Successfully Deployed New Digital Platform at
Scale
Declares Quarterly Cash Dividend of
$0.10 Per Share
MCLEAN,
Va., April 27, 2023 /PRNewswire/ -- Primis
Financial Corp. (NASDAQ: FRST) ("Primis" or the "Company"), and its
wholly-owned subsidiary, Primis Bank (the "Bank"), today reported
net income of $5.8 million for the
quarter ended March 31, 2023,
compared to $3.1 million for the
quarter ended December 31, 2022 and
$4.6 million for the quarter ended
March 31, 2022. Earnings per
share ("EPS") for the three months ended March 31, 2023 were $0.23 on a basic and diluted basis, compared to
$0.13 on a basic and $0.12 on a diluted basis for the three months
ended December 31, 2022 and
$0.19 on both a basic and diluted
basis for the three months ended March 31,
2022.
Updates on Digital Platform and Resulting Strength in
Liquidity and Capital
As of December 31, 2022, the
Company's ratio of gross loans to deposits was approximately 108%
due to increasing liquidity constraints in the industry beginning
late last year. As a result, management accelerated the roll
out of the new digital banking platform that had begun in the fall
of 2022 to a more aggressive pursuit of new customers beginning
February 1, 2023. The results
of that effort exceeded management's expectations and generated the
following results for the digital platform as of or for the three
months ended March 31, 2023:
- $980 million of deposits from
approximately 11,500 customers at quarter-end
- Vast majority of funds (approx. 94%) were raised prior to the
bank failures in mid-March with little attrition and continued
customer growth since that time
- Customers are in all 50 states with approximately 88% of
balances outside of Virginia, D.C.
and Maryland
- Cost of deposits of 4.88%, approximately equal to Fed Funds,
approximately 25 basis points below short-term borrowing costs and
30 to 40 basis points below earnings rate on one-way sweep
arrangements
- Approximately 73% of funds from other banks and credit unions,
versus online-focused banks or fintechs, with a little over 50%
from banks with over $25 billion in
assets
- No additional staffing added
- No fraud losses
- Less than $90 thousand in
incremental marketing expense
Dennis J. Zember, Jr., President
and CEO commented, "Two and a half years ago, we began a project to
build modern infrastructure with the stated goal of being able to
open accounts quickly and easily nationwide. Through this
period, the industry's liquidity levels were near all-time highs
and the effort regularly seemed redundant. Still, we believed
that being able to self-fund our lines of business with a low-cost
national deposit platform as necessary. It is very exciting
to see our hard work strengthen our Company in such a meaningful
way with thousands of new customers and leading technology."
As a result of the successful expansion of the digital customer
base, Primis substantially improved its liquidity profile in the
first quarter. As of March 31,
2023:
- The ratio of gross loans to deposits has declined to 83% from
108% at year-end
- Grew total cash and equivalents to $607
million, up from $78 million
at December 31, 2022
- Repaid $340 million of short-term
borrowings and listing agent CDs that matured in the first
quarter
- Uninsured/non-collateralized deposits now represent only 26% of
total deposits
- Liquidity sources (FHLB borrowings, Brokered CDs, etc.) plus
cash-on-hand represent over 180% of uninsured/non-collateralized
deposit balances
The Company's securities portfolio was $244.6 million at March
31, 2023. Of the total, only $13.1 million is categorized as held-to-maturity
with the rest designated as available-for-sale. The
unrealized after-tax loss on our available-for-sale portfolio was
$23.5 million, down from $25.9 million at year-end, and is included in the
Company's equity. The unrealized loss on our held-to-maturity
portfolio is $0.7 million after-tax
at March 31, 2023. If the Bank
sold its portfolio for liquidity purposes, Primis would continue to
have solid capital ratios as highlighted by the table below:
|
Est. as
of
|
Adjusted
|
Capital
Ratios
|
March 31,
2023
|
March 31,
2023
|
Tier 1
Leverage
|
8.59 %
|
8.50 %
|
CET1 Risk Based
Capital
|
10.13 %
|
9.50 %
|
Tier 1 Risk Based
Capital
|
10.45 %
|
9.83 %
|
Total Risk Based
Capital
|
14.03 %
|
13.47 %
|
Financial Highlights for the Period Ended March 31, 2023
- Total deposits grew 34.7% un-annualized linked-quarter to
$3.67 billion.
- Loans held for investment grew at an annualized rate of 13.1%
in the first quarter compared to the linked-quarter, net of a
decline in Paycheck Protection Program ("PPP") balances.
- Successfully completed first Panacea loan sale – approximately
$15 million of loans with
$427 thousand pre-tax gain.
- Return on average assets of 0.60% for the three months ended
March 31, 2023 versus 0.36% for the
three months ended December 31, 2022
and 0.55% for the three months ended March
31, 2022. Operating return on average assets
(1) of 0.60%, 0.09% and 0.57% for the three months
ended March 31, 2023, December 31, 2022 and March 31, 2022, respectively.
- Pre-tax pre-provision return on average assets
(1) was 1.31% for the three months ended
March 31, 2023, versus 1.33% for the
three months ended December 31, 2022
and 0.75% for the three months ended March
31, 2022.
- Pre-tax pre-provision operating return on average assets
(1) was 1.31% for the three months ended
March 31, 2023, versus 0.99% for the
three months ended December 31, 2022
and 0.77% for the three months ended March
31, 2022.
- Mortgage banking almost broke even for the quarter with a
$0.2 million after-tax loss versus
$2.2 million after-tax loss in the
prior quarter, with substantially all of the loss occurring in the
seasonally slow month of January.
- Net interest margin of 3.15% in the first quarter of 2023 was
up from 2.96% in the same period last year and down 52 basis points
from 3.67% in the fourth quarter of 2022. Core net interest
margin(1), which excludes the effects of PPP loans, was
3.16% in the first quarter of 2023, down from 3.68% in the fourth
quarter of 2022 and up from 2.96% in the first quarter of
2022.
- Core bank net interest margin (excluding excess digital deposit
balances) of 3.38% for the first quarter of 2023.
- Allowance for credit losses to total loans was 1.17% at
March 31, 2023 and at December 31, 2022, compared to 1.23% at
March 31, 2022. Allowance for
credit losses to total loans (excluding PPP balances and loans held
for sale) was 1.17% at March 31, 2023
and at December 31, 2022, compared to
1.24% at March 31, 2022.
- Equity to assets was 9.52% at March 31,
2023 and tangible common equity to tangible assets was
7.14%. Excluding $500 million
of excess cash that the Company will begin sweeping, these ratios
would have been 10.80% and 7.90%, respectively, at March 31, 2023 compared to 11.04% and 8.27%,
respectively, at December 31,
2022.
Speaking about the items in the Company's quarterly performance,
Mr. Zember said, "Our results in the first quarter were only mildly
impacted by the challenges our industry is facing with liquidity
levels. To drive the nearly $1
billion of deposit growth, we incurred about $0.49 million of negative spread that fully
abated with the Federal Reserve's last rate hike.
Additionally, we incurred approximately $0.42 million of one-time data processing costs
related to over 30,000 applications for the new accounts.
Loan volumes and demand softened, particularly in the core bank,
but pipelines in Panacea and Life Premium Finance are still strong
and building with weighted average yields above 7.50%.
Additionally, Panacea completed its first loan sale transaction
with a $0.47 million gain and is
building a pipeline of other potential buyers. Lastly, we
expect to have sweep capabilities late in the second quarter that
will allow us to resume aggressively growing the digital platform
with positive spreads but no impact on our asset or capital
levels."
Net Interest Income
Adjusted net interest income (excluding the excess revenue from
credit enhancements) increased in the first quarter of 2023 to
$27.5 million compared to
$22.8 million for the same quarter in
2022 and was down slightly when compared to $28.2 million for the fourth quarter of
2022. Higher yields on earning assets offset most of the
accelerating cost of funding experienced by the industry in the
quarter. The Company did experience approximately
$0.4 million of negative spread on
the digital platform initiative that had fully abated by the end of
the quarter.
The Company's net interest margin in the first quarter of 2023
was greatly affected by the success of the digital deposit
platform. Excluding the impact of the excess digital
deposits and cash balances, the core bank's net interest margin
declined by 0.29% to 3.38% compared to 3.67% in the fourth quarter
of 2022. Increased competition in the Company's core
banking markets moved the cost of deposits higher to 1.67% in the
current quarter of 2023 compared to 0.78% in the fourth quarter of
2022. At the core bank level, yields on earning assets
increased to 5.31% in the first quarter of 2023 compared to 4.80%
in the fourth quarter of 2022, buoyed by higher rates on cash and
loans.
On a consolidated basis, the Company's net interest margin
includes approximately $346 million
of excess deposits with a cost that is slightly higher than the
quarter's earnings rate on cash, costing the Company about
$0.4 million during the first
quarter. At quarter end, the cost of these deposits was
slightly below the earnings rate on excess cash and approximately
30 to 40 basis points below the earnings rate for non-reciprocal
sweeps. Management intends to continue growing deposits
on the digital platform and use non-reciprocal sweeps to manage
total funding and asset levels. The Company expects some
amount of incremental net revenue from the platform in the
short-term that could positively impact the net interest margin by
5 to 10 basis points.
Averages
|
|
Core
Bank
|
|
Excess Digital
Platform
|
|
Total
Bank
|
Average Earning
Assets
|
|
3,303
|
|
346
|
|
3,652
|
Average
Deposits
|
|
2,940
|
|
346
|
|
3,186
|
Average Total
Funding
|
|
3,225
|
|
346
|
|
3,471
|
|
|
|
|
|
|
|
Yield on Earning
Assets
|
|
5.31 %
|
|
4.41 %
|
|
5.24 %
|
Cost of
Deposits
|
|
1.67 %
|
|
4.88 %
|
|
1.91 %
|
Cost of
Funds
|
|
1.98 %
|
|
4.88 %
|
|
2.19 %
|
Net Interest
Margin
|
|
3.38 %
|
|
N/A
|
|
3.15 %
|
Noninterest Income
Noninterest income increased during the quarter to $11.5 million, up $9.4
million when compared to the first quarter of 2022 and up
$0.6 million compared to the fourth
quarter of 2022. The Company began accounting for certain
third party credit enhancements on consumer lending during the
third quarter of 2022 and purchased the mortgage platform in the
second quarter of 2022.
Gains associated with credit enhancements on consumer lending
amounted to $4.9 million in the
current quarter of 2023 and $1.8
million in the fourth quarter of 2022. These amounts
offset similar amounts of the Company's provision for loan losses
in the respective quarters.
Mortgage revenue, and profitability, increased substantially in
the first quarter of 2023. Production teams hired in the
fourth quarter built pipelines during the quarter and the Company
saw attractive build in revenue. Total mortgage revenue for
the quarter was $4.3 million against
interest rate lock volume during the quarter of $142 million.
During the quarter, Panacea realized $0.43 million of gains associated with a small
sale of commercial loans totaling $15
million. Management continues efforts to secure
additional buyers for the division's consumer and commercial loans
and believes sales of $50 -
$100 million are likely in 2023.
Noninterest Expense
Noninterest expense was $27.4
million for the first quarter of 2023, compared to
$29.1 million for the fourth quarter
of 2022. Noninterest expense for the first quarter of 2023 and
fourth quarter of 2022 included $873
thousand and $1.37 million,
respectively, of servicing and other expenses for a third-party
managed loan portfolio. Noninterest expense adjusted for
these expenses, branch consolidation costs, other restructuring
costs and unfunded commitment reserve impacts was $26.5 million for the first quarter of 2023
unchanged from levels in the fourth quarter of 2022. Included in
noninterest expense was $5.0 million
in expenses related to Primis Mortgage in the first quarter of 2023
versus $5.4 million in the fourth
quarter of 2022. The expiration of elevated draws at year end was
offset by higher commission expense due to increased mortgage
activity.
Excluding mortgage, nonrecurring expenses and the third party
expenses described above, noninterest expense for the first quarter
of 2023 was $21.5 million versus
$21.2 million linked-quarter.
Compensation and benefits declined $757
thousand linked-quarter largely due to reduced incentive
compensation accruals. Marketing expense declined
$364 thousand as the Bank prioritized
digital advertising over more expensive local media. Other
professional fees declined $743
thousand from the fourth quarter due to expenses associated
with bringing certain V1BE activities in-house in the fall.
Offsetting these reductions was an increase in FDIC insurance costs
of $132 thousand and increased fraud
losses of $371 thousand, primarily
around increased check fraud activity. Data processing costs
were also higher by $549 thousand due
to substantially higher application volume on the digital platform
in the first quarter.
The Company's efficiency ratio was 68.6% in the first quarter of
2023 versus 71.7% in the fourth quarter of 2022. The
operating efficiency ratio (1) in the first quarter of
2023 was 68.6% compared to 76.7% in the fourth quarter of
2022. As noted above, the efficiency ratio was heavily
impacted by Primis Mortgage in the first quarter. Excluding
mortgage, the operating efficiency ratio was 63.3% for the first
quarter of 2023 versus 66.7% for the fourth quarter of 2022.
Loan Portfolio and Asset Quality
Loans held for investment increased to $3.04 billion at March 31,
2023, compared to $2.95
billion at December 31,
2022. Loans held for investment grew at an annualized rate of
13%, net of a decline in PPP balances, in the first quarter.
Loan growth was particularly strong in the Life Premium Finance
division in the first quarter, as discussed below. Growth in
the portfolio was also offset by the sale of approximately
$15 million of Panacea loans in the
first quarter.
Nonperforming assets, excluding portions guaranteed by the SBA,
were $32.8 million at March 31, 2023, compared to $34.9 million at December
31, 2022, while loans rated substandard or doubtful
decreased to $39.5 million in the
first quarter of 2023 from $41.0
million in the fourth quarter of 2022. As discussed in
previous periods, a substantial portion of the Bank's nonperforming
assets are comprised of two relationships with a combined balance
of approximately $27 million. A
large residential property with a balance of approximately
$8 million included in that total,
continues to make sporadic payments and is current as of
March 31, 2023. The other
relationship, primarily consisting of assisted living facilities,
is currently in the middle of a receiver-managed marketing
process. The Bank currently holds no other real estate owned
at the end of the first quarter.
The Company recorded a provision for loan losses of $5.2 million for the first quarter of 2023 versus
$7.9 million for the fourth quarter
of 2022. Of this provision, $4.7
million was due to charge-offs and reserve build for the
loan portfolio with a third-party credit enhancement described
previously. This portion of the provision is fully offset by
a gain recorded in noninterest income and has no effect on net
income. Excluding this provision amount, the provision for
loan losses would have been $469
thousand. As a percentage of loans, excluding PPP
balances, the allowance for credit losses was 1.17% at the end of
the first quarter of 2023 and fourth quarter of 2022.
Net charge-offs were $4.0 million
for the first quarter of 2023, down from $5.3 million in the fourth quarter of 2022.
Excluding the losses tied to the impaired relationship described in
the fourth quarter and charge-offs that are covered by a
third-party, the first quarter would have experienced $2.1 million of net charge-offs versus
$1.3 million of net recoveries in the
fourth quarter of 2022. First quarter net charge-offs were
primarily related to existing nonperforming assets with specific
reserve amounts established in prior quarters.
Deposits and Funding
Total deposits increased to $3.67
billion at March 31, 2023 from
$2.72 billion at December 31, 2022, or 34.7% un-annualized.
The Bank's new digital banking offering drove substantial growth in
the quarter with balances on the new platform reaching $980 million, up from $30
million at year-end. The majority of the growth was in
savings accounts with the remainder largely in NOW accounts.
The Company was able to use the substantial growth in deposits to
pay off $325 million of FHLB advances
and $15 million of listing agent CDs
that matured in the first quarter. Currently, the Bank's only
wholesale funding is comprised of $100
million of brokered CDs that mature in 2023.
Mr. Zember commented on additional growth in the bank, saying
"Our core bank's success in the quarter on deposit levels and costs
is notable but somewhat hidden by the digital platform
success. The Core bank experienced a 0.2% decline in total
deposits which is remarkable in the current environment. More
notable is that during the quarter a single non-interest bearing
relationship totaling approximately $52
million at year end moved out of the bank accounting for 61%
of the decline in non-interest bearing balances in the first
quarter of 2023. Excluding this relationship, the core bank
would have experienced deposit growth during the quarter of 1.7%,
while keeping its costs and resulting margins mostly intact.
As we move forward in the year, we expect to continue growing
deposits on the digital platform, developing the sweep arrangements
that allow us to manage our capital and liquidity on a just-in-time
basis and still earn some amount of spread on the balances.
We will convert as many of these new customers as possible into
core customers over the next 12 months, continue tweaking and
improving the functionality of our technology, and finish building
and rolling out the lower cost deposit strategies including small
business. I am determined to put real space between us and
our competition using functional, intuitive technology delivered by
traditional community bank service and personal attention."
Digital Lines of Business
The Company operates two national lines of business that are
focused primarily on lending to higher quality segments of the
economy and a national digital platform for funding purposes.
While each of the divisions are relatively new, management believes
that the combined strategy can have margins in the 3.00%-3.25%
range, efficiency ratios in the 30%-40% range and 50% less net
charge-offs than traditional community bank commercial real
estate.
Panacea continues to experience substantial growth alongside the
development of its nationally-recognized brand. The division
increased its total client relationships to over 3,500 doctor
households across all 50 states. Panacea finished the first quarter
of 2023 with approximately $256.1
million in outstanding loans, an increase of $7.7 million, or 3.1%, from December 31, 2022. As highlighted above, Panacea
sold approximately $15 million of
loans in the first quarter for a pre-tax gain of $427 thousand. Without the loan sale,
growth would have been 9% for the quarter, or 36% annualized.
Panacea expects profitability to increase materially in 2023 due to
higher gain on sale income in coming quarters.
Panacea-related deposits increased to $30.9 million at March 31,
2023, up 35% from December 31,
2022 and a substantially higher rate of growth than loan
growth for the quarter. Coupled with its loan sale strategy,
Panacea expects to continue increasing the amount it self-funds its
balance sheet.
The Life Premium Finance ("LPF") division, launched in late
2021, ended the first quarter of 2023 with outstanding balances,
net of deferred fees, of $236.7
million, compared to $193.8
million at the end of the fourth quarter of 2022. The
LPF division increased profitability (including assumed cost of
funds) at almost twice the rate it grew earnings assets as it
continues to experience meaningful operating leverage.
As previously discussed, higher expenses related to team
acquisitions at Primis Mortgage ended at the end of the last
quarter. Primis Mortgage was breakeven for February and March
with an after-tax loss for the quarter of $212 thousand. The locked pipeline ended
the first quarter of 2023 at $53
million, up 110% from December 31,
2022 while loan fundings increased to $123 million in the first quarter, up 43% from
the fourth quarter. Primis still expects Primis Mortgage to
contribute $4 to $5 million to net income and 10 to 15 basis
points to return on assets in 2023.
Shareholders' Equity
Book value per share as of March 31,
2023 was $16.21, an increase
of $0.23 from December 31, 2022. Tangible book value per
share(1) at the end of the first quarter of 2023 was
$11.86, an increase of $0.25 from December
31, 2022. Shareholders' equity was $400.3 million, or 9.52% of total assets, at
March 31, 2023. Tangible common
equity(1) at March 31,
2023 was $292.7 million, or
7.14% of tangible assets(1). Equity ratios
are temporarily depressed by the excess cash and liquidity on the
bank's balance sheet. Management estimates that approximately
$500 million of the Bank's current
balance sheet will be included in the sweep program in the second
quarter and that tangible common equity to tangible assets will
move back to approximately 8.0%. Unrealized losses on the
Company's available-for-sale securities portfolio declined by
$2.4 million to $23.5 million due to marginal increases in market
interest rates during the quarter. The Company has the
wherewithal to hold these securities until maturity or recovery of
the value and does not anticipate realizing any losses on the
investments.
Additionally, the Board of Directors announced and declared a
dividend of $0.10 per share payable
on May 26, 2023 to shareholders of
record on May 12, 2023. This is
Primis' forty-sixth consecutive quarterly dividend.
About Primis Financial Corp.
As of March 31, 2023, Primis had
$4.21 billion in total assets,
$3.04 billion in total loans and
$3.67 billion in total deposits.
Primis Bank provides a range of financial services to individuals
and small- and medium-sized businesses through thirty-two
full-service branches in Virginia
and Maryland and provides services
to customers through certain online and mobile applications.
Contacts:
|
Address:
|
Dennis J. Zember, Jr.,
President and CEO
|
Primis Financial
Corp.
|
Matthew A. Switzer, EVP
and CFO
|
1676 International
Drive, Suite 900
|
Phone: (703)
893-7400
|
McLean, VA
22102
|
|
|
|
|
Primis Financial Corp.,
NASDAQ Symbol FRST
|
|
Website:
www.primisbank.com
|
|
Conference Call
The Company's management will host a conference call to discuss
its first quarter results on Friday, April
28, 2023 at 10:00 a.m. (ET). A
live Webcast of the conference call is available at the following
website: https://events.q4inc.com/attendee/659480176.
Participants may also call 1-888-330-3573 and ask for the Primis
Financial Corp. call. A replay of the teleconference will be
available for 7 days by calling 1-800-770-2030 and providing Replay
Access Code 4440924.
Non-GAAP Measures
Statements included in this press release include non-GAAP
financial measures and should be read along with the accompanying
tables. Primis uses non-GAAP financial measures to analyze its
performance. The measures entitled net income adjusted for
nonrecurring income and expenses; pre-tax pre-provision operating
earnings; operating return on average assets; pre-tax pre-provision
operating return on average assets; operating return on average
equity; operating return on average tangible equity; operating
efficiency ratio; operating earnings per share – basic; operating
earnings per share – diluted; tangible book value per share;
tangible common equity; tangible common equity to tangible assets;
and core net interest margin are not measures recognized under GAAP
and therefore are considered non-GAAP financial measures. We use
the term "operating" to describe a financial measure that excludes
income or expense considered to be non-recurring in nature.
Items identified as non-operating are those that, when excluded
from a reported financial measure, provide management or the reader
with a measure that may be more indicative of forward-looking
trends in our business. A reconciliation of these non-GAAP
financial measures to the most comparable GAAP measures is provided
in the Reconciliation of Non-GAAP items table.
Management believes that these non-GAAP financial measures
provide additional useful information about Primis that allows
management and investors to evaluate the ongoing operating results,
financial strength and performance of Primis and provide meaningful
comparison to its peers. Non-GAAP financial measures should not be
considered as an alternative to any measure of performance or
financial condition as promulgated under GAAP, and investors should
consider Primis' performance and financial condition as reported
under GAAP and all other relevant information when assessing the
performance or financial condition of Primis. Non-GAAP
financial measures are not standardized and, therefore, it may not
be possible to compare these measures with other companies that
present measures having the same or similar names.
Non-GAAP financial measures have limitations as analytical
tools, and investors should not consider them in isolation or as a
substitute for analysis of the results or financial condition as
reported under GAAP.
Forward-Looking Statements
This press release and certain of our other filings with the
Securities and Exchange Commission contain statements that
constitute "forward-looking statements" within the meaning of, and
subject to the protections of, Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of
1934, as amended. All statements other than statements of
historical fact are forward-looking statements. Such statements can
generally be identified by such words as "may," "plan,"
"contemplate," "anticipate," "believe," "intend," "continue,"
"expect," "project," "predict," "estimate," "could," "should,"
"would," "will," and other similar words or expressions of the
future or otherwise regarding the outlook for the Company's future
business and financial performance and/or the performance of the
banking industry and economy in general. These forward-looking
statements include, but are not limited to, our expectations
regarding our future operating and financial performance, including
our outlook and long-term goals for future growth and new offerings
and services; our expectations regarding net interest margin;
expectations on our growth strategy, expense management, capital
management and future profitability; expectations on credit quality
and performance; and the assumptions underlying our
expectations.
Prospective investors are cautioned that any such
forward-looking statements are not guarantees of future performance
and involve known and unknown risks and uncertainties which may
cause the actual results, performance or achievements of the
Company to be materially different from the future results,
performance or achievements expressed or implied by such
forward-looking statements. Forward-looking statements are based on
the information known to, and current beliefs and expectations of,
the Company's management and are subject to significant risks and
uncertainties. Actual results may differ materially from those
contemplated by such forward-looking statements. Factors that might
cause such differences include, but are not limited to: the
Company's ability to implement its various strategic and growth
initiatives, including its recently established Panacea Financial
and Life Premium Finance Divisions, new digital banking platform,
V1BE fulfillment service and Primis Mortgage Company; competitive
pressures among financial institutions increasing significantly;
changes in applicable laws, rules, or regulations, including
changes to statutes, regulations or regulatory policies or
practices; changes in management's plans for the future; credit
risk associated with our lending activities; changes in interest
rates, inflation, loan demand, real estate values, or competition,
as well as labor shortages and supply chain disruptions; changes in
accounting principles, policies, or guidelines; adverse results
from current or future litigation, regulatory examinations or other
legal and/or regulatory actions, including as a result of the
Company's participation in and execution of government programs
related to the COVID-19 pandemic; potential impacts of the recent
adverse developments in the banking industry highlighted by
high-profile bank failures, including impacts on customer
confidence, deposit outflows, liquidity and the regulatory response
thereto; potential increases in the provision for credit losses;
and other general competitive, economic, political, and market
factors, including those affecting our business, operations,
pricing, products, or services.
Forward-looking statements speak only as of the date on which
such statements are made. These forward-looking statements are
based upon information presently known to the Company's management
and are inherently subjective, uncertain and subject to change due
to any number of risks and uncertainties, including, without
limitation, the risks and other factors set forth in the Company's
filings with the Securities and Exchange Commission, the Company's
Annual Report on Form 10-K for the year ended December 31, 2022, under the captions "Cautionary
Note Regarding Forward-Looking Statements" and "Risk Factors," and
in the Company's Quarterly Reports on Form 10-Q and Current Reports
on Form 8-K. The Company undertakes no obligation to update any
forward-looking statement to reflect events or circumstances after
the date on which such statement is made, or to reflect the
occurrence of unanticipated events. Readers are cautioned not to
place undue reliance on these forward-looking statements.
(1)
|
Non-GAAP financial
measure. Please see "Reconciliation of Non-GAAP Items"in the
financial tables for more information and for a reconciliation to
GAAP.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Primis Financial
Corp.
|
|
|
|
|
|
|
|
|
|
Financial Highlights
(unaudited)
|
|
|
|
|
|
|
|
|
(Dollars in
thousands, except per share data)
|
For Three Months
Ended:
|
|
Variance - 1Q 2023
vs.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected Performance
Ratios:
|
1Q
2023
|
4Q
2022
|
3Q
2022
|
2Q
2022
|
1Q
2022
|
|
4Q
2022
|
|
1Q
2022
|
|
Return on average
assets
|
0.60 %
|
0.36 %
|
0.61 %
|
0.63 %
|
0.55 %
|
|
24
|
bps
|
4
|
bps
|
Operating return on
average assets(1)
|
0.60 %
|
0.09 %
|
0.64 %
|
0.76 %
|
0.57 %
|
|
51
|
|
3
|
|
Pre-tax pre-provision
return on average assets(1)
|
1.31 %
|
1.33 %
|
1.16 %
|
0.83 %
|
0.75 %
|
|
(2)
|
|
56
|
|
Pre-tax pre-provision
operating return on average assets(1)
|
1.31 %
|
0.99 %
|
1.20 %
|
1.00 %
|
0.77 %
|
|
33
|
|
55
|
|
Return on average
equity
|
5.77 %
|
3.07 %
|
4.98 %
|
4.92 %
|
4.49 %
|
|
270
|
|
128
|
|
Operating return on
average equity(1)
|
5.77 %
|
0.75 %
|
5.22 %
|
5.93 %
|
4.58 %
|
|
502
|
|
119
|
|
Operating return on
average tangible equity(1)
|
7.85 %
|
1.03 %
|
7.14 %
|
8.08 %
|
6.16 %
|
|
682
|
|
169
|
|
Cost of
funds
|
|
2.19 %
|
1.19 %
|
0.71 %
|
0.53 %
|
0.52 %
|
|
100
|
|
167
|
|
Net interest
margin
|
3.15 %
|
3.67 %
|
3.57 %
|
3.33 %
|
2.96 %
|
|
(52)
|
|
19
|
|
Core net interest
margin(1)
|
3.16 %
|
3.68 %
|
3.58 %
|
3.35 %
|
2.96 %
|
|
(52)
|
|
20
|
|
Gross loans to
deposits
|
82.98 %
|
108.32 %
|
101.06 %
|
97.99 %
|
89.11 %
|
|
(25)
|
pts
|
(6)
|
pts
|
Efficiency
ratio
|
|
68.59 %
|
71.71 %
|
71.85 %
|
75.01 %
|
76.11 %
|
|
(3)
|
|
(752)
|
|
Operating efficiency
ratio(1)
|
68.59 %
|
76.65 %
|
70.92 %
|
70.23 %
|
75.65 %
|
|
(8)
|
|
(706)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Share
Data:
|
|
|
|
|
|
|
|
|
|
|
Earnings per share -
Basic
|
$
0.23
|
$
0.13
|
$
0.21
|
$
0.20
|
$
0.19
|
|
76.92
|
%
|
21.05
|
%
|
Operating earnings per
share - Basic(1)
|
$
0.23
|
$
0.03
|
$
0.22
|
$
0.25
|
$
0.19
|
|
NM
|
|
22.70
|
|
Earnings per share -
Diluted
|
$
0.23
|
$
0.12
|
$
0.20
|
$
0.20
|
$
0.19
|
|
91.67
|
|
21.05
|
|
Operating earnings per
share - Diluted(1)
|
$
0.23
|
$
0.03
|
$
0.21
|
$
0.24
|
$
0.19
|
|
NM
|
|
23.20
|
|
Book value per
share
|
$
16.21
|
$
15.98
|
$
15.89
|
$
16.17
|
$
16.42
|
|
1.44
|
|
(1.28)
|
|
Tangible book value per
share(1)
|
$
11.86
|
$
11.61
|
$
11.54
|
$
11.77
|
$
12.11
|
|
2.15
|
|
(2.06)
|
|
Cash dividend per
share
|
$
0.10
|
$
0.10
|
$
0.10
|
$
0.10
|
$
0.10
|
|
-
|
|
-
|
|
Weighted average shares
outstanding - Basic
|
24,625,943
|
24,601,108
|
24,576,887
|
24,562,753
|
24,503,945
|
|
0.10
|
|
0.50
|
|
Weighted average shares
outstanding - Diluted
|
24,685,206
|
24,685,663
|
24,688,422
|
24,681,425
|
24,662,588
|
|
(0.00)
|
|
0.09
|
|
Shares outstanding at
end of period
|
24,685,064
|
24,680,097
|
24,650,239
|
24,650,239
|
24,622,739
|
|
0.02
|
%
|
0.25
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset Quality
Ratios:
|
|
|
|
|
|
|
|
|
|
|
Non-performing assets
as a percent of total assets, excluding SBA guarantees
|
0.78 %
|
0.98 %
|
1.11 %
|
0.61 %
|
0.47 %
|
|
(20)
|
bps
|
31
|
bps
|
Net charge-offs
(recoveries) as a percent of average loans (annualized)
|
0.53 %
|
0.74 %
|
0.17 %
|
(0.07 %)
|
(0.03 %)
|
|
(21)
|
|
56
|
|
Core net charge-offs
(recoveries) as a percent of average loans (annualized)
|
0.28 %
|
0.52 %
|
0.17 %
|
(0.07 %)
|
(0.03 %)
|
|
(24)
|
|
31
|
|
Allowance for credit
losses to total loans
|
1.17 %
|
1.17 %
|
1.17 %
|
1.15 %
|
1.23 %
|
|
0
|
|
(5)
|
|
Allowance for credit
losses to total loans (excluding PPP loans)
|
1.17 %
|
1.17 %
|
1.17 %
|
1.16 %
|
1.24 %
|
|
0
|
|
(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
Ratios:
|
|
|
|
|
|
|
|
|
|
|
|
Equity to
assets
|
|
9.52 %
|
11.04 %
|
11.67 %
|
12.32 %
|
12.55 %
|
|
(153)
|
bps
|
(304)
|
bps
|
Tangible common equity
to tangible assets(1)
|
7.14 %
|
8.27 %
|
8.73 %
|
9.27 %
|
9.57 %
|
|
(113)
|
|
(243)
|
|
Leverage ratio
(2)
|
|
8.59 %
|
9.48 %
|
10.11 %
|
10.31 %
|
9.77 %
|
|
(89)
|
|
(118)
|
|
Common equity tier 1
capital ratio (2)
|
10.13 %
|
10.54 %
|
11.17 %
|
11.59 %
|
12.64 %
|
|
(41)
|
|
(251)
|
|
Tier 1 risk-based
capital ratio (2)
|
10.45 %
|
10.88 %
|
11.53 %
|
11.97 %
|
13.06 %
|
|
(43)
|
|
(261)
|
|
Total risk-based
capital ratio (2)
|
14.03 %
|
14.80 %
|
15.71 %
|
16.29 %
|
17.66 %
|
|
(77)
|
|
(363)
|
|
|
|
|
(1) See
Reconciliation of Non-GAAP financial
measures.
|
|
|
(2) March
31, 2023 ratios are estimated and may be subject to change pending
the final filing of the FR Y-9C.
|
|
The company
defines "NM" as not meaningful for increases or decreases greater
than 300 percent.
|
|
Primis Financial
Corp.
|
|
|
|
|
|
|
|
|
|
(Dollars in
thousands)
|
As Of
:
|
|
Variance - 1Q 2023
vs.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed
Consolidated Balance Sheets (unaudited)
|
1Q
2023
|
4Q
2022
|
3Q
2022
|
2Q
2022
|
1Q
2022
|
|
4Q
2022
|
|
1Q
2022
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
607,125
|
$
77,859
|
$
97,738
|
$
70,721
|
$
298,230
|
|
NM
|
%
|
103.58
|
%
|
Investment
securities-available for sale
|
231,468
|
236,315
|
238,891
|
257,180
|
271,626
|
|
(2.05)
|
|
(14.78)
|
|
Investment
securities-held to maturity
|
13,115
|
13,520
|
14,391
|
14,978
|
16,138
|
|
(3.00)
|
|
(18.73)
|
|
Loans held for
sale
|
42,011
|
27,626
|
13,388
|
16,096
|
-
|
|
52.07
|
|
100.00
|
|
Loans receivable, net
of deferred fees
|
3,043,732
|
2,948,836
|
2,737,086
|
2,628,797
|
2,393,669
|
|
3.22
|
|
27.16
|
|
Allowance for credit
losses
|
(35,727)
|
(34,544)
|
(31,956)
|
(30,209)
|
(29,379)
|
|
3.42
|
|
21.61
|
|
|
Net loans
|
|
3,008,005
|
2,914,292
|
2,705,130
|
2,598,588
|
2,364,290
|
|
3.22
|
|
27.23
|
|
Stock in Federal
Reserve Bank and Federal Home Loan Bank
|
12,083
|
25,815
|
16,689
|
12,940
|
11,927
|
|
(53.19)
|
|
1.31
|
|
Bank premises and
equipment, net
|
25,136
|
25,257
|
25,534
|
26,113
|
29,872
|
|
(0.48)
|
|
(15.85)
|
|
Operating lease
right-of-use assets
|
9,352
|
5,335
|
5,511
|
4,777
|
5,305
|
|
75.30
|
|
76.29
|
|
Goodwill and other
intangible assets
|
107,539
|
107,863
|
108,170
|
108,524
|
106,075
|
|
(0.30)
|
|
1.38
|
|
Assets held for sale,
net
|
3,115
|
3,115
|
3,127
|
3,127
|
-
|
|
-
|
|
100.00
|
|
Bank-owned life
insurance
|
67,591
|
67,201
|
67,519
|
67,339
|
67,099
|
|
0.58
|
|
0.73
|
|
Other real estate
owned
|
-
|
-
|
1,041
|
1,041
|
1,041
|
|
-
|
|
(100.00)
|
|
Deferred tax assets,
net
|
18,825
|
18,289
|
17,892
|
14,658
|
12,380
|
|
2.93
|
|
52.06
|
|
Other assets
|
|
60,041
|
49,050
|
42,141
|
40,496
|
35,893
|
|
22.41
|
|
67.28
|
|
|
Total assets
|
$
4,205,406
|
$
3,571,537
|
$
3,357,162
|
$
3,236,578
|
$
3,219,876
|
|
17.75
|
%
|
30.61
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
stockholders' equity
|
|
|
|
|
|
|
|
|
|
|
Demand
deposits
|
$
497,531
|
$
582,556
|
$
687,272
|
$
653,181
|
$
559,682
|
|
(14.60)
|
%
|
(11.10)
|
%
|
NOW accounts
|
|
835,348
|
617,687
|
637,786
|
677,237
|
730,235
|
|
35.24
|
|
14.39
|
|
Money market
accounts
|
865,115
|
811,365
|
803,050
|
802,953
|
831,580
|
|
6.62
|
|
4.03
|
|
Savings
accounts
|
971,439
|
245,713
|
217,220
|
220,211
|
225,291
|
|
295.36
|
|
NM
|
|
Time
deposits
|
|
498,564
|
465,057
|
362,992
|
329,223
|
339,456
|
|
7.20
|
|
46.87
|
|
Total deposits
|
|
3,667,997
|
2,722,378
|
2,708,320
|
2,682,805
|
2,686,244
|
|
34.74
|
|
36.55
|
|
Securities sold under
agreements to repurchase - short term
|
4,346
|
6,445
|
9,886
|
10,020
|
11,231
|
|
(32.57)
|
|
(61.30)
|
|
Federal Home Loan Bank
advances
|
-
|
325,000
|
125,000
|
25,000
|
-
|
|
(100.00)
|
|
NM
|
|
Subordinated debt and
notes
|
95,382
|
95,312
|
95,241
|
95,170
|
95,099
|
|
0.07
|
|
0.30
|
|
Operating lease
liabilities
|
9,799
|
5,767
|
6,044
|
5,299
|
5,897
|
|
69.92
|
|
66.17
|
|
Other
liabilities
|
|
27,617
|
22,232
|
20,863
|
19,647
|
17,210
|
|
24.22
|
|
60.47
|
|
|
Total
liabilities
|
3,805,141
|
3,177,134
|
2,965,354
|
2,837,941
|
2,815,681
|
|
19.77
|
|
35.14
|
|
Stockholders'
equity
|
400,265
|
394,403
|
391,808
|
398,637
|
404,195
|
|
1.49
|
|
(0.97)
|
|
|
Total liabilities and
stockholders' equity
|
$
4,205,406
|
$
3,571,537
|
$
3,357,162
|
$
3,236,578
|
$
3,219,876
|
|
17.75
|
%
|
30.61
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible common
equity(1)
|
$
292,726
|
$
286,540
|
$
283,638
|
$
290,113
|
$
298,120
|
|
2.16
|
%
|
(1.81)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The company
defines "NM" as not meaningful for increases or decreases greater
than 300 percent.
|
Primis Financial
Corp.
|
|
|
|
|
|
|
|
|
|
(Dollars in
thousands)
|
For Three Months
Ended:
|
|
Variance - 1Q 2023
vs.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed
Consolidated Statement of Operations (unaudited)
|
1Q
2023
|
4Q
2022
|
3Q
2022
|
2Q
2022
|
1Q
2022
|
|
4Q
2022
|
|
1Q
2022
|
|
Interest and dividend
income
|
$
47,159
|
$
38,635
|
$
32,596
|
$
28,258
|
$
26,585
|
|
22.06
|
%
|
77.39
|
%
|
Interest
expense
|
|
18,749
|
9,058
|
5,146
|
3,652
|
3,731
|
|
106.99
|
|
NM
|
|
|
Net interest
income
|
28,410
|
29,577
|
27,450
|
24,606
|
22,854
|
|
(3.95)
|
|
24.31
|
|
Provision for (recovery
of) credit losses
|
5,187
|
7,860
|
2,890
|
422
|
99
|
|
(34.01)
|
|
NM
|
|
|
Net interest income
after provision for (recovery of) credit losses
|
23,223
|
21,717
|
24,560
|
24,184
|
22,755
|
|
6.93
|
|
2.06
|
|
Account maintenance and
deposit service fees
|
1,216
|
1,427
|
1,525
|
1,442
|
1,351
|
|
(14.79)
|
|
(9.99)
|
|
Income from bank-owned
life insurance
|
420
|
847
|
394
|
378
|
375
|
|
(50.41)
|
|
12.00
|
|
Gain on debt
extinguishment
|
-
|
-
|
-
|
-
|
-
|
|
-
|
|
-
|
|
Mortgage banking
income
|
4,315
|
2,264
|
2,197
|
593
|
-
|
|
90.59
|
|
-
|
|
Gain on sale of Panacea
loans
|
478
|
-
|
-
|
-
|
-
|
|
-
|
|
-
|
|
Credit enhancement
income
|
4,886
|
1,822
|
1,220
|
-
|
-
|
|
168.17
|
|
-
|
|
Gain on sale of other
investment
|
-
|
4,411
|
-
|
-
|
-
|
|
100.00
|
|
100.00
|
|
Other
|
|
217
|
217
|
284
|
217
|
364
|
|
-
|
|
(40.38)
|
|
|
Noninterest
income
|
11,532
|
10,988
|
5,620
|
2,630
|
2,090
|
|
4.95
|
|
NM
|
|
Employee compensation
and benefits
|
15,028
|
16,213
|
12,594
|
10,573
|
9,625
|
|
(7.31)
|
|
56.14
|
|
Occupancy and equipment
expenses
|
3,022
|
2,899
|
2,857
|
2,546
|
2,557
|
|
4.24
|
|
18.19
|
|
Amortization of core
deposit intangible
|
317
|
317
|
326
|
341
|
341
|
|
-
|
|
(7.04)
|
|
Virginia franchise tax
expense
|
849
|
814
|
813
|
814
|
813
|
|
4.30
|
|
4.43
|
|
Data processing
expense
|
2,251
|
1,702
|
1,528
|
1,293
|
1,490
|
|
32.26
|
|
51.07
|
|
Marketing
expense
|
569
|
933
|
938
|
731
|
465
|
|
(39.01)
|
|
22.37
|
|
Telecommunication and
communication expense
|
377
|
343
|
342
|
366
|
382
|
|
9.91
|
|
(1.31)
|
|
Net (gain) loss on
other real estate owned
|
-
|
131
|
-
|
-
|
(59)
|
|
100.00
|
|
(100.00)
|
|
Loss on bank premises
and equipment
|
-
|
-
|
64
|
620
|
-
|
|
-
|
|
-
|
|
Professional
fees
|
|
862
|
1,605
|
1,261
|
827
|
1,094
|
|
(46.29)
|
|
(21.21)
|
|
Credit enhancement
costs
|
873
|
1,369
|
-
|
-
|
-
|
|
(36.23)
|
|
-
|
|
Other
expenses
|
|
3,249
|
2,764
|
3,038
|
2,319
|
2,279
|
|
17.55
|
|
42.56
|
|
|
Noninterest
expense
|
27,397
|
29,090
|
23,761
|
20,430
|
18,987
|
|
(5.82)
|
|
44.29
|
|
Income before income
taxes
|
7,358
|
3,615
|
6,419
|
6,384
|
5,858
|
|
103.54
|
|
25.61
|
|
Income tax
expense
|
1,583
|
530
|
1,365
|
1,375
|
1,265
|
|
198.68
|
|
25.14
|
|
|
Net Income
|
$
5,775
|
$
3,085
|
$
5,054
|
$
5,009
|
$
4,593
|
|
87.20
|
|
25.73
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) See
Reconciliation of Non-GAAP financial
measures.
|
|
The company
defines "NM" as not meaningful for increases or decreases greater
than 300 percent.
|
Primis Financial
Corp.
|
|
|
|
|
|
|
|
|
|
(Dollars in
thousands)
|
As
Of:
|
|
Variance - 1Q 2023
vs.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan Portfolio
Composition
|
1Q
2023
|
4Q
2022
|
3Q
2022
|
2Q
2022
|
1Q
2022
|
|
4Q
2022
|
|
1Q
2022
|
|
Loans held for
sale
|
$
42,011
|
$
27,626
|
$
13,388
|
$
16,096
|
$
-
|
|
52.07
|
%
|
100.00
|
%
|
Loans secured by real
estate:
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate
- owner occupied
|
460,245
|
461,126
|
437,636
|
433,840
|
406,285
|
|
(0.19)
|
|
13.28
|
|
|
Commercial real estate
- non-owner occupied
|
577,481
|
581,168
|
573,732
|
600,436
|
615,682
|
|
(0.63)
|
|
(6.20)
|
|
|
Secured by
farmland
|
7,404
|
8,436
|
8,852
|
9,305
|
8,896
|
|
(12.23)
|
|
(16.77)
|
|
|
Construction and land
development
|
151,950
|
148,762
|
138,371
|
117,604
|
116,365
|
|
2.14
|
|
30.58
|
|
|
Residential 1-4
family
|
607,118
|
610,919
|
616,764
|
607,548
|
575,946
|
|
(0.62)
|
|
5.41
|
|
|
Multi-family
residential
|
139,978
|
140,321
|
137,253
|
144,406
|
152,266
|
|
(0.24)
|
|
(8.07)
|
|
|
Home equity lines of
credit
|
64,606
|
65,152
|
65,852
|
69,860
|
72,440
|
|
(0.84)
|
|
(10.81)
|
|
|
Total real estate
loans
|
2,008,782
|
2,015,884
|
1,978,460
|
1,982,999
|
1,947,880
|
|
(0.35)
|
|
3.13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
loans
|
547,095
|
523,110
|
470,934
|
448,582
|
336,961
|
|
4.59
|
|
62.36
|
|
Paycheck Protection
Program loans
|
2,603
|
4,564
|
8,014
|
17,525
|
31,404
|
|
(42.97)
|
|
(91.71)
|
|
Consumer
loans
|
|
485,252
|
405,278
|
279,678
|
179,691
|
77,424
|
|
19.73
|
|
NM
|
|
|
Loans receivable, net
of deferred fees
|
$
3,043,732
|
$
2,948,836
|
$
2,737,086
|
$
2,628,797
|
$
2,393,669
|
|
3.22
|
%
|
27.16
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans by Risk
Grade:
|
|
|
|
|
|
|
|
|
|
|
Pass, not
graded
|
$
-
|
$
-
|
$
-
|
$
-
|
$
-
|
|
-
|
%
|
-
|
%
|
Pass Grade
1 - Highest Quality
|
607
|
600
|
616
|
609
|
786
|
|
1.17
|
|
(22.77)
|
|
Pass Grade
2 - Good Quality
|
253,665
|
209,605
|
149,389
|
129,571
|
8,734
|
|
21.02
|
|
NM
|
|
Pass Grade
3 - Satisfactory Quality
|
1,596,690
|
1,591,364
|
1,520,364
|
1,513,054
|
1,413,480
|
|
0.33
|
|
12.96
|
|
Pass Grade
4 - Pass
|
1,124,993
|
1,073,952
|
984,012
|
890,709
|
895,197
|
|
4.75
|
|
25.67
|
|
Pass Grade
5 - Special Mention
|
28,273
|
32,278
|
35,410
|
67,736
|
51,884
|
|
(12.41)
|
|
(45.51)
|
|
Grade 6 -
Substandard
|
39,504
|
41,037
|
47,295
|
27,118
|
23,588
|
|
(3.74)
|
|
67.47
|
|
Grade 7 -
Doubtful
|
-
|
-
|
-
|
-
|
-
|
|
-
|
|
-
|
|
Grade 8 -
Loss
|
|
-
|
-
|
-
|
-
|
-
|
|
-
|
|
-
|
|
Total loans
|
|
$
3,043,732
|
$
2,948,836
|
$
2,737,086
|
$
2,628,797
|
$
2,393,669
|
|
3.22
|
%
|
27.16
|
%
|
(Dollars in
thousands)
|
As Of or For Three
Months Ended:
|
|
|
|
|
|
|
|
|
Asset Quality
Information
|
1Q
2023
|
4Q
2022
|
3Q
2022
|
2Q
2022
|
1Q
2022
|
Allowance for Credit
Losses:
|
|
|
Balance at beginning of
period
|
$
(34,544)
|
$
(31,956)
|
$
(30,209)
|
$
(29,379)
|
$
(29,105)
|
(Provision for) /
recovery of allowance for credit losses
|
(5,187)
|
(7,860)
|
(2,890)
|
(422)
|
(99)
|
Net
charge-offs
|
|
4,004
|
5,272
|
1,143
|
(408)
|
(175)
|
Ending
balance
|
|
$
(35,727)
|
$
(34,544)
|
$
(31,956)
|
$
(30,209)
|
$
(29,379)
|
|
|
|
|
|
|
|
|
Reserve for Unfunded
Commitments:
|
|
|
Balance at beginning of
period
|
$
(1,416)
|
$
(1,380)
|
$
(1,069)
|
$
(1,237)
|
$
(977)
|
(Expense for) /
recovery of unfunded loan commitment reserve
|
(91)
|
(36)
|
(311)
|
168
|
(260)
|
Total Reserve for
Unfunded Commitments
|
$
(1,507)
|
$
(1,416)
|
$
(1,380)
|
$
(1,069)
|
$
(1,237)
|
|
|
|
As
Of:
|
|
Variance - 1Q 2023
vs.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Performing
Assets:
|
1Q
2023
|
4Q
2022
|
3Q
2022
|
2Q
2022
|
1Q
2022
|
|
4Q
2022
|
|
1Q
2022
|
|
Nonaccrual
loans
|
$
33,397
|
$
35,484
|
$
36,851
|
$
19,635
|
$
14,941
|
|
(5.88)
|
%
|
123.53
|
%
|
Accruing loans
delinquent 90 days or more
|
1,625
|
3,361
|
1,855
|
1,512
|
1,817
|
|
(51.65)
|
|
(10.57)
|
|
Total non-performing
loans
|
35,022
|
38,845
|
38,706
|
21,147
|
16,758
|
|
(9.84)
|
|
108.99
|
|
Other real estate
owned
|
-
|
-
|
1,041
|
1,041
|
1,041
|
|
-
|
|
(100.00)
|
|
Total non-performing
assets
|
$
35,022
|
$
38,845
|
$
39,747
|
$
22,188
|
$
17,799
|
|
(9.84)
|
|
96.76
|
|
SBA guaranteed portion
of non-performing loans
|
$
2,206
|
$
3,969
|
$
2,573
|
$
2,319
|
$
2,651
|
|
(44.42)
|
|
(16.79)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Troubled debt
restructuring
|
$
4,242
|
$
3,599
|
$
3,170
|
$
2,695
|
$
3,103
|
|
17.87
|
|
36.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The company
defines "NM" as not meaningful for increases or decreases greater
than 300 percent.
|
Primis Financial
Corp.
|
|
|
|
|
|
|
|
|
|
(Dollars in
thousands)
|
For Three Months
Ended:
|
|
Variance - 2Q 2021
vs.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Balance
Sheet
|
1Q
2023
|
4Q
2022
|
3Q
2022
|
2Q
2022
|
1Q
2022
|
|
4Q
2022
|
|
1Q
2022
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
Loans held for
sale
|
$
25,346
|
$
22,413
|
$
21,199
|
$
6,936
|
$
-
|
|
13.09
|
%
|
100.00
|
%
|
Loans, net of deferred
fees
|
2,991,965
|
2,824,892
|
2,669,605
|
2,509,978
|
2,360,782
|
|
5.91
|
|
26.74
|
|
Investment
securities
|
246,402
|
253,345
|
269,780
|
287,722
|
302,431
|
|
(2.74)
|
|
(18.53)
|
|
Other earning
assets
|
388,327
|
92,604
|
90,268
|
158,817
|
466,952
|
|
NM
|
|
(16.84)
|
|
Total earning
assets
|
3,652,040
|
3,193,254
|
3,050,852
|
2,963,453
|
3,130,165
|
|
14.37
|
|
16.67
|
|
Other assets
|
|
254,004
|
246,593
|
234,355
|
228,893
|
226,320
|
|
3.01
|
|
12.23
|
|
Total
assets
|
|
$
3,906,044
|
$
3,439,847
|
$
3,285,207
|
$
3,192,346
|
$
3,356,485
|
|
13.55
|
%
|
16.37
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
stockholders' equity
|
|
|
|
|
|
|
|
|
|
|
Demand
deposits
|
$
556,479
|
$
648,151
|
$
665,020
|
$
596,714
|
$
545,530
|
|
(14.14)
|
%
|
2.01
|
%
|
Interest-bearing
liabilities:
|
|
|
|
|
|
|
|
|
|
|
NOW and other demand
accounts
|
722,584
|
624,868
|
660,387
|
695,481
|
817,430
|
|
15.64
|
|
(11.60)
|
|
Money market
accounts
|
824,541
|
805,303
|
803,860
|
810,781
|
809,460
|
|
2.39
|
|
1.86
|
|
Savings
accounts
|
593,823
|
232,543
|
219,167
|
222,274
|
224,716
|
|
155.36
|
|
164.25
|
|
Time
deposits
|
|
489,066
|
379,088
|
343,986
|
329,198
|
350,368
|
|
29.01
|
|
39.59
|
|
Total
Deposits
|
3,186,493
|
2,689,953
|
2,692,420
|
2,654,448
|
2,747,504
|
|
18.46
|
|
15.98
|
|
Borrowings
|
|
284,946
|
325,100
|
166,621
|
107,784
|
171,293
|
|
(12.35)
|
|
66.35
|
|
Total
Funding
|
|
3,471,439
|
3,015,053
|
2,859,041
|
2,762,232
|
2,918,797
|
|
15.14
|
|
18.93
|
|
Other
Liabilities
|
|
28,812
|
26,318
|
23,832
|
22,095
|
23,057
|
|
9.48
|
|
24.96
|
|
Stockholders'
equity
|
405,793
|
398,476
|
402,334
|
408,019
|
414,631
|
|
1.84
|
|
(2.13)
|
|
Total liabilities
and stockholders' equity
|
$
3,906,044
|
$
3,439,847
|
$
3,285,207
|
$
3,192,346
|
$
3,356,485
|
|
13.55
|
%
|
16.37
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Memo: Average PPP
loans
|
$
4,241
|
$
5,926
|
$
11,868
|
$
23,950
|
$
51,491
|
|
(28.43)
|
%
|
(91.76)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Interest
Income
|
|
|
|
|
|
|
|
|
|
|
Loans held for
sale
|
$
391
|
$
349
|
$
263
|
$
93
|
$
-
|
|
12.03
|
%
|
100.00
|
%
|
Loans
|
|
|
40,960
|
35,881
|
30,260
|
26,272
|
24,749
|
|
14.16
|
|
65.50
|
|
Investment
securities
|
1,584
|
1,571
|
1,518
|
1,445
|
1,430
|
|
0.83
|
|
10.77
|
|
Other earning
assets
|
4,224
|
834
|
555
|
448
|
406
|
|
NM
|
|
NM
|
|
Total
Earning Assets
|
47,159
|
38,635
|
32,596
|
28,258
|
26,585
|
|
22.06
|
|
77.39
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest bearing
DDA
|
-
|
-
|
-
|
-
|
-
|
|
-
|
|
-
|
|
NOW and other
interest-bearing demand accounts
|
2,267
|
544
|
536
|
556
|
666
|
|
NM
|
|
240.39
|
|
Money market
accounts
|
4,801
|
2,894
|
1,667
|
938
|
859
|
|
65.89
|
|
NM
|
|
Savings
accounts
|
4,750
|
305
|
141
|
142
|
149
|
|
NM
|
|
NM
|
|
Time
deposits
|
|
3,226
|
1,567
|
943
|
674
|
700
|
|
105.87
|
|
NM
|
|
Total Deposit
Costs
|
15,044
|
5,310
|
3,287
|
2,310
|
2,374
|
|
183.31
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings
|
|
3,705
|
3,748
|
1,859
|
1,342
|
1,357
|
|
(1.15)
|
|
173.03
|
|
Total Funding
Costs
|
18,749
|
9,058
|
5,146
|
3,652
|
3,731
|
|
106.99
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Interest
Income
|
$
28,410
|
$
29,577
|
$
27,450
|
$
24,606
|
$
22,854
|
|
(3.95)
|
%
|
24.31
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Memo: SBA PPP
loan interest and fee income
|
$
3
|
$
14
|
$
28
|
$
59
|
$
435
|
|
(78.57)
|
%
|
(99.31)
|
%
|
Memo: SBA PPP
loan funding costs
|
$
4
|
$
5
|
$
10
|
$
21
|
$
44
|
|
(20.00)
|
%
|
(90.91)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Interest
Margin
|
|
|
|
|
|
|
|
|
|
|
Loans held for
sale
|
6.26 %
|
6.18 %
|
4.92 %
|
5.38 %
|
0.00 %
|
|
8
|
bps
|
626
|
bps
|
Loans
|
|
|
5.55 %
|
5.04 %
|
4.50 %
|
4.20 %
|
4.25 %
|
|
51
|
|
130
|
|
Investments
|
|
2.61 %
|
2.46 %
|
2.23 %
|
2.01 %
|
1.92 %
|
|
15
|
|
69
|
|
Other Earning
Assets
|
4.41 %
|
3.57 %
|
2.44 %
|
1.13 %
|
0.35 %
|
|
84
|
|
406
|
|
Total Earning
Assets
|
5.24 %
|
4.80 %
|
4.24 %
|
3.82 %
|
3.44 %
|
|
44
|
|
180
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOW
|
|
|
1.27 %
|
0.35 %
|
0.32 %
|
0.32 %
|
0.33 %
|
|
92
|
|
94
|
|
MMDA
|
|
2.36 %
|
1.43 %
|
0.82 %
|
0.46 %
|
0.43 %
|
|
93
|
|
193
|
|
Savings
|
|
3.24 %
|
0.52 %
|
0.26 %
|
0.26 %
|
0.27 %
|
|
272
|
|
297
|
|
CDs
|
|
|
2.68 %
|
1.64 %
|
1.09 %
|
0.82 %
|
0.81 %
|
|
104
|
|
187
|
|
Cost of
Interest Bearing Deposits
|
2.32 %
|
1.03 %
|
0.64 %
|
0.45 %
|
0.44 %
|
|
129
|
|
188
|
|
Cost of
Deposits
|
1.91 %
|
0.78 %
|
0.48 %
|
0.35 %
|
0.35 %
|
|
113
|
|
156
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
Funding
|
|
5.27 %
|
4.57 %
|
4.43 %
|
4.99 %
|
3.22 %
|
|
70
|
|
205
|
|
Total Cost of
Funds
|
2.19 %
|
1.19 %
|
0.71 %
|
0.53 %
|
0.52 %
|
|
100
|
|
167
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Interest
Margin
|
3.15 %
|
3.67 %
|
3.57 %
|
3.33 %
|
2.96 %
|
|
(52)
|
|
19
|
|
Net Interest
Spread
|
2.63 %
|
3.28 %
|
3.31 %
|
3.15 %
|
2.81 %
|
|
(65)
|
|
(18)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Memo: Excluding
SBA PPP loans
|
|
|
|
|
|
|
|
|
|
|
|
Loans
|
|
5.56 %
|
5.05 %
|
4.51 %
|
4.23 %
|
4.27 %
|
|
51
|
bps
|
129
|
bps
|
|
Total Earning
Assets
|
5.24 %
|
4.81 %
|
4.25 %
|
3.85 %
|
3.44 %
|
|
44
|
|
180
|
|
|
Net Interest
Margin*
|
3.16 %
|
3.68 %
|
3.58 %
|
3.35 %
|
2.96 %
|
|
(52)
|
|
20
|
|
|
*Net interest margin
excluding the effect of SBA PPP loans assumes a funding cost of
35bps on average PPP balances in all applicable
periods
|
Primis Financial
Corp.
|
|
|
|
|
|
|
|
|
(Dollars in
thousands, except per share data)
|
For Three Months
Ended:
|
|
For Three Months
Ended:
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Non-GAAP items:
|
1Q
2023
|
4Q
2022
|
3Q
2022
|
2Q
2022
|
1Q
2022
|
|
1Q
2023
|
1Q
2022
|
Net income
|
|
$
5,775
|
$
3,085
|
$
5,054
|
$
5,009
|
$
4,593
|
|
$
5,775
|
|
$
4,593
|
Non-GAAP adjustments to
Net Income:
|
|
|
|
|
|
|
|
|
|
|
Branch Consolidation /
Other restructuring
|
-
|
1,175
|
308
|
901
|
-
|
|
-
|
|
-
|
|
(Gain) on sale of
Infinex investment
|
-
|
(4,144)
|
-
|
-
|
-
|
|
-
|
|
-
|
|
Merger
expenses
|
-
|
-
|
-
|
401
|
115
|
|
-
|
|
115
|
|
(Gain) on debt
extinguishment
|
-
|
-
|
-
|
-
|
-
|
|
-
|
|
-
|
|
Income tax
effect
|
-
|
641
|
(67)
|
(281)
|
(25)
|
|
-
|
|
(25)
|
|
Net income adjusted for
nonrecurring income and expenses
|
$
5,775
|
$
757
|
$
5,295
|
$
6,030
|
$
4,683
|
|
$
5,775
|
|
$
4,683
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$
5,775
|
$
3,085
|
$
5,054
|
$
5,009
|
$
4,593
|
|
$
5,775
|
|
$
4,593
|
|
Income tax
expense
|
1,583
|
530
|
1,365
|
1,375
|
1,265
|
|
1,583
|
|
1,265
|
|
Provision for credit
losses (incl. unfunded commitment expense)
|
5,278
|
7,896
|
3,201
|
254
|
359
|
|
5,278
|
|
359
|
Pre-tax pre-provision
earnings
|
$
12,636
|
$
11,511
|
$
9,620
|
$
6,638
|
$
6,217
|
|
$
12,636
|
|
$
6,217
|
|
Effect of adjustment
for nonrecurring income and expenses
|
-
|
(2,969)
|
308
|
1,302
|
115
|
|
-
|
|
115
|
Pre-tax pre-provision
operating earnings
|
$
12,636
|
$
8,542
|
$
9,928
|
$
7,940
|
$
6,332
|
|
$
12,636
|
|
$
6,332
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average
assets
|
0.60 %
|
0.36 %
|
0.61 %
|
0.63 %
|
0.55 %
|
|
0.60 %
|
|
0.55 %
|
|
Effect of adjustment
for nonrecurring income and expenses
|
0.00 %
|
(0.27 %)
|
0.03 %
|
0.13 %
|
0.01 %
|
|
0.00 %
|
|
0.01 %
|
Operating return on
average assets
|
0.60 %
|
0.09 %
|
0.64 %
|
0.76 %
|
0.57 %
|
|
0.60 %
|
|
0.57 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average
assets
|
0.60 %
|
0.36 %
|
0.61 %
|
0.63 %
|
0.55 %
|
|
0.60 %
|
|
0.55 %
|
|
Effect of tax
expense
|
0.16 %
|
0.06 %
|
0.16 %
|
0.17 %
|
0.15 %
|
|
0.16 %
|
|
0.15 %
|
|
Effect of provision for
credit losses (incl. unfunded commitment expense)
|
0.55 %
|
0.91 %
|
0.39 %
|
0.03 %
|
0.04 %
|
|
0.55 %
|
|
0.04 %
|
Pre-tax pre-provision
return on average assets
|
1.31 %
|
1.33 %
|
1.16 %
|
0.83 %
|
0.75 %
|
|
1.31 %
|
|
0.75 %
|
|
Effect of adjustment
for nonrecurring income and expenses and expenses
|
0.00 %
|
(0.34 %)
|
0.04 %
|
0.16 %
|
0.01 %
|
|
0.00 %
|
|
0.01 %
|
Pre-tax pre-provision
operating return on average assets
|
1.31 %
|
0.99 %
|
1.20 %
|
1.00 %
|
0.77 %
|
|
1.31 %
|
|
0.77 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average
equity
|
5.77 %
|
3.07 %
|
4.98 %
|
4.92 %
|
4.49 %
|
|
5.77 %
|
|
4.49 %
|
|
Effect of adjustment
for nonrecurring income and expenses
|
0.00 %
|
(2.32 %)
|
0.24 %
|
1.00 %
|
0.09 %
|
|
0.00 %
|
|
0.09 %
|
Operating return on
average equity
|
5.77 %
|
0.75 %
|
5.22 %
|
5.93 %
|
4.58 %
|
|
5.77 %
|
|
4.58 %
|
|
Effect of goodwill and
other intangible assets
|
2.08 %
|
0.28 %
|
1.92 %
|
2.15 %
|
1.58 %
|
|
2.08 %
|
|
1.58 %
|
Operating return on
average tangible equity
|
7.85 %
|
1.03 %
|
7.14 %
|
8.08 %
|
6.16 %
|
|
7.86 %
|
|
6.16 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Efficiency
ratio
|
|
68.59 %
|
71.71 %
|
71.85 %
|
75.01 %
|
76.11 %
|
|
68.59 %
|
|
76.11 %
|
|
Effect of adjustment
for nonrecurring income and expenses
|
0.00 %
|
4.93 %
|
(0.93 %)
|
(4.78 %)
|
(0.46 %)
|
|
0.00 %
|
|
(0.46 %)
|
Operating efficiency
ratio
|
68.59 %
|
76.65 %
|
70.92 %
|
70.23 %
|
75.65 %
|
|
68.59 %
|
|
75.65 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share -
Basic
|
$
0.23
|
$
0.13
|
$
0.21
|
$
0.20
|
$
0.19
|
|
$ 0.23
|
|
$ 0.19
|
|
Effect of adjustment
for nonrecurring income and expenses
|
0.00
|
(0.10)
|
0.01
|
0.05
|
0.00
|
|
0.00
|
|
0.00
|
Operating earnings per
share - Basic
|
$
0.23
|
$
0.03
|
$
0.22
|
$
0.25
|
$
0.19
|
|
$ 0.23
|
|
$ 0.19
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share -
Diluted
|
$
0.23
|
$
0.12
|
$
0.20
|
$
0.20
|
$
0.19
|
|
$ 0.23
|
|
$ 0.19
|
|
Effect of adjustment
for nonrecurring income and expenses
|
0.00
|
(0.09)
|
0.01
|
0.04
|
(0.00)
|
|
0.00
|
|
(0.00)
|
Operating earnings per
share - Diluted
|
$
0.23
|
$
0.03
|
$
0.21
|
$
0.24
|
$
0.19
|
|
$ 0.23
|
|
$ 0.19
|
|
|
|
|
|
|
|
|
|
|
|
|
Book value per
share
|
$
16.21
|
$
15.98
|
$
15.89
|
$
16.17
|
$
16.42
|
|
$
16.21
|
|
$
16.42
|
|
Effect of goodwill and
other intangible assets
|
(4.36)
|
(4.37)
|
(4.39)
|
(4.40)
|
(4.31)
|
|
(4.36)
|
|
(4.31)
|
Tangible book value per
share
|
$
11.86
|
$
11.61
|
$
11.54
|
$
11.77
|
$
12.11
|
|
$
11.86
|
|
$
12.11
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity
|
$
400,265
|
$
394,403
|
$
391,808
|
$
398,637
|
$
404,195
|
|
$ 400,265
|
|
$ 404,195
|
|
Less goodwill and other
intangible assets
|
(107,539)
|
(107,863)
|
(108,147)
|
(108,524)
|
(106,075)
|
|
(107,539)
|
|
(106,075)
|
Tangible common
equity
|
$
292,726
|
$
286,540
|
$
283,661
|
$
290,113
|
$
298,120
|
|
$ 292,726
|
|
$ 298,120
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity to
assets
|
|
9.52 %
|
11.04 %
|
11.67 %
|
12.32 %
|
12.55 %
|
|
9.52 %
|
|
12.55 %
|
|
Effect of goodwill and
other intangible assets
|
(2.37 %)
|
(2.77 %)
|
(2.94 %)
|
(3.04 %)
|
(2.98 %)
|
|
(2.37 %)
|
|
(2.98 %)
|
Tangible common equity
to tangible assets
|
7.14 %
|
8.27 %
|
8.73 %
|
9.27 %
|
9.57 %
|
|
7.14 %
|
|
9.57 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
margin
|
3.15 %
|
3.67 %
|
3.57 %
|
3.33 %
|
2.96 %
|
|
3.15 %
|
|
2.96 %
|
|
Effect of adjustments
for PPP associated balances*
|
0.01 %
|
0.01 %
|
0.01 %
|
0.02 %
|
(0.00 %)
|
|
0.01 %
|
|
(0.00 %)
|
Core net interest
margin
|
3.16 %
|
3.68 %
|
3.58 %
|
3.35 %
|
2.96 %
|
|
3.16 %
|
|
2.96 %
|
|
*Net interest margin
excluding the effect of PPP loans assumes a funding cost of 35bps
on average PPP balances in all applicable periods
|
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SOURCE Primis Financial Corp.