Primis Financial Corp. (FRST) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call highlights strong financial metrics, including improved net interest margin, significant loan growth, and increased mortgage revenue. The Q&A section reinforces positive sentiment with expected growth in warehouse balances and loan production. Despite some unclear management responses, the company's strategic plans for ROA and expense management are well-received. The lack of negative surprises and optimistic guidance supports a positive stock price reaction.
Key Financial Performance
Earnings $29.5 million or $1.20 per share for the quarter, representing almost a 3% ROA. This includes a substantial gain from a sale-leaseback transaction and restructuring-related noise.
Run Rate Earnings Approximately $8 million, equating to an 80 basis point ROA on $4 billion of average assets. This reflects no improvement from the restructuring and includes a seasonally slow mortgage quarter.
Net Interest Margin Increased from 2.90% in Q4 of the previous year to 3.28% in Q4 of the current year. The restructuring had no impact on Q4 margins, but when fully implemented, it is expected to add 28 basis points.
Checking Accounts Growth Increased by over 23% during the year, driven by leveraging a proprietary delivery app and efforts in the warehouse division.
Noninterest-Bearing Deposits Improved from 12%-13% of total deposits in mid-2024 to 16.3% at the end of 2025, reflecting a focus on funding asset growth with transaction accounts.
Earning Assets Grew by $325 million for the year, with larger growth on the loan side. Loan yields dropped only 10 basis points despite falling short-term rates.
Gross Loans Held for Investment Increased approximately 10% annualized from September 30 to December 31. Including Panacea loans sold, the increase would have been approximately 17% annualized.
Net Interest Income Approximately $31 million in Q4, up from $26 million in the year-ago period, driven by earning asset growth and margin expansion.
Mortgage Revenue $10 million in Q4, up from $8.9 million in Q3. Retail mortgage production increased 84% year-over-year in Q4, with closed loans reaching $1.2 billion for the year, a 50% increase over 2024.
Provision for Loan Losses $2.4 million in Q4, with $1 million due to specific reserving for impaired loans and $600,000 tied to consumer portfolio activity.
Core Noninterest Expense Approximately $21 million in Q4, slightly higher than the run rate for the past year, with adjustments for one-time items and division-specific volatility.
You have reached the limit. Sign up to access full content
Get started
Operating Highlights
Proprietary delivery app: Leveraged to grow checking accounts by over 23% during the year.
Digital platform: Finished 2025 with $993 million in digital deposits, maintaining 90% of balances despite rate reductions.
C&I portfolio growth: Substantial growth with $75 million in new commercial loans closed in December, accompanied by $90 million in related deposits.
Mortgage production: Closed loans increased to $1.2 billion in 2025, a 50% increase over 2024, with December production at $143 million.
Margin improvement: Net interest margin increased from 2.90% in Q4 2024 to 3.28% in Q4 2025, with expectations for further expansion in 2026.
Cost of deposits: Core bank cost of deposits reduced to 159 basis points in Q4 2025, down 14 basis points from Q3.
Operating leverage: Achieved through controlled operating expenses and leveraging back-office resources, maintaining a quarterly core expense range of $23-$24 million for 2026.
Sale-leaseback transaction: Generated substantial gain, enabling restructuring and repositioning for 2026.
Integrated business lines: Built scalable lines of business with limited resource requirements, providing strategic options for growth.
You have reached the limit. Sign up to access full content
Get started
Risk or Challenges
Forward-looking statements: The company acknowledges that forward-looking statements involve risks and uncertainties, which could lead to actual results differing materially from expectations.
Restructuring impact: The restructuring had virtually no impact on fourth-quarter margins, and its full implementation is expected to add 28 basis points to margins. However, the process involves risks related to execution and achieving projected benefits.
Digital deposits: Digital deposits decreased by less than 10% year-over-year, reflecting some customer attrition despite efforts to maintain balances.
Loan portfolio growth: Loan portfolio growth is subject to risks, including potential defaults and the ability to maintain yield amidst changing market conditions.
Mortgage business: The mortgage business faces seasonal slowness and market volatility, which could impact profitability and production targets.
Operating expenses: The company has controlled operating expenses but acknowledges noise from restructuring and other items, which could challenge maintaining expense levels.
Provision for loan losses: The provision for loan losses increased due to specific reserving for impaired loans and activity in the consumer portfolio, indicating credit risk.
Cost of deposits: The cost of deposits remains a focus area, but any failure to grow noninterest-bearing deposits could increase funding costs.
You have reached the limit. Sign up to access full content
Get started
Guidance & Outlook
Revenue and Margin Projections: The company expects further margin expansion in 2026, with net interest margin projected to increase by approximately 11 basis points due to investment portfolio restructuring and debt redemption. Additionally, $331 million of loans repricing in the second half of 2026 will contribute to higher loan yields.
Loan and Deposit Growth: Gross loans held for investment increased by 10% annualized in Q4 2025, with expectations for continued growth in 2026. Deposits also grew by 10% annualized in Q4, with noninterest-bearing deposits reaching 16% of total deposits. The company aims to maintain this growth trajectory.
Mortgage Business Outlook: Primis Mortgage closed $1.2 billion in loans in 2025, a 50% increase from 2024. The company projects 2026 production to range between $1.6 billion and $2 billion, with improved profitability and efficiency ratios.
Operating Expense Management: The company plans to maintain core noninterest expenses in the range of $23 million to $24 million per quarter in 2026, with efforts to push costs to the lower end of this range.
Capital and Strategic Goals: The company has the capital to achieve its 1% ROA goal in 2026 and is confident in its ability to meet this target. Strategic options are being explored to leverage the strong community bank and integrated business lines.
You have reached the limit. Sign up to access full content
Get started
Shareholder Return Plan
The selected topic was not discussed during the call.
You have reached the limit. Sign up to access full content
Get started
Key Q&A
Q:Where do you see average warehouse balances ending in 2026?
A:The company anticipates mortgage warehouse balances to average $500 million across the year, with seasonal fluctuations. It may average $400 million in the first quarter, peak over $600 million in the summer, and end the fourth quarter about $100 million higher than the previous year's fourth quarter.
Q:How should we think about overall loan growth in 2026?
A:The core bank is expected to grow by about $100 million, or 5%-7%. Panacea is modeled at $150 million, and the warehouse is expected to grow by $200-$250 million compared to the end of the previous year.
Q:How should we think about expense sensitivity as mortgage banking and fee income improve?
A:Quarterly expenses for 2026 are guided to $23-$24 million, excluding mortgage. Mortgage expenses will scale with revenue, and pretax contribution is expected to be 50-60 basis points. Loan closings are projected to improve by 40%-50%, with better bottom-line contributions.
Q:What is your target sustainable ROA for the full year 2026?
A:The target sustainable ROA for 2026 is 1%. The first quarter may be below this due to seasonality, but the second half of the year is expected to exceed 1%, achieving the target for the full year.
Q:Will the noise in expenses from 2023-2024 continue into the first half of 2026?
A:The majority of the noise in expenses is behind, with only minor impacts expected in the first quarter of 2026.
Q:How significant is margin expansion in achieving the 1% ROA target?
A:Margin expansion is a key factor, with the existing balance sheet and growth agenda contributing. The margin is expected to improve from 3.28% in Q4 2025 to mid-3.4% in Q1 2026, potentially reaching 3.5% by year-end. Operating expense discipline and higher contributions from mortgage will also support the ROA target.
Q:What is the outlook for deposit growth?
A:Deposit growth is driven by new customer acquisition, with nearly 6,000 new customers added in 2025. Balances for new customers tend to double within three years. Growth is focused on C&I, owner-occupied, and treasury-related sales, with referrals playing a significant role.
Q:Will there be more production hires in the mortgage business?
A:Yes, more hires are planned, but they will be incremental and less costly compared to the two large teams hired in 2025. The goal is to grow mortgage production to $2.5-$3 billion while maintaining balance with the core bank.
Q:What is the status of the $40 million increase in special mention loans?
A:The increase includes loans with strong cash flows, guarantors, and liquidity. One loan is an office CRE deal modified for special mention, another has strong guarantor support, and one assisted living loan is resolving tenant issues. No substandard classifications or significant impairments are expected.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the exact impact of new hires on mortgage production growth and the precise timeline for resolving special mention loans.
You have reached the limit. Sign up to access full content
Get started
Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
CI portfolio
Conference Instructions
Corp Conference
Finance level
Financial Corp
Life Premium
Mortgage Primis
Mortgage loan
Premium asset
Premium sale
Primis Financial
Primis Mortgage
Primis lot
ROA asset
ROA book
ROA improvement
ROA people
access bank
account CDs
account delivery
area
asset Life
bank account
bank deposit
customer
deposit success
fact
loan side
noise restructuring
office
platform core
production
rate basis
region
resource
restructure
restructuring item
scale
story
style
success core
FRST Transcript
Primis Financial Corp. (FRST) Q4 2025 Earnings Call Transcript
Positive1-30
The earnings call highlights strong financial metrics, including improved net interest margin, significant loan growth, and increased mortgage revenue. The Q&A section reinforces positive sentiment with expected growth in warehouse balances and loan production. Despite some unclear management responses, the company's strategic plans for ROA and expense management are well-received. The lack of negative surprises and optimistic guidance supports a positive stock price reaction.
Primis Financial Corp. (FRST) Q3 2025 Earnings Call Transcript
Positive10-24
The earnings call summary reflects strong financial performance with significant improvements in net earnings, EPS, and ROA. The company has a clear strategy for cost management and deposit growth, with a focus on maintaining profitability. The Q&A section indicates confidence in loan growth and deposit management, although some details were vague. Overall, the positive financial results and optimistic outlook for future growth suggest a likely positive stock price movement, especially considering the potential for increased margins and growth in digital banking.
Primis Financial Corp. (FRST) Q2 2025 Earnings Call Transcript
Positive7-25
The earnings call highlights strong financial performance, with significant net income, improved margins, and robust mortgage volume growth. The Q&A section suggests positive growth expectations for Panacea and the mortgage warehouse, with anticipated NIM improvements. Although management avoided specifics on local vs. digital growth, overall guidance remains optimistic. The strategic focus on cost reduction and asset growth, coupled with a low cost of deposits, supports a positive outlook. Despite some uncertainties, the overall sentiment is positive, anticipating a stock price increase of 2% to 8%.
Earnings call transcript: Primis Financial Q1 2025 misses EPS forecast
Unknown4-30
The earnings call presents a mixed picture: while there are positive aspects such as improved net interest margin and loan growth, there are significant concerns including high charge-offs, consumer loan volatility, and regulatory pressures. The Q&A section reveals uncertainties around Panacea deconsolidation and potential challenges in Q2. Despite some positive guidance, the lack of a share repurchase or dividend program and unclear management responses temper the outlook. Overall, the sentiment is neutral due to the balancing of positive financial metrics against significant risks and uncertainties.
FRST Report
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
How soon is the transcript available after the earnings call ends?
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
Is the transcript edited or altered in any way?
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
Why do some answers appear as “Unclear” or “Inaudible”?
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
