FRST - Earnings call 4 2023 | Primis Financial Corp.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Hello, and thank you for standing by. My name is Regina, and I will be your conference operator today. At this time, I'd like to welcome everyone to the Primis Financial Corp. Fourth Quarter Earnings Conference Call. [Operator Instructions]

to Officer. conference like Switzer, to now Financial Chief would turn over the Matt I ahead. go Please

Matthew Switzer

Good morning, you and thank conference call. for joining the

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

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

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

Dennis Zember

all Matt, our to you, call. Thank and have thank of joined that you you fourth quarter conference

CIO, that afternoon Cody was company and could it make Matt. technical I me the wanted I've year, XX. our come Cody had the the Sheflett, skills to of suddenly the the to Before investing of get fortune one but quarter to engineering results the being all and good CIOs outdream the public life. our most around. and January I of unquestionably know all for he into passed had of visionary let on Cody away

that, and we culture attention top build. drove aspire to our love company with humble fostered staff the On of he that unique

be staff our prepared. to his reeling in for And while many is incessantly confident always the future, years I'm departure. company Cody Fortunately, mentored his from

results. our about Now

what include $XXX,XXX important quarter, obviously than and third loss think $X.X results the is in about related is of about were in we timing the that lower is million these which quarter. where I pretax For a mortgage

don't all was of Matt's do. And In to been which quarter, margin want known I I've while news, steal the good our up. to

advantage it's the our expenses be going that Liquidity control results. and that sales. We is XXXX quartile year, strong Our this very top wind into at at we growth new levels. getting know in the improving see thinks on can deposits but to clearly yet has down and to a even levels stronger. NPAs that to in were of down. in that XXXX and lot margins, have we that took journey operating low nice seen all to Primis can impressive the more Nobody in built land and ratios, operating close momentum core levels expense capital chaos us industry drive in

all our yields. the increased Without up factors. control points, hard we of important margin from basis in XX any loan was resulting noise We management quarter, costs, deposit about the

Our incremental activity was very accretive.

momentum And with in into million interest going on clearly quarterly income production million. margins on information ratios. improvement $XX in $XXX accounts, side 'XX, in and But to kind about new more is our net we of quarter, loan There's With continued which opened our critical only costing details $XX million shortly is of for yields of that are the Matt's X.XX%. deposit funded coming. that this the new activity,

through half division, delivered earlier of was we the revenue year. every in virtually later, restructured through an continue smaller second are deposits a coming Cost and in digital especially In so of made amount touch We've impressive the more changes important, almost controls and we accounts enough make individually, almost than of solely equally with when open 'XX expense, the year pressured, year consolidated originally anticipated that still XXXX, the improvements that fourth revenue of channels. are to X while have bottom and we to through they referrals the were levels. branches today. And and line. restructuring pushing quarter and comp offset XX% to previously the existing allow into we tasks jobs it leveraged we This continued honestly, with absorb more opened substantial making a A technology customers. over even to mindset we the advertising deposit are growth to are levels XX% a large grew accounts we with the from better no

only We and being. really on now time deposits referrals promise on of platform focusing to are is But accounts live for take starting the with the this activity shape. that lower-cost business

taken convenience our bank we're with franchise amidst industry We've were 'XX, core Our well in has think the to X new and customer branch didn't we levels new that deposit possible. referrals bringing the technology major we're table. to accounts retail outperformed the that headwinds. see driving consolidation and And need starting substantial activity for to

effort to we've the accounts we've new cracked a autopilot. convey nut, non-CD to deposit Over or quarters, costing balances opened on with low I remarkably million of is that X.XX%. X,XXX don't this anybody X approximately this last $XXX want that

and better that our to in noticeably determined technology through trend. tools and staff, But grid. so balances builds and had is Moving we've force confidence continue this sheer with we're momentum even the far deposit success and

few important our for A notable factors think, I other XXXX. and,

was exclusive B round, And Association. just X divisions, Dental of market for value closed partner concept. Premium this and Finance American the thereafter its Our national Series the shortly years. rightly Life impressive establishing an Panacea banking outstanding had named Panacea

ramp our this by either up to unrealized bank. worth Panacea to in across deconsolidate anticipate rate is in recognize would ownership We Our being is or repurchases near $XX touch this the entity consolidated. share the that increase substantial million course, and future, at of which about while us which, point is gain give able flexibility growth

Premium CRE. that, of bringing year, and an operate expense diversification they've on substantially technology and yields our the built substantial one remarkable balance amazing efficiency top at and quality lowest On imaginable. burdens speed, sheet, Life to better with they drive that are had of than

Lastly, activity mortgage in slowdown production. the and profitability, despite expected year expected despite total million an finished in with our $XXX slowdown the division -- profitable just

recruited all have using We and technology bonuses culture producers. build big our year without stable sign-on to great

from January, current a the 'XX, is over Looking ago. at year up XX% pipeline our month,

And the so much opportunity is we here like revenue feel brighter.

to I'm Turning pretty about Matt. over what could bring. 'XX this excited

and been expense on never strong has or core loan management bank quality. core control on this deposit Our growth

stage in places they need that ratios and be and levels will concept with expect, capital the uncertain the past boost to we to drive where liquidity we the us are flexibility and divisions economic all rate Our our operating nimble conditions. and give

So with that, you. Matt, turn it to

Matthew Switzer

that Q&A. release you, a in be of both get which our Thank reminder, so investor and as of results we X-K I'll website results to of on can our overview are brief can SEC. our a quarter with a the full description But found presentation, earnings provide Dennis. and the fourth on

include shares Results Panacea will to our discussed, As Dennis Financial unless this discussed common just quarter Holdings, be relative PFH. the of noted. or consolidation otherwise results

quarter were were versus year or diluted ago bit in Operating XX. September per and the up substantially $X.X Total quarter fourth assets $X.XX essentially $X.X earnings the or $X.XX a share million versus per up share period. $X.X the $X.XX million billion, for from linked little in

or in $XX which minimis that's million quarter, linked quarter. Excluding after this loans, out sale, roughly and roughly and for fourth point are PPP the balances selling held loans participating $XX of loan selling of de at loans increased million X.X% or

Deposits were flat. essentially

the quarter. Dennis in funding the Core manage as As in almost XX. balance increased is which margin, third for in fourth $XX.X exciting and X.XX% asset as we points from average deposits income, sheet $XXX accounting were basis at December to, the we a row, noise sweeping million liquidity essentially Impressively fourth earning we in as portfolio higher discussed were to interest approximately noted swept off offset million of which million $X previously, net interest the press flat excess by quarter off deposits pressures third-party we our excess quarter cost environment. Net release, alluded think the noninterest-bearing in a to increased yields. current had managed with XX excluding

continue advantage our believe unique to X-pronged have we due We a deposit to funding strategy.

cost a fourth bank quarter, basis As only the third of core increased deposits versus in result, points X the quarter.

which million third first reduced quarter. Excluding in the accounting was fourth will improve mortgage due think income -- the to in we quarter adjustments, in noninterest and is will million $X.X activity, quarter $X.X versus largely seasonal the

fourth Core for adjustments, noninterest quarter expense, excluding million $XX.X and the items versus mortgage third was nonrecurring the $XX.X million in accounting quarter.

of XX consolidation to reserves previous the related for in third from in to for of branches million that, were core is the earlier assets expenses. $X.X October. The accounting administrative assets to net $X.X fourth XX in was were that press includes of managed million, charge-off down addition the quarter, end in in gains specific majority to basis cost credit at million the expense $X from quarter in reimbursement for X and our third-party points year points million due announced Panacea provision December versus to charge-offs of gross credits $X.X credit was $X quarter. XXX Holdings by which versus in Nonperforming basis offset portfolio, that the we the As fourth last losses Financial the of or million quarter discussed is the X.XX% loans noninterest which was was quarters. we to of income losses the related the But substantially at decline allowance reflective year. The impaired saves release, division

since indicated, of the XX the quarter in operating ROA to highest level points the fourth Lastly, as basis quarter, second improved XXXX. Dennis

We are mortgage healthy that the additional prospects believe improve opportunity a our profitability we in higher confident We with term. can expense we tough even interest in and still base are net the keep margin, grinding to in near we with income have XXXX. have optimistic environment about and activity combined expect rightsized a

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

Operator

from Our Casey Instructions] Piper the will [Operator with Sandler. of first question come line Whitman

Casey Whitman

have that good this it's a expense first I that at million. to burden, cable $XX.X still you looking room cost is have bring coming quarter pretty off? the in with the down a in release, coming bit just rate? Do run full think off, just saves core So just Or operating you

Matthew Switzer

say mean, it's a artificially Casey. low, little would I I No.

be even I reimbursing that. still noise of in us the is million And That the for quarter from does be that other there Panacea run to think still the it million excess some some reimbursement though expense guidance also will some expenses of division. $XX.X they accrual fourth the include $XX had $XX.X in million that first rate. better previously offset won't in our quarter, would Holdings

$XX.X to best run term. million is $XX So I that would million the still near say rate in the

Casey Whitman

$X.X the But expenses referenced you consolidating just the the million Okay. Panacea, that reimbursement in that's for effect cost? of

Matthew Switzer

of to small Largely majority their expenses a vast added there they're reimbursement. couple but related were all to expense the our expenses -- while outside our are consolidated, of of of expenses their things

Casey Whitman

looking Panacea in Okay. in guess, the mean how of relationship, how sort going the here term, And forward? investment at Or dumb it's down work? does near effect you I term? to P&L going just -- just guys does not -- the for near just I the Or it the

Dennis Zember

profitability incremental little expenses from their and bottom the operating one Panacea been sales all line of hitting minus from likely fee of bit income, income sort spread The that. a plus what's

line at is average is Going times forward, capital times especially assets. the the basically their bottom total our -- rate parent. their operating now outstanding The hurdle that

as would consistently So whereas be $X.X somewhere in increase. line expect million, fluctuate. the assets until it -- to million, bottom expect pretty probably probably might and -- hitting the obviously, increasing, I'd I past, $X.X

might that. just like had or basically or forward they The If recruiting reimbursement that The quarter, funding we loan is a the if post bit operating we was growth expense lower because operating higher. we're to did establish big some provision hurdle. X little a going something hurdle

to Matt's reimbursement talking just for basically expense was catch up 'XX. that the us about So

more be our forward, Panacea higher will from be will Going and consistent. results operating they

Casey Whitman

Okay.

Just go ahead. given --

Matthew Switzer

going apples-to-apples say, we confusing. things this to the What to an I to couple allow as much do to tried very of possible you and put was last get on as I to comparison just is quarters. know is back

us. So most to expenses, right you mean, it only expense the of consolidation, have reimbursement they if I now, is and --

of noninterest the non-controlling impact So from it. line the years. XX% items only really very own a on rate division is run in expense, that those it's other And The lot the then no had still which -- because the noninterest for than if change the last line you take of consolidation below of Panacea items, items. There's in expense also -- is line. in down essentially X we all interest offset there's our the we've line

start then line So if forward, that and you're apples-to-apples, of expense to the basically and I how to kind those you that we back revenue about to the you about trying consolidation. have talked get going use think will get just with back noninterest prior items as been and to you

Casey Whitman

Got the effect you would you'd referenced include of mortgage it? it. correct? And the on million top then $XX And of Panacea, add

Matthew Switzer

would yes, consolidated. the as reimbursement of effect of It include future Panacea, level if weren't the they from

Casey Whitman

sort that? how And about where forward? just is guess, you sheet of you how are start growing, I capital Or we the about today going Could that. just portfolio potential given Appreciate think to balance Okay. should then potentially overall more? thinking the and keep

Matthew Switzer

we've quarters growth. mid-single the I couple of about Yes. digits talked know last

I growth. balance XX% for we're towards 'XX, more sheet targeting overall think around

Casey Whitman

I'll but some there's seasonality year the within outlook quarter, reasonable those you what's this revenues extent to share? ask, thing next just a for mortgage appreciate Last can

Dennis Zember

We made $XXX,XXX or or so and third the quarter. second in $XXX,XXX

we'd have quarter. third I even normally money fourth don't and mean, I think we me, in broke the would be lost the -- excuse probably higher in I than quarter. second XX% that think

quarter altogether, So some with of mortgage $XXX,XXX a we I the we little rate do I has think made the that seasonality. fluctuations I in fourth and think to But during made year. mean bit like --

Matthew Switzer

million. $XXX About

Dennis Zember

and probably to going maybe incrementally expected be burden incremental, to I expense About just given billion, million, more much $X would even profitable, could $XXX there million. $XXX it's And fixed the somewhere is be the not think, grow.

$XXX $X looks like and going which If to were $XXX,XXX million, made we Probably this million... we year, do. to able we're be it able volume to increase to

Matthew Switzer

That's would say, what I Yes. pretax.

Operator

of line question Your with the Stephens. comes from Gunther next Russell

Russell Elliott Gunther

Finance to about well. I on as XXXX, Life the particularly for start a about XX% and commentary maybe minute addressable growth on just Premium mix, wanted touch loan just the Panacea

Dennis Zember

mean and I enough bank. the I to could think think them barn, needle Panacea much for we out both Life a let I the Premium growth good get -- could of they if move larger probably

of But what on what I'd opportunities. but tell loan be. muted their opportunity you production to relative got sale is also has some flow working capabilities, he's here real and Tyler So great could agreements

our probably $XXX that to don't the know balance Tyler as will balance for that of for sheet I So Panacea. hit million much sheet, $XXX million on

the don't then Premium that probably range just the the Life those unimaginably million burden Premium in yields -- of either is finance think think I bank is sure that probably, low. And could Life the divisions. think know as getting I $XXX the market is are expense I same there. probably core just just the I remarkable, do for

core $XX It's each back. So and in in kind $XXX million of what $XXX divisions million us gets the somewhere of probably around probably the bank. to million

to the through market horses all be the we've core and that to I know or Long would love and that. there Long economy term, is knows. we is term, going potential more make be obviously realistic. the got driving there, there we're everybody -- bank, yes, I don't think sure I'll long the term, for just just the activity

Russell Elliott Gunther

That's really color, Dennis. switching maybe the And to helpful then margin. gears just

coming are at So than about rate talked you again, where the looking at a loan have growth. we're guys on the with deposits loan new much yields XX% lower you success and

in a margin Fed you as well? XXXX, that for set that to you're how what spend could with So regard second us, thinking thinking expectation expectations through in maybe trends core just funds

Matthew Switzer

the that fit. internally don't a debate know I core funds, passive Fed a Russell. There's we over have heated

Dennis Zember

. because the won bet last year is Matt he laughing

Matthew Switzer

bet. this that $XXX won think win you I going we costs. deposit it I year. just mean, that like we already to, flat, the sheet to the we've if I scenario, and million repricing higher I And growth feel to got rates balance mean, of were I'm grind moderate continue continue Dennis could give funded. alluded would essentially to we I'll margin on from Yes. think

mid-XXXs, year of will when to arguably of of the year range. by we may depending in So up rate cuts end a they a the basis points. the probably margin continue the us came couple XXX think on grind to cost couple

true lot I And whole get be the to whole I think industry, of the that's benefit as industry. think cuts shape we X curve. for of the going a rates don't an from because of

if that's that's predict, of but maybe So hard It's to we're XXX but XXX get cuts of couple rate a kind we're what thinking. to we all.

Dennis Zember

I this any just it. not think well. because both going way we're couple it think going wrote Matt the up, cuts really But is on rates then bring a going deleted down. that and in was Rates my -- overall, rate of relief. positioned I we're believe to I it I comments, numbers I I wrote and

is mean not relief I the a X% I because deposit deposit still in on fund mostly. Xs the industry mean, Fed is for going cost bring to costs.

I don't the to I high So have anyway. start deposit costs pretty dollar we're going a that beta couple don't lower to first drifting for think are dollar. just going rate of on think cuts

So...

Russell Elliott Gunther

that's The that guide would be from just framing this relative helpful, narrative. I that core margin quarter? that $XXX guys. to Well, million is appreciate follow-up

Matthew Switzer

Yes. Yes.

Russell Elliott Gunther

on capital It I'd just last and that like then buyback to just increased getting expectations getting one. seems you're And some flexibility Great. Okay. hurdles here. done. comments love

Dennis Zember

calls I I, balance we on some and come we've obviously, the that engines grow mean, sheet. these built and Matt can

levels capital to and or even flexibility new the is we especially just higher. moving lot real, a capital even tangible 'XX we're below opportunities. go real at don't capital capital capital. And determined so grab of book, are for and And to stock levels trading of have cognizant the see more We when

confident share per are earnings ratios about is capital in yes, in. are operating where that our being going, is start build said, Matt and where So going, where pretty coming to I

to -- if stock the able book, that we gain So not were we to has moved the and we anticipate and get with pretty that of active capital. tangible getting be deconsolidate off

to story little think to is of legs get it. starting I obvious a our bit

to Matt us we're capital and lets Russell, if lot So that more stock. I more, that being might our but a thinking little it prepared grow not, a are end of up own

Operator

next [Operator Christopher question line come your with Marinac Instructions] from Montgomery Janney Scott. of and the will

Christopher Marinac

the in wanted operating partially this an on I adjust Dennis $XX.X that have and you change? we further can kind but higher pre-provision appears understand, previous it PPNR you talk called that back basis this for of kind that pretax the expenses, is may we about of callers, Matt, answered operating of operating is quarter, million expense out, that the to than the because

Dennis Zember

is given saying. It Yes. was Matt what a higher touch

higher probably . to yes, million need So would end. might guide $XX% Matt But of -- add saying Matt lower range, I $XX.X you $XXX,XXX to to was that, the the And to guide million. $XXX,XXX, add could to end that -- you probably so Chris.

Christopher Marinac

Okay. Would kind on and of true any get revenue the And that's on side to there expenses. adjustments a apples? apples be

Dennis Zember

No.

Christopher Marinac

netting third Because each is to have be so about we don't against that. all other, party the concerned too

Dennis Zember

On the pre-provision. pretax

Matthew Switzer

that wanted line take And on come effect that a I there out. income item through if third-party a to you Well, the all I pre-provision, pretax there's third-party, take is customer... back. In noninterest would

Christopher Marinac

Okay.

rate? that kind of net reduction you which to run So a get kind use therefore that, to to a be of would

Matthew Switzer

in above using there. that's you're Yes. the obviously, line, the But Panacea consolidated expense if the noninterest expenses got

that as to well. out got you adjust So

expenses So the use table that's consolidated our noninterest for the adjusting if expense, Panacea. you from out

Christopher Marinac

Yes. Understood.

angles quarter-to-quarter. important got that and about is appreciate focusing the Okay. when as manage talk deposit most on What you've in this we release. And the the costs, you business one you're then that I

Dennis Zember

a incremental on deposit or... whole On cost as --

Christopher Marinac

that Or on dials X of focused yes. forward, should going you all we them? number? at to looking be Thinking And -- trying and should Correct. are core bank on turn each

Dennis Zember

this All yield about cycle, Chris, that -- bank X deposit is think the mean strongest this inverted not rate people the think Primis did X. core All we curve, fact coming for I portfolio. I sure. I -- into having mean our

on for have way platform. the through so bank one we've part desperate So dollar we're single expensive seemed we all every deposit I was our of of it platform, lower really it I is, that have as digital XX the mean, costs. this. like it's in moved flexibility because the mean the digital And much the days, region, remarkable like just I money. core remember reason we not for pretty And

And then it for the next months, seemed different. XX

on the had I growth. on spot we're things into now a think we that leveraging and sweet $X a a platform, It's accelerated at the right anything right digital rapid leveraging a of through. the I really billion is referrals little rates. lot say, now really growth where there some think getting I balance the platform not that's banks is feel of we're is level whereas the like of shine technology sort growth doing it and It's letting for, remarkable the sheet. muted, advantages so the really by the really core and really

remarkable That's why such to a of deposit costs. we level why get and -- we how incremental really

Christopher Marinac

expect it. we just being then digital would quarter-over-quarter QX? the things would equal costs incrementally, all in down come Got And again that to

Dennis Zember

beta our beta Matt think core a and I couple I balances the I mean the versus a funds on on bank probably moves. digital low first pretty platform, high has the the probably that Fed pretty are think, are probably to rate I XX% of have saying, cost

I falling you'd platform So digital which might the cost. rates the faster, think affect expect higher given

cost and/or to lower I that going -- or me, on incremental we're Fed bring to betas the the digital on products down lower weighted funds spreads average are noninterest-bearing think of the what's some the sort have business side. just are of platform new excuse selling,

Operator

turn time. this for at closing over the back We to I'll Zember have no remarks. Dennis call further questions

Dennis Zember

Thank I have great that, day if soon. you I a have any or call. comments. more With joining all our you Matt for Talk you and you hope available weekend. questions again to are

Operator

now disconnect. you joining, meeting. you today's conclude may and thank That We for will all

Primis Financial (FRST) 26 Jan 242023 Q4 Earnings call transcript