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 the fourth quarter of 2025 [4] - Net interest income increased to approximately $31 million from $26 million in the previous 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 [6][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 the fourth quarter [17] Market Data and Key Metrics Changes - Non-interest-bearing deposits ended the year at $554 million, or 16% of total deposits, up from 14% the previous year [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 for a 1% ROA goal for 2026, with expectations for further margin expansion [24][38] - The focus remains on growing core deposits and improving the mix of earning assets, with a strategy to leverage existing resources for growth [15][16] - The company is committed to maintaining a community-style banking approach, enhancing customer loyalty and deposit retention [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving growth targets, citing a strong pipeline and operational leverage as key drivers [12][16] - The company noted that the vast majority of operational noise from previous quarters is behind them, with expectations for a smoother first half of 2026 [42] - Management highlighted the importance of new customer acquisition and the positive impact on deposit balances over time [51][53] 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, down from the previous quarter [20] Q&A Session Summary Question: What are the expectations for warehouse balances in 2026? - Management anticipates mortgage warehouse balances to average $500 million across the year, with seasonal fluctuations [28] Question: How should we think about overall loan growth in 2026? - The core bank is targeting approximately $100 million in loan growth, with a focus on C&I and owner-occupied loans [32] 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 [38]