Primis(US:FRST)2025-08-11 21:22PART I - FINANCIAL INFORMATION Item 1 - Financial Statements 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 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 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 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 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, 20252830 - 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 adjustments32 - 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 thousand43 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial performance, highlighting increased net income from PFH deconsolidation, growth in key divisions, and asset quality Operational Highlights 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 2024158 - Panacea Financial Division outstanding loan balances grew 16% ($71.5 million) during the first half of 2025158 - 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 million156157 Results of Operations 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 shares159 - 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 loan159 - 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 2025159 Financial Condition 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 loans161192 - 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 million161200201 - 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 portfolio161210 Capital Resources 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 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 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 reporting250 - The company is continuing its efforts to remediate the material weaknesses, and no new material changes to internal controls were reported during the period252 PART II - OTHER INFORMATION Item 1 – Legal Proceedings 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 Bank254 Item 1A – Risk Factors 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 report256 Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds 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 |