ladies and gentlemen thank you for standing by my name is colby and i'll be your conference operator today at this time i would like to welcome you to the premise financial corp first quarter earnings call all lines have been placed on mute to prevent any background noise and after the speakers are marks we will conduct a question and answer session if you'd like to ask a question at that time please press star then the number one on your telephone keypad to raise your hand and enter the queue if you'd like to withdraw your question at any time you can press star one again i will now turn the call over to matthew switzer you may begin good morning and thank you

for joining us for premise financial corps 2026 first quarter webcast and conference call before we begin please note that many of our comments during this call will be forward-looking statements which involve risk and uncertainty there are many factors that cause actual results to differ materially from the anticipated results for other expectations expressed in the forward-looking statements further discussion of the company's risk factors and other important information regarding our forward-looking statements are part of our recent filings with the securities exchange commission including our recently filed earnings release which has also been posted to the investor relations section of our corporate site permissbank.com we undertake no obligation to update or revise forward-looking statements to reflect changes assumptions the occurrence of unanticipated events or changes to future operating results over time in addition some of the financial measures that we may discuss this morning are non-GAAP financial measures how a non-GAAP measure relates to the most comfortable GAAP measure will be discussed when the non-GAAP measure used is not readily apparent I will now turn the call over to our president and chief executive officer Dennis Sever thank you Matt thank you for all of you that have joined our first quarter conference call we're excited to report that in the first quarter we earned 7.3 million dollars or 30 cents per share which compares to 22.6 million dollars and 92 cents per share in the same quarter of 25 because i'm reading that excited to report earnings

shrinking that much the fact of the matter is on an operating basis we earned 33 cents per share in the first quarter which excluded a small tax adjustment related to 2025 results and when you compare that to the same quarter a year ago, it's up 126% operating earnings, where we reported 14 cents in the same quarter of 25. And Matt may mention this, but the first quarter of 25 included a substantial gain on the deconsolidation of propanacea, which is what I'm excluding. Our key operating ratios obviously improved alongside of that earnings number I just gave you on an operating basis our roa improved to 84 basis points compared to 40 basis points in the same quarter of 25. driving that were a couple items margin mostly and as well as operating expense control on net interest margin our net interest margins excuse me benefited from the securities restructure as well as the mix of earning assets and climbed to 3.43 percent in the first quarter compared to 315 in the same quarter of 25. we continue to put up nice growth numbers that are manageable but really distinguish us amongst our peer group loans ended at 3.4 billion dollars 11.7 percent compared to the same quarter in 26 that excludes about 40 million dollars or so that map that we moved into loans held for sale related to a flow agreement with panacea so really our growth was probably stronger than this deposit growth over the same period is really what you should look at that came in at just better than eight percent with very little of that from the digital platform which is pretty steady state at about a billion dollars the growth in checking accounts in our company was even more notable with non-interest bearing checking accounts growing to $541 million, which is almost 19% higher than where we were in 2025. Checking accounts continue to be a more meaningful element of our deposit mix, and we're 15.9% of total deposits compared to just 14.2% in the first quarter of 2025. And lastly, it's very important to note that we grew deposits in this strong a fashion and never once felt pressured in our core bank or on our digital platform to be more aggressive on rate. We're doing it with technology, with service, with people, with getting in front of folks, focusing on commercial deposits and having real success. All of the energy and momentum on our balance sheet really starts at our core bank. There's never been a time since I came to premise that our core bank has had this opportunity on both sides of the balance sheet. Honestly, we're winning business that several years ago we just wouldn't have been in the running for or maybe even had a conversation about. Virtually nothing that we're doing to win this business has to do with rates or fees. We're leaning hard into our technology, our service, our people, our existing customers who are turning out to be amazing centers of influence for us. For so long, it felt like all we were doing here is working on our factory and stuff in the factory, but today stuff is rolling off that assembly line faster and faster and I'm very encouraged by what our people are accomplishing. Mortgage warehouse has fully replaced life-free and financed at this point and has been so well received in the marketplace. We finished the quarter with about $460 million outstanding and for a few days in the quarter near the end of March we pre-crested half a billion dollars outstanding. This is before any refi boom. It's before the busy spring and summer seasons for retail mortgages. Importantly, warehouse is still producing impressive yields and margins, efficiency ratios in the 20s. The amount of scale and impact on our overall operating ratios from this business is not really something that's been fully baked or recognized in our current numbers, as really they've been just scaling the business so quickly over the past year but as we I believe we could probably double this business in the next 12 to 18 months and I believe the incremental impact from that second double is going to be very meaningful retail mortgage had an absolute blowout for them they'll tell you that it was impacted by some middle east activities and an impact on rates and fair value adjustments and And that's true. We might have reported half a billion dollars. Looking at math, half a billion dollars more had that. But regardless, pre-tax income in the mortgage group grew to $2.1 million in the first quarter compared to $766,000 same quarter a year ago. In the quarter, our earnings crept up to 57 basis points on close volume compared to 46 in the same period a year ago. So on a profitability basis, we're up maybe 20, a little better than 20% on closed volume. Our recruiting pipeline has never been this strong. And consistently, we double each month on apps, closed volume, new files. So we have real, so we're very positive about what the second half of the year would look like. Right now, we believe Previce Mortgage is on track to be a top 50 mortgage company nationwide in 2026. And lastly, before I turn it over to Matt, I want to emphasize what's really present in mind for us and our desire to build this into a top-performing bank. In our day-to-day here, we are laser-focused on growing checking accounts, like I mentioned earlier, to about 20% of total deposits. Secondly, we're determined to drive massive amounts of operating leverage from our consistent reliable balance sheet growth using steady to decreasing OPEX. And I know I've been saying this for several quarters, and so as the quarter ended, I was pretty delighted to start playing with the numbers and see what I'm about to tell you If you look at the last year, first quarter of 25 all the way back to the first quarter of 24, we're reporting growth in core revenue of about 45, excuse me, we're reporting core revenue of about $45.6 million, which is higher, about 33.7%, call it 34% over a year ago. reported operating expenses straight off of Matt's income statement no adjustments came in at 33.8 million which is only four percent higher than the same time a year ago that's 34 growth in revenue only a four percent growth in opx I had in my comments that I'd like to promise that we could do that for a couple more years but I was afraid Matt would grimace so I took that out But this is an extraordinary level of operating leverage and really the driver of our results. Nobody at premise thinks we're done in this area and that revenue may not be outpacing OPEX going forward. We have several strategies, of course, to continue getting this result and one of those is AI. And I don't want to still Matt's comments or his hard work on this and I know he's going comment further on this, but AI for us is the same kind of opportunity and catalyst that you would expect me to report if we were doing an M&A transaction. We already have all the tools we need for this. We expect hardly no additional investment except short, except the deep training that we're going to give our staff to be effective with this, and we believe that in a year we are going to be the undisputed leader amongst banks under 10 billion dollars using ai to drive operating results sales efficiency customer satisfaction and experience and importantly fraud provision when you combine that with our work towards converting our core bank to a fully digital core we are on the edge of being a uniquely positioned bank with technology that has figured out how to keep our community bank field I will turn it over to you thank you Dennis as a reminder a discussion of our financial

results can be found in our press release and investor presentation located on our website and in our 8K follow-up of the SEC beginning with the balance sheet gross loans helper investment increased approximately 14 percent annualized from December 31 to March 31 led by growth and panacea and mortgage warehouse average earning assets increased six percent annualized in the first quarter with the slower growth rate versus period end growth due to the rampant mortgage warehouse later in the period. Average deposits were up four percent annualized in the quarter, while average non-interest bearing deposits were up seven percent per year end. Net interest income was approximately 32 million, a substantial improvement from 26 million a year ago. Our net interest margin in the first quarter was 3.43 percent, up from 3.28 percent last quarter and 3.15 percent in the year ago period and we have expectations for further march expansion as we progress through 2026. we completed a redemption of 27 million of supported debt at the end of january so that was only partially reflected in the core we also have approximately 400 million of loans repricing in the second half of 2026 and early 27 with a weighted average yield of 4.81% that will add to loan yields. The core bank Huff's deposits remains very attractive at 159 basis points for the quarter, flat from the fourth quarter. Cost of total deposits was 223 basis points in Q1, down three basis points linked to quarter. Our focus on growing NIB deposits is a key part of our strategy to continue driving funding costs lower. Our provision this quarter was $1.5 million, partially driven by growth in the loan portfolio described above approximately 0.7 million of the provision was due to specific reserving on impaired loans while another 0.4 million was tied to activity in the consumer portfolio core net charge-offs remained low at six basis points in the first quarter of 2026. non-interest income was 13.6 million in the quarter versus 12.8 million in the fourth quarter after adjusting for the sale leaseback gain investment portfolio restructuring and Hennessey a loan pool sale in the fourth quarter mortgage revenue was solid in q1 at 10.8 million versus 10 million in the fourth quarter and would have been even better in the first quarter if not for the impact of market volatility late in the quarter year-over-year retail mortgage production was 122 percent higher in the first quarter of 26 versus the first quarter of 25 showing strong momentum as we head into the busy home buying season also included in that production was 26 million of attractive construction to permanent loans in the first quarter up from 4 million in the first quarter last year on the expense side when you exclude mortgage and panacea division volatility and non-recurring items our core expenses were 22 million in the first quarter versus 20.8 million a year ago absent the increased occupancy expense from our recent sale leaseback transaction core expenses on this basis would have actually been down year over year we've been focused on controlling expenses to maximize operating leverage and feel like we are in a good spot on that front so far in 2026. i would also like to take a moment to briefly touch on how we are thinking about ai as mentioned in the earnings release we have canvassed the bank looking for opportunities to deploy ai tools to reduce repetitive and time-consuming tasks and generate efficiencies our first pass has identified hundreds of hours of opportunity and there is almost certainly more that will be found as we start tackling these projects we view this as a key part of our strategy to keep expense growth to a minimum while maximizing operating leverage equally as exciting from where i sit our in-house talent in this area combined with the robust tools built into our existing products such as microsoft copilot should allow us to get the vast majority of these efficiencies without expensive consultants in summary we are excited to report a solid first quarter in line with our expectations and believe we are still on track to hit our profitability goal 26. with that operator we can now open the line for q a thank you we will now begin the question and answer session again if you'd like to ask a question please press star then the number one

on your telephone keypad to raise your hand and enter the queue if you'd like to withdraw your question at any time you can press star one again we'll pause just for a moment to compile the roster and your first question comes from woody lay with kbw your line is open hey good morning guys warm woody hey woody i wanted to start on mortgage and as you mentioned it was a blowout quarter and what's typically a a seasonally um weaker quarter we're now entering the the the stronger quarters ahead what what are your expectations for production in the near term

and and then also in in the mortgage expenses were was there additional hiring that was done in 1q26 or elevated legal expenses anything that sort of propped that up nothing unusual on the expense uh I think what I think we probably I think maybe we came into the year thinking we might have we closed 1.2 billion last year but had a lot of momentum in the fourth quarter thought we probably had like a one six one seven mortgage company and then through the first quarter felt like um it was a little higher maybe 1.8 maybe even 2 billion but um we uh i feel like we're probably still maybe around 100. i mean we're going to be april's very strong sort of reflecting what we thought i think for the i'd say we're probably still somewhere in the 1.8 range and yeah on close volume and i think what he was important is you know as we've been growing what's important is like we were 46 basis points a year ago we're 57 basis points now on close volume um what's impacting that is obviously a lot more um scale on the fixed expenses as we get closer to 2 billion uh a lot more focus on matt mentioned construction perm we have a big construction perm focus here that's honestly very uh centered on government for getting higher yields fields there and really we've been building that for the last year. These are probably six to nine months fields and so that's starting to flow. So what's important I think is that we think we're going to do a billion eight or so this year as things look right now and maybe trend somewhere closer to probably a touch over 60 basis points.

We, you know the middle east event probably hit us for a few basis points five or six basis points on profitability so we might have been over 60 had we not had the um fair value just that's going to happen in mortgage actually you can't really exclude it yeah that's helpful color and then maybe shifting over to the net interest margin outlook matt you you noted some of the loan repricing tailwinds um through the remainder of the year you know growth is expected to remain strong you're gonna have to fund uh fund that growth so do you think you can continue to post

strong growth and see margin expansion or will it be um you know are we looking more at a flat margin with incremental growth i think we'll see a little bit more margin expansion uh because of the debt payoff i mentioned and we also had a little bit of a drag in the margin for from moving those loans to uh help for sale we've reversed some uh deferred costs that run ran through the margin it was only like a basis point um so we'll see some uh margin expansion next quarter uh and a little and then probably inch up from there i mean i i would not expect you know margin to hit

three six but would we hit you know high three fours to three and a half as we go through the year most likely got it and then maybe just last for me on the credit i i appreciate the comments on uh the pay downs of those 90 day past two ones um past subsequent to quarter end but just on some of those larger relationships that are still on mpa any any update on those and when we could see possible resolution Matt it's funny you ask that Matt looks straight at me like you answer that one I mean the uh there's two real estate commercial real estate deals office and

both had um both had pretty good quarters on new leases uh so I mean it's I think it's trending being positive there I think the two things are trending positive one there's more leasing activity sale cycle on new leases in an office park like this is longer than we want it to be but still the fact that they're talking to a lot of folks and that there's a pathway is positive the second is cap rates are improving and they're not falling like we'd like them to but they are improving and And so I think, you know, every day that goes by, we're a little safer on the value. They're current, so they're not – these are not – we're not – I mean, it could change any time. But right now, they're – things are trending more positive there. Does that answer your question?

Yeah, no, that's perfect. I appreciate you taking my questions. Congrats on the good quarter.

Thanks, Willie. your next question comes from the line of russell gunther with stevens inc your line is open hey good morning guys i wanted to start right morning dennis morning matt maybe just a quick follow-up on the margin commentary appreciate the directional guide but maybe some of the underpinning assumptions would be helpful to get a sense for kind of where new commercial loan origination yields are today. And then, Matt, within the guide, how are you thinking about deposit costs from here? Is there room to move those lower, or is there kind of a flat to upward bias within your margin expectations?

I'll start with the last piece. I think on the deposit side, it's probably flat, up or down a couple basis points, but not I don't expect any substantial moves in the cost of the pilots in the near term on the production side we're in the core bank probably sixes yeah we're probably regularly five years I mean we're still probably all in we're probably close to five years 275 mortgage warehouse is probably better than that mortgage warehouse is probably with fees is

probably you know one month so for plus 315 320 panacea is outstanding I mean that they are I mean they really I mean the niche that they've established for themselves their marketing their profile the opportunity to do business with them is reflected in the rates and I think And the rate they're getting on their production is exceptional, too. They're probably five-year Treasury plus $250, $260 on that kind of credit. You know, on funding, and Matt and I regularly debate this. I mean, we could, I mean, across the bank right now, I feel like we could probably take digital down 25%. or 30 basis points probably not lose that much we can probably take the core bank down you know five or ten it's already very low but there's some savings that we could get on the deposit side the problem is it puts us in a place where we're not uh very strong on the um on the growth side and again we're not leading into rate on digital or anything else but we also don't want to um not be competitive and right now when we're looking at you know panacea panacea can see it could do 200 million for us this year warehouse could grow three four hundred million the core bank is the best itself of being that could be a couple hundred million we just don't want to get in a position i mean we don't want to go harvest 30 basis points of deposit costs and then just rely on home loan bank advances that's we don't want to be that bank all right thank you You guys appreciate the color there, and Dennis, you kind of took my next question in terms of how that loan growth might shake out from a vertical perspective, so I appreciate that.

Maybe I would then switch gears to the expense front.

How are you guys thinking about directionally the overall expense base, inclusive, if we could, of the kind of mortgage banking vertical as well? inclusive of mortgage that was kind of hard to spit out unfortunately uh because it's so tied to volume i mean if you know it's gonna be a almost direct percentage of whatever their fine's going to be in the next quarter um i mean i like to think of mortgage as kind of you net non-interest income and non-interest expense for the year now that doesn't include like spread income which we also included in our profitability meant probably going to net us five or six million for the year so you can kind of back into you know take your um whatever you're not in here revenue assumption is and not interested you know for mortgage and kind of back into expense from there otherwise when And then panaceous death and volatility to it as well, so we really focus on that core expense number, which is around $22 million, I think. I think we'll stay in that kind of $22 to $23 million range for the year.

Understood. I appreciate it, Matt.

And then just last one from you guys would be an update on your kind of ROA glide path. like you mentioned in your remarks, would expect to hit your targets, which I think are 1% ROA by the end of the year. What aspirations do you guys have from there and sort of a timeline to achieve?

We want to answer that before Fox News or something. No, please move the goal post again. Matt sometimes doesn't like how aspirational I am.

Oh, I understand.

Yeah, I get that yeah I mean 1% I mean 1% is a good line for us because we've not consistently been there but 1% is not going to um I mean given our growth rate that problem our growth rates and our dividends that will probably keep the bank capital levels flat but I mean we want to build book we want to build capital ratios we want to position ourselves to be strategic and so we've got to be higher than that. I think mortgage at scale I've said it's 57 basis points. Mortgage at scale probably is you know another 20 percent higher than that. That's going to be a big deal in the RLA. That's probably another 10 basis points for the RLA. Warehouse is probably going to add another 10 basis points once it gets to scale. The AI thing that Matt's working on and our rest of our bank I mean over time and we're not looking at that if Russell is something that's to reduce headcount what it's going to do is take the experts we have and just make them be able to manage twice as much and that's we can manage like that when we have growth rates like we have we know I know I'm going to need these staff these staff over time I mean aspirationally we ought to be um given these lines of business on top of our core bank we ought to be 125 or better and probably are looking more ROTC to be something that would get near 15. I think if 15% ROTC kind of can control your future if people don't like your stock you can just buy it back if they do like your stock then you can do other strategic things but really until you get to that point you're all you're doing is working to get to that point in a boxing unit I appreciate it guys I appreciate your thoughts and for taking all my questions thank you very much thanks folks again if you'd like to ask a question please press star then the number one on your telephone keypad your next question comes from the line of Christopher Marinac with Bren Capital Research your line is open hey good morning um Dennis the last couple days banks have talked about the competitiveness of digital deposits being more expensive than the brokered funds and I'm curious what you think about that it seems that you're in a much better place you've been doing the digital banking much longer and I'm just curious kind of how you look at that and is that digital area going to grow less as a result of the rate environment you know I'm so glad you asked that question I remember speaking on a panel somewhere and I was talking about how we had these 25 or 30 000 digital customers all across the country that have never been in a branch probably never seen one of our bankers and i was talking about how that we sometimes peruse their social media or we you know in communications with them we find out that they have a dog uh you know a cabapoo and we will do things that are very community bankers we will send them some swag you know a dog collar band or we'll reach out to them when we're in you know I've gone to see customers when I'm in um Telluride I found additional customers that was out there and went and had breakfast with them the reason that I'm not going to sit here and say these deposits aren't more expensive honestly they should be they we have 25 000 or more digital customers that we're banking with six people so that they should be more comfortable I mean more expensive there's very little cost associated with it but we have separated them from being just straight rate driven by being community bankers the same thing that we do in the bank to make our customers not be solely rate focused we're doing that on the digital platform I'm not going to sit here and say that we're the only people that are doing that but I will tell you we're probably more effective at that than our competition and we've been doing that for now for three years since we've got the real big slug of deposits in here our average digital customer has average digital customer is probably down 150 basis points from where their peak was the average digital customer has been here you know probably more than 30 months closer to 36 their average age is over 50 average deposits probably approaching 30 40 thousand dollars they have the cell phone numbers of the bankers that work them everybody has talked to a banker I mean it's just things like that that have separated these customers from being solely rate focused. Now, I would tell you in the core bank, the core bank's cost of deposits is probably 180, 175, 159. I mean, the digital is sitting there at like 375 or so. Like I said, we could probably push that down 25 or 30. So let's just say we could get to three and a half so yeah it's obviously more expensive but um it's it's growing at that level and um yeah I don't know I don't want to ramble about it but I'm very proud I'm very proud of how our bankers pushed a community bank attitude and approach onto these 25 000 customers and And that's paid off. Chris, that was a very long and rambling answer to your question.

That is a-okay. Thanks for sharing all that. My other question just goes back to the mortgage business. As you continue to thrive in mortgage, both in terms of production and gains, plus the mortgage warehouse, is there a natural cap that will happen to how much of that business you want for the whole company?

Will the bank just grow around it and kind of naturally cap how much mortgage will be down the road? that that's see that's the kind of thing you don't worry about when you're starting up matt and i joke all the time that we are claim to fame is that we find problems and we fix them so well that they create new problems um i mean mortgage really should not be we don't want to be a mortgage company here we want to run an amazing mortgage company but we don't want to be just to be a mortgage company it really probably should be more than 20 of our bottom line no question about. I mean, and some of it is, you know, we have a dynamite team in mortgage and a dynamite leader, and we have that for the core bank as well, too, and RIT, but I mean, the core bank, we're a little, we don't, we're still not fascinated with CRE. We're doing it, but that's not our hallmark. You know, we're in some non-growth, not really, not really fast growth areas in the core bank so over time we're we've got to find a way probably to grow the core bank faster so that mortgage warehouse panacea all of those stay as complement to the bank and not the whole story um i mean we not we all want to change the growth profiles or the growth dynamics i mean our core bank is what our core bank right now is doing is amazing and i don't want to step on the gas any harder and get a different kind of business um some strategy will open up to us we've not been in an M&A strategy or a position to do that maybe that'll open up one day and that's probably the catalyst we need to build on the core bank and let these other items that we do that are so good and just run so well be a complement to that great that's very helpful thanks for that i appreciate all the information today thanks chris thank you and there are no further questions at this time i'd like to turn the conference back over to dennis zember for any closing remarks thank you all for joining our first quarter conference call if you have any questions matt and i are around happy to get on the phone with you otherwise have a good weekend we'll talk to you soon this concludes today's conference call you may now disconnect