Primis Financial Corp. ((FRST)) has held its Q4 earnings call. Read on for the main highlights of the call.
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In its recent earnings call, Primis Financial Corp. conveyed a balanced narrative of strategic advancements and ongoing challenges. With a focus on bolstering core bank growth and digital strategies, the company is poised for an optimistic future, despite existing hurdles from legacy consumer loan issues. The strategic initiatives are primarily designed to streamline earnings and enhance profitability by 2025.
Core Bank Deposit Growth
By the end of 2024, Primis Financial Corp. reported $2.1 billion in core deposits, underscoring a substantial pricing advantage due to lower deposit costs compared to larger peers and community banks. This cost-effective approach is critical for the bank’s competitive positioning in the market.
Digital Strategy and Customer Growth
Primis has made significant strides in its digital strategy, boasting around 18,000 digital full-service checking accounts. The company is focused on enhancing margins through reduced deposit rates and improved asset yields, aligning with broader digital transformation goals.
Mortgage Division Expansion
The mortgage division has seen remarkable growth, with production increasing by 30% to 40% year-over-year, scaling from $250 million to over $1 billion. This expansion highlights the division’s pivotal role in the company’s growth strategy.
Panacea Division Growth
The Panacea division, which caters to medical professionals, has expanded impressively, achieving nearly $435 million in total loans and close to $100 million in low-cost funding. This sector is set to reach a potential client base of 10,000, further driving the company’s growth.
Net Interest Margin Improvement
Primis Financial Corp. anticipates an improvement in its net interest margin to a range of 3.25% to 3.50%. This forecast is supported by strategic actions to lower deposit costs and enhance asset yields, crucial for sustaining profitability.
Consumer Loan Book Challenges
The company faced significant challenges with its consumer loan book, setting aside a $20.8 million provision to align it with fair value. Additional challenges included $2.5 million in interest reversals from charged-off loans and $1.25 million from fraud losses, reflecting ongoing legacy issues.
Pre-Tax Loss Reporting
Primis reported a pre-tax loss of $17.4 million, primarily attributed to consumer program cleanups. However, excluding one-time charges, core profitability was closer to $10 million, indicating underlying strength in the company’s operations.
Interest Rate Lag Impact
An interest rate lag on the digital platform resulted in a cost of about $1 million in the fourth quarter. This underscored the need for timely rate adjustments to prevent future financial impacts.
Forward-Looking Guidance
Looking ahead, Primis Financial Corp. is optimistic about its strategic direction, particularly with a targeted net interest margin of 3.25% to 3.50% as it scales its mortgage warehouse business in 2025. The company’s focus on exiting the consumer loan portfolio and the strategic growth of Panacea are expected to yield significant gains and enhance the tangible book value.
In summary, Primis Financial Corp.’s earnings call highlighted a strategic pivot towards core banking growth and digital initiatives, while addressing legacy challenges. The company’s forward-looking strategies aim to solidify its financial standing and profitability by 2025, offering a promising outlook for stakeholders.
