Primis Financial Q2 Earnings Call Highlights

Primis Financial posted Q2 2026 net income of $9.4 million, or $0.38 per diluted share, up sharply from both the prior quarter and a year earlier. Return on average assets improved to 0.90%, which management said better reflects the company’s recurring operating level. Revenue and balance-sheet trends were strong, with net interest income rising to $33.8 million and net interest margin expanding to 3.45%. Loan growth, deposit growth, and higher noninterest income — including stronger mortgage activity — helped drive the quarter. Credit quality improved overall, but Primis increased reserves on its largest office commercial real estate loan, contributing to a $5.5 million provision for credit losses. Management also outlined a core consolidation initiative it says could add about $7 million pretax next year, or roughly $0.22 per share.

Primis Financial NASDAQ: FRST reported second-quarter 2026 net income of $9.4 million, or $0.38 per diluted share, up from $7.3 million, or $0.30 per share, in the first quarter and $2.4 million, or $0.10 per share, a year earlier. President and Chief Executive Officer Dennis Zember said the quarter reflected revenue growth, contained operating expenses, improved net interest margins, lower nonperforming assets and continued growth in earning assets. Return on average assets rose to 0.90%, from 0.76% in the prior quarter and 0.26% a year earlier. The quarter included a $5.9 million gain from the sale of an insurance agency investment. Primis said it offset that gain with a legal settlement and a reserve build on its largest office commercial real estate credit. Zember said the company viewed its reported 0.90% return on assets as representative of its recurring operating level.

Net interest income totaled approximately $33.8 million, compared with $32.1 million in the first quarter and $25.2 million in the year-ago period. Net interest margin was 3.45%, up two basis points sequentially and 59 basis points from 2.86% a year earlier. Chief Financial Officer Matthew Switzer said the margin improvement reflected earning-asset growth funded at attractive incremental margins, including a three-basis-point sequential increase in the yield on earning assets. Average earning assets increased about 14% on an annualized basis during the quarter and 11% year over year. Gross loans held for investment grew about 8% annualized from March 31 through June 30 and were 11% higher than a year earlier, led by continued growth in Panacea and Mortgage Warehouse. Average deposits increased about 12% annualized, while average noninterest-bearing deposits rose about 24% annualized. Noninterest-bearing deposits represented 16.3% of average deposits, compared with 14.3% a year earlier. Core bank deposit costs were 1.60% during the quarter, down from 1.79% in the prior-year period. Total deposit costs were 2.25%, down 28 basis points year over year, while total funding costs were 2.46%, flat sequentially and down 21 basis points from a year earlier. Management said it expects net interest margin to remain near current levels, within roughly one or two basis points, as competitive pressures affect loan pricing. Switzer said Primis has subordinated debt that it expects to refinance within the next one or two quarters, potentially reducing the cost of that debt by 200 to 250 basis points and offsetting incremental margin pressure.

Noninterest income was $22 million, up from $13.6 million in the first quarter and $18 million a year ago. Beyond the insurance-investment gain, mortgage-related noninterest income increased 44% year over year to $11.4 million. Primis Mortgage closed $421 million in volume, a