Primis Financial (NASDAQ:FRST) reported fourth-quarter 2025 earnings of $29.5 million, or $1.20 per share, which President and CEO Dennis Zember said equated to nearly a 3% return on assets (ROA). Management emphasized that the quarter included a “substantial gain” from a sale-leaseback transaction and related restructuring items that created “noise” in reported results.
Looking beyond those items, Zember said he and CFO Matt Switzer view the company’s run-rate earnings at roughly $8 million per quarter, or about an 80-basis-point ROA on approximately $4 billion of average assets, reflecting “virtually no improvement from the restructure” and a seasonally slow mortgage quarter. Management said that set-up gives the company momentum entering 2026, with an ongoing goal of reaching a 1% ROA.
Margin expansion and balance sheet growth
Switzer noted additional expected tailwinds for margin as 2026 progresses, including the investment portfolio restructuring (which only benefited half of December) and the redemption of $27 million of subordinated debt expected at the end of January. If both items had been in place for all of the fourth quarter, Switzer said NIM would have been about 11 basis points higher.
He also pointed to:
- Approximately $331 million of loans repricing predominantly in the second half of 2026, with a weighted-average yield just under 5%.
- $40 million of deposits with a contractual rate leaving at the end of January, with a cost almost 80 basis points higher than wholesale funding.
On the balance sheet, Switzer said gross loans held for investment increased about 10% annualized from Sept. 30 to Dec. 31. Including a Panacea loan sold in the fourth quarter, he said gross loans would have increased about 17% annualized, led by growth in Panacea and mortgage warehouse. Average earning assets increased 13% annualized in the fourth quarter, while deposits rose 10% annualized, which management attributed to strong production late in the quarter.
Deposit mix improvements and checking account growth
Zember highlighted deposit mix improvement as a key theme in 2025. He said non-interest-bearing deposits as a percentage of total deposits improved to 16.3% at Dec. 31, 2025, compared with 12%–13% in mid-2024, and noted the company had been “even higher than that early this year.” Switzer said non-interest-bearing deposits ended the year at $554 million, or 16% of total deposits, versus $439 million, or 14%, at the end of 2024.
Management also emphasized checking account growth. Zember said checking accounts grew by more than 23% during the year, representing about $116 million of growth, which he characterized as potentially among the top growth rates nationally. He credited efforts including the company’s proprietary delivery app and expansion of treasury services to warehouse clients, and said the bank has been funding nearly all earning asset growth with transaction accounts rather than wholesale borrowings.
In the Q&A, Zember said Primis tracks new customers (not simply new accounts) and reported nearly 6,000 new customers were added last year, compared with barely more than 1,000 in his first year at the company. He added that, historically, balances from customers three years after acquisition are “almost double” what they were in the first year, although he cautioned that attrition remains a normal factor.
Mortgage, warehouse growth, and 2026 outlook
Management described mortgage-related businesses as an important driver of profitability and operating leverage. Zember said mortgage warehouse averaged $175 million of outstandings for the year and suggested it could average roughly $500 million in 2026. In response to an analyst question, Zember outlined expected seasonality, with an average around $400 million in the first quarter, peaking well over $600 million in summer, and tapering in the fourth quarter.
Zember said the mortgage warehouse business is generating “comfortably over 2% ROA” and indicated scaling the average balance from $175 million to $500 million should improve earnings contribution. Switzer added that the business’ margins are accretive to consolidated levels and that its run-rate efficiency ratio is in the mid-20s, which could become more visible in consolidated ratios as the segment scales.
On retail mortgage, Zember said Primis Mortgage increased closed loans to approximately $1.2 billion in 2025, a 50% increase over 2024, and recorded $143 million of closings in December. He said management is modeling 2026 production in the $1.6 billion to $2 billion range. Switzer reported mortgage revenue of $10 million in the fourth quarter, up from $8.9 million in the third quarter, with seasonal softness offset by production from new hires. He also said retail mortgage production was 84% higher in the fourth quarter of 2025 versus the fourth quarter of 2024, and highlighted $32 million of construction-to-permanent production in the quarter.
On profitability, Zember said Primis Mortgage earned $1.4 million pre-tax in the fourth quarter. Management said it expects mortgage to be a “much higher contributor” for full-year 2026 than 2025, in part because the company expects to benefit from teams hired in 2025 without repeating the buildout-related expense impact experienced in early 2025.
Expenses, credit, and the 1% ROA target
Operating leverage was a central focus of management’s commentary. Zember said the company has controlled and reworked its operating expense base for about two years, investing primarily in revenue-producing personnel while leveraging the back office. He said management believes it can hold a roughly $22 million go-forward operating expense level referenced in the press release reconciliation, supporting a trend of improved results as revenue grows.
Switzer provided more color on quarterly expense normalization. Excluding mortgage and Panacea division volatility and non-recurring items, he said core expenses were $28 million versus $22 million in the third quarter, driven in part by higher compensation accruals, particularly $4.5 million of restricted stock expense. He also cited approximately $1.8 million of other one-time items, including one month of lease expense, plus roughly $300,000 to $400,000 of cleanup expenses expected to moderate next quarter. Normalizing those items, he said core non-interest expense on a comparable basis was approximately $21 million.
For 2026, Switzer said the company’s conservative estimate for quarterly core expense (adjusted for mortgage and Panacea) is $23 million to $24 million, inclusive of $1.5 million of quarterly lease expense tied to the sale-leaseback transaction, with management “pushing hard” to be at the bottom of or below that range. He noted that mortgage expenses scale with revenue and that management prefers to evaluate mortgage on a pre-tax contribution basis.
On credit, Switzer said the provision for credit losses was $2.4 million, partly due to loan growth, including about $1 million tied to specific reserving for impaired loans at year-end and about $600,000 related to consumer portfolio activity. In response to a question about loans moving to special mention, Zember discussed several credits and said management did not expect those items to move to substandard or result in “big impairments or losses,” citing factors such as debt coverage, loan-to-value, guarantor strength, and remediation efforts.
Looking ahead, management reiterated its objective of achieving a 1% ROA in 2026, acknowledging that seasonality could weigh on the first quarter but expecting stronger performance in the second half of the year. Switzer said the sale-leaseback transaction was “timely” and helped reposition the company to enter 2026 with momentum, adding that Primis has the capital and fundamentals in place to pursue its goals.
About Primis Financial (NASDAQ:FRST)
Primis Financial Corporation is a bank holding company headquartered in Waycross, Georgia, operating through its wholly owned subsidiary, Primis Bank. The company offers a full suite of commercial and retail banking services tailored to meet the needs of individuals, small businesses, and agricultural clients across its service area. Primis Bank focuses on building relationships within the communities it serves, positioning itself as a local financial partner for deposit-taking, lending, and treasury management solutions.
Primis Bank maintains a network of branch offices throughout southeastern Georgia, serving a combination of rural and suburban markets.
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