Primis Financial Corp Sets Stage for Strategic Turnaround with Q1 2025 Earnings Release

Primis Financial Corp (NASDAQ: FRST) has set its earnings calendar for the first quarter of 2025, with results scheduled to drop after markets close on Tuesday, April 29, 2025. The company will host a conference call the following morning at 10:00 a.m. ET, offering investors a critical update on its ambitious restructuring plan. The event comes amid a backdrop of mixed financial results from late 2024, as Primis pivots away from high-risk consumer lending and bets big on mortgage warehouse lending, healthcare finance, and digital banking.

The Road to Restructuring

Primis’ fourth-quarter 2024 earnings revealed a stark reality: a $14.7 million net loss ($0.59 per share) driven by a $20 million provision expense tied to its decision to wind down its third-party consumer loan portfolio. The company moved $133 million of these loans to "held for sale" status, with the remaining $39 million carrying a $10 million allowance for credit losses. Management has framed this as a necessary step to eliminate a $29.9 million pre-tax drag on profitability in 2024.

But the pain is intentional. By exiting this segment, Primis aims to focus on higher-margin opportunities. The mortgage warehouse lending division, launched late last year, now boasts $400 million in committed lines and a SOFR + 340 basis points return. Meanwhile, its healthcare-focused subsidiary, Panacea Financial, grew loans to $434 million by late 2024, targeting 10,000 medical clients by 2025.

Key Growth Drivers to Watch

1. Mortgage Warehouse Momentum:
   The company’s new mortgage warehouse division has secured preferred lender status with a national builder, unlocking access to $15 billion in annual construction-to-perm loan volume. Management projects this segment alone could add 15 basis points to 2025 return on assets (ROAA).

2. Digital Deposit Surge:
   Primis’ app-based platform now holds $981 million in deposits across 18,000 accounts, with average balances of $55,000. A new affinity brand, launching in March 2025, aims to tap niche markets through influencer partnerships. Deposit costs have already fallen to 1.87%, far below regional peers.

3. Panacea’s Expansion:
   With $92 million in deposits and 6,000 healthcare clients, Panacea’s valuation (19% owned by Primis) is expected to rise further. Management cited $19.6 million in equity value post-2023 capital raises, hinting at potential upside.

Financial Outlook: Cost Cuts and ROAA Recovery

The 2024 net loss masks strategic progress. Excluding the consumer loan drag and one-time items, Primis reported an adjusted ROAA of 0.65%, up from a reported -0.19%. For 2025, management targets $21–22 million in quarterly core expenses (down from $23.5M in Q4 2024) and $6.5 million in annual savings from repriced digital deposits.

Risks and Regulatory Headwinds

• NASDAQ Delisting Risk: The company faces a May 15 hearing to appeal a delisting warning tied to delayed 2024 financial reporting. Filing its 10-K on time is critical to avoid removal from the exchange.
• Consumer Loan Legacy: While the portfolio is winding down, the remaining $39 million in held-for-investment loans could pose credit risks.
• Interest Rate Volatility: A prolonged Fed rate-hike cycle could pressure net interest margins, though $350 million in loans set to reprice in 2025 may mitigate this.

Investor Takeaway: A High-Risk, High-Reward Turnaround Play

Primis’ Q1 2025 earnings will test whether its restructuring is on track. The dividend continuity—marking 53 straight quarterly payouts—signals management’s confidence, even as it navigates regulatory and operational hurdles.

The stock’s valuation reflects uncertainty: shares trade at a 0.7x tangible book value, suggesting skepticism about its turnaround. Yet, with $3.7 billion in assets and a $10.77 tangible book per share, there’s room for recovery if strategic bets on mortgage lending and Panacea pay off.

Conclusion: A Make-or-Break Quarter

Primis Financial’s Q1 earnings will hinge on two metrics:
1. Mortgage warehouse lending growth: Has the division met or exceeded its $400 million committed lines?
2. Cost discipline: Did core expenses stay within the $21–22M quarterly guidance?

A strong showing could reignite investor confidence and push shares higher. However, missteps in execution or regulatory setbacks could deepen the company’s challenges. For now, the earnings call on April 30 will be the ultimate litmus test for this high-stakes turnaround.