FRST — Primis Financial Corp

Summary of Primis Financial Corp. (FRST) Q2 2026 Earnings Call

1. Key Financial Results and Metrics:

• Net Earnings: $9.4 million, or $0.38 per share, compared to $2.4 million, or $0.10 per share, in Q2 2025.
• Return on Average Assets (ROA): 90 basis points, up from 26 basis points a year ago and 76 basis points in Q1 2026.
• Net Interest Margin: 3.45%, up from 2.86% a year ago and slightly up from 3.43% in Q1 2026.
• Average Earning Assets: $3.9 billion, an 11% increase year-over-year.
• Nonperforming Assets: Improved to 1.45% of total assets, down from 1.9% a year ago.
• Core Operating Expenses: Increased by approximately 15% year-over-year, but overall operating leverage improved with revenue growth of 40%.

2. Strategic Updates and Business Highlights:

• Core Revenue: Exceeded $50 million for the first time, a 40% increase year-over-year.
• Credit Quality Improvement: Nonperforming loans decreased by 36%, with a significant reduction in classified assets.
• Core Consolidation Project: Expected to yield $7 million in pretax earnings improvements in 2027, enhancing operating leverage.
• Mortgage Business Performance: Closed volume increased by 30% year-over-year to $421 million, with mortgage-related noninterest income growing by 44%.

3. Forward Guidance and Outlook:

• Loan Growth: Anticipated to remain steady in the second half of 2026, with expectations of continued growth in the mortgage warehouse and core banking segments.
• Margin Outlook: Expected to stabilize around current levels, with potential for slight increases due to refinancing opportunities and improved asset pricing.
• Expense Management: Core operating expenses projected to stabilize between $22 million and $22.5 million in Q3 2026, with additional savings anticipated from the core conversion project.

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

• Credit Risk: Continued provisions for specific reserves related to nonaccrual loans, particularly a large office commercial real estate loan, which remains a concern despite some leasing activity.
• Competitive Pressures: Increased competition in loan and deposit pricing could impact net interest margins, although management believes they have levers to mitigate this.
• Economic Environment: The potential for a sluggish mortgage market could affect future growth, although management remains optimistic about their mortgage division's performance.

5. Notable Q&A Insights:

• Net Interest Margin: Management indicated that margins are expected to remain stable, with some pressure from loan pricing but potential offsets from refinancing subordinated debt.
• Credit Quality: Specific reserves for a large office CRE loan were discussed, with management emphasizing the importance of maintaining healthy reserves to mitigate earnings volatility.
• Core Conversion Benefits: The core conversion is expected to provide significant operational efficiencies and revenue enhancements, with a focus on improving noninterest income.
• Mortgage Warehouse Spreads: Current spreads are competitive, with management noting strong profitability despite market challenges.

Overall, Primis Financial Corp. reported strong financial performance in Q2 2026, with significant improvements in earnings, margins, and asset quality, while also outlining strategic initiatives aimed at sustaining growth and profitability in the future. However, challenges related to credit risk and competitive pressures remain areas of focus for management.