EX-99.1 2 tm244186d1_ex99-1.htm EXHIBIT 99.1

Exhibit 99.1

 

 

 

Primis Financial Corp. Reports Earnings per Share for the Fourth Quarter of 2023

 

Announces Investment in Panacea Financial Holdings, Inc.

 

Declares Quarterly Cash Dividend of $0.10 Per Share

 

For immediate release

 

Thursday, January 25, 2024

 

McLean, Virginia, January 25, 2024 – Primis Financial Corp. (NASDAQ: FRST) (“Primis” or the “Company”), and its wholly-owned subsidiary, Primis Bank (the “Bank”), today reported net income available to common shareholders of $8.1 million or $0.33 per diluted share for the quarter ended December 31, 2023, compared to net income available to common shareholders of $3.0 million or $0.12 per diluted share for the quarter ended December 31, 2022. For the year-to-date period in 2023, the Company reported earnings available to common and diluted earnings per share of $9.9 million and $0.40, respectively, compared to $17.5 million and $0.71, respectively, in the same period in 2022. Earnings for the year-to-date period in 2023 include $13.0 million or $0.53 per diluted share of after-tax nonrecurring charges and goodwill impairment.

 

Investment in Panacea Financial Holdings, Inc.

 

Panacea Financial Holdings, Inc. (“PFH”) is a separate legal entity that owns the rights to the Panacea Financial brand and intellectual property with a goal of growing and monetizing those assets. The Panacea Financial Division of Primis Bank has a partnership agreement with PFH and is the primary bank partner as of year-end 2023. In late December 2023, PFH completed a $24.5 million Series B financing round lead by a global venture capital firm. Proceeds from the raise will allow PFH to further invest in its strong brand and product offerings including upgraded technology platforms to further serve customers. As part of the financing round, Primis acquired approximately 19% of PFH for an immaterial purchase price due to previous operating losses in the Panacea Financial Division. At December 31, 2023, the implied fair market value of Primis’ investment in PFH based on the capital raise valuation was approximately $20 million.

 

Dennis J. Zember, Jr., President and Chief Executive Officer of Primis commented, “We are excited that the hard work of the Panacea and Primis Bank teams has resulted in a very successful capital raise with sophisticated investors. This is a tremendous vote of confidence in what we have been building over the past three years and will allow the Panacea team to keep building out their brand and capabilities while taking their business to the next level. Importantly, Panacea’s material improvement in profitability during 2023 combined with this infusion of capital immediately improves the level and reliability of earnings that Primis Bank will enjoy from the relationship and should be very accretive to future operations.”

 

"Primis has been a tremendous partner since we launched Panacea in late 2020 and we are thrilled to announce the successful completion of our Series B funding round," said Tyler Stafford, CFA, CEO and Co-founder of Panacea Financial. "Our goal is to build a widely diversified and deeply integrated suite of financial products and services for doctors, their practices, and ultimately the broader healthcare industry. Both Panacea and Primis are excited about what we can accomplish together.”

 

Because of the substantial activities between PFH and the Panacea Financial Division of Primis, and limited activities of PFH outside of its relationship with Primis at December 31, 2023, a thorough analysis of GAAP requires Primis to consolidate PFH for financial reporting purposes. As a result, all PFH balance sheet and income statement items are reflected in the financial statements of Primis. References to noncontrolling interests reflect the interests in PFH of owners other than Primis. The analysis for consolidation is a highly technical exercise and is required to be evaluated regularly as facts and circumstances change. Management anticipates that the increasing level of activity at PFH will ultimately lead to deconsolidation in subsequent quarters.

 

(1)Non-GAAP financial measure. Please see “Reconciliation of Non-GAAP Items” in the financial tables for more information and for a reconciliation to GAAP.

 

1

 

 

PFH also elected to reimburse Primis for certain personnel expenses for 2023 to compensate for a profitability target shortfall in the Panacea Financial Division for the 2023 fiscal year as defined in the partnership agreement between PFH and Primis Bank. Total reimbursement was $2.81 million and was reflected in the fourth quarter of 2023. A substantial majority of the loss in noncontrolling interest is primarily attributed to this reimbursement of costs to Primis Bank by PFH.

 

Financial Highlights

 

The results of the fourth quarter of 2023 reflected material improvement in operating results across several fronts. Notably, the Company:

 

·Increased operating return on average assets(1) to 89 basis points, up from 81 basis points in the third quarter of 2023

 

·Generated a margin of 3.36%, up from 3.01% linked quarter. Excluding accounting adjustments from a third-party managed portfolio discussed below, margin for the fourth quarter was 3.09%.

 

·Opened over 2,000 new deposit account relationships totaling $75 million with a weighted average cost of only 2.96%.

 

·Sold approximately $16 million of loans for gains of approximately $0.3 million and participated out another $15 million to manage balance sheet capacity.

 

·Noninterest expense was $29.8 million for the fourth quarter of 2023, compared to $37.1 million for the third quarter of 2023. The fourth quarter of 2023 was by impacted the consolidation of PFH and higher expenses due to a third party managed portfolio while the third quarter of 2023 included a $11.2 million goodwill impairment expense. Excluding these items and nonrecurring expenses, mortgage expenses and unfunded commitment reserve expense, noninterest expense was $18.7 million in the fourth quarter, down from $20.5 million in the third quarter of 2023 on a comparable basis.

 

·Maintained peer-group leading liquidity with only $105 million of wholesale funding and $113 million of off-balance sheet funds swept off at December 31, 2023.

 

·61% reduction in linked-quarter nonperforming assets to only $7.7 million excluding SBA guarantees

 

·Grew all capital ratios including TCE/TA which is now at 7.99%. Leverage ratio increased to 8.93%.

 

Commenting on the quarterly results, Dennis J. Zember Jr., President and CEO stated, “2023 was a challenging year for the industry and our bank. But through it all, we actually grew revenue by $14 million or 11%. Our work in earlier years positioned us well and allowed us to continue growing loans (by 9.1%) but growing deposits even faster (20.1%). We finished the year with very low NPAs and wholesale borrowings and solid capital levels that we believe can accommodate continued growth at measured levels. Most importantly, we completed a restructuring of the Bank with some branch consolidation that when taken with our other successes points to continued improvement in overall profitability through the coming year.”

 

Net Interest Income

 

Net interest income increased approximately $3.1 million to $30.3 million during the fourth quarter compared to the third quarter of 2023 largely due to $2.6 million of accretion in the fourth quarter related to a third-party managed portfolio (largely offset by a comparable amount in noninterest expense) versus $0.3 million in the third quarter of 2023. Excluding this accretion, net interest income increased to $27.7 million in the fourth quarter of 2023 versus $26.8 million linked-quarter. For the year-to-date period in 2023, the Company reported $108 million of net interest income excluding accounting accretion compared to $103 million in 2022, an increase of 4.7%. For the fourth quarter of 2023, the Company reported a net interest margin of 3.36% versus 3.01% for the third quarter of 2023. Excluding accretion, margin increased 10 basis points to 3.09% in the fourth quarter.

 

(1)Non-GAAP financial measure. Please see “Reconciliation of Non-GAAP Items” in the financial tables for more information and for a reconciliation to GAAP.

  

2

 

 

Interest income on earning assets increased during the fourth quarter of 2023 to $54.7 million compared to $50.8 million during the third quarter of 2023. Excluding the accretion described above, interest income increased to $52.1 million in the fourth quarter of 2023 compared to $50.5 million during the third quarter of 2023. Yield on earning assets and loans held for investment were 6.08% and 6.33%, respectively. Excluding accretion, yield on earning assets and loans held for investment were 5.79% and 6.01%, up 22 basis points and 21 basis points, respectively, from the third quarter of 2023.

 

Interest expense increased $0.7 million to $24.4 million in the fourth quarter of 2023 compared to the third quarter of 2023. Cost of deposits increased 9 basis points to 2.69% in the fourth quarter from 2.60% in the third quarter of 2023. Management continues to leverage the strong liquidity generated by the Bank’s digital platform to conservatively manage the cost of deposits in the core bank. As highlighted by the table below, core bank deposit costs increased 3 basis points to 1.94% in the fourth quarter while the cost of wholesale funding options, using three-month FHLB advance rates as a proxy, were 5.56% on average in the quarter.

 

    

4Q23

    

3Q23

    

2Q23

    

1Q23

    

4Q22

 
                          
Core Bank Int. Exp.  $12,125   $12,380   $11,823   $9,343   $5,183 
Digital Platform Int. Exp.  $10,162   $9,196   $12,960   $5,701   $127 
                          
Core Bank Avg. Noninterest-bearing  $472,630   $471,813   $472,416   $555,771   $648,051 
Core Bank Avg. Interest-bearing deposits (IBD)  $2,008,386   $2,099,617   $2,155,212   $2,149,650   $2,027,211 
Digital Platform Avg. IBD  $800,963   $723,145   $1,052,603   $481,072   $14,691 
                          
Core Bank Cost of IBD   2.40%   2.34%   2.20%   1.76%   1.01%
Core Bank Cost of Deposits   1.94%   1.91%   1.80%   1.40%   0.77%
Digital Platform Cost of IBD   5.03%   5.05%   4.94%   4.81%   3.42%
                          
Avg. 3M FHLB Rate   5.56%   5.54%   5.31%   4.96%   4.40%

 

Noninterest Income

 

Noninterest income decreased during the fourth quarter to $9.0 million compared to $9.9 million in the third quarter of 2023. Excluding credit enhancement income from a third-party managed portfolio, noninterest income decreased $2.0 million to $5.9 million in the fourth quarter of 2023, largely due to decreased mortgage banking activity. During the fourth quarter of 2023, the Bank realized $0.3 million of gains associated with the sale of Panacea commercial and consumer loans, down slightly from $0.5 million of gains recognized in the third quarter of 2023.

 

Noninterest Expense

 

Noninterest expense was $29.8 million for the fourth quarter of 2023, compared to $37.1 million for the third quarter of 2023. Management considers the core expense burden that adjusts for certain items such as those that are volume dependent (e.g., mortgage banking related) or nonoperational (e.g. accounting accruals for the third-party managed loan portfolio and changes in the reserve for unfunded commitments). The following table illustrates the degree to which the Company has improved its operating expense burden during 2023:

 

    

4Q23

    

3Q23

    

4Q22

    

YTD23

    

YTD22

 
Reported Non-Interest Expense   29,836    37,066    29,106    124,868    92,376 
Less:                         
Goodwill Impairment        (11,150)        (11,150)     
Mortgage Expenses   (4,785)   (5,108)   (5,357)   (20,152)   (9,361)
Branch Closure and Other Nonrecurring   (643)   (200)   (1,175)   (2,331)   (1,175)
Effect of Consolidating PFH   (2,813)             (2,813)     
Effects of Third-Party Managed Portfolio   (2,823)   (337)   (1,369)   (4,548)   (1,369)
Reserve for Unfunded Commitment   (67)   257    (36)   325    (409)
Core Operating Expense Burden   18,705    20,528    21,169    84,199    80,062 

 

(1)Non-GAAP financial measure. Please see “Reconciliation of Non-GAAP Items” in the financial tables for more information and for a reconciliation to GAAP.

 

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As noted above, the core expense burden increased $4.1 million or 5.2% during the year. Mr. Zember noted, “The restructuring activities we undertook in the second quarter of 2023 were supplemented in the third and fourth quarter, resulting in a noticeable improvement in expenses. Our run rate on expenses in the fourth quarter mirror levels we experienced in 2022 despite substantially higher revenues and asset levels.”

 

Taxes

 

Tax expense for the fourth quarter was $0.4 million versus expense of $1.9 million in the third quarter of 2023. The fourth quarter reflects the recognition of approximately $1.1 million of R&D tax credits the Bank is recovering from development work on the Bank’s digital banking platform over the past three years. The remaining differences are largely due to adjustments to accruals for the 2023 tax year. The Company expects the effective tax rate in 2024 to be approximately 18.5%.

 

Loan Portfolio and Asset Quality

 

Loans held for investment increased to $3.21 billion at December 31, 2023, compared to $3.17 billion at September 30, 2023. The Company sold or participated out approximately $31 million of loans in the fourth quarter of 2023. Adjusting for these activities, loans would have increased 2.5% in the fourth quarter of 2023 versus the third quarter of 2023.

 

Nonperforming assets, excluding portions guaranteed by the SBA, were $7.7 million at December 31, 2023, compared to $19.6 million at September 30, 2023, while loans rated substandard or doubtful decreased to $17.2 million in the fourth quarter of 2023 from $28.8 million in the third quarter of 2023. The decline was largely attributable to one remaining assisted living problem credit outstanding at September 30, 2023 that was resolved in early October. The Bank had no other real estate owned at the end of the fourth quarter of 2023.

 

The Company recorded a provision for loan losses of $3.1 million for the fourth quarter of 2023 versus $1.6 million for the third quarter of 2023. Of this provision, $3.0 million was due to charge-offs for the loan portfolio with a third-party credit enhancement described previously. This portion of the provision is fully offset by a gain recorded in noninterest income and has no effect on net income. Excluding this provision amount, the provision for loan losses would have been $0.1 million for the fourth quarter of 2023 due lowered modeled losses on certain portfolios, particularly Panacea commercial loans and Life Premium Finance. As a percentage of loans, excluding PPP balances, the allowance for credit losses was 1.06% and 1.13% at the end of the fourth and third quarter of 2023, respectively.

 

Net charge-offs were $5.0 million for the fourth quarter of 2023, up from $4.3 million for the third quarter of 2023. Excluding the losses that are covered by a third-party, the fourth quarter of 2023 would have experienced $2.0 million of net charge-offs versus $2.2 million of net charge-offs in the third quarter of 2023. Net charge-offs, excluding those losses covered by the third party were $6.5 million, or 0.20%, in 2023 compared to $4.3 million, or 0.16%, in 2022.

 

Deposits and Funding

 

Total deposits on the balance sheet at December 31, 2023 decreased to $3.27 billion from $3.29 billion at September 30, 2023 with excess deposits and associated cash balances swept off the balance sheet to optimize liquidity. Swept deposits receive full FDIC coverage, bringing the Bank’s percentage of uninsured or unsecured deposits to 22%. Liquidity sources represent almost 174% of uninsured or unsecured deposits as of December 31, 2023, up substantially from December 31, 2022.

 

Deposit growth in the Bank continues to benefit from better technology and unique convenience factors. During the fourth quarter, the community bank attracted $58 million in new deposit relationships with a weighted average cost of 2.37%. V1BE, the Bank’s proprietary invitation-only delivery tool, increased total users by 16% during the fourth quarter of 2023, from 1,013 at the end of the third quarter of 2023 to 1,179 at the end of the fourth quarter of 2023.

 

During the fourth quarter, the Bank opened approximately 1,000 new deposit account on the digital platform with a weighted average cost of 4.94%.  This new customer growth is a direct result of referrals made to us by existing customers with no marketing costs incurred.  At quarter end, the Bank had over 14,000 digital accounts with $910 million in total deposits and average balances of $63 thousand.

 

(1)Non-GAAP financial measure. Please see “Reconciliation of Non-GAAP Items” in the financial tables for more information and for a reconciliation to GAAP.

  

4

 

 

As of December 31, 2023, the Bank has $75 million of brokered CDs that mature in the middle of 2024 and $30 million of overnight FHLB advances. The Bank has no other wholesale funding and has $113 million of deposits currently sweeping to other banks.

 

Digital Lines of Business

 

The Panacea Financial Division continues to experience substantial growth alongside the development of the nationally-recognized Panacea Financial brand. The Panacea Financial Division finished the fourth quarter of 2023 with approximately $322 million in outstanding loans, an increase of $4.1 million from September 30, 2023. As highlighted above, the division sold approximately $16 million of loans in the fourth quarter of 2023 for a pre-tax gain of $0.3 million.

 

Panacea-related customer deposits increased to $56 million at December 31, 2023, up 5% from September 30, 2023 and a higher growth rate than the growth in loans for the fourth quarter of 2023. Coupled with loan sales, the Panacea Financial Division is expected to continue increasing the amount with which it self-funds its balance sheet.

 

The Life Premium Finance (“LPF”) division ended the fourth quarter of 2023 with outstanding balances, net of deferred fees, of $382 million, compared to $361 million at the end of the third quarter of 2023, or an increase of 5.9%. LPF also participated out approximately $15 million of loans in the fourth quarter.

 

Primis Mortgage had a pre-tax loss of $733 thousand in the fourth quarter due to the expected seasonal slowdown in mortgage activity and increased hedging costs due to the rate volatility in the quarter. Primis Mortgage continues to aggressively manage costs to preserve profitability in a lower volume environment. The locked loan pipeline decreased at the end of the fourth quarter of 2023 to $23.1 million from $41.6 million at the end of the third quarter of 2023. Activity has increased as expected through January 2024 and the Company expects continued growth in production and profitability throughout 2024.

 

Shareholders’ Equity

 

Book value per common share as of December 31, 2023 was $16.09, an increase of $0.60 from September 30, 2023. Tangible book value per common share(1) at the end of the fourth quarter of 2023 was $12.23, an increase of $0.61 from September 30, 2023.  Common shareholders’ equity was $397 million, or 10.25% of total assets, at December 31, 2023. Tangible common equity(1) at December 31, 2023 was $302 million, or 7.99% of tangible assets(1).  After-tax unrealized losses on the Company’s available-for-sale securities portfolio decreased by $8.7 million to $21.8 million due to decreases in market interest rates during the fourth quarter of 2023. The Company has the intent and ability to hold these securities until maturity or recovery of the value and does not anticipate realizing any losses on the investments.

 

The Board of Directors declared a dividend of $0.10 per share payable on February 23, 2024 to shareholders of record on February 9, 2024. This is Primis’ forty-ninth consecutive quarterly dividend.

 

About Primis Financial Corp.

 

As of December 31, 2023, Primis had $3.9 billion in total assets, $3.2 billion in total loans and $3.3 billion in total deposits. Primis Bank provides a range of financial services to individuals and small- and medium-sized businesses through twenty-four full-service branches in Virginia and Maryland and provides services to customers through certain online and mobile applications.

 

Contacts: Address:
Dennis J. Zember, Jr., President and CEO Primis Financial Corp.
Matthew A. Switzer, EVP and CFO 1676 International Drive, Suite 900
Phone: (703) 893-7400 McLean, VA 22102

 

Primis Financial Corp., NASDAQ Symbol FRST 

Website: www.primisbank.com

 

(1)Non-GAAP financial measure. Please see “Reconciliation of Non-GAAP Items” in the financial tables for more information and for a reconciliation to GAAP.

 

5

 

 

Conference Call

 

The Company’s management will host a conference call to discuss its fourth quarter results on Friday, January 26, 2024 at 10:00 a.m. (ET). A live Webcast of the conference call is available at the following website: https://events.q4inc.com/attendee/441718411. Participants may also call 1-888-330-3573 and ask for the Primis Financial Corp. call. A replay of the teleconference will be available for 7 days by calling 1-800-770-2030 and providing Replay Access Code 4440924.

 

Non-GAAP Measures

 

Statements included in this press release include non-GAAP financial measures and should be read along with the accompanying tables. Primis uses non-GAAP financial measures to analyze its performance. The measures entitled net income adjusted for nonrecurring income and expenses; pre-tax pre-provision operating earnings; operating return on average assets; pre-tax pre-provision operating return on average assets; operating return on average equity; operating return on average tangible equity; operating efficiency ratio; operating earnings per share – basic; operating earnings per share – diluted; tangible book value per share; tangible common equity; tangible common equity to tangible assets; and core net interest margin 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; and the assumptions underlying our expectations.

 

(1)Non-GAAP financial measure. Please see “Reconciliation of Non-GAAP Items” in the financial tables for more information and for a reconciliation to GAAP.

 

6

 

 

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, digital banking platform, V1BE fulfillment service and Primis Mortgage Company; 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; the impact of current and future economic and market conditions generally (including seasonality) and in the financial services industry, nationally and within our primary market areas; 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; potential impacts of adverse developments in the banking industry highlighted by high-profile bank failures, including impacts on customer confidence, deposit outflows, liquidity and the regulatory response thereto; potential increases in the provision for credit losses; our ability to identify and address increased cybersecurity risks, including those impacting vendors and other third parties; fraud or misconduct by internal or external actors, which we may not be able to prevent, detect or mitigate; acts of God or of war or other conflicts, including the current Ukraine/Russia conflict and Israel/Hamas conflict, acts of terrorism, pandemics or other catastrophic events that may affect general economic conditions; 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, 2022, 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.

 

7

 

 

Primis Financial Corp. 

Financial Highlights (unaudited)

(Dollars in thousands, except per share data) 

 

    For Three Months Ended:     Variance - 4Q 2023 vs.   For Twelve Months Ended:     Variance  
Selected Performance Ratios:   4Q 2023     3Q 2023     2Q 2023     1Q 2023     4Q 2022     3Q 2023   4Q 2022   4Q 2023     4Q 2022     YTD  
Return on average assets     0.84 %     (0.36 )%     (0.03 )%     0.58 %     0.35 %     120 bps   49 bps   0.25 %     0.53 %     (28 )bps
Operating return on average assets(1)     0.89 %     0.81 %     0.08 %     0.58 %     0.08 %     8     81     0.58 %     0.50 %     8  
Pre-tax pre-provision return on average assets(1)     1.22 %     (0.03 )%     0.36 %     1.27 %     1.32 %     124     (11 )   0.70 %     1.02 %     (32 )
Pre-tax pre-provision operating return on average assets(1)     1.29 %     1.14 %     0.50 %     1.27 %     0.98 %     16     31     1.04 %     0.89 %     15  
Return on average common equity     8.37 %     (3.54 )%     (0.27 )%     5.64 %     3.04 %     1,191     533     2.51 %     4.35 %     (184 )
Operating return on average common equity(1)     8.89 %     7.80 %     0.90 %     5.64 %     0.71 %     109     818     5.79 %     4.10 %     168  
Operating return on average tangible common equity(1)     11.82 %     10.69 %     1.23 %     7.69 %     0.98 %     114     1,084     7.86 %     5.59 %     227  
Cost of funds     2.85 %     2.75 %     2.83 %     2.20 %     1.19 %     9     165     2.66 %     0.75 %     191  
Net interest margin     3.36 %     3.01 %     2.64 %     3.15 %     3.67 %     36     (31 )   3.03 %     3.39 %     (35 )
Core net interest margin(1)     3.36 %     3.01 %     2.64 %     3.15 %     3.68 %     35     (32 )   3.03 %     3.40 %     (36 )
Gross loans to deposits     98.28 %     96.13 %     96.30 %     83.39 %     108.24 %     2 pts   (10 )pts   98.28 %     108.24 %     (10 )pts
Efficiency ratio     76.04 %     99.97 %     88.42 %     69.26 %     71.82 %     (24 )   422     83.00 %     73.50 %     950  
Operating efficiency ratio(1)     74.40 %     69.36 %     84.11 %     69.26 %     76.77 %     5     (237 )   74.04 %     75.66 %     (163 )
                                                                             
Per Common Share Data:                                                                            
Earnings per common share - Basic   $ 0.33     $ (0.14 )   $ (0.01 )   $ 0.23     $ 0.12       (330.29 )%   166.68 % $ 0.40     $ 0.71       (43.54 )%
Operating earnings per common share - Basic(1)   $ 0.35     $ 0.32     $ 0.04     $ 0.23     $ 0.03       10.84     1,109.37   $ 0.93     $ 0.67       37.84  
Earnings per common share - Diluted   $ 0.33     $ (0.14 )   $ (0.01 )   $ 0.23     $ 0.12       (329.92 )   167.16   $ 0.40     $ 0.71       (43.40 )
Operating earnings per common share - Diluted(1)   $ 0.35     $ 0.32     $ 0.04     $ 0.23     $ 0.03       10.66     1,111.55   $ 0.93     $ 0.67       38.18  
Book value per common share   $ 16.09     $ 15.49     $ 15.91     $ 16.13     $ 15.90       3.85     1.21   $ 16.09     $ 15.90       1.21  
Tangible book value per common share(1)   $ 12.23     $ 11.62     $ 11.57     $ 11.77     $ 11.53       5.26     6.06   $ 12.23     $ 11.53       6.06  
Cash dividend per common share   $ 0.10     $ 0.10     $ 0.10     $ 0.10     $ 0.10       -     -   $ 0.40     $ 0.40       -  
Weighted average shares outstanding - Basic     24,647,728       24,641,981       24,638,505       24,625,943       24,601,108       0.02     0.19     24,638,609       24,561,483       0.31  
Weighted average shares outstanding - Diluted     24,687,993       24,641,981       24,638,505       24,685,206       24,685,663       0.19     0.01     24,686,289       24,668,838       0.07  
Shares outstanding at end of period     24,693,172       24,686,764       24,690,064       24,685,064       24,680,097       0.03 %   0.05 %   24,693,172       24,680,097       0.05  %
                                                                             
Asset Quality Ratios:                                                                            
Non-performing assets as a percent of total assets, excluding SBA guarantees     0.20 %     0.51 %     0.64 %     0.78 %     0.98 %     (31 )bps   (78 )bps   0.20 %     0.98 %     (78 )bps
Net charge-offs (recoveries) as a percent of average loans (annualized)     0.61 %     0.53 %     0.20 %     0.53 %     0.74 %     8     (13 )   0.47 %     0.23 %     24  
Core net charge-offs (recoveries) as a percent of average loans (annualized)(2)     0.24 %     0.27 %     0.02 %     0.28 %     0.53 %     (3 )   (29 )   0.20 %     0.16 %     4  
Allowance for credit losses to total loans     1.06 %     1.13 %     1.21 %     1.17 %     1.17 %     (7 )   (11 )   1.06 %     1.17 %     (11 )
                                                                             
Capital Ratios:                                                                            
Common equity to assets     10.25 %     9.98 %     10.15 %     9.43 %     10.99 %     27 bps   (74 )bps                      
Tangible common equity to tangible assets(1)     7.99 %     7.67 %     7.59 %     7.06 %     8.22 %     31     (23 )                      
Leverage ratio(3)     8.93 %     8.78 %     8.14 %     8.59 %     9.48 %     15     (55 )                      
Common equity tier 1 capital ratio(3)     10.00 %     9.64 %     9.38 %     10.04 %     10.54 %     36     (54 )                      
Tier 1 risk-based capital ratio(3)     10.31 %     9.94 %     9.68 %     10.36 %     10.88 %     37     (57 )                      
Total risk-based capital ratio(3)     13.75 %     13.37 %     13.16 %     14.20 %     14.80 %     38     (105 )                      

 

(1) See Reconciliation of Non-GAAP financial measures.

(2) Excludes third-party charge-offs.

(3) December 31, 2023 ratios are estimated and may be subject to change pending the final filing of the FR Y-9C.

 

8

 

 

Primis Financial Corp.   
(Dollars in thousands)
Condensed Consolidated Balance Sheets (unaudited)

 

   As Of :   Variance - 4Q 2023 vs.  
  4Q 2023   3Q 2023   2Q 2023   1Q 2023   4Q 2022   3Q 2023   4Q 2022 
Assets                                   
Cash and cash equivalents  $77,553   $93,865   $100,868   $607,125   $77,859    (17.38)%   (0.39)%
Investment securities-available for sale   228,420    216,875    223,087    231,468    236,315    5.32    (3.34)
Investment securities-held to maturity   11,650    11,975    12,378    13,115    13,520    (2.71)   (13.83)
Loans held for sale   57,691    66,266    57,704    42,011    27,626    (12.94)   108.83 
Loans receivable, net of deferred fees   3,213,805    3,165,830    3,194,352    3,058,772    2,946,637    1.52    9.07 
Allowance for credit losses   (34,040)   (35,861)   (38,544)   (35,847)   (34,544)   (5.08)   (1.46)
Net loans   3,179,765    3,129,969    3,155,807    3,022,925    2,912,093    1.59    9.19 
Stock in Federal Reserve Bank and Federal Home Loan Bank   14,246    12,796    12,083    12,083    25,815    11.33    (44.82)
Bank premises and equipment, net   20,611    24,878    25,298    25,136    25,257    (17.15)   (18.39)
Operating lease right-of-use assets   10,646    11,402    10,707    9,352    5,335    (6.63)   99.55 
Goodwill and other intangible assets   95,417    95,741    107,215    107,539    107,863    (0.34)   (11.54)
Assets held for sale, net   6,735    3,115    3,115    3,115    3,115    116.21    116.21 
Bank-owned life insurance   67,588    67,176    67,985    67,591    67,201    0.61    0.58 
Other real estate owned   -    -    -    -    -    -    - 
Deferred tax assets, net   19,585    22,565    20,513    18,924    18,289    (13.21)   7.09 
Other assets   86,167    76,478    71,925    59,792    49,211    12.67    75.10 
Total assets  $3,876,074   $3,833,101   $3,868,685   $4,220,176   $3,569,499    1.12%   8.59%
                                    
Liabilities and stockholders' equity                                   
Demand deposits  $472,941   $490,719   $480,832   $497,531   $582,556    (3.62)%   (18.82)%
NOW accounts   773,028    803,276    817,725    835,348    617,687    (3.77)   25.15 
Money market accounts   794,530    800,951    850,359    865,115    811,365    (0.80)   (2.07)
Savings accounts   783,758    746,608    696,750    971,439    245,713    4.98    218.97 
Time deposits   445,898    451,850    471,330    498,564    465,057    (1.32)   (4.12)
Total deposits   3,270,155    3,293,404    3,316,996    3,667,997    2,722,378    (0.71)   20.12 
Securities sold under agreements to repurchase - short term   3,044    3,838    3,921    4,346    6,445    (20.69)   (52.77)
Federal Home Loan Bank advances   30,000    -    -    -    325,000    100.00    (90.77)
Secured borrowings   20,332    19,702    20,604    17,169    -    -    100.00 
Subordinated debt and notes   95,595    95,524    95,453    95,382    95,312    0.07    0.30 
Operating lease liabilities   11,686    12,347    11,546    9,799    5,767    (5.35)   102.64 
Other liabilities   26,500    25,797    27,371    27,418    22,232    2.73    19.20 
Total liabilities   3,457,312    3,450,612    3,475,891    3,822,111    3,177,134    0.19    8.82 
Total Primis common stockholders' equity   397,330    382,487    392,795    398,064    392,365    3.88    1.27 
Noncontrolling interest   21,432    -    -    -    -    100.00    100.00 
Total stockholders' equity   418,762    382,487    392,795    398,064    392,365    9.48    6.73 
Total liabilities and stockholders' equity  $3,876,074   $3,833,100   $3,868,686   $4,220,176   $3,569,499    1.12%   8.59%
                                    
Tangible common equity(1)  $301,913   $286,746   $285,580   $290,525   $284,502    5.29%   6.12%

 

9

 

 

Primis Financial Corp.   
(Dollars in thousands)

Condensed Consolidated Statement of Operations (unaudited)

 

  For Three Months Ended:    Variance - 4Q 2023 vs.   For Twelve Months Ended:   Variance 
  4Q 2023   3Q 2023   2Q 2023   1Q 2023   4Q 2022   3Q 2023   4Q 2022   4Q 2023   4Q 2022   YTD 
Interest and dividend income  $54,661   $50,808   $53,029   $47,395   $38,595    7.58%   41.63%  $205,893   $125,945    63.48%
Interest expense   24,405    23,672    26,794    18,902    9,058    3.09    169.43    93,774    21,587     NM  
Net interest income   30,256    27,136    26,235    28,493    29,537    11.50    2.43    112,119    104,358    7.44 
Provision for credit losses   3,141    1,612    4,312    5,307    7,860    94.86    (60.04)   14,371    11,271    27.51 
Net interest income after provision for credit losses   27,115    25,524    21,923    23,186    21,677    6.23    25.09    97,748    93,087    5.01 
Account maintenance and deposit service fees   1,578    1,503    1,430    1,216    1,427    4.99    10.58    5,727    5,745    (0.31)
Income from bank-owned life insurance   420    787    394    420    847    (46.63)   (50.41)   2,021    1,994    1.35 
Mortgage banking income   3,210    4,922    5,198    4,315    2,264    (34.78)   41.78    17,645    5,054    249.13 
Gain on sale of loans   290    451    -    52    -    (35.76)   -    793    -    100.00 
Credit enhancement income   3,124    2,047    1,152    4,886    1,822    52.61    71.46    11,209    3,042    100.00 
Gain on sale of other investment   190    -    -    -    4,411    -    (95.69)   190    4,411    (95.69)
Other   168    232    130    217    217    (27.59)   (22.58)   747    1,082    (30.96)
Noninterest income   8,980    9,942    8,304    11,106    10,988    (9.68)   (18.27)   38,332    21,328    79.73 
Employee compensation and benefits   14,645    13,809    15,283    15,028    16,213    6.05    (9.67)   58,765    49,005    19.92 
Occupancy and equipment expenses   2,982    3,170    3,445    3,022    2,899    (5.93)   2.86    12,619    10,859    16.21 
Amortization of intangible assets   317    317    318    317    317    -    -    1,269    1,325    (4.23)
Goodwill impairment   -    11,150    -    -    -    (100.00)   -    11,150    -    100.00 
Virginia franchise tax expense   849    849    848    849    814    -    4.30    3,395    3,254    4.33 
Data processing expense   2,217    2,250    2,828    2,251    1,702    (1.47)   30.26    9,546    6,013    58.76 
Marketing expense   352    377    521    569    933    (6.63)   (62.27)   1,819    3,067    (40.69)
Telecommunication and communication expense   358    356    416    377    343    0.56    4.37    1,507    1,433    5.16 
Net (gain) loss on other real estate owned   -    -    -    -    131    -    (100.00)   -    72    (100.00)
Loss (gain) on bank premises and equipment   478    (2)   -    -    -     NM     100.00    476    684    (30.41)
Professional fees   1,586    1,118    1,075    862    1,605    41.86    (1.18)   4,641    4,787    (3.05)
Credit enhancement costs   2,823    337    515    873    1,369    737.69    106.21    4,548    1,369    100.00 
Other expenses   3,229    3,335    5,291    3,277    2,780    (3.19)   16.14    15,132    10,508    44.01 
Noninterest expense   29,836    37,066    30,540    27,425    29,106    (19.51)   2.51    124,868    92,376    35.17 
Income (loss) before income taxes   6,259    (1,600)   (313)   6,866    3,559     NM     75.87    11,212    22,039    (49.13)
Income tax expense (benefit)   418    1,925    (46)   1,254    519    (78.29)   (19.51)   3,552    4,490    (20.89)
Net Income (loss)   5,841    (3,526)   (268)   5,612    3,040    (265.68)   92.17    7,660    17,549    (56.35)
Noncontrolling interest  $2,280    -    -    -    -    100.00    100.00    2,280    -    100.00 
Net income (loss) attributable to Primis' common shareholders  $8,121   $(3,526)  $(268)  $5,612   $3,040    (330.35)   167.18   $9,940   $17,549    (43.36)

 

 

10

 

 

Primis Financial Corp.   

(Dollars in thousands)

 

    As Of:    Variance - 4Q 2023 vs.  
Loan Portfolio Composition  4Q 2023   3Q 2023   2Q 2023   1Q 2023   4Q 2022   3Q 2023   4Q 2022 
Loans held for sale  $57,691   $66,266   $57,704   $42,011   $27,626    (12.94)%   108.83%
Loans secured by real estate:                                   
Commercial real estate - owner occupied   456,283    439,627    455,252    465,072    461,126    3.79    (1.05)
Commercial real estate - non-owner occupied   579,960    578,261    597,254    577,481    581,168    0.29    (0.21)
Secured by farmland   6,339    6,381    6,577    6,258    7,290    (0.66)   (13.05)
Construction and land development   164,808    172,071    175,141    151,950    148,762    (4.22)   10.79 
Residential 1-4 family   607,029    601,198    592,756    607,118    610,919    0.97    (0.64)
Multi-family residential   127,857    129,586    133,754    139,978    140,321    (1.33)   (8.88)
Home equity lines of credit   59,670    59,996    62,808    64,606    65,152    (0.54)   (8.41)
     Total real estate loans   2,001,946    1,987,120    2,023,542    2,012,463    2,014,738    0.75    (0.63)
                                    
Commercial loans   603,862    607,142    599,527    558,454    522,057    (0.54)   15.67 
Paycheck Protection Program loans   2,023    2,105    2,143    2,603    4,564    (3.90)   (55.67)
Consumer loans   605,974    569,463    569,139    485,252    405,278    6.41    49.52 
Loans receivable, net of deferred fees  $3,213,805   $3,165,830   $3,194,352   $3,058,772   $2,946,637    1.52%   9.07%
                                    
Loans by Risk Grade:                                   
  Pass, not graded  $-   $-   $-   $-   $-    -%   -%
  Pass Grade 1 - Highest Quality   875    851    743    607    600    2.82    45.83 
  Pass Grade 2 - Good Quality   405,019    383,306    367,950    253,665    209,605    5.66    93.23 
  Pass Grade 3 - Satisfactory Quality   1,626,380    1,609,924    1,624,626    1,596,091    1,590,765    1.02    2.24 
  Pass Grade 4 - Pass   1,149,362    1,109,638    1,134,932    1,140,632    1,072,352    3.58    7.18 
  Pass Grade 5 - Special Mention   14,930    33,299    32,383    28,273    32,278    (55.16)   (53.75)
  Grade 6 - Substandard   17,239    28,812    33,718    39,504    41,037    (40.17)   (57.99)
  Grade 7 - Doubtful   -    -    -    -    -    -    - 
  Grade 8 - Loss   -    -    -    -    -    -    - 
Total loans  $3,213,805   $3,165,830   $3,194,352   $3,058,772   $2,946,637    1.52%   9.07%
             
(Dollars in thousands)  As Of or For Three Months Ended:         
Asset Quality Information  4Q 2023   3Q 2023   2Q 2023   1Q 2023   4Q 2022         
Allowance for Credit Losses:                                   
Balance at beginning of period  $(35,861)  $(38,544)  $(35,847)  $(34,544)  $(31,956)          
Provision for for credit losses   (3,141)   (1,612)   (4,312)   (5,307)   (7,860)          
Net charge-offs   4,962    4,295    1,614    4,004    5,272           
Ending balance  $(34,040)  $(35,861)  $(38,544)  $(35,847)  $(34,544)          
                                    
Reserve for Unfunded Commitments:                                   
Balance at beginning of period  $(1,024)  $(1,281)  $(1,527)  $(1,416)  $(1,380)          
(Expense for) / recovery of unfunded loan commitment reserve   (67)   257    246    (111)   (36)          
Total Reserve for Unfunded Commitments  $(1,091)  $(1,024)  $(1,281)  $(1,527)  $(1,416)          
                                    
   As Of:   Variance - 4Q 2023 vs. 
Non-Performing Assets:  4Q 2023   3Q 2023   2Q 2023   1Q 2023   4Q 2022   3Q 2023   4Q 2022 
Nonaccrual loans  $9,095   $20,171   $25,290   $33,397   $35,484    (54.91)%   (74.37)%
Accruing loans delinquent 90 days or more   1,714    1,714    1,714    1,625    3,361    -    (49.00)
Total non-performing loans   10,809    21,885    27,004    35,022    38,845    (50.61)   (72.17)
Other real estate owned   -    -    -    -    -    -    - 
Total non-performing assets  $10,809   $21,885   $27,004   $35,022   $38,845    (50.61)   (72.17)
SBA guaranteed portion of non-performing loans  $3,115   $2,290   $2,331   $2,206   $3,969    36.03    (21.52)

 

11

 

 

Primis Financial Corp.

(Dollars in thousands)

   For Three Months Ended:   Variance - 4Q 2023 vs.   For Twelve Months Ended:   Variance 
Average Balance Sheet  4Q 2023   3Q 2023   2Q 2023   1Q 2023   4Q 2022   3Q 2023   4Q 2022   4Q 2023   4Q 2022   YTD 
Assets                                                  
Loans held for sale  $48,380   $55,775   $48,698   $25,346   $22,413    (13.26)%   115.86%  $44,643   $12,722    250.91%
Loans, net of deferred fees   3,212,140    3,195,417    3,122,660    3,007,005    2,822,693    0.52    13.80    3,133,883    2,590,602    20.97 
Investment securities   228,335    234,601    240,700    246,402    253,345    (2.67)   (9.87)   237,452    278,162    (14.64)
Other earning assets   79,925    93,159    568,251    388,327    92,604    (14.21)   (13.69)   281,052    200,828    39.95 
Total earning assets   3,568,780    3,578,952    3,980,309    3,667,080    3,191,055    (0.28)   11.84    3,697,030    3,082,314    19.94 
Other assets   264,573    267,527    258,528    253,734    246,754    (1.10)   7.22    261,834    234,286    11.76 
Total assets  $3,833,353   $3,846,480   $4,238,836   $3,920,814   $3,437,809    (0.34)%   11.51%  $3,958,864   $3,316,600    19.37%
                                                   
Liabilities and equity                                                  
Demand deposits  $473,750   $472,485   $473,295   $556,479   $648,151    0.27%   (26.91)%  $495,105   $614,285    (19.40)%
Interest-bearing liabilities:                                                  
NOW and other demand accounts   782,305    806,339    826,598    722,584    624,868    (2.98)   25.20    784,680    698,907    12.27 
Money market accounts   790,971    850,892    858,532    824,541    805,303    (7.04)   (1.78)   831,196    807,330    2.96 
Savings accounts   783,432    703,809    1,026,085    593,823    232,543    11.31    236.90    777,143    224,682    245.89 
Time deposits   451,521    460,961    495,721    489,066    379,088    (2.05)   19.11    474,178    350,720    35.20 
   Total Deposits   3,281,979    3,294,486    3,680,231    3,186,493    2,689,953    (0.38)   22.01    3,362,302    2,695,924    24.72 
Borrowings   120,913    118,806    120,398    302,115    325,100    1.77    (62.81)   164,488    193,050    (14.80)
  Total Funding   3,402,892    3,413,292    3,800,629    3,488,608    3,015,053    (0.30)   12.86    3,526,790    2,888,974    22.08 
Other Liabilities   38,390    37,743    37,274    28,613    26,318    1.72    45.87    35,530    23,825    49.13 
Total liabilites   3,441,282    3,451,035    3,837,903    3,517,221    3,041,371    (0.28)   13.15    3,562,320    2,912,799    22.30 
Primis common stockholders' equity   384,849    395,445    400,933    403,593    396,438    (2.68)   (2.92)   395,957    403,801    (1.94)
Noncontrolling interest   7,222    —    -    -    -    100.00    100.00    587    -    100.00 
Total stockholders' equity   392,071    395,445    400,933    403,593    396,438    (0.85)   (1.10)   396,544    403,801    (1.80)
Total liabilities and stockholders' equity  $3,833,353   $3,846,480   $4,238,836   $3,920,814   $3,437,809    (0.34)%   11.51%  $3,958,864   $3,316,600    19.37%
                                                   
Memo:  Average PPP loans  $2,081   $2,126   $2,407   $3,001   $5,926    (2.12)%   (64.88)%  $2,400   $23,152    (89.63)%
                                                   
Net Interest Income                                                  
Loans held for sale  $842   $873   $700   $391   $349    (3.55)%   141.26%  $2,806   $705    298.01%
Loans   51,220    47,220    43,620    41,196    35,841    8.47    42.91    183,256    117,033    56.58 
Investment securities   1,646    1,593    1,551    1,584    1,571    3.33    4.77    6,374    5,964    6.87 
Other earning assets   953    1,122    7,158    4,224    834    (15.06)   14.27    13,457    2,243     NM  
   Total Earning Assets Income   54,661    50,808    53,029    47,395    38,595    7.58    41.63    205,893    125,945    63.48 
                                                   
Non-interest bearing DDA   -    -    -    -    -    -    -    -    -    - 
NOW and other interest-bearing demand accounts   4,334    4,460    4,343    2,267    544    (2.83)    NM     15,404    2,303     NM  
Money market accounts   6,129    6,555    6,231    4,801    2,894    (6.50)   111.78    23,717    6,357    273.08 
Savings accounts   7,860    6,760    10,405    4,750    305    16.27     NM     29,774    737     NM  
Time deposits   3,964    3,801    3,804    3,226    1,567    4.29    152.97    14,795    3,884    280.92 
  Total Deposit Costs   22,287    21,576    24,783    15,044    5,310    3.30     NM     83,690    13,281     NM  
                                                   
Borrowings   2,118    2,096    2,011    3,858    3,748    1.03    (43.49)   10,084    8,306    21.41 
  Total Funding Costs   24,405    23,672    26,794    18,902    9,058    3.09    169.43    93,774    21,587     NM  
                                                   
Net Interest Income  $30,256   $27,136   $26,235   $28,493   $29,537    11.50%   2.43%  $112,119   $104,358    7.44%
                                                   
Memo:  SBA PPP loan interest and fee income  $5   $5   $6   $3   $14    -%   (64.29)%  $19   $533    (96.44)%
Memo:  SBA PPP loan funding costs  $2   $2   $2   $3   $5    -%   (60.00)%  $9   $81    (88.89)%
                                                   
Net Interest Margin                                                  
Loans held for sale   6.90%   6.21%   5.77%   6.26%   6.18%   69bps   72bps   6.29%   5.54%   75bps
Loans   6.33%   5.86%   5.60%   5.56%   5.04%   46    129    5.85%   4.52%   133 
Investments   2.86%   2.69%   2.58%   2.61%   2.46%   17    40    2.68%   2.14%   54 
Other Earning Assets   4.73%   4.78%   5.05%   4.41%   3.57%   (5)   116    4.79%   1.12%   367 
  Total Earning Assets   6.08%   5.63%   5.34%   5.24%   4.80%   44    128    5.57%   4.09%   148 
                                                   
NOW   2.20%   2.19%   2.11%   1.27%   0.35%   1    185    1.96%   0.33%   163 
MMDA   3.07%   3.06%   2.91%   2.36%   1.43%   1    164    2.85%   0.79%   206 
Savings   3.98%   3.81%   4.07%   3.24%   0.52%   17    346    3.83%   0.33%   350 
CDs   3.48%   3.27%   3.08%   2.68%   1.64%   21    184    3.12%   1.11%   201 
  Cost of Interest Bearing Deposits   3.15%   3.03%   3.10%   2.32%   1.03%   12    212    2.92%   0.64%   228 
  Cost of Deposits   2.69%   2.60%   2.70%   1.91%   0.78%   9    191    2.49%   0.49%   200 
                                                   
Other Funding   6.95%   7.00%   6.70%   5.18%   4.57%   (5)   238    6.13%   4.30%   183 
  Total Cost of Funds   2.85%   2.75%   2.83%   2.20%   1.19%   9    165    2.66%   0.75%   191 
                                                   
Net Interest Margin   3.36%   3.01%   2.64%   3.15%   3.67%   36    (31)   3.03%   3.39%   (35)
Net Interest Spread   2.77%   2.46%   2.12%   2.63%   3.28%   31    (51)   2.48%   3.14%   (66)
                                                   
Memo:  Excluding SBA PPP loans                                                  
Loans   6.33%   5.87%   5.61%   5.56%   5.05%   46bps   128bps   5.85%   4.54%   131bps
Total Earning Assets   6.08%   5.64%   5.35%   5.25%   4.81%   44    127    5.57%   4.10%   147 
Net Interest Margin*   3.36%   3.01%   2.64%   3.15%   3.68%   35    (32)   3.03%   3.40%   (36)

 

*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.

 

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Primis Financial Corp.
(Dollars in thousands, except per share data)

   For Three Months Ended:   For Twelve Months Ended: 
Reconciliation of Non-GAAP items:  4Q 2023   3Q 2023   2Q 2023   1Q 2023   4Q 2022   4Q 2023   4Q 2022 
Net income (loss) attributable to Primis' common shareholders  $8,121   $(3,526)  $(268)  $5,612   $3,040   $9,940   $17,549 
Non-GAAP adjustments to Net Income:                                   
Branch Consolidation / Other restructuring   449    -    1,488    -    1,175    1,937    2,384 
Professional fee expenses related to Panacea investment   194    -    -    -    -    194      
Gain on sale of Infinex investment   -    -    -    -    (4,144)   -    (4,144)
Merger expenses   -    -    -    -    -    -    516 
Goodwill impairment   -    11,150    -    -    -    11,150    - 
Loan officer fraud, operational losses   -    200    -    -    -    200    - 
Income tax effect   (139)   (44)   (321)   -    641    (504)   269 
Net income (loss) attributable to Primis' common shareholders adjusted for nonrecurring income and expenses  $8,625   $7,780   $899   $5,612   $712   $22,917   $16,574 
                                    
Net income (loss) attributable to Primis' common shareholders  $8,121   $(3,526)  $(268)  $5,612   $3,040   $9,940   $17,549 
Income tax expense (benefit)   418    1,925    (46)   1,254    519    3,552    4,490 
Provision for credit losses (incl. unfunded commitment expense)   3,208    1,355    4,066    5,418    7,896    14,046    11,710 
Pre-tax pre-provision earnings  $11,747   $(246)  $3,752   $12,284   $11,455   $27,538   $33,749 
Effect of adjustment for nonrecurring income and expenses   643    11,350    1,488    -    (2,969)   13,481    (4,286)
Pre-tax pre-provision operating earnings  $12,390   $11,104   $5,240   $12,284   $8,486   $41,019   $29,463 
                                    
Return on average assets   0.84%   (0.36)%   (0.03)%   0.58%   0.35%   0.25%   0.53%
Effect of adjustment for nonrecurring income and expenses   0.05%   1.17%   0.11%   0.00%   (0.27)%   0.33%   (0.03)%
Operating return on average assets   0.89%   0.81%   0.08%   0.58%   0.08%   0.58%   0.50%
                                    
Return on average assets   0.84%   (0.36)%   (0.03)%   0.58%   0.35%   0.25%   0.53%
Effect of tax expense   0.04%   0.20%   (0.00)%   0.13%   0.06%   0.09%   0.14%
Effect of provision for credit losses  (incl. unfunded commitment expense)   0.34%   0.13%   0.39%   0.56%   0.91%   0.36%   0.35%
Pre-tax pre-provision return on average assets   1.22%   (0.03)%   0.36%   1.27%   1.32%   0.70%   1.02%
Effect of adjustment for nonrecurring income and expenses and expenses   0.07%   1.17%   0.14%   0.00%   (0.34)%   0.34%   (0.13)%
Pre-tax pre-provision operating return on average assets   1.29%   1.14%   0.50%   1.27%   0.98%   1.04%   0.89%
                                    
Return on average common equity   8.37%   (3.54)%   (0.27)%   5.64%   3.04%   2.51%   4.35%
Effect of adjustment for nonrecurring income and expenses   0.52%   11.34%   1.17%   0.00%   (2.33)%   3.28%   (0.25)%
Operating return on average common equity   8.89%   7.80%   0.90%   5.64%   0.71%   5.79%   4.10%
Effect of goodwill and other intangible assets   2.93%   2.89%   0.33%   2.05%   0.27%   2.07%   1.49%
Operating return on average tangible common equity   11.82%   10.69%   1.23%   7.69%   0.98%   7.86%   5.59%
                                    
Efficiency ratio   76.04%   99.97%   88.42%   69.26%   71.82%   83.00%   73.50%
Effect of adjustment for nonrecurring income and expenses   (1.64)%   (30.61)%   (4.31)%   0.00%   4.95%   (8.96)%   2.16%
Operating efficiency ratio   74.40%   69.36%   84.11%   69.26%   76.77%   74.04%   75.66%
                                    
Earnings per common share - Basic  $0.33   $(0.14)  $(0.01)  $0.23   $0.12   $0.40   $0.71 
Effect of adjustment for nonrecurring income and expenses   0.02    0.46    0.05    -    (0.09)   0.53    (0.04)
Operating earnings per common share - Basic  $0.35   $0.32   $0.04   $0.23   $0.03   $0.93   $0.67 
                                    
Earnings per common share - Diluted  $0.33   $(0.14)  $(0.01)  $0.23   $0.12   $0.40   $0.71 
Effect of adjustment for nonrecurring income and expenses   0.02    0.46    0.05    -    (0.09)   0.53    (0.04)
Operating earnings per common share - Diluted  $0.35   $0.32   $0.04   $0.23   $0.03   $0.93   $0.67 
                                    
Book value per common share  $16.09   $15.49   $15.91   $16.13   $15.90   $16.09   $15.90 
Effect of goodwill and other intangible assets   (3.86)   (3.87)   (4.34)   (4.36)   (4.37)   (3.86)   (4.37)
Tangible book value per common share  $12.23   $11.62   $11.57   $11.77   $11.53   $12.23   $11.53 
                                    
Total Primis common stockholders' equity  $397,330   $382,487   $392,795   $398,064   $392,365   $397,330   $392,365 
Less goodwill and other intangible assets   (95,417)   (95,741)   (107,215)   (107,539)   (107,863)   (95,417)   (107,863)
Tangible common equity  $301,913   $286,746   $285,580   $290,525   $284,502   $301,913   $284,502 
                                    
Common equity to assets   10.25%   9.98%   10.15%   9.43%   10.99%   10.25%   10.99%
Effect of goodwill and other intangible assets   (2.26)%   (2.31)%   (2.56)%   (2.37)%   (2.77)%   (2.27)%   (2.77)%
Tangible common equity to tangible assets   7.99%   7.67%   7.59%   7.06%   8.22%   7.99%   8.22%
                                    
Net interest margin   3.36%   3.01%   2.64%   3.15%   3.67%   3.03%   3.39%
Effect of adjustments for PPP associated balances*   0.00%   0.00%   0.00%   0.00%   0.01%   0.00%   0.01%
Core net interest margin   3.36%   3.01%   2.64%   3.15%   3.68%   3.03%   3.40%

 

*Net interest margin excluding the effect of PPP loans assumes a funding cost of 35bps on average PPP balances in all applicable periods

 

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