Primis Financial Corp. Q4 FY2025 earnings call

• Earnings: Q4 2025 earnings were $29.5 million or $1.2 per share, ~3% ROA. Run rate earnings for 2025 were ~$8 million, ~80 basis point ROA on ~$4 billion average assets.
• Margin: Margin increased from 2.90% in Q4 2024 to 3.28% in Q4 2025. Press release shows restructure impact on margins is ~28 basis points, with potential to reach 3.5% margins.
• Deposits: Grew checking accounts by over 23% in 2025, with ~$116 million growth. Noninterest-bearing deposits increased from 12-13% in mid-2024 to 16.3% at 12/31/25.
• Loans: Grew earning assets by $325 million in 2025, with larger growth in loans. C&I portfolio grew substantially, with $75 million of new commercial loans closed in December 2025.
• Operational Expenses: Controlled and reworked operating expense base, aiming to hold operating expense burden around $22 million going forward.
• Mortgage: Primis Mortgage saw closed loans increase to ~$1.2 billion in 2025 (50% increase vs 2024), with $143 million closed in Q4 2025 at great profitability. Mortgage warehouse average outstanding was $175 million in 2025, with expectation to average $500 million in 2026.

Net Interest Income: Approximately $31 million in Q4 2025, up from $26 million in the year-ago period. Net interest margin was 3.28% in Q4 2025, up from 2.9% in the year-ago period. Noninterest Income: Excluding gains from sale leaseback and investment portfolio restructuring, it was $14.2 million in Q4 2025 vs $12 million in Q3 2025. Mortgage revenue was $10 million in Q4 2025 vs $8.9 million in Q3 2025. Expenses: Core expenses excluding mortgage and Panacea division volatility and nonrecurring items were $28 million in Q4 2025 vs $22 million in Q3 2025. Guided 2026 quarterly core expenses (excluding mortgage) to $23-$24 million. Loans: Gross loans increased ~17% annualized in Q4 2025, led by Panacea and Mortgage Warehouse. Average earning assets increased 13% annualized. Deposits up 10% annualized in Q4 2025. Noninterest-bearing deposits ended 2025 at $554 million (16% of total deposits) vs $439 million (14%) in 2024.

• 2026 Margin: Expect further margin expansion in 2026. Q4 2025 margin was 3.28%, with potential to reach mid-threes to high threes by year-end.
• Loan Growth: Core bank aiming for ~$100 million loan growth in 2026. Panacea and mortgage warehouse expected to contribute to growth.
• Expenses: 2026 quarterly core expenses (excluding mortgage) guided to $23-$24 million. Mortgage banking expected to scale with revenue, with pretax contribution improving.
• ROA: Target sustainable 1% ROA for full year 2026, with expectation to be below that in Q1 2026 due to seasonality but above in the second half.

• Forward-Looking Statements: Comments involve risk and uncertainty, with factors that could cause actual results to differ from forward-looking statements.
• Loan Quality: Specific loans in special mention, with some having modifications but expected to remain in special mention or improve, no immediate substandard or loss concerns.

Q: On loan side, where do you see mortgage warehouse balances ending in 2026?

A: Anticipate mortgage warehouse to average $500 million in 2026, seasonal with peaks over $600 million in summer and lower in Q4.

Q: How to think about overall loan growth in 2026?

A: Core bank aiming for ~$100 million growth, C&I and under occupied focus; Panacea and mortgage warehouse expected to contribute with seasonality.

Q: Impact of expense sensitivity as mortgage banking improves?

A: $23-$24 million guidance excludes mortgage; mortgage pretax contribution expected to improve with scaling loan closings.

Q: Target sustainable ROA for 2026?

A: Bogey is 1% ROA, with Q1 likely below due to seasonality but above in second half.

Q: Noise in expenses for first half of 2026?

A: Best majority of noise behind us, minimal in Q1 compared to Q4.

Q: Deposit growth and funding?

A: Focus on new customer acquisition, with new customers attracting higher balances over time; balance growth from new accounts and existing customer relationships.

Q: Mortgage production hires?

A: Will continue hiring, but incremental with new producers; aiming for mortgage production to scale to $2.5-$3 billion.

Q: Loan quality of special mention loans?

A: Specific impairments expected to remain in special mention with strong cash flows, guarantors, and recaps, no immediate substandard or loss concerns.