FRST - Earnings call transcript Q4 2024

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Operator

Good morning. My name is Audra, and I will be your conference operator today. At this time, I would like to welcome everyone to the Primis Financial Corp. Fourth Quarter Earnings Call. Today's conference is being recorded. time, Matthew like Switzer, this conference turn At to over Chief Instructions] I to would the [Operator Financial Officer. ahead. go Please

Matthew Switzer

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

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

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

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

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

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

Dennis Zember

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

about First was decision financially. into discussion let's and off, start this impact with of that why portfolio what moved we a held the for sale

we enough sheet. it Moving allowed mostly into to significantly balance off to that the can moved the portfolio credit this held sale and be for neutralize market cost position us

and real held book until would of in to available a we realize strategic the that and/or option host release for this serious of no on is company sold. strategic said We value in are the our market is sale like about press moving us options,

this Panacea, would alongside and orchestrated tangible company deconsolidation have like succeed. book of value the that of strategies more company's our in fact on believe we have strategic quarter. even the we this I we've and could lets marked exit right that the And outlined and focus handle our believe all it to having could I we Had improved the the this X that just only orchestrated first But on -- half wish can for working we we half really other we're that in of 'XX. we now do half quarter, of future. is

of to we that 'XX So to slog and us or soon can the more here believe through right that with couple cleaner. as kind believe we book either shed be quarters the made was ratios lower take I noticeable. would a decision decision as the operating be hit, this just the so In earnings the push position we could end,

that I year's hard selling company of go filings some obviously last quick. real hidden been because haven't I to real not and over see with our the has want we of as this some the value been of values noise because the value, of some partially recognized book. in delayed consumer

year-end. had XX, XXX deposits cost community larger That's of deposits or more competition. than $X.XX points some peers, XX billion of our only core December basis core at lower than comparably a XX easily with our it's lower of bank sized billion billion 'XX At and points to basis $X.X $XX of our bank

and Better have we reliable has enviable of yet, core bank CRE, our levels very very quality. credit

only if the community rates. core The course, and But digital core in basis attribute of to the led competition strategy lower this that points deposits grown you deposits focused be we've but that a -- result my relationships, us pricing of but higher years, cost X last to my we've strategy, has has on have digital my this to advantage. significant fund is if had slowly a banks cost surely, community of the of laser-focused XXX some bank a Over bank. than that's

was rolling consolidating those the all only the while of from our achieving consolidation. lending as new XX% XX customers and -- to we branches brand on banked XX a achieved to new with through with retention twice the side, this Even money customers footprint the I to pipeline as of existing I better year a into ended all XX% most bank. customers, the new that branch year rate is We've volume VXBE us. never have and large that coming that prior mean of from mean, over customers don't

the clean Our bank positioned good is profitable and model in markets. and in very

the XX,XXX have customers. side, nation's of remarkable not only the it's we operating results, then really, But margins, the a with that's full-service the grown one valuable. the digital account ratio can't if On fully we checking offering improvement, digital about to drive

year, yielded Last X.XX% and digital X.XX%. cost book our Premium deposits our Life

only we mean, platforms. bottom margin. provide efficient very are that basis But didn't So of these had points a meaningful of XXX I both just line. collectively,

XX right on by higher we've about points, to with forward by warehouse. deposits the the side rate reduced we've If moved now, basis points those mortgage basis asset and on you XXX fast

push this results book warehouse efficient and X.XX% the safe construction and short-term platforms as to and strategy will asset strategies. 'XX. national at scale perm, yet. we on positioned But margins we this progress build X.XX% in fully fact see with are the we isn't The to Essentially, in the range is on

consistently month growing division any been the production year. mortgage to XX% Our to XX% when compare prior has you

few and the impact from company rates that our will built where slowly produce $X to XX no of years, basis $XXX still scenario production over move billion. to Assuming results higher, moving We've ROA mortgage by XX points. million our over volumes last fall this

the offering. step instead and bonuses cautious working national with with gas strategies absolutely construction we on stingy are recruiting, signing and the could year but We like organic term

dentists. loans year, XX% into in division to $XXX under total almost -- impressively growth division Lastly, vets in These where to Panacea, reach rates are believe our on low-cost reached only chance and XX,XXX clients. to This we move a $XXX grew we focused and we as have million the to XX% end doctors, XX% and just are million funding. of accelerating XX% around the

innovative Panacea with an brought. The adoption are bank country is in a have. unrealized bank's a say to ROA doctors and PFH, have the with significant and make that we there U.S. our I with solutions have division life. $XXX in high and then of the isn't ROA doctor doctor billion very banks parent lifetime dare have banking clients than that to market more fewer value company, capture Primis a continues And way accretive the client customers for overall the value There to where that's we rates profitable innovate them for

and Matt I'd detail will in this. reconciliation, you more but discuss his with give leave you

neutralized in fourth moves costs. Our quarter the million of credit $XX

better $XX net once scale interest is million deposit of the this. to operating million and annualized costs million As to warehouses of we're today, moves incremental lowering income and at selling expense in Life annually combination $X.X number about about in from only of there's Premium. $X.X achieve 'XX, That more

are growing bank for value and strong our is core still and Mortgage most and our importantly, values profitability. central focus

and not list rather that the stated of value on done starts succeed, outlast in the cutting that. work it feels positioned we but a limping along, realize new This all to find bank good this, ways of trying harder to our to know did my have we take a to have even we the strategy massive are in like the kind would the As was results that with just It beginning, company. I'd can [indiscernible] to noise strategy. are just out and market we focused like the and achieve. posting I do to

that, will turn you with your comments. for over I Matt, to it

Matthew Switzer

you, Thank Dennis.

comparisons. some in both which SEC. our As a release In X-K of be found materials, will recent in results trends a our in can press be discussion filed reminder, with our investor and those can you financial of presentation, find of found the quarter-over-quarter

offensive the remarks reported. noise of defensive. quarter, My from to focus associated to this the various Given versus core bank adjustments $XX the both articulate are the is profitability going which morning pretax on loss closer of initiatives income to million the interpreting this and

smaller interest the reversal loss of the and mark when provision for of value to Holdings, consumer reported losses items book consumer million program not loss and additional you consumer for following provision to pretax million from $XX.X pretax cleanup. On a was consumer loss a the that consolidated moved related million. basis, $X.X charged-off fair The portion the for the are related loans on this exclude loan for of in of $XX.X we sale. loans. held fraud Panacea million included to $X.XX

Premium Finance $X activity net that Other other the related expected expenses restatements Without can't accrual approximately accounting in to related made nonrecurring release the the to $X.X not to that have we the approximately these items following: and sale million expense million $X.X million items nature of quarters. and legal press earnings $X.X and in nonrecurring include or various release continue other that the we items, from million the are initiatives Life activities subsequent discussed that item into in lump were the would of gain quarter in pretax. of business. impacted we

mortgage in After the quarter. and was at of have to net rate Premium million October end sold be warehouse the believe we The This the would Life profitability of still due bank level Finance the partially impact of made in drags. is with run replaced following fourth what these approximately will below $X.X only items, pretax the portfolio quarter. the

spread so the loss recorded mortgage remaining The in at promotional us million, approximately where had is quarter. this quarter, the quarter income. to Premium Finance balances in the first the was million year. exit promo temporary fourth approximately later we the $X but Life Half eliminated We $XX warehouse drag until in soon. the on no of average fourth will million period This of cost gets on revenue of be least loans largely of this portfolio $X.X scale

that on adjustments a to lagged was November. technology digital planned We platform to for change due rates the

adjustment in result, approximately didn't the fourth first we mid-December our rate a million of and carry quarter. $X interest mid-January. another another This As in until us X cost make

was be is will to fourth in we projected through begin to pretax more million, move flip meaningfully Lastly, first retail to quarter $X.X but XXXX. profitable of quarter mortgage profitability earnings seasonally in as the and back drag slow roughly and to a is the

or These million will in they as of If already are further growth you drag earnings on have for before closer are implemented and margin in $XX moves in pretax and building any half hypothetical expansion items strategic not these be adjust realized based XXXX. first we to the potential items, is XXXX.

move We parse but bank's to through bank 'XX the moving was have It's we we to the very fruit. believe parts, the the demonstrate fourth appreciate initiatives consumer and earnings the through our cleaner portfolio these the positions profit tackle and bear all quarter in decision hard one it. to potential right true as and

we that, the now for With open line questions. operator, can

Operator

[Operator first We'll Instructions] at our Stephens. take Russell Gunther question from

Russell Elliott Gunther

Just new could some with and takes if puts verticals given start of on entrants. growth we loan the exit the and outlook,

think the year. perm the of I deck the outlook also start sort just got new to net growth relationship is in contribute terms the unlikely for But baked a of loan maybe lot you've in this referenced 'XX? construction,

Dennis Zember

Yes, Matt, I'll start.

in can You the fill blanks.

bank, is across look year. first the the you If probably the across is this company, this

loan I've of I we I our that the or in mean, -- a and it the since focused. -- with like is that ago. end was probably bank the coming growth been mentioned the here said year in press think I loan and what on I core that release like mostly double a we're bank potential pipeline year, pipeline said we At

Absolutely. we can the in grow So bank?

I and is between somewhere the $XXX million. call million $XXX this year bank think probably it,

CRE, CRE But owner-occupied don't investor mostly is quite fact we not on digits. and just focus we're real the So C&I. double hard

We're chasing new relationships.

is as customers, not new not at just same Finance to not of mortgage or actual to end Premium in help What is so money -- calling existing disposed for the our expect value the we value we that what grow for we're well. number to warehouse can or checking as about the of. to that's is year. money grow which accounts customers we're gone, scale, existing looking So Life new just

at that So the where end the of we another against are million. probably $XXX probably year,

is I think that. the than much opportunity larger there

at that off The team the and point of sort had cut we more doubled before triple brought than that outstanding funding. some

the grow lot just capital to down. replacing for and level of there's So But loans within Premium. we're is some Life a really going year, Panacea's potential there. scale modeling agreements. Panacea flow and got securitizing this forward up of markets, opportunity

might would first what be So much secondary may you I their some a little think see get in potential for Panacea to with then grow of bit some the quarter the the customers. more in market of realize and doctor competitive

Russell Elliott Gunther

And the gears maybe just All switching right, to then helpful. margin. Dennis, really that's

a talked the Maybe about where and us this for verticals, just exits would for exit of X.XX% X.XX% entries lending similar give question, cadence time. to and margin given expect sense So to the just 'XX? year over you the you XQ a

Matthew Switzer

to to be spread terms the that book, I of But closer a in I was if in the reduction mean roll range. that we buildup fourth exited be Life in should Premium rates. over margin. you the upper and think off of year, interest but we the add as end the margin, will and before we had the X.XX% fourth it back quarter, the Finance quarter we that reversal

a consumer have you book, reasonable I Finance a book, the if but basis Premium -- yield. core Premium mean, not does The on the Life Life Finance,

be will that construction warehouse by perm. away, replaced will So mortgage that but go

said this expect amount, comes year. reduction probably deposit and see and lending and you to see fully that yields rates. wouldn't We think good some I this construction-perm the in a continued might on construction-perm have it then year with we noticeable

the and kind I through quarter then volume. margin first lines business all build expansion the those different up we're up as ticking year So mean, expecting in of

Dennis Zember

it, mean, platform. we being there last Russell, add, But And with, competition. that our asset year, is really very I'd relative I XX% the our from especially strategy decent call was also national posted funding the was our thin. fact of margins to

to what as inside I call probably moves mean obviously, the relieve well. with -- even digital side. under of a with would that. of that's depressed And think it So that we've going to I on margins. come something And that X% made was little the through ourselves those that,

account I and interest mean, level I with of and net have and Matt at still checking income won't -- don't -- when that Matt out like model of mean, model income, the end we the top we When net the -- net we interest come range. we interest said, with I that margin,

pretty to the repricing thing Matt's stay have year interest much that all for asset last -- now, deck -- the of is right all shows here income. asset we that positive the deck Matt's repricing, we assuming of

have most So we're potential to degree We not of what's a in to rates a place expect that shrink. still where interest see on fallen income we upside have renewed.

Russell Elliott Gunther

what then be the provision of the and we terms the on thinking charge-off of with takes about help the for both you Thank core puts kind in to levels? NIM. net And exit, consumer should and

Matthew Switzer

Our core charge-offs this quarter was like X basis points.

book. that the if sheet incremental a So consumer provisioning of of term. because on near still charge-off volume then largest And of whole very, the coming we're of not is think burden reserve drivers modest mortgage lot should X balance the seeing activity outside to relatively call it, probably biggest points the levels low. so basis be warehouse. XX And in you from the business very is here growth,

too high. is XX coverage Life the modeling still had. Premium arguably as think Finance But level which of reserve I a book like points, we're basis similar

$X charge-offs of covered quarter covered and a growth. maybe some incremental million probably provision So

Russell Elliott Gunther

X Got it. And for guys, then me. last

potential guys your Just referenced The kind Panacea gain. picture. and the of -- bigger you for release recognizing in and that deconsolidation comments

I think of $XX do think referenced, more last the also it's than release you million. valuation the roughly

what like for you is that a can quantify with And to to just to any today? expected then are pro sense give us So recognized. book upside tangible estimate -- able you look forma that

Dennis Zember

say more there I mean, a growth less it's whole could just what than -- I I not mean Panacea's need exhaust services to can I of the wish value we everything the is recognize I that financial time. loans did strategy say the last confidently you than deposits, client and full possibly number. confidently just and develop and a and that would life. but to for doctor solutions products

made And the is to on progress and right have we through middle 'XX the the since massive. that December now of that year

do you what know last we lot the could excitement I a have deconsolidated they're into Honestly, year, it didn't So that. the employees even probably that there. I I move And is we really have bank the And that want know for is to there. deconsolidating but any that, don't to though doing value -- results. are to means of that that we I think fall we would it the as Banking available didn't know, want the employees doing into nuance be, Service, a entity. didn't who risk for that. but see

more PFH as and substantial. become don't don't is has I time I real. know, as the we've I think has a Banking on think risk And as of Service gone

talking down it. can really out, it we think move selling we're necessarily. about. It's it's deconsolidate to That's one, selling not position. probably monetizing It's I so all And not not our just

And never just safe services about. is really sort transfer happen, some would we're some just talking deconsolidating not to way saying it and that, the that we're but into all And do to that entity. that is of employees

Operator

to Janney move Marinac We'll Montgomery next Christopher Scott. at

Christopher Marinac

Can about way. loan And one the there that standpoint? give timing to is of the recoup go me, accounting there. kind the of having we losses? the an sale? of more back more I to history to enhancements want recap along credit loss just a potential from just some go back consumer Is to these And those based

Matthew Switzer

on took mean lot that we recovery you not mean this, unfortunate whole into look addition value. I the on we charge market Chris. if modeling factors, to a core in to charge-offs, the reported, the the quarter in of charge-offs at were significant book I We're the there fair mean, move I charge-offs the

so to we're it get charge. necessarily intention on as our which amount, went but result of counting out part -- possible, of ahead soon is on. big unlikely small that something a to not recovery is in we held to that a Maybe for as moved portfolio that's this So sale and why

through will process, going we're income some still the While though. on that be there portfolio,

to it's not big a So market value X, there of it's we're that sitting portion that as assuming not adjustment say held-for-sale back. but million fair comes earning in $XX

Christopher Marinac

Got it.

Okay.

exit other the a So to the on core is more move to strategic your this lines? end decision at of day, and business

Matthew Switzer

Exactly.

Christopher Marinac

Yes.

Okay. is and else strategic seen strategic of was I anything something or here? changes the last just that And you're core the from and release wanted night, beginning the executing review strategic then there that press else bank front, done we've the if on verify you've or sort now the to and of the on on

Dennis Zember

I I mean, things base, I there we other operating are have we're mean, the to revenue. not trying are we that are just every doing. mean, we with expense obviously, strategically, improvement drive

So we expense the sort on efficiency strategies are focused of hard some side. on

not that I grew we One I with lower the digital would platform? to there XX% about we're digital we if funding strategy be in chance we're I mean cost -- our did baking or not XXX thing account, mean on on a basis to X%. closer is, incremental is of that talking digital. here spread a we'd just of points of mean funding checking drive

modeling strategy not some we're But hands I realize to here do not have mean either. We that. are So our sitting that. on we some of

mean, we're talking And that, some we're but -- yet I that not and strategically. some about it of it modeling can see is of I not

enough we the really, the can bank is be first core meaningful the core On to bank confidence results. time, Chris, our that had side, this that

help probably we going to our the opportunity. in in some there's lenders telephone And And is our disruption recruiting really that's that. and tell new for are so markets region, you that would ringing hard I there's been

at through strategically, core say on the digital I'd checking are that more getting So accounts -- we're doing really and focused platform. already bank recruiting the opportunity things the the

Christopher Marinac

of mean the is that what I you bank X year leads could on mix in or Great. you versus like would digital bank. from X where to follow-up guess my deposits the I be the question of Or would now? say it And deposits. terms core

digital. $X $X billion the of core at and about the thinking the the Just and change billion roughly

Dennis Zember

on were the -- years X side. core to to there don't get -- talking to stay core and bank, Probably aggressive did to core up only I to hard able give We're the We going probably going at growth and -- bank. in the on $X.X probably this that relationship. accomplish the see we would laser-focused you're get $X.X billion out do billion fact want from like we're not that now, anything

and digital I for the So think I that $X.X and there, we've $X of lower and next stuff XX% sort what probably there a to on of we're can don't to we we're billion. with we side thing couple change now. of rest only as to have take got that kind year what it digital grow the really think the it's we from We really funding of now is the the Really have commercial sort side. just the with -- relationships well business of then cost XX% do the need focused doing mix years on. billion so new grow right That's what

We're We're we not or $X looking focused in when to $X $X the or on billion out deposits try billion that comes try before are $X.X mix to bigger. to of driving billion. to the billion we $X.X materially just really there include tweaking that all profitability and of get billion really grow Panacea

Christopher Marinac

down. as that on And last with costs has come X quarter, quarters started last already have the the those really evolution mix

Dennis Zember

correct. yes, Yes,

Christopher Marinac

Got it.

where about on I ask: then do just I earnings year see lot you should you contributor size Panacea; in that see a X. you about, the guess, already deposits And know of to talked but Panacea then looking the talked where X Panacea, Okay. Russell's b, this moves beyond a, and do wanted deconsolidation grow I or of terms Matt at questions, doing to, the that with some and out

Dennis Zember

year last this the I to more mean than year. I it's earnings, think be going profitable to contributor

we good have and for don't It's they mean their [indiscernible] to sheet want as them want I sources. for balance both Primis' alternate with -- us overwhelmed think don't I business.

on sort that. we profitability, think I I we're of don't $X we're million away So peaking million probably think or -- but from $X

have and that when I the there branch, deposits doctor mean we -- I lifetime technology. never I have doctors, we're material accounts mean exhausting that value been almost services, the chances have going approaching about have to on of several very a lot financial checking more ancillary vets dentists real. I than talk mean, have are XX,XXX have of think client, a X a introducing centers services. of the growing in

it that is thing devices technology kind focused. So doctors it technology of And hit the and quarter all really, was deposit really seeing fourth some a this new where growth. immediately half of almost of of year, started second technology the mostly their lift in deposit

accounts. Panacea just They They is life. checking $XX,XXX. commercial selling is servicing bankers exceptional not there have at checking checking -- they treasury account more have ancillary real Average them account. the time, they're real plain services commercial have all

I think with sheet well, possible. pipeline balance -- not funding deposit So deposits I all is of I mean, is mean, their their

lot over that. they're to XX%, probably But that listening, could probably sure is see of now, maybe XX%. funding [ right moving That more see than like it XX%, could a I better XX% deposits their time, I ] Tyler I'm even --

Operator

our I over will And Q&A Zember closing to for conference back that now remarks. concludes session. Dennis turn the

Dennis Zember

I available the day we'll you, conference and everybody today, Matt and all [indiscernible] Thank be Janney tomorrow. at are

have available. a good Thank right. day. All you or we Have are any questions comments, If you.

Operator

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

disconnect. now may You

Primis Financial (FRST) 29 Jan 252024 Q4 Earnings call transcript