Exhibit 99.1

FOR IMMEDIATE RELEASE

Prime Meridian Holding Company Reports

fourth quarter AND YEAR END 2020 Results

COVID-19 Update

The COVID-19 pandemic has negatively impacted the global economy, disrupted global supply chains, lowered equity market valuations, created significant volatility and disruption in financial markets and significantly increased unemployment levels.  The extent to which the COVID-19 pandemic impacts our business, results of operations, and financial condition, as well as our regulatory capital and liquidity ratios, will depend on future developments and the duration of the pandemic and actions taken by governmental authorities to slow the spread of the disease and mitigate its economic impact.

Management believes credit quality deterioration directly related to the pandemic still could materialize in the future. Through December 31, 2020, the Company has reported 70 requests for payment deferrals or modifications on loans totaling $42.4 million. Approximately 91% of the requests were for loans secured with real estate.  At year end, 64 of these 70 loan modification requests, totaling $39.0 million, had reverted back to original pre-modification terms and are being paid as agreed. The tables below give more detail on loan modification activity and PPP loan originations through December 31, 2020.

Active Loan Deferral Requests 

December 31, 2020

(dollars in thousands)

PPP Loans by Industry

December 31, 2020

(dollars in thousands)

Earnings Summary (Unaudited)

(dollars in thousands)

On a linked quarter basis, a $477,000 increase in net interest income and $256,000 decrease in the provision for loan losses, were offset by lower noninterest income and a $705,000 increase in noninterest expense.  A lower effective state income tax rate in the fourth quarter (due to a final year-end tax adjustment of $63,000) ultimately led to the 4.1% increase in net earnings. 

Compared to the same period a year ago, the $594,000 increase in net earnings is attributed to higher interest income on loans, higher noninterest income (driven by mortgage revenue and swap fee income), lower interest expense (driven by a lower cost of funds), and a decrease in the provision for loan losses.  Increases in noninterest expense and income tax expense partially offset these positive contributions to net income. 

Compared to 2019, the $916,000, or 25.9%, increase in earnings in 2020 is primarily attributed to over 20% growth in both net interest income and noninterest income, partially offset by increases in the provision for loan losses, noninterest expense and income tax expense.  The $1.7 million increase in the provision for loan losses is due primarily to $1.17 million in net charge-off activity and $559,000 in cumulative unallocated reserves to provide for potential credit deterioration associated with the COVID-19 global pandemic. Annual loan growth (excluding PPP loans) for the year 2020 was approximately $27 million higher than for the year 2019, also contributing to the higher provision.  A lower effective state income tax rate in 2020 also benefited net earnings for that period.  In response to federal tax reform, Florida's corporate income tax rate was reduced to 4.458% for the years 2019-2021 and currently is set to revert back to 5.5% on January 1, 2022.

Interest income (Unaudited)

(dollars in thousands)

On a linked quarter basis and compared to the fourth quarter of 2019, the increase in total interest income is mostly attributed to a higher volume of loans and the accelerated recognition of SBA origination fees on PPP loans that have been forgiven.  Average loan balances increased $147.6 million, or 44.7%, from the fourth quarter of 2019, with more than half of the loan growth coming from PPP loan originations in 2020.  Excluding PPP loans, the average loan balance still increased approximately $70.2 million, or 21.3%, from the same period last year, boosted primarily by commercial real estate and residential real estate loan originations.  Decreases in interest income from securities and other interest-earning assets is primarily a function of lower rates when compared to the linked quarter and the fourth quarter of 2019.  

Despite lower loan yields, total interest income was favorably impacted year-over-year by strong growth in non-PPP loan originations and $1.7 million in total interest income related to PPP loans. The $1.1 million decrease in other interest income reflects lower yields.  

Interest expense (Unaudited)

(dollars in thousands)

Despite higher balances of interest-bearing liabilities, total interest expense declined $82,000 from the third quarter of 2020 and $338,000 from the fourth quarter of 2019. The average rate paid on interest-bearing liabilities has declined 52 basis points from 1.13% in the fourth quarter of 2019 to 0.61% in the fourth quarter of 2020.

Margin Analysis (Unaudited)

(dollars in thousands)

The Company's net interest margin showed improvement in the fourth quarter of 2020 primarily due to the accelerated recognition of SBA origination fees on 129 forgiven PPP loans (totaling $15.6 million) and a lower cost of funds.  Management continues to expect fluctuation in its net interest margin in 2021 due to PPP loan forgiveness and another round of PPP originations.

The following table summarizes year-over-year changes in selected yields and rates.  The impact of lower market interest rates on interest-earning assets outpaced the improvement in cost of funds.  

Provision for Loan Losses

Comparing the fourth quarter to the third quarter of 2020, the provision for loan losses decreased approximately 41.2%, or $256,000.  This decrease was in large part due to $323,000 in unallocated reserves taken during the third quarter of 2020 related to potential credit deterioration from COVID-19.

The provision for loan losses for the quarter and year ended December 31, 2020 increased substantially over the same periods in 2019.  The Company recognized $1.17 million in net charge-offs in 2020 (unrelated to the COVID-19 pandemic) and loan growth (excluding PPP loans) was approximately $27 million higher in 2020 than 2019.  The charge-offs, in conjunction with an increase in general and specific reserves and a $559,000 addition to unallocated reserves in anticipation of possible COVID-19 related credit deterioration, resulted in higher provision expense in 2020. 

Noninterest income (Unaudited)

(dollars in thousands)

On a linked quarter basis, noninterest income increased across all categories, with the exception of other income. The decrease in other income was largely driven by $132,000 in interest rate swap fee income that was reported in the third quarter compared to zero swap fee income reported in the fourth quarter.

Compared to the fourth quarter of 2019, growth in debit card/ATM net revenue, mortgage banking net revenue, income from bank-owned life insurance and other income outpaced the 24.0% decline in income from service charges and fees on deposit accounts.  Increases in debit card/ATM net revenue largely stemmed from the Bank processing more debit card transactions, while the decline in service charges and fees from 2019 levels is attributed to lower non-sufficient funds ("NSF") fees. The mortgage team reported strong results in 2020, surpassing 2019 production by units, volume, and gain on sales revenue. Mortgage rates dipped to historic lows during the fourth quarter of 2020, and as a result, the volume of refinancings reached approximately 50% of our mortgage loan volume in the fourth quarter.

Year-over-year growth in debit card/ATM revenue, mortgage banking revenue, and other income more than offset the $75,000 decline in service charges and fees on deposit accounts.  The 26.0% decline in service charges and fees on deposit accounts is largely attributed to a $90,000 drop in NSF fees in 2020. The 39.7% increase in debit card/ATM revenue reflects higher transaction volume in 2020 and is expected to be a steady source of noninterest income in 2021. The mortgage team produced strong results in 2020, outpacing 2019 in terms of units, volume, and gain on sales revenue, while the $136,000 increase in other income resulted from the Company's addition of an interest rate hedging program in 2020 which allows commercial loan clients to swap from variable to fixed interest rates. 

Noninterest expense (Unaudited)

(dollars in thousands)

On a linked quarter basis, a $627,000 increase in salaries and benefits was the principal driver of the $705,000 increase in total noninterest expense.  The 41.9% increase in salaries and employee benefits over the third quarter of 2020 is attributed to an increase in fourth quarter incentive pay rewarding employees who assisted in the process of originating and funding PPP loans, higher commission expense attributed to a backlog of held-for-sale loans in the third quarter that were sold in the fourth quarter, and a $162,000 decrease in deferred loan costs due to fewer portfolio originations.  Marketing expense began to normalize in the fourth quarter of 2020 as the Company embarked on a company-wide relationship campaign and expanded its holiday outreach.  The FDIC lowered its deposit insurance assessment rates in the month of September, thus lowering our expense accrual in the fourth quarter of 2020.

Compared to the fourth quarter of 2019, the $741,000 increase in salaries and employee benefits reflects higher incentive pay. The $48,000 increase in occupancy costs stemmed from higher depreciation and FF&E expense, while marketing expense declined from 2019 levels due to the limitation on business and travel activities during the global COVID-19 pandemic.  FDIC assessment expense increased over the fourth quarter of 2019 due mostly to the $36,000 credit that was received in 2019 when the Deposit Insurance Fund Reserve Ratio exceeded its 1.38% threshold, but also due to a larger assessment base in 2020. 

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The increase in salaries and employee benefits expense resulted primarily from budgeted salary increases and higher incentive pay related to a higher dollar payout in 2020 and the PPP bonuses paid to employees who helped with PPP loans. As previously discussed, marketing expenses were curtailed in 2020 as the global pandemic restricted group gatherings and business travel and FDIC assessment expense increased year over year due mostly to the $36,000 credit that was received in 2019 and a larger assessment base in 2020.  The $133,000 increase in software maintenance, amortization, and other reflects a growing company and its expanded information technology needs. 

Balance Sheet

At December 31, 2020, the Company reported $647.3 million in total assets, $580.6 million in deposits, and $476.7 million in net portfolio loans. This compares to $500.9 million in total assets, $438.3 million in deposits, and $337.7 million in net portfolio loans at December 31, 2019. Loan growth occurred in all categories, with the exception of consumer loans which declined slightly.  Nearly all of the net growth in the commercial sector stemmed from PPP loan originations. Excluding the $66.8 million year-end balance of PPP loans, the Company still achieved double digit loan growth, or approximately 22.1%, since 2019 due mostly to strong loan production in the commercial real estate and residential real estate sectors.  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)

The $142.3 million increase in deposits since December 31, 2019 is attributed to increased market share resulting from our outreach efforts, deposits associated with PPP loans, and conversion of new PPP clients to expanded banking relationships.  Furthermore, existing clients have maintained additional liquidity in the current environment. PPP-sourced deposits were estimated to be $23.4 million at December 31, 2020. While management anticipates some shrinkage in deposits as PPP funds are spent, management expects the majority of the increase in total deposits will remain long term.

Total stockholders’ equity was $60.3 million, or 9.3% of total assets, at December 31, 2020 compared to $55.9 million at December 31, 2019, or 11.2% of total assets.  Increases in retained earnings and accumulated other comprehensive income were partially offset by the Company's $1.2 million share repurchase that was initiated toward the end of the first quarter.  Book value per share increased from $17.51 at December 31, 2019 to $19.32 at December 31, 2020, with 3,119,471 common shares outstanding.

As of December 31, 2020, the Bank was considered to be “well capitalized” with a Tier 1 Leverage Capital Ratio of 9.09%, a 13.29% Common Equity Tier 1 Capital Ratio, a 13.29% Tier 1 Risk-Based Capital Ratio, and a 14.54% Total Risk-Based Capital Ratio.  Since December 31, 2019, the Holding Company has injected $6 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 December 31, 2020, there were no outstanding borrowings under this Line of Credit. 

Asset Quality

Loans totaling $1.3 million were deemed to be impaired under the Bank’s policy at December 31, 2020, with reserves on impaired loans totaling $179,000.  At December 31, 2020, the Bank had five nonaccrual loans in the aggregate amount of $1.3 million, compared to twelve nonaccrual loans totaling $2.6 million at December 31, 2019.  At December 31, 2020, the Company reported no loans greater than 90 days past due and accruing and no other real estate owned. Net charge-offs, totaling $1.2 million for the year ended December 31, 2020, were predominantly in the commercial loan category and were not related to the COVID-19 pandemic. Nonperforming assets as a percentage of total assets stood at 0.19% at the December 31, 2020. Management believes that the allowance for loan losses which was $6.1 million, or 1.46% of gross loans (excluding PPP loans), at December 31, 2020 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. As of December 31, 2020, the Bank had 90 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, U.S. generally accepted accounting principles (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

Prime Meridian Holding Company and Subsidiary

Condensed Consolidated Statements of Earnings (Unaudited)

(in thousands except per share amounts)

⁽¹⁾ Annual cash dividends were paid during the first quarters of 2020 and 2019.