Primis Financial Corp. (NASDAQ:FRST) Q4 2022 Earnings Conference Call January 27, 2023 10:00 AM ET Company Participants Matthew Switzer - Executive Vice President and Chief Financial Officer Dennis Zember - President and Chief Executive Officer Conference Call Participants Casey Whitman - Piper Sandler Christopher Marinac - Janney Montgomery Scott Operator Hello and thank you for standing by. My name is Regina and I will be your conference operator today. At this time, I would like to welcome everyone to Pr ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended September 30, 2022 Commission File No. 001-33037 PRIMIS FINANCIAL CORP. (Exact name of registrant as specified in its charter) Virginia 20-1417448 (State or other jurisdiction (I.R.S. Employer Identification No.) of incorporation or organization) 6830 Old Dominion Drive McLean, Virginia 221 ...

Primis Financial Corp. (NASDAQ:FRST) Q3 2022 Results Conference Call October 28, 2022 10:00 AM ET Company Participants Matthew Switzer - Chief Financial Officer Dennis Zember - President and CEO Conference Call Participants Freddie Strickland - Janney Montgomery Scott Operator Good day and welcome to today's Primis Financial Corporation Third Quarter Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [O ...

PRIMIS Third Quarter 2022 NASDAQ: FRST Forward-Looking Statements This presentation and certain of our other filings with the Securities and Exchange Commission contain statements that constitute "forward-looking statements" within the meaning of, and subject to the protections of, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are forward-looking statements. Such statements ca ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended June 30, 2022 PRIMIS FINANCIAL CORP. (Exact name of registrant as specified in its charter) Virginia 20-1417448 of incorporation or organization) (State or other jurisdiction (I.R.S. Employer Identification No.) 6830 Old Dominion Drive McLean, Virginia 22101 (Address of principal executive ...

Primis Financial Corp. (NASDAQ:FRST) Q2 2022 Earnings Conference Call July 29, 2022 10:00 AM ET Company Participants Matt Switzer - CFO Dennis Zember - President and CEO Conference Call Participants Andrew Terrell - Stephens Christopher Marinac - Janney Montgomery Scott Operator Good day, and welcome to the Primis Financial Corp. 2022 Second Quarter Earnings Call. All participants will be in listen-only mode. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the con ...

[PART I - FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Item 1 - Financial Statements](index=4&type=section&id=Item%201%20-%20Financial%20Statements) This section presents the unaudited consolidated financial statements of Primis Financial Corp. for the quarter ended March 31, 2022, including balance sheets, income statements, statements of changes in stockholders' equity, and cash flow statements, along with detailed notes on accounting policies, investment securities, loans, fair value measurements, leases, debt, stock-based compensation, commitments, earnings per share, and a subsequent event [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets%20as%20of%20March%2031%2C%202022%20and%20December%2031%2C%202021) Consolidated Balance Sheet Highlights (in thousands) | Metric | March 31, 2022 | December 31, 2021 | | :-------------------- | :------------- | :---------------- | | Total Assets | $3,219,876 | $3,407,353 | | Total Loans | $2,393,669 | $2,339,986 | | Total Deposits | $2,686,244 | $2,763,216 | | Total Stockholders' Equity | $404,195 | $411,881 | - Total assets decreased by **5.5%** from **$3.407 billion** at December 31, 2021, to **$3.220 billion** at March 31, 2022[9](index=9&type=chunk) - Total loans increased by **2.3%** from **$2.340 billion** to **$2.394 billion**[9](index=9&type=chunk) - Total deposits decreased by **2.8%** from **$2.763 billion** to **$2.686 billion**[9](index=9&type=chunk) - Total stockholders' equity decreased by **1.9%** from **$411.881 million** to **$404.195 million**, primarily due to unrealized losses on available-for-sale securities[9](index=9&type=chunk) [Consolidated Statements of Income and Comprehensive Income (Loss)](index=5&type=section&id=Consolidated%20Statements%20of%20Income%20and%20Comprehensive%20Income%20%28Loss%29%20for%20the%20three%20months%20ended%20March%2031%2C%202022%20and%202021) Consolidated Income Statement Highlights (in thousands) | Metric | Q1 2022 | Q1 2021 | Change (%) | | :--------------------------- | :----------- | :----------- | :--------- | | Net Income | $4,593 | $9,383 | -51.0% | | Net Interest Income | $22,854 | $24,955 | -8.4% | | Provision for (recovery of) credit losses | $99 | $(1,372) | N/A | | Total Noninterest Income | $2,090 | $2,349 | -11.0% | | Total Noninterest Expenses | $18,987 | $18,023 | 5.3% | | Comprehensive Income (Loss) | $(5,974) | $8,161 | -173.2% | - Net income decreased by **51.0%** from **$9.383 million** in Q1 2021 to **$4.593 million** in Q1 2022[10](index=10&type=chunk) - Net interest income decreased by **8.4%** from **$24.955 million** to **$22.854 million**[10](index=10&type=chunk) - Provision for credit losses changed from a recovery of **$1.372 million** in Q1 2021 to a provision of **$0.099 million** in Q1 2022[10](index=10&type=chunk) - Other comprehensive loss significantly increased from **$(1.222) million** to **$(10.567) million**, primarily due to unrealized losses on available-for-sale securities[10](index=10&type=chunk) [Consolidated Statements of Changes in Stockholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity%20for%20the%20three%20months%20ended%20March%2031%2C%202022%20and%202021) Changes in Stockholders' Equity (in thousands) | Metric | December 31, 2021 | March 31, 2022 | | :--------------------------- | :---------------- | :------------- | | Balance, beginning of period | $411,881 | $411,881 | | Net income | — | $4,593 | | Changes in other comprehensive loss | — | $(10,567) | | Dividends on common stock | — | $(2,457) | | Stock-based compensation expense | — | $751 | | Balance, end of period | $411,881 | $404,195 | - Total stockholders' equity decreased from **$411.881 million** at December 31, 2021, to **$404.195 million** at March 31, 2022[11](index=11&type=chunk) - Net income contributed **$4.593 million**, but was offset by a significant change in other comprehensive loss of **$(10.567) million** due to investment securities[11](index=11&type=chunk) - Dividends on common stock were **$0.10 per share**, totaling **$2.457 million**[11](index=11&type=chunk) [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20three%20months%20ended%20March%2031%2C%202022%20and%202021) Consolidated Cash Flow Highlights (in thousands) | Metric | Q1 2022 | Q1 2021 | | :------------------------------------------ | :----------- | :----------- | | Net cash from operating activities (continuing) | $3,043 | $8,849 | | Net cash from investing activities (continuing) | $(56,814) | $40,381 | | Net cash from financing activities (continuing) | $(178,166) | $235,149 | | Net change in cash and cash equivalents | $(231,937) | $284,095 | | Cash and cash equivalents at end of period | $298,230 | $480,280 | - Net cash provided by operating activities from continuing operations decreased from **$8.849 million** in Q1 2021 to **$3.043 million** in Q1 2022[13](index=13&type=chunk) - Net cash used in investing activities from continuing operations was **$(56.814) million** in Q1 2022, a significant change from **$40.381 million** provided in Q1 2021, primarily due to a net increase in loans[13](index=13&type=chunk) - Net cash used in financing activities from continuing operations was **$(178.166) million** in Q1 2022, compared to **$235.149 million** provided in Q1 2021, mainly due to a net decrease in deposits and repayment of FHLB advances[13](index=13&type=chunk) - Cash and cash equivalents at the end of the period decreased by **37.7%** from **$480.280 million** in Q1 2021 to **$298.230 million** in Q1 2022[13](index=13&type=chunk) [Notes to Unaudited Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) [Note 1. ACCOUNTING POLICIES](index=8&type=section&id=1.%20ACCOUNTING%20POLICIES) The company, a bank holding company for Primis Bank, prepares consolidated financial statements under U.S. GAAP, making estimates that affect reported amounts, and details its discontinued operation and recent accounting pronouncements - Primis Bank provides commercial banking services, focusing on loans secured primarily by commercial real estate and other commercial loans to small and medium-sized businesses, as well as loans to individuals[16](index=16&type=chunk) - The company operates **40 full-service branches** (**35 in Virginia, 5 in Maryland**) and provides services through online and mobile applications[15](index=15&type=chunk) - Primis Bank sold its common membership interests in Southern Trust Mortgage, LLC (STM) on December 31, 2021, and STM is no longer considered an affiliate or reportable operating segment[18](index=18&type=chunk) - The company is evaluating the impact of adopting ASU 2022-02, which eliminates accounting guidance on troubled debt restructurings (TDRs) and amends vintage disclosures, effective for annual periods beginning after December 15, 2022[25](index=25&type=chunk) [Note 2. INVESTMENT SECURITIES](index=12&type=section&id=2.%20INVESTMENT%20SECURITIES) The company's investment securities portfolio consists of available-for-sale (AFS) and held-to-maturity (HTM) securities, with AFS securities showing significant gross unrealized losses primarily due to rising interest rates, while HTM securities have no credit loss allowance due to strong credit quality Investment Securities Summary (in thousands) | Metric | March 31, 2022 | December 31, 2021 | | :----------------------------------- | :------------- | :---------------- | | Securities available-for-sale, at fair value | $271,626 | $271,332 | | Securities held-to-maturity, at amortized cost | $16,138 | $22,940 | | Gross Unrealized Losses (AFS) | $(12,517) | $(1,662) | - Gross unrealized losses on available-for-sale securities increased significantly to **$(12.5) million** at March 31, 2022, from **$(1.7) million** at December 31, 2021[27](index=27&type=chunk) - Approximately **$169.5 million** of investment securities were pledged at March 31, 2022, to secure public deposits, FHLB advances, and repurchase agreements[30](index=30&type=chunk) - No allowance for credit losses has been recorded for held-to-maturity securities, as they are backed by the U.S. government or have strong credit quality[31](index=31&type=chunk) [Note 3. LOANS AND ALLOWANCE FOR CREDIT LOSSES](index=15&type=section&id=3.%20LOANS%20AND%20ALLOWANCE%20FOR%20CREDIT%20LOSSES) The total loan portfolio increased to **$2.394 billion** at March 31, 2022, with real estate loans as the largest segment, while nonaccrual loans slightly increased and the allowance for credit losses (ACL) on loans was **$29.379 million**, calculated using the CECL methodology Loan Portfolio Composition (in thousands) | Loan Type | March 31, 2022 | December 31, 2021 | | :------------------------------ | :------------- | :---------------- | | Total Real Estate Loans | $1,941,418 | $1,891,236 | | Commercial Loans | $335,537 | $301,980 | | Paycheck Protection Program loans | $31,404 | $77,319 | | Consumer Loans | $77,383 | $60,996 | | Total Loans | $2,393,669 | $2,339,986 | - Nonaccrual loans totaled **$14.941 million** at March 31, 2022, compared to **$15.029 million** at December 31, 2021 (excluding SBA guaranteed amounts)[40](index=40&type=chunk) - There were **10 Troubled Debt Restructurings (TDRs)** outstanding in the amount of **$3.1 million** at March 31, 2022, primarily due to the economic impact of COVID-19[49](index=49&type=chunk) Allowance for Credit Losses (ACL) Activity (in thousands) | Metric | Q1 2022 | Q1 2021 | | :--------------------------- | :----------- | :----------- | | Beginning balance | $29,105 | $36,345 | | Provision (recovery) | $99 | $(1,372) | | Charge-offs | $(61) | $(110) | | Recoveries | $236 | $30 | | Ending balance | $29,379 | $34,893 | [Note 4. FAIR VALUE](index=26&type=section&id=4.%20FAIR%20VALUE) The company categorizes financial instruments measured at fair value into a three-level hierarchy, with available-for-sale securities as Level 2, and collateral-dependent loans and Other Real Estate Owned (OREO) as Level 3 due to significant unobservable inputs - The fair value hierarchy categorizes inputs into Level 1 (quoted prices in active markets), Level 2 (significant other observable inputs), and Level 3 (significant unobservable inputs)[68](index=68&type=chunk) - All available-for-sale debt investment securities are classified within **Level 2** of the valuation hierarchy[69](index=69&type=chunk) - Collateral-dependent loans are measured at fair value on a non-recurring basis and classified as **Level 3**, totaling **$30.868 million** at March 31, 2022[72](index=72&type=chunk)[74](index=74&type=chunk) - Other Real Estate Owned (OREO) is measured at fair value less cost to sell and classified as **Level 3**, totaling **$1.041 million** at March 31, 2022[73](index=73&type=chunk)[74](index=74&type=chunk) [Note 5. LEASES](index=29&type=section&id=5.%20LEASES) The company leases premises and equipment under operating leases, recognizing right-of-use assets and related liabilities, with operating lease liabilities totaling **$5.9 million** and right-of-use assets totaling **$5.3 million** at March 31, 2022 Operating Lease Information (in thousands) | Metric | March 31, 2022 | December 31, 2021 | | :-------------------------------------- | :------------- | :---------------- | | Operating lease liabilities | $5,897 | $6,498 | | Operating lease right-of-use assets | $5,305 | $5,866 | | Weighted-average remaining lease term | 4.4 years | 4.7 years | | Weighted-average discount rate | 2.5% | 2.5% | [Note 6. SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE AND OTHER BORROWINGS](index=31&type=section&id=6.%20SECURITIES%20SOLD%20UNDER%20AGREEMENTS%20TO%20REPURCHASE%20AND%20OTHER%20BORROWINGS) The company uses securities sold under agreements to repurchase (repo) and other borrowings as funding sources, with repo balances increasing to **$11.2 million** at March 31, 2022, collateralized by callable agency and residential government-sponsored mortgage-backed securities - Securities sold under agreements to repurchase (repo) increased to **$11.231 million** at March 31, 2022, from **$9.962 million** at December 31, 2021[80](index=80&type=chunk) - Approximately **$19.4 million** of callable agency securities and residential government-sponsored mortgage-backed securities were pledged as collateral for overnight repurchase agreements and deposits at March 31, 2022[81](index=81&type=chunk) [Note 7. JUNIOR SUBORDINATED DEBT AND SENIOR SUBORDINATED NOTES](index=31&type=section&id=7.%20JUNIOR%20SUBORDINATED%20DEBT%20AND%20SENIOR%20SUBORDINATED%20NOTES) The company holds **$10.3 million** in junior subordinated debt (Tier 1 capital) and **$87.0 million** in senior subordinated notes (Tier 2 capital), with varying fixed-to-floating interest rates tied to LIBOR or SOFR - Junior subordinated debt outstanding was **$10.3 million** at March 31, 2022, with an interest rate of **3.86%** (three-month LIBOR plus 2.95%), qualifying as **Tier 1 capital**[82](index=82&type=chunk)[83](index=83&type=chunk) - Senior Subordinated Notes due 2027 totaled **$27.0 million**, bearing interest at a floating rate of three-month LIBOR plus 3.95%, qualifying as **Tier 2 capital**[84](index=84&type=chunk) - Senior Subordinated Notes due 2030 totaled **$60.0 million**, bearing interest at an initial rate of **5.40%**, converting to Term Secured Overnight Financing Rate (SOFR) plus 531 basis points, qualifying as **Tier 2 capital**[87](index=87&type=chunk) [Note 8. STOCK-BASED COMPENSATION](index=33&type=section&id=8.%20STOCK-BASED%20COMPENSATION) The company's 2017 Equity Compensation Plan reserves 750,000 shares, with **281,800** stock options outstanding, **$0.8 million** in compensation expense for time-vested restricted stock awards, and **59,335** performance-based restricted stock units with no recognized expense as vesting is not yet probable - **281,800 stock options** were outstanding at March 31, 2022, with a weighted average exercise price of **$11.01**, and no associated stock-based compensation expense for Q1 2022[90](index=90&type=chunk) - Stock-based compensation expense for time-vested restricted stock awards totaled **$0.8 million** for Q1 2022, with **$1.0 million** unrecognized, expected to be recognized over **3.1 years**[92](index=92&type=chunk) - **59,335 performance-based restricted stock units** were outstanding at March 31, 2022, with no compensation expense recognized for Q1 2022 as vesting is not probable, and a potential unrecognized expense of **$1.3 million**[93](index=93&type=chunk)[95](index=95&type=chunk) [Note 9. COMMITMENTS AND CONTINGENCIES](index=34&type=section&id=9.%20COMMITMENTS%20AND%20CONTINGENCIES) Primis is exposed to off-balance sheet risks from commitments to extend credit and standby letters of credit, with unfunded lines and undisbursed construction loan funds totaling **$396.7 million** and an allowance for credit losses on off-balance-sheet exposures increasing to **$1.237 million** - Letters of credit outstanding totaled **$12.7 million** at March 31, 2022[97](index=97&type=chunk) - Unfunded lines of credit and undisbursed construction loan funds totaled **$396.7 million** at March 31, 2022[102](index=102&type=chunk) - The allowance for credit losses on off-balance-sheet credit exposures increased to **$1.237 million** at March 31, 2022, from **$0.977 million** at January 1, 2022[100](index=100&type=chunk) - Commitments on subscription agreements for non-marketable equity securities were **$4.6 million** at March 31, 2022[103](index=103&type=chunk) [Note 10. EARNINGS PER SHARE](index=37&type=section&id=10.%20EARNINGS%20PER%20SHARE) Basic and diluted EPS from continuing operations for Q1 2022 were **$0.19**, a decrease from Q1 2021, with weighted average shares outstanding for diluted EPS at **24,663 thousand** Earnings Per Share (EPS) Summary | Metric | Q1 2022 | Q1 2021 | | :-------------------------------------- | :------ | :------ | | Basic EPS from continuing operations | $0.19 | $0.35 | | Diluted EPS from continuing operations | $0.19 | $0.34 | | Basic EPS from discontinued operation | $0.00 | $0.04 | | Diluted EPS from discontinued operation | $0.00 | $0.04 | - Weighted average shares outstanding for diluted EPS from continuing operations were **24,663 thousand** for Q1 2022[104](index=104&type=chunk) [Note 11. SUBSEQUENT EVENT](index=37&type=section&id=11.%20SUBSEQUENT%20EVENT) On April 28, 2022, Primis Bank entered into a definitive agreement to acquire **100%** of SeaTrust Mortgage Company, with closing anticipated in Q2 2022 - On April 28, 2022, Primis Bank entered into a definitive agreement to acquire **100%** of SeaTrust Mortgage Company[105](index=105&type=chunk) - The acquisition of SeaTrust is anticipated to close in the **second quarter of 2022**[105](index=105&type=chunk) [Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations](index=38&type=section&id=Item%202%20-%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Primis Financial Corp.'s financial condition and results of operations for Q1 2022, covering forward-looking statements, critical accounting policies, the economic environment, financial highlights, detailed results of operations, and financial condition [FORWARD-LOOKING STATEMENTS](index=38&type=section&id=FORWARD-LOOKING%20STATEMENTS) This section contains forward-looking statements subject to risks and uncertainties, including economic conditions, COVID-19 impact, strategic initiatives, litigation, interest rate changes, and regulatory actions, where actual results may differ materially from expectations - Forward-looking statements are not guarantees of future performance and are subject to risks, assumptions, and uncertainties that are difficult to predict[108](index=108&type=chunk) - Key factors that could cause actual results to differ include economic, business, and market conditions, the ongoing impact of COVID-19, the ability to implement strategic initiatives, adverse litigation, changes in interest rates and inflation, and regulatory actions[109](index=109&type=chunk)[112](index=112&type=chunk) [CRITICAL ACCOUNTING POLICIES](index=42&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES) The company's critical accounting policies involve significant management judgment and estimation, particularly concerning the allowance for credit losses (ACL) on financial instruments, which is management's best estimate of expected credit losses, with ultimate adequacy dependent on external factors - Accounting policies related to the allowance for credit losses on financial instruments (loans and off-balance-sheet credit exposures) are considered critical due to considerable subjective judgment and estimation[117](index=117&type=chunk) - The allowance represents management's best estimate of current expected credit losses, considering historical experience, current conditions, and reasonable and supportable forecasts[118](index=118&type=chunk) - The ultimate adequacy of allowance accounts is dependent on factors beyond control, such as portfolio performance, the economy, interest rate changes, and regulatory views[118](index=118&type=chunk) [CURRENT ECONOMIC ENVIRONMENT](index=42&type=section&id=CURRENT%20ECONOMIC%20ENVIRONMENT) The U.S. economy contracted in Q1 2022, with intensified inflationary pressures leading the Federal Reserve to increase interest rates, which the company expects to favorably impact net interest margin and income without significantly affecting core loan growth - The U.S. economy contracted by **1.4%** on an annualized basis in Q1 2022, the first decline since Q2 2020, while consumer spending grew **2.7%**[119](index=119&type=chunk) - Unemployment declined to **3.6%** in March 2022 from **3.9%** in December 2021[119](index=119&type=chunk) - Lingering economic effects of the COVID-19 pandemic (supply chain backlogs, labor shortages, increased input costs) and the Russia-Ukraine conflict intensified inflationary pressures[119](index=119&type=chunk) - The Federal Reserve approved a **25-basis point interest rate increase** in March 2022, the first in over three years[119](index=119&type=chunk) - The company expects planned interest rate increases to contribute favorably to net interest margin and income, without significantly impacting core loan growth[122](index=122&type=chunk) [OVERVIEW](index=44&type=section&id=OVERVIEW) Primis Financial Corp. is the bank holding company for Primis Bank, a Virginia state-chartered bank established in 2005, offering financial services to individuals and small-to-medium businesses through 40 branches in Virginia and Maryland, and online/mobile applications - Primis Financial Corp. is the bank holding company for Primis Bank, a Virginia state-chartered bank that commenced operations on April 14, 2005[124](index=124&type=chunk) - Primis Bank provides a range of financial services to individuals and small and medium-sized businesses[124](index=124&type=chunk) - As of March 31, 2022, Primis Bank had **forty full-service branches** in Virginia and Maryland and also provides services through online and mobile applications[124](index=124&type=chunk) [FINANCIAL HIGHLIGHTS](index=44&type=section&id=FINANCIAL%20HIGHLIGHTS) For Q1 2022, net income was **$4.6 million**, total assets decreased to **$3.22 billion**, total loans (excluding PPP) increased to **$2.36 billion**, total deposits decreased to **$2.69 billion**, and book value per share decreased to **$16.42** due to unrealized losses on available-for-sale securities Key Financial Highlights | Metric | March 31, 2022 | December 31, 2021 (or Q1 2021) | | :-------------------------------------- | :------------- | :----------------------------- | | Net income (Q1) | $4.6 million | $9.4 million (Q1 2021) | | Total assets | $3.22 billion | $3.40 billion | | Total loans (excluding PPP) | $2.36 billion | $2.26 billion | | Total deposits | $2.69 billion | $2.76 billion | | Book value per share | $16.42 | $16.76 | | Cost of deposits (Q1) | 0.35% | 0.60% (Q1 2021) | | Allowance for credit losses to total loans (excl. PPP) | 1.24% | 1.29% | - Net income for Q1 2022 totaled **$4.6 million**, a decrease from **$9.4 million** in Q1 2021[126](index=126&type=chunk) - Total assets decreased by **5.5%** to **$3.22 billion** at March 31, 2022, compared to December 31, 2021[126](index=126&type=chunk) - Total loans, excluding PPP balances, increased by **4.4%** to **$2.36 billion** at March 31, 2022, from December 31, 2021[126](index=126&type=chunk) - Book value per share was **$16.42** at March 31, 2022, a decrease of **$0.34** from December 31, 2021, primarily due to **$10.6 million** in unrealized mark-to-market adjustments on available-for-sale securities[126](index=126&type=chunk) [RESULTS OF OPERATIONS](index=46&type=section&id=RESULTS%20OF%20OPERATIONS) The company's net income from continuing operations decreased by **45%** to **$4.6 million** in Q1 2022, primarily due to lower net interest income and a provision for credit losses, with discontinued operations contributing zero net income [Net Income](index=46&type=section&id=Net%20Income) - Net income from continuing operations for Q1 2022 was **$4.6 million** (**$0.19 basic and diluted EPS**), a **45% decrease** from **$8.4 million** (**$0.35 basic and $0.34 diluted EPS**) in Q1 2021[127](index=127&type=chunk) - The decrease in net income was primarily driven by lower net interest income (though excluding PPP fees, it increased **$2.5 million**) and a provision for credit losses in 2022 compared to a recovery in 2021[127](index=127&type=chunk) - Net income from discontinued operations was **zero** for Q1 2022, down from **$1.0 million** (**$0.04 basic and diluted EPS**) for Q1 2021, following the STM transaction closing[128](index=128&type=chunk) [Net Interest Income](index=46&type=section&id=Net%20Interest%20Income) Net Interest Income and Margin | Metric | Q1 2022 | Q1 2021 | | :-------------------- | :----------- | :----------- | | Net interest income | $22.9 million| $25.0 million| | Net interest margin | 2.96% | 3.41% | | Net PPP fee income | $0.3 million | $5.0 million | - Net interest margin, excluding the effects of PPP loans, was **2.96%** for Q1 2022, slightly down from **2.99%** for Q1 2021[130](index=130&type=chunk) - The cost of average interest-bearing deposits decreased by **30 basis points** to **0.44%** for Q1 2022, compared to **0.74%** for Q1 2021[130](index=130&type=chunk) [Provision for Credit Losses](index=48&type=section&id=Provision%20for%20Credit%20Losses) - The company recorded a provision for credit losses of **$0.1 million** for Q1 2022, compared to a recovery of credit losses of **$1.4 million** for Q1 2021[135](index=135&type=chunk) - This change was primarily a result of robust loan growth and a slightly weaker economic outlook due to global uncertainty[135](index=135&type=chunk) - Charge-offs totaled **$0.1 million** for Q1 2022, while recoveries totaled **$0.2 million**[135](index=135&type=chunk) [Noninterest Income](index=48&type=section&id=Noninterest%20Income) Noninterest Income (in thousands) | Category | Q1 2022 | Q1 2021 | Change | | :-------------------------------------- | :------ | :------ | :----- | | Account maintenance and deposit service fees | $1,351 | $1,664 | $(313) | | Income from bank-owned life insurance | $375 | $386 | $(11) | | Other | $364 | $299 | $65 | | Total noninterest income | $2,090 | $2,349 | $(259) | - Total noninterest income decreased by **11.0%** to **$2.1 million** for Q1 2022, compared to **$2.3 million** for Q1 2021[137](index=137&type=chunk) - The decrease was primarily driven by a **$0.3 million** reduction in account maintenance and deposit service fees, mainly due to new debit card contracts[137](index=137&type=chunk) [Noninterest Expense](index=49&type=section&id=Noninterest%20Expense) Noninterest Expenses (in thousands) | Category | Q1 2022 | Q1 2021 | Change | | :---------------------------- | :------ | :------ | :----- | | Salaries and benefits | $9,625 | $9,372 | $253 | | Data processing expense | $1,490 | $799 | $691 | | Furniture and equipment expenses | $1,100 | $816 | $284 | | Total noninterest expenses | $18,987 | $18,023 | $964 | - Total noninterest expenses increased by **5.3%** to **$19.0 million** during Q1 2022, compared to **$18.0 million** during Q1 2021[139](index=139&type=chunk) - The increase was primarily due to a **$0.7 million** increase in data processing expense (higher technology costs) and a **$0.3 million** increase in employee compensation and benefits[139](index=139&type=chunk) - Other expenses decreased, largely driven by a **$0.2 million** decrease in the reserve for unfunded commitments[139](index=139&type=chunk) [FINANCIAL CONDITION](index=49&type=section&id=FINANCIAL%20CONDITION) Total assets decreased by **5.5%** to **$3.22 billion** at March 31, 2022, while total loans increased by **2.3%** to **$2.39 billion**, and total deposits decreased by **2.8%** to **$2.69 billion**, with equity reduced by **$10.6 million** due to unrealized mark-to-market adjustments on available-for-sale securities [Balance Sheet Overview](index=49&type=section&id=Balance%20Sheet%20Overview) - Total assets were **$3.22 billion** at March 31, 2022, a decrease of **5.5%** from **$3.40 billion** at December 31, 2021[140](index=140&type=chunk) - Total loans increased by **2.3%** to **$2.39 billion** at March 31, 2022, from **$2.34 billion** at December 31, 2021[140](index=140&type=chunk) - Total deposits were **$2.69 billion** at March 31, 2022, a decrease of **2.8%** from **$2.76 billion** at December 31, 2021[140](index=140&type=chunk) - Total equity was **$404.2 million** at March 31, 2022, compared to **$411.9 million** at December 31, 2021, with a **$10.6 million** reduction due to unrealized mark-to-market adjustments on available-for-sale securities[140](index=140&type=chunk)[141](index=141&type=chunk) [Loans](index=49&type=section&id=Loans) - Total loans were **$2.39 billion** at March 31, 2022, up from **$2.34 billion** at December 31, 2021[142](index=142&type=chunk) - PPP loans decreased to **$31.4 million** at March 31, 2022, from **$77.0 million** at December 31, 2021[142](index=142&type=chunk) - Excluding PPP loans, loans outstanding increased by **$99.6 million**, or **4.4%**, since December 31, 2021[142](index=142&type=chunk) Loan Portfolio Composition (in thousands) - March 31, 2022 | Loan Type | Amount | Percent | | :-------------------------------------- | :-------- | :------ | | Commercial real estate - owner occupied | $404,957 | 16.9% | | Commercial real estate - non-owner occupied | $613,282 | 25.6% | | Residential 1-4 family | $574,688 | 24.0% | | Commercial loans | $335,537 | 14.0% | | Total real estate loans | $1,941,418| 81.1% | [Asset Quality](index=53&type=section&id=Asset%20Quality) Nonperforming Assets (in thousands) | Metric | March 31, 2022 | December 31, 2021 | | :-------------------------------------- | :------------- | :---------------- | | Nonaccrual loans | $14,941 | $15,029 | | Loans past due 90 days and accruing interest | $1,817 | $283 | | Total nonperforming loans | $16,758 | $15,312 | | Other real estate owned | $1,041 | $1,163 | | Total nonperforming assets | $17,799 | $16,475 | - Nonaccrual loans (excluding SBA guaranteed amounts) were **$14.9 million** at March 31, 2022, a **0.6% decrease** from **$15.0 million** at December 31, 2021[150](index=150&type=chunk) - The ratio of nonperforming assets (excluding SBA guaranteed loans) to total assets was **0.47%** at March 31, 2022, up from **0.44%** at December 31, 2021[150](index=150&type=chunk) - Allowance for credit losses to total loans was **1.23%** at March 31, 2022, compared to **1.24%** at December 31, 2021[149](index=149&type=chunk) - There were **ten Troubled Debt Restructuring (TDR) loans** totaling **$3.1 million** at March 31, 2022, with no defaults on TDRs modified during the past twelve months[151](index=151&type=chunk) [Investment Securities](index=54&type=section&id=Investment%20Securities) - Total investment securities (available-for-sale and held-to-maturity) were **$287.8 million** at March 31, 2022, a **2.2% decrease** from **$294.3 million** at December 31, 2021[153](index=153&type=chunk) Investment Securities Portfolio (in thousands) | Category | March 31, 2022 | December 31, 2021 | | :-------------------------------------- | :------------- | :---------------- | | Available-for-sale investment securities | $271,626 | $271,332 | | Held-to-maturity investment securities | $16,138 | $22,940 | - No credit impairment charges related to credit losses were recognized during Q1 2022 or Q1 2021[156](index=156&type=chunk) [Liquidity and Funds Management](index=56&type=section&id=Liquidity%20and%20Funds%20Management) - The company's objective is to ensure the ability to meet financial obligations, including deposit payments, debt repayment, and funding new business opportunities[157](index=157&type=chunk) - Funding sources include customer deposits, loan and investment payments, FHLB borrowings, institutional certificates of deposit, and federal funds lines of credit[157](index=157&type=chunk) - At March 31, 2022, unfunded lines of credit and undisbursed construction loan funds totaled **$396.7 million**[159](index=159&type=chunk) - Certificate of deposit accounts maturing in less than one year totaled **$286.4 million** as of March 31, 2022[159](index=159&type=chunk) [Capital Resources](index=56&type=section&id=Capital%20Resources) - Primis Financial Corp. and Primis Bank are subject to various regulatory capital requirements and are categorized as **well-capitalized** under the regulatory framework for prompt corrective action (PCA) and Basel III capital requirements[161](index=161&type=chunk)[165](index=165&type=chunk) Primis Financial Corp. Capital Ratios (March 31, 2022) | Ratio | Actual Ratio | Minimum Required | | :------------------------ | :----------- | :--------------- | | Leverage ratio | 9.77% | 4.00% | | Common equity tier 1 capital ratio | 12.64% | 4.50% | | Tier 1 risk-based capital ratio | 13.06% | 6.00% | | Total risk-based capital ratio | 17.66% | 8.00% | Primis Bank Capital Ratios (March 31, 2022) | Ratio | Actual Ratio | Minimum Required | Well Capitalized | | :------------------------ | :----------- | :--------------- | :--------------- | | Leverage ratio | 11.65% | 4.00% | 5.00% | | Common equity tier 1 capital ratio | 15.70% | 7.00% | 6.50% | | Tier 1 risk-based capital ratio | 15.70% | 8.50% | 8.00% | | Total risk-based capital ratio | 16.95% | 10.50% | 10.00% | - Primis Bank had a capital conservation buffer of **8.95%** at March 31, 2022, exceeding the **2.50%** minimum requirement[165](index=165&type=chunk) [Item 3 – Quantitative and Qualitative Disclosures about Market Risk](index=58&type=section&id=Item%203%20%E2%80%93%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company manages interest rate risk through its Asset-Liability Committee (ALCO) using simulation modeling to estimate changes in Economic Value of Equity (EVE) and Net Interest Income (NII) under various interest rate scenarios, with all changes remaining within policy guidelines - The company's earnings depend significantly on net interest income, making it subject to interest rate risk[167](index=167&type=chunk) - Interest rate risk is managed by the Asset-Liability Committee (ALCO) using simulation modeling to estimate changes in Economic Value of Equity (EVE) and Net Interest Income (NII) under various interest rate scenarios[167](index=167&type=chunk)[168](index=168&type=chunk)[173](index=173&type=chunk) Sensitivity of Economic Value of Equity (EVE) as of March 31, 2022 | Change in Interest Rates (Basis Points) | % Change From Base EVE | | :-------------------------------------- | :--------------------- | | Up 400 | (3.52)% | | Up 300 | (2.19)% | | Up 200 | (1.05)% | | Up 100 | 0.58% | | Down 100 | (8.89)% | Sensitivity of Net Interest Income (NII) as of March 31, 2022 (in thousands) | Change in Interest Rates (Basis Points) | $ Change From Base NII | | :-------------------------------------- | :--------------------- | | Up 400 | $(937) | | Up 300 | $(917) | | Up 200 | $(926) | | Up 100 | $(253) | | Down 100 | $(3,204) | - All modeled changes in EVE and NII are within the company's Asset/Liability Risk Management Policy guidelines[170](index=170&type=chunk)[173](index=173&type=chunk) [Item 4 – Controls and Procedures](index=60&type=section&id=Item%204%20%E2%80%93%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of March 31, 2022, with no material changes in internal control over financial reporting during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of March 31, 2022[175](index=175&type=chunk) - There have been no changes in internal control over financial reporting that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting during the quarter ended March 31, 2022[177](index=177&type=chunk) [PART II - OTHER INFORMATION](index=62&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Item 1 – Legal Proceedings](index=62&type=section&id=Item%201%20%E2%80%93%20Legal%20Proceedings) Primis and Primis Bank are involved in various legal claims and proceedings in the ordinary course of business, which management believes will not have a material adverse effect on the company's financial condition or results of operations, with no significant proceedings pending or threatened - Primis and Primis Bank are parties to various claims and proceedings arising in the ordinary course of business[178](index=178&type=chunk) - Management believes that these matters, individually and in the aggregate, will not have a material adverse effect on the Bank's financial condition or results of operations[178](index=178&type=chunk) - There are no proceedings pending or threatened that represent a significant risk against Primis or Primis Bank as of March 31, 2022[178](index=178&type=chunk) [Item 1A – Risk Factors](index=62&type=section&id=Item%201A%20%E2%80%93%20Risk%20Factors) The company refers to the risk factors disclosed in its Annual Report on Form 10-K for the year ended December 31, 2021, noting that additional unknown or immaterial risks could also adversely affect its business - The company disclosed risk factors in its Annual Report on Form 10-K for the year ended December 31, 2021[179](index=179&type=chunk) - Additional risks and uncertainties not currently known or considered immaterial may also materially adversely affect the business, financial condition, and/or operating results[179](index=179&type=chunk) [Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds](index=62&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 - Not applicable[180](index=180&type=chunk) [Item 3 – Defaults Upon Senior Securities](index=62&type=section&id=Item%203%20%E2%80%93%20Defaults%20Upon%20Senior%20Securities) This item is not applicable for the reporting period - Not applicable[181](index=181&type=chunk) [Item 4 – Mine Safety Disclosures](index=62&type=section&id=Item%204%20%E2%80%93%20Mine%20Safety%20Disclosures) This item is not applicable for the reporting period - Not applicable[182](index=182&type=chunk) [Item 5 – Other Information](index=62&type=section&id=Item%205%20%E2%80%93%20Other%20Information) This item is not applicable for the reporting period - Not applicable[183](index=183&type=chunk) [Item 6 - Exhibits](index=63&type=section&id=Item%206%20-%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including Articles of Incorporation, Amended and Restated Bylaws, and certifications from the CEO and CFO, along with Inline XBRL formatted financial statements and the cover page interactive data file - Exhibits include Articles of Incorporation, Amended and Restated Bylaws, and certifications from the Chief Executive Officer and Chief Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[186](index=186&type=chunk) - The filing includes Inline XBRL (Extensible Business Reporting Language) formatted financial statements and the cover page interactive data file[188](index=188&type=chunk) [Signatures](index=65&type=section&id=Signatures) The report was signed by Dennis J. Zember, Jr., President and Chief Executive Officer, and Matthew Switzer, Executive Vice President and Chief Financial Officer, on May 10, 2022 - The report was signed by Dennis J. Zember, Jr., President and Chief Executive Officer, and Matthew Switzer, Executive Vice President and Chief Financial Officer[190](index=190&type=chunk) - The signing date for the report was May 10, 2022[190](index=190&type=chunk)

Primis Financial Corp. (NASDAQ:FRST) Q1 2022 Earnings Conference Call April 29, 2022 10:00 AM ET Company Participants Matt Switzer - CFO Dennis Zember - President and CEO Conference Call Participants Casey Whitman - Piper Sandler Feddie Strickland - Janney Montgomery Scott Broderick Preston - Stephens Inc. Operator Good day, and welcome to the Primis Financial Corporation First Quarter Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the co ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 001-33037 PRIMIS FINANCIAL CORP. (Exact name of registrant as specified in its charter) Virginia (State or other jurisdiction of ...

NASDAQ: FRST Fourth Quarter 2021 e "forward-looking statements" within the meaning of, and subject to the protections of, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are forward-looking statements. Such statements can generally be identified by such words as "may," "plan," "contemplate," "anticipate," "believe," "intend," "continue," "expect," "project," "predict," "estimate ...