Primis Financial Corp. Reports Earnings per Share for the First Quarter of 2025

Declares Quarterly Cash Dividend of $0.10 Per Share , /PRNewswire/ -- Primis Financial Corp. (NASDAQ: FRST) ("Primis" or the "Company"), and its wholly-owned subsidiary, Primis Bank (the "Bank"), today reported net income available to common shareholders of $2.7 million, or $0.11 earnings per basic and diluted share, for the quarter ended March 31, 2025, compared to a net loss available to common shareholders of $23.3 million, or $0.94 loss per basic and diluted share, for the three months ended December 31, 2024 and net income available to common shareholders of $2.5 million, or $0.10 earnings per basic and diluted share, for the quarter ended March 31, 2024. Operating Results During the first quarter, the Company moved its consumer loan book back to held for investment out of held for sale after the efforts to consummate the sale were not successful. Associated with this move, the Company evaluated the portfolio aggressively in its CECL model and booked an additional $1.9 million provision for the portfolio. Additionally, during the quarter, the Company incurred unusually high professional fees associated with the accelerated efforts to transition to a new auditor in a compressed timeline for its Form 10-K filing. Excluding these amounts and other nonrecurring costs, the Company earned $5.1 million, resulting in a normalized return on assets of 0.56% for the first quarter of 2025. Commenting on the quarter, Dennis J. Zember, Jr., President and Chief Executive Officer, stated, "We believe our normalized operations show material improvement over the recent quarters and believe that our pathway to more meaningful results is much clearer. Our focus is on measured earning asset growth back to the $3.75 billion level of 2024, harvesting cost savings from our operations and IT systems and enjoying the earnings lift from 2024's and 2025's recruiting success in mortgage. Collectively, from our starting point in the current quarter, we believe the Company is positioned well." Strategic Repositioning Progress As discussed last quarter, the Company spent substantial time and energy in 2024 focusing the organization on its core bank and lines of business that drive premium operating results. The first quarter of 2025 demonstrated progress in key areas that are expected to continue and build through 2025. The following discussion highlights recent progress for each of these strategies: Core Community Bank The core bank has 24 banking offices in Virginia and Maryland with $2.2 billion of low-cost customer deposits. The core bank's cost of deposits of 1.83% in the first quarter of 2025 is lower than most of its larger regional bank competitors and up to 100 basis points lower than equal sized peers in the greater Washington, D.C. region. Approximately 20% of the core bank's deposit base are noninterest bearing deposits, supported with the region's best and most unique technology including the Bank's proprietary V1BE service which directly supports approximately $200 million of mostly commercial clients in the Bank's footprint. The core bank's loan portfolio was essentially flat in the traditionally slow first quarter with approximately $24 million of loan closings occurring in March 2025 and additional closings scheduled for early in the second quarter of 2025. The loan pipeline at March 31, 2025 was $228 million versus approximately $119 million at December 31, 2024. The Bank's loan portfolio is diversified across the footprint and is well below regulatory concentration limits for commercial real estate. Primis Mortgage Primis Mortgage earned approximately $0.8 million pre-tax from retail mortgage activities in the first quarter of 2025, compared to a loss of $0.4 million in the fourth quarter of 2024. Locked loans totaled $257 million in the first quarter of 2025, up 27% from the fourth quarter of 2024. The month of March 2025 saw $110 million of lock volume which was 53% higher than the same month a year ago. During the quarter, Primis Mortgage successfully recruited leading teams in the Nashville, Wilmington, Raleigh and Austin markets with total production potential of approximately $500 million based on 2024 activity from these producers. Relative to 2024's closed production of approximately $800 million, this successful quarter of recruiting is expected to meaningfully change the contribution to the Company's return on assets. These new teams were in place for the last couple of weeks in the first quarter and contributed to a 100% growth in applications for the mortgage division for the last week of March over the same period in 2024. National Strategies Mortgage warehouse lending activity was significant in the first quarter of 2025 following the expansion of the team in the fall of 2024. Outstanding loan balances at March 31, 2025 were $115 million, up 80% from $64 million at December 31, 2024. Committed facilities ended the first quarter of 2025 at $487 million versus $349 million at the end of 2024 with utilization beginning to ramp up. Mortgage warehouse also funded approximately 10% of its balance sheet with associated customer noninterest bearing deposit balances totaling $11 million at March 31, 2025. Funding for the national strategies is provided by the Bank's digital platform powering what we believe is one of only a handful of bank deposit offerings nationwide that is both fully functional and inherently app based. The platform ended the first quarter of 2025 with just over $1 billion of deposits with a cost of deposits approximately equal to Fed Funds. Late in the first quarter of 2025, the Bank leveraged its digital platform to launch a new and unique affinity brand. This brand will leverage well-known ambassadors and influencers to drive adoption of attractive deposit products in a unique niche. Because it utilizes our existing technology platform, the cost to launch this incremental brand is nominal. The Company believes this strategy is highly replicable and has the potential to be a significant driver of growth in the next few years. Panacea Financial Panacea's growth remained strong to start 2025 with loans outstanding up $40 million, or 9% unannualized, from the fourth quarter of 2024 funded by $94 million of deposits attributable to the division. Panacea is the number one ranked "Bank for doctors" on Google and banks approximately 6,000 professionals and practices nationwide with a goal of reaching 10,000 customers by the end of 2025. Panacea is also developing the initial phase of what is expected to be a sophisticated suite of technology products and services targeting the medical, dental and veterinary space. Outlook Mr. Zember commented, "Despite a material decrease in earning assets from the sale of the Life Premium Finance business, the Company's profitability has improved. Our core bank, Mortgage Warehouse and Panacea will build earning assets back to levels we enjoyed prior to the sale which we believe will add 21 basis points to the ROA. Primis mortgage has substantial momentum compared to 2024 that is not rate related and we expect their results to add 0.15% to our ROA in 2025 compared to 0.05% in 2024. Lastly, the Company's continued focus on operating expense is substantial enough that management expects expense growth in 2025 to be very low such that growth in earning assets or other revenue strategies will be very impactful to the bottom line. The overhang from the consumer loan book is largely behind us as promotional loans have dropped from $90 million to only $17 million at the end of the first quarter of 2025. Not included in our outlook is a substantial reduction in technology spend and data processing that we expect to experience as we consolidate our traditional core and our digital core. Over the last year, we have built a customer experience that is largely core agnostic, with real time features and app-based account opening. This has positioned us to be able to consolidate our two cores and reduce our annual spend substantially. We expect to complete the analysis in the second quarter of 2025 and believe the savings could be approximately $6 million to 7 million per year or another 15 basis points improvement in ROA. As noted above, management's estimate of run-rate return on assets was 0.56% in the first quarter of 2025. The initiatives described above, along with eventually removing the ten basis point drag from the consolidated losses of Panacea Financial Holdings, would double our return on assets. All of these initiatives are in place and already showing results." Net Interest Income Net interest income increased slightly to $26.4 million during the first quarter of 2025 compared to $26.1 million in the fourth quarter of 2024. Growth in net interest income was moderated by declining earning assets from the final sale of Life Premium Finance loans and runoff of consumer loans offsetting growth in other areas along with two fewer days in the quarter. The net interest margin was 3.15% in the first quarter of 2025 compared to 2.90% and 2.84% in the fourth quarter of 2024 and first quarter of 2024, respectively. Yield on loans and yield on average earnings assets declined three basis points and two basis points, respectively, in the first quarter of 2025 from the fourth quarter of 2024. New loan production in the first quarter of 2025 had a weighted average yield of 7.20% which, combined with anticipated repricing activity in 2025, suggests further improvement in earning asset yields during the year. Cost of deposits decreased a further 28 basis points to 2.52% in the first quarter of 2025 from 2.80% in the fourth quarter of 2024 with most of the reduction occurring on the digital platform which decreased 58 basis points in the first quarter of 2025 versus the fourth quarter of 2024. Noninterest Income Noninterest income was $7.8 million in the first quarter of 2025 versus $13.2 million in the fourth quarter of 2024 which included a $4.7 million gain from the sale of the Life Premium Finance division. Income from mortgage banking activity increased to $5.6 million in the first quarter of 2025 compared to $5.1 million in the fourth quarter of 2024. Offsetting the improvement in mortgage income is the decline in noninterest income associated with the consumer loan program and its promotional loans. In the first quarter of 2025, the Company recorded negative impacts to noninterest income totaling $0.3 million compared to a positive amount in the same quarter of 2024 totaling $2.0 million. Management notes that the impacts from these issues are largely behind us and that recognition of deferred interest and the offsetting derivative write-down will be minimal going forward as the promotional loans are only $17.2 million at March 31, 2025. Noninterest Expense Noninterest expense was $32.5 million for the first quarter of 2025, compared to $37.8 million for the fourth quarter of 2024. Noninterest expense also includes consolidated expenses from Panacea Financial Holdings ("PFH"). Management considers the core expense burden of the Bank that adjusts for certain items that are volume dependent such as mortgage banking-related expenses or expense related to changes in the reserve for unfunded commitments. The following table illustrates the Company's core operating expense burden during 2024 and the first quarter of 2025: ($ in thousands) 1Q 2025 4Q 2024 3Q 2024 2Q 2024 1Q 2024 Reported Noninterest Expense $32,516 $37,841 $30,955 $29,786 $27,538 PFH Consolidated Expenses (4,754) (3,641) (2,576) (2,347) (2,119) Noninterest Expense Excl. PFH 27,762 34,200 28,379 27,439 25,419 Nonrecurring (1,144) (3,686) (1,352) (1,453) (438) Primis Mortgage Expenses (5,725) (6,354) (6,436) (6,084) (5,122) Consumer Program Servicing Fee (622) (681) (699) (312) (312) Reserve for Unfunded Commitment (13) 6 (96) 546 2 Total Adjustments (7,504) (10,715) (8,583) (7,303) (5,870) Core Operating Expense Burden $20,258 $23,485 $19,796 $20,136 $19,549 As noted above, the core expense burden decreased $3.2 million in the first quarter of 2025 from the fourth quarter of 2024. As discussed last quarter, the fourth quarter of 2024 included a number of items which moderated as expected in the first quarter of 2025. Core operating expense burden is projected to be between $20 million and $21 million per quarter for the remainder of 2025. Loan Portfolio and Asset Quality Loans held for investment increased to $3.04 billion at March 31, 2025, compared to $2.89 billion at December 31, 2024 largely due to the reclassification of consumer program loans to held for investment in the first quarter of 2025 from held for sale at the end of 2024. Loan balances associated with the consumer loan program were $132 million at March 31, 2025, net of the discount taken in the fourth quarter of 2024, versus $152 million of loan balances at December 31, 2024. As previously disclosed, the Company ceased origination of loans under the consumer loan program at the end of January 2025. Excluding the consumer loan balances, loans held for investment would have increased 3.4% annualized in the first quarter of 2025 with the majority of the growth coming from the Mortgage Warehouse and Panacea divisions. The Company expects similar growth rates from these divisions with substantially more contribution from the core bank and intends to rebuild earning assets to levels seen in mid-2024 before the sale of Life Premium Finance. Nonperforming assets, excluding portions guaranteed by the SBA, were only 0.28% of total assets, or $10.4 million at March 31, 2025, compared to 0.29% or $10.8 million at December 31, 2024. The Bank had no other real estate owned at the end of the first quarter of 2025. The Company recorded a provision for loan losses of $1.6 million for the first quarter of 2025 compared to $6.5 million in the same quarter in 2024. As previously stated, the Company moved the consumer loan book into its held for investment loan portfolio in the first quarter of 2025 and aggressively evaluated the portfolio using its CECL model. Reserve build associated with this analysis totaled $1.9 million in the first quarter of 2025. As a percentage of loans held for investment, the allowance for credit losses was 1.45% at the end of the first quarter of 2025 compared to 1.66% in the same quarter of 2024. Total allowance and discounts on the consumer loan program totaled $23.8 million, or 16% of gross principal balance, at March 31, 2025. Net charge-offs were $11.3 million for the first quarter of 2025, down from $30.9 million for the fourth quarter of 2024. Consumer loan program net charge-offs were $10.8 million in the first quarter of 2025 versus $30.5 million in the fourth quarter of 2024 inclusive of the mark-to-market loss of $20.0 million when the loans were moved to held for sale. Core net charge-offs, excluding those losses from the consumer loan program, were $0.5 million, or 0.06% of average loans, in the first quarter of 2025 compared to $0.5 million, or 0.05%, in the fourth quarter of 2024(1). Deposits and Funding Total deposits at March 31, 2025 decreased slightly to $3.16 billion from $3.17 billion at December 31, 2024 as the Bank swept excess funds off balance sheet to manage excess liquidity. Deposits swept off balance sheet totaled $152 million at March 31, 2025 versus $137 million at December 31, 2024. Importantly, noninterest bearing demand deposits were $446 million at March 31, 2025, up from $439 million at December 31, 2024 as the Company emphasizes driving up low cost deposit balances and deposits associated with Mortgage Warehouse activities increase. The Company has no wholesale funding and is 100% funded with customer deposits at March 31, 2025. Shareholders' Equity Book value per common share as of March 31, 2025 was $14.38, an increase of $0.15 from December 31, 2024. Tangible book value per common share(1) at the end of the first quarter of 2025 was $10.59, an increase of $0.17 from December 31, 2024. Common shareholders' equity was $356 million, or 9.67% of total assets, at March 31, 2025. Tangible common equity(1) at March 31, 2025 was $262 million, or 7.31% of tangible assets(1). After-tax unrealized losses on the Company's available-for-sale securities portfolio decreased by $3.6 million to $17.6 million due to decreases in market interest rates during the first quarter of 2025. The Company has the intent and ability to hold these securities until maturity or recovery of the value and does not anticipate realizing any losses on the investments. The Board of Directors declared a dividend of $0.10 per share payable on May 28, 2025 to shareholders of record on May 14, 2025. This is Primis' fifty-fourth consecutive quarterly dividend. About Primis Financial Corp. As of March 31, 2025, Primis had $3.7 billion in total assets, $3.0 billion in total loans held for investment and $3.2 billion in total deposits. Primis Bank provides a range of financial services to individuals and small- and medium-sized businesses through twenty-four full-service branches in Virginia and Maryland and provides services to customers through certain online and mobile applications. Contacts: Address: Dennis J. Zember, Jr., President and CEO Primis Financial Corp. Matthew A. Switzer, EVP and CFO 1676 International Drive, Suite 900 Phone: (703) 893-7400 McLean, VA 22102 Primis Financial Corp., NASDAQ Symbol FRST Website: www.primisbank.com Conference Call The Company's management will host a conference call to discuss its first quarter results on Wednesday, April 30, 2025 at 10:00 a.m. (ET). A live Webcast of the conference call is available at the following website: https://events.q4inc.com/attendee/478210319. Participants may also call 1-800-715-9871 and ask for the Primis Financial Corp. call. A replay of the teleconference will be available for 7 days by calling 1-800-770-2030 and providing Replay Access Code 4554342. Non-GAAP Measures Statements included in this press release include non-GAAP financial measures and should be read along with the accompanying tables. Primis uses non-GAAP financial measures to analyze its performance. The measures entitled net income adjusted for nonrecurring income and expenses; pre-tax pre-provision operating earnings; operating return on average assets; pre-tax pre-provision operating return on average assets; operating return on average equity; operating return on average tangible equity; operating efficiency ratio; operating earnings per share – basic; operating earnings per share – diluted; tangible book value per share; tangible common equity; tangible common equity to tangible assets; and core net interest margin are not measures recognized under GAAP and therefore are considered non-GAAP financial measures. We use the term "operating" to describe a financial measure that excludes income or expense considered to be non-recurring in nature. Items identified as non-operating are those that, when excluded from a reported financial measure, provide management or the reader with a measure that may be more indicative of forward-looking trends in our business. A reconciliation of these non-GAAP financial measures to the most comparable GAAP measures is provided in the Reconciliation of Non-GAAP Items table. Management believes that these non-GAAP financial measures provide additional useful information about Primis that allows management and investors to evaluate the ongoing operating results, financial strength and performance of Primis and provide meaningful comparison to its peers. Non-GAAP financial measures should not be considered as an alternative to any measure of performance or financial condition as promulgated under GAAP, and investors should consider Primis' performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of Primis. Non-GAAP financial measures are not standardized and, therefore, it may not be possible to compare these measures with other companies that present measures having the same or similar names. Non-GAAP financial measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the results or financial condition as reported under GAAP. Forward-Looking Statements This press release 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 can generally be identified by such words as "may," "plan," "contemplate," "anticipate," "believe," "intend," "continue," "expect," "project," "predict," "estimate," "could," "should," "would," "will," and other similar words or expressions of the future or otherwise regarding the outlook for the Company's future business and financial performance and/or the performance of the banking industry and economy in general. These forward-looking statements include, but are not limited to, our expectations regarding our future operating and financial performance, including the preliminary estimated financial and operating information presented herein, which is subject to adjustment; our outlook and long-term goals for future growth and new offerings and services; our expectations regarding net interest margin; expectations on our growth strategy, expense management, capital management and future profitability; expectations on credit quality and performance; and the assumptions underlying our expectations. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve known and unknown risks and uncertainties which may cause the actual results, performance or achievements of the Company to be materially different from the future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements are based on the information known to, and current beliefs and expectations of, the Company's management and are subject to significant risks and uncertainties. Actual results may differ materially from those contemplated by such forward-looking statements. Factors that might cause such differences include, but are not limited to: instability in global economic conditions and geopolitical matters; the impact of current and future economic and market conditions generally (including seasonality) and in the financial services industry, nationally and within our primary market areas; changes in interest rates, inflation, loan demand, real estate values, or competition, as well as labor shortages and supply chain disruptions; the impact of tariffs, trade policies, and trade wars (including reduced consumer spending, lower economic growth or recession, reduced demand for U.S. exports, disruptions to supply chains, and decreased demand for other banking products and services); the Company's ability to implement its various strategic and growth initiatives, including its recently established Panacea Financial Division, digital banking platform, V1BE fulfillment service, Mortgage Warehouse division and Primis Mortgage Company; the risks associated with the Life Premium Finance sale, including failure to achieve the expected impact to our operating results; competitive pressures among financial institutions increasing significantly; changes in applicable laws, rules, or regulations, including changes to statutes, regulations or regulatory policies or practices; changes in management's plans for the future; credit risk associated with our lending activities; changes in accounting principles, policies, or guidelines; adverse results from current or future litigation, regulatory examinations or other legal and/or regulatory actions; potential impacts of adverse developments in the banking industry highlighted by high-profile bank failures, including impacts on customer confidence, deposit outflows, liquidity and the regulatory response thereto; potential increases in the provision for credit losses; our ability to identify and address increased cybersecurity risks, including those impacting vendors and other third parties; fraud or misconduct by internal or external actors, which we may not be able to prevent, detect or mitigate; acts of God or of war or other conflicts, including the current Ukraine/Russia conflict and Israel/Hamas conflict, acts of terrorism, pandemics or other catastrophic events that may affect general economic conditions; and other general competitive, economic, political, and market factors, including those affecting our business, operations, pricing, products, or services. Forward-looking statements speak only as of the date on which such statements are made. These forward-looking statements are based upon information presently known to the Company's management and are inherently subjective, uncertain and subject to change due to any number of risks and uncertainties, including, without limitation, the risks and other factors set forth in the Company's filings with the Securities and Exchange Commission, the Company's Annual Report on Form 10-K for the year ended December 31, 2024, under the captions "Cautionary Note Regarding Forward-Looking Statements" and "Risk Factors," and in the Company's Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made, or to reflect the occurrence of unanticipated events. Readers are cautioned not to place undue reliance on these forward-looking statements. (1) Non-GAAP financial measure. Please see "Reconciliation of Non-GAAP Items" in the financial tables for more information and for a reconciliation to GAAP. Primis Financial Corp. Financial Highlights (unaudited) (Dollars in thousands, except per share data) For Three Months Ended: Selected Performance Ratios: 1Q 2025 4Q 2024 3Q 2024 2Q 2024 1Q 2024 Return on average assets 0.30 % (2.43 %) 0.12 % 0.35 % 0.26 % Operating return on average assets(1) 0.40 % (2.51 %) 0.20 % 0.46 % 0.29 % Pre-tax pre-provision return on average assets(1) 0.58 % 0.44 % 0.86 % 0.75 % 1.02 % Pre-tax pre-provision operating return on average assets(1) 0.71 % 0.33 % 0.96 % 0.85 % 1.06 % Return on average common equity 3.10 % (24.28 %) 1.31 % 3.69 % 2.59 % Operating return on average common equity(1) 4.14 % (25.13 %) 2.15 % 4.81 % 2.95 % Operating return on average tangible common equity(1) 5.65 % (33.33 %) 2.86 % 6.42 % 3.94 % Cost of funds 2.68 % 2.97 % 3.25 % 3.16 % 2.97 % Net interest margin 3.15 % 2.90 % 2.97 % 2.72 % 2.84 % Gross loans to deposits 96.33 % 91.06 % 89.94 % 98.95 % 97.37 % Efficiency ratio 95.30 % 96.41 % 82.82 % 83.36 % 77.41 % Operating efficiency ratio(1) 91.97 % 98.92 % 79.92 % 79.56 % 76.17 % Per Common Share Data: Earnings per common share - Basic $ 0.11 $ (0.94) $ 0.05 $ 0.14 $ 0.10 Operating earnings per common share - Basic(1) $ 0.14 $ (0.98) $ 0.08 $ 0.18 $ 0.11 Earnings per common share - Diluted $ 0.11 $ (0.94) $ 0.05 $ 0.14 $ 0.10 Operating earnings per common share - Diluted(1) $ 0.14 $ (0.98) $ 0.08 $ 0.18 $ 0.11 Book value per common share $ 14.38 $ 14.23 $ 15.41 $ 15.22 $ 15.16 Tangible book value per common share(1) $ 10.59 $ 10.42 $ 11.59 $ 11.38 $ 11.31 Cash dividend per common share $ 0.10 $ 0.10 $ 0.10 $ 0.10 $ 0.10 Weighted average shares outstanding - Basic 24,706,593 24,701,260 24,695,685 24,683,734 24,673,857 Weighted average shares outstanding - Diluted 24,722,734 24,701,260 24,719,920 24,708,484 24,707,113 Shares outstanding at end of period 24,722,734 24,722,734 24,722,734 24,708,234 24,708,588 Asset Quality Ratios: Non-performing assets as a percent of total assets, excluding SBA guarantees 0.28 % 0.29 % 0.25 % 0.25 % 0.23 % Net charge-offs (recoveries) as a percent of average loans (annualized) 1.47 % 3.83 % 0.93 % 0.60 % 0.64 % Core net charge-offs (recoveries) as a percent of average loans (annualized)(1) 0.06 % 0.05 % 0.11 % (0.07 %) 0.10 % Allowance for credit losses to total loans 1.45 % 1.86 % 1.72 % 1.56 % 1.66 % Capital Ratios: Common equity to assets 9.67 % 9.53 % 9.47 % 9.48 % 9.63 % Tangible common equity to tangible assets(1) 7.31 % 7.16 % 7.29 % 7.27 % 7.36 % Leverage ratio(2) 8.17 % 7.76 % 8.20 % 8.25 % 8.38 % Common equity tier 1 capital ratio(2) 8.88 % 8.74 % 8.23 % 8.85 % 8.98 % Tier 1 risk-based capital ratio(2) 9.20 % 9.05 % 8.51 % 9.14 % 9.27 % Total risk-based capital ratio(2) 12.56 % 12.53 % 11.68 % 12.45 % 12.62 % (1) See Reconciliation of Non-GAAP financial measures. (2) Ratios are estimated and may be subject to change pending the final filing of the FR Y-9C. Primis Financial Corp. (Dollars in thousands) For Three Months Ended: Condensed Consolidated Balance Sheets (unaudited) 1Q 2025 4Q 2024 3Q 2024 2Q 2024 1Q 2024 Assets Cash and cash equivalents $ 57,044 $ 64,505 $ 77,274 $ 66,580 $ 88,717 Investment securities-available for sale 241,638 235,903 242,543 232,867 230,617 Investment securities-held to maturity 9,153 9,448 9,766 10,649 10,992 Loans held for sale 74,439 247,108 458,722 94,644 72,217 Loans receivable, net of deferred fees 3,043,348 2,887,447 2,973,723 3,300,562 3,227,665 Allowance for credit losses (44,021) (53,724) (51,132) (51,574) (53,456) Net loans 2,999,327 2,833,723 2,922,591 3,248,988 3,174,209 Stock in Federal Reserve Bank and Federal Home Loan Bank 12,982 13,037 20,875 16,837 14,225 Bank premises and equipment, net 19,217 19,432 19,668 19,946 20,412 Operating lease right-of-use assets 10,352 10,279 10,465 10,293 10,206 Goodwill and other intangible assets 93,804 94,124 94,444 94,768 95,092 Assets held for sale, net 2,420 5,497 9,864 5,136 6,359 Bank-owned life insurance 67,609 67,184 66,750 66,319 67,685 Deferred tax assets, net 26,015 26,466 25,582 25,232 24,513 Consumer Program derivative asset 1,597 4,511 7,146 9,929 10,685 Other assets 62,004 58,898 58,657 63,830 64,050 Total assets $ 3,677,601 $ 3,690,115 $ 4,024,347 $ 3,966,018 $ 3,889,979 Liabilities and stockholders' equity Demand deposits $ 446,221 $ 438,917 $ 421,231 $ 420,241 $ 463,190 NOW accounts 819,606 817,715 748,833 793,608 771,116 Money market accounts 785,552 798,506 835,099 831,834 834,514 Savings accounts 777,736 775,719 873,810 866,279 823,325 Time deposits 330,210 340,178 427,458 423,501 422,778 Total deposits 3,159,325 3,171,035 3,306,431 3,335,463 3,314,923 Securities sold under agreements to repurchase - short term 4,019 3,918 3,677 3,273 3,038 Federal Home Loan Bank advances - - 165,000 80,000 25,000 Secured borrowings 16,729 17,195 17,495 21,069 21,298 Subordinated debt and notes 95,949 95,878 95,808 95,737 95,666 Operating lease liabilities 11,638 11,566 11,704 11,488 11,353 Other liabilities 24,724 25,541 27,169 24,777 24,102 Total liabilities 3,312,384 3,325,133 3,627,284 3,571,807 3,495,380 Total Primis common stockholders' equity 355,602 351,756 381,022 376,047 374,577 Noncontrolling interest 9,615 13,226 16,041 18,164 20,022 Total stockholders' equity 365,217 364,982 397,063 394,211 394,599 Total liabilities and stockholders' equity $ 3,677,601 $ 3,690,115 $ 4,024,347 $ 3,966,018 $ 3,889,979 Tangible common equity(1) $ 261,798 $ 257,632 $ 286,578 $ 281,279 $ 279,485 Primis Financial Corp. (Dollars in thousands) For Three Months Ended: Condensed Consolidated Statement of Operations (unaudited) 1Q 2025 4Q 2024 3Q 2024 2Q 2024 1Q 2024 Interest and dividend income $ 47,723 $ 51,338 $ 57,104 $ 52,191 $ 50,336 Interest expense 21,359 25,261 29,081 27,338 25,067 Net interest income 26,364 26,077 28,023 24,853 25,269 Provision for credit losses 1,596 33,483 7,511 3,119 6,508 Net interest income after provision for credit losses 24,768 (7,406) 20,512 21,734 18,761 Account maintenance and deposit service fees 1,339 1,276 1,398 1,780 1,330 Income from bank-owned life insurance 425 434 431 981 564 Mortgage banking income 5,615 5,140 6,803 6,402 5,574 Gain (loss) on sale of loans - (4) - (29) 336 Gain on sale of Life Premium Finance portfolio, net of broker fees - 4,723 - - - Consumer Program derivative (292) 928 79 1,272 2,041 Gain on other investments 53 15 51 136 206 Other 617 663 168 186 256 Noninterest income 7,757 13,175 8,930 10,728 10,307 Employee compensation and benefits 17,390 18,028 16,764 16,088 15,735 Occupancy and equipment expenses 3,285 3,466 3,071 3,099 3,106 Amortization of intangible assets 313 313 318 317 317 Virginia franchise tax expense 577 631 631 632 631 Data processing expense 2,849 3,434 2,552 2,347 2,231 Marketing expense 514 499 449 499 459 Telecommunication and communication expense 287 295 330 341 346 Professional fees 2,224 3,129 2,914 2,976 1,365 Miscellaneous lending expenses 834 1,446 1,098 285 451 Gain (loss) on bank premises and equipment 106 13 (352) (124) - Other expenses 4,137 6,587 2,828 3,202 2,897 Noninterest expense 32,516 37,841 30,603 29,662 27,538 Income (loss) before income taxes 9 (32,072) (1,161) 2,800 1,530 Income tax expense (benefit) 936 (5,917) (304) 1,265 718 Net Income (loss) (927) (26,155) (857) 1,535 812 Noncontrolling interest 3,602 2,820 2,085 1,901 1,654 Net income (loss) attributable to Primis' common shareholders $ 2,675 $ (23,335) $ 1,228 $ 3,436 $ 2,466 (1) See Reconciliation of Non-GAAP financial measures. Primis Financial Corp. (Dollars in thousands) For Three Months Ended: Loan Portfolio Composition 1Q 2025 4Q 2024 3Q 2024 2Q 2024 1Q 2024 Loans held for sale $ 74,439 $ 247,108 $ 458,722 $ 94,644 $ 72,217 Loans secured by real estate: Commercial real estate - owner occupied 477,233 475,898 463,848 463,328 458,026 Commercial real estate - non-owner occupied 600,872 610,482 609,743 612,428 577,752 Secured by farmland 3,742 3,711 4,356 4,758 4,341 Construction and land development 104,301 101,243 105,541 104,886 146,908 Residential 1-4 family 576,837 588,859 607,313 608,035 602,124 Multi-family residential 157,443 158,426 169,368 171,512 128,599 Home equity lines of credit 60,321 62,954 62,421 62,152 57,765 Total real estate loans 1,980,749 2,001,573 2,022,590 2,027,099 1,975,515 Commercial loans 698,097 608,595 533,998 619,365 623,804 Paycheck Protection Program loans 1,738 1,927 1,941 1,969 2,003 Consumer loans 357,652 270,063 409,754 646,590 620,745 Total Non-PCD loans 3,038,236 2,882,158 2,968,283 3,295,023 3,222,067 PCD loans 5,112 5,289 5,440 5,539 5,598 Total loans receivable, net of deferred fees $ 3,043,348 $ 2,887,447 $ 2,973,723 $ 3,300,562 $ 3,227,665 Loans by Risk Grade: Pass Grade 1 - Highest Quality 880 872 820 692 633 Pass Grade 2 - Good Quality 175,379 175,659 177,763 488,728 412,593 Pass Grade 3 - Satisfactory Quality 1,643,957 1,567,228 1,509,405 1,503,918 1,603,053 Pass Grade 4 - Pass 1,124,901 1,041,947 1,184,671 1,204,268 1,177,065 Pass Grade 5 - Special Mention 28,498 30,111 53,473 87,471 19,454 Grade 6 - Substandard 69,733 71,630 47,591 15,485 14,867 Grade 7 - Doubtful - - - - - Grade 8 - Loss - - - - - Total loans $ 3,043,348 $ 2,887,447 $ 2,973,723 $ 3,300,562 $ 3,227,665 (Dollars in thousands) For Three Months Ended: Asset Quality Information 1Q 2025 4Q 2024 3Q 2024 2Q 2024 1Q 2024 Allowance for Credit Losses: Balance at beginning of period $ (53,724) $ (51,132) $ (51,574) $ (53,456) $ (52,209) Provision for for credit losses (1,596) (33,483) (7,511) (3,119) (6,508) Net charge-offs 11,299 30,891 7,953 5,001 5,261 Ending balance $ (44,021) $ (53,724) $ (51,132) $ (51,574) $ (53,456) Reserve for Unfunded Commitments: Balance at beginning of period $ (1,121) $ (1,127) $ (1,031) $ (1,577) $ (1,579) (Expense for) / recovery of unfunded loan commitment reserve (13) 6 (96) 546 2 Total Reserve for Unfunded Commitments $ (1,134) $ (1,121) $ (1,127) $ (1,031) $ (1,577) Non-Performing Assets: 1Q 2025 4Q 2024 3Q 2024 2Q 2024 1Q 2024 Nonaccrual loans $ 12,956 $ 15,026 $ 14,424 $ 11,289 $ 10,139 Accruing loans delinquent 90 days or more 1,713 1,713 1,714 1,897 1,714 Total non-performing assets $ 14,669 $ 16,739 $ 16,138 $ 13,186 $ 11,853 SBA guaranteed portion of non-performing loans $ 4,307 $ 5,921 $ 5,954 $ 3,268 $ 3,095 Primis Financial Corp. (Dollars in thousands) For Three Months Ended: Average Balance Sheet 1Q 2025 4Q 2024 3Q 2024 2Q 2024 1Q 2024 Assets Loans held for sale $ 170,509 $ 100,243 $ 98,110 $ 84,389 $ 58,896 Loans, net of deferred fees 2,897,481 3,127,249 3,324,157 3,266,651 3,206,888 Investment securities 245,216 253,120 242,631 244,308 241,179 Other earning assets 86,479 96,697 83,405 73,697 77,067 Total earning assets 3,399,685 3,577,309 3,748,303 3,669,045 3,584,030 Other assets 238,592 237,704 243,715 243,196 248,082 Total assets $ 3,638,277 $ 3,815,013 $ 3,992,018 $ 3,912,241 $ 3,832,112 Liabilities and equity Demand deposits $ 436,857 $ 437,388 $ 421,908 $ 433,315 $ 458,306 Interest-bearing liabilities: NOW and other demand accounts 805,522 787,884 748,202 778,458 773,943 Money market accounts 788,067 819,803 859,988 823,156 814,147 Savings accounts 754,304 767,342 866,375 866,652 800,328 Time deposits 335,702 404,682 425,238 423,107 431,340 Total Deposits 3,120,452 3,217,099 3,321,711 3,324,688 3,278,064 Borrowings 116,955 160,886 238,994 158,919 120,188 Total Funding 3,237,407 3,377,985 3,560,705 3,483,607 3,398,252 Other Liabilities 38,465 39,566 36,527 34,494 34,900 Total liabilites 3,275,872 3,417,551 3,597,232 3,518,101 3,433,152 Primis common stockholders' equity 350,423 382,370 377,314 374,731 378,008 Noncontrolling interest 11,982 15,092 17,472 19,409 20,952 Total stockholders' equity 362,405 397,462 394,786 394,140 398,960 Total liabilities and stockholders' equity $ 3,638,277 $ 3,815,013 $ 3,992,018 $ 3,912,241 $ 3,832,112 Net Interest Income Loans held for sale $ 2,564 $ 1,553 $ 1,589 $ 1,521 $ 907 Loans 42,400 46,831 52,699 48,024 46,816 Investment securities 1,906 1,894 1,799 1,805 1,715 Other earning assets 853 1,060 1,017 841 898 Total Earning Assets Income 47,723 51,338 57,104 52,191 50,336 Non-interest bearing DDA - - - - - NOW and other interest-bearing demand accounts 4,515 4,771 4,630 4,827 4,467 Money market accounts 5,420 6,190 7,432 6,788 6,512 Savings accounts 6,418 7,587 8,918 8,912 8,045 Time deposits 3,039 4,127 4,371 4,095 3,990 Total Deposit Costs 19,392 22,675 25,351 24,622 23,014 Borrowings 1,967 2,586 3,730 2,716 2,053 Total Funding Costs 21,359 25,261 29,081 27,338 25,067 Net Interest Income $ 26,364 $ 26,077 $ 28,023 $ 24,853 $ 25,269 Net Interest Margin Loans held for sale 6.10 % 6.16 % 6.44 % 7.25 % 6.19 % Loans 5.93 % 5.96 % 6.31 % 5.91 % 5.87 % Investments 3.15 % 2.98 % 2.95 % 2.97 % 2.86 % Other Earning Assets 4.00 % 4.36 % 4.85 % 4.59 % 4.69 % Total Earning Assets 5.69 % 5.71 % 6.06 % 5.72 % 5.65 % NOW 2.27 % 2.41 % 2.46 % 2.49 % 2.32 % MMDA 2.79 % 3.00 % 3.44 % 3.32 % 3.22 % Savings 3.45 % 3.93 % 4.10 % 4.14 % 4.04 % CDs 3.67 % 4.06 % 4.09 % 3.89 % 3.72 % Cost of Interest Bearing Deposits 2.93 % 3.25 % 3.48 % 3.42 % 3.28 % Cost of Deposits 2.52 % 2.80 % 3.04 % 2.98 % 2.82 % Other Funding 6.82 % 6.39 % 6.22 % 6.89 % 6.90 % Total Cost of Funds 2.68 % 2.97 % 3.25 % 3.16 % 2.97 % Net Interest Margin 3.15 % 2.90 % 2.97 % 2.72 % 2.84 % Net Interest Spread 2.60 % 2.30 % 2.37 % 2.11 % 2.22 % Primis Financial Corp. (Dollars in thousands, except per share data) For Three Months Ended: Reconciliation of Non-GAAP items: 1Q 2025 4Q 2024 3Q 2024 2Q 2024 1Q 2024 Net income (loss) attributable to Primis' common shareholders $ 2,675 $ (23,335) $ 1,228 $ 3,436 $ 2,466 Non-GAAP adjustments to Net Income: Branch Consolidation / Other restructuring 144 - - - - Professional fee expense related to accounting matters and LPF sale 893 1,782 1,352 1,453 438 Gains on sale of closed bank branch buildings 107 - (352) (124) - Gain on sale of Life Premium Finance portfolio, net of broker fees - (4,723) - - - Consumer program fraud losses - 1,904 - - - Income tax effect (247) 224 (216) (287) (95) Net income (loss) attributable to Primis' common shareholders adjusted fornonrecurring income and expenses $ 3,572 $ (24,148) $ 2,012 $ 4,478 $ 2,809 Net income (loss) attributable to Primis' common shareholders $ 2,675 $ (23,335) $ 1,228 $ 3,436 $ 2,466 Income tax expense (benefit) 936 (5,917) (304) 1,265 718 Provision for credit losses (incl. unfunded commitment expense) 1,609 33,477 7,607 2,573 6,506 Pre-tax pre-provision earnings $ 5,220 $ 4,225 $ 8,531 $ 7,274 $ 9,690 Effect of adjustment for nonrecurring income and expenses 1,144 (1,037) 1,000 1,329 438 Pre-tax pre-provision operating earnings $ 6,364 $ 3,188 $ 9,531 $ 8,603 $ 10,128 Return on average assets 0.30 % (2.43 %) 0.12 % 0.35 % 0.26 % Effect of adjustment for nonrecurring income and expenses 0.10 % (0.08 %) 0.08 % 0.11 % 0.03 % Operating return on average assets 0.40 % (2.51 %) 0.20 % 0.46 % 0.29 % Return on average assets 0.30 % (2.43 %) 0.12 % 0.35 % 0.26 % Effect of tax expense 0.10 % (0.62 %) (0.03 %) 0.13 % 0.08 % Effect of provision for credit losses (incl. unfunded commitment expense) 0.18 % 3.49 % 0.77 % 0.27 % 0.68 % Pre-tax pre-provision return on average assets 0.58 % 0.44 % 0.86 % 0.75 % 1.02 % Effect of adjustment for nonrecurring income and expenses and expenses 0.13 % (0.11 %) 0.10 % 0.10 % 0.04 % Pre-tax pre-provision operating return on average assets 0.71 % 0.33 % 0.96 % 0.85 % 1.06 % Return on average common equity 3.10 % (24.28 %) 1.31 % 3.69 % 2.59 % Effect of adjustment for nonrecurring income and expenses 1.04 % (0.85 %) 0.84 % 1.12 % 0.36 % Operating return on average common equity 4.14 % (25.13 %) 2.15 % 4.81 % 2.95 % Effect of goodwill and other intangible assets 1.51 % (8.20 %) 0.71 % 1.61 % 0.99 % Operating return on average tangible common equity 5.65 % (33.33 %) 2.86 % 6.42 % 3.94 % Efficiency ratio 95.30 % 96.36 % 82.98 % 83.42 % 77.41 % Effect of adjustment for nonrecurring income and expenses (3.33 %) 2.54 % (2.87 %) (3.79 %) (1.24 %) Operating efficiency ratio 91.97 % 98.90 % 80.11 % 79.63 % 76.17 % Earnings per common share - Basic $ 0.11 $ (0.94) $ 0.05 $ 0.14 $ 0.10 Effect of adjustment for nonrecurring income and expenses 0.03 (0.04) 0.03 0.04 0.01 Operating earnings per common share - Basic $ 0.14 $ (0.98) $ 0.08 $ 0.18 $ 0.11 Earnings per common share - Diluted $ 0.11 $ (0.94) $ 0.05 $ 0.14 $ 0.10 Effect of adjustment for nonrecurring income and expenses 0.03 (0.04) 0.03 0.04 0.01 Operating earnings per common share - Diluted $ 0.14 $ (0.98) $ 0.08 $ 0.18 $ 0.11 Book value per common share $ 14.38 $ 14.23 $ 15.41 $ 15.22 $ 15.16 Effect of goodwill and other intangible assets (3.79) (3.81) (3.82) (3.84) (3.85) Tangible book value per common share $ 10.59 $ 10.42 $ 11.59 $ 11.38 $ 11.31 Net charge-offs (recoveries) as a percent of average loans (annualized) 1.47 % 3.83 % 0.93 % 0.60 % 0.64 % Impact of third-party consumer portfolio (1.41 %) (3.78 %) (0.82 %) (0.67 %) (0.54 %) Core net charge-offs (recoveries) as a percent of average loans (annualized) 0.06 % 0.05 % 0.11 % (0.07 %) 0.10 % Total Primis common stockholders' equity $ 355,602 $ 351,756 $ 381,022 $ 376,047 $ 374,577 Less goodwill and other intangible assets (93,804) (94,124) (94,444) (94,768) (95,092) Tangible common equity $ 261,798 $ 257,632 $ 286,578 $ 281,279 $ 279,485 Common equity to assets 9.67 % 9.53 % 9.47 % 9.48 % 9.63 % Effect of goodwill and other intangible assets (2.36 %) (2.37 %) (2.18 %) (2.21 %) (2.27 %) Tangible common equity to tangible assets 7.31 % 7.16 % 7.29 % 7.27 % 7.36 % SOURCE Primis Financial Corp. 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Primis Financial Corp. Reports Earnings per Share for the First Quarter of 2025

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