Executive Summary

Q3 2024 delivered a strong rebound: net earnings rose 46.7% quarter-over-quarter to $2.603M and 22.8% year-over-year; diluted EPS was $0.78 vs $0.54 in Q2 and $0.66 in Q3 2023 .
Operating efficiency improved materially; the efficiency ratio fell to 58.24% (vs 65.02% in Q2), aided by lower software and marketing costs; net interest margin ticked up to 3.63% (vs 3.55% in Q2) .
Balance sheet growth continued: deposits reached $824.0M (+10.1% YTD) and gross loans reached $692.7M (+6.2% YTD), with residential/home equity driving loan mix; liquidity sources totaled $612.2M (74.3% of deposits) .
Credit quality normalized: net charge-offs were just $11K vs $800K in Q2; allowance for credit losses on loans ended at $5.4M (0.78% of total loans) .
Street consensus was unavailable for PMHG at the time of analysis; no earnings call transcript was attached to the 8-K (press release and investor presentation only), so catalysts center on demonstrated efficiency gains, NIM improvement, and deposit growth trajectory .

What Went Well and What Went Wrong

What Went Well

“Very proud of the Bank's performance this quarter… we are running efficiently… doing more, with less,” CEO Sammie D. Dixon, Jr. commented, reflecting tangible efficiency improvements (efficiency ratio 58.24%) .
Net interest income rose 7.4% QoQ and 10.5% YoY to $7.941M, driven by higher loan yields, asset mix shift into higher-yielding cash, and lower FHLB borrowing; NIM improved to 3.63% .
Deposit and loan growth were broad-based: deposits +$75.3M YTD and loans +$40.7M YTD, with most loan growth in residential/home equity; book value per share increased to $26.87 .

What Went Wrong

Funding costs remained elevated: average rate on interest-bearing liabilities increased to 3.09% vs 2.96% in Q2 and 2.19% in Q3 2023, tempering NIM vs prior year (3.63% vs 3.68% in Q3 2023) .
Noninterest expense was still up 4.5% YoY to $4.934M, with higher salaries/benefits and software-related costs following 4Q’23 core conversion .
Mortgage banking and deposit service fees (NSF) remain variable; noninterest income was flat QoQ and its mix reflects softer NSF fees even as debit card and mortgage banking improved YoY .

Financial Results

Metric	Q3 2023	Q2 2024	Q3 2024
Revenue (NII + Noninterest income) ($USD Thousands)	$7,686	$7,921	$8,472
Net Interest Income ($USD Thousands)	$7,187	$7,394	$7,941
Noninterest Income ($USD Thousands)	$499	$527	$531
Credit Loss Expense ($USD Thousands)	$175	$444	$100
Noninterest Expense ($USD Thousands)	$4,723	$5,150	$4,934
Earnings Before Income Taxes ($USD Thousands)	$2,788	$2,327	$3,438
Income Taxes ($USD Thousands)	$668	$553	$835
Net Earnings ($USD Thousands)	$2,120	$1,774	$2,603
EPS – Basic ($)	$0.66	$0.54	$0.79
EPS – Diluted ($)	$0.66	$0.54	$0.78

Margin Metrics	Q3 2023	Q2 2024	Q3 2024
Net Interest Margin (%)	3.68%	3.55%	3.63%
Efficiency Ratio (%)	61.45%	65.02%	58.24%
ROAA (%)	1.03%	0.81%	1.14%
ROAE (%)	11.31%	8.70%	12.20%

Segment and portfolio composition (loans by class):

Class	Dec 31, 2023 Amount ($000)	% of Total	Jun 30, 2024 Amount ($000)	% of Total	Sep 30, 2024 Amount ($000)	% of Total
Commercial Real Estate	$208,429	32.0%	$212,711	30.8%	$216,379	31.2%
Residential & Home Equity	$273,383	41.9%	$290,546	42.1%	$297,887	43.0%
Construction	$78,197	12.0%	$90,166	13.1%	$82,639	11.9%
Commercial	$85,983	13.2%	$90,926	13.2%	$89,788	13.0%
Consumer	$5,936	0.9%	$5,909	0.8%	$5,971	0.9%
Total Loans	$651,928	100.0%	$690,258	100.0%	$692,664	100.0%

Balance sheet KPIs:

KPI	Dec 31, 2023	Jun 30, 2024	Sep 30, 2024
Total Assets ($USD Millions)	$854.5	$893.4	$931.6
Total Deposits ($USD Millions)	$748.7	$790.4	$824.0
Net Loans ($USD Millions)	$646.1	$684.8	$687.1
Loan-to-Deposit Ratio (%)	87.1%	87.3%	84.1%
Nonperforming Assets / Total Assets (%)	0.40%	0.34%	0.26%
On-balance-sheet Liquidity ($USD Millions)	$146.8	$144.8	$181.6
Off-balance-sheet Funding Capacity ($USD Millions)	$389.7	$401.2	$430.6

Notes: Revenue calculated as Net Interest Income plus Total Noninterest Income using reported 8‑K figures .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Dividend per common share	FY 2024	$0.22 (FY 2023 actual)	$0.25 declared for FY 2024 (paid in Q1 2024)	Raised

No formal revenue, margin, OpEx, tax rate, or segment guidance was disclosed in the Q3 2024 8-K press release (the filing provided the press release and investor presentation exhibits only) .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2)	Current Period (Q3 2024)	Trend
Operational efficiency/core systems	Completed core conversion in 4Q’23; efficiencies starting to be leveraged (Q1) ; one-time conversion-related expenses paid in Q2	Efficiency ratio improved to 58.24%; lower software and marketing expenses	Improving
Net interest margin	NIM 3.51% (Q1) and 3.55% (Q2) amid rising funding costs	NIM 3.63%; asset mix shift to higher-yielding cash and reduced FHLB borrowings	Improving QoQ
Deposit growth & mix	Deposits +$3.0M in Q1; growth in noninterest-bearing and time deposits ; Q2 deposits +$41.7M YTD	Deposits +$75.3M YTD to $824.0M; broad-based growth across categories	Building
Credit quality	Q1 charge-offs $27K; Q2 net charge-offs $800K tied to impaired relationships	Net charge-offs $11K; allowance 0.78% of loans; NPAs/Assets 0.26%	Normalizing/improving
Liquidity & funding capacity	Off-balance sheet capacity $386.6M (Q1), $401.2M (Q2); on-balance sheet $134.9M (Q1), $144.8M (Q2)	Off-balance sheet $430.6M; on-balance sheet $181.6M; total liquidity 74.3% of deposits	Increasing

Management Commentary

“Very proud of the Bank's performance this quarter… we are running efficiently and are optimizing the performance of our systems as well as our team.”
“Growth is happening in all areas of the Bank and our efficiency ratio is down right where we want it… we are doing more, with less.”
Q2 tone: “We are positioning ourselves for the next chapter… tighter, leaner team… ready to put more points on the board.”
Q1 tone: “Technology upgrades during the fourth quarter… operational efficiencies we are just now starting to leverage.”

Q&A Highlights

No public earnings call transcript or Q&A was attached to the Q3 2024 8-K; the filing provided a press release and investor presentation exhibits only . Similarly, Q2 and Q1 8-Ks attached press releases/presentations without transcripts .

Estimates Context

Wall Street consensus EPS/revenue estimates from S&P Global were unavailable for PMHG at the time of this report; therefore, beat/miss analysis vs Street cannot be provided. Values would be retrieved from S&P Global when available.

Key Takeaways for Investors

Strong sequential profit recovery: net earnings +46.7% QoQ to $2.603M; diluted EPS $0.78 vs $0.54 in Q2, reflecting tighter expenses and lower credit loss expense .
Operating leverage improved: efficiency ratio 58.24% (vs 65.02% in Q2); management emphasized doing “more, with less,” indicating sustainable focus on cost discipline .
NIM uptick with favorable asset/funding mix: NIM 3.63% vs 3.55% in Q2; reduced FHLB borrowings and higher-yielding cash boosted net interest income .
Deposits and loans expanding: deposits +$75.3M YTD to $824.0M; loans +$40.7M YTD to $692.7M, with continued push in residential/home equity .
Credit normalization: net charge-offs just $11K vs $800K in Q2; allowance 0.78% of loans; NPAs/Assets at 0.26% .
Liquidity robust: total sources $612.2M (74.3% of deposits); off-balance sheet capacity $430.6M, on-balance sheet liquidity $181.6M .
Near-term trading focus: efficiency improvements and NIM recovery act as catalysts; watch deposit costs and funding mix as key variables affecting NIM trajectory (NIM still slightly below Q3 2023 at 3.63% vs 3.68%) .

Prime Meridian Holding Co (PMHG)·Q3 2024 Earnings Summary