8-K
Primis Financial Corp. (FRST)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event Reported): July 29, 2021
Primis Financial Corp.
(Exact Name of Registrant as Specified in Charter)
| Virginia | 001-33037 | 20-1417448 |
|---|---|---|
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification Number) |
6830 Old Dominion Drive, McLean, Virginia 22101
(Address of Principal Executive Offices) (Zip Code)
(703) 893-7400
(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchanged on which registered |
|---|---|---|
| COMMON STOCK | FRST | NASDAQ |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
On July 29, 2021, Primis Financial Corp. (“Primis” or the “Company”) issued a press release announcing its financial results for the three months ended June 30, 2021. A copy of the press release is filed as Exhibit 99.1 to this Current Report on Form 8-K and incorporated herein by reference.
Item 7.01. Regulation FD Disclosure.
The Company has prepared presentation materials (the “Investor Presentation”) that management intends to use from time to time hereafter in presentations about the Company’s operations and performance. The Company may use the Investor Presentation, possibly with modifications, in presentations to current and potential investors, analysts, lenders, business partners, acquisition candidates, customers, employees and others with an interest in the Company and its business.
A copy of the Investor Presentation is furnished as Exhibit 99.2 to this Current Report on Form 8-K and incorporated herein by reference. The Investor Presentation is also available on the Company's website at www.primisbank.com. Materials on the Company’s website are not part of or incorporated by reference into this report.
In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, including Exhibits 99.1 and 99.2 attached hereto, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 8.01. Other Events.
On July 29, 2021, Primis issued a press release announcing the declaration of a dividend payable on August 27, 2021 to shareholders of record as of August 13, 2021. A copy of the press release is filed as Exhibit 99.1 to this Current Report on Form 8-K and incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
| Exhibit No. | Description |
|---|---|
| 99.1 | Press Release dated July 29, 2021 |
| 99.2 | Primis Financial Corp. Second Quarter 2021 Investor Presentation |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Primis Financial Corp. | ||
|---|---|---|
| Date: July 29, 2021 | By: | /s/ Matthew A. Switzer |
| Matthew A. Switzer | ||
| Chief Financial Officer |
Exhibit 99.1
Primis Financial Corp. Reports Diluted Earnings per Share of $0.42 for the Second Quarter of 2021
Declares Quarterly Cash Dividend of $0.10 Per Share
MCLEAN, Va., July 29, 2021 /PRNewswire/ -- Primis Financial Corp. (NASDAQ: FRST) ("Primis" or the "Company"), and its wholly-owned subsidiary Primis Bank (the "Bank"), today reported net income of $10.3 million for the quarter ended June 30, 2021, compared to $9.4 million for the quarter ended March 31, 2021. Earnings per share for the three months ended June 30, 2021 were $0.42 on a basic and diluted basis, compared to $0.39 basic and $0.38 diluted for the three months ended March 31, 2021.
Earnings for the six months ended June 30, 2021 were $19.7 million compared to $4.7 million for the six months ended June 30, 2020. Earnings per share for the six months ended June 30, 2021 were $0.81 basic and $0.80 diluted, compared to $0.20 basic and $0.19 diluted for the six months ended June 30, 2020.
The Board of Directors also announced and declared a dividend of $0.10 per share payable on August 27, 2021 to shareholders of record on August 13, 2021. This is Primis' thirty-ninth consecutive quarterly dividend.
Highlights for the three months ended June 30, 2021
- Total assets at the end of the second quarter of 2021 were $3.4 billion, an increase of 10.5% versus the year ago period.
- Gross loans were $2.3 billion at the end of the second quarter of 2021, down 9.0% and 4.4% from the year ago period and linked-quarter, respectively. Excluding Paycheck Protection Program ("PPP") balances, gross loans declined 6.1% and 0.21%, respectively, over the same time periods.
- Total deposits increased $599.5 million year-over-year despite a $231.0 million decline in time deposits over the same time frame. Non-time deposits comprised 85.9% of total deposits at June 30, 2021 versus 83.7% at March 31, 2021 and 71.2% at June 30, 2020.
- Net income, pre-tax pre-provision earnings^(1)^ and pre-tax pre-provision operating earnings^(1)^ were $10.3 million, $9.1 million and $9.1 million, respectively, for the second quarter of 2021, versus $9.4 million, $11.3 million and $11.5 million, respectively, for the first quarter of 2021.
- Return on average assets of 1.23% for the quarter ended June 30, 2021 versus 1.19% for the quarter ended March 31, 2021.
- Operating return on average assets^(1)^ of 1.23% for the quarter ended June 30, 2021 versus 1.21% for the quarter ended March 31, 2021.
- Pre-tax pre-provision return on average assets^(1)^ and pre-tax pre-provision operating return on average assets^(1)^ of 1.08% for the second quarter of 2021, compared to 1.43% and 1.45%, respectively, in the first quarter of 2021.
- Loans on deferral were $26.0 million or 1.3% of gross loans excluding PPP balances. Approximately 55% of total deferrals were from the hotel portfolio.
- Negative provision for credit losses of $4.2 million for the second quarter of 2021 versus a negative provision of $1.4 million for the first quarter of 2021.
- Allowance for credit losses to total loans (excluding PPP balances) of 1.52% at June 30, 2021 versus 1.70% at March 31, 2021 and 1.09% at June 30, 2020.
- Cost of deposits declined to 0.50% for the second quarter of 2021 compared to 0.60% for the first quarter of 2021 and 0.95% for the second quarter of 2020.
- Book value per share of $16.59 and tangible book value per share^(1)^ of $12.22 at June 30, 2021, representing an increase of $0.92 and $1.01, respectively, from a year ago despite a significant build in the allowance for credit losses and $0.40 in dividends paid over the last twelve months.
Commenting on the quarter, Dennis J. Zember, Jr., President and Chief Executive Officer stated, "We are proud of our Bank's efforts to deliver world-class service to our customers and are seeing the results of that effort in our rapidly improving funding mix. We are laser-focused on enhancing our products and capabilities through our digital efforts and are excited by the technology we will have at our disposal when we launch our new digital bank late this year. We are also continuing to invest in our management and organization to ensure we have the talent and resources to run a much larger bank."
Net Interest Income
Net interest income decreased 12.6% to $21.8 million for the three months ended June 30, 2021 from $25.0 million for the three months ended March 31, 2021. The Company's reported net interest margin for the second quarter was 2.80% compared to 3.41% in the first quarter of 2021. Net interest income and net interest margin were both impacted by lower levels of PPP fee income recognition in the second quarter of 2021. Net PPP fee income recognized was $1.8 million for the three months ended June 30, 2021 versus $4.9 million for the prior quarter. Net interest margin excluding the effects of PPP loans^(1)^ was 2.77% in the second quarter of 2021, down 22 bps from 2.99% linked-quarter. Net interest margin excluding the effects of PPP loans continues to be negatively impacted by unusually high cash balances at the Bank. Average balances of cash and equivalents were $558.8 million in the second quarter of 2021, up from $319.1 million in the first quarter of 2021.
Yield on loans for the second quarter of 2021 was 4.34%, or 4.46%^(1)^ excluding the effect of PPP loans, compared to 4.82% or 4.47%, respectively in the first quarter of 2021. The Company continues to pursue core deposits to improve the overall deposit mix while reducing funding costs. As a result of these efforts and a general decline in market rates, the cost of total deposits declined to 0.50% in the second quarter of 2021 from 0.60% in the prior quarter.
Noninterest Income
During the three months ended June 30, 2021, Primis had non-interest income of $4.5 million compared to $3.8 million for the three months ended March 31, 2021. Gains on our investment in Southern Trust Mortgage ("STM") increased to $1.9 million compared to $1.3 million in first quarter in 2021. The second quarter at STM benefited from a gain related to the sale of mortgage servicing rights while STM's first quarter was impacted by a management restructuring charge as previously discussed. Recoveries related to acquisition-related previously charged-off loans and investment securities also increased $145 thousand from the first quarter of 2021.
Noninterest Expense
Noninterest expense was $17.4 million for the three months ended June 30, 2021, compared to $18.2 million for the three months ended March 31, 2021. The decrease in noninterest expense was largely driven by a decrease of $562 thousand in employee compensation and benefits and decrease of $561 thousand in reserve for unfunded commitments expense from the prior quarter, partially offset by an increase of $217 thousand in data processing expense for the same time frames. Employee compensation in the second quarter of 2021 included $429 thousand in employee incentive payments tied to core deposits generated in the first quarter of 2021, down from $454 thousand of incentive expense recognized last quarter.
Loan Portfolio and Asset Quality
Loans outstanding declined to $2.29 billion at June 30, 2021, compared to $2.39 billion at March 31, 2021 and $2.51 billion at June 30, 2020. Excluding PPP loans, loans outstanding have decreased $134.5 million since June 30, 2020 and $4.30 million since March 31, 2021. The Company ended the second quarter of 2021 with $26.0 million of loans on deferral, or 1.3% of total loans excluding PPP loans, down from $112.8 million of loans on deferral at March 31, 2021. Hotels account for 55% of deferrals as of June 30, 2021 versus 59% at March 31, 2021.
Nonperforming assets, excluding portions guaranteed by the SBA, were 0.43% of total assets at June 30, 2021, compared to 0.41% at March 31, 2021. Loans rated substandard or doubtful declined 7.3% in the second quarter versus the linked-quarter. Doubtful loans were $1.53 million at June 30, 2021, up from $0 in the prior quarter, due to the downgrade of two SBA guaranteed relationships. The credits have been on nonaccrual and in work-out for an extended period of time and have been downgraded while the Bank pursues the SBA guarantees.
The allowance for credit losses was $31.3 million at June 30, 2021, down 10% from $34.9 million at March 31, 2021 and up 32% from $23.6 million at June 30, 2020. The Company recorded a negative provision of $4.22 million in the second quarter as loans on deferral and the economic impact of COVID-19 declined dramatically in the quarter. As a percentage of loans (excluding PPP), the allowance was 1.52% at the end of the second quarter of 2021 versus 1.70% as of March 31, 2021. Net charge-offs remain low with net recoveries of $587 thousand in the second quarter of 2021 versus net charge-offs of $80 thousand in the prior quarter.
Deposits
Total deposits increased to $2.75 billion at June 30, 2021, compared to $2.69 billion at March 31, 2021 and $2.15 billion at June 30, 2020. The Company continues to aggressively pursue improvement in the funding mix with an emphasis on core deposits. During the quarter, CDs declined by $49.8 million while core deposits (demand, NOW, money market and savings) increased $112.3 million linked-quarter. Time deposits represented approximately 14% of total deposits at June 30, 2021, down from 16% at March 31, 2021 and 29% at June 30, 2020.
Shareholders' Equity
Book value per share as of June 30, 2021 was $16.59, an increase of $0.37 since March 31, 2021 and $0.92 since June 30, 2020. Tangible book value per share^(1)^ at the end of the second quarter of 2021 was $12.22, an increase of $0.38 since March 31, 2021 and $1.01 since June 30, 2020. Shareholder's equity was $406.9 million, or 12% of total assets at June 30, 2021. Tangible common equity^(1)^ at June 30, 2021 was $299.8 million, or 9.12% of tangible assets^(1)^.
Panacea Financial Division Update
The Bank's Panacea Division ("Panacea"), which launched in November of 2020, focuses on national lending and deposit gathering with unique products and services for the medical community. The division is seeing increasing traction within the medical community and the pipeline suggests rapid growth for the division in the second half of 2021. To date, over 45% of its borrowers have established checking account relationships with Panacea. Additionally during the second quarter, Panacea hired an experienced healthcare banker from a super-regional bank to lead its new commercial division, Panacea Practice Solutions. Panacea now offers personal, student debt refinance, commercial real estate and practice loans. Lastly, Panacea is launching an expansion on August 1 to target dentists with the same innovative products and services currently offered to the medical community.
About Primis Financial Corp.
As of June 30, 2021, Primis had $3.40 billion in total assets, $2.29 billion in total loans and $2.75 billion in total deposits. Primis Bank, the Company's banking subsidiary, provides a range of financial services to individuals and small- and medium-sized businesses through forty-one full-service branches in Virginia and Maryland and through certain internet and mobile applications.
| Contacts: | Address: |
|---|---|
| Dennis J. Zember, Jr., President and CEO | Primis Financial Corp. |
| Matthew A. Switzer, EVP and CFO | 6830 Old Dominion Drive |
| Phone: (703) 893-7400 | McLean, VA 22101 |
| Primis Financial Corp., NASDAQ Symbol FRST | |
| Website: www.primisbank.com |
Conference Call
The Company's management will host a conference call to discuss its second quarter results Friday, July 30, 2021 at 10:00 a.m. (ET). A live Webcast of the conference call is available at the following website: https://www.webcaster4.com/Webcast/Page/2742/41861. Participants may also call 1-877-870-4263 and ask for the Primis Financial Corp. call. A replay of the teleconference will be available through August 6, 2021 by calling 1-877-344-7529 and providing Replay Access Code 10157863.
Non-GAAP Measures
Statements included in this press release include non-GAAP financial measures and should be read along with the accompanying tables. Primis uses non-GAAP financial measures to analyze its performance. The measures entitled net income adjusted for nonrecurring income and expenses; pre-tax pre-provision operating earnings; operating return on average assets; pre-tax pre-provision operating return on average assets; operating return on average equity; operating return on average tangible equity; operating efficiency ratio; tangible book value per share; tangible common equity; tangible common equity to tangible assets; and net interest margin excluding PPP loans are not measures recognized under GAAP and therefore are considered non-GAAP financial measures. A reconciliation of these non-GAAP financial measures to the most comparable GAAP measures is provided in the Reconciliation of Non-GAAP items table.
Management believes that these non-GAAP financial measures provide additional useful information about Primis that allows management and investors to evaluate the ongoing operating results, financial strength and performance of Primis and provide meaningful comparison to its peers. Non-GAAP financial measures should not be considered as an alternative to any measure of performance or financial condition as promulgated under GAAP, and investors should consider Primis' performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of Primis. Non-GAAP financial measures are not standardized and, therefore, it may not be possible to compare these measures with other companies that present measures having the same or similar names.
Non-GAAP financial measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the results or financial condition as reported under GAAP.
Forward-Looking Statements
This press release and certain of our other filings with the Securities and Exchange Commission contain statements that constitute "forward-looking statements" within the meaning of, and subject to the protections of, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are forward-looking statements. Such statements can generally be identified by such words as "may," "plan," "contemplate," "anticipate," "believe," "intend," "continue," "expect," "project," "predict," "estimate," "could," "should," "would," "will," and other similar words or expressions of the future or otherwise regarding the outlook for the Company's future business and financial performance and/or the performance of the banking industry and economy in general. These forward-looking statements include, but are not limited to, our expectations regarding our future operating and financial performance, including our outlook and long-term goals for future growth; our expectations regarding net interest margin; expectations on our growth strategy, expense management, capital management and future profitability; expectations on credit quality and performance; statements regarding the potential effects of the COVID-19 pandemic on our business and financial results and conditions; and the assumptions underlying our expectations.
Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve known and unknown risks and uncertainties which may cause the actual results, performance or achievements of the Company to be materially different from the future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements are based on the information known to, and current beliefs and expectations of, the Company's management and are subject to significant risks and uncertainties. Actual results may differ materially from those contemplated by such forward-looking statements. Factors that might cause such differences include, but are not limited to: the Company's ability to implement its various strategic and growth initiatives, including its announced new digital bank; competitive pressures among financial institutions increasing significantly; changes in economic or political conditions, either nationally or locally, particularly in areas in which the Company conducts operations; interest rate risk; changes in applicable laws, rules, or regulations, including changes to statutes, regulations or regulatory policies or practices as a result of, or in response to the COVID-19 pandemic; changes in management's plans for the future; credit risk associated with our lending activities; changes in interest rates, inflation, loan demand, real estate values, or competition; changes in accounting principles, policies, or guidelines; adverse results from current or future litigation, regulatory examinations or other legal and/or regulatory actions, including as a result of the Company's participation in and execution of government programs related to the COVID-19 pandemic; the impact of the COVID-19 pandemic on the Company's assets, business, cash flows, financial condition, liquidity, prospects and results of operations; potential increases in the provision for loan losses resulting from the COVID-19 pandemic; and other general competitive, economic, political, and market factors, including those affecting our business, operations, pricing, products, or services.
Forward-looking statements speak only as of the date on which such statements are made. These forward-looking statements are based upon information presently known to the Company's management and are inherently subjective, uncertain and subject to change due to any number of risks and uncertainties, including, without limitation, the risks and other factors set forth in the Company's filings with the Securities and Exchange Commission, the Company's Annual Report on Form 10-K for the year ended December 31, 2020, under the captions "Cautionary Note Regarding Forward-Looking Statements" and "Risk Factors," and in the Company's Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made, or to reflect the occurrence of unanticipated events. Readers are cautioned not to place undue reliance on these forward-looking statements.
(1) Non-GAAP financial measure. Please see "Reconciliation of Non-GAAP Items"in the financial tables for more information and for a reconciliation to GAAP.
| Primis Financial Corp. | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Financial Highlights (unaudited) | |||||||||||||||
| (Dollars in thousands, except per share data) | For Three MonthsEnded: | Variance - 2Q 2021 vs. | For Six Months Ended: | Variance | |||||||||||
| Selected Performance Ratios: | 2Q 2021 | 1Q 2021 | 4Q 2020 | 3Q 2020 | 2Q 2020 | 1Q 2021 | 2Q 2020 | 2Q 2021 | 2Q 2020 | YTD | |||||
| Return on average assets | 1.23% | 1.19% | 1.15% | 1.19% | 0.61% | 4 | bps | 62 | bps | 1.21% | 0.33% | 87 | bps | ||
| Operating return on average assets ^(1)^ | 1.23% | 1.21% | 0.82% | 1.19% | 0.61% | 2 | 62 | 1.21% | 0.64% | 57 | |||||
| Pre-tax pre-provision operating return on average assets^(1)^ | 1.08% | 1.45% | 1.56% | 1.78% | 2.28% | (37) | (120) | 1.20% | 1.81% | (61) | |||||
| Return on average equity | 10.28% | 9.63% | 9.16% | 9.87% | 4.92% | 65 | 536 | 9.96% | 2.49% | 747 | |||||
| Operating return on average equity ^(1)^ | 10.28% | 9.79% | 6.53% | 9.87% | 4.92% | 49 | 536 | 9.96% | 4.76% | 520 | |||||
| Operating return on average tangible equity ^(1)^ | 14.03% | 13.45% | 9.04% | 13.72% | 6.86% | 58 | 717 | 13.64% | 6.65% | 699 | |||||
| Cost of funds | 0.66% | 0.78% | 0.93% | 0.83% | 0.97% | (12) | (31) | 0.72% | 1.16% | (44) | |||||
| Net interest margin | 2.80% | 3.41% | 3.58% | 3.18% | 3.33% | (61) | (53) | 3.10% | 3.32% | (22) | |||||
| Gross loans to deposits | 83.11% | 88.95% | 100.32% | 113.86% | 116.73% | (6) | pts | (34) | pts | 83.11% | 116.73% | (34) | pts | ||
| Efficiency ratio | 66.15% | 63.17% | 55.19% | 52.22% | 45.61% | 3 | 2,054 | 64.59% | 62.54% | 205 | |||||
| Operating efficiency ratio^(1)^ | 66.15% | 62.48% | 43.11% | 52.22% | 45.61% | 4 | 2,054 | 64.59% | 52.63% | 1,197 | |||||
| Per Share Data: | |||||||||||||||
| Earnings per share - Basic | $ <br> 0.42 | $ 0.39 | $ 0.37 | $ 0.40 | $ 0.19 | 8.99 | % | 121.05 | % | $ 0.81 | $ <br> 0.20 | NM | % | ||
| Earnings per share - Diluted | $ <br> 0.42 | $ 0.38 | $ 0.37 | $ 0.39 | $ 0.19 | 9.70 | 121.05 | $ 0.80 | $ 0.19 | NM | |||||
| Book value per share | $ <br> 16.59 | $ 16.22 | $ 16.03 | $ 15.96 | $ 15.67 | 2.26 | 5.87 | $ 16.59 | $ <br> 15.77 | 5.20 | |||||
| Tangible book value per share^(1)^ | $ <br> 12.22 | $ 11.84 | $ 11.60 | $ 11.53 | $ 11.21 | 3.18 | 9.01 | $ 12.22 | $<br> 11.21 | 9.01 | |||||
| Cash dividend per share | $ <br> 0.10 | $ 0.10 | $ 0.10 | $ 0.10 | $ 0.10 | (0.21) | - | $ 0.20 | $ <br> 0.20 | - | |||||
| Weighted average shares outstanding - Basic | 24,450,916 | 24,349,884 | 24,272,312 | 24,270,455 | 24,246,355 | 0.41 | 0.84 | 24,489,050 | 24,207,357 | 1.16 | |||||
| Weighted average shares outstanding - Diluted | 24,616,824 | 24,509,052 | 24,401,037 | 24,375,383 | 24,352,708 | 0.44 | 1.08 | 24,562,719 | 24,349,153 | 0.88 | |||||
| Shares outstanding at end of period | 24,537,269 | 24,532,795 | 24,368,612 | 24,368,853 | 24,361,603 | 0.02 | % | 0.72 | % | 24,537,269 | 24,361,603 | 0.72 | % | ||
| Asset Quality Ratios: | |||||||||||||||
| Non-performing assets as a percent of total assets, excluding SBA guarantees | 0.43% | 0.41% | 0.47% | 0.53% | 0.57% | 2 | bps | (14) | bps | 0.43% | 0.57% | (14) | bps | ||
| Net charge-offs (recoveries) as a percent of average loans (annualized) | (0.10%) | 0.01% | 0.13% | (0.02%) | 0.00% | (11) | (10) | 0.00% | 0.00% | - | |||||
| Allowance for credit losses to total loans | 1.37% | 1.46% | 1.49% | 1.02% | 0.94% | (9) | 43 | 1.37% | 0.94% | 43 | |||||
| Allowance for credit losses to total loans (excluding PPP loans) | 1.52% | 1.70% | 1.71% | 1.18% | 1.09% | (17) | 44 | 1.52% | 1.08% | 44 | |||||
| Capital Ratios: | |||||||||||||||
| Tangible common equity to tangible assets^(1)^ | 9.12% | 9.01% | 9.49% | 9.22% | 9.22% | 10 | bps | (10) | bps | ||||||
| Leverage ratio ^(2)^ | 9.38% | 9.61% | 9.69% | 9.28% | 9.35% | (23) | 3 | ||||||||
| Common equity tier 1 capital ratio ^(2)^ | 13.77% | 13.64% | 13.05% | 12.58% | 11.23% | 13 | 254 | ||||||||
| Tier 1 risk-based capital ratio ^(2)^ | 14.23% | 14.11% | 13.52% | 13.03% | 11.65% | 12 | 258 | ||||||||
| Total risk-based capital ratio^(2)^ | 19.52% | 19.48% | 19.58% | 18.87% | 14.59% | 4 | 493 | (1) See Reconciliation of Non-GAAP financial measures. | |||||||
| --- | |||||||||||||||
| (2) June 30, 2021 ratios are estimated and may be subject to<br>change pending the final filing of the FR Y-9C. | |||||||||||||||
| The company defines "NM" as not meaningful for increases or decreases greater than 300 percent. | |||||||||||||||
| Primis Financial Corp. | |||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||
| (Dollars in thousands) | As Of : | Variance - 2Q 2021 vs. | |||||||||||||
| Condensed Consolidated Balance Sheets (unaudited) | 2Q2021 | 1Q 2021 | 4Q 2020 | 3Q 2020 | 2Q 2020 | 1Q 2021 | 2Q 2020 | ||||||||
| Assets | |||||||||||||||
| Cash and cash equivalents | $ <br>620,839 | $ 480,280 | $ 196,185 | $ 149,272 | $ 82,586 | 29.27 | % | NM | % | ||||||
| Investment securities-available for sale | 201,977 | 170,216 | 153,233 | 157,896 | 160,979 | 18.66 | 25.47 | ||||||||
| Investment securities-held to maturity | 28,669 | 33,180 | 40,721 | 49,323 | 53,958 | (13.60) | (46.87) | ||||||||
| Loans receivable, net of deferred fees | 2,286,355 | 2,391,529 | 2,440,496 | 2,523,709 | 2,511,504 | (4.40) | (8.96) | ||||||||
| Allowance for credit losses | (31,265) | (34,893) | (36,345) | (25,779) | (23,627) | (10.40) | 32.33 | ||||||||
| Net loans | 2,255,090 | 2,356,636 | 2,404,151 | 2,497,930 | 2,487,877 | (4.31) | (9.36) | ||||||||
| Stock in Federal Reserve Bank and Federal Home Loan Bank | 15,521 | 15,521 | 16,927 | 16,927 | 16,927 | - | (8.31) | ||||||||
| Equity method investment in mortgage affiliate | 12,649 | 13,912 | 12,652 | 13,238 | 9,412 | (9.08) | 34.39 | ||||||||
| Preferred investment in mortgage affiliate | 3,305 | 3,305 | 3,305 | 3,305 | 3,305 | - | - | ||||||||
| Bank premises and equipment, net | 30,099 | 30,076 | 30,306 | 30,679 | 31,087 | 0.08 | (3.18) | ||||||||
| Operating lease right-of-use assets | 6,386 | 6,947 | 7,511 | 7,033 | 7,111 | (8.08) | (10.20) | ||||||||
| Intangible assets | 107,098 | 107,439 | 107,780 | 108,122 | 108,463 | (0.32) | (1.26) | ||||||||
| Bank-owned life insurance | 65,949 | 65,569 | 65,409 | 65,015 | 64,622 | 0.58 | 2.05 | ||||||||
| Other real estate owned | 1,274 | 2,255 | 3,078 | 5,388 | 6,006 | (43.50) | (78.79) | ||||||||
| Deferred tax assets, net | 14,442 | 14,702 | 14,646 | 14,477 | 11,087 | (1.77) | 30.26 | ||||||||
| Accrued interest receivable | 13,028 | 18,197 | 19,998 | 21,076 | 15,074 | (28.41) | (13.57) | ||||||||
| Other assets | 18,825 | 12,235 | 12,771 | 14,892 | 13,677 | 53.86 | 37.64 | ||||||||
| Total assets | $<br> 3,395,151 | $ 3,330,470 | $ 3,088,673 | $ 3,154,573 | $ 3,072,171 | 1.94 | % | 10.51 | % | ||||||
| Liabilities and stockholders' equity | |||||||||||||||
| Demand deposits | $ <br>525,244 | $ 511,611 | $ 440,674 | $ 467,581 | $ 447,605 | 2.66 | % | 17.35 | % | ||||||
| NOW accounts | 912,666 | 821,746 | 714,752 | 472,553 | 424,096 | 11.06 | 115.20 | ||||||||
| Money market accounts | 714,759 | 713,968 | 603,318 | 534,899 | 488,229 | 0.11 | 46.40 | ||||||||
| Savings accounts | 209,441 | 202,488 | 183,814 | 179,756 | 171,681 | 3.43 | 21.99 | ||||||||
| Time deposits | 388,954 | 438,773 | 490,048 | 561,685 | 619,918 | (11.35) | (37.26) | ||||||||
| Total deposits | 2,751,064 | 2,688,586 | 2,432,606 | 2,216,474 | 2,151,529 | 2.32 | 27.87 | ||||||||
| Securities sold under agreements to repurchase - short term | 12,521 | 16,445 | 16,065 | 16,181 | 16,412 | (23.86) | (23.71) | ||||||||
| Federal Home Loan Bank advances | 100,000 | 100,000 | 100,000 | 100,000 | 100,000 | - | - | ||||||||
| PPPLF Advances | - | - | - | 283,906 | 333,574 | - | (100.00) | ||||||||
| Subordinated notes | 95,404 | 95,367 | 115,329 | 115,378 | 56,689 | 0.04 | 68.29 | ||||||||
| Operating lease liabilities | 7,014 | 7,629 | 8,238 | 7,800 | 7,896 | (8.06) | (11.17) | ||||||||
| Other liabilities | 22,208 | 24,457 | 25,881 | 25,851 | 24,402 | (9.20) | (8.99) | ||||||||
| Total liabilities | 2,988,211 | 2,932,484 | 2,698,119 | 2,765,590 | 2,690,502 | 1.90 | 11.07 | ||||||||
| Stockholders' equity | 406,940 | 397,986 | 390,554 | 388,983 | 381,669 | 2.25 | 6.62 | ||||||||
| Total liabilities and stockholders' equity | $ 3,395,151 | $ 3,330,470 | $ 3,088,673 | $ 3,154,573 | $ 3,072,171 | 1.94 | % | 10.51 | % | ||||||
| Tangible common equity^(1)^ | $ 299,842 | $ <br> 290,547 | $ 282,774 | $ 280,861 | $ 273,206 | 3.20 | % | 9.75 | % | ||||||
| Primis Financial Corp. | |||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||
| (Dollars in thousands) | For Three MonthsEnded: | Variance - 2Q 2021 vs. | For Six Months Ended: | Variance | |||||||||||
| Condensed Consolidated Statement of Operations (unaudited) | 2Q2021 | 1Q 2021 | 4Q 2020 | 3Q 2020 | 2Q 2020 | 1Q 2021 | 2Q 2020 | 2Q 2021 | 2Q 2020 | YTD | |||||
| Interest and dividend income | $ <br>26,631 | $ 30,308 | $ <br> 31,919 | $ 28,707 | $ 28,672 | (12.13) | % | (7.12) | % | $ 56,939 | $ <br> 57,153 | (0.37) | % | ||
| Interest expense | 4,831 | 5,353 | 6,265 | 5,709 | 6,199 | (9.75) | (22.07) | 10,184 | 14,165 | (28.10) | |||||
| Net interest income | 21,800 | 24,955 | 25,654 | 22,998 | 22,473 | (12.64) | (2.99) | 46,755 | 42,988 | 8.76 | |||||
| Provision for (recovery of) credit losses | (4,215) | (1,372) | 3,101 | 2,000 | 10,899 | 207.22 | (138.67) | (5,587) | 14,349 | (138.94) | |||||
| Net interest income after provision for (recovery of) credit losses | 26,015 | 26,327 | 22,553 | 20,998 | 11,574 | (1.19) | 124.77 | 52,342 | 28,639 | 82.76 | |||||
| Account maintenance and deposit service fees | 1,784 | 1,817 | 1,700 | 1,633 | 1,489 | (1.82) | 19.81 | 3,601 | 3,187 | 12.99 | |||||
| Income from bank-owned life insurance | 379 | 386 | 394 | 394 | 385 | (1.81) | (1.56) | 765 | 771 | (0.78) | |||||
| Equity gain from mortgage affiliate | 1,878 | 1,315 | 2,571 | 3,826 | 4,161 | 42.81 | (54.87) | 3,193 | 4,392 | (27.30) | |||||
| Realized losses on sales of investment securities | - | - | (620) | - | - | - | - | - | - | - | |||||
| Recoveries on loans and securities charged-off prior to acquisition | 224 | 79 | 3,793 | 288 | 2,235 | 183.54 | (89.98) | 303 | 2,419 | (87.47) | |||||
| Other | 229 | 220 | 129 | 130 | 123 | 4.09 | 86.18 | 449 | 444 | 1.13 | |||||
| Noninterest income | 4,494 | 3,817 | 7,967 | 6,271 | 8,393 | 17.74 | (46.46) | 8,311 | 11,213 | (25.88) | |||||
| Employee compensation and benefits | 8,810 | 9,372 | 9,211 | 7,817 | 7,338 | (6.00) | 20.06 | 18,182 | 19,647 | (7.46) | |||||
| Occupancy and equipment expenses | 2,311 | 2,355 | 2,114 | 2,151 | 2,044 | (1.87) | 13.06 | 4,666 | 4,602 | 1.39 | |||||
| Amortization of core deposit intangible | 341 | 341 | 341 | 341 | 341 | - | - | 682 | 682 | - | |||||
| Virginia franchise tax expense | 759 | 675 | 613 | 615 | 659 | 12.44 | 15.17 | 1,434 | 1,229 | 16.68 | |||||
| Data processing expense | 1,016 | 799 | 814 | 701 | 956 | 27.16 | 6.28 | 1,815 | 1,663 | 9.14 | |||||
| Telecommunication and communication expense | 414 | 522 | 378 | 382 | 369 | (20.69) | 12.20 | 936 | 737 | 27.00 | |||||
| Net (gain) loss on other real estate owned | 77 | (60) | 905 | (16) | - | 228.33 | - | 17 | 71 | (76.06) | |||||
| Professional fees | 1,289 | 1,287 | 1,166 | 1,494 | 873 | 0.16 | 47.65 | 2,576 | 2,066 | 24.69 | |||||
| Other expenses | 2,376 | 2,885 | 3,012 | 1,779 | 1,490 | (17.64) | 59.46 | 5,261 | 3,225 | 63.13 | |||||
| Noninterest expense | 17,393 | 18,176 | 18,554 | 15,264 | 14,070 | (4.31) | 23.62 | 35,569 | 33,922 | 4.86 | |||||
| Income before income taxes | 13,116 | 11,968 | 11,966 | 12,005 | 5,897 | 9.59 | 122.42 | 25,084 | 5,930 | NM | |||||
| Income tax expense | 2,841 | 2,585 | 3,003 | 2,417 | 1,188 | 9.90 | 139.14 | 5,426 | 1,194 | NM | |||||
| Net income | $ 10,275 | $ 9,383 | $ 8,963 | $ 9,588 | $ 4,709 | 9.51 | % | 118.20 | % | $ 19,658 | $ <br> 4,736 | NM | % | ^(1)^See Reconciliation of Non-GAAP financial measures. | |
| --- | |||||||||||||||
| The company defines "NM" as notmeaningful for increases or decreases greater than 300 percent. | |||||||||||||||
| Primis Financial Corp. | |||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||
| (Dollars in thousands) | As Of: | Variance - 2Q 2021 vs. | |||||||||||||
| Loan Portfolio Composition | 2Q 2021 | 1Q 2021 | 4Q 2020 | 3Q 2020 | 2Q 2020 | 1Q 2021 | 2Q 2020 | ||||||||
| Loans secured by real estate: | |||||||||||||||
| Commercial real estate - owner occupied | $ 417,489 | $ 421,666 | $ 436,338 | $ 416,446 | $ 412,607 | (0.99) | % | 1.18 | % | ||||||
| Commercial real estate - non-owner occupied | 563,114 | 567,945 | 602,191 | 603,891 | 590,054 | (0.85) | (4.57) | ||||||||
| Secured by farmland | 11,861 | 12,351 | 13,136 | 16,640 | 16,876 | (3.97) | (29.72) | ||||||||
| Construction and land development | 109,719 | 104,661 | 103,401 | 120,108 | 122,105 | 4.83 | (10.14) | ||||||||
| Residential 1-4 family | 516,475 | 515,518 | 559,299 | 581,949 | 612,941 | 0.19 | (15.74) | ||||||||
| Multi-family residential | 130,221 | 136,914 | 107,130 | 107,529 | 100,567 | (4.89) | 29.49 | ||||||||
| Home equity lines of credit | 80,262 | 85,160 | 91,857 | 97,870 | 101,355 | (5.75) | (20.81) | ||||||||
| Total real estate loans | 1,829,141 | 1,844,215 | 1,913,352 | 1,944,433 | 1,956,505 | (0.82) | (6.51) | ||||||||
| Commercial loans | 194,610 | 188,050 | 189,622 | 217,511 | 205,009 | 3.49 | (5.07) | ||||||||
| Paycheck Protection Program loans | 234,315 | 335,210 | 314,982 | 338,473 | 325,014 | (30.10) | (27.91) | ||||||||
| Consumer loans | 28,289 | 24,054 | 22,540 | 23,292 | 24,976 | 17.61 | 13.26 | ||||||||
| Loans receivable, net of deferred fees | $ 2,286,355 | $ 2,391,529 | $ 2,440,496 | $ 2,523,709 | $ 2,511,504 | (4.40) | % | (8.96) | % | ||||||
| Loans by Risk Grade: | |||||||||||||||
| Pass, not graded | $ <br> - | $ - | $ 533,287 | $ 574,954 | $ 653,943 | - | % | (100.00) | % | ||||||
| Pass Grade 1 - Highest Quality | 1,054 | 955 | 778 | 891 | 306 | 10.37 | 244.44 | ||||||||
| Pass Grade 2 - Good Quality | 247,664 | 348,836 | 332,251 | 375,861 | 323,512 | (29.00) | (23.45) | ||||||||
| Pass Grade 3 - Satisfactory Quality | 1,142,784 | 1,110,453 | 627,270 | 878,031 | 837,606 | 2.91 | 36.43 | ||||||||
| Pass Grade 4 - Pass | 823,866 | 853,234 | 872,604 | 660,630 | 662,534 | (3.44) | 24.35 | ||||||||
| Pass Grade 5 - Special Mention | 29,844 | 33,661 | 29,809 | 14,132 | 14,006 | (11.34) | 113.08 | ||||||||
| Grade 6 - Substandard | 39,613 | 44,390 | 44,497 | 19,210 | 19,597 | (10.76) | 102.14 | ||||||||
| Grade 7 - Doubtful | 1,530 | - | - | - | - | - | - | ||||||||
| Grade 8 - Loss | - | - | - | - | - | - | - | ||||||||
| Total loans | $ 2,286,355 | $ 2,391,529 | $ 2,440,496 | $ 2,523,709 | $ 2,511,504 | (4.40) | % | (8.96) | % | ||||||
| (Dollars in thousands) | As Of or For Three Months Ended: | ||||||||||||||
| --- | --- | --- | --- | --- | --- | ||||||||||
| Asset Quality Information | 2Q 2021 | 1Q 2021 | 4Q 2020 | 3Q 2020 | 2Q 2020 | ||||||||||
| Allowance for Credit Losses: | Allowance for Credit Losses | Allowance for Loan losses | |||||||||||||
| Balance at beginning of period | $ (34,893) | $ <br> (36,345) | $ (25,779) | $ (23,627) | $ (12,722) | ||||||||||
| Adoption of CECL | - | - | (8,292) | - | - | ||||||||||
| (Provision for) recovery of loan<br>losses | 4,215 | 1,372 | (3,101) | (2,000) | (10,899) | ||||||||||
| Net<br>charge-offs | (587) | 80 | 827 | (152) | (6) | ||||||||||
| Ending balance | $ (31,265) | $ (34,893) | $ (36,345) | $ (25,779) | $ (23,627) | ||||||||||
| Reserve for Unfunded Commitments: | Allowance for CreditLosses | Allowance for Loan losses | |||||||||||||
| Balance at beginning<br>of period | $ (1,450) | $ (740) | $ (55) | $ (55) | $ (55) | ||||||||||
| Adoption of CECL | - | - | (305) | - | - | ||||||||||
| Unfunded loan commitment expense | (149) | (710) | (380) | - | - | ||||||||||
| Total Reserve for Unfunded<br>Commitments | $ (1,599) | $ (1,450) | $ (740) | $ (55) | $ (55) | ||||||||||
| As Of: | Variance - 2Q 2021 vs. | ||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||
| Non-Performing Assets: | 2Q 2021 | 1Q 2021 | 4Q 2020 | 3Q 2020 | 2Q 2020 | 1Q 2021 | 2Q 2020 | ||||||||
| Nonaccrual loans | $ <br>14,604 | $ 14,251 | $ 14,462 | $ 15,270 | $ 14,930 | 2.48 | % | (2.18) | % | ||||||
| Accruing loans delinquent 90 days or more | - | - | - | - | - | - | - | ||||||||
| Total non-performing loans | 14,604 | 14,251 | 14,462 | 15,270 | 14,930 | 2.48 | (2.18) | ||||||||
| Other real estate owned | 1,274 | 2,255 | 3,078 | 5,388 | 6,006 | (43.50) | (78.79) | ||||||||
| Total non-performing assets | $ <br> 15,878 | $ 16,506 | $ 17,540 | $ 20,658 | $ 20,936 | (3.80) | (24.16) | ||||||||
| SBA guaranteed portion of non-performing loans | $ <br>1,380 | $ 2,960 | $<br> 3,076 | $ 4,076 | $ 3,513 | (53.38) | (60.72) | ||||||||
| Troubled debt restructuring | $ <br>2,766 | $ 2,804 | $<br> 987 | $ 1,629 | $ 1,667 | (1.36) | 65.9 | ||||||||
| Loans deferred under COVID-19 modifications | $ <br> 25,977 | $ 112,834 | $ 122,010 | $ 436,591 | $ 707,841 | (76.98) | % | (96.33) | % | ||||||
| Primis Financial Corp. | |||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||
| (Dollars in thousands) | For Three MonthsEnded: | Variance - 2Q 2021 vs. | For Six Months Ended: | Variance | |||||||||||
| Average Balance Sheet | 2Q 2021 | 1Q 2021 | 4Q 2020 | 3Q 2020 | 2Q 2020 | 1Q 2021 | 2Q 2020 | 2Q 2021 | 2Q 2020 | YTD | |||||
| Assets | |||||||||||||||
| Loans, net of deferred fees | $ 2,327,162 | $ 2,436,713 | $ 2,497,259 | $ 2,501,614 | $ 2,401,620 | (4.50) | % | (3.10) | % | $ 2,381,635 | $ 2,301,274 | 3.49 | % | ||
| Investment securities | 215,713 | 193,364 | 204,968 | 213,039 | 222,124 | 11.56 | (2.89) | 204,600 | 226,959 | (9.85) | |||||
| Other earning assets | 577,939 | 339,480 | 147,014 | 163,159 | 91,230 | 70.24 | NM | 459,368 | 73,015 | NM | |||||
| Total earning assets | 3,120,814 | 2,969,557 | 2,849,241 | 2,877,812 | 2,714,974 | 5.09 | 14.95 | 3,045,603 | 2,601,248 | 17.08 | |||||
| Other assets | 239,564 | 240,737 | 252,231 | 256,284 | 250,897 | (0.49) | (4.52) | 240,147 | 251,798 | (4.63) | |||||
| Total assets | $ 3,360,378 | $ 3,210,294 | $ 3,101,472 | $ 3,134,096 | $ 2,965,871 | 4.68 | % | 13.30 | % | $ 3,285,750 | $ 2,853,046 | 15.17 | % | ||
| Liabilities and stockholders' equity | |||||||||||||||
| Demand deposits | $ 516,877 | $ 477,812 | $ <br>459,830 | $ 452,500 | $ <br> 418,382 | 8.18 | % | 23.54 | % | $ 497,452 | $ <br> 375,895 | 32.34 | % | ||
| Interest-bearing liabilities: | |||||||||||||||
| NOW and other demand accounts | 867,499 | 773,768 | 688,125 | 451,583 | 404,700 | 12.11 | 114.36 | 820,892 | 392,115 | 109.35 | |||||
| Money market accounts | 719,925 | 653,443 | 569,223 | 504,887 | 488,648 | 10.17 | 47.33 | 686,867 | 479,150 | 43.35 | |||||
| Savings accounts | 206,507 | 192,252 | 182,434 | 176,305 | 163,574 | 7.41 | 26.25 | 199,419 | 155,635 | 28.13 | |||||
| Time deposits | 409,247 | 465,945 | 525,607 | 590,263 | 710,483 | (12.17) | (42.40) | 437,440 | 733,269 | (40.34) | |||||
| Total Deposits | 2,720,055 | 2,563,219 | 2,425,219 | 2,175,538 | 2,185,787 | 6.12 | 24.44 | 2,642,070 | 2,136,064 | 23.69 | |||||
| Borrowings | 217,890 | 226,398 | 260,493 | 547,182 | 371,836 | (3.76) | (41.40) | 222,121 | 311,833 | (28.77) | |||||
| Total Funding | 2,937,945 | 2,789,617 | 2,685,712 | 2,722,720 | 2,557,623 | 5.32 | 14.87 | 2,864,191 | 2,447,897 | 17.01 | |||||
| Other Liabilities | 21,628 | 25,539 | 26,588 | 25,869 | 24,495 | (15.31) | (11.70) | 23,572 | 23,139 | 1.87 | |||||
| Stockholders' equity | 400,805 | 395,138 | 389,172 | 385,507 | 383,753 | 1.43 | 4.44 | 397,987 | 382,010 | 4.18 | |||||
| Total liabilities and stockholders' equity | $ 3,360,378 | $ 3,210,294 | $ 3,101,472 | $ 3,134,096 | $ 2,965,871 | 4.68 | % | 13.30 | % | $ 3,285,750 | $<br> 2,853,046 | 15.17 | % | ||
| Memo: Average PPP loans | $ <br>294,019 | $ 333,145 | $ 332,080 | $ 335,653 | $ 192,751 | (11.74) | % | 52.54 | % | $ 313,474 | $ <br> 96,375 | 225.26 | % | ||
| Net Interest Income | |||||||||||||||
| Loans | $ 25,182 | $ <br> 28,957 | $ 30,596 | $ 27,266 | $ 27,044 | (13.04) | % | (6.89) | % | $ 54,139 | $ <br> 53,785 | 0.66 | % | ||
| Investment securities | 1,073 | 1,042 | 993 | 1,129 | 1,247 | 2.98 | (13.95) | 2,115 | 2,608 | (18.90) | |||||
| Other earning assets | 376 | 309 | 330 | 312 | 381 | 21.68 | (1.31) | 685 | 760 | (9.87) | |||||
| Total Earning Assets | 26,631 | 30,308 | 31,919 | 28,707 | 28,672 | (12.13) | (7.12) | 56,939 | 57,153 | (0.37) | |||||
| Non-interest bearing DDA | - | - | - | - | - | - | - | - | - | - | |||||
| NOW and other interest-bearing demand accounts | 1,022 | 1,093 | 1,167 | 807 | 745 | (6.50) | 37.18 | 2,116 | 1,531 | 38.21 | |||||
| Money market accounts | 1,153 | 1,085 | 984 | 800 | 830 | 6.27 | 38.92 | 2,238 | 2,404 | (6.91) | |||||
| Savings accounts | 157 | 142 | 137 | 130 | 107 | 10.56 | 46.73 | 299 | 223 | 34.08 | |||||
| Time deposits | 1,057 | 1,496 | 2,038 | 2,620 | 3,464 | (29.34) | (69.49) | 2,552 | 7,491 | (65.93) | |||||
| Total Deposit Costs | 3,389 | 3,816 | 4,326 | 4,357 | 5,146 | (11.19) | (34.14) | 7,205 | 11,649 | (38.15) | |||||
| Other Borrowings | 1,442 | 1,537 | 1,939 | 1,352 | 1,053 | (6.18) | 36.94 | 2,979 | 2,516 | 18.40 | |||||
| Total Funding Costs | 4,831 | 5,353 | 6,265 | 5,709 | 6,199 | (9.75) | (22.07) | 10,184 | 14,165 | (28.10) | |||||
| Net Interest Income | $ <br> 21,800 | $ 24,955 | $ 25,654 | $ 22,998 | $ 22,473 | (12.64) | % | (2.99) | % | $ 46,755 | $ 42,988 | 8.76 | % | ||
| Memo: SBA PPP loan interest and fee income | $ <br> 2,559 | $ 5,778 | $ 5,725 | $ 2,233 | $ 512 | (55.71) | % | NM | % | $ 8,337 | $<br> 512 | NM | % | ||
| Memo: SBA PPP loan funding costs | $ <br>257 | $ 288 | $ 498 | $ 174 | $ 82 | (10.76) | % | 213.41 | % | $ 544 | $ 147 | 270.07 | % | ||
| Net Interest Margin | |||||||||||||||
| Loans | 4.34% | 4.82% | 4.87% | 4.34% | 4.53% | (48) | bps | (19) | bps | 4.58% | 4.70% | (12) | bps | ||
| Investments | 2.00% | 2.19% | 1.93% | 2.11% | 2.26% | (19) | (26) | 2.08% | 2.31% | (23) | |||||
| Other Earning Assets | 0.26% | 0.37% | 0.89% | 0.76% | 1.68% | (11) | (142) | 0.30% | 2.09% | (179) | |||||
| Total Earning Assets | 3.42% | 4.14% | 4.46% | 3.97% | 4.25% | (72) | (83) | 3.77% | 4.42% | (65) | |||||
| - | |||||||||||||||
| NOW | 0.47% | 0.57% | 0.67% | 0.71% | 0.74% | (10) | (27) | 0.52% | 0.79% | (27) | |||||
| MMDA | 0.64% | 0.67% | 0.69% | 0.63% | 0.68% | (3) | (4) | 0.66% | 1.01% | (35) | |||||
| Savings | 0.30% | 0.30% | 0.30% | 0.29% | 0.26% | - | 4 | 0.30% | 0.29% | 1 | |||||
| CDs | 1.04% | 1.30% | 1.54% | 1.77% | 1.96% | (26) | (92) | 1.18% | 2.05% | (87) | |||||
| Cost of Interest Bearing Deposits | 0.62% | 0.74% | 0.88% | 1.01% | 1.17% | (12) | (55) | 0.68% | 1.33% | (65) | |||||
| Cost of Deposits | 0.50% | 0.60% | 0.71% | 0.80% | 0.95% | (10) | (45) | 0.55% | 1.10% | (55) | |||||
| - | |||||||||||||||
| Other Funding | 2.65% | 2.75% | 2.96% | 0.98% | 1.14% | (10) | 151 | 2.70% | 1.62% | 108 | |||||
| Total Cost of Funds | 0.66% | 0.78% | 0.93% | 0.83% | 0.97% | (12) | (31) | 0.72% | 1.16% | (44) | |||||
| - | |||||||||||||||
| Net Interest Margin | 2.80% | 3.41% | 3.58% | 3.18% | 3.33% | (61) | (53) | 3.10% | 3.32% | (22) | |||||
| Net Interest Spread | 2.76% | 3.36% | 3.53% | 3.14% | 3.27% | (60) | (51) | 3.05% | 3.25% | (20) | |||||
| Memo: Excluding SBA PPP loans | |||||||||||||||
| Loans | 4.46% | 4.47% | 4.57% | 4.60% | 4.83% | (1) | bps | (37) | bps | 4.47% | 4.86% | (39) | bps | ||
| Total Earning Assets | 3.42% | 3.77% | 4.14% | 4.14% | 4.49% | (36) | (107) | 3.59% | 4.55% | (96) | |||||
| Net Interest Margin* | 2.77% | 2.99% | 3.23% | 3.28% | 3.51% | (23) | (75) | 2.88% | 3.42% | (55) | *Net interest margin excluding the effect of SBA PPP loans assumes a funding cost of 35bps on average PPP balances in all applicable periods | ||||
| --- | |||||||||||||||
| The company defines "NM" as not meaningful for increases or decreases greater than 300 percent. | |||||||||||||||
| Primis Financial Corp. | |||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | ||||||||
| (Dollars in thousands, except per share data) | For Three MonthsEnded: | For Six Months Ended: | |||||||||||||
| Reconciliation of Non-GAAP items: | 2Q 2021 | 1Q 2021 | 4Q 2020 | 3Q 2020 | 2Q 2020 | 2Q 2021 | 2Q 2020 | ||||||||
| Net income | $ 10,275 | $ <br> 9,383 | $ 8,963 | $ 9,588 | $ 4,709 | $ 19,658 | $ 4,736 | ||||||||
| Non-GAAP adjustments to Net Income: | |||||||||||||||
| Management Restructure / Recruiting | - | 200 | 843 | - | - | - | 4,899 | ||||||||
| Branch Closures | - | - | - | - | - | - | 479 | ||||||||
| (Gain<br>or recovery) / loss on securities | - | - | (2,964) | - | - | - | - | ||||||||
| Brand<br>Initative / Renaming | - | - | 1,000 | - | - | - | - | ||||||||
| Extraordinary PPP income and expense | - | - | (2,177) | - | - | - | - | ||||||||
| Other<br>loss and related legal expenses | - | - | - | - | - | - | - | ||||||||
| Income<br>tax effect | - | (43) | 729 | - | - | - | (1,076) | ||||||||
| Net Income adjusted for nonrecurring income and expenses | $ 10,275 | $ 9,540 | $ 6,394 | $ 9,588 | $ 4,709 | $ 19,658 | $ 9,038 | ||||||||
| Net income | $ 10,275 | $<br> 9,383 | $ 8,963 | $ 9,588 | $ 4,709 | $ 19,658 | $ 4,736 | ||||||||
| Income tax expense | 2,841 | 2,585 | 3,003 | 2,417 | 1,188 | 5,426 | 1,194 | ||||||||
| Provision for credit losses (incl. unfunded commitment expense) | (4,066) | (661) | 3,481 | 2,000 | 10,899 | (5,587) | 14,349 | ||||||||
| Pre-tax pre-provision<br>earnings | $ 9,050 | $ 11,307 | $ 15,447 | $ 14,005 | $ 16,796 | $ 19,497 | $ 20,279 | ||||||||
| Effect of adjustment for nonrecurring income and expenses | - | 200 | (3,298) | - | - | - | 5,378 | ||||||||
| Pre-tax pre-provision operating<br>earnings | $ 9,050 | $ 11,507 | $ 12,149 | $ 14,005 | $ 16,796 | $ 19,497 | $ 25,657 | ||||||||
| Return on average assets | 1.23% | 1.19% | 1.15% | 1.19% | 0.61% | 1.21% | 0.33% | ||||||||
| Effect<br>of adjustment for nonrecurring income and expenses | 0.00% | 0.02% | (0.33%) | 0.00% | 0.00% | 0.00% | 0.30% | ||||||||
| Operating return on average<br>assets | 1.23% | 1.21% | 0.82% | 1.19% | 0.61% | 1.21% | 0.64% | ||||||||
| Return on average assets | 1.23% | 1.19% | 1.15% | 1.19% | 0.61% | 1.21% | 0.33% | ||||||||
| Effect<br>of tax expense | 0.34% | 0.33% | 0.39% | 0.33% | 0.18% | 0.33% | 0.08% | ||||||||
| Effect of provision for credit losses | (0.49%) | (0.08%) | 0.45% | 0.26% | 1.49% | (0.34%) | 1.01% | ||||||||
| Pre-tax pre-provision return on average<br>assets | 1.08% | 1.43% | 1.98% | 1.78% | 2.28% | 1.20% | 1.43% | ||||||||
| Effect of adjustment for nonrecurring income and expenses | 0.00% | 0.03% | (0.42%) | 0.00% | 0.00% | 0.00% | 0.38% | ||||||||
| Pre-tax pre-provision operating return on average<br>assets | 1.08% | 1.45% | 1.56% | 1.78% | 2.28% | 1.20% | 1.81% | ||||||||
| Return on average equity | 10.28% | 9.63% | 9.16% | 9.87% | 4.92% | 9.96% | 2.49% | ||||||||
| Effect of adjustment for nonrecurring income and expenses | 0.00% | 0.16% | (2.63%) | 0.00% | 0.00% | 0.00% | 2.26% | ||||||||
| Operating return on average<br>equity | 10.28% | 9.79% | 6.53% | 9.87% | 4.92% | 9.96% | 4.76% | ||||||||
| Effect of goodwill and other intangible assets | 3.75% | 3.66% | 2.51% | 3.85% | 1.94% | 3.68% | 1.90% | ||||||||
| Operating return on average tangible equity | 14.03% | 13.45% | 9.04% | 13.72% | 6.86% | 13.64% | 6.65% | ||||||||
| Efficiency ratio | 66.15% | 63.17% | 55.19% | 52.22% | 45.61% | 64.59% | 62.54% | ||||||||
| Effect of adjustment for nonrecurring income and expenses | 0.00% | (0.70%) | (12.07%) | 0.00% | 0.00% | 0.00% | (9.92%) | ||||||||
| Operating efficiency ratio | 66.15% | 62.48% | 43.11% | 52.22% | 45.61% | 64.59% | 52.63% | ||||||||
| Book value per share | $ <br>16.59 | $ 16.22 | $ 16.03 | $ 15.96 | $ 15.67 | $ 16.59 | $ 15.77 | ||||||||
| Effect of goodwill and other intangible assets | (4.37) | (4.38) | (4.43) | (4.43) | (4.46) | (4.36) | (4.45) | ||||||||
| Tangible book value per share | $ 12.22 | $ 11.84 | $ 11.60 | $ 11.53 | $ 11.21 | $ 12.22 | $ 11.21 | ||||||||
| Stockholders' equity | $ <br>406,940 | $ 397,986 | $ 390,554 | $ 388,983 | $ 381,669 | $ 406,940 | $ 381,669 | ||||||||
| Less goodwill and other intangible assets | (107,098) | (107,439) | (107,780) | (108,122) | (108,463) | (107,098) | (108,463) | ||||||||
| Tangible common equity | $ 299,842 | $ 290,547 | $ 282,774 | $ 280,861 | $ 273,206 | $ 299,842 | $ 273,206 | ||||||||
| Equity to assets | 11.99% | 11.95% | 12.64% | 12.33% | 12.42% | 11.99% | 12.42% | ||||||||
| Effect of goodwill and other intangible assets | (2.87%) | (2.94%) | (3.16%) | (3.11%) | (3.21%) | (2.87%) | (3.21%) | ||||||||
| Tangible common equity to tangible assets | 9.12% | 9.01% | 9.49% | 9.22% | 9.22% | 9.12% | 9.22% | ||||||||
| Net interest margin | 2.80% | 3.41% | 3.58% | 3.18% | 3.33% | 3.10% | 3.32% | ||||||||
| Effect of adjustment for PPP associated balances* | (0.03%) | (0.42%) | (0.35%) | 0.10% | 0.18% | (0.22%) | 0.10% | ||||||||
| Net interest margin excluding<br>PPP | 2.77% | 2.99% | 3.23% | 3.28% | 3.51% | 2.88% | 3.42% | *Net interest margin excluding the effect of PPP loans assumes a funding cost of 35bps on average PPP balances in all applicable periods | |||||||
| --- |
Second Quarter 2021 NASDAQ: FRST Exhibit 99.2
This presentation and certain of our other filings with the Securities and Exchange Commission contain statements that constitute “forward-looking statements” within the meaning of, and subject to the protections of, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are forward-looking statements. Such statements can generally be identified by such words as "may," "plan," "contemplate," "anticipate," "believe," "intend," "continue," "expect," "project," "predict," "estimate," "could," "should," "would," "will," and other similar words or expressions of the future or otherwise regarding the outlook for the Company’s future business and financial performance and/or the performance of the banking industry and economy in general. These forward-looking statements include, but are not limited to, our expectations regarding our future operating and financial performance, including our outlook and long-term goals for future growth; our expectations regarding net interest margin; expectations on our growth strategy, expense management, capital management and future profitability; expectations on credit quality and performance; statements regarding the potential effects of the COVID-19 pandemic on our business and financial results and conditions; and the assumptions underlying our expectations. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve known and unknown risks and uncertainties which may cause the actual results, performance or achievements of the Company to be materially different from the future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements are based on the information known to, and current beliefs and expectations of, the Company’s management and are subject to significant risks and uncertainties. Actual results may differ materially from those contemplated by such forward-looking statements. Factors that might cause such differences include, but are not limited to: the Company’s ability to implement its various strategic and growth initiatives, including its announced new digital bank; competitive pressures among financial institutions increasing significantly; changes in economic or political conditions, either nationally or locally, particularly in areas in which the Company conducts operations; interest rate risk; changes in applicable laws, rules, or regulations, including changes to statutes, regulations or regulatory policies or practices as a result of, or in response to the COVID-19 pandemic; changes in management’s plans for the future; credit risk associated with our lending activities; changes in interest rates, inflation, loan demand, real estate values, or competition; changes in accounting principles, policies, or guidelines; adverse results from current or future litigation, regulatory examinations or other legal and/or regulatory actions, including as a result of the Company’s participation in and execution of government programs related to the COVID-19 pandemic; the impact of the COVID-19 pandemic on the Company’s assets, business, cash flows, financial condition, liquidity, prospects and results of operations; potential increases in the provision for loan losses resulting from the COVID-19 pandemic; and other general competitive, economic, political, and market factors, including those affecting our business, operations, pricing, products, or services. Forward-looking statements speak only as of the date on which such statements are made. These forward-looking statements are based upon information presently known to the Company’s management and are inherently subjective, uncertain and subject to change due to any number of risks and uncertainties, including, without limitation, the risks and other factors set forth in the Company’s filings with the Securities and Exchange Commission, the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, under the captions “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors,” and in the Company’s Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made, or to reflect the occurrence of unanticipated events. Readers are cautioned not to place undue reliance on these forward-looking statements. 2 Forward-Looking Statements
Statements included in this presentation include non-GAAP financial measures and should be read along with the accompanying tables. Primis uses non-GAAP financial measures to analyze its performance. The measures entitled pre-tax pre-provision operating earnings; pre-tax pre-provision operating return on average assets; tangible common equity; tangible common equity to tangible assets; tangible book value per share; and net interest margin excluding PPP loans are not measures recognized under GAAP and therefore are considered non-GAAP financial measures. A reconciliation of these non-GAAP financial measures to the most comparable GAAP measures is provided in the Reconciliation of Non-GAAP items table. Management believes that these non-GAAP financial measures provide additional useful information about Primis that allows management and investors to evaluate the ongoing operating results, financial strength and performance of Primis and provide meaningful comparison to its peers. Non-GAAP financial measures should not be considered as an alternative to any measure of performance or financial condition as promulgated under GAAP, and investors should consider Primis’s performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of Primis. Non-GAAP financial measures are not standardized and, therefore, it may not be possible to compare these measures with other companies that present measures having the same or similar names. Non-GAAP financial measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the results or financial condition as reported under GAAP. 3 Non-GAAP Measures
Company Snapshot 4 Corp. Headquarters: McLean, VA Bank Headquarters: Glen Allen, VA Branches: 41 Ticker (NASDAQ): FRST Balance Sheet Assets: $3.4 billion Loans: $2.3 billion Deposits: $2.8 billion TCE/TA(1): 9.12% TBV/Share(1): $12.22
Profitability ROAA: 1.23% ROAE: 10.28% ROATCE(1): 14.03% Net Interest Margin: 2.80% Efficiency Ratio: 66.15%
Valuation Market Capitalization: $378.7 million Price / Book Value per Share 0.93x Price / Tangible Book Value: 1.26x Price / 2021 Estimated EPS(2): 12.76x Price / 2022 Estimated EPS(2): 13.79x Dividend Yield(3): 2.59% Pricing as of July 28, 2021. Financial data as of or for the three months ended June 30, 2021. (1) See reconciliation of Non-GAAP financial measures on slide 20. (2) Mean analyst estimates per S&P Global. (3) Assumes $0.40 annualized dividend.
Talented management team and board committed to building long-term shareholder value
Footprint in attractive banking markets
Aggressive and early use of technology positioning the bank for superior performance as the industry evolves
Significant operating leverage as loan demand recovers
Investment Highlights 5
Management Team 6 Insiders have purchased over 1% of the Company’s shares in the last 12 months Name Years at Primis Years in Industry Title
Deposit data as of June 30, 2020. Dollars in millions. Source: S&P Global.
Meaningful Opportunities in Attractive Markets 7 Virginia Washington D.C. Richmond Projected Population Growth 2021-2026 Total Population 2021 States
MSAs
Strategic Update 8 Maximize core funding
Embrace technology for competitive advantage
Partner with FinTech entrepreneurs to drive above-average growth Core deposits now over 85% of total deposits with almost 20% non-interest bearing
On-track for Q4 launch of digital offering built on modern technology
Panacea Financial division building momentum and demonstrates our ability to execute on unique partnerships Other opportunities in the pipeline Our focus is on building long-term shareholder value by pursuing the following: Strategic Priorities Progress Made
Dollars in millions. (1) See reconciliation of Non-GAAP financial measures on slide 20. Balance Sheet Trends 9
Deposit Trends Dollars in millions. (1) Core deposits exclude time deposits. CAGR ’17-2Q21: 122% ’19-2Q21: 146% Deposit Composition Core Deposit Growth (1) Aggressively growing core deposits to reposition our funding base for the future
No brokered deposits and only $24.8 million of listing service CDs remaining 10
Loan Composition and Trends Dollars in millions. Loan Trends and Yields Loan Composition Loans (excluding PPP) declined 0.21% linked-quarter
Pipelines, both core bank and Panacea, are beginning to build 11
Asset Quality 12 Classified loans and NPAs exclude guaranteed portion of SBA loans. NPAs / Loans (ex. PPP) + OREO NCOs / Average Loans Criticized & Classified Loans / Total Loans (ex. PPP) Asset quality remains solid with no significant migration in Q2
Deferred loans declined to $26MM in Q2, down from $113MM in Q1 2 hotels represent 55% of deferrals Substantially all remaining deferrals are expected to resume payments in Q3
All remaining OREO currently under contract with potential closing 2H’21
Allowance for Credit Losses 13 Classified loans exclude guaranteed portion of SBA loans. ACL / Gross Loans (ex. PPP) ACL / Classified Loans Reserve release of $4.2 million in Q2 as deferrals declined and economic impacts of COVID-19 receded
ACL coverage of both gross loans and classified loans remains adequate
Profitability 14 Dollars in millions. (1) See reconciliation of Non-GAAP financial measures on slide 20.
Return on Average Assets Pre-Tax Pre-Provision Earnings Profitability in Q2 benefited from mortgage activity and negative provisioning
Pre-tax pre-provision earnings continue to be impacted by margin compression and excess cash balances
Cash and Equivalents Net Interest Margin 15 Dollars in millions. (1) See reconciliation of Non-GAAP financial measures on slide 20. Net Interest Margin Reported net interest margin negatively impacted by reduced PPP fee income recognized in Q2 ($1.8 million Q2 versus $4.9 million Q1)
Cash and equivalents continued to increase in the quarter, with average cash balances increasing $240 million in Q2 versus Q1
Non-Interest Expense and Efficiency Ratio 16 Dollars in thousands. (1) See reconciliation of Non-GAAP financial measures on slide 20.
Non-Interest Expense (Excluding Reserve for Unfunded Commitments Expense) Efficiency Ratio Continued focus on managing expenses in a difficult operating environment while positioning the organization for growth
2020 efficiency ratio benefited from out-sized mortgage activity
Efficiency ratio in 2021 negatively impacted by margin compression due to significant liquidity build
Per Share Results 17 (1) See reconciliation of Non-GAAP financial measures on slide 20. Diluted Earnings Per Share Tangible Book Value Per Share (1)
Talented management team and board committed to building long-term shareholder value
Footprint in attractive banking markets
Aggressive and early use of technology positioning the bank for superior performance as the industry evolves
Significant operating leverage as loan demand recovers
Summary 18
Appendix 19
*Net interest margin excluding the effect of SBA PPP loans assumes a funding cost of 35bps on average PPP balances in all applicable periods Non-GAAP Reconciliation 20 *Net interest margin excluding the effect of PPP loans assumes a funding cost of 35 bps on average PPP balances in all applicable periods.