Primis Financial Navigates 'Noisy' Quarter, Eyes 1% ROA Goal for 2026
WAYCROSS, Ga. – Primis Financial Corp. (NASDAQ: FRST) closed 2025 with a fourth-quarter net income of $29.5 million, or $1.20 per share. While the results reflected a robust near-3% return on assets, company executives were quick to contextualize the figure, noting a "substantial" one-time gain from a sale-leaseback transaction layered "noise" over the underlying performance.
Stripping away the restructuring items, CEO Dennis Zember and CFO Matt Switzer estimated the company's core run-rate earnings at approximately $8 million per quarter. This translates to an ROA of about 80 basis points on $4 billion in average assets—a level management admits shows "virtually no improvement from the restructure" amid a seasonally slow period for mortgage. The setup, however, is framed as a springboard for 2026, with the firm's sights firmly set on achieving a 1% ROA.
"The strategic moves we made late in the year were timely," Switzer commented during the earnings call. "They've repositioned our balance sheet and provided capital flexibility, giving us tangible momentum as we enter the new year."
A key bright spot was net interest income, which climbed to $31 million from $26 million a year ago. The net interest margin (NIM) expanded to 3.28%, up sequentially and year-over-year. Switzer projected further NIM tailwinds in 2026, including the full-quarter benefit of an investment portfolio restructuring and the planned redemption of $27 million in subordinated debt.
Beyond the income statement, management highlighted strategic progress. Gross loans grew at an annualized rate of 10%, a figure that would approach 17% including a sold loan portfolio. Deposit growth was strong at a 10% annualized pace, but more critically, the mix improved. Non-interest-bearing deposits rose to 16.3% of total deposits by year-end, up from 12-13% in mid-2024.
"The shift in our deposit base is a fundamental story for us," Zember stated. "Funding asset growth with transaction accounts, rather than wholesale borrowing, is a sustainable competitive advantage." He credited initiatives like the bank's proprietary app and expanded treasury services for driving a 23% surge in checking accounts.
The mortgage segment emerged as a central pillar of the growth narrative. The mortgage warehouse business, which averaged $175 million in outstandings for 2025, is projected to scale to an average of roughly $500 million in 2026. Zember noted the business currently generates "comfortably over 2% ROA." Meanwhile, retail mortgage originations jumped 50% year-over-year to $1.2 billion in 2025, with management modeling $1.6 to $2 billion for 2026.
On expenses, after adjusting for volatility in mortgage and the Panacea division plus one-time items, Switzer normalized core non-interest expense to approximately $21 million for the quarter. For 2026, the company provided a conservative core expense guidance of $23-$24 million per quarter, inclusive of new lease costs, with a goal to push toward the lower end.
Credit metrics remained stable. The provision for credit losses was $2.4 million, primarily tied to loan growth and specific reserves. Management expressed confidence in its portfolio, not anticipating significant impairments from loans recently moved to special mention status.
As Primis looks ahead, the path to a 1% ROA hinges on executing this playbook: scaling high-return businesses like mortgage, maintaining discipline on core expenses, and continuing to optimize its deposit franchise. Acknowledging first-quarter seasonality, executives projected stronger performance in the back half of 2026.
Market Voices: Analyst & Investor Reactions
Eleanor Vance, Portfolio Manager at Sterling Trust: "The underlying trends here are positive, especially the deposit mix improvement and the clear operating leverage path. The 1% ROA target is ambitious but appears grounded in specific, scalable business lines like mortgage warehouse. This is a story of gradual, managed transformation."
Marcus Thorne, Independent Banking Analyst: "It's a 'show me' story now. Stripping out the one-time gain, core profitability is still anemic. They've been talking about expense control for two years, yet guidance for '26 suggests limited near-term relief. The mortgage growth is impressive, but that's a cyclical and competitive market. I need to see the 1% ROA materialize in reported numbers, not just in the outlook."
David Chen, Retail Investor: "Finally some clear communication! The 23% checking account growth is huge—that's sticky, low-cost funding. They're building a real customer base, not just accounts. The stock seems undervalued if they can even get close to that ROA target."
Rebecca Shaw, Financial Blogger at 'The Street Skeptic': "Another quarter of 'noise' and 'adjustments.' Why does it feel like every good number has an asterisk? A 'substantial gain' pads the earnings, then they hand-wave to a much lower 'run-rate.' The mortgage projections are wildly optimistic. This feels like management trying to dazzle us with future promises to distract from a still-mediocre core performance. I'm not buying the hype."
Primis Financial Corporation is the holding company for Primis Bank, offering commercial and retail banking services across southeastern Georgia.