Primis Financial (FRST) Q3 2024 earnings summary

Executive summary

• Reported Q3 2024 net income of $1.2 million, reversing a prior year loss, with results impacted by corrected accounting for the consumer loan portfolio and continued technology adoption and branch consolidation.

• Announced sale of Life Premium Finance Division to EverBank, expecting a $4.5 million pre-tax gain in Q4 2024, and began onboarding a new Mortgage Warehouse team to replace sold assets with higher-yielding loans.

• Digital platforms, including V1BE, saw user and deposit growth, with strong small business engagement and over $911 million in digital deposits.

• Panacea Financial Division achieved $28.3 million in Q3 originations, $90 million in deposits, and $4.8 million YTD pre-tax earnings.

• Primis Mortgage generated $1.0 million pre-tax earnings in Q3, with $230 million funded and operations in 43 states and D.C.

Financial highlights

• Net interest income for Q3 2024 was $28.0 million, up $3.7 million year-over-year, with net interest margin improving to 2.97% from 2.70% in Q3 2023, aided by $3.0 million in previously deferred interest income.

• Net income attributable to common shareholders was $1.2 million for Q3 2024, down from $3.8 million in Q2 2024.

• Noninterest income fell to $9.3 million in Q3 2024, mainly due to lower Consumer Program derivative income.

• Noninterest expense was $31.0 million in Q3 2024, with core bank expenses at $19.8 million, and efficiency ratio at 83.2%.

• Provision for credit losses increased to $7.5 million in Q3 2024, mainly due to Consumer Program loan charge-offs.

Outlook and guidance

• Management expects a $4.5 million pre-tax gain in Q4 2024 from the Life Premium Finance Division sale and anticipates further margin expansion from higher-yielding Mortgage Warehouse loans.

• Expense outlook is expected to remain relatively flat despite the premium finance sale and new hires in Mortgage Warehouse.

• Loan growth is anticipated to benefit from higher rates, partially offsetting deposit cost increases.

• Promotional loan balances are expected to decline to nominal levels by end of 2025.

• V1BE and Panacea platforms expected to drive further deposit and loan growth.