FRST - Earnings call 3 2022 | Primis Financial Corp.

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Operator

Good day, and welcome to today's Primis Financial Corporation Third Quarter Earnings Call. [Operator Instructions] I would now like to turn today's conference over to Matthew Switzer, Chief Financial Officer. Please go ahead, sir.

Matthew Switzer

Good morning, and thank you for joining us.

Before we begin, please note that many of our comments during this call will be forward-looking statements, which involve risk and uncertainty. that anticipated actual expressed results forward-looking factors materially to in many statements. the from or are could results cause differ the There other expectations

information statements risk Investor future discussion update been our of has or recently with Exchange www.primisbank.com. and the the filed further to and forward-looking filings reflect We or forward-looking Relations to company's Securities including no For other obligation are of recent changes important also over Commission, our the site, regarding the posted assumptions, section part corporate earnings undertake events revise our statements occurrence operating which factors our to changed unanticipated time. of of results to release,

this the financial A now over can release. I In President financial of turn measures addition, non-GAAP be some earnings call the Dennis Zember. comparable are discuss found reconciliation measures. morning GAAP of measures will the the may and Officer, to most we our measures Chief Executive our in non-GAAP to that

Dennis Zember

all teams, quarter and well we the performance expect very quarter so XXX release I applications about and X the joined illustrate the we our conference X have October quarter applications. Thank you, recruited and notable a third but ended full our the goal. To August investment $X $XXX in about trends in of brought you anybody. taken the call. we of to XXX have that out first most recruited close this of what month strong producers. million the this to in We about into quarter the teams core with billion that of the in then and and moments thank and is we quarter you talk very just some in few is in driving item we we about capacity, take some And how We took very million this to production mortgage. talk earnings $XXX the with far, strong current X referenced XXXX. group landed before press The want our progress, Matt, other to about

we other now. for the $XX operating existing volume. XXX The signing loss. into which to about We should end about full of with quarter and applications we capacity, onboarded the being about to XX% to team's $XX XXX small per group's And month expect out buy this at million team month, is the pay accounted bonuses, and translate per pipeline, of million

in them, While the we booked quarter the to loans the team built paid and onboard no cost recruited just the pipelines. team

we've And company that revenue or that of the from production in the The the these fourth new revenue what beyond. expected. to will level the of of lot all about is teams happen so and expect we quarter mortgage we a built

income While -- don't about produce we like adding think points. and about would expect our increase the We level should continue to grow, net we $X.XX XX this EPS into like share by to year. grow continue production per of new total next of costs to basis

in quarters, be will and customer couple I of in believe set, the to on traction marketing bank digital the small, In we month, And one dollars branches. believe in could while all first of fashion brings new a accounts. just core the it's a In bank the our also we first get began $XX We our in digital largest had more the bank. of the in customer pronounced I million a about hypercompetitive unquestionably month, the and features our of we put is have which time is to those When feel franchise in presentation and going novel place you I that delivery core from our last one put look Matt the we offering in our first combine with we think app night, features of markets. that list the together. progressive out Bob, some a grow that of capabilities the product

Speaking staffing and even there wanted in $X.X for in than areas, in we One, position to in pipe, banks. customers estimate need into reach are X,XXX that XX% we we that opinion, To to generally or to breakeven. There to pre-provision to pretax in extra posted close service neighboring deliveries of need in and million be per us the branches, but can't that we hardball we of a only losing in up markets to the extra my of X,XXX will quarter, out secondly, spent about X we've breakeven day In deposit bringing where full-service a that position there position of when to us this help are service customers costs. Right reasons. several X, we the maybe with this cost of these more about and deposits, concept inside only $XXX,XXX do investing is what month. had fraction, with to drawing expand to want to in about in we've new risk million expand items VXBE years. minutes, $X.X strategy. These markets the highest the liquidity be community banks And $XXX,XXX investment the current offer a over up. X-year operate. stomach quarter. earnings the service some done and we're pace date, be the export be other cost the other on to new to And XX to hours the a branch we to this wanted but period banks can't and a now, inconvenience to

are we about very from For to an the ROA. current quarter, resulted ago as year, ROA over basis reporting mix growth was XXXX, fees associated which Driving low XX a in of margin of last pretax million XX% substantially of beta. we a about and income This X.XX% of quarter $X.X current of from or year improvement the excluding that and X.X% an from higher in the million when and revenue pre-provision controllable reported points. asset earning is deposit only in up $X.X PPP as both needed improvement in X.XX% well the a

will So I and I'm with is up returns. I'm to have to there, the in very clear and will know, pre-provision. pleased pleased higher, with we fact making the the to the see do revenue ROA we're reported progress move the profitable ladder move Panacea mortgage of with I all to continue a and The that. pathway team, quickly. pretax move But move its

of and not produce loan for we model comment And I will changes don't ratio to have to growth and provisions will returns being this deposit that strategies going much confident want spent We're but that nothing industry, going to is on with a thing I higher Our provision longer. years for very and loan headed. are losses Last before bought. grow flushed slam I loan associated with the the from these and just I right all feel X moderate. We've the potential benefiting the Matt, online than is see it have turn X at our much we bank time, the to where that growth liquidity new back stay but could us deposits easy loan from quarter these know the believe to And we I to are when in finished honestly, I just strategies deposits. At building in coming facing, disappeared. environment with or digital the money and the were XXX% liquidity strategies. more as at more, our the same feel the strategies absolutely position given rate I wonderful deposit, industry moment. deposit last

We core loan deposit I continue much digital will bank, expect ratios to grow alongside XXX% to bank over for longer. the don't the and expect

will for on some to Matt With over Okay. turn comments the I it numbers. that,

Matthew Switzer

Dennis. you, Thank

second reminder, release diluted diluted presentation, be in in a quarter $X.XX description found quarter the or quarter. our million of both of As versus per operations from share were per be the third can share earnings results on full $X.XX $X continuing and our which or Earnings earnings third a $X.X third our website. found for million can quarter

quarter billion in September per up share second slightly million items, the the XX. or June $X.X from onetime earnings $X versus were at $X.XX Excluding in XX, quarter. Total $X.XX third were million or diluted $X.XX assets

and primarily XX% annualized Panacea sale, in for was by loans QX. held grew in the driven quarter. loans Growth loan Finance PPP balances and Excluding Life Premium

which quarter the portfolio, annualized in the in XX.X%, a albeit is pace. record Deposits bearing mix are our a loan We Non-interest for improve. fourth slower in almost up expect at continued the to seasonally QX, growth deposits X% bank. were while

confident we industry few growing pressures. next face look quarters, we in have ability out As we of the keep the to deposits are the

the and the which increasing VXBE $XX.X to Dennis account platform nationwide $XX.X in strong As all markets, funding. XX.X% QX in income Panacea, with unique in service, strong for enhanced quarter, quarter saw to, our we from alluded digital Net deposit in growth million million features have growth. or we by interest linked brand plan leverage to a of branches

margin XX the assets and points, and from from increased reported earning up points, XX second of basis basis basis of cost points basis while XX for QX. quarter or basis cost of on was the points, Our effects PPP, the funds deposits X.XX%, excluding X.XX% expanded and respectively, third XX points quarter. Yield respectively, XX

premise quarter. largely to in million beta largely linked due X% to from a recruiting job remains the income substantial cycle $X.X quarter particular, the added X this with in only mortgage incredible of deposit year third date. has team mortgage. platform The million management done premise Non-interest at to low Our increased full to quarter, $X.X an teams

billion With with overall this these $X to from next roughly meaningful additions, additions of up we and million income non-interest projecting over year, profitability. originations are $XXX year,

$X.X quarter portfolio. discussed a asset also million for to included of this build-out expense branch of a loan expenses, this and included Non-interest of full a Non-interest origination teams, approximately in Dennis expense reserve quarter, which gain our credit the number increase unfunded included quarter of $XXX,XXX an mortgage indemnification tied including for items commitment closure previously. of $XXX,XXX segment of as in a income costs

and lower last costs for $XX.X roughly $XXX,XXX. investments roughly quarter. be increased or costs plus advertising fraud increase lower platform deferred and new impact, professional these mailing, expenses of expense QX, commitments, in lending expense driven Many up losses unfunded business. $XXX,XXX, for which was $XXX,XXX The a combined additional Excluding an million, recovery these in $XX customer forward. commercial which in of non-interest going $XXX,XXX roughly from volumes our by items was Increased VXBE was from lower the increase roughly digital was and of marketing of lines will and million

start data fourth approximately quarter by $XXX,XXX from also main We renegotiation contract. the to benefit in processing of will starting our the

included forecasts for by we models provision economic The loan experienced one credit QX. increase was tied in $XXX,XXX in specific the and CECL driven nonaccrual reserves provision versus in our growth was in QX an things: losses quarter, Our to in $X.XX million X weakening loan.

previous We specific also that $X.X net credit already to against of in largely charge-offs reserves established QX million, it in quarters. had tied one had

a credit XX to loans, and QX. of net As placed on our in result, comprised allowance June SBA X living at losses slightly million increased mention excluding relationship PPP, rated was to assisted assets and gross increased versus relationship X.XX% special guarantees of nonaccrual largely due $XX.X in QX, X.XX% at primarily XX. Nonperforming September for downgraded last This quarter to one facilities. was

with We current fully are and borrower we the are collateralized. of properties indicate dispose the working to appraisals

XX% operating essentially quarter, QX. Our was efficiency the approximately flat third from in ratio

in QX. impact efficiency We Excluding our the in bringing XX% mortgage, the X. QX, have ratio total to been branches operating of the consolidated for X would year approximately

With plus finish on additional we a combined to XXXX. drive above, efficiency processing improvements can we XX% savings basis continue operating the pursuing, are below as highlighted we we efficiency data the believe

operating was up As Dennis pre-provision XXX in QX. QX, basis XXX ROA points mentioned, from pretax in points basis

in Excluding this in basis mortgage, the higher have would approximately quarter. been the investment points XX ratio

to that, to open discussion, questions. see now ramp line Similar the confident efficiency operator, and ratio meaningful Our various to we can improvement are assets continue the ROA lines continue will near we pretax, business quickly. pre-provision return future. With to the on in profitability

Operator

with Janney from [Operator first Scott. comes of question Strickland Montgomery Instructions] line the Feddie Your

Feddie Strickland

have with versus digital from of you of funding core accounts, with digital color next trends. in curious, into a visibility bank you operations? comes terms And wanted new funding But bit how new bank. much deposit gave that just and going of little Just year? I into kind regular deposit start to guys know the I of the trends do bank new was

Matthew Switzer

Frank. question, great a That's

bows you very of as we bank, to it were the digital end the final live broader were out it. worked slow the sure July. So recall, at of then And made to the went we heavily public all advertise while

and bank quarter. the digital the the third late advertising -- of start to didn't that kind through those really midway we So in products until mid-

we're think deposits today, we here platform sit As already. in at that million $X in approximately I

we set some combined then we're the there, digital accounts that platform to and features So VXBE we've up the year. the the got feel products in and with good that those pretty see novel some good pretty of next that going growth into how we've fourth quarter in

Feddie Strickland

[indiscernible] on accounts? checking

Matthew Switzer

consumer Yes. now, would right And are products live accounts. I point the out, only

So yet. we don't even have live business

$X next Business year. be million consumer funding. early is all that So should live

Dennis Zember

I think I that. almost deposits $X too, banks let's core to your of got, the say, question think under a billion little just

us probably grow, I at to being here. I feel our Northern exposure in to like centered rates. the Hampton a Maryland given X% and are it, expect out without Virginia, markets. X% feel on D.C., in a aggressive year, too good Roads X%, normal looking in think call being year, in Southern you'd Richmond normal I those without

I facing a think deposits. XX% in probably industry traction is the

hard grow. bank bank, core the it the So might for be core to

I to going growing. banks core think all struggle are

think seen bank, I you've digital different. quarter. that think, I this is The

reported I the tenor one the approaching margins quarter. I next don't I than new want want cost to on to loaning net But if that's I customers in look against we we're going we the this higher think Sage it's and be liability believe, early. only a what We're do at victory bank where the the thing side. I sit digital But know to the money. and think million. are year $XX of don't and interest I here pushing declare that change of it's you what really, funds

So in the going to is whole rate incremental margins. to deposits, think it's strategy itself a growth It's our big increase going to I make our difference.

Matthew Switzer

comment the little third it bit When commercial last a a talking over for quarter. one at Panacea. we're Deposit the little They gathering. XX million Panacea deposits. got with that. I deposits, especially my about remarks, of but Feddie, on has in push highlighted deposits customers. end

with in I penetration But focus account their been commercial almost to XXX% as their building think all they out other have deposit date. great a areas of customers. has not a with as it business

market built-in base to. intend customer eyeballs short we more they've that massive However, a here got And can aggressively to and in that they order. leverage

Feddie Strickland

continue? to we a the in the expenses. the color. it. And you appreciate slowdown XX%, on switching from term go Got line we know Or as I start was No, quarter. expense do curious that's here? as I I think see of you just guided longer fourth that really growth helpful. all in Does saw gears where sort to well? rise third towards revenues I you efficiency can said in also the the think just just quarter

Matthew Switzer

to that. parts X guess I

basis Longer not the quarter, So to yes, were technically nonrecurring, expenses growth fourth regular be the we showing items should should is assets, bank, expecting efficiency. of mortgage bring a it's below goal core up excluding not we see ROA only efficiency mortgage, to down a in financials. not but have the additive our business being in by quarter mid-XXs fourth but to on because of in because we're XX% term, not those definition, the in heavy number not stated on higher higher a

range. of finance out, below should that to business and bank of should premium us ratio be to the life the Community So our be to kind of lines low stripping below Bank a mid-XXs XX we're then community rest XX combined that driving mid-XXs. efficiency bottom and Anaya the puts of well standard

Feddie Strickland

absent given sounds Is whatnot? shift expands downturn as like of banks Do you I to speaking opportunities the you're provided up market just Got an and space there. see just you more on did mortgage good how little I treating was there you producer? can pick you of quarter. explain And have it of going what a to -- you you see other curious just that external it. past That's guidance this are mean from there there in the also And think I in mortgage, out mortgage. of just rates kind know helpful. bit if

Matthew Switzer

Honestly, opportunity of lot to grow a a think we've great team. got There's mortgage. I

got think good I we've leadership.

the we I we -- could next it what we do do need X bank further infrastructure to other from the were here, putting to we've drive should. I digital Dynamite returns. a X invest mortgage though. I along to way can more that investing the up and we we think being feel before we mean think along I just that along us or there. we for probably got I if probably profitability, great get get harder but don't Panacea think I don't the keep sort -- contracting. profitability I I think further how and I building I stomach times good is don't on and systems. make think teams X incubate sort of But with we some results we good -- industry then in think these think some in it's is teams, industry. start name of ideas, much that's up let X its love them we to ourselves year. might with I ought of don't expected sort mean of I let I and picked And further retracting know just great June start I markets. infrastructure like the or before just

these would year of know a teams ago, I recruited you dollars. don't teams think I And it have of have mean, taken million that even couple a moved that either good -- just I them. could we

top ability portfolio couple the especially anything. independents paid. of plus And are today, we million dollar slashing marketing, slashing of a on taken to companies, backroom what no have You would mortgage bonuses, signing

available the these are a lot And companies XXXX. right mortgage teams now. I of right nation's so started best now mean in

happens this homes. think I the look so what And good what pullback, that's we're teams And is mortgage best for from. in the benefiting

Feddie Strickland

At least problem. the answer

Matthew Switzer

Exactly. Exactly.

Feddie Strickland

No, see that time within Fed you -- little sense. the is that the premium makes can talk makes knowing about on interplay it. whether is mortgage, XXXX curious line, mortgage, what's bit profitability segments, different what But a about it's sense. out various see? subsidiaries, of finance do. the it's you a XXXX, along division, kind of same not Got That further in to of over that -- And little the more the exactly little or a what different mortgage forecast level less going the obviously, across what was harder I to just you talked to Panacea opportunity

Matthew Switzer

environment I credit do bank about is a do as it core think -- we'll to a normal should X.XX% the in ROA. probably probably X

a our I premium ROA. efficiency to premium probably going XXX they're XXX run finance, efficiency said was Matt mean XX% ratio. ratio. to a will I -- think XX% do finance I like below folks

I people. get infrastructure. want is to XXX there may X because think deposit to what with X in Panacea be We we invest XXX they billion could getting longer is do or their $X probably ROA. outstanding to

going Panacea to I doctors, sides the look that production. full-service basis long really probably side. XX like bank, mortgage, in maybe is produce term mean to vets think balance but points dentists, I to sheet staff, XX would on think, probably for both the I at deposit somewhere the to pretax and least medical digital nation's the expanding of first

$X.X we of $X million So I do should we pretax. of billion think production, if do think I

more that here think can if you little I should and end with there things think mortgage of range. pretax billion take in and year, point a from $X probably next the to get adding think basis I can to billion the higher $X MSRs do for I secondary XX produce to billion, us, you servicing because somewhere closer But and bit profitability. $X and you

digital think is the focused. mostly I bank digital bank, deposit the

we'll probably of bank, think it of And going OpEx might touch an have associated I to core will of that with be have it. funds but produce cost ahead established low it's a deposits no lot very, that a have infrastructure. very a

from that the And line significant. think will so bottom impact be I

Feddie Strickland

I That's exactly was what looking for.

just And last for question I So appreciate me. it.

can sentiment even you might all not if with Just a seen the looking anything customer or be customers economic any there? talk speaking, kind was you of talk of bit customer Just about customers broadly just recession. discussion? expansion, to at speak or seen any in just more that outlook? behavior Have change and you've any doing little curious an doing I expansion just incremental

Matthew Switzer

spoken think now, last I couple of the a few I'm weeks. I've right thinking to of in that customers

they're I probably and just of of I be same think mean, is don't I the we're investors kind and hyper bankers, think of this coming. boat. I think aware sort what -- more might all in

customers the being seen quick-paying of really slowdown, week. We're we foreclosed. afraid In what meeting I quarter XX% We we've anything the credit a out got last afraid And I coming the or on is talking that just sold valuations we are seen that's were think that's signs a -- little yet. your equity, in all not investors down, loan in happened they sideline question because commercial estate think, we real they don't third private venture are, good -- afraid everybody credit we're afraid sort that's but recession, just because That's to investors happened We but that haven't think that yes, on this of And are heard of, XXX%. don't XX%, I or of don't but see yet. not not the think about And we if I news, credit. know yet. don't I they've not that our not it. We everybody is board capital of guard underwater of resolved don't but that what sort freight, people anything. I against are bank they anything that And from are know are seen on are answers we aware. a the stuff see yet. some of if they anything, anecdotal customers they we've

Feddie Strickland

banks, broad but just and sounds like in everyone overview anything is I've that's of necessarily is like aware, seeing what's a the nutshell, That just to going that's in other kind said heard not hearing because down what what think that which it news, -- a going answers there's right? was sounds they're it. similar I the like looking of for street. that on No, they're you I on

Matthew Switzer

Right.

Operator

I'd over call There Zember. to the to back turn time. are no Dennis further like questions at this

Dennis Zember

appreciate attendance today. I everybody's

If you have any and will or questions I Matt comments, available. be

reach or do we'll can. telephone out Just e-mail what and we

Operator

Thank concludes you, have conference call. This and a weekend. good today's

You may now disconnect.

Primis Financial (FRST) 28 Oct 222022 Q3 Earnings call transcript