Primis Financial (FRST) Q1 2025 earnings summary

Executive summary

• Net income for Q1 2025 was $22.6 million ($0.92 per share), up from $2.5 million in Q1 2024, driven by a $24.6 million gain on the deconsolidation of Panacea Financial Holdings (PFH).

• Performance in the first quarter tracked expectations, with strong momentum in the core community bank and a significant pipeline of new customers, tripling year-over-year.

• The core bank's loan pipeline increased to $228 million at quarter-end, and mortgage warehouse balances rose 80% sequentially.

• PFH was deconsolidated as of March 31, 2025, resulting in a fair value gain and ongoing equity method accounting for the retained investment.

• Excluding nonrecurring items, adjusted net income was $5.1 million, with a normalized ROA of 0.56% for Q1 2025.

Financial highlights

• Net interest income for Q1 2025 was $26.4 million, up $1.1 million year-over-year, with net interest margin expanding to 3.15% from 2.84%.

• Noninterest income rose to $32.3 million from $10.3 million, mainly due to the PFH deconsolidation gain.

• Noninterest expense decreased to $32.5 million from $37.8 million sequentially; core operating expense burden dropped by $3.2 million.

• Allowance for credit losses to total loans decreased to 1.45% from 1.86% at year-end, reflecting charge-offs in the Consumer Program portfolio.

• Book value and tangible book value per share increased by 96 and 98 basis points, respectively, during the quarter.

Outlook and guidance

• Management targets exceeding 1% ROA by year-end, with margin expansion of 5–10 bps in Q2 and 10–20 bps by year-end, depending on rate environment.

• Earning assets are expected to grow by $100 million in the core bank, $150 million in warehouse, and $125 million in Panacea over the year, with no additional operating expense required.

• Expense growth in 2025 projected to be very low; technology consolidation could yield $6–7 million in annual savings.

• Primis Mortgage expected to add 0.15% to ROA in 2025, up from 0.05% in 2024.

• Initiatives in place could double run-rate ROA from the current 0.56%.