Polk County between Orlando and Tampa along the Interstate 4 (I-4) corridor. According to recently released U.S. Census Bureau data from July, 2017 to July, 2018, Polk County ranks fourth nationally as one of the fastest growing metropolitan areas.

“We have been preparing the move into Central Florida since the end of 2018,” said Sammie D. Dixon, Jr., Vice Chairman, President and CEO of the Company. “We’re excited about adding this market and the way our team has embraced Lakeland. This gives us great confidence with the next steps to be taken,” continued Dixon. The Lakeland office opened its doors April 16, 2019.

“We have assembled a very experienced team in Lakeland,” says Dixon. “Michael A. Micallef, Jr. Market President for Polk County – is the right person to lead our growth there,” he said. “Our Lakeland business development officer, personal bankers and tellers are all excellent ambassadors of the Prime Meridian Bank brand,” continued Dixon.

Mr. Micallef was elected to the Boards of the Bank and the Company, effective March 1, 2019.

“We will continue to look for opportunities and grow our franchise while maintaining the high quality of service now in Lakeland, Crawfordville and, especially, in our hometown of Tallahassee,” Dixon said.

The purchase of the Lakeland location was completed February 20, 2019. The exterior of the 7,500 sq. ft. facility at 3340 South Florida Avenue, Lakeland, Florida, was rebranded to reflect Prime Meridian Bank standards of white brick and a green roof.

Coincidentally, the Bank’s interior already resembled the look and feel of Prime Meridian Bank’s color, finishes, and fixtures. “From the way we greet people in our lobbies to the taste of our cookies, step inside any of our offices and you will experience the same warmth and inviting hospitality,” said Dixon.

The Bank’s executive team saw moves in the first quarter as well. Effective April 1, 2019, Clint F. Weber was named Executive Vice President and Chief Financial Officer, replacing R. Randy Guemple who retired March 31, 2019. Mr. Weber was promoted internally and had been the Bank’s Credit Officer.
Mr. Guemple will remain on the Boards of the Bank and the Company.

Also effective April, 1, 2019, Monté L. Ward was appointed Executive Vice President and Chief Information Officer. Mr. Ward had been Senior Vice President, Bank Operations, and Information Security Officer.

The Company showed stronger-than-expected deposit growth for the first quarter with deposits increasing $64.2 million year over year to $373.5 million, up 20.8% from a year ago at March 31, 2018.

According to Dixon, net growth in commercial loans was flat for the quarter due to several circumstances. “Loan portfolio runoff, including payoffs on large participations, outpaced new production and resulted in a net reduction in the loan portfolio from year end,” he explained.

However, says Dixon, “We continue to see strong appetite for loans and for our relationship-style of banking. Our balance sheet is very well postured to accommodate growth. We remain very liquid in terms of funds to lend and capital to leverage.”

The Company maintained its market share in the home mortgage sector in Leon and Wakulla Counties. Though mortgage production experienced a seasonal slowdown early in the first quarter, demand returned by quarter’s end. Prime Meridian Bank continued its third-place ranking in mortgage production as it has for the past two years, according to Metro Market Trends data.

Earnings Summary

(dollars in thousands)

										Change 1Q'19 vs.
	1Q'19			4Q'18			1Q'18			4Q'18			1Q'18
Net Interest Income	$	3,687		$	3,666		$	3,239			0.6	%		13.8	%
Provision for Loan Losses		(165	)		(47	)		(254	)		251.1			(35.0	)
Noninterest income		362			344			310			5.2			16.8
Noninterest expense		(2,743	)		(2,384	)		(2,297	)		15.1			19.4
Income Taxes		(274	)		(311	)		(244	)		(11.9	)		12.3
Net Income	$	867		$	1,268		$	754			(31.6	)%		15.0	%

Compared to the fourth quarter of 2018, the Company’s performance reflects flat loan growth, relatively flat growth in noninterest income due to an overall slowdown in mortgage lending in our market area and lower service fees on deposit accounts, a higher loan provision due to reserves taken on specific impaired loans and higher noninterest expense. Higher noninterest expense is partially due to preparations for the opening of the Company’s new office in Lakeland, Florida, which occurred on April 16, 2019.

Compared to the first quarter of 2018, the Company’s performance reflects a 6.3%, or $17.3 million, increase in the Company’s loan portfolio, a lower loan loss provision, and additional investment in bank-owned life insurance. These gains were partially offset by higher noninterest expense, namely salaries and benefits, and higher income taxes.

Interest income

(dollars in thousands)							Change 1Q'19 vs.
	1Q'19		4Q'18		1Q'18		4Q'18			1Q'18
Interest income:
Loans	$	3,856	$	3,854	$	3,274		0.1	%		17.8	%
Securities		296		280		288		5.7			2.8
Other		348		280		74		24.3			370.3
Total interest income	$	4,500	$	4,414	$	3,636		1.9	%		23.8	%

Net loans grew $17.3 million, or 6.3%, since the first quarter of 2018 and stayed relatively flat from December 31, 2018 as loan portfolio runoff has outpaced new production. Since June 30, 2018, all but one of the Company’s loan participations have been repurchased by the originating bank, translating into a $13.5 million reduction in net loans. Excess cash has been temporarily deployed in federal funds sold and interest-bearing accounts at other financial institutions whose higher yields have helped boost interest income.

Interest expense:

(dollars in thousands)							Change 1Q'19 vs.
	1Q'19		4Q'18		1Q'18		4Q'18			1Q'18
Total interest expense	$	813	$	748	$	397		8.7	%		104.8	%

The increase in the Company’s cost of funds on a linked quarter basis and year-over-year was driven by growing balances of time deposits and money market accounts and higher rates paid on those deposits. For the quarter ended March 31, 2019, the average balance of interest-bearing deposits increased $55.6 million, or 24.1%, while the average rates paid on deposits increased 45 basis points, when compared to the same period a year ago.

Margin Analysis

	1Q'19					4Q'18					1Q'18
	Average		Yield/			Average		Yield/			Average		Yield/
(dollars in thousands)	Balance		Rate			Balance		Rate			Balance		Rate
Interest-earning assets:
Loans⁽¹⁾	$	296,137		5.13	%	$	295,516		5.13	%	$	266,280		4.83	%
Mortgage loans held for sale		4,742		4.89			4,850		5.03			5,250		4.42
Securities		46,010		2.57			44,872		2.50			49,483		2.33
Other⁽²⁾		55,327		2.52			45,629		2.45			17,417		1.70
Total interest-earning assets		402,216		4.48			390,867		4.52			338,430		4.30
Noninterest-earning assets		20,134					16,126					12,516
Total assets	$	422,350				$	406,993				$	350,946

Interest-bearing liabilities:
Savings, NOW and money-market deposits	$	243,509		0.99	%	$	231,299		0.97	%	$	208,107		0.67	%
Time deposits		42,699		1.97			40,944		1.81			22,458		0.89
Total interest-bearing deposits		286,208		1.14			272,243		1.10			230,565		0.69
Total interest-bearing liabilities		286,208		1.14			272,243		1.10			230,565		0.69
Noninterest-bearing deposits		83,184					83,029					72,030
Noninterest-bearing liabilities		1,900					2,351					1,591
Stockholders' equity		51,058					49,370					46,760
Total liabilities and stockholders' equity	$	422,350				$	406,993				$	350,946

Net earning assets	$	116,008				$	118,624				$	107,865
Interest rate spread				3.34	%				3.42	%				3.61	%
Net interest margin⁽³⁾				3.67	%				3.75	%				3.83	%

⁽¹⁾ Includes nonaccrual loans
⁽²⁾Other interest-earning assets include federal funds sold, interest-bearing deposits and FHLB stock.
⁽³⁾Net interest margin is net interest income divided by total average interest-earning assets, annualized

Compared to the prior quarter, the margin compression in the first quarter of 2019 is mostly driven by a shift in the earning-assets mix, coupled with an increase in the cost of funds for interest-bearing deposits. Other interest-earning assets, predominantly federal funds sold and interest-bearing deposits, was the only category to show any material growth in its average balances. Management expects margin improvement when these funds are strategically deployed into loans.

Compared to the first quarter of 2018, the decline in the net interest margin is attributed to several factors. The increase in rates paid on interest-bearing liabilities outpaced the increase in yields earned on interest-earning assets. Moreover, the average balance of interest-bearing liabilities increased $55.6 million quarter over quarter, nearly matching the $63.8 million increase in the average balance of interest-earning assets.

Provision for Loan Losses

From the fourth quarter of 2018 to the first quarter of 2019, the provision for loan losses increased $118,000 due to an increase in additional reserves on specific impaired loans. Compared to the first quarter of 2018, the provision for loan losses decreased $89,000, or 35.0%. This decline in the provision is attributed to higher loan growth during the first quarter of 2018 compared to the first quarter of 2019.

Noninterest income

(dollars in thousands)							Change 1Q'19 vs.
	1Q'19		4Q'18		1Q'18		4Q'18			1Q'18
Service charges and fees on deposit accounts	$	71	$	74	$	87		(4.1	)%		(18.4	)%
Mortgage banking revenue		106		108		110		(1.9	)		(3.6	)
Income from bank-owned life insurance		45		34		11		32.4			309.1
Other income		140		128		102		9.4			37.3
Total noninterest income	$	362	$	344	$	310		5.2	%		16.8	%

The increases in noninterest income from the fourth quarter of 2018 and the first quarter of 2019 are mostly due to increased investment in bank-owned life insurance and higher interchange income from ATM/debit cards due to increased transaction volume. These gains were partially offset by a decline in service charges and fees on deposit accounts due to lower volume of non-sufficient funds fees. Mortgage banking revenue has remained relatively flat for the past twelve months due to a general slowdown in loan production in our market area. Despite this slowdown, the Company has maintained its market share in the mortgage sector of Leon and Wakulla counties.

Noninterest expense

(dollars in thousands)							Change 1Q'19 vs.
	1Q'19		4Q'18		1Q'18		4Q'18			1Q'18
Salaries and employee benefits	$	1,557	$	1,319	$	1,228		18.0	%		26.8	%
Occupancy and equipment		275		234		235		17.5			17.0
Professional fees		77		107		84		(28.0	)		(8.3	)
Marketing		199		144		207		38.2			(3.9	)
FDIC/State Assessment		43		51		36		(15.7	)		19.4
Software maintenance, amortization and other		152		160		148		(5.0	)		2.7
Other		440		369		359		19.2			22.6
Total noninterest expense	$	2,743	$	2,384	$	2,297		15.1	%		19.4	%

The key driver of the increase in total noninterest expense continues to be salaries and employee benefits. The Company had 71 full-time equivalent employees at March 31, 2018, compared to 79 at December 31, 2018 and 83 at March 31, 2019. The increase in employees is not only attributed to staffing the Lakeland office, but also to preparing the Company as a whole for continued organic growth.

Other noninterest expense also shows a steady upward trend from the first and fourth quarters of 2018. Printing and supplies expense is a key driver in both period comparisons with a large part of this increase related to the opening of the Company’s new office in Lakeland, Florida.

Balance Sheet

At March 31, 2019, the Company reported $426.8 million in total assets, $373.5 million in deposits, and $289.9 million in net portfolio loans. This compares to $401.7 million in total assets, $349.1 million in deposits, and $290.1 million in net portfolio loans at December 31, 2018. Loan growth occurred in residential real estate and home equity and commercial, with modest declines in the other categories. 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 )

	March 31, 2019						December 31, 2018
	unaudited						audited
	Amount			% of Total			Amount			% of Total
Commercial real estate	$	76,689			26.2	%	$	82,494			28.1	%
Residential real estate and home equity		124,335			42.4			121,454			41.4
Construction		29,665			10.1			31,601			10.8
Commercial		55,809			19.0			51,018			17.4
Consumer		6,733			2.3			6,747			2.3

Total Loans		293,231			100.0	%		293,314			100.0	%

Net deferred loan costs		469						460
Allowance for loan losses		(3,800	)					(3,661	)
Loans, net	$	289,900					$	290,113

Total stockholders’ equity was $51.7 million, or 12.1% of total assets, at March 31, 2019, compared to $50.8 million, or 12.7% of total assets, at December 31, 2018. Book value per share increased from $16.19 at December 31, 2018 to $16.44 at March 31, 2019, with 3,143,140 common shares outstanding.

As of March 31, 2019, the Bank was considered to be “well capitalized” with a Tier 1 Leverage Capital Ratio of 9.18%, a 13.00% Common Equity Tier 1 Risk-Based Capital Ratio, a 13.00% Tier 1 Risk-Based Capital Ratio, and a 14.25% Total Risk-Based Capital Ratio.

Asset Quality

Loans totaling $1.5 million were deemed to be impaired under the Bank’s policy at March 31, 2019, while loans totaling $1.2 million were deemed to be impaired under the Bank’s policy at December 31, 2018. At March 31, 2019, the Bank had five nonaccrual loans in the aggregate amount of $365,000 compared to six nonaccrual loans totaling $342,000 at December 31, 2018. At March 31, 2019, the Company also reported one 90-day past due accruing loan in the amount of $243,000. Net charge-offs totaled $26,000 for the quarter ended March 31, 2019 and nonperforming assets as a percentage of total assets was 0.14%. Management believes that the allowance for loan losses which was $3.8 million, or 1.30% of gross loans, at March 31, 2019 is adequate.

About Prime Meridian Holding Company

Headquartered in Tallahassee, Florida, Prime Meridian Holding Company (OTCQX: PMHG) offers a broad range of banking services through its wholly owned subsidiary, Prime Meridian Bank, a Florida state-chartered non-member bank. Founded in 2008, the Bank now serves the Tallahassee and Lakeland/Winter Haven Metropolitan Statistical Areas (MSA), including clients in North and Central Florida as well as South Georgia and South Alabama. The Bank currently has four Florida locations: two in Tallahassee, Florida, one in Crawfordville, Florida, and one in Lakeland, Florida which opened April 16, 2019. As of March 31, 2019, the Bank had 83 full-time equivalent employees. For more information about Prime Meridian Holding Company, please visit www.primemeridianbank.com.

Tables Follow

Prime Meridian Holding Company and Subsidiary

Condensed Consolidated Statements of Earnings (Unaudited)

(in thousands except per share amounts)

	1Q'19		4Q'18		3Q'18		2Q'18		1Q'18
Interest income:
Loans	$	3,856	$	3,854	$	3,798	$	3,543	$	3,274
Securities		296		280		276		287		288
Other		348		280		198		82		74
Total interest income		4,500		4,414		4,272		3,912		3,636
Interest Expense-
Deposits		813		748		662		500		397
Total interest expense		813		748		662		500		397
Net interest income		3,687		3,666		3,610		3,412		3,239
Provision for loan losses		165		47		135		155		254
Net interest income after provision for loan losses		3,522		3,619		3,475		3,257		2,985

Noninterest income:
Service charges and fees on deposit accounts		71		74		83		89		87
Mortgage banking revenue		106		108		124		105		110
Income from bank-owned life insurance		45		34		11		10		11
Other income		140		128		120		110		102
Total noninterest income		362		344		338		314		310

Noninterest expense:
Salaries and employee benefits		1,557		1,319		1,341		1,218		1,228
Occupancy and equipment		275		234		237		226		235
Professional fees		77		107		86		97		84
Marketing		199		144		193		133		207
FDIC/State Assessment		43		51		38		38		36
Software maintenance, amortization and other		152		160		167		159		148
Other		440		369		396		370		359
Total noninterest expense		2,743		2,384		2,458		2,241		2,297

Earnings before income taxes		1,141		1,579		1,355		1,330		998
Income taxes		274		311		337		328		244
Net earnings	$	867	$	1,268	$	1,018	$	1,002	$	754

Basic earnings per share	$	0.28	$	0.40	$	0.33	$	0.32	$	0.24

Diluted earnings per share	$	0.28	$	0.40	$	0.33	$	0.32	$	0.24

Prime Meridian Holding Company and Subsidiary

Condensed Consolidated Statements of Earnings

(in thousands, except per share amounts)

	Three Months Ended March 31,
	unaudited
	2019		2018
Interest income:
Loans	$	3,856	$	3,274
Securities		296		288
Other		348		74
Total interest income		4,500		3,636
Interest expense-
Deposits		813		397
Total interest expense		813		397
Net interest income		3,687		3,239
Provision for loan losses		165		254
Net interest income after provision for loan losses		3,522		2,985
Noninterest income:
Service charges and fees on deposit accounts		71		87
Mortgage banking revenue		106		110
Income from bank-owned life insurance		45		11
Other income		140		102
Total noninterest income		362		310
Noninterest expense:
Salaries and employee benefits		1,557		1,228
Occupancy and equipment		275		235
Professional fees		77		84
Marketing		199		207
FDIC/State assessment		43		36
Software maintenance, amortization and other		152		148
Other		440		359
Total noninterest expense		2,743		2,297
Earnings before income taxes		1,141		998
Income taxes		274		244
Net earnings	$	867	$	754

Earnings per common share:
Basic	$	0.28	$	0.24
Diluted	$	0.28	$	0.24
Cash dividends per common share⁽¹⁾	$	0.12	$	0.10

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

Prime Meridian Holding Company and Subsidiary

Condensed Consolidated Balance Sheets

(in thousands)

	1Q'19		4Q'18		3Q'18		2Q'18		1Q'18
	(Unaudited)		(Audited)		(Unaudited)		(Unaudited)		(Unaudited)
Assets
Cash & cash equivalents	$	66,805	$	48,038	$	56,775	$	32,429	$	22,175
Securities available for sale		48,205		45,384		44,359		46,657		48,014
Loans, held for sale		5,808		4,767		6,782		7,321		6,394
Loans, net		289,900		290,113		289,022		285,473		272,611
Federal Home Loan Bank stock		404		355		355		355		355
Premises & equipment, net		7,055		4,656		4,699		4,828		4,936
Accrued interest receivable		1,023		1,034		1,028		1,027		985
Bank-owned life insurance		6,368		6,323		1,789		1,778		1,768
Other assets		1,281		1,032		1,149		1,137		1,060
Total Assets	$	426,849	$	401,702	$	405,958	$	381,005	$	358,298


Liabilities and Stockholders' Equity
Noninterest-bearing demand deposits	$	83,186	$	80,097	$	83,296	$	76,564	$	73,736
Savings, NOW and money-market deposits		244,584		227,674		230,817		220,363		212,153
Time deposits		45,743		41,296		41,133		34,896		23,393
Total Deposits		373,513		349,067		355,246		331,823		309,282
Official checks		495		837		865		602		1,368
Other liabilities		1,157		978		984		644		708
Total Liabilities		375,165		350,882		357,095		333,069		311,358
Total Stockholders' Equity		51,684		50,820		48,863		47,936		46,940
Total Liabilities and Stockholders' Equity	$	426,849	$	401,702	$	405,958	$	381,005	$	358,298

Prime Meridian Holding Company and Subsidiary

Financial Highlights (Unaudited)

(dollars in thousands, except per share amounts)

	1Q'19			4Q'18			3Q'18			2Q'18			1Q'18

Per Share Data:
Earnings per share - Basic	$	0.28		$	0.40		$	0.33		$	0.32		$	0.24
Earnings per share - Diluted	$	0.28		$	0.40		$	0.33		$	0.32		$	0.24
Book value per share	$	16.44		$	16.19		$	15.61		$	15.33		$	15.03
Shares outstanding		3,143,140			3,138,945			3,128,671			3,125,233			3,122,769
Weighted-average basic shares outstanding		3,140,401			3,131,379			3,127,038			3,123,594			3,120,613
Weighted-average diluted shares outstanding		3,144,071			3,136,048			3,130,171			3,126,022			3,123,505

Selected Performance Ratios and Other Data:
Return on average assets⁽¹⁾		0.82	%		1.07	%		1.03	%		1.10	%		0.86	%
Return on average equity⁽¹⁾		6.79			8.43			8.42			8.49			6.45
Average yield on earning assets		4.48			4.52			4.47			4.46			4.30
Net interest margin⁽²⁾		3.67			3.75			3.78			3.89			3.83
Efficiency ratio⁽³⁾		67.75			59.45			62.26			60.14			64.72
Noninterest expense/average assets⁽¹⁾		2.60			2.47			2.49			2.47			2.85

Asset Quality Data:
Nonaccrual loans	$	365		$	342		$	179		$	90		$	369
Total nonperforming assets		608			342			179			90			369
Nonpeforming assets/total assets		0.14	%		0.09	%		0.04	%		0.02	%		0.10	%

Capital Ratios:
Tier 1 Leverage Capital Ratio (Company)		12.28	%		12.61	%		12.64	%		13.43	%		13.60	%
Tier 1 Leverage Capital Ratio (Bank)		9.18			9.28			9.21			9.68			9.69
Common Equity Tier I Capital Ratio (Bank)		13.00			12.90			12.40			12.28			12.38
Tier I Risk Based Capital Ratio (Bank)		13.00			12.90			12.40			12.28			12.38
Total Capital Ratio (Bank)		14.25			14.15			13.65			13.51			13.61

⁽¹⁾Annualized
⁽²⁾Net interest margin is net interest income divided by total average interest-earning assets, annualized
⁽³⁾Efficiency Ratio represents noninterest expense divided by the sum of net interest income plus noninterest income.

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