Primis Financial Corp. Q1 FY2025 earnings call

• Three strategies to drive ROA: growth in earning assets back to pre-Life Premium book level, Mortgage division growth to add 20 basis points to ROA, and core processing contract consolidation. - Core Community Bank has a pipeline of new customers 3x year ago, loans up in April. - Mortgage division added top teams in various markets, increased production capacity. - Working on core processing contract consolidation expected in Q2 2025 to lift ROA by 15-18 basis points. - Panacea deconsolidation efforts with progress made near end of Q1, consumer book moved to held for investment with reduced volatility.

The Core Community Bank saw loans down slightly in Q1 due to delayed closings but was up $25 million in loans in April with a pipeline. Loan repricings were in the mid-7% range, new deposit accounts under 2%, and operating expense was same as the prior year. The Mortgage division closed $800M of loans in 2024 with $1.2B momentum at year-end, added top teams increasing production capacity. Panacea had efforts to deconsolidate, with first quarter consolidation reducing operating ROA by 10 basis points. The consumer book was moved to held for investment, with promotional loans reduced to $17M from $90M, reserved 75% of principal balance of remaining promotional loans.

• Growth in earning assets to $3.75B would add 24 basis points to ROA. - Mortgage growth and profitability expansion expected to add 15 basis points. - Technology spend reduction expected to add 15 basis points, on track to exceed 1% ROA. - Margin expected to expand 5-10 basis points in Q2, 10-20 basis points by end of year. - Core consolidation savings likely affecting 2026, core bank OpEx around $20M consistent with prior year.

• High cost to run digital core. - Complex accounting in Panacea deconsolidation. - Potential volatility in consumer loan portfolio if not managed properly.

Q: Any wrenches in Q2 for not reaching higher profitability?

A: Mortgage is on track with strong volumes, core bank closing pipeline loans, no operating expense pressure.

Q: Margin outlook in 2Q and remainder of year?

A: Expect 5-10 basis points margin expansion in Q2, 10-20 basis points by end of year.

Q: Panacea deconsolidation timing and pickup?

A: Changes made at end of Q1, need to evaluate accounting requirements, could be effective March 31, would book substantial gain from fair value treatment.