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): October 28, 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 October 28, 2021, Primis Financial Corp. (“Primis” or the “Company”) issued a press release announcing its financial results for the three months ended September 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 October 28, 2021, Primis issued a press release announcing the declaration of a dividend payable on November 26, 2021 to shareholders of record as of November 12, 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 October 28, 2021 |
| 99.2 | Primis Financial Corp. Third 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: October 28, 2021 | By: | /s/ Matthew A. Switzer |
| Matthew A. Switzer | ||
| Chief Financial Officer |
Exhibit 99.1
Primis Financial Corp. Reports Diluted Earnings per Share from Continuing Operations of $0.25 for the Third Quarter of 2021
Declares Quarterly Cash Dividend of $0.10 Per Share
MCLEAN, Va., Oct. 28, 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 $3.9 million for the quarter ended September 30, 2021, compared to $10.3 million for the quarter ended June 30, 2021. Earnings per share for the three months ended September 30, 2021 were $0.16 on a basic and diluted basis, compared to $0.42 basic and diluted for the three months ended June 30, 2021.
Earnings for the nine months ended September 30, 2021 were $23.6 million compared to $14.3 million for the nine months ended September 30, 2020. Earnings per share for the nine months ended September 30, 2021 were $0.97 basic and $0.96 diluted, compared to $0.59 basic and diluted for the nine months ended September 30, 2020.
As previously disclosed, on September 23, 2021, Primis Bank announced that it entered into an agreement with Southern Trust Mortgage ("STM"), whereby STM intends to purchase all of the Bank's common membership interests and a portion of the Bank's preferred interests in STM for a combination of cash and a promissory note. The transaction is expected to close in the fourth quarter of 2021. At closing, STM will continue to be a borrower of the Bank, but the Bank will no longer be a minority owner of STM. The Company will also no longer accrue earnings related to the Bank's common membership interests in STM. The Company recorded a pre-tax charge of approximately $2.9 million related to the transaction in the third quarter of 2021. The investment in STM has been classified as a discontinued operation and prior period financial information has been retrospectively adjusted for the impact of the transaction.
The Board of Directors also announced and declared a dividend of $0.10 per share payable on November 26, 2021 to shareholders of record on November 12, 2021. This is Primis' fortieth consecutive quarterly dividend.
Highlights for the three months ended September 30, 2021
- Net income from continuing operations totaled $6.2 million, or $0.25 per basic and diluted share, compared to $8.8 million, or $0.36 per basic and diluted share in the second quarter of 2021.
- Total assets at the end of the third quarter of 2021 were $3.45 billion, an increase of 9.5% versus the year ago period.
- Gross loans, excluding PPP, balances grew an annualized 24% during the third quarter of 2021.
- Total deposits increased to $2.81 billion at September 30, 2021, higher by 26.7% compared to the same period in 2020.
- Non-interest bearing demand deposits increased to $535.7 million or 19.1% of total deposits while time deposits continued shrinking to 13.4% of total deposits at September 30, 2021.
- Net income from continuing operations, pre-tax pre-provision earnings from continuing operations^(1)^ and pre-tax pre-provision operating earnings from continuing operations^(1)^ were $6.2 million, $8.5 million and $8.5 million, respectively, for the third quarter of 2021, versus $8.8 million, $7.2 million and $7.2 million, respectively, for the second quarter of 2021.
- Return on average assets from continuing operations of 0.72% for the quarter ended September 30, 2021 versus 1.05% for the quarter ended June 30,
- Operating return on average assets from continuing operations^(1)^ of 0.72% for the quarter ended September 30, 2021 versus 1.05% for the quarter ended June 30, 2021.
- Pre-tax, pre-provision return on average assets from continuing operations^(1)^ and pre-tax, pre-provision operating return on average assets from continuing operations^(1)^ of 0.98% for the third quarter of 2021, compared to 0.86%, in the second quarter of 2021.
- Provision for credit losses of $1.1 million for the third quarter of 2021 versus a negative provision of $4.2 million for the second quarter of 2021.
- Allowance for credit losses to total loans (excluding PPP balances) of 1.40% at September 30, 2021 versus 1.52% at June 30, 2021 and 1.18% at September 30, 2020.
- Cost of deposits declined to 0.45% for the third quarter of 2021 compared to 0.50% for the second quarter of 2021 and 0.80% for the third quarter of 2020.
- Book value per share of $16.63 and tangible book value per share^(1)^ of $12.28 at September 30, 2021, representing an increase of $0.67 and $0.75, 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.
Dennis J. Zember, Jr., President and Chief Executive Officer commented, "Our efforts over the last year or so to build stronger commercial lending teams and niche lines of business paid off during the quarter as we posted very strong loan growth. Additionally, our pipelines encourage us about the coming quarters that we can sustain growth rates that can rapidly put our excess liquidity to work with only minimal levels of incremental operating expenses. We continue to search for niche lines of business on the deposit and loan side that can augment our long-term growth rates and are pleased to announce our entry into Life Insurance Premium Finance. During the quarter we recruited a team of sales, technology and operations leaders with substantial experience in the sector to rapidly build a division focused on this top tier asset."
Commenting on the Company's digital bank development, Mr. Zember stated, "On November 15 of this year, we are rolling out our digital bank to consumers with full checking and savings offerings. This initial offering will be directed towards 'family and friends' until late December when we will begin offering the digital bank in a much broader sense. Development on expanded consumer and full commercial deposit services are already underway and likely something that we will introduce during the first quarter."
Net Interest Income
Net interest income increased 6.5% to $23.2 million for the three months ended September 30, 2021 from $21.8 million for the three months ended June 30, 2021. The Company's reported net interest margin for the third quarter was 2.87% compared to 2.80% in the second quarter of 2021. Net PPP fee income recognized was $2.7 million for the three months ended September 30, 2021 versus $1.8 million for the prior quarter. Excluding net PPP fees, net interest income was $20.5 million for the three months ended September 30, 2021 versus $20.0 million in the second quarter of 2021, an increase of 2.8%. Net interest margin excluding the effects of PPP loans^(1)^ was 2.66% in the third quarter of 2021, down eleven basis points from 2.77% 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 $675.6 million in the third quarter of 2021, up from $563.9 million in the second quarter of 2021.
Yield on loans for the third quarter of 2021, excluding the effect of PPP loans, was 4.35%^(1)^ compared to 4.46%, respectively, in the second quarter of 2021. Efforts to improve the momentum on loan production and core loan growth has resulted in better results with very little impact to overall loan yields. Management believes it can continue to achieve its robust loan growth goals without substantial dilution to overall portfolio yields and without subjecting the company to increased interest rate risk.
The Company's efforts on deposit sales and growth continue to focus on growth in lower cost deposit types. Management has continued to adjust deposit rates lower throughout the current interest rate environment and believes some small additional savings can be achieved. Management believes additional savings can be achieved in the overall cost of funds but wants to stay slightly ahead of its peers and continue driving outsized increases in total deposits, believing that the momentum on loan growth and lending strategies will use the liquidity in short order.
Noninterest Income
During the three months ended September 30, 2021, Primis had non-interest income of $2.7 million, compared to $2.6 million for the three months ended June 30, 2021. This excludes the pre-tax charge of approximately $2.9 million in the third quarter of 2021 and equity gains in prior periods related to STM which are now recorded in discontinued operations. Recoveries related to acquisition-related previously charged-off loans and investment securities also increased $257 thousand from the second quarter of 2021 to $481 thousand in the third quarter of 2021.
Noninterest Expense
Noninterest expense was $16.9 million for the three months ended September 30, 2021, compared to $17.4 million for the three months ended June 30, 2021. Included in noninterest expense is unfunded commitment reserve recovery in the third quarter of 2021 of $470 thousand and reserve for unfunded commitment expense of $149 thousand in the second quarter of 2021. Excluding these items, noninterest expense for the three months ended September 30, 2021 was $17.4 million, an increase of $120 thousand from the second quarter of 2021.
As the Company progresses in to 2022, management believes that incremental increases in noninterest expense will include the costs of the new digital banking effort as well as a slower build on leadership roles that has occurred in 2021. Repositioning some existing positions, consolidating some of its branch infrastructure and several other strategies are anticipated to offset some of the known increases and hold the overall growth rate to low single digits.
Loan Portfolio and Asset Quality
Loans outstanding increased to $2.31 billion at September 30, 2021, compared to $2.29 billion at June 30, 2021 and decreased from $2.52 billion at September 30, 2020. Excluding PPP loans, loans outstanding have increased $122.1 million since June 30, 2021, a growth rate of 5.9% or approximately 24% annualized. An intense focus on building credit relationships, increased traction with new loan officers that joined early this year and increasing momentum from our Panacea Division all contributed to growth this quarter. The Company believes these factors will continue to drive loan growth at mid-teens or higher rates through the end of 2022.
The Company ended the third quarter of 2021 with $7.0 million of loans on deferral, or 0.3% of total loans excluding PPP loans, down from $26.0 million of loans on deferral at June 30, 2021. Nonperforming assets, excluding portions guaranteed by the SBA, were 0.47% of total assets at September 30, 2021, compared to 0.43% of total assets at June 30, 2021. Loans rated substandard or doubtful increased $4.1 million in the third quarter versus the linked-quarter, primarily due to the downgrade of one relationship.
The allowance for credit losses was $30.4 million at September 30, 2021, down 2.8% from $31.3 million at June 30, 2021 and up 17.9% from $25.8 million at September 30, 2020. The Company recorded a provision of $1.1 million in the third quarter, primarily as a result of robust loan growth for the quarter. As a percentage of loans (excluding PPP), the allowance declined to 1.40% at the end of the third quarter of 2021 versus 1.52% as of June 30, 2021 due to improving economic fundamentals. Annualized net charge-offs as a percentage of average loans were 34 basis points in the third quarter of 2021 versus net recoveries of ten basis points in the prior quarter. Net charge-offs in the third quarter were largely driven by the write-off of loans rated doubtful in the second quarter of 2021 for which reserves had already been established.
Deposits
Total deposits increased to $2.81 billion at September 30, 2021, compared to $2.75 billion at June 30, 2021 and $2.22 billion at September 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 $14.0 million while core deposits (demand, NOW, money market and savings) increased $70.0 million linked-quarter. Time deposits represented approximately 13% of total deposits at September 30, 2021, down from 14% at June 30, 2021 and 25% at September 30, 2020.
Shareholders' Equity
Book value per share as of September 30, 2021 was $16.63, an increase of $0.04 since June 30, 2021 and $0.67 since September 30, 2020. Tangible book value per share^(1)^ at the end of the third quarter of 2021 was $12.28, an increase of $0.06 since June 30, 2021 and $0.75 since September 30, 2020. Shareholder's equity was $408.6 million, or 11.8% of total assets at September 30, 2021. Tangible common equity^(1)^ at September 30, 2021 was $301.9 million, or 9.02% of tangible assets^(1)^.
Panacea FinancialDivision Update
During the third quarter, the Bank's Panacea Financial Division ("Panacea" or the "Division") saw a forty percent linked-quarter increase in consumer loan and deposit applications which led to accelerating growth, including early momentum within its recently launched Practice Solutions division. Also during the quarter, Panacea announced partnerships with three national and state medical associations. Additionally, Panacea launched its In-Training Medical/Dental School Loan Refinance product which allows physicians and dentists that are in training the opportunity to refinance their student debt at a lower interest rate, while benefiting from affordable monthly payments during training. The Division is on track to expand to veterinarians by November 30, 2021 and, when combined with the expiration of the forbearance period under the CARES Act on January 31, 2022 related to student loans, the Division is optimistic for robust consumer growth in 2022. Panacea closed its first commercial loans in September within its Practice Solutions division and is actively recruiting experienced commercial healthcare bankers and a credit team with deep industry subject matter expertise. Lastly, the Panacea Financial Foundation awarded $25,000 in scholarships to five underrepresented minority medical students during the third quarter of 2021. Importantly, on October 22, 2021, the Internal Revenue Service granted the Panacea Financial Foundation tax-exempt status as a 501(c)(3) which allows the Foundation to raise additional donations from organizations, customers, and other external parties who also share in their passion for strengthening the underrepresented ethnic and racial minority pipeline of doctors. More information can be found at www.panaceafinancial.com.
About Primis Financial Corp.
As of September 30, 2021, Primis had $3.45 billion in total assets, $2.31 billion in total loans and $2.81 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 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 third quarter results Friday, October 29, 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/2742/43176. 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 November 5, 2021 by calling 1-877-344-7529 and providing Replay Access Code 10161016.
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; 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 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 Division and announced new digital bank; competitive pressures among financial institutions increasing significantly; 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 areconciliation to GAAP.
| Primis Financial Corp. | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Financial Highlights (unaudited) | |||||||||||||
| (Dollars in thousands, except per share data) | For Three MonthsEnded: | Variance - 3Q 2021 vs. | For Nine Months Ended: | Variance | |||||||||
| Selected Performance Ratios: | 3Q 2021 | 2Q 2021 | 1Q 2021 | 4Q 2020 | 3Q 2020 | 2Q 2021 | 3Q 2020 | 3Q 2021 | 3Q 2020 | YTD | |||
| Return on average assets from continuing operations | 0.72% | 1.05% | 1.06% | 0.91% | 0.83% | (34) | bps | (12) | bps | 0.94% | 0.35% | 59 | bps |
| Operating return on average assets from continuing operations^(1)^ | 0.72% | 1.05% | 1.08% | 0.58% | 0.83% | (34) | (12) | 0.94% | 0.55% | 39 | |||
| Pre-tax pre-provision operating return on average assets from continuing operations^(1)^ | 0.98% | 0.86% | 1.29% | 1.23% | 1.30% | 12 | (31) | 1.02% | 1.43% | (41) | |||
| Return on average equity from continuing operations | 6.01% | 8.81% | 8.57% | 7.19% | 6.74% | (280) | (73) | 7.77% | 2.71% | 506 | |||
| Operating return on average equity from continuing operations^(1)^ | 6.01% | 8.81% | 8.73% | 4.57% | 6.74% | (280) | (73) | 7.77% | 4.20% | 356 | |||
| Operating return on average tangible equity from continuing operations^(1)^ | 8.13% | 12.03% | 12.00% | 6.32% | 9.37% | (390) | (124) | 10.60% | 5.87% | 473 | |||
| Cost of funds | 0.57% | 0.66% | 0.78% | 0.93% | 0.83% | (9) | (26) | 0.68% | 1.05% | (37) | |||
| Net interest margin | 2.87% | 2.80% | 3.41% | 3.58% | 3.18% | 7 | (31) | 3.02% | 3.27% | (25) | |||
| Gross loans to deposits | 82.46% | 83.11% | 88.95% | 100.32% | 113.86% | (1) | pts | (31) | pts | 82.46% | 113.86% | (31) | pts |
| Efficiency ratio from continuing operations | 65.25% | 71.24% | 66.20% | 59.75% | 60.08% | (6) | 517 | 67.46% | 65.36% | 210 | |||
| Operating efficiency ratio from continuing operations^(1)^ | 65.25% | 71.24% | 65.47% | 59.75% | 60.08% | (6) | 517 | 67.46% | 58.21% | 925 | |||
| Per Share Data: | |||||||||||||
| Earnings per share from continuing operations - Basic | $ 0.25 | $ 0.36 | $ <br>0.35 | $ 0.29 | $ <br> 0.27 | (30.57) | % | (7.41) | % | $ 0.96 | $ <br> 0.32 | 200.00 | % |
| Earnings per share from discontinued operations - Basic | $ <br>(0.09) | $ 0.06 | $ 0.04 | $ 0.08 | $ 0.13 | (249.58) | % | (169.23) | $ 0.01 | $ <br> 0.27 | (96.30) | ||
| Earnings per share - Basic | $ 0.16 | $ 0.42 | $ <br>0.40 | $ 0.37 | $ <br> 0.40 | (61.93) | % | (60.00) | $ 0.97 | $ <br> 0.59 | 64.41 | ||
| Earnings per share from continuing operations - Diluted | $ <br>0.25 | $ 0.36 | $ <br>0.34 | $ 0.29 | $ <br>0.27 | (30.10) | (6.71) | $ 0.95 | $ 0.32 | 196.88 | |||
| Earnings per share from discontinued operations - Diluted | $ <br>(0.09) | $ 0.06 | $ <br> 0.04 | $ 0.08 | $ <br> 0.12 | (250.59) | (178.02) | $ 0.01 | $ <br> 0.27 | (96.30) | |||
| Earnings per share - Diluted | $ 0.16 | $ 0.42 | $ <br>0.38 | $ 0.37 | $ <br> 0.39 | (61.67) | % | (59.32) | $ 0.96 | $ <br> 0.59 | 62.71 | ||
| Book value per share | $ 16.63 | $ 16.59 | $ 16.22 | $ 16.03 | $ 15.96 | 0.24 | 4.20 | $ 16.63 | $ 15.96 | 4.20 | |||
| Tangible book value per share^(1)^ | $ <br>12.28 | $ 12.22 | $ <br> 11.84 | $ 11.60 | $ 11.53 | 0.49 | 6.50 | $ 12.28 | $ <br> 11.53 | 6.50 | |||
| Cash dividend per share | $ 0.10 | $ 0.10 | $ 0.10 | $ 0.10 | $ <br>0.10 | - | - | $ 0.30 | $ <br> 0.30 | - | |||
| Weighted average shares outstanding - Basic | 24,474,104 | 24,450,916 | 24,349,884 | 24,272,312 | 24,270,455 | 0.09 | 0.84 | 24,425,416 | 24,228,543 | 0.81 | |||
| Weighted average shares outstanding - Diluted | 24,634,384 | 24,616,824 | 24,509,052 | 24,401,037 | 24,375,383 | 0.07 | 1.06 | 24,582,680 | 24,349,995 | 0.96 | |||
| Shares outstanding at end of period | 24,574,619 | 24,537,269 | 24,532,795 | 24,368,612 | 24,368,853 | 0.15 | % | 0.84 | % | 24,574,619 | 24,368,853 | 0.84 | % |
| Asset Quality Ratios: | |||||||||||||
| Non-performing assets as a percent of total assets, excluding SBA guarantees | 0.47% | 0.43% | 0.41% | 0.47% | 0.53% | 5 | bps | (5) | bps | 0.47% | 0.53% | (5) | bps |
| Net charge-offs (recoveries) as a percent of average loans (annualized) | 0.34% | (0.10%) | 0.01% | 0.13% | (0.02%) | 44 | 37 | 0.00% | 0.00% | - | |||
| Allowance for credit losses to total loans | 1.31% | 1.37% | 1.46% | 1.49% | 1.02% | (5) | 29 | 1.31% | 1.02% | 29 | |||
| Allowance for credit losses to total loans (excluding PPP loans) | 1.40% | 1.52% | 1.70% | 1.71% | 1.18% | (13) | 21 | 1.40% | 1.18% | 22 | |||
| Capital Ratios: | |||||||||||||
| Tangible common equity to tangible assets^(1)^ | 9.02% | 9.12% | 9.01% | 9.49% | 9.22% | (10) | bps | (20) | bps | ||||
| Leverage ratio ^(2)^ | 9.15% | 9.38% | 9.61% | 9.69% | 9.28% | (23) | (13) | ||||||
| Common equity tier 1 capital ratio ^(2)^ | 13.85% | 13.77% | 13.64% | 13.05% | 12.58% | 9 | 127 | ||||||
| Tier 1 risk-based capital ratio ^(2)^ | 14.31% | 14.23% | 14.11% | 13.52% | 13.03% | 8 | 128 | ||||||
| Total risk-based capital ratio^(2)^ | 19.60% | 19.52% | 19.48% | 19.58% | 18.87% | 8 | 73 | ||||||
| ^(1)^See Reconciliation of Non-GAAP financial measures. | |||||||||||||
| ^(2)^September 30, 2021 ratios are estimated and may be subject to change pending the final filing of the FR Y-9C. | |||||||||||||
| Primis Financial Corp. | |||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||
| (Dollars in thousands) | As Of : | Variance - 3Q 2021 vs. | |||||||||||
| Condensed Consolidated Balance Sheets (unaudited) | 3Q2021 | 2Q 2021 | 1Q 2021 | 4Q 2020 | 3Q 2020 | 2Q 2021 | 3Q 2020 | ||||||
| Assets | |||||||||||||
| Cash and cash equivalents | $ 650,746 | $ 620,839 | $ <br>480,280 | $ 196,185 | $ <br> 149,272 | 4.82 | % | NM | % | ||||
| Investment securities-available for sale | 206,821 | 201,977 | 170,216 | 153,233 | 157,896 | 2.40 | 30.99 | ||||||
| Investment securities-held to maturity | 26,412 | 28,669 | 33,180 | 40,721 | 49,323 | (7.87) | (46.45) | ||||||
| Loans receivable, net of deferred fees | 2,314,584 | 2,286,355 | 2,391,529 | 2,440,496 | 2,523,709 | 1.23 | (8.29) | ||||||
| Allowance for credit losses | (30,386) | (31,265) | (34,893) | (36,345) | (25,779) | (2.81) | 17.87 | ||||||
| Net loans | 2,284,198 | 2,255,090 | 2,356,636 | 2,404,151 | 2,497,930 | 1.29 | (8.56) | ||||||
| Stock in Federal Reserve Bank and Federal Home Loan Bank | 15,521 | 15,521 | 15,521 | 16,927 | 16,927 | - | (8.31) | ||||||
| Equity method investment in mortgage affiliate - held for sale | 9,750 | 12,649 | 13,912 | 12,652 | 13,238 | (22.92) | (26.35) | ||||||
| Preferred investment in mortgage affiliate - held for sale | 300 | 300 | 300 | 300 | 300 | - | - | ||||||
| Preferred investment in mortgage affiliate | 3,005 | 3,005 | 3,005 | 3,005 | 3,005 | - | - | ||||||
| Bank premises and equipment, net | 30,686 | 30,099 | 30,076 | 30,306 | 30,679 | 1.95 | 0.02 | ||||||
| Operating lease right-of-use assets | 6,331 | 6,386 | 6,947 | 7,511 | 7,033 | (0.86) | (9.98) | ||||||
| Intangible assets | 106,757 | 107,098 | 107,439 | 107,780 | 108,122 | (0.32) | (1.26) | ||||||
| Bank-owned life insurance | 66,336 | 65,949 | 65,569 | 65,409 | 65,015 | 0.59 | 2.03 | ||||||
| Other real estate owned | 1,312 | 1,274 | 2,255 | 3,078 | 5,388 | 2.98 | (75.65) | ||||||
| Deferred tax assets, net | 13,571 | 14,442 | 14,702 | 14,646 | 14,477 | (6.03) | (6.26) | ||||||
| Accrued interest receivable | 13,643 | 13,028 | 18,197 | 19,998 | 21,076 | 4.72 | (35.27) | ||||||
| Other assets | 17,028 | 18,825 | 12,235 | 12,771 | 14,892 | (7.95) | 16.36 | ||||||
| Total assets | $ 3,452,417 | $ 3,395,151 | $ <br> 3,330,470 | $ 3,088,673 | $ 3,154,573 | 1.70 | % | 9.45 | % | ||||
| Liabilities and stockholders' equity | |||||||||||||
| Demand deposits | $ 535,706 | $ <br> 525,244 | $ 511,611 | $ 440,674 | $ 467,581 | 1.99 | % | 14.57 | % | ||||
| NOW accounts | 921,667 | 912,666 | 821,746 | 714,752 | 472,553 | 0.99 | 95.04 | ||||||
| Money market accounts | 758,259 | 714,759 | 713,968 | 603,318 | 534,899 | 6.09 | 41.76 | ||||||
| Savings accounts | 216,470 | 209,441 | 202,488 | 183,814 | 179,756 | 3.36 | 20.42 | ||||||
| Time deposits | 374,965 | 388,954 | 438,773 | 490,048 | 561,685 | (3.60) | (33.24) | ||||||
| Total deposits | 2,807,067 | 2,751,064 | 2,688,586 | 2,432,606 | 2,216,474 | 2.04 | 26.65 | ||||||
| Securities sold under agreements to repurchase - short term | 13,348 | 12,521 | 16,445 | 16,065 | 16,181 | 6.60 | (17.51) | ||||||
| Federal Home Loan Bank advances | 100,000 | 100,000 | 100,000 | 100,000 | 100,000 | - | - | ||||||
| PPPLF Advances | - | - | - | - | 283,906 | - | (100.00) | ||||||
| Subordinated notes | 95,442 | 95,404 | 95,367 | 115,329 | 115,378 | 0.04 | (17.28) | ||||||
| Operating lease liabilities | 7,000 | 7,014 | 7,629 | 8,238 | 7,800 | (0.20) | (10.26) | ||||||
| Other liabilities | 20,931 | 22,208 | 24,457 | 25,881 | 25,851 | (5.75) | (19.03) | ||||||
| Total liabilities | 3,043,788 | 2,988,211 | 2,932,484 | 2,698,119 | 2,765,590 | 1.86 | 10.06 | ||||||
| Stockholders' equity | 408,629 | 406,940 | 397,986 | 390,554 | 388,983 | 0.42 | 5.05 | ||||||
| Total liabilities and stockholders' equity | $ <br> 3,452,417 | $ 3,395,151 | $ 3,330,470 | $ 3,088,673 | $ 3,154,573 | 1.69 | % | 9.44 | % | ||||
| Tangible common equity^(1)^ | $ <br>301,872 | $ 299,842 | $ 290,547 | $ 282,774 | $ 280,861 | 0.68 | % | 7.48 | % | ||||
| Primis Financial Corp. | |||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (Dollars in thousands) | For Three Months Ended: | Variance - 3Q 2021 vs. | For Nine Months Ended: | Variance | |||||||||
| Condensed Consolidated Statement of Operations (unaudited) | 3Q2021 | 2Q 2021 | 1Q 2021 | 4Q 2020 | 3Q 2020 | 2Q 2021 | 3Q 2020 | 3Q 2021 | 3Q 2020 | YTD | |||
| Interest and dividend income | $ 27,801 | $ <br>26,631 | $ 30,308 | $ 31,919 | $ 28,707 | 4.39 | % | (3.16) | % | $ 84,740 | $ <br> 85,860 | (1.30) | |
| Interest expense | 4,594 | 4,831 | 5,353 | 6,265 | 5,709 | (4.91) | (19.53) | 14,778 | 19,874 | (25.64) | |||
| Net interest income | 23,207 | 21,800 | 24,955 | 25,654 | 22,998 | 6.45 | 0.91 | 69,962 | 65,986 | 6.03 | |||
| Provision for (recovery of) credit losses | 1,085 | (4,215) | (1,372) | 3,101 | 2,000 | (125.74) | (45.75) | (4,502) | 16,349 | (127.54) | |||
| Net interest income after provision for (recovery of) credit losses | 22,122 | 26,015 | 26,327 | 22,553 | 20,998 | (14.96) | 5.35 | 74,464 | 49,637 | 50.02 | |||
| Account maintenance and deposit service fees | 1,843 | 1,784 | 1,817 | 1,700 | 1,633 | 3.31 | 12.86 | 5,444 | 4,820 | 12.95 | |||
| Income from bank-owned life insurance | 387 | 379 | 386 | 394 | 394 | 2.11 | (1.78) | 1,152 | 1,165 | (1.12) | |||
| Realized losses on sales of investment securities | - | - | - | (620) | - | - | - | - | - | - | |||
| Recoveries on loans and securities charged-off prior to acquisition | 481 | 224 | 79 | 3,793 | 288 | 114.73 | 67.01 | 784 | 2,707 | (71.04) | |||
| Other | (26) | 229 | 220 | 129 | 130 | (111.35) | (120.00) | 423 | 574 | (26.31) | |||
| Noninterest income | 2,685 | 2,616 | 2,502 | 5,396 | 2,445 | 2.64 | 9.82 | 7,803 | 9,266 | (15.79) | |||
| Employee compensation and benefits | 9,032 | 8,810 | 9,372 | 9,211 | 7,817 | 2.52 | 15.54 | 27,214 | 27,464 | (0.91) | |||
| Occupancy and equipment expenses | 2,523 | 2,311 | 2,355 | 2,114 | 2,151 | 9.17 | 17.29 | 7,189 | 6,753 | 6.46 | |||
| Amortization of core deposit intangible | 341 | 341 | 341 | 341 | 341 | - | - | 1,023 | 1,023 | - | |||
| Virginia franchise tax expense | 732 | 759 | 675 | 613 | 615 | (3.56) | 19.02 | 2,166 | 1,844 | 17.46 | |||
| Data processing expense | 1,003 | 1,016 | 799 | 814 | 701 | (1.28) | 43.08 | 2,818 | 2,364 | 19.20 | |||
| Telecommunication and communication expense | 415 | 414 | 522 | 378 | 382 | 0.24 | 8.64 | 1,351 | 1,119 | 20.73 | |||
| Net (gain) loss on other real estate owned | - | 77 | (60) | 905 | (16) | 100.00 | - | 17 | 55 | (69.09) | |||
| Professional fees | 1,208 | 1,289 | 1,287 | 1,166 | 1,494 | (6.28) | (19.14) | 3,784 | 3,560 | 6.29 | |||
| Other expenses | 1,640 | 2,376 | 2,885 | 3,012 | 1,779 | (30.98) | (7.81) | 6,901 | 5,004 | 37.91 | |||
| Noninterest expense | 16,894 | 17,393 | 18,176 | 18,554 | 15,264 | (2.87) | 10.68 | 52,463 | 49,186 | 6.66 | |||
| Income from continuing operations before income taxes | 7,913 | 11,238 | 10,653 | 9,395 | 8,179 | (29.59) | (3.25) | 29,804 | 9,717 | 206.72 | |||
| Income tax expense | 1,697 | 2,434 | 2,301 | 2,358 | 1,647 | (30.29) | 3.05 | 6,438 | 1,956 | 229.07 | |||
| Income from continuing operations | 6,216 | 8,804 | 8,352 | 7,037 | 6,532 | (29.39) | (4.84) | 23,366 | 7,761 | 201.09 | |||
| Income (loss) from discontinued operations before income taxes | (2,899) | 1,878 | 1,315 | 2,571 | 3,826 | (254.37) | (175.77) | 294 | 8,218 | (96.42) | |||
| Income tax expense (benefit) | (622) | 407 | 284 | 645 | 770 | (252.91) | (180.75) | 63 | 1,655 | (96.19) | |||
| Income (loss) from discontinued operations | (2,277) | 1,471 | 1,031 | 1,926 | 3,056 | (254.77) | (174.52) | 231 | 6,563 | (96.48) | |||
| Net income | $ 3,939 | $ 10,275 | $ 9,383 | $ 8,963 | $ <br>9,588 | (61.66) | % | (58.92) | % | $ 23,597 | $ <br> 14,324 | 64.74 | |
| ^(1)^See Reconciliation of Non-GAAP financial measures. | |||||||||||||
| The company defines "NM" as not meaningful for increases or decreases greater than 300 percent. | |||||||||||||
| Primis Financial Corp. | |||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||
| (Dollars in thousands) | As Of: | ||||||||||||
| Loan Portfolio Composition | 3Q 2021 | 2Q 2021 | 1Q 2021 | 4Q 2020 | 3Q 2020 | 3Q 2020 | |||||||
| Loans secured by real estate: | |||||||||||||
| Commercial real estate - owner occupied | $ <br>421,940 | $ 417,489 | $ <br>421,666 | $ 436,338 | 416,446 | % | 1.32 | % | |||||
| Commercial real estate - non-owner occupied | 631,423 | 563,114 | 567,945 | 602,191 | 603,891 | 4.56 | |||||||
| Secured by farmland | 10,721 | 11,861 | 12,351 | 13,136 | 16,640 | (35.57) | |||||||
| Construction and land development | 109,763 | 109,719 | 104,661 | 103,401 | 120,108 | (8.61) | |||||||
| Residential 1-4 family | 531,556 | 516,475 | 515,518 | 559,299 | 581,949 | (8.66) | |||||||
| Multi-family residential | 153,310 | 130,221 | 136,914 | 107,130 | 107,529 | 42.58 | |||||||
| Home equity lines of credit | 75,775 | 80,262 | 85,160 | 91,857 | 97,870 | (22.58) | |||||||
| Total real estate loans | 1,934,488 | 1,829,141 | 1,844,215 | 1,913,352 | 1,944,433 | (0.51) | |||||||
| Commercial loans | 203,243 | 194,610 | 188,050 | 189,622 | 217,511 | (6.56) | |||||||
| Paycheck Protection Program loans | 140,465 | 234,315 | 335,210 | 314,982 | 338,473 | (58.50) | |||||||
| Consumer loans | 36,388 | 28,289 | 24,054 | 22,540 | 23,292 | 56.23 | |||||||
| Loans receivable, net of deferred fees | $ <br> 2,314,584 | $ 2,286,355 | $ 2,391,529 | $ 2,440,496 | 2,523,709 | % | (8.29) | % | |||||
| Loans by Risk Grade: | |||||||||||||
| Pass, not graded | $ - | $ - | $ <br> - | $ 533,287 | 574,954 | % | (100.00) | % | |||||
| Pass Grade 1 - Highest Quality | 789 | 1,054 | 955 | 778 | 891 | (11.45) | |||||||
| Pass Grade 2 - Good Quality | 153,834 | 247,664 | 348,836 | 332,251 | 375,861 | (59.07) | |||||||
| Pass Grade 3 - Satisfactory Quality | 1,248,233 | 1,142,784 | 1,110,453 | 627,270 | 878,031 | 42.16 | |||||||
| Pass Grade 4 - Pass | 841,451 | 823,866 | 853,234 | 872,604 | 660,630 | 27.37 | |||||||
| Pass Grade 5 - Special Mention | 25,008 | 29,844 | 33,661 | 29,809 | 14,132 | 76.96 | |||||||
| Grade 6 - Substandard | 45,269 | 39,613 | 44,390 | 44,497 | 19,210 | 135.65 | |||||||
| Grade 7 - Doubtful | - | 1,530 | - | - | - | - | |||||||
| Grade 8 - Loss | - | - | - | - | - | - | |||||||
| Total loans | $ 2,314,584 | $ <br> 2,286,355 | $ 2,391,529 | $ 2,440,496 | 2,523,709 | % | (8.29) | % | |||||
| (Dollars in thousands) | As Of or For Three Months Ended: | ||||||||||||
| Asset Quality Information | 3Q 2021 | 2Q 2021 | 1Q 2021 | 4Q 2020 | 3Q 2020 | ||||||||
| Allowance for Credit Losses: | |||||||||||||
| Balance at beginning of period | $ <br> (31,265) | $ (34,893) | $ <br> (36,345) | $ (25,779) | (23,627) | ||||||||
| Adoption of CECL | - | - | - | (8,292) | - | ||||||||
| (Provision for) / recovery of allowance for credit losses | (1,085) | 4,215 | 1,372 | (3,101) | (2,000) | ||||||||
| Net charge-offs | 1,964 | (587) | 80 | 827 | (152) | ||||||||
| Ending balance | $ (30,386) | $ (31,265) | $ (34,893) | $ (36,345) | (25,779) | ||||||||
| Reserve for Unfunded Commitments: | |||||||||||||
| Balance at beginning of period | $ (1,599) | $ (1,450) | $ <br> (740) | $ (55) | (55) | ||||||||
| Adoption of CECL | - | - | - | (305) | - | ||||||||
| (Expense for) / recovery of unfunded loan commitment reserve | 470 | (149) | (710) | (380) | - | ||||||||
| Total Reserve for Unfunded Commitments | $ <br> (1,129) | $ (1,599) | $ (1,450) | $ (740) | (55) | ||||||||
| As Of: | |||||||||||||
| Non-Performing Assets: | 3Q 2021 | 2Q 2021 | 1Q 2021 | 4Q 2020 | 3Q 2020 | 3Q 2020 | |||||||
| Nonaccrual loans | $ 18,352 | $ <br> 14,604 | $ 14,251 | $ 14,462 | 15,270 | % | 20.18 | % | |||||
| Accruing loans delinquent 90 days or more | - | - | - | - | - | - | |||||||
| Total non-performing loans | 18,352 | 14,604 | 14,251 | 14,462 | 15,270 | 20.18 | |||||||
| Other real estate owned | 1,312 | 1,274 | 2,255 | 3,078 | 5,388 | (75.65) | |||||||
| Total non-performing assets | $ <br>19,664 | $ 15,878 | $ 16,506 | $ 17,540 | 20,658 | (4.81) | |||||||
| SBA guaranteed portion of non-performing loans | $ 3,361 | $ 1,380 | $ 2,960 | $ 3,076 | 4,076 | (17.54) | |||||||
| Troubled debt restructuring | $ 3,710 | $ 2,766 | $ 2,804 | $ 987 | 1,629 | 127.7 | |||||||
| Loans deferred under COVID-19 modifications | $ <br>6,985 | $ 25,977 | $ <br> 112,834 | $ 122,010 | 436,591 | % | (98.40) | % |
All values are in US Dollars.
| Primis Financial Corp. | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Dollars in thousands) | For Three Months Ended: | Variance - 2Q 2021 vs. | For Nine Months Ended: | Variance | ||||||||||
| Average Balance Sheet | 3Q 2021 | 2Q 2021 | 1Q 2021 | 4Q 2020 | 3Q 2020 | 2Q 2021 | 3Q 2020 | 3Q 2021 | 3Q 2020 | YTD | ||||
| Assets | ||||||||||||||
| Loans, net of deferred fees | $ 2,291,945 | $ 2,327,162 | $ 2,436,713 | $ 2,497,259 | $ 2,501,614 | (1.51) | % | (8.38) | % | $ 2,351,410 | $ 2,368,541 | (0.72) | % | |
| Investment securities | 229,906 | 215,713 | 193,364 | 204,968 | 213,039 | 6.58 | 7.92 | 213,128 | 222,285 | (4.12) | ||||
| Other earning assets | 689,084 | 577,939 | 339,480 | 147,014 | 163,159 | 19.23 | NM | 536,781 | 103,283 | NM | ||||
| Total earning assets | 3,210,935 | 3,120,814 | 2,969,557 | 2,849,241 | 2,877,812 | 2.89 | 11.58 | 3,101,319 | 2,694,109 | 15.11 | ||||
| Investment in STM - Held for sale | 12,621 | 12,728 | 12,629 | 12,168 | 9,453 | 12,659 | 6,601 | |||||||
| Other assets | 230,116 | 226,836 | 228,108 | 240,063 | 246,831 | 1.45 | (6.77) | 228,361 | 246,703 | (7.43) | ||||
| Total assets | $ 3,453,672 | $ <br> 3,360,378 | $ 3,210,294 | $ 3,101,472 | $ 3,134,096 | 2.78 | % | 10.20 | % | $ 3,342,339 | $<br> 2,947,413 | 13.40 | % | |
| Liabilities and stockholders' equity | ||||||||||||||
| Demand deposits | $ 547,500 | $ <br>516,877 | $ 477,812 | $ <br> 459,830 | $ 452,500 | 5.92 | % | 20.99 | % | $ 514,318 | $ 401,616 | 28.06 | % | |
| Interest-bearing liabilities: | ||||||||||||||
| NOW and other demand accounts | 920,203 | 867,499 | 773,768 | 688,125 | 451,583 | 6.08 | 103.77 | 854,360 | 412,083 | 107.33 | ||||
| Money market accounts | 744,280 | 719,925 | 653,443 | 569,223 | 504,887 | 3.38 | 47.42 | 706,215 | 487,791 | 44.78 | ||||
| Savings accounts | 213,859 | 206,507 | 192,252 | 182,434 | 176,305 | 3.56 | 21.30 | 204,286 | 162,575 | 25.66 | ||||
| Time deposits | 380,233 | 409,247 | 465,945 | 525,607 | 590,263 | (7.09) | (35.58) | 418,161 | 685,253 | (38.98) | ||||
| Total Deposits | 2,806,075 | 2,720,055 | 2,563,219 | 2,425,219 | 2,175,538 | 3.16 | 28.98 | 2,697,340 | 2,149,318 | 25.50 | ||||
| Borrowings | 215,670 | 217,890 | 226,398 | 260,493 | 547,182 | (1.02) | (60.59) | 219,947 | 390,856 | (43.73) | ||||
| Total Funding | 3,021,745 | 2,937,945 | 2,789,617 | 2,685,712 | 2,722,720 | 2.85 | 10.98 | 2,917,287 | 2,540,174 | 14.85 | ||||
| Other Liabilities | 21,718 | 21,628 | 25,539 | 26,588 | 25,869 | 0.42 | (16.05) | 22,947 | 24,055 | (4.61) | ||||
| Stockholders' equity | 410,209 | 400,805 | 395,138 | 389,172 | 385,507 | 2.35 | 6.41 | 402,105 | 383,184 | 4.94 | ||||
| Total liabilities and stockholders' equity | $ <br> 3,453,672 | $ 3,360,378 | $ <br> 3,210,294 | $ 3,101,472 | $ <br> 3,134,096 | 2.78 | % | 10.20 | % | $ 3,342,339 | $ 2,947,413 | 13.40 | % | |
| Memo: Average PPP loans | $ 191,504 | $ 294,019 | $ 333,145 | $ 332,080 | $ 335,653 | (34.87) | % | (42.95) | % | $ 272,371 | $ 176,717 | 54.13 | % | |
| Net Interest Income | ||||||||||||||
| Loans | $ 26,181 | $ <br>25,182 | $ 28,957 | $ <br> 30,596 | $ 27,266 | 3.97 | % | (3.98) | % | $ 80,320 | $ <br> 81,051 | (0.90) | % | |
| Investment securities | 1,083 | 1,073 | 1,042 | 993 | 1,129 | 0.93 | (4.07) | 3,198 | 3,737 | (14.42) | ||||
| Other earning assets | 537 | 376 | 309 | 330 | 312 | 42.82 | 72.12 | 1,222 | 1,072 | 13.99 | ||||
| Total Earning Assets | 27,801 | 26,631 | 30,308 | 31,919 | 28,707 | 4.39 | (3.16) | 84,740 | 85,860 | (1.30) | ||||
| Non-interest bearing DDA | - | - | - | - | - | - | - | - | - | - | ||||
| NOW and other interest-bearing demand accounts | 1,062 | 1,022 | 1,093 | 1,167 | 807 | 3.91 | 31.60 | 3,178 | 2,338 | 35.93 | ||||
| Money market accounts | 1,056 | 1,153 | 1,085 | 984 | 800 | (8.41) | 32.00 | 3,294 | 3,204 | 2.81 | ||||
| Savings accounts | 165 | 157 | 142 | 137 | 130 | 5.10 | 26.92 | 464 | 353 | 31.44 | ||||
| Time deposits | 877 | 1,057 | 1,496 | 2,038 | 2,620 | (17.03) | (66.53) | 3,429 | 10,111 | (66.09) | ||||
| Total Deposit Costs | 3,160 | 3,389 | 3,816 | 4,326 | 4,357 | (6.76) | (27.47) | 10,365 | 16,006 | (35.24) | ||||
| Other Borrowings | 1,434 | 1,442 | 1,537 | 1,939 | 1,352 | (0.55) | 6.07 | 4,413 | 3,868 | 14.09 | ||||
| Total Funding Costs | 4,594 | 4,831 | 5,353 | 6,265 | 5,709 | (4.91) | (19.53) | 14,778 | 19,874 | (25.64) | ||||
| Net Interest Income | $ 23,207 | $ 21,800 | $ <br>24,955 | $ 25,654 | $ <br> 22,998 | 6.45 | % | 0.91 | % | $ 69,962 | $ <br> 65,986 | 6.03 | % | |
| Memo: SBA PPP loan interest and fee income | $ <br>3,146 | $ 2,559 | $ <br> 5,778 | $ 5,725 | $ 2,233 | 22.94 | % | 40.89 | % | $ 11,483 | $ <br> 2,745 | NM | % | |
| Memo: SBA PPP loan funding costs | $ 169 | $ 257 | $ 288 | $ 498 | $ <br> 174 | (34.24) | % | (2.87) | % | $ 713 | $ <br> 258 | 176.36 | % | |
| Net Interest Margin | ||||||||||||||
| Loans | 4.53% | 4.34% | 4.82% | 4.87% | 4.34% | 19 | bps | 19 | bps | 4.57% | 4.57% | - | bps | |
| Investments | 1.87% | 2.00% | 2.19% | 1.93% | 2.11% | (13) | (24) | 2.01% | 2.25% | (24) | ||||
| Other Earning Assets | 0.31% | 0.26% | 0.37% | 0.89% | 0.76% | 5 | (45) | 0.30% | 1.39% | (109) | ||||
| Total Earning Assets | 3.44% | 3.42% | 4.14% | 4.46% | 3.97% | 2 | (53) | 3.65% | 4.26% | (61) | ||||
| - | ||||||||||||||
| NOW | 0.46% | 0.47% | 0.57% | 0.67% | 0.71% | (1) | (25) | 0.50% | 0.76% | (26) | ||||
| MMDA | 0.56% | 0.64% | 0.67% | 0.69% | 0.63% | (8) | (7) | 0.62% | 0.88% | (26) | ||||
| Savings | 0.31% | 0.30% | 0.30% | 0.30% | 0.29% | 1 | 2 | 0.30% | 0.29% | 1 | ||||
| CDs | 0.92% | 1.04% | 1.30% | 1.54% | 1.77% | (12) | (85) | 1.10% | 1.97% | (87) | ||||
| Cost of Interest Bearing Deposits | 0.56% | 0.62% | 0.74% | 0.88% | 1.01% | (6) | (45) | 0.63% | 1.22% | (59) | ||||
| Cost of Deposits | 0.45% | 0.50% | 0.60% | 0.71% | 0.80% | (5) | (35) | 0.51% | 0.99% | (48) | ||||
| - | ||||||||||||||
| Other Funding | 2.64% | 2.65% | 2.75% | 2.96% | 0.98% | (1) | 166 | 2.68% | 1.32% | 136 | ||||
| Total Cost of Funds | 0.57% | 0.66% | 0.78% | 0.93% | 0.83% | (9) | (26) | 0.68% | 1.05% | (37) | ||||
| Net Interest Margin | 2.87% | 2.80% | 3.41% | 3.58% | 3.18% | 7 | (31) | 3.02% | 3.27% | (25) | ||||
| Net Interest Spread | 2.83% | 2.76% | 3.36% | 3.53% | 3.14% | 7 | (31) | 2.98% | 3.21% | (23) | ||||
| Memo: Excluding SBA PPP loans | ||||||||||||||
| Loans | 4.35% | 4.46% | 4.47% | 4.57% | 4.60% | (11) | bps | (25) | bps | 4.43% | 4.77% | (34) | bps | |
| Total Earning Assets | 3.24% | 3.42% | 3.77% | 4.14% | 4.14% | (18) | (90) | 3.46% | 4.40% | (94) | ||||
| Net Interest Margin* | 2.66% | 2.77% | 2.99% | 3.23% | 3.28% | (11) | (62) | 2.80% | 3.36% | (56) | ||||
| *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 Nine Months Ended: | ||||||||||||
| Reconciliation of Non-GAAP items: | 3Q 2021 | 2Q 2021 | 1Q 2021 | 4Q 2020 | 3Q 2020 | 3Q 2021 | 3Q 2020 | |||||||
| Net income from continuing operations | $ 6,216 | $ <br> 8,804 | $ 8,352 | $ 7,037 | $ 6,532 | $ 23,366 | $ 7,761 | |||||||
| Non-GAAP adjustments to Net<br>Income from continuing operations: | ||||||||||||||
| Management Restructure / Recruiting | - | - | 200 | 843 | - | - | 4,899 | |||||||
| Branch Closures | - | - | - | - | - | - | 479 | |||||||
| (Gain or recovery) / loss on securities | - | - | - | (2,964) | - | - | - | |||||||
| Brand Initiative / Renaming | - | - | - | 1,000 | - | - | - | |||||||
| Extraordinary PPP income and expense | - | - | - | (2,177) | - | - | - | |||||||
| Other loss and related legal expenses | - | - | - | - | - | - | - | |||||||
| Income tax effect | - | - | (43) | 729 | - | - | (1,076) | |||||||
| Net Income from continuing operations adjusted for nonrecurring income and expenses | $ <br> 6,216 | $ 8,804 | $ 8,509 | $ 4,468 | $ 6,532 | $ 23,366 | $ 12,063 | |||||||
| Net income from continuing operations | $ <br> 6,216 | $ 8,804 | $ <br> 8,352 | $ 7,037 | $ 6,532 | $ 23,366 | $ 7,761 | |||||||
| Income tax expense | 1,697 | 2,434 | 2,301 | 2,358 | 1,647 | 6,438 | 1,956 | |||||||
| Provision for credit losses (incl. unfunded commitment expense) | 615 | (4,066) | (661) | 3,481 | 2,000 | (4,502) | 16,349 | |||||||
| Pre-tax pre-provision earnings from continuing operations | $ 8,528 | $ <br> 7,172 | $ 9,992 | $ 12,876 | $ 10,179 | $ 25,302 | $ 26,066 | |||||||
| Effect of adjustment for nonrecurring income and expenses | - | - | 200 | (3,298) | - | - | 5,378 | |||||||
| Pre-tax pre-provision operating earnings from continuing operations | $ 8,528 | $ 7,172 | $ 10,192 | $ 9,578 | $ 10,179 | $ 25,302 | $ 31,444 | |||||||
| Return on average assets from continuing operations | 0.72% | 1.05% | 1.06% | 0.91% | 0.83% | 0.94% | 0.35% | |||||||
| Effect of adjustment for nonrecurring income and expenses | 0.00% | 0.00% | 0.02% | (0.33%) | 0.00% | 0.00% | 0.20% | |||||||
| Operating return on average assets from continuing operations | 0.72% | 1.05% | 1.08% | 0.58% | 0.83% | 0.94% | 0.55% | |||||||
| Return on average assets from continuing operations | 0.72% | 1.05% | 1.06% | 0.91% | 0.83% | 0.94% | 0.35% | |||||||
| Effect of tax expense | 0.20% | 0.29% | 0.29% | 0.30% | 0.21% | 0.26% | 0.09% | |||||||
| Effect of provision for credit losses | 0.07% | (0.49%) | (0.08%) | 0.45% | 0.25% | (0.18%) | 0.74% | |||||||
| Pre-tax pre-provision return on average assets from continuing<br>operations | 0.98% | 0.86% | 1.27% | 1.66% | 1.30% | 1.02% | 1.18% | |||||||
| Effect of adjustment for nonrecurring income and expenses | 0.00% | 0.00% | 0.03% | (0.42%) | 0.00% | 0.00% | 0.24% | |||||||
| Pre-tax pre-provision operating return on average assets from continuing<br>operations | 0.98% | 0.86% | 1.29% | 1.23% | 1.30% | 1.02% | 1.43% | |||||||
| Return on average equity from continuing operations | 6.01% | 8.81% | 8.57% | 7.19% | 6.74% | 7.77% | 2.71% | |||||||
| Effect of adjustment for nonrecurring income and expenses | 0.00% | 0.00% | 0.16% | (2.63%) | 0.00% | 0.00% | 1.50% | |||||||
| Operating return on average equity from continuing operations | 6.01% | 8.81% | 8.73% | 4.57% | 6.74% | 7.77% | 4.20% | |||||||
| Effect of goodwill and other intangible assets | 2.12% | 3.22% | 3.26% | 1.75% | 2.63% | 2.83% | 1.66% | |||||||
| Operating return on average tangible equity from continuing<br>operations | 8.13% | 12.03% | 12.00% | 6.32% | 9.37% | 10.60% | 5.87% | |||||||
| Efficiency ratio from continuing operations | 65.25% | 71.24% | 66.20% | 59.75% | 60.08% | 67.46% | 65.36% | |||||||
| Effect of adjustment for nonrecurring income and expenses | 0.00% | 0.00% | (0.73%) | 0.00% | 0.00% | 0.00% | (7.15%) | |||||||
| Operating efficiency ratio from continuing operations | 65.25% | 71.24% | 65.47% | 59.75% | 60.08% | 67.46% | 58.21% | |||||||
| Book value per share | $ 16.63 | $ 16.59 | $ <br> 16.22 | $ 16.03 | $ <br> 15.96 | $ 16.63 | $ 15.96 | |||||||
| Effect of goodwill and other intangible assets | (4.35) | (4.37) | (4.38) | (4.43) | (4.43) | (4.34) | (4.44) | |||||||
| Tangible book value per share | $ 12.28 | $ <br> 12.22 | $ 11.84 | $ 11.60 | $ 11.53 | $ 12.28 | $ 11.53 | |||||||
| Stockholders' equity | $ <br> 408,629 | $ 406,940 | $ 397,986 | $ 390,554 | $ 388,983 | $ 408,629 | $ 388,983 | |||||||
| Less goodwill and other intangible assets | (106,757) | (107,098) | (107,439) | (107,780) | (108,122) | (106,757) | (108,122) | |||||||
| Tangible common equity | $ 301,872 | $ <br> 299,842 | $ 290,547 | $ 282,774 | $ 280,861 | $ 301,872 | $ 280,861 | |||||||
| Equity to assets | 11.83% | 11.99% | 11.95% | 12.64% | 12.33% | 11.83% | 12.33% | |||||||
| Effect of goodwill and other intangible assets | (2.81%) | (2.87%) | (2.94%) | (3.16%) | (3.11%) | (2.81%) | (3.11%) | |||||||
| Tangible common equity to tangible assets | 9.02% | 9.12% | 9.01% | 9.49% | 9.22% | 9.02% | 9.22% | |||||||
| Net interest margin | 2.87% | 2.80% | 3.41% | 3.58% | 3.18% | 3.02% | 3.27% | |||||||
| Effect of adjustment for PPP associated balances* | (0.21%) | (0.03%) | (0.42%) | (0.35%) | 0.10% | (0.22%) | 0.09% | |||||||
| Net interest margin excluding PPP | 2.66% | 2.77% | 2.99% | 3.23% | 3.28% | 2.80% | 3.36% | |||||||
| *Net interest margin excluding the effect of PPP loans assumes a funding cost of 35bps on average PPP balances in all applicable periods |
Third 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 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. 3 Non-GAAP Measures
Company Snapshot 4 Corp. Headquarters: McLean, VA Bank Headquarters: Glen Allen, VA Branches: 40 Ticker (NASDAQ): FRST Balance Sheet Assets: $3.5 billion Loans: $2.3 billion Deposits: $2.8 billion TCE/TA(1): 9.02% TBV/Share(1): $12.28
Profitability ROAA: 0.72% ROAE: 6.01% ROATCE(1): 8.13% Net Interest Margin: 2.87% Efficiency Ratio(2): 65.25%
Valuation Market Capitalization: $354.6 million Price / Book Value per Share 0.87x Price / Tangible Book Value: 1.18x Price / 2021 Estimated EPS(3): 11.37x Price / 2022 Estimated EPS(3): 13.55x Dividend Yield(4): 2.77% Pricing as of October 27, 2021. Financial data as of or for the three months ended September 30, 2021. (1) See reconciliation of Non-GAAP financial measures on slide 21. (2) Results from continuing operations (3) Mean analyst estimates per S&P Global. (4) Assumes $0.40 annualized dividend.
(1) Results for continuing operations. See reconciliation of Non-GAAP financial measures on slide 21. Net income from continuing operations of $6.2 million or $0.25 per basic and diluted share
Gross loans, excluding PPP balances, grew approx. 24% annualized
Total deposits increased to $2.81 billion with non-interest bearing demand deposits at 19.1% of deposits and time deposits declining to 13.4% of total deposits
Pre-tax, pre-provision return on average assets(1) of 0.98% compared to 0.86% in the second quarter
Net interest margin, excluding the effects of PPP, of 2.66% versus 2.77% in the second quarter Impacted by average cash and equivalent balance increase of $112 million in the quarter to $676 million
Announced the launch of the Primis Life Premium Finance Division Third Quarter Highlights 5
Talented management team and board committed to building long-term shareholder value
Footprint in attractive banking markets augmented by niche lines of business that will produce out-sized growth in higher quality assets over time
Aggressive and early use of technology positioning the bank for superior performance as the industry evolves
Significant operating leverage as loan demand recovers and liquidity is put to work
Investment Thesis 6
Management Team 7 Name Years at Primis Years in Industry Title
Deposit data as of June 30, 2021. Dollars in millions. Source: S&P Global.
Meaningful Opportunities in Attractive Markets 8 Projected Population Growth 2021-2026 Total Population 2021 States
MSAs Virginia Washington D.C. Richmond
Strategic Update 9 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
Announced launch of new tech-enabled Life Premium Finance Division Panacea Financial Division momentum accelerating 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 21. Balance Sheet Trends 10
Deposit Trends Dollars in millions. (1) Core deposits exclude time deposits. CAGR ’17-2Q21: 122% ’19-2Q21: 141% Deposit Composition Core Deposit Growth (1) 11 Deposit composition continues to improve while deposit costs decline
Focus is still on building customer relationships and continuing to grow core deposits
Loan Composition and Trends Dollars in millions. Loan Trends and Yields Loan Composition (Ex. PPP) 12 Robust loan growth of 5.9%, or 24% annualized, linked-quarter excluding PPP balances
Investments in loan officers and Panacea division are beginning to mature and should continue to drive strong growth rates through 2022
Asset Quality 13 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) Deferred loans declined in Q3 to $7 million tied to one relationship that is on interest-only payments Scheduled to resume full principal and interest in Q4
Criticized assets continue to remain at moderate levels
Net charge-offs in Q3 largely driven by write-off of loans listed as Doubtful in Q2 and previously reserved for
Allowance for Credit Losses 14 Classified loans exclude guaranteed portion of SBA loans. ACL / Gross Loans (Ex. PPP) ACL / Classified Loans Provision of $1.1 million in Q3 due to higher non-PPP loan growth
ACL coverage of gross loans declined to 1.40% due to improving economic fundamentals
Average Cash Balances Net Interest Margin 15 Dollars in millions. (1) See reconciliation of Non-GAAP financial measures on slide 21
Margin continues to be impacted by excess liquidity as average cash and equivalent balances increased $112 million in Q3 to $676 million
Additional cash balances in Q3 contributed 9bps of downward pressure on the margin. Net Interest Margin Trends
Efficiency Ratio Non-Interest Expense and Efficiency Ratio 16 Dollars in thousands. (1) Results from continuing operations. (2) See reconciliation of Non-GAAP financial measures on slide 21.
(1) Noninterest expense expected to grow at a mid-single digit rate in 2022 as we continue to invest in growth initiatives (e.g. Digital Bank, Panacea, Premium Finance) offset by efficiency improvement efforts Non-Interest Expense (Ex. Reserve for Unfunded Commitments Expense)
Profitability 17 Dollars in millions. (1) Results from continuing operations. (2) See reconciliation of Non-GAAP financial measures on slide 21.
Return on Average Assets Pre-Tax Pre-Provision Earnings (1) Operating leverage expected to drive improving profitability in 2022 as liquidity is deployed in earning assets
Tangible Book Value Per Share Diluted Earnings Per Share from Continuing Operations Per Share Results 18 (1) See reconciliation of Non-GAAP financial measures on slide 21. (1)
Summary 19 Talented management team and board committed to building long-term shareholder value
Footprint in attractive banking markets augmented by niche lines of business that will produce out-sized growth in higher quality assets over time
Aggressive and early use of technology positioning the bank for superior performance as the industry evolves
Significant operating leverage as loan demand recovers and liquidity is put to work
Appendix 20
*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 21 *Net interest margin excluding the effect of PPP loans assumes a funding cost of 35 bps on average PPP balances in all applicable periods.