On Friday, Primis Finl (NASDAQ:FRST) discussed first-quarter financial results during its earnings call. The full transcript is provided below.
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View the webcast at https://events.q4inc.com/attendee/286254303
Summary
Primis Finl reported first-quarter earnings of $7.3 million or $0.30 per share, down from $22.6 million or $0.92 per share in the same quarter last year; however, operating earnings increased to $0.33 per share, up 126% from the previous year.
The company’s net interest margin improved to 3.43% due to securities restructuring and a favorable mix of earning assets. Loan growth was robust, ending at $3.4 billion, reflecting an 11.7% increase, while deposit growth was strong at over 8%.
Primis Finl is focusing on technology and service to drive deposit growth and plans to leverage AI for operational efficiency. The mortgage division had a strong quarter with pre-tax income rising to $2.1 million, and the company expects to be a top 50 mortgage firm by 2026.
Management highlighted their aim to achieve a 1% ROA by the end of the year, with aspirations for 1.25% or higher in the future, driven by growth in mortgage, warehouse, and core banking operations.
The company is keen on using AI to enhance operational leverage, reduce costs, and improve customer satisfaction, positioning itself as a leader among banks under $10 billion.
Full Transcript
OPERATOR
Ladies and gentlemen, thank you for standing by. My name is Colby and I’ll be your conference operator today. At this time I would like to welcome you to the Primis Finl Primis Finl First quarter earnings call. All lines have been placed on mute to prevent any background noise and after the speaker’s remarks we will conduct a question and answer session. If you’d like to ask a question at that time, please press Star then the number one on your telephone keypad to raise your hand and enter the queue. If you’d like to withdraw your question at any time, you can press Star one again. I will now turn the call over to Matthew Switzer. You may begin.
Matthew Switzer
Good morning and thank you for joining us for this financial conference call. Before we begin, please note that many of our comments during this call will be forward looking statements which involve risk and uncertainty. There are many factors that can cause actual results to differ materially from the anticipated results or other expectations expressed in the forward looking statements. Further discussion of the Company’s risk factors and other important information regarding our forward looking statements are part of our recent filings with the Securities and Exchange Commission, including our recently filed earnings release which has also been posted to the Investor Relations section of our corporate site, firm’s bank website. We undertake no obligation to update or revise forward looking statements to reflect changes, assumptions, the occurrence of unanticipated events or changes to future operating results over time. In addition, some of the financial measures that we may discuss this morning are non GAAP financial measures. Our non GAAP measure relates to the most comparable GAAP measure will be discussed when the non GAAP measure is used, if not readily apparently. I will now turn the call over to our President and Chief Executive Officer, Dennis Seppert.
Dennis Seppert (President and Chief Executive Officer)
Dennis thank you Matt. Thank you. For all of you that have joined our first quarter conference call, we’re excited to report that in the first quarter we earned $7.3 million or $0.30 per share which compares to $22.6 million $0.92 per share in the same quarter of 25. I guess I’m reading that excited to report earnings shrinking that much. The fact of the matter is on an operating basis we earned $0.33 per share in the first quarter, which excluded a small tax adjustment related to 2025 results. And when you compare that to second quarter a year ago, it’s up 126% operating earnings where we reported $0.14 in the same quarter of 25. And Matt may mention this but the first quarter 25 included a substantial gain on the deconsolidation of Panacea, which is the. Which is what I’m excluding. Our key operating ratios obviously improved alongside that earnings number I just gave you. On an operating basis, our ROA improved to 84 basis points compared to 40 basis points in same quarter of 25. Driving that were a couple items margin mostly and as well as operating expense control on net interest margin. Our net interest margin, excuse me, benefited from the securities restructure as well as the mix of earning assets and climbed to 3.43% in the first quarter compared to 315 in the same quarter of 25. We continue to put up nice growth numbers that are manageable but really distinguish us amongst our peer group. Loans ended at $3.4 billion 11.7% compared to the same quarter in 26. That excludes about $40 million or so that Matt that we moved into loans held for sale related to a flow agreement with Panacea. So really our growth was probably stronger than this. Deposit growth over the same period is really what you should look at. That came in at just better than 8% with very little of that from the digital platform which is pretty steady state at about a billion dollars. The growth in checking accounts in our company was even more notable with non interest bearing checking accounts growing to 541 million which is almost 19% higher than where we were in 25. Checking accounts continue to be a more meaningful element of our deposit mix and we’re 15.9% of total deposits compared to just 14.2% in 1Q25. And lastly, it’s very important to note that we grew deposits in this strong fashion and never once felt pressured in our core bank or on our digital platform to be more aggressive on rate. We’re doing it with technology, with service, with people getting in front of folks, focusing on commercial deposits and having real success. All of the energy and momentum on our balance sheet really starts at our core bank. There’s never been a time since I came to premise that our core bank has had this opportunity on both sides of the balance sheet. Honestly, we’re winning business that several years ago we just wouldn’t have been in the running for or maybe even had a conversation about. Virtually nothing that we’re doing to win this business has to do with rates or fees. Is we’re leaning hard into our technology, our service, our people, our existing customers who are turning out to be amazing centers of influence for us. For so long it felt like we were that all we were doing here is working on our factory and stuff in the factory. But today stuff is rolling off that assembly line faster and faster and I’m very encouraged by what our people are accomplishing. Mortgage Warehouse is full, fully replaced. Life Premium finance at this point has been so well received in the marketplace. We finished the quarter with about 460 million outstanding for a few days in the quarter. At the end, near the end of March we crested half a billion dollars outstanding. This is before any refi boom. It’s before the busy spring and summer seasons for retail mortgage. Importantly, Warehouse is still producing impressive yields and margins efficiency ratios in the 20s. The amount of scale and impact on our overall operating ratios from this business is not really something that’s been fully baked or recognized in our current numbers as really they’ve been just scaling the business so quickly over the past year. But as we I believe we could probably double this business in the next 12 to 18 months and I believe the incremental impact from that second double is going to be very meaningful. Retail mortgage had an absolute blowout quarter. They’ll tell you that it was impacted by some Middle east activities and an impact on rates and fair value adjustments. And that’s true. We might have reported half a billion dollars looking at map half a billion dollars more had that. But regardless pre tax income in the mortgage group grew to $2.1 million in the first quarter compared to 766,000 same quarter a year ago. In the quarter our earnings crept up to 57 basis points on close volume compared to 46 in the same period a year ago. So on a profitability basis we’re up maybe 20 little better than 20% on closed volume. Our recruiting pipeline has never been this strong and consistently we double each month on apps, close volume, new files, so we have real so we’re very positive about what the second half of the year would look like right now we believe Primis Mortgage is on track to be a top 50 mortgage company nationwide in 2026. And lastly before I turn it over to Matt, I want to emphasize what’s really present mind for us in our desire to build this into a top performing bank in our day to day here we are laser focused on growing checking accounts like I mentioned earlier to about 20% of total deposits. Secondly, we’re determined to drive massive amounts of operating leverage from our consistent reliable balance sheet growth using steady to decreasing opex. And I know I’ve been saying this for several quarters and so as the quarter ended I was pretty delighted to start playing with the numbers and see what I’m about to tell you here. If you look at the last year first quarter 25 to from first quarter of 25 all the way back to 1Q24, we’re reporting growth in core revenue of about 45. Excuse me, we’re reporting core revenue of about $45.6 million, which is higher about 33.7%. Call it 34% over a year ago, reported operating expenses straight off of map income statement, no adjustment came in at 33.8 million which is only 4% higher than the same time a year ago. That’s 34% growth in revenue, only a 4% growth in opex. I had in my comments that I’d like to promise that we could do that for a couple more years, but I was afraid Matt would grimace so I took that out. But this is an extraordinary level of operating leverage and really the driver of our results. Nobody at Primis thinks we’re done in this area and that revenue may not be outpacing OPEX going forward. We have …
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