Primis Financial Corp. · NASDAQ:FRST
Primis Financial — Q4 2022 Earnings Presentation
27 slides from Primis Financial's earnings presentation, Jan 27, 2023
Slide 1: Fourth Quarter 2022
Fourth Quarter 2022 NASDAQ: FRST
Slide 2: Forward-looking statements
This Presentation 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 Secur
Slide 3: Non-GAAP financial measures
Statements included in this presentation 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 from continuing operations adjusted for nonrecurring income and exp
Slide 4: Company overview and valuation snapshot
Corp. Headquarters: McLean, VA Bank Headquarters: Glen Allen, VA Branches: 32 Ticker (NASDAQ): FRST Valuation Market Capitalization: $294 million Price / Book Value per Share 0.75x Price / Tangible Book Value: 1.03x Price / 2023 Estimated EPS(3): 9.47x Price / 2024 Estimated EPS(3): 8.28x Dividend Y
Slide 5: Investment highlights
• Talented management team and board committed to building long-term shareholder value – Attractive multi-pronged strategy for growth – Aggressive and early use of technology positioning the bank for superior performance as the industry evolves • Poised for outsized EPS growth versus peers – Busines
Slide 6: Strategic milestones timeline
Nov 2020 Sep 2021 Apr 2022 Sep 2022 Launched Panacea Financial Launched V1BE…Nation’s Announced consolidation of Launched a new digital – Nation’s first fintech first and only app-powered 8 branches which doubled platform for Primis Bank platform directed to branch delivery service in deposits/branc
Slide 7: Q4 run rate earnings and 2023 potential PTPP earnings
Q4 Run Rate Earnings 2023 Potential PTPP Earnings • Q4 earnings depressed by mortgage while other business lines (Panacea/Life Premium Finance) are hitting inflection points • Mortgage will no longer be a drag beginning in Q1’23 (anticipated breakeven) with material contribution for the year from 20
Slide 8: V1BE update
Deposits per Branch $84,635 $85,074 $74,522 $69,080 $67,156 V1BE Coverage Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 V1BE Update(1) • V1BE adoption/utilization continues to build with monthly transactions up 55% in Q4, primarily due to small-business 56% ~$89 million activity 4.88 % of V1BE Users Deposit balance
Slide 9: Digital banking platform
• Soft consumer launch July 25, 2022 with marketing efforts beginning late Q3’22 • Total platform deposits of $29.7 million as of December 31, 2022 • Almost 50% of all new deposit accounts are being opened online instead of in the branches (versus almost all accounts opened in the branch 3 years ago
Slide 10: Primis Mortgage expansion
• Significant expansion of mortgage footings in a short period of time (now licensed in 39 states and D.C.) • 35% increase in originations in Q4 vs Q3 despite headwinds from increasing rates and seasonal low point • On track for $1 billion of mortgage production in 2023, even in the current rate env
Slide 11: Panacea Financial update
Q4’22 Loan Composition ($248.4 million) Q4’22 Update • $46.5 million growth in loan balances in Q4’22 • Total 2022 loan originations of $229.8 mil. vs. original guidance of 24.2% PRN $125 - 150 mil. • Now banking >1% of all new doctors in the U.S. Student Refi 55.2% • Deposit growth of 69% unannuali
Slide 12: Life Premium Finance key metrics
Key Portfolio Metrics $193.8 Million 50.2% $791.8 Million Loan Balances (Net of Fees) Q4 Loan Balance Growth Projected Balance at Maturity Key Performance Metrics Placement Ratio 67% ORIGINATION CYCLE TIME SUBMISSIONS Carrier Approvals 26 Average number of days Average weekly from submission to loan
Slide 13: Fourth Quarter Results
Fourth Quarter Results
Slide 14: Fourth quarter highlights
• Return on average assets from continuing operations of 0.36% for the three months ended December 31, 2022 versus 0.61% for the three months ended September 30, 2022 and 0.88% for the three months ended December 31, 2021. Operating return on average assets from continuing operations(1) of 0.09%, 0.
Slide 15: Total assets, gross loans, deposits and TCE/TA
$3,572 $3,407 $3,357 9.57% $3,220 $3,237 $2,949 9.27% $2,763 9.26% $2,686 $2,683 $2,708 $2,737 $2,722 $2,629 $2,394 $2,340 8.73% 8.27% Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Total Assets Gross Loans Deposits TCE/TA(1) Dollars in millions. 15 (1) See reconciliation of Non-GAAP financial measures on slide 27.
Slide 16: Results by business line: Bank, Panacea, LPF, Mortgage
Bank Panacea LPF Mortgage Q4 '22 Q3 '22 Chg Q4 '22 Q3 '22 Chg Q4 '22 Q3 '22 Chg Q4 '22 Q3 '22 Chg Net Interest Income * $25,482 $25,284 0.8% $1,840 $1,465 25.6% $659 $530 24.4% $226 $171 32.3% Noninterest Income ** 2,750 2,195 25.3% 3 2 86.2% 5 5 (9.4%) 2,264 2,197 3.1% Operating Noninterest Exp. (e
Slide 17: Loan trends, yields and composition
Loan Trends and Yields Q4’22 Loan Composition (Ex. PPP) $5 Other Consumer 2.5% CRE - OO $8 $18 13.8% 15.7% $77 $31 $2,944 5.04% $2,729 4.86% $2,611 $2,362 $2,263 CRE - NOO 4.51% 19.7% 4.57% C&I 17.8% 4.50% 4.27% 4.23% 4.33% 4.25% 4.20% C&D 5.1% Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Residential Loans (Ex.PPP
Slide 18: Asset quality: criticized and classified loans
• Nonperforming assets and classified loans decreased by $2.3 million and Criticized & Classified Loans / Total Loans (Ex. PPP) $6.3 million, respectively, primarily due to impairment of one relationship • Migrated from special mention in Q3 • Largely comprised of multiple assisted living facilities
Slide 19: Allowance for credit losses
ACL Walk Forward ACL / Gross Loans (Ex. PPP) Growth/Model Third-Party Covered Q4 Impairment, Net 1.29% 1.24% 1.17% 1.17% 1.16% Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 • Provision for credit losses of $7.9 million in Q4 versus provision of $2.9 million in Q3 • Majority of provision due to impairment of one non
Slide 20: Deposit composition
Deposit Composition – Q4’22 Core Deposit Growth(1) Time Deposits 17.1% Demand Deposits 21.4% 1.43% Savings Accounts 9.0% 0.93% 0.92% $2,403 0.78% $1,943 $2,257 $1,342 $530 $583 $1,172 $441 NOW Accounts 0.48% 22.7% $339 Money Market $320 $1,872 Accounts $1,502 $1,675 29.8% $852 $1,003 2018 2019 2020
Slide 21: Net interest margin and net interest income trends
Net Interest Margin Trends Net Interest Income Progression $1,388 $38 $2,593 $80 $479 3.58% 3.67% 3.57% 3.51% 3.35% 3.33% 3.00% 2.96% $27,412 $28,189 2.96% 2.79% $24,526 $22,375 $21,648 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Non-Core Interest Income Net Interest Income (Core) Net Interest Margin Net Interest
Slide 22: Non-interest expense and efficiency ratio
Non-Interest Expense (Ex. Res. for Unfunded Com. Expense) • Q4 NIE, excluding unfunded commitment expense, impacted by the following: • Restructuring and other nonrecurring expenses of $1.2 $29,054 million $20,598 $23,450 $1,175 • Primis Mortgage expenses of $5.4 million due to full quarter $18,644
Slide 23: Return on average assets and PTPP operating earnings
(1) Return on Average Assets Pre-Tax Pre-Provision Operating Earnings 0.88% Adjusted for Mortgage Impact: 0.83% 1.15% 1.10% 0.76% 1.05% 0.91% 1.00% 0.63% 0.64% 0.61% 0.77% 0.78% 0.57% 0.55% $8.71 $6.72 $7.91 $7.94 0.36% $6.33 0.09% Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 ROAA Ope
Slide 24: Diluted EPS and tangible book value per share
Diluted Earnings Per Share and Adjusted Diluted EPS(1) Tangible Book Value Per Share (1) $1.48 $1.42 $1.42 $12.43 $1.32 $11.60 $11.61 $11.09 $1.26 $1.25 $9.88 $0.68 $0.72 $0.68 $0.61 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 EPS Adjusted EPS • Tangible book value per share reduced by $1.05 a
Slide 25: Investment highlights
• Talented management team and board committed to building long-term shareholder value • Attractive multi-pronged strategy for growth beginning to pay dividends • Aggressive and early use of technology positioning the bank for superior performance as the industry evolves • Significant valuation upsi
Slide 26: Appendix
Appendix 26
Slide 27: Reconciliation of Non-GAAP items
Primis Financial Corp. (Dollars in thousands, except per share data) For Three Months Ended: For Twelve Months Ended: Reconciliation of Non-GAAP items: 4Q 2022 3Q 2022 2Q 2022 1Q 2022 4Q 2021 4Q 2022 4Q 2021 Net income from continuing operations $ 3,085 $ 5,054 $ 5,009 $ 4,593 $ 7,651 $ 17,741 $ 31,