FRST — Primis Financial Corp

Primis Financial Corp. (FRST) Q1 2026 Earnings Call Summary

1. Key Financial Results and Metrics:

• Net Income: $7.3 million, or $0.30 per share, down from $22.6 million, or $0.92 per share in Q1 2025.
• Operating Earnings: $0.33 per share, a 126% increase from $0.14 in Q1 2025 when excluding a substantial gain from the deconsolidation of Panacea.
• Return on Assets (ROA): Improved to 84 basis points from 40 basis points year-over-year.
• Net Interest Margin: Increased to 3.43% from 3.15% in Q1 2025, with expectations for further expansion.
• Loan Growth: Total loans reached $3.4 billion, up 11.7% year-over-year.
• Deposit Growth: Deposits increased by over 8%, with noninterest-bearing checking accounts growing nearly 19% to $541 million.

2. Strategic Updates and Business Highlights:

• Primis is focusing on enhancing its core banking operations, leveraging technology and customer service rather than competing on rates.
• The mortgage division showed strong performance, with retail mortgage production up 122% year-over-year, and profitability per closed volume increased from 46 to 57 basis points.
• The company is actively integrating AI to improve operational efficiency and reduce costs without significant additional investment.
• Primis aims to grow checking accounts to represent 20% of total deposits and is committed to maintaining low operating expenses relative to revenue growth.

3. Forward Guidance and Outlook:

• The company anticipates continued growth in loans and deposits, with mortgage production expected to reach around $1.8 billion for the year.
• Net interest margin is projected to improve slightly, potentially reaching the high 3.4% to 3.5% range by year-end.
• Primis is on track to achieve a 1% ROA by the end of 2026, with aspirations for further improvement driven by growth in mortgage and warehouse operations.

4. Bad News, Challenges, or Points of Concern:

• The significant decline in net income compared to the previous year raises concerns about profitability sustainability.
• There are risks associated with market volatility affecting mortgage performance, particularly in light of geopolitical events impacting rates.
• The company faces competitive pressures in the digital banking space, particularly regarding deposit costs, which could impact growth if not managed effectively.
• Concerns remain about the performance of certain larger commercial real estate loans, although recent leasing activity shows positive trends.

5. Notable Q&A Insights:

• Management expressed confidence in the mortgage division, projecting strong production in the upcoming quarters, despite acknowledging potential impacts from market volatility.
• There was discussion about the competitive landscape for digital deposits, with management highlighting their unique approach to customer engagement as a differentiator.
• Questions regarding net interest margin indicated a cautious but optimistic outlook, with expectations for slight improvements while managing deposit costs.
• Management reiterated their commitment to maintaining a balanced growth strategy, ensuring that mortgage and warehouse operations complement rather than dominate the overall business model.