[PART I - FINANCIAL INFORMATION](index=5&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Item 1 - Financial Statements](index=5&type=section&id=Item%201%20-%20Financial%20Statements) Unaudited condensed consolidated financial statements for Primis Financial Corp. as of June 30, 2025, including balance sheets, income, and cash flows [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets grew to **$3.87 billion** by June 30, 2025, driven by loan growth, while liabilities and equity also increased Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 (unaudited) | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$3,871,726** | **$3,690,115** | | Total cash and cash equivalents | $94,074 | $64,505 | | Net loans | $3,084,536 | $2,833,723 | | Goodwill | $93,459 | $93,459 | | **Total Liabilities** | **$3,495,311** | **$3,325,133** | | Total deposits | $3,342,673 | $3,171,035 | | **Total Stockholders' Equity** | **$376,415** | **$364,982** | [Condensed Consolidated Statements of Income and Comprehensive Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20and%20Comprehensive%20Income) Six-month net income surged to **$25.1 million** due to a **$32.0 million** gain on the Panacea investment, despite a Q2 decline Key Income Statement Data (in thousands, except per share amounts) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $25,180 | $24,853 | $51,544 | $50,122 | | Provision for credit losses | $8,303 | $3,119 | $9,899 | $9,627 | | Total Noninterest Income | $18,030 | $10,852 | $50,365 | $21,158 | | *Gains on Panacea Financial Holdings investment* | *$7,450* | *$—* | *$32,028* | *$—* | | Total Noninterest Expenses | $31,942 | $29,786 | $64,458 | $57,323 | | **Net income attributable to Primis' common stockholders** | **$2,437** | **$3,436** | **$25,073** | **$5,902** | | **Earnings per share, diluted** | **$0.10** | **$0.14** | **$1.01** | **$0.24** | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities was **$6.6 million** for H1 2025, with investing activities using **$119.9 million** Cash Flow Summary for the Six Months Ended June 30 (in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(6,587) | $51,297 | | Net cash used in investing activities | $(119,889) | $(173,857) | | Net cash provided by financing activities | $156,045 | $111,587 | | **Net change in cash and cash equivalents** | **$29,569** | **$(10,973)** | [Notes to Unaudited Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Detailed notes explain accounting policies and financial data, covering PFH deconsolidation, loan portfolio, and fair value - On March 31, 2025, the Company deconsolidated Panacea Financial Holdings (PFH) after determining it was no longer the primary beneficiary of the VIE, resulting in a recognized gain of **$24.6 million** for the six months ended June 30, 2025[28](index=28&type=chunk)[30](index=30&type=chunk) - On June 12, 2025, the Company signed a term sheet to sell a portion of its retained PFH common shares, generating proceeds of **$22.1 million**, and a further gain of **$7.5 million** in Q2 2025 from this sale and fair value adjustments[32](index=32&type=chunk) - In June 2025, the company repurchased **79,549 shares** of its common stock under its authorized Stock Repurchase Program at an average cost of **$10.00 per share**, for a total of **$807 thousand**[43](index=43&type=chunk) [Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations](index=57&type=section&id=Item%202%20-%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, highlighting increased net income from PFH deconsolidation, growth in key divisions, and asset quality [Operational Highlights](index=63&type=section&id=Operational%20Highlights) Operational highlights include significant growth in Mortgage Warehouse and Panacea Financial divisions, and substantial gains from PFH - Mortgage Warehouse outstanding loan balances grew **189%** to **$184.5 million** as of June 30, 2025, from **$63.8 million** at year-end 2024[158](index=158&type=chunk) - Panacea Financial Division outstanding loan balances grew **16%** (**$71.5 million**) during the first half of 2025[158](index=158&type=chunk) - The deconsolidation of PFH on March 31, 2025, resulted in a **$24.6 million** gain, with a subsequent sale of retained shares in June 2025 generating proceeds of **$22.1 million** and a further gain of **$7.5 million**[156](index=156&type=chunk)[157](index=157&type=chunk) [Results of Operations](index=64&type=section&id=Results%20of%20Operations) Six-month net income surged to **$25.1 million** due to a **$32.0 million** PFH gain, while Q2 net income declined due to higher credit loss provisions - Six-month net income available to common shareholders increased to **$25.1 million** in 2025 from **$5.9 million** in 2024, largely due to a **$24.6 million** gain on PFH deconsolidation and a **$7.5 million** gain on the sale and fair value adjustment of PFH shares[159](index=159&type=chunk) - Q2 2025 net income decreased to **$2.4 million** from **$3.4 million** in Q2 2024, primarily due to a **166%** increase in the provision for loan losses, driven by impairment on a single commercial real estate loan[159](index=159&type=chunk) - Core net interest margin, excluding the impact of the Consumer Program portfolio, was **3.12%** for both the second quarter and first six months of 2025[159](index=159&type=chunk) [Financial Condition](index=80&type=section&id=Financial%20Condition) Total assets grew to **$3.87 billion** by June 30, 2025, driven by loan growth, though asset quality deteriorated - Total loans held for investment increased by **8%** to **$3.1 billion** at June 30, 2025, from December 31, 2024, driven by growth in Commercial and Consumer loans[161](index=161&type=chunk)[192](index=192&type=chunk) - Nonperforming assets as a percentage of total assets increased significantly to **1.90%** as of June 30, 2025, compared to **0.29%** at year-end 2024, driven by two relationships totaling **$63.6 million**[161](index=161&type=chunk)[200](index=200&type=chunk)[201](index=201&type=chunk) - The allowance for credit losses (ACL) to total loans ratio decreased to **1.47%** from **1.86%** at year-end, largely due to charge-offs in the Consumer Program portfolio[161](index=161&type=chunk)[210](index=210&type=chunk) [Capital Resources](index=92&type=section&id=Capital%20Resources) Both Primis Financial Corp. and Primis Bank exceeded all regulatory capital requirements as of June 30, 2025 Regulatory Capital Ratios | Ratio | Actual (June 30, 2025) | Well-Capitalized Minimum (Bank) | | :--- | :--- | :--- | | **Primis Financial Corp.** | | | | Common equity tier 1 | 8.92% | n/a | | Tier 1 risk-based capital | 9.22% | n/a | | Total risk-based capital | 12.43% | n/a | | **Primis Bank** | | | | Common equity tier 1 | 10.37% | 6.50% | | Tier 1 risk-based capital | 10.37% | 8.00% | | Total risk-based capital | 11.62% | 10.00% | [Item 3 – Quantitative and Qualitative Disclosures about Market Risk](index=95&type=section&id=Item%203%20%E2%80%93%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company manages interest rate risk, with EVE projected to decrease by **11.57%** in a +200 bps rate shock Sensitivity of Economic Value of Equity (EVE) as of June 30, 2025 | Rate Shock (Basis Points) | EVE % Change From Base | | :--- | :--- | | Up 400 | (23.66)% | | Up 200 | (11.57)% | | Up 100 | (3.52)% | | Down 100 | 1.14% | | Down 200 | (1.90)% | Sensitivity of Net Interest Income (NII) as of June 30, 2025 | Rate Shock (Basis Points) | NII $ Change From Base (in thousands) | | :--- | :--- | | Up 400 | $143 | | Up 200 | $(224) | | Up 100 | $913 | | Down 100 | $(688) | | Down 200 | $(2,842) | [Item 4 – Controls and Procedures](index=98&type=section&id=Item%204%20%E2%80%93%20Controls%20and%20Procedures) Disclosure controls and procedures were not effective as of June 30, 2025, due to ongoing remediation of material weaknesses - The CEO and CFO concluded that disclosure controls and procedures are not effective as of June 30, 2025, due to the continued remediation of previously identified material weaknesses in internal controls over financial reporting[250](index=250&type=chunk) - The company is continuing its efforts to remediate the material weaknesses, and no new material changes to internal controls were reported during the period[252](index=252&type=chunk) [PART II - OTHER INFORMATION](index=99&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Item 1 – Legal Proceedings](index=99&type=section&id=Item%201%20%E2%80%93%20Legal%20Proceedings) The company is involved in various legal proceedings, but no material adverse effect on financial condition is anticipated - As of June 30, 2025, there are no legal proceedings pending or threatened that represent a significant risk to Primis or Primis Bank[254](index=254&type=chunk) [Item 1A – Risk Factors](index=99&type=section&id=Item%201A%20%E2%80%93%20Risk%20Factors) No material changes to previously disclosed risk factors from the 2024 Form 10-K were reported during the period - No material changes to the risk factors disclosed in the 2024 Form 10-K were reported during the period covered by this report[256](index=256&type=chunk) [Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds](index=99&type=section&id=Item%202%20%E2%80%93%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q2 2025, the company repurchased **79,549 shares** of common stock at an average price of **$10.00** per share Issuer Purchases of Equity Securities - Q2 2025 | Period | Total Number of Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | April 1-30, 2025 | — | $— | | May 1-30, 2025 | — | $— | | June 1-30, 2025 | 79,549 | $10.00 | | **Total** | **79,549** | **$10.00** |

Financial Data and Key Metrics Changes - For the second quarter, the company reported net income of approximately $8.4 million, or $0.34 per share, which included a pretax gain of $7.5 million [4][5] - The effective cost of deposits was $2.89, which is 32% lower than the same quarter a year ago [7] - Core net interest margin (NIM) was 3.15%, up from 3.13% in the previous quarter and 280 basis points from a year ago [21] - Non-interest income increased to $10.6 million from $8.5 million in the previous quarter [23] Business Line Data and Key Metrics Changes - The core bank remains nearly 70% of the total balance sheet, with a return on assets (ROA) of approximately $138 million supported by low-cost deposits [11] - Premise Mortgage closed $323 million in the quarter, up about 52% from the same quarter in 2024 [12] - Panacea Financial grew to over $500 million in outstanding credit, focusing on deposit growth [14] Market Data and Key Metrics Changes - Non-interest bearing deposits increased by $22 million or 19% annualized in the quarter [21] - The company experienced a 12% annualized increase in gross loans held for investment from March 31 to June 30 [20] Company Strategy and Development Direction - The company is focused on organic growth and has not engaged in mergers and acquisitions since 2017 [9] - The strategy includes maintaining low operating expenses while leveraging digital platforms to enhance deposit growth [8][10] - The company aims to achieve a 1% ROA goal by 2026, with expectations of growing pre-tax, pre-provision earnings to over $13 million [25] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's positioning and ability to generate attractive earnings in the coming quarters [26] - The company does not foresee any negative influences that would cause earnings pressure [16] - Management indicated that the second quarter was the last quarter to bear significant noise due to the consumer program [25] Other Important Information - The company has negotiated a solution with its core provider that will save approximately $300,000 per month starting in August [8] - The company is in the early stages of ramping up its SBA lending activities, with gains of $210,000 recorded in the second quarter [24] Q&A Session Summary Question: Loan growth expectations for the back half of the year and overall 2026 - Management expects Mortgage Warehouse to average between $250 million to $350 million next year, with Panacea potentially reaching $100 million to $150 million on the balance sheet [31][34] Question: Anticipated improvement or compression in core NIM - Management expects core NIM to creep up to the mid-320s by the end of the year, assuming no rate cuts [39] Question: Growth in core bank deposits and loans - Management believes the core bank will outgrow digital deposits, with a focus on low-cost deposit growth [43] Question: Impact of interest rates on mortgage volume - Management indicated that mortgage volume could increase significantly if interest rates drop into the low sixes [47] Question: Expectations for charge-offs - Management does not anticipate a significant decrease in net charge-offs, as they are already at industry levels [49] Question: Appropriate growth rate for core expenses - Management aims to reduce core expenses to around $18 million, with expected normal inflation of 3% to 4% thereafter [53][55]

Financial Performance & Valuation - The company's market capitalization is $294 million[11] - The price to tangible book value is at 102%[11], suggesting an attractive entry point[14] - The company's Return on Average Tangible Common Equity (ROTCE) is 11.79%[11] - Core Net Interest Margin is 3.13%[11] Balance Sheet & Loan Portfolio - Total assets amount to $3.88 billion[11] - Total loans held for investment (HFI) are $3.13 billion[11] - Total deposits are $3.38 billion[11] - The company's Tangible Common Equity to Tangible Assets (TCE/TA) ratio is 7.63%[11] Strategic Initiatives & Growth - New and renewed loan yields are at 7.57%[20] - Customer deposits in Panacea Financial are $107 million, up 58% since Q2 2024[30]

[Earnings Announcement & Dividend Declaration](index=1&type=section&id=Earnings%20Announcement) [Q2 2025 Financial Highlights](index=1&type=section&id=Q2%202025%20Financial%20Highlights) Primis Financial Corp. reported a significant increase in net income available to common shareholders and diluted earnings per share for the second quarter and first six months of 2025 compared to the same periods in 2024 Net Income Available to Common Shareholders | Period | 2025 (Millions) | 2024 (Millions) | YoY Change | | :----- | :-------------- | :-------------- | :--------- | | Q2 | $8.4 | $3.4 | +147.1% | | YTD | $31.1 | $5.9 | +427.1% | Diluted Earnings Per Share (EPS) | Period | 2025 | 2024 | YoY Change | | :----- | :--- | :--- | :--------- | | Q2 | $0.34 | $0.14 | +142.9% | | YTD | $1.26 | $0.24 | +425.0% | [Quarterly Cash Dividend](index=1&type=section&id=Quarterly%20Cash%20Dividend) The Board of Directors declared a quarterly cash dividend of $0.10 per share, marking the company's fifty-fifth consecutive quarterly dividend - Primis Financial Corp. declared a quarterly cash dividend of **$0.10 per share**, payable on August 22, 2025, to shareholders of record on August 8, 2025. This is the company's **fifty-fifth consecutive quarterly dividend**[1](index=1&type=chunk)[29](index=29&type=chunk) [Operating Results & Management Commentary](index=1&type=section&id=Operating%20Results) [Management Commentary](index=1&type=section&id=Management%20Commentary) President and CEO Dennis J. Zember, Jr. expressed satisfaction with progress in rebuilding the balance sheet for higher sustained earnings, emphasizing the core bank's profitability and the growth potential of mortgage warehouse and Panacea, while non-core portfolios are being run off - Management is pleased with progress in rebuilding the balance sheet for higher sustained earnings in the second half of 2025[4](index=4&type=chunk) - The core bank is maximizing profitability with its core deposit base while pursuing moderate growth[4](index=4&type=chunk) - Mortgage warehouse and Panacea are executing on their growth potential as non-core portfolios run off[4](index=4&type=chunk) [Significant Items Impacting the Quarter](index=1&type=section&id=Significant%20Items%20Impacting%20the%20Quarter) The second quarter included both positive and negative items, such as a gain from the sale of a portion of Panacea Financial Holdings, a substantial increase in Primis Mortgage loan closings, and a significant reduction in promotional loans. Management anticipates future expense reductions from core contract renegotiations and vendor consolidation - Completed the sale of a portion of ownership in Panacea Financial Holdings, Inc. (PFH), generating **$22.1 million in proceeds** and a **$7.5 million pre-tax gain**[5](index=5&type=chunk) - Promotional loans driving volatility finished the quarter at only **$9.6 million**, with write-offs of accrued interest expected to decline to less than **$0.5 million in Q3 2025**[5](index=5&type=chunk) - Primis Mortgage closed **$323 million in loans**, up **52% from the same quarter in 2024**, with a substantial portion from construction-to-permanent products[5](index=5&type=chunk) - Expected expense reductions of **$0.9 million in Q3** and **$1.5 million in Q4 and beyond** due to core contract renegotiation and vendor consolidation[5](index=5&type=chunk) [Run-Rate Pre-Tax Pre-Provision Earnings Outlook](index=2&type=section&id=Run-Rate%20Pre-Tax%20Pre-Provision%20Earnings%20Outlook) Adjusting for non-recurring items, the company's run-rate pre-tax pre-provision earnings were approximately $8.4 million in Q2 2025. Management projects future pre-tax pre-provision earnings of $10.5 to $11 million, driven by anticipated technology cost savings and the end of core deposit amortization - Run-rate pre-tax pre-provision earnings were approximately **$8.4 million in Q2 2025**, after adjusting for Consumer Program interest reversals and PFH gain[6](index=6&type=chunk) - Management has visibility to pre-tax pre-provision earnings of **$10.5 to $11 million**, before benefits of profitable growth and balance sheet repricing[6](index=6&type=chunk) - Expected reduction in quarterly expenses of approximately **$1.5 million** due to technology cost savings starting late Q3 2025 and the end of core deposit amortization in June[6](index=6&type=chunk) [Divisional Performance](index=2&type=section&id=Significant%20Improvement%20in%20All%20Divisions) [Core Community Bank](index=2&type=section&id=Core%20Community%20Bank) The Core Community Bank, comprising 70% of the Company's balance sheet, boasts a strong deposit base with 19% noninterest-bearing deposits. Its proprietary V1BE service supports over $200 million in commercial clients, and the bank plans to license this technology to other institutions by year-end 2025. The cost of deposits for the core bank was 1.79% in Q2 2025, significantly lower than peers - Core bank represents approximately **70% of the Company's total balance sheet**[7](index=7&type=chunk) - Approximately **19% of the core bank's deposit base** are noninterest-bearing deposits[7](index=7&type=chunk) - The V1BE service directly supports more than **$200 million of mostly commercial clients**, with plans to license the technology to other banks before the end of 2025[7](index=7&type=chunk) - Cost of deposits for the core bank was **1.79% in Q2 2025**, compared to 2.20% in Q2 2024, up to **100 basis points lower than similar sized peers**[12](index=12&type=chunk) [Primis Mortgage](index=2&type=section&id=Primis%20Mortgage) Primis Mortgage closed $323 million in loans in Q2 2025, a 52% increase compared to Q2 2024. Earnings were temporarily reduced by approximately $1.2 million due to support for new production teams - Primis Mortgage closed mortgage volume of **$323 million in Q2 2025**, up **52% compared to Q2 2024**[8](index=8&type=chunk) - Earnings for Primis Mortgage were depressed by approximately **$1.2 million** related to support for new production teams[8](index=8&type=chunk) [National Strategies (Mortgage Warehouse & Digital Platform)](index=2&type=section&id=National%20Strategies) Mortgage warehouse lending activity saw significant growth, with outstanding loan balances increasing 60% QoQ and 189% YoY. Committed facilities also grew substantially. The Bank's digital platform, which exclusively funds national strategies, ended Q2 2025 with almost $1.1 billion of deposits at a cost of 4.28% in June 2025, down from 5.05% in June 2024 Mortgage Warehouse Lending Growth | Metric | June 30, 2025 | March 31, 2025 | Dec 31, 2024 | YoY Change (vs. 2Q24) | | :-------------------- | :------------ | :------------- | :----------- | :-------------------- | | Outstanding Loan Balances | $185 million | $115 million | $64 million | +189% (vs. $14M) | | Committed Facilities | $804 million | $487 million | $349 million | +65% (QoQ) | | Associated Customer Noninterest Bearing Deposit Balances | $21 million | - | - | +80% (QoQ) | - The Bank's digital platform provides funding exclusively for national strategies, with no pressure on the core bank[10](index=10&type=chunk) - Digital platform deposits reached almost **$1.1 billion** at the end of Q2 2025, with a cost of deposits of **4.28% in June 2025**, down from $0.9 billion and 5.05% at June 30, 2024[13](index=13&type=chunk) [Panacea Financial](index=3&type=section&id=Panacea%20Financial) Panacea Financial maintained strong growth in Q2 2025, with loans outstanding increasing 34% YoY to $505 million and customer deposits growing 58% YoY to $107 million. The division aims to reach 10,000 customers by the end of 2025 and is developing a sophisticated suite of technology products for the medical, dental, and veterinary sectors Panacea Financial Growth | Metric | Q2 2025 | Q2 2024 | YoY Change | | :---------------- | :------ | :------ | :--------- | | Loans Outstanding | $505 million | - | +34% | | Customer Deposits | $107 million | - | +58% | - Panacea is the number one ranked 'Bank for doctors' on Google, serving over **7,000 professionals and practices nationwide**, with a goal of reaching **10,000 customers by the end of 2025**[15](index=15&type=chunk) - Panacea is developing an initial phase of sophisticated technology products and services targeting the medical, dental, and veterinary space[15](index=15&type=chunk) [Financial Performance Analysis](index=3&type=section&id=Financial%20Performance%20Analysis) [Net Interest Income & Margin](index=3&type=section&id=Net%20Interest%20Income) Reported net interest income decreased slightly to $25.5 million in Q2 2025 due to a final significant write-off of accrued interest on the consumer loan portfolio. However, excluding the Consumer Program impacts, net interest income increased by 10.4% YoY to $27.5 million, and the net interest margin improved to 3.15% (excluding Consumer Program) from 2.80% YoY. The cost of deposits decreased to 2.52% in Q2 2025 from 2.98% YoY Net Interest Income & Margin | Metric | Q2 2025 | Q1 2025 | Q2 2024 | YoY Change (Q2) | | :------------------------------------ | :------ | :------ | :------ | :-------------- | | Net Interest Income (Reported) | $25.5M | $26.4M | $24.9M | +2.4% | | Net Interest Margin (Reported) | 2.89% | - | 2.72% | +17 bps | | Net Interest Income (Excl. Consumer Program) | $27.5M | - | $24.9M | +10.4% | | Net Interest Margin (Excl. Consumer Program) | 3.15% | 3.13% | 2.80% | +35 bps | | Cost of Deposits | 2.52% | - | 2.98% | -46 bps | - New and renewed loan production in Q2 2025 had a weighted average yield of **7.57%**, up from 7.25% in Q2 2024[19](index=19&type=chunk) - Total maturities of loans over the five quarters beginning Q4 2025 total **$574 million** with weighted average yields of **5.71%**, indicating opportunity for higher yields[19](index=19&type=chunk) [Noninterest Income](index=4&type=section&id=Noninterest%20Income) Noninterest income was $18.0 million in Q2 2025, significantly lower than Q1 2025 ($32.3 million) due to a large gain from PFH deconsolidation in Q1, but higher than Q2 2024 ($10.7 million). Q2 2025 included a $7.4 million gain from the sale of PFH shares and remeasurement. Mortgage banking income increased to $7.9 million Noninterest Income | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :------------------------------------ | :------ | :------ | :------ | | Total Noninterest Income | $18.0M | $32.3M | $10.7M | | Gain from PFH sale and remeasurement | $7.4M | $24.6M (deconsolidation gain) | - | | Mortgage Banking Activity Income | $7.9M | $5.6M | - | | Consumer Program Derivative Income | $0.6M | $(0.3M) | - | [Noninterest Expense](index=4&type=section&id=Noninterest%20Expense) Reported noninterest expense decreased slightly to $31.9 million for Q2 2025 from $32.5 million in Q1 2025, with Q1 including consolidated PFH expenses. The core operating expense burden increased QoQ but would have been less than $21 million if adjusted for non-recurring items like consulting, FDIC insurance, audit, and legal expenses Noninterest Expense ($ thousands) | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :------------------------------------ | :------ | :------ | :------ | | Reported Noninterest Expense | $31,927 | $32,516 | $29,662 | | Core Operating Expense Burden | $22,661 | $20,414 | $20,136 | - Q2 2025 core expense burden included approximately **$0.5 million of consulting**, **$0.4 million of additional FDIC insurance**, **$0.4 million of remaining 2024 audit expense**, and **$0.2 million of legal expenses** related to employee fraud recovery efforts, which are not expected to continue[23](index=23&type=chunk) [Loan Portfolio and Asset Quality](index=4&type=section&id=Loan%20Portfolio%20and%20Asset%20Quality) Loans held for investment increased to $3.13 billion at June 30, 2025, driven by growth in Panacea Financial loans (up 34% YoY to $505 million) and Mortgage Warehouse outstandings (up 189% YoY to $185 million). Nonaccrual loans remained low at 0.26% of total loans. The provision for loan losses decreased to $1.2 million in Q2 2025, and the allowance for credit losses as a percentage of loans held for investment was 1.24% Loan Portfolio Highlights | Metric | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :------------------------------------ | :------------ | :------------- | :------------ | | Loans held for investment | $3.13 billion | $3.04 billion | $3.30 billion | | Panacea Financial loans | $505 million | $474 million | $376 million | | Mortgage Warehouse outstandings | $185 million | $115 million | $14 million | | Consumer loan program balances (net of discounts) | $113 million | - | $194 million | Asset Quality Metrics | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :------------------------------------ | :------ | :------ | :------ | | Nonaccrual loans (% of total loans) | 0.26% | - | 0.24% | | Provision for loan losses | $1.2M | $1.6M | $3.1M | | Allowance for credit losses (% of loans HFI) | 1.24% | - | 1.56% | - The company had no other real estate owned at the end of Q2 2025[25](index=25&type=chunk) [Deposits and Funding](index=5&type=section&id=Deposits%20and%20Funding) Total deposits at June 30, 2025, were essentially flat year-over-year. Noninterest-bearing demand deposits showed strong annualized growth of 18% compared to December 31, 2024, reaching $478 million. The company is 100% funded with customer deposits and has no wholesale funding Deposits and Funding | Metric | June 30, 2025 | June 30, 2024 | Annualized Growth (vs. Dec 31, 2024) | | :------------------------------------ | :------------ | :------------ | :----------------------------------- | | Total deposits | $3.3 billion | $3.3 billion | Flat YoY | | Noninterest bearing demand deposits | $478 million | - | +18% | | Deposits swept off balance sheet | $37 million | $4 million | - | - The Company is **100% funded with customer deposits** and has no wholesale funding[27](index=27&type=chunk) [Shareholders' Equity & Dividends](index=5&type=section&id=Shareholders'%20Equity) Book value per common share increased 2% YoY to $15.52, and tangible book value per common share increased 3% YoY to $11.72. The company repurchased almost 80 thousand shares at a weighted average price of $10.00 per share and declared its fifty-fifth consecutive quarterly dividend of $0.10 per share Shareholders' Equity Metrics (June 30, 2025) | Metric | Amount | YoY Change (vs. June 30, 2024) | | :------------------------------------ | :----- | :----------------------------- | | Book value per common share | $15.52 | +2% ($0.30) | | Tangible book value per common share | $11.72 | +3% ($0.34) | | Common shareholders' equity | $382 million | - | | Tangible common equity | $289 million | - | - The Company repurchased almost **80 thousand shares** of its common stock at a weighted average price of **$10.00 per share** during the quarter[28](index=28&type=chunk) - The Board of Directors declared a dividend of **$0.10 per share**, marking Primis' **fifty-fifth consecutive quarterly dividend**[29](index=29&type=chunk) [Company Information & Disclosures](index=6&type=section&id=Company%20Information%20%26%20Disclosures) [About Primis Financial Corp.](index=6&type=section&id=About%20Primis%20Financial%20Corp.) As of June 30, 2025, Primis Financial Corp. had $3.9 billion in total assets, $3.1 billion in total loans held for investment, and $3.3 billion in total deposits. Primis Bank provides a range of financial services through 24 full-service branches in Virginia and Maryland, complemented by online and mobile applications Primis Financial Corp. Snapshot (June 30, 2025) | Metric | Amount | | :------------------------------------ | :----- | | Total assets | $3.9 billion | | Total loans held for investment | $3.1 billion | | Total deposits | $3.3 billion | - Primis Bank operates **twenty-four full-service branches** in Virginia and Maryland, offering financial services to individuals and small- to medium-sized businesses, along with online and mobile applications[31](index=31&type=chunk) [Contacts & Conference Call](index=6&type=section&id=Contacts) This section provides contact information for Primis Financial Corp.'s President and CEO, Dennis J. Zember, Jr., and EVP and CFO, Matthew A. Switzer. It also details the upcoming conference call for Q2 results on Friday, July 25, 2025, at 10:00 a.m. (ET), including webcast and dial-in information - Contact information for Dennis J. Zember, Jr. (President and CEO) and Matthew A. Switzer (EVP and CFO) is provided[32](index=32&type=chunk) - A conference call to discuss Q2 results will be held on **Friday, July 25, 2025, at 10:00 a.m. (ET)**, with a live webcast available at https://events.q4inc.com/attendee/362488451[32](index=32&type=chunk) [Non-GAAP Measures](index=6&type=section&id=Non-GAAP%20Measures) The press release includes non-GAAP financial measures, such as 'net income adjusted for nonrecurring income and expenses' and 'pre-tax pre-provision operating earnings,' which management uses to analyze performance and provide insights into ongoing operating results and trends. These measures are not recognized under GAAP and should be considered alongside GAAP figures, with reconciliations provided in the financial tables - Non-GAAP financial measures are used to analyze performance and provide a more indicative measure of forward-looking trends by excluding non-recurring income or expense[33](index=33&type=chunk)[34](index=34&type=chunk) - Examples of non-GAAP measures include net income adjusted for nonrecurring income and expenses, pre-tax pre-provision operating earnings, operating return on average assets, and tangible book value per share[33](index=33&type=chunk) - Non-GAAP measures should not be considered an alternative to GAAP measures and may not be comparable with other companies due to lack of standardization[34](index=34&type=chunk)[35](index=35&type=chunk) [Forward-Looking Statements](index=6&type=section&id=Forward-Looking%20Statements) This section contains forward-looking statements regarding future operating and financial performance, growth strategies, expense management, capital management, profitability, and credit quality. It cautions investors that these statements are not guarantees of future performance and involve known and unknown risks and uncertainties that could cause actual results to differ materially - The report contains forward-looking statements identifiable by words like 'may,' 'plan,' 'anticipate,' 'believe,' 'expect,' and 'project,' concerning future operating and financial performance, growth, and market conditions[36](index=36&type=chunk) - Forward-looking statements are not guarantees of future performance and involve known and unknown risks and uncertainties that may cause actual results to differ materially[39](index=39&type=chunk) - Risk factors include instability in global economic conditions, changes in interest rates, competitive pressures, regulatory changes, credit risk, cybersecurity risks, and other general competitive, economic, political, and market factors[39](index=39&type=chunk) [Financial Tables (Unaudited)](index=9&type=section&id=Financial%20Highlights%20(unaudited)) [Selected Performance Ratios](index=9&type=section&id=Selected%20Performance%20Ratios) This section presents key financial performance ratios for Primis Financial Corp., including profitability, efficiency, asset quality, and capital ratios, across several quarters Selected Performance Ratios (Q2 2025 vs. Q2 2024) | Metric | 2Q 2025 | 2Q 2024 | | :------------------------------------ | :------ | :------ | | Return on average assets | 0.89% | 0.35% | | Operating return on average assets | 0.29% | 0.46% | | Pre-tax pre-provision return on average assets | 1.23% | 0.75% | | Net interest margin | 2.89% | 2.72% | | Core net interest margin | 3.15% | 2.85% | | Efficiency ratio | 73.37% | 83.36% | | Operating efficiency ratio | 87.88% | 79.56% | | Earnings per common share - Diluted | $0.34 | $0.14 | | Book value per common share | $15.52 | $15.22 | | Tangible book value per common share | $11.72 | $11.38 | | Non-performing assets as a percent of total assets, excluding SBA guarantees | 0.86% | 0.25% | | Allowance for credit losses to total loans | 1.24% | 1.56% | | Common equity to assets | 9.86% | 9.48% | | Tangible common equity to tangible assets | 7.63% | 7.27% | [Condensed Consolidated Balance Sheets](index=11&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20(unaudited)) The condensed consolidated balance sheets provide a snapshot of the company's financial position, showing total assets increased to $3.88 billion at June 30, 2025, from $3.70 billion at March 31, 2025. Net loans and total deposits also saw increases Condensed Consolidated Balance Sheets (Selected Items, $ thousands) | Metric | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :------------------------------------ | :------------ | :------------- | :------------ | | Total assets | $3,877,701 | $3,697,310 | $3,966,018 | | Loans receivable, net of deferred fees | $3,130,521 | $3,043,348 | $3,300,562 | | Allowance for credit losses | $(38,841) | $(44,021) | $(51,574) | | Net loans | $3,091,680 | $2,999,327 | $3,248,988 | | Total deposits | $3,342,673 | $3,168,872 | $3,335,463 | | Total Primis common stockholders' equity | $382,405 | $375,563 | $376,047 | | Tangible common equity | $288,897 | $281,759 | $281,279 | [Condensed Consolidated Statement of Operations](index=11&type=section&id=Condensed%20Consolidated%20Statement%20of%20Operations%20(unaudited)) The condensed consolidated statement of operations details the company's revenues, expenses, and net income. For Q2 2025, net income available to common shareholders was $8.4 million, a significant increase from $3.4 million in Q2 2024. Net interest income was $25.5 million, and noninterest income was $18.0 million Condensed Consolidated Statement of Operations (Selected Items, $ thousands) | Metric | 2Q 2025 | 1Q 2025 | 2Q 2024 | YTD 2025 | YTD 2024 | | :------------------------------------ | :------ | :------ | :------ | :------- | :------- | | Interest and dividend income | $47,935 | $47,723 | $52,191 | $95,658 | $102,544 | | Interest expense | $22,447 | $21,359 | $27,338 | $43,806 | $52,422 | | Net interest income | $25,488 | $26,364 | $24,853 | $51,852 | $50,122 | | Provision for credit losses | $1,159 | $1,596 | $3,119 | $2,755 | $9,627 | | Noninterest income | $18,030 | $32,335 | $10,728 | $50,365 | $21,158 | | Noninterest expense | $31,927 | $32,516 | $29,662 | $64,443 | $57,323 | | Net income (loss) attributable to Primis' common shareholders | $8,427 | $22,636 | $3,436 | $31,063 | $5,902 | [Loan Portfolio Composition](index=13&type=section&id=Loan%20Portfolio%20Composition) This table details the composition of the loan portfolio by category and risk grade. Total loans receivable, net of deferred fees, stood at $3.13 billion in Q2 2025, with real estate and commercial loans forming the largest segments Loan Portfolio Composition (Selected Categories, $ thousands) | Loan Category | 2Q 2025 | 1Q 2025 | 2Q 2024 | | :------------------------------------ | :------ | :------ | :------ | | Loans held for sale | $126,869 | $74,439 | $94,644 | | Total real estate loans | $1,972,374 | $1,980,749 | $2,027,099 | | Commercial loans | $811,458 | $698,097 | $619,365 | | Consumer loans | $339,936 | $357,652 | $646,590 | | Total loans receivable, net of deferred fees | $3,130,521 | $3,043,348 | $3,300,562 | Loans by Risk Grade (2Q 2025, $ thousands) | Risk Grade | Amount | | :------------------------------------ | :----- | | Pass Grade 1 - Highest Quality | $667 | | Pass Grade 2 - Good Quality | $170,560 | | Pass Grade 3 - Satisfactory Quality | $1,737,153 | | Pass Grade 4 - Pass | $1,127,608 | | Pass Grade 5 - Special Mention | $25,459 | | Grade 6 - Substandard | $69,074 | [Asset Quality Information](index=13&type=section&id=Asset%20Quality%20Information) This table provides detailed asset quality metrics, including the allowance for credit losses and non-performing assets. The allowance for credit losses decreased to $38.8 million in Q2 2025, while total non-performing assets increased to $38.2 million, primarily due to a rise in accruing loans delinquent 90 days or more Allowance for Credit Losses ($ thousands) | Metric | 2Q 2025 | 1Q 2025 | 2Q 2024 | | :------------------------------------ | :------ | :------ | :------ | | Balance at beginning of period | $(44,021) | $(53,724) | $(53,456) | | Provision for credit losses | $(1,159) | $(1,596) | $(3,119) | | Net charge-offs | $6,339 | $5,001 | $7,953 | | Ending balance | $(38,841) | $(44,021) | $(51,574) | Non-Performing Assets ($ thousands) | Metric | 2Q 2025 | 1Q 2025 | 2Q 2024 | | :------------------------------------ | :------ | :------ | :------ | | Nonaccrual loans | $12,983 | $12,956 | $11,289 | | Accruing loans delinquent 90 days or more | $25,188 | $1,897 | $1,714 | | Total non-performing assets | $38,171 | $14,669 | $13,186 | | SBA guaranteed portion of non-performing loans | $4,750 | $3,268 | $5,954 | [Average Balance Sheet & Net Interest Income Analysis](index=14&type=section&id=Average%20Balance%20Sheet) The average balance sheet provides a detailed breakdown of average earning assets, liabilities, and equity, along with a comprehensive analysis of interest income, interest expense, and net interest margin. Total earning assets averaged $3.53 billion in Q2 2025 Average Balance Sheet (Selected Items, $ thousands) | Metric | 2Q 2025 | 1Q 2025 | 2Q 2024 | | :------------------------------------ | :------ | :------ | :------ | | Total earning assets | $3,531,540 | $3,399,685 | $3,669,045 | | Total assets | $3,794,515 | $3,641,597 | $3,912,241 | | Total Deposits | $3,260,020 | $3,129,999 | $3,324,688 | | Total Funding | $3,377,721 | $3,246,954 | $3,483,607 | | Total liabilities | $3,414,370 | $3,285,234 | $3,518,101 | | Total stockholders' equity | $380,145 | $356,363 | $394,140 | Net Interest Income Analysis (Selected Items, $ thousands) | Metric | 2Q 2025 | 1Q 2025 | 2Q 2024 | | :------------------------------------ | :------ | :------ | :------ | | Total Earning Assets Income | $47,935 | $47,723 | $52,191 | | Total Deposit Costs | $20,497 | $19,392 | $24,622 | | Total Funding Costs | $22,447 | $21,359 | $27,338 | | Net Interest Income | $25,488 | $26,364 | $24,853 | | Net Interest Margin | 2.89% | 3.15% | 2.72% | | Net Interest Spread | 2.35% | 2.60% | 2.11% | [Reconciliation of Non-GAAP Items](index=16&type=section&id=Reconciliation%20of%20Non-GAAP%20items) This table provides a detailed reconciliation of various non-GAAP financial measures to their most comparable GAAP measures, including adjustments for non-recurring income and expenses, pre-tax pre-provision earnings, operating return on assets, operating return on equity, operating efficiency ratio, and tangible book value per common share Net Income Reconciliation (2Q 2025, $ thousands) | Metric | GAAP | Non-GAAP Adjustments | Adjusted Non-GAAP | | :------------------------------------ | :----- | :------------------- | :---------------- | | Net income (loss) attributable to Primis' common shareholders | $8,427 | $(5,659) | $2,768 | Pre-tax Pre-provision Earnings Reconciliation (2Q 2025, $ thousands) | Metric | GAAP | Non-GAAP Adjustments | Adjusted Non-GAAP | | :------------------------------------ | :----- | :------------------- | :---------------- | | Pre-tax pre-provision earnings | $11,593 | $(7,218) | $4,375 | Tangible Book Value per Common Share Reconciliation (2Q 2025) | Metric | GAAP | Non-GAAP Adjustments | Adjusted Non-GAAP | | :------------------------------------ | :----- | :------------------- | :---------------- | | Book value per common share | $15.52 | $(3.80) | $11.72 | Core Net Interest Margin Reconciliation (2Q 2025) | Metric | Reported | Effect of adjustment for Consumer Portfolio | Core | | :------------------------------------ | :------- | :--------------------------------------- | :--- | | Net interest margin | 2.89% | 0.26% | 3.15% |

Core Financial Performance - Primis Financial Corp. reported a net income of $8.4 million, or $0.34 per diluted share, for Q2 2025, a significant increase from $3.4 million, or $0.14 per diluted share, in Q2 2024 [1] - For the first half of 2025, net income available to common shareholders was $31.1 million, or $1.26 per diluted share, compared to $5.9 million, or $0.24 per diluted share, in the same period of 2024 [2] Operating Results - The company highlighted improved profitability and momentum in key areas, with a focus on rebuilding its balance sheet for sustained earnings [3] - Adjusted pre-tax pre-provision earnings for Q2 2025 were approximately $8.4 million, with expectations of reaching $10.5 to $11 million in the near future [4] Division Performance - The core community bank, which constitutes about 70% of the total balance sheet, has a strong deposit base with 19% being noninterest-bearing deposits [5] - Primis Mortgage closed $323 million in mortgage volume in Q2 2025, a 52% increase from the same quarter in 2024 [6] - Mortgage warehouse lending activity saw outstanding loan balances rise to $185 million, up 60% from Q1 2025 and 189% from Q4 2024 [7] Funding and Deposits - The digital platform ended Q2 2025 with nearly $1.1 billion in deposits, with a cost of deposits at 4.28%, down from 5.05% a year earlier [9] - Noninterest-bearing demand deposits grew to $478 million, reflecting an annualized growth rate of 18% compared to December 31, 2024 [23] Shareholder Returns - The Board of Directors declared a quarterly cash dividend of $0.10 per share, marking the company's fifty-fifth consecutive quarterly dividend [25] Asset Quality and Loan Portfolio - Loans held for investment increased to $3.13 billion at June 30, 2025, compared to $3.04 billion at March 31, 2025 [20] - The company recorded a provision for loan losses of $1.2 million for Q2 2025, down from $3.1 million in the same quarter of 2024 [22] Equity and Valuation - Book value per common share increased to $15.52, a 2% rise from June 30, 2024, while tangible book value per common share rose to $11.72, a 3% increase [24]

Company Announcement - Primis Financial Corp. will release its second quarter 2025 results after market close on July 24, 2025 [1] - A conference call and audio webcast for analysts and investors is scheduled for July 25, 2025, at 10:00 a.m. Eastern Time [1] - The earnings call can be accessed via a specific webcast link and participants are encouraged to join 15 minutes early [1] Financial Overview - As of March 31, 2025, Primis Financial Corp. reported total assets of $3.7 billion, total loans held for investment of $3.0 billion, and total deposits of $3.2 billion [2] - Primis Bank, the banking subsidiary, offers a variety of financial services to individuals and small- to medium-sized businesses through 24 full-service branches in Virginia and Maryland, as well as online and mobile applications [2]

Core Viewpoint - Primis Financial Corp. has signed a non-binding term sheet to sell a portion of its ownership in Panacea Financial Holdings, expected to generate approximately $22 million in proceeds and an additional pre-tax gain of $6.5 to $7.0 million due to the sales price exceeding the carrying value as of March 31, 2025 [1][2]. Financial Performance - As of March 31, 2025, Primis Financial Corp. reported total assets of $3.7 billion, total loans held for investment of $2.9 billion, and total deposits of $3.2 billion [3]. Strategic Implications - The CEO emphasized that realizing the gain from the sale will enable the company to pursue more aggressive strategies, such as share repurchase programs and accelerating growth initiatives [2]. - The company believes that the incremental margins in its core banking operations are currently better than they have been in several years, with minimal operating expense increases [2]. Commitment to Panacea - Despite the sale, the company maintains its confidence in Panacea's long-term potential and continues to support its mission of providing tech-enabled financial solutions to healthcare professionals [2].

[PART I - FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) Presents Q1 2025 unaudited financial statements, management's discussion, market risk, and internal controls [Item 1 - Financial Statements](index=3&type=section&id=Item%201%20-%20Financial%20Statements) Presents Q1 2025 unaudited consolidated financial statements, including balance sheets, income, equity, cash flows, and notes [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet as of March 31, 2025, shows a slight asset increase, reclassification of loans, and higher stockholders' equity | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | | :--------------------------------------- | :------------------------------ | :------------------------------- | :-------------------- | | Total assets | $3,697,310 | $3,690,115 | $7,195 | | Total loans held for sale | $74,439 | $247,108 | $(172,669) | | Net loans | $2,999,327 | $2,833,723 | $165,604 | | Investment in Panacea Financial Holdings, Inc. common stock | $21,227 | $— | $21,227 | | Total liabilities | $3,321,747 | $3,325,133 | $(3,386) | | Total stockholders' equity | $375,563 | $364,982 | $10,581 | [Condensed Consolidated Statements of Income and Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20and%20Comprehensive%20Income) Q1 2025 net income significantly increased due to Panacea deconsolidation gain, improved net interest income, and lower credit loss provision | Metric | For the Three Months Ended March 31, 2025 (in thousands) | For the Three Months Ended March 31, 2024 (in thousands) | Change (in thousands) | | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :-------------------- | | Net income attributable to Primis' common stockholders | $22,636 | $2,466 | $20,170 | | Earnings per share, diluted | $0.92 | $0.10 | $0.82 | | Gain on deconsolidation of Panacea Financial Holdings, Inc. | $24,578 | $— | $24,578 | | Net interest income | $26,364 | $25,269 | $1,095 | | Provision for credit losses | $1,596 | $6,508 | $(4,912) | | Total noninterest income | $32,335 | $10,307 | $22,028 | | Total noninterest expenses | $32,516 | $27,538 | $4,978 | [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) Total equity increased from net income and comprehensive income, partially offset by dividends and Panacea deconsolidation impact | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | | :--------------------------------------- | :------------------------------ | :------------------------------- | :-------------------- | | Total stockholders' equity | $375,563 | $364,982 | $10,581 | | Net income | $22,636 | $19,034 (Q1 2025) | $3,602 | | Other comprehensive income | $3,612 | $(1,838) (Q1 2024) | $5,450 | | Panacea Financial Holdings, Inc. deconsolidation (Noncontrolling Interests) | $(9,624) | $13,226 (Dec 31, 2024) | $(22,850) | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow improved, investing activities used cash, and financing activities shifted to cash usage, leading to a net cash decrease | Metric | For the Three Months Ended March 31, 2025 (in thousands) | For the Three Months Ended March 31, 2024 (in thousands) | Change (in thousands) | | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :-------------------- | | Net cash provided by (used in) operating activities | $34,393 | $(965) | $35,358 | | Net cash used in investing activities | $(27,307) | $(26,343) | $(964) | | Net cash provided (used in) by financing activities | $(14,547) | $38,472 | $(53,019) | | Net change in cash and cash equivalents | $(7,461) | $11,164 | $(18,625) | | Loans held for sale transferred to held for investment | $152,092 | $— | $152,092 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Provides detailed accounting policies, significant events, and specific financial instrument information for the condensed consolidated statements [1. Accounting Policies](index=9&type=section&id=1.%20Accounting%20Policies) Outlines Primis Financial Corp.'s business, subsidiaries, Panacea deconsolidation accounting, Life Premium Finance disposition, and key accounting practices - Primis Bank operates **24 full-service branches** in Virginia and Maryland, offering a range of financial services[16](index=16&type=chunk) - Panacea Financial Holdings, Inc. (PFH) was deconsolidated on March 31, 2025, due to changes in the relationship and control, resulting in a **$24.6 million gain** for Primis[16](index=16&type=chunk)[23](index=23&type=chunk)[25](index=25&type=chunk) - The company now accounts for its **19% common stock investment** in PFH at fair value under ASC 825, with a retained interest of **$21.2 million** at deconsolidation[24](index=24&type=chunk)[25](index=25&type=chunk) - The disposition of the Life Premium Finance (LPF) division was completed by January 31, 2025, with approximately **$64 million** of additional loans sold to EverBank[29](index=29&type=chunk) - The company has two reportable operating segments: Primis Mortgage and Primis Bank[30](index=30&type=chunk) [2. Investment Securities](index=16&type=section&id=2.%20Investment%20Securities) Details available-for-sale and held-to-maturity investment securities, their fair values, and unrealized gains/losses, noting no credit impairment | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--------------------------------------- | :------------------------------ | :------------------------------- | | Total available-for-sale securities | $241,638 | $235,903 | | Total held-to-maturity securities | $9,153 | $9,448 | | Gross unrealized losses on available-for-sale securities | $(22,782) | $(26,966) | - No allowance for credit losses has been recorded for held-to-maturity securities, as they are backed by the U.S. government or deemed low risk[43](index=43&type=chunk) - As of March 31, 2025, **155 available-for-sale investment securities** were in an unrealized loss position, primarily due to changes in interest rates, not credit-related impairment[44](index=44&type=chunk) [3. Loans and Allowance for Credit Losses](index=21&type=section&id=3.%20Loans%20and%20Allowance%20for%20Credit%20Losses) Covers loan portfolio composition, reclassification of Consumer Program loans, nonaccrual loans, credit quality, and allowance for credit losses activity | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--------------------------------------- | :------------------------------ | :------------------------------- | | Total loans held for investment | $3,043,348 | $2,887,447 | | Total loans held for sale | $74,439 | $247,108 | | Total nonaccrual loans | $12,950 | $15,026 | | Allowance for credit losses | $44,021 | $53,724 | | Provision for credit losses (Q1) | $1,596 | $6,508 | - Approximately **$101.6 million** of Consumer Program loans were transferred from held for sale back to the consumer loans category within loans held for investment as of March 31, 2025[49](index=49&type=chunk) - During Q1 2025, **667 Consumer Program loans** with an amortized cost of **$5.7 million** were modified, primarily through settlements or term extensions, to enhance collections and mitigate charge-offs[72](index=72&type=chunk) - Net charge-offs for the three months ended March 31, 2025, totaled **$14.3 million**, with **$10.8 million** attributed to the Consumer Program portfolio[80](index=80&type=chunk)[177](index=177&type=chunk) [4. Derivatives](index=38&type=section&id=4.%20Derivatives) Describes derivative instruments, including Consumer Program and mortgage banking derivatives, their fair values, and key valuation inputs | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--------------------------------------- | :------------------------------ | :------------------------------- | | Consumer Program derivative asset | $1,597 | $4,511 | | Mortgage banking derivative assets | $1,415 | $1,000 | | Input for IRLCs | March 31, 2025 | December 31, 2024 | | :---------------------- | :------------- | :---------------- | | Average pullthrough rates | 82.95 % | 89.19 % | | Average costs to originate | 1.35 % | 1.31 % | [5. Fair Value](index=41&type=section&id=5.%20Fair%20Value) Presents assets and liabilities measured at fair value, categorized by hierarchy, highlighting significant unobservable inputs for specific assets | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--------------------------------------- | :------------------------------ | :------------------------------- | | Total assets measured at fair value (recurring) | $590,449 | $573,962 | | Investment in Panacea Financial Holdings, Inc. common stock (Level 3) | $21,227 | $— | | Consumer Program derivative (Level 3) | $1,597 | $4,511 | - The fair value of net loans, time deposits, junior subordinated debt, and senior subordinated notes are measured using the exit-price notion[103](index=103&type=chunk) [6. Leases](index=44&type=section&id=6.%20Leases) Details operating leases, including right-of-use assets, lease liabilities, weighted-average term, discount rate, and maturity analysis | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--------------------------------------- | :------------------------------ | :------------------------------- | | Operating lease liabilities | $11,639 | $11,566 | | Operating lease right-of-use assets | $10,352 | $10,279 | | Metric | March 31, 2025 | | :--------------------------------------- | :------------- | | Weighted-average remaining lease term (years) | 5.9 | | Weighted-average discount rate | 4.0 % | [7. Debt and Other Borrowings](index=44&type=section&id=7.%20Debt%20and%20Other%20Borrowings) Outlines various debt instruments, borrowing capacity from FHLB and Federal Reserve, and the nature of secured borrowings | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--------------------------------------- | :------------------------------ | :------------------------------- | | Securities sold under agreements to repurchase | $4,019 | $3,918 | | Junior subordinated debt | $9,892 | $9,880 | | Senior subordinated notes | $86,057 | $85,998 | | Secured borrowings | $16,729 | $17,195 | - Primis Bank had **$541.3 million** in lendable collateral value from the FHLB and **$550.5 million** in borrowing capacity from the Federal Reserve discount window as of March 31, 2025, with no current borrowings under these programs[108](index=108&type=chunk) [8. Stock-Based Compensation](index=45&type=section&id=8.%20Stock-Based%20Compensation) Summarizes stock-based compensation plans, including activity, recognized expense, and unrecognized expense for various award types | Metric | For the Three Months Ended March 31, 2025 (in thousands) | For the Three Months Ended March 31, 2024 (in thousands) | | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Stock-based compensation expense (time vested restricted stock) | $31 | $200 | - Unrecognized compensation expense for time-vested restricted stock awards was **$0.1 million**, expected to be recognized over a weighted average period of **2.5 years**[118](index=118&type=chunk) - Unrecognized compensation expense for performance-based restricted stock units was **$4.2 million** as of March 31, 2025, but no expense was recognized during the quarter due to the low probability of vesting[120](index=120&type=chunk)[121](index=121&type=chunk) [9. Commitments and Contingencies](index=49&type=section&id=9.%20Commitments%20and%20Contingencies) Describes off-balance sheet risks, such as credit commitments and letters of credit, and the allowance for credit losses on these exposures | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--------------------------------------- | :------------------------------ | :------------------------------- | | Letters of credit outstanding | $17,700 | $9,900 | | Unfunded lines of credit and undisbursed construction loan funds | $403,500 | $459,200 | | Metric | March 31, 2025 (in thousands) | January 1, 2025 (in thousands) | | :--------------------------------------- | :------------------------------ | :------------------------------- | | Allowance for credit losses on off-balance-sheet credit exposures | $1,134 | $1,121 | [10. Earnings Per Share](index=51&type=section&id=10.%20Earnings%20Per%20Share) Reconciles denominators for basic and diluted earnings per share computations for the three months ended March 31, 2025 and 2024 | Metric | For the Three Months Ended March 31, 2025 | For the Three Months Ended March 31, 2024 | | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Basic EPS | $0.92 | $0.10 | | Diluted EPS | $0.92 | $0.10 | [11. Segment Information](index=51&type=section&id=11.%20Segment%20Information) Identifies Primis Bank and Primis Mortgage as reportable segments, providing a breakdown of their financial performance - The company's two reportable operating segments are Primis Bank and Primis Mortgage[131](index=131&type=chunk) | Segment | Net Income Attributable to Primis' Common Stockholders (Q1 2025, in thousands) | Net Income Attributable to Primis' Common Stockholders (Q1 2024, in thousands) | | :---------------- | :---------------------------------------------------------------- | :---------------------------------------------------------------- | | Primis Bank | $4,267 | $3,411 | | Primis Mortgage | $772 | $1,032 | [Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations](index=53&type=section&id=Item%202%20-%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's discussion of financial condition and results for Q1 2025, covering business overview, highlights, and detailed financial analysis [Forward-Looking Statements](index=53&type=section&id=FORWARD-LOOKING%20STATEMENTS) Cautionary statement on forward-looking statements, highlighting inherent risks and uncertainties that could affect actual results - Forward-looking statements are not guarantees of future performance and are subject to risks, assumptions, and uncertainties that are difficult to predict and beyond the company's control[139](index=139&type=chunk) - Key risk factors include economic conditions, credit and financial market disruptions, geopolitical events, fraudulent acts, ability to implement strategic initiatives, litigation, changes in interest rates, and regulatory actions[141](index=141&type=chunk) [Overview](index=59&type=section&id=OVERVIEW) Introduces Primis Financial Corp. and Primis Bank operations, branch network, Panacea deconsolidation, and commercial lending focus - Primis Bank operates **24 full-service branches** in Virginia and Maryland, providing financial services to individuals and small/medium-sized businesses[145](index=145&type=chunk) - Panacea Financial Holdings, Inc. (PFH) was deconsolidated on March 31, 2025, but will continue to partner with the Panacea Division of the Bank for loan origination[145](index=145&type=chunk) - Primis Bank's core business focuses on commercial real estate and other secured/unsecured commercial loans, funded primarily by deposits[146](index=146&type=chunk) [Operational Highlights](index=59&type=section&id=OPERATIONAL%20HIGHLIGHTS) Q1 2025 operational successes across core banking, mortgage warehouse, Panacea, and Primis Mortgage, including loan growth and improved earnings - Core bank loan pipeline increased to **$228 million** as of March 31, 2025, from **$119 million** as of December 31, 2024[147](index=147&type=chunk) - Core bank's cost of deposits was **1.83%** in Q1 2025, supported by almost **20% noninterest-bearing deposits**[147](index=147&type=chunk) - Mortgage warehouse outstanding loan balances grew **80% to $115 million** as of March 31, 2025, from **$64 million** as of December 31, 2024[147](index=147&type=chunk) - Panacea Financial Division's outstanding loan balances grew **$40 million (9% unannualized)** in Q1 2025, from **$433.8 million** as of December 31, 2024[150](index=150&type=chunk) - Primis Mortgage earned approximately **$0.8 million pre-tax** in Q1 2025, up from **$0.4 million** in Q4 2024, with locked loan volume increasing **27% QoQ to $257 million**[150](index=150&type=chunk) [Financial Highlights](index=61&type=section&id=FINANCIAL%20HIGHLIGHTS) Q1 2025 financial performance, including increased net income from PFH deconsolidation, stable assets, improved net interest margin, and strengthened capital | Metric | Q1 2025 (in thousands) | Q1 2024 (in thousands) | Change (in thousands) | | :--------------------------------------- | :--------------------- | :--------------------- | :-------------------- | | Net income available to common shareholders | $22,600 | $2,500 | $20,100 | | Total loans held for investment | $3,000,000 | $2,800,000 | $200,000 | | Net interest margin | 3.15% | 2.84% | 0.31% | | Allowance for credit losses to total loans | 1.45% | 1.86% | (0.41%) | | Common Equity Tier 1 capital ratio | 9.35% | 8.74% | 0.61% | - Net income was primarily driven by a **$24.6 million gain** on the deconsolidation of Panacea Financial Holdings, Inc[151](index=151&type=chunk) - Total loans held for investment increased by **$0.2 billion (5.4%)** due to growth in Panacea and mortgage warehouse lending, and the transfer of **$0.1 billion** of Consumer Program loans back from held for sale[151](index=151&type=chunk) - Noninterest expense increased by **$5.0 million** due to personnel costs, professional fees, and data processing costs, with expected annual savings of **$6-8 million** from core system consolidation by early to mid-2026[151](index=151&type=chunk) [Results of Operations](index=63&type=section&id=RESULTS%20OF%20OPERATIONS) Detailed analysis of net income, net interest income, provision for credit losses, noninterest income, and expenses for Q1 2025 [Net Income](index=63&type=section&id=Net%20Income) Significant increase in Q1 2025 net income, driven by Panacea deconsolidation gain, higher net interest income, and lower credit loss provision | Metric | Q1 2025 (in thousands) | Q1 2024 (in thousands) | Change (in thousands) | | :--------------------------------------- | :--------------------- | :--------------------- | :-------------------- | | Net income available to common shareholders | $22,636 | $2,466 | $20,170 | - The increase in net income was driven by a **$24.6 million gain** on the deconsolidation of PFH, a **$1.1 million increase** in net interest income, and a **$4.9 million decrease** in provision for credit losses[152](index=152&type=chunk) [Net Interest Income](index=63&type=section&id=Net%20Interest%20Income) Net interest income increased in Q1 2025 due to improved net interest margin, lower liability costs, and despite reduced interest-earning assets | Metric | Q1 2025 (in thousands) | Q1 2024 (in thousands) | Change (in thousands) | | :--------------------------------------- | :--------------------- | :--------------------- | :-------------------- | | Net interest income | $26,364 | $25,269 | $1,095 | | Net interest margin | 3.15% | 2.84% | 0.31% | - Average interest-bearing liabilities declined by **$139 million**, with rates paid on these liabilities decreasing by **34 basis points**, largely due to a **100 basis point decline** in the fed funds borrowing rate[154](index=154&type=chunk) - Average earning asset balances decreased by **$184 million**, primarily due to a **$309 million decline** in average loan balances from the sale of the Life Premium Finance portfolio, partially offset by growth in Panacea and Mortgage Warehouse loan portfolios[155](index=155&type=chunk) [Provision for Credit Losses](index=65&type=section&id=Provision%20for%20Credit%20Losses) Significant decrease in Q1 2025 provision for credit losses, mainly due to lower provisioning for Consumer Program loans after prior charge-offs | Metric | Q1 2025 (in thousands) | Q1 2024 (in thousands) | Change (in thousands) | | :--------------------------------------- | :--------------------- | :--------------------- | :-------------------- | | Provision for credit losses | $1,596 | $6,508 | $(4,912) | | Provision for Consumer Program loans | $1,900 | $4,900 | $(3,000) | - Excluding the Consumer Program, the company recorded a benefit for expected losses of **$0.3 million** in Q1 2025, compared to a provision of **$1.6 million** in Q1 2024[161](index=161&type=chunk) [Noninterest Income](index=67&type=section&id=Noninterest%20Income) Substantial increase in Q1 2025 noninterest income, primarily from the Panacea deconsolidation gain, partially offset by lower derivative income | Metric | Q1 2025 (in thousands) | Q1 2024 (in thousands) | Change (in thousands) | | :--------------------------------------- | :--------------------- | :--------------------- | :-------------------- | | Total noninterest income | $32,335 | $10,307 | $22,028 | | Gain on deconsolidation of Panacea Financial Holdings, Inc. | $24,578 | $— | $24,578 | | Consumer Program derivative (loss) income | $(292) | $2,041 | $(2,333) | - The decline in Consumer Program derivative income was primarily due to fair value loss adjustments of **$2.9 million** in Q1 2025, as **$21.1 million** of loans exited their no-interest promotional period[163](index=163&type=chunk) [Noninterest Expense](index=69&type=section&id=Noninterest%20Expense) Increased noninterest expenses in Q1 2025, driven by higher salaries, professional fees, and data processing costs, with future savings expected from system consolidation | Metric | Q1 2025 (in thousands) | Q1 2024 (in thousands) | Change (in thousands) | | :--------------------------------------- | :--------------------- | :--------------------- | :-------------------- | | Total noninterest expenses | $32,516 | $27,538 | $4,978 | | Salaries and benefits | $17,941 | $15,735 | $2,206 | | Professional fees | $2,225 | $1,365 | $860 | | Data processing expense | $2,849 | $2,231 | $618 | - The increase in salaries and benefits was due to growth in the mortgage line of business and expenses from PFH prior to deconsolidation[166](index=166&type=chunk) - The company expects annual savings of approximately **$6 million to $8 million** from consolidating its core operational systems, with an anticipated impact beginning early to mid-2026[166](index=166&type=chunk) [Financial Condition](index=70&type=section&id=FINANCIAL%20CONDITION) Details changes in loans, asset quality, allowance for credit losses, investment securities, deposits, and borrowings, highlighting portfolio trends [Loans Held for Sale](index=70&type=section&id=Loans%20Held%20for%20Sale) Significant decline in Q1 2025 loans held for sale due to LPF loan sales and reclassification of Consumer Program loans | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | | :--------------------------------------- | :------------------------------ | :------------------------------- | :-------------------- | | Total loans held for sale | $74,439 | $247,108 | $(172,669) | - The decline was driven by the sale of **$50.7 million** of LPF loans and the transfer of **$101.7 million** of Consumer Program loans back to held for investment[168](index=168&type=chunk) [Loans](index=70&type=section&id=Loans) Gross loans held for investment increased in Q1 2025 due to Consumer Program loan transfers and growth in mortgage warehouse and Panacea divisions | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--------------------------------------- | :------------------------------ | :------------------------------- | | Gross loans held for investment | $3,043,348 | $2,887,447 | | Loan Type (March 31, 2025) | Amount (in thousands) | Percent of Total Loans | | :--------------------------------------- | :-------------------- | :--------------------- | | Total real estate loans | $1,980,749 | 65.1% | | Commercial loans | $698,097 | 22.9% | | Consumer loans | $357,652 | 11.7% | [Asset Quality; Past Due Loans and Nonperforming Assets](index=73&type=section&id=Asset%20Quality%3B%20Past%20Due%20Loans%20and%20Nonperforming%20Assets) Asset quality remained stable in Q1 2025, with a decrease in nonperforming assets driven by lower nonaccrual loans | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--------------------------------------- | :------------------------------ | :------------------------------- | | Total nonperforming assets | $14,663 | $16,739 | | Nonaccrual loans | $12,950 | $15,026 | | Nonperforming assets excluding SBA guaranteed loans to total assets | 0.28% | 0.29% | - The decrease in nonaccrual loans was primarily due to **$2.5 million** of paydowns on one relationship, partially offset by new nonaccrual placements[173](index=173&type=chunk) [Allowance for Credit Losses](index=74&type=section&id=Allowance%20for%20Credit%20Losses) Allowance for credit losses decreased in Q1 2025 due to net charge-offs, primarily from Consumer Program, and improved credit quality | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--------------------------------------- | :------------------------------ | :------------------------------- | | Allowance for credit losses | $44,000 | $53,700 | | Net charge-offs (Q1 2025) | $11,300 | N/A | | Allowance for credit losses to total loans | 1.45% | 1.86% | - Net charge-offs of **$11.3 million** in Q1 2025 were primarily related to **$10.8 million** in the Consumer Program portfolio[177](index=177&type=chunk) - The allowance for the Consumer Program loan portfolio was **$7.5 million** as of March 31, 2025, representing **17% of the total allowance**, with **128% coverage** of non-current principal balances[178](index=178&type=chunk) [Investment Securities](index=75&type=section&id=Investment%20Securities) Total investment securities slightly increased in Q1 2025, with unrealized losses on available-for-sale securities due to interest rates, not credit impairment | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--------------------------------------- | :------------------------------ | :------------------------------- | | Total investment securities | $250,800 | $245,400 | - Available-for-sale securities are carried at fair value, with unrealized gains or losses included in accumulated other comprehensive income (loss)[180](index=180&type=chunk) - No credit impairment charges were recognized related to credit losses on held-to-maturity investment securities during Q1 2025[181](index=181&type=chunk) [Deposits and Other Borrowings](index=75&type=section&id=Deposits%20and%20Other%20Borrowings) Details funding sources, including stable deposits with a shift to lower-cost accounts, and utilization of FHLB and Federal Reserve borrowing capacities [Deposits](index=75&type=section&id=Deposits) Total deposits remained stable in Q1 2025, with a favorable shift towards lower-cost demand and NOW deposit balances | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--------------------------------------- | :------------------------------ | :------------------------------- | | Total deposits | $3,200,000 | $3,200,000 | - Lower-cost demand and NOW deposit balances increased by **$9.2 million**, offsetting a decline in money market deposit accounts[186](index=186&type=chunk) - Uninsured deposits totaled **$623.5 million**, representing **20% of total deposits** as of March 31, 2025[187](index=187&type=chunk) [Other Borrowings](index=77&type=section&id=Other%20Borrowings) Utilizes various borrowed funds for liquidity, maintaining significant unused borrowing capacity with FHLB and Federal Reserve | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--------------------------------------- | :------------------------------ | :------------------------------- | | Securities sold under agreements to repurchase | $4,000 | $3,900 | | Secured borrowings | $16,700 | $17,200 | - The company had **$366.3 million** of unused FHLB lines of credit and **$550.5 million** of available credit with the Federal Reserve Bank as of March 31, 2025, with no FHLB borrowings outstanding[188](index=188&type=chunk) [Junior Subordinated Debt and Senior Subordinated Notes](index=77&type=section&id=Junior%20Subordinated%20Debt%20and%20Senior%20Subordinated%20Notes) Refers to Note 7 for detailed information on the company's junior subordinated debt and senior subordinated notes [Liquidity and Funds Management](index=77&type=section&id=Liquidity%20and%20Funds%20Management) Manages liquidity to meet obligations through diverse funding sources and regular cash flow forecasts - Funding sources include customer deposits, payments on loans and investments, FHLB borrowings, and federal funds lines of credit[193](index=193&type=chunk) - Cash flow forecasts are prepared on a **30, 60, and 90-day basis**, as well as **one and two-year bases**, incorporating expected cash flows on loans, investment securities, and deposits[193](index=193&type=chunk) [Capital Resources](index=79&type=section&id=Capital%20Resources) Company and Primis Bank maintain capital levels well above regulatory minimums, with Primis Bank categorized as 'well capitalized' - Primis Financial Corp. and Primis Bank are subject to various regulatory capital requirements and maintain capital amounts and ratios above minimums[194](index=194&type=chunk)[195](index=195&type=chunk) - Primis Bank was categorized as **'well capitalized'** under the regulatory framework for Prompt Corrective Action as of March 31, 2025[194](index=194&type=chunk) | Capital Ratio | Primis Financial Corp. (Mar 31, 2025) | Primis Bank (Mar 31, 2025) | | :--------------------------------------- | :------------------------------------ | :------------------------- | | Leverage ratio | 8.71% | 9.72% | | Common equity tier 1 capital ratio | 9.35% | 10.96% | | Tier 1 risk-based capital ratio | 9.66% | 10.96% | | Total risk-based capital ratio | 12.96% | 12.22% | - Primis Bank's capital conservation buffer was **4.22%** as of March 31, 2025, exceeding the **2.50% minimum requirement**[200](index=200&type=chunk) [Item 3 – Quantitative and Qualitative Disclosures about Market Risk](index=82&type=section&id=Item%203%20%E2%80%93%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) Addresses interest rate risk management through ALCO and simulation modeling, presenting sensitivity of EVE and NII to rate shifts - The company manages interest rate risk through its Asset-Liability Committee (ALCO) and quarterly interest sensitivity reviews using simulation modeling[202](index=202&type=chunk)[203](index=203&type=chunk) | Interest Rate Shock (Basis Points) | EVE $ Change from Base (Mar 31, 2025, in thousands) | EVE % Change From Base (Mar 31, 2025) | | :--------------------------------- | :------------------------------------------ | :------------------------------------ | | Up 400 | $(143,548) | (26.93)% | | Up 300 | $(106,831) | (20.04)% | | Up 200 | $(72,051) | (13.52)% | | Up 100 | $(24,884) | (4.67)% | | Down 100 | $9,269 | 1.74% | | Down 200 | $(4,928) | (0.92)% | | Down 300 | $(33,826) | (6.35)% | | Down 400 | $(89,118) | (16.72)% | | Interest Rate Shock (Basis Points) | Adjusted NII $ Change From Base (Mar 31, 2025, in thousands) | | :--------------------------------- | :----------------------------------------------------------- | | Up 400 | $(2,166) | | Up 300 | $(1,880) | | Up 200 | $(1,604) | | Up 100 | $85 | | Down 100 | $(223) | | Down 200 | $(1,807) | | Down 300 | $(3,578) | | Down 400 | $(5,047) | [Item 4 – Controls and Procedures](index=85&type=section&id=Item%204%20%E2%80%93%20Controls%20and%20Procedures) Disclosure controls were ineffective due to ongoing material weakness remediation, yet financial statements fairly present Q1 2025 results - Disclosure controls and procedures were not effective as of March 31, 2025, due to continued remediation of previously identified material weaknesses in internal controls over financial reporting[210](index=210&type=chunk) - Despite the material weaknesses, management concluded that the condensed consolidated financial statements for Q1 2025 fairly present the company's financial condition, results of operations, and cash flows[211](index=211&type=chunk) - There were no material changes in internal controls over financial reporting during the three months ended March 31, 2025[212](index=212&type=chunk) [PART II - OTHER INFORMATION](index=85&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) Provides additional information including legal proceedings, risk factors, equity sales, defaults, mine safety, other disclosures, and exhibits [Item 1 – Legal Proceedings](index=85&type=section&id=Item%201%20%E2%80%93%20Legal%20Proceedings) Company is involved in ordinary course legal claims, but management expects no material adverse effect on financial condition or operations - No proceedings are pending or, to management's knowledge, threatened that represent a significant risk against Primis or Primis Bank as of March 31, 2025[213](index=213&type=chunk) [Item 1A – Risk Factors](index=85&type=section&id=Item%201A%20%E2%80%93%20Risk%20Factors) Refers to previously disclosed risk factors in the 2024 Form 10-K, confirming no material changes during the current reporting period - There are no material changes during the period covered by this Report to the risk factors previously disclosed in the 2024 Form 10-K[215](index=215&type=chunk) [Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds](index=87&type=section&id=Item%202%20%E2%80%93%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This item is not applicable for the reporting period [Item 3 – Defaults Upon Senior Securities](index=87&type=section&id=Item%203%20%E2%80%93%20Defaults%20Upon%20Senior%20Securities) This item is not applicable for the reporting period [Item 4 – Mine Safety Disclosures](index=87&type=section&id=Item%204%20%E2%80%93%20Mine%20Safety%20Disclosures) This item is not applicable for the reporting period [Item 5 – Other Information](index=87&type=section&id=Item%205%20%E2%80%93%20Other%20Information) Confirms no directors or executive officers adopted, terminated, or modified trading arrangements during Q1 2025 - No directors or executive officers adopted, terminated, or modified a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the three months ended March 31, 2025[220](index=220&type=chunk) [Item 6 - Exhibits](index=88&type=section&id=Item%206%20-%20Exhibits) Lists all exhibits filed with the Form 10-Q, including certifications and financial statements in Inline XBRL format - Exhibits include Certifications of the Chief Executive Officer and Chief Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[223](index=223&type=chunk) - The financial statements for the quarter ended March 31, 2025, are filed in Inline XBRL format[224](index=224&type=chunk)

Core Viewpoint - Primis Financial Corp. has deconsolidated Panacea Financial Holdings, resulting in a pre-tax gain of approximately $24.6 million and an expected after-tax gain of about $20.0 million, or $0.81 per share [1][2]. Financial Impact - The fair market value of the Company's investment in PFH was evaluated at $21.2 million as of March 31, 2025 [2]. - The Company anticipates recouping consolidated operating losses totaling $3.4 million, with portions being non-taxable [2]. - Following the deconsolidation, the Company's return on assets (ROA) is expected to improve by ten basis points, and the operating efficiency ratio will decrease by approximately 14 points [3]. Company Overview - As of March 31, 2025, Primis Financial Corp. reported total assets of $3.7 billion, total loans held for investment of $3.0 billion, and total deposits of $3.2 billion [4]. - Primis Bank offers a variety of financial services to individuals and small- to medium-sized businesses through 24 full-service branches in Virginia and Maryland, as well as online and mobile applications [4].

Financial Data and Key Metrics Changes - The company reported a pretax net income of $4,500,000 for the first quarter, with adjustments leading to a pretax net income of $7,500,000 or $5,900,000 after tax, equating to a 66 basis point ROA [18][19] - Net interest margin increased to 3.15%, up from 2.90% in the previous quarter, benefiting from reduced deposit costs [19][20] - Core bank cost of deposits remained attractive at 183 basis points, with new loans yielding over 7% [20][21] Business Line Data and Key Metrics Changes - The core community bank's loan pipeline has tripled compared to a year ago, with a $25,000,000 increase in loans as of April [6][7] - The mortgage division closed $800,000,000 in loans in 2024, with a significant increase in production capacity due to new team additions [9][10] - Non-interest income for the quarter was $7,800,000, down from $8,500,000 in the previous quarter, primarily due to a negative swing in fee income related to the consumer program [20] Market Data and Key Metrics Changes - The company expects about $100,000,000 growth from the core bank, $150,000,000 from warehouse, and $125,000,000 from Panacea [8] - The digital platform is projected to fund around $500,000,000 in excess lending for Panacea by the end of the year, with a 1.5% after-tax ROI [12][13] Company Strategy and Development Direction - The company is focused on three strategies to drive higher ROAs, including growth in earning assets, expansion of the mortgage division, and consolidation of core processing contracts [5][8][11] - The digital platform is crucial for funding excess lending and supporting the community bank, reducing pressure on credit decisions [13][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving higher profitability in the second quarter, with no significant pressures on operating expenses [25][27] - The company anticipates a strong performance in mortgage volumes due to seasonal trends and recent team recruitments [30][32] Other Important Information - The company is working towards deconsolidating Panacea, which could improve operating results significantly [15][60] - The consumer loan portfolio has been moved back to held for investment, with a focus on reducing volatility and risk [16][19] Q&A Session Summary Question: Any potential issues for Q2 profitability? - Management noted an increase in earning assets and expected strong mortgage performance, with no significant pressures on operating expenses [25][27] Question: Resolution timeline for consumer loans? - Management indicated that a significant portion of promotional loans is expected to pay off within the year, with a focus on managing the remaining standard consumer loans [34][35] Question: Margin outlook for Q2 and the year? - Management projected a 5-10 basis points margin expansion in Q2, with a potential increase of 10-20 basis points by year-end [41][42] Question: Expectations for charge-offs going forward? - Management expects high charge-offs but believes they have sufficient reserves to absorb them as the portfolio runs off [52][53] Question: Timing for Panacea deconsolidation? - Management indicated that if deconsolidation is determined, it would be effective March 31, with a substantial gain expected from fair value treatment [59][60]