FRST — Primis Financial Corp.

Primis Financial Corp. (FRST) Q4 2025 Earnings Call Summary

1. Key Financial Results and Metrics

• Earnings: Reported earnings of $29.5 million or $1.20 per share, translating to a 3% return on assets (ROA).
• Net Interest Income: Approximately $31 million, up from $26 million in Q4 2024.
• Net Interest Margin: Increased to 3.28%, compared to 2.90% in the prior year.
• Deposits: Grew by 10% annualized in Q4, with noninterest-bearing deposits rising to 16.3% of total deposits, up from 14% in 2024.
• Loan Growth: Average earning assets increased by 13% annualized in Q4, with a focus on commercial and industrial (C&I) loans and mortgage warehouse lending.

2. Strategic Updates and Business Highlights

• Checking Account Growth: Achieved over 23% growth in checking accounts, positioning the bank among the top 10 nationwide.
• Digital Deposits: Finished 2025 with $903 million in digital deposits, showing resilience despite a slight decline in balances.
• Cost Management: Operating expenses were controlled, with a core expense run rate expected to stabilize around $22 million.
• Mortgage Business: Closed loans increased to approximately $1.2 billion, a 50% rise from 2024, with a focus on profitability.

3. Forward Guidance and Outlook

• 2026 Goals: Aiming for a sustainable ROA of 1%, with expectations for margin expansion and continued loan growth.
• Loan Growth Projections: Anticipating core bank loan growth of around $100 million (5-7%) and mortgage warehouse lending to average $500 million for the year.
• Expense Management: Projected quarterly core expenses for 2026 are expected to be in the range of $23 to $24 million, excluding mortgage volatility.

4. Bad News, Challenges, or Points of Concern

• Restructuring Impact: The restructuring process introduced some noise in financial results, although most challenges are expected to be behind them.
• Loan Quality: A few loans were placed on special mention status, raising concerns about potential downgrades, although management expressed confidence in their underlying strength.
• Market Conditions: The first quarter of 2026 is anticipated to be seasonally slower, particularly for mortgage and mortgage warehouse segments.

5. Notable Q&A Insights

• Loan Growth Expectations: Management expects warehouse balances to peak over $600 million in summer 2026, with a focus on maintaining strong ROA.
• Expense Sensitivity: Core expenses are expected to remain stable, with mortgage banking expenses scaling with revenue improvements.
• Customer Acquisition: The bank is focusing on acquiring new customers, with nearly 6,000 new customers added in the past year, which is expected to drive future deposit growth.
• Mortgage Production: Continued hiring in the mortgage segment is planned, but with a more incremental approach to avoid large upfront costs experienced in previous years.

Overall, Primis Financial Corp. reported solid financial results for Q4 2025, with strategic initiatives focused on deposit growth and operational efficiency. The outlook for 2026 is optimistic, although management remains cautious about potential challenges in the first quarter and loan quality.