FRST - Earnings call 3 2023 | Primis Financial Corp.

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Operator

Hello, my name is Krista, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Primis Financial Corporation Third Quarter Earnings Call. [Operator Instructions]

Thank you. I will now turn the conference over to Matt Switzer, Chief Financial Officer.

begin. may You

Matthew Switzer

thank and joining us. Good you morning, for

that many filings the we posted undertake which discussion of the our forward-looking results or events during statements comments from Securities other please the the many statements, recent differ Investor and or Commission, our company's revise our results recently that in future release, site, to begin, note Exchange of no changes section of information earnings the factors are including forward-looking risk update assumptions, this or occurrence has There expectations involve anticipated and factors forward-looking our cause materially part are of primisbank.com. We time. of regarding with to risk actual our over operating corporate to Before Relations which uncertainty. could other call to statements unanticipated expressed and results will important obligation be statements. Further changed filed to been also the reflect forward-looking

addition, may be non-GAAP release. discuss measures reconciliation most this that in to comparable can earnings some found we GAAP of the our are measures. A measures financial financial morning of In non-GAAP the measures the

President turn I over will Zember. and the Chief Dennis to now Officer, our Executive call

Dennis Zember

about back Thank I'll and then details. to and areas. third the that you few key broad-based quarter we it you, Matt, and in about to a some our some quarter and improvement Matt you have more of conference excited give joined thank all of our call. see discuss I'm for those momentum

CFO; been President Matt -- by call, who of Primis has I'm Switzer, recently in the named joined the Fulk, here who our is Rick with by and Bank. way, today

net interest importantly most is and First margin. our

quarter, Our thanks couple items. significantly margin this to of improved a

balance the XX. First, on off June began sweeping excess funds sheet we

the a of it significant second to and none quarter. So the for quarter, the would which margin have normalize go If quarter, be in I back that in the of impact for was couple way. headed of second in basis felt quarter that still margin directionally was increased that by points, but felt the third entire our the third is

Further, as margin with we a our had and release X.XX%. a September, of strong dates,

increasingly higher. we and levels are at we can hold confident continue So that these moving

Obviously, parts there's of the lot play wins we're margin. success moving the block improving the a to in foundational community the at banking. are in having But this

On a the million, new that we side, new account $XX for $X.XX. cost opened note totaling weighted X,XXX with accounts almost we average only new of customers

course, X% deposit of movements have dead accounts, rate represented of be existing almost of cost top deposits, in funds. would and and basis any neutralizing annualized would in on an existing this a On annualized our growth total

kind pretty have high deposit of post this So rates notable. activity having to to really is interest without

did with our the the even in further, we And platform, national than scale Community Bank. X/X deposit new more of this of activity account

really has more existing retention customer side, of challenge, XX% like factors of difference, customer our made the such [ and branches Bob about a have But X minimal. a of calling been from or efforts ago. a runoff consolidation announced quarter branches convenience X those our ] our cost footprint key has and focus managed of of of which an the we quarter a up deposits been impressive and On was slightly 'XX. second bank only deposits, from the The the a core because X.XX%

getting result, deposit we announcement. have job X place consolidating are since In an have team increased a believe levels this and Rick in and actually of fact, where with sustainable. done branches that X us we the outstanding the his it's

level and is these against our bank deserved. far so excitement well and with quarter third wins looked for energy the pipeline very the the fourth and quarter Our result, closed at promising activity

quarter. significant Even -- referrals. a percentage opened average X%, was on existing about third no spent we've annualized. Impressively, of of and about total On from in new cost side, accounts, X,XXX the by digital so, new XX% below in platform grew the these the and still customer on activity we the the was money the marketing accounts paid deposits

In the new they customers every third X quarter, accounts opened for closed. about account one

is Our average and per average our is balance $XX,XXX, customer XX depositor old. years about

of On over our Life and new about side, value the $XXX we're average increasing fashion, of million had Between Bank, the lending at demonstrating we production Panacea the an in Premium, an niches. Community yield X.XX%.

rate the which more we that booked press the of of spreads than release way environment. interest incremental in noted X.XX%, Matt pressure today's neutralizes dilutive

sources lending niches obviously believe other high-quality Panacea capacity. their I whether and and Both and it partners, Premium and divisions quarter platforms, banks sourcing is brands securitization business. with what or of relationships production XX% established Life about collectively of are the place spent be

place As to capacity. full move and the higher run at next percentage number we engines go quarter, fourth into in through sources are these going have it's we this to -- my hope we'll this that year,

this in continues shined move forward, a division mortgage division. tough quarter, kind albeit this build to Our environment to of

and During of of $XXX had about volume the almost they $XXX,XXX. earnings quarter, pretax million funded

Importantly, focusing got on controls. efforts our cost division this and serious on top-shelf excellent lenders by result

do team our turn will impress disciplines Our our in. will the understands yields And they off. environment are and division's volumes again we will and jump that, and when pay profitability

to with sheet make close balance on turn deposits. the it and comment liquidity we're great story Today, strong a a to very really I itself. and on sitting quick I want As Matt, back here

levels. capital strong have We

concentrations low have anything really no nonperforming office problematic. CRE We very We really have or assets. in

that on we have substantial the off that loan are sheet. balance We deposit take profitable, engines and or very incrementally can and

able as we control uncertainty. expenses. I really are inch are hire And and we well up are like earnings and as to period margins this where operating of reduce on moving in Our

back you. Now with that, I'll turn it to

Matthew Switzer

earnings presentation, our which brief as be and our website. turn Thank our we of full But reminder, release in found can you, Dennis. quarter Q&A. will results on be found overview investor of third a results description a can our provide to I a third before of quarter both

Operating share quarter, second quarter third period. $X.X the and $X $X.XX XX% per up $X.XX were over diluted year-ago the million versus or share in earnings per from the million or for diluted

Total assets XX. flat XX, at September billion versus June were $X.X

Excluding moved held loans X% sale, Panacea PPP loans $X $XX at million to XX. sold another and loan balances million for declined at of quarter. linked for and loans September We held sale

in for We third in of $XX transactions, held slightly participation loans would million quarter. finance those grown Life also sold in the Premium not loans quarter. have for If investment the

down $XXX quarter. the program were slightly by of sweep sweeping manage excess We deposits. we the end of the in deposits as off million in approximately Deposits liquidity had QX, excess at

flat quarter, XX. ending XX while increased balances third X% deposits noninterest-bearing unannualized from were in noninterest-bearing average June the Impressively, to September

services strength developed bank with continue small core source Our resonate a businesses. of to products customers, and is this the unique particularly and environment, we've in

yields. cost interest as with asset Net increased income adjusting million increased were from carried higher the we interest QX. third excess the when to $X earning in liquidity funding for pressures $XX.X quarter, X% X.XX% quarter, offset margin to million Net in last

We have a unique advantage to we strategy. believe due funding our two-pronged

we XX costs core the options. As increase in a below were result, points, quarter, to basis in in the deposit able wholesale increase to well bank in the the hold third

given million quarter. income noninterest increase $X.X was adjustments, in the Excluding QX, Offsetting revenue second in income. declined versus the an Mortgage third on decline was environment. $X.X the in quarter still sale in but accounting slightly that million gain strong was

of $XX a held Panacea will sold moved for shortly. We $XXX,XXX for $X sale another they million million and loans gain as to close

the higher on Additional in income that pipeline confidence fourth lead quarter. in gain potential sales will sale the us be have to

quarter Core that last noninterest expense, nonrecurring were was excluding the effective and through $XX.X decline the third quarter. administrative in is we announced items saves midway third reflective cost the adjustments, and mortgage accounting previous versus for million of The quarter, quarter. the million $XX.X

consolidate at October. X the end will also of We branches

We navigating on expense additional side saves continue this environment. to through while disciplined be challenging and for look the attrition

losses The our in gains. is provision the third noninterest million managed accounting and last quarter. portfolio, third-party for by was provision quarter credit $X.X million of the income $X.X versus offset due to for million which was $X.X

have which charge-off in piece that net assets bringing specific basis or forma to quarters. the was in nonperforming million majority $X.X million, resolution reserves of were at we relationship tied Core The of assisted X/XX. final October, $X.X XX the to of relationship pro discussed charge-offs resolved of was points assets partial problem the living previous the of

small to credit loans, quarter, reserve under with specific and PPP a for of X.XX% reduced XX allowance versus due gross reserves losses losses charge-off was September CECL. points a excluding model basis from lower balance and release The to largely the at the balances, last XXX loan decline

quarter, Lastly the operating the and in in to 'XX. points ROAA fourth highest XX quarter basis improved third level since the summary, of

net grinding margin. quarter, realized being a savings expense are can further with in have income confident and fourth keep we the healthy higher We interest

optimistic can revenue, the gain Combined still our in difficult improve profitability and we with sale even additional are prospects near this about term. on in believe we environment,

With the operator, now we Q&A. that, can for line open

Operator

[Operator Your first Whitman of the Sandler. Piper from comes line question Instructions] Casey from

Casey Whitman

Congrats on the quarter.

growth? the profitability how some that you your holding balance sheet see Could is think there? of should about So Do modest outlook size first, can allowing here? us see walk you What flat, the through accrete? from we we improvement, pretty capital

Matthew Switzer

I or it's but think nearly quarters, we'll X. in year not X modest X, the pace next growth last see the the been over

digits time to So frame. single mid- probably high over that

Dennis Zember

I to low. moves mean nonperformers on that inch way capital want And I TCE. this with mean, than especially where a in think now, we're not are right more really they And TCE with comfortable lower. levels I hire we

a earnings growing are continue sheet, with but at for. is pace So looking to able they we're the what being moving where balance slower

Casey Whitman

Okay.

growth, growth? continue up, trend and balance same this but confidence So not to that reached to extent we the go have continue to sheet pretty we'll like do point maybe high NII, some quarter, the on inflection the then the will up. with stable see we've Maybe to margins even

Matthew Switzer

I think so.

Casey Whitman

expect was thought talk you success of maybe the do Dennis, And deposits the more want to a in one. at this Bank? big Community $XX we just with this kind Okay. quarter inflow? million your that Can I of about

Dennis Zember

some was going neutralize any did we announced, so that impact closures, of his of to you so customer, have closing on team only that Rick seen from -- the -- month Rick Rick, every sort well, a And we and outflows. to or sitting the and sort impacted. not When that here, branch to days might branches talk that before mobilized go or Yes. XX before out announced be

into into I a little there I couple at really initiative. -- sales of of are that go they close few in bit sitting duplicating a here why all fourth the And with were were some end think I third there really, that we're we quarter confidence as and the accounts, we mean, -- uncovered And opportunities, we really think, sort quarter a really, before end. it didn't sizable the more September quite the of didn't turned that we of about quarter. working on a that's

the that team the and -- So Rick important, Rick led in or or the the in mean start positive and level me, for and I the and we restructure third move the the second excuse excitement position, -- directing building Pretty there. quarter quarter that restructure wins and us our this it's getting let into essentially had energy company.

Matthew Switzer

-- with I to -- we're And got in bank we some the we with the services. are like advantages we've of mean some we But small alone pursue and and business core technology I'll our feel probably customers. XXX% that and strategy products dedicated we're just -- not have add,

a platform digital reasonable raise can the We through out cost. at of funds market retail

So deposit market. we raising do other lot specials campaigns we put energy or don't of can market, CD retail that of because in to into have out a

costs Virginia lower banks, So a big balances, on we're P&C our they're core in cut interest as rate underpaying and in on Maryland particularly lot our are and are generally costs and the is of from from horrible Truist. focus on the are business, them banks higher small still and markets lot getting and balances. way coming those a service, But those also, hearing that back bank

a go after there's some lot and think of to banks move room we business. those running So

Casey Whitman

where will Is to it think land the you in gave Okay. there? quarter? us same as sort change any for you can the Or last consolidations And quarterly an of then that? branch range you to give expenses update

Matthew Switzer

next until about in still be higher. pretty feel much range. it's Maybe confident fully won't it I mean but quarter, that I

maybe but to in think day, the to quarter. XX I the said -- XX end that XX.X we next of still neighborhood comfortable at XX.X

Casey Whitman

And the that excludes just mortgage, right?

Matthew Switzer

it does. Yes. Yes,

Dennis Zember

today. closed Branch

Casey Whitman

the -- that today? of Is right? end that month Is the closing or at branches the

Dennis Zember

Today.

Casey Whitman

Okay. Great.

Dennis Zember

All right. you. Thank

Operator

Janney Your of Strickland comes the next question from line Feddie Montgomery from Scott.

Feddie Strickland

How million or quarters, next I to expense the wanted run the back trying sense the whether Just next low just much grow just next million beyond over digits? in course were rate. of $XX.X your expense mid-single terms about just quarter go that we what's XXXX? that's of year? thinking could talking a to that point to $XX Or couple of we for for good get expenses see to

Matthew Switzer

XXX% a great we mean -- are I controlling focused question. That's on the environment, expenses. our given

out So bottom keep our goal then at to increases to minimum. and that is level a

like end higher that. of I'd at not than the thank single digits So certainly day, to low the

Feddie Strickland

then it. I Got you what in we has is spot up that end in October, here as comments, And your by this late think any rate and -- gone at of on the sit mentioned but deposits was the new amount? opening quarter, the meaningful that

Dennis Zember

with but what's on repricing rate I mean business that more deposits, is in Xs. the not still with the the business. outpacing and obviously, incremental was solidly new incremental -- think but a I inching asset than higher, in fashion, dramatic we're new spot

mean, new margin we're honestly, just really business. spread think generating with I asset higher. what's I enough I That really new generating So -- enough we're moving repricing the incremental is think

Matthew Switzer

Yes.

we hoping points of late cost it month, October, X got in that's with went Overall was deposits in think we're about wins than than in July the we a that And month, less to basis saw that and but the lower on of flat September. I of deposits November. some August. cost in up

Feddie Strickland

that do this deposit just then some That's back you at million rolling strong this CDs in the of base? potentially Understood. you'll off you on is have off? later enough do like that think supplement put that growth helpful. feel that the $XX level Or funding roll And year, brokerage you can you point let

Matthew Switzer

let that off. going We're to roll

Feddie Strickland

with exactly that quarter and me. the for I charge-offs to level question quarters? Last know mean, But base is reserve strong going net play how each we your case should don't just is where obviously, couple everything Okay. compare a we credit. out What's over certain of next for expect today? the level with

Matthew Switzer

still that, XXX a we'll be term. I the that reason of mean, off XXX,XXX there's running a left little piece our been has see quarter -- we of in quarter. the think the with fourth I And that last charge-off in relationship, will living would any why have be bit specific reserve charged assisted a quarter. -- don't near that about the a Absent

Feddie Strickland

Understood.

Operator

in the at back We Instructions] I'll over closing the [Operator this call have to no time. further for questions Zember queue Dennis turn remarks.

Dennis Zember

joining you good All weekend. have right. a Thank again you for our call. I safe hope and

questions, take any a office, right. Thank If Have you. have you day. I'm to here are in happy and All good call. the we the

Operator

you today's And conference now your participation, disconnect. may you this Thank and for call. concludes

Primis Financial (FRST) 27 Oct 232023 Q3 Earnings call transcript