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  Title	Primis Financial Primis Financial Corp. Reports Earnings per Share for the Third Quarter of 2024 (PR Newswire)
  ID	3582299
  External ID	7244531801
  Author	Unknown
  Published Date	Oct. 24, 2024, 4:15 p.m.
  Summary	Announces Sale of Life Premium Finance Division Announces Expansion of Mortgage Warehouse Lending Team Declares Quarterly Cash Dividend of $0.10 Per Share MCLEAN, Va. , Oct. 24, 2024 /PRNewswire/ -
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  URL	https://www.placera.se/placera/pressmeddelanden/2024/10/24/primis-financial-primis-financial-corp-reports-earnings-per-share-for-the-third-quarter-of-2024.html
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  Content ID	1895171
  Key	019dc2a5-6c9a-434b-bd47-11e8c6991c94
  Content	Announces Sale of Life Premium Finance Division Announces Expansion of Mortgage Warehouse Lending Team Declares Quarterly Cash Dividend of $0.10 Per Share MCLEAN, Va. , Oct. 24, 2024 /PRNewswire/ -- Primis Financial Corp. (NASDAQ: FRST) ("Primis" or the "Company"), and its wholly-owned subsidiary, Primis Bank (the "Bank"), today reported net income available to common shareholders of $1.2 million or $0.05 per diluted share for the quarter ended September 30, 2024 , compared to a net loss available to common shareholders of $6.0 million or $0.24 per diluted share for the quarter ended September 30 , 2023. For the year-to-date period in 2024, the Company reported earnings available to common and diluted earnings per share of $7.5 million and $0.30 , respectively, compared to $0.3 million and $0.01 , respectively, in the same period in 2023. Earnings for the three month and year-to-date periods are highly affected by the Company's corrected accounting for a third-party originated consumer portfolio. Earnings for the three month and year-to-date period in 2024 include $0.8 million and $2.2 million , respectively, or $0.03 and $0.09 per diluted share, respectively, of after-tax nonrecurring charges versus $11.3 million and $12.5 million , respectively, or $0.45 and $0.51 per diluted share, respectively in the comparable 2023 periods and inclusive of the goodwill impairment in the third quarter of 2023. Adjusting for these items, operating net income available to common shareholders was $2.0 million (1) or $0.08 per diluted share (1) for the quarter ended September 30, 2024 , compared to net operating income available to common shareholders of $5.3 million (1) or $0.21 per diluted share (1) for the quarter ended September 30, 2023 . For the year-to-date period in 2024 when adjusting for these items, earnings available to common and diluted earnings per share was $9.6 million (1) and $0.39 (1) , respectively, compared to $12.8 million (1) and $0.52 (1) , respectively, in the same period in 2023. Sale of Life Premium Finance Division On October 24, 2024 , Primis Bank and EverBank, N.A. ("EverBank") entered into a purchase and assumption agreement whereby EverBank will acquire the Life Premium Finance Division from Primis Bank including all the associated loans, except for a subset of mostly fixed rate and rate-capped loans retained by the Bank, and the operations of the division, including its employees, for a premium of $6.0 million . Primis Bank expects to record a pre-tax gain of $4.5 million net of advisory and legal fees in the fourth quarter of 2024. On October 31, 2024 , EverBank will acquire approximately $370 million of loans from the division with Primis Bank providing interim servicing until the transition of the business at the final closing which is expected on January 31 , 2025. Between the first and second closings, EverBank will purchase loans generated by the division in ordinary course at par. After the second closing, EverBank will service the Bank's retained portfolio for the duration of the portfolio. Dennis J. Zember, Jr. , President and Chief Executive Officer of Primis commented, "Three years ago we hired a set of professionals with a vision to build a tech-forward solution for life insurance premium finance. This platform has been widely accepted and used by the industry's facilitators to such a degree that its opportunity is bigger than our balance sheet. EverBank is known for investing in scalable businesses with attractive risk-adjusted returns which makes our life premium finance team a perfect fit." Mortgage Warehouse Lending Team Expansion In early October of 2024, Primis hired a seasoned team of mortgage warehouse lending professionals from a larger bank with a very successful track record in this space. While Primis Bank has had mortgage warehouse lending capabilities for some time, production had been limited while the Bank searched for the right leadership. Four key individuals have joined the Bank comprising sales, operations and portfolio management with another four to five support staff expected in the coming months. Commented Mr. Zember, "Mortgage warehouse lending as an asset class has very attractive returns and limited losses. With several very large banks exiting the space and mortgage volumes projected to increase substantially, we believe this is a perfect time to expand our capabilities. Knowing the team we hired and having visited quite a few of their customers, I believe we can replace all of the life premium business we are selling with yields that are 125bps to 150bps higher. I expect the credit results and operating expense burdens to be similar so we believe the bottom-line impact will be significant as we scale this operation." Discussion of Results The following table highlights selected financial data for the last five quarters: 3Q 2024 2Q 2024 1Q 2024 4Q 2023 3Q 2023 Return on average assets 0.12 % 0.39 % 0.26 % (0.85 %) (0.62 %) Operating return on average assets (1) 0.20 % 0.50 % 0.29 % (0.79 %) 0.54 % Pre-tax pre-provision return on average assets (1) 0.85 % 0.78 % 1.02 % 0.96 % (0.33 %) Pre-tax pre-prov. operating return on average assets (1) 0.95 % 0.92 % 1.05 % 1.01 % (0.30 %) Return on average common equity 1.28 % 4.06 % 2.62 % (8.43 %) (6.11 %) Operating return on average common equity (1) 2.11 % 5.18 % 2.99 % (7.91 %) 5.35 % Operating return on avg. tangible common equity (1) 2.80 % 6.93 % 3.98 % (10.53 %) 7.35 % Cost of funds 3.25 % 3.16 % 2.97 % 2.85 % 2.75 % Net interest margin 2.97 % 2.72 % 2.84 % 2.86 % 2.70 % Gross loans to deposits 89.68 % 98.95 % 97.37 % 98.45 % 96.37 % Efficiency ratio 83.22 % 82.62 % 77.41 % 81.31 % 108.50 % Operating efficiency ratio (1) 80.35 % 78.86 % 76.17 % 79.43 % 75.17 % As disclosed in our recent filings with the SEC, the Company has corrected its method for accounting for a third-party originated and serviced consumer loan portfolio (the "Consumer Program") and in which the separate agreements comprising the portfolio are treated as separate units of account (See "Critical Accounting Estimates and Policies" in the Company's 2023 Form 10-K). A subset of the Consumer Program has promotional characteristics where interest is deferred during the promotional period and is waived if the customer pays off the loan prior to the period end. In that event, the third-party reimburses the Bank for the waived interest. Until the end of the promotional period, the Company is unable to accrue interest on the loan under GAAP but does record a derivative representing the fair value of expected interest reimbursements from the third-party. Credit costs are also fully included in the Company's results, including estimated life of loan losses required by ASC 326 while potential credit enhancements from the Consumer Program are only reflected as received. Total outstanding balances in the Consumer Program were $180 million as of September 30, 2024 versus $194 million at June 30, 2024 . Net Interest Income Net interest income increased approximately $3.2 million , or 13%, to $28.0 million during the third quarter of 2024 compared to the second quarter of 2024 largely due to increased interest recognition on previously deferring loans. For the third quarter of 2024, the Company reported a net interest margin of 2.97% versus 2.72% for the second quarter of 2024. Interest income increased 9.4% to $57.1 million in the third quarter of 2024 compared to $52.2 million during the second quarter of 2024. At September 30, 2024 , $60 million of loans were deferring interest due to a promotional feature. The Company recognized $3.0 million of interest in the third quarter of 2024 from promotional loans that were deferring interest and then began amortizing. In addition, in the third quarter of 2024, payoff of promotional loans triggered reimbursement of $2.5 million of deferred interest that was recognized in noninterest income. Promotional loan balances of $17 million and $21 million will reach the end of their promotional periods in the fourth quarter of 2024 and first quarter of 2025, respectively, after which loans with a promotional feature will decline to a nominal amount of the Bank's portfolio by the end of 2025. Yield on earning assets and loans held for investment were 6.06% and 6.31%, respectively, in the third quarter of 2024 versus 5.72% and 5.91%, respectively, in the second quarter of 2024. Interest expense increased $1.7 million to $29.1 million in the third quarter of 2024 compared to the second quarter of 2024 largely due to an increased reliance on FHLB funding during the third quarter. Cost of deposits increased 6 basis points to 3.04% in the third quarter of 2024 from 2.98% in the second quarter of 2024. Cost of funds was 3.25% in the third quarter of 2024, an increase of 9 basis points linked-quarter. Noninterest Income Noninterest income decreased during the third quarter of 2024 to $9.3 million compared to $11.2 million in the second quarter of 2024. Included in the second quarter of 2024 is approximately $0.9 million of bank-owned life insurance income due to a death benefit payout. Income from mortgage banking activity increased $0.4 million during the third quarter. Offsetting the increase in mortgage banking income was a reduction of $0.4 million in service fees and $1.2 million reduction in income related to the Consumer Program. Noninterest Expense Noninterest expense was $31 .0 million for the third quarter of 2024, compared to $29.8 million for the second quarter of 2024. Noninterest expense also includes consolidated expenses from Panacea Financial Holdings ("PFH"). Management considers the core expense burden of the Bank that adjusts for certain items such as those that are volume dependent (e.g., mortgage banking related) or nonoperational (e.g., changes in the reserve for unfunded commitments). The following table illustrates the degree to which the Company has managed its operating expense burden during 2024: 3Q 2024 2Q 2024 1Q 2024 4Q 2023 3Q 2023 Reported Noninterest Expense 31,045 29,786 27,538 27,780 36,950 PFH Consolidated Expenses (2,666) (2,347) (2,119) (2,813) - Noninterest Expense Excl. PFH 28,379 27,439 25,419 24,967 36,950 Nonrecurring / Goodwill Impair. (1,352) (1,453) (438) (165) (11,350) Mortgage Expenses (6,436) (6,084) (5,122) (4,785) (5,108) Consumer Program Servicing Fee (699) (312) (312) (312) (312) Reserve for Unfunded Commitment (96) 546 2 (554) 257 Total Adjustments (8,583) (7,303) (5,870) (5,816) (16,513) Core Operating Expense Burden 19,796 20,136 19,550 19,151 20,437 As noted above, the core expense burden decreased $0.3 million in the third quarter of 2024 from the second quarter of 2024. Core expense burden was $19.8 million , in line with the average for the last five quarters. Loan Portfolio and Asset Quality Loans held for investment decreased to $2.97 billion at September 30, 2024 , compared to $3.30 billion at June 30 , 2024. As noted above, the Bank has entered into an agreement to sell approximately $370 million of life premium finance loans and which have been reclassified to loans held for sale at September 30 , 2024. Including these balances, loans held for investment would have increased 1.1% unannualized in the third quarter of 2024. The Panacea and Life Premium Finance divisions had loan growth of 4.4% and 11.1%, respectively, in the third quarter of 2024. Nonperforming assets, excluding portions guaranteed by the SBA, were only 0.25% of total assets, or $10.2 million at September 30, 2024 , compared to 0.25% or $9.9 million at June 30 , 2024. Loans rated substandard were $47.6 million in the third quarter of 2024 compared to $15.5 million in the second quarter of 2024. The increase was largely driven by a single commercial credit that has experienced slower lease activity past its construction phase. Management evaluated and valued the property using conservative cap rates and lengthy times to lease and included the shortfall in its specific reserve. The Bank had no other real estate owned at the end of the third quarter of 2024. The Company recorded a provision for loan losses of $7.5 million for the third quarter of 2024 versus $3.1 million for the second quarter of 2024. Of this provision, $4.0 million was due to Consumer Program activity. The remaining provision was due to specific reserves established on individually evaluated credits, approximately $2.2 million of which was tied to the commercial credit described above. As a percentage of loans, including life premium finance loans classified as held-for-sale at the end of the third quarter, the allowance for credit losses was 1.53% and 1.56% at the end of the third and second quarter of 2024, respectively. Net charge-offs were $8.0 million for the third quarter of 2024, up from $5.0 million for the second quarter of 2024. Consumer Program net charge-offs were $6.7 million in the third quarter versus $4.4 million in the second quarter of 2024. Core net charge-offs, excluding those losses from the Consumer Program, were $1.3 million , or 0.15% of average loans, in the third quarter of 2024 compared to $0.6 million , or 0.07%, in the second quarter of 2024. Deposits and Funding Total deposits at September 30, 2024 decreased slightly to $3.31 billion from $3.34 billion at June 30 , 2024. Importantly, noninterest bearing deposits were $421 million at September 30, 2024 , up slightly from $420 million at June 30, 2024 and in the face of substantial remixing activity towards interest bearing accounts. Deposit growth in the Bank continues to benefit from better technology and unique convenience factors. V1BE, the Bank's proprietary invitation-only delivery tool, increased total users by 5% during the third quarter of 2024, and now has over 2,400 users on the platform as of September 30, 2024 . During the third quarter of 2024, the Bank opened approximately $32.5 million new deposit accounts on the digital platform with very modest marketing expenses. At quarter end, the Bank had over 17,000 digital accounts with $911 million in total deposits and average balances of approximately $53 thousand. As of September 30, 2024 , the Bank has $75.0 million of brokered CDs that mature at the end of 2024 and $165.0 million of short-term FHLB advances. Lines of Business The Panacea Financial Division continues to experience substantial growth alongside the development of the nationally-recognized Panacea Financial brand. The Panacea Financial Division finished the third quarter of 2024 with approximately $392 million in outstanding loans, an increase of $16.5 million from June 30, 2024. Panacea-related deposits were $90 million at September 30, 2024 with a weighted average cost of 2.00%. Panacea continues to roll out innovative technology capabilities that is expected to continue increasing the amount with which it self-funds its balance sheet. Primis Mortgage had pre-tax income of $1.0 million in the third quarter of 2024 up from $0.9 million in the previous quarter. Locked loan volumes averaged $56.1 million per month in the third quarter of 2024, up from $52.0 million per month in the second quarter of 2024. Primis Mortgage continues to aggressively manage costs to preserve profitability in a lower volume environment while selectively adding talent to grow production. Shareholders' Equity Book value per common share as of September 30, 2024 was $15.43 , an increase of $0.20 from June 30 , 2024. Tangible book value per common share (1) at the end of the third quarter of 2024 was $11.61 , an increase of $0.21 from June 30 , 2024. Common shareholders' equity was $381 million , or 9.48% of total assets, at September 30 , 2024. Tangible common equity (1) at September 30, 2024 was $287 million , or 7.30% of tangible assets (1) . After-tax unrealized losses on the Company's available-for-sale securities portfolio decreased by $6.0 million to $17.1 million due to decreases in market interest rates during the third quarter of 2024. The Company has the intent and ability to hold these securities until maturity or recovery of the value and does not anticipate realizing any losses on the investments. The Board of Directors declared a dividend of $0.10 per share payable on November 22, 2024 to shareholders of record on November 8 , 2024. This is Primis' fifty-second consecutive quarterly dividend. About Primis Financial Corp. As of September 30, 2024 , Primis had $4.0 billion in total assets, $2.9 billion in total loans held for investment and $3.3 billion in total deposits. Primis Bank provides a range of financial services to individuals and small- and medium-sized businesses through twenty-four full-service branches in Virginia and Maryland and provides services to customers through certain online and mobile applications. Contacts : Address : Dennis J. Zember, Jr., President and CEO Primis Financial Corp. Matthew A. Switzer, EVP and CFO 1676 International Drive, Suite 900 Phone: (703) 893-7400 McLean, VA 22102 Primis Financial Corp., NASDAQ Symbol FRST Website: www.primisbank.com Conference Call The Company's management will host a conference call to discuss its third quarter results on Friday, October 25, 2024 at 10:00 a.m. (ET) . A live Webcast of the conference call is available at the following website: https://events.q4inc.com/attendee/853860984 . Participants may also call 1-888-330-3573 and ask for the Primis Financial Corp. call. A replay of the teleconference will be available for 7 days by calling 1-800-770-2030 and providing Replay Access Code 4440924. Non-GAAP Measures Statements included in this press release include non-GAAP financial measures and should be read along with the accompanying tables. Primis uses non-GAAP financial measures to analyze its performance. The measures entitled net income adjusted for nonrecurring income and expenses; pre-tax pre-provision operating earnings; operating return on average assets; pre-tax pre-provision operating return on average assets; operating return on average equity; operating return on average tangible equity; operating efficiency ratio; operating earnings per share – basic; operating earnings per share – diluted; tangible book value per share; tangible common equity; tangible common equity to tangible assets; and core net interest margin are not measures recognized under GAAP and therefore are considered non-GAAP financial measures. We use the term "operating" to describe a financial measure that excludes income or expense considered to be non-recurring in nature. Items identified as non-operating are those that, when excluded from a reported financial measure, provide management or the reader with a measure that may be more indicative of forward-looking trends in our business. A reconciliation of these non-GAAP financial measures to the most comparable GAAP measures is provided in the Reconciliation of Non-GAAP Items table. Management believes that these non-GAAP financial measures provide additional useful information about Primis that allows management and investors to evaluate the ongoing operating results, financial strength and performance of Primis and provide meaningful comparison to its peers. Non-GAAP financial measures should not be considered as an alternative to any measure of performance or financial condition as promulgated under GAAP, and investors should consider Primis' performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of Primis. Non-GAAP financial measures are not standardized and, therefore, it may not be possible to compare these measures with other companies that present measures having the same or similar names. Non-GAAP financial measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the results or financial condition as reported under GAAP. Forward-Looking Statements This press release and certain of our other filings with the Securities and Exchange Commission contain statements that constitute "forward-looking statements" within the meaning of, and subject to the protections of, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are forward-looking statements. Such statements can generally be identified by such words as "may," "plan," "contemplate," "anticipate," "believe," "intend," "continue," "expect," "project," "predict," "estimate," "could," "should," "would," "will," and other similar words or expressions of the future or otherwise regarding the outlook for the Company's future business and financial performance and/or the performance of the banking industry and economy in general. These forward-looking statements include, but are not limited to, our expectations regarding our future operating and financial performance, including the preliminary estimated financial and operating information presented herein, which is subject to adjustment; our outlook and long-term goals for future growth and new offerings and services; our expectations regarding net interest margin; expectations on our growth strategy, expense management, capital management and future profitability; expectations on credit quality and performance; and the assumptions underlying our expectations. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve known and unknown risks and uncertainties which may cause the actual results, performance or achievements of the Company to be materially different from the future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements are based on the information known to, and current beliefs and expectations of, the Company's management and are subject to significant risks and uncertainties. Actual results may differ materially from those contemplated by such forward-looking statements. Factors that might cause such differences include, but are not limited to: the result of the "pre-clearance" process with the Office of the Chief Accountant of the SEC and the impact on the Company's financial statements; the possibility that the Company is unable to regain compliance with, or thereafter continue to comply with, applicable Nasdaq Listing Rules, or experience violations of additional Nasdaq Listing Rules; the possibility that Nasdaq may deny the Company's appeal and delist the Company's securities; the Company's ability to implement its various strategic and growth initiatives, including the sale of the Life Premium Finance Division and the impact on the Company's operating results and its recently established Panacea Financial Division, digital banking platform, V1BE fulfillment service and Primis Mortgage Company; competitive pressures among financial institutions increasing significantly; changes in applicable laws, rules, or regulations, including changes to statutes, regulations or regulatory policies or practices; changes in management's plans for the future; credit risk associated with our lending activities; the impact of current and future economic and market conditions generally (including seasonality) and in the financial services industry, nationally and within our primary market areas; changes in interest rates, inflation, loan demand, real estate values, or competition, as well as labor shortages and supply chain disruptions; changes in accounting principles, policies, or guidelines; adverse results from current or future litigation, regulatory examinations or other legal and/or regulatory actions; potential impacts of adverse developments in the banking industry highlighted by high-profile bank failures, including impacts on customer confidence, deposit outflows, liquidity and the regulatory response thereto; potential increases in the provision for credit losses; our ability to identify and address increased cybersecurity risks, including those impacting vendors and other third parties; fraud or misconduct by internal or external actors, which we may not be able to prevent, detect or mitigate; acts of God or of war or other conflicts, including the current Ukraine / Russia conflict and Israel /Hamas conflict, acts of terrorism, pandemics or other catastrophic events that may affect general economic conditions; and other general competitive, economic, political, and market factors, including those affecting our business, operations, pricing, products, or services. Forward-looking statements speak only as of the date on which such statements are made. These forward-looking statements are based upon information presently known to the Company's management and are inherently subjective, uncertain and subject to change due to any number of risks and uncertainties, including, without limitation, the risks and other factors set forth in the Company's filings with the Securities and Exchange Commission, the Company's Annual Report on Form 10-K for the year ended December 31, 2023 , under the captions "Cautionary Note Regarding Forward-Looking Statements" and "Risk Factors," and in the Company's Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made, or to reflect the occurrence of unanticipated events. Readers are cautioned not to place undue reliance on these forward-looking statements. (1) Non-GAAP financial measure. Please see "Reconciliation of Non-GAAP Items" in the financial tables for more information and for a reconciliation to GAAP. Primis Financial Corp. Financial Highlights (unaudited) (Dollars in thousands, except per share data) For Three Months Ended: For Nine Months Ended: Selected Performance Ratios: 3Q 2024 2Q 2024 1Q 2024 4Q 2023 3Q 2023 3Q 2024 3Q 2023 Return on average assets 0.12 % 0.39 % 0.26 % (0.85 %) (0.62 %) 0.25 % 0.01 % Operating return on average assets (1) 0.20 % 0.50 % 0.29 % (0.79 %) 0.54 % 0.33 % 0.43 % Pre-tax pre-provision return on average assets (1) 0.85 % 0.78 % 1.02 % 0.96 % (0.33 %) 0.88 % 0.48 % Pre-tax pre-provision operating return on average assets (1) 0.95 % 0.92 % 1.05 % 1.01 % (0.30 %) 0.98 % 0.91 % Return on average common equity 1.28 % 4.06 % 2.62 % (8.43 %) (6.11 %) 2.66 % 0.11 % Operating return on average common equity (1) 2.11 % 5.18 % 2.99 % (7.91 %) 5.35 % 3.44 % 4.32 % Operating return on average tangible common equity (1) 2.80 % 6.93 % 3.98 % (10.53 %) 7.35 % 4.60 % 5.92 % Cost of funds 3.25 % 3.16 % 2.97 % 2.85 % 2.75 % 3.13 % 2.61 % Net interest margin 2.97 % 2.72 % 2.84 % 2.86 % 2.70 % 2.85 % 2.61 % Gross loans to deposits 89.68 % 98.95 % 97.37 % 98.45 % 96.37 % 89.68 % 96.37 % Efficiency ratio 83.22 % 82.62 % 77.41 % 81.31 % 108.50 % 81.12 % 86.30 % Operating efficiency ratio (1) 80.35 % 78.86 % 76.17 % 79.43 % 75.17 % 78.49 % 74.56 % Per Common Share Data: Earnings per common share - Basic $ 0.05 $ 0.15 $ 0.10 $ (0.33) $ (0.24) $ 0.30 $ 0.01 Operating earnings per common share - Basic (1) $ 0.08 $ 0.20 $ 0.11 $ (0.31) $ 0.21 $ 0.39 $ 0.52 Earnings per common share - Diluted $ 0.05 $ 0.15 $ 0.10 $ (0.33) $ (0.24) $ 0.30 $ 0.01 Operating earnings per common share - Diluted (1) $ 0.08 $ 0.20 $ 0.11 $ (0.31) $ 0.21 $ 0.39 $ 0.52 Book value per common share $ 15.43 $ 15.23 $ 15.16 $ 15.23 $ 15.30 $ 15.43 $ 15.30 Tangible book value per common share (1) $ 11.61 $ 11.40 $ 11.31 $ 11.37 $ 11.42 $ 11.61 $ 11.42 Cash dividend per common share $ 0.10 $ 0.10 $ 0.10 $ 0.10 $ 0.10 $ 0.30 $ 0.30 Weighted average shares outstanding - Basic 24,695,685 24,683,734 24,673,857 24,647,728 24,641,981 24,683,556 24,635,535 Weighted average shares outstanding - Diluted 24,719,920 24,708,484 24,707,113 24,687,993 24,641,981 24,710,345 24,635,535 Shares outstanding at end of period 24,722,734 24,708,234 24,708,588 24,693,172 24,686,764 24,722,734 24,686,764 Asset Quality Ratios: Non-performing assets as a percent of total assets, excluding SBA guarantees 0.25 % 0.25 % 0.23 % 0.20 % 0.51 % 0.25 % 0.51 % Net charge-offs (recoveries) as a percent of average loans (annualized) 0.93 % 0.60 % 0.64 % 0.61 % 0.53 % 0.52 % 0.32 % Core net charge-offs (recoveries) as a percent of average loans (annualized) (2) 0.15 % 0.07 % 0.11 % 0.24 % 0.27 % (0.10 %) 0.12 % Allowance for credit losses to total loans 1.72 % 1.56 % 1.66 % 1.62 % 1.13 % 1.72 % 1.13 % Capital Ratios: Common equity to assets 9.48 % 9.49 % 9.63 % 9.75 % 9.84 % Tangible common equity to tangible assets (1) 7.30 % 7.27 % 7.36 % 7.46 % 7.53 % Leverage ratio (3) 8.06 % 8.25 % 8.38 % 8.37 % 8.60 % Common equity tier 1 capital ratio (3) 8.98 % 8.85 % 8.97 % 8.96 % 9.36 % Tier 1 risk-based capital ratio (3) 9.28 % 9.14 % 9.26 % 9.25 % 9.66 % Total risk-based capital ratio (3) 12.66 % 12.45 % 12.61 % 13.44 % 13.05 % (1) See Reconciliation of Non-GAAP financial measures. (2) Excludes third-party charge-offs (3) Ratios are estimated and may be subject to change pending the final filing of the FR Y-9C. Primis Financial Corp. (Dollars in thousands) As Of : Condensed Consolidated Balance Sheets (unaudited) 3Q 2024 2Q 2024 1Q 2024 4Q 2023 3Q 2023 Assets Cash and cash equivalents $ 77,274 $ 66,580 $ 88,717 $ 77,553 $ 93,865 Investment securities-available for sale 242,543 232,867 230,617 228,420 216,875 Investment securities-held to maturity 9,766 10,649 10,992 11,650 11,975 Loans held for sale 467,325 94,644 72,217 57,691 66,266 Loans receivable, net of deferred fees 2,965,120 3,300,562 3,227,665 3,219,414 3,173,788 Allowance for credit losses (51,132) (51,574) (53,456) (52,209) (35,862) Net loans 2,913,988 3,248,988 3,174,209 3,167,205 3,137,926 Stock in Federal Reserve Bank and Federal Home Loan Bank 20,875 16,837 14,225 14,246 12,796 Bank premises and equipment, net 19,668 19,946 20,412 20,611 24,878 Operating lease right-of-use assets 10,465 10,293 10,206 10,646 11,402 Goodwill and other intangible assets 94,444 94,768 95,092 95,417 95,741 Assets held for sale, net 3,898 5,136 6,359 6,735 3,115 Bank-owned life insurance 67,010 66,578 67,685 67,588 67,176 Deferred tax assets, net 25,582 25,232 24,513 22,395 24,179 Consumer Program derivative asset 9,763 9,929 10,685 10,806 12,818 Other assets 62,002 63,917 64,050 65,583 59,847 Total assets $ 4,024,603 $ 3,966,364 $ 3,889,979 $ 3,856,546 $ 3,838,859 Liabilities and stockholders' equity Demand deposits $ 421,231 $ 420,241 $ 463,190 $ 472,941 $ 490,719 NOW accounts 748,833 793,608 771,116 773,028 803,276 Money market accounts 835,099 831,834 834,514 794,530 800,951 Savings accounts 873,810 866,279 823,325 783,758 746,608 Time deposits 427,458 423,501 422,778 445,898 451,850 Total deposits 3,306,431 3,335,463 3,314,923 3,270,155 3,293,404 Securities sold under agreements to repurchase - short term 3,677 3,273 3,038 3,044 3,838 Federal Home Loan Bank advances 165,000 80,000 25,000 30,000 - Secured borrowings 17,495 21,069 21,298 20,393 29,649 Subordinated debt and notes 95,808 95,737 95,666 95,595 95,524 Operating lease liabilities 11,704 11,488 11,353 11,686 12,347 Other liabilities 27,168 24,777 24,102 28,080 26,487 Total liabilities 3,627,283 3,571,807 3,495,380 3,458,953 3,461,249 Total Primis common stockholders' equity 381,352 376,393 374,577 376,161 377,610 Noncontrolling interest 15,968 18,164 20,022 21,432 - Total stockholders' equity 397,320 394,557 394,599 397,593 377,610 Total liabilities and stockholders' equity $ 4,024,603 $ 3,966,364 $ 3,889,979 $ 3,856,546 $ 3,838,859 Tangible common equity (1) $ 286,908 $ 281,625 $ 279,485 $ 280,744 $ 281,869 Primis Financial Corp. (Dollars in thousands) For Three Months Ended: For Nine Months Ended: Condensed Consolidated Statement of Operations (unaudited) 3Q 2024 2Q 2024 1Q 2024 4Q 2023 3Q 2023 3Q 2024 3Q 2023 Interest and dividend income $ 57,112 $ 52,199 $ 50,345 $ 50,163 $ 48,027 $ 159,656 $ 142,485 Interest expense 29,089 27,346 25,076 24,437 23,697 81,511 69,499 Net interest income 28,023 24,853 25,269 25,726 24,330 78,145 72,986 Provision for credit losses 7,511 3,119 6,508 21,310 1,616 17,138 11,231 Net interest income after provision for credit losses 20,512 21,734 18,761 4,416 22,714 61,007 61,755 Account maintenance and deposit service fees 1,468 1,861 1,393 1,518 1,534 4,722 4,215 Income from bank-owned life insurance 431 1,327 564 420 787 2,322 1,601 Mortgage banking income 6,803 6,402 5,574 3,210 4,922 18,779 14,435 Gain (loss) on sale of loans - (29) 336 526 217 307 268 Consumer Program derivative 79 1,272 2,041 2,886 2,033 3,392 15,233 Gain (loss) on other investments 51 136 206 190 30 393 (6) Gain (loss) on bank premises and equipment 352 124 - (478) 2 476 2 Other 99 105 193 169 201 397 584 Noninterest income 9,283 11,198 10,307 8,441 9,726 30,788 36,332 Employee compensation and benefits 16,764 16,088 15,735 14,645 13,809 48,587 44,120 Occupancy and equipment expenses 3,071 3,099 3,106 2,982 3,170 9,276 9,637 Amortization of intangible assets 318 317 317 317 317 952 952 Goodwill impairment - - - - 11,150 - 11,150 Virginia franchise tax expense 631 632 631 849 849 1,894 2,546 Data processing expense 2,552 2,347 2,231 2,216 2,250 7,130 7,329 Marketing expense 449 499 459 352 377 1,407 1,467 Telecommunication and communication expense 330 341 346 358 356 1,017 1,149 Professional fees 2,914 2,976 1,365 1,586 1,118 7,255 3,055 Miscellaneous lending expenses 1,098 285 451 1,128 424 1,834 1,878 Other expenses 2,918 3,202 2,897 3,347 3,130 9,017 11,060 Noninterest expense 31,045 29,786 27,538 27,780 36,950 88,369 94,343 Income (loss) before income taxes (1,250) 3,146 1,530 (14,923) (4,510) 3,426 3,744 Income tax expense (benefit) (304) 1,265 718 (4,472) 1,519 1,679 3,405 Net Income (loss) (946) 1,881 812 (10,451) (6,029) 1,747 339 Noncontrolling interest 2,158 1,901 1,654 2,280 - 5,713 - Net income (loss) attributable to Primis' common shareholders $ 1,212 $ 3,782 $ 2,466 $ (8,171) $ (6,029) $ 7,460 $ 339 (1) See Reconciliation of Non-GAAP financial measures. Primis Financial Corp (Dollars in thousands) As Of: Loan Portfolio Composition 3Q 2024 2Q 2024 1Q 2024 4Q 2023 3Q 2023 Loans held for sale $ 467,325 $ 94,644 $ 72,217 $ 57,691 $ 66,266 Loans secured by real estate: Commercial real estate - owner occupied 463,848 463,328 458,026 455,397 432,367 Commercial real estate - non-owner occupied 609,743 612,428 577,752 578,600 605,508 Secured by farmland 4,356 4,758 4,341 5,044 5,082 Construction and land development 105,541 104,886 146,908 164,742 170,849 Residential 1-4 family 607,313 608,049 602,124 606,226 600,389 Multi-family residential 169,368 171,512 128,599 127,857 129,586 Home equity lines of credit 62,421 62,138 57,765 59,670 59,996 Total real estate loans 2,022,590 2,027,099 1,975,515 1,997,536 2,003,777 Commercial loans 526,772 619,365 623,804 602,623 603,637 Paycheck Protection Program loans 1,941 1,969 2,003 2,023 2,105 Consumer loans 408,378 646,590 620,745 611,583 558,277 Total Non-PCD loans 2,959,681 3,295,023 3,222,067 3,213,765 3,167,796 PCD loans 5,439 5,539 5,598 5,649 5,992 Total loans receivable, net of deferred fees $ 2,965,120 $ 3,300,562 $ 3,227,665 $ 3,219,414 $ 3,173,788 Loans by Risk Grade: Pass, not graded $ - $ - $ - $ - $ - Pass Grade 1 - Highest Quality 820 692 633 875 851 Pass Grade 2 - Good Quality 169,285 488,728 412,593 405,019 383,306 Pass Grade 3 - Satisfactory Quality 1,509,280 1,503,918 1,603,053 1,626,380 1,632,256 Pass Grade 4 - Pass 1,184,671 1,204,268 1,177,065 1,154,971 1,095,264 Pass Grade 5 - Special Mention 53,473 87,471 19,454 14,930 33,299 Grade 6 - Substandard 47,591 15,485 14,867 17,239 28,812 Grade 7 - Doubtful - - - - - Grade 8 - Loss - - - - - Total loans $ 2,965,120 $ 3,300,562 $ 3,227,665 $ 3,219,414 $ 3,173,788 (Dollars in thousands) As Of or For Three Months Ended: Asset Quality Information 3Q 2024 2Q 2024 1Q 2024 4Q 2023 3Q 2023 Allowance for Credit Losses: Balance at beginning of period $ (51,574) $ (53,456) $ (52,209) $ (35,862) $ (38,541) Provision for for credit losses (7,511) (3,119) (6,508) (21,310) (1,616) Net charge-offs 7,953 5,001 5,261 4,963 4,295 Ending balance $ (51,132) $ (51,574) $ (53,456) $ (52,209) $ (35,862) Reserve for Unfunded Commitments: Balance at beginning of period $ (1,031) $ (1,577) $ (1,579) $ (1,025) $ (1,282) (Expense for) / recovery of unfunded loan commitment reserve (96) 546 2 (554) 257 Total Reserve for Unfunded Commitments $ (1,127) $ (1,031) $ (1,577) $ (1,579) $ (1,025) As Of: Non-Performing Assets: 3Q 2024 2Q 2024 1Q 2024 4Q 2023 3Q 2023 Nonaccrual loans $ 14,424 $ 11,289 $ 10,139 $ 9,095 $ 20,171 Accruing loans delinquent 90 days or more 1,714 1,897 1,714 1,714 1,625 Total non-performing assets $ 16,138 $ 13,186 $ 11,853 $ 10,809 $ 21,796 SBA guaranteed portion of non-performing loans $ 5,954 $ 3,268 $ 3,095 $ 3,115 $ 2,290 Primis Financial Corp. (Dollars in thousands) For Three Months Ended: For Nine Months Ended: Average Balance Sheet 3Q 2024 2Q 2024 1Q 2024 4Q 2023 3Q 2023 3Q 2024 3Q 2023 Assets Loans held for sale $ 98,110 $ 84,389 $ 58,896 $ 48,380 $ 55,775 $ 80,530 $ 43,384 Loans, net of deferred fees 3,324,157 3,266,651 3,206,888 3,208,295 3,193,236 3,266,111 3,099,225 Investment securities 242,631 244,308 241,179 228,335 234,601 242,706 240,525 Other earning assets 83,405 73,697 77,067 79,925 93,159 78,076 348,831 Total earning assets 3,748,303 3,669,045 3,584,030 3,564,935 3,576,771 3,667,423 3,731,965 Other assets 243,972 243,200 248,082 262,977 268,038 244,913 260,474 Total assets $ 3,992,275 $ 3,912,245 $ 3,832,112 $ 3,827,912 $ 3,844,809 $ 3,912,336 $ 3,992,439 Liabilities and equity Demand deposits $ 421,908 $ 433,315 $ 458,306 $ 473,750 $ 472,485 $ 440,172 $ 500,459 Interest-bearing liabilities: NOW and other demand accounts 748,202 778,458 773,943 782,305 806,339 766,800 785,480 Money market accounts 859,988 823,156 814,147 790,971 850,892 832,531 844,752 Savings accounts 866,375 866,652 800,328 783,432 703,809 844,531 775,024 Time deposits 425,238 423,107 431,340 451,521 460,961 426,557 481,813 Total Deposits 3,321,711 3,324,688 3,278,064 3,281,979 3,294,486 3,310,591 3,387,528 Borrowings 238,994 158,919 120,188 120,213 119,797 172,942 172,662 Total Funding 3,560,705 3,483,607 3,398,252 3,402,192 3,414,283 3,483,533 3,560,190 Other Liabilities 36,527 34,494 34,900 39,056 39,303 35,344 35,457 Total liabilites 3,597,232 3,518,101 3,433,152 3,441,248 3,453,586 3,518,877 3,595,647 Primis common stockholders' equity 377,595 374,735 378,008 384,332 391,223 374,189 396,792 Noncontrolling interest 17,448 19,409 20,952 2,332 - 19,270 - Total stockholders' equity 395,043 394,144 398,960 386,664 391,223 393,459 396,792 Total liabilities and stockholders' equity $ 3,992,275 $ 3,912,245 $ 3,832,112 $ 3,827,912 $ 3,844,809 $ 3,912,336 $ 3,992,439 Net Interest Income Loans held for sale $ 1,589 $ 1,521 $ 907 $ 842 $ 873 $ 4,017 $ 1,964 Loans 52,707 48,032 46,825 46,723 44,439 147,564 123,289 Investment securities 1,799 1,805 1,715 1,645 1,593 5,319 4,728 Other earning assets 1,017 841 898 953 1,122 2,756 12,504 Total Earning Assets Income 57,112 52,199 50,345 50,163 48,027 159,656 142,485 Non-interest bearing DDA - - - - - - - NOW and other interest-bearing demand accounts 4,630 4,827 4,467 4,334 4,460 13,924 11,070 Money market accounts 7,432 6,788 6,512 6,129 6,555 20,732 17,587 Savings accounts 8,918 8,912 8,045 7,860 6,760 25,876 21,915 Time deposits 4,371 4,095 3,990 3,964 3,801 12,455 10,831 Total Deposit Costs 25,351 24,622 23,014 22,287 21,576 72,987 61,403 Borrowings 3,738 2,724 2,062 2,150 2,121 8,524 8,096 Total Funding Costs 29,089 27,346 25,076 24,437 23,697 81,511 69,499 Net Interest Income $ 28,023 $ 24,853 $ 25,269 $ 25,726 $ 24,330 $ 78,145 $ 72,986 Net Interest Margin Loans held for sale 6.44 % 7.25 % 6.19 % 6.90 % 6.21 % 6.66 % 6.05 % Loans 6.31 % 5.91 % 5.87 % 5.78 % 5.52 % 6.04 % 5.32 % Investments 2.95 % 2.97 % 2.86 % 2.86 % 2.69 % 2.93 % 2.63 % Other Earning Assets 4.85 % 4.59 % 4.69 % 4.73 % 4.78 % 4.72 % 4.79 % Total Earning Assets 6.06 % 5.72 % 5.65 % 5.58 % 5.33 % 5.82 % 5.10 % NOW 2.46 % 2.49 % 2.32 % 2.20 % 2.19 % 2.43 % 1.88 % MMDA 3.44 % 3.32 % 3.22 % 3.07 % 3.06 % 3.33 % 2.78 % Savings 4.10 % 4.14 % 4.04 % 3.98 % 3.81 % 4.09 % 3.78 % CDs 4.09 % 3.89 % 3.72 % 3.48 % 3.27 % 3.90 % 3.01 % Cost of Interest Bearing Deposits 3.48 % 3.42 % 3.28 % 3.15 % 3.03 % 3.40 % 2.84 % Cost of Deposits 3.04 % 2.98 % 2.82 % 2.69 % 2.60 % 2.94 % 2.42 % Other Funding 6.22 % 6.89 % 6.90 % 7.10 % 7.02 % 6.58 % 6.27 % Total Cost of Funds 3.25 % 3.16 % 2.97 % 2.85 % 2.75 % 3.13 % 2.61 % Net Interest Margin 2.97 % 2.72 % 2.84 % 2.86 % 2.70 % 2.85 % 2.61 % Net Interest Spread 2.37 % 2.12 % 2.22 % 2.27 % 2.13 % 2.24 % 2.49 % Primis Financial Corp. (Dollars in thousands, except per share data) For Three Months Ended: For Nine Months Ended: Reconciliation of Non-GAAP items: 3Q 2024 2Q 2024 1Q 2024 4Q 2023 3Q 2023 3Q 2024 3Q 2023 Net income (loss) attributable to Primis' common shareholders $ 1,212 $ 3,782 $ 2,466 $ (8,171) $ (6,029) $ 7,460 $ 339 Non-GAAP adjustments to Net Income: Branch Consolidation / Other restructuring - - - 449 - - 1,488 Loan officer fraud , operational losses - - - - 200 - 200 Professional fee expenses related to the SEC pre-clear process and financial reporting restatements 1,352 1,453 438 - - 3,243 - Professional fee expenses related to Panacea investment - - - 194 - - - Goodwill impairment - - - - 11,150 - 11,150 Gains on sale of closed bank branch buildings (352) (124) - - - (476) - Income tax effect (216) (287) (95) (139) (44) (598) (365) Net income (loss) attributable to Primis' common shareholders adjusted for nonrecurring income and expenses $ 1,996 $ 4,824 $ 2,809 $ (7,667) $ 5,277 $ 9,629 $ 12,813 Net income (loss) attributable to Primis' common shareholders $ 1,212 $ 3,782 $ 2,466 $ (8,171) $ (6,029) $ 7,460 $ 339 Income tax expense (benefit) (304) 1,265 718 (4,472) 1,519 1,679 3,405 Provision for credit losses (incl. unfunded commitment expense) 7,607 2,573 6,506 21,864 1,359 16,686 10,685 Pre-tax pre-provision earnings $ 8,515 $ 7,620 $ 9,690 $ 9,221 $ (3,151) $ 25,825 $ 14,429 Effect of adjustment for nonrecurring income and expenses 1,000 1,329 438 643 11,350 2,767 12,838 Pre-tax pre-provision operating earnings $ 9,515 $ 8,949 $ 10,128 $ 9,864 $ 8,199 $ 28,592 $ 27,267 Return on average assets 0.12 % 0.39 % 0.26 % (0.85 %) (0.62 %) 0.25 % 0.01 % Effect of adjustment for nonrecurring income and expenses 0.08 % 0.11 % 0.04 % 0.05 % 1.17 % 0.07 % 0.42 % Operating return on average assets 0.20 % 0.50 % 0.29 % (0.79 %) 0.54 % 0.33 % 0.43 % Return on average assets 0.12 % 0.39 % 0.26 % (0.85 %) (0.62 %) 0.25 % 0.01 % Effect of tax expense (0.03 %) 0.13 % 0.08 % (0.46 %) 0.16 % 0.06 % 0.11 % Effect of provision for credit losses (incl. unfunded commitment expense) 0.76 % 0.26 % 0.68 % 2.27 % 0.14 % 0.57 % 0.36 % Pre-tax pre-provision return on average assets 0.85 % 0.78 % 1.02 % 0.96 % (0.33 %) 0.88 % 0.48 % Effect of adjustment for nonrecurring income and expenses and expenses 0.10 % 0.14 % 0.04 % 0.05 % 0.02 % 0.09 % 0.43 % Pre-tax pre-provision operating return on average assets 0.95 % 0.92 % 1.05 % 1.01 % (0.30 %) 0.98 % 0.91 % Return on average common equity 1.28 % 4.06 % 2.62 % (8.43 %) (6.11 %) 2.66 % 0.11 % Effect of adjustment for nonrecurring income and expenses 0.83 % 1.12 % 0.37 % 0.52 % 11.47 % 0.77 % 4.20 % Operating return on average common equity 2.11 % 5.18 % 2.99 % (7.91 %) 5.35 % 3.44 % 4.32 % Effect of goodwill and other intangible assets 0.69 % 1.75 % 0.99 % (2.61 %) 2.00 % 1.17 % 1.60 % Operating return on average tangible common equity 2.80 % 6.93 % 3.98 % (10.53 %) 7.35 % 4.60 % 5.92 % Efficiency ratio 83.22 % 82.62 % 77.41 % 81.31 % 108.50 % 81.12 % 86.30 % Effect of adjustment for nonrecurring income and expenses (2.87 %) (3.76 %) (1.23 %) (1.88 %) (33.33 %) (2.63 %) (11.74 %) Operating efficiency ratio 80.35 % 78.86 % 76.17 % 79.43 % 75.17 % 78.49 % 74.56 % Earnings per common share - Basic $ 0.05 $ 0.15 $ 0.10 $ (0.33) $ (0.24) $ 0.30 $ 0.01 Effect of adjustment for nonrecurring income and expenses 0.03 0.05 0.01 0.02 0.45 0.09 0.51 Operating earnings per common share - Basic $ 0.08 $ 0.20 $ 0.11 $ (0.31) $ 0.21 $ 0.39 $ 0.52 Earnings per common share - Diluted $ 0.05 $ 0.15 $ 0.10 $ (0.33) $ (0.24) $ 0.30 $ 0.01 Effect of adjustment for nonrecurring income and expenses 0.03 0.05 0.01 0.02 0.45 0.09 0.51 Operating earnings per common share - Diluted $ 0.08 $ 0.20 $ 0.11 $ (0.31) $ 0.21 $ 0.39 $ 0.52 Book value per common share $ 15.43 $ 15.23 $ 15.16 $ 15.23 $ 15.30 $ 15.43 $ 15.30 Effect of goodwill and other intangible assets (3.82) (3.83) (3.85) (3.86) (3.88) (3.82) (3.88) Tangible book value per common share $ 11.61 $ 11.40 $ 11.31 $ 11.37 $ 11.42 $ 11.61 $ 11.42 Total Primis common stockholders' equity $ 381,352 $ 376,393 $ 374,577 $ 376,161 $ 377,610 $ 381,352 $ 377,610 Less goodwill and other intangible assets (94,444) (94,768) (95,093) (95,417) (95,741) (94,444) (95,741) Tangible common equity $ 286,908 $ 281,625 $ 279,484 $ 280,744 $ 281,869 $ 286,908 $ 281,869 Common equity to assets 9.48 % 9.49 % 9.63 % 9.75 % 9.84 % 9.48 % 9.84 % Effect of goodwill and other intangible assets (2.18 %) (2.22 %) (2.27 %) (2.29 %) (2.31 %) (2.18 %) (2.31 %) Tangible common equity to tangible assets 7.30 % 7.27 % 7.36 % 7.46 % 7.53 % 7.30 % 7.53 % View original content to download multimedia: https://www.prnewswire.com/news-releases/primis-financial-corp-reports-earnings-per-share-for-the-third-quarter-of-2024-302286204.html SOURCE Primis Financial Corp.
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