Primis Financial (FRST) Q3 Earnings call transcript Oct 25, 2024
2min read Primis Financial Corp's third quarter earnings call, led by CFO Matthew Switzer and CEO Dennis Zember, offered insights into the company's financial performance and strategic initiatives. The call, which was marked by forward-looking statements and discussions on various financial metrics, provided a comprehensive view of Primis Financial Corp's current state and future prospects.
Correction of Accounting Error and Impact on Financial Performance
The call began with discussions on the correction of an accounting error related to a consumer loan portfolio and its impact on the company's financials. This error, which is expected to affect about 5-6% of the total loans, has resulted in a delay in SEC filings and consultations with the SEC. Despite this setback, Primis Financial Corp highlighted its progress in other areas, such as the core bank's improved cost of deposits and the pipeline of new commercial relationships.
Core Bank's Improved Performance and Strategic Initiatives
The core bank's performance was a significant focus of the call, with Primis Financial Corp highlighting its lower cost of deposits compared to community bank peers and the leverage of digital platforms like V1BE. The company also shared its plans to focus on new relationships, which have tripled in pace compared to last year. This strategic shift towards new relationships is expected to drive growth for the core bank and contribute to improved operating results.
Expansion into Mortgage Warehouse and Strategic Acquisition
A notable development discussed during the call was Primis Financial Corp's entry into mortgage warehouse lending and the acquisition of a team from a large bank exiting the space. This move is expected to replace the entire Life Premium portfolio, improving tangible common equity ratio and net interest margin. Additionally, the company is looking to replace the entire Life Premium portfolio with mortgage warehouse loans, which could lead to a significant boost in ROA and earnings per share.
Strategic Investments and Future Outlook
The call also touched upon Primis Financial Corp's investment in Panacea Financial Holdings and its division focused on ancillary financial services. While the impact of these investments is not yet fully realized, the company is optimistic about their potential contribution to the company's growth. Looking ahead, Primis Financial Corp aims to achieve a sustainable 1% ROA, a goal that is expected to be realized in the second half of 2025, subject to the change in accounting that the company is hoping for.
Investor Questions and Management's Responses
The call concluded with questions from key shareholders and investors, providing insights into their concerns and priorities. Primis Financial Corp's management team provided detailed responses, offering clarity on the company's financial performance, strategic initiatives, and future outlook. These interactions underscored the company's commitment to transparency and investor engagement, a critical aspect of maintaining a strong relationship with stakeholders.
Conclusion
Primis Financial Corp's third quarter earnings call offered a comprehensive overview of the company's financial performance and strategic initiatives. Despite the challenges posed by the accounting error and delayed filings, Primis Financial Corp is making significant strides in its core banking operations and exploring new opportunities in mortgage warehouse lending. With a clear focus on growth and investor engagement, Primis Financial Corp is well-positioned to navigate the complexities of the financial sector and capitalize on emerging opportunities.
