Sign in

You're signed outSign in or to get full access.

PM

Prime Meridian Holding Co (PMHG)·Q4 2023 Earnings Summary

Executive Summary

  • Q4 2023 net earnings were $1,830,000 and diluted EPS $0.55, down from $2,642,000 and $0.83 in Q4 2022 as higher funding costs and a larger credit loss provision weighed on results .
  • Net interest margin compressed to 3.61% (Q4) from 3.98% (Q4 2022) and 3.68% (Q3), reflecting deposit mix shifts toward higher-cost products and FHLB borrowings amid a sharply higher rate backdrop .
  • The Board declared an annual cash dividend of $0.25 per share payable Feb 29, 2024; this compares to $0.22 paid for 2023, highlighting capital strength and shareholder return focus despite macro headwinds .
  • Loans grew 9.5% year over year (Dec 31, 2023 vs. Dec 31, 2022) with strength in commercial real estate and residential real estate; total deposits rose 2.3% in 2023, though mix shifted to time deposits .
  • Liquidity remained robust: $146.8M on-balance sheet plus $389.7M off-balance sheet funding capacity, totaling $536.5M (71.7% of total deposits), a key support for balance sheet resilience .

What Went Well and What Went Wrong

What Went Well

  • Solid loan growth: Gross loans increased $56.3M (+9.5% y/y) with most growth in commercial and residential real estate, supporting interest income expansion .
  • Strong liquidity and capital: Total liquidity sources of $536.5M (71.7% of deposits) and “well capitalized” status (Bank Total Risk-Based Capital Ratio 14.03%) underpin resilience .
  • Dividend increase signals confidence: The Board declared an annual cash dividend of $0.25 per share for 2024, above the $0.22 paid in 2023 .
    Quote: “We are knocking on the door of becoming a $1 billion bank – built on years of organic growth.” – Sammie D. Dixon, Jr., Vice Chairman, President & CEO .

What Went Wrong

  • Margin pressure intensified: NIM fell to 3.61% in Q4 (vs. 3.68% Q3, 3.98% Q4’22) as the average cost of funds rose to 1.90% (from 0.64% in Q4’22) on deposit mix shifts and higher-rate funding .
  • Higher credit costs: Provision for credit losses rose to $707k in Q4 (vs. $175k in Q3), reflecting specific reserves on newly evaluated loans and uptick in past-due residential mortgages .
  • Asset quality deterioration vs. prior periods: Nonperforming assets increased to 0.40% of total assets with 12 nonperforming loans totaling $3.4M at year-end, up from 0.19% in Q3 .

Financial Results

Income Statement Trends

Metric ($USD Thousands)Q2 2023Q3 2023Q4 2023
Net Interest Income7,353 7,187 7,253
Credit Loss Expense325 175 707
Noninterest Income463 499 492
Noninterest Expense4,521 4,723 4,646
Net Earnings2,257 2,120 1,830
Diluted EPS ($)0.70 0.66 0.55

Margin and Profitability KPIs

Metric (%)Q2 2023Q3 2023Q4 2023
Net Interest Margin3.78 3.68 3.61
ROAA1.10 1.03 0.87
ROAE12.31 11.31 9.85
Efficiency Ratio57.84 61.45 59.99

Interest Income/Expense Breakdown

Metric ($USD Thousands)Q2 2023Q3 2023Q4 2023
Interest Income – Loans8,570 9,019 9,658
Interest Income – Debt Securities925 919 921
Interest Income – Other184 244 287
Interest Expense – Deposits1,917 2,691 3,351
Interest Expense – FHLB/Other Borrowings409 304 262

Balance Sheet and Credit KPIs

MetricQ2 2023Q3 2023Q4 2023
Loans, Net ($USD Thousands)614,744 628,974 646,127
Total Deposits ($USD Thousands)702,828 722,807 748,688
FHLB Advances ($USD Thousands)35,000 25,000 15,000
Nonperforming Assets / Total Assets (%)0.17 0.19 0.40
Book Value per Share ($)23.25 22.91 24.53
Allowance for Credit Losses / Loans (%)0.76 0.77 0.86

Year-over-Year (Q4 2023 vs. Q4 2022)

MetricQ4 2022Q4 2023
Net Interest Income ($USD Thousands)7,858 7,253
Net Earnings ($USD Thousands)2,642 1,830
Diluted EPS ($)0.83 0.55
Net Interest Margin (%)3.98 3.61
Deposit Interest Expense ($USD Thousands)1,137 3,351

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Dividend per Share ($)20240.22 (2023 annual paid) 0.25 (declared, payable Feb 29, 2024) Raised

Note: No formal quantitative guidance on revenue, margins, OpEx, OI&E, tax rate, or segment targets was provided in the Q4 2023 materials; the dividend announcement was the only explicit guidance-like item .

Earnings Call Themes & Trends

No earnings call transcript was available for Q4 2023; themes below synthesize press releases and 8-Ks for the last three quarters .

TopicQ2 2023 (Previous)Q3 2023 (Previous)Q4 2023 (Current)Trend
Interest rates & funding costsNIM pressure expected; funding cost rising; margin management emphasized Net interest spread narrowing; NIM 3.68%; interest-bearing deposit costs rising Average cost of funds up to 1.90%; NIM 3.61%; deposit mix shifting to higher-cost accounts Continuing pressure
Deposits & mixDeposits -3.9% since YE; uninsured deposits 27% (ex-public funds) Deposits -1.2% since YE; opened 378 net new non-maturity accounts; uninsured 35% incl. public, 29.2% excl. Deposits +2.3% y/y; time deposits up $42.3M; mix shift to higher-cost accounts Mix toward time deposits
Mortgage bankingLower activity from higher rates and inventory constraints Sequential improvement but y/y down; mortgage revenue dynamics mixed Q/Q up vs Q4’22, but full-year down 25.6% y/y Muted overall
Liquidity & borrowing capacityOff-balance sheet capacity $355.7M; on-balance liquidity $145.6M Off-balance sheet $384.6M; on-balance $140.2M Total liquidity sources $536.5M (71.7% of deposits) Strengthened
Asset qualityNPA/Assets 0.17%; nonaccruals up vs YE NPA/Assets 0.19%; net charge-offs $379k YTD NPA/Assets 0.40%; 12 nonperforming loans totaling $3.4M; provision $707k Deteriorating vs prior quarters
CapitalTCE 9.03% (Company) TCE 8.99% (Company) TCE 9.36% (Company); CET1 13.18% (Bank) Improved vs Q3

Management Commentary

  • “We are knocking on the door of becoming a $1 billion bank – built on years of organic growth. And we have achieved this in markets dominated by national competitors and much older institutions.” – Sammie D. Dixon, Jr. .
  • “A national liquidity shrinkage and a weak economic outlook made 2023 interesting. The Fed rolled out rate increases at a pace unprecedented in recent memory… 11 rate hikes totaling 525 bps.” – Sammie D. Dixon, Jr. .
  • “All the while we remained focused on tuning our engines, making system improvements, and bringing in new efficiencies… In times like these you better believe culture matters.” – Sammie D. Dixon, Jr. .

Q&A Highlights

  • Not available: No Q4 2023 earnings call transcript was found in the filings/document catalog, so there are no Q&A disclosures to report .

Estimates Context

  • Wall Street consensus estimates (EPS, Revenue) via S&P Global were not accessible at the time of analysis; thus estimate comparisons are omitted.
  • Absent consensus, notable drivers that would anchor any future estimate updates include: NIM compression (3.61% in Q4), higher deposit costs (interest expense $3.351M), and increased provision ($707k) .

Key Takeaways for Investors

  • Margin dynamics: NIM compressed to 3.61% and average cost of funds rose to 1.90% amid deposit mix shifts; further monitoring of deposit pricing and mix is warranted .
  • Credit costs normalized higher: Q4 provision was $707k with allowance at 0.86% of loans; watch residential mortgage past dues and specific reserves trends .
  • Growth with discipline: Loans up 9.5% y/y, deposits up 2.3% in 2023; growth concentrated in CRE and residential real estate loans .
  • Liquidity cushion: $146.8M on-balance liquidity and total liquidity sources of $536.5M (71.7% of deposits) provide a buffer against funding stress .
  • Capital strength and shareholder returns: “Well capitalized” metrics at the Bank and an increased annual dividend to $0.25 per share support investor confidence .
  • Expense control: Efficiency ratio at 59.99% (Q4) and sequential decline in noninterest expense vs. Q3 highlight cost discipline .
  • Monitoring priorities: Deposit mix/costs, asset quality (NPA/Assets 0.40%), and mortgage banking trajectory remain key variables for near-term performance .