Primis(US:FRST)2021-10-29 18:55Financial Data and Key Metrics Changes - Earnings for the third quarter were $6.2 million or $0.25 per basic and diluted share, compared to $8.8 million or $0.36 per share in the previous quarter [23] - Total assets grew to $3.45 billion, with gross loans increasing to $2.31 billion from $2.29 billion in the previous quarter, reflecting a 5.9% linked quarter growth excluding PPP loans [23][24] - Deposits increased by 2% to $2.81 billion, with non-interest bearing deposits remaining over 19% [25] Business Line Data and Key Metrics Changes - The company achieved approximately $122 million in total loan growth, representing a 24% annualized growth rate, primarily from the core bank and some mortgage loan purchases [8][24] - Non-interest income saw a modest increase in the third quarter compared to the prior quarter, while non-interest expenses rose to $120,000 [30] Market Data and Key Metrics Changes - Credit quality remained stable, with non-performing assets increasing by $1.8 million, and net charge-offs were $2 million, primarily tied to previously rated doubtful loans [27][28] - COVID-related deferrals declined to $7 million, with a significant portion tied to one relationship transitioning to interest-only payments [28] Company Strategy and Development Direction - The company is focusing on deploying excess liquidity resulting from successful deposit growth, targeting a mid-teens growth rate for loans in the second half of the year and into 2022 [7][8] - A new niche line of business in life insurance premium finance is being developed, with experienced individuals recruited to drive this initiative [11][12] - The digital bank initiative is set to launch a pilot program on November 15, offering full-service checking and savings accounts, with plans to expand into commercial offerings [15][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustainable loan growth momentum and the potential for improved profitability, aiming for a return on assets (ROA) target of 1% by the second half of next year [18][36] - The company is optimistic about the impact of new business lines and digital banking solutions on overall profitability and efficiency [19][72] Other Important Information - The investment in Southern Trust Mortgage has been classified as a discontinued operation, impacting prior period financial information [22] - The company plans to offset expected increases in expenses related to growth initiatives through repositioning and efficiency improvements, targeting low single-digit expense growth in 2022 [31][61] Q&A Session Summary Question: What is the accretion number this quarter? - The accretion number was $469,000 [34] Question: What is a reasonable timeframe to achieve profitability targets? - Management aims to approach the 1% ROA target in the second half of next year, with potential for further improvements in early 2023 [36] Question: Where will the mid-teens loan growth come from? - Approximately one-third is expected from the core bank, with the remaining growth split between panacea and the life insurance business [44] Question: Are there plans for commercial insurance premium finance? - There is potential for expansion into commercial insurance premium finance, but the focus is currently on establishing the life insurance premium finance business [46] Question: What are the expectations for growth from the partnership with the home improvement FinTech? - The partnership is expected to enhance underwriting and sourcing of deals, contributing positively to growth [48] Question: What are the new origination yields on a blended basis? - The blended yield is close to the overall portfolio yields, with specific yields varying between consumer and commercial loans [50][52] Question: Are there plans for branch cuts? - While specific branch cuts are not announced, there are opportunities to reduce the number of branches without impacting overall operations [55][62] Question: What industry was involved in the credit downgrade? - The downgrade was related to an acquisition and development loan for a property where the project is stalled, but the loan has a good loan-to-value ratio [57]