Primis Financial Corp. · NASDAQ:FRST
Primis Financial — Southern National Bancorp of Virginia — Investor Presentation (August 2020)
33 slides from Primis Financial's investor presentation, Aug 17, 2020
Slide 1: Southern National Bancorp of Virginia, Inc. Investor Presentation
SOUTHERN NATIONAL BANCORP OF VIRGINIA, INC. INVESTOR PRESENTATION
Slide 2: Certain Important Information Disclaimer
2 CERTAIN IMPORTANT INFORMATION DISCLAIMER This presentation has been prepared by Southern National Bancorp of Virginia, Inc . (the “Company”) solely for information purposes based on its own information, as well as information from public sources . This presentation is a summary only and has been p
Slide 3: Caution Regarding Forward Looking Statements
3 CERTAIN IMPORTANT INFORMATION CAUTION REGARDING FORWARD LOOKING STATEMENTS This presentation contains forward - looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that relate to future events or the future performance of Southern National Bancorp of Virgi
Slide 4: Company Overview
COMPANY OVERVIEW
Slide 5: Southern National Bancorp of Virginia, Inc.
5 SOUTHERN NATIONAL BANCORP OF VIRGINIA, INC. ▪ NASDAQ: SONA ▪ Market Cap: $223 million (1) ▪ Headquartered in Mclean, VA ▪ Holding company for Sonabank, a state chartered bank headquartered in Glen Allen, VA ▪ Opened April 14, 2005 ▪ Completed transformational merger of equals with Eastern Virginia
Slide 6: Investment Highlights
6 INVESTMENT HIGHLIGHTS A PREMIER D.C. - MD - VA FRANCHISE SUPERIOR MARKET POSITION ATTRACTIVE BUSINESS MIX EXPERIENCED LEADERSHIP STRONG FINANCIAL POSITIONING CONSISTENT GROWTH STORY ▪ Geographically diverse footprint encompassing attractive D.C. area banking markets ▪ Attractive demographic profil
Slide 7: Experienced Leadership
7 EXPERIENCED LEADERSHIP TOP EXECUTIVES DENNIS J. ZEMBER, JR. President, CEO & Director ▪ Joined SONA in February 2020 ▪ Former President, CEO & Vice Chair at Ameris Bancorp ▪ Prior to CEO, held the roles of COO & CFO at Ameris Bancorp (2005 – 2019) ▪ Led Ameris through numerous events and transacti
Slide 8: Growth Milestones
8 GROWTH MILESTONES 2020 Leadership Transition 2014 Acquisition of Southern Trust Mortgage LLC Acquisition of Prince George’s Federal Savings Bank 2012 FDIC Assisted Acquisition of HarVest Bank of Maryland Sale of Non - Performing Loans to Garrison Investment Group 2011 Acquisition of Two Bank of Ha
Slide 9: Financial Highlights
FINANCIAL HIGHLIGHTS
Slide 10: 2nd Quarter 2020 Highlights
10 2ND QUARTER 2020 HIGHLIGHTS (1) Tangible common equity is a non - GAAP financial measure. See appendix for reconciliation FINANCIAL HIGHLIGHTS OBSERVATIONS ▪ Net income of $4.7 million ▪ Diluted earnings per share of $0.19 ▪ Return on average assets of 0.61% and return on average tangible common
Slide 11: Balance Sheet Trends
11 BALANCE SHEET TRENDS (1) Tangible common equity is a non - GAAP financial measure. See appendix for reconciliation Note: Annual data or the year ended December 31 of each respective year; 2020Q1 data for the three months ended March 31, 202 0 TOTAL ASSETS ($ M ) TOTAL GROSS LOANS ($ M ) TOTAL DEP
Slide 12: Consistent Earnings Power
12 0.00% 3.00% 6.00% 9.00% 12.00% 15.00% 18.00% 2016 2017 2018 2019 2020Q2 YTD ROATCE Core ROATCE CONSISTENT EARNINGS POWER (1) Tangible common equity is a non - GAAP financial measure. See appendix for reconciliation (2) Core earnings performance is a non - GAAP financial measure. See appendix for
Slide 13: Conservative Credit Culture
13 1 - 4 FAMILY 28.5% CONSUMER 0.2 % COMMERCIAL 71.3 % CONSERVATIVE CREDIT CULTURE JUNE 30, 2020 NONACCRUAL LOANS BY TYPE 12/31/2016 12/31/2017 12/31/2018 12/31/2019 6/30/2020 GROSS NONACCRUAL LOANS $3,795 $16,931 $6,709 $8,900 $14,930 SBA GUARANTEED AMOUNT NOT INCL. IN NONACC. LOANS 2,173 4,664 3,3
Slide 14: Allowance for Loan Losses Trends
14 $ 23,627 0.94 % 1.28% 0.04 % 0.00% 0.30% 0.60% 0.90% 1.20% 1.50% $0 $6,000 $12,000 $18,000 $24,000 $30,000 2017 2018 2019 2020Q2 YTD ALL ALL / Total Loans ALLL + Credit Marks / Total Loans NCOs / Average Loans ALLOWANCE FOR LOAN LOSSES ( 1 ) Includes loans secured by farmland and multi - family r
Slide 15: COVID-Pandemic Response
COVID - 19 PANDEMIC RESPONSE
Slide 16: On-Going Credit Review
16 ON - GOING CREDIT REVIEW → All loans > $2.0 million that are not reviewed by internal or external loan review require loan officer review annually that is similar to a credit submission → Internal loan review is required each year to review loans representing 30% of the commercial loan portfolio
Slide 17: Paycheck Protection Program (PPP)
17 PAYCHECK PROTECTION PROGRAM (“PPP”) ▪ Approved 4,244 applications through 8/10/20 ▪ Received SBA approval on $346 million of loans ▪ Funded $346 million of loans ▪ PPP fees of $11.0 million; $0 recognized to date ▪ 100% of PPP loans are C&I SBA PAYCHECK PROTECTION PROGRAM ($000) Count ($000) Coun
Slide 18: COVID - Loan Modifications
18 COVID - 19 LOAN MODIFICATIONS ▪ As of August 10, 2020, total modified loans or loans with request for modifications were $575 million or 23.2% of loans outstanding ▪ Total modified loans decreased $133 million, or 19%, from June 30, 2020 to August 10, 2020 ▪ SONA continues to work closely with cu
Slide 19: Loan Portfolio
LOAN PORTFOLIO
Slide 20: Key Lending Strategies
20 KEY LENDING STRATEGIES COMMERCIAL BANKING SBA LENDING ▪ Offers a full range of lending options, including commercial real estate ▪ As of 6/30/2020, commercial real estate (1) makes up 49% of total loans, and other commercial loans contribute an additional 8% ▪ Expertise in the federally guarantee
Slide 21: Loan Portfolio Detail
21 $0 $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 2016Y 2017Y 2018Y 2019Y 2020Q2 OWNER OCC CRE NON-OWNER OCC CRE CONSTRUCTION & LAND MULTIFAM NON-CRE LOANS LOAN PORTFOLIO DETAIL 6/30/2020 LOAN PORTFOLIO COMPOSITION OBSERVATIONS ▪ 2 nd quarter 2020 loan yield of 4.53% ▪ 1 st half
Slide 22: Sectors with Escalated Monitoring: Hotels
22 SECTORS WITH ESCALATED MONITORING: HOTELS HOTEL / MOTEL LOAN PORTFOLIO ▪ 6/30/2020 hotel loans of $283.8 million or 11.3% of the loan portfolio ▪ Approximately 76% of hotel loans had been granted a COVID - 19 deferral as of 6/30/2020 ▪ SONA has never experienced a charge - off on hotel loans – mo
Slide 23: Sectors with Escalated Monitoring: Restaurants
23 Taco Bell $33,251 38% Arbys $5,176 6% Blaze Pizza $6,385 7% Tropical Smoothie Café $1,201 1% Wendy's $926 1% Baskin Robins Ice Cream $690 1% Subway $926 1% Independent $ 35,635 40% Other $ 4,010 5% SECTORS WITH ESCALATED MONITORING: RESTAURANTS RESTAURANT PORTFOLIO ▪ $80.5M of restaurant exposure
Slide 24: Loan Portfolio by Risk Rating
24 LOAN PORTFOLIO BY RISK RATING (1) Includes loans secured by farmland and multi - family residential loans (2) Includes home equity lines of credit (3) Includes SBA guarantees of $1.5 million 6/30/2020 LOAN PORTFOLIO BY RISK RATING Pass Special Mention Substandard (3) Total % Pass Commercial Real
Slide 25: Funding and Liquidity
FUNDING AND LIQUIDITY
Slide 26: Deposit Mix
26 DEPOSIT MIX 6/30/2020 DEPOSIT MIX OBSERVATIONS ▪ Reduced time deposits by $163 million in the 1 st half as part of broader efforts to reduce reliance on brokered and listing service accounts ▪ Improved cost of deposits in the 1 st half as a result of the current interest rate environment and redu
Slide 27: Liquidity
27 LIQUIDITY ▪ SONA manages liquidity to meet short - term financial obligations including the payment of deposits on demand or at maturity, the repayment of borrowings at maturity and the ability to fund commitments and other new business opportunities ▪ Funding is obtained through a variety of sou
Slide 28: Investment Portfolio
28 AVAILABLE FOR SALE 74 % HELD TO MATURITY 26 % INVESTMENT PORTFOLIO AMORTIZED FAIR INVESTMENT SECURITIES AVAILABLE FOR SALE COST GAINS LOSSES VALUE RESIDENTIAL GOVERNMENT-SPONSORED MBS $44,608 $1,689 -- $46,297 OBLIGATIONS OF STATE AND POLITICAL SUBDIVISIONS 16,192 842 -- 17,034 CORPORATE SECURITI
Slide 29: Appendix
APPENDIX
Slide 30: Consolidated Financial Highlights
30 CONSOLIDATED FINANCIAL HIGHLIGHTS For the Twelve Months Ended In $000s except for per share data 12/31/2017 12/31/2018 12/31/2019 9/30/2019 12/31/2019 3/31/2020 06/30/20 Balance Sheet Total Assets $2,614,252 $2,701,295 $2,722,170 $2,698,915 $2,722,170 $2,762,563 $3,072,171 Total Gross Loans $2,06
Slide 31: Kroll Ratings
31 KROLL RATINGS Source : Kroll Bond Ratings Agency SOUTHERN NATIONAL BANCORP OF VIRGINIA, INC. Senior Unsecured Debt BBB Subordinated Debt BBB- Short-Term Debt K3 SONABANK Senior Unsecured Debt BBB+ Deposit BBB+ Subordinated Debt BBB Short-Term Deposit K2 Short-Term Debt K2 OUTLOOK Stable KROLL BON
Slide 32: Non-GAAP Reconciliation
32 NON - GAAP RECONCILIATION 6 Months Ended, Dollars in thousands, except per share data 2016 2017 2018 2019 YTD Total common stockholder's equity (GAAP) $126,344 $322,772 $348,290 $377,241 $381,669 Less goodwill and other intangible assets $11,388 $110,660 $110,563 $109,145 $108,463 Tangible common
Slide 33: Non-GAAP Reconciliation
33 NON - GAAP RECONCILIATION 6 Months Ended, Dollars in thousands, except per share data 2017 2018 2019 6/30/2020 Allowance for Loan Losses A $9,397 $12,283 $10,261 $23,627 Credit Marks on Acquired Loans $21,061 $15,055 $11,153 $8,645 Allowance for Loan Losses + Credit Marks on Acquired Loans B $30,
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