EX-99.1 3 tm2427630d1_ex99-1.htm EXHIBIT 99.1

Exhibit 99.1

 

PRIMIS FINANCIAL CORP.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION

 

 

On October 31, 2024, Primis Bank (the “Bank”), a wholly-owned subsidiary of Primis Financial Corp. (the “Company”), completed the first closing of its previously announced sale of its Life Premium Finance divison to EverBank, N.A. (“EverBank”). The second closing and full transfer of the business, including employees, is scheduled for January 31, 2025.

 

The unaudited pro forma condensed consolidated financial information is based on our historical financial statements, and gives effect to the sale of the division in accordance with Article 11 of Regulation S-X. The unaudited pro forma condensed consolidated statements of income for the nine months ended September 30, 2024 and the year ended December 31, 2023 give effect to the sale of the division as if it had occurred on January 1, 2023, while the unaudited pro forma condensed consolidated balance sheet as of September 30, 2024 gives effect to the sale as if it had occurred on that day.

 

The unaudited pro forma condensed consolidated financial statements (i) do not necessarily reflect what the Company's financial condition or results of operations would have been had the sale of the division occurred on the dates indicated, (ii) are based upon available information and assumptions that management considers to be reasonable to give effect, on a pro forma basis, to the sale of the division and (iii) are intended for informational purposes only. In addition, the unaudited pro forma condensed consolidated financial statements should not be considered to be indicative of our future consolidated financial performance or results of operations and should be read in conjunction with our audited consolidated financial statements, and notes thereto, included in our Annual Report on Form 10-K for the year ended December 31, 2023 and in our Form 10-Q for the three and nine-months ended September 30, 2024.

 

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PRIMIS FINANCIAL CORP.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET 

 

 

   September 30, 2024 
   Historical   Adjustments   Pro Forma 
             
ASSETS               
Cash and cash equivalents:               
Cash and due from financial institutions  $10,854   $373,916(a)  $384,770 
Interest-bearing deposits in other financial institutions   66,420         66,420 
Total cash and cash equivalents   77,274    373,916    451,190 
                
Securities available-for-sale, at fair value (amortized cost of $264,151 and $255,891, respectively)   242,543         242,543 
                
Securities held-to-maturity, at amortized cost (fair value of $9,162 and $10,839, respectively)   9,766         9,766 
                
Loans held for sale, at fair value   96,897         96,897 
Loans held for sale, at lower of cost or market   361,825    (361,825)(b)   0 
Total loans held for sale   458,722    (361,825)   96,897 
                
Loans held for investment, collateralizing secured borrowings   17,591         17,591 
Loans held for investment   2,956,132         2,956,132 
Less: allowance for credit losses   (51,132)   435(c)   (50,697)
Net loans   2,922,591    435    2,923,026 
                
Stock in Federal Reserve Bank (FRB) and Federal Home Loan Bank (FHLB)   20,875         20,875 
Bank premises and equipment, net   19,668         19,668 
Assets held for sale   9,864    (5,966)(d)   3,898 
Operating lease right-of-use assets   10,465         10,465 
Cloud computing arrangement assets, net   8,460         8,460 
Goodwill   93,459         93,459 
Intangible assets, net   985         985 
Bank-owned life insurance   66,750         66,750 
Deferred tax assets, net   25,582         25,582 
Consumer Program derivative asset   7,146         7,146 
Other assets   50,197         50,197 
Total assets  $4,024,347   $6,560   $4,030,907 
                
LIABILITIES AND STOCKHOLDERS' EQUITY               
Noninterest-bearing demand deposits  $421,231        $421,231 
Interest-bearing deposits:               
    NOW accounts   748,833         748,833 
    Money market accounts   835,099         835,099 
    Savings accounts   873,810         873,810 
    Time deposits   427,458         427,458 
    Total interest-bearing deposits   2,885,200         2,885,200 
Total deposits   3,306,431         3,306,431 
                
Securities sold under agreements to repurchase   3,677         3,677 
Secured borrowings   17,495         17,495 
FHLB advances   165,000         165,000 
Junior subordinated debt   9,867         9,867 
Senior subordinated notes   85,941         85,941 
Operating lease liabilities   11,704         11,704 
Other liabilities   27,169    2,563(e)   29,732 
Total liabilities   3,627,284    2,563    3,629,847 
                
Stockholders' equity:               
Preferred stock, $0.01 par value. Authorized 5,000,000 shares; no shares issued and outstanding   —         — 
Common stock, $0.01 par value. Authorized 45,000,000 shares; 24,722,734 and 24,693,172 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively   247         247 
Additional paid in capital   314,066         314,066 
Retained earnings   83,854    3,997(f)   87,851 
Accumulated other comprehensive loss   (17,145)        (17,145)
Total Primis stockholders' equity   381,022    3,997    385,019 
Noncontrolling interests   16,041         16,041 
Total stockholders' equity   397,063    3,997    401,060 
Total liabilities and stockholders' equity  $4,024,347   $6,560   $4,030,907 

  

 

(a) Reflects the receipt of cash consideration at the closing of the transaction.
(b) Reflects the loan balances being sold net of unearned income.
(c) Reflects the recovery of allowance for credit losses on sold loans.
(d) Reflects the payment of accrued interest.
(e) Reflects accruals for transaction costs and income tax expense recorded at closing.
(f) Reflects the gain recorded at the closing of the transaction, net of transaction costs, recognition of unearned income, recovery of allowance for credit losses and income tax expense.

 

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PRIMIS FINANCIAL CORP.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME 

  

   For the Nine Months Ended September 30, 2024   For the Year Ended December 31, 2023 
   Historical   Adjustments   Pro Forma   Historical   Adjustments   Pro Forma 
Interest and dividend income:                              
Interest and fees on loans  $151,581   $(16,610)(g)  $134,971   $172,788   $(14,635)(g)  $158,153 
Interest and dividends on taxable securities   5,022    —    5,022    5,966    —    5,966 
Interest and dividends on tax exempt securities   297    —    297    407    —    407 
Interest and dividends on other earning assets   2,756    —    2,756    13,457    —    13,457 
Total interest and dividend income   159,656    (16,610)   143,046    192,618    (14,635)   177,983 
Interest expense:                              
Interest on deposits   72,987    —    72,987    83,690    —    83,690 
Interest on other borrowings   8,524    (10,527)(g)   (2,003)   10,217    (10,356)(g)   (139)
Total interest expense   81,511    (10,527)   70,984    93,907    (10,356)   83,551 
Net interest income   78,145    (6,083)   72,062    98,711    (4,279)   94,432 
Provision for credit losses   17,138    (277)(g)   16,861    32,540    (60)(g)   32,480 
Net interest income after provision for credit losses   61,007    (5,806)   55,201    66,171    (4,219)   61,952 
                               
Noninterest income:                              
Account maintenance and deposit service fees   4,722    (5)(g)   4,717    5,733    1(g)   5,734 
Income from bank-owned life insurance   1,975    —    1,975    2,021    —    2,021 
Mortgage banking income   18,779    —    18,779    17,645    —    17,645 
Gain on other investments   393    —    393    184    —    184 
Consumer Program derivative gains (losses)   3,392    —    3,392    18,120    —    18,120 
Other noninterest income   1,180    —    1,180    1,547    —    1,547 
Gain on Disposal   —    4,500(h)   4,500    —    4,500(h)   4,500 
Total noninterest income   30,441    4,495    34,936    45,250    4,501    49,751 
                               
Noninterest expenses:                              
Salaries and benefits   48,587    (494)(g)   48,093    58,765    (377)(g)   58,388 
Occupancy expenses   3,988    —    3,988    6,239    —    6,239 
Furniture and equipment expenses   5,288    (10)(g)   5,278    6,381    (113)(g)   6,268 
Amortization of intangible assets   952    —    952    1,269    —    1,269 
Virginia franchise tax expense   1,894    —    1,894    3,395    —    3,395 
FDIC insurance assessment   1,744    —    1,744    2,929    —    2,929 
Data processing expense   7,130    —    7,130    9,545    (1)   9,544 
Marketing expense   1,407    (3)(g)   1,404    1,819    (1)(g)   1,818 
Telephone and communication expense   1,017    (3)(g)   1,014    1,507    —(g)   1,507 
Loss on bank premises and equipment and assets held for sale   —    —    —    476    —    476 
Professional fees   7,255    (67)(g)   7,188    4,641    —(g)   4,641 
Goodwill impairment   —    —    —    11,150    —    11,150 
Fraud losses   59    —    59    3,311    —    3,311 
Miscellaneous lending expenses   1,835    —    1,835    3,006    —    3,006 
Other operating expenses   7,123    (54)(g)   7,069    8,167    (38)(g)   8,129 
Total noninterest expenses   88,279    (631)   87,648    122,600    (529)   122,071 
Income (loss) before income taxes   3,169    (680)   2,489    (11,179)   811    (10,368)
Income tax expense (benefit)   1,679    (143)(i)   1,536    (1,067)   170(i)   (897)
Net income (loss)   1,490    (537)   953    (10,112)   641    (9,471)
Net income attributable to noncontrolling interests   5,640    —    5,640    2,280    —    2,280 
Net income (loss) attributable to Primis' common stockholders  $7,130   $(537)  $6,593   $(7,832)  $641   $(7,191)
                               
Other comprehensive income (loss):                              
Unrealized loss on available-for-sale securities   5,863    —    5,863    5,250    —    5,250 
Tax benefit   1,231    —    1,231    1,177    —    1,177 
Other comprehensive loss   4,632    —    4,632    4,073    —    4,073 
Comprehensive income (loss)  $11,762   $(537)  $11,225   $(3,759)  $641   $(3,118)
Earnings (loss) per share, basic  $0.29   $(0.02)  $0.27   $(0.32)  $0.03   $(0.29)
Earnings (loss) per share, diluted  $0.29   $(0.02)  $0.27   $(0.32)  $0.03   $(0.29)
                               
Weighted average basic common shares   24,683,556    24,683,556    24,683,556    24,638,609    24,638,609    24,638,609 
Weighted average diluted common shares   24,710,345    24,710,345    24,710,345    24,638,609    24,638,609    24,638,609 

  

 

(g) Reflects the elimination of revenues and expenses associated with the division for the nine months ended September 30, 2024 and the year ended December 31, 2023.
(h) Reflects the pre-tax gain recorded at the closing of the transaction, net of transaction costs.
(i) Reflects the estimated tax impact of the transaction accounting adjustments.

  

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PRIMIS FINANCIAL CORP.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 

 

(1) Basis of Presentation

 

The unaudited pro forma condensed consolidated statements of income for the nine months ended September 30, 2024 and the year ended December 31, 2023 give effect to the sale of the division as if it had occurred on January 1, 2023, while the unaudited pro forma condensed consolidated balance sheet as of September 30, 2024 gives effect to the sale as if it had occurred on that day.

 

(2) Adjustments to the Unaudited Pro Forma Condensed Consolidated Financial Statements

 

The following is a summary of the transaction accounting adjustments reflected in the unaudited pro forma condensed consolidated financial statements:

 

(a)Reflects the receipt of cash consideration at the closing of the transaction.

 

(b)Reflects the loan balances being sold net of unearned income.

 

(c)Reflects the recovery of allowance for credit losses on sold loans.

 

(d)Reflects the payment of accrued interest.

 

(e)Reflects accruals for transaction costs and income tax expense recorded at closing.

 

(f)Reflects the gain recorded at the closing of the transaction, net of transaction costs, recognition of unearned income, recovery of allowance for credit losses and income tax expense.

 

(g)Reflects the elimination of revenues and expenses associated with the division for the nine months ended September 30, 2024 and the year ended December 31, 2023.

 

(h)Reflects the pre-tax gain recorded at the closing of the transaction, net of transaction costs.

 

(i)Reflects the estimated tax impact of the transaction accounting adjustments.

 

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