Primis Financial Q3 2026 Earnings Call Transcript

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Provided by Quartr
October 23, 2026

Key Takeaways

  • Positive Sentiment: Third-quarter earnings improved year over year to $8.7 million, or $0.35 per diluted share, while operating earnings rose substantially and pre-tax, pre-provision operating income increased 38% from the prior-year period.
  • Positive Sentiment: Core banking performance remained strong, with net interest margin expanding to 3.66% and core margin reaching 3.59% excluding a $700,000 interest recovery. Management expects additional, though more moderate, margin expansion from loan repricing and stable deposit costs.
  • Negative Sentiment: Mortgage banking revenue declined as higher rates reduced activity, and management expects annual mortgage volume to fall from roughly $1.6 billion to $1.1 billion if rates remain elevated. The mortgage division lost approximately $200,000 in the quarter, although the company has reduced fixed costs by about $4 million annually.
  • Positive Sentiment: Credit quality and capital trends improved, with non-performing assets declining to 1.43% of total assets, tangible book value rising 18% year over year, and the TCE ratio increasing to 8.14%. Management is targeting a TCE ratio above 8.5% through continued earnings growth and disciplined balance-sheet expansion.
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Earnings Conference Call
Primis Financial Q3 2026
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Operator

Hello, everyone. Thank you for joining us and welcome to Primis Financial Corp third quarter earnings call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. I will now hand the conference over to Matthew Switzer, Chief Financial Officer. Matthew, please go ahead.

Matthew Switzer
CFO at Primis Financial

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 Securities and 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.

Matthew Switzer
CFO at Primis Financial

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.

Dennis Zember
Dennis Zember
President and CEO at Primis Financial

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 $0.35 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 core bank, which increased to about 3.66% 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.

Dennis Zember
Dennis Zember
President and CEO at Primis Financial

The balance sheet restructuring we did at the end of 2025 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 combined quarter after quarter, growing deposits at a healthy and profitable level, and our bank loan engines focus on higher quality customers with yields and rates that I know are at a win-win level. There is 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 Warehouse that corresponded to a pretty steep rise in rates.

Dennis Zember
Dennis Zember
President and CEO at Primis Financial

The 10-year Treasury increased almost 100 basis points in the third quarter, and it moved Freddie Mac's average 30-year mortgage from 6.43% at the end of June to 7.28% 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 rightsizing 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. We know that a notable reduction in compensation will occur as volumes fall.

Dennis Zember
Dennis Zember
President and CEO at Primis Financial

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 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.

Dennis Zember
Dennis Zember
President and CEO at Primis Financial

I expect balances to come in a little in the fourth quarter, just given the mortgage backdrop and how that is going to affect warehouse. I expect that we can probably finish the year with total growth in the balance sheet of about 8%-8.5% on year-end balances. Deposits have grown slower over the past year as we have been unsure about where rates were headed. I know that our loan pricing and our sensitivity would allow us to be more aggressive on rates for deposits, but we did not want to outrun the Fed, and so we stood still waiting to know which direction rates will be going and relied more heavily on Federal Home Loan Bank. Still today, we do not have any wholesale or broker deposits. We have a pipeline of large deposit opportunities that should move our year-end balances materially at very attractive rates.

Dennis Zember
Dennis Zember
President and CEO at Primis Financial

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 $13.81, 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-sevens. 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 will turn it to you.

Matthew Switzer
CFO at Primis Financial

Thank you, Dennis. As a reminder, a discussion of our financial results can be found in our press release and investor presentation located on our website and in our 8-K filed with the SEC. As Dennis mentioned, Primis reported earnings of $8.7 million, or diluted earnings per share of $0.35 in the third quarter, compared to $9.4 million or $0.38 per share in the second quarter, and $6.8 million or $0.28 per share a year ago. Operating earnings were $0.35 per share this quarter, up substantially from $0.23 in the second quarter and $0.28 a year ago. Operating return on average assets was 80 basis points versus 53 basis points in the second quarter and 70 basis points a year ago. Pre-tax, pre-provision operating net income was $12 million in the third quarter, up 38% from $8.7 million in the year ago period.

Matthew Switzer
CFO at Primis Financial

Turning to the balance sheet, gross loans held for investment increased approximately 4% annualized from June 30th to September 30th, and we were up 9% year-over-year. Core bank loan growth was approximately 11% annualized in the quarter, and Panacea loans held for investment increased $20 million to $603 million, partially offset by a $43 million decline in period end Mortgage Warehouse balances to $501 million. Average earning assets were approximately $3.94 billion, up slightly linked quarter, but up 9% compared to the year ago quarter. Total deposits ended the quarter at $3.47 billion, up $26 million linked quarter and 4% year-over-year, while FHLB advances declined $80 million to $220 million. Net interest income was approximately $36.3 million, up from $33.8 million last quarter and $29 million a year ago. The third quarter included approximately $700,000 of interest recoveries from a previously charged-off loan.

Matthew Switzer
CFO at Primis Financial

Excluding that recovery, net interest income was $35.6 million, up 5.5% linked quarter. Our reported net interest margin was 3.66%, up 21 basis points linked quarter and 48 basis points year-over-year. Excluding this interest recovery, core net interest margin was 3.59%, up a healthy 14 basis points from the second quarter. While earning asset yields continued to increase, we have benefited from a stable funding base with cost of total deposits up 228 basis points in the third quarter, up three basis points linked quarter and down 18 basis points year-over-year, while total cost of funds was 247 basis points, up one basis point linked quarter and down 15 basis points year-over-year. Our provision this quarter was $1.1 million compared to $5.5 million in the second quarter and a recovery of $449,000 a year ago.

Matthew Switzer
CFO at Primis Financial

The majority of the provision this quarter was driven by loan growth as described above. Asset quality remained stable with non-performing assets, excluding portions guaranteed by the SBA, improving to 1.43% of total assets at quarter end from 1.45% at June 30 and 2.07% a year ago. Core net charge-offs were 17 basis points in the third quarter, down 53 basis points in the second quarter and up from 3 basis points a year ago, with the year-over-year increase largely driven by one credit that had previously been reserved for. Non-interest income was $12.9 million in the third quarter versus $22 million last quarter, which also included a $5.9 million investment gain. Mortgage banking revenue was $8 million, down from $11.4 million last quarter and $8.9 million a year ago, reflecting the significant market disruption during the quarter.

Matthew Switzer
CFO at Primis Financial

Primis Mortgage still closed $347 million of volume, which was a 12.5% increase year-over-year. We also reported $1.5 million of gain on sale income related to Panacea loans and the guaranteed portion of SBA loans this quarter. Other income included approximately $900,000 of recoveries on a previously charged-off loan reflected in the third quarter. On the expense side, reported non-interest expense was $37.2 million, down from $38.2 million in the second quarter and up from $32.3 million a year ago. Excluding Mortgage and Panacea division volatility and non-recurring items, our core operating expense burden was approximately $24.2 million versus $24.9 million in the second quarter and $21.6 million a year ago. Included in the third quarter numbers, approximately $1.4 million of loan-related expenses and $0.4 million of professional fees and other third-party expenses incurred in the quarter.

Matthew Switzer
CFO at Primis Financial

Excluding these items, the core operating expense burden was essentially flat with the run rate we discussed last quarter and down slightly from the year ago period when adjusting for the lease expense associated with our sale leaseback in the fourth quarter of 2025. We continue to expect approximately $3 million of annualized savings from vendor consolidation and statement services beginning early in 2027. These savings are an important part of our effort to drive continued operating leverage through 2027. In summary, the third quarter demonstrated continued strength in the core banking franchise, further margin expansion, stable credit costs, and meaningful year-over-year improvement in operating earnings. Break even on net overhead for Mortgage, which would still be lower than normal for a typical third quarter, would have had us at a 1% ROA for the third quarter as we have been targeting.

Matthew Switzer
CFO at Primis Financial

We can not control the environment, but we are taking steps to align costs with current volumes while preserving our ability to benefit when the market recovers. We like how we are positioned right now, and we could not be more confident that profitability is going to continue to improve as planned. With that, operator, we can now open the line for Q&A.

Operator

We will now begin the question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Russell Gunther from Stephens. Your line is now open. Please go ahead.

Russell Gunther
Russell Gunther
Analyst at Stephens

Hey, good morning, guys.

Matthew Switzer
CFO at Primis Financial

Hey, Russell.

Dennis Zember
Dennis Zember
President and CEO at Primis Financial

Russell, good morning.

Russell Gunther
Russell Gunther
Analyst at Stephens

Hey, Dennis. Hey, Matt. Guys, wanted to start out on the margin. Great core result this quarter. You are well through where you thought you might end the year, I think in that 350-355 basis points range. It would be helpful to get a sense for where you see the margin trajectory from here into the fourth quarter and next year. Would you guys expect to see continued expansion, or has the rate environment or competitive landscape shifted your view on where that margin ultimately shakes out?

Matthew Switzer
CFO at Primis Financial

Yeah, I think we will continue to see some incremental margin expansion, Russell. It is probably not going to be quite as dramatic as it was this quarter, but we have got loan repricing still in front of us from loans we put on five years ago. That is going to still play out over the next, call it two to three quarters. We have strongly benefited from our core deposit base, and I do not have the beta in front of me, but our beta on this last rate move was very low. We have been selectively adjusting rates as customers have raised their hand, but we have not been aggressively moving rates up across the board or going after hot money, which is including on the digital platform. We did not adjust rates on the digital platform after the last rate move.

Matthew Switzer
CFO at Primis Financial

We are going to continue to see absent a Fed move, we are going to continue to see people raise their hand or ask for concessions, and we will manage through that, but we do not expect a big move in cost of funds. It will be more incremental, and then loan yields will continue to tick up. I think that when you put all that together, we will have some incremental margin expansion 4 or 5 basis points over time, but not quite what we saw this quarter.

Dennis Zember
Dennis Zember
President and CEO at Primis Financial

The big moves are behind us to get us here.

Russell Gunther
Russell Gunther
Analyst at Stephens

Well, still an excellent result and sounds like some forward progress still to come. So appreciate the color. Very helpful. Maybe switching gears onto the expense side of things. I hear you on how the Mortgage Warehouse revenue will impact comp and the step down there. Maybe outside of that, how are you thinking about core trends in the fourth quarter? Do we see more of a step down in 2027 as some of those efficiency initiatives pull through? Just be helpful to get. I hear you on positive operating leverage, but maybe just a finer point on core expense trends.

Matthew Switzer
CFO at Primis Financial

Yeah. I think last quarter, we talked about a run rate expense of, call it $22 million-$22.5 million quarterly when you take out Mortgage Warehouse and Panacea and non-recurring noise. We're basically in that same ballpark this quarter when you take out those couple of expenses that I highlighted in Mortgage Warehouse and Panacea. I still think around that $22.5 million number is still a good spot for the fourth quarter as we go into next year. Next year, it'll be midway through the first quarter, we'll start to see those savings from our contracts around the statements and other vendor consolidations, that $3 million number I highlighted. So in our mind, that's incrementally bringing down that $22.5 million number. Now we will adjust salaries and things like that late in the first quarter. So that'll put some pressure up.

Matthew Switzer
CFO at Primis Financial

But we're looking for offsets to that to keep us in that low $22 million range or less after those statement savings.

Russell Gunther
Russell Gunther
Analyst at Stephens

Okay. Thanks, Matt. Guys, just last one for me, if I could. The deck had suggested that 2027 estimates are achievable. I see consensus near $2. That puts you firmly in that sustainable ROA north of one. Do you have a goalpost in mind beyond that and a timing you'd hope to achieve it?

Dennis Zember
Dennis Zember
President and CEO at Primis Financial

Oh, man. It wouldn't be normal for me to tell you the next goal before we get to this goal, Russell. Our peer group's better than that. Some of the things that we've been doing over the years, investing and building stuff around here, we're done with that. We're simply harvesting the good that all of our efforts have provided. I think we'd be higher than that, and the mortgage investment sort of requires it. I think adjusting mortgage, even at this level if these rates persist, and we're really somewhere in the $1 billion-$1.2 billion, I still think Mortgage Warehouse would add 10 basis points to the ROA over a year. I think if it was higher, if we were sort of in the $1.7 billion-$1.8 billion, probably be closer to 15 basis points.

Dennis Zember
Dennis Zember
President and CEO at Primis Financial

But at 10 basis points, given where the margin is and some of the OPEX things that Matt was mentioning that are, we're a month away from some of these things happening. 1% is definitely in sight. We'd have been there this quarter if just sort of steady on mortgage. Beyond that, we really just got to sort of get to and get above peer level, which is probably another 15 basis points.

Russell Gunther
Russell Gunther
Analyst at Stephens

Got it. Okay. Very good, guys. Thanks so much for taking my questions.

Dennis Zember
Dennis Zember
President and CEO at Primis Financial

All right. Thanks, Russell.

Operator

Your next question comes from the line of Steve Moss with Raymond James. Your line is now open. Please go ahead.

Analyst at Raymond James

Hey, guys. Good morning. It's [Chase] on for Steve.

Dennis Zember
Dennis Zember
President and CEO at Primis Financial

Hey, good morning.

Analyst at Raymond James

Hey. Good core bank loan growth this quarter, and I saw the pipeline number in the release. Thank you for that. Can you just give a sense where you're seeing the best opportunities today and maybe how to think about growth in 4Q into 2027?

Dennis Zember
Dennis Zember
President and CEO at Primis Financial

I think 4Q loan growth, I think the core bank will probably continue with. Well, actually, the core bank may be flat the fourth quarter. We have one big loan payoff. Disappointing that it is paying off, but that is probably going to keep us flat on the core bank. Mortgage Warehouse had a strong third quarter despite where rates went. It is the fourth quarter. I would expect it to sag a little. I think for the year, we are going to end up with loan growth in probably the 8% category. We have several good drivers. We have the core bank. We have Panacea. We have Mortgage Warehouse. We can kind of lean on any of them in a quarter to sort of keep earning assets moving.

Dennis Zember
Dennis Zember
President and CEO at Primis Financial

I think we end the year somewhere around 8%, which I think is right in line with where Matt and I want it to go. It allows us to have earnings grow in TCE. It does not pressure that. Matt and I do not want to get back in the sevens. We really want to be kind of closer to 8.5% or 9%. I think 8% loan growth is good. I would tell you, I think 8%, given those loan drivers, those businesses, I think we could probably sustain that for a couple more years. I think we are going to have on the deposit side, I think we can fund the majority of that with core deposit growth, not using broker, not using wholesale.

Dennis Zember
Dennis Zember
President and CEO at Primis Financial

I am pretty sure we are going to have a dynamite fourth quarter on deposits, just given some of what I know is going to close and show up here. So I think for the year, we will probably be, call it 3%, 4%, 5% on deposits. But next year, I think we would be stronger than that. So I would say we are probably going to settle back from 9% right now to probably around 8% for the whole year, and I would probably call for that same thing next year. Matt?

Matthew Switzer
CFO at Primis Financial

Yeah. The core bank had a really good third quarter, but for the year will not be at 11% rate. We think about the core bank more kind of a 5%-7% year in and year out. Then, we can manage the Panacea growth. We can manage mortgage portfolio. So something mid to high single digits is comfortable for next year.

Dennis Zember
Dennis Zember
President and CEO at Primis Financial

Not having to push, it's a real luxury not having to push hard on the core bank. Keep it on sort of in the 5%-6% growth rate because, one, we focus on better deposits. We focus that are less rate sensitive, that are less rate shoppers. We can really focus on the best loan opportunities, whether that's the loan rate or the yield or structure, credit quality. So we're able to be a little more picky and then lean harder on whether it's Panacea, Mortgage Warehouse, or even digital to sort of get us to where we want to be. I think it's a real luxury.

Analyst at Raymond James

Appreciate all that color there. Just staying on loans here, where are new loans pricing at now today?

Dennis Zember
Dennis Zember
President and CEO at Primis Financial

Mortgage Warehouse. Well, the core bank probably comfortably, all blended comfortably, either prime plus a little bit. Panacea is probably five-year plus 225-250 basis points maybe, but probably with five-year moving up, it's probably tightened that spread a little. Mortgage Warehouse is generally like SOFR with fees, generally like SOFR 275 basis points, maybe 300 basis points.

Analyst at Raymond James

Got that. Appreciate you. Just one more for me here. I believe I heard you say $1.1 billion-$1.6 billion in mortgage production at current rates. I know it's a bit tough to answer, but if mortgage rates came down another 50-100 basis points, I know we're down a lot in the 10-year this week, how much upside could there be to that range, you think?

Dennis Zember
Dennis Zember
President and CEO at Primis Financial

Yeah. I have found that I cannot accurately predict anything with mortgage outside of tomorrow. That is a good question, and I will tell you, Matt has got a massive amount of algorithms and R squareds on mortgage. I will tell you that at our current level, with rates low 7%-7.25%, we are about a $1.1 billion mortgage shop. And at that level, we are probably about 30-35 basis points of pre-tax on volume. So maybe $3.5 million-$4 million at the high end, pre-tax. At $1.6 billion, if rates were like in the mid-6s like we were at the end of the second quarter, we were on track to do $1.6 billion-$1.7 billion, maybe a little more. And at that level, we are probably comfortably over 50 basis points of profitability.

Dennis Zember
Dennis Zember
President and CEO at Primis Financial

At $1.6 billion, you are doing somewhere closer to $8 million of pre-tax. Again, our mortgage company does not have the luxury of nothing boosting our mortgage company's profitability with servicing or servicing revenues or recurring any of that. We do all service release type sales. We hedge a good bit. But there is a lot of upside. I will tell you this, and I am reluctant to say this because I do not want anybody to hear us thinking that we are just hoping for higher rates. We are not. We are adjusting to today's rate with cost saves that will make us more efficient if rates sort of fall. But we are sort of presuming that these rates will be persistent. The economy is a lot hotter and stronger than we want to believe it is, at least what the results say.

Dennis Zember
Dennis Zember
President and CEO at Primis Financial

And so we are sort of pretending that this is, not pretending, we are acting like this is our new norm. I say that. I do watch the 10-year every day, and I celebrate every time it is in the red. Anyway, go ahead.

Analyst at Raymond James

All right. No, that was it. I appreciate all the color, guys. I will step back here. Thank you.

Dennis Zember
Dennis Zember
President and CEO at Primis Financial

Appreciate it.

Operator

Your next question comes from the line of Christopher Marinac from Brean Capital. Your line is now open. Please go ahead.

Christopher Marinac
Christopher Marinac
Analyst at Brean Capital

Hey, good morning. Dennis, can you brag a little bit on the Banking Valet business that you've rebranded and maybe talk about the opportunities for more deposit growth from that channel?

Dennis Zember
Dennis Zember
President and CEO at Primis Financial

Yeah. The Banking Valet was what we used to call V1BE, for those on the call, and that's basically our proprietary app where we deliver banking services to mostly commercial customers, but commercial and consumer customers. Basically any service you can get in the branch, you can use our app and we will bring that service to you. So, we have thousands of customers using it. Of all the customers that have downloaded it and used it, maybe one or two have quit using it or deleted it, so it's very popular. Virtually none of these customers have closed their accounts. It's probably one of the leading things our commercial and treasury people lead with when they are in front of a new customer. Virtually every commercial deposit relationship we have that didn't come because of a loan came because of this service. It's very valuable, very useful.

Dennis Zember
Dennis Zember
President and CEO at Primis Financial

Probably half of our checking accounts are rooted with this app. I would tell you, and that's very important because especially in a rising rate environment where deposits, checking accounts seem to sag a little bit, I think this is something that's going to keep us pretty steady or potentially increasing. We have beta tested this in a faraway market to see how we could deliver services. We found COIs, salespeople, and had some success. I'm not going to go out on a limb and say that that's the future here. Really what we do is we just use this to expand the power of our branch beyond 5 mi. We're selling probably out to 20 mi-25 mi of each of our branches. It just makes our branches. It's not a branch replacement tool, it's sort of a branch enhancement tool.

Dennis Zember
Dennis Zember
President and CEO at Primis Financial

We changed the name from V1BE to Banking Valet just to be a little more progressive and sort of fit with the rest of the bank as well. I don't know, Chris, if that answered your question, but--

Christopher Marinac
Christopher Marinac
Analyst at Brean Capital

Dennis, my impression is that you can lean more into this and as well as sort of with a weak Mortgage Warehouse environment, that you can lean more into banking. Certainly that may be a blessing in disguise. Just curious if you think that's going to help you get more core deposits, continue to have this low-cost funding engine that can drive earnings while you manage expenses and hopefully get a turn in the mortgage business later.

Dennis Zember
Dennis Zember
President and CEO at Primis Financial

Yeah. Chris, the numbers, you can't look at the balances in our numbers and sort of. If you look at the balances, you can't really see the success of this over the last three or four years because, really, you've had so much shift mix going on as rates have moved up. But what you can see is the stability in deposits as our betas have shrunk to rising rates. Here we are with an extremely attractive cost of deposits. I tell you, a lot of it is because of this. It's rooted in this plus long-term loyalty. While we are growing deposits aggressively with this, it's just not as visible because of shift mix. But I think if rates were to sort of stabilize, I know you would see stronger results in non-interest-bearing to deposit, non-interest-bearing to total.

Christopher Marinac
Christopher Marinac
Analyst at Brean Capital

Got it. That's helpful. Matt, just a quick one for you. The operating expenses, should we see a small downtick in Q4 and then the more bigger change as the systems and other changes that you've already announced kick in in Q1?

Matthew Switzer
CFO at Primis Financial

I think we'll be flattish in the fourth quarter and then start to tick down in Q1.

Christopher Marinac
Christopher Marinac
Analyst at Brean Capital

Okay. So the $3 million adjustment, we should see a lot of that in Q1?

Matthew Switzer
CFO at Primis Financial

Yeah.

Christopher Marinac
Christopher Marinac
Analyst at Brean Capital

Perfect. Okay. Anything on the credit side? You had success lowering charge-offs and criticized backed off a little bit. Anything in the pipeline in terms of where that could go further from here?

Matthew Switzer
CFO at Primis Financial

No, not at the moment. We didn't have any migration in the quarter. It's really focused on working through the ones we already have.

Christopher Marinac
Christopher Marinac
Analyst at Brean Capital

No, I was more curious if losses would be the same or if it's possible that they could grind lower.

Dennis Zember
Dennis Zember
President and CEO at Primis Financial

Oh, net charge-offs?

Christopher Marinac
Christopher Marinac
Analyst at Brean Capital

Correct.

Dennis Zember
Dennis Zember
President and CEO at Primis Financial

We have some pretty substantial specific reserves on a few of the classified assets. We've debated, or are debating, and mostly from an accounting standpoint, if we should charge those off, as opposed to just carrying them as the specifics, so the NPA ratio is not as inflated. But we may do that before the end of the quarter, but I think that's it. Aside from that, I don't think we see anything that would move that number.

Matthew Switzer
CFO at Primis Financial

Not right now that would generate incremental provisioning.

Dennis Zember
Dennis Zember
President and CEO at Primis Financial

Yeah.

Matthew Switzer
CFO at Primis Financial

You're charging off existing reserves.

Christopher Marinac
Christopher Marinac
Analyst at Brean Capital

Got it. Okay. That's great. Thank you both. I appreciate it.

Matthew Switzer
CFO at Primis Financial

Thank you, Chris.

Operator

This concludes the question and answer session. I will now turn the call back to Dennis Zember for closing remarks.

Dennis Zember
Dennis Zember
President and CEO at Primis Financial

Thank you all again for joining us on our third quarter call. Hope everybody has a good weekend and a good fourth quarter, and we will talk to you soon.

Operator

This concludes today's call. Thank you for attending. You may now disconnect.

Executives
    • Dennis Zember
      Dennis Zember
      President and CEO
Analysts
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