Executive Summary

PMHG reported net earnings of $1.774M and diluted EPS of $0.54 for Q2 2024, down 8.1% sequentially from $0.59 in Q1 and down 21.4% year over year from $0.70 in Q2 2023 .
Net interest margin ticked up sequentially to 3.55% vs. 3.51% in Q1, though remained below 3.78% in Q2 2023; noninterest income rose 16.3% QoQ on stronger mortgage banking revenue .
Operating expenses increased 6.4% QoQ and 13.9% YoY, driven by salaries/benefits and software maintenance/core conversion-related costs; efficiency ratio worsened to 65.02% vs. 63.81% in Q1 .
Credit loss expense rose to $444K, with $803K in charge-offs linked largely to two previously impaired commercial relationships; allowance for credit losses was $5.3M (0.77% of gross loans) at quarter-end .
CEO highlighted loan and deposit balance growth, improved net mortgage banking revenue, and a “clean balance sheet,” positioning the team to execute a “back-to-basics” approach heading into H2 2024 .

What Went Well and What Went Wrong

What Went Well

Loan and deposit growth: Gross loans increased $38.3M (5.9%) and total deposits rose $41.7M (5.6%) since year-end; on-balance sheet liquidity was $144.8M, with total liquidity sources at 69.1% of total deposits .
Sequential margin improvement: Net interest margin rose to 3.55% from 3.51% in Q1 as average earning asset yields increased to 5.63% (vs. 5.44% in Q1) .
Mortgage banking and fee momentum: Noninterest income increased 16.3% QoQ and 13.8% YoY, led by mortgage banking revenue and steady debit card/ATM fees .
Management tone: “We are positioning ourselves for the next chapter… Loan and deposit balances improved, as did net mortgage banking revenue. We have a clean balance sheet heading into the second half of 2024.” – Sammie D. Dixon, Jr., CEO .

What Went Wrong

Earnings pressure: Diluted EPS of $0.54 declined 8.1% QoQ and 21.4% YoY as higher funding costs and elevated operating expenses tempered bottom-line growth .
Expense inflation: Total noninterest expense rose 6.4% QoQ and 13.9% YoY due to salaries/benefits and software costs tied to the Q4’23 core conversion; efficiency ratio worsened to 65.02% vs. 57.84% in Q2’23 .
Credit costs: Net charge-offs totaled $803K (mostly two impaired commercial loans) and credit loss expense increased to $444K; ACL/loans declined to 0.77% from 0.86% at year-end .

Financial Results

Income Statement and EPS (USD Thousands, EPS in USD)

Metric	Q2 2023	Q1 2024	Q2 2024
Total Interest Income ($)	$9,679	$11,065	$11,738
Net Interest Income ($)	$7,353	$7,133	$7,394
Credit Loss Expense ($)	$325	$211	$444
Noninterest Income ($)	$463	$453	$527
Noninterest Expense ($)	$4,521	$4,841	$5,150
Earnings Before Income Taxes ($)	$2,970	$2,534	$2,327
Income Taxes ($)	$713	$603	$553
Net Earnings ($)	$2,257	$1,931	$1,774
EPS - Basic ($)	$0.71	$0.59	$0.54
EPS - Diluted ($)	$0.70	$0.59	$0.54

Key Ratios

Metric	Q2 2023	Q1 2024	Q2 2024
Net Interest Margin (%)	3.78	3.51	3.55
ROAA (%)	1.10	0.91	0.81
ROAE (%)	12.31	9.61	8.70
Efficiency Ratio (%)	57.84	63.81	65.02
Nonperforming Assets/Total Assets (%)	0.17	0.40	0.34

Balance Sheet KPIs (Quarter-End)

Metric	Q4 2023	Q1 2024	Q2 2024
Total Assets ($USD Thousands)	$854,528	$862,660	$893,381
Total Deposits ($USD Thousands)	$722,807	$751,713	$790,370
Net Loans ($USD Thousands)	$646,127	$666,826	$684,762
Book Value per Share ($)	$22.91	$24.71	$25.35
Tier 1 Leverage Ratio (Bank) (%)	10.18	10.35	10.32
Total Risk-Based Capital (Bank) (%)	13.99	14.02	14.09

Loans by Class (Composition)

Class	Q1 2024 Amount ($000)	Q1 2024 % of Total	Q2 2024 Amount ($000)	Q2 2024 % of Total
Commercial Real Estate	$226,634	33.7%	$212,711	30.8%
Residential RE & Home Equity	$264,638	39.3%	$290,546	42.1%
Construction	$87,593	13.0%	$90,166	13.1%
Commercial	$88,426	13.2%	$90,926	13.2%
Consumer	$5,545	0.8%	$5,909	0.8%
Total Loans	$672,836	100.0%	$690,258	100.0%

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Mortgage Banking Revenue Activity	2H 2024	None provided	Management expects continued fluctuations due to rate uncertainty and limited inventory vs. demand	Qualitative caution (no formal range)
Revenue, EPS, Margins, OpEx, Tax Rate	FY/Quarterly	None provided	None provided	No formal guidance

Note: PMHG did not issue quantitative guidance ranges in the Q2 2024 materials; commentary focused on operating posture, core conversion impacts, and mortgage activity expectations .

Earnings Call Themes & Trends

No earnings call transcript was available; company issued a press release and investor presentation on July 26, 2024 . The narrative below tracks themes across recent quarters using management commentary.

Topic	Previous Mentions (Q4 2023 & Q1 2024)	Current Period (Q2 2024)	Trend
Cost of Funds & Deposit Mix	Funding costs rose sharply in 2023; shift from noninterest-bearing to higher-cost money market/time deposits; NIM 3.61% in Q4	Average cost of interest-bearing liabilities up to 2.96%; NIM improved to 3.55% QoQ but below prior year	Stabilizing NIM QoQ amid elevated funding costs
Technology/Core Conversion	Q4’23 core conversion completed; higher software expenses in Q1	Additional mostly one-time expenses related to core conversion in Q2	Nearing completion; expense normalization expected post-conversion
Mortgage Banking	Q1 saw +31.5% YoY mortgage banking revenue	Strong early Q2 performance but slowed later; continued volatility expected	Volatile with rate uncertainty and inventory constraints
Credit Quality	Q1 NPA/Assets at 0.40%; modest charge-offs ($27K)	NPA/Assets 0.34%; net charge-offs $803K tied to impaired commercial loans	Mixed: improved NPA ratio but elevated net charge-offs
Liquidity & Capital	Q1 total liquidity sources at 69.4% of deposits; well-capitalized	Q2 total liquidity sources at 69.1% of deposits; well-capitalized	Stable high liquidity and strong capital

Management Commentary

“We are positioning ourselves for the next chapter… Loan and deposit balances improved, as did net mortgage banking revenue. We have a clean balance sheet heading into the second half of 2024.” – Sammie D. Dixon, Jr., Vice Chairman, President, and CEO .
“We have an exceptionally competent and confident team that cares about its clients and is dedicated to growing the Bank.” – Sammie D. Dixon, Jr. .
Q2 highlights include on-balance sheet liquidity of $144.8M and total liquidity sources of $546.0M (69.1% of deposits), and well-capitalized regulatory ratios (Tier 1 Leverage 10.32%, Total RBC 14.09%) .
Management noted higher operating expenses tied to salaries/benefits and software/core conversion costs, alongside mortgage banking revenue strength early in the quarter with later moderation .

Q&A Highlights

No Q2 2024 earnings call transcript was available; no Q&A disclosures were published. PMHG posted a press release and investor presentation on July 26, 2024 .

Estimates Context

We attempted to retrieve Wall Street consensus estimates (EPS and revenue) via S&P Global for Q2 2024; data was unavailable due to access limits (Daily Request Limit exceeded). As a result, estimate comparisons could not be provided and may need to be sourced separately from S&P Global or company coverage lists [GetEstimates error]. Values retrieved from S&P Global.*

Key Takeaways for Investors

Sequential NIM improvement to 3.55% suggests modestly improving asset yields, but elevated deposit costs continue to cap net interest income growth; watch for funding mix shifts and pricing discipline .
Top-line support from mortgage banking and debit card/ATM fees helped noninterest income; mortgage activity remains rate-sensitive and inventory constrained, implying continued volatility .
Expense normalization is a medium-term lever post-core conversion; near-term efficiency ratio deterioration (65.02%) underscores the importance of opex control in H2 .
Credit costs were a notable headwind with $803K net charge-offs tied to impaired commercial loans; monitor commercial credit resolution and ACL adequacy (0.77% of gross loans) .
Balance sheet growth (loans +5.9% and deposits +5.6% YTD) and strong liquidity/capital levels provide flexibility to navigate rate/macro uncertainty and support future growth .
With no formal guidance, the narrative emphasizes operational execution (“back-to-basics”) and culture; near-term stock reaction catalysts likely tied to margin trajectory, opex normalization, and credit outcomes .
Estimate context was unavailable; any beat/miss assessment requires fresh S&P Global consensus inputs—positioning for relative performance will hinge on subsequent updates to funding costs, credit, and mortgage trends [GetEstimates error]. Values retrieved from S&P Global.*

Prime Meridian Holding Co (PMHG)·Q2 2024 Earnings Summary