Primis Financial Corp.

Good day, and welcome to the Primus Financial Core Second Quarter Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing star, then zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your touchtone phone. To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Matt Switzer, Chief Financial Officer. Please go ahead.

Thank you, Sean, and good morning, everyone, and thank you for joining us for our second quarter earnings call. Before we begin, please note that many of our comments during this call will be forward-looking statements which involve risk and uncertainty. There are many factors that could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements. These factors are discussed in our recent filings with the Securities and Exchange Commission, including our recently filed earnings release, which has been posted to the investor relations section of our corporate site, premisebank.com. We undertake no obligation, and we specifically disclaim any obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time. In addition, some of the financial measures that we may discuss this morning are non-GAAP financial measures. A reconciliation of the non-GAAP measures to the most comparable GAAP measures can be found in our earnings release. I will now turn the call over to our President and Chief Executive Officer, Dennis Zimber.

Thanks, Matt, and thank you to all of you who have joined our call today. We had a good quarter on several fronts and some really positive items ahead of us. We also have some challenges that we can discuss here, but even those challenges pale relative to the opportunities that we all believe this franchise has going forward. Matt's going to get into the details about the quarter and about the numbers, but at a high level, we earned 42 cents per share this quarter, which was roughly 10% higher than what we earned in the same quarter a year ago. We've grown total assets to about $3.4 billion, mainly through very successful efforts on deposit levels. At the end of the current quarter, total deposits were $2.8 billion, which only included $388 million of CD. In the last year, we've run off about 40% of our CD portfolio, pretty much all of our brokered and national CDs, and replaced that with about $800 million of growth in transaction accounts. I know the industry is awash in liquidity, and that trend has definitely helped. But our work on training, sales incentives, new products and services, and adding additional staff has had a tremendous impact on our deposit levels. I'm very thankful, very grateful for the team that we have here at Premise, for their absolute drive to be champions, and the results that we are getting across the board. The quality of the team here, their results, their early results, give me a lot of confidence that the results that we're seeing are sustainable. The success on growing deposits and building our funding base has led to what is currently our biggest challenge. We finished the quarter with about $850 million of very low-yielding short-term assets, which include our PPP portfolio. Deploying that in the current environment has not been easy, but we've started to make some headway, and the second half of this year will be noticeably better with respect to loan growth. Our pipelines in our commercial bank are higher, and our pipeline in Panacea is building very nicely with their recent move into commercial. We are still recruiting where it's possible, but the growth that we expect in the second half of the year and in 2022 has very little incremental operating expense behind it. So we expect really impressive operating leverage in the coming quarters. Lastly, and really before I turn it back over to Matt, We continue to work towards a fourth quarter launch of our digital bank offering that's focused on commercial and consumer checking accounts, at least initially. Our team and our partners are very close to the testing phase of the project, and we are still targeting a complete project that we can go live with during the fourth quarter. There are some elements of our work on this digital bank that are actually just a few weeks away from a live test with elements of our existing customer base. This test will prove in a real-world environment if the features and the hooks, as we like to call them, are actionable, if they are meaningful enough to move business from one competitor bank to premise, which obviously is our goal. I'd like to take this opportunity to say one more thing about our vision for digital. The biggest misperception is that we are going all digital and basically going to abandon our effort to build an impressive growth and profitability machine out of this existing franchise, and that's just not true. Everything that it takes to build a legacy franchise with the growth and profitability that earns high multiples, you're going to do, period. Our digital bank will just complement our core bank, not replace it. It will further augment our future growth, and I absolutely, unquestionably believe that. Traditional bankers, which I am one, have subtly dismissed digital bank efforts because they seemingly focus too much on interchange income or low-balance millennials like my two young sons. Planning an entry into this space is critical. I mean, it's absolutely critical. But it's also terrifying because there are untold millions of fees and service charges in the legacy bank system that we all know cannot materialize in the digital world. The only way to avoid that is to run a parallel brand And you're talking about companies that have decades and centuries building brand loyalty and bulletproof images. Our vision is to focus elsewhere. We've looked at our core customers and we've talked to them endlessly. We've gained real insight into what would start to move them from valuing the branch to valuing a digital platform. Because we're looking to augment our core bank, we will only be using one brand, which is premise, which we believe is very unique in our industry. And let's be honest, no one, everybody operating in this industry believes that future growth in earnings and balances will progressively be less centered on branches, more built in the traditional fashion. We are confident that our efforts are perfectly timed to drive value in the core bank right now and be ready for where we all know the industry is going into the future. All right, with that, I'll turn it back to Matt for an update on the quarter.