Prime Meridian : Reports SECOND quarter 2022 Results - Form 8-K

Prime Meridian Holding Company Reports

SECOND quarter 2022 Results

TALLAHASSEE, FL - July 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 six months ended June 30, 2022. The Company reported net earnings of $1,967,000, or $0.62 per basic and diluted share, for the three months ended June 30, 2022, compared to net earnings of $2,262,000 or $0.72 per basic and diluted share, for the three months ended June 30, 2021. The Company reported net earnings of $4,208,000, or $1.34 per basic and $1.32 per diluted share for the six months ended June 30, 2022, compared to $4,496,000, or $1.44 per basic and diluted share for the six months ended June 30, 2021.

"Rising interest rates and inflation concerns have now extended the period of economic uncertainty that began in 2020 with the pandemic," said Sammie D. Dixon, Vice Chairman, President and CEO of Prime Meridian. "You are going to get different forecasts depending on which advisor or expert you hear. With a number of external factors changing, our game plan is to stay the course while continuing to be nimble enough to make adjustments when needed. New information, new decision. We keep an eye out for any credit weaknesses as we move forward and continue to see opportunities for responsible growth in the markets we serve."

"We are performing well as a company with strong year-to-date loan activity and continued deposit growth. The Company's net loan portfolio increased $61.5 million, or 12.5% since year-end, excluding $14.1 million in PPP loan forgiveness during the first half of the year. Operationally, we are proud of where we are. Our same quarter, year-over-year, asset growth is up 13.8% due to our core belief in relationship banking, our culture," Dixon said. "Client relationships, and the ability to pivot, are performance keys in times of change."

It is those client relationships that drove over 1,000 clients and their friends to take part in the Bank's Client Appreciation grill events during the quarter. "Folks enjoy coming out to have lunch with us and sharing a sense of community. It's pretty special," said Dixon. "Taking care of the client is more important than anything else and the clients appreciate it," he said.

Second Quarter 2022 Highlights

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

(dollars in thousands except per share amounts)

		2Q'22			1Q'22			4Q'21			3Q'21			2Q'21
Net earnings		$	1,967			$	2,241			$	1,752			$	2,099			$	2,262
Book value per share		$	20.48			$	20.87			$	21.42			$	20.99			$	20.40
Earnings per share - Basic		$	0.62			$	0.71			$	0.56			$	0.67			$	0.72
Earnings per share - Diluted		$	0.62			$	0.71			$	0.55			$	0.67			$	0.72
Weighted-average basic shares outstanding			3,151,760				3,138,695				3,128,831				3,127,524				3,126,197
Weighted-average diluted shares outstanding			3,189,319				3,174,697				3,162,746				3,145,017				3,139,179
Return on average assets(1)			0.90	%			1.05	%			0.85	%			1.09	%			1.24	%
Return on average equity(1)			12.13				12.70				10.11				12.99				14.40
Average yield on earning assets(1)			3.43				3.09				3.11				3.34				3.40
Net interest margin(1)			3.21				2.88				2.85				3.06				3.11
Efficiency ratio(2)			54.32				59.28				63.83				55.90				53.99
Nonperforming assets/total assets(3)			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.

•	Net earnings of $1.967 million fell modestly from 1Q22 and 2Q21 levels, due to the provision for loan losses (compared to a credit in the other periods), decreasing fee and interest income earned on the Paycheck Protection Program (PPP), a decline in mortgage banking net revenue, and higher noninterest expense. Partially offsetting this was strong second-quarter loan production coupled with investment activity which boosted total interest income.
•	Adjusted pre-tax, pre-provision net earnings for the second quarter of 2022 were $3.3 million and adjusted pre-tax, pre-provision annualized returns on average assets and average common equity were 1.50% and 20.12%, 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.)
•	Book value per share fell $0.39, or 1.9%, to $20.48 as rising interest rates have caused unrealized market value declines in the Company's investment securities portfolio, outpacing earnings retention.
•	Since December 31, 2021, net loans increased $47.4 million, or 9.7%, while deposits increased by $21.6 million, or 2.8%.
•	Asset quality remained strong with two loans totaling $349,000 on nonaccrual status and a nonperforming assets/total assets ratio of 0.04%.

1

Earnings Summary (Unaudited)

(dollars in thousands)

														Change 2Q'22 vs.
		2Q'22			1Q'22			2Q'21			1Q'22			2Q'21
Net interest income		$	6,642			$	5,859			$	5,452				13.4	%			21.8	%
Provision (credit) for loan losses			731				(371	)			(185	)			297.0				495.1
Noninterest income			504				518				620				(2.7	)			(18.7	)
Noninterest expense			3,882				3,780				3,278				2.7				18.4
Income taxes			566				727				717				(22.1	)			(21.1	)
Net earnings		$	1,967			$	2,241			$	2,262				(12.2	)%			(13.0	)%

On a linked quarter basis and compared to 2Q21, the decrease in net earnings is primarily attributed to the provision for loan losses (compared to a credit in both prior periods), partially offset by higher net interest income and lower income taxes. Lower income from mortgage banking activities and increases in noninterest expense (mostly attributed to higher salaries and employee benefits) also contributed to the decline in net earnings.

		For the Six Months Ended
		June 30, 2022			June 30, 2021			$ Change			% Change
Net interest income		$	12,501			$	11,018			$	1,483				13.5	%
Provision (credit) for loan losses			360				(185	)			545				294.6
Noninterest income			1,022				1,292				(270	)			(20.9	)
Noninterest expense			7,662				6,575				1,087				16.5
Income taxes			1,293				1,424				(131	)			(9.2	)
Net earnings		$	4,208			$	4,496			$	(288	)			(6.4	)%

Comparing the six-month periods, higher net interest income and lower taxes were offset primarily by higher noninterest expense and secondarily by the provision for loan losses and lower noninterest income.

Net Interest Income (Unaudited)

(dollars in thousands)

														Change 2Q'22 vs.
		2Q'22			1Q'22			2Q'21			1Q'22			2Q'21
Interest income:
Loans		$	6,029			$	5,784			$	5,632				4.2	%			7.0	%
Securities			737				385				262				91.4				181.3
Other			331				124				65				166.9				409.2
Total interest income			7,097				6,293				5,959				12.8	%			19.1	%
Interest expense:
Deposits			415				403				500				3.0	%			(17.0	)%
Other borrowings			40				31				7				29.0				471.4
Total interest expense			455				434				507				4.8				(10.3	)
Net interest income		$	6,642			$	5,859			$	5,452				13.4	%			21.8	%

On a linked quarter basis and compared to the second quarter of 2021, the volume increase in loans and securities is the biggest driver of the increase in net interest income, followed by rate increases, and to a lesser extent, one additional day when comparing 2Q22 to 1Q22. Average interest-earning assets totaled $828.2 million for 2Q22, compared to $814.2 million for 1Q22 and $700.4 million for 2Q21. Partially offsetting this was a $259,000 and a $637,000 reduction in PPP fee and interest income when compared to 1Q22 and 2Q21, respectively. Excluding the impact of PPP, interest on loans would have increased 9.4% on a linked quarter basis and 22.6%, compared to the second quarter of 2021 (please refer to "Non-GAAP Measures and Ratio Reconciliation" in the Tables on page 11 for more detail.) Interest expense increased $21,000 from the first quarter of 2022 due to volume increases in average interest-earning deposit balances and other borrowings. Compared to 2Q21, interest expense decreased $52,000 as volume increases were offset by a strategic reduction of deposit rates made in the first quarter of 2022. The Company's 2Q22 net interest margin of 3.21% compared favorably to 1Q22 (2.88%) and 2Q21 (3.11%).

		For the Six Months Ended
		June 30, 2022			June 30, 2021			$ Change			% Change
Interest income:
Loans		$	11,813			$	11,437			$	376				3.3	%
Securities			1,122				511				611				119.6
Other			455				114				341				299.1
Total interest income			13,390				12,062				1,328				11.0	%
Interest expense:
Deposits			818				1,037				(219	)			(21.1	)%
Other borrowings			71				7				64				914.3
Total interest expense			889				1,044				(155	)			(14.8	)
Net interest income		$	12,501			$	11,018			$	1,483				13.5	%

Comparing the six-month periods, the average balance of interest-earnings assets increased 22.0%, or $147.8 million, and was the primary driver of the increase in net interest income. Partially offsetting this was a $1.2 million decrease in interest and fee income from PPP Loans as the Bank moved through the forgiveness process of these loans which impacted average loan yields and the net interest margin. The yield on the average balance of interest-earning assets declined from 3.79% for the six months ended June 30, 2021 to 3.26% for the six months ended June 30, 2022 while the net interest margin dipped from 3.27% to 3.04% for the same time period. (Please refer to the average balance sheet on page 9).

2

Provision for Loan Losses

After recording a $371,000 and a $185,000 credit for loan losses in 1Q22 and 2Q21, respectively, the Company's strong loan production in the second quarter of 2022 resulted in a $731,000 provision for loan losses.

Noninterest income (Unaudited)

(dollars in thousands)

														Change 2Q'22 vs.
		2Q'22			1Q'22			2Q'21			1Q'22			2Q'21
Service charges and fees on deposit accounts		$	73			$	68			$	56				7.4	%			30.4	%
Debit card/ATM revenue, net			143				129				124				10.9				15.3
Mortgage banking revenue, net			139				165				332				(15.8	)			(58.1	)
Income from bank-owned life insurance			94				95				67				(1.1	)			40.3
Other income			55				61				41				(9.8	)			34.1
Total noninterest income		$	504			$	518			$	620				(2.7	)%			(18.7	)%

		For the Six Months Ended
		June 30, 2022			June 30, 2021			$ Change			% Change
Service charges and fees on deposit accounts		$	141			$	109			$	32				29.4	%
Debit card/ATM revenue, net			272				233				39				16.7
Mortgage banking revenue, net			304				633				(329	)			(52.0	)
Income from bank-owned life insurance			189				130				59				45.4
Gain on sale of debt securities available for sale			-				108				(108	)			N/A
Other income			116				79				37				46.8
Total noninterest income		$	1,022			$	1,292			$	(270	)			(20.9	)%

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

Noninterest expense (Unaudited)

(dollars in thousands)

														Change 2Q'22 vs.
		2Q'22			1Q'22			2Q'21			1Q'22			2Q'21
Salaries and employee benefits		$	2,238			$	2,160			$	1,805				3.6	%			24.0	%
Occupancy and equipment			396				408				378				(2.9	)			4.8
Professional fees			130				146				120				(11.0	)			8.3
Marketing			213				167				199				27.5				7.0
FDIC assessment			84				124				49				(32.3	)			71.4
Software maintenance, amortization and other			285				242				251				17.8				13.5
Other			536				533				476				0.6				12.6
Total noninterest expense		$	3,882			$	3,780			$	3,278				2.7	%			18.4	%

		For the Six Months Ended
		June30, 2022			June30, 2021			$ Change			% Change
Salaries and employee benefits		$	4,398			$	3,657			$	741				20.3	%
Occupancy and equipment			804				764				40				5.2
Professional fees			276				250				26				10.4
Marketing			380				339				41				12.1
FDIC assessment			208				119				89				74.8
Software maintenance, amortization and other			527				501				26				5.2
Other			1,069				945				124				13.1
Total noninterest expense		$	7,662			$	6,575			$	1,087				16.5	%

For all comparison periods, an increase in salaries and employee benefits is the primary driver of higher noninterest expense due to a larger employee base (100 FTEs at June 30, 2022 versus 95 at June 30, 2021) and annual raises that went in effect in March of 2022. The fluctuation in the quarterly FDIC assessment is primarily attributed to changing assessment rates while an increased assessment rate and higher deposit balances led to the $89,000 increase when comparing the six-month periods. The $124,000 increase in other noninterest expense from the first half of 2021 to the first half of 2022 is attributed to modest fluctuations in various miscellaneous expense categories.

3

Balance Sheet

At June 30, 2022, the Company reported $860.8 million in total assets, $784.6 million in deposits, and $537.6 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 $14.1 million in PPP loan forgiveness during the first half of 2022, the Company's net loan portfolio increased $61.5 million, or 12.5%, since year-end. At June 30, 2022, $1.0 million in PPP loans remained on the balance sheet with $44,000 in fee income, net of costs, left to be recognized.

Prime Meridian Holding Company and Subsidiary

Loans by Class

(dollars in thousands)

			June 30, 2022			December 31, 2021
			Unaudited			Audited
			Amount			% of Total			Amount			% of Total
Commercial real estate			$	179,976				33.0	%		$	156,306				31.5	%
Residential real estate and home equity				208,769				38.4				183,536				36.9
Construction				71,382				13.1				71,164				14.3
Commercial				75,996				14.0				78,584				15.8
Consumer				7,961				1.5				7,283				1.5
Total loans				544,084				100.0	%			496,873				100.0	%
Net deferred loan costs (fees)				93								(701	)
Allowance for loan losses				(6,611	)							(5,974	)
Loans, net			$	537,566							$	490,198

Deposit balances decreased $3.4 million from 1Q22 and is attributed to seasonal outflows of public funds rather than a trend linked to business or consumer accounts. Given the current interest rate environment, management is monitoring potential volatility in deposit balances closely. Total stockholders' equity was $64.6 million, or 7.5% of total assets, at June 30, 2022 compared to $67.0 million at December 31, 2021, or 8.0% of total assets. The $2.4 million decrease in equity from year-end stemmed from a $6.5 million change in accumulated other comprehensive loss on the company's investment securities portfolio due to the rising rate environment, partially offset by net earnings for the six months ended June 30, 2022. Book value per share decreased from $21.42 at December 31, 2021 with 3,129,046 common shares outstanding to $20.48 at June 30, 2022, with 3,155,308 common shares outstanding. While the Company acknowledges that rising interest rates have generated unrealized losses in its investment portfolio during the six months ended June 30, 2022, the Company's asset sensitive balance sheet is expected to respond well to the current rate environment.

As of June 30, 2022, the Bank was considered to be "well capitalized" with a Tier 1 Leverage Capital Ratio of 8.61%, a 12.61% Common Equity Tier 1 Capital Ratio, a 12.61% Tier 1 Risk-Based Capital Ratio, and a 13.72% 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 June 30, 2022, the Company had an outstanding loan balance under this line of $4.1 million and year-to-date interest expense of $71,000.

Asset Quality

At June 30, 2022, the Bank had nonaccrual loans totaling $349,000 compared to none at December 31, 2021. Net charge-offs totaled $7,000 for the quarter ended June 30, 2022 and that ratio of nonperforming assets as a percentage of total assets was 0.04%. Management believes that the allowance for loan losses which was $6.6 million, or 1.22% of gross loans, at June 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 June 30, 2022, the Bank had 100 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)

		2Q'22			1Q'22			4Q'21			3Q'21			2Q'21
Interest income:
Loans		$	6,029			$	5,784			$	5,794			$	5,819			$	5,632
Securities			737				385				292				283				262
Other			331				124				76				78				65
Total interest income			7,097				6,293				6,162				6,180				5,959
Interest expense:
Deposits			415				403				483				502				500
Other borrowings			40				31				26				25				7
Total interest expense			455				434				509				527				507
Net interest income			6,642				5,859				5,653				5,653				5,452
Provision (credit) for loan losses			731				(371	)			81				-				(185	)
Net interest income after provision for loan losses			5,911				6,230				5,572				5,653				5,637
Noninterest income:
Service charges and fees on deposit accounts			73				68				75				61				56
Debit card/ATM revenue, net			143				129				129				108				124
Mortgage banking revenue, net			139				165				216				325				332
Income from bank-owned life insurance			94				95				69				73				67
Other income			55				61				112				46				41
Total noninterest income			504				518				601				613				620
Noninterest expense:
Salaries and employee benefits			2,238				2,160				2,408				2,028				1,805
Occupancy and equipment			396				408				402				380				378
Professional fees			130				146				130				103				120
Marketing			213				167				171				197				199
FDIC assessment			84				124				119				78				49
Software maintenance, amortization and other			285				242				237				237				251
Other			536				533				525				480				476
Total noninterest expense			3,882				3,780				3,992				3,503				3,278
Earnings before income taxes			2,533				2,968				2,181				2,763				2,979
Income taxes			566				727				429				664				717
Net earnings		$	1,967			$	2,241			$	1,752			$	2,099			$	2,262
Basic earnings per common share		$	0.62			$	0.71			$	0.56			$	0.67			$	0.72
Diluted earnings per common share		$	0.62			$	0.71			$	0.55			$	0.67			$	0.72

6

Prime Meridian Holding Company and Subsidiary

Condensed Consolidated Statements of Earnings

(in thousands, except per share amounts)

		Three Months Ended June30,			Six Months Ended June30,
		2022			2021			2022			2021
		Unaudited			Unaudited
Interest income:
Loans		$	6,029			$	5,632			$	11,813			$	11,437
Securities			737				262				1,122				511
Other			331				65				455				114
Total interest income			7,097				5,959				13,390				12,062
Interest expense:
Deposits			415				500				818				1,037
Other borrowings			40				7				71				7
Total interest expense			455				507				889				1,044
Net interest income			6,642				5,452				12,501				11,018
Provision (credit) for loan losses			731				(185	)			360				(185	)
Net interest income after provision for loan losses			5,911				5,637				12,141				11,203
Noninterest income:
Service charges and fees on deposit accounts			73				56				141				109
Debit card/ATM revenue, net			143				124				272				233
Mortgage banking revenue, net			139				332				304				633
Income from bank-owned life insurance			94				67				189				130
Gain on sale of securities available for sale			-				-				-				108
Other income			55				41				116				79
Total noninterest income			504				620				1,022				1,292
Noninterest expense:
Salaries and employee benefits			2,238				1,805				4,398				3,657
Occupancy and equipment			396				378				804				764
Professional fees			130				120				276				250
Marketing			213				199				380				339
FDIC assessment			84				49				208				119
Software maintenance, amortization and other			285				251				527				501
Other			536				476				1,069				945
Total noninterest expense			3,882				3,278				7,662				6,575
Earnings before income taxes			2,533				2,979				5,501				5,920
Income taxes			566				717				1,293				1,424
Net earnings		$	1,967			$	2,262			$	4,208			$	4,496
Earnings per common share:
Basic		$	0.62			$	0.72			$	1.34			$	1.44
Diluted			0.62				0.72				1.32				1.44
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)

		2Q'22			1Q'22			4Q'21			3Q'21			2Q'21
		(Unaudited)			(Unaudited)			(Audited)			(Unaudited)			(Unaudited)
Assets
Cash & cash equivalents		$	134,122			$	233,789			$	233,473			$	212,652			$	181,599
Debt securities available for sale			133,382				101,868				73,763				67,124				63,306
Debt securities held to maturity			8,777				6,185				-				-				-
Loans, held for sale			10,725				11,241				11,768				10,976				13,736
Loans, net			537,566				479,526				490,198				476,513				470,488
Federal Home Loan Bank stock			463				463				366				366				366
Premises & equipment, net			8,228				7,905				7,962				8,018				8,159
Right of use lease asset			3,151				3,205				3,258				3,310				3,363
Accrued interest receivable			1,933				1,649				1,505				1,478				1,751
Bank-owned life insurance			16,342				16,248				16,153				12,085				12,012
Other assets			6,148				4,087				2,677				1,952				1,839
Total Assets		$	860,837			$	866,166			$	841,123			$	794,474			$	756,619
Liabilities and Stockholders' Equity
Liabilities:
Noninterest-bearing demand deposits		$	210,685			$	206,018			$	209,351			$	219,996			$	199,662
Savings, NOW and money-market deposits			535,359				534,049				503,759				448,528				433,954
Time deposits			38,545				47,876				49,832				49,817				49,744
Total Deposits			784,589				787,943				762,942				718,341				683,360
Other borrowings			4,125				3,975				3,575				3,075				3,075
Official checks			776				1,625				1,141				1,168				965
Operating lease liability			3,303				3,350				3,397				3,443				3,489
Other liabilities			3,415				3,512				3,037				2,798				1,943
Total Liabilities			796,208				800,405				774,092				728,825				692,832
Total Stockholders' Equity			64,629				65,761				67,031				65,649				63,787
Total Liabilities and Stockholders' Equity		$	860,837			$	866,166			$	841,123			$	794,474			$	756,619

8

Prime Meridian Holding Company and Subsidiary

Condensed Consolidated Average Balance Sheets (Unaudited)

(in thousands)

		2Q'22			1Q'22			2Q'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)		$	514,166			$	5,912			4.60	%		$	489,263			$	5,684				4.65	%		$	483,587			$	5,505				4.55	%
Loans held for sale			11,174				117			4.19				10,550				100				3.79				14,784				127				3.44
Debt securities			132,562				737			2.22				84,088				385				1.83				60,155				262				1.74
Other(2)			170,320				331			0.78				230,348				124				0.22				141,842				65				0.18
Total interest-earning assets			828,222			$	7,097			3.43	%			814,249			$	6,293				3.09	%			700,368			$	5,959				3.40	%
Noninterest-earning assets			41,391											38,599												31,313
Total assets		$	869,613										$	852,848											$	731,681
Interest-bearing liabilities:
Savings, NOW and money-market deposits		$	536,209			$	357			0.27	%		$	517,506			$	335				0.26	%		$	413,859			$	410				0.40	%
Time deposits			43,611				58			0.53				48,920				68				0.56				51,372				90				0.70
Total interest-bearing deposits			579,820				415			0.29				566,426				403				0.28				465,231				500				0.43
Other borrowings			4,034				40			3.97				3,717				31				3.34				802				7				3.49
Total interest-bearing liabilities			583,854			$	455			0.31	%			570,143			$	434				0.30	%			466,033			$	507				0.44	%
Noninterest-bearing deposits			213,521											208,793												196,726
Noninterest-bearing liabilities			7,345											3,328												6,085
Stockholders' equity			64,893											70,584												62,837
Total liabilities and stockholders' equity		$	869,613										$	852,848											$	731,681
Net earning assets		$	244,368										$	244,106											$	234,335
Net interest income						$	6,642										$	5,859											$	5,452
Interest rate spread(3)										3.12	%											2.79	%											2.96	%
Net interest margin(4)										3.21	%											2.88	%											3.11	%

		For the Six Months Ended June 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)		$	501,783			$	11,596				4.62	%		$	483,586			$	11,204				4.63	%
Loans held for sale			10,864				217				3.99				14,081				233				3.31
Debt securities			108,459				1,122				2.07				59,893				511				1.71
Other(2)			200,167				455				0.45				115,888				114				0.20
Total interest-earning assets			821,273			$	13,390				3.26	%			673,448			$	12,062				3.58	%
Noninterest-earning assets			40,004												29,971
Total assets		$	861,277											$	703,419
Interest-bearing liabilities:
Savings, NOW and money-market deposits		$	526,909			$	693				0.26	%		$	396,541			$	811				0.41	%
Time deposits			46,251				125				0.54				52,906				226				0.85
Total interest-bearing deposits			573,160				818				0.29				449,447				1,037				0.46
Other borrowings			3,877				71				3.66				411				7				3.41
Total interest-bearing liabilities			577,037			$	889				0.31	%			449,858			$	1,044				0.46	%
Noninterest-bearing deposits			211,170												185,424
Noninterest-bearing liabilities			7,202												6,361
Stockholders' equity			65,868												61,776
Total liabilities and stockholders' equity		$	861,277											$	703,419
Net earning assets		$	244,236											$	223,590
Net interest income						$	12,501											$	11,018
Interest rate spread (3)											2.95	%											3.12	%
Net interest margin(4)											3.04	%											3.27	%

(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)

			2Q'22			1Q'22			4Q'21			3Q'21			2Q'21
Per Share Data:
Earnings per common share - Basic			$	0.62			$	0.71			$	0.56			$	0.67			$	0.72
Earnings per common share - Diluted			$	0.62			$	0.71			$	0.55			$	0.67			$	0.72
Book value per common share			$	20.48			$	20.87			$	21.42			$	20.99			$	20.40
Common shares outstanding				3,155,308				3,150,261				3,129,046				3,127,730				3,126,474
Weighted-average basic common shares outstanding				3,151,760				3,138,695				3,128,831				3,127,524				3,126,197
Weighted-average diluted common shares outstanding				3,189,319				3,174,697				3,162,746				3,145,017				3,139,179
Selected Performance Ratios and Other Data:
Return on average assets(1)				0.90	%			1.05	%			0.85	%			1.09	%			1.24	%
Return on average equity(1)				12.13				12.70				10.11				12.99				14.40
Average yield on earning assets				3.43				3.09				3.11				3.34				3.40
Net interest margin(2)				3.21				2.88				2.85				3.06				3.11
Efficiency ratio(3)				54.32				59.28				63.83				55.90				53.99
Noninterest expense/average assets(1)				1.79				1.77				1.93				1.82				1.79
Asset Quality Data:
Nonaccrual loans			$	349			$	-			$	-			$	-			$	-
Loans 90 days past due + other real estate owned				-				-				-				-				-
Total nonperforming assets				349				-				-				-				-
Nonperforming assets/total assets				0.04	%			-				-				-				-
Loans 30-89 days past due			$	1,597			$	1,546			$	1,121			$	526			$	1,022
Total loans				544,084				485,573				496,873				483,634				478,138
Loans 30-89 days past due/total loans				0.29	%			0.32	%			0.23	%			0.11	%			0.21	%
Net (recoveries) charge-offs/average loans (1)				-				(0.23	)			-				-				0.01
Capital Ratios:
Tier 1 Leverage Capital Ratio (Company)				8.16	%			8.10	%			8.12	%			8.45	%			8.61	%
Tier 1 Leverage Capital Ratio (Bank)				8.61				8.56				8.53				8.82				9.01
Common Equity Tier 1 Capital Ratio (Bank)				12.61				13.60				12.72				13.30				13.87
Tier 1 Risk-Based Capital Ratio (Bank)				12.61				13.60				12.72				13.30				13.87
Total Risk-Based Capital Ratio (Bank)				13.72				14.70				13.80				14.45				15.11

(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)

		2Q'22			1Q'22			4Q'21			3Q'21			2Q'21
Net Income
Net earnings (GAAP)		$	1,967			$	2,241			$	1,752			$	2,099			$	2,262
Plus: Provision (credit) for loan losses			731				(371	)			81				-				(185	)
Plus: income taxes			566				727				429				664				717
PTPP(1) net earnings (non-GAAP)		$	3,264			$	2,597			$	2,262			$	2,763			$	2,794
Earnings per Share (EPS)
Weighted average common shares, diluted			3,189,319				3,174,697				3,162,746				3,145,017				3,139,179
EPS, diluted (GAAP)		$	0.62			$	0.71			$	0.55			$	0.67			$	0.72
PTPP(1) EPS, diluted (non-GAAP)		$	1.02			$	0.82			$	0.72			$	0.88			$	0.89
Return on Average Assets (ROAA)
Average assets		$	869,613			$	852,848			$	826,027			$	771,867			$	731,681
ROAA (GAAP)			0.90	%			1.05	%			0.85	%			1.09	%			1.24	%
PTPP(1) ROAA (non-GAAP)			1.50	%			1.22	%			1.10	%			1.43	%			1.53	%
Return on Average Equity
Average equity		$	64,893			$	70,584			$	69,336			$	64,636			$	62,837
ROAE (GAAP)			12.13	%			12.70	%			10.11	%			12.99	%			14.40	%
PTPP(1) ROAE (non-GAAP)			20.12	%			14.72	%			13.05	%			17.10	%			17.79	%
Adjusted Average Loan Yield:
Net loans, excluding loans held for sale		$	537,566			$	479,526			$	490,198			$	476,513			$	470,488
Less PPP loans			(1,023	)			(4,937	)			(15,172	)			(27,554	)			(54,563	)
Adjusted net loans, excluding loans held for sale and PPP (non-GAAP)		$	536,543			$	474,589			$	475,026			$	448,959			$	415,925
Average loans, excluding loans held for sale		$	514,166			$	489,263			$	477,175			$	477,322			$	483,587
Less average PPP loans			(2,876	)			(9,652	)			(18,684	)			(43,033	)			(69,318	)
Adjusted average loans, excluding loans held for sale and PPP (non-GAAP)		$	511,290			$	479,611			$	458,491			$	434,289			$	414,269
Interest on loans, excluding loans held for sale		$	5,912			$	5,684			$	5,686			$	5,708			$	5,505
Less interest income and earned fee income on PPP loans			(237	)			(496	)			(584	)			(865	)			(874	)
Adjusted interest on loans, excluding loans held for sale and PPP (non-GAAP)		$	5,675			$	5,188			$	5,102			$	4,843			$	4,631
Growth rate over linked quarter			9.4	%			1.7	%			5.3	%			4.6	%			(0.7	)%
Average loan yield, excluding loans held for sale (GAAP)			4.60	%			4.65	%			4.77	%			4.78	%			4.55	%
Adjusted average loan yield, excluding loans held for sale and PPP (non-GAAP)			4.44	%			4.33	%			4.45	%			4.46	%			4.47	%

⁽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 Six Months Ended
		June 30, 2022			June 30, 2021
Net Income
Net earnings (GAAP)		$	4,208			$	4,496
Plus: (credit) provision for loan losses			360				(185	)
Plus: income taxes			1,293				1,424
PTPP(1) net earnings (non-GAAP)		$	5,861			$	5,735
Earnings per Share (EPS)
Weighted average common shares, diluted			3,188,802				3,128,185
EPS, diluted (GAAP)		$	1.32			$	1.44
PTPP(1) EPS, diluted (non-GAAP)		$	1.84			$	1.83
Return on Average Assets (ROAA)
Average assets		$	861,277			$	703,419
ROAA (GAAP)			0.98	%			1.28	%
PTPP(1) ROAA (non-GAAP)			1.36	%			1.63	%
Return on Average Equity (ROAE)
Average equity (GAAP)		$	65,868			$	61,776
ROAE (GAAP)			12.78	%			14.56	%
PTPP(1) ROAE (non-GAAP)			17.80	%			18.57	%

⁽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
	[phone]
	Prime Meridian Holding Company
	Website: www.primemeridianbank.com

13