Results
Primis Financial Corp.
08/11/2025 | Press release | Distributed by Public on 08/11/2025 15:13
Amendment to Current Report (Form 8-K/A)
Primis Financial Corp. Reports Earnings per Share for the Second Quarter of 2025
Declares Quarterly Cash Dividend of $0.10 Per Share
For immediate release
Thursday, July 24, 2025
McLean, Virginia, July 24, 2025 - Primis Financial Corp. (NASDAQ: FRST) ("Primis" or the "Company"), and its wholly-owned subsidiary, Primis Bank (the "Bank"), today reported net income available to common shareholders of $2.4 million, or $0.10 per diluted share, for the quarter ended June 30, 2025, compared to $3.4 million, or $0.14 per diluted share, for the quarter ended June 30, 2024.
For the six months ended June 30, 2025, the Company reported net income available to common shareholders of $25.1 million, or $1.01 per diluted share, compared to a net income available to common shareholders of $5.9 million or $0.24 per diluted share, for the six months ended June 30, 2024.
Operating Results
Operating results in the quarter clearly point to improved profitability and momentum on key areas but included positive and negative items that management expects to not reflect going forward. Significant items occurring during the quarter were:
| · | During the quarter, the Company completed the sale of a portion of its ownership in Panacea Financial Holdings, Inc. ("PFH") generating proceeds to the Company of $22.1 million and an additional pre-tax gain of $7.5 million. |
| · | Promotional loans driving volatility in the Company's results finished the quarter at only $9.6 million. The Company's credit quality results for the quarter warranted no additional provision for loan losses on this portfolio. Write-offs of accrued interest on promotional loans that rolled to amortization but subsequently defaulted was $2 million and expected to decline to less than $0.5 million in the third quarter of 2025 given the very low levels of promotional interest recognized in the second quarter. |
| · | Primis Mortgage closed $323 million in loans, up 52% from the same quarter in 2024. A substantial portion of the increase in closed volume was construction-to-permanent product related with revenue delayed until the end of the construction period. Additionally, pricing and draw support for the new production teams substantially ended during the quarter and totaled $1.2 million. |
| · | Several items have occurred that will impact the Company's operations going forward. Renegotiation of the Company's core contract with its provider as well as other items are expected to reduce expenses $0.9 million in the third quarter and then $1.5 million in the fourth quarter and beyond. Continued consolidation of the Company's cores and other vendor relationships will continue and provide more than adequate downward pressure on operating expenses to allow for substantial operating leverage through the end of 2026. |
Commenting on the quarter, Dennis J. Zember, Jr., President and Chief Executive Officer, stated, "We are pleased with the progress we have made in rebuilding our balance sheet for higher sustained earnings as we enter the second half of 2025. The core bank is maximizing profitability with its enviable core deposit base while pursuing moderate growth. At the same time, mortgage warehouse and Panacea are executing on their tremendous growth potential while non-core portfolios run off.
1
As discussed below, the second quarter was impacted by the last sizable portion of Consumer Program interest reversals and higher expenses that aren't expected to continue. Adjusting for those items and the PFH gain, our run-rate pre-tax pre-provision earnings were approximately $8.1 million in the second quarter. Mortgage profitability was lower due to increasing construction to perm lending that is highly profitable but has a lag until revenue materializes. In the second quarter, the value of that production was approximately $0.9 million pre-tax assuming conservative gain on sale margins. Lastly, we are close to executing on our plan to reduce technology costs and anticipate the savings to begin late in the third quarter of 2025. Along with the end of our core deposit amortization in June, our expected reduction in quarterly expenses is approximately $1.5 million. In total, we believe we have visibility to pre-tax pre-provision earnings of $10.5 to $11 million before the benefits of the profitable growth and balance sheet repricing we have in front of us."
Significant Improvement in All Divisions
As discussed in previous quarters, the Company spent substantial time and energy in 2024 focusing the organization on its core bank and lines of business that drive premium operating results. The second quarter of 2025 demonstrated progress in key areas that are expected to continue and build through the rest of the year and into 2026. The following discussion highlights recent progress for each of these strategies:
Core Community Bank
The core bank has 24 banking offices in Virginia and Maryland and is approximately 70% of the Company's total balance sheet. Management believes the core bank's value amongst its regional peers is undeniable given how well its balance sheet is positioned:
| · | The Core bank has low concentrations of investor CRE (39% of loans and only 213% of regulatory capital) |
| · | A robust pipeline of mostly new customers to the bank with yields that are incremental to the Bank's margin |
| · | Cost of deposits of 1.79% in the second quarter of 2025 compared to 2.20% in the same quarter in 2024. The core bank's cost of deposits is up to 100 basis points lower than similar sized peers in the greater DC region. |
| · | Zero brokered deposits and no reliance on FHLB borrowings. |
| · | A proprietary banking app for commercial depositors that drives new sales independent of lending efforts in and around our region. |
Approximately 19% of the core bank's deposit base are noninterest bearing deposits, supported with what management believes is the region's best and most unique technology including the Bank's proprietary V1BE service which directly supports more than $200 million of mostly commercial clients in the Bank's footprint. Approximately $30 million of checking accounts are associated with customers that use V1BE every week. The Company is frequently approached by other community banks looking to use this technology with their own customers. Primis is currently implementing enhancements to make V1BE easier to license to other banks and expects to have its first customer onboard before the end of 2025.
Primis Mortgage
Primis Mortgage has closed mortgage volume of $323 million in the second quarter of 2025, up 52% compared to the same quarter in 2024. Earnings for Primis mortgage were depressed by approximately $1.2 million related to the commitment of one quarter's support for the new production teams hired in the last week of the first quarter of 2025.
National Strategies
Mortgage warehouse lending activity was significant in the first and second quarter of 2025 following the expansion of the team in the fall of 2024. Outstanding loan balances at June 30, 2025 were $185 million, up 60% from $115 million at March 31, 2025 and up 189% from $64 million at December 31, 2024. Committed facilities ended the second quarter of 2025 at $804 million versus $487 million at March 31, 2025 and $349 million at the end of 2024. Mortgage warehouse also funded approximately 11% of its balance sheet with associated customer noninterest bearing deposit balances totaling $21 million at June 30, 2025 up 80% from March 31, 2025.
Funding for the national strategies is provided exclusively by the Bank's digital platform powered by what the Bank believes is one the safest and most functional deposit account in the nation. Because of the scalability of the platform, there is no pressure whatsoever on the core bank to provide funding and risk the profitable, decades old relationships with core customers
(1) Non-GAAP financial measure. Please see "Reconciliation of Non-GAAP Items" in the financial tables for more information and for a reconciliation to GAAP.
2
The platform ended the second quarter of 2025 with almost $1.1 billion of deposits with a cost of deposits of 4.28% in the month of June 2025, compared to $0.9 billion at June 30, 2024 with a cost of 5.05%. Over 1,000 of our digital accounts have come from referrals from another customer and approximately 61% of our consumer accounts have been with the bank for over two years.
Panacea Financial
Panacea's growth remained strong through the second quarter of 2025 with loans outstanding of $505 million, up 34% compared to the same quarter in 2024. At the end of the current quarter, Panacea customer deposits totaled $107 million, up 58% from June 30, 2024. Importantly, much of this growth was commercial in nature with a weighted average cost below 0.25% and has continued at a similar pace since quarter end.
Panacea is the number one ranked "Bank for doctors" on Google and banks over 7,000 professionals and practices nationwide with a goal of reaching 10,000 customers by the end of 2025. Panacea is also developing the initial phase of what is expected to be a sophisticated suite of technology products and services targeting the medical, dental and veterinary space.
Net Interest Income
Because of the final significant write-off of accrued interest on the consumer loan portfolio and $0.3 million of interest reversal on a commercial real estate loan that moved to nonaccrual in the second quarter, net interest income decreased to $25.2 million during the second quarter of 2025 compared to $26.4 million in the first quarter of 2025 and $24.9 million in the second quarter of 2024. The reported net interest margin was 2.86% in the second quarter of 2025 compared to 2.72% in the second quarter of 2024.
Excluding the impacts of the Consumer Program portfolio, the Company's net interest margin was 3.12%(1) in the second quarter of 2025 compared to 2.80%(1) in the same quarter in 2024. Net interest income for the second quarter, excluding the impacts of the write-off of accrued interest, increased by 10.4% to $27.5 million compared to $24.9 million in the second quarter of 2024.
Normalizing the volatile income and write-off recognition in the consumer portfolio to illustrate the Company's net interest margin and forward momentum is seen below:
| ($ in thousands) | 2Q25 | 1Q25 | 4Q24 | 3Q24 | ||||||||||||
| Int. Inc. Recog. - Consumer Prog. | $ | 2,077 | $ | 5,676 | $ | 5,831 | $ | 5,152 | ||||||||
| Int. Inc. Reversals - Consumer Prog. | (2,037 | ) | (2,832 | ) | (2,512 | ) | - | |||||||||
| Int. Inc., Net - Consumer Prog, | 40 | 2,844 | 3,319 | 5,152 | ||||||||||||
| Promo Interest Income Recognized | 321 | 3,264 | 2,976 | 2,956 | ||||||||||||
| Promo Interest Reversals | (2,066 | ) | (2,644 | ) | (2,493 | ) | - | |||||||||
| Promo Interest Income, Net | $ | (1,745 | ) | $ | 620 | $ | 483 | $ | 2,956 | |||||||
Under GAAP, the Company recognizes interest income when promotional features on the Consumer Program loans expire and which generally includes a substantial amount of deferred interest accumulated to that point. If the loan subsequently defaults, that previously recognized interest is reversed against interest income. As detailed in the table above, the Bank recognized substantial interest income on loans exiting their promotional periods beginning in the third quarter of 2024 with a roughly one quarter lag of subsequent reversals primarily due to high first payment defaults on full deferral promotional loans. As seen in the table, interest recognized on promotional loan expirations was insignificant in the second quarter of 2025 which will lead to substantially lower interest income reversals going forward. At June 30, 2025, the Company had $9.7 million of full deferral loans remaining, down from $77.2 million at June 30, 2024, with promotional period expirations spread over the next four quarters. Net interest margin excluding the Consumer Program portfolio impact entirely, including balances, the net interest margin for the rest of the Bank was 3.12%(1) in the second quarter of 2025, down slightly from 3.13%(1) in the first quarter of 2025.
Excluding the interest write-offs on the consumer loan book the yield on loans and yield on average earnings assets was 5.87% and 5.64% in the second quarter of 2025, respectively, compared to 5.91% and 5.72%, respectively, in the same quarter of 2024. New and renewed loan production in the second quarter of 2025 across all divisions had a weighted average yield of 7.57% which compares favorably to 7.25% for the same quarter in 2024. Total maturities of loans over the five quarters beginning with the fourth quarter of 2025 total $574 million with weighted average yields of 5.71%, indicating continued opportunity for management to move yields on loans and average earning assets higher.
(1) Non-GAAP financial measure. Please see "Reconciliation of Non-GAAP Items" in the financial tables for more information and for a reconciliation to GAAP.
3
Cost of deposits in the second quarter of 2025 was 2.52% compared to 2.98% in the same quarter in 2024. The Company recently lowered digital platform rates and, combined with recent growth in lower cost deposit accounts, expects further improvement in cost of deposits in the third quarter of 2025.
Noninterest Income
Noninterest income was $18.0 million in the second quarter of 2025 versus $32.3 million in the first quarter of 2025 and $10.7 million in the second quarter of 2024. The Company deconsolidated PFH as of March 31, 2025 and upon deconsolidation recognized a gain of $24.6 million within noninterest income in the first quarter of 2025. Noninterest income in the second quarter of 2025 included a $7.4 million gain from the sale of a portion of the Company's PFH shares and remeasurement of the remaining shares at fair market value at June 30, 2025. Income from mortgage banking activity increased to $7.9 million in the second quarter of 2025 compared to $5.6 million in the first quarter of 2025. Noninterest income from the Consumer Program increased to $0.6 million in the second quarter of 2025 from a loss of $0.3 million in the first quarter of 2025 largely due to prepayment activity offsetting the reduction in the associated derivative. The Company also recorded losses on other investments of $0.3 million in the second quarter of 2025 versus gains of $0.1 million in the first quarter of 2025. Lastly, gain on sale of SBA loans was $0.2 million in the second quarter of 2025 after no sales in the first quarter of 2025.
Noninterest Expense
Noninterest expense was $31.9 million for the second quarter of 2025, compared to $32.5 million for the first quarter of 2025. First quarter noninterest expense included consolidated expenses from PFH prior to deconsolidation as of March 31, 2025. Management considers the core expense burden of the Bank that adjusts for certain items that are volume dependent such as mortgage banking-related expenses or expense related to changes in the reserve for unfunded commitments. The following table illustrates the Company's core operating expense burden during 2024 and the first two quarters of 2025:
| ($ in thousands) | 2Q25 | 1Q25 | 4Q24 | 3Q24 | 2Q24 | |||||||||||||||
| Reported Noninterest Expense | $ | 31,927 | $ | 32,516 | $ | 37,841 | $ | 30,603 | $ | 29,662 | ||||||||||
| PFH Consolidated Expenses | - | (4,754 | ) | (3,641 | ) | (2,576 | ) | (2,347 | ) | |||||||||||
| Noninterest Expense Excl. PFH | 31,927 | 27,762 | 34,200 | 28,027 | 27,315 | |||||||||||||||
| Nonrecurring | (232 | ) | (1,144 | ) | (3,686 | ) | (1,000 | ) | (1,329 | ) | ||||||||||
| Primis Mortgage Expenses | (8,514 | ) | (5,569 | ) | (6,354 | ) | (6,436 | ) | (6,084 | ) | ||||||||||
| Consumer Program Servicing Fee | (518 | ) | (622 | ) | (681 | ) | (699 | ) | (312 | ) | ||||||||||
| Reserve for Unfunded Commitment | (18 | ) | (13 | ) | 6 | (96 | ) | 546 | ||||||||||||
| Total Adjustments | (9,282 | ) | (7,348 | ) | (10,715 | ) | (8,231 | ) | (7,179 | ) | ||||||||||
| Core Operating Expense Burden | $ | 22,645 | $ | 20,414 | $ | 23,485 | $ | 19,796 | $ | 20,136 | ||||||||||
As noted above, the core expense burden increased $2.2 million in the second quarter of 2025 from the first quarter of 2025. The second quarter included a number of items not expected to continue going forward including approximately $0.5 million of consulting expenses, $0.4 million related to additional FDIC insurance expense, $0.4 million of remaining audit expense for the 2024 audit and $0.2 million of legal expenses related to employee fraud recovery efforts. Marketing expenses were also approximately $0.2 million higher in the second quarter of 2025 versus the first quarter of 2025 but are expected to moderate. Adjusting for these items, core operating expense burden would have been less than $21 million and within the range of $20 million to $21 million of quarterly noninterest expense previously estimated for 2025.
Loan Portfolio and Asset Quality
Loans held for investment increased to $3.13 billion at June 30, 2025 compared to $3.04 billion at March 31, 2025 and declined from $3.30 billion at June 30, 2024 prior to the sale of the Life Premium Finance portfolio. Important drivers in these levels are seen below:
| · | Core Bank loans totaled $2.12 billion at June 30, 2025 compared to $2.22 billion at June 30, 2024. |
| · | Panacea Financial loans grew $129 million or 34% to $505 million over the past 12 months ending June 30, 2024. Doctors and practices in the division's network improved from approximately 5,000 at June 30, 2024 to over 7,000 at June 30, 2025. |
(1) Non-GAAP financial measure. Please see "Reconciliation of Non-GAAP Items" in the financial tables for more information and for a reconciliation to GAAP.
4
| · | Mortgage warehouse outstandings improved to $185 million at the end of the second quarter of 2025 compared to only $14 million at the same time in 2024. Approved lines grew substantially during the quarter to $804 million, up approximately 65% since March 31, 2025. |
| · | Loan balances associated with the consumer loan program declined to $113 million at June 30, 2025, net of the fair value discounts compared to $194 million at June 30, 2024. Importantly, loans in promotional periods with full deferral were only $9.6 million or 7.8% of gross loans at June 30, 2025 compared to $77.2 million or 40% of total loans a year ago. |
| · | Investor CRE as a percentage of regulatory capital was 213% at both June 30, 2025 and June 30, 2024. |
Nonaccrual loans, excluding portions guaranteed by the SBA, were 1.54% of total loans at June 30, 2025 compared to 0.24% of total loans at June 30, 2024. The increase in nonaccrual loans in the second quarter of 2025 was primarily driven by the downgrade of one commercial real estate loan with a balance of $40.1 million to nonaccrual status. As in prior quarters, the Bank has no other real estate owned at the end of the second quarter of 2025.
The Company recorded a provision for loan losses of $8.3 million for the second quarter of 2025 compared to $1.6 million for the first quarter of 2025 and $3.1 million in the same quarter in 2024. Approximately $7.1 million of the provision was driven by the downgrade of two commercial real estate loans to substandard in the second quarter of 2025, one of which required impairment under the Company's allowance methodology. As previously stated, the Company moved the Consumer Program loan book into its held for investment loan portfolio in the first quarter of 2025 and evaluated the portfolio using its CECL model at that time. Based on performance during the quarter, there was no required provision expense associated with the Consumer Program in the second quarter of 2025. As a percentage of loans held for investment, the allowance for credit losses was 1.47% at the end of the second quarter of 2025 compared to 1.56% at the end of the second quarter of 2024. Total allowance and discounts on the Consumer Program loan portfolio totaled $13 million at June 30, 2025 which represents 11% of gross principal balance and 323% of loans more than one period delinquent as of that date.
Deposits and Funding
Total deposits at June 30, 2025 were essentially flat from June 30, 2024. Deposits swept off balance sheet increased to $37 million at June 30, 2025 versus $4 million at the same time in 2024. Importantly, noninterest bearing demand deposits were $478 million at June 30, 2025, an annualized growth rate of 18% compared to balances at December 31, 2024. As stated earlier, the Company has no wholesale funding and is 100% funded with customer deposits at June 30, 2025.
Shareholders' Equity
Book value per common share as of June 30, 2025 was $15.27, an increase of $0.05 from June 30, 2024. Tangible book value per common share(1) at the end of the second quarter of 2025 was $11.48, an increase of $0.10 from June 30, 2024. Common shareholders' equity was $376 million, or 9.72% of total assets, at June 30, 2025. Tangible common equity(1) at June 30, 2025 was $283 million, or 7.49% of tangible assets(1). During the quarter, the Company repurchased almost 80 thousand shares of its common stock at a weighted average price of $10.00 per share.
The Board of Directors declared a dividend of $0.10 per share payable on August 22, 2025 to shareholders of record on August 8, 2025. This is Primis' fifty-fifth consecutive quarterly dividend.
About Primis Financial Corp.
As of June 30, 2025, Primis had $3.9 billion in total assets, $3.1 billion in total loans held for investment and $3.3 billion in total deposits. Primis Bank provides a range of financial services to individuals and small- and medium-sized businesses through twenty-four full-service branches in Virginia and Maryland and provides services to customers through certain online and mobile applications.
| Contacts: | Address: | |
| Dennis J. Zember, Jr., President and CEO | Primis Financial Corp. | |
| Matthew A. Switzer, EVP and CFO | 1676 International Drive, Suite 900 | |
| Phone: (703) 893-7400 | McLean, VA 22102 |
Primis Financial Corp., NASDAQ Symbol FRST
Website: www.primisbank.com
(1) Non-GAAP financial measure. Please see "Reconciliation of Non-GAAP Items" in the financial tables for more information and for a reconciliation to GAAP.
5
Conference Call
The Company's management will host a conference call to discuss its second quarter results on Friday, July 25, 2025 at 10:00 a.m. (ET). A live Webcast of the conference call is available at the following website: https://events.q4inc.com/attendee/362488451. Participants may also call 1-800-715-9871 and ask for the Primis Financial Corp. call. A replay of the teleconference will be available for 7 days by calling 1-800-770-2030 and providing Replay Access Code 4554342.
Non-GAAP Measures
Statements included in this press release include non-GAAP financial measures and should be read along with the accompanying tables. Primis uses non-GAAP financial measures to analyze its performance. The measures entitled net income adjusted for nonrecurring income and expenses; pre-tax pre-provision operating earnings; operating return on average assets; pre-tax pre-provision operating return on average assets; operating return on average equity; operating return on average tangible equity; operating efficiency ratio; operating earnings per share - basic; operating earnings per share - diluted; tangible book value per share; tangible common equity; tangible common equity to tangible assets; and core net interest margin are not measures recognized under GAAP and therefore are considered non-GAAP financial measures. We use the term "operating" to describe a financial measure that excludes income or expense considered to be non-recurring in nature. Items identified as non-operating are those that, when excluded from a reported financial measure, provide management or the reader with a measure that may be more indicative of forward-looking trends in our business. A reconciliation of these non-GAAP financial measures to the most comparable GAAP measures is provided in the Reconciliation of Non-GAAP Items table.
Management believes that these non-GAAP financial measures provide additional useful information about Primis that allows management and investors to evaluate the ongoing operating results, financial strength and performance of Primis and provide meaningful comparison to its peers. Non-GAAP financial measures should not be considered as an alternative to any measure of performance or financial condition as promulgated under GAAP, and investors should consider Primis' performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of Primis. Non-GAAP financial measures are not standardized and, therefore, it may not be possible to compare these measures with other companies that present measures having the same or similar names.
Non-GAAP financial measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the results or financial condition as reported under GAAP.
Forward-Looking Statements
Primis Financial Corp. published this content on August 11, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on August 11, 2025 at 21:13 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]