EX-99.1 2 tm2426766d1_ex99-1.htm EXHIBIT 99.1

 

Exhibit 99.1

 

 

 

 

Primis Financial Corp. Reports Earnings per Share for the Third Quarter of 2024

 

Announces Sale of Life Premium Finance Division

 

Announces Expansion of Mortgage Warehouse Lending Team

 

Declares Quarterly Cash Dividend of $0.10 Per Share

 

For immediate release

Thursday, October 24, 2024

 

McLean, Virginia, October 24, 2024 – Primis Financial Corp. (NASDAQ: FRST) (“Primis” or the “Company”), and its wholly-owned subsidiary, Primis Bank (the “Bank”), today reported net income available to common shareholders of $1.2 million or $0.05 per diluted share for the quarter ended September 30, 2024, compared to a net loss available to common shareholders of $6.0 million or $0.24 per diluted share for the quarter ended September 30, 2023. For the year-to-date period in 2024, the Company reported earnings available to common and diluted earnings per share of $7.5 million and $0.30, respectively, compared to $0.3 million and $0.01, respectively, in the same period in 2023. Earnings for the three month and year-to-date periods are highly affected by the Company’s corrected accounting for a third-party originated consumer portfolio.

 

Earnings for the three month and year-to-date period in 2024 include $0.8 million and $2.2 million, respectively, or $0.03 and $0.09 per diluted share, respectively, of after-tax nonrecurring charges versus $11.3 million and $12.5 million, respectively, or $0.45 and $0.51 per diluted share, respectively in the comparable 2023 periods and inclusive of the goodwill impairment in the third quarter of 2023. Adjusting for these items, operating net income available to common shareholders was $2.0 million(1) or $0.08 per diluted share(1) for the quarter ended September 30, 2024, compared to net operating income available to common shareholders of $5.3 million(1) or $0.21 per diluted share(1) for the quarter ended September 30, 2023. For the year-to-date period in 2024 when adjusting for these items, earnings available to common and diluted earnings per share was $9.6 million(1) and $0.39(1), respectively, compared to $12.8 million(1) and $0.52(1), respectively, in the same period in 2023.

 

Sale of Life Premium Finance Division

 

On October 24, 2024, Primis Bank and EverBank, N.A. (“EverBank”) entered into a purchase and assumption agreement whereby EverBank will acquire the Life Premium Finance Division from Primis Bank including all the associated loans, except for a subset of mostly fixed rate and rate-capped loans retained by the Bank, and the operations of the division, including its employees, for a premium of $6.0 million. Primis Bank expects to record a pre-tax gain of $4.5 million net of advisory and legal fees in the fourth quarter of 2024.

 

On October 31, 2024, EverBank will acquire approximately $370 million of loans from the division with Primis Bank providing interim servicing until the transition of the business at the final closing which is expected on January 31, 2025. Between the first and second closings, EverBank will purchase loans generated by the division in ordinary course at par. After the second closing, EverBank will service the Bank’s retained portfolio for the duration of the portfolio.

 

(1) Non-GAAP financial measure. Please see “Reconciliation of Non-GAAP Items” in the financial tables for more information and for a reconciliation to GAAP.

 

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Dennis J. Zember, Jr., President and Chief Executive Officer of Primis commented, “Three years ago we hired a set of professionals with a vision to build a tech-forward solution for life insurance premium finance. This platform has been widely accepted and used by the industry’s facilitators to such a degree that its opportunity is bigger than our balance sheet. EverBank is known for investing in scalable businesses with attractive risk-adjusted returns which makes our life premium finance team a perfect fit.”

 

Mortgage Warehouse Lending Team Expansion

 

In early October of 2024, Primis hired a seasoned team of mortgage warehouse lending professionals from a larger bank with a very successful track record in this space. While Primis Bank has had mortgage warehouse lending capabilities for some time, production had been limited while the Bank searched for the right leadership. Four key individuals have joined the Bank comprising sales, operations and portfolio management with another four to five support staff expected in the coming months.

 

Commented Mr. Zember, “Mortgage warehouse lending as an asset class has very attractive returns and limited losses. With several very large banks exiting the space and mortgage volumes projected to increase substantially, we believe this is a perfect time to expand our capabilities. Knowing the team we hired and having visited quite a few of their customers, I believe we can replace all of the life premium business we are selling with yields that are 125bps to 150bps higher. I expect the credit results and operating expense burdens to be similar so we believe the bottom-line impact will be significant as we scale this operation.”

 

Discussion of Results

 

The following table highlights selected financial data for the last five quarters:

 

   3Q 2024   2Q 2024   1Q 2024   4Q 2023   3Q 2023 
Return on average assets   0.12%   0.39%   0.26%   (0.85)%   (0.62)%
Operating return on average assets(1)   0.20%   0.50%   0.29%   (0.79)%   0.54%
Pre-tax pre-provision return on average assets(1)   0.85%   0.78%   1.02%   0.96%   (0.33)%
Pre-tax pre-prov. operating return on average assets(1)   0.95%   0.92%   1.05%   1.01%   (0.30)%
Return on average common equity   1.28%   4.06%   2.62%   (8.43)%   (6.11)%
Operating return on average common equity(1)   2.11%   5.18%   2.99%   (7.91)%   5.35%
Operating return on avg. tangible common equity(1)   2.80%   6.93%   3.98%   (10.53)%   7.35%
Cost of funds   3.25%   3.16%   2.97%   2.85%   2.75%
Net interest margin   2.97%   2.72%   2.84%   2.86%   2.70%
Gross loans to deposits   89.68%   98.95%   97.37%   98.45%   96.37%
Efficiency ratio   83.22%   82.62%   77.41%   81.31%   108.50%
Operating efficiency ratio(1)   80.35%   78.86%   76.17%   79.43%   75.17%

 

As disclosed in our recent filings with the SEC, the Company has corrected its method for accounting for a third-party originated and serviced consumer loan portfolio (the “Consumer Program”) and in which the separate agreements comprising the portfolio are treated as separate units of account (See “Critical Accounting Estimates and Policies” in the Company’s 2023 Form 10-K). A subset of the Consumer Program has promotional characteristics where interest is deferred during the promotional period and is waived if the customer pays off the loan prior to the period end. In that event, the third-party reimburses the Bank for the waived interest. Until the end of the promotional period, the Company is unable to accrue interest on the loan under GAAP but does record a derivative representing the fair value of expected interest reimbursements from the third-party. Credit costs are also fully included in the Company’s results, including estimated life of loan losses required by ASC 326 while potential credit enhancements from the Consumer Program are only reflected as received. Total outstanding balances in the Consumer Program were $180 million as of September 30, 2024 versus $194 million at June 30, 2024.

 

(1) Non-GAAP financial measure. Please see “Reconciliation of Non-GAAP Items” in the financial tables for more information and for a reconciliation to GAAP.

 

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Net Interest Income

 

Net interest income increased approximately $3.2 million, or 13%, to $28.0 million during the third quarter of 2024 compared to the second quarter of 2024 largely due to increased interest recognition on previously deferring loans. For the third quarter of 2024, the Company reported a net interest margin of 2.97% versus 2.72% for the second quarter of 2024.

 

Interest income increased 9.4% to $57.1 million in the third quarter of 2024 compared to $52.2 million during the second quarter of 2024. At September 30, 2024, $60 million of loans were deferring interest due to a promotional feature. The Company recognized $3.0 million of interest in the third quarter of 2024 from promotional loans that were deferring interest and then began amortizing. In addition, in the third quarter of 2024, payoff of promotional loans triggered reimbursement of $2.5 million of deferred interest that was recognized in noninterest income. Promotional loan balances of $17 million and $21 million will reach the end of their promotional periods in the fourth quarter of 2024 and first quarter of 2025, respectively, after which loans with a promotional feature will decline to a nominal amount of the Bank’s portfolio by the end of 2025. Yield on earning assets and loans held for investment were 6.06% and 6.31%, respectively, in the third quarter of 2024 versus 5.72% and 5.91%, respectively, in the second quarter of 2024.

 

Interest expense increased $1.7 million to $29.1 million in the third quarter of 2024 compared to the second quarter of 2024 largely due to an increased reliance on FHLB funding during the third quarter. Cost of deposits increased 6 basis points to 3.04% in the third quarter of 2024 from 2.98% in the second quarter of 2024. Cost of funds was 3.25% in the third quarter of 2024, an increase of 9 basis points linked-quarter.

 

Noninterest Income

 

Noninterest income decreased during the third quarter of 2024 to $9.3 million compared to $11.2 million in the second quarter of 2024. Included in the second quarter of 2024 is approximately $0.9 million of bank-owned life insurance income due to a death benefit payout. Income from mortgage banking activity increased $0.4 million during the third quarter. Offsetting the increase in mortgage banking income was a reduction of $0.4 million in service fees and $1.2 million reduction in income related to the Consumer Program.

 

Noninterest Expense

 

Noninterest expense was $31.0 million for the third quarter of 2024, compared to $29.8 million for the second quarter of 2024. Noninterest expense also includes consolidated expenses from Panacea Financial Holdings (“PFH”). Management considers the core expense burden of the Bank that adjusts for certain items such as those that are volume dependent (e.g., mortgage banking related) or nonoperational (e.g., changes in the reserve for unfunded commitments). The following table illustrates the degree to which the Company has managed its operating expense burden during 2024:

 

   3Q 2024   2Q 2024   1Q 2024   4Q 2023   3Q 2023 
Reported Noninterest Expense   31,045    29,786    27,538    27,780    36,950 
PFH Consolidated Expenses   (2,666)   (2,347)   (2,119)   (2,813)   - 
Noninterest Expense Excl. PFH   28,379    27,439    25,419    24,967    36,950 
                          
Nonrecurring / Goodwill Impair.   (1,352)   (1,453)   (438)   (165)   (11,350)
Mortgage Expenses   (6,436)   (6,084)   (5,122)   (4,785)   (5,108)
Consumer Program Servicing Fee   (699)   (312)   (312)   (312)   (312)
Reserve for Unfunded Commitment   (96)   546    2    (554)   257 
Total Adjustments   (8,583)   (7,303)   (5,870)   (5,816)   (16,513)
                          
Core Operating Expense Burden   19,796    20,136    19,550    19,151    20,437 

 

(1) Non-GAAP financial measure. Please see “Reconciliation of Non-GAAP Items” in the financial tables for more information and for a reconciliation to GAAP.

 

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As noted above, the core expense burden decreased $0.3 million in the third quarter of 2024 from the second quarter of 2024. Core expense burden was $19.8 million, in line with the average for the last five quarters.

 

Loan Portfolio and Asset Quality

 

Loans held for investment decreased to $2.97 billion at September 30, 2024, compared to $3.30 billion at June 30, 2024. As noted above, the Bank has entered into an agreement to sell approximately $370 million of life premium finance loans and which have been reclassified to loans held for sale at September 30, 2024. Including these balances, loans held for investment would have increased 1.1% unannualized in the third quarter of 2024. The Panacea and Life Premium Finance divisions had loan growth of 4.4% and 11.1%, respectively, in the third quarter of 2024.

 

Nonperforming assets, excluding portions guaranteed by the SBA, were only 0.25% of total assets, or $10.2 million at September 30, 2024, compared to 0.25% or $9.9 million at June 30, 2024. Loans rated substandard were $47.6 million in the third quarter of 2024 compared to $15.5 million in the second quarter of 2024. The increase was largely driven by a single commercial credit that has experienced slower lease activity past its construction phase. Management evaluated and valued the property using conservative cap rates and lengthy times to lease and included the shortfall in its specific reserve. The Bank had no other real estate owned at the end of the third quarter of 2024.

 

The Company recorded a provision for loan losses of $7.5 million for the third quarter of 2024 versus $3.1 million for the second quarter of 2024. Of this provision, $4.0 million was due to Consumer Program activity. The remaining provision was due to specific reserves established on individually evaluated credits, approximately $2.2 million of which was tied to the commercial credit described above. As a percentage of loans, including life premium finance loans classified as held-for-sale at the end of the third quarter, the allowance for credit losses was 1.53% and 1.56% at the end of the third and second quarter of 2024, respectively.

 

Net charge-offs were $8.0 million for the third quarter of 2024, up from $5.0 million for the second quarter of 2024. Consumer Program net charge-offs were $6.7 million in the third quarter versus $4.4 million in the second quarter of 2024. Core net charge-offs, excluding those losses from the Consumer Program, were $1.3 million, or 0.15% of average loans, in the third quarter of 2024 compared to $0.6 million, or 0.07%, in the second quarter of 2024.

 

Deposits and Funding

 

Total deposits at September 30, 2024 decreased slightly to $3.31 billion from $3.34 billion at June 30, 2024. Importantly, noninterest bearing deposits were $421 million at September 30, 2024, up slightly from $420 million at June 30, 2024 and in the face of substantial remixing activity towards interest bearing accounts.

 

Deposit growth in the Bank continues to benefit from better technology and unique convenience factors. V1BE, the Bank’s proprietary invitation-only delivery tool, increased total users by 5% during the third quarter of 2024, and now has over 2,400 users on the platform as of September 30, 2024.

 

During the third quarter of 2024, the Bank opened approximately $32.5 million new deposit accounts on the digital platform with very modest marketing expenses. At quarter end, the Bank had over 17,000 digital accounts with $911 million in total deposits and average balances of approximately $53 thousand.

 

As of September 30, 2024, the Bank has $75.0 million of brokered CDs that mature at the end of 2024 and $165.0 million of short-term FHLB advances.

 

Lines of Business

 

The Panacea Financial Division continues to experience substantial growth alongside the development of the nationally-recognized Panacea Financial brand. The Panacea Financial Division finished the third quarter of 2024 with approximately $392 million in outstanding loans, an increase of $16.5 million from June 30, 2024. Panacea-related deposits were $90 million at September 30, 2024 with a weighted average cost of 2.00%. Panacea continues to roll out innovative technology capabilities that is expected to continue increasing the amount with which it self-funds its balance sheet.

 

(1) Non-GAAP financial measure. Please see “Reconciliation of Non-GAAP Items” in the financial tables for more information and for a reconciliation to GAAP.

 

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Primis Mortgage had pre-tax income of $1.0 million in the third quarter of 2024 up from $0.9 million in the previous quarter. Locked loan volumes averaged $56.1 million per month in the third quarter of 2024, up from $52.0 million per month in the second quarter of 2024. Primis Mortgage continues to aggressively manage costs to preserve profitability in a lower volume environment while selectively adding talent to grow production.

 

Shareholders’ Equity

 

Book value per common share as of September 30, 2024 was $15.43, an increase of $0.20 from June 30, 2024. Tangible book value per common share(1) at the end of the third quarter of 2024 was $11.61, an increase of $0.21 from June 30, 2024.  Common shareholders’ equity was $381 million, or 9.48% of total assets, at September 30, 2024. Tangible common equity(1) at September 30, 2024 was $287 million, or 7.30% of tangible assets(1).  After-tax unrealized losses on the Company’s available-for-sale securities portfolio decreased by $6.0 million to $17.1 million due to decreases in market interest rates during the third quarter of 2024. The Company has the intent and ability to hold these securities until maturity or recovery of the value and does not anticipate realizing any losses on the investments.

 

The Board of Directors declared a dividend of $0.10 per share payable on November 22, 2024 to shareholders of record on November 8, 2024. This is Primis’ fifty-second consecutive quarterly dividend. 

 

About Primis Financial Corp.

 

As of September 30, 2024, Primis had $4.0 billion in total assets, $2.9 billion in total loans held for investment and $3.3 billion in total deposits. Primis Bank provides a range of financial services to individuals and small- and medium-sized businesses through twenty-four full-service branches in Virginia and Maryland and provides services to customers through certain online and mobile applications.

 

Contacts:Address:
Dennis J. Zember, Jr., President and CEOPrimis Financial Corp.
Matthew A. Switzer, EVP and CFO1676 International Drive, Suite 900
Phone: (703) 893-7400McLean, VA 22102

 

Primis Financial Corp., NASDAQ Symbol FRST

Website: www.primisbank.com

 

Conference Call

 

The Company’s management will host a conference call to discuss its third quarter results on Friday, October 25, 2024 at 10:00 a.m. (ET). A live Webcast of the conference call is available at the following website: https://events.q4inc.com/attendee/853860984. Participants may also call 1-888-330-3573 and ask for the Primis Financial Corp. call. A replay of the teleconference will be available for 7 days by calling 1-800-770-2030 and providing Replay Access Code 4440924.

 

Non-GAAP Measures

 

Statements included in this press release include non-GAAP financial measures and should be read along with the accompanying tables. Primis uses non-GAAP financial measures to analyze its performance. The measures entitled net income adjusted for nonrecurring income and expenses; pre-tax pre-provision operating earnings; operating return on average assets; pre-tax pre-provision operating return on average assets; operating return on average equity; operating return on average tangible equity; operating efficiency ratio; operating earnings per share – basic; operating earnings per share – diluted; tangible book value per share; tangible common equity; tangible common equity to tangible assets; and core net interest margin are not measures recognized under GAAP and therefore are considered non-GAAP financial measures. We use the term “operating” to describe a financial measure that excludes income or expense considered to be non-recurring in nature. Items identified as non-operating are those that, when excluded from a reported financial measure, provide management or the reader with a measure that may be more indicative of forward-looking trends in our business. A reconciliation of these non-GAAP financial measures to the most comparable GAAP measures is provided in the Reconciliation of Non-GAAP Items table.

 

(1) Non-GAAP financial measure. Please see “Reconciliation of Non-GAAP Items” in the financial tables for more information and for a reconciliation to GAAP.

 

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Management believes that these non-GAAP financial measures provide additional useful information about Primis that allows management and investors to evaluate the ongoing operating results, financial strength and performance of Primis and provide meaningful comparison to its peers. Non-GAAP financial measures should not be considered as an alternative to any measure of performance or financial condition as promulgated under GAAP, and investors should consider Primis’ performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of Primis. Non-GAAP financial measures are not standardized and, therefore, it may not be possible to compare these measures with other companies that present measures having the same or similar names.

 

Non-GAAP financial measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the results or financial condition as reported under GAAP.

 

Forward-Looking Statements

 

This press release and certain of our other filings with the Securities and Exchange Commission contain statements that constitute “forward-looking statements” within the meaning of, and subject to the protections of, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are forward-looking statements. Such statements can generally be identified by such words as "may," "plan," "contemplate," "anticipate," "believe," "intend," "continue," "expect," "project," "predict," "estimate," "could," "should," "would," "will," and other similar words or expressions of the future or otherwise regarding the outlook for the Company’s future business and financial performance and/or the performance of the banking industry and economy in general. These forward-looking statements include, but are not limited to, our expectations regarding our future operating and financial performance, including the preliminary estimated financial and operating information presented herein, which is subject to adjustment; our outlook and long-term goals for future growth and new offerings and services; our expectations regarding net interest margin; expectations on our growth strategy, expense management, capital management and future profitability; expectations on credit quality and performance; and the assumptions underlying our expectations.

 

Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve known and unknown risks and uncertainties which may cause the actual results, performance or achievements of the Company to be materially different from the future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements are based on the information known to, and current beliefs and expectations of, the Company’s management and are subject to significant risks and uncertainties. Actual results may differ materially from those contemplated by such forward-looking statements. Factors that might cause such differences include, but are not limited to: the result of the “pre-clearance” process with the Office of the Chief Accountant of the SEC and the impact on the Company’s financial statements; the possibility that the Company is unable to regain compliance with, or thereafter continue to comply with, applicable Nasdaq Listing Rules, or experience violations of additional Nasdaq Listing Rules; the possibility that Nasdaq may deny the Company’s appeal and delist the Company’s securities; the Company’s ability to implement its various strategic and growth initiatives, including the sale of the Life Premium Finance Division and the impact on the Company’s operating results and its recently established Panacea Financial Division, digital banking platform, V1BE fulfillment service and Primis Mortgage Company; competitive pressures among financial institutions increasing significantly; changes in applicable laws, rules, or regulations, including changes to statutes, regulations or regulatory policies or practices; changes in management’s plans for the future; credit risk associated with our lending activities; the impact of current and future economic and market conditions generally (including seasonality) and in the financial services industry, nationally and within our primary market areas; changes in interest rates, inflation, loan demand, real estate values, or competition, as well as labor shortages and supply chain disruptions; changes in accounting principles, policies, or guidelines; adverse results from current or future litigation, regulatory examinations or other legal and/or regulatory actions; potential impacts of adverse developments in the banking industry highlighted by high-profile bank failures, including impacts on customer confidence, deposit outflows, liquidity and the regulatory response thereto; potential increases in the provision for credit losses; our ability to identify and address increased cybersecurity risks, including those impacting vendors and other third parties; fraud or misconduct by internal or external actors, which we may not be able to prevent, detect or mitigate; acts of God or of war or other conflicts, including the current Ukraine/Russia conflict and Israel/Hamas conflict, acts of terrorism, pandemics or other catastrophic events that may affect general economic conditions; and other general competitive, economic, political, and market factors, including those affecting our business, operations, pricing, products, or services.

 

Forward-looking statements speak only as of the date on which such statements are made. These forward-looking statements are based upon information presently known to the Company’s management and are inherently subjective, uncertain and subject to change due to any number of risks and uncertainties, including, without limitation, the risks and other factors set forth in the Company’s filings with the Securities and Exchange Commission, the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, under the captions “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors,” and in the Company’s Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made, or to reflect the occurrence of unanticipated events. Readers are cautioned not to place undue reliance on these forward-looking statements.

  

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Primis Financial Corp.                            
Financial Highlights (unaudited)                            
(Dollars in thousands, except per share data)  For Three Months Ended:   For Nine Months Ended: 
Selected Performance Ratios:  3Q 2024   2Q 2024   1Q 2024   4Q 2023   3Q 2023   3Q 2024   3Q 2023 
Return on average assets   0.12%   0.39%   0.26%   (0.85)%   (0.62)%   0.25%   0.01%
Operating return on average assets(1)   0.20%   0.50%   0.29%   (0.79)%   0.54%   0.33%   0.43%
Pre-tax pre-provision return on average assets(1)   0.85%   0.78%   1.02%   0.96%   (0.33)%   0.88%   0.48%
Pre-tax pre-provision operating return on average assets(1)   0.95%   0.92%   1.05%   1.01%   (0.30)%   0.98%   0.91%
Return on average common equity   1.28%   4.06%   2.62%   (8.43)%   (6.11)%   2.66%   0.11%
Operating return on average common equity(1)   2.11%   5.18%   2.99%   (7.91)%   5.35%   3.44%   4.32%
Operating return on average tangible common equity(1)   2.80%   6.93%   3.98%   (10.53)%   7.35%   4.60%   5.92%
Cost of funds   3.25%   3.16%   2.97%   2.85%   2.75%   3.13%   2.61%
Net interest margin   2.97%   2.72%   2.84%   2.86%   2.70%   2.85%   2.61%
Gross loans to deposits   89.68%   98.95%   97.37%   98.45%   96.37%   89.68%   96.37%
Efficiency ratio   83.22%   82.62%   77.41%   81.31%   108.50%   81.12%   86.30%
Operating efficiency ratio(1)   80.35%   78.86%   76.17%   79.43%   75.17%   78.49%   74.56%
                                    
Per Common Share Data:                                   
Earnings per common share - Basic  $0.05   $0.15   $0.10   $(0.33)  $(0.24)  $0.30   $0.01 
Operating earnings per common share - Basic(1)  $0.08   $0.20   $0.11   $(0.31)  $0.21   $0.39   $0.52 
Earnings per common share - Diluted  $0.05   $0.15   $0.10   $(0.33)  $(0.24)  $0.30   $0.01 
Operating earnings per common share - Diluted(1)  $0.08   $0.20   $0.11   $(0.31)  $0.21   $0.39   $0.52 
Book value per common share  $15.43   $15.23   $15.16   $15.23   $15.30   $15.43   $15.30 
Tangible book value per common share(1)  $11.61   $11.40   $11.31   $11.37   $11.42   $11.61   $11.42 
Cash dividend per common share  $0.10   $0.10   $0.10   $0.10   $0.10   $0.30   $0.30 
Weighted average shares outstanding - Basic   24,695,685    24,683,734    24,673,857    24,647,728    24,641,981    24,683,556    24,635,535 
Weighted average shares outstanding - Diluted   24,719,920    24,708,484    24,707,113    24,687,993    24,641,981    24,710,345    24,635,535 
Shares outstanding at end of period   24,722,734    24,708,234    24,708,588    24,693,172    24,686,764    24,722,734    24,686,764 
                                    
Asset Quality Ratios:                                   
Non-performing assets as a percent of total assets, excluding SBA guarantees   0.25%   0.25%   0.23%   0.20%   0.51%   0.25%   0.51%
Net charge-offs (recoveries) as a percent of average loans (annualized)   0.93%   0.60%   0.64%   0.61%   0.53%   0.52%   0.32%
Core net charge-offs (recoveries) as a percent of average loans (annualized)(2)   0.15%   0.07%   0.11%   0.24%   0.27%   (0.10)%   0.12%
Allowance for credit losses to total loans   1.72%   1.56%   1.66%   1.62%   1.13%   1.72%   1.13%
Capital Ratios:                                         
Common equity to assets   9.48%   9.49%   9.63%   9.75%   9.84%                
Tangible common equity to tangible assets(1)   7.30%   7.27%   7.36%   7.46%   7.53%                
Leverage ratio(3)   8.06%   8.25%   8.38%   8.37%   8.60%                
Common equity tier 1 capital ratio(3)   8.98%   8.85%   8.97%   8.96%   9.36%                
Tier 1 risk-based capital ratio(3)   9.28%   9.14%   9.26%   9.25%   9.66%                
Total risk-based capital ratio(3)   12.66%   12.45%   12.61%   13.44%   13.05%                

 

(1) See Reconciliation of Non-GAAP financial measures.

(2) Excludes third-party charge-offs.

(3) Ratios are estimated and may be subject to change pending the final filing of the FR Y-9C.

 

7

 

 

Primis Financial Corp.    
(Dollars in thousands)  As Of : 
Condensed Consolidated Balance Sheets (unaudited)  3Q 2024   2Q 2024   1Q 2024   4Q 2023   3Q 2023 
Assets                    
Cash and cash equivalents  $77,274   $66,580   $88,717   $77,553   $93,865 
Investment securities-available for sale   242,543    232,867    230,617    228,420    216,875 
Investment securities-held to maturity   9,766    10,649    10,992    11,650    11,975 
Loans held for sale   467,325    94,644    72,217    57,691    66,266 
Loans receivable, net of deferred fees   2,965,120    3,300,562    3,227,665    3,219,414    3,173,788 
Allowance for credit losses   (51,132)   (51,574)   (53,456)   (52,209)   (35,862)
Net loans   2,913,988    3,248,988    3,174,209    3,167,205    3,137,926 
Stock in Federal Reserve Bank and Federal Home Loan Bank   20,875    16,837    14,225    14,246    12,796 
Bank premises and equipment, net   19,668    19,946    20,412    20,611    24,878 
Operating lease right-of-use assets   10,465    10,293    10,206    10,646    11,402 
Goodwill and other intangible assets   94,444    94,768    95,092    95,417    95,741 
Assets held for sale, net   3,898    5,136    6,359    6,735    3,115 
Bank-owned life insurance   67,010    66,578    67,685    67,588    67,176 
Deferred tax assets, net   25,582    25,232    24,513    22,395    24,179 
Consumer Program derivative asset   9,763    9,929    10,685    10,806    12,818 
Other assets   62,002    63,917    64,050    65,583    59,847 
Total assets  $4,024,603   $3,966,364   $3,889,979   $3,856,546   $3,838,859 
                          
Liabilities and stockholders' equity                         
Demand deposits  $421,231   $420,241   $463,190   $472,941   $490,719 
NOW accounts   748,833    793,608    771,116    773,028    803,276 
Money market accounts   835,099    831,834    834,514    794,530    800,951 
Savings accounts   873,810    866,279    823,325    783,758    746,608 
Time deposits   427,458    423,501    422,778    445,898    451,850 
Total deposits   3,306,431    3,335,463    3,314,923    3,270,155    3,293,404 
Securities sold under agreements to repurchase - short term   3,677    3,273    3,038    3,044    3,838 
Federal Home Loan Bank advances   165,000    80,000    25,000    30,000    - 
Secured borrowings   17,495    21,069    21,298    20,393    29,649 
Subordinated debt and notes   95,808    95,737    95,666    95,595    95,524 
Operating lease liabilities   11,704    11,488    11,353    11,686    12,347 
Other liabilities   27,168    24,777    24,102    28,080    26,487 
Total liabilities   3,627,283    3,571,807    3,495,380    3,458,953    3,461,249 
Total Primis common stockholders' equity   381,352    376,393    374,577    376,161    377,610 
Noncontrolling interest   15,968    18,164    20,022    21,432    - 
Total stockholders' equity   397,320    394,557    394,599    397,593    377,610 
Total liabilities and stockholders' equity  $4,024,603   $3,966,364   $3,889,979   $3,856,546   $3,838,859 
                          
Tangible common equity(1)  $286,908   $281,625   $279,485   $280,744   $281,869 

 

Primis Financial Corp.        
(Dollars in thousands)  For Three Months Ended:   For Nine Months Ended: 
Condensed Consolidated Statement of Operations (unaudited)  3Q 2024   2Q 2024   1Q 2024   4Q 2023   3Q 2023   3Q 2024   3Q 2023 
Interest and dividend income  $57,112   $52,199   $50,345   $50,163   $48,027   $159,656   $142,485 
Interest expense   29,089    27,346    25,076    24,437    23,697    81,511    69,499 
Net interest income   28,023    24,853    25,269    25,726    24,330    78,145    72,986 
Provision for credit losses   7,511    3,119    6,508    21,310    1,616    17,138    11,231 
Net interest income after provision for credit losses   20,512    21,734    18,761    4,416    22,714    61,007    61,755 
Account maintenance and deposit service fees   1,468    1,861    1,393    1,518    1,534    4,722    4,215 
Income from bank-owned life insurance   431    1,327    564    420    787    2,322    1,601 
Mortgage banking income   6,803    6,402    5,574    3,210    4,922    18,779    14,435 
Gain (loss) on sale of loans   -    (29)   336    526    217    307    268 
Consumer Program derivative   79    1,272    2,041    2,886    2,033    3,392    15,233 
Gain (loss) on other investments   51    136    206    190    30    393    (6)
Gain (loss) on bank premises and equipment   352    124    -    (478)   2    476    2 
Other   99    105    193    169    201    397    584 
Noninterest income   9,283    11,198    10,307    8,441    9,726    30,788    36,332 
Employee compensation and benefits   16,764    16,088    15,735    14,645    13,809    48,587    44,120 
Occupancy and equipment expenses   3,071    3,099    3,106    2,982    3,170    9,276    9,637 
Amortization of intangible assets   318    317    317    317    317    952    952 
Goodwill impairment   -    -    -    -    11,150    -    11,150 
Virginia franchise tax expense   631    632    631    849    849    1,894    2,546 
Data processing expense   2,552    2,347    2,231    2,216    2,250    7,130    7,329 
Marketing expense   449    499    459    352    377    1,407    1,467 
Telecommunication and communication expense   330    341    346    358    356    1,017    1,149 
Professional fees   2,914    2,976    1,365    1,586    1,118    7,255    3,055 
Miscellaneous lending expenses   1,098    285    451    1,128    424    1,834    1,878 
Other expenses   2,918    3,202    2,897    3,347    3,130    9,017    11,060 
Noninterest expense   31,045    29,786    27,538    27,780    36,950    88,369    94,343 
Income (loss) before income taxes   (1,250)   3,146    1,530    (14,923)   (4,510)   3,426    3,744 
Income tax expense (benefit)   (304)   1,265    718    (4,472)   1,519    1,679    3,405 
Net Income (loss)   (946)   1,881    812    (10,451)   (6,029)   1,747    339 
Noncontrolling interest   2,158    1,901    1,654    2,280    -    5,713    - 
Net income (loss) attributable to Primis' common shareholders  $1,212   $3,782   $2,466   $(8,171)  $(6,029)  $7,460   $339 

 

(1) See Reconciliation of Non-GAAP financial measures. 

 

8

 

 

Primis Financial Corp.    
(Dollars in thousands)  As Of: 
Loan Portfolio Composition  3Q 2024   2Q 2024   1Q 2024   4Q 2023   3Q 2023 
Loans held for sale  $467,325   $94,644   $72,217   $57,691   $66,266 
Loans secured by real estate:                         
Commercial real estate - owner occupied   463,848    463,328    458,026    455,397    432,367 
Commercial real estate - non-owner occupied   609,743    612,428    577,752    578,600    605,508 
Secured by farmland   4,356    4,758    4,341    5,044    5,082 
Construction and land development   105,541    104,886    146,908    164,742    170,849 
Residential 1-4 family   607,313    608,049    602,124    606,226    600,389 
Multi-family residential   169,368    171,512    128,599    127,857    129,586 
Home equity lines of credit   62,421    62,138    57,765    59,670    59,996 
Total real estate loans   2,022,590    2,027,099    1,975,515    1,997,536    2,003,777 
                          
Commercial loans   526,772    619,365    623,804    602,623    603,637 
Paycheck Protection Program loans   1,941    1,969    2,003    2,023    2,105 
Consumer loans   408,378    646,590    620,745    611,583    558,277 
Total Non-PCD loans   2,959,681    3,295,023    3,222,067    3,213,765    3,167,796 
PCD loans   5,439    5,539    5,598    5,649    5,992 
Total loans receivable, net of deferred fees  $2,965,120   $3,300,562   $3,227,665   $3,219,414   $3,173,788 
                          
Loans by Risk Grade:                         
Pass, not graded  $-   $-   $-   $-   $- 
Pass Grade 1 - Highest Quality   820    692    633    875    851 
Pass Grade 2 - Good Quality   169,285    488,728    412,593    405,019    383,306 
Pass Grade 3 - Satisfactory Quality   1,509,280    1,503,918    1,603,053    1,626,380    1,632,256 
Pass Grade 4 - Pass   1,184,671    1,204,268    1,177,065    1,154,971    1,095,264 
Pass Grade 5 - Special Mention   53,473    87,471    19,454    14,930    33,299 
Grade 6 - Substandard   47,591    15,485    14,867    17,239    28,812 
Grade 7 - Doubtful   -    -    -    -    - 
Grade 8 - Loss   -    -    -    -    - 
Total loans  $2,965,120   $3,300,562   $3,227,665   $3,219,414   $3,173,788 

 

(Dollars in thousands)  As Of or For Three Months Ended: 
Asset Quality Information  3Q 2024   2Q 2024   1Q 2024   4Q 2023   3Q 2023 
Allowance for Credit Losses:        
Balance at beginning of period  $(51,574)  $(53,456)  $(52,209)  $(35,862)  $(38,541)
Provision for for credit losses   (7,511)   (3,119)   (6,508)   (21,310)   (1,616)
Net charge-offs   7,953    5,001    5,261    4,963    4,295 
Ending balance  $(51,132)  $(51,574)  $(53,456)  $(52,209)  $(35,862)
                          
Reserve for Unfunded Commitments:                         
Balance at beginning of period  $(1,031)  $(1,577)  $(1,579)  $(1,025)  $(1,282)
(Expense for) / recovery of unfunded loan commitment reserve   (96)   546    2    (554)   257 
Total Reserve for Unfunded Commitments  $(1,127)  $(1,031)  $(1,577)  $(1,579)  $(1,025)

 

   As Of: 
Non-Performing Assets:  3Q 2024   2Q 2024   1Q 2024   4Q 2023   3Q 2023 
Nonaccrual loans  $14,424   $11,289   $10,139   $9,095   $20,171 
Accruing loans delinquent 90 days or more   1,714    1,897    1,714    1,714    1,625 
Total non-performing assets  $16,138   $13,186   $11,853   $10,809   $21,796 
SBA guaranteed portion of non-performing loans  $5,954   $3,268   $3,095   $3,115   $2,290 

 

9

 

 

Primis Financial Corp.        
(Dollars in thousands)  For Three Months Ended:   For Nine Months Ended: 
Average Balance Sheet  3Q 2024   2Q 2024   1Q 2024   4Q 2023   3Q 2023   3Q 2024   3Q 2023 
Assets                                   
Loans held for sale  $98,110   $84,389   $58,896   $48,380   $55,775  $80,530   $43,384 
Loans, net of deferred fees   3,324,157    3,266,651    3,206,888    3,208,295    3,193,236   3,266,111    3,099,225 
Investment securities   242,631    244,308    241,179    228,335    234,601   242,706    240,525 
Other earning assets   83,405    73,697    77,067    79,925    93,159

 

 

   78,076    348,831 
Total earning assets   3,748,303    3,669,045    3,584,030    3,564,935    3,576,771    3,667,423    3,731,965 
Other assets   243,972    243,200    248,082    262,977    268,038    244,913    260,474 
Total assets  $3,992,275   $3,912,245   $3,832,112   $3,827,912   $3,844,809   $3,912,336   $3,992,439 
                                    
Liabilities and equity                                   
Demand deposits  $421,908   $433,315   $458,306   $473,750   $472,485   $440,172   $500,459 
Interest-bearing liabilities:                                   
NOW and other demand accounts   748,202    778,458    773,943    782,305    806,339    766,800    785,480 
Money market accounts   859,988    823,156    814,147    790,971    850,892    832,531    844,752 
Savings accounts   866,375    866,652    800,328    783,432    703,809    844,531    775,024 
Time deposits   425,238    423,107    431,340    451,521    460,961    426,557    481,813 
Total Deposits   3,321,711    3,324,688    3,278,064    3,281,979    3,294,486    3,310,591    3,387,528 
Borrowings   238,994    158,919    120,188    120,213    119,797    172,942    172,662 
Total Funding   3,560,705    3,483,607    3,398,252    3,402,192    3,414,283    3,483,533    3,560,190 
Other Liabilities   36,527    34,494    34,900    39,056    39,303    35,344    35,457 
Total liabilites   3,597,232    3,518,101    3,433,152    3,441,248    3,453,586    3,518,877    3,595,647 
Primis common stockholders' equity   377,595    374,735    378,008    384,332    391,223    374,189    396,792 
Noncontrolling interest   17,448    19,409    20,952    2,332    -    19,270    - 
Total stockholders' equity   395,043    394,144    398,960    386,664    391,223    393,459    396,792 
Total liabilities and stockholders' equity  $3,992,275   $3,912,245   $3,832,112   $3,827,912   $3,844,809   $3,912,336   $3,992,439 
                                    
Net Interest Income                                   
Loans held for sale  $1,589   $1,521   $907   $842   $873   $4,017   $1,964 
Loans   52,707    48,032    46,825    46,723    44,439    147,564    123,289 
Investment securities   1,799    1,805    1,715    1,645    1,593    5,319    4,728 
Other earning assets   1,017    841    898    953    1,122    2,756    12,504 
Total Earning Assets Income   57,112    52,199    50,345    50,163    48,027    159,656    142,485 
                                    
Non-interest bearing DDA   -    -    -    -    -    -    - 
NOW and other interest-bearing demand accounts   4,630    4,827    4,467    4,334    4,460    13,924    11,070 
Money market accounts   7,432    6,788    6,512    6,129    6,555    20,732    17,587 
Savings accounts   8,918    8,912    8,045    7,860    6,760    25,876    21,915 
Time deposits   4,371    4,095    3,990    3,964    3,801    12,455    10,831 
Total Deposit Costs   25,351    24,622    23,014    22,287    21,576    72,987    61,403 
                                    
Borrowings   3,738    2,724    2,062    2,150    2,121    8,524    8,096 
Total Funding Costs   29,089    27,346    25,076    24,437    23,697    81,511    69,499 
                                    
Net Interest Income  $28,023   $24,853   $25,269   $25,726   $24,330   $78,145   $72,986 
                                    
Net Interest Margin                                   
Loans held for sale   6.44%   7.25%   6.19%   6.90%   6.21%   6.66%   6.05%
Loans   6.31%   5.91%   5.87%   5.78%   5.52%   6.04%   5.32%
Investments   2.95%   2.97%   2.86%   2.86%   2.69%   2.93%   2.63%
Other Earning Assets   4.85%   4.59%   4.69%   4.73%   4.78%   4.72%   4.79%
  Total Earning Assets   6.06%   5.72%   5.65%   5.58%   5.33%   5.82%   5.10%
                                    
NOW   2.46%   2.49%   2.32%   2.20%   2.19%   2.43%   1.88%
MMDA   3.44%   3.32%   3.22%   3.07%   3.06%   3.33%   2.78%
Savings   4.10%   4.14%   4.04%   3.98%   3.81%   4.09%   3.78%
CDs   4.09%   3.89%   3.72%   3.48%   3.27%   3.90%   3.01%
Cost of Interest Bearing Deposits   3.48%   3.42%   3.28%   3.15%   3.03%   3.40%   2.84%
Cost of Deposits   3.04%   2.98%   2.82%   2.69%   2.60%   2.94%   2.42%
                                    
Other Funding   6.22%   6.89%   6.90%   7.10%   7.02%   6.58%   6.27%
Total Cost of Funds   3.25%   3.16%   2.97%   2.85%   2.75%   3.13%   2.61%
                                    
Net Interest Margin   2.97%   2.72%   2.84%   2.86%   2.70%   2.85%   2.61%
Net Interest Spread   2.37%   2.12%   2.22%   2.27%   2.13%   2.24%   2.49%

 

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Primis Financial Corp.        
(Dollars in thousands, except per share data)  For Three Months Ended:   For Nine Months Ended: 
Reconciliation of Non-GAAP items:  3Q 2024   2Q 2024   1Q 2024   4Q 2023   3Q 2023   3Q 2024   3Q 2023 
Net income (loss) attributable to Primis' common shareholders  $1,212   $3,782   $2,466   $(8,171)  $(6,029)  $7,460   $339 
Non-GAAP adjustments to Net Income:                                   
Branch Consolidation / Other restructuring   -    -    -    449    -    -    1,488 
Loan officer fraud, operational losses   -    -    -    -    200    -    200 
Professional fee expenses related to the SEC pre-clear process and financial reporting restatements   1,352    1,453    438    -    -    3,243    - 
Professional fee expenses related to Panacea investment   -    -    -    194    -    -    - 
Goodwill impairment   -    -    -    -    11,150    -    11,150 
Gains on sale of closed bank branch buildings   (352)   (124)   -    -    -    (476)   - 
Income tax effect   (216)   (287)   (95)   (139)   (44)   (598)   (365)
Net income (loss) attributable to Primis' common shareholders adjusted for nonrecurring income and expenses  $1,996   $4,824   $2,809   $(7,667)  $5,277   $9,629   $12,813 
                                    
Net income (loss) attributable to Primis' common shareholders  $1,212   $3,782   $2,466   $(8,171)  $(6,029)  $7,460   $339 
Income tax expense (benefit)   (304)   1,265    718    (4,472)   1,519    1,679    3,405 
Provision for credit losses (incl. unfunded commitment expense)   7,607    2,573    6,506    21,864    1,359    16,686    10,685 
Pre-tax pre-provision earnings  $8,515   $7,620   $9,690   $9,221   $(3,151)  $25,825   $14,429 
Effect of adjustment for nonrecurring income and expenses   1,000    1,329    438    643    11,350    2,767    12,838 
Pre-tax pre-provision operating earnings  $9,515   $8,949   $10,128   $9,864   $8,199   $28,592   $27,267 
                                    
Return on average assets   0.12%   0.39%   0.26%   (0.85)%   (0.62)%   0.25%   0.01%
Effect of adjustment for nonrecurring income and expenses   0.08%   0.11%   0.04%   0.05%   1.17%   0.07%   0.42%
Operating return on average assets   0.20%   0.50%   0.29%   (0.79)%   0.54%   0.33%   0.43%
                                    
Return on average assets   0.12%   0.39%   0.26%   (0.85)%   (0.62)%   0.25%   0.01%
Effect of tax expense   (0.03)%   0.13%   0.08%   (0.46)%   0.16%   0.06%   0.11%
Effect of provision for credit losses  (incl. unfunded commitment expense)   0.76%   0.26%   0.68%   2.27%   0.14%   0.57%   0.36%
Pre-tax pre-provision return on average assets   0.85%   0.78%   1.02%   0.96%   (0.33)%   0.88%   0.48%
Effect of adjustment for nonrecurring income and expenses and expenses   0.10%   0.14%   0.04%   0.05%   0.02%   0.09%   0.43%
Pre-tax pre-provision operating return on average assets   0.95%   0.92%   1.05%   1.01%   (0.30)%   0.98%   0.91%
                                    
Return on average common equity   1.28%   4.06%   2.62%   (8.43)%   (6.11)%   2.66%   0.11%
Effect of adjustment for nonrecurring income and expenses   0.83%   1.12%   0.37%   0.52%   11.47%   0.77%   4.20%
Operating return on average common equity   2.11%   5.18%   2.99%   (7.91)%   5.35%   3.44%   4.32%
Effect of goodwill and other intangible assets   0.69%   1.75%   0.99%   (2.61)%   2.00%   1.17%   1.60%
Operating return on average tangible common equity   2.80%   6.93%   3.98%   (10.53)%   7.35%   4.60%   5.92%
                                    
Efficiency ratio   83.22%   82.62%   77.41%   81.31%   108.50%   81.12%   86.30%
Effect of adjustment for nonrecurring income and expenses   (2.87)%   (3.76)%   (1.23)%   (1.88)%   (33.33)%   (2.63)%   (11.74)%
Operating efficiency ratio   80.35%   78.86%   76.17%   79.43%   75.17%   78.49%   74.56%
                                    
Earnings per common share - Basic  $0.05   $0.15   $0.10   $(0.33)  $(0.24)  $0.30   $0.01 
Effect of adjustment for nonrecurring income and expenses   0.03    0.05    0.01    0.02    0.45    0.09    0.51 
Operating earnings per common share - Basic  $0.08   $0.20   $0.11   $(0.31)  $0.21   $0.39   $0.52 
                                    
Earnings per common share - Diluted  $0.05   $0.15   $0.10   $(0.33)  $(0.24)  $0.30   $0.01 
Effect of adjustment for nonrecurring income and expenses   0.03    0.05    0.01    0.02    0.45    0.09    0.51 
Operating earnings per common share - Diluted  $0.08   $0.20   $0.11   $(0.31)  $0.21   $0.39   $0.52 
                                    
Book value per common share  $15.43   $15.23   $15.16   $15.23   $15.30   $15.43   $15.30 
Effect of goodwill and other intangible assets   (3.82)   (3.83)   (3.85)   (3.86)   (3.88)   (3.82)   (3.88)
Tangible book value per common share  $11.61   $11.40   $11.31   $11.37   $11.42   $11.61   $11.42 
                                    
Total Primis common stockholders' equity  $381,352   $376,393   $374,577   $376,161   $377,610   $381,352   $377,610 
Less goodwill and other intangible assets   (94,444)   (94,768)   (95,093)   (95,417)   (95,741)   (94,444)   (95,741)
Tangible common equity  $286,908   $281,625   $279,484   $280,744   $281,869   $286,908   $281,869 
                                    
Common equity to assets   9.48%   9.49%   9.63%   9.75%   9.84%   9.48%   9.84%
Effect of goodwill and other intangible assets   (2.18)%   (2.22)%   (2.27)%   (2.29)%   (2.31)%   (2.18)%   (2.31)%
Tangible common equity to tangible assets   7.30%   7.27%   7.36%   7.46%   7.53%   7.30%   7.53%

 

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