Primis Financial Corp.

Press star 1 again. I will now hand the conference over to Matthew Switzer, Chief Financial Officer. Matthew, please go ahead.

Good morning. 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. 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 Security Exchange Commission, including our recently filed earnings release, which has also been posted to the investor relations section of our corporate site, primisbank.com. We undertake no 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. 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 Zember.

Thank you, Matt. Thank you for everyone that's joined our third quarter earnings call. For the quarter, we're reporting 8.7 million of net earnings, or about 35 cents per share. which is a healthy increase of 28% over the same quarter a year ago. A couple notable items had a real outsized impact on the quarter's results. First was our net interest margin coming out of the community bank which increased to about 366 in the current quarter compared to the same quarter a year ago. That's about a 15% improvement when we reported 3.18%. We continue to benefit from a very valuable deposit portfolio with long-term loyal customers, and we pair that with loan production levels, loan production and loan repricing opportunities that have delivered real results. Putting that steady quarter-over-quarter improvement in perspective, we've grown annual net interest income by about $28 million over the last 12 months. The balance sheet restructuring we did at the end of 25 definitely helped. but staying disciplined on both sides of the balance sheet and with loan repricing has been the real driver. Our core bank and our digital platform combine quarter after quarter, growing deposits at a healthy and profitable level and our bank's loan engines focus on higher quality customers with yields and rates that I know are at a win-win level. There's real competition out there right now on the loan side and customers are shopping very hard. So having a valuable deposit side of the balance sheet is critical to being competitive and profitable. On the negative side, we had a fall off in revenue in the mortgage company that corresponded to a pretty steep rise in rates. The 10-year treasury increased almost 100 basis points in the third quarter, and it moved Freddie Mac's average 30-year mortgage from 643 at the end of June to 728 at the end of September. Our mortgage CEO calibrates volume based on these rates and if these higher rates were to persist, we think annual volume would decrease from about $1.6 billion a year to about $1.1 billion a year. Knowing this might be a new normal, we have been right-sizing costs mostly in support and vendor categories since mid-September and have reduced fixed costs by about $4 million a year. These fixed cost reductions are augmented by the fact that virtually none of our commission-based sales team have regular salaries, and so we know that a notable reduction in compensation will occur as volumes fall. In the third quarter, the mortgage company lost about $200,000, which included the $2.5 million reset in the open pipeline values. and about $300,000 of provision for growth in portfolio and construction loans. This performance with these headwinds, I'm sorry, this performance with those headwinds combined with the restructuring work that our mortgage team has undertaken give us confidence in this division as we adjust to what might be a new norm in rates. On the balance sheet, we ended the quarter with about $3.5 billion in loans, up 9.3% from a year ago, but only up about $30 million from the end of the second quarter. Production in our core bank was very good, with very good rates, and we supported that with mostly steady balances in warehouse and higher balances in panacea. I'd expect balances to come in a little in the fourth quarter, just given the mortgage backdrop and how that's going to affect warehouse. I expect that we probably finish the year with total growth in the balance sheet of about eight to eight and a half percent on year-end balances. Deposits have grown slower over the past year as we've been unsure about where rates were heading. I know that our loan pricing and our sensitivity allow us to be would allow us to be more aggressive on rates for deposits but we did want to outrun the Fed and so we stood still waiting to waiting to know which direction rates will be going and rely more heavily on federal home loan banks. Still today, we don't have any wholesale or broker deposits and we have a pipeline of large deposit opportunities that should move our year-end balances materially at very attractive rates. Lastly, capital levels are creeping up like we believe they would. For the quarter, tangible book value and tangible common equity to total assets improved. Tangible book value ended at 1381, which is 18% higher than a year ago. And our TCE ratio improved to 8.14, which is materially higher than a year ago when we were in the mid-sevenths. Matt and I really would like for TCE to be north of 8.5, and we expect that a continued improvement in earnings and cautious balance sheet growth will get us there in a few quarters. With that, Matt, I'll turn it to you.