Primis Financial Corp. Reports Preliminary Earnings Per Share for the Second Quarter of 2024

Rhea-AI Summary

Primis Financial Corp. (NASDAQ: FRST) reported preliminary results for Q2 2024, with diluted earnings per share of $0.32, compared to a loss of $0.01 in Q2 2023. The company's total assets reached $3.99 billion, up from $3.87 billion year-over-year. Net income available to common shareholders was $7.82 million, a significant improvement from a loss of $311,000 in the same period last year.

Key financial metrics include:

• Net interest income: $27.63 million (up from $26.24 million)
• Noninterest income: $14.49 million (up from $8.31 million)
• Return on average assets: 0.80% (up from -0.03%)
• Net interest margin: 3.03% (up from 2.64%)

The Board of Directors declared a quarterly cash dividend of $0.10 per share, payable on August 23, 2024.

Positive

• Diluted earnings per share increased to $0.32 from a loss of $0.01 year-over-year
• Net income available to common shareholders improved to $7.82 million from a loss of $311,000
• Total assets grew to $3.99 billion, up 3.3% year-over-year
• Net interest income increased by 5.3% to $27.63 million
• Noninterest income rose significantly by 74.5% to $14.49 million
• Net interest margin improved to 3.03% from 2.64%
• Return on average assets increased to 0.80% from -0.03%
• Nonperforming assets decreased to 0.25% of total assets from 0.64%

Negative

• Ongoing consultation process with SEC regarding accounting for a consumer loan portfolio
• Delay in filing Annual Report on Form 10-K for 2023 and Quarterly Reports for Q1 and Q2 2024
• Need to restate financial statements for the first three quarters of 2023
• Pre-tax losses of $2.34 million attributable to Panacea Financial Holdings
• Increased net charge-offs to 0.60% of average loans from 0.20% year-over-year

Insights

Financial Analyst

Primis Financial Corp.'s preliminary Q2 2024 results show notable improvements, but come with significant caveats. The company reported earnings per share of $0.32, a substantial increase from the $0.01 loss per share in Q2 2023. However, these results are subject to potential adjustments pending the outcome of an ongoing SEC consultation process.

Key financial metrics show positive trends:

• Net income increased to $7.82 million from a $311,000 loss year-over-year
• Net interest income rose by 5.3% to $27.63 million
• Net interest margin improved to 3.03% from 2.64%
• Return on average assets and equity turned positive at 0.80% and 7.86% respectively

However, there are some concerning aspects:

• Net charge-offs increased significantly to $5 million from $1.61 million in Q2 2023
• The company incurred $2.34 million in pre-tax losses from its partially-owned subsidiary, Panacea Financial Holdings
• Additional expenses of $1.3 million related to accounting advisory and other projects impacted pre-tax income

The declaration of a $0.10 per share dividend suggests management's confidence in the company's financial position. However, investors should approach these results with caution given the ongoing SEC consultation and potential for material adjustments to financial statements.

Legal Expert

The ongoing SEC consultation process regarding Primis Financial Corp.'s accounting for a consumer loan portfolio is a significant legal and regulatory concern. This situation has far-reaching implications:

• Delayed Financial Reporting: The company has yet to file its 2023 Annual Report and Q1 and Q2 2024 Quarterly Reports, potentially risking non-compliance with SEC reporting requirements.
• Restatement Risk: Primis may need to restate its financial statements for the first three quarters of 2023, which could impact investor confidence and potentially lead to legal challenges.
• Regulatory Scrutiny: The involvement of the SEC's Office of the Chief Accountant suggests a high level of regulatory attention, which could result in additional oversight or potential enforcement actions.
• Disclosure Obligations: The company must carefully manage its disclosures during this period to avoid potential securities law violations.

The preliminary nature of the reported results and the explicit warning that actual results may differ materially underscore the legal complexities Primis is navigating. Investors should be aware that the outcome of the SEC consultation could significantly alter the financial picture presented in these preliminary results.

The company's decision to continue dividend payments during this period of uncertainty is noteworthy from a legal perspective. While it may signal confidence, it also raises questions about capital management and fiduciary duty in light of the unresolved accounting issues.

Declares Quarterly Cash Dividend of $0.10 Per Share

MCLEAN, Va., July 25, 2024 /PRNewswire/ -- Primis Financial Corp. (NASDAQ: FRST) ("Primis" or the "Company"), and its wholly-owned subsidiary, Primis Bank (the "Bank"), today reported preliminary results for the second quarter of 2024.  As previously discussed in its Form 12b-25/A filed on April 1, 2024, Primis is currently pursuing a consultation process with the Office of the Chief Accountant of the Securities and Exchange Commission ("SEC") regarding the accounting for a consumer loan portfolio originated through a third-party.  This process with the SEC is ongoing and must be completed in order for the Company to complete its Annual Report on Form 10-K for the year ended December 31, 2023, its Quarterly Reports on Form 10-Q for the three and six months ended March 31, 2024 and June 30, 2024, respectively, and to restate its financial statements for each of the first three quarters of 2023.

While Primis works diligently to complete the pre-clearance process with the SEC, the Company is providing the preliminary results for the second quarter of 2024 below.  These results reflect the same accounting methodology as in prior periods for the consumer portfolio identified above for comparison purposes and to demonstrate underlying trends in the Company's performance.  The Company's independent auditor has not reviewed or audited these preliminary estimated financial results. The Company's actual results may differ materially from these preliminary financial results. This preliminary financial data has been prepared by and is the responsibility of the Company. Until the process with the SEC is complete, the results should be considered preliminary and are subject to adjustment based on the results of that process, the restatement, and other developments that may arise between now and the time its audited consolidated financial statements for the year ended December 31, 2023 are issued.

Preliminary Financial Results (Unaudited) – Q2 2024 versus Q2 2023
(Dollars in thousands except per share)	Q2 2024		Q2 2023
Total Assets	$3,997,539		$3,868,675
Loans HFI	3,300,562		3,194,352
Allowance for Credit Losses	(41,519)		(38,544)
Total Deposits	3,335,463		3,316,996
Common Stockholders' Equity	405,856		392,831
Book Value per Common Share	$16.43		$15.91
Effect of Intangible Assets	(3.84)		(4.34)
Tangible Book Value per Common Share	$12.59		$11.57
Net Interest Income	$27,625		$26,235
Provision For Credit Losses	3,929		4,355
Noninterest Income	14,491		8,305
Noninterest Expense	30,166		30,554
Pre-Tax Income / (Loss)	8,021		(369)
Tax Expense / (Benefit)	2,100		(58)
Net Income / (Loss)	5,921		(311)
Loss Attributable to Noncontrolling Interest	1,900		-
Net Income / (Loss) Avail. To Common	$7,821		($311)
Basic Earnings per Common Share	$0.32		($0.01)
Diluted Earnings per Common Share	$0.32		($0.01)
Return on Average Assets	0.80	%	(0.03)	%
Return on Average Common Equity	7.86	%	(0.31)	%
Net Interest Margin	3.03	%	2.64	%
Nonperforming Assets (excluding SBA Guarantees)	$9,918		$24,673
NPAs (excl. SBA Guarantees) / Total Assets	0.25	%	0.64	%
Net Charge-offs	$5,002		$1,614
Net Charge-offs (excluding third-party covered)	590		195
Net C/O's / Avg. Loans (annualized)	0.60	%	0.20	%
Net C/O's (excl. third-party covered) / Avg. Loans (ann.)	0.07	%	0.02	%

Beginning in the fourth quarter of 2023, results include consolidated results for Panacea Financial Holdings, Inc. ("PFH") which is partially owned by the Company.  Noncontrolling interests in the table above represent the portion of PFH losses not owned by Primis.  Pre-tax income for the second quarter of 2024 included $2.34 million of pre-tax losses attributable to PFH.   Pre-tax income in the second quarter of 2024 was also impacted by approximately $1.3 million of expenses related to accounting advisory and other projects in the quarter.  Adjusting for these items, pre-tax income would have been $11.66 million in the second quarter of 2024, an increase of $10.54 million as compared to adjusted pre-tax earnings of $1.12 million in the year-ago period.

Declaration of Cash Dividend

The Board of Directors declared a dividend of $0.10 per share payable on August 23, 2024 to shareholders of record on August 9, 2024.  This is Primis' fifty-first consecutive quarterly dividend. 

About Primis Financial Corp.

As of June 30, 2024, Primis had $4.0 billion in total assets, $3.3 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

Conference Call

The Company's management will host a conference call to discuss its preliminary second quarter results on Friday, July 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/808999214.  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.

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 the preliminary estimated financial and operating information presented herein, which is subject to adjustment; 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.

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 result of the "pre-clearance" process with the Office of the Chief Accountant of the SEC and the impact on the Company's financial statements; 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.

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SOURCE Primis Financial Corp.

FAQ

What was Primis Financial Corp's (FRST) earnings per share in Q2 2024?

Primis Financial Corp (FRST) reported preliminary diluted earnings per share of $0.32 for Q2 2024, compared to a loss of $0.01 per share in Q2 2023.

How much did Primis Financial Corp's (FRST) total assets grow in Q2 2024?

Primis Financial Corp's (FRST) total assets grew to $3.99 billion in Q2 2024, up 3.3% from $3.87 billion in Q2 2023.

What dividend did Primis Financial Corp (FRST) declare for Q2 2024?

Primis Financial Corp (FRST) declared a quarterly cash dividend of $0.10 per share, payable on August 23, 2024, to shareholders of record on August 9, 2024.

How did Primis Financial Corp's (FRST) net interest margin change in Q2 2024?

Primis Financial Corp's (FRST) net interest margin improved to 3.03% in Q2 2024, up from 2.64% in Q2 2023.

What challenges is Primis Financial Corp (FRST) facing with its financial reporting?

Primis Financial Corp (FRST) is in a consultation process with the SEC regarding accounting for a consumer loan portfolio, delaying its 2023 Annual Report and Q1/Q2 2024 Quarterly Reports, and necessitating a restatement of financial statements for the first three quarters of 2023.