Primis Financial Corp. Q2 FY2025 earnings call

Quarter Results

• Second quarter net income ~$8.4 million or $0.34 per share. Included $7.5 million pretax gain on PFH, $1.2 million support for Primis Mortgage teams, $2 million write-off on maturing promo loans.

Operating Leverage

• Incremental margins in mid-4% range, OpEx steady/declining. Sold $375M earning assets but no related OpEx decline; added warehouse lending team.

Operating Divisions

• Core bank: ~70% of balance sheet, ROA 1.38%, focused on low-cost deposits via branch network and VIBE app. Mortgage warehouse: building lines/relationships, volume up. Primis Mortgage: closed $323M (+52% Y/Y), new teams supported by $1.2M draws. Panacea: over $500M credit, over $150M deposits, 30%+ coverage ratio.

Stock Pitch

• Fourth cheapest in comp peer group, organic growth story, operating leverage driving earnings, no negative influences on earnings/risk.

The core bank is still nearly 70% of the total balance sheet, with a ROA of about 1.38% and a cost of deposits in the 1.75% range. Mortgage warehouse showed pretax contribution with key operating ratios, and Primis Mortgage closed about $323 million in the quarter, up ~52% from Q2 2024. Panacea grew to over $500 million of outstanding credit, had over $150 million of total deposits, and a 30%+ coverage ratio on total loans. Revenue contributions: core bank ~70%, others in respective proportions.

Loan Growth

• Warehouse target $250M-$350M next year, Panacea ~$100M-$150M next year, core bank ~5% growth. Back half 2025 and 2026 growth expected low to mid-single digits due to runoff books and balance sheet constraints.

NIM

• Core NIM expected to creep up ~2 basis points/month, reaching mid-3.20s by end of 2025.

Expenses

• Technology savings and CDI amortization ending to lower run rate to $18M-$18.5M per quarter in 2026, then expect 3%-4% inflation growth from there.

Forward-looking statements involve risk and uncertainty. Non-GAAP financial measures used; factors could cause actual results to differ from expectations. Risks discussed in SEC filings related to forward-looking statements.

Q: Provide color around loan growth expectations for the back half of 2025 and overall 2026, particularly for Panacea and mortgage warehouse.

A: Warehouse target $250M-$350M next year, Panacea ~$100M-$150M next year, core bank ~5% growth. Back half 2025 growth expected low to mid-single digits due to runoff books and balance sheet constraints.

Q: How much improvement or compression in core NIM do you anticipate over the next few quarters if no rate cuts?

A: Expect ~2 basis points/month margin expansion, with core NIM creeping up to mid-3.20s by end of 2025.

Q: Change in criticized and classifieds and its impact on charge-offs?

A: Net charge-offs around industry average. Promo loans mostly through, with ~$9M remaining, charge-offs not expected to drop significantly.

Q: Appropriate growth rate for core expenses over the next 6-7 quarters?

A: Aim for $18M-$18.5M run rate with tech savings and other initiatives, then expect 3%-4% inflation growth from there.