Primis(FRST) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported earnings of $29.5 million, or $1.20 per share, with a return on assets (ROA) of almost 3% for Q4 2025 [4] - The net interest income increased to approximately $31 million from $26 million in the same period last year [18] - The net interest margin improved to 328 basis points from 290 basis points year-over-year [18] Business Line Data and Key Metrics Changes - The company grew checking accounts by over 23% during the year, with a total increase of about $116 million [5][9] - Closed loans in the Primis Mortgage segment increased to approximately $1.2 billion, a 50% increase over 2024 [14] - The average earning assets increased by 13% annualized in Q4 2025 [17] Market Data and Key Metrics Changes - Non-interest-bearing deposits ended the year at $554 million, or 16% of total deposits, compared to 14% at the end of 2024 [18] - The company anticipates mortgage warehouse balances to average $500 million across 2026, with seasonal peaks expected [28] Company Strategy and Development Direction - The company aims to achieve a 1% ROA goal for 2026, with expectations for further margin expansion [24][39] - The focus remains on growing core deposits and integrated lines of business, avoiding reliance on investor commercial real estate [15][44] - The company plans to continue hiring in the mortgage segment but with a more incremental approach to avoid large upfront expenses [47] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving growth and improving ROA, citing strong deposit growth and operational leverage [11][39] - The company believes that the noise from past restructuring is largely behind them, with expectations for a smoother operational environment in 2026 [34] Other Important Information - The company completed a sale-leaseback transaction that allowed for repositioning and entering 2026 with momentum [24] - The core bank's cost of deposits remains attractive at 159 basis points for the quarter, down from the previous quarter [19] Q&A Session Summary Question: What are the expectations for warehouse balances in 2026? - The company anticipates mortgage warehouse to average $500 million across the year, with seasonal fluctuations [28] Question: How should expenses be viewed in relation to mortgage banking? - The guided quarterly expenses for 2026 are $23-$24 million, excluding mortgage volatility [30] Question: What is the target sustainable ROA for 2026? - The target remains at 1% ROA for the full year, with expectations for improvement in the second half [32]