FRST - Earnings call transcript Q1 2024

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Operator

Thank you for standing by. My name is John, and I will be your conference operator for today. At this time, I would like to welcome everyone to the Primis Financial Corp.

First Quarter Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Matt Switzer, Chief Financial Officer. ahead. go Please

Matthew Switzer

thank Corp.'s and joining for us Good First you Quarter Financial XXXX Call. Webcast Primis morning, for and Conference

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

forward-looking statements discussion Exchange important corporate our the Further our filed site, of the information filings has recent to factors company's Commission, which Relations been also recently and part other and are primisbank.com. with of risk our earnings Securities our release, section Investor posted of regarding the including

statements or the of to reflect We to obligation changes undertake over no changed unanticipated occurrence forward-looking to time. events operating revise update results future assumptions, or

the measure we non-GAAP relates In measures readily GAAP comparable financial addition, discussed used apparent. measure if How not is discuss are to a measures. financial some non-GAAP measure when the will this most morning non-GAAP of that be the may

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

Dennis Zember

up saying I And to Thank call see all year. last you, it's our such satisfying everyone start think lot improvement. very to today. added changes plowed material we've those that. to that how company Matt. by joined appreciate I over the a I appreciate changes just of that our want to And have I

compared want ago. on improvement pre-provision -- by where serious color were come headwinds the we pretax showing expense $X.X the I'm of more a I this When to million this that been. -- I the consulting add look little unique given to services That improvements that I have these cost how when from. year give back improved industry's substantial a about quarter,

the branch retained infrastructure XX% of Last XX% and results deposits. core bank outstanding. those about year, the First, still it bank's consolidated are of its

our quarter, the of results impacts level. in these the a which franchise. is the a -- the the out X.XX%, which deposits excludes cost when just which margin, still down separate impact at fourth core came deposit franchise, X% third-party core is Our bank's but portfolio above the from Driving deposit of of core only of you national posted deposit X.XX% interest-bearing our touch

deposits most base of peers, customer of than XX and cost the This speaks about basis lower interest-bearing franchise. volumes is points our our XXX regional between of it quality and our and

to with on pipelines are other and deposit side, technologies relationships. the VXBE leveraging where Our win heavily our sales focused meaningful advantages we are

about in fund Panacea growth about quarter now that able recognize compares multiple entire Their balance of but that that year in $X.X Secondly, approximately over deposits and pipeline their of Holdings stronger deposits where we ago. pipeline in the after still past soon year tax to same book have value market book $XX $XX,XXX value. a as and buildout pretax growth earned capital loans, to, is has million sheet. favorably remarkable, Their of their million Financial We recognized result raise. been Panacea of to loans expect deposit made a technology they their especially was possible the the as we quarter, have the improvement intangible not but deconsolidate and than direct be which in only XX% by it's on

at $XXX,XXX year a operating built mortgage last excellent quarter This to expense capabilities. when tweak compared all for industry I expect rates capacity an and or and the in technology of in in division quarter our and quarter ago. year begin earn want about the first build keep the first their to same lower revenue XX-year division be to or for allowed year this for that is singles just loss result And that, rates above with doubles to the recruited right hitting we mortgage X%. Our $XXX,XXX fall. through a tweaked with burden. they of ready and the rates secondary particular to to boom pretax continue recruiting the of That now and and in

Lastly, customers. ahead process yields our for of burdens production business sector's remarkably in with year up and finished Premium XXX fastest Finance cash income basis results are managing the points are Driving CRE. period the and about XXX% is quarter $X.X This low their digitally-oriented current a pretax expense with about from ago. $XXX,XXX most same facilitators that secured easily those division million, of operating the

it stronger. region any Without I one come fully last reason our much -- about strategy multifaceted strategy to looking just company we operating this already improve where that is more the lot tweak concept that a success. slate this We're question, better complexities. we drive one level, from or to our results. we the year and for think not looking the through just dependent says the our that success, consolidated for we or are on it's that emerged add results not have are to the instead and enjoy At just

With All to will right. Matt. turn I it that, you, back

Matthew Switzer

before quarters is incorporate now will SEC Q&A. preclearance previous disclosed pending will financial purposes. the discuss overview to as an These as accounting Thank preliminary, for you, consistent of reminder, previously comparison turn our But results methodologies Dennis. we I a process. we information provide our results

portfolio related an include third-party quarters, these different in first to expense. noninterest amount included included a offsetting related net that results adjustments As across line in in previous this income $X.XX the to portfolio items. with In is managed various interest quarter, million

exclude losses In amount this of included following related an to noninterest will In amounts. with addition, items core references these offsetting the the portfolio for million $X.XX provision credit in to income. discussion,

consolidated will be of of that's in income $X.X is discussed $X of continue In our $XX,XXX our the results. amounts PFH. noted. income to Results comprised This these included quarter pretax Panacea excluding of Holdings, million. or loss addition, PFH unless share, consolidation common include million relative consolidated Financial this results and to noninterest included and approximately pretax financial noninterest expense in was otherwise

December With that, diluted share, were from March XX, onetime were diluted per earnings first $X.X Total $X.X earnings million in period. Adjusting for billion $X.XX per and per $X.XX versus share available items, million common core quarter or for the and up certain the substantially $X.X and respectively. or PFH ago assets were earnings year slightly $X.XX XX. up at share to

of in the and up for loans quarter balance of March increased declined sheet billion $X.X program X% Excluding loans XX. the quarter quarter. at in PPP $XX and roughly deposits million Panacea in slightly deposits fourth QX, X% off after loans to were selling approximately loan net approximately sale, of million. annualized $XX Deposits approximately million balances held the $XXX the sweep from Noninterest-bearing in

yield to increased of XX on core increased in funds on yield held portfolio to Core while offsetting day third-party less $XX.X X due deposits points QX increased points million X.XX%. $X.X only interest basis margin with X.XX%, X.XX%. to net basis basis points increased Core interest assets and basis calendar million net points funding to from adjustments in to basis increased increased income, managed decreased the X.XX%, Cost X Core QX. points earning partially XX to for costs. decreased cost excluding to accounting X while X income of loans yields loan X.XX%

quarter Excluding QX increased Noninterest included on expenses $X.X Unfunded net largely up quarter income PFH. Mortgage the sale. $XXX,XXX was due in Panacea million accounting revenue versus in excluding was reserve mortgage the noninterest volume. loan on $XX.X sale higher first Noninterest of quarter million adjustments, versus million, also in expense activity. $X.X million quarter, this this was of included QX, million income the gain to $X.X quarter. $X.X from commitment last last expense number $XXX,XXX $XX,XXX from

for in expense, noninterest mortgage $XX.X accounting with the items versus $XX.X million line in was Core previous expectations. nonrecurring and and excluding QX quarter million adjustments,

More the we importantly, noninterest versus was period, made core base ago have strategies. rightsizing growth executing strides on quarter expense this lower while the by approximately XX% the expense demonstrating substantial our year

$X.X smaller QX last build QX provision softer when versus economic under modeling The a much influenced forecast allowance of particularly provision our charge-offs core QX. approximately core versus from losses $X.X net Core reserve by $XXX,XXX CECL for million down in was forward million in was net for QX unemployment. were $XXX,XXX, The credit quarter. in projected

points operating in optimistic year improving period. ago earnings profitability and this we versus from the remains even offsetting in Core core pretax we operating assets basis quarter, was continue first the environment, profitable Lastly, XX% was returns quarter first quarter linked here. million and in XX were X% solid in Mortgage core the million QX. the fourth the on roughly a pretax swing $X return provision. an increase pre-provision in nicely average up Core with are can versus quarter, difficult $XX.X

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

Operator

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

Casey Whitman

ask, I'll update just might any of First you is for timing to Panacea? be deconsolidate all, able when on there the

Matthew Switzer

that I can't We're say in the quarter, second it's third quarter. in be would the hopeful it Casey. possible definitively

Casey Whitman

you this deposits? go walk growth? deposit us have breakout digital of noninterest Okay. sort much How the Are deposits mean, just appreciate the sort I'll through that. through deposit faring? in the walk bearing how Maybe you of I I Just core seeing -- the towards sort us some you of growth can quarter, are this quarter.

Matthew Switzer

that we were sweep in bank some sweep call balance deposits $XX declined last we quarter. but the deposits core in Actually, from Yes. amount all it, Average quarter. $X.X $XX The were core off relatively or the the million flat. down, million, about million sheet,

sheet digital platform. And margin. balance large a the least by not the pickup, within on at So then

-- consistent. If been deposits cost you have look at the digital relatively the

was -- and of similar core about think the bank in But seen cost The in our this did quarter. interest-bearing last average about up deposits XX peers. quarter, basis across tick cost our versus of XXX deposits total points up, quarter. the bank digital was XXX core activity on we've I

Casey Whitman

slow, see of to least far at cost this of to March kind start pace so you deposit or in Are month? starting that increases

Matthew Switzer

think as the extent. a hopefully, not in lot into margin year, quarter. rate of Yes, second quarter, a cut more we're and towards the I'm even flattish I thinking more we're no to optimistic going of probably we the expansion I a certain to have as latter go in -- half margin mean, the environment. as expansion

Dennis Zember

come we deposits. takes that the don't of Every if that compression right probably little, little coming accounts got I And Casey, -- below pricing I'd opening those day, I add we're accounts a what that -- again, more have to so don't we a those happening. a core we I about of good. needy probably in off pressure the value digital is add again, XXX see it, desperate, bank's platform, are the word -- I I but Yes, which the we're of between, I want and lot week, back deposits to on opening probably call use why margin mean accounts with -- and the that cost each somewhere advertising. Each for XX $XX,XXX that's X%, is, see would more don't somewhere think would bank, are of to no do in core the averages. franchise think

-- where this may it start see get I even we I right So in got don't on moving loan like be don't the view. really -- have to in Matt to we're funds here. we a don't a I going or place don't to with coming the and think pipeline, quarter feel demand But I

Casey Whitman

adjusted. core but there, be of a it or You outlook accurate? hoped that margin, your core sort run of you're you and sounds there rate, expense of for like had from where threw Would a Matt, XXXX sort somewhat from lot meaningfully be to core near a that out hasn't fees, numbers

Matthew Switzer

Yes.

Casey Whitman

this Okay. low any And I coming credit that a one major classifieds I'll of level. just address quarter anything or But any did ask you in of sort you the upticks want to migration nonaccruals or very there? are -- recognize more. off see

Matthew Switzer

$XX.X million an level million mention can at up, tell not low but not. unusual We last this relatively our our call declined still of it, substandard from XX.X what did actually activity. versus quarter. you $X.X XX.X which is base, to $XX risk And then quarter, was million special a quarter, I last -- And roughly rated so

movement of of bit little no but directional a net-net, swings. out buckets, and large in So

Operator

The Scott. Christopher question of Janney from the Montgomery from next line Marinac comes

Christopher Marinac

I'm question. up left on where going pick credit to Casey the off

think just structure? saw we it sort of losses, an that build quarter, reserve because was you'll of this the was of or do So it you out abundance higher this prudent have caution, at is

Matthew Switzer

of rest on charge-offs, then I an reserve credits. of core specific it, the about that build the mean was increase -- some individual And it the was reserves core in like $XXX,XXX-or-so of provision of build. reserve was obviously. Half

we And was bit But huge other average of recently. number. the under had been $XXX,XXX, that this substantial, on $XXX,XXX forecast not just weaker mean the did not the had than CECL. front other the those other see half, quarter, model-driven and forecasts about not have roughly We our little Moody's And then in a a So of forecasts, under end but factor were the they a a does methodology reserves. I seen our banks it build, release. model. releasing reserve with into just

Christopher Marinac

over Would the we look we run party, the the that saw that a outside expect at Perfectly a near is of for charge-offs fine. And of good you this guess, the be cycle? core I course if to the higher rate term? quarter little third

Matthew Switzer

good there. a it run Hopefully, that's probably down I rate. will from be think

Christopher Marinac

then has get Got develops? What think it. a bit it rate deposits you at just does margin. question new door? do as quarter sort money And in of that last next do to cost back little to off the And of kind just this may incremental that, the with new

Matthew Switzer

you take you we're a or on depends it? that do it. I'll to want to do do me It of avenue want Dennis, the stab Chris. pursuing, do

On incremental it then Xs. in low efforts in the driven. of commercial core is of probably our the bank or is still cost bank, in or around digital core And depends the markets most funds -- local on our X platform,

success we've X. coming using get I can interest-bearing account X, they're customers. even of our referenced those of had lot we remarks, if his Dennis below an getting offers, in corporate technology some a by particularly And think customers sometimes business well into

the money -- probably the dollars it's incremental to in all pulling weighted those get an in. time the just raising levers all we're to So mid-Xs basis. we're low average on But

Dennis Zember

yes, mean, Backing bit very bringing $XX was on that's we're digital I kind $XX marketing do I eloquently, the on we money we're it in million Yes. there. sorry, with Matt, I but mean little digital can probably a what the X checking. I'm side. on without think quarter in I -- just or side, of we million, speaking I Matt to mute. And a can anything, the up said. probably probably do call million high of Xs mean any $XX

And the it's On right. technologies bank is and side, core Matt they quarter our as is $XX but core cost deposits total bank, million what -- especially checking the other not probably, side, total core rates bank it, -- down the exactly the blends accounts. VXBE has the bank some mean incremental. I now, like of the total with for call expensive a on right of are whole of just that's the that where moving and that reliably,

dilutive I things bank I that's a to on Back lot to the we're this. margin. mean like-minded think margin. I question Casey's of about that a doing are the in and don't Matt X%

accretive and dent incremental that. be funds think I really in incremental repricing one-off and the there place, that. may our good of are It think lending levels for our here But to actually. a sure, cost and I we're

Christopher Marinac

Great. That's the of And that about digital you've channel all the kind pace years. function laid a the groundwork very in couple in of you're that helpful. talking is past of the

bit little bigger? possible be So that, could over number a it is that time,

Dennis Zember

digital will and mean, still I first restrict to on pretty has we we're banker we to service yes, mean contact. customer still just because every we're deposits absolutely. -- still the a introduce trying open of actually that amount I customer be trying that this,

mean, the which customers get helps. accounts name that believe really customers opening next not really have lower of are to And point, customers. do those phase in digital going of referring in introducing not and that we're bring never and we point, this, term to is we're this have, accounts. are that reasonable open an but it, gets they've your will the we're sort longer of longer We I out going platform. Really, increasingly, are we we costs. the But our It's it. concepts recognition, there, market bank the and do and said we heard your the of. avalanche the customers it's activity that. not marketing on this we're deposits -- more you mean oriented XX,XXX So mean, I But to do of checking what name probably see. I We've Chris, amount better we more that customers the this other a account to limiting opened long to not marketing this. call XX,XXX

Operator

from comes Stephens. the from Gunther of The last line question Russell

Russell Elliott Gunther

I growth year. the for expectations your wanted loan to ask about

you gain strategy on mix volume and could sale in? and factors talk If then about this how your

Dennis Zember

Yes, core start. A got existing some I'll bank lot of opportunities. loan definitely that with the think -- The is I customers.

industry's cautiousness and of probably mute bank. of kind core to cautiousness investors see we balance out estate the on I the think sheet can the CRE honestly growth going real is see

think Premium we trying could digits. we're really got we're a but between much. not talent I loan We of little, -- Premium growth to Premium take -- kind of that probably think Matt? -- total Panacea to maybe Finance we're trying And those I mute Life growth there's kind and that's could think loan where no looking probably the Finance. for has Life I levels volumes, same Finance high Life single

Matthew Switzer

Yes.

loan imminently and think digits, net maybe low said digits still quarter, sales, I net XX-ish double we percent growth, to doable. I last of high single think

Russell Elliott Gunther

just high growth you single-digit, that remind couple use it, follow-ups. the balancing potential kind capital, just hear potential Panacea. double-digit low to of of loan with buyback activity? on the of of for maybe the then a terms us And guys. timing I I Can Okay. you appreciate deconsolidate of ability in

Matthew Switzer

gain, that best capital, be tangible value, mean that will get continue I book growth buybacks trade or a if discount at meaningful it evaluate definitely more much we attractive. we when use to the we buybacks. become Well, for to obviously

Dennis Zember

Probably ideas. move the strategic -- buyback move the would list of way up probably

Russell Elliott Gunther

response on good. materially to year for Okay. last start Matt, touched And just 'XX in to one adjusted. overall the then you hasn't the Very given question, me. outlook a

can of ROA us that basis? sustainable remind we of all you together, to your So X% as achieving this timeline a target on fold just

Matthew Switzer

that's that believe still of We at end year. the this doable

that say. of to the dependent 'XX about we hard we've think -- that's environment. half get. somewhat fourth kind of It's level, where can talked to upon latter I the think So quarter, get we or third pretty whether -- to it's But margin consistently on still

Operator

there to are back As like no remarks. the questions turn this further Dennis time. closing to at would Zember for over call I

Dennis Zember

Okay. the Thanks that I day, again for of some joined and Matt expressed any really everyone the and the available interest. time. rest call are

if soon. any good you us hope have call weekend. more questions, you We'll talk So have I otherwise, to a you

Operator

This you conference participation. today's call. your concludes Thank for

You may now disconnect.

Primis Financial (FRST) 26 Apr 242024 Q1 Earnings call transcript