Primis(US:FRST)2025-04-30 15:02Financial Data and Key Metrics Changes - The company reported a pretax net income of $4,500,000 for the first quarter, with adjustments leading to a pretax net income of $7,500,000 or $5,900,000 after tax, equating to a 66 basis point ROA [18][19] - Net interest margin increased to 3.15%, up from 2.90% in the previous quarter, benefiting from reduced deposit costs [19][20] - Core bank cost of deposits remained attractive at 183 basis points, with new loans yielding over 7% [20][21] Business Line Data and Key Metrics Changes - The core community bank's loan pipeline has tripled compared to a year ago, with a $25,000,000 increase in loans as of April [6][7] - The mortgage division closed $800,000,000 in loans in 2024, with a significant increase in production capacity due to new team additions [9][10] - Non-interest income for the quarter was $7,800,000, down from $8,500,000 in the previous quarter, primarily due to a negative swing in fee income related to the consumer program [20] Market Data and Key Metrics Changes - The company expects about $100,000,000 growth from the core bank, $150,000,000 from warehouse, and $125,000,000 from Panacea [8] - The digital platform is projected to fund around $500,000,000 in excess lending for Panacea by the end of the year, with a 1.5% after-tax ROI [12][13] Company Strategy and Development Direction - The company is focused on three strategies to drive higher ROAs, including growth in earning assets, expansion of the mortgage division, and consolidation of core processing contracts [5][8][11] - The digital platform is crucial for funding excess lending and supporting the community bank, reducing pressure on credit decisions [13][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving higher profitability in the second quarter, with no significant pressures on operating expenses [25][27] - The company anticipates a strong performance in mortgage volumes due to seasonal trends and recent team recruitments [30][32] Other Important Information - The company is working towards deconsolidating Panacea, which could improve operating results significantly [15][60] - The consumer loan portfolio has been moved back to held for investment, with a focus on reducing volatility and risk [16][19] Q&A Session Summary Question: Any potential issues for Q2 profitability? - Management noted an increase in earning assets and expected strong mortgage performance, with no significant pressures on operating expenses [25][27] Question: Resolution timeline for consumer loans? - Management indicated that a significant portion of promotional loans is expected to pay off within the year, with a focus on managing the remaining standard consumer loans [34][35] Question: Margin outlook for Q2 and the year? - Management projected a 5-10 basis points margin expansion in Q2, with a potential increase of 10-20 basis points by year-end [41][42] Question: Expectations for charge-offs going forward? - Management expects high charge-offs but believes they have sufficient reserves to absorb them as the portfolio runs off [52][53] Question: Timing for Panacea deconsolidation? - Management indicated that if deconsolidation is determined, it would be effective March 31, with a substantial gain expected from fair value treatment [59][60]