8-K: Primis Financial Corp. Announces Preliminary Q2 2024 Results and Declares Dividend

Primis Financial Corp. reported preliminary second-quarter earnings per share of $0.32 and declared a $0.10 per share cash dividend.

Summary

• Primis Financial Corp. has released its preliminary financial results for the second quarter of 2024, showing a net income available to common shareholders of $7.821 million, or $0.32 per share.
• This is a significant improvement compared to a net loss of $0.311 million, or a loss of $0.01 per share, in the same quarter of the previous year.
• The company's total assets reached approximately $4 billion, with total loans at $3.3 billion and total deposits at $3.3 billion.
• Net interest income increased to $27.625 million from $26.235 million year-over-year, and noninterest income rose to $14.491 million from $8.305 million.
• The company also declared a cash dividend of $0.10 per share, payable on August 23, 2024, to shareholders of record on August 9, 2024.
• These results are preliminary and subject to change pending the completion of a consultation process with the SEC regarding the accounting for a consumer loan portfolio.

Sentiment

Score: 7

Explanation: The document shows a positive turnaround in financial performance, but the ongoing SEC consultation and restatement process introduce uncertainty. The dividend declaration is a positive sign, but the preliminary nature of the results tempers the overall sentiment.

Positives

• The company achieved a significant turnaround in profitability, moving from a loss to a profit in the second quarter of 2024.
• There was a substantial increase in noninterest income, indicating a diversification of revenue streams.
• The company's net interest margin improved to 3.03% from 2.64% year-over-year.
• Nonperforming assets decreased significantly, suggesting improved asset quality.
• The declaration of a cash dividend demonstrates the company's commitment to returning value to shareholders.
• The company's tangible book value per common share increased to $12.59 from $11.57 year-over-year.

Negatives

• The reported results are preliminary and subject to change due to an ongoing consultation process with the SEC.
• The company is still working to complete its Annual Report on Form 10-K for the year ended December 31, 2023, and restate its financial statements for the first three quarters of 2023.
• Pre-tax income for the second quarter of 2024 included $2.34 million of pre-tax losses attributable to Panacea Financial Holdings, Inc. (PFH).
• Pre-tax income was also impacted by approximately $1.3 million of expenses related to accounting advisory and other projects in the quarter.

Risks

• The ongoing consultation process with the SEC regarding the accounting for a consumer loan portfolio could lead to adjustments in the financial statements.
• The company's actual results may differ materially from the preliminary results due to the ongoing SEC consultation and restatement process.
• The company faces risks related to competitive pressures, changes in regulations, and economic conditions.
• There are risks associated with credit quality, cybersecurity, and potential fraud or misconduct.
• The company is exposed to risks from acts of God, war, terrorism, pandemics, and other catastrophic events.

Future Outlook

The company's future performance is subject to the outcome of the SEC consultation process and the restatement of prior financial statements. The company is focused on its growth strategy, expense management, and capital management, but faces various risks and uncertainties that could impact its results.

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 identified above for comparison purposes and to demonstrate underlying trends in the Company's performance.
• The company's management will host a conference call to discuss its preliminary second quarter results on Friday, July 26, 2024.

Industry Context

The announcement comes amid a period of scrutiny for the banking industry, with recent high-profile bank failures impacting customer confidence and regulatory responses. Primis's focus on improving its financial performance and addressing accounting issues is crucial for maintaining stability and investor confidence.

Comparison to Industry Standards

• Primis's reported net interest margin of 3.03% is within the range of regional banks, but it is important to compare this to peers with similar asset sizes and geographic footprints.
• The reduction in nonperforming assets to 0.25% of total assets is a positive sign, indicating improved asset quality compared to the previous year's 0.64%.
• The company's return on average assets of 0.80% and return on average common equity of 7.86% are metrics that should be compared to industry averages and specific peer banks to assess relative performance.
• Companies like Truist Financial Corporation (TFC) and Capital One Financial Corporation (COF) are larger national banks that can be used as a benchmark for comparison, but regional banks like First Horizon Corporation (FHN) and Regions Financial Corporation (RF) may be more relevant peers for Primis.

Stakeholder Impact

• Shareholders will benefit from the declared cash dividend and the improved financial performance.
• Employees may experience increased job security due to the company's improved financial health.
• Customers may have increased confidence in the bank's stability and services.
• Creditors may view the company as a lower-risk borrower due to its improved financial position.

Next Steps

• The company will complete the consultation 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 for the year ended December 31, 2023.
• The company will host a conference call to discuss its preliminary second quarter results on July 26, 2024.

Key Dates

Keywords

financial results, earnings per share, cash dividend, preliminary results, net income, net interest income, noninterest income, SEC consultation, Primis Financial Corp, FRST