Primis Financial Earnings Call Highlights Profitability Rebound

Primis Financial Corp. ((FRST)) has held its Q1 earnings call. Read on for the main highlights of the call.

Primis Financial struck an upbeat tone on its latest earnings call, stressing that underlying performance is improving even as headline GAAP profits fell versus a one‑time gain last year. Executives highlighted surging operating earnings, wider margins and strong loan and mortgage growth, arguing these trends, plus cost discipline, position the bank for stronger profitability ahead.

Operating earnings rebound despite tough GAAP comparison

Operating EPS jumped to $0.33 in Q1 2026 from $0.14 a year earlier, a roughly 126% increase on an operating basis. GAAP EPS slipped to $0.30 from $0.92, but management stressed that last year’s figure was inflated by a non‑recurring gain tied to the Panacea deconsolidation.

ROA and margin expansion underscore core improvement

Return on assets doubled to 0.84% from 0.40% a year ago, reflecting stronger underlying profitability. Net interest margin widened to 3.43% from 3.15% a year earlier and about 3.20% last quarter, lifting net interest income to roughly $32 million versus $26 million.

Broad-based growth in loans and deposits

Total loans ended the quarter at $3.4 billion, up 11.7% year‑over‑year, with gross loans growing at a 14% annualized pace. Deposits rose just over 8% from a year earlier, and noninterest‑bearing checking balances climbed about 19% to $541 million, now nearly 16% of total deposits.

Mortgage and warehouse businesses gather pace

Retail mortgage production surged 122% year‑over‑year, driving pretax mortgage income to $2.1 million from $0.8 million. Mortgage revenue reached $10.8 million, with profitability on closed volume rising to 57 basis points, while the $460 million warehouse line could potentially double in 12 to 18 months.

Operating leverage driven by revenue growth and cost control

Core revenue grew about 34% year‑over‑year, far outpacing roughly 4% growth in reported operating expenses to $33.8 million. Core noninterest expense, excluding mortgage and volatile items, was about $22 million and is expected to stay in the $22–23 million range for the full year.

Capital moves and repricing set up future margin tailwinds

Primis completed the reduction of $27 million of subordinated debt in January, helping lower funding costs. Management also flagged around $400 million of loans repricing in late 2026 and early 2027 at a weighted average yield near 4.81%, which should support further asset‑yield and margin expansion.

Credit costs remain low despite higher provisioning

The bank booked a $1.5 million provision for credit losses, including about $0.7 million in specific reserves on impaired loans and roughly $0.4 million tied to consumer growth. Even so, core net charge‑offs were just 6 basis points, underscoring limited realized losses so far.

Managing remaining NPAs and office CRE risk

Management acknowledged a small number of larger office‑linked commercial real estate credits that remain nonperforming. While leasing activity and cap rate trends are reportedly improving, executives cautioned that the timing and ultimate resolution of these exposures remain uncertain.

Mortgage volatility and fair value swings temper upside

Late‑quarter market volatility, including geopolitical shocks, clipped mortgage profitability by an estimated 5–6 basis points. Those moves also drove fair value adjustments that muted what management said would have been even stronger mortgage results in an otherwise robust quarter.

Balancing deposit costs with digital growth

The cost of total deposits was 2.23% in Q1, ticking down modestly from the prior quarter but still a key focus area. Executives noted that digital deposits tend to carry higher rates and could be repriced lower by 25–30 basis points, but doing so risks slowing growth and weakening Primis’s competitive position.

AI and digital investments aimed at boosting efficiency

Primis outlined an emerging AI and digital strategy that has already identified hundreds of hours of potential efficiency gains across the bank. The company expects to leverage existing tools and internal talent with minimal incremental spending, targeting better sales productivity, smoother customer experiences and enhanced fraud controls.

Guidance: on track toward 1% ROA and higher margins

Management reiterated its goal of reaching roughly 1% ROA by the end of 2026 and projected net interest margin moving into the high‑3.4% range, around 3.5%. That outlook rests on continued loan growth, the subordinated‑debt payoff, scheduled loan repricing and strong mortgage momentum, including an expected $1.8 billion of 2026 mortgage closings and potential doubling of the warehouse book.

Primis’s call painted a picture of a bank rebuilding earnings power beneath noisy GAAP comparisons and market volatility. For investors, the story hinges on whether margin tailwinds, expanding mortgage and warehouse franchises, disciplined expenses and contained credit issues can collectively lift returns to management’s 1% ROA target over the next two years.