8-K
Primis Financial Corp. (FRST)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event Reported): July 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 July 28, 2022, Primis Financial Corp. (“Primis” or the “Company”) issued a press release announcing its financial results for the three months ended June 30, 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 July 28, 2022, Primis issued a press release announcing the declaration of a dividend payable on August 26, 2022 to shareholders of record as of August 12, 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 9.01. Financial Statements and Exhibits.
| Exhibit | Description |
|---|---|
| No. | |
| 99.1 | Press Release Dated July 28, 2022 |
| 99.2 | Primis Financial Corp. Second Quarter 2022 Investor Presentation |
| 104 | Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Primis Financial Corp. | ||
|---|---|---|
| Date: July 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 for the Second Quarter of 2022
Completed the Previously Announced Acquisition of SeaTrust Mortgage Company
Declares Quarterly Cash Dividend of $0.10 Per Share
MCLEAN, Va., July 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 from continuing operations of $5.0 million for the quarter ended June 30, 2022, compared to $4.6 million for the quarter ended March 31, 2022 and $8.8 million for the quarter ended June 30, 2021. Earnings per share ("EPS") from continuing operations for the three months ended June 30, 2022 were $0.20 on a basic and diluted basis, compared to $0.19 on a basic and diluted basis for the three months ended March 31, 2022.
Net income from continuing operations adjusted for nonrecurring income and expenses^(1)^ was $6.0 million for the three months ended June 30, 2022 versus $4.7 million for the three months ended March 31, 2022. Adjustments, as described further below, include nonrecurring expenses due to branch closures and merger-related expenses. Operating earnings per share from continuing operations^(1)^ were $0.25 on a basic and $0.24 on a diluted basis, compared to $0.19 on a basic and diluted basis for the three months ended March 31, 2022.
Net income from continuing operations for the six months ended June 30, 2022 was $9.6 million compared to $17.2 million for the six months ended June 30, 2021. Earnings per share from continuing operations for the six months ended June 30, 2022 were $0.39 on a basic and diluted basis, compared to $0.71 basic and $0.70 diluted for the six months ended June 30, 2021.
As previously disclosed, on May 31, 2022, Primis Bank completed the previously announced acquisition of 100% of the stock of SeaTrust Mortgage Company ("SeaTrust"), a bank-owned mortgage company based in Wilmington, North Carolina, which was subsequently renamed Primis Mortgage Company ("Primis Mortgage").
Commenting on the quarter, Dennis Zember, Jr., President and CEO said "We have made significant progress in several areas of the Bank that we believe were limiting our market value. We have remixed our deposits with a focus on core deposits and checking accounts and built some unique lines of business that will change the market's opinion about our ability to grow. We have built a culture that is catching on in our local markets and beyond and have improved expertise and skills in our workforce rapidly. I believe this quarter's results and the movement in some of our key ratios are evidence that we are being successful."
| (1) Non-GAAP financial measure. Pleasesee "Reconciliation of Non-GAAP Items"in the financial tables for more information and for a reconciliation to GAAP. |
|---|
Financial Highlights for the Period Ended June 30, 2022
- Improvement in return on average assets from continuing operations^(1)^ to 0.63% for the three months ended June 30, 2022 from 0.55% for the three months ended March 31, 2022. Operating return on average assets from continuing operations^(1)^ improved by a larger amount to 0.76% from 0.57% in the first quarter of 2022.
- Loans held for investment grew at an annualized rate of 24.7% for the first six months of 2022 or 30.8% net of a decline in PPP balances.
- Non-interest bearing checking deposits were $653.1 million, representing 24.3% of total deposits at June 30, 2022, compared to 19.1% at June 30, 2021.
- Time deposits were only $329.2 million, representing 12.3% of total deposits at June 30, 2022, down from 14.1% at the same time in 2021.
- Net interest margin of 3.33% in the second quarter of 2022, was up substantially from 2.80% the same period last year.
- FHLB borrowings of only $25 million at the end of the second quarter of 2022, which provides substantial liquidity opportunities.
- Strong capital position with Tier 1 Leverage Ratio at Primis Bank of 12.27% at the end of the second quarter of 2022, which is more than adequate in terms of supporting the Company's expected growth.
- Revenue growth outpaced expenses, despite significant investment in the organization. Total revenue in the second quarter of 2022 increased 12.5% to $27.2 million compared to $24.2 million in the second quarter of 2021. Total revenue, excluding PPP-related income, increased 25.5% in the second quarter of 2022 to $27.2 million from $21.7 million in the second quarter of 2021.
- Non-interest expenses were $20.4 million in the second quarter of 2022, an increase of 18.8% from the second quarter of 2021. Excluding nonrecurring revenue and expenses, non-interest expenses grew to $19.1 million in the second quarter of 2022, an increase of 11.2% from the $17.2 million recorded in the second quarter of 2021.
- Pre-tax pre-provision return on average assets from continuing operations^(1)^ was 0.83% for the three months ended June 30, 2022, up 8 basis points from 0.75% for the three months ended March 31, 2022. Pre-tax pre-provision operating return on average assets from continuing operations^(1)^ was 1.00% for the three months ended June 30, 2022, up 23 basis points from 0.77% for the three months ended March 31, 2022.
- Allowance for credit losses to total loans was 1.15% at June 30, 2022, compared to 1.23% at March 31, 2022. Allowance for credit losses to total loans (excluding PPP balances and loans held for sale) was 1.16% at June 30, 2022, compared to 1.24% at March 31, 2022.
Operating Performance
The Company reported strong increases in key ratios and growth rates for the second quarter of 2022. Speaking about the performance improvement, Mr. Zember said, "Our primary focus is on two areas right now. First, to tweak the core bank's performance while rationalizing its cost base. We consolidated six branches in the current quarter and are planning to consolidate two additional in the third quarter. Secondly, to bring the lines of business quickly to the kind of profitability that moves the needle for our organization. Both Panacea and Life Premium Finance had substantial growth in the quarter and while their pipelines and expectations are just as substantial, the costs to produce and book this growth have already been incurred. I expect all of these decisions will compound and that our second half of the year will be exciting."
Lines of Business
While the Company's main business continues to be the core bank, management has invested diligently in certain lines of business that augment the profitability and growth rates a core community bank can offer shareholders. These businesses are resource light, digitally oriented and produce return on assets that are superior to bank only returns with better than average long-term credit quality. The table below highlights revenue and expenses directly attributable to the Company's various business lines. Net interest income in the table below also includes an assumed cost of funds given to each business line for illustrative purposes, with offsetting benefit to net interest income included in the bank column. The bank column includes all activities not captured in the business lines, including parent company activities.
| (Dollars in thousands) | Bank | Panacea | LPF | Mortgage | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Consolidated Statement of Operations (unaudited) | Q2 '22 | Q1 '22 | Chg | Q2 '22 | Q1 '22 | Chg | Q2 '22 | Q1 '22 | Chg | Q2 '22 | Q1 '22 | Chg |
| Net Interest Income * | $ 23,341 | $ 22,226 | 5.0 % | $ 905 | $ 559 | 62.0 % | $ 294 | $ <br>70 | 323.3 % | $ 65 | $ - | N/A |
| Noninterest Income | 2,029 | 2,090 | (2.9 %) | 2 | 0 | N/A | 5 | - | N/A | 593 | - | N/A |
| Operating Noninterest Expense (excl. res. for unfunded) | 17,774 | 17,636 | 0.8 % | 799 | 844 | (5.3 %) | (37) | 132 | N/A | 759 | - | N/A |
| Pre-Tax Pre-Provision Net Income | 7,596 | 6,680 | 13.7 % | 108 | (285) | N/A | 337 | (63) | N/A | (102) | - | N/A |
| Gross Loans (inc. HFS) | $ 2,368,601 | $ 2,258,206 | 4.9 % | $ 142,670 | $ 81,232 | 75.6 % | $ 99,675 | $ 22,826 | 336.7 % | $ 16,096 | $ - | N/A |
| Total Deposits | 2,669,212 | 2,679,331 | (0.4 %) | 10,778 | 6,913 | 55.9 % | 2,717 | - | - | - | ||
| * Net interest income assumes business line funding requirements are provided by the Company at it's cost of funds plus 100 basis points. |
Panacea has successfully built a nationally-recognized brand and now has ten national and state association partnerships. The division has banking relationships with over 2,000 doctor households across all 50 states. Panacea finished the second quarter of 2022 with approximately $143 million in outstanding loans, an increase of $61.4 million, or 76%, from March 31, 2022. At the end of the second quarter, Panacea's loan portfolio was 52% commercial, 28% consumer and 20% student loan refinance. As previously discussed, Panacea became profitable on a direct basis in the first quarter. Including an assumed cost of funds, Panacea became profitable on a funded basis in the second quarter as well as highlighted above.
Commenting on Panacea's recent momentum, Tyler Stafford, President of the division stated, "The success of Panacea's doctor-centric relationship banking model continues to compound within our target market of doctors across the country, evidenced with a 5.0-star customer review rating and the #1 ranking on TrustPilot within the "Bank" category. With our recently added bankers continuing to ramp, our pipeline of loan opportunities is well over $150 million and continues to build. As a result, we are increasing our loan growth expectations for 2022 from a range of $125 to $150 million to $175 to $200 million. Importantly, the credit quality of our portfolio remains pristine and, given the robustness of our pipeline, we are in a position to be even more selective on pursuing the strongest credits that maximize our profitability. Lastly, we have several deposit-focused initiatives underway which we expect to translate into stronger core deposit growth in the coming quarters."
The Life Premium Finance Division, launched in late 2021, ended the second quarter of 2022 with outstanding balances, net of deferred fees, of $99.7 million, compared to $13.0 million at the end of the fourth quarter of 2021. The Life Premium Finance Division is already showing a healthy level of profitability (including assumed cost of funds) with just 7 months of operations. The division's emphasis on technology, operational efficiencies and a superior customer experience continues to resonate with the marketplace. Total approved credit in the division finished the second quarter of 2022 at $413 million with remaining funding of premiums over the next three to five years.
Primis acquired Primis Mortgage Company on May 31, 2022 and successfully integrated its operations in June. On July 11, Primis Mortgage Company welcomed Chris Blevins to the team as a regional executive. Chris came from a large independent mortgage company where he managed a large region that generated annual production of approximately $6 billion. As previously discussed, the Company expects marginal contribution to earnings from mortgage in 2022 as Primis Mortgage builds out its team and achieves the needed scale and production capacity to make a meaningful earnings contribution in 2023.
As of July 25, Primis now offers 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, refunds 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.
Net Interest Income
Net interest income increased 12.9% to $24.6 million for the three months ended June 30, 2022 from $21.8 million for the three months ended June 30, 2021. The Company's reported net interest margin for the second quarter of 2022 was 3.33% compared to 2.80% in the second quarter of 2021. Net interest income, excluding the effect of PPP fees, was $24.6 million in the second quarter of 2022, compared to $20.0 million in the second quarter of 2021, an increase of $4.6 million or 23.1%. Also excluding the effects of PPP, the Company's net interest margin expanded to 3.35% in the second quarter of 2022 compared to 2.77% in the same quarter of 2022.
The Company's loan growth over the past several quarters and the improved asset mix has been the driver of positive movements in both margins and net interest income. Loans held for investment represented 84.7% of total average interest earning assets in the second quarter of 2022, compared to 74.6% in the same quarter of 2021. Yield on loans for the second quarter of 2022 was 4.20% compared to 4.34% in the second quarter of 2021. Loan yields in the second quarter, excluding the effect of PPP, were 4.23%, down from 4.46% in the same quarter of 2021.
Total cost of funds in the second quarter of 2022 was 0.53%, down from 0.66% in the same quarter of 2021. Continued growth in checking accounts as a percentage of total deposits and lower rates on other deposits led to the improvement. Total demand deposits and total non-time deposits at the end of the second quarter of 2022 were 24.3% and 87.7%, respectively, compared 19.1% and 85.9%, respectively, in the second quarter of 2021.
Non-interest Income
During the three months ended June 30, 2022, Primis had non-interest income of $2.63 million, compared to $2.09 million for the three months ended March 31, 2022. The increase was primarily due to revenues associated with Primis Mortgage for only one month as the acquisition closed on May 31, 2022. The Company closed $27.0 million in loans in June, down 5.6% from May as the team transitioned to Primis. The rapid slowdown in the mortgage and housing markets have caused many mortgage companies to restructure substantially, reducing headcount in servicing, support and production. While the current market conditions are not ideal for substantial revenues and profitability in this sector, the opportunity to add the needed production capacity at much more reasonable terms than a year ago are real. The division expects to recruit profitable teams and the necessary support throughout the remainder of 2022 and be a material contributor to the Company's results in 2023.
Non-interest Expense
Non-interest expense was $20.4 million for the three months ended June 30, 2022, which included $0.4 million in merger costs, $0.9 million in branch closure costs, and new mortgage expenses of approximately $0.8 million. Non-interest expense also included a recovery of unfunded commitment reserve of $168 thousand in the second quarter of 2022. Excluding merger costs, branch closure costs, new mortgage expenses and unfunded commitment reserve impacts, the Company's adjusted operating expense was $18.5 million for the second quarter of 2022, compared to $18.6 million in the first quarter of 2022 and $17.0 million for the second quarter of 2021.
The Company's operating efficiency ratio from continuing operations^(1)^in the second quarter of 2022 was 70.2% compared to 75.7% in the first quarter of 2022. The Bank intends to consolidate two more branch locations in the third quarter of 2022. Additionally, management has identified other areas of savings including consolidation of certain staffing positions, contract renegotiations and other opportunities that we expect could save between $3 million and $4 million per year. These amounts, combined with operating performance improvements at the Company's lines of business, could reduce the operating efficiency to below 63% by year end.
Loan Portfolio and Asset Quality
Loans held for investment increased to $2.63 billion at June 30, 2022, compared to $2.39 billion at March 31, 2022. Loans held for investment grew at an annualized rate of 24.7% for the first six months of 2022 or 30.8% net of a decline in PPP balances. Loan growth was robust across the organization, particularly the Panacea and Life Premium Finance divisions which saw their growth rates accelerate in the second quarter. The Company believes loan growth will continue at a similar pace as the first half of 2022 for the rest of the year.
Nonperforming assets, excluding portions guaranteed by the SBA, were $19.9 million at June 30, 2022 compared to $15.1 million at March 31, 2022 driven by a large residential loan that had been adversely rated and is now subject to foreclosure. The loan-to-value on the property is less than 50% and no loss is anticipated. Loans rated substandard or doubtful increased to $27.1 million in the second quarter of 2022 from $23.6 million at the end of the first quarter of 2022.
The allowance for credit losses was $30.2 million at June 30, 2022, up $0.83 million from $29.4 million at March 31, 2022. The Company recorded a provision for credit losses of $0.4 million compared to $0.1 million in the first quarter of 2022. As a percentage of loans, excluding PPP balances, the allowance declined to 1.16% at the end of the second quarter of 2022 compared to 1.24% at the end of the first quarter of 2022. The Company recorded $0.4 million in net recoveries in the second quarter of 2022 compared to net recoveries of $0.2 million in the first quarter of 2022.
Deposits
Total deposits decreased slightly to $2.68 billion at June 30, 2022, compared to $2.69 billion at March 31, 2022. Non-interest bearing demand deposits now represent 24.3% of total deposits and time deposits represent only 12.3% of total deposits at June 30, 2022.
Shareholders' Equity
Book value per share as of June 30, 2022 was $16.17, a decrease of $0.25 since March 31, 2022. Tangible book value per share^(1)^ at the end of the second quarter of 2022 was $11.77, a decrease of $0.34 since March 31, 2022. Shareholders' equity was $399 million, or 12.3% of total assets, at June 30, 2022. Tangible common equity^(1)^ at June 30, 2022 was $290 million, or 9.3% of tangible assets^(1)^. Equity balances decreased from March 31, 2022 to June 30, 2022 because of $8.5 million of unrealized losses on the Company's available-for-sale securities portfolio due to continued 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 August 26, 2022 to shareholders of record on August 12, 2022. This is Primis' forty-third consecutive quarterly dividend.
About Primis Financial Corp.
As of June 30, 2022, Primis had $3.24 billion in total assets, $2.63 billion in total loans and $2.68 billion in total deposits. Primis Bank provides a range of financial services to individuals and small- and medium-sized businesses through thirty-four full-service branches in Virginia and Maryland and provides services to customers through certain online and mobile applications.
Contacts
Dennis J. Zember, Jr., President and CEO
Matthew A. Switzer, EVP and CFO
Phone: (703) 893-7400
Primis Financial Corp., NASDAQ Symbol FRST
Website: www.primisbank.com
Address:
Primis Financial Corp.
6830 Old Dominion Drive
McLean, VA 22101
Conference Call
The Company's management will host a conference call to discuss its second quarter results on Friday, July 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/Dn1WKpOkRPb. Participants may also call 1-888-346-2613 and ask for the Primis Financial Corp. call. A replay of the teleconference will be available for 5 days by calling 1-877-344-7529 and providing Replay Access Code 7372270.
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; operating earnings per share from continuing operations – basic; operating earnings per share from continuing operations – diluted; 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 recent 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: | Variance - 2Q 2022 vs. | For Six Months Ended: | Variance | ||||||||||
| Selected Performance Ratios: | 2Q 2022 | 1Q 2022 | 4Q 2021 | 3Q 2021 | 2Q 2021 | 1Q 2022 | 2Q 2021 | 2Q 2022 | 2Q2021 | YTD | ||||
| Return on average assets from continuing operations | 0.63 % | 0.55 % | 0.88 % | 0.72 % | 1.05 % | 7 | bps | (43) | bps | 0.59 % | 1.06 % | (47) | bps | |
| Operating return on average assets from continuing operations^(1)^ | 0.76 % | 0.57 % | 0.83 % | 0.72 % | 1.05 % | 19 | (30) | 0.66 % | 1.07 % | (41) | ||||
| Pre-tax pre-provision operating return on average assets from continuing operations^(1)^ | 1.00 % | 0.77 % | 0.91 % | 0.98 % | 0.86 % | 23 | 14 | 0.86 % | 1.07 % | (21) | ||||
| Return on average equity from continuing operations | 4.92 % | 4.49 % | 7.37 % | 6.01 % | 8.81 % | 43 | (389) | 4.71 % | 8.69 % | (399) | ||||
| Operating return on average equity from continuing operations^(1)^ | 5.93 % | 4.58 % | 6.94 % | 6.01 % | 8.81 % | 135 | (288) | 5.25 % | 8.77 % | (352) | ||||
| Operating return on average tangible equity from continuing operations^(1)^ | 8.08 % | 6.16 % | 9.36 % | 8.12 % | 12.03 % | 192 | (395) | 7.09 % | 12.02 % | (493) | ||||
| Cost of funds | 0.53 % | 0.52 % | 0.56 % | 0.57 % | 0.66 % | 1 | (13) | 0.52 % | 0.72 % | (20) | ||||
| Net interest margin | 3.33 % | 2.96 % | 3.00 % | 2.87 % | 2.80 % | 37 | 53 | 3.14 % | 3.10 % | 4 | ||||
| Gross loans to deposits | 97.99 % | 89.11 % | 84.68 % | 82.46 % | 83.11 % | 9 | pts | 15 | pts | 97.99 % | 83.11 % | 15 | pts | |
| Efficiency ratio from continuing operations | 75.01 % | 76.11 % | 68.16 % | 64.80 % | 71.00 % | (1) | 401 | 75.54 % | 68.36 % | 718 | ||||
| Operating efficiency ratio from continuing operations^(1)^ | 70.23 % | 75.65 % | 69.63 % | 64.80 % | 71.00 % | (5) | (77) | 72.82 % | 67.97 % | 486 | ||||
| Per Share Data: | ||||||||||||||
| Earnings per share from continuing operations - Basic | $ 0.20 | $ 0.19 | $ 0.31 | $ 0.25 | $ 0.36 | 5.26 | % | (44.45) | % | $ 0.39 | $ 0.71 | (45.07) | % | |
| Earnings per share from discontinued operations - Basic | - | - | - | (0.09) | 0.06 | - | (100.00) | $ - | $ 0.10 | (100.00) | ||||
| Earnings per share - Basic | $ 0.20 | $ 0.19 | $ 0.31 | $ 0.16 | $ 0.42 | 5.26 | (52.41) | $ 0.05 | $ 0.81 | (94.24) | ||||
| Operating earnings per share from continuing operations - Basic^(1)^ | $ 0.25 | $ 0.19 | $ 0.29 | $ 0.25 | $ 0.36 | - | - | $ 0.44 | $ 0.71 | - | ||||
| Earnings per share from continuing operations - Diluted | $ 0.20 | $ 0.19 | $ 0.31 | $ 0.25 | $ 0.36 | 5.26 | (44.08) | $ 0.39 | $ 0.70 | (44.29) | ||||
| Earnings per share from discontinued operations - Diluted | - | - | - | (0.09) | 0.06 | - | (100.00) | - | 0.10 | (100.00) | ||||
| Earnings per share - Diluted | $ 0.20 | $ 0.19 | $ 0.31 | $ 0.16 | $ 0.42 | 5.26 | (52.08) | $ 0.39 | $ 0.80 | (51.25) | ||||
| Operating earnings per share from continuing operations - Diluted^(1)^ | $ 0.24 | $ 0.19 | $ 0.29 | $ 0.25 | $ 0.36 | - | - | $ 0.43 | $ 0.70 | - | ||||
| Book value per share | $ 16.17 | $ 16.42 | $ 16.76 | $ 16.63 | $ 16.59 | (1.52) | (2.53) | $ 16.17 | $ 16.59 | (2.53) | ||||
| Tangible book value per share^(1)^ | $ 11.77 | $ 12.11 | $ 12.43 | $ 12.28 | $ 12.22 | (2.81) | (3.68) | $ 11.77 | $ 12.22 | (3.68) | ||||
| Cash dividend per share | $ 0.10 | $ 0.10 | $ 0.10 | $ 0.10 | $ 0.10 | - | - | $ 0.20 | $ 0.20 | - | ||||
| Weighted average shares outstanding - Basic | 24,562,753 | 24,503,945 | 24,476,569 | 24,474,104 | 24,450,916 | 0.24 | 0.46 | 24,533,512 | 24,489,050 | 0.18 | ||||
| Weighted average shares outstanding - Diluted | 24,681,425 | 24,662,588 | 24,653,363 | 24,634,384 | 24,616,824 | 0.08 | 0.26 | 24,666,486 | 24,562,719 | 0.42 | ||||
| Shares outstanding at end of period | 24,650,239 | 24,622,739 | 24,574,619 | 24,574,619 | 24,537,269 | 0.11 | % | 0.46 | % | 24,650,239 | 24,537,269 | 0.46 | % | |
| Asset Quality Ratios: | ||||||||||||||
| Non-performing assets as a percent of total assets, excluding SBA guarantees | 0.61 % | 0.47 % | 0.44 % | 0.47 % | 0.43 % | 14 | bps | 19 | bps | 0.61 % | 0.43 % | 19 | bps | |
| Net charge-offs (recoveries) as a percent of average loans (annualized) | (0.07 %) | (0.03 %) | (0.00 %) | 0.34 % | (0.10 %) | (4) | 4 | (0.04 %) | (0.04 %) | - | ||||
| Allowance for credit losses to total loans | 1.15 % | 1.23 % | 1.24 % | 1.31 % | 1.37 % | (8) | (22) | 1.15 % | 1.37 % | (22) | ||||
| Allowance for credit losses to total loans (excluding PPP loans) | 1.16 % | 1.24 % | 1.29 % | 1.40 % | 1.52 % | (9) | (37) | 1.16 % | 1.52 % | (37) | ||||
| Capital Ratios: | ||||||||||||||
| Tangible common equity to tangible assets^(1)^ | 9.27 % | 9.57 % | 9.26 % | 9.02 % | 9.12 % | (30) | bps | 16 | bps | |||||
| Leverage ratio ^(2)^ | 10.21 % | 10.13 % | 9.41 % | 9.15 % | 9.38 % | 8 | 83 | |||||||
| Common equity tier 1 capital ratio ^(2)^ | 12.60 % | 13.99 % | 13.09 % | 13.85 % | 13.77 % | (139) | (117) | |||||||
| Tier 1 risk-based capital ratio ^(2)^ | 13.01 % | 14.45 % | 13.52 % | 14.31 % | 14.23 % | (144) | (122) | |||||||
| Total risk-based capital ratio^(2)^ | 17.58 % | 19.41 % | 18.52 % | 19.60 % | 19.52 % | (183) | (194) | |||||||
| ^(1)^See Reconciliation of Non-GAAP financial measures. | ||||||||||||||
| ^(2)^ June 30, 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) | As Of : | Variance - 2Q 2022 vs. | ||||||||||||
| Condensed Consolidated Balance Sheets (unaudited) | 2Q 2022 | 1Q 2022 | 4Q 2021 | 3Q 2021 | 2Q 2021 | 1Q 2022 | 2Q 2021 | |||||||
| Assets | ||||||||||||||
| Cash and cash equivalents | $ 70,721 | $ 298,230 | $ 530,167 | $ 650,746 | $ 620,839 | (76.29) | % | (88.61) | % | |||||
| Investment securities-available for sale | 257,180 | 271,626 | 271,332 | 206,821 | 201,977 | (5.32) | 27.33 | |||||||
| Investment securities-held to maturity | 14,978 | 16,138 | 22,940 | 26,412 | 28,669 | (7.19) | (47.76) | |||||||
| Loans held for sale | 16,096 | - | - | - | - | - | - | |||||||
| Loans receivable, net of deferred fees | 2,628,797 | 2,393,669 | 2,339,986 | 2,314,584 | 2,286,355 | 9.82 | 14.98 | |||||||
| Allowance for credit losses | (30,209) | (29,379) | (29,105) | (30,386) | (31,265) | 2.83 | (3.38) | |||||||
| Net loans | 2,598,588 | 2,364,290 | 2,310,881 | 2,284,198 | 2,255,090 | 9.91 | 15.23 | |||||||
| Stock in Federal Reserve Bank and Federal Home Loan Bank | 12,940 | 11,927 | 15,521 | 15,521 | 15,521 | 8.49 | (16.63) | |||||||
| Investments in mortgage affiliate - held for sale | - | - | - | 10,050 | 12,949 | - | (100.00) | |||||||
| Bank premises and equipment, net | 26,113 | 29,872 | 30,410 | 30,686 | 30,099 | (12.58) | (13.24) | |||||||
| Operating lease right-of-use assets | 4,777 | 5,305 | 5,866 | 6,331 | 6,386 | (9.95) | (25.20) | |||||||
| Goodwill and other intangible assets | 108,524 | 106,075 | 106,416 | 106,757 | 107,098 | 2.31 | 1.33 | |||||||
| Assets held for sale, net | 3,127 | - | - | - | - | - | - | |||||||
| Bank-owned life insurance | 67,339 | 67,099 | 66,724 | 66,336 | 65,949 | 0.36 | 2.11 | |||||||
| Other real estate owned | 1,041 | 1,041 | 1,163 | 1,312 | 1,274 | - | (18.29) | |||||||
| Deferred tax assets, net | 14,658 | 12,380 | 9,571 | 13,571 | 14,442 | 18.40 | 1.50 | |||||||
| Other assets | 40,496 | 35,893 | 36,362 | 33,676 | 34,858 | 12.82 | 16.17 | |||||||
| Total assets | $ 3,236,578 | $ 3,219,876 | $ 3,407,353 | $ 3,452,417 | $ 3,395,151 | 0.52 | % | (4.67) | % | |||||
| Liabilities and stockholders' equity | ||||||||||||||
| Demand deposits | $ 653,181 | $ 559,682 | $ 530,282 | $ 535,706 | $ 525,244 | 16.71 | % | 24.36 | % | |||||
| NOW accounts | 677,237 | 730,235 | 849,738 | 921,667 | 912,666 | (7.26) | (25.80) | |||||||
| Money market accounts | 802,953 | 831,580 | 799,759 | 758,259 | 714,759 | (3.44) | 12.34 | |||||||
| Savings accounts | 220,211 | 225,291 | 222,862 | 216,470 | 209,441 | (2.25) | 5.14 | |||||||
| Time deposits | 329,223 | 339,456 | 360,575 | 374,965 | 388,954 | (3.01) | (15.36) | |||||||
| Total deposits | 2,682,805 | 2,686,244 | 2,763,216 | 2,807,067 | 2,751,064 | (0.13) | (2.48) | |||||||
| Securities sold under agreements to repurchase - short term | 10,020 | 11,231 | 9,962 | 13,348 | 12,521 | (10.78) | (19.97) | |||||||
| Federal Home Loan Bank advances | 25,000 | - | 100,000 | 100,000 | 100,000 | - | (75.00) | |||||||
| Subordinated debt and notes | 95,170 | 95,099 | 95,028 | 95,442 | 95,404 | 0.07 | (0.25) | |||||||
| Operating lease liabilities | 5,299 | 5,897 | 6,498 | 7,000 | 7,014 | (10.14) | (24.45) | |||||||
| Other liabilities | 19,647 | 17,210 | 20,768 | 20,931 | 22,208 | 14.16 | (11.53) | |||||||
| Total liabilities | 2,837,941 | 2,815,681 | 2,995,472 | 3,043,788 | 2,988,211 | 0.79 | (5.03) | |||||||
| Stockholders' equity | 398,637 | 404,195 | 411,881 | 408,629 | 406,940 | (1.38) | (2.04) | |||||||
| Total liabilities and stockholders' equity | $ 3,236,578 | $ 3,219,876 | $ 3,407,353 | $ 3,452,417 | $ 3,395,151 | 0.52 | % | (4.67) | % | |||||
| Tangible common equity^(1)^ | $ 290,113 | $ 298,120 | $ 305,465 | $ 301,872 | $ 299,842 | (2.69) | % | (3.24) | % | |||||
| Primis Financial Corp. | ||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (Dollars in thousands) | For Three Months Ended: | Variance - 2Q 2022 vs. | For Six Months Ended: | Variance | ||||||||||
| Condensed Consolidated Statement of Operations (unaudited) | 2Q 2022 | 1Q 2022 | 4Q 2021 | 3Q 2021 | 2Q 2021 | 1Q 2022 | 2Q 2021 | 2Q 2022 | 2Q2021 | YTD | ||||
| Interest and dividend income | $ 28,258 | $ 26,585 | $ 28,503 | $ 27,801 | $ 26,631 | 6.29 | % | 6.11 | % | $ 54,843 | $ 56,939 | (3.68) | % | |
| Interest expense | 3,652 | 3,731 | 4,262 | 4,594 | 4,831 | (2.12) | (24.40) | 7,383 | 10,184 | (27.50) | ||||
| Net interest income | 24,606 | 22,854 | 24,241 | 23,207 | 21,800 | 7.67 | 12.87 | 47,460 | 46,755 | 1.51 | ||||
| Provision for (recovery of) credit losses | 422 | 99 | (1,299) | 1,085 | (4,215) | NM | (110.01) | 521 | (5,587) | (109.33) | ||||
| Net interest income after provision for (recovery of) credit losses | 24,184 | 22,755 | 25,540 | 22,122 | 26,015 | 6.28 | (7.04) | 46,939 | 52,342 | (10.32) | ||||
| Account maintenance and deposit service fees | 1,442 | 1,351 | 1,420 | 1,509 | 1,586 | 6.74 | (9.08) | 2,793 | 3,250 | (14.06) | ||||
| Income from bank-owned life insurance | 378 | 375 | 535 | 387 | 379 | 0.80 | (0.26) | 753 | 765 | (1.57) | ||||
| Gain on debt extinguishment | - | - | 573 | - | - | - | - | - | - | - | ||||
| Gain (loss) on sale of mortgage loans | 593 | - | - | - | - | - | - | 593 | - | - | ||||
| Other | 217 | 364 | 359 | 455 | 453 | (40.38) | (52.10) | 581 | 752 | (22.74) | ||||
| Noninterest income | 2,630 | 2,090 | 2,887 | 2,351 | 2,418 | 25.84 | 8.77 | 4,720 | 4,767 | (0.99) | ||||
| Employee compensation and benefits | 10,573 | 9,625 | 9,527 | 9,032 | 8,810 | 9.85 | 20.01 | 20,198 | 18,182 | 11.09 | ||||
| Occupancy and equipment expenses | 2,546 | 2,557 | 2,487 | 2,523 | 2,311 | (0.43) | 10.17 | 5,103 | 4,666 | 9.37 | ||||
| Amortization of core deposit intangible | 341 | 341 | 342 | 341 | 341 | - | - | 682 | 682 | - | ||||
| Virginia franchise tax expense | 814 | 813 | 733 | 732 | 759 | 0.12 | 7.25 | 1,627 | 1,434 | 13.46 | ||||
| Data processing expense | 1,293 | 1,197 | 934 | 1,003 | 1,016 | 8.02 | 27.26 | 2,783 | 1,815 | 53.33 | ||||
| Telecommunication and communication expense | 366 | 382 | 439 | 415 | 414 | (4.19) | (11.59) | 748 | 936 | (20.09) | ||||
| Net (gain) loss on other real estate owned | - | (59) | 70 | - | 77 | 100.00 | (100.00) | (59) | 17 | NM | ||||
| Net (gain) loss on fixed assets | 620 | - | - | - | - | - | - | 620 | - | - | ||||
| Professional fees | 827 | 1,387 | 1,238 | 874 | 1,091 | (40.37) | (24.20) | 1,921 | 2,225 | (13.66) | ||||
| Other expenses | 3,050 | 2,744 | 2,722 | 1,640 | 2,376 | 11.15 | 28.37 | 5,794 | 5,261 | 10.13 | ||||
| Noninterest expense | 20,430 | 18,987 | 18,492 | 16,560 | 17,195 | 7.60 | 18.81 | 39,417 | 35,218 | 11.92 | ||||
| Income from continuing operations before income taxes | 6,384 | 5,858 | 9,935 | 7,913 | 11,238 | 8.98 | (43.19) | 12,242 | 21,891 | (44.08) | ||||
| Income tax expense | 1,375 | 1,265 | 2,284 | 1,702 | 2,434 | 8.70 | (43.51) | 2,640 | 4,735 | (44.24) | ||||
| Income from continuing operations | 5,009 | 4,593 | 7,651 | 6,211 | 8,804 | 9.06 | (43.10) | 9,602 | 17,156 | (44.03) | ||||
| Income (loss) from discontinued operations before income taxes | - | - | - | (2,899) | 1,878 | - | (100.00) | - | 3,193 | (100.00) | ||||
| Income tax expense (benefit) | - | - | - | (627) | 407 | - | (100.00) | - | 691 | (100.00) | ||||
| Income (loss) from discontinued operations | - | - | - | (2,272) | 1,471 | - | (100.00) | - | 2,502 | (100.00) | ||||
| Net income | $ 5,009 | $ 4,593 | $ 7,651 | $ 3,939 | $ 10,275 | 9.06 | % | (51.25) | % | $ 9,602 | $ 19,658 | (51.15) | % | |
| ^(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) | AsOf: | |||||||||||||
| Loan Portfolio Composition | 2Q 2022 | 1Q 2022 | 4Q 2021 | 3Q 2021 | 2Q 2021 | 2Q 2021 | ||||||||
| Loans secured by real estate: | ||||||||||||||
| Commercial real estate - owner occupied | $ 433,840 | $ 406,285 | $ 389,109 | $ 421,940 | 417,489 | % | 3.92 | % | ||||||
| Commercial real estate - non-owner occupied | 600,436 | 615,682 | 590,523 | 631,423 | 563,114 | 6.63 | ||||||||
| Secured by farmland | 9,305 | 8,896 | 10,003 | 10,721 | 11,861 | (21.55) | ||||||||
| Construction and land development | 117,604 | 116,365 | 121,520 | 109,763 | 109,719 | 7.19 | ||||||||
| Residential 1-4 family | 607,548 | 575,946 | 548,830 | 531,556 | 516,475 | 17.63 | ||||||||
| Multi-family residential | 144,406 | 152,266 | 164,071 | 153,310 | 130,221 | 10.89 | ||||||||
| Home equity lines of credit | 69,860 | 72,440 | 73,877 | 75,775 | 80,262 | (12.96) | ||||||||
| Total real estate loans | 1,982,999 | 1,947,880 | 1,897,933 | 1,934,488 | 1,829,141 | 8.41 | ||||||||
| Commercial loans | 448,582 | 336,961 | 303,697 | 203,243 | 194,610 | 130.50 | ||||||||
| Paycheck Protection Program loans | 17,525 | 31,404 | 77,319 | 140,465 | 234,315 | (92.52) | ||||||||
| Consumer loans | 179,691 | 77,424 | 61,037 | 36,388 | 28,289 | NM | ||||||||
| Loans receivable, net of deferred fees | $ 2,628,797 | $ 2,393,669 | $ 2,339,986 | $ 2,314,584 | 2,286,355 | % | 14.98 | % | ||||||
| Loans by Risk Grade: | ||||||||||||||
| Pass, not graded | $ - | $ - | $ - | $ - | - | % | - | % | ||||||
| Pass Grade 1 - Highest Quality | 609 | 786 | 641 | 789 | 1,054 | (42.22) | ||||||||
| Pass Grade 2 - Good Quality | 129,571 | 8,734 | 103,496 | 153,834 | 247,664 | (47.68) | ||||||||
| Pass Grade 3 - Satisfactory Quality | 1,513,054 | 1,413,480 | 1,327,718 | 1,248,233 | 1,142,784 | 32.40 | ||||||||
| Pass Grade 4 - Pass | 890,709 | 895,197 | 836,610 | 841,451 | 823,866 | 8.11 | ||||||||
| Pass Grade 5 - Special Mention | 67,736 | 51,884 | 31,112 | 25,008 | 29,844 | 126.97 | ||||||||
| Grade 6 - Substandard | 27,118 | 23,588 | 40,409 | 45,269 | 39,613 | (31.54) | ||||||||
| Grade 7 - Doubtful | - | - | - | - | 1,530 | (100.00) | ||||||||
| Grade 8 - Loss | - | - | - | - | - | - | ||||||||
| Total loans | $ 2,628,797 | $ 2,393,669 | $ 2,339,986 | $ 2,314,584 | 2,286,355 | % | 14.98 | % | ||||||
| (Dollars in thousands) | AsOf or For Three Months Ended: | |||||||||||||
| Asset Quality Information | 2Q 2022 | 1Q 2022 | 4Q 2021 | 3Q 2021 | 2Q 2021 | |||||||||
| Allowance for Credit Losses: | ||||||||||||||
| Balance at beginning of period | $ (29,379) | $ (29,105) | $ (30,386) | $ (31,265) | (34,893) | |||||||||
| (Provision for) / recovery of allowance for credit losses | (422) | (99) | 1,299 | (1,085) | 4,215 | |||||||||
| Net charge-offs | (408) | (175) | (18) | 1,964 | (587) | |||||||||
| Ending balance | $ (30,209) | $ (29,379) | $ (29,105) | $ (30,386) | (31,265) | |||||||||
| Reserve for Unfunded Commitments: | ||||||||||||||
| Balance at beginning of period | $ (1,237) | $ (977) | $ (1,129) | $ (1,599) | (1,450) | |||||||||
| (Expense for) / recovery of unfunded loan commitment reserve | 168 | (260) | 152 | 470 | (149) | |||||||||
| Total Reserve for Unfunded Commitments | $ (1,069) | $ (1,237) | $ (977) | $ (1,129) | (1,599) | |||||||||
| As Of: | ||||||||||||||
| Non-Performing Assets: | 2Q2022 | 1Q 2022 | 4Q 2021 | 3Q 2021 | 2Q 2021 | 2Q 2021 | ||||||||
| Nonaccrual loans | $ 19,635 | $ 14,941 | $ 15,029 | $ 18,352 | 14,604 | % | 34.45 | % | ||||||
| Accruing loans delinquent 90 days or more | 1,512 | 1,817 | 283 | - | - | - | ||||||||
| Total non-performing loans | 21,147 | 16,758 | 15,312 | 18,352 | 14,604 | 44.80 | ||||||||
| Other real estate owned | 1,041 | 1,041 | 1,163 | 1,312 | 1,274 | (18.29) | ||||||||
| Total non-performing assets | $ 22,188 | $ 17,799 | $ 16,475 | $ 19,664 | 15,878 | 39.74 | ||||||||
| SBA guaranteed portion of non-performing loans | $ 2,319 | $ 2,651 | $ 1,388 | $ 3,361 | 1,380 | 68.04 | ||||||||
| Troubled debt restructuring | $ 2,695 | $ 3,103 | $ 3,401 | $ 3,710 | 2,766 | (2.6) | ||||||||
| Loans deferred under COVID-19 modifications | $ - | $ - | $ - | $ <br>6,985 | 25,977 | % | (100.00) | % | ||||||
| The company defines "NM" as not meaningful for increases or decreases greater than 300 percent. |
All values are in US Dollars.
| Primis Financial Corp. | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Dollars in thousands) | For Three Months Ended: | Variance - 2Q 2021 vs. | For Six Months Ended: | Variance | ||||||||||
| Average Balance Sheet | 2Q 2022 | 1Q 2022 | 4Q 2021 | 3Q 2021 | 2Q 2021 | 1Q 2022 | 2Q 2021 | 2Q 2022 | 2Q2021 | YTD | ||||
| Assets | ||||||||||||||
| Loans held for sale | $ 6,936 | $ - | $ - | $ - | $ - | - | % | - | % | $ 3,487 | $ - | - | % | |
| Loans, net of deferred fees | 2,509,978 | 2,360,782 | 2,317,260 | 2,291,945 | 2,327,162 | 6.32 | 7.86 | 2,435,792 | 2,381,635 | 2.27 | ||||
| Investment securities | 287,722 | 302,431 | 258,265 | 229,906 | 215,713 | (4.86) | 33.38 | 295,036 | 204,600 | 44.20 | ||||
| Other earning assets | 158,817 | 466,952 | 632,841 | 689,084 | 577,939 | (65.99) | (72.52) | 312,033 | 459,368 | (32.07) | ||||
| Total earning assets | 2,963,453 | 3,130,165 | 3,208,366 | 3,210,935 | 3,120,814 | (5.33) | (5.04) | 3,046,348 | 3,045,603 | 0.02 | ||||
| Investment in STM - Held for sale | — | — | 9,941 | 12,621 | 12,728 | - | (100.00) | - | 12,679 | (100.00) | ||||
| Other assets | 228,893 | 226,320 | 229,718 | 230,116 | 226,836 | 1.14 | 0.91 | 227,614 | 227,468 | 0.06 | ||||
| Total assets | $ 3,192,346 | $ 3,356,485 | $ 3,448,025 | $ 3,453,672 | $ 3,360,378 | (4.89) | % | (5.00) | % | $ 3,273,962 | $ 3,285,750 | (0.36) | % | |
| Liabilities and stockholders' equity | ||||||||||||||
| Demand deposits | $ 596,714 | $ 545,530 | $ 547,504 | $ 547,500 | $ 516,877 | 9.38 | % | 15.45 | % | $ 571,264 | $ 497,452 | 14.84 | % | |
| Interest-bearing liabilities: | ||||||||||||||
| NOW and other demand accounts | 695,481 | 817,430 | 878,652 | 920,203 | 867,499 | (14.92) | (19.83) | 756,118 | 820,892 | (7.89) | ||||
| Money market accounts | 810,781 | 809,460 | 784,942 | 744,280 | 719,925 | 0.16 | 12.62 | 810,124 | 686,867 | 17.94 | ||||
| Savings accounts | 222,274 | 224,716 | 219,823 | 213,859 | 206,507 | (1.09) | 7.64 | 223,489 | 199,419 | 12.07 | ||||
| Time deposits | 329,198 | 350,368 | 368,603 | 380,233 | 409,247 | (6.04) | (19.56) | 339,724 | 437,440 | (22.34) | ||||
| Total Deposits | 2,654,448 | 2,747,504 | 2,799,524 | 2,806,075 | 2,720,055 | (3.39) | (2.41) | 2,700,719 | 2,642,070 | 2.22 | ||||
| Borrowings | 107,784 | 171,293 | 209,215 | 208,689 | 210,505 | (37.08) | (48.80) | 139,363 | 214,444 | (35.01) | ||||
| Total Funding | 2,762,232 | 2,918,797 | 3,008,739 | 3,014,764 | 2,930,560 | (5.36) | (5.74) | 2,840,082 | 2,856,514 | (0.58) | ||||
| Other Liabilities | 22,095 | 23,057 | 27,407 | 28,699 | 29,013 | (4.17) | (23.84) | 22,573 | 31,249 | (27.76) | ||||
| Stockholders' equity | 408,019 | 414,631 | 411,879 | 410,209 | 400,805 | (1.59) | 1.80 | 411,307 | 397,987 | 3.35 | ||||
| Total liabilities and stockholders' equity | $ 3,192,346 | $ 3,356,485 | $ 3,448,025 | $ 3,453,672 | $ 3,360,378 | (4.89) | % | (5.00) | % | $ 3,273,962 | $ 3,285,750 | (0.36) | % | |
| Memo: Average PPP loans | $ 23,950 | $ 51,491 | $ 102,078 | $ 191,504 | $ 294,019 | (53.49) | % | (91.85) | % | $ 37,644 | $ 313,474 | (87.99) | % | |
| Net Interest Income | ||||||||||||||
| Loans held for sale | $ 93 | $ - | $ - | $ <br>- | $ - | - | % | - | % | $ 93 | $ - | - | % | |
| Loans | 26,272 | 24,749 | 26,701 | 26,181 | 25,182 | 6.15 | 4.33 | 51,021 | 54,139 | (5.76) | ||||
| Investment securities | 1,445 | 1,430 | 1,242 | 1,083 | 1,073 | 1.05 | 34.67 | 2,874 | 2,115 | 35.89 | ||||
| Other earning assets | 448 | 406 | 560 | 537 | 376 | 10.34 | 19.15 | 854 | 685 | 24.67 | ||||
| Total Earning Assets | 28,258 | 26,585 | 28,503 | 27,801 | 26,631 | 6.29 | 6.11 | 54,842 | 56,939 | (3.68) | ||||
| Non-interest bearing DDA | - | - | - | - | - | - | - | - | - | - | ||||
| NOW and other interest-bearing demand accounts | 556 | 666 | 832 | 1,062 | 1,022 | (16.52) | (45.60) | 1,222 | 2,116 | (42.25) | ||||
| Money market accounts | 938 | 859 | 952 | 1,056 | 1,153 | 9.20 | (18.65) | 1,797 | 2,238 | (19.71) | ||||
| Savings accounts | 142 | 149 | 154 | 165 | 157 | (4.70) | (9.55) | 291 | 299 | (2.68) | ||||
| Time deposits | 674 | 700 | 809 | 877 | 1,057 | (3.71) | (36.23) | 1,374 | 2,552 | (46.16) | ||||
| Total Deposit Costs | 2,310 | 2,374 | 2,747 | 3,160 | 3,389 | (2.70) | (31.84) | 4,684 | 7,205 | (34.99) | ||||
| Borrowings | 1,342 | 1,357 | 1,515 | 1,434 | 1,442 | (1.11) | (6.93) | 2,699 | 2,979 | (9.40) | ||||
| Total Funding Costs | 3,652 | 3,731 | 4,262 | 4,594 | 4,831 | (2.12) | (24.40) | 7,383 | 10,184 | (27.50) | ||||
| Net Interest Income | $ 24,606 | $ 22,854 | $ 24,241 | $ 23,207 | $ 21,800 | 7.67 | % | 12.87 | % | $ 47,459 | $ 46,755 | 1.51 | % | |
| Memo: SBA PPP loan interest and fee income | $ 59 | $ 435 | $ 2,503 | $ 3,146 | $ 2,559 | (86.44) | % | (97.69) | % | $ 494 | $ 8,337 | (94.07) | % | |
| Memo: SBA PPP loan funding costs | $ 21 | $ 44 | $ 90 | $ 169 | $ 257 | (52.27) | % | (91.83) | % | $ 65 | $ 544 | (88.05) | % | |
| Net Interest Margin | ||||||||||||||
| Loans held for sale | 5.38 % | 0.00 % | 0.00 % | 0.00 % | 0.00 % | 538 | bps | 538 | bps | 5.38 % | 0.00 % | 538 | bps | |
| Loans | 4.20 % | 4.25 % | 4.57 % | 4.53 % | 4.34 % | (5) | (14) | 4.22 % | 4.58 % | (36) | ||||
| Investments | 2.01 % | 1.92 % | 1.91 % | 1.87 % | 2.00 % | 9 | 1 | 1.96 % | 2.08 % | (12) | ||||
| Other Earning Assets | 1.13 % | 0.35 % | 0.35 % | 0.31 % | 0.26 % | 78 | 87 | 0.55 % | 0.30 % | 25 | ||||
| Total Earning Assets | 3.82 % | 3.44 % | 3.52 % | 3.44 % | 3.42 % | 38 | 40 | 3.63 % | 3.77 % | (14) | ||||
| NOW | 0.32 % | 0.33 % | 0.38 % | 0.46 % | 0.47 % | (1) | (15) | 0.33 % | 0.52 % | (19) | ||||
| MMDA | 0.46 % | 0.43 % | 0.48 % | 0.56 % | 0.64 % | 3 | (18) | 0.45 % | 0.66 % | (21) | ||||
| Savings | 0.26 % | 0.27 % | 0.28 % | 0.31 % | 0.30 % | (1) | (4) | 0.26 % | 0.30 % | (4) | ||||
| CDs | 0.82 % | 0.81 % | 0.87 % | 0.92 % | 1.04 % | 1 | (22) | 0.82 % | 1.18 % | (36) | ||||
| Cost of Interest Bearing Deposits | 0.45 % | 0.44 % | 0.48 % | 0.56 % | 0.62 % | 1 | (17) | 0.44 % | 0.68 % | (24) | ||||
| Cost of Deposits | 0.35 % | 0.35 % | 0.39 % | 0.45 % | 0.50 % | - | (15) | 0.35 % | 0.55 % | (20) | ||||
| - | ||||||||||||||
| Other Funding | 4.99 % | 3.22 % | 2.87 % | 2.73 % | 2.75 % | 177 | 224 | 3.91 % | 2.80 % | 111 | ||||
| Total Cost of Funds | 0.53 % | 0.52 % | 0.56 % | 0.57 % | 0.66 % | 1 | (13) | 0.52 % | 0.72 % | (20) | ||||
| Net Interest Margin | 3.33 % | 2.96 % | 3.00 % | 2.87 % | 2.80 % | 37 | 53 | 3.14 % | 3.10 % | 4 | ||||
| Net Interest Spread | 3.15 % | 2.81 % | 2.96 % | 2.83 % | 2.76 % | 34 | 39 | 2.97 % | 3.05 % | (8) | ||||
| Memo: Excluding SBA PPP loans | ||||||||||||||
| Loans | 4.23 % | 4.27 % | 4.33 % | 4.35 % | 4.46 % | (4) | bps | (23) | bps | 4.25 % | 4.47 % | (22) | bps | |
| Total Earning Assets | 3.85 % | 3.44 % | 3.32 % | 3.24 % | 3.42 % | 40 | 43 | 3.64 % | 3.59 % | 6 | ||||
| Net Interest Margin* | 3.35 % | 2.96 % | 2.79 % | 2.66 % | 2.77 % | 39 | 59 | 3.15 % | 2.88 % | 28 | ||||
| *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: | For Six Months Ended: | ||||||||||||
| Reconciliation of Non-GAAP items: | 2Q 2022 | 1Q 2022 | 4Q 2021 | 3Q 2021 | 2Q 2021 | 2Q 2022 | 2Q2021 | |||||||
| Net income from continuing operations | $ 5,009 | $ 4,593 | $ 7,651 | $ 6,211 | $ 8,804 | $ 9,602 | $ 17,156 | |||||||
| Non-GAAP adjustments to Net Income from continuing operations: | ||||||||||||||
| Management Restructure / Recruiting | - | - | - | - | - | - | 200 | |||||||
| Branch Closures/ Consolidations | 901 | - | - | - | - | 901 | - | |||||||
| Merger expenses | 401 | 115 | - | - | - | 516 | - | |||||||
| (Gain) on debt extinguishment | - | - | (573) | - | - | - | - | |||||||
| Income tax effect | (281) | (25) | 124 | - | - | (306) | (43) | |||||||
| Net income from continuing operations adjusted for nonrecurring income and expenses | $ 6,030 | $ 4,683 | $ 7,202 | $ 6,211 | $ 8,804 | $ 10,713 | $ 17,313 | |||||||
| Net income from continuing operations | $ 5,009 | $ 4,593 | $ 7,651 | $ 6,211 | $ 8,804 | $ 9,602 | $ 17,156 | |||||||
| Income tax expense | 1,375 | 1,265 | 2,284 | 1,702 | 2,434 | 2,640 | 4,735 | |||||||
| Provision for credit losses (incl. unfunded commitment expense) | 254 | 359 | (1,451) | 615 | (4,066) | 353 | (4,727) | |||||||
| Pre-tax pre-provision earnings from continuing operations | $ 6,638 | $ 6,217 | $ 8,484 | $ 8,528 | $ 7,172 | $ 12,595 | $ 17,164 | |||||||
| Effect of adjustment for nonrecurring income and expenses | 1,302 | 115 | (573) | - | - | 1,417 | 200 | |||||||
| Pre-tax pre-provision operating earnings from continuing operations | $ 7,940 | $ 6,332 | $ 7,911 | $ 8,528 | $ 7,172 | $ 14,012 | $ 17,364 | |||||||
| Return on average assets from continuing operations | 0.63 % | 0.55 % | 0.88 % | 0.72 % | 1.05 % | 0.59 % | 1.06 % | |||||||
| Effect of adjustment for nonrecurring income and expenses | 0.13 % | 0.01 % | (0.05 %) | 0.00 % | 0.00 % | 0.07 % | 0.01 % | |||||||
| Operating return on average assets from continuing operations | 0.76 % | 0.57 % | 0.83 % | 0.72 % | 1.05 % | 0.66 % | 1.07 % | |||||||
| Return on average assets from continuing operations | 0.63 % | 0.55 % | 0.88 % | 0.72 % | 1.05 % | 0.59 % | 1.06 % | |||||||
| Effect of tax expense | 0.17 % | 0.15 % | 0.26 % | 0.20 % | 0.29 % | 0.16 % | 0.29 % | |||||||
| Effect of provision for credit losses | 0.03 % | 0.04 % | (0.17 %) | 0.07 % | (0.49 %) | 0.02 % | (0.29 %) | |||||||
| Pre-tax pre-provision return on average assets from continuing operations | 0.83 % | 0.75 % | 0.98 % | 0.98 % | 0.86 % | 0.78 % | 1.06 % | |||||||
| Effect of adjustment for nonrecurring income and expenses | 0.16 % | 0.01 % | (0.07 %) | 0.00 % | 0.00 % | 0.09 % | 0.01 % | |||||||
| Pre-tax pre-provision operating return on average assets from continuing operations | 1.00 % | 0.77 % | 0.91 % | 0.98 % | 0.86 % | 0.86 % | 1.07 % | |||||||
| Return on average equity from continuing operations | 4.92 % | 4.49 % | 7.37 % | 6.01 % | 8.81 % | 4.71 % | 8.69 % | |||||||
| Effect of adjustment for nonrecurring income and expenses | 1.00 % | 0.09 % | (0.43 %) | 0.00 % | 0.00 % | 0.54 % | 0.08 % | |||||||
| Operating return on average equity from continuing operations | 5.93 % | 4.58 % | 6.94 % | 6.01 % | 8.81 % | 5.25 % | 8.77 % | |||||||
| Effect of goodwill and other intangible assets | 2.15 % | 1.58 % | 2.42 % | 2.12 % | 3.22 % | 1.84 % | 3.24 % | |||||||
| Operating return on average tangible equity from continuing operations | 8.08 % | 6.16 % | 9.36 % | 8.12 % | 12.03 % | 7.09 % | 12.02 % | |||||||
| Efficiency ratio from continuing operations | 75.01 % | 76.11 % | 68.16 % | 64.80 % | 71.00 % | 75.54 % | 68.36 % | |||||||
| Effect of adjustment for nonrecurring income and expenses | (4.78 %) | (0.46 %) | 1.47 % | 0.00 % | 0.00 % | (2.72 %) | (0.39 %) | |||||||
| Operating efficiency ratio from continuing operations | 70.23 % | 75.65 % | 69.63 % | 64.80 % | 71.00 % | 72.82 % | 67.97 % | |||||||
| Earnings per share from continuing operations - Basic | $ 0.20 | $ 0.19 | $ 0.31 | $ 0.25 | $ 0.36 | $ 0.39 | $ 0.71 | |||||||
| Effect of adjustment for nonrecurring income and expenses | 0.05 | 0.00 | (0.02) | 0.00 | - | 0.05 | (0.00) | |||||||
| Operating earnings per share from continuing operations - Basic | $ 0.25 | $ 0.19 | $ 0.29 | $ 0.25 | $ 0.36 | $ 0.44 | $ 0.71 | |||||||
| Earnings per share from continuing operations - Diluted | $ 0.20 | $ 0.19 | $ 0.31 | $ 0.25 | $ 0.36 | $ 0.39 | $ 0.70 | |||||||
| Effect of adjustment for nonrecurring income and expenses | 0.04 | (0.00) | (0.02) | 0.00 | - | 0.04 | 0.00 | |||||||
| Operating earnings per share from continuing operations - Diluted | $ 0.24 | $ 0.19 | $ 0.29 | $ 0.25 | $ 0.36 | $ 0.43 | $ 0.70 | |||||||
| Book value per share | $ 16.17 | $ 16.42 | $ 16.76 | $ 16.63 | $ 16.59 | $ 16.17 | $ 16.59 | |||||||
| Effect of goodwill and other intangible assets | (4.40) | (4.31) | (4.34) | (4.35) | (4.37) | (4.40) | (4.36) | |||||||
| Tangible book value per share | $ 11.77 | $ 12.11 | $ 12.43 | $ 12.28 | $ 12.22 | $ 11.77 | $ 12.22 | |||||||
| Stockholders' equity | $ 398,637 | $ 404,195 | $ 411,881 | $ 408,629 | $ 406,940 | $ 398,637 | $ 406,940 | |||||||
| Less goodwill and other intangible assets | (108,524) | (106,075) | (106,416) | (106,757) | (107,098) | (108,524) | (107,098) | |||||||
| Tangible common equity | $ 290,113 | $ 298,120 | $ 305,465 | $ 301,872 | $ 299,842 | $ 290,113 | $ 299,842 | |||||||
| Equity to assets | 12.32 % | 12.55 % | 12.10 % | 11.84 % | 11.99 % | 12.32 % | 11.99 % | |||||||
| Effect of goodwill and other intangible assets | (3.04 %) | (2.98 %) | (2.84 %) | (2.81 %) | (2.87 %) | (3.04 %) | (2.87 %) | |||||||
| Tangible common equity to tangible assets | 9.27 % | 9.57 % | 9.26 % | 9.02 % | 9.12 % | 9.27 % | 9.12 % | |||||||
| Net interest margin | 3.33 % | 2.96 % | 3.00 % | 2.87 % | 2.80 % | 3.14 % | 3.10 % | |||||||
| Effect of adjustment for PPP associated balances* | 0.02 % | (0.00 %) | (0.21 %) | (0.21 %) | (0.03 %) | 0.01 % | (0.22 %) | |||||||
| Net interest margin excluding PPP | 3.35 % | 2.96 % | 2.79 % | 2.66 % | 2.77 % | 3.15 % | 2.88 % | |||||||
| *Net interest margin excluding the effect of PPP loans assumes a funding cost of 35bps on average PPP balances in all applicable periods |
Second Quarter 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 recent 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; operating earnings per share from continuing operations –diluted; 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: McLean, VA Bank Headquarters: Glen Allen, VA Branches: 34 Ticker (NASDAQ): FRST Valuation Market Capitalization: $327 million Price / Book Value per Share 0.82x Price / Tangible Book Value: 1.13x Price / 2022 Estimated EPS(3): 14.62x Price / 2023 Estimated EPS(3): 11.67x Dividend Yield(4): 3.01% 4 Pricing as of July 27, 2022. Financial data as of or for the three months ended June 30, 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.
High Performing Community Bank 5 V1BE adoption/utilization accelerating with transactions up 31% in Q2
Impressive core market loan growth with 19.8% annualized loan growth in Q2(2)
6 branches consolidated in Q2’22, 2 branches consolidating in Q3’22 Deposits per Branch (1) Pro forma for 2 branch closures expected in the third quarter (2) Excludes PPP, Panacea, Life Premium Finance balances and loans held for sale Map Source: S&P Global.
1,268 Downloads of the V1BE App ~$33 Million Amt. of Deposit Accts Utilizing V1BE 59% % of V1BE Users that are SMBs V1BE Update V1BE Coverage ~50 Minutes Average Fulfillment Time 244,699 Total Minutes Saved by Customers 2,015 Q2 Transactions $78,906 $74,522 $67,156 $69,080 $68,465 $65,502 Q2'22 PF Q2'22 Q1'22 Q4'21 Q3'21 Q2'21 $78,906 $74,522 $67,156 $69,080 $68,465 $65,502 Q2'22 PF Q2'22 Q1'22 Q4'21 Q3'21 Q2'21
Digital Bank Update 6 Initial consumer launch – July 25, 2022
Business launch anticipated late Q3
Initial products 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
7 $61.4 million growth in loan balances in Q2 Q2’22 originations of $69.4 million
Now banking >2,000 doctor households across all 50 states
Opened 481 new checking and savings accounts in Q2’22
0.0% net charge offs in Q2’22
10 national and state association partnerships
Increasing 2022 loan growth guidance to $175-$200 mil. Panacea Financial Update Q2’22 Update Q2’22 Loan Composition ($143 million) Consumer Applications Credit Quality 760 Weighted Average FICO1 $269,923 Average Annual Salary2 3.58x Weighted Average Business DSC3 2.59x Weighted Average Global DSC3 Consumer and Commercial Divisions In-Practice Consumer Portfolio Commercial Division 415 587 870 954 1,654 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 27.7% 20.6% 51.7% PRN Student Refi Commercial 415 587 870 954 1,654 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 27.7% 20.6% 51.7% PRN Student Refi Commercial
4 8 Life Insurance Premium Finance Update Key Portfolio Metrics Key Performance Metrics Average Actual Primis Processing Time is ~5 Days Placement Ratio Carrier Approvals Top-Tier Partners Facilitators 72% 24 29 4 Portfolio is over secured by discounted collateral 8.8MM SECURED 27 ORIGINATION CYCLE TIME SUBMISSIONS 337% 483% Q2 Loan Balance Growth and Deal Growth Respectively $413 Million Projected Balance at Maturity $99.7 million Loan Balances (Net of Fees)
Second Quarter Results
Net income from continuing operations of $5.0 million or $0.20 per basic and diluted share
Adjusted net income from continuing operations of $6.0 million(1) or $0.25 per basic share and $0.24 per diluted share
Gross loans, excluding PPP balances and HFS, grew approx. 42% annualized with solid contribution from across the organization
Total deposits essentially flat linked-quarter at $2.68 billion while mix continues to improve Non-interest bearing demand deposits at 24.3% of deposits versus 19.1% a year ago Time deposits declined to 12.3% of total deposits
Net interest income, excluding PPP fees, of $24.6 million in Q2’22 versus $20.0 million in Q2’21
Reported net interest margin and net interest margin, excluding the effects of PPP, of 3.33% and 3.35%, respectively, versus 2.96% and 2.96%, respectively, in the first quarter
Pre-tax, pre-provision ROAA and pre-tax, pre-provision operating ROAA(1) of 0.83% and 1.00%, respectively, compared to 0.75% and 0.77%, respectively, in the first quarter Highest pre-tax, pre-provision operating ROAA, excluding PPP fee income, since Q3 ‘20
Successfully completed the acquisition of Primis Mortgage Company (previously SeaTrust)
New digital bank is now live!
(1) Results for continuing operations. See reconciliation of Non-GAAP financial measures on slide 23. Second Quarter Highlights 10
Dollars in millions. (1) See reconciliation of Non-GAAP financial measures on slide 23. Balance Sheet Trends 11 $2,629 $2,394 $2,340 $2,315 $2,286 $2,683 $2,686 $2,763 $2,807 $2,751 $3,237 $3,220 $3,407 $3,452 $3,395 9.27% 9.57% 9.26% 9.02% 9.12% Q2'22 Q1'22 Q4'21 Q3'21 Q2'21 Gross Loans Deposits Total assets TCE/TA(1)
Lines of Business
Dollars in thousands. * Net interest income assumes business line funding requirements are provided by the Company at it's cost of funds plus 100 basis points. 12 Bank Panacea LPF Mortgage Q2 '22 Q1 '22 Chg Q2 '22 Q1 '22 Chg Q2 '22 Q1 '22 Chg Q2 '22 Q1 '22 Chg Net Interest Income * $ 23,341 $ 22,226 5.0% $ 905 $ 559 62.0% $ 294 $ 70 323.3% $ 65 $ - N/A Noninterest Income 2,029 2,090 (2.9%) 2 0 N/A 5 - N/A 593 - N/A Op. Non. Exp. (excl. res. unf.) 17,774 17,636 0.8% 799 844 (5.3%) (37) 132 N/A 759 - N/A PTPP Net Income $ 7,596 $ 6,680 13.7% $ 108 $ (285) N/A $ 337 $ (63) N/A $ (102) $ - N/A Gross Loans (inc.HFS) $ 2,368,601 $ 2,258,206 4.9% $ 142,670 $ 81,232 75.6% $ 99,675 $ 22,826 336.7% $ 16,096 $ - N/A Total Deposits 2,669,212 2,679,331 (0.4%) 10,778 6,913 55.9% 2,717 - - -
Dollars in millions. Loan Composition and Trends 13 Loan Trends and Yields Q2’22 Loan Composition (Ex. PPP) Robust loan growth of 10.5%, or 42% annualized, linked-quarter excluding PPP balances (30.8% annualized for 1H’22)
Already exceeded loan growth expectations for 2022, excluding PPP balances, and expect growth to continue for the rest of the year at a similar pace as 1H’22 $2,611 $2,362 $2,263 $2,174 $2,052 $18 $31 $77 $140 $234 4.20% 4.25% 4.57% 4.53% 4.34% 4.23% 4.27% 4.33% 4.35% 4.46% Q2'22 Q1'22 Q4'21 Q3'21 Q2'21 Loans (Ex. PPP) PPP Gross Loans Yield on Loans Yield on Loans (Ex. PPP) CRE -OO16.6% CRE -NOO23.0% C&D4.5% Residential28.8% C&I17.2% Consumer6.9% Other3.0%
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) Nonperforming loans increased $4.7 million in Q2, primarily due to one large residential property (<50% LTV)
Classified assets remain at moderate levels while criticized assets increased in Q2 primarily due to one relationship
OREO flat at $1.04 million in Q2
Net recoveries of $422K in Q2 1.93% 1.89% 1.72% 0.88% 0.94% 1.45% 1.15% 1.38% 2.20% 2.59% 3.38% 3.04% 3.09% 3.08% 3.54% Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Substandard & Doubtful Special Mention Combined (0.10%) 0.34% (0.00%) (0.03%) (0.07%) Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 0.71% 0.75% 0.67% 0.64% 0.76% Q2'21 Q3'21 Q4'21 Q1'22 Q2'22
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 $0.4 million in Q2 versus provision of $0.1 million in Q1
ACL coverage of gross loans declined to 1.16% from 1.24% in Q1 81.5% 71.1% 74.3% 139.4% 121.1% Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 1.52% 1.40% 1.29% 1.24% 1.16% Q2'21 Q3'21 Q4'21 Q1'22 Q2'22
Dollars in millions. (1) Core deposits exclude time deposits. Deposit Trends 16 Deposit Composition – Q2’22 Core Deposit Growth (1) Total deposits were essentially flat in Q2 versus Q1 while NIB increased to 24.3% of total deposits
Focus remains on building customer relationships and continuing to grow core deposits Cost of Deposits: 35 bps Demand Deposits24.3% NOW Accounts25.2% Money Market Accounts29.9% Savings Accounts8.2% Time Deposits12.3% $852 $1,003 $1,502 $1,872 $1,700 $320 $339 $441 $530 $653 $1,172 $1,342 $1,943 $2,403 $2,354 0.93% 1.43% 0.92% 0.48% 0.35% 2018 2019 2020 2021 Q2'22 Interest Bearing Deposits Demand Cost of Deposits
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, Q2’22 was the fifth consecutive quarter of increasing net interest income and fourth consecutive quarter of margin expansion as robust loan growth improves the Bank’s earning asset mix
Expectation is for continued NII growth and for margin expansion at a slower pace in 2H’22 Net Interest Margin Trends $19,974 $20,544 $21,995 $22,546 $24,606 $1,826 $2,663 $2,246 $308 2.80% 2.87% 3.00% 2.96% 3.33% 2.77% 2.66% 2.79% 2.96% 3.35% Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Net Interest Income (Ex. PPP) PPP Fee Income Net Interest Margin Net Interest Margin (Ex.PPP)
Q2 NIE, excluding unfunded commitment expense, impacted by the following: $401K merger-related expenses (up from $115K in Q1) Branch closure-related expenses of $901K Addition of Primis Mortgage expenses for June of $759K
Excluding nonrecurring items and impact of mortgage, Q2 NIE was down slightly to $18.5 million versus $18.6 million in Q1
Panacea and Life Premium Finance profitable in Q2 on a direct pre-provision basis and after adjusting for assumed cost of funds
2 additional branches planned for consolidation in Q3’22
Increased operating leverage, particularly with lines of business, along with expense initiatives could drive efficiency ratio to low 60s by year end 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) $18,537 $18,612 $19,217 $17,030 $17,046 $1,302 $115 ($573) $759 $20,598 $18,727 $18,644 $17,030 $17,046 Q2'22 Q1'22 Q4'21 Q3'21 Q2'21 Adjusted Non-Interest Expense Nonrecurring Mortgage Ex. Merger Expense 75.0% 76.1% 68.2% 64.8% 71.0% 70.2% 75.7% 69.6% 64.8% 71.0% Q2'22 Q1'22 Q4'21 Q3'21 Q2'21 Efficiency Ratio Operating Efficiency
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 Operating Earnings (1) Meaningful operating leverage in Q2’22 expected to continue
PTPP Operating ROAA highest since Q3’20 excluding PPP fee income $7.94 $6.33 $7.91 $8.53 $7.17 1.00% 0.77% 0.91% 0.98% 0.86% Q2'22 Q1'22 Q4'21 Q3'21 Q2'21 PTPP Operating Earnings (2) PTPP Operating ROAA(2) 0.63% 0.55% 0.88% 0.72% 1.05% 0.76% 0.57% 0.83% 0.72% 1.05% Q2'22 Q1'22 Q4'21 Q3'21 Q2'21 ROAA Operating ROAA (2)
Tangible Book Value Per Share Diluted Earnings Per Share and Adjusted Diluted EPS
(1) See reconciliation of Non-GAAP financial measures on slide 23. Per Share Results 20 (1) Tangible book value per share adversely impacted by $8.5 million change in unrealized mark-to-market adjustments on the Company’s available-for-sale securities portfolio $9.88 $11.09 $11.60 $12.43 $11.77 2018 2019 2020 2021 Q2'22 $1.42 $1.32 $0.61 $1.26 $0.19 $0.20 $1.42 $1.44 $0.68 $1.25 $0.19 $0.24 2018 2019 2020 2021 Q1'22 Q2'22 EPS Adjusted EPS
Talented management team and board committed to building long-term shareholder value
Attractive multi-pronged strategy for growth beginning to pay dividends
Aggressive and early use of technology positioning the bank for superior performance as the industry evolves
Significant valuation upside as strategic investments mature
Summary 21
Appendix 22
*Net interest margin excluding the effect of PPP loans assumes a funding cost of 35 bps on average PPP balances in all applicable periods. Non-GAAP Reconciliation 23 Primis Financial Corp. (Dollars in thousands, except per share data)For Three Months Ended:Reconciliation of Non-GAAP items:2Q 20221Q 20224Q 20213Q 20212Q 20212Q 20222Q 2021Net income from continuing operations5,009$ 4,593$ 7,651$ 6,211$ 8,804$ 9,602$ 17,156$ Non-GAAP adjustments to Net Income from continuing operations:Management Restructure / Recruiting- - - - - - 200 Branch Closures/ Consolidations901 - - - - 901 - Merger expenses401 115 - - - 516 - (Gain) on debt extinguishment- - (573) - - - - Income tax effect(281) (25) 124 - - (306) (43) Net income from continuing operations adjusted for nonrecurring income and expenses6,030$ 4,683$ 7,202$ 6,211$ 8,804$ 10,713$ 17,313$ Net income from continuing operations5,009$ 4,593$ 7,651$ 6,211$ 8,804$ 9,602$ 17,156$ Income tax expense1,3751,2652,2841,7022,4342,6404,735Provision for credit losses (incl. unfunded commitment expense)254359(1,451)615(4,066)353(4,727)Pre-tax pre-provision earnings from continuing operations6,638$ 6,217$ 8,484$ 8,528$ 7,172$ 12,595$ 17,164$ Effect of adjustment for nonrecurring income and expenses1,302 115 (573) - - 1,417 200 Pre-tax pre-provision operating earnings from continuing operations7,940$ 6,332$ 7,911$ 8,528$ 7,172$ 14,012$ 17,364$ Return on average assets from continuing operations0.63%0.55%0.88%0.72%1.05%0.59%1.06%Effect of adjustment for nonrecurring income and expenses0.13%0.01%(0.05%)0.00%0.00%0.07%0.01%Operating return on average assets from continuing operations0.76%0.57%0.83%0.72%1.05%0.66%1.07%Return on average assets from continuing operations0.63%0.55%0.88%0.72%1.05%0.59%1.06%Effect of tax expense0.17%0.15%0.26%0.20%0.29%0.16%0.29%Effect of provision for credit losses0.03%0.04%(0.17%)0.07%(0.49%)0.02%(0.29%)Pre-tax pre-provision return on average assets from continuing operations0.83%0.75%0.98%0.98%0.86%0.78%1.06%Effect of adjustment for nonrecurring income and expenses0.16%0.01%(0.07%)0.00%0.00%0.09%0.01%Pre-tax pre-provision operating return on average assets from continuing operations1.00%0.77%0.91%0.98%0.86%0.86%1.07%Return on average equity from continuing operations4.92%4.49%7.37%6.01%8.81%4.71%8.69%Effect of adjustment for nonrecurring income and expenses1.00%0.09%(0.43%)0.00%0.00%0.54%0.08%Operating return on average equity from continuing operations5.93%4.58%6.94%6.01%8.81%5.25%8.77%Effect of goodwill and other intangible assets2.15%1.58%2.42%2.12%3.22%1.84%3.24%Operating return on average tangible equity from continuing operations8.08%6.16%9.36%8.12%12.03%7.09%12.02%Efficiency ratio from continuing operations75.01%76.11%68.16%64.80%71.00%75.54%68.36%Effect of adjustment for nonrecurring income and expenses(4.78%)(0.46%)1.47%0.00%0.00%(2.72%)(0.39%)Operating efficiency ratio from continuing operations70.23%75.65%69.63%64.80%71.00%72.82%67.97%Earnings per share from continuing operations - Basic0.20$ 0.19$ 0.31$ 0.25$ 0.36$ 0.39$ 0.71$ Effect of adjustment for nonrecurring income and expenses0.05 0.00 (0.02) 0.00- 0.05 (0.00) Operating earnings per share from continuing operations - Basic0.25$ 0.19$ 0.29$ 0.25$ 0.36$ 0.44$ 0.71$ Earnings per share from continuing operations - Diluted0.20$ 0.19$ 0.31$ 0.25$ 0.36$ 0.39$ 0.70$ Effect of adjustment for nonrecurring income and expenses0.04 (0.00) (0.02) 0.00- 0.04 0.00 Operating earnings per share from continuing operations - Diluted0.24$ 0.19$ 0.29$ 0.25$ 0.36$ 0.43$ 0.70$ Book value per share16.17$ 16.42$ 16.76$ 16.63$ 16.59$ 16.17$ 16.59$ Effect of goodwill and other intangible assets(4.40) (4.31) (4.34) (4.35) (4.37) (4.40) (4.36) Tangible book value per share11.77$ 12.11$ 12.43$ 12.28$ 12.22$ 11.77$ 12.22$ Stockholders' equity398,637$ 404,195$ 411,881$ 408,629$ 406,940$ 398,637$ 406,940$ Less goodwill and other intangible assets(108,524)(106,075)(106,416)(106,757)(107,098)(108,524)(107,098)Tangible common equity290,113$ 298,120$ 305,465$ 301,872$ 299,842$ 290,113$ 299,842$ Equity to assets12.32%12.55%12.10%11.84%11.99%12.32%11.99%Effect of goodwill and other intangible assets(3.04%)(2.98%)(2.84%)(2.81%)(2.87%)(3.04%)(2.87%)Tangible common equity to tangible assets9.27%9.57%9.26%9.02%9.12%9.27%9.12%Net interest margin3.33%2.96%3.00%2.87%2.80%3.14%3.10%Effect of adjustment for PPP associated balances*0.02%(0.00%)(0.21%)(0.21%)(0.03%)0.01%(0.22%)Net interest margin excluding PPP3.35%2.96%2.79%2.66%2.77%3.15%2.88%For Six Months Ended: