Primis Financial Corp.

Thank you for standing by and welcome to the Primus Financial Court Fourth Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again press star one. Thank you. I'd now like to turn the call over to Matt Switzer, Chief Financial Officer.

You may begin. Good morning. Thank you for joining us for Premise Financial Corp's 2025 fourth quarter webcast and conference 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 can cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements. Further discussion of the company's risk factors and other important information regarding our forward-looking statements are part of our recent filings with the Securities and Exchange Commission. including our recently filed earnings release, which has also been posted to the investor relations section of our corporate site, premisebank.com. We undertake no obligation to update or revise forward-looking statements to reflect change 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. How a non-GAAP measure relates to the most comparable GAAP measure will be discussed when the non-GAAP measure is used if not readily apparent. I will now turn the call over to our President and Chief Executive Officer, Dennis Semper.

Thank you, Matt. And thank you to all of you that have joined our fourth quarter 2025 conference call. We're very pleased to be reporting our 25 results today and really excited about what 26 is going to look like. For the quarter, we're reporting earnings of $29.5 million, or $1.20 per share, which works out to almost a 3% ROA. I tell people all the time that your best result F isn't good enough tomorrow, and that you have to strive to keep reaching higher, which may have trapped me. But obviously, in the quarter, we had the substantial gain from the cell leaf back, and quite a bit of related noise, from the restructure and some other items that we were afforded because of the outside gain. The most important thing you can take away from this call is this. In the fourth quarter of 25, Matt and I are showing our run rate earnings at about $8 million, which works out to about an 80 basis point ROA on about $4 billion of average assets. That reflects virtually no improvement from the restructure that we announced. And it includes a seasonally slow quarter of mortgage. So, taken together, going into 26, we see substantial momentum and a lot of opportunity to hit our goals. I want to talk about some of the real notable improvements this year. When you look at fourth quarter, or you look at December 31 of any year versus the prior year, what do you notice? For us, we noticed that our margin increased from 290 in the fourth quarter of last year to 328 in the fourth quarter of this year. Excuse me. The restructure includes the restructure had virtually no impact on fourth quarter margins, and our press release showed that that, when it's fully implemented, would add about 28 basis points. Pushing this kind of margin in our company to a place where 3.5% margins are in range It's very impressive against our peer group and our region, and our core bank has led the drive. Next, we grew checking accounts, which has been a big focus of our bank. Next, we grew checking accounts by over 23% during the year. Talk a little more about this, but from a percentage basis, we have to be in the top 10 banks nationwide on checking account growth. We achieved this by leveraging our proprietary delivery app in our market and abroad. We grew our C&I portfolio substantially and saw the normal deposit balances you would expect from this effort show up. We benefited from our warehouse division's effort selling our treasury services to their clients. We improved our non-interest-bearing deposits to total deposits from 12, 13% in mid-24 to 16.3% at 1231.25. We've been even higher than that early this year. Most importantly, we continue to fund nearly every dollar of earning asset growth with transaction accounts, not retail or bankruptcy needs, or wholesale borrowings. Lastly, we rebuilt our earning assets just like we said we would after the life premium sale. with balances from the core bank and our lending divisions, and we did it with much more yield and scale than we had in life premiums. For the year, we grew earning assets by $325 million with a larger growth in loan size. We held our yield steady compared to 24 with loans only dropping 10 basis points despite the fall in short-term rates during the year. Where are all these successes coming from? And, you know, why are we confident that there's more to come here? Our core bank has led the way this year in almost all of the areas, particularly on deposit growth and driving success with cost of funds. For the year, I'm showing that we grew checking accounts by about $116 million, which is about 23%, as I stated earlier. On the loan side, our focus has been on C&I and under-occupied as it, you know, as long as we can remember. And as we finished the year, we saw a real flurry of loan closings and sales success that are going to carry over into 26. In December alone, the core bank closed about 75 million of new commercial loans with about 90 million of related deposits. Importantly, the incremental margins on this business are almost 4%, with no incremental operating resources, or new staff, so we achieved the operating leverage that Matt and I have been talking about and that has been the driver of our 25 improvements. In the fourth quarter, we rolled the digital platform up under the core bank's reporting arm, so now everything facing the bank customer reports to RIC. We finished 25 with $993 million in digital deposits, which is down maybe less than 10% from where we were a year ago. despite the fact that the rate is down 115 basis points. We have over 20,000 customers on this platform, about 15% of those in our core footprint. Because of the success of this platform, there is not a single ounce of pressure on our core base deposit goals, production efforts, or pricing, which is reflected in their remarkably low cost of deposits. Through the year and The changes in rates, we've maintained 90% of the balances, which is unquestionably a testament to our style of surprising the customer with a personal banker, 24-7 access to the bank, rapid turnaround with any question or concern, and near zero fraud. In short, we engineered a community-style banking approach for these customers, and when rates started falling, they rewarded us with their loyalty. I think a key success or something that's, all those are important items, but the thing that's really driving the bottom line improvement or the ROA improvement is operating leverage. For maybe two years, we have controlled and reworked our operating expense base. We've invested only in production and revenue personnel, and we've leveraged our back office for We've leveraged our back office resources on the growth. Every moment of turnover or attrition on our administrative functions has been an opportunity to improve talent and drive more leverage, and we've not really missed any opportunity. Matt provides a table in the press release that shows our operating expense burden, and it obviously includes some of the noise from the restructure and some other items. But on a go-forward basis, we reconcile right back to around $22 million or so. So we believe we can hold this. I think maybe we've been saying this for four or five quarters, but we think we can hold this line for several more quarters and allow a reliable trend on revenue to keep improving results. Another success, another area where we believe the success is going to continue is on the mortgage side or where we face the mortgage industry with warehouse and retail. They're obviously separate lines of business, but in our company, they both work together and drive results in a markedly different fashion than what you see in most community banks. We've talked quite a bit about warehouse this year and about how those results are impacting our results, The fact is, warehouse only averaged $175 million of outstanding for the year. That's not even half of the assets we sold with life premium finance, and only about 35% of what we think 26 could average. Our margins in the business are accretive to our overall levels, and our run rate efficiency ratio here is in the mid-20s, which is going to be noticeable on our consolidated ratios when we reach scale. At previous mortgage, we saw closed loans increase to approximately $1.2 billion, 50% increase over 24. But more importantly, we closed $143 million in December of 25, arguably the slowest month of the year in this business, but a good indicator for why we're modeling 26 production in the $1.6 to $2 billion range. Also, it's important to note that growth did improve profitability, and on a pre-tax basis, Premise Mortgage earned $1.4 million in the fourth quarter, which is about $1.8 million higher than 24. Before I give it back to Matt, let me say what is special about what we're managing. Obviously, I could soak up a lot on this call, on this topic, but I think the important thing for our investors to know is that we've rebuilt a core bank into one that is leading on deposit successes and growth. We're not just milking a branch infrastructure from two decades ago. We're growing the core bank with good deposits, good core deposits, and improving our mix. We've built integrated lines of businesses that have substantial sales scale. Every single one of our lines of business feel us pumping the brakes every month. to not outrun our resources or our capital or become our whole story. The growth part of our story is bank. It's fully built, requires very limited resources to continue growing. When you combine that with a strong and leading community bank, we have strategic options that many banks in our region do not have. We've had a lot of noise in our past. I'm not going to pretend that we did, but there's no doubt in my mind that every quarter of reliable ROA and growth intangible that we can post, that noise subsides and our multiples, I believe, will return and reward the shareholders for our hard work. I'll turn it back to you.