Primis Financial Corp. (NASDAQ:FRST), a state commercial bank headquartered in McLean, Virginia, has completed a significant transaction involving the sale of its Life Premium Finance Division to EverBank, N.A. The deal, which was initially agreed upon on October 24, 2024, was finalized on October 31, 2024, with the sale of approximately $354 million in loans.
The transaction includes a premium of $6.0 million and encompasses not only the loan portfolio but also the operations of the division and its employees. Primis Bank will continue to provide interim servicing until the complete transition of the business to EverBank, which is expected to occur by January 31, 2025. Additionally, EverBank will purchase an extra $19 million in loans and any new loans generated in the ordinary course of business at par value between the first and final closing dates.
After the completion of the sale, EverBank will also take over the servicing of the retained loan portfolio from Primis Bank. This retained portfolio consists primarily of fixed-rate and rate-capped loans that were not included in the sale.
The financial impact of the transaction has been detailed in pro forma financial statements, which have been filed with the SEC and are incorporated into this report by reference. These statements provide an unaudited pro forma condensed consolidated balance sheet as of September 30, 2024, and an unaudited pro forma condensed consolidated statement of income for the year ended December 31, 2023, and the nine months ended September 30, 2024.
This strategic move is part of Primis Financial Corp.'s ongoing efforts to optimize its operations and focus on its core business. The completion of this asset disposition is a significant event for the company and is expected to influence its financial position and strategy moving forward.
The details of the sale are outlined in the Purchase and Assumption Agreement, which is available in the exhibits of the SEC filing. This report is based on the information contained in the SEC filing by Primis Financial Corp.
In other recent news, Primis Financial Corp. has made several strategic shifts impacting its Q3 performance. The company reported a correction in accounting for a consumer loan portfolio, which affected the quarter's results. Despite this, the mortgage team achieved a $1 billion annual production run rate, marking a 67% increase in locked loans from Q3 2023.
Stephens, a financial analyst firm, revised its price target for Primis Financial to $14.00, down from $16.00, while retaining an Overweight rating. The adjustment followed Primis Financial's recent quarterly earnings report and the sale of its Life Premium Finance division to EverBank, expected to result in a pre-tax gain of approximately $4.5 million for Q4 2024.
The analyst from Stephens expects a net interest margin expansion of 20 basis points from current levels, supported by the acceleration of deposit down betas. The revenue lost from the sale is forecasted to be compensated by Primis Financial's new venture into the mortgage warehouse space, led by a seasoned team from IBTX. Primis Financial targets a 1% return on assets (ROA) by late 2025 and aims to be current on SEC filings by mid-November 2024. These recent developments indicate potential growth and a cautious outlook due to ongoing SEC consultations.
InvestingPro Insights
The recent sale of Primis Financial Corp.'s (NASDAQ:FRST) Life Premium Finance Division aligns with several key financial indicators and expert insights from InvestingPro. Despite the company's recent challenges, including negative operating income of -$7.12 million over the last twelve months, there are signs of potential improvement on the horizon.
An InvestingPro Tip suggests that net income is expected to grow this year, which could be partly attributed to strategic moves like the recent asset sale. This positive outlook is further supported by analysts' predictions that the company will return to profitability this year. These projections are particularly significant given that Primis has not been profitable over the last twelve months.
Investors should note that Primis currently trades at a price-to-book ratio of 0.73, indicating that the stock may be undervalued relative to its assets. This could be an attractive entry point for value-oriented investors, especially if the company's profitability improves as expected.
It's worth mentioning that Primis has maintained dividend payments for 13 consecutive years, as highlighted by another InvestingPro Tip. With a current dividend yield of 3.57%, the stock may appeal to income-focused investors, although caution is warranted given the company's recent financial performance.
For readers interested in a more comprehensive analysis, InvestingPro offers additional tips and insights that could provide a deeper understanding of Primis Financial Corp.'s investment potential.
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