PRIMIS FINANCIAL CORP._March 31, 2025

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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 March 31, 2025

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)

1676 International Drive, Suite 900

McLean, Virginia 22102

(Address of principal executive offices) (zip code)

(703) 893-7400

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class:	Trading symbol	Name of each exchange on which registered:
Common Stock, par value $0.01 per share	FRST	NASDAQ Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☐ No ☒

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b–2 of the Exchange Act:


Large accelerated filer ☐	Accelerated filer ☒	Smaller reporting company ☐

Non-accelerated filer ☐	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

As of April 30, 2025, there were 24,722,734 shares of common stock, $0.01 par value, outstanding.

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PRIMIS FINANCIAL CORP.

FORM 10-Q

March 31, 2025

TABLE OF CONTENTS		PAGE
PART I - FINANCIAL INFORMATION

Item 1 - Financial Statements

Condensed Consolidated Balance Sheets as of March 31, 2025 and December 31, 2024		2
Condensed Consolidated Statements of Income and Comprehensive Income for the three months ended March 2025 and 2024		3
Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three months ended March 2025 and 2024		4
Condensed Consolidated Statements of Cash Flows for the three months ended March 2025 and 2024		5
Notes to Unaudited Condensed Consolidated Financial Statements		6

Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations		38

Item 3 – Quantitative and Qualitative Disclosures about Market Risk		55

Item 4 – Controls and Procedures		57

PART II - OTHER INFORMATION

Item 1 – Legal Proceedings		57

Item 1A – Risk Factors		57

Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds		58

Item 3 – Defaults Upon Senior Securities		58

Item 4 – Mine Safety Disclosures		58

Item 5 – Other Information		58

Item 6 - Exhibits		59

Signatures		61

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PRIMIS FINANCIAL CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except per share amounts)


	March 31,		December 31,
	2025		2024
	(unaudited)
ASSETS
Cash and cash equivalents:
Cash and due from financial institutions	$	7,972	$	8,059
Interest-bearing deposits in other financial institutions		49,072		56,446
Total cash and cash equivalents		57,044		64,505

Securities available-for-sale, at fair value (amortized cost of $263,795 and $262,632, respectively)		241,638		235,903

Securities held-to-maturity, at amortized cost (fair value of $8,445 and $8,602, respectively)		9,153		9,448

Loans held for sale, at fair value		74,439		83,276
Loans held for sale, at lower of cost or market		—		163,832
Total loans held for sale		74,439		247,108

Loans held for investment, collateralizing secured borrowings		16,811		17,287
Loans held for investment		3,026,537		2,870,160
Less: allowance for credit losses		(44,021)		(53,724)
Net loans		2,999,327		2,833,723

Stock in Federal Reserve Bank (FRB) and Federal Home Loan Bank (FHLB)		12,983		13,037
Bank premises and equipment, net		19,210		19,432
Assets held for sale		2,420		5,497
Operating lease right-of-use assets		10,352		10,279
Cloud computing arrangement assets, net		7,485		8,065
Goodwill		93,459		93,459
Intangible assets, net		345		665
Bank-owned life insurance		67,609		67,184
Deferred tax assets, net		21,399		26,466
Consumer Program derivative asset		1,597		4,511
Investment in Panacea Financial Holdings, Inc. common stock		21,227		—
Other assets		57,623		50,833
Total assets	$	3,697,310	$	3,690,115

LIABILITIES AND STOCKHOLDERS' EQUITY
Noninterest-bearing demand deposits	$	455,768	$	438,917
Interest-bearing deposits:
NOW accounts		819,606		817,715
Money market accounts		785,552		798,506
Savings accounts		777,736		775,719
Time deposits		330,210		340,178
Total interest-bearing deposits		2,713,104		2,732,118
Total deposits		3,168,872		3,171,035

Securities sold under agreements to repurchase		4,019		3,918
Secured borrowings		16,729		17,195
Junior subordinated debt		9,892		9,880
Senior subordinated notes		86,057		85,998
Operating lease liabilities		11,639		11,566
Other liabilities		24,539		25,541
Total liabilities		3,321,747		3,325,133

Commitments and contingencies (See Note 9)

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 shares issued and outstanding at March 31, 2025 and December 31, 2024		247		247
Additional paid in capital		314,725		314,694
Retained earnings		78,211		58,047
Accumulated other comprehensive loss		(17,620)		(21,232)
Total Primis stockholders' equity		375,563		351,756
Noncontrolling interests		—		13,226
Total stockholders' equity		375,563		364,982
Total liabilities and stockholders' equity	$	3,697,310	$	3,690,115

See accompanying notes to unaudited condensed consolidated financial statements.

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PRIMIS FINANCIAL CORP.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(dollars in thousands, except per share amounts) (Unaudited)



	For the Three Months Ended March 31,
	2025		2024
Interest and dividend income:
Interest and fees on loans	$	44,964	$	47,732
Interest and dividends on taxable securities		1,811		1,615
Interest and dividends on tax exempt securities		95		100
Interest and dividends on other earning assets		853		898
Total interest and dividend income		47,723		50,345
Interest expense:
Interest on deposits		19,392		23,014
Interest on other borrowings		1,967		2,062
Total interest expense		21,359		25,076
Net interest income		26,364		25,269
Provision for credit losses		1,596		6,508
Net interest income after provision for credit losses		24,768		18,761

Noninterest income:
Account maintenance and deposit service fees		1,339		1,393
Income from bank-owned life insurance		425		564
Gain on deconsolidation of Panacea Financial Holdings, Inc.		24,578		—
Mortgage banking income		5,615		5,574
Gain on sale of loans		—		336
Gain on other investments		53		206
Consumer Program derivative (loss) income		(292)		2,041
Other noninterest income		617		193
Total noninterest income		32,335		10,307

Noninterest expenses:
Salaries and benefits		17,941		15,735
Occupancy expenses		1,428		1,490
Furniture and equipment expenses		1,857		1,616
Amortization of intangible assets		313		317
Virginia franchise tax expense		577		631
FDIC insurance assessment		793		610
Data processing expense		2,849		2,231
Marketing expense		514		459
Telephone and communication expense		287		346
Loss on bank premises and equipment and assets held for sale		106		—
Professional fees		2,225		1,365
Miscellaneous lending expenses		834		451
Other operating expenses		2,792		2,287
Total noninterest expenses		32,516		27,538
Income before income taxes		24,587		1,530
Income tax expense		5,553		718
Net income		19,034		812
Net loss attributable to noncontrolling interests		3,602		1,654
Net income attributable to Primis' common stockholders	$	22,636	$	2,466

Other comprehensive income (loss):
Unrealized gain (loss) on available-for-sale securities	$	4,572	$	(2,327)
Tax expense (benefit)		960		(489)
Other comprehensive income (loss)		3,612		(1,838)
Comprehensive income	$	26,248	$	628
Earnings per share, basic	$	0.92	$	0.10
Earnings per share, diluted	$	0.92	$	0.10

See accompanying notes to unaudited condensed consolidated financial statements.

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PRIMIS FINANCIAL CORP.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND 2024

(dollars in thousands, except per share amounts) (Unaudited)


	For the Three Months Ended March 31, 2025
									Accumulated
					Additional				Other
	Common Stock				Paid in		Retained		Comprehensive		Noncontrolling
	Shares		Amount		Capital		Earnings		Loss		Interests		Total
Balance - December 31, 2024		24,722,734	$	247	$	314,694	$	58,047	$	(21,232)	$	13,226	$	364,982
Net income (loss)		—		—		—		22,636		—		(3,602)		19,034
Other comprehensive income		—		—		—		—		3,612		—		3,612
Panacea Financial Holdings, Inc. deconsolidation		—		—		—		—		—		(9,624)		(9,624)
Dividends on common stock ($0.10 per share)		—		—		—		(2,472)		—		—		(2,472)
Stock-based compensation expense		—		—		31		—		—		—		31
Balance - March 31, 2025		24,722,734	$	247	$	314,725	$	78,211	$	(17,620)	$	—	$	375,563

		For the Three Months Ended March 31, 2024
									Accumulated
					Additional				Other
	Common Stock				Paid in		Retained		Comprehensive		Noncontrolling
	Shares		Amount		Capital		Earnings		Loss		Interests		Total
Balance - December 31, 2023		24,693,172	$	247	$	313,548	$	84,143	$	(21,777)	$	21,432	$	397,593
Issuance of Panacea Financial Holdings stock, net of costs		—		—		—		—		—		244		244
Net income (loss)		—		—		—		2,466		—		(1,654)		812
Other comprehensive loss		—		—		—		—		(1,838)		—		(1,838)
Dividends on common stock ($0.10 per share)		—		—		—		(2,476)		—		—		(2,476)
Stock option exercises		3,500		—		37		—		—		—		37
Stock-based compensation expense		—		—		227		—		—		—		227
Balance - March 31, 2024		24,696,672	$	247	$	313,812	$	84,133	$	(23,615)	$	20,022	$	394,599

See accompanying notes to unaudited condensed consolidated financial statements.

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PRIMIS FINANCIAL CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND 2024

(dollars in thousands, except per share amounts) (Unaudited)


	For the Three Months Ended March 31,
	2025		2024
Operating activities:
Net income	$	19,034	$	812
Adjustments to reconcile net income to net cash and cash equivalents (used in) provided by operating activities:
Depreciation and amortization		2,228		2,270
Net amortization of premiums and (accretion of discounts)		88		(264)
Provision for credit losses		1,596		6,508
Proceeds from sales of loans originated to sell		12,224		10,880
Net change in mortgage loans held for sale		26,193		(14,802)
Net gains on mortgage banking		(5,615)		(5,574)
Net gains on sale of loans		—		(336)
Loss on bank premises and equipment and assets held for sale		106		—
Earnings on bank-owned life insurance		(425)		(417)
Gain on bank-owned life insurance death benefit		—		(148)
Stock-based compensation expense		31		227
Gain on deconsolidation of Panacea Financial Holdings, Inc.		(24,578)		—
Gain on other investments		(53)		(206)
Deferred income tax benefit		4,106		(1,629)
Net change in fair value of loan derivative		2,914		121
Net (increase) decrease in other assets		(6,143)		5,904
Net decrease in other liabilities		2,687		(4,311)
Net cash and cash equivalents provided by (used in) operating activities		34,393		(965)
Investing activities:
Purchases of securities available-for-sale		(8,604)		(8,815)
Proceeds from paydowns, maturities and calls of securities available-for-sale		7,290		4,165
Proceeds from paydowns, maturities and calls of securities held-to-maturity		288		651
Net decrease in FRB and FHLB stock		54		21
Net change in loans held for investment		(78,256)		(23,658)
Proceeds from sales of loans initially originated to be held for investment		50,994		—
Proceeds from bank-owned life insurance death benefit		—		918
Proceeds from sales of assets held for sale		748		373
Purchases of other investments		179		2
Net cash and cash equivalents used in investing activities		(27,307)		(26,343)
Financing activities:
Net increase (decrease) in deposits		(11,710)		44,768
Cash dividends paid on common stock		(2,472)		(2,476)
Proceeds from exercised stock options		—		37
Proceeds from secured borrowings, net of repayments		(466)		905
Proceeds from (repayment of) short-term FHLB advances		—		(5,000)
Increase (decrease) in securities sold under agreements to repurchase		101		(6)
Issuance of Panacea Financial Holdings stock, net of costs		—		244
Net cash and cash equivalents provided (used in) by financing activities		(14,547)		38,472
Net change in cash and cash equivalents		(7,461)		11,164
Cash and cash equivalents at beginning of period		64,505		77,553
Cash and cash equivalents at end of period	$	57,044	$	88,717
Supplemental disclosure of cash flow information
Cash payments for:
Interest	$	22,199	$	24,739
Income taxes	$	—	$	23
Supplemental schedule of noncash activities:
Loans held for sale transferred to held for investment	$	152,092	$	—
Assets held for sale transferred to other assets	$	2,221	$	—
Deconsolidation of Panacea Financial Holdings, Inc.	$	9,624	$	—

See accompanying notes to unaudited condensed consolidated financial statements.

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PRIMIS FINANCIAL CORP.

Notes to Unaudited Condensed Consolidated Financial Statements

1. ACCOUNTING POLICIES

As of March 31, 2025, Primis Bank had twenty-four full-service branches in Virginia and Maryland and also provided services to customers through certain online and mobile applications. The Company is headquartered in McLean, Virginia and has an administrative office in Glen Allen, Virginia and an operations center in Atlee, Virginia. Primis Mortgage Company (“PMC”), a residential mortgage lender headquartered in Wilmington, North Carolina, is a consolidated subsidiary of Primis Bank. Panacea Financial Holdings, Inc. (“PFH”), headquartered in Little Rock, Arkansas, owns the rights to the Panacea Financial brand and its intellectual property and partners with the Bank to offer a suite of financial products and services for doctors, their practices, and ultimately the broader healthcare industry. PFH was de-consolidated from the Company on March 31, 2025 as further discussed below in “PFH Deconsolidation”. The operating results of PFH are included in the Company’s consolidated operating results during the three months ended March 31, 2025.

The accounting policies and practices of Primis and its subsidiaries conform to U.S. generally accepted accounting principles (“U.S. GAAP”) and to general practice within the banking industry. A discussion of the Company’s material accounting policies are located in our 2024 Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2024 (the “2024 Form 10-K”).

Principles of Consolidation

The consolidated financial statements include the accounts of Primis and its subsidiaries Primis Bank and PMC. PFH results of operations is included until its deconsolidation as of March 31, 2025 as further described below. Significant inter-company accounts and transactions have been eliminated in consolidation. Primis consolidates subsidiaries in which it holds, directly or indirectly, more than 50 percent of the voting rights or where it exercises control. Entities where Primis holds 20 to 50 percent of the voting rights, or has the ability to exercise significant influence, or both, are accounted for under the equity method. Primis owns EVB Statutory Trust I (the “Trust”) which is an unconsolidated subsidiary and the junior subordinated debt owed to the Trust is reported as a liability of Primis. Primis consolidated PFH through March 31, 2025 as further described below.

We determine whether we have a controlling financial interest in an entity by first evaluating whether the entity is a voting interest entity or a variable interest entity (“VIE”) under U.S. GAAP. Voting interest entities are entities in which the total equity investment at risk is sufficient to enable the entity to finance itself independently and provides the equity holders with the obligation to absorb losses, the right to receive residual returns and the right to make decisions about the entity’s activities. We consolidate voting interest entities in which we have all, or at least a majority of, the voting interest. As defined in U.S. GAAP, VIEs are entities that lack one or more of the characteristics of a voting interest entity. A controlling financial interest in a VIE is present when an enterprise has both the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and an obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. The enterprise with a controlling financial interest, known as the primary beneficiary, consolidates the VIE. The Company has investments in VIE’s for which we are not the primary beneficiary and, as such, are not included in our consolidated financial statements.

PFH Deconsolidation

On December 21, 2023, PFH completed a $24.5 million Series B financing round led by a global venture capital firm. As part of the financing round, Primis acquired approximately 19% of PFH’s common stock for an immaterial purchase price due to previous operating losses in the Bank’s Panacea Financial Division. The Company performed an analysis and

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determined that PFH is a VIE because it lacks one or more of the characteristics of a voting interest entity. The Company’s analysis further determined that it has a controlling financial interest in PFH due to the substantial historical activities between PFH and the Bank’s Panacea Financial Division coupled with the limited activities of PFH outside of its relationship with Primis. Further, there are employees of Primis that have historically carried out substantially all of the activities of PFH. Accordingly, the Company determined it is the primary beneficiary of PFH and consolidated it as of December 31, 2023 and no circumstances resulted in a change in that determination as of December 31, 2024.

As of March 31, 2025, the three primary executives of PFH resigned from their positions as management-level employees of Primis’ Panacea Financial Division of the Bank. Additionally, Primis and PFH modified their partnership agreement as of March 31, 2025 to allow PFH more control over the type and amount of lending it can perform through the Bank. As a result of these changes in the relationship between the Company and PFH a re-assessment of PFH under the VIE accounting guidance was performed. The Company determined that PFH continues to be a VIE because it lacks one or more of the characteristics of a voting interest entity. However, as of March 31, 2025, the Company has determined based on the relationship changes described above that it was no longer the primary beneficiary of the VIE because it no longer has the power to direct the activities that most significantly impact the VIE’s economic performance. Accordingly, the Company deconsolidated PFH as of March 31, 2025.

Upon deconsolidation, the Company performed an analysis of its 1.7 million common share investment in PFH. The Company determined that a combination of its level of voting share ownership (19% of total outstanding voting shares) along with meaningful continued involvement in PFH’s lending and operating activities that the investment met the requirements to be accounted for in accordance with ASC 323, Investments - Equity Method and Joint Ventures. As of the time of deconsolidation and initial application of ASC 323, the Company decided to elect the fair value option (“FVO”) allowed under ASC 323 and will account for its investment in PFH common stock as of March 31, 2025 at fair value under ASC 825, Financial Instruments. The FVO is irrevocable and must be used in all future periods following election.

For the three months ended March 31, 2025, the Company recognized a gain from deconsolidation of PFH of $24.6 million which is recorded in the income statement in “Gain on deconsolidation of Panacea Financial Holdings, Inc.” within noninterest income. The gain resulted from recognition as of March 31, 2025 of the Company’s retained interest in PFH common stock of $21.2 million, at fair value, and the deconsolidation as of the same date of noncontrolling interest in PFH of $9.6 million and PFH’s net assets of $6.2 million. The Company engaged a third-party valuation specialist to perform a valuation of the Company’s PFH common shares as of March 31, 2025. The valuation included an assessment of the value of PFH primarily using an income approach leveraging a discounted cash flow technique. Key inputs and assumptions in the valuation included projected financial growth of PFH driven by future loan growth assumptions, growth in new services offerings of PFH, and cost savings from fundings provided by customer growth. Following deconsolidation, the Company will continue to originate loans for PFH through its Panacea Division of the Bank, retaining some of the originated loans and selling the remaining. Any loans retained by the Company will be included within Net Loans in the balance sheet and will be included in the Company’s determination of future expected credit losses, which is the Company’s primary exposure to losses as a result of its continued involvement with PFH. For any originated loans that are intended to be sold, the Company will also include these on its balance sheet until the time of sale but through an agreement with PFH any exposure to a decline in value prior to sale will be reimbursed to the Company by PFH. The Company will also continue, through the Division, to provide loan origination support to PFH and servicing of loans retained by the Division.

Following deconsolidation, the Company determined that any transactions between the Company and PFH would be related party transactions under relevant accounting guidance. The primary transactions between the Company and PFH relate to quarterly payments between the parties driven by financial performance of loans PFH originates in the Division of the Bank. As of March 31, 2025, the Company had a receivable of $3.4 million included within other assets in the balance sheet related to this quarterly payment due from PFH. As of March 31, 2025, the Company did not hold any assets on its balance sheet related to PFH which could be used by PFH to settle their obligations. The Company does not have an obligation to provide any future monetary support to PFH. The maximum exposure to loss as of March 31, 2025 as a result

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of continued involvement with PFH is the common stock investment of $21.2 million, the receivable of $3.4 million, and any potential credit losses on loans originated in the division of the Bank as discussed above.

Disposition of the Life Premium Finance Division

On October 24, 2024, the Company entered into a purchase and assumption agreement with EverBank, N.A. (“EverBank”) for sale of the Company’s Life Premium Finance division (“LPF”). EverBank acquired LPF from the Company, except for a subset of mostly fixed rate and rate-capped loans that were retained by the Bank. All of the LPF operations, including its employees, were assumed by EverBank following the close of the transaction, which took place in two parts. EverBank acquired approximately $370 million of loans from the division at a $6.0 million premium at the first close on October 31, 2024. Between the first and second closing, which happened on January 31, 2025, EverBank purchased loans generated by the division in ordinary course at par. The Bank provided interim servicing from the first closing until the transition of the business at the final closing when EverBank began servicing the purchased loans and serviced the Bank’s retained portfolio for the duration of the portfolio. From the first closing through December 31, 2024, the Bank sold approximately $400 million of loans and related accrued interest and recorded a pre-tax gain of $4.7 million, net of advisory and legal fees. As of December 31, 2024, the Bank had an additional $50.7 million of loans to be sold to EverBank which were recorded in loans held for sale at lower of cost or market. The Bank subsequently sold approximately $64 million of additional loans at par to EverBank (inclusive of the loans in held for sale at year end) from January 1, 2025 through the second close on January 31, 2025.

Operating Segments

The Company, through its Bank subsidiary, provides a broad range of financial services. While the Company’s chief operating decision maker monitors the revenue streams of the various financial products and services, operations are managed and financial performance is evaluated on an organization-wide basis. Management has determined that the Company has two reportable operating segments: Primis Mortgage and Primis Bank, as discussed in Note 11 – Segment Information.

Basis of Presentation

The unaudited condensed consolidated financial statements and notes thereto have been prepared in accordance with U.S. GAAP for interim financial information and instructions for Form 10-Q and follow general practice within the banking industry. Accordingly, the unaudited condensed consolidated financial statements do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. However, in the opinion of management, all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of the results of the interim periods presented have been made. The results of operations for the interim periods are not necessarily indicative of the results that may be expected for the full year. For further information, refer to the consolidated financial statements and footnotes thereto included in the 2024 Form 10-K.

Use of Estimates

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates. Estimates that are particularly susceptible to change in the near term include: the determination of the allowance for credit losses, the fair value of investment securities, the credit impairment of investment securities, the mortgage banking derivatives, interest rate swap derivatives, Consumer Program derivative, the valuation of goodwill, and deferred tax assets. Management monitors and continually reassess these at each reporting period.

Interest Rate Swaps

The Company is subject to interest rate risk exposure in the normal course of business through its core lending operations. Primarily to help mitigate interest rate risk associated with its loan portfolio, the Company entered into interest

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rate swaps in May and August 2023 with a large U.S. financial institution as the counterparty. Interest rate swaps are contractual agreements whereby one party pays a floating interest rate on a notional principal amount and receives a fixed-rate payment on the same notional principal, or vice versa, for a fixed period of time. Interest rate swaps change in value with movements in benchmark interest rates, such as Prime or the Secured Overnight Financing Rate (“SOFR”). Interest rate swaps subject the Company to market risk associated with changes in interest rates, changes in interest rate volatility, as well as the credit risk that the counterparty will fail to perform. The Company’s interest rate swaps are pay-fixed and receive-floating whereby the Company receives a variable rate of interest based on SOFR.

As of March 31, 2025, the gross amounts of interest rate swap derivative assets and liabilities were $0.6 million and $0.4 million, respectively, and are recorded net in other assets in the consolidated balance sheets. As of December 31, 2024 the gross amounts of interest rate swap derivative assets and liabilities were $1.1 million and $0.3 million, respectively, and are recorded net in other assets in the consolidated balance sheets.

The following table represents the carrying value of the portfolio layer method hedged assets and the cumulative fair value hedging adjustments included in the carrying value of the hedged assets as of March 31, 2025 and December 31, 2024:


	March 31, 2025						December 31, 2024
(dollars in thousands)		Amortized Cost Basis		Hedged Asset		Basis Adjustment		Amortized Cost Basis		Hedged Asset		Basis Adjustment
Fixed rate assets	$	911,540	$	249,788	$	(212)	$	818,375	$	249,190	$	(810)

Recent Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU requires annual disclosure of certain information relating to the rate reconciliation, income taxes paid by jurisdiction, income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign, and income tax expense (or benefit) from continuing operations disaggregated by federal, state, and foreign. The ASU also eliminates certain requirements relating to unrecognized tax benefits and certain deferred tax disclosure relating to subsidiaries and corporate joint ventures. This ASU is effective for the Company’s annual disclosures beginning for the year ended December 31, 2025. The Company is currently evaluating the impact of this ASU to the annual financial statement disclosures in its Form 10-K for the year ending December 31, 2025.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40). This ASU requires more disclosures about specific types of expenses included in the expense captions presented on the face of the income statement as well as disclosures about selling expenses, but does not change the requirements for the presentation of expenses on the face of the income statement. The amendments in this standard will be effective for the Company on January 1, 2027, and is required to be applied prospectively, with early adoption permitted. The Company does not believe this standard will have a material impact on its consolidated financial statements.

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2. INVESTMENT SECURITIES

The amortized cost and fair value of available-for-sale investment securities and the related gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) were as follows (in thousands):


	Amortized		Gross Unrealized				Fair
	Cost		Gains		Losses		Value
March 31, 2025
Residential government-sponsored mortgage-backed securities	$	105,126	$	74	$	(12,118)	$	93,082
Obligations of states and political subdivisions		33,180		6		(3,451)		29,735
Corporate securities		16,000		—		(662)		15,338
Residential government-sponsored collateralized mortgage obligations		60,597		539		(1,260)		59,876
Government-sponsored agency securities		16,328		—		(2,115)		14,213
Agency commercial mortgage-backed securities		25,373		—		(3,087)		22,286
SBA pool securities		7,191		6		(89)		7,108
Total	$	263,795	$	625	$	(22,782)	$	241,638


	Amortized		Gross Unrealized				Fair
	Cost		Gains		Losses		Value
December 31, 2024
Residential government-sponsored mortgage-backed securities	$	105,655	$	5	$	(14,253)	$	91,407
Obligations of states and political subdivisions		33,500		3		(3,798)		29,705
Corporate securities		16,000		—		(920)		15,080
Residential government-sponsored collateralized mortgage obligations		57,908		223		(1,741)		56,390
Government-sponsored agency securities		16,315		—		(2,479)		13,836
Agency commercial mortgage-backed securities		25,750		—		(3,572)		22,178
SBA pool securities		7,504		6		(203)		7,307
Total	$	262,632	$	237	$	(26,966)	$	235,903

The amortized cost, gross unrecognized gains and losses, allowance for credit losses and fair value of investment securities held-to-maturity were as follows (in thousands):


	Amortized		Gross Unrecognized				Allowance for		Fair
	Cost		Gains		Losses		Credit Losses		Value
March 31, 2025
Residential government-sponsored mortgage-backed securities	$	7,477	$	2	$	(629)	$	—	$	6,850
Obligations of states and political subdivisions		1,519		—		(74)		—		1,445
Residential government-sponsored collateralized mortgage obligations		157		—		(7)		—		150
Total	$	9,153	$	2	$	(710)	$	—	$	8,445


	Amortized		Gross Unrecognized				Allowance for		Fair
	Cost		Gains		Losses		Credit Losses		Value
December 31, 2024
Residential government-sponsored mortgage-backed securities	$	7,760	$	2	$	(764)	$	—	$	6,998
Obligations of states and political subdivisions		1,519		—		(75)		—		1,444
Residential government-sponsored collateralized mortgage obligations		169		—		(9)		—		160
Total	$	9,448	$	2	$	(848)	$	—	$	8,602

Available-for-sale investment securities of $8.6 million were purchased during the three months ended March 31, 2025 and $8.8 million were purchased during the three months ended March 31, 2024, respectively. No held-to-maturity investments were purchased during the three months ended March 31, 2025 and 2024. No investment securities were sold during the three months ended March 31, 2025 and 2024.

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The amortized cost and fair value of available-for-sale and held-to-maturity investment securities as of March 31, 2025, by contractual maturity, were as follows (in thousands). Investment securities not due at a single maturity date are shown separately.


	Available-for-Sale				Held-to-Maturity
	Amortized				Amortized
	Cost		Fair Value		Cost		Fair Value
Due within one year	$	1,757	$	1,737	$	—	$	—
Due in one to five years		11,546		10,947		1,014		969
Due in five to ten years		39,197		35,216		505		476
Due after ten years		13,008		11,386		—		—
Residential government-sponsored mortgage-backed securities		105,126		93,082		7,477		6,850
Residential government-sponsored collateralized mortgage obligations		60,597		59,876		157		150
Agency commercial mortgage-backed securities		25,373		22,286		—		—
SBA pool securities		7,191		7,108		—		—
Total	$	263,795	$	241,638	$	9,153	$	8,445

Investment securities with a carrying amount of approximately $138.8 million and $141.1 million at March 31, 2025 and December 31, 2024, respectively, were pledged to secure public deposits, certain other deposits, a line of credit for advances from the FHLB of Atlanta, and repurchase agreements.

Management measures expected credit losses on held-to-maturity securities on a collective basis by major security type with each type sharing similar risk characteristics and considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. With regard to U.S. Treasury and residential mortgage-backed securities issued by the U.S. government, or agencies thereof, it is expected that the securities will not be settled at prices less than the amortized cost basis of the securities as such securities are backed by the full faith and credit of and/or guaranteed by the U.S. government. Accordingly, no allowance for credit losses has been recorded for these securities. With regard to securities issued by states and political subdivisions and other held-to-maturity securities, management considers (i) issuer bond ratings, (ii) historical loss rates for given bond ratings, (iii) whether issuers continue to make timely principal and interest payments under the contractual terms of the securities and (iv) internal forecasts. As of March 31, 2025, Primis did not have a material allowance for credit losses on held-to-maturity securities.

As of both March 31, 2025 and December 31, 2024, there were 155 investment securities available-for-sale that were in an unrealized loss position. The unrealized losses related to investment securities available-for-sale as of March 31, 2025 and December 31, 2024, relate to changes in interest rates relative to when the investment securities were purchased, and do not indicate credit-related impairment. Primis performs quantitative analysis and if needed, a qualitative analysis in this determination. As a result of the Company’s analysis, none of the securities were deemed to require an allowance

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for credit losses. Primis has the ability and intent to retain these securities for a period of time sufficient to recover all unrealized losses.

The following tables present information regarding investment securities available-for-sale and held-to-maturity in a continuous unrealized loss position as of March 31, 2025 and December 31, 2024 by duration of time in a loss position (in thousands):


	Less than 12 months				12 Months or More				Total
March 31, 2025	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
Available-for-Sale	value		Losses		value		Losses		value		Losses
Residential government-sponsored mortgage-backed securities	$	3,648	$	(21)	$	78,556	$	(12,097)	$	82,204	$	(12,118)
Obligations of states and political subdivisions		513		(2)		28,215		(3,449)		28,728		(3,451)
Corporate securities		4,963		(38)		10,376		(624)		15,339		(662)
Residential government-sponsored collateralized mortgage obligations		12,440		(110)		14,316		(1,150)		26,756		(1,260)
Government-sponsored agency securities		—		—		14,213		(2,115)		14,213		(2,115)
Agency commercial mortgage-backed securities		—		—		22,285		(3,087)		22,285		(3,087)
SBA pool securities		4,380		(56)		2,223		(33)		6,603		(89)
Total	$	25,944	$	(227)	$	170,184	$	(22,555)	$	196,128	$	(22,782)


	Less than 12 months				12 Months or More				Total
March 31, 2025	Fair		Unrecognized		Fair		Unrecognized		Fair		Unrecognized
Held-to-Maturity	value		Losses		value		Losses		value		Losses
Residential government-sponsored mortgage-backed securities	$	—	$	—	$	6,781	$	(629)	$	6,781	$	(629)
Obligations of states and political subdivisions		573		(7)		872		(67)		1,445		(74)
Residential government-sponsored collateralized mortgage obligations		—		—		149		(7)		149		(7)
Total	$	573	$	(7)	$	7,802	$	(703)	$	8,375	$	(710)


	Less than 12 months				12 Months or More				Total
December 31, 2024	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
Available-for-Sale	value		Losses		value		Losses		value		Losses
Residential government-sponsored mortgage-backed securities	$	10,233	$	(102)	$	80,700	$	(14,151)	$	90,933	$	(14,253)
Obligations of states and political subdivisions		2,060		(21)		26,642		(3,777)		28,702		(3,798)
Corporate securities		—		—		15,080		(920)		15,080		(920)
Residential government-sponsored collateralized mortgage obligations		16,488		(339)		14,739		(1,402)		31,227		(1,741)
Government-sponsored agency securities		—		—		13,836		(2,479)		13,836		(2,479)
Agency commercial mortgage-backed securities		—		—		22,178		(3,572)		22,178		(3,572)
SBA pool securities		4,359		(161)		2,426		(42)		6,785		(203)
Total	$	33,140	$	(623)	$	175,601	$	(26,343)	$	208,741	$	(26,966)


	Less than 12 months				12 Months or More				Total
December 31, 2024	Fair		Unrecognized		Fair		Unrecognized		Fair		Unrecognized
Held-to-Maturity	value		Losses		value		Losses		value		Losses
Residential government-sponsored mortgage-backed securities	$	—	$	—	$	6,927	$	(764)	$	6,927	$	(764)
Obligations of states and political subdivisions		572		(8)		872		(67)		1,444		(75)
Residential government-sponsored collateralized mortgage obligations		—		—		160		(9)		160		(9)
Total	$	572	$	(8)	$	7,959	$	(840)	$	8,531	$	(848)

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3. LOANS AND ALLOWANCE FOR CREDIT LOSSES

The following table summarizes the composition of our loan portfolio as of March 31, 2025 and December 31, 2024 (in thousands):


	March 31, 2025		December 31, 2024
Loans held for sale, at fair value	$	74,439	$	83,276
Loans held for sale, at lower of cost or market		—		163,832
Total loans held for sale	$	74,439	$	247,108

Loans held for investment
Loans secured by real estate:
Commercial real estate - owner occupied ⁽¹⁾	$	477,233	$	475,898
Commercial real estate - non-owner occupied		600,872		610,482
Secured by farmland		3,742		3,711
Construction and land development		104,301		101,243
Residential 1-4 family		576,837		588,859
Multi-family residential		157,443		158,426
Home equity lines of credit		60,321		62,954
Total real estate loans		1,980,749		2,001,573

Commercial loans ⁽²⁾		698,097		608,595
Paycheck Protection Program loans		1,738		1,927
Consumer loans		357,652		270,063
Total Non-PCD loans		3,038,236		2,882,158
PCD loans		5,112		5,289
Total loans held for investment	$	3,043,348	$	2,887,447

(1)	Includes $6.3 million and $6.3 million related to loans collateralizing secured borrowings as of March 31, 2025 and December 31, 2024, respectively.

(2)	Includes $10.5 million and $11.0 million related to loans collateralizing secured borrowings as of March 31, 2025 and December 31, 2024, respectively.

Loans held for sale, at the lower of cost or market

As of December 31, 2024, $113.3 million of Consumer Program loans and $50.5 million of life premium finance loans were included in loans held for sale, at the lower of cost or market, based on the Company’s decision to sell the loans. The life premium finance loans were sold during the three months ended March 31, 2025. At March 31, 2025, the Company determined it would no longer sell the Consumer Program loans and has the intent and ability to hold these loans for the foreseeable future as it intends to run-off the portfolio and therefore transferred the loans back to the consumer loans category within loans held for investment at their amortized cost of $101.6 million as of that date.

Consumer Program Loans

The Company has $131.5 million and $152.1 million of principal balance of loans outstanding in the Consumer Program as of March 31, 2025 and December 31, 2024, respectively, or 4% and 5%, respectively of our total gross loan portfolio as of each date. Loans in the Consumer Program are included within the consumer loans category disclosures in this footnote as of March 31, 2025 and $113.3 million is included in loans held for sale, at the lower of cost or market, and $39.0 million in the consumer loans category in loans held for investment as of December 31, 2024. As of March 31, 2025, 12% of the loans were in a promotional period requiring no payment of interest on their loans with 91% of these promotional loan periods ending in the second quarter of 2025 through the first quarter of 2026.

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Accrued Interest Receivable

Accrued interest receivable on loans totaled $18.8 million and $16.5 million as of March 31, 2025 and December 31, 2024, respectively, and is included in other assets in the consolidated balance sheets.

Nonaccrual and Past Due Loans

Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Loans are placed on nonaccrual status when, in management’s opinion, the borrower may be unable to meet payment obligations as they become due, as well as when required by regulatory provisions. In determining whether or not a borrower may be unable to meet payment obligations for each class of loans, we consider the borrower’s debt service capacity through the analysis of current financial information, if available, and/or current information with regards to our collateral position. Regulatory provisions would typically require the placement of a loan on nonaccrual status if (i) principal or interest has been in default for a period of 90 days or more unless the loan is both well secured and in the process of collection or (ii) full payment of principal and interest is not expected. Loans may be placed on nonaccrual status regardless of whether or not such loans are considered past due. When interest accrual is discontinued, all unpaid accrued interest is reversed. Interest income on nonaccrual loans is recognized only to the extent that cash payments are received in excess of principal due. A loan may be returned to accrual status when all the principal and interest amounts contractually due are brought current and future principal and interest amounts contractually due are reasonably assured, which is typically evidenced by a sustained period (at least six months) of repayment performance by the borrower.

The following tables present the aging of the recorded investment in past due loans by class of loans held for investment as of March 31, 2025 and December 31, 2024 (in thousands):


	30 - 59		60 - 89		90
	Days		Days		Days		Total		Loans Not		Total
March 31, 2025	Past Due		Past Due		or More		Past Due		Past Due		Loans
Commercial real estate - owner occupied	$	191	$	—	$	1,535	$	1,726	$	475,507	$	477,233
Commercial real estate - non-owner occupied		4,274		69		—		4,343		596,529		600,872
Secured by farmland		—		127		—		127		3,615		3,742
Construction and land development		17		—		—		17		104,284		104,301
Residential 1-4 family		2,051		393		1,538		3,982		572,855		576,837
Multi- family residential		—		567		—		567		156,876		157,443
Home equity lines of credit		181		—		85		266		60,055		60,321
Commercial loans		2,585		37,714		3,080		43,379		654,718		698,097
Paycheck Protection Program loans		—		—		1,713		1,713		25		1,738
Consumer loans		6,242		3,751		219		10,212		347,440		357,652
Total Non-PCD loans		15,541		42,621		8,170		66,332		2,971,904		3,038,236
PCD loans		238		—		—		238		4,874		5,112
Total	$	15,779	$	42,621	$	8,170	$	66,570	$	2,976,778	$	3,043,348

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	30 - 59		60 - 89		90
	Days		Days		Days		Total		Loans Not		Total
December 31, 2024	Past Due		Past Due		or More		Past Due		Past Due		Loans
Commercial real estate - owner occupied	$	456	$	52	$	4,021	$	4,529	$	471,369	$	475,898
Commercial real estate - non-owner occupied		9,539		4,290		—		13,829		596,653		610,482
Secured by farmland		—		—		—		—		3,711		3,711
Construction and land development		12		656		—		668		100,575		101,243
Residential 1-4 family		6,694		318		1,462		8,474		580,385		588,859
Multi- family residential		—		—		—		—		158,426		158,426
Home equity lines of credit		1,098		168		238		1,504		61,450		62,954
Commercial loans		24,101		1,279		1,954		27,334		581,261		608,595
Paycheck Protection Program loans		—		—		1,886		1,886		41		1,927
Consumer loans		6,625		7,013		—		13,638		256,425		270,063
Total Non-PCD loans		48,525		13,776		9,561		71,862		2,810,296		2,882,158
PCD loans		—				—		—		5,289		5,289
Total	$	48,525	$	13,776	$	9,561	$	71,862	$	2,815,585	$	2,887,447

The amortized cost, by class, of loans and leases on nonaccrual status as of March 31, 2025 and December 31, 2024, were as follows (in thousands):


	90 Days			Less Than	Total		Nonaccrual With
	Past Due			90 Days	Nonaccrual		No Credit
March 31, 2025	or More			Past Due	Loans		Loss Allowance
Commercial real estate - owner occupied	$	1,535	$	422	$	1,957	$	632
Commercial real estate - non-owner occupied		—		383		383		384
Secured by farmland		—		352		352		352
Construction and land development		—		125		125		125
Residential 1-4 family		1,538		2,329		3,867		3,800
Home equity lines of credit		85		582		667		666
Commercial loans		3,080		217		3,297		1,043
Consumer loans		219		807		1,026		1,026
Total Non-PCD loans		6,457		5,217		11,674		8,028
PCD loans		—		1,276		1,276		1,276
Total	$	6,457	$	6,493	$	12,950	$	9,304

	90 Days			Less Than	Total		Nonaccrual With
	Past Due			90 Days	Nonaccrual		No Credit
December 31, 2024	or More			Past Due	Loans		Loss Allowance
Commercial real estate - owner occupied	$	4,021	$	431	$	4,452	$	641
Commercial real estate - non-owner occupied		—		393		393		393
Secured by farmland		—		378		378		378
Construction and land development		—		130		130		130
Residential 1-4 family		1,462		2,417		3,879		3,879
Home equity lines of credit		238		542		780		780
Commercial loans		1,954		720		2,674		846
Paycheck Protection Program loans		173		—		173		173
Consumer loans		—		864		864		864
Total Non-PCD loans		7,848		5,875		13,723		8,084
PCD loans		—		1,303		1,303		1,303
Total	$	7,848	$	7,178	$	15,026	$	9,387

There were $1.7 million of Paycheck Protection Program (“PPP”) loans greater than 90 days past due and still accruing as of both March 31, 2025 and December 31, 2024, respectively.

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The following table presents nonaccrual loans as of March 31, 2025 by class and year of origination (in thousands):


															Revolving
															Loans
													Revolving		Converted
	2025		2024		2023		2022		2021		Prior		Loans		To Term		Total
Commercial real estate - owner occupied	$	—	$	—	$	—	$		$	210	$	1,747	$	—	$	—	$	1,957
Commercial real estate - non-owner occupied		—		—		—		—		—		383		—		—		383
Secured by farmland		—		—		—		—		—		352		—		—		352
Construction and land development		—		—		—		—		—		125		—		—		125
Residential 1-4 family		—		156		67		531		—		2,140		296		677		3,867
Home equity lines of credit		—		—		—		—		—		—		652		15		667
Commercial loans		—		32		207		970		383		933		649		123		3,297
Consumer loans		—		—		128		477		397		1		—		23		1,026
Total non-PCD nonaccruals		—		188		402		1,978		990		5,681		1,597		838		11,674
PCD loans		—		—		—		—		—		1,276		—		—		1,276
Total nonaccrual loans	$	—	$	188	$	402	$	1,978	$	990	$	6,957	$	1,597	$	838	$	12,950

Interest received on nonaccrual loans was immaterial for both the three months ended March 31, 2025 and 2024.

Modifications Provided to Borrowers Experiencing Financial Difficulty

The Bank determines that a borrower may be experiencing financial difficulty if the borrower is currently delinquent on any of its debt, or if the Bank is concerned that the borrower may not be able to perform in accordance with the current terms of the loan agreement in the foreseeable future. Many aspects of the borrower’s financial situation are assessed when determining whether they are experiencing financial difficulty, particularly as it relates to commercial borrowers due to the complex nature of the loan structure, business/industry risk and borrower/guarantor structures. Concessions may include the reduction of an interest rate at a rate lower than current market rates for a new loan with similar risk, extension of the maturity date, reduction of accrued interest, or principal forgiveness. When evaluating whether a concession has been granted, the Bank also considers whether the borrower has provided additional collateral or guarantors and whether such additions adequately compensate the Bank for the restructured terms, or if the revised terms are consistent with those currently being offered to new loan customers.

The assessments of whether a borrower is experiencing financial difficulty at the time a concession has been granted is subjective in nature and management’s judgment is required when determining whether the concession results in a modification that is accounted for as a new loan or a continuation of the existing loan under U.S. GAAP.

Although each occurrence is unique to the borrower and is evaluated separately, for all portfolio segments, loans modified as a result of borrowers experiencing financial difficulty are typically modified through reductions in interest rates, reductions in payments, changing the payment terms from principal and interest to interest only, and/or extensions in term maturity.

The allowance for credit losses incorporates an estimate of lifetime expected credit losses and is recorded on each asset upon asset origination or acquisition. The starting point for the estimate of the allowance for credit losses is historical loss information, which includes losses from modifications of receivables to borrowers experiencing financial difficulty. Because the effect of most modifications made to borrowers experiencing financial difficulty is already included in the allowance for credit losses because of the measurement methodologies used to estimate the allowance, a change to the allowance for credit losses is generally not recorded upon modification. Occasionally, the Company modifies certain loans by providing principal forgiveness. When principal forgiveness is provided, the amortized cost basis of the

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loan is written off against the allowance. The amount of the principal forgiveness is deemed to be uncollectible; therefore, that portion of the loan is written off, resulting in a reduction of the amortized cost basis and a corresponding adjustment to the allowance for credit losses.

If it is determined that a modified loan (or portion of a loan) has subsequently been deemed uncollectible, the loan (or a portion of the loan) is written off. At that time, the amortized cost basis of the loan is reduced by the uncollectible amount and the allowance for credit losses is adjusted by the same amount.

The following provides a summary of loans modified to borrowers experiencing financial difficulty as of March 31, 2025, excluding Consumer Program loans ($ in thousands):



	# of		Amortized	%
	Loans		cost	of loan
March 31, 2025	modified		modified	class
Commercial real estate - owner occupied	2	$	405	0.08	%
Commercial real estate - non-owner occupied	2		28,755	4.79	%
Residential 1-4 family	3		257	0.04	%
Home equity lines of credit	2		88	0.15	%
Commercial loans	2		1,206	0.17	%
Consumer loans	5		190	0.05	%
Total	16	$	30,901

All financial difficulty modifications originated prior to the three months ended March 31, 2025, have been paid as agreed in accordance with the modified terms, with the exception of two loans still in modification and one loan returned to contractual payments.

Two loans with a total $55 thousand in amortized cost were modified to borrowers experiencing financial difficulty, representing 0.02% of the other consumer loans segment. One of these two, with $25 thousand in amortized cost was modified to defer payments for three months, followed by six months of reduced payments, resuming original contractual payments July 2, 2025. Total contractual payments, prior to this modification, for three months ended March 31, 2025, would have been $1,632. The other modification, totaling $30 thousand, was granted four months of deferred payments, followed by nine months of reduced payments reamortizing the loan from a five to seven-year term. Total contractual payments, prior to this modification, for three months ended March 31, 2025, would have been $1,173.

Two loans, totaling $126 thousand, representing 0.09% of total revolving 1-4 family and 0.01% of total secured by first lien loans were modified to one borrower experiencing financial difficulty. Payments for both loans were deferred, first of the two with $57 thousand, in amortized cost (and $987 in originally scheduled payments for the first quarter 2025) for three months and the second with $68 thousand in amortized cost (and $2,112 in originally scheduled payments for the first quarter 2025) for six months, with accrued principal and interest added to the back of each note extending their maturity dates accordingly. One loan modification, secured by first liens, with a total $108 thousand in amortized cost and representing 0.02% of this segment, has had three 30–59 day payment delinquencies in the last three months. No payment modifications were made to this first lien loan which retained its original $1,262 monthly payment and 6.68% interest rate for a one-year period. If the interest rate for this loan had been adjusted as scheduled to 7.98%, total contractual payments for the three months ended March 31, 2025, would have totaled $4,572 versus the $3,442 paid. The other modification of $31 thousand in amortized cost resides in revolving 1-4 family and represents 0.01% of the loan pool. This loan was modified from its original 8.5% rate to a fixed 6% for a 5-year term and total contractual payments, prior to modification, for three months ended March 31, 2025, would have been $714.

Two existing financial difficulty modifications with $1.21 million in amortized cost represent 0.23% of the commercial and industrial category. One of these two, with $38 thousand in amortized cost, was modified to $627 in principal payments repaid over 83 months compared to its original $845 payments over 60 months term. The other modification, totaling $12 million was modified under a forbearance agreement, to monthly payments of $8,000 through its June 2026 maturity. Total

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contractual payments, prior to this modification, for the three months ended March 31, 2025, would have been $57 thousand.

During the three months ended March 31, 2025, two loans totaling $28.7 million in amortized cost, in the non-owner-occupied category and representing 4.8% of total non-owner occupied loans, remain modified to borrowers experiencing financial difficulty. The first of the two with $393 thousand in amortized cost was extended at interest only for 18 months This loan was to have been paid in full at its original March 2024 maturity. The second loan modified with $28.4 million in amortized cost was restructured to allow for the extension of its interest only period for an additional 24 months. Prior to this restructure total principal and interest payments, for the three months ended March 31,2025, would have been $16 million compared to the total $263 thousand in interest only payments received.

The following table depicts the amortized cost basis as of March 31, 2025, of the performance of loans that have been modified to borrowers experiencing financial difficulty in the last 12 months and returned to contractual payments ($ in thousands):


	Payment Status

	Current		30-59 days past due		60-89 days past due		90 days or more
Commercial real estate - owner occupied	$	405	$	—	$	—	$	—
Residential 1-4 family		81		—		—
Consumer loans		53		82				—
Total	$	539	$	82	$	—	$	—

Consumer Program modifications

During the three months ended March 31, 2025, the Company began offering modifications to Consumer Program borrowers in an attempt to enhance collections of delinquent loans and mitigate charge-offs. The primary type of modifications were settlements of amounts owed for less than the current outstanding principal balance and term modifications to extend maturity dates. In certain cases, a partial loan settlement occurred with the original maturity extended for the remaining balance that was not settled.

Consumer Program modifications are within the consumer loans category and included 667 loans modified with an amortized cost of $5.7 million during the three months ended March 31, 2025. During the three months ended March 31, 2025, 145 loans with an amortized cost of $1.8 million were provided only a term extension. During the three months ended March 31, 2025, 50 loans with an amortized cost of $0.5 million were provided a modification that allowed partial settlement of principal owed of $0.1 million with the remaining principal maturity date extended. The average term modification provided on the aggregate population of loans that received a term extension was 3.3 years and if these terms modifications had not been provided the balance of principal and interest due during the three months ended March 31, 2025 would have been $0.3 million, instead of $0.1 million actually collected during the period on these modified loans. During the three months ended March 31, 2025, 472 loans with an amortized cost of $3.4 million were provided a modification that allowed for partial or full settlement of their principal balance outstanding. All loans that were provided modifications during the three months ended March 31, 2025 were performing under their modified terms as of March 31, 2025.

Credit Quality Indicators

Through its system of internal controls, Primis evaluates and segments loan portfolio credit quality using regulatory definitions for Special Mention, Substandard and Doubtful. Special Mention loans are considered to be criticized. Substandard and Doubtful loans are considered to be classified.

Special Mention loans are loans that have a potential weakness that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position.

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Substandard loans may be inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful loans have all the weaknesses inherent in those classified as Substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable or improbable. Primis had no loans classified as Doubtful as of March 31, 2025 or December 31, 2024.

In monitoring credit quality trends in the context of assessing the appropriate level of the allowance for credit losses on loans, we monitor portfolio credit quality by the weighted-average risk grade of each class of loan.

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The following table presents weighted-average risk grades for all loans, by class and year of origination/renewal as of March 31, 2025 (in thousands):


															Revolving
															Loans
														Revolving	Converted
	2025		2024		2023		2022		2021		Prior		Loans		To Term		Total
Commercial real estate - owner occupied
Pass	$	15,725	$	43,749	$	63,207	$	79,361	$	59,956	$	198,577	$	1,174	$	8,215	$	469,964
Special Mention		—		—		—		—		—		3,179		—		—		3,179
Substandard		—		—		—		—		210		3,880		—		—		4,090
Doubtful		—		—		—		—		—		—		—		—		—
	$	15,725	$	43,749	$	63,207	$	79,361	$	60,166	$	205,636	$	1,174	$	8,215	$	477,233
Current period gross charge offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Weighted average risk grade		3.22		3.24		3.52		3.41		3.43		3.45		3.66		3.74		3.43
Commercial real estate - nonowner occupied
Pass	$	1,189	$	21,884	$	37,413	$	55,565	$	113,996	$	333,171	$	3,221	$	3,207	$	569,646
Special Mention		—		—		—		—		—		2,569		—		—		2,569
Substandard		—		—		—		—		28,372		285		—		—		28,657
Doubtful		—		—		—		—		—		—		—		—		—
	$	1,189	$	21,884	$	37,413	$	55,565	$	142,368	$	336,025	$	3,221	$	3,207	$	600,872
Current period gross charge offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Weighted average risk grade		3.00		3.72		3.55		3.17		4.16		3.71		3.11		2.91		3.75
Secured by farmland
Pass	$	224	$	203	$	68	$	—	$	2	$	2,334	$	463	$	96	$	3,390
Special Mention		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		352		—		—		352
Doubtful		—		—		—		—		—		—		—		—		—
	$	224	$	203	$	68	$	—	$	2	$	2,686	$	463	$	96	$	3,742
Current period gross charge offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Weighted average risk grade		4.00		—		3.00		N/A		—		4.25		3.99		3.04		4.14
Construction and land development
Pass	$	2,556	$	30,750	$	22,009	$	36,271	$	3,692	$	7,520	$	980	$	—	$	103,778
Special Mention		—		—		—		—		—		(5)		—		—		(5)
Substandard		—		—		—		—		—		528		—		—		528
Doubtful		—		—		—		—		—		—		—		—		—
	$	2,556	$	30,750	$	22,009	$	36,271	$	3,692	$	8,043	$	980	$	—	$	104,301
Current period gross charge offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Weighted average risk grade		3.04		3.02		3.92		3.68		3.03		3.52		3.30		N/A		3.48
Residential 1-4 family
Pass	$	5,117	$	30,289	$	31,581	$	155,652	$	132,873	$	207,133	$	6,300	$	2,865	$	571,810
Special Mention		—		—		—		—		—		603		—		—		603
Substandard		—		159		67		531		—		2,695		295		677		4,424
Doubtful		—		—		—		—		—		—		—		—		—
	$	5,117	$	30,448	$	31,648	$	156,183	$	132,873	$	210,431	$	6,595	$	3,542	$	576,837
Current period gross charge offs	$	—	$	—	$	—	$	—	$	—	$		$	—	$	—	$	—
Weighted average risk grade		3.03		3.09		3.09		3.09		3.04		3.19		3.73		3.96		3.12
Multi- family residential
Pass	$	—	$	1,338	$	448	$	21,632	$	23,584	$	85,796	$	4,865	$	549	$	138,212
Special Mention		—		—		—		—		18,387		—		—		—		18,387
Substandard		—		—		—		—		—		567		—		277		844
Doubtful		—		—		—		—		—		—		—		—		—
	$	—	$	1,338	$	448	$	21,632	$	41,971	$	86,363	$	4,865	$	826	$	157,443
Current period gross charge offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Weighted average risk grade		N/A		4.00		3.00		3.17		3.88		3.42		4.00		4.67		3.53
Home equity lines of credit
Pass	$	—	$	243	$	430	$	378	$	468	$	504	$	56,813	$	116	$	58,952
Special Mention		—		—		—		—		—		(1)		32		—		31
Substandard		—		—		—		—		—		(2)		707		633		1,338
Doubtful		—		—		—		—		—		—		—		—		—
	$	—	$	243	$	430	$	378	$	468	$	501	$	57,552	$	749	$	60,321
Current period gross charge offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Weighted average risk grade		3.00		3.00		3.00		3.00		3.00		3.13		3.07		5.60		3.10
Commercial loans
Pass	$	49,566	$	208,459	$	79,078	$	168,996	$	31,150	$	25,386	$	100,032	$	6,627	$	669,294
Special Mention		—		—		—		841		—		1		12		946		1,800
Substandard		—		33		211		22,379		383		1,127		2,747		123		27,003
Doubtful		—		—		—		—		—		—		—		—		—
	$	49,566	$	208,492	$	79,289	$	192,216	$	31,533	$	26,514	$	102,791	$	7,696	$	698,097
Current period gross charge offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	33	$	33
Weighted average risk grade		3.11		3.13		3.35		3.39		3.83		3.40		3.41		3.90		3.32

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															Revolving
															Loans
														Revolving	Converted
	2025		2024		2023		2022		2021		Prior		Loans		To Term		Total
Paycheck Protection Program loans
Pass	$	—	$	—	$	—	$	—	$	863	$	875	$	—	$	—	$	1,738
Special Mention		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—		—
	$	—	$	—	$	—	$	—	$	863	$	875	$	—	$	—	$	1,738
Current period gross charge offs	$	—	$	—	$	—	$	—	$	173	$	—	$	—	$	—	$	173
Weighted average risk grade		N/A		N/A		N/A		N/A		2.00		2.00		N/A		N/A		2.00
Consumer loans
Pass	$	2,382	$	140,594	$	16,705	$	165,172	$	20,383	$	3,367	$	7,293	$	602	$	356,498
Special Mention		—		—		4		29		—		35		—		—		68
Substandard		—		—		126		517		418		2		—		23		1,086
Doubtful		—		—		—		—		—		—		—		—		—
	$	2,382	$	140,594	$	16,835	$	165,718	$	20,801	$	3,404	$	7,293	$	625	$	357,652
Current period gross charge offs	$	480	$	3,043	$	10,439	$	157	$	—	$		$	9	$	—	$	14,128
Weighted average risk grade		4.00		4.00		3.22		2.77		3.25		6.12		2.45		4.07		3.34
PCD
Pass	$	—	$	—	$	—	$	—	$	—	$	1,836	$	—	$	—	$	1,836
Special Mention		—		—		—		—		—		1,866		—		—		1,866
Substandard		—		—		—		—		—		1,410		—		—		1,410
Doubtful		—		—		—		—		—		—		—		—		—
	$	—	$	—	$	—	$	—	$	—	$	5,112	$	—	$	—	$	5,112
Current period gross charge offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Weighted average risk grade		N/A		N/A		N/A		N/A		N/A		4.82		N/A		N/A		4.82
Total	$	76,759	$	477,701	$	251,347	$	707,324	$	434,737	$	885,590	$	184,934	$	24,956	$	3,043,348
Current period gross charge offs	$	480	$	3,043	$	10,439	$	157	$	173	$	—	$	9	$	33	$	14,334
Weighted average risk grade		3.15		3.42		3.43		3.17		3.60		3.50		3.29		3.80		3.40

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The following table presents weighted-average risk grades for all loans, by class and year of origination/renewal as of December 31, 2024 (in thousands):



															Revolving
															Loans
														Revolving	Converted
	2024		2023		2022		2021		2020		Prior		Loans		To Term		Total
Commercial real estate - owner occupied
Pass	$	41,807	$	58,979	$	79,927	$	65,362	$	14,830	$	193,528	$	1,623	$	9,280	$	465,336
Special Mention		—		—		—		—		—		3,960		—		—		3,960
Substandard		—		—		—		210		—		6,392		—		—		6,602
Doubtful		—		—		—		—		—		—		—		—		—
	$	41,807	$	58,979	$	79,927	$	65,572	$	14,830	$	203,880	$	1,623	$	9,280	$	475,898
Current period gross charge offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Weighted average risk grade		3.24		3.53		3.42		3.39		3.17		3.51		3.34		3.76		3.44
Commercial real estate - nonowner occupied
Pass	$	21,857	$	37,292	$	56,104	$	117,439	$	45,057	$	295,756	$	2,486	$	3,216	$	579,207
Special Mention		—		—		—		—		—		2,904		—		—		2,904
Substandard		—		—		—		28,371		—		—		—		—		28,371
Doubtful		—		—		—		—		—		—		—		—		—
	$	21,857	$	37,292	$	56,104	$	145,810	$	45,057	$	298,660	$	2,486	$	3,216	$	610,482
Current period gross charge offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Weighted average risk grade		3.72		3.55		3.17		4.13		3.84		3.68		3.14		2.91		3.74
Secured by farmland
Pass	$	270	$	68	$	—	$	4	$	76	$	2,408	$	400	$	107	$	3,333
Special Mention		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		378		—		—		378
Doubtful		—		—		—		—		—		—		—		—		—
	$	270	$	68	$	—	$	4	$	76	$	2,786	$	400	$	107	$	3,711
Current period gross charge offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Weighted average risk grade		4.00		—		N/A		4.00		N/A		4.26		3.89		3.06		4.14
Construction and land development
Pass	$	28,796	$	22,554	$	36,762	$	3,957	$	(1)	$	8,224	$	821	$	—	$	101,113
Special Mention		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		130		—		—		130
Doubtful		—		—		—		—		—		—		—		—		—
	$	28,796	$	22,554	$	36,762	$	3,957	$	(1)	$	8,354	$	821	$	—	$	101,243
Current period gross charge offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Weighted average risk grade		3.01		3.73		3.69		3.10		3.00		3.42		3.36		N/A		3.46
Residential 1-4 family
Pass	$	32,866	$	33,350	$	161,816	$	134,244	$	37,927	$	174,569	$	6,054	$	2,985	$	583,811
Special Mention		—		—		—		—		—		605		—		—		605
Substandard		159		263		542		—		—		2,680		262		537		4,443
Doubtful		—		—		—		—		—		—		—		—		—
	$	33,025	$	33,613	$	162,358	$	134,244	$	37,927	$	177,854	$	6,316	$	3,522	$	588,859
Current period gross charge offs	$	—	$	—	$	—	$	—	$	—	$	8	$	—	$	—	$	8
Weighted average risk grade		3.13		3.11		3.09		3.04		3.07		3.20		3.74		3.85		3.12
Multi- family residential
Pass	$	1,356	$	451	$	21,692	$	23,703	$	17,147	$	69,360	$	4,863	$	564	$	139,136
Special Mention		—		—		—		18,438		—		—		—		—		18,438
Substandard		—		—		—		—		—		573		—		279		852
Doubtful		—		—		—		—		—		—		—		—		—
	$	1,356	$	451	$	21,692	$	42,141	$	17,147	$	69,933	$	4,863	$	843	$	158,426
Current period gross charge offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Weighted average risk grade		N/A		3.00		3.17		3.88		3.91		3.30		4.00		4.66		3.53
Home equity lines of credit
Pass	$	211	$	428	$	348	$	458	$	44	$	3,017	$	56,813	$	140	$	61,459
Special Mention		—		—		—		—		—		(1)		32		—		31
Substandard		—		—		—		—		—		11		812		641		1,464
Doubtful		—		—		—		—		—		—		—		—		—
	$	211	$	428	$	348	$	458	$	44	$	3,027	$	57,657	$	781	$	62,954
Current period gross charge offs	$	—	$	—	$	—	$	—	$	—	$	—	$	9	$	—	$	9
Weighted average risk grade		3.00		3.00		3.00		3.00		3.00		3.90		3.08		5.53		3.15
Commercial loans
Pass	$	152,489	$	85,049	$	179,070	$	32,374	$	4,125	$	22,008	$	97,721	$	6,781	$	579,617
Special Mention		—		—		1,276		—		—		1		1,127		—		2,404
Substandard		31		4		21,967		383		169		1,108		2,782		130		26,574
Doubtful		—		—		—		—		—		—		—		—		—
	$	152,520	$	85,053	$	202,313	$	32,757	$	4,294	$	23,117	$	101,630	$	6,911	$	608,595
Current period gross charge offs	$	—	$	383	$	—	$	—	$	—	$	196	$	347	$	—	$	926
Weighted average risk grade		3.21		3.35		3.40		3.83		3.34		3.42		3.44		3.75		3.38

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															Revolving
															Loans
														Revolving	Converted
	2024		2023		2022		2021		2020		Prior		Loans		To Term		Total
Paycheck Protection Program loans
Pass	$	—	$	—	$	—	$	870	$	884	$	—	$	—	$	—	$	1,754
Special Mention		—		—		—		173		—		—		—		—		173
Substandard		—		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—		—
	$	—	$	—	$	—	$	1,043	$	884	$	—	$	—	$	—	$	1,927
Current period gross charge offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Weighted average risk grade		N/A		N/A		N/A		2.66		2.00		N/A		N/A		N/A		2.36
Consumer loans
Pass	$	51,194	$	17,987	$	166,307	$	21,621	$	537	$	3,044	$	7,718	$	637	$	269,045
Special Mention		—		4		59		—		—		41		—		—		104
Substandard		2		40		447		398		—		2		—		25		914
Doubtful		—		—		—		—		—		—		—		—		—
	$	51,196	$	18,031	$	166,813	$	22,019	$	537	$	3,087	$	7,718	$	662	$	270,063
Current period gross charge offs	$	19,199	$	9,777	$	19,790	$	1,293	$	—	$	33	$	—	$	—	$	50,092
Weighted average risk grade		4.27		3.37		2.88		3.29		4.00		4.01		2.46		N/A		3.22
PCD
Pass	$	—	$	—	$	—	$	—	$	—	$	1,890	$	—	$	—	$	1,890
Special Mention		—		—		—		—		—		1,960		—		—		1,960
Substandard		—		—		—		—		—		1,439		—		—		1,439
Doubtful		—		—		—		—		—		—		—		—		—
	$	—	$	—	$	—	$	—	$	—	$	5,289	$	—	$	—	$	5,289
Current period gross charge offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Weighted average risk grade		N/A		N/A		N/A		N/A		N/A		4.81		N/A		N/A		4.81
Total	$	331,038	$	256,469	$	726,317	$	448,005	$	120,795	$	795,987	$	183,514	$	25,322	$	2,887,447
Current period gross charge offs	$	19,199	$	10,160	$	19,790	$	1,293	$	—	$	237	$	356	$	—	$	51,035
Weighted average risk grade		3.29		3.41		3.17		3.59		3.50		3.49		3.31		3.75		3.39

Revolving loans that converted to term during the three months ended March 31, 2025 and 2024 were as follows (in thousands):


	For the three months ended March 31, 2025		For the three months ended March 31, 2024
Commercial real estate - non-owner occupied	$	16	$	—
Residential 1-4 family		167		—
Commercial loans		946		71
Consumer loans		—		11
Total loans	$	1,129	$	82

There were no foreclosed residential real estate property held or in the process of foreclosure as of both March 31, 2025 and December 31, 2024.

Allowance For Credit Losses – Loans

The allowance for credit losses on loans is a contra-asset valuation account, calculated in accordance with ASC 326 that is deducted from the amortized cost basis of loans to present the net amount expected to be collected. The amount of the allowance represents management's best estimate of current expected credit losses on loans considering available information, from internal and external sources, relevant to assessing collectability over the loans' contractual terms, adjusted for expected prepayments when appropriate. The accounting policy related to the allowance for credit losses is considered a critical policy given the level of estimation, judgment, and uncertainty in the levels of the allowance required to account for the expected losses in the loan portfolio and the material effect such estimation, judgment, and uncertainty can have on the consolidated financial results.

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In calculating the allowance for credit losses, most loans are segmented into pools based upon similar characteristics and risk profiles. For allowance modeling purposes, our loan pools include but are not limited to (i) commercial real estate - owner occupied, (ii) commercial real estate - non-owner occupied, (iii) construction and land development, (iv) commercial, (v) agricultural loans, (vi) residential 1-4 family and (vii) consumer loans. We periodically reassess each pool to ensure the loans within the pool continue to share similar characteristics and risk profiles and to determine whether further segmentation is necessary. For each loan pool, we measure expected credit losses over the life of each loan utilizing a combination of inputs: (i) probability of default, (ii) probability of attrition, (iii) loss given default and (iv) exposure at default. Internal data is supplemented by, but not replaced by, peer data when required, primarily to determine the probability of default input. The various pool-specific inputs may be adjusted for current macroeconomic assumptions. Significant macroeconomic variables utilized in our allowance models include, among other things, (i) Virginia Gross Domestic Product, (ii) Virginia House Price Index, and (iii) Virginia unemployment rates.

Management qualitatively adjusts allowance model results for risk factors that are not considered within our quantitative modeling processes but are nonetheless relevant in assessing the expected credit losses within our loan pools. Qualitative factor (“Q-Factor”) adjustments are driven by key risk indicators that management tracks on a pool-by-pool basis.

In some cases, management may determine that an individual loan exhibits unique risk characteristics which differentiate the loan from other loans within our loan pools. In such cases, the loans are evaluated for expected credit losses on an individual basis and excluded from the collective evaluation.

The following tables present details of the allowance for credit losses on loans segregated by loan portfolio segment as of March 31, 2025 and December 31, 2024, calculated in accordance with ASC 326 (in thousands).


	Commercial		Commercial										Home
	Real Estate		Real Estate				Construction						Equity
	Owner		Non-owner		Secured by		and Land		1-4 Family		Multi-Family		Lines Of		Commercial		Consumer		PCD
March 31, 2025	Occupied		Occupied		Farmland		Development		Residential		Residential		Credit		Loans		Loans		Loans		Total
Modeled expected credit losses	$	5,010		4,148		1		929		6,123		840		439		4,211		5,087		—		26,788
Q-factor and other qualitative adjustments		353		692		21		158		347		648		20		681		274		—		3,194
Specific allocations		334		2,072		—		—		67		—		—		6,207		5,139		220		14,039
Total	$	5,697	$	6,912	$	22	$	1,087	$	6,537	$	1,488	$	459	$	11,099	$	10,500	$	220	$	44,021

	Commercial		Commercial										Home
	Real Estate		Real Estate				Construction						Equity
	Owner		Non-owner		Secured by		and Land		1-4 Family		Multi-Family		Lines Of		Commercial		Consumer		PCD
December 31, 2024	Occupied		Occupied		Farmland		Development		Residential		Residential		Credit		Loans		Loans		Loans		Total
Modeled expected credit losses	$	4,623		4,194		1		1,045		6,423		971		511		4,062		3,932		—		25,762
Q-factor and other qualitative adjustments		321		698		19		158		396		649		22		694		362		—		3,319
Specific allocations		955		2,074		—		—		—		—		—		6,038		15,331		245		24,643
Total	$	5,899	$	6,966	$	20	$	1,203	$	6,819	$	1,620	$	533	$	10,794	$	19,625	$	245	$	53,724

No allowance for credit losses has been recognized for PPP loans as such loans are fully guaranteed by the SBA.

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Activity in the allowance for credit losses by class of loan for the three months ended March 31, 2025 and 2024 is summarized below (in thousands):


	Commercial		Commercial
	Real Estate		Real Estate				Construction						Home Equity
	Owner		Non-owner		Secured by		and Land		1-4 Family		Multi-Family		Lines Of		Commercial		Consumer		PCD
Three Months Ended March 31, 2025	Occupied		Occupied		Farmland		Development		Residential		Residential		Credit		Loans		Loans		Loans		Total
Allowance for credit losses:
Beginning balance	$	5,899	$	6,966	$	20	$	1,203	$	6,819	$	1,620	$	533	$	10,794	$	19,625	$	245	$	53,724
Provision (recovery)		(202)		(54)		2		(116)		(282)		(132)		(75)		511		1,969		(25)		1,596
Charge offs		—		—		—		—		—		—		—		(206)		(14,128)		—		(14,334)
Recoveries		—		—		—		—		—		—		1		—		3,034		—		3,035
Ending balance	$	5,697	$	6,912	$	22	$	1,087	$	6,537	$	1,488	$	459	$	11,099	$	10,500	$	220	$	44,021

Three Months Ended March 31, 2024
Allowance for credit losses:
Beginning balance	$	4,255	$	5,822	$	31	$	1,129	$	4,938	$	1,590	$	364	$	6,320	$	26,088	$	1,672	$	52,209
Provision (recovery)		308		(158)		(5)		67		169		(49)		(18)		953		5,249		(8)		6,508
Charge offs		—		—		—		—		—		—		—		(347)		(5,032)		—		(5,379)
Recoveries		—		—		—		—		—		—		2		—		116		—		118
Ending balance	$	4,563	$	5,664	$	26	$	1,196	$	5,107	$	1,541	$	348	$	6,926	$	26,421	$	1,664	$	53,456

Generally, a commercial loan, or a portion thereof, is charged-off when it is determined, through the analysis of any available current financial information with regards to the borrower, that the borrower is incapable of servicing unsecured debt, there is little or no prospect for near term improvement and no realistic strengthening action of significance is pending or, in the case of secured debt, when it is determined, through analysis of current information with regards to our collateral position, that amounts due from the borrower are in excess of the calculated current fair value of the collateral. Losses on installment loans are recognized in accordance with regulatory guidelines. All other consumer loan losses are recognized when delinquency exceeds 120 cumulative days with the exception of the Consumer Program loans that are charged-off once they become 90 days past due.

The following table presents the principal balance of loans that were evaluated for expected credit losses on an individual basis and the related specific allocations, by loan portfolio segment as of March 31, 2025 and December 31, 2024 (in thousands):


	March 31, 2025				December 31, 2024
	Loan		Specific		Loan		Specific
	Balance		Allocations		Balance		Allocations
Commercial real estate - owner occupied	$	3,759	$	334	$	6,266	$	955
Commercial real estate - non-owner occupied		28,755		2,072		28,764		2,074
Secured by farmland		352		—		378		—
Construction and land development		403		—		—		—
Residential 1-4 family		2,044		67		2,268		—
Multi- family residential		844		—		852		—
Home equity lines of credit		618		—		628		—
Commercial loans		26,348		6,207		25,947		6,038
Consumer loans ⁽¹⁾		43,779		5,139		22,885		15,331
Total non-PCD loans		106,902		13,819		87,988		24,398
PCD loans		5,112		220		5,289		245
Total loans	$	112,014	$	14,039	$	93,277	$	24,643

⁽¹⁾In addition to the specific allocations as of March 31, 2025, there is $11.4 million of discount due to prior charge-offs of the outstanding principal balance of Consumer Program loans.

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The following table presents a breakdown between loans at amortized cost that were evaluated on an individual basis and identified as collateral dependent loans and non-collateral dependent loans, by loan portfolio segment and their collateral value as of March 31, 2025 and December 31, 2024 (in thousands):


	March 31, 2025				December 31, 2024
			Non				Non
	Collateral		Collateral		Collateral		Collateral
	Dependent		Dependent		Dependent		Dependent
	Assets ⁽¹⁾		Assets ⁽¹⁾		Assets ⁽¹⁾		Assets ⁽¹⁾
Commercial real estate - owner occupied	$	3,545	$	—	$	4,229	$	—
Commercial real estate - non-owner occupied		30,100		—		30,130		—
Secured by farmland		1,192		—		1,277		—
Construction and land development		405		—		—		—
Residential 1-4 family		2,801		—		3,038		—
Multi- family residential		856		—		857		—
Home equity lines of credit		622		—		635		—
Commercial loans		26,576		—		26,424		—
Total loans	$	66,097	$	—	$	66,590	$	—

Collateral value	$	74,134	$	—	$	75,375	$	—

⁽¹⁾ Loan balances include PCD loans and are presented net of SBA guarantees

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4. DERIVATIVES

Consumer Program Derivative

The Company has a derivative instrument in connection with its agreement with a third-party that originates loans that are held on the Company’s balance sheet. The third-party provides credit support and reimbursement for lost interest under the agreement and the Company provides performance fees to the third-party on performing loans. Specifically, a portion of the originated loans are originated with a promotional period where interest accrues on the loans but is not owed to the Company unless and until the loan begins to amortize. If the borrower prepays the principal on the loan prior to the end of the promotional period the accrued interest is waived, but becomes due to the Company from the third-party under the agreement. This expected payment of waived interest to the Company along with performance fees due to the third-party comprise the value of the derivative. The fair value of the derivative instrument was an asset of $1.6 million and $4.5 million as of March 31, 2025 and December 31, 2024, respectively. The underlying cash flows were $1.5 million and $4.8 million as of March 31, 2025 and December 31, 2024, respectively. The Company calculates the fair value of this derivative using a discounted cash flow model using inputs that are inherently judgmental and reflect management’s best estimates of the assumptions a market participant would use to calculate the fair value. The most significant inputs and assumptions in determining the value of the derivative are noted below ($ in thousands).


	March 31, 2025
					Weighted
	Low		High		Average
Remaining cumulative charge-offs	$	29,815	$	42,919		n/a
Remaining cumulative promotional prepayments ⁽¹⁾	$	8,101	$	14,587	$	10,226
Average life (years)		n/a		n/a		0.7
Discount rate		4.06%		15.07%		15.07%

	December 31, 2024
					Weighted
	Low		High		Average
Remaining cumulative charge-offs	$	28,387	$	41,994		n/a
Remaining cumulative promotional prepayments ⁽¹⁾	$	24,322	$	53,661	$	34,366
Average life (years)		n/a		n/a		0.5
Discount rate		4.28%		14.39%		14.39%

(1)

Reflects principal amount expected to prepay.

Mortgage Banking Derivatives and Financial Instruments

The Company enters into IRLCs (“interest rate lock commitments”) to originate residential mortgage loans held for sale, at specified interest rates and within a specified period of time (generally between 30 and 90 days), with borrowers who have applied for a loan and have met certain credit and underwriting criteria. The IRLCs are adjusted for estimated costs to originate the loan as well as the probability that the mortgage loan will fund within the terms of the IRLC (the pullthrough rate). Estimated costs to originate include loan officer commissions and overrides. The pullthrough rate is estimated on changes in market conditions, loan stage, and actual borrower behavior using a historical analysis of IRLC closing rates. The Company obtains an analysis from a third party on a monthly basis to support the reasonableness of the pullthrough estimate.

Best efforts and mandatory forward loan sale commitments are commitments to sell individual mortgage loans using both best efforts and mandatory delivery at a fixed price to an investor at a future date. Forward loan sale commitments that are mandatory delivery are accounted for as derivatives and carried at fair value, determined as the amount that would

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be necessary to settle the derivative financial instrument at the balance sheet date. Forward loan sale commitments that are best efforts are not derivatives but can be and have been accounted for at fair value, determined in a similar manner to those that are mandatory delivery. Forward loan sale commitments are recorded on the balance sheet as derivative assets and derivative liabilities with changes in their fair values recorded in mortgage banking income in the statement of operations.

The key unobservable inputs used in determining the fair value of IRLCs are as follows as of March 31, 2025 and December 31, 2024:


	March 31, 2025		December 31, 2024
Average pullthrough rates	82.95	%	89.19	%
Average costs to originate	1.35	%	1.31	%

The following summarizes derivative and non-derivative financial instruments as of March 31, 2025 and December 31, 2024:


	March 31, 2025
	Fair		Notional
Derivative financial instruments:	Value		Amount
Derivative assets ⁽¹⁾	$	1,415	$	60,165
Derivative liabilities	$	—	$	—
⁽¹⁾Pullthrough rate adjusted
	March 31, 2025
	Fair		Notional
Non-derivative financial instruments:	Value		Amount
Best efforts assets	$	194	$	13,815

	December 31, 2024
	Fair		Notional
Derivative financial instruments:	Value		Amount
Derivative assets ⁽¹⁾	$	1,000	$	34,593
Derivative liabilities	$	—	$	—
⁽¹⁾Pullthrough rate adjusted
	December 31, 2024
	Fair		Notional
Non-derivative financial instruments:	Value		Amount
Best efforts assets	$	82	$	6,352

The notional amounts of mortgage loans held for sale not committed to investors was $51.6 million and $54.7 million as of March 31, 2025 and December 31, 2024, respectively.

The Company has exposure to credit loss in the event of contractual non-performance by its trading counterparties in derivative instruments that the Company uses in its rate risk management activities. The Company manages this credit risk by selecting only counterparties that the Company believes to be financially strong, spreading the risk among multiple counterparties, by placing contractual limits on the amount of unsecured credit extended to any single counterparty and by entering into netting agreements with counterparties, as appropriate.

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5. FAIR VALUE

ASC 820 establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data

Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability

Assets and liabilities measured at fair value on a recurring basis are summarized below:


			Fair Value Measurements Using
					Significant
			Quoted Prices in		Other		Significant
			Active Markets for		Observable		Unobservable
	Total at		Identical Assets		Inputs		Inputs
(dollars in thousands)	March 31, 2025		(Level 1)		(Level 2)		(Level 3)
Assets:
Available-for-sale securities
Residential government-sponsored mortgage-backed securities	$	93,082	$	—	$	93,082	$	—
Obligations of states and political subdivisions		29,735		—		29,735		—
Corporate securities		15,338		—		15,338		—
Residential government-sponsored collateralized mortgage obligations		59,876		—		59,876		—
Government-sponsored agency securities		14,213		—		14,213		—
Agency commercial mortgage-backed securities		22,286		—		22,286		—
SBA pool securities		7,108		—		7,108		—
		241,638		—		241,638		—
Loans held for investment		249,788		—		249,788		—
Loans held for sale, at fair value		74,439		—		74,439		—
Consumer Program derivative		1,597		—		—		1,597
Mortgage banking financial assets		194		—		—		194
Mortgage banking derivative assets		1,415		—		—		1,415
Interest rate swaps, net		151		—		151		—
Investment in Panacea Financial Holdings, Inc. common stock ⁽¹⁾		21,227		—		—		21,227
Total assets	$	590,449	$	—	$	565,865	$	24,433

(1)

Inputs and assumptions utilized in determining the fair value are discussed in “PFH Deconsolidation” in footnote 1, Accounting Policies.

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			Fair Value Measurements Using
					Significant
			Quoted Prices in		Other		Significant
			Active Markets for		Observable		Unobservable
	Total at		Identical Assets		Inputs		Inputs
(dollars in thousands)	December 31, 2024		(Level 1)		(Level 2)		(Level 3)
Assets:
Available-for-sale securities
Residential government-sponsored mortgage-backed securities	$	91,407	$	—	$	91,407	$	—
Obligations of states and political subdivisions		29,705		—		29,705		—
Corporate securities		15,080		—		15,080		—
Residential government-sponsored collateralized mortgage obligations		56,390		—		56,390		—
Government-sponsored agency securities		13,836		—		13,836		—
Agency commercial mortgage-backed securities		22,178		—		22,178		—
SBA pool securities		7,307		—		7,307		—
		235,903		—		235,903		—
Loans held for investment		249,190		—		249,190		—
Loans held for sale, at fair value		83,276		—		83,276		—
Consumer Program derivative		4,511		—		—		4,511
Mortgage banking financial assets		82		—		—		82
Mortgage banking derivative assets		1,000		—		—		1,000
Total assets	$	573,962	$	—	$	568,369	$	5,593

Assets measured at fair value on a non-recurring basis are summarized below:

Fair Value Measurements Using

Significant

Quoted Prices in

Other

Significant

Active Markets for

Observable

Unobservable

Total at

Identical Assets

Inputs

(dollars in thousands)

March 31, 2025

(Level 1)

(Level 2)

(Level 3)

Collateral dependent loans

66,097

—

66,097

Assets held for sale

2,420

—

2,420


			Fair Value Measurements Using
					Significant
			Quoted Prices in		Other		Significant
			Active Markets for		Observable		Unobservable
	Total at		Identical Assets		Inputs		Inputs
(dollars in thousands)	December 31, 2024		(Level 1)		(Level 2)		(Level 3)
Collateral dependent loans	$	66,590	$	—	$	—	$	66,590
Loans held for sale, at lower of cost or market		163,832		50,662		113,170		—
Assets held for sale		5,497		—		—		5,497

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Fair Value of Financial Instruments

The carrying amount, estimated fair values and fair value hierarchy levels of financial instruments were as follows (in thousands) for the periods indicated:


		March 31, 2025				December 31, 2024
	Fair Value	Carrying		Fair		Carrying		Fair
	Hierarchy Level	Amount		Value		Amount		Value
Financial assets:
Cash and cash equivalents	Level 1	$	57,044	$	57,044	$	64,505	$	64,505
Securities available-for-sale	Level 2		241,638		241,638		235,903		235,903
Securities held-to-maturity	Level 2		9,153		8,445		9,448		8,602
Stock in Federal Reserve Bank and Federal Home Loan Bank	Level 2		12,983		12,983		13,037		13,037
Preferred investment in mortgage company	Level 2		3,005		3,005		3,005		3,005
Net loans	Level 2 and 3		2,999,327		2,866,310		2,833,723		2,564,623
Loans held for sale	Level 2		74,439		74,439		83,276		83,276
Loans held for sale, at lower of cost or market	Level 3		—		—		163,832		163,832
Consumer Program derivative	Level 3		1,597		1,597		4,511		4,511
Mortgage banking financial assets	Level 3		194		194		82		82
Mortgage banking derivative assets	Level 3		1,415		1,415		1,000		1,000
Interest rate swaps, net	Level 2		151		151		752		752
Investment in Panacea Financial Holdings, Inc. common stock	Level 3		21,227		21,227		—		—
Financial liabilities:
Demand deposits and NOW accounts	Level 2	$	1,275,374	$	1,275,374	$	1,256,632	$	1,256,632
Money market and savings accounts	Level 2		1,563,288		1,563,288		1,574,225		1,574,225
Time deposits	Level 3		330,210		329,591		340,178		339,767
Securities sold under agreements to repurchase	Level 1		4,019		4,019		3,918		3,918
Junior subordinated debt	Level 2		9,892		8,992		9,880		9,016
Senior subordinated notes	Level 2		86,057		86,302		85,998		85,987
Secured borrowings	Level 3		16,729		16,729		17,195		17,195

Carrying amount is the estimated fair value for cash and cash equivalents, loans held for sale, mortgage banking financial assets and liabilities, mortgage banking derivative assets and liabilities, Consumer Program derivative, interest rate swaps, demand deposits and NOW accounts, savings accounts, money market accounts, FHLB advances, secured borrowings and securities sold under agreements to repurchase.

Fair value of junior subordinated debt and senior subordinated notes are based on current rates for similar financing. Carrying amount of Federal Reserve Bank and FHLB stock is a reasonable estimate of fair value as these securities are not readily marketable and are based on the ultimate recoverability of the par value. The fair value of off-balance-sheet items is not considered material. Fair value of net loans, time deposits, junior subordinated debt, and senior subordinated notes are measured using the exit-price notion. The net loans that use level 2 inputs are related to the portfolio of loans underlying our interest rate swaps as previously discussed in “Note 1 – Accounting Policies”.

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6. LEASES

The Company leases certain premises under operating leases. In recognizing lease right-of-use assets and related liabilities, we account for lease and non-lease components (such as taxes, insurance, and common area maintenance costs) separately as such amounts are generally readily determinable under our lease contracts. As of March 31, 2025 and December 31, 2024, the Company had operating lease liabilities totaling $11.6 million, and right-of-use assets totaling $10.4 million and $10.3 million, respectively, reflected in our condensed consolidated balance sheets related to these leases. We do not currently have any financing leases. For the three months ended March 31, 2025 and 2024, our net operating lease costs were $0.6 million. These net operating lease costs are reflected in occupancy expenses on our condensed consolidated statements of income.

The following table presents other information related to our operating leases:


	For the Three Months Ended
	March 31, 2025			March 31, 2024
Other information:
Weighted-average remaining lease term - operating leases, in years		5.9			7.1
Weighted-average discount rate - operating leases		4.0	%		4.0	%

The following table summarizes the maturity of remaining lease liabilities:



	As of
(dollars in thousands)	March 31, 2025
Lease payments due:
2025	$	1,870
2026		2,462
2027		2,405
2028		2,155
2029		1,608
Thereafter		2,667
Total lease payments		13,167
Less: imputed interest		(1,528)
Lease liabilities	$	11,639

As of March 31, 2025, the Company did not have any operating lease that has not yet commenced that will create additional lease liabilities and right-of-use assets for the Company.

7. DEBT AND OTHER BORROWINGS

Other borrowings can consist of FHLB convertible advances, FHLB of Atlanta overnight advances, FHLB advances maturing within one year, federal funds purchased, Federal Reserve Board Discount Window, secured borrowings and securities sold under agreements to repurchase (“repo”) that mature within one year, which are secured transactions with customers. The balance in repo accounts as of March 31, 2025 and December 31, 2024 was $4.0 million and $3.9 million, respectively.

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As of March 31, 2025 and December 31, 2024, we had pledged callable agency securities, residential government-sponsored mortgage-backed securities and collateralized mortgage obligations with a carrying value of $6.9 million and $6.8 million, respectively, to customers who require collateral for overnight repurchase agreements and deposits.

As of March 31, 2025, Primis Bank had lendable collateral value in the form of residential 1-4 family mortgages, HELOCs, commercial mortgage loans, and investment securities supporting borrowing capacity of approximately $541.3 million from the FHLB.

In June 2023, the Bank took the necessary steps to participate in the Federal Reserve discount window borrowing program. As of March 31, 2025, the Bank had borrowing capacity of $550.5 million within the program and has not borrowed under the program.

In 2017, the Company assumed $10.3 million of trust preferred securities that were issued on September 17, 2003 and placed through a trust in a pooled underwriting totaling approximately $650 million. As of March 31, 2025 and December 31, 2024, there was $10.3 million outstanding, net of approximately $0.4 million of debt issuance costs as of March 31, 2025 and December 31, 2024. As of March 31, 2025 and December 31, 2024, the interest rate payable on the trust preferred securities was 7.51% and 7.56%, respectively. As of March 31, 2025, all of the trust preferred securities qualified as Tier 1 capital.

On January 20, 2017, Primis completed the sale of $27.0 million of its fixed-to-floating rate senior Subordinated Notes due 2027. Interest is currently payable at an annual floating rate equal to three-month CME Term SOFR plus a tenor spread adjustment of 0.26% until maturity or early redemption. As of March 31, 2025, 20% of these Notes qualified as Tier 2 capital.

On August 25, 2020, Primis completed the sale of $60.0 million of its fixed-to-floating rate Subordinated Notes due 2030. Interest is payable at an initial annual fixed rate of 5.40% and after September 1, 2025, at a floating rate equal to a benchmark rate, which is expected to be Three-Month Term SOFR, plus a spread of 531 basis points. As of March 31, 2025, all of these notes qualified as Tier 2 capital.

As of March 31, 2025 and December 31, 2024, the remaining unamortized debt issuance costs related to the senior Subordinated Notes totaled $0.9 million and $1.0 million, respectively.

Secured Borrowings

The Company transferred $1.1 million and $23.4 million in principal balance of loans to another financial institution in 2024 and 2023, respectively, that were accounted for as secured borrowings. The balance of secured borrowings was $16.7 million and $17.2 million as of March 31, 2025 and December 31, 2024, respectively, and the remaining amortized cost balance of the underlying loans was $16.8 million and $17.3 million, respectively. None of the loans underlying the secured borrowings were past due 30 days or greater or on nonaccrual as of March 31, 2025 and December 31, 2024 and were all internally rated as “pass” loans as presented in our “credit quality indicators” section of “Note 3 – Loans and Allowance for Credit Losses”. The loans were included in our allowance for credit losses process and an allowance was calculated on the loans as part of their inclusion in a pool with other loans with similar credit risk characteristics. There were no charge-offs of the loans underlying the secured borrowings during the three months ended March 31, 2025. The underlying loans collateralize the borrowings and cannot be sold or pledged by the Company.

8. STOCK-BASED COMPENSATION

The 2017 Equity Compensation Plan (the “2017 Plan”) has a maximum number of 750,000 shares reserved for issuance. The purpose of the 2017 Plan is to promote the success of the Company by providing greater incentives to employees, non-employee directors, consultants and advisors to associate their personal financial interests with the long-term financial success of the Company, including its subsidiaries, and with growth in stockholder value, consistent with the Company’s risk management practices.

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A summary of stock option activity for the three months ended March 31, 2025 follows:


				Weighted
		Weighted		Average	Aggregate
		Average		Remaining	Intrinsic
		Exercise		Contractual	Value
	Shares	Price		Term	(in thousands)
Options outstanding, beginning of period	35,800	$	11.73	1.0	$	4
Exercised	—		—
Options outstanding, end of period	35,800	$	11.73	0.7		—

Exercisable at end of period	35,800	$	11.73	0.7		—

There was no stock-based compensation expense associated with stock options for the three months ended March 31, 2025 and 2024. As of March 31, 2025, we do not have any unrecognized compensation expense associated with the stock options.

A summary of time vested restricted stock awards for the three months ended March 31, 2025 follows:


		Weighted		Weighted
		Average		Average
		Grant-Date		Remaining
		Fair Value		Contractual
	Shares	Per Share		Term
Unvested restricted stock outstanding, beginning of period	20,900	$	13.18	1.8
Vested	(9,050)		15.15
Unvested restricted stock outstanding, end of period	11,850	$	11.67	2.5

Stock-based compensation expense for time vested restricted stock awards totaled $31 thousand and $0.2 million for the three months ended March 31, 2025 and 2024, respectively. Unrecognized compensation expense associated with restricted stock awards was $0.1 million, which is expected to be recognized over a weighted average period of 2.5 years.

A summary of performance-based restricted stock units (the “Units”) for the three months ended March 31, 2025 follows:


			Weighted	Weighted
			Average	Average
			Grant-Date	Remaining
			Fair Value	Contractual
	Shares		Per Share	Term
Unvested Units outstanding, beginning of period	223,460	$	11.79	2.1
Forfeited	—		—
Unvested Units outstanding, end of period	223,460		11.79	1.8

These Units are subject to service and performance conditions. These Units vest based on the achievement of both conditions. Achievement of the performance condition will be determined at the end of the five-year performance period (the “Performance Period”) by evaluating the: 1) Company’s adjusted earnings per share compound annual growth measured for the Performance Period and 2) performance factor achieved. Payouts between performance levels will be determined based on straight line interpolation.

The Company recognized no stock-based compensation expense during the three months ended March 31, 2025 and 2024 as a result of the probability of a portion of the Units vesting because it is not probable that these Units will vest. The

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potential unrecognized compensation expense associated with these Units was $4.2 million as of March 31, 2025 and December 31, 2024.

9. COMMITMENTS AND CONTINGENCIES

Financial Instruments with Off-Balance Sheet Risk

Primis is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit, standby letters of credit and guarantees of credit card accounts. These instruments involve elements of credit and funding risk in excess of the amount recognized in the consolidated balance sheets. Letters of credit are written conditional commitments issued by Primis to guarantee the performance of a customer to a third party. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers. The Company had letters of credit outstanding totaling $17.7 million and $9.9 million as of March 31, 2025 and December 31, 2024, respectively.

The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instruments for commitments to extend credit and letters of credit is based on the contractual amount of these instruments. Primis uses the same credit policies in making commitments and conditional obligations as we do for on-balance sheet instruments. Unless noted otherwise, we do not require collateral or other security to support financial instruments with credit risk.

Allowance For Credit Losses - Off-Balance-Sheet Credit Exposures

The allowance for credit losses on off-balance sheet credit exposures is a liability account, calculated in accordance with ASC 326, representing expected credit losses over the contractual period for which Primis is exposed to credit risk resulting from a contractual obligation to extend credit. No allowance is recognized if the Company has the unconditional right to cancel the obligation. Off-balance sheet credit exposures primarily consist of amounts available under outstanding lines of credit and letters of credit detailed above. For the period of exposure, the estimate of expected credit losses considers both the likelihood that funding will occur and the amount expected to be funded over the estimated remaining life of the commitment or other off-balance sheet exposure. The likelihood and expected amount of funding are based on historical utilization rates. The amount of the allowance represents management's best estimate of expected credit losses on commitments expected to be funded over the contractual life of the commitment. Estimating credit losses on amounts expected to be funded uses the same methodology as described for loans in Note 3 - Loans and Allowance for Credit Losses, as if such commitments were funded. The allowance for credit losses on off-balance sheet credit exposures is reflected in other liabilities in the consolidated balance sheets.

The following table details activity in the allowance for credit losses on off-balance-sheet credit exposures:


	2025		2024

Balance as of January 1	$	1,121	$	1,579
Credit loss expense		13		(458)
Balance as of March 31	$	1,134	$	1,121

Commitments

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments are made predominately for adjustable rate loans, and generally have fixed expiration dates of up to three months or other termination clauses and usually require payment of a fee. Since many of the commitments may expire without being completely drawn upon, the total commitment amounts do not necessarily represent future cash requirements. We evaluate each customer’s creditworthiness on a case-by-case basis.

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The Company had $133.1 million of mortgage loan commitments outstanding as of March 31, 2025, all of which contractually expire within thirty years.

As of March 31, 2025 and December 31, 2024, we had unfunded lines of credit and undisbursed construction loan funds totaling $403.5 million and $459.2 million, respectively, not all of which will ultimately be drawn. Virtually all of our unfunded lines of credit and undisbursed construction loan funds are variable rate. The amount of certificate of deposit accounts maturing in less than one year was $282.8 million as of March 31, 2025. Management anticipates that funding requirements for these commitments can be met in the normal course of business.

Primis also had commitments on the subscription agreements entered into for investments in non-marketable equity securities of $1.7 million and $0.9 million as of March 31, 2025 and December 31, 2024, respectively.

10. EARNINGS PER SHARE

The following is a reconciliation of the denominators of the basic and diluted earnings per share (“EPS”) computations (amounts in thousands, except per share data):


			Weighted
			Average
	Income		Shares	Per Share
	(Numerator)		(Denominator)	Amount

For the three months ended March 31, 2025
Basic EPS	$	22,636	24,707	$	0.92
Effect of dilutive stock options and unvested restricted stock		—	16		—
Diluted EPS	$	22,636	24,723	$	0.92

For the three months ended March 31, 2024
Basic EPS	$	2,466	24,674	$	0.10
Effect of dilutive stock options and unvested restricted stock		—	33		—
Diluted EPS	$	2,466	24,707	$	0.10

The Company had 35,800 anti-dilutive options as of March 31, 2025. The Company did not have any anti-dilutive options as of March 31, 2024.

11. SEGMENT INFORMATION

The Company’s reportable operating segments are determined based on its internal organizational structure, which is overseen by the Chief Executive Officer (“CEO”), the Company’s designated Chief Operating Decision Maker (“CODM”). While the CEO consults with key members of his leadership team, the ultimate responsibility for making operational decisions and resource allocations resides with the CEO. For the three months ended March 31, 2025 and 2024, the Company’s internal organizational structure and resulting management reporting was concentrated around the Bank and Primis Mortgage, which resulted in the Company determining these to be its two reportable segments.

Primis’ organizational structure and its operational segments are determined by attributes such as products, services, and customer base which are then aggregated based on similarities around these attributes. The operating results for each segment are regularly reviewed by the CEO using a broad set of financial and operational data. Key financial data utilized by the CEO to assess financial performance and allocate resources includes loan and deposit growth, certain direct expenses, net interest income and mortgage banking income along with overall net income attributable to Primis’ common shareholders. The CEO also considers actual results compared to budgeted results in these metrics when assessing performance and making determinations related to resource allocations. The following is a description of our reportable segments.

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Primis Bank. This segment specializes in providing financing services to businesses in various industries along with consumer and residential loans to individuals. The segment also provides deposit-related services to businesses, non-profits, municipalities, and individual consumers. The primary source of revenue for this segment is interest income from the origination of loans, while the primary expenses are interest expenses on deposits, provisions for loan losses, personnel costs, and data processing expenses.

Primis Mortgage. This segment specializes in originating mortgages in a majority of the U.S. The primary source of revenue for this segment is noninterest income generated from the origination and sale of mortgage loans, while the primary expense of the segment is personnel costs.

The following table provides financial information for the Company's reportable segments. In additional to the Company’s two reportable segments as described above, the caption “Other” has been included to provide reconciliation to the Company’s consolidated results and includes operational costs that are not a part of the two reportable segments but don’t qualify to be considered a separate reportable segment. “Other” primarily includes the Primis Bank Holding Company and PFH, which are generally cost centers to the consolidated entity, along with elimination adjustments to reconcile the results of the reportable segments to the consolidated financial statements prepared in conformity with U.S. GAAP.


	As of and for the three months ended March 31, 2025
	Primis Mortgage		Primis Bank		Other ⁽¹⁾		Consolidated Company
($ in thousands)
Interest income	$	1,056	$	46,617	$	50	$	47,723
Interest expense		—		19,691		1,668		21,359
Net interest income		1,056		26,926		(1,618)		26,364
Provision for loan losses		—		1,596		—		1,596
Net interest income after provision for loan losses		1,056		25,330		(1,618)		24,768

Noninterest income:
Mortgage banking income		5,722		(107)		—		5,615
Other noninterest income		—		1,831		24,889		26,720
Total noninterest income		5,722		1,724		24,889		32,335

Noninterest expenses:
Salaries and benefits		4,680		9,686		3,575		17,941
Data processing expense		131		2,718		—		2,849
Other operating expenses		970		9,267		1,489		11,726
Total noninterest expenses		5,781		21,671		5,064		32,516
Income before income taxes		997		5,383		18,207		24,587
Income tax expense		225		1,116		4,212		5,553
Net income		772		4,267		13,995		19,034
Net loss attributable to noncontrolling interests		—		—		3,602		3,602
Net income attributable to Primis' common stockholders	$	772	$	4,267	$	17,597	$	22,636

Total assets	$	89,531	$	3,665,760	$	(57,981)	$	3,697,310

(1)

Other includes Parent, PFH and intercompany eliminations.

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	As of and for the three months ended March 31, 2024
	Primis Mortgage		Primis Bank		Other ⁽¹⁾		Consolidated Company
($ in thousands)
Interest income	$	907	$	49,372	$	66	$	50,345
Interest expense		—		23,390		1,686		25,076
Net interest income		907		25,982		(1,620)		25,269
Provision for loan losses		—		6,508		—		6,508
Net interest income after provision for loan losses		907		19,474		(1,620)		18,761

Noninterest income:
Mortgage banking income		5,574		—		—		5,574
Other noninterest income		—		4,655		78		4,733
Total noninterest income		5,574		4,655		78		10,307

Noninterest expenses:
Salaries and benefits		4,231		9,772		1,732		15,735
Data processing expense		87		2,144		—		2,231
Other operating expenses		804		7,943		825		9,572
Total noninterest expenses		5,122		19,859		2,557		27,538
Income before income taxes		1,359		4,270		(4,099)		1,530
Income tax expense		327		859		(468)		718
Net income (loss)		1,032		3,411		(3,631)		812
Net loss attributable to noncontrolling interests		—		—		1,654		1,654
Net income (loss) attributable to Primis' common stockholders	$	1,032	$	3,411	$	(1,977)	$	2,466

Total assets	$	81,840	$	3,881,301	$	(73,162)	$	3,889,979

(1)

Other includes Parent, PFH and intercompany eliminations.

ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s discussion and analysis (“MD&A”) is presented to aid the reader in understanding and evaluating the financial condition and results of operations of Primis. This discussion and analysis should be read with the condensed consolidated financial statements, the footnotes thereto, and the other financial data included in this report and in our Annual Report on Form 10-K for the year ended December 31, 2024. Results of operations for the three months ended March 31, 2025 are not necessarily indicative of results that may be attained for any other period. The emphasis of this discussion will be on the three months ended March 31, 2025 compared to the three months ended March 31, 2024 for the consolidated income statements. For the consolidated balance sheets, the emphasis of this discussion will be the balances as of March 31, 2025 compared to December 31, 2024. This discussion and analysis contains statements that may be considered “forward-looking statements” as defined in, and subject to the protections of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. See the following section for additional information regarding forward-looking statements.

FORWARD-LOOKING STATEMENTS

Statements and financial discussion and analysis contained in this Quarterly Report on Form 10-Q that are not statements of historical fact constitute forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical facts and are based on current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks,

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assumptions and uncertainties that are difficult to predict. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. The words “believe,” “may,” “forecast,” “should,” “anticipate,” “contemplate,” “estimate,” “expect,” “project,” “predict,” “intend,” “continue,” “would,” “could,” “hope,” “might,” “assume,” “objective,” “seek,” “plan,” “strive” or similar words, or the negatives of these words, identify forward-looking statements.

Forward-looking statements involve risks and uncertainties that may cause our actual results to differ materially from the expectations of future results we express or imply in any forward-looking statements. In addition to the Risk Factors contained in this Quarterly Report on Form 10-Q, as well as the Risk Factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024, and the other reports we file with the Securities and Exchange Commission, factors that could contribute to those differences include, but are not limited to:

●

the effects of future economic, business and market conditions and disruptions in the credit and financial markets, domestic and foreign;

●

potential increases in the provision for credit losses and other general competitive, economic, political, and market factors, including those affecting our business, operations, pricing, products, or services;

●

uncertainties surrounding geopolitical events, trade policy, taxation policy, and monetary policy which continue to impact the outlook for future economic growth (including an economic downturn or recession), including U.S. imposition of tariffs on other countries and consideration of responsive actions by these nations or the expansion of import fees and tariffs among a larger group of nations, which is bringing greater ambiguity to the outlook for future economic growth;

●

fraudulent and negligent acts by loan applicants, mortgage brokers and our employees;

●

our ability to recover certain losses related to fraudulent loans under the Company's insurance policies and to successfully complete the claims process and minimize the financial impact of these loans;

●

our ability to implement our various strategic and growth initiatives, including our Panacea Financial Division, digital banking platform, V1BE fulfillment service and Primis Mortgage Company as well as our cost saving project to reduce administrative and branch expenses;

●

adverse results from current or future litigation, regulatory examinations or other legal and/or regulatory actions;

●

changes in the local economies in our market areas which adversely affect our customers and their ability to transact profitable business with us, including the ability of our borrowers to repay their loans according to their terms or a change in the value of the related collateral;

●

changes in interest rates, inflation, stagflation, loan demand, real estate values, or competition, as well as labor shortages, supply chain disruptions, the threat of recession and volatile equity capital markets;

●

changes in the availability of funds resulting in increased costs or reduced liquidity, as well as the adequacy of our cash flow from operations and borrowings to meet our short-term liquidity needs;

●

a deterioration or downgrade in the credit quality and credit agency ratings of the investment securities in our investment securities portfolio;

●

impairment concerns and risks related to our investment securities portfolio of collateralized mortgage obligations, agency mortgage-backed securities and obligations of states and political subdivisions;

●

the incurrence and impairment of goodwill associated with current or future acquisitions and adverse short-term effects on our results of operations;

●

increased credit risk in our assets and increased operating risk caused by a material change in commercial, consumer and/or real estate loans as a percentage of our total loan portfolio, including as a result of rising or elevated interest rates, inflation and recessionary concerns;

●

the concentration of our loan portfolio in loans collateralized by real estate;

●

our level of construction and land development and commercial real estate loans;

●

risk related to a third-party’s ability to satisfy its contractual obligation to reimburse us for waived interest on loans with promotional features that pay off early;

●

our ability to identify and address potential cybersecurity risks on our systems and/or third party vendors and service providers on which we rely, heightened by the developments in generative artificial intelligence and increased use of our virtual private network platform, including data security breaches, credential stuffing, malware, “denial-of-service” attacks, “hacking” and identity theft, a failure of which could disrupt our business

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and result in the disclosure of and/or misuse or misappropriation of confidential or proprietary information, disruption or damage to our systems, increased costs, losses, or adverse effects to our reputation;

●

changes in the levels of loan prepayments and the resulting effects on the value of our loan portfolio;

●

the failure of assumptions and estimates underlying the establishment of and provisions made for credit losses;

●

our ability to expand and grow our business and operations, including the acquisition of additional banks, and our ability to realize the cost savings and revenue enhancements we expect from such activities;

●

government intervention in the U.S. financial system, including the effects of legislative, tax, accounting and regulatory actions and reforms, including the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), the Jumpstart Our Business Startups Act, the Consumer Financial Protection Bureau, the capital ratios of Basel III as adopted by the federal banking authorities, the Tax Cuts and Jobs Act of 2017 and the CARES Act, as well as the possibility that the U.S. could default on its debt obligations and the risk of inflation and interest rate increases resulting from monetary and fiscal stimulus response, which may have unanticipated adverse effects on our customers, and our financial condition and results of operations;

●

the potential implementation of a regulatory reform agenda under the new presidential administration that is significantly different than that of the prior administration, impacting rulemaking, supervision, examination and enforcement priorities of the federal banking agencies;

●

increased competition for deposits and loans adversely affecting rates and terms;

●

the continued service of key management personnel;

●

the potential payment of interest on demand deposit accounts to effectively compete for customers;

●

potential environmental liability risk associated with properties that we assume upon foreclosure;

●

increased asset levels and changes in the composition of assets and the resulting impact on our capital levels and regulatory capital ratios;

●

risks of current or future mergers and acquisitions, including the related time and cost of implementing transactions and the potential failure to achieve expected gains, revenue growth or expense savings;

●

increases in regulatory capital requirements for banking organizations generally, which may adversely affect our ability to expand our business or could cause us to shrink our business;

●

acts of God or of war or other conflicts, civil unrest, acts of terrorism, pandemics or other catastrophic events that may affect general economic conditions;

●

changes in accounting policies, rules and practices and applications or determinations made thereunder;

●

any inability or failure to implement and maintain effective internal control over financial reporting and/or disclosure control or inability to remediate our existing material weaknesses in our internal controls deemed ineffective;

●

failure to maintain effective internal controls and procedures, including the ability to remediate identified material weaknesses in internal control over financial reporting expediently;

●

the risk that our deferred tax assets could be reduced if future taxable income is less than currently estimated, if corporate tax rates in the future are less than current rates, or if sales of our capital stock trigger limitations on the amount of net operating loss carryforwards that we may utilize for income tax purposes;

●

our ability to attract and retain qualified employees, including as a result of heightened labor shortages;

●

risks related to diversity, equity and inclusion (“DEI”) and environmental, social and governance (“ESG”) strategies and initiatives, the scope and pace of which could alter our reputation and shareholder, associate, customer and third-party affiliations or result in litigation in connection with anti-DEI and anti-ESG laws, rules or activism;

●

negative publicity and the impact on our reputation;

●

our ability to realize the value of derivative assets that are recorded at fair value due to changes in fair value driven by actual results being materially different than our assumptions;

●

our ability to grow the mortgage warehouse business and achievement of certain margin results; and

●

other factors and risks described under “Risk Factors” herein and in any of the reports that we file with the Securities and Exchange Commission (the “Commission” or “SEC”) under the Exchange Act.

Forward-looking statements are not guarantees of performance or results and should not be relied upon as representing management’s views as of any subsequent date. A forward-looking statement may include a statement of the assumptions or bases underlying the forward-looking statement. We believe we have chosen these assumptions or bases in good faith and that they are reasonable. We caution you, however, that assumptions or bases almost always vary from actual results,

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and the differences between assumptions or bases and actual results can be material. When considering forward-looking statements, you should refer to the risk factors and other cautionary statements in this Quarterly Report on Form 10-Q and in our periodic and current reports filed with the SEC for specific factors that could cause our actual results to be different from those expressed or implied by our forward-looking statements. These statements speak only as of the date of this Quarterly Report on Form 10-Q (or an earlier date to the extent applicable). Except as required by applicable law, we undertake no obligation to update publicly these statements in light of new information or future events.

OVERVIEW

Primis Financial Corp. (“Primis,” “we,” “us,” “our” or the “Company”) is the bank holding company for Primis Bank (“Primis Bank” or the “Bank”), a Virginia state-chartered bank which commenced operations on April 14, 2005. Primis Bank provides a range of financial services to individuals and small and medium-sized businesses. As of March 31, 2025, Primis Bank had twenty-four full-service branches in Virginia and Maryland and also provides services to customers through certain online and mobile applications. Twenty-two full-service retail branches are in Virginia and two full-service retail branches are in Maryland. The Company is headquartered in McLean, Virginia and has an administrative office in Glen Allen, Virginia and an operations center in Atlee, Virginia. Primis Mortgage Company, a residential mortgage lender headquartered in Wilmington, North Carolina, is a consolidated subsidiary of Primis Bank. PFH owns the rights to the Panacea Financial brand and its intellectual property and partners with the Bank to offer a suite of financial products and services for doctors, veterinarians, dentists, their practices, and ultimately the broader healthcare industry. PFH was a consolidated subsidiary of Primis until March 31, 2025, when it was deconsolidated in accordance with applicable accounting guidance.

While Primis Bank offers a wide range of commercial banking services, it focuses on making loans secured primarily by commercial real estate and other types of secured and unsecured commercial loans to small and medium-sized businesses in a number of industries, as well as loans to individuals for a variety of purposes. Primis Bank invests in real estate-related securities, including collateralized mortgage obligations and agency mortgage backed securities. Primis Bank’s principal sources of funds for loans and investing in securities are deposits and, to a lesser extent, borrowings. Primis Bank offers a broad range of deposit products, including checking, savings, money market accounts and certificates of deposit. Primis Bank actively pursues business relationships by utilizing the business contacts of its senior management, other bank officers and its directors, thereby capitalizing on its knowledge of its local market areas.

OPERATIONAL HIGHLIGHTS

Our strategy centers on growing earning assets back to previous levels after the sale of our Life Premium Finance division and achieving higher production and profitability in our retail mortgage business. We continued to execute successfully during the first quarter of 2025 these strategies including the following:

Core Community Bank

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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 as of March 31, 2025 was $228 million versus approximately $119 million as of December 31, 2024.

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The core bank’s cost of deposits was 1.83% in the first quarter of 2025, supported by almost 20% of the deposit base in noninterest bearing deposits.

Mortgage Warehouse

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Outstanding loan balances as of March 31, 2025 were $115 million, up 80% from $64 million as of December 31, 2024.

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Mortgage warehouse funded approximately 10% of its balance sheet with associated customer noninterest bearing deposit balances, which totaled $11 million as of March 31, 2025.

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Committed facilities were up 40% to $487 million as of March 31, 2025 compared to $349 million as of December 31, 2024.

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Panacea Financial Division

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Outstanding loan balances grew 9% unannualized, or $40 million, during the first quarter of 2025 from $433.8 million as of December 31, 2024.

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Outstanding deposits were $94 million as of March 31, 2025, up 2% from December 31, 2024. Panacea is funding 20% of its outstanding loan balances as of March 31, 2025.

Primis Mortgage

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Earned approximately $0.8 million pre-tax from retail mortgage activities in the first quarter of 2025 compared to $0.4 million in the fourth quarter of 2024.

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Locked loan volume was $257 million in the first quarter of 2025, up 27% from the fourth quarter of 2024. The month of March 2025 was up 53% versus the same month a year ago.

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Recruited teams in the first quarter 2025 with approximately $500 million of run-rate annualized production. Applications the last week of March 2025, after all teams were in place, were 100% higher than the same week in the year-ago period.

Changes in the relationship between PFH and Primis during the first quarter of 2025 resulted in a determination to deconsolidate PFH from Primis as of March 31, 2025. The deconsolidation resulted in recognition of a $24.6 million gain for Primis during the three months ended March 31, 2025, as a result of recording the fair value of our retained interest in common stock of PFH. We will continue to assess the fair value of our common stock investment each reporting period and record the changes in fair value in our financial results for the respective period. The deconsolidation results in us no longer including PFH’s financial results in our financial results after March 31, 2025. PFH will continue to work with the Panacea Division of the Bank to originate loans, some of which the Bank will retain and others will be sold to investors and other financial institutions.

FINANCIAL HIGHLIGHTS

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Net income available to common shareholders for the three months ended March 31, 2025 totaled $22.6 million, or $0.92 basic and diluted earnings per share, compared to net income of $2.5 million, or $0.10 basic and diluted loss per share for the three months ended March 31, 2024. Net income during 2025 was driven by a $24.6 gain on the deconsolidation of PFH.

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Total assets as of both March 31, 2025 and December 31, 2024 were $3.7 billion.

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Total loans held for investment as of March 31, 2025 were $3.0 billion, an increase of $0.2 billion, or 5.4%, from December 31, 2024. The increase was led by growth in the Panacea division and mortgage warehouse lending, but also included transfer of $0.1 billion of Consumer Program loans back from HFS.

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Total deposits were $3.2 billion as of both March 31, 2025 and December 31, 2024.

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Non-time deposits were flat in total since year end, but lower-cost demand deposits were up 2%.

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The ratio of gross loans (excluding loans held for sale) to deposits increased to 96% at March 31, 2025, from 90% at December 31, 2024.

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Net interest margin grew to 3.15% in the first quarter of 2025 compared to 2.84% in the first quarter of 2024. The significant driver of this increase was a meaningful decrease in our cost of funds that declined by 29 basis points.

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Net interest income increased $1.1 million in the first quarter of 2025 compared to the first quarter of 2024, driven by a $3.7 million decline in interest expense.

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Noninterest income increased during the three months ended March 31, 2025 compared to the same period in 2024, driven primarily by gain on deconsolidation of PFH in 2025, offset by losses associated with the Consumer Program derivative in 2025 compared to income on the Consumer Program derivative in 2024.

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Noninterest expense was up $5.0 million in the first quarter of 2025 compared to the same period in 2024, driven by personnel costs, professional fees, and data processing costs. The personnel costs are a result of growth in PFH and strategic growth of certain parts of the business. Professional fees grew as a result of the annual financial statement audit and data processing from the continued high cost of operating two core operational systems. We are actively working to consolidate our core environment and expect substantial cost savings once we have consolidated to one core.

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Allowance for credit losses to total loans was down 41 basis points to 1.45% as of March 31, 2025, compared to 1.86% as of December 31, 2024. The decline was driven in large part due to charge-offs on the Consumer Program portfolio during the quarter and smaller additional reserves compared to these charge-offs due to higher expected credit quality of remaining Consumer Program loans.

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Asset quality remained relatively stable from year end, declining 1 basis point, with nonperforming assets as a percent of total assets (excluding SBA guarantees) at 0.28% as of March 31, 2025 compared to 0.29% as of December 31, 2024.

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Book value and tangible book value per common share increased by 96 and 98 basis points, respectively, during the first quarter.

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All of our capital ratios increased in the first quarter as well, with Common Equity Tier 1, Tier 1, and Total risk based capital ratios increasing 61, 61, and 43 basis points, respectively.

RESULTS OF OPERATIONS

Net Income

Net income available to common shareholders for the three months ended March 31, 2025 totaled $22.6 million, or $0.92 basic and diluted earnings per share, compared to $2.5 million, or $0.10 basic and diluted earnings per share for the three months ended March 31, 2024. The results reflect an increase in noninterest income of $22.0 million, primarily due to the gain on deconsolidation of PFH, an increase in net interest income of $1.1 million, a decrease in provision for credit losses of $4.9 million, and an increase in noncontrolling interest of $1.9 million, partially offset by an increase in noninterest expense of $5.0 million. The increase in noncontrolling interests were related to losses attributable to other stockholders of PFH prior to de-consolidation as of March 31, 2025. Additional details of the remaining changes in net income will be discussed in the remaining sections of this Results of Operations section.

Net Interest Income

Our operating results depend primarily on our net interest income, which is the difference between interest and dividend income on interest-earning assets such as loans and investments, and interest expense on interest-bearing liabilities such as deposits and borrowings. Net interest income was $26.4 million for the three months ended March 31, 2025, compared to $25.3 million for the three months ended March 31, 2024. Net interest income increased as a result of interest-bearing liability cost declines offsetting lower interest-earning asset income. Our net interest margin for the three months ended March 31, 2025 was 3.15%, compared to 2.84% for the three months ended March 31, 2024. Margin increased by 31 basis points primarily as a result of lower average interest-bearing liabilities coupled with a decline of 34 basis points paid on these liabilities, while yields on interest-earning assets increased by 4 basis points on $184 million of lower average interest-earning asset balances.

Average interest-bearing liabilities declined by $139 million due in large part because of maturing time deposits driving average time deposit balances down by $96 million. We also experienced declines in average money market and savings balances of $72 million, partially offset by growth in demand deposits of $32 million. Rates on average interest-bearing deposits declined 35 basis points in total, in large part due to a decline in the fed funds borrowing rate during the last twelve months of 100 basis points.

Yields on average interest earning assets increased, but the $184 million decline in associated average balances resulted in a $2.6 million decline in interest income. Average earning asset balances were driven lower by a $309 million decline in average loan balances which was primarily a result of the sale of approximately $400 million of our loan portfolio in the fourth quarter of 2024. These average loan balance declines were partially offset by continue growth of Panacea and Mortgage Warehouse loan portfolios during the first quarter of 2025. Loans held for investment had a $4.8 million decline in interest income that was due in large part to these lower average balances, partially offset by yields across the remaining portfolio that were 15 basis points higher compared to the first quarter of 2024. The higher yields for loans were fueled by an increase in benchmark rates since 2022 resulting in new loans at higher rates replacing maturing and paid off loans at lower rates. Partially offsetting this decline in average loan balances and loan interest income was an increase of $112 million in average loans held for sale balances due primarily to the Consumer Program loan transfers at year end that

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remained in held for sale during the entire first quarter. The higher average loans held for sale balances drove interest income higher on loans held for sale by $1 million compared to first quarter of 2024.

The following table details average balances of interest-earning assets and interest-bearing liabilities, the amount of interest earned/paid on such assets and liabilities, and the yield/rate for the periods indicated:


	Average Balance Sheets and Net Interest Margin
	Analysis For the Three Months Ended
	March 31, 2025						March 31, 2024
			Interest						Interest
	Average		Income/		Yield/		Average		Income/		Yield/
	Balance		Expense		Rate		Balance		Expense		Rate

	(Dollar amounts in thousands)

Assets
Interest-earning assets:
Loans held for sale	$	170,509	$	2,564	6.10	%	$	58,896	$	907	6.19	%
Loans, net of deferred fees ^{(1) (2)}		2,897,481		42,400	5.93	%		3,206,888		46,825	5.87	%
Investment securities		245,216		1,906	3.15	%		241,179		1,715	2.86	%
Other earning assets		86,479		853	4.00	%		77,067		898	4.69	%
Total earning assets		3,399,685		47,723	5.69	%		3,584,030		50,345	5.65	%
Allowance for credit losses		(47,039)						(51,110)
Total non-earning assets		288,951						299,192
Total assets	$	3,641,597					$	3,832,112

Liabilities and stockholders' equity
Interest-bearing liabilities:
NOW and other demand accounts	$	805,522	$	4,515	2.27	%	$	773,943	$	4,467	2.32	%
Money market accounts		788,067		5,420	2.79	%		814,147		6,512	3.22	%
Savings accounts		754,304		6,418	3.45	%		800,328		8,045	4.04	%
Time deposits		335,702		3,039	3.67	%		431,340		3,990	3.72	%
Total interest-bearing deposits		2,683,595		19,392	2.93	%		2,819,758		23,014	3.28	%
Borrowings		116,955		1,967	6.82	%		120,188		2,062	6.90	%
Total interest-bearing liabilities		2,800,550		21,359	3.09	%		2,939,946		25,076	3.43	%
Noninterest-bearing liabilities:
Demand deposits		446,404						458,306
Other liabilities		38,280						34,900
Total liabilities		3,285,234						3,433,152
Primis common stockholders' equity		344,381						378,008
Noncontrolling interest		11,982						20,952
Total stockholders' equity		356,363						398,960
Total liabilities and stockholders' equity	$	3,641,597	$	26,364			$	3,832,112	$	25,269
Interest rate spread					2.60	%					2.22	%
Net interest margin					3.15	%					2.84	%

(1)	Includes loan fees in both interest income and the calculation of the yield on loans.

(2)	Calculations include non-accruing loans in average loan amounts outstanding.

Provision for Credit Losses

The provision for credit losses is a current charge to earnings made in order to adjust the allowance for credit losses for current expected losses in the loan portfolio based on an evaluation of the loan portfolio characteristics, current economic conditions, changes in the nature and volume of lending, historical loan experience and other known internal and external factors affecting loan collectability, and assessment of reasonable and supportable forecasts of future economic conditions that would impact collectability of the loans. Our allowance for credit losses is calculated by segmenting the loan portfolio by loan type and applying risk factors to each segment. The risk factors are determined by considering historical loss data, peer data, as well as applying management’s judgment.

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The Company recorded a provision for credit losses for the three months ended March 31, 2025 and 2024, of $1.6 million and $6.5 million, respectively. The provision included amounts calculated in our normal reserve process for the Consumer Program loans which totaled $1.9 million and $4.9 million during the three months ended March 31, 2025 and 2024, respectively. These provisions related to the Consumer Program loan portfolio were primarily due to provisioning driven by credit weakness we continue to experience on loans originated in this portfolio from the third quarter of 2022 through the first quarter of 2023. As of March 31, 2025, $59.7 million, or 45%, of our remaining Consumer Program loan balance was originated during that time, with 77% of these loans current and 88% are either current or less than 30 days past due. As of March 31, 2025 we have allowances and discounts to the outstanding principal balance of Consumer Program loans due to charge-offs taken when we moved the loans to held for sale of $23.8 million. Excluding the Consumer Program, we had a benefit for expected losses of $0.3 million and provision for expected credit losses of $1.6 million during the three months ended March 31, 2025 and 2024, respectively.

The Financial Condition section of this MD&A provides information on our loan portfolio, past due loans, nonperforming assets and the allowance for credit losses.

Noninterest Income

The following table presents the major categories of noninterest income for the three months ended March 31, 2025 and 2024:


	For the Three Months Ended
	March 31,
(dollars in thousands)	2025		2024		Change
Account maintenance and deposit service fees	$	1,339	$	1,393	$	(54)
Income from bank-owned life insurance		425		564		(139)
Gain on deconsolidation of Panacea Financial Holdings, Inc.		24,578		—		24,578
Mortgage banking income		5,615		5,574		41
Gain on sale of loans		—		336		(336)
Gain on other investments		53		206		(153)
Consumer Program income		(292)		2,041		(2,333)
Other noninterest income		617		193		424
Total noninterest income	$	32,335	$	10,307	$	22,028

Noninterest income increased 214% to $32.3 million for the three months ended March 31, 2025, compared to $10.3 million for the three months ended March 31, 2024. The increase in noninterest income was primarily driven by the $24.6 million gain on the deconsolidation of PFH, partially offset by declines in Consumer Program derivative income. The Company deconsolidated PFH as of March 31, 2025 and upon deconsolidation recognized a gain of $24.6 million. The gain was driven by recognition of our remaining common stock investment in PFH at fair value. The Consumer Program derivative income declined primarily due to fair value loss adjustments on the derivative asset of $2.9 million during the three months ended March 31, 2025 compared to losses of $0.1 million during the three months ended March 31, 2024. The derivative asset and related losses are driven by anticipated cash payments due to us from the third-party when borrowers prepay their loans in a no-interest promotional period. During the first three months of 2025, the value of the derivative and related losses were primarily driven by $21.1 million of loans ending their no-interest promotional period by either paying off the loan or allowing their loan to begin amortizing. This resulted in a decrease in total remaining promotional loans to $17.8 million as of March 31, 2025. Offsetting the fair value loss adjustments during the three months ended March 31, 2025 was $2.6 million of realized income as a result of borrowers paying off their promotional period loans before the end of the promotional period which triggers payment from the derivative counterparty of the interest accrued during the promotional period, along with other income due to us under the agreement.

Noninterest income was generally consistent with the prior year when excluding the gain on PFH and the impact of the Consumer Program income with the remaining changes in noninterest income primarily due to various impacts in the prior year period that did not reoccur in 2025. Income from bank-owned life insurance included death-benefit payments in the prior year due to a former executive’s death, and we had gains on sales of loans and certain other investments in first quarter of 2024 that did not reoccur in the first quarter of 2025. These were partially offset by an increase in loan

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servicing income in the first quarter of 2025 related to the sales of LPF loans in 2024. The servicing income on sold LPF loans will not continue because at the final sale of LPF loans in first quarter of 2025, the servicing transferred to the buyer.

Noninterest Expense

The following table presents the major categories of noninterest expense for the three months ended March 31, 2025 and 2024:


	For the Three Months Ended
	March 31,
(dollars in thousands)	2025		2024		Change
Salaries and benefits	$	17,941	$	15,735	$	2,206
Occupancy expenses		1,428		1,490		(62)
Furniture and equipment expenses		1,857		1,616		241
Amortization of core deposit intangible		313		317		(4)
Virginia franchise tax expense		577		631		(54)
FDIC insurance assessment		793		610		183
Data processing expense		2,849		2,231		618
Marketing expense		514		459		55
Telephone and communication expense		287		346		(59)
(Gain) loss on bank premises and equipment and assets held for sale		106		—		106
Professional fees		2,225		1,365		860
Miscellaneous lending expenses		834		451		383
Other operating expenses		2,792		2,287		505
Total noninterest expenses	$	32,516	$	27,538	$	4,978

Noninterest expenses increased 18% to $32.5 million during the three months ended March 31, 2025, compared to $27.5 million during the three months ended March 31, 2024. The increase was primarily driven by higher salaries and benefits expenses, professional fees, data processing expense, miscellaneous lending expenses, and other operating expenses in 2025. The higher salaries and benefits expense was driven by growth in activity in the mortgage line of business and also from the growth in expenses of PFH that we were required to include in our results through deconsolidation as of March 31, 2025, as discussed in footnote 1 to the condensed consolidated financial statements in Item 1. in this Form 10-Q, each seeing growth of $0.5 million and $1.8 million, respectively. The increase in professional fees was related to higher audit fees in the first quarter of 2025 compared to 2024 due to the amount of work required by our new auditors in a compressed timeline as a result of our inability to engage them earlier in 2024 due to the completion of our prior auditors work being delayed by the SEC pre-approval process as discussed in our 2023 Form 10-K. Data processing expense continued to be higher in the first quarter of 2025 due to continued growth in transaction levels and the use of two operational core processing systems. We have begun an analysis to consolidate our operational core and believe the annual savings from consolidating systems could be approximately $6 million to $8 million annually, with an expectation of this potential core consolidation impacting noninterest expense beginning early to mid-2026. Miscellaneous lending expense increases were primarily driven by an increase of $0.3 million in servicing fees we pay the third-party that services the Consumer Program loan portfolio. Other operating expenses grew primarily as a result of the growth in PFH other operating expenses in the first quarter of 2025 compared to the same period in 2024. As a result of deconsolidation of PFH, future periods noninterest expenses will not include their operating results.

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FINANCIAL CONDITION

The following illustrates key balance sheet categories as of March 31, 2025 and December 31, 2024 (in thousands):


	March 31,		December 31,
	2025		2024		Change

Total cash and cash equivalents	$	57,044	$	64,505	$	(7,461)
Securities available-for-sale		241,638		235,903		5,735
Securities held-to-maturity		9,153		9,448		(295)
Loans held for sale, at fair value		74,439		83,276		(8,837)
Loans held for sale, at lower of cost or market		—		163,832		(163,832)
Net loans		2,999,327		2,833,723		165,604
Other assets		315,709		299,428		16,281
Total assets	$	3,697,310	$	3,690,115	$	7,195

Total deposits	$	3,168,872	$	3,171,035	$	(2,163)
Borrowings		116,697		116,991		(294)
Other liabilities		36,178		37,107		(929)
Total liabilities		3,321,747		3,325,133		(3,386)
Total equity		375,563		364,982		10,581
Total liabilities and equity	$	3,697,310	$	3,690,115	$	7,195

Loans held for sale

Loans held for sale declined $172.7 million from December 31, 2024 primarily due to the sale of $50.7 million of LPF loans during the first quarter and the transfer back to Net loans (held for investment) of $101.7 million of Consumer Program loans as of March 31, 2025 after the decision to retain these for the foreseeable future or until maturity. The remaining declines were due to paydowns on the Consumer Program loans prior to transfer back to held for investment and sales of Primis Mortgage loans held at fair value, net of new originations.

Loans

Gross loans held for investment were $3.0 billion and $2.9 billion as of March 31, 2025 and December 31, 2024, respectively. The increase in loans was driven by the transfer back into the held for investment portfolio of Consumer Program loans along with growth of the mortgage warehouse and Panacea division loans, partially offset by loan paydowns concentrated in loans secured by real estate. As of March 31, 2025 and December 31, 2024, a majority of our loans were to customers located in Virginia and Maryland. We are not dependent on any single customer or group of customers whose insolvency would have a material adverse effect on our operations.

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The composition of our loans held for investment portfolio consisted of the following as of March 31, 2025 and December 31, 2024 (in thousands):


	March 31, 2025				December 31, 2024
	Amount		Percent		Amount		Percent
Loans secured by real estate:
Commercial real estate - owner occupied	$	477,233	15.7	%	$	475,898	16.5	%
Commercial real estate - non-owner occupied		600,872	19.7	%		610,482	21.1	%
Secured by farmland		3,742	0.1	%		3,711	0.1	%
Construction and land development		104,301	3.4	%		101,243	3.5	%
Residential 1-4 family		576,837	19.0	%		588,859	20.4	%
Multi- family residential		157,443	5.2	%		158,426	5.4	%
Home equity lines of credit		60,321	2.0	%		62,954	2.2	%
Total real estate loans		1,980,749	65.1	%		2,001,573	69.2	%

Commercial loans		698,097	22.9	%		608,595	21.1	%
Paycheck protection program loans		1,738	0.1	%		1,927	0.1	%
Consumer loans		357,652	11.7	%		270,063	9.4	%
Total Non-PCD loans		3,038,236	99.8	%		2,882,158	99.8	%
PCD loans		5,112	0.2	%		5,289	0.2	%
Total loans	$	3,043,348	100.0	%	$	2,887,447	100.0	%

The following table sets forth the contractual maturity ranges of our loans held for investment portfolio and the amount of those loans with fixed and floating interest rates in each maturity range as of March 31, 2025 (in thousands):


			After 1 Year				After 5 Years
			Through 5 Years				Through 15 Years				After 15 Years
	One Year		Fixed		Floating		Fixed		Floating		Fixed		Floating
	or Less		Rate		Rate		Rate		Rate		Rate		Rate		Total
Loans secured by real estate:
Commercial real estate - owner occupied	$	19,989	$	81,888	$	22,302	$	169,097	$	131,558	$	1,673	$	50,726	$	477,233
Commercial real estate - non-owner occupied		57,705		189,878		35,624		76,973		84,628		9,425		146,639		600,872
Secured by farmland		701		688		74		188		939		—		1,152		3,742
Construction and land development		52,540		1,818		26,092		3,868		19,926		—		57		104,301
Residential 1-4 family		8,661		49,872		17,637		23,234		48,827		66,688		361,918		576,837
Multi- family residential		20,233		86,716		21,592		—		6,458		—		22,444		157,443
Home equity lines of credit		3,830		864		7,235		56		790		19		47,527		60,321
Total real estate loans		163,659		411,724		130,556		273,416		293,126		77,805		630,463		1,980,749
Commercial loans		126,805		102,677		136,550		291,575		36,806		1,082		2,602		698,097
Paycheck protection program loans		1,215		523		—		—		—		—		—		1,738
Consumer loans		2,263		225,001		54,691		66,886		6,857		1,949		5		357,652
Total Non-PCD loans		293,942		739,925		321,797		631,877		336,789		80,836		633,070		3,038,236
PCD loans		1,159		2,461		104		—		1,008		380		—		5,112
Total loans	$	295,101	$	742,386	$	321,901	$	631,877	$	337,797	$	81,216	$	633,070	$	3,043,348

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The following table sets forth the contractual maturity ranges of our Consumer Program loan portfolio as of March 31, 2025, which is only originated at fixed rates. The amounts do not include the $16.3 million of remaining fair market value adjustments related to the original $20.0 million write-down of portfolio when transferred to HFS as of December 31, 2024 (in thousands):


	One Year or Less		After One Year to Five Years		After Five Through Ten Years		After Ten Years		Total
Total Consumer Program Loans ⁽¹⁾	$	1,236	$	59,524	$	50,482	$	36,574	$	147,816

⁽¹⁾ Does not include $16.3 million of remaining fair market value adjustments related to the original $20.0 million write-down of portfolio when transferred to HFS as of December 31, 2024.

The following table describes the period over which our Consumer Program loans that are currently in a no interest promotional period will exit that promotional period and begin to amortize. All of these promotional loans amortize over four years from the date they exit the promotional period if not prepaid before the end of the promotional period (in thousands):


	Amount ending		Amount ending
	No Interest		No Interest		Total Interest
	Promo Period in		Promo Period in		Promo
	next 12 months		next 13-24 months		as of 3/31/25
Consumer Program Loans	$	16,173	$	1,611	$	17,784

During the three months ended March 31, 2025, $21.1 million of loans either paid off during the no interest promo period or converted to amortizing at the end of the promo period.

Asset Quality; Past Due Loans and Nonperforming Assets

The following table presents a comparison of nonperforming assets as of March 31, 2025 and December 31, 2024 (in thousands):


	March 31,			December 31,
	2025			2024
Nonaccrual loans	$	12,950		$	15,026
Loans past due 90 days and accruing interest		1,713			1,713
Total nonperforming assets		14,663			16,739

SBA guaranteed amounts included in nonperforming loans	$	4,307		$	5,921

Allowance for credit losses to total loans		1.45	%		1.86	%
Allowance for credit losses to nonaccrual loans		339.79	%		357.53	%
Allowance for credit losses to nonperforming loans		300.10	%		320.94	%
Nonaccrual to total loans		0.43	%		0.52	%
Nonperforming assets excluding SBA guaranteed loans to total assets		0.28	%		0.29	%

Nonperforming assets declined during the first quarter of 2025, driven by a decrease in nonaccrual loans of $2.1 million. The decrease in nonaccrual loans was driven primarily by $2.5 million of paydowns during the quarter on one relationship that included two commercial loans in nonaccrual and was partially offset by several loans placed on nonaccrual during the quarter. We will generally place a loan on nonaccrual status when it becomes 90 days past due, with the exception of most consumer loans which are charged off at 120 days past due and Consumer Program loans which are charged off once they reach 90 days past due. Loans will also be placed on nonaccrual status in cases where we are

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uncertain whether the borrower can satisfy the contractual terms of the loan agreement. Cash payments received while a loan is categorized as nonaccrual will be recorded as a reduction of principal as long as doubt exists as to future collections.

We maintain appraisals on loans secured by real estate, particularly those categorized as nonperforming loans and potential problem loans. In instances where appraisals reflect reduced collateral values, we make an evaluation of the borrower’s overall financial condition to determine the need, if any, for impairment or write-down to their fair values. If foreclosure occurs, we record OREO at the lower of our recorded investment in the loan or fair value less our estimated costs to sell.

Our loan portfolio losses and delinquencies have been primarily limited by our underwriting standards and portfolio management practices. Whether losses and delinquencies in our portfolio will increase significantly depends upon the value of the real estate securing the loans and economic factors, such as the overall economy, rising or elevated interest rates, historically high or persistent inflation, and recessionary concerns.

Allowance for Credit Losses

Our allowance for credit losses was $44.0 million as of March 31, 2025 compared to $53.7 million as of December 31, 2024. The $9.7 million decline was driven by $11.3 million in net charge-offs during the first quarter of 2025, partially offset by $1.6 million in provision for expected credit losses. The decline in our allowance is also driven by higher credit quality of the remaining Consumer Program loans as of March 31, 2025, not requiring significant additions to the allowance. Net charge-offs were primarily related to charge-offs in the Consumer Program portfolio. During the three months ended March 31, 2025, we charged-off $10.8 million, net of recoveries, in the Consumer Program portfolio. A majority of these charge-offs related to loans originated from the third quarter of 2022 through the first quarter of 2023 where we have experienced significant credit weaknesses. The provision for expected credit losses during the first quarter was also driven primarily by provisions for the Consumer Program portfolio of $1.9 million.

We originate Consumer Program loans using a third party that sources and subsequently manages the portfolio of loans. As of March 31, 2025, the principal balance outstanding was $147.8 million excluding a $16.3 million discount as a result of our prior decision to market a majority of the portfolio for sale, which has since been moved back to held for investment and will be run-off over time. These loans are accounted for similar to our other consumer loans and are not placed on nonaccrual because they are charged off when they become 90 days past due. The allowance on this portfolio of loans was $7.5 million as of March 31, 2025 and represented 17% of our total allowance for credit losses. The allowance on this portfolio plus the discount results in a reduction of the outstanding principal balance of $23.8 million or 16%. As of March 31, 2025, 87% of the outstanding principal balance was current, resulting in 128% coverage by the aggregate allowance and discount of the non-current principal balances.

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Investment Securities

The following table sets forth a summary of the investment securities portfolio as of the dates indicated. Available-for-sale investment securities are reported at fair value, and held-to-maturity investment securities are reported at amortized cost (in thousands).


	March 31,		December 31,
	2025		2024
Available-for-sale investment securities:
Residential government-sponsored mortgage-backed securities	$	93,082	$	91,407
Obligations of states and political subdivisions		29,735		29,705
Corporate securities		15,338		15,080
Residential government-sponsored collateralized mortgage obligations		59,876		56,390
Government-sponsored agency securities		14,213		13,836
Agency commercial mortgage-backed securities		22,286		22,178
SBA pool securities		7,108		7,307
Total	$	241,638	$	235,903

Held-to-maturity investment securities:
Residential government-sponsored mortgage-backed securities	$	7,477	$	7,760
Obligations of states and political subdivisions		1,519		1,519
Residential government-sponsored collateralized mortgage obligations		157		169
Total	$	9,153	$	9,448

Debt investment securities that we have the positive intent and ability to hold to maturity are classified as held-to-maturity and carried at amortized cost. Investment securities classified as available-for-sale are those debt securities that may be sold in response to changes in interest rates, liquidity needs or other similar factors. Investment securities available-for-sale are carried at fair value, with unrealized gains or losses net of deferred taxes, included in accumulated other comprehensive income (loss) in stockholders’ equity. Our portfolio of available-for-sale securities currently contains a material amount of unrealized mark-to-market adjustments due to increases in market interest rates since the original purchase of many of these securities. We intend to hold these securities until maturity or recovery of the value and do not anticipate realizing any losses on the investments.

Investment securities, available-for-sale and held-to-maturity, totaled $250.8 million as of March 31, 2025, an increase of 2.2% from $245.4 million as of December 31, 2024, primarily due to purchases of available-for-sale securities, partially offset by paydowns, maturities, and calls of the investments over the past three months. We recognized no credit impairment charges related to credit losses on our held-to-maturity investment securities during the three months ended March 31, 2025.

For additional information regarding investment securities refer to “Note 2 - Investment Securities” in this Form 10-Q.

Deposits and Other Borrowings

Deposits

The market for deposits is competitive. We offer a line of traditional deposit products that currently include noninterest-bearing and interest-bearing checking (or NOW accounts), commercial checking, money market accounts, savings accounts and certificates of deposit. We compete for deposits through our banking branches with competitive pricing, as well as nationally through advertising and online banking. We use deposits as a principal source of funding for our lending, purchasing of investment securities and for other business purposes.

The variety of deposit accounts we offer allows us to be competitive in obtaining funds and in responding to the threat of disintermediation (the flow of funds away from depository institutions such as banking institutions into direct

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investment vehicles such as government and corporate securities). Our ability to attract and maintain deposits, and the effect of such retention on our cost of funds, has been, and will continue to be, significantly affected by the general economy and market rates of interest.

Total deposits were $3.2 billion as of both March 31, 2025 and December 31, 2024. The mix of deposits changed during the three months, including an increase in lower-cost demand and NOW deposit balances of $9.2 million, offset by a decline in money market deposit account balances. Our deposits are diversified in type and by underlying customer and lack significant concentrations to any type of customer (i.e. commercial, consumer, government) or industry. Deposits are net of excess amounts we sweep off balance sheet to manage liquidity. Deposits swept off balance sheet were $157 million as of March 31, 2025, compared to $137 million as of December 31, 2024.

Uninsured deposits are defined as the portion of deposit accounts in U.S. offices that exceed the FDIC insurance limit and amounts in any other uninsured investment or deposit account that are classified as deposits and are not subject to any federal or state deposit insurance regimes. Total uninsured deposits as calculated per regulatory guidance were $623.5 million, or 20% of total deposits, as of March 31, 2025.

Other Borrowings

We use other borrowed funds to support our liquidity needs and to temporarily satisfy our funding needs from increased loan demand and for other shorter term purposes. We are a member of the FHLB and are authorized to obtain advances from the FHLB from time to time as needed. The FHLB has a credit program for members with different maturities and interest rates, which may be fixed or variable. We are required to collateralize our borrowings from the FHLB with purchases of FHLB stock and other collateral acceptable to the FHLB. As of March 31, 2025 and December 31, 2024, we had no FHLB borrowings. As of March 31, 2025, we had $366.3 million of unused and available FHLB lines of credit as well as $550.5 million of available credit with the Federal Reserve Bank (FRB), secured by excess collateral pledged to the FHLB and FRB in the form of loans and investment securities.

Other borrowings can consist of federal funds purchased, secured borrowings due to failed loan sales, and securities sold under agreements to repurchase (“repo”) that mature within one year, which are secured transactions with customers. The balance in repo accounts at both March 31, 2025 and December 31, 2024 was $4.0 million and $3.9 million, respectively.

We had secured borrowings of $16.7 million and $17.2 million as of March 31, 2025 and December 31, 2024, respectively, related to loan transfers to other financial institutions during 2023 and 2024 that did not meet the criteria to be treated as a sale under relevant accounting guidance. These borrowings reflect the cash received for transferring the loans to the other financial institution and any unamortized sale premium and are secured by approximately the same amount of loans held for investment that are recorded in our balance sheet. We retained the servicing of the loans that were transferred and accordingly receive principal and interest from the borrower as contractually required and transfer the interest to the other financial institution net of our contractually agreed upon servicing fee. The loans transferred have an average maturity of approximately ten years which will be the time over which the principal balance of the loans in our balance sheet and secured borrowings will pay down, absent borrower prepayments. For additional information on secured borrowings refer to “Note 7 –Debt and Other Borrowings” in this Form 10-Q.

Junior Subordinated Debt and Senior Subordinated Notes

For information about junior subordinated debt and senior subordinated notes and their anticipated principal repayments refer to “Note 7 –Debt and Other Borrowings.”

Liquidity and Funds Management

The objective of our liquidity management is to ensure the ability to meet our financial obligations. These obligations include the payment of deposits on demand or at maturity, the repayment of borrowings at maturity and the ability to fund commitments and other new business opportunities. We obtain funding from a variety of sources, including customer deposit accounts, customer certificates of deposit and payments on our loans and investments. If our level of core deposits

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are not sufficient to fully fund our lending activities, we have access to funding from additional sources, including but not limited to borrowing from the Federal Home Loan Bank of Atlanta and institutional certificates of deposits. In addition, we maintain federal funds lines of credit with two correspondent banks, totaling $75 million, and utilize securities sold under agreements to repurchase and reverse repurchase agreement borrowings from approved securities dealers as needed. For additional information about borrowings and anticipated principal repayments refer to “Note 7 –Debt and Other Borrowings”, and “Note 9 – Commitments and Contingencies.”

We prepare a cash flow forecast on a 30, 60 and 90 day basis along with a one and two year basis. These projections incorporate expected cash flows on loans, investment securities, and deposits based on data used to prepare our interest rate risk analyses. As of March 31, 2025, Primis was not aware of any known trends, events or uncertainties that have or are reasonably likely to have a material impact on our liquidity. As of March 31, 2025, Primis has no material commitments or long-term debt for capital expenditures.

Capital Resources

Capital management consists of providing equity to support both current and future operations. Primis Financial Corp. and its subsidiary, Primis Bank, are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory - and possibly additional discretionary - actions by regulators that, if undertaken, could have a direct material effect on our financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action (“PCA”), we must meet specific capital guidelines that involve quantitative measures of our assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. As of March 31, 2025 and December 31, 2024, the most recent regulatory notifications categorized the Bank as well capitalized under regulatory framework for PCA. Federal banking agencies do not provide a similar well capitalized threshold for bank holding companies.

Quantitative measures established by regulation to ensure capital adequacy require Primis to maintain minimum amounts and ratios of Total and Tier I capital (as defined in the regulations) to average assets (as defined). Management believes, as of March 31, 2025, that Primis meets all capital adequacy requirements to which it is subject.

The following table provides a comparison of the leverage and risk-weighted capital ratios of Primis Financial Corp. and Primis Bank at the periods indicated to the minimum and well-capitalized required regulatory standards:


	Minimum
	Required for
	Capital		To Be		Actual Ratio at
	Adequacy		Categorized as		March 31,		December 31,
	Purposes		Well Capitalized⁽¹⁾		2025		2024
Primis Financial Corp.
Leverage ratio	4.00	%	n/a		8.71	%	7.76	%
Common equity tier 1 capital ratio	4.50	%	n/a		9.35	%	8.74	%
Tier 1 risk-based capital ratio	6.00	%	n/a		9.66	%	9.05	%
Total risk-based capital ratio	8.00	%	n/a		12.96	%	12.53	%

Primis Bank
Leverage ratio	4.00	%	5.00	%	9.72	%	9.10	%
Common equity tier 1 capital ratio	7.00	%	6.50	%	10.96	%	10.78	%
Tier 1 risk-based capital ratio	8.50	%	8.00	%	10.96	%	10.78	%
Total risk-based capital ratio	10.50	%	10.00	%	12.22	%	12.04	%

(1)	Prompt corrective action provisions are not applicable at the bank holding company level.

Bank regulatory agencies have approved regulatory capital guidelines (“Basel III”) aimed at strengthening existing capital requirements for banking organizations. The Basel III Capital Rules require Primis Financial Corp. and Primis Bank to maintain (i) a minimum ratio of Common Equity Tier 1 capital to risk-weighted assets of at least 4.5%, plus a

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2.5% “capital conservation buffer”, (ii) a minimum ratio of Tier 1 capital to risk-weighted assets of at least 6.0%, plus the capital conservation buffer, (iii) a minimum ratio of Total capital to risk-weighted assets of at least 8.0%, plus the capital conservation buffer and (iv) a minimum leverage ratio of 4.0%. Failure to meet minimum capital requirements may result in certain actions by regulators which could have a direct material effect on the consolidated financial statements.

Primis Financial Corp. and Primis Bank remain well-capitalized under Basel III capital requirements. Primis Bank had a capital conservation buffer of 4.22% as of March 31, 2025, which exceeded the 2.50% minimum requirement below which the regulators may impose limits on distributions.

Primis Bank’s capital position is consistent with being well-capitalized under the regulatory framework for PCA.

CRITICAL ACCOUNTING POLICIES

The critical accounting policies are discussed in MD&A in our Annual Report on Form 10-K for the year ended December 31, 2024. Significant accounting policies and changes in accounting principles and effects of new accounting pronouncements are discussed in “Note 1 - Organization and Significant Accounting Policies” in the Form 10-K for the year ended December 31, 2024. Disclosures regarding changes in our significant accounting policies since year end and the effects of new accounting pronouncements are included in “Note 1 - Accounting Policies” in this Form 10-Q. There have been no changes to the significant accounting policies during the first three months of 2025.

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ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are engaged primarily in the business of investing funds obtained from deposits and borrowings into interest-earning loans and investments. Consequently, our earnings depend to a significant extent on our net interest income, which is the difference between the interest income on loans and other investments and the interest expense on deposits and borrowings. To the extent that our interest-bearing liabilities do not reprice or mature at the same time as our interest-earning assets, we are subject to interest rate risk and corresponding fluctuations in net interest income. Our Asset-Liability Committee (“ALCO”) meets regularly and is responsible for reviewing our interest rate sensitivity position and establishing policies to monitor and limit exposure to interest rate risk. The policies established by the ALCO are reviewed and approved by our Board of Directors. We have employed asset/liability management policies that seek to manage our net interest income, without having to incur unacceptable levels of credit or investment risk.

We use simulation modeling to manage our interest rate risk, and review quarterly interest sensitivity. This approach uses a model which generates estimates of the change in our economic value of equity (“EVE”) over a range of interest rate scenarios. EVE is the present value of expected cash flows from assets, liabilities and off-balance sheet contracts using assumptions including estimated loan prepayment rates, reinvestment rates and deposit decay rates.

The following tables are based on an analysis of our interest rate risk as measured by the estimated change in EVE resulting from instantaneous and sustained parallel shifts in the yield curve (plus 400 basis points or minus 100 basis points, measured in 100 basis point increments) as of March 31, 2025 and December 31, 2024. All changes are within our Asset/Liability Risk Management Policy guidelines (amounts in thousands).


	Sensitivity of EVE
	As of March 31, 2025
	EVE						EVE as a % of
Change in Interest Rates			$ Change		% Change		Total		Equity
in Basis Points (Rate Shock)	Amount		From Base		From Base		Assets		Book Value
Up 400	$	389,471	$	(143,548)	(26.93)	%	10.53	%	103.70	%
Up 300		426,188		(106,831)	(20.04)	%	11.53	%	113.48	%
Up 200		460,968		(72,051)	(13.52)	%	12.47	%	122.74	%
Up 100		508,135		(24,884)	(4.67)	%	13.74	%	135.30	%
Base		533,019		—	—	%	14.42	%	141.93	%
Down 100		542,288		9,269	1.74	%	14.67	%	144.39	%
Down 200		528,091		(4,928)	(0.92)	%	14.28	%	140.61	%
Down 300		499,193		(33,826)	(6.35)	%	13.50	%	132.92	%
Down 400		443,901		(89,118)	(16.72)	%	12.01	%	118.20	%


	Sensitivity of EVE
	As of December 31, 2024
	EVE						EVE as a % of
Change in Interest Rates			$ Change		% Change		Total		Equity
in Basis Points (Rate Shock)	Amount		From Base		From Base		Assets		Book Value
Up 400	$	438,490	$	(68,444)	(13.50)	%	11.88	%	120.14	%
Up 300		451,722		(55,212)	(10.89)	%	12.24	%	123.77	%
Up 200		464,410		(42,524)	(8.39)	%	12.59	%	127.24	%
Up 100		493,213		(13,721)	(2.71)	%	13.37	%	135.13	%
Base		506,934		—	—	%	13.74	%	138.89	%
Down 100		509,055		2,121	0.42	%	13.80	%	139.47	%
Down 200		493,913		(13,021)	(2.57)	%	13.38	%	135.33	%
Down 300		469,048		(37,886)	(7.47)	%	12.71	%	128.51	%
Down 400		435,781		(71,153)	(14.04)	%	11.81	%	119.40	%

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Our interest rate sensitivity is also monitored by management through the use of a model that generates estimates of the change in the net interest income (“NII”) over a range of interest rate scenarios. NII depends upon the relative amounts of interest-earning assets and interest-bearing liabilities and the interest rates earned or paid on them. In this regard, the model assumes that the composition of our interest sensitive assets and liabilities existing as of March 31, 2025 and December 31, 2024 remains constant over the period being measured and also assumes that a particular change in interest rates is reflected uniformly across the yield curve regardless of the duration to maturity or repricing of specific assets and liabilities. All changes are within our ALM Policy guidelines as of March 31, 2025 and December 31, 2024 (amounts in thousands).


	Sensitivity of NII
	As of March 31, 2025
	Adjusted NII
Change in Interest Rates			$ Change
in Basis Points (Rate Shock)	Amount		From Base
Up 400	$	110,965	$	(2,166)
Up 300		111,251		(1,880)
Up 200		111,527		(1,604)
Up 100		113,216		85
Base		113,131		—
Down 100		112,908		(223)
Down 200		111,324		(1,807)
Down 300		109,553		(3,578)
Down 400		108,084		(5,047)


	Sensitivity of NII
	As of December 31, 2024
	Adjusted NII
Change in Interest Rates			$ Change
in Basis Points (Rate Shock)	Amount		From Base
Up 400	$	95,367	$	(15,874)
Up 300		98,941		(12,300)
Up 200		102,472		(8,769)
Up 100		107,370		(3,871)
Base		111,241		—
Down 100		114,126		2,885
Down 200		114,960		3,719
Down 300		115,205		3,964
Down 400		115,736		4,495

Sensitivity of EVE and NII are modeled using different assumptions and approaches. Certain shortcomings are inherent in the methodology used in the above interest rate risk measurements. Modeling changes in EVE and NII sensitivity requires the making of certain assumptions that may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. Accordingly, although the EVE tables and NII tables provide an indication of our interest rate risk exposure at a particular point in time, such measurements are not intended to, and do not, provide a precise forecast of the effect of changes in market interest rates on our net worth and NII.

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ITEM 4 – CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures. Disclosure controls and procedures are our controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

As of the end of the period covered by this quarterly report on Form 10-Q, under the supervision and with the participation of management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d -15(e) under the Securities Exchange Act of 1934). Based upon that evaluation, our CEO and CFO have concluded that these controls and procedures are not effective as of the end of the period covered by this Quarterly Report on Form 10-Q. This conclusion was reached as a result of the continued remediation of previously identified material weaknesses in its internal controls over financial reporting as further described in Item 9A in the 2024 Annual Report on Form 10-K.

Notwithstanding the material weaknesses that have not been fully remediated, the Company’s management, including the CEO and CFO, has concluded that the condensed consolidated financial statements, included in this Form 10-Q, as of and for the three months ended March 31, 2025, fairly present, in all material respects, the Company's financial condition, results of operations and cash-flows for the periods presented in conformity with generally accepted accounting principles for interim financial statements.

(b) Changes in Internal Control over Financial Reporting. There were no changes in our internal controls over financial reporting that occurred during the three months ended March 31, 2025 that materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting. During the three months ended March 31, 2025, the Company continued to remediate the material weaknesses in its internal control over financial reporting as previously identified and disclosed in Item 9A. in the 2024 Annual Report on Form 10-K. Management continues to put controls in place to remediate the previously identified material weaknesses and the material weaknesses will not be remediated until the necessary controls are in place and operating effectively for a sufficient amount of time.

PART II - OTHER INFORMATION

ITEM 1 – LEGAL PROCEEDINGS

Primis and Primis Bank are from time to time a party, as both plaintiff and defendant, to various claims and proceedings arising in the ordinary course of the Bank’s business, including administrative and/or legal proceedings that may include employment-related claims, as well as claims of lender liability, breach of contract, and other similar lending-related claims. While the ultimate resolution of these matters cannot be determined at this time, the Bank’s management presently believes that such matters, individually and in the aggregate, will not have a material adverse effect on the Bank’s financial condition or results of operations. There are no proceedings pending, or to management’s knowledge, threatened, that represent a significant risk against Primis or Primis Bank as of March 31, 2025.

ITEM 1A – RISK FACTORS

In addition to the other information set forth in this Report, in evaluating an investment in the Company’s securities, investors should consider carefully, among other things, the risk factors previously disclosed in Part I, Item 1A of our 2024 Form 10-K, which could materially affect the Company's business, financial position, results of operations, cash flows, or future results. Please be aware that these risks may change over time and other risks may prove to be important in the future. New risks may emerge at any time, and we cannot predict such risks or estimate the extent to which they may affect our business, financial condition or results of operations, or the trading price of our securities.

There are no material changes during the period covered by this Report to the risk factors previously disclosed in our 2024 Form 10-K.

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ITEM 2 – UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES

Not applicable.

ITEM 3 – DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4 – MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5 – OTHER INFORMATION

Pursuant to Item 408(a) of Regulation S-K, none of the Company's directors or executive officers adopted, terminated or modified a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the three months ended March 31, 2025.

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ITEM 6 - EXHIBITS

(a) Exhibits.


Exhibit No.		Description

3.1		Articles of Incorporation (incorporated herein by reference to Exhibit 3.1 to Primis Financial Corp.’s (formerly Southern National’s) Registration Statement on Form S-1 (Registration No. 333-136285) filed August 4, 2006)

3.2		Certificate of Amendment to the Articles of Incorporation dated January 31, 2005 (incorporated herein by reference to Exhibit 3.2 to Primis Financial Corp.’s (formerly Southern National’s) Registration Statement on Form S-1 (Registration No. 333-136285) filed on August 4, 2006)

3.3		Certificate of Amendment to the Articles of Incorporation dated April 13, 2006 (incorporated herein by reference to Exhibit 3.3 to Primis Financial Corp.’s (formerly Southern National’s) Registration Statement on Form S-1 (Registration No. 333-136285) filed on August 4, 2006)

3.4		Articles of Amendment to the Articles of Incorporation dated June 30, 2021 (incorporated herein by reference to Exhibit 3.1 to Primis Financial Corp.’s Current Report on Form 8-K filed on June 30, 2021)

3.5		Amended and Restated Bylaws (incorporated herein by reference to Exhibit 3.2 to Primis Financial Corp.’s Current Report on Form 8-K filed on June 30, 2021)

31.1*		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1**		Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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101		The following materials from Primis Financial Corp. Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, formatted in Inline XBRL (Extensible Business Reporting Language), filed herewith: (i) Consolidated Balance Sheets (unaudited), (ii) Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) (unaudited), (iii) Consolidated Statement of Changes in Stockholders’ Equity (unaudited), (iv) Consolidated Statements of Cash Flows (unaudited), and (v) Notes to Consolidated Financial Statements (unaudited).

104		The cover Page Interactive Data File (the cover page XBRL tags are embedded in the Inline XBRL document).

+ Management contract or compensatory plan or arrangement

* Filed with this Quarterly Report on Form 10-Q

** Furnished with this Quarterly Report on Form 10-Q

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Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


			Primis Financial Corp.
			(Registrant)


May 13, 2025			/s/ Dennis J. Zember, Jr.
(Date)			Dennis J. Zember, Jr.
			President and Chief Executive Officer



May 13, 2025			/s/ Matthew Switzer
(Date)			Matthew Switzer
			Executive Vice President and Chief Financial Officer