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): April 28, 2022
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)
Not Applicable
(Former name or former address, if changed since last report)
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 April 28, 2022, Primis Financial Corp. (“Primis” or the “Company”) issued a press release announcing its financial results for the three months ended March 31, 2022. 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 April 28, 2022, Primis issued a press release announcing the declaration of a dividend payable on May 27, 2022 to shareholders of record as of May 13, 2022. 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.
On April 28, 2022, the Company disclosed in its press release announcing its financial results for the three months ended March 31, 2022 that Primis Bank, the Company’s wholly-owned banking subsidiary, has entered into a definitive agreement to acquire 100% of the issued and outstanding capital stock of SeaTrust Mortgage Company, a North Carolina corporation. 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 April 28, 2022 |
| 99.2 | Primis Financial Corp. First Quarter 2022 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: April 28, 2022 | By: | /s/ Matthew A. Switzer |
| Matthew A. Switzer | ||
| Chief Financial Officer |
Exhibit 99.1
Primis Financial Corp. Reports Basic and Diluted Earnings per Share from Continuing Operations of $0.19 for the First Quarter of 2022
Announces Signing of a Definitive Agreement to Acquire SeaTrust Mortgage Company
Declares Quarterly Cash Dividend of $0.10 Per Share
MCLEAN, Va., April 28, 2022 /PRNewswire/ -- Primis Financial Corp. (NASDAQ: FRST) ("Primis" or the "Company"), and its wholly-owned subsidiary, Primis Bank (the "Bank"), today reported net income of $4.6 million for the quarter ended March 31, 2022, compared to $7.7 million for the quarter ended December 31, 2021. Earnings per share ("EPS") for the three months ended March 31, 2022 were $0.19 on a basic and diluted basis, compared to $0.31 on a basic and diluted basis for the three months ended December 31, 2021.
As discussed below, Primis today also announced the signing of a definitive agreement to acquire 100% of the stock of SeaTrust Mortgage Company ("SeaTrust"), a bank-owned mortgage company based in Wilmington, North Carolina. Primis anticipates closing the acquisition of SeaTrust in the second quarter of 2022, subject to the satisfaction or waiver of certain closing conditions.
Commenting on the quarter, Dennis Zember, Jr., President and CEO said "I am delighted with where we finished the quarter and even more excited about the momentum we are carrying into the rest of the year. In addition to growth in our core bank, Panacea and Life Premium Finance have substantial pipelines and a record level of engagement from referral sources. Our ability to add a wholly-owned mortgage platform into our operations for such a reasonable price provides so much opportunity to shareholders with virtually no downside. Lastly, our digital offerings are going live and will be unique for consumers and small businesses nationwide."
Highlights for the three months ended March 31, 2022
- Net income from continuing operations totaled $4.6 million, or $0.19 per basic and diluted share, compared to $7.7 million, or $0.31 per basic and diluted share in the fourth quarter of 2021.
- Total assets at the end of the first quarter of 2022 were $3.22 billion, a decrease of 3.3% compared to the first quarter of 2021.
- Gross loans, excluding Paycheck Protection Program ("PPP") balances, grew at an annualized pace of 17.6% during the first quarter of 2022 compared to the fourth quarter of 2021. Gross loans, excluding PPP balances, ended the quarter at $2.36 billion, compared to $2.26 billion at December 31, 2021 and $2.06 billion at March 31, 2021.
- Total deposits were $2.69 billion at March 31, 2022, flat compared to March 31, 2021.
- Non-time deposits were $2.35 billion at March 31, 2022, an increase of 4.3% compared to March 31, 2021.
- Non-interest bearing demand deposits increased to $560 million, or 20.8% of total deposits compared to 19.0% at the end of the same quarter in 2021.
- Time deposits decreased to $339.5 million or 12.6% of total deposits at March 31, 2022 compared to $438.8 million or 16.3% at the end of the first quarter in 2021.
- Cost of deposits declined to 0.35% for the first quarter of 2022 compared to 0.39% for the fourth quarter of 2021 and 0.60% for the first quarter of
- Pre-tax pre-provision earnings from continuing operations^(1)^ and pre-tax pre-provision operating earnings from continuing operations^(1)^ were $6.2 million and $6.3 million, respectively, for the first quarter of 2022, compared to $8.5 million and $7.9 million, respectively, for the fourth quarter of 2021.
- Provision for credit losses were $0.1 million for the first quarter of 2022 compared to recovery of credit losses of $1.3 million for the fourth quarter of 2021.
- Allowance for credit losses to total loans (excluding PPP balances) was 1.24% at March 31, 2022, compared to 1.29% at December 31, 2021 and 1.70% at March 31, 2021.
- Book value per share was $16.42 and tangible book value per share^(1)^ was $12.11 at March 31, 2022, representing a decrease of $0.34 and $0.32, respectively, from December 31, 2021 after $0.10 in dividends paid during the quarter.
- Joined the USDF Consortium, a membership-based association of FDIC-insured banks, to explore the use of a bank-minted tokenized deposit (USDF™), as an alternative blockchain-powered method of moving value.
- Entered final testing of Primis' new digital bank offering.
Acquisition of SeaTrust Mortgage Company
Primis announced today a definitive agreement to acquire SeaTrust Mortgage Company from its parent company. Formed in late 2019 by an experienced management team, SeaTrust originates mortgages primarily in the Carolinas, Florida and Tennessee from eight offices. Origination volumes in 2021 were approximately $255 million, including both conventional and government mortgage loans, with estimated volumes for 2022 approaching $300 million pre-transaction. John Owens, President of SeaTrust, and Margaret Kronmueller, Chief Operating Officer, will remain with the company as Chief Executive Officer and Chief Operating Officer, respectively, as it rebrands to Primis Mortgage and embarks on a new growth strategy.
Dennis J. Zember, Jr., President and Chief Executive Officer of Primis commented, "We have been public with our desire for a wholly-owned mortgage solution at Primis and believe SeaTrust is the ideal platform for us. The platform is run very efficiently, already profitable at only $250 million of annual volume and fully licensed with FNMA and FHA. John and Margaret are fantastic mortgage bankers with a proven track-record of growing a profitable mortgage business and have substantial contacts in the industry that should pave the way for a larger production team. The entire Company is ambitious and excited about this new partnership. Lastly, our purchase price for this platform means substantial upside for shareholders with only a negligible impact to tangible book value."
Primis anticipates closing this all-cash acquisition in the second quarter of 2022. Additionally, management expects there to be only a minimal impact to tangible book value per share at closing and expects the business to be neutral to earnings and ROA for the remainder of 2022 as earnings are reinvested in recruiting and other growth-oriented systems. Management of Primis and SeaTrust have explored several recruiting opportunities together and are confident in the ability to quickly reach a level of scale necessary for Primis.
Continued Mr. Zember, "We are excited to see the momentum from the investments we made in 2021 with earning assets growth across the organization. Panacea and Life Premium Finance started the year strong and should begin adding to profitability this year. Our core community bank continues to grow and become more profitable. Primis Mortgage will contribute in the near future and will have synergies with our other business lines. Our digital offerings are going live and will provide the base for us to build our future on. We joined the USDF Consortium in the first quarter and are already pursuing use cases for this technology. We are enthusiastic about the performance of the bank going forward."
Lines of Business
As discussed previously, the Company's efforts to develop or incubate new lines of business continue to produce early-stage results. Long–term, the Bank believes these lines of business and the outsized growth associated with them are key to delivering higher levels of earnings per share growth.
Panacea finished the first quarter of 2022 with approximately $81.2 million in outstanding loans, an increase of $31.0 million, or 61.8%, from December 31, 2021. Approximately 51% of first quarter originations were commercial related and the remainder almost equally split between student loan refinance and personal loans. Panacea has successfully built a nationally-recognized brand and with a growing team of industry-leading bankers experienced in providing financial services to the medical, dental and veterinary communities across the United States. The Company believes that the momentum that the organization has built along with its brand, its partner associations and its experienced team leads will result in continued substantial growth.
Commenting on the momentum that Panacea is experiencing, Mr. Tyler Stafford, CEO of the division said, "The level of interest in our offerings and our value proposition continues to increase. Our pipeline of loan opportunities is well over $100 million and continues to grow. Additionally, our application volume is growing and we expect to eclipse 1,000 applications per month by the end of 2022. We continue to recruit experienced commercial bankers across the nation with hyper-competitive products and services. I am confident that we can finish the year with $200 million in loans outstanding with even more momentum that we are experiencing right now."
The Life Premium Finance Division, launched in the fourth quarter of 2021, ended the first quarter of 2022 with outstanding balances, net of deferred fees, of $22.8 million, compared to $13.0 million at the end of the fourth quarter of 2021. To date, the division's loan balances have increased to $38 million and the pipeline currently totals approximately $60 million. Total approved credit in the division finished the first quarter of 2022 at $127 million for future funding of premiums over the next three to five years.
Primis will soon be one of the first banks in the U.S. to offer a full service, full-featured checking account powered by its new digital platform. The account's low cost of acquisition and management allows the Bank to offer hyper-competitive terms. The account includes free overdrafts, refund to the customer of debit and credit interchange income on its cards, free ATM transactions nationwide, bill pay, peer-to-peer capabilities and delivery of almost any conceivable banking service directly to customers' doorsteps in select markets. Speaking about the progress, Mr. Zember commented "Our opportunity with this digital platform is perfectly timed. As our lending strategies in the bank and our lines of business begin to accelerate, we believe the digital bank affords us the opportunity to fund that growth profitably. Additionally, the Company is currently in late-stage discussions with several FinTech's or financially-oriented companies that currently offer single, important services to their customers but lack the full feature banking experience that Primis can offer. Our pitch to these firms and their interest levels and engagement demonstrates the opportunity with this concept, and I am determined to build substantial value for our shareholders with this idea."
Net Interest Income
Net interest income, excluding the effect of PPP fees, was $22.5 million in the first quarter of 2022, compared to $20.0 million in the first quarter of 2021. Compared to the fourth quarter of 2021, net interest income increased $0.5 million despite the shorter quarter. Also excluding the effects of PPP, the Company's net interest margin expanded to 2.96% in the first quarter of 2022 compared to 2.79% in the fourth quarter of 2021 and 2.99% in the first quarter in 2021. Fee income associated with PPP lending programs was $0.3 million in the first quarter of 2022, a material decline from $4.9 million in the first quarter of 2021.
The Company's loan growth over the past several quarters has had a positive impact on both margins and net interest income as the earning asset mix improves. Loans represented 75.4% of total average earning assets in the first quarter of 2022, compared to 72.2% in the fourth quarter of 2021 and 82.1% in the first quarter of 2021. Loan yields in the first quarter, excluding the effect of PPP, were 4.27%, down only slightly from 4.33% in the fourth quarter of 2021 and 4.47% in the first quarter of 2021.
Improvements in the Company's cost of funds more than offset the small decline in loan yields. Total cost of funds in the first quarter of 2022 was 0.52%, down from 0.78% in the first quarter of 2021. Continued improvement in the deposit mix as well as several tweaks to interest bearing deposit rates have brought the organization's funding structure much closer to the Company's peer group. Total demand deposits and total non-CD deposits at the end of the first quarter of 2022 were 20.8% and 87.4%, compared to 19.0% and 83.7% at the end of the first quarter of 2021.
Non-interest Income
During the three months ended March 31, 2022, Primis had non-interest income of $2.1 million, compared to $2.9 million for the three months ended December 31, 2021. The fourth quarter of 2021 included a gain on debt extinguishment of $573 thousand. Adjusting for the gain on debt extinguishment, non-interest income would have been $2.3 million for the fourth quarter of 2021.
Non-interest Expense
Non-interest expense was $19.0 million for the three months ended March 31, 2022, compared to $18.5 million for the three months ended December 31, 2021. Included in non-interest expense is unfunded commitment reserve expense of $260 thousand in the first quarter of 2022 compared to recovery of $152 thousand in the fourth quarter of 2021. Excluding this item, non-interest expense for the three months ended March 31, 2022 was $18.7 million, essentially flat from the three months ended December 31, 2021. As discussed last quarter, Primis intends to consolidate branches in 2022. Six branches will consolidate in the second quarter of this year with another two branches anticipated to be consolidated in the third quarter. Approximately $1.5 million of expense reductions are expected to be realized in 2022 as a result of the branch consolidations with run-rate savings of $3.0 million annually.
Expenses associated with lines of business amounted to $1.6 million in the first quarter of 2022, compared to $0.4 million in the first quarter of 2021. Panacea's expenses have grown primarily as the division has hired commercial sales staff centered on both lending and treasury services. Life Premium Finance costs still center mostly on the principals the Company hired to build the division. Primis expects additional hires in the near future as loan pipelines, outstanding balances and agency approvals continue to improve.
The Company's efficiency ratio and operating efficiency ratio in the first quarter of 2022 was 76.1% and 75.6%, respectively, compared to 66.0% and 65.3%, respectively, in the first quarter of 2021. As highlighted earlier, the first quarter of 2021 benefited from substantially higher PPP fee income. The direct impact of the Company's lines of business contributed approximately 4.0% to the efficiency ratio in the first quarter of 2022. Without this impact, and assuming full run-rate savings from branch consolidations outlined above, the Company's efficiency ratio would have been approximately 60% in the first quarter of 2022.
Loan Portfolio and Asset Quality
Loans outstanding increased to $2.39 billion at March 31, 2022, compared to $2.34 billion at December 31, 2021. Excluding PPP loans, loans outstanding increased $100 million from December 31, 2021, an annualized growth rate of approximately 17.6%. Loan growth was robust across the organization, including the Panacea and Life Premium Finance divisions. The Company believes loan growth will continue at mid-teens or higher rates through the end of 2022.
Nonperforming assets, excluding portions guaranteed by the SBA, were essentially flat at $15.1 million at March 31, 2022 compared to December 31, 2021. Loans rated substandard or doubtful decreased $16.8 million, or 41.6%, from the fourth quarter of 2021, primarily due to the upgrade of one relationship.
The allowance for credit losses was $29.4 million at March 31, 2022, up $0.3 million from $29.1 million at December 31, 2021. The Company recorded a provision for credit losses of $0.1 million compared to a recovery of credit loss expense of $1.3 million in the fourth quarter of 2021, primarily as a result of robust loan growth and a slightly weaker economic outlook due to global uncertainty. As a percentage of loans, excluding PPP balances, the allowance declined to 1.24% at the end of the first quarter of 2022 compared to 1.29% at the end of the fourth quarter of 2021. The Company recorded $175 thousand in net recoveries in the first quarter of 2022 compared to net recoveries of $18 thousand in the fourth quarter of 2021.
Deposits
Total deposits decreased to $2.69 billion at March 31, 2022, compared to $2.76 billion at December 31, 2021. The decrease in deposits was largely driven by an approximately $103 million reduction in deposits tied to a mortgage relationship that temporarily reduced its balances in the first quarter and is expected to fund back up in the second quarter. Absent the reduction in the first quarter, both total deposits and non-time core deposits would have continued to show strong growth in the quarter. Non-interest bearing demand deposits now represent 20.8% of total deposits and time deposits represent only 12.6% of total deposits at March 31, 2022.
Shareholders' Equity
Book value per share as of March 31, 2022 was $16.42, a decrease of $0.34 since December 31, 2021. Tangible book value per share^(1)^ at the end of the first quarter of 2022 was $12.11, a decrease of $0.32 since December 31, 2021. Shareholders' equity was $404 million, or 12.6% of total assets, at March 31, 2022. Tangible common equity^(1)^ at March 31, 2022 was $298.1 million, or 9.57% of tangible assets^(1)^. Equity balances were reduced by $10.6 million from December 31, 2021 to March 31, 2022 because of unrealized mark-to-market adjustments on the Company's available-for-sale securities portfolio due to dramatic increases in market interest rates during the quarter. The Company has the wherewithal to hold these securities until maturity or recovery of the value and does not anticipate realizing any losses on the investments.
Additionally, the Board of Directors announced and declared a dividend of $0.10 per share payable on May 27, 2022 to shareholders of record on May 13, 2022. This is Primis' forty-second consecutive quarterly dividend.
About Primis Financial Corp.
As of March 31, 2022, Primis had $3.22 billion in total assets, $2.39 billion in total loans and $2.69 billion in total deposits. Primis Bank provides a range of financial services to individuals and small- and medium-sized businesses through forty full-service branches in Virginia and Maryland and provides services to customers through certain online 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 first quarter results on Friday, April 29, 2022 at 10:00 a.m. (ET). A live Webcast of the conference call is available at the following website: https://app.webinar.net/NYLd0VB01OB. Participants may also call 1-888-346-2613 and ask for the Primis Financial Corp. call. A replay of the teleconference will be available through May 6, 2022 by calling 1-877-344-7529 and providing Replay Access Code 1138528.
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 from continuing operations adjusted for nonrecurring income and expenses; pre-tax pre-provision operating earnings from continuing operations; operating return on average assets from continuing operations; pre-tax pre-provision operating return on average assets from continuing operations; operating return on average equity from continuing operations; operating return on average tangible equity from continuing operations; operating efficiency ratio from continuing operations; 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. We use the term "operating" to describe a financial measure that excludes income or expense considered to be non-recurring in nature. Items identified as non-operating are those that, when excluded from a reported financial measure, provide management or the reader with a measure that may be more indicative of forward-looking trends in our business. 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 and new offerings and services; 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 effects of the ongoing COVID-19 pandemic and related variants 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 recently established Panacea Financial and Life Premium Finance Divisions, new digital bank and V1BE fulfillment service and proposed acquisition of SeaTrust; competitive pressures among financial institutions increasing significantly; changes in applicable laws, rules, or regulations, including changes to statutes, regulations or regulatory policies or practices; 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, as well as labor shortages and supply chain disruptions; 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 ongoing 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 credit losses; 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, 2021, 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.
| Primis Financial Corp. | |||||||
|---|---|---|---|---|---|---|---|
| Financial Highlights (unaudited) | |||||||
| (Dollars in thousands, except per share data) | For Three Months Ended: | ||||||
| Selected Performance Ratios: | 1Q 2022 | 4Q 2021 | 3Q 2021 | 2Q 2021 | 1Q 2021 | 1Q 2021 | |
| Return on average assets from continuing operations | 0.55% | 0.88% | 0.72% | 1.05% | 1.06% | (50) | |
| Operating return on average assets from continuing operations^(1)^ | 0.57% | 0.83% | 0.72% | 1.05% | 1.08% | (51) | |
| Pre-tax pre-provision operating return on average assets from continuing operations^(1)^ | 0.77% | 0.91% | 0.98% | 0.86% | 1.30% | (54) | |
| Return on average equity from continuing operations | 4.49% | 7.37% | 6.01% | 8.81% | 8.57% | (408) | |
| Operating return on average equity from continuing operations^(1)^ | 4.58% | 6.94% | 6.01% | 8.81% | 8.73% | (415) | |
| Operating return on average tangible equity from continuing operations^(1)^ | 6.16% | 9.36% | 8.12% | 12.03% | 12.00% | (584) | |
| Cost of funds | 0.52% | 0.56% | 0.57% | 0.66% | 0.78% | (26) | |
| Net interest margin | 2.96% | 3.00% | 2.87% | 2.80% | 3.41% | (45) | |
| Gross loans to deposits | 89.11% | 84.68% | 82.46% | 83.11% | 88.95% | 0 | |
| Efficiency ratio from continuing operations | 76.11% | 68.17% | 64.80% | 71.00% | 66.01% | 1,011 | |
| Operating efficiency ratio from continuing operations^(1)^ | 75.65% | 69.64% | 64.80% | 71.00% | 65.28% | 1,038 | |
| Per Share Data: | |||||||
| Earnings per share from continuing operations - Basic | $ 0.19 | $ 0.31 | $ 0.25 | $ 0.36 | 0.35 | (46.18) | |
| Earnings per share from discontinued operations - Basic | - | - | (0.09) | 0.06 | 0.04 | (100.00) | |
| Earnings per share - Basic | $ 0.19 | $ 0.31 | $ 0.16 | $ <br>0.42 | 0.40 | (51.94) | |
| Earnings per share from continuing operations - Diluted | $ 0.19 | $ 0.31 | $ 0.25 | $ 0.36 | 0.34 | (44.24) | |
| Earnings per share from discontinued operations - Diluted | - | - | (0.09) | 0.06 | 0.04 | (100.00) | |
| Earnings per share - Diluted | $ 0.19 | $ 0.31 | $ 0.16 | $ <br>0.42 | 0.38 | (50.37) | |
| Book value per share | $ 16.42 | $ 16.76 | $ 16.63 | $ 16.59 | 16.22 | 1.22 | |
| Tangible book value per share^(1)^ | $ 12.11 | $ 12.43 | $ 12.28 | $ 12.22 | 11.84 | 2.25 | |
| Cash dividend per share | $ 0.10 | $ 0.10 | $ 0.10 | $ 0.10 | 0.10 | (0.21) | |
| Weighted average shares outstanding - Basic | 24,503,945 | 24,476,569 | 24,474,104 | 24,450,916 | 24,349,884 | 0.63 | |
| Weighted average shares outstanding - Diluted | 24,662,588 | 24,653,363 | 24,634,384 | 24,616,824 | 24,509,052 | 0.63 | |
| Shares outstanding at end of period | 24,622,739 | 24,574,619 | 24,574,619 | 24,537,269 | 24,532,795 | 0.37 | |
| Asset Quality Ratios: | |||||||
| Non-performing assets as a percent of total assets, excluding SBA guarantees | 0.47% | 0.44% | 0.47% | 0.43% | 0.41% | 6 | |
| Net charge-offs (recoveries) as a percent of average loans (annualized) | (0.03%) | (0.00%) | 0.34% | (0.10%) | 0.01% | (4) | |
| Allowance for credit losses to total loans | 1.23% | 1.24% | 1.31% | 1.37% | 1.46% | (23) | |
| Allowance for credit losses to total loans (excluding PPP loans) | 1.24% | 1.29% | 1.40% | 1.52% | 1.70% | (45) | |
| Capital Ratios: | |||||||
| Tangible common equity to tangible assets^(1)^ | 9.57% | 9.26% | 9.02% | 9.12% | 9.01% | 56 | |
| Leverage ratio ^(2)^ | 10.13% | 9.41% | 9.15% | 9.38% | 9.61% | 52 | |
| Common equity tier 1 capital ratio ^(2)^ | 13.99% | 13.09% | 13.85% | 13.77% | 13.64% | 35 | |
| Tier 1 risk-based capital ratio ^(2)^ | 14.45% | 13.52% | 14.31% | 14.23% | 14.11% | 34 | |
| Total risk-based capital ratio^(2)^ | 19.41% | 18.52% | 19.60% | 19.52% | 19.48% | (7) | |
| ^(1)^See Reconciliation of Non-GAAP financial measures. | |||||||
| ^(2)^ March 31, 2022 ratios are estimated and may be subject to change pending the final filing of the FR Y-9C. | |||||||
| Primis Financial Corp. | |||||||
| (Dollars in thousands) | AsOf : | ||||||
| Condensed Consolidated Balance Sheets (unaudited) | 1Q 2022 | 4Q 2021 | 3Q 2021 | 2Q 2021 | 1Q 2021 | 1Q 2021 | |
| Assets | |||||||
| Cash and cash equivalents | $ 298,230 | $ 530,167 | $ 650,746 | $ 620,839 | 480,280 | (37.90) | |
| Investment securities-available for sale | 271,626 | 271,332 | 206,821 | 201,977 | 170,216 | 59.58 | |
| Investment securities-held to maturity | 16,138 | 22,940 | 26,412 | 28,669 | 33,180 | (51.36) | |
| Loans receivable, net of deferred fees | 2,393,669 | 2,339,986 | 2,314,584 | 2,286,355 | 2,391,529 | 0.09 | |
| Allowance for credit losses | (29,379) | (29,105) | (30,386) | (31,265) | (34,893) | (15.80) | |
| Net loans | 2,364,290 | 2,310,881 | 2,284,198 | 2,255,090 | 2,356,636 | 0.32 | |
| Stock in Federal Reserve Bank and Federal Home Loan Bank | 11,927 | 15,521 | 15,521 | 15,521 | 15,521 | (23.16) | |
| Investments in mortgage affiliate - held for sale | - | - | 10,050 | 12,949 | 14,212 | (100.00) | |
| Bank premises and equipment, net | 29,872 | 30,410 | 30,686 | 30,099 | 30,076 | (0.68) | |
| Operating lease right-of-use assets | 5,305 | 5,866 | 6,331 | 6,386 | 6,947 | (23.64) | |
| Goodwill and other intangible assets | 106,075 | 106,416 | 106,757 | 107,098 | 107,439 | (1.27) | |
| Bank-owned life insurance | 67,099 | 66,724 | 66,336 | 65,949 | 65,569 | 2.33 | |
| Other real estate owned | 1,041 | 1,163 | 1,312 | 1,274 | 2,255 | (53.84) | |
| Deferred tax assets, net | 12,380 | 9,571 | 13,571 | 14,442 | 14,702 | (15.79) | |
| Other assets | 35,893 | 36,362 | 33,676 | 34,858 | 33,437 | 7.35 | |
| Total assets | $ 3,219,876 | $ 3,407,353 | $ 3,452,417 | $ 3,395,151 | 3,330,470 | (3.32) | |
| Liabilities and stockholders' equity | |||||||
| Demand deposits | $ 559,682 | $ 530,282 | $ 535,706 | $ 525,244 | 511,611 | 9.40 | |
| NOW accounts | 730,235 | 849,738 | 921,667 | 912,666 | 821,746 | (11.14) | |
| Money market accounts | 831,580 | 799,759 | 758,259 | 714,759 | 713,968 | 16.47 | |
| Savings accounts | 225,291 | 222,862 | 216,470 | 209,441 | 202,488 | 11.26 | |
| Time deposits | 339,456 | 360,575 | 374,965 | 388,954 | 438,773 | (22.64) | |
| Total deposits | 2,686,244 | 2,763,216 | 2,807,067 | 2,751,064 | 2,688,586 | (0.09) | |
| Securities sold under agreements to repurchase - short term | 11,231 | 9,962 | 13,348 | 12,521 | 16,445 | (31.71) | |
| Federal Home Loan Bank advances | - | 100,000 | 100,000 | 100,000 | 100,000 | (100.00) | |
| Subordinated debt and notes | 95,099 | 95,028 | 95,442 | 95,404 | 95,367 | (0.28) | |
| Operating lease liabilities | 5,897 | 6,498 | 7,000 | 7,014 | 7,629 | (22.70) | |
| Other liabilities | 17,210 | 20,768 | 20,931 | 22,208 | 24,457 | (29.63) | |
| Total liabilities | 2,815,681 | 2,995,472 | 3,043,788 | 2,988,211 | 2,932,484 | (3.98) | |
| Stockholders' equity | 404,195 | 411,881 | 408,629 | 406,940 | 397,986 | 1.56 | |
| Total liabilities and stockholders' equity | $ 3,219,876 | $ 3,407,353 | $ 3,452,417 | $ 3,395,151 | 3,330,470 | (3.32) | |
| Tangible common equity^(1)^ | $ 298,120 | $ 305,465 | $ 301,872 | $ 299,842 | 290,547 | 2.61 | |
| Primis Financial Corp. | |||||||
| (Dollars in thousands) | For Three Months Ended: | ||||||
| Condensed Consolidated Statement of Operations (unaudited) | 1Q 2022 | 4Q 2021 | 3Q 2021 | 2Q 2021 | 1Q 2021 | 1Q 2021 | |
| Interest and dividend income | $ 26,585 | $ 28,503 | $ 27,801 | $ 26,631 | 30,308 | (12.28) | |
| Interest expense | 3,731 | 4,262 | 4,594 | 4,831 | 5,353 | (30.30) | |
| Net interest income | 22,854 | 24,241 | 23,207 | 21,800 | 24,955 | (8.42) | |
| Provision for (recovery of) credit losses | 99 | (1,299) | 1,085 | (4,215) | (1,372) | (107.22) | |
| Net interest income after provision for (recovery of) credit losses | 22,755 | 25,540 | 22,122 | 26,015 | 26,327 | (13.57) | |
| Account maintenance and deposit service fees | 1,351 | 1,420 | 1,509 | 1,586 | 1,664 | (18.81) | |
| Income from bank-owned life insurance | 375 | 535 | 387 | 379 | 386 | (2.85) | |
| Gain on debt extinguishment | - | 573 | - | - | - | - | |
| Recoveries on loans and securities charged-off prior to acquisition | 90 | 52 | 481 | 224 | 79 | 13.92 | |
| Other | 274 | 307 | (26) | 229 | 220 | 24.55 | |
| Noninterest income | 2,090 | 2,887 | 2,351 | 2,418 | 2,349 | (11.03) | |
| Employee compensation and benefits | 9,625 | 9,527 | 9,032 | 8,810 | 9,372 | 2.70 | |
| Occupancy and equipment expenses | 2,557 | 2,487 | 2,523 | 2,311 | 2,355 | 8.58 | |
| Amortization of core deposit intangible | 341 | 342 | 341 | 341 | 341 | - | |
| Virginia franchise tax expense | 813 | 733 | 732 | 759 | 675 | 20.44 | |
| Data processing expense | 1,197 | 934 | 1,003 | 1,016 | 799 | 49.81 | |
| Telecommunication and communication expense | 382 | 439 | 415 | 414 | 522 | (26.82) | |
| Net (gain) loss on other real estate owned | (59) | 70 | - | 77 | (60) | (1.67) | |
| Professional fees | 1,387 | 1,238 | 874 | 1,091 | 1,134 | 22.31 | |
| Other expenses | 2,744 | 2,722 | 1,640 | 2,376 | 2,885 | (4.89) | |
| Noninterest expense | 18,987 | 18,492 | 16,560 | 17,195 | 18,023 | 5.35 | |
| Income from continuing operations before income taxes | 5,858 | 9,935 | 7,913 | 11,238 | 10,653 | (45.01) | |
| Income tax expense | 1,265 | 2,284 | 1,702 | 2,434 | 2,301 | (45.02) | |
| Income from continuing operations | 4,593 | 7,651 | 6,211 | 8,804 | 8,352 | (45.01) | |
| Income (loss) from discontinued operations before income taxes | - | - | (2,899) | 1,878 | 1,315 | (100.00) | |
| Income tax expense (benefit) | - | - | (627) | 407 | 284 | (100.00) | |
| Income (loss) from discontinued operations | - | - | (2,272) | 1,471 | 1,031 | (100.00) | |
| Net income | $ 4,593 | $ 7,651 | $ 3,939 | $ 10,275 | 9,383 | (51.05) | |
| ^(1)^See Reconciliation of Non-GAAP financial measures. | |||||||
| Primis Financial Corp. | |||||||
| (Dollars in thousands) | AsOf: | ||||||
| Loan Portfolio Composition | 1Q 2022 | 4Q 2021 | 3Q 2021 | 2Q 2021 | 1Q 2021 | 1Q 2021 | |
| Loans secured by real estate: | |||||||
| Commercial real estate - owner occupied | $ 406,285 | $ 389,109 | $ 421,940 | $ 417,489 | 421,666 | (3.65) | |
| Commercial real estate - non-owner occupied | 615,682 | 590,523 | 631,423 | 563,114 | 567,945 | 8.41 | |
| Secured by farmland | 8,896 | 10,003 | 10,721 | 11,861 | 12,351 | (27.97) | |
| Construction and land development | 116,365 | 121,520 | 109,763 | 109,719 | 104,661 | 11.18 | |
| Residential 1-4 family | 575,946 | 548,830 | 531,556 | 516,475 | 515,518 | 11.72 | |
| Multi-family residential | 152,266 | 164,071 | 153,310 | 130,221 | 136,914 | 11.21 | |
| Home equity lines of credit | 72,440 | 73,877 | 75,775 | 80,262 | 85,160 | (14.94) | |
| Total real estate loans | 1,947,880 | 1,897,933 | 1,934,488 | 1,829,141 | 1,844,215 | 5.62 | |
| Commercial loans | 336,961 | 303,697 | 203,243 | 194,610 | 188,050 | 79.19 | |
| Paycheck Protection Program loans | 31,404 | 77,319 | 140,465 | 234,315 | 335,210 | (90.63) | |
| Consumer loans | 77,424 | 61,037 | 36,388 | 28,289 | 24,054 | 221.88 | |
| Loans receivable, net of deferred fees | $ 2,393,669 | $ 2,339,986 | $ 2,314,584 | $ 2,286,355 | 2,391,529 | 0.09 | |
| Loans by Risk Grade: | |||||||
| Pass, not graded | $ - | $ - | $ - | $ - | - | - | |
| Pass Grade 1 - Highest Quality | 786 | 641 | 789 | 1,054 | 955 | (17.70) | |
| Pass Grade 2 - Good Quality | 8,734 | 103,496 | 153,834 | 247,664 | 348,836 | (97.50) | |
| Pass Grade 3 - Satisfactory Quality | 1,413,480 | 1,327,718 | 1,248,233 | 1,142,784 | 1,110,453 | 27.29 | |
| Pass Grade 4 - Pass | 895,197 | 836,610 | 841,451 | 823,866 | 853,234 | 4.92 | |
| Pass Grade 5 - Special Mention | 51,884 | 31,112 | 25,008 | 29,844 | 33,661 | 54.14 | |
| Grade 6 - Substandard | 23,588 | 40,409 | 45,269 | 39,613 | 44,390 | (46.86) | |
| Grade 7 - Doubtful | - | - | - | 1,530 | - | - | |
| Grade 8 - Loss | - | - | - | - | - | - | |
| Total loans | $ 2,393,669 | $ 2,339,986 | $ 2,314,584 | $ 2,286,355 | 2,391,529 | 0.09 | |
| (Dollars in thousands) | AsOf or For Three Months Ended: | ||||||
| Asset Quality Information | 1Q 2022 | 4Q 2021 | 3Q 2021 | 2Q 2021 | 1Q 2021 | ||
| Allowance for Credit Losses: | |||||||
| Balance at beginning of period | $ (29,105) | $ (30,386) | $ (31,265) | $ (34,893) | (36,345) | ||
| (Provision for) / recovery of allowance for credit losses | (99) | 1,299 | (1,085) | 4,215 | 1,372 | ||
| Net charge-offs | (175) | (18) | 1,964 | (587) | 80 | ||
| Ending balance | $ (29,379) | $ (29,105) | $ (30,386) | $ (31,265) | (34,893) | ||
| Reserve for Unfunded Commitments: | |||||||
| Balance at beginning of period | $ (977) | $ (1,129) | $ (1,599) | $ (1,450) | (740) | ||
| (Expense for) / recovery of unfunded loan commitment reserve | (260) | 152 | 470 | (149) | (710) | ||
| Total Reserve for Unfunded Commitments | $ (1,237) | $ (977) | $ (1,129) | $ (1,599) | (1,450) | ||
| As Of: | |||||||
| Non-Performing Assets: | 1Q2022 | 4Q 2021 | 3Q 2021 | 2Q 2021 | 1Q 2021 | 1Q 2021 | |
| Nonaccrual loans | $ 14,941 | $ 15,029 | $ 18,352 | $ 14,604 | 14,251 | 4.84 | |
| Accruing loans delinquent 90 days or more | 1,817 | 283 | - | - | - | - | |
| Total non-performing loans | 16,758 | 15,312 | 18,352 | 14,604 | 14,251 | 17.59 | |
| Other real estate owned | 1,041 | 1,163 | 1,312 | 1,274 | 2,255 | (53.84) | |
| Total non-performing assets | $ 17,799 | $ 16,475 | $ 19,664 | $ 15,878 | 16,506 | 7.83 | |
| SBA guaranteed portion of non-performing loans | $ 2,651 | $ 1,388 | $ 3,361 | $ 1,380 | 2,960 | (10.44) | |
| Troubled debt restructuring | $ 3,103 | $ 3,401 | $ 3,710 | $ 2,766 | 2,804 | 10.7 | |
| Loans deferred under COVID-19 modifications | $ - | $ - | $ 6,985 | $ 25,977 | 112,834 | (100.00) | |
| The company defines "NM" as not meaningful for increases or decreases greater than 300 percent. | |||||||
| Primis Financial Corp. | |||||||
| (Dollars in thousands) | For Three Months Ended: | ||||||
| Average Balance Sheet | 1Q 2022 | 4Q 2021 | 3Q 2021 | 2Q 2021 | 1Q 2021 | 1Q 2021 | |
| Assets | |||||||
| Loans, net of deferred fees | $ 2,360,782 | $ 2,317,260 | $ 2,291,945 | $ 2,327,162 | 2,436,713 | (3.12) | |
| Investment securities | 302,431 | 258,265 | 229,906 | 215,713 | 193,364 | 56.41 | |
| Other earning assets | 466,952 | 632,841 | 689,084 | 577,939 | 339,480 | 37.55 | |
| Total earning assets | 3,130,165 | 3,208,366 | 3,210,935 | 3,120,814 | 2,969,557 | 5.41 | |
| Investment in STM - Held for sale | — | 9,941 | 12,621 | 12,728 | 12,629 | ||
| Other assets | 226,320 | 229,718 | 230,116 | 226,836 | 228,108 | (0.78) | |
| Total assets | $ 3,356,485 | $ 3,448,025 | $ 3,453,672 | $ 3,360,378 | 3,210,294 | 4.55 | |
| Liabilities and stockholders' equity | |||||||
| Demand deposits | $ 545,530 | $ 547,504 | $ 547,500 | $ 516,877 | 477,812 | 14.17 | |
| Interest-bearing liabilities: | |||||||
| NOW and other demand accounts | 817,430 | 878,652 | 920,203 | 867,499 | 773,768 | 5.64 | |
| Money market accounts | 809,460 | 784,942 | 744,280 | 719,925 | 653,443 | 23.88 | |
| Savings accounts | 224,716 | 219,823 | 213,859 | 206,507 | 192,252 | 16.89 | |
| Time deposits | 350,368 | 368,603 | 380,233 | 409,247 | 465,945 | (24.80) | |
| Total Deposits | 2,747,504 | 2,799,524 | 2,806,075 | 2,720,055 | 2,563,219 | 7.19 | |
| Borrowings | 171,293 | 209,215 | 208,689 | 210,505 | 218,427 | (21.58) | |
| Total Funding | 2,918,797 | 3,008,739 | 3,014,764 | 2,930,560 | 2,781,646 | 4.93 | |
| Other Liabilities | 23,057 | 27,407 | 28,699 | 29,013 | 33,510 | (31.19) | |
| Stockholders' equity | 414,631 | 411,879 | 410,209 | 400,805 | 395,138 | 4.93 | |
| Total liabilities and stockholders' equity | $ 3,356,485 | $ 3,448,025 | $ 3,453,672 | $ 3,360,378 | 3,210,294 | 4.55 | |
| Memo: Average PPP loans | $ 51,491 | $ 102,078 | $ 191,504 | $ 294,019 | 333,145 | (84.54) | |
| Net Interest Income | |||||||
| Loans | $ 24,749 | $ 26,701 | $ 26,181 | $ 25,182 | 28,957 | (14.53) | |
| Investment securities | 1,430 | 1,242 | 1,083 | 1,073 | 1,042 | 37.24 | |
| Other earning assets | 406 | 560 | 537 | 376 | 309 | 31.39 | |
| Total Earning Assets | 26,585 | 28,503 | 27,801 | 26,631 | 30,308 | (12.28) | |
| Non-interest bearing DDA | - | - | - | - | - | - | |
| NOW and other interest-bearing demand accounts | 666 | 832 | 1,062 | 1,022 | 1,093 | (39.07) | |
| Money market accounts | 859 | 952 | 1,056 | 1,153 | 1,085 | (20.83) | |
| Savings accounts | 149 | 154 | 165 | 157 | 142 | 4.93 | |
| Time deposits | 700 | 809 | 877 | 1,057 | 1,496 | (53.21) | |
| Total Deposit Costs | 2,374 | 2,747 | 3,160 | 3,389 | 3,816 | (37.79) | |
| Borrowings | 1,357 | 1,515 | 1,434 | 1,442 | 1,537 | (11.71) | |
| Total Funding Costs | 3,731 | 4,262 | 4,594 | 4,831 | 5,353 | (30.30) | |
| Net Interest Income | $ 22,854 | $ 24,241 | $ 23,207 | $ 21,800 | 24,955 | (8.42) | |
| Memo: SBA PPP loan interest and fee income | $ 435 | $ 2,503 | $ 3,146 | $ 2,559 | 5,778 | (92.47) | |
| Memo: SBA PPP loan funding costs | $ 44 | $ 90 | $ 169 | $ 257 | 288 | (84.72) | |
| Net Interest Margin | |||||||
| Loans | 4.25% | 4.57% | 4.53% | 4.34% | 4.82% | (57) | |
| Investments | 1.92% | 1.91% | 1.87% | 2.00% | 2.19% | (27) | |
| Other Earning Assets | 0.35% | 0.35% | 0.31% | 0.26% | 0.37% | (2) | |
| Total Earning Assets | 3.44% | 3.52% | 3.44% | 3.42% | 4.14% | (70) | |
| NOW | 0.33% | 0.38% | 0.46% | 0.47% | 0.57% | (24) | |
| MMDA | 0.43% | 0.48% | 0.56% | 0.64% | 0.67% | (24) | |
| Savings | 0.27% | 0.28% | 0.31% | 0.30% | 0.30% | (3) | |
| CDs | 0.81% | 0.87% | 0.92% | 1.04% | 1.30% | (49) | |
| Cost of Interest Bearing Deposits | 0.44% | 0.48% | 0.56% | 0.62% | 0.74% | (30) | |
| Cost of Deposits | 0.35% | 0.39% | 0.45% | 0.50% | 0.60% | (25) | |
| Other Funding | 3.22% | 2.87% | 2.73% | 2.75% | 2.85% | 37 | |
| Total Cost of Funds | 0.52% | 0.56% | 0.57% | 0.66% | 0.78% | (26) | |
| Net Interest Margin | 2.96% | 3.00% | 2.87% | 2.80% | 3.41% | (45) | |
| Net Interest Spread | 2.81% | 2.96% | 2.83% | 2.76% | 3.36% | (55) | |
| Memo: Excluding SBA PPP loans | |||||||
| Loans | 4.27% | 4.33% | 4.35% | 4.46% | 4.47% | (20) | |
| Total Earning Assets | 3.44% | 3.32% | 3.24% | 3.42% | 3.77% | (33) | |
| Net Interest Margin* | 2.96% | 2.79% | 2.66% | 2.77% | 2.99% | (4) | |
| *Net interest margin excluding the effect of SBA PPP loans assumes a funding cost of 35bps on average PPP balances in all applicable periods | |||||||
| Primis Financial Corp. | |||||||
| (Dollars in thousands, except per share data) | For Three Months Ended: | ||||||
| Reconciliation of Non-GAAP items: | 1Q 2022 | 4Q 2021 | 3Q 2021 | 2Q 2021 | 1Q 2021 | 1Q<br>2021 | |
| Net income from continuing operations | $ 4,593 | $ 7,651 | $ 6,211 | $ 8,804 | 8,352 | 8,352 | |
| Non-GAAP adjustments to Net Income from continuing operations: | |||||||
| Management Restructure / Recruiting | - | - | - | - | 200 | 200 | |
| Merger expenses | 115 | - | - | - | - | - | |
| (Gain) on debt extinguishment | - | (573) | - | - | - | - | |
| Income tax effect | (25) | 124 | - | - | (43) | (43) | |
| Net Income from continuing operations adjusted for nonrecurring income and expenses | $ 4,683 | $ 7,202 | $ 6,211 | $ 8,804 | 8,509 | 8,509 | |
| Net income from continuing operations | $ 4,593 | $ 7,651 | $ 6,211 | $ 8,804 | 8,352 | 8,352 | |
| Income tax expense | 1,265 | 2,284 | 1,702 | 2,434 | 2,301 | 2,301 | |
| Provision for credit losses (incl. unfunded commitment expense) | 359 | (1,451) | 615 | (4,066) | (661) | (661) | |
| Pre-tax pre-provision earnings from continuing operations | $ 6,217 | $ 8,484 | $ 8,528 | $ 7,172 | 9,992 | 9,992 | |
| Effect of adjustment for nonrecurring income and expenses | 115 | (573) | - | - | 200 | 200 | |
| Pre-tax pre-provision operating earnings from continuing operations | $ 6,332 | $ 7,911 | $ 8,528 | $ 7,172 | 10,192 | 10,192 | |
| Return on average assets from continuing operations | 0.55% | 0.88% | 0.72% | 1.05% | 1.06% | 1.06% | |
| Effect of adjustment for nonrecurring income and expenses | 0.01% | (0.05%) | 0.00% | 0.00% | 0.02% | 0.02% | |
| Operating return on average assets from continuing operations | 0.57% | 0.83% | 0.72% | 1.05% | 1.08% | 1.08% | |
| Return on average assets from continuing operations | 0.55% | 0.88% | 0.72% | 1.05% | 1.06% | 1.06% | |
| Effect of tax expense | 0.15% | 0.26% | 0.20% | 0.29% | 0.29% | 0.29% | |
| Effect of provision for credit losses | 0.04% | (0.17%) | 0.07% | (0.49%) | (0.08%) | (0.08%) | |
| Pre-tax pre-provision return on average assets from continuing operations | 0.75% | 0.98% | 0.98% | 0.86% | 1.27% | 1.27% | |
| Effect of adjustment for nonrecurring income and expenses | 0.01% | (0.07%) | 0.00% | 0.00% | 0.03% | 0.03% | |
| Pre-tax pre-provision operating return on average assets from continuing operations | 0.77% | 0.91% | 0.98% | 0.86% | 1.30% | 1.30% | |
| Return on average equity from continuing operations | 4.49% | 7.37% | 6.01% | 8.81% | 8.57% | 8.57% | |
| Effect of adjustment for nonrecurring income and expenses | 0.09% | (0.43%) | 0.00% | 0.00% | 0.16% | 0.16% | |
| Operating return on average equity from continuing operations | 4.58% | 6.94% | 6.01% | 8.81% | 8.73% | 8.73% | |
| Effect of goodwill and other intangible assets | 1.58% | 2.42% | 2.12% | 3.22% | 3.26% | 3.27% | |
| Operating return on average tangible equity from continuing operations | 6.16% | 9.36% | 8.12% | 12.03% | 12.00% | 12.00% | |
| Efficiency ratio from continuing operations | 76.11% | 68.17% | 64.80% | 71.00% | 66.01% | 66.01% | |
| Effect of adjustment for nonrecurring income and expenses | (0.46%) | 1.47% | 0.00% | 0.00% | (0.73%) | (0.73%) | |
| Operating efficiency ratio from continuing operations | 75.65% | 69.64% | 64.80% | 71.00% | 65.28% | 65.28% | |
| Earnings per share from continuing operations - Basic | $ 0.19 | $ 0.31 | $ 0.25 | $ 0.36 | 0.35 | 0.35 | |
| Effect of adjustment for nonrecurring income and expenses | 0.00 | (0.02) | 0.00 | 0.00 | (0.00) | (0.00) | |
| Operating earnings per share from continuing operations - Basic | $ 0.19 | $ 0.29 | $ 0.25 | $ 0.36 | 0.35 | 0.35 | |
| Earnings per share from continuing operations - Diluted | $ 0.19 | $ 0.31 | $ 0.25 | $ 0.36 | 0.34 | 0.34 | |
| Effect of adjustment for nonrecurring income and expenses | (0.00) | (0.02) | 0.00 | 0.00 | 0.01 | 0.01 | |
| Operating earnings per share from continuing operations - Diluted | $ 0.19 | $ 0.29 | $ 0.25 | $ 0.36 | 0.35 | 0.35 | |
| Book value per share | $ 16.42 | $ 16.76 | $ 16.63 | $ 16.59 | 16.22 | 16.22 | |
| Effect of goodwill and other intangible assets | (4.31) | (4.34) | (4.35) | (4.37) | (4.38) | (4.38) | |
| Tangible book value per share | $ 12.11 | $ 12.43 | $ 12.28 | $ 12.22 | 11.84 | 11.84 | |
| Stockholders' equity | $ 404,195 | $ 411,881 | $ 408,629 | $ 406,940 | 397,986 | 397,986 | |
| Less goodwill and other intangible assets | (106,075) | (106,416) | (106,757) | (107,098) | (107,439) | (107,439) | |
| Tangible common equity | $ 298,120 | $ 305,465 | $ 301,872 | $ 299,842 | 290,547 | 290,547 | |
| Equity to assets | 12.55% | 12.10% | 11.84% | 11.99% | 11.95% | 11.95% | |
| Effect of goodwill and other intangible assets | (2.98%) | (2.84%) | (2.81%) | (2.87%) | (2.94%) | (2.94%) | |
| Tangible common equity to tangible assets | 9.57% | 9.26% | 9.02% | 9.12% | 9.01% | 9.01% | |
| Net interest margin | 2.96% | 3.00% | 2.87% | 2.80% | 3.41% | 3.41% | |
| Effect of adjustment for PPP associated balances* | (0.00%) | (0.21%) | (0.21%) | (0.03%) | (0.42%) | (0.42%) | |
| Net interest margin excluding PPP | 2.96% | 2.79% | 2.66% | 2.77% | 2.99% | 2.99% | |
| *Net interest margin excluding the effect of PPP loans assumes a funding cost of 35bps on average PPP balances in all applicable periods |
All values are in US Dollars.
First Quarter 2022 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 and new offerings and services; 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 effects of the ongoing COVID-19 pandemic and related variants 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 recently established Panacea Financial and Life Premium Finance Divisions, new digital bank and V1BE fulfillment service and proposed acquisition of SeaTrust; competitive pressures among financial institutions increasing significantly; changes in applicable laws, rules, or regulations, including changes to statutes, regulations or regulatory policies or practices; 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, as well as labor shortages and supply chain disruptions; 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 ongoing 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 credit losses; 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, 2021, 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. Forward-Looking Statements 2
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 from continuing operations; pre-tax pre-provision operating return on average assets from continuing operations; 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. Non-GAAP Measure 3
A pioneering bank, committed to imagining a faster and more convenient way to serve you. WELCOME TO PRIMIS Corp. Headquarters: Bank Headquarters: Branches: Ticker (NASDAQ): Valuation Market Capitalization: Price / Book Value per Share Price / Tangible Book Value: Price / 2022 Estimated EPS(3): Price / 2023 Estimated EPS(3): Dividend Yield(4): 4 Pricing as of April 27, 2022. Financial data as of or for the three months ended March 31, 2022. (1) See reconciliation of Non-GAAP financial measures on slide 23. (2) Results from continuing operations (3) Mean analyst estimates per S&P Global. (4) Assumes $0.40 annualized dividend. McLean, VA Glen Allen, VA 40 FRST $336 million 0.83x 1.13x 12.30x 9.68x 2.93% Pricing as of April 27, 2022. Financial data as of or for the three months ended March 31, 2022. (1) See reconciliation of Non-GAAP financial measures on slide 23. (2) Results from continuing operations (3) Mean analyst estimates per S&P Global. (4) Assumes $0.40 annualized dividend.
Proposed Acquisition of SeaTrust Mortgage Company 5 Founded in late 2019 / Began production February 2020
Experienced management team (remaining with Primis)
FHA and Fannie approved
2021 production of $255 million / 2022 estimated production of $300 million
Closing expected in Q2’22, subject to closing conditions General Information Lower risk – currently owned by another bank
Smaller and more digestible but highly scalable
Minimal TBV impact
Expect meaningful EPS and ROAA impact in 2023 Strategic Benefits SeaTrust Offices
High Performing Community Bank 6 Continued focus on improving deposit mix and lowering cost of deposits
Solid loan growth in our core markets with 10.7% annualized loan growth in Q1*
Consolidating 6 branches in Q2’22 and 2 branches in Q3’22 Cost of Deposits: 35 bps Cost of Deposits: 60 bps Deposit Composition – Q1’22 vs. Q1’21
\* Excludes PPP, Panacea and Life Premium Finance balances Source: S&P Global.
~1000 Downloads of the V1BE App ~$30 Million Amt. of Deposit Accts Utilizing V1BE 235 Users of V1BE ~$133,000 Average Deposit Balance of V1BE Users V1BE Update V1BE Coverage
Digital Bank Update 7 Final testing for imminent public launch
Initial products will include consumer and business deposit accounts with novel features Significant debit card rewards Free overdraft Embedded V1BE functionality Build out small-business offerings, including lending
Leverage platform to power BaaS offering
Incorporate blockchain-powered payments through our participation in the USDF Consortium Initial Launch Up Next
8 $31.0 million growth in loan balances in Q1 Q1’22 originations of $35.7 million, pacing at the high end of 2022 growth expectations despite student loan payments deferral extensions
Achieved pre-provision profitability in March, well ahead of schedule
Banking >1,400 doctor households across all 50 states
$0.0 net charge offs, 0 loans > 30 days past due in Q1’22
Realizing ~100% DDA penetration and >70% Treasury Management penetration among business borrowers
Announced partnership with Massachusetts Medical Society and its 25,000 members
Continued adding to the team with an emphasis on production and production support
Commercial/Credit team has an average of 17.6 years experience in healthcare/practice finance Panacea Financial Update Q1’22 Update Q1’22 Loan Composition ($81.2 million) Consumer Applications
4 9 Life Insurance Premium Finance Update Key Portfolio Metrics Key Performance Metrics Average Actual Primis Processing Time is ~4 Days Placement Ratio Carrier Approvals Top-Tier Partners Distribution Partners 86% 19 24 4 76% 180% Loan Balance Growth and Deal Growth Respectively 3.28% Weighted Average Yield $127 Million Total Approved Credit $22.8 Million Loan Balances (Net of Fees)
First Quarter Results
Net income from continuing operations of $4.6 million or $0.19 per basic and diluted share
Gross loans, excluding PPP balances, grew approx. 18% annualized with solid contribution from across the organization
Total deposits declined slightly linked-quarter to $2.69 billion from $2.76 billion while mix continues to improve Decline driven by $103 million decline in mortgage related balance that will refund in Q2 Non-interest bearing demand deposits at 20.8% of deposits versus 19.2% at the end of 2021 Time deposits declined to 12.6% of total deposits
Pre-tax, pre-provision return on average assets and pre-tax, pre-provision operating return on average assets(1) of 0.75% and 0.77%, respectively, compared to 0.98% and 0.91%, respectively, in the fourth quarter
Reported net interest margin and net interest margin, excluding the effects of PPP, of 2.96% and 2.96%, respectively, versus 3.00% and 2.79% in the fourth quarter
Net interest income, excluding PPP fees, of $22.5 million in Q1’22 versus $20.0 million in Q1’21
(1) Results for continuing operations. See reconciliation of Non-GAAP financial measures on slide 23. First Quarter Highlights 11
Dollars in millions. (1) See reconciliation of Non-GAAP financial measures on slide 23. Balance Sheet Trends 12 $3,330 $2,689 $2,392 9.01% Q1'21 $3,395 $2,751 $2,286 9.12% Q2'21 $3,452 $2,807 $2,315 9.02% Q3'21 $3,407 $2,763 $2,340 9.26% Q4'21 $3,220 $2,686 $2,394 Q1'22 Gross Loans deposits total assets tce/ta(1)
Dollars in millions. Loan Composition and Trends 13 Loan Composition (Ex. PPP) Robust loan growth of 4.4%, or 17.6% annualized, linked-quarter excluding PPP balances
Continue to anticipate mid- to high-teens loan growth for 2022, excluding PPP balances $335 4.82% Q1'21 $2,056 4.47% Q2'21 $234 4.46% Q3'21 $2,052 4.34% Q4'21 $140 4.53% Q1'22 $2,174 4.35% LOANS (EX. PPP) $77 4.57% PPP $2,263 4.33% YEILD ON LOANS $31 4.27% YEILD ON LOANS(EX.PPP) $2,362 4.25% 3.3% CONSUMER 3.4% OTHER 17.2% C&I 14.3% RESIDENTIAL 30.8% C&D 4.9% CRE - NOO 26.10% CRE - OO
Classified loans and NPAs exclude guaranteed portion of SBA loans. Asset Quality 14 NPAs / Loans (Ex. PPP) + OREO NCOs / Average Loans Criticized & Classified Loans / Total Loans (Ex. PPP) Criticized assets continue to remain at moderate levels with substandard loans declining and nonperforming loans staying flat in Q1
OREO declined to $1.04 million in Q1 from $1.16 million in Q4
Net recoveries of $175K in Q1
Classified loans exclude guaranteed portion of SBA loans. Allowance for Credit Losses 15 ACL / Gross Loans (Ex. PPP) ACL / Classified Loans Provision for credit losses of $0.1 million in Q1 versus recovery of $1.3 million in Q4 as economic forecasts soften slightly and loan growth continues at a robust pace
ACL coverage of gross loans declined to 1.24% from 1.29% in Q4
Dollars in millions. (1) Core deposits exclude time deposits. Deposit Trends 16 Deposit Composition – Q1’22 Core Deposit Growth (1) Total deposits declined slightly in Q1, largely due to $103 million decrease in balances associated with mortgage escrows Anticipate this account will refund in Q2
Focus remains on building customer relationships and continuing to grow core deposits, as evidenced by our increasing percentage of demand deposits Cost of Deposits: 35 bps
Margin Progression
Dollars in millions. (1) See reconciliation of Non-GAAP financial measures on slide 23
Net Interest Income and Net Interest Margin 17 Excluding PPP impacts, Q1’22 was the fourth consecutive quarter of increasing net interest income and third consecutive quarter of margin expansion as robust loan growth improves the Bank’s earning asset mix
Expectation is for these trends to continue as loan growth remains strong and liquidity is deployed Average cash and equivalent balances decreased $165 million in Q1 to $455 million Net Interest Margin Trends
Q1 NIE, excluding unfunded commitment expense, essentially flat from Q4 Reduced consulting/legal/marketing expenses were offset by planned expenses tied to growth initiatives Legal expenses related to SeaTrust transaction of $115K in Q1 Expenses related to Panacea/Life Premium Finance/Digital increased $621K in Q1’22 versus Q4’21
Anticipate consolidating 6 branch locations in Q2’22 and 2 locations in Q3’22 as digital efforts take hold $1.5 million savings in 2022 with run-rate savings of $3.0 million in 2023
Panacea/Life Premium Finance/Digital contributed approximately 4 points to the efficiency ratio in Q1 Panacea pre-provision profitable in March, Life Premium Finance pre-provision profitable early Q2, both ahead of schedule Anticipate improvement in efficiency ratio through 2022 as Panacea and Life Premium Finance become meaningfully profitable
Q1 efficiency ratio without growth initiatives and full run-rate branch savings estimated at approximately 60% Efficiency Ratio Dollars in thousands. (1) Results from continuing operations. (2) See reconciliation of Non-GAAP financial measures on slide 23.
Non-Interest Expense and Efficiency Ratio 18 (1) Non-Interest Expense (Ex. Res. for Unfunded Com. Expense)
Dollars in millions. (1) Results from continuing operations. (2) See reconciliation of Non-GAAP financial measures on slide 23.
Profitability 19 Return on Average Assets Pre-Tax Pre-Provision Earnings (1) Operating leverage expected to drive improving profitability as excess liquidity is deployed in higher-yielding assets, strategic business lines become profitable and branch consolidation savings are realized
Without impact of business lines and assuming full run-rate branch savings, PTPP Operating ROAA estimated to be approximately 1.2% in Q1’22
Tangible Book Value Per Share Diluted Earnings Per Share from Continuing Operations
(1) See reconciliation of Non-GAAP financial measures on slide 23. Per Share Results 20 (1) Tangible book value per share adversely impacted by $10.6 million change in unrealized mark-to-market adjustments on the Company’s available-for-sale securities portfolio
Talented management team and board committed to building long-term shareholder value
Attractive multi-pronged strategy for growth
Aggressive and early use of technology positioning the bank for superior performance as the industry evolves
Significant valuation upside as strategic investments mature
Summary 21
Appendix 22
*Net interest margin excluding the effect of PPP loans assumes a funding cost of 35 bps on average PPP balances in all applicable periods. Non-GAAP Reconciliation 23 Primis Financial Corp. (Dollars in thousands, except per share data)For Three Months Ended:Reconciliation of Non-GAAP items:1Q 20224Q 20213Q 20212Q 20211Q 20211Q 20221Q 2021Net income from continuing operations4,593$ 7,651$ 6,211$ 8,804$ 8,352$ 4,593$ 8,352$ Non-GAAP adjustments to Net Income from continuing operations:Management Restructure / Recruiting- - - - 200 - 200 Merger expenses115 - - - - 115 - (Gain) on debt extinguishment- (573) - - - - - Income tax effect(25) 124 - - (43) (25) (43) Net Income from continuing operations adjusted for nonrecurring income and expenses4,683$ 7,202$ 6,211$ 8,804$ 8,509$ 4,683$ 8,509$ Net income from continuing operations4,593$ 7,651$ 6,211$ 8,804$ 8,352$ 4,593$ 8,352$ Income tax expense1,2652,2841,7022,4342,3011,2652,301Provision for credit losses (incl. unfunded commitment expense)359(1,451)615(4,066)(661)359(661)Pre-tax pre-provision earnings from continuing operations6,217$ 8,484$ 8,528$ 7,172$ 9,992$ 6,217$ 9,992$ Effect of adjustment for nonrecurring income and expenses115 (573) - - 200 115 200 Pre-tax pre-provision operating earnings from continuing operations6,332$ 7,911$ 8,528$ 7,172$ 10,192$ 6,332$ 10,192$ Return on average assets from continuing operations0.55%0.88%0.72%1.05%1.06%0.55%1.06%Effect of adjustment for nonrecurring income and expenses0.01%(0.05%)0.00%0.00%0.02%0.01%0.02%Operating return on average assets from continuing operations0.57%0.83%0.72%1.05%1.08%0.57%1.08%Return on average assets from continuing operations0.55%0.88%0.72%1.05%1.06%0.55%1.06%Effect of tax expense0.15%0.26%0.20%0.29%0.29%0.15%0.29%Effect of provision for credit losses0.04%(0.17%)0.07%(0.49%)(0.08%)0.04%(0.08%)Pre-tax pre-provision return on average assets from continuing operations0.75%0.98%0.98%0.86%1.27%0.75%1.27%Effect of adjustment for nonrecurring income and expenses0.01%(0.07%)0.00%0.00%0.03%0.01%0.03%Pre-tax pre-provision operating return on average assets from continuing operations0.77%0.91%0.98%0.86%1.30%0.77%1.30%Return on average equity from continuing operations4.49%7.37%6.01%8.81%8.57%4.49%8.57%Effect of adjustment for nonrecurring income and expenses0.09%(0.43%)0.00%0.00%0.16%0.09%0.16%Operating return on average equity from continuing operations4.58%6.94%6.01%8.81%8.73%4.58%8.73%Effect of goodwill and other intangible assets1.58%2.42%2.12%3.22%3.26%1.58%3.27%Operating return on average tangible equity from continuing operations6.16%9.36%8.12%12.03%12.00%6.16%12.00%Efficiency ratio from continuing operations76.11%68.17%64.80%71.00%66.01%76.11%66.01%Effect of adjustment for nonrecurring income and expenses(0.46%)1.47%0.00%0.00%(0.73%)(0.46%)(0.73%)Operating efficiency ratio from continuing operations75.65%69.64%64.80%71.00%65.28%75.65%65.28%Earnings per share from continuing operations - Basic0.19$ 0.31$ 0.25$ 0.36$ 0.35$ 0.19$ 0.35$ Effect of adjustment for nonrecurring income and expenses0.00 (0.02) 0.00 0.00(0.00) 0.00 (0.00) Operating earnings per share from continuing operations - Basic0.19$ 0.29$ 0.25$ 0.36$ 0.35$ 0.19$ 0.35$ Earnings per share from continuing operations - Diluted0.19$ 0.31$ 0.25$ 0.36$ 0.34$ 0.19$ 0.34$ Effect of adjustment for nonrecurring income and expenses(0.00) (0.02) 0.00 0.000.01 (0.00) 0.01 Operating earnings per share from continuing operations - Diluted0.19$ 0.29$ 0.25$ 0.36$ 0.35$ 0.19$ 0.35$ Book value per share16.42$ 16.76$ 16.63$ 16.59$ 16.22$ 16.42$ 16.22$ Effect of goodwill and other intangible assets(4.31) (4.34) (4.35) (4.37) (4.38) (4.31) (4.38) Tangible book value per share12.11$ 12.43$ 12.28$ 12.22$ 11.84$ 12.11$ 11.84$ Stockholders' equity404,195$ 411,881$ 408,629$ 406,940$ 397,986$ 404,195$ 397,986$ Less goodwill and other intangible assets(106,075)(106,416)(106,757)(107,098)(107,439)(106,075)(107,439)Tangible common equity298,120$ 305,465$ 301,872$ 299,842$ 290,547$ 298,120$ 290,547$ Equity to assets12.55%12.10%11.84%11.99%11.95%12.55%11.95%Effect of goodwill and other intangible assets(2.98%)(2.84%)(2.81%)(2.87%)(2.94%)(2.98%)(2.94%)Tangible common equity to tangible assets9.57%9.26%9.02%9.12%9.01%9.57%9.01%Net interest margin2.96%3.00%2.87%2.80%3.41%2.96%3.41%Effect of adjustment for PPP associated balances*(0.00%)(0.21%)(0.21%)(0.03%)(0.42%)(0.00%)(0.42%)Net interest margin excluding PPP2.96%2.79%2.66%2.77%2.99%2.96%2.99%