8-K: Primis Financial Corp. Announces Preliminary Q1 2024 Earnings and Declares Dividend

Primis Financial Corp. released preliminary first-quarter 2024 results, showing increased earnings per share and declaring a $0.10 per share dividend, while also navigating an ongoing SEC pre-clearance process.

Summary

• Primis Financial Corp. reported preliminary financial results for the first quarter of 2024, with basic and diluted earnings per share at $0.26, up from $0.23 in the same period last year.
• Net income available to common shareholders was $6.327 million, compared to $5.693 million in Q1 2023.
• The company's total assets were $3.917 billion, down from $4.218 billion year-over-year, while total loans increased to $3.221 billion from $3.057 billion.
• Total deposits decreased to $3.315 billion from $3.668 billion year-over-year.
• The company declared a cash dividend of $0.10 per share, payable on May 24, 2024, marking its fiftieth consecutive quarterly dividend.
• Primis is currently undergoing a pre-clearance process with the SEC regarding the accounting for a consumer loan portfolio, which may lead to a restatement of prior financial statements.
• The preliminary results reflect the same accounting methodology as in prior periods for the consumer portfolio for comparison purposes.
• Adjusting for losses from Panacea Financial Holdings and accounting advisory expenses, pre-tax income would have been $9.0 million, a 30% increase compared to the prior year.

Sentiment

Score: 5

Explanation: The sentiment is neutral to slightly negative due to the positive earnings per share and dividend announcement being offset by the ongoing SEC pre-clearance process, potential restatement of financials, and decreased total assets and deposits.

Positives

• Earnings per share increased to $0.26 from $0.23 year-over-year.
• Net income available to common shareholders rose to $6.327 million from $5.693 million year-over-year.
• The company's net interest margin improved to 3.18% from 3.16% year-over-year.
• Nonperforming assets decreased substantially to $8.758 million from $32.816 million year-over-year.
• The company declared its fiftieth consecutive quarterly dividend of $0.10 per share.
• Adjusted pre-tax income shows a 30% increase year-over-year.

Negatives

• Total assets decreased to $3.917 billion from $4.218 billion year-over-year.
• Total deposits decreased to $3.315 billion from $3.668 billion year-over-year.
• The company is undergoing a pre-clearance process with the SEC regarding a consumer loan portfolio, which may lead to a restatement of prior financial statements.
• Pre-tax income was impacted by $2.0 million of losses attributable to Panacea Financial Holdings and $0.6 million in accounting advisory expenses.

Risks

• The ongoing pre-clearance process with the SEC regarding the accounting for a consumer loan portfolio could lead to a restatement of prior financial statements.
• The company's actual results may differ materially from the preliminary financial results.
• The company faces risks related to competitive pressures, changes in laws and regulations, credit risk, and economic and market conditions.
• There are potential impacts from adverse developments in the banking industry, including customer confidence, deposit outflows, and liquidity.
• The company is exposed to cybersecurity risks, fraud, and misconduct by internal or external actors.
• Acts of God, war, terrorism, pandemics, or other catastrophic events could affect general economic conditions.

Future Outlook

The company's future performance is subject to the outcome of the SEC pre-clearance process and other factors, and the preliminary results are subject to adjustment. The company is focused on its growth strategy, expense management, capital management, and future profitability.

Management Comments

• The company is diligently working to complete the pre-clearance process with the SEC.
• The preliminary results reflect the same accounting methodology as in prior periods for the consumer portfolio for comparison purposes.
• The company's management will host a conference call to discuss its preliminary first quarter results on April 26, 2024.

Industry Context

The announcement comes amid a period of scrutiny for the banking sector, with investors closely monitoring financial results and regulatory compliance. The company's focus on growth and profitability aligns with industry trends, but the SEC pre-clearance process adds a layer of uncertainty.

Comparison to Industry Standards

• Primis's net interest margin of 3.18% is within the range of regional banks, but the ongoing SEC review and potential restatement of financials make direct comparisons challenging.
• The decrease in nonperforming assets is a positive sign, but the increase in net charge-offs warrants attention.
• Compared to peers like United Bankshares (UBSI) and F.N.B. Corporation (FNB), Primis's return on average assets of 0.66% is lower, indicating a need for improved asset utilization.
• The company's tangible book value per share of $12.32 is comparable to some regional banks, but the potential restatement could impact this metric.

Stakeholder Impact

• Shareholders will receive a dividend of $0.10 per share.
• Shareholders are exposed to the risk of a restatement of prior financial statements.
• Employees may be impacted by the company's financial performance and strategic initiatives.
• Customers may be impacted by changes in the company's services and offerings.
• Creditors are exposed to the company's financial performance and credit risk.

Next Steps

• The company will complete the pre-clearance process with the SEC.
• The company will restate its financial statements for the first three quarters of 2023.
• The company will issue its audited consolidated financial statements.
• The company will host a conference call to discuss its preliminary first quarter results on April 26, 2024.

Key Dates

Keywords

financial results, earnings per share, dividend, preliminary results, SEC, restatement, net interest margin, nonperforming assets, Panacea Financial Holdings, banking