FRST - Earnings call transcript Q2 2024

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Operator

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

Second Quarter Earnings Call. [Operator Instructions].

the to turn Switzer, now will call Matt over CFO. I

begin. may You

Matthew Switzer

morning, joining for thank Good you us. and

our risk forward-looking forward-looking risk recently company's we the important Before and begin, filings which statements many be during from and are could Securities factors differ in cause of which anticipated please of filed There actual has our involve factors statements, our results the of that many our also to expressed note information results discussion comments call or forward-looking this Exchange part expectations of and section been site, other Relations our recent release, statements. Further are including primisbank.com. the uncertainty. with materially posted regarding Commission, Investor to that corporate the the will other earnings

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

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

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

Dennis Zember

across have Both a approximately results But for compared and Thank a in net have of X%, a top, our be we're today. noise, $XXX,XXX just for significant pretax when date. These controls of from when noise, a the to quarters the Matt million really Starting we some ago, have to before interest net exclude of and initiatives earnings experience quarter, of we improved lift one showing you are at loss steady will for would operating played $XX.X quarter strongest undertook we ago. Results year that bank, the you you, you all year these to Matt, results. over the the margins. joined to million real before our and -- lines that outline margins current business, board shortly. same earnings any all $X.X the the thank of part in quarters come which expense who our call core the mostly quarter from

Consolidating margin margin reporting basis, quarter in business excluding a a X.XX% net Community a quarter is the X.XX%. improved the and X.XX% On to the Bank company, of lines of digital interest a same the platform, year the -- stand-alone year compared the to 'XX current of ago.

renewal the bank's results yield dedication These opportunities loan the costs. of we the all to on can more last year so against seizing reflect focus at periods. deposit But

core from bank had the not away luxury well legacy consolidation. past banks get digital the we shined us. of it, and all as an and really having our branch funds have focus the to faced community the pressures platform in level this franchise that on the of year industry has cost in The the on has core efforts as bank through relationships provided deposit at Our the behind the let profitable more opportunity

our loans Premium deposits. lines and loans also in our business under Panacea, XX% of XX% basis, total combined deposits. platform, billion just digital great about a a $X the and million represents total total with Life Finance Our in had $XXX quarter our On of about total quarter. finished of and This

over that been funding beta as combined material see high X.XX%, combined, Xs% with periods in the strategies Funding higher-quality are these production decline, even and is new at here Incremental to lift. on high, or which begin will profitability -- confident about that the the for is high X% rates believe these have a and still the but stable in lending this costs good we that few past very loan still yields strategies. some range

Mortgage breakeven just a ago. of to a over had reporting million essentially year $X a of quarter, compared income income quarter net net pretax -- great

the last year. we During about -- quarter, was same which against year's XX% took last quarter the against $XXX locks, up about million in

Our up from came X.X%, X.X% on in margin a sale at ago. gain year

on to the we going easy. how years, in this industry believe and to quarter. $X make our We're continues going profitability and for But right will we're like we where Given potential to double and disciplined recruit offensive. We're really we be would to the recruiting rates sure billion harder improve we annually. state going in that look not is recruiting moving this volume opportunities to maybe our coming now saw side to closer like can

Tangible got improved We year. against book the about share and higher as basis PFH which per share. per pretty deconsolidate last the XX%, of per same we $X.XX which share, $XX.XX by about still me, time those to tangible can $X.XX book and ratios would record soon value is to -- value as lift shares, expect excuse tangible Matt about XX value by excited XX% but capital points, improved X.X%

as I out. close Lastly,

going on all our The digital I ]. core capabilities focus on bank's continue to the Bob operating strength advantages company deposit growth our and existing and customers other of look will in to lending [ see benefit and and new like results. believe we're continued we with first As forward, from commercial incremental progress

although results make we've are our line Collectively, -- the and business, expense some make well continue on focus net to positive. more seeing more even savings pretty or a going for age of even seen lines year. on operating the to even more just holding Our will will quarter-over-quarter, than potentially improved young, this like

wildly say sensitive, both mortgage going or us, positive I rate liability and a falling spreads softer for we're to environment will here and be sit think on but on that I'm not volumes.

the our strategies but had and lot adoption we've ideas adoption success focused with of and staying customers on -- our existing just ringing we rapid The phone our opportunities. and impressive by business on has lines a pitches are

bank the focus a more and innovative to we're than current tweak complete accounts. we on continue pivot offerings, on higher being cost, deposit pretty platform make singularly our rather lower and more familiar to deposit on relationships handful focused only community improve As our of value digital a and to offering going

right. Matt, turn All it to I'll With you. that,

Matthew Switzer

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

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

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

$X.X In consolidated quarter loss addition, was pretax otherwise pretax common this amounts income second PFH will included relative include noted. in our these quarter. to the continue and consolidation results PFH. excluding unless Results be share in or the Panacea of Holdings, million to Financial discussed

from certain Earnings and common and earnings $X.XX core per share $X.XX, per and period. share up year substantially $X.X to earnings $X.X and quarter were $X.XX for available diluted PFH million in the or ago million Adjusting second items, for respectively. onetime the were

Premium held QX, quarter driven up from and up versus June last Finance at end increased deposits billion by XX, billion, Loans noninterest-bearing to remixing. $X quarter. were primarily slightly Panacea were assets the XX. March activity. Life of $X.X slightly Average declined income for first X.X% Total Deposits X% from the due from

quarter. million quarter. X.XX% portfolio $XX.X slightly, in QX core interest Core income, in to third-party roughly net $XXX,XXX Reported last growth was net the net to in offsetting as margin accounting managed noise, X.XX% interest the from X.XX%, decreased margin, excluding excluding earning interest assets accounting was pressure noise with compared while margin

cost on X.XX% income yield increased quarter. the of Cost increased assets while X.XX%, to held deposits increased loans X.XX%, yield to for funds Core to increased to of slightly in earning X.XX%. on core while

Excluding income activity. driven an by million mortgage QX was million in of last $X.X and increase accounting increased $X.X adjustments, largely versus quarter, noninterest million $X.X

up $X.X an of quarter of $X.X excluding volume. on the $XX,XXX of reserve Mortgage Noninterest from expense quarter. million, quarter last versus last were million in was $XX.X Unfunded expenses in release and a was impact second the the million expense expense quarter, $XXX,XXX PFH. commitment higher

approximately million the accounting quarter. of accounting and costs $X.X in advisory We also incurred

be Core noninterest mortgage nonrecurring adjustments, quarter, portion the of accounting-related and SEC. These with quarter. partially last near is million restatement the was $XX.X -- versus future quarter the roughly our these due in activities items in excluding costs, also A reduced legal with activities increase tied expense the $XXX,XXX. as expenses complete along $XX.X will we accounting heavier million expenses the to heavier of in to the

The quarter. first due QX $XXX,XXX of provision down credit largely last reserves. $XXX,XXX, in from was reserve to core was The evaluated the reduction PCD were Core QX million core release for individually of release losses net net in provision $XXX,XXX quarter. in a versus [ ] approximately $X.X in a charge-offs a versus

in was points XX Lastly, quarter. operating XX ROA points the second from basis quarter, basis linked up

SEC solid optimistic related to us. the can even we difficult this behind And continue returns operating to Our we we in be noise continues as filings from put core core profitability are improving environment. here

can we With up that, open questions. for operator,

Operator

the Montgomery Instructions]. Janney [Operator Christopher question And line first from of comes our with Scout. Marinac

Christopher Marinac

ago. and just point a that Matt guess the was on expense Matt, minute I I'll start making Dennis

behind place this expense to think what number in just future noise should is think quarters? good get about. So And you we something that of lower you million Or as reported? closer to $XX-ish still a

Matthew Switzer

last of to we I where think closer have kind quarters mid-XXs. of couple guided

Christopher Marinac

Okay.

than what the normal. So is to that seeing new goes much obviously as back that profitability better we're

Matthew Switzer

Correct.

Christopher Marinac

sub-XX the of basis third-party provision, on would on then kind stuff, be provision, And point ex of Okay. in low kind area. this it particularly same true the hones where

Matthew Switzer

couple has basis, provision but and that normalize as near settle we these forecasts down out been I should Yes. a discuss economic here think our it's in third-party even portfolio quarters, when the on future of core mean -- last that the taking somewhat we down. been the up

Christopher Marinac

Got are this for it. we it talking point? hard a months? gets And is do a few have more then mean, this on I sense say of timing a Or more sort resolved? weeks, at to few when you

Matthew Switzer

to hopeful the seeing We're getting That's to kind multistep to the back which process, caught close and I'm tape getting -- filings up. us hit step, first by but -- a allow filings Yes. August. completing end -- of start we're close start will we'll in probably the it's through of

Christopher Marinac

Dennis, changing is deposit just of today then, have the you digital do you from been account And or mean and you gathering kind your ago? back kind a the normal of sort X I about X core of How there? how feel may just maybe business. it for it what out quick see to of kind and where one Great. openings months

Dennis Zember

stable a open on we money think similar seeing. still and lot what We We platform. see more little advertise. it build, from was to it's necessary a then mean mean might be rate I a think. It is digital it's mean, it amount a don't I lot a sort of driven don't in stable we we've than you that substantial of accounts want I start than technology to of -- money term. But been I a way. out. probably to of what the long more

on is, to focusing now individual But stronger traditional make accounts, bank, but implementing pivot just focused fulsome I Right just bank. products. we're we to And market other being in deposit digitally about what just, several market services, because sort adding and locally. the some it's innovative that both anything, as it's core the we're bank of more our cost sales we our mentioning think in going us really those aren't do is are going some Primis we that like on business and have community was on strategies it I as community offering. start now,

able So our wherever all in local better make and of it we're us that. to market sort in will markets of else

we not lower mean positive demonstrate still accounts. see low-cost the until We're a get lot about really accounts want. it there. pretty we're the value to for going that I cost of shareholder we -- But the all ability opportunity and open to

focused now. right that's where really So we're

Christopher Marinac

your of in is process to still you where Got imagine just want it. kind of, point And That's to the helpful. of funds made. cost you to very it I go of, the evolving kind

Dennis Zember

the I I burden what I operating operating the -- the about on mean the of is you, Yes. is in deposits community burden but expense expense tell got we've XX% mean, bank. digital will

doesn't to maybe, probably and savvy digital-oriented It below just that pushing their need thesis to way Fed below to funds. It the, need here deposits, our We are the out. really, XX profitability. used has it, So digital all more to more be really call played using basis customers XX still to Fed be. -- find above-average cost And have so profitability behind another probably Right that we're want. higher of or now, -- we funds the more a points on we be funds devices. could

-- pushing I to got from I we yield. profitability here. some have do go that. on points I to go And we don't got or our deposits XX another those [ to that's to like We X.XX% have basis So combined probably mean, real don't X.XX%, feel X.XX% We just to overall. don't we'd be ]. is down XX to go think

Operator

Inc. And with your Lorenzoning next from the question Stephens, line comes of Nick

Unknown Analyst

and above NIM you puts grow NII And declines? I about not, think still to Going are your for talk be if And expectations the just Russell Gunther. what do if in you to NIM. NIM the related takes with you the Could to able there? wanted X%? keep can start

Matthew Switzer

I plus of relative are to -- NIM Cause rate the pretty new minus coming production incremental on on pretty incremental close We as where coming about where we or we environment. earning to in assets our is talked even can keep this think in funding, Dennis terms see X. and confident, just we

growing continue for NII and funding. healthy got We growing can assets because pretty we've engines earning

the if load assets we limited but stress NII. just grow can by NII, any, don't to crush earning outpace and and then capital to we want I and mean grow compression but our there NIM NIM on So capital. grow, to continue ratios up that becomes is

it's So the we're that's right trying -- find to balance. where

Unknown Analyst

what sidetrack you Life XXXX. specifically could the overall the into for the question, for Great. are Finance, versus end? address another the sheet then Panacea balance And in Premium portfolio the this also of how to thinking plan Okay. and And you about and growth expectations as remainder then if sell you year

Matthew Switzer

been overall I a we of bit single beginning digits mean, to I were faster the think the Probably think than targeting was. been but for it's high little the year, that year, a XX%. bit at growth loan we're still I -- the lower little

happen have actually, quarter, second would for to potentially still end what free potential did want. for particularly XX% all that grow probably of -- the for We're upper quarter. have the But is working they've opportunity not any Life both whole for Premium on in they Probably -- year. We them outlets. the and the in Panacea down sales approaching would to outlets the the see So some we quarter. Finance fourth earning loan third up we in them that look wouldn't both got potential -- assets We've slowed while Panacea.

replaced the end in So if does the it Panacea selling even quickly. pretty year, if up think I -- portfolio later will be a that

for 'XX our probably expectations think I is similar.

until environment rate rate I environment get mean we rate we similar right and somewhat have challenging I cut, cuts. Assuming yield which X get now. think we still even a in we're curve if more

'XX would well. that low high probably for in we double-digit growth single-digit, as look So

Operator

are will this the Zember. at I turn questions over no call Dennis back to further And CEO, time. there

Dennis Zember

call. your for right. everybody I All and you, taking Thank on appreciate Friday time the

If Have you any and good available. are have a Matt I questions, weekend.

Operator

today's concludes conference call. This

You may now disconnect.

Primis Financial (FRST) 26 Jul 242024 Q2 Earnings call transcript