Primis Financial Corp. Reports Basic and Diluted Earnings per Share for the First Quarter of 2023
Successfully Deployed New Digital Platform at Scale
Declares Quarterly Cash Dividend of
Updates on Digital Platform and Resulting Strength in Liquidity and Capital
As of
of deposits from approximately 11,500 customers at quarter-end$980 million - Vast majority of funds (approx.
94% ) were raised prior to the bank failures in mid-March with little attrition and continued customer growth since that time - Customers are in all 50 states with approximately
88% of balances outside ofVirginia , D.C. andMaryland - Cost of deposits of
4.88% , approximately equal to Fed Funds, approximately 25 basis points below short-term borrowing costs and 30 to 40 basis points below earnings rate on one-way sweep arrangements - Approximately
73% of funds from other banks and credit unions, versus online-focused banks or fintechs, with a little over50% from banks with over in assets$25 billion - No additional staffing added
- No fraud losses
- Less than
in incremental marketing expense$90 thousand
As a result of the successful expansion of the digital customer base, Primis substantially improved its liquidity profile in the first quarter. As of
- The ratio of gross loans to deposits has declined to
83% from108% at year-end - Grew total cash and equivalents to
, up from$607 million at$78 million December 31, 2022 - Repaid
of short-term borrowings and listing agent CDs that matured in the first quarter$340 million - Uninsured/non-collateralized deposits now represent only
26% of total deposits - Liquidity sources (FHLB borrowings, Brokered CDs, etc.) plus cash-on-hand represent over
180% of uninsured/non-collateralized deposit balances
The Company's securities portfolio was
Est. as of | Adjusted | |
Capital Ratios | ||
Tier 1 Leverage | 8.59 % | 8.50 % |
10.13 % | 9.50 % | |
Tier 1 | 10.45 % | 9.83 % |
14.03 % | 13.47 % |
Financial Highlights for the Period Ended
- Total deposits grew
34.7% un-annualized linked-quarter to .$3.67 billion - Loans held for investment grew at an annualized rate of
13.1% in the first quarter compared to the linked-quarter, net of a decline in Paycheck Protection Program ("PPP") balances. - Successfully completed first Panacea loan sale – approximately
of loans with$15 million pre-tax gain.$427 thousand - Return on average assets of
0.60% for the three months endedMarch 31, 2023 versus0.36% for the three months endedDecember 31, 2022 and0.55% for the three months endedMarch 31, 2022 . Operating return on average assets (1) of0.60% ,0.09% and0.57% for the three months endedMarch 31, 2023 ,December 31, 2022 andMarch 31, 2022 , respectively. - Pre-tax pre-provision return on average assets (1) was
1.31% for the three months endedMarch 31, 2023 , versus1.33% for the three months endedDecember 31, 2022 and0.75% for the three months endedMarch 31, 2022 . - Pre-tax pre-provision operating return on average assets (1) was
1.31% for the three months endedMarch 31, 2023 , versus0.99% for the three months endedDecember 31, 2022 and0.77% for the three months endedMarch 31, 2022 . - Mortgage banking almost broke even for the quarter with a
after-tax loss versus$0.2 million after-tax loss in the prior quarter, with substantially all of the loss occurring in the seasonally slow month of January.$2.2 million - Net interest margin of
3.15% in the first quarter of 2023 was up from2.96% in the same period last year and down 52 basis points from3.67% in the fourth quarter of 2022. Core net interest margin(1), which excludes the effects of PPP loans, was3.16% in the first quarter of 2023, down from3.68% in the fourth quarter of 2022 and up from2.96% in the first quarter of 2022. - Core bank net interest margin (excluding excess digital deposit balances) of
3.38% for the first quarter of 2023. - Allowance for credit losses to total loans was
1.17% atMarch 31, 2023 and atDecember 31, 2022 , compared to1.23% atMarch 31, 2022 . Allowance for credit losses to total loans (excluding PPP balances and loans held for sale) was1.17% atMarch 31, 2023 and atDecember 31, 2022 , compared to1.24% atMarch 31, 2022 . - Equity to assets was
9.52% atMarch 31, 2023 and tangible common equity to tangible assets was7.14% . Excluding of excess cash that the Company will begin sweeping, these ratios would have been$500 million 10.80% and7.90% , respectively, atMarch 31, 2023 compared to11.04% and8.27% , respectively, atDecember 31, 2022 .
Speaking about the items in the Company's quarterly performance,
Net Interest Income
Adjusted net interest income (excluding the excess revenue from credit enhancements) increased in the first quarter of 2023 to
The Company's net interest margin in the first quarter of 2023 was greatly affected by the success of the digital deposit platform. Excluding the impact of the excess digital deposits and cash balances, the core bank's net interest margin declined by
On a consolidated basis, the Company's net interest margin includes approximately
Averages | Excess Digital | |||||
Average Earning Assets | 3,303 | 346 | 3,652 | |||
Average Deposits | 2,940 | 346 | 3,186 | |||
Average Total Funding | 3,225 | 346 | 3,471 | |||
Yield on Earning Assets | 5.31 % | 4.41 % | 5.24 % | |||
Cost of Deposits | 1.67 % | 4.88 % | 1.91 % | |||
Cost of Funds | 1.98 % | 4.88 % | 2.19 % | |||
Net Interest Margin | 3.38 % | N/A | 3.15 % |
Noninterest Income
Noninterest income increased during the quarter to
Gains associated with credit enhancements on consumer lending amounted to
Mortgage revenue, and profitability, increased substantially in the first quarter of 2023. Production teams hired in the fourth quarter built pipelines during the quarter and the Company saw attractive build in revenue. Total mortgage revenue for the quarter was
During the quarter, Panacea realized
Noninterest Expense
Noninterest expense was
Excluding mortgage, nonrecurring expenses and the third party expenses described above, noninterest expense for the first quarter of 2023 was
The Company's efficiency ratio was
Loan Portfolio and Asset Quality
Loans held for investment increased to
Nonperforming assets, excluding portions guaranteed by the SBA, were
The Company recorded a provision for loan losses of
Net charge-offs were
Deposits and Funding
Total deposits increased to
As we move forward in the year, we expect to continue growing deposits on the digital platform, developing the sweep arrangements that allow us to manage our capital and liquidity on a just-in-time basis and still earn some amount of spread on the balances. We will convert as many of these new customers as possible into core customers over the next 12 months, continue tweaking and improving the functionality of our technology, and finish building and rolling out the lower cost deposit strategies including small business. I am determined to put real space between us and our competition using functional, intuitive technology delivered by traditional community bank service and personal attention."
Digital Lines of Business
The Company operates two national lines of business that are focused primarily on lending to higher quality segments of the economy and a national digital platform for funding purposes. While each of the divisions are relatively new, management believes that the combined strategy can have margins in the
Panacea continues to experience substantial growth alongside the development of its nationally-recognized brand. The division increased its total client relationships to over 3,500 doctor households across all 50 states. Panacea finished the first quarter of 2023 with approximately
Panacea-related deposits increased to
The Life Premium Finance ("LPF") division, launched in late 2021, ended the first quarter of 2023 with outstanding balances, net of deferred fees, of
As previously discussed, higher expenses related to team acquisitions at Primis Mortgage ended at the end of the last quarter. Primis Mortgage was breakeven for February and March with an after-tax loss for the quarter of
Shareholders' Equity
Book value per share as of
Additionally, the Board of Directors announced and declared a dividend of
About
As of
Contacts: | Address: |
Phone: (703) 893-7400 | |
Website: www.primisbank.com |
Conference Call
The Company's management will host a conference call to discuss its first quarter results on
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
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 banking platform, V1BE fulfillment service and
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
(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. |
Primis Financial Corp. | ||||||||||||
Financial Highlights (unaudited) | ||||||||||||
(Dollars in thousands, except per share data) | For Three Months Ended: | Variance - 1Q 2023 vs. | ||||||||||
Selected Performance Ratios: | 1Q 2023 | 4Q 2022 | 3Q 2022 | 2Q 2022 | 1Q 2022 | 4Q 2022 | 1Q 2022 | |||||
Return on average assets | 0.60 % | 0.36 % | 0.61 % | 0.63 % | 0.55 % | 24 | bps | 4 | bps | |||
Operating return on average assets(1) | 0.60 % | 0.09 % | 0.64 % | 0.76 % | 0.57 % | 51 | 3 | |||||
Pre-tax pre-provision return on average assets(1) | 1.31 % | 1.33 % | 1.16 % | 0.83 % | 0.75 % | (2) | 56 | |||||
Pre-tax pre-provision operating return on average assets(1) | 1.31 % | 0.99 % | 1.20 % | 1.00 % | 0.77 % | 33 | 55 | |||||
Return on average equity | 5.77 % | 3.07 % | 4.98 % | 4.92 % | 4.49 % | 270 | 128 | |||||
Operating return on average equity(1) | 5.77 % | 0.75 % | 5.22 % | 5.93 % | 4.58 % | 502 | 119 | |||||
Operating return on average tangible equity(1) | 7.85 % | 1.03 % | 7.14 % | 8.08 % | 6.16 % | 682 | 169 | |||||
Cost of funds | 2.19 % | 1.19 % | 0.71 % | 0.53 % | 0.52 % | 100 | 167 | |||||
Net interest margin | 3.15 % | 3.67 % | 3.57 % | 3.33 % | 2.96 % | (52) | 19 | |||||
Core net interest margin(1) | 3.16 % | 3.68 % | 3.58 % | 3.35 % | 2.96 % | (52) | 20 | |||||
Gross loans to deposits | 82.98 % | 108.32 % | 101.06 % | 97.99 % | 89.11 % | (25) | pts | (6) | pts | |||
Efficiency ratio | 68.59 % | 71.71 % | 71.85 % | 75.01 % | 76.11 % | (3) | (752) | |||||
Operating efficiency ratio(1) | 68.59 % | 76.65 % | 70.92 % | 70.23 % | 75.65 % | (8) | (706) | |||||
Per Share Data: | ||||||||||||
Earnings per share - Basic | $ 0.23 | $ 0.13 | $ 0.21 | $ 0.20 | $ 0.19 | 76.92 | % | 21.05 | % | |||
Operating earnings per share - Basic(1) | $ 0.23 | $ 0.03 | $ 0.22 | $ 0.25 | $ 0.19 | NM | 22.70 | |||||
Earnings per share - Diluted | $ 0.23 | $ 0.12 | $ 0.20 | $ 0.20 | $ 0.19 | 91.67 | 21.05 | |||||
Operating earnings per share - Diluted(1) | $ 0.23 | $ 0.03 | $ 0.21 | $ 0.24 | $ 0.19 | NM | 23.20 | |||||
Book value per share | $ 16.21 | $ 15.98 | $ 15.89 | $ 16.17 | $ 16.42 | 1.44 | (1.28) | |||||
Tangible book value per share(1) | $ 11.86 | $ 11.61 | $ 11.54 | $ 11.77 | $ 12.11 | 2.15 | (2.06) | |||||
Cash dividend per share | $ 0.10 | $ 0.10 | $ 0.10 | $ 0.10 | $ 0.10 | - | - | |||||
Weighted average shares outstanding - Basic | 24,625,943 | 24,601,108 | 24,576,887 | 24,562,753 | 24,503,945 | 0.10 | 0.50 | |||||
Weighted average shares outstanding - Diluted | 24,685,206 | 24,685,663 | 24,688,422 | 24,681,425 | 24,662,588 | (0.00) | 0.09 | |||||
Shares outstanding at end of period | 24,685,064 | 24,680,097 | 24,650,239 | 24,650,239 | 24,622,739 | 0.02 | % | 0.25 | % | |||
Asset Quality Ratios: | ||||||||||||
Non-performing assets as a percent of total assets, excluding SBA guarantees | 0.78 % | 0.98 % | 1.11 % | 0.61 % | 0.47 % | (20) | bps | 31 | bps | |||
Net charge-offs (recoveries) as a percent of average loans (annualized) | 0.53 % | 0.74 % | 0.17 % | (0.07 %) | (0.03 %) | (21) | 56 | |||||
Core net charge-offs (recoveries) as a percent of average loans (annualized) | 0.28 % | 0.52 % | 0.17 % | (0.07 %) | (0.03 %) | (24) | 31 | |||||
Allowance for credit losses to total loans | 1.17 % | 1.17 % | 1.17 % | 1.15 % | 1.23 % | 0 | (5) | |||||
Allowance for credit losses to total loans (excluding PPP loans) | 1.17 % | 1.17 % | 1.17 % | 1.16 % | 1.24 % | 0 | (7) | |||||
Capital Ratios: | ||||||||||||
Equity to assets | 9.52 % | 11.04 % | 11.67 % | 12.32 % | 12.55 % | (153) | bps | (304) | bps | |||
Tangible common equity to tangible assets(1) | 7.14 % | 8.27 % | 8.73 % | 9.27 % | 9.57 % | (113) | (243) | |||||
Leverage ratio (2) | 8.59 % | 9.48 % | 10.11 % | 10.31 % | 9.77 % | (89) | (118) | |||||
Common equity tier 1 capital ratio (2) | 10.13 % | 10.54 % | 11.17 % | 11.59 % | 12.64 % | (41) | (251) | |||||
Tier 1 risk-based capital ratio (2) | 10.45 % | 10.88 % | 11.53 % | 11.97 % | 13.06 % | (43) | (261) | |||||
Total risk-based capital ratio (2) | 14.03 % | 14.80 % | 15.71 % | 16.29 % | 17.66 % | (77) | (363) |
(1) See Reconciliation of Non-GAAP financial measures. | ||||
(2) | ||||
The company defines "NM" as not meaningful for increases or decreases greater than 300 percent. |
Primis Financial Corp. | ||||||||||||
(Dollars in thousands) | As Of : | Variance - 1Q 2023 vs. | ||||||||||
Condensed Consolidated Balance Sheets (unaudited) | 1Q 2023 | 4Q 2022 | 3Q 2022 | 2Q 2022 | 1Q 2022 | 4Q 2022 | 1Q 2022 | |||||
Assets | ||||||||||||
Cash and cash equivalents | $ 607,125 | $ 77,859 | $ 97,738 | $ 70,721 | $ 298,230 | NM | % | 103.58 | % | |||
Investment securities-available for sale | 231,468 | 236,315 | 238,891 | 257,180 | 271,626 | (2.05) | (14.78) | |||||
Investment securities-held to maturity | 13,115 | 13,520 | 14,391 | 14,978 | 16,138 | (3.00) | (18.73) | |||||
Loans held for sale | 42,011 | 27,626 | 13,388 | 16,096 | - | 52.07 | 100.00 | |||||
Loans receivable, net of deferred fees | 3,043,732 | 2,948,836 | 2,737,086 | 2,628,797 | 2,393,669 | 3.22 | 27.16 | |||||
Allowance for credit losses | (35,727) | (34,544) | (31,956) | (30,209) | (29,379) | 3.42 | 21.61 | |||||
Net loans | 3,008,005 | 2,914,292 | 2,705,130 | 2,598,588 | 2,364,290 | 3.22 | 27.23 | |||||
Stock in | 12,083 | 25,815 | 16,689 | 12,940 | 11,927 | (53.19) | 1.31 | |||||
Bank premises and equipment, net | 25,136 | 25,257 | 25,534 | 26,113 | 29,872 | (0.48) | (15.85) | |||||
Operating lease right-of-use assets | 9,352 | 5,335 | 5,511 | 4,777 | 5,305 | 75.30 | 76.29 | |||||
107,539 | 107,863 | 108,170 | 108,524 | 106,075 | (0.30) | 1.38 | ||||||
Assets held for sale, net | 3,115 | 3,115 | 3,127 | 3,127 | - | - | 100.00 | |||||
Bank-owned life insurance | 67,591 | 67,201 | 67,519 | 67,339 | 67,099 | 0.58 | 0.73 | |||||
Other real estate owned | - | - | 1,041 | 1,041 | 1,041 | - | (100.00) | |||||
Deferred tax assets, net | 18,825 | 18,289 | 17,892 | 14,658 | 12,380 | 2.93 | 52.06 | |||||
Other assets | 60,041 | 49,050 | 42,141 | 40,496 | 35,893 | 22.41 | 67.28 | |||||
Total assets | $ 4,205,406 | $ 3,571,537 | $ 3,357,162 | $ 3,236,578 | $ 3,219,876 | 17.75 | % | 30.61 | % | |||
Liabilities and stockholders' equity | ||||||||||||
Demand deposits | $ 497,531 | $ 582,556 | $ 687,272 | $ 653,181 | $ 559,682 | (14.60) | % | (11.10) | % | |||
NOW accounts | 835,348 | 617,687 | 637,786 | 677,237 | 730,235 | 35.24 | 14.39 | |||||
Money market accounts | 865,115 | 811,365 | 803,050 | 802,953 | 831,580 | 6.62 | 4.03 | |||||
Savings accounts | 971,439 | 245,713 | 217,220 | 220,211 | 225,291 | 295.36 | NM | |||||
Time deposits | 498,564 | 465,057 | 362,992 | 329,223 | 339,456 | 7.20 | 46.87 | |||||
Total deposits | 3,667,997 | 2,722,378 | 2,708,320 | 2,682,805 | 2,686,244 | 34.74 | 36.55 | |||||
Securities sold under agreements to repurchase - short term | 4,346 | 6,445 | 9,886 | 10,020 | 11,231 | (32.57) | (61.30) | |||||
- | 325,000 | 125,000 | 25,000 | - | (100.00) | NM | ||||||
Subordinated debt and notes | 95,382 | 95,312 | 95,241 | 95,170 | 95,099 | 0.07 | 0.30 | |||||
Operating lease liabilities | 9,799 | 5,767 | 6,044 | 5,299 | 5,897 | 69.92 | 66.17 | |||||
Other liabilities | 27,617 | 22,232 | 20,863 | 19,647 | 17,210 | 24.22 | 60.47 | |||||
Total liabilities | 3,805,141 | 3,177,134 | 2,965,354 | 2,837,941 | 2,815,681 | 19.77 | 35.14 | |||||
Stockholders' equity | 400,265 | 394,403 | 391,808 | 398,637 | 404,195 | 1.49 | (0.97) | |||||
Total liabilities and stockholders' equity | $ 4,205,406 | $ 3,571,537 | $ 3,357,162 | $ 3,236,578 | $ 3,219,876 | 17.75 | % | 30.61 | % | |||
Tangible common equity(1) | $ 292,726 | $ 286,540 | $ 283,638 | $ 290,113 | $ 298,120 | 2.16 | % | (1.81) | % | |||
The company defines "NM" as not meaningful for increases or decreases greater than 300 percent. |
Primis Financial Corp. | ||||||||||||
(Dollars in thousands) | For Three Months Ended: | Variance - 1Q 2023 vs. | ||||||||||
Condensed Consolidated Statement of Operations (unaudited) | 1Q 2023 | 4Q 2022 | 3Q 2022 | 2Q 2022 | 1Q 2022 | 4Q 2022 | 1Q 2022 | |||||
Interest and dividend income | $ 47,159 | $ 38,635 | $ 32,596 | $ 28,258 | $ 26,585 | 22.06 | % | 77.39 | % | |||
Interest expense | 18,749 | 9,058 | 5,146 | 3,652 | 3,731 | 106.99 | NM | |||||
Net interest income | 28,410 | 29,577 | 27,450 | 24,606 | 22,854 | (3.95) | 24.31 | |||||
Provision for (recovery of) credit losses | 5,187 | 7,860 | 2,890 | 422 | 99 | (34.01) | NM | |||||
Net interest income after provision for (recovery of) credit losses | 23,223 | 21,717 | 24,560 | 24,184 | 22,755 | 6.93 | 2.06 | |||||
Account maintenance and deposit service fees | 1,216 | 1,427 | 1,525 | 1,442 | 1,351 | (14.79) | (9.99) | |||||
Income from bank-owned life insurance | 420 | 847 | 394 | 378 | 375 | (50.41) | 12.00 | |||||
Gain on debt extinguishment | - | - | - | - | - | - | - | |||||
Mortgage banking income | 4,315 | 2,264 | 2,197 | 593 | - | 90.59 | - | |||||
Gain on sale of Panacea loans | 478 | - | - | - | - | - | - | |||||
Credit enhancement income | 4,886 | 1,822 | 1,220 | - | - | 168.17 | - | |||||
Gain on sale of other investment | - | 4,411 | - | - | - | 100.00 | 100.00 | |||||
Other | 217 | 217 | 284 | 217 | 364 | - | (40.38) | |||||
Noninterest income | 11,532 | 10,988 | 5,620 | 2,630 | 2,090 | 4.95 | NM | |||||
Employee compensation and benefits | 15,028 | 16,213 | 12,594 | 10,573 | 9,625 | (7.31) | 56.14 | |||||
Occupancy and equipment expenses | 3,022 | 2,899 | 2,857 | 2,546 | 2,557 | 4.24 | 18.19 | |||||
Amortization of core deposit intangible | 317 | 317 | 326 | 341 | 341 | - | (7.04) | |||||
849 | 814 | 813 | 814 | 813 | 4.30 | 4.43 | ||||||
Data processing expense | 2,251 | 1,702 | 1,528 | 1,293 | 1,490 | 32.26 | 51.07 | |||||
Marketing expense | 569 | 933 | 938 | 731 | 465 | (39.01) | 22.37 | |||||
Telecommunication and communication expense | 377 | 343 | 342 | 366 | 382 | 9.91 | (1.31) | |||||
Net (gain) loss on other real estate owned | - | 131 | - | - | (59) | 100.00 | (100.00) | |||||
Loss on bank premises and equipment | - | - | 64 | 620 | - | - | - | |||||
Professional fees | 862 | 1,605 | 1,261 | 827 | 1,094 | (46.29) | (21.21) | |||||
Credit enhancement costs | 873 | 1,369 | - | - | - | (36.23) | - | |||||
Other expenses | 3,249 | 2,764 | 3,038 | 2,319 | 2,279 | 17.55 | 42.56 | |||||
Noninterest expense | 27,397 | 29,090 | 23,761 | 20,430 | 18,987 | (5.82) | 44.29 | |||||
Income before income taxes | 7,358 | 3,615 | 6,419 | 6,384 | 5,858 | 103.54 | 25.61 | |||||
Income tax expense | 1,583 | 530 | 1,365 | 1,375 | 1,265 | 198.68 | 25.14 | |||||
Net Income | $ 5,775 | $ 3,085 | $ 5,054 | $ 5,009 | $ 4,593 | 87.20 | 25.73 | |||||
(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) | As Of: | Variance - 1Q 2023 vs. | ||||||||||
Loan Portfolio Composition | 1Q 2023 | 4Q 2022 | 3Q 2022 | 2Q 2022 | 1Q 2022 | 4Q 2022 | 1Q 2022 | |||||
Loans held for sale | $ 42,011 | $ 27,626 | $ 13,388 | $ 16,096 | $ - | 52.07 | % | 100.00 | % | |||
Loans secured by real estate: | ||||||||||||
Commercial real estate - owner occupied | 460,245 | 461,126 | 437,636 | 433,840 | 406,285 | (0.19) | 13.28 | |||||
Commercial real estate - non-owner occupied | 577,481 | 581,168 | 573,732 | 600,436 | 615,682 | (0.63) | (6.20) | |||||
Secured by farmland | 7,404 | 8,436 | 8,852 | 9,305 | 8,896 | (12.23) | (16.77) | |||||
Construction and land development | 151,950 | 148,762 | 138,371 | 117,604 | 116,365 | 2.14 | 30.58 | |||||
Residential 1-4 family | 607,118 | 610,919 | 616,764 | 607,548 | 575,946 | (0.62) | 5.41 | |||||
Multi-family residential | 139,978 | 140,321 | 137,253 | 144,406 | 152,266 | (0.24) | (8.07) | |||||
Home equity lines of credit | 64,606 | 65,152 | 65,852 | 69,860 | 72,440 | (0.84) | (10.81) | |||||
Total real estate loans | 2,008,782 | 2,015,884 | 1,978,460 | 1,982,999 | 1,947,880 | (0.35) | 3.13 | |||||
Commercial loans | 547,095 | 523,110 | 470,934 | 448,582 | 336,961 | 4.59 | 62.36 | |||||
Paycheck Protection Program loans | 2,603 | 4,564 | 8,014 | 17,525 | 31,404 | (42.97) | (91.71) | |||||
Consumer loans | 485,252 | 405,278 | 279,678 | 179,691 | 77,424 | 19.73 | NM | |||||
Loans receivable, net of deferred fees | $ 3,043,732 | $ 2,948,836 | $ 2,737,086 | $ 2,628,797 | $ 2,393,669 | 3.22 | % | 27.16 | % | |||
Loans by Risk Grade: | ||||||||||||
Pass, not graded | $ - | $ - | $ - | $ - | $ - | - | % | - | % | |||
Pass Grade 1 - Highest Quality | 607 | 600 | 616 | 609 | 786 | 1.17 | (22.77) | |||||
Pass Grade 2 - Good Quality | 253,665 | 209,605 | 149,389 | 129,571 | 8,734 | 21.02 | NM | |||||
Pass Grade 3 - Satisfactory Quality | 1,596,690 | 1,591,364 | 1,520,364 | 1,513,054 | 1,413,480 | 0.33 | 12.96 | |||||
Pass Grade 4 - Pass | 1,124,993 | 1,073,952 | 984,012 | 890,709 | 895,197 | 4.75 | 25.67 | |||||
Pass Grade 5 - Special Mention | 28,273 | 32,278 | 35,410 | 67,736 | 51,884 | (12.41) | (45.51) | |||||
Grade 6 - Substandard | 39,504 | 41,037 | 47,295 | 27,118 | 23,588 | (3.74) | 67.47 | |||||
Grade 7 - Doubtful | - | - | - | - | - | - | - | |||||
Grade 8 - Loss | - | - | - | - | - | - | - | |||||
Total loans | $ 3,043,732 | $ 2,948,836 | $ 2,737,086 | $ 2,628,797 | $ 2,393,669 | 3.22 | % | 27.16 | % |
(Dollars in thousands) | As Of or For Three Months Ended: | ||||||
Asset Quality Information | 1Q 2023 | 4Q 2022 | 3Q 2022 | 2Q 2022 | 1Q 2022 | ||
Allowance for Credit Losses: | |||||||
Balance at beginning of period | $ (34,544) | $ (31,956) | $ (30,209) | $ (29,379) | $ (29,105) | ||
(Provision for) / recovery of allowance for credit losses | (5,187) | (7,860) | (2,890) | (422) | (99) | ||
Net charge-offs | 4,004 | 5,272 | 1,143 | (408) | (175) | ||
Ending balance | $ (35,727) | $ (34,544) | $ (31,956) | $ (30,209) | $ (29,379) | ||
Reserve for Unfunded Commitments: | |||||||
Balance at beginning of period | $ (1,416) | $ (1,380) | $ (1,069) | $ (1,237) | $ (977) | ||
(Expense for) / recovery of unfunded loan commitment reserve | (91) | (36) | (311) | 168 | (260) | ||
Total Reserve for Unfunded Commitments | $ (1,507) | $ (1,416) | $ (1,380) | $ (1,069) | $ (1,237) |
As Of: | Variance - 1Q 2023 vs. | |||||||||||
Non-Performing Assets: | 1Q 2023 | 4Q 2022 | 3Q 2022 | 2Q 2022 | 1Q 2022 | 4Q 2022 | 1Q 2022 | |||||
Nonaccrual loans | $ 33,397 | $ 35,484 | $ 36,851 | $ 19,635 | $ 14,941 | (5.88) | % | 123.53 | % | |||
Accruing loans delinquent 90 days or more | 1,625 | 3,361 | 1,855 | 1,512 | 1,817 | (51.65) | (10.57) | |||||
Total non-performing loans | 35,022 | 38,845 | 38,706 | 21,147 | 16,758 | (9.84) | 108.99 | |||||
Other real estate owned | - | - | 1,041 | 1,041 | 1,041 | - | (100.00) | |||||
Total non-performing assets | $ 35,022 | $ 38,845 | $ 39,747 | $ 22,188 | $ 17,799 | (9.84) | 96.76 | |||||
SBA guaranteed portion of non-performing loans | $ 2,206 | $ 3,969 | $ 2,573 | $ 2,319 | $ 2,651 | (44.42) | (16.79) | |||||
Troubled debt restructuring | $ 4,242 | $ 3,599 | $ 3,170 | $ 2,695 | $ 3,103 | 17.87 | 36.7 | |||||
The company defines "NM" as not meaningful for increases or decreases greater than 300 percent. |
Primis Financial Corp. | ||||||||||||
(Dollars in thousands) | For Three Months Ended: | Variance - 2Q 2021 vs. | ||||||||||
Average Balance Sheet | 1Q 2023 | 4Q 2022 | 3Q 2022 | 2Q 2022 | 1Q 2022 | 4Q 2022 | 1Q 2022 | |||||
Assets | ||||||||||||
Loans held for sale | $ 25,346 | $ 22,413 | $ 21,199 | $ 6,936 | $ - | 13.09 | % | 100.00 | % | |||
Loans, net of deferred fees | 2,991,965 | 2,824,892 | 2,669,605 | 2,509,978 | 2,360,782 | 5.91 | 26.74 | |||||
Investment securities | 246,402 | 253,345 | 269,780 | 287,722 | 302,431 | (2.74) | (18.53) | |||||
Other earning assets | 388,327 | 92,604 | 90,268 | 158,817 | 466,952 | NM | (16.84) | |||||
Total earning assets | 3,652,040 | 3,193,254 | 3,050,852 | 2,963,453 | 3,130,165 | 14.37 | 16.67 | |||||
Other assets | 254,004 | 246,593 | 234,355 | 228,893 | 226,320 | 3.01 | 12.23 | |||||
Total assets | $ 3,906,044 | $ 3,439,847 | $ 3,285,207 | $ 3,192,346 | $ 3,356,485 | 13.55 | % | 16.37 | % | |||
Liabilities and stockholders' equity | ||||||||||||
Demand deposits | $ 556,479 | $ 648,151 | $ 665,020 | $ 596,714 | $ 545,530 | (14.14) | % | 2.01 | % | |||
Interest-bearing liabilities: | ||||||||||||
NOW and other demand accounts | 722,584 | 624,868 | 660,387 | 695,481 | 817,430 | 15.64 | (11.60) | |||||
Money market accounts | 824,541 | 805,303 | 803,860 | 810,781 | 809,460 | 2.39 | 1.86 | |||||
Savings accounts | 593,823 | 232,543 | 219,167 | 222,274 | 224,716 | 155.36 | 164.25 | |||||
Time deposits | 489,066 | 379,088 | 343,986 | 329,198 | 350,368 | 29.01 | 39.59 | |||||
Total Deposits | 3,186,493 | 2,689,953 | 2,692,420 | 2,654,448 | 2,747,504 | 18.46 | 15.98 | |||||
Borrowings | 284,946 | 325,100 | 166,621 | 107,784 | 171,293 | (12.35) | 66.35 | |||||
Total Funding | 3,471,439 | 3,015,053 | 2,859,041 | 2,762,232 | 2,918,797 | 15.14 | 18.93 | |||||
Other Liabilities | 28,812 | 26,318 | 23,832 | 22,095 | 23,057 | 9.48 | 24.96 | |||||
Stockholders' equity | 405,793 | 398,476 | 402,334 | 408,019 | 414,631 | 1.84 | (2.13) | |||||
Total liabilities and stockholders' equity | $ 3,906,044 | $ 3,439,847 | $ 3,285,207 | $ 3,192,346 | $ 3,356,485 | 13.55 | % | 16.37 | % | |||
Memo: Average PPP loans | $ 4,241 | $ 5,926 | $ 11,868 | $ 23,950 | $ 51,491 | (28.43) | % | (91.76) | % | |||
Net Interest Income | ||||||||||||
Loans held for sale | $ 391 | $ 349 | $ 263 | $ 93 | $ - | 12.03 | % | 100.00 | % | |||
Loans | 40,960 | 35,881 | 30,260 | 26,272 | 24,749 | 14.16 | 65.50 | |||||
Investment securities | 1,584 | 1,571 | 1,518 | 1,445 | 1,430 | 0.83 | 10.77 | |||||
Other earning assets | 4,224 | 834 | 555 | 448 | 406 | NM | NM | |||||
Total Earning Assets | 47,159 | 38,635 | 32,596 | 28,258 | 26,585 | 22.06 | 77.39 | |||||
Non-interest bearing DDA | - | - | - | - | - | - | - | |||||
NOW and other interest-bearing demand accounts | 2,267 | 544 | 536 | 556 | 666 | NM | 240.39 | |||||
Money market accounts | 4,801 | 2,894 | 1,667 | 938 | 859 | 65.89 | NM | |||||
Savings accounts | 4,750 | 305 | 141 | 142 | 149 | NM | NM | |||||
Time deposits | 3,226 | 1,567 | 943 | 674 | 700 | 105.87 | NM | |||||
Total Deposit Costs | 15,044 | 5,310 | 3,287 | 2,310 | 2,374 | 183.31 | NM | |||||
Borrowings | 3,705 | 3,748 | 1,859 | 1,342 | 1,357 | (1.15) | 173.03 | |||||
Total Funding Costs | 18,749 | 9,058 | 5,146 | 3,652 | 3,731 | 106.99 | NM | |||||
Net Interest Income | $ 28,410 | $ 29,577 | $ 27,450 | $ 24,606 | $ 22,854 | (3.95) | % | 24.31 | % | |||
Memo: SBA PPP loan interest and fee income | $ 3 | $ 14 | $ 28 | $ 59 | $ 435 | (78.57) | % | (99.31) | % | |||
Memo: SBA PPP loan funding costs | $ 4 | $ 5 | $ 10 | $ 21 | $ 44 | (20.00) | % | (90.91) | % | |||
Net Interest Margin | ||||||||||||
Loans held for sale | 6.26 % | 6.18 % | 4.92 % | 5.38 % | 0.00 % | 8 | bps | 626 | bps | |||
Loans | 5.55 % | 5.04 % | 4.50 % | 4.20 % | 4.25 % | 51 | 130 | |||||
Investments | 2.61 % | 2.46 % | 2.23 % | 2.01 % | 1.92 % | 15 | 69 | |||||
Other Earning Assets | 4.41 % | 3.57 % | 2.44 % | 1.13 % | 0.35 % | 84 | 406 | |||||
Total Earning Assets | 5.24 % | 4.80 % | 4.24 % | 3.82 % | 3.44 % | 44 | 180 | |||||
NOW | 1.27 % | 0.35 % | 0.32 % | 0.32 % | 0.33 % | 92 | 94 | |||||
MMDA | 2.36 % | 1.43 % | 0.82 % | 0.46 % | 0.43 % | 93 | 193 | |||||
Savings | 3.24 % | 0.52 % | 0.26 % | 0.26 % | 0.27 % | 272 | 297 | |||||
CDs | 2.68 % | 1.64 % | 1.09 % | 0.82 % | 0.81 % | 104 | 187 | |||||
Cost of Interest Bearing Deposits | 2.32 % | 1.03 % | 0.64 % | 0.45 % | 0.44 % | 129 | 188 | |||||
Cost of Deposits | 1.91 % | 0.78 % | 0.48 % | 0.35 % | 0.35 % | 113 | 156 | |||||
Other Funding | 5.27 % | 4.57 % | 4.43 % | 4.99 % | 3.22 % | 70 | 205 | |||||
Total Cost of Funds | 2.19 % | 1.19 % | 0.71 % | 0.53 % | 0.52 % | 100 | 167 | |||||
Net Interest Margin | 3.15 % | 3.67 % | 3.57 % | 3.33 % | 2.96 % | (52) | 19 | |||||
Net Interest Spread | 2.63 % | 3.28 % | 3.31 % | 3.15 % | 2.81 % | (65) | (18) | |||||
Memo: Excluding SBA PPP loans | ||||||||||||
Loans | 5.56 % | 5.05 % | 4.51 % | 4.23 % | 4.27 % | 51 | bps | 129 | bps | |||
Total Earning Assets | 5.24 % | 4.81 % | 4.25 % | 3.85 % | 3.44 % | 44 | 180 | |||||
Net Interest Margin* | 3.16 % | 3.68 % | 3.58 % | 3.35 % | 2.96 % | (52) | 20 |
*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 Three Months Ended: | |||||||||
Reconciliation of Non-GAAP items: | 1Q 2023 | 4Q 2022 | 3Q 2022 | 2Q 2022 | 1Q 2022 | 1Q 2023 | 1Q 2022 | ||||
Net income | $ 5,775 | $ 3,085 | $ 5,054 | $ 5,009 | $ 4,593 | $ 5,775 | $ 4,593 | ||||
Non-GAAP adjustments to Net Income: | |||||||||||
Branch Consolidation / Other restructuring | - | 1,175 | 308 | 901 | - | - | - | ||||
(Gain) on sale of Infinex investment | - | (4,144) | - | - | - | - | - | ||||
Merger expenses | - | - | - | 401 | 115 | - | 115 | ||||
(Gain) on debt extinguishment | - | - | - | - | - | - | - | ||||
Income tax effect | - | 641 | (67) | (281) | (25) | - | (25) | ||||
Net income adjusted for nonrecurring income and expenses | $ 5,775 | $ 757 | $ 5,295 | $ 6,030 | $ 4,683 | $ 5,775 | $ 4,683 | ||||
Net income | $ 5,775 | $ 3,085 | $ 5,054 | $ 5,009 | $ 4,593 | $ 5,775 | $ 4,593 | ||||
Income tax expense | 1,583 | 530 | 1,365 | 1,375 | 1,265 | 1,583 | 1,265 | ||||
Provision for credit losses (incl. unfunded commitment expense) | 5,278 | 7,896 | 3,201 | 254 | 359 | 5,278 | 359 | ||||
Pre-tax pre-provision earnings | $ 12,636 | $ 11,511 | $ 9,620 | $ 6,638 | $ 6,217 | $ 12,636 | $ 6,217 | ||||
Effect of adjustment for nonrecurring income and expenses | - | (2,969) | 308 | 1,302 | 115 | - | 115 | ||||
Pre-tax pre-provision operating earnings | $ 12,636 | $ 8,542 | $ 9,928 | $ 7,940 | $ 6,332 | $ 12,636 | $ 6,332 | ||||
Return on average assets | 0.60 % | 0.36 % | 0.61 % | 0.63 % | 0.55 % | 0.60 % | 0.55 % | ||||
Effect of adjustment for nonrecurring income and expenses | 0.00 % | (0.27 %) | 0.03 % | 0.13 % | 0.01 % | 0.00 % | 0.01 % | ||||
Operating return on average assets | 0.60 % | 0.09 % | 0.64 % | 0.76 % | 0.57 % | 0.60 % | 0.57 % | ||||
Return on average assets | 0.60 % | 0.36 % | 0.61 % | 0.63 % | 0.55 % | 0.60 % | 0.55 % | ||||
Effect of tax expense | 0.16 % | 0.06 % | 0.16 % | 0.17 % | 0.15 % | 0.16 % | 0.15 % | ||||
Effect of provision for credit losses (incl. unfunded commitment expense) | 0.55 % | 0.91 % | 0.39 % | 0.03 % | 0.04 % | 0.55 % | 0.04 % | ||||
Pre-tax pre-provision return on average assets | 1.31 % | 1.33 % | 1.16 % | 0.83 % | 0.75 % | 1.31 % | 0.75 % | ||||
Effect of adjustment for nonrecurring income and expenses and expenses | 0.00 % | (0.34 %) | 0.04 % | 0.16 % | 0.01 % | 0.00 % | 0.01 % | ||||
Pre-tax pre-provision operating return on average assets | 1.31 % | 0.99 % | 1.20 % | 1.00 % | 0.77 % | 1.31 % | 0.77 % | ||||
Return on average equity | 5.77 % | 3.07 % | 4.98 % | 4.92 % | 4.49 % | 5.77 % | 4.49 % | ||||
Effect of adjustment for nonrecurring income and expenses | 0.00 % | (2.32 %) | 0.24 % | 1.00 % | 0.09 % | 0.00 % | 0.09 % | ||||
Operating return on average equity | 5.77 % | 0.75 % | 5.22 % | 5.93 % | 4.58 % | 5.77 % | 4.58 % | ||||
Effect of goodwill and other intangible assets | 2.08 % | 0.28 % | 1.92 % | 2.15 % | 1.58 % | 2.08 % | 1.58 % | ||||
Operating return on average tangible equity | 7.85 % | 1.03 % | 7.14 % | 8.08 % | 6.16 % | 7.86 % | 6.16 % | ||||
Efficiency ratio | 68.59 % | 71.71 % | 71.85 % | 75.01 % | 76.11 % | 68.59 % | 76.11 % | ||||
Effect of adjustment for nonrecurring income and expenses | 0.00 % | 4.93 % | (0.93 %) | (4.78 %) | (0.46 %) | 0.00 % | (0.46 %) | ||||
Operating efficiency ratio | 68.59 % | 76.65 % | 70.92 % | 70.23 % | 75.65 % | 68.59 % | 75.65 % | ||||
Earnings per share - Basic | $ 0.23 | $ 0.13 | $ 0.21 | $ 0.20 | $ 0.19 | $ 0.23 | $ 0.19 | ||||
Effect of adjustment for nonrecurring income and expenses | 0.00 | (0.10) | 0.01 | 0.05 | 0.00 | 0.00 | 0.00 | ||||
Operating earnings per share - Basic | $ 0.23 | $ 0.03 | $ 0.22 | $ 0.25 | $ 0.19 | $ 0.23 | $ 0.19 | ||||
Earnings per share - Diluted | $ 0.23 | $ 0.12 | $ 0.20 | $ 0.20 | $ 0.19 | $ 0.23 | $ 0.19 | ||||
Effect of adjustment for nonrecurring income and expenses | 0.00 | (0.09) | 0.01 | 0.04 | (0.00) | 0.00 | (0.00) | ||||
Operating earnings per share - Diluted | $ 0.23 | $ 0.03 | $ 0.21 | $ 0.24 | $ 0.19 | $ 0.23 | $ 0.19 | ||||
Book value per share | $ 16.21 | $ 15.98 | $ 15.89 | $ 16.17 | $ 16.42 | $ 16.21 | $ 16.42 | ||||
Effect of goodwill and other intangible assets | (4.36) | (4.37) | (4.39) | (4.40) | (4.31) | (4.36) | (4.31) | ||||
Tangible book value per share | $ 11.86 | $ 11.61 | $ 11.54 | $ 11.77 | $ 12.11 | $ 11.86 | $ 12.11 | ||||
Stockholders' equity | $ 400,265 | $ 394,403 | $ 391,808 | $ 398,637 | $ 404,195 | ||||||
Less goodwill and other intangible assets | (107,539) | (107,863) | (108,147) | (108,524) | (106,075) | (107,539) | (106,075) | ||||
Tangible common equity | $ 292,726 | $ 286,540 | $ 283,661 | $ 290,113 | $ 298,120 | ||||||
Equity to assets | 9.52 % | 11.04 % | 11.67 % | 12.32 % | 12.55 % | 9.52 % | 12.55 % | ||||
Effect of goodwill and other intangible assets | (2.37 %) | (2.77 %) | (2.94 %) | (3.04 %) | (2.98 %) | (2.37 %) | (2.98 %) | ||||
Tangible common equity to tangible assets | 7.14 % | 8.27 % | 8.73 % | 9.27 % | 9.57 % | 7.14 % | 9.57 % | ||||
Net interest margin | 3.15 % | 3.67 % | 3.57 % | 3.33 % | 2.96 % | 3.15 % | 2.96 % | ||||
Effect of adjustments for PPP associated balances* | 0.01 % | 0.01 % | 0.01 % | 0.02 % | (0.00 %) | 0.01 % | (0.00 %) | ||||
Core net interest margin | 3.16 % | 3.68 % | 3.58 % | 3.35 % | 2.96 % | 3.16 % | 2.96 % |
*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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