FRST — Primis Financial Corp.

Summary of Primis Financial Corp. (FRST) Q3 2025 Earnings Call

1. Key Financial Results and Metrics

• Net Earnings: $6.8 million, or $0.28 per share, compared to $2 million and $0.08 per share in Q3 2024.
• Return on Assets (ROA): Improved to 70 basis points; adjusted core ROA closer to 90 basis points.
• Return on Tangible Common Equity (ROTCE): 9.45%.
• Net Interest Margin: 3.18%, up from 2.86% in Q2 2025 and 2.97% a year ago.
• Loan Growth: Gross loans increased nearly 9% annualized; with Panacea loans included, growth was approximately 15% annualized.
• Deposits: Flat in Q3 but up 7% annualized; noninterest-bearing deposits increased by 10% annualized.

2. Strategic Updates and Business Highlights

• Core Margin: Increased to 3.15%, up 35 basis points year-over-year, with expectations of further improvement.
• Mortgage Division: Grew production from $20 million to $100-$120 million monthly; Q3 pretax income of $1.9 million, a significant recovery from Q2.
• Panacea Division: Loan balances rose to $530 million, with deposits up 50% year-over-year.
• Cost Management: Operating expenses remained stable, with a focus on minimizing growth despite inflationary pressures.

3. Forward Guidance and Outlook

• ROA Target: Aiming for 1% ROA, with expectations for continued growth in pretax earnings to over $13 million.
• Loan Growth: Anticipated 10-12% growth across the bank for the next year, with potential for 7-8% growth in the core bank.
• Margin Expectations: Projecting to reach a 3.30% margin by Q1 2026, driven by improved deposit mix and asset repricing.

4. Bad News, Challenges, or Points of Concern

• Credit Quality: Notable downgrades in two office real estate loans in Northern Virginia, with one on nonaccrual status. Concerns about cash flow and borrower support persist.
• Market Competition: Increased competition for deposits as rates decline, which may pressure margins.
• Expense Management: While expenses are stable, there are ongoing challenges with nonrecurring items that could impact future performance.

5. Notable Q&A Insights

• Loan Growth: Management expects some runoff in mortgage warehouse loans in Q4 but believes overall growth will continue.
• Deposit Strategy: Emphasis on increasing noninterest-bearing deposits to enhance funding stability and reduce costs.
• Customer Stickiness: Digital banking customers are proving to be more loyal than anticipated, with over 90% retention rates despite rate adjustments.
• Asset Quality Resolution: Management is optimistic about resolving some nonaccrual loans in the coming quarters, which could positively impact margins.

Overall, Primis Financial Corp. demonstrated significant improvement in profitability and strategic growth initiatives, although challenges in credit quality and competitive pressures remain areas to monitor.