Primis(US:FRST)2025-10-24 15:02Financial Data and Key Metrics Changes - The company reported net earnings of $6.8 million and earnings per share of $0.28 for the third quarter, compared to core income of $2 million and $0.08 per share in the same quarter of 2024 [4] - Return on Assets (ROA) improved to 70 basis points, and Return on Tangible Common Equity (ROTCE) improved to 9.45% [4] - Core ROA adjusted for certain non-permanent items is closer to 90 basis points, aligning with the target of 1% ROA [5] - Net interest margin for the third quarter was 3.18%, up from 2.86% in the previous quarter and 2.97% year-over-year [19] Business Line Data and Key Metrics Changes - The mortgage division's production increased from approximately $20 million per month to $100-$120 million per month over the past few years, with pre-tax earnings of about $1.9 million in the current quarter [10] - The Mortgage Warehouse division showed average balances of about $210 million, ending balances of about $327 million, and pre-tax earnings of about $1.6 million [11] - Panacea's loan balances increased to $530 million, with deposits growing to about $132 million, a 50% increase year-over-year [12] Market Data and Key Metrics Changes - Non-interest-bearing checking accounts grew by about 16% compared to a year ago, improving the deposit mix and reducing the cost of deposits by almost 20% [7] - Average earning assets increased by 10% annualized in the third quarter, positioning the company to replace earning assets sold a year ago [18] Company Strategy and Development Direction - The company is focused on increasing the proportion of non-interest-bearing deposits to around 20% of total deposits, which is currently about 20% in the core bank [34] - The strategy emphasizes driving low-cost deposits and maintaining competitive rates for checking accounts to support growth and profitability [42] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving a 1% ROA goal, citing substantial tailwinds and improved profitability ratios [23] - The company is optimistic about the potential for loan growth in the fourth quarter and into 2026, with expectations of 6%-8% growth in the core bank [31] Other Important Information - The company noted limited impacts on net interest margin from the consumer program and expects continued improvement in margins due to new loans repricing [20] - The company has a strong focus on managing operating expenses, with core non-interest expense slightly higher than the year-ago quarter [22] Q&A Session Summary Question: Thoughts on overall loan growth for the fourth quarter and into 2026 - Management indicated potential for more runoff in the Mortgage Warehouse but expects to sustain levels around $210 million, with Panacea loans potentially reaching $150 million in annual production [29][31] Question: Timing for reaching a 3.30% margin - Management anticipates reaching a 3.30% margin by the first quarter of next year, focusing on increasing non-interest-bearing deposits [32][34] Question: Impact of interest rates on deposit costs - Management noted that while competition may drive rates down, the company's growth in checking accounts allows for competitive positioning without sacrificing margins [42] Question: Evidence of sticky customers from the digital banking platform - Management confirmed that digital customers are stickier than expected, with over 90% having multiple accounts or referring others [44][49] Question: Resolution of asset quality issues - Management expressed optimism about resolving certain loans in the next few quarters, particularly a C&I property that could improve margins [50][52]