# Primis Financial Corp.: Form 10-Q for the period ended Sep 30, 2024

- Company: [Primis Financial Corp.](/companies/frst.md) (CIK 1325670)
- Form: 10-Q
- Filed: 2024-12-11
- Accepted by EDGAR: Dec 11, 2024, 17:09 ET
- Period: 2024-09-30
- Accession: 0001558370-24-016161
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1325670/000155837024016161/frst-20240930x10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1325670/000155837024016161/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Interest expense | 3 months, 2024-07-01 to 2024-09-30 | $29.1m | us-gaap:InterestExpense |
| Interest expense | 9 months, 2024-01-01 to 2024-09-30 | $81.5m | us-gaap:InterestExpense |
| Income tax | 3 months, 2024-07-01 to 2024-09-30 | −$304.0k | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2024-01-01 to 2024-09-30 | $1.7m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-07-01 to 2024-09-30 | $1.2m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2024-01-01 to 2024-09-30 | $7.1m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-07-01 to 2024-09-30 | $0.05 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2024-01-01 to 2024-09-30 | $0.29 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-07-01 to 2024-09-30 | $0.05 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2024-01-01 to 2024-09-30 | $0.29 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-07-01 to 2024-09-30 | 24,720,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2024-01-01 to 2024-09-30 | 24,710,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2024-01-01 to 2024-09-30 | $54.0m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2024-01-01 to 2024-09-30 | $0 | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 9 months, 2024-01-01 to 2024-09-30 | $7.4m | us-gaap:PaymentsOfDividendsCommonStock |
| Cash and equivalents | at 2024-09-30 | $77.3m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Total assets | at 2024-09-30 | $4.02bn | us-gaap:Assets |
| Total liabilities | at 2024-09-30 | $3.63bn | us-gaap:Liabilities |
| Shareholders' equity | at 2024-09-30 | $381.0m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 78,992 characters.

Management’s discussion and analysis 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, 2023. Results of operations for the three and nine months ended September 30, 2024 are not necessarily indicative of results that may be attained for any other period. The emphasis of this discussion will be on the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023 for the consolidated statements of income (loss) and comprehensive income (loss). For the consolidated balance sheets, the emphasis of this discussion will be the balances as of September 30, 2024 compared to December 31, 2023. 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, 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, 2023, 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;
- 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, new 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, 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 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 to the allowance 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;
- 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, including the current conflicts in Ukraine/Russia and the Middle East, 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 environmental, social and governance strategies and initiatives, the scope and pace of which could alter our reputation and shareholder, associate, customer and third-party affiliations;
- our ability to de-consolidate Panacea Financial Holdings, Inc. (“PFH”) and recognize gains on our investment in PFH common stock as a result of de-consolidation;
- 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, 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 September 30, 2024, 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 is a consolidated subsidiary of Primis and 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.

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 (NOW), 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.

### Current Economic Environment

U.S. economic growth accelerated in 2024, with Real Gross Domestic Product growing by an annualized 1.6% in the first quarter, 3% in the second quarter and another 2.8% in the third quarter. According to the U.S. Bureau of Labor and Statistics, the rate of unemployment has increased from 3.7% at 2023 year end to 4.1% in in September 2024. The Federal

Reserve (the “Fed”) raised interest rates 500 bps from May of 2022 through July 2023, a pace that has not been experienced in more than 40 years. However, during the third quarter of 2024 the Fed lowered interest rates by 50 basis points, easing monetary policy for the first time in four years and bringing the target range to 4.75% to 5.00% as of September 30, 2024. Inflation, while beginning to show signs of moderating, fell to 2.4% in September 2024 but still remains higher than the Fed’s long term target rate of 2.0% and the Fed appears committed to maintaining high rates until inflation is back at their target rate. The Fed has indicated that future rate adjustments will continue to be data-dependent.

Despite the current quarter rate cut, we continue to operate in a high rate environment that is continuing to put strong margin pressure on us and all banks. The cost of deposits has increased alongside the Fed rate increases since 2022 and will continue to remain above historical low loan rates that borrowers locked-in during the years prior to the rate hikes noted above. Loan growth in the current rate environment will benefit from the continued higher rates and should assist in partially offsetting growth in deposit costs that have accumulated. Margin pressures for us, and the industry as a whole, is likely to remain until multiple future rate cuts occur.

### FINANCIAL HIGHLIGHTS

- Net income available to common shareholders for the three months ended September 30, 2024 totaled $1.2 million, or $0.05 basic and diluted earnings per share, compared to a net loss of $6.0 million, or $0.24 basic and diluted loss per share for the three months ended September 30, 2023.
- Net income available to common shareholders for the nine months ended September 30, 2024 totaled $7.1 million, or $0.29 basic and diluted earnings per share, compared to $0.3 million, or $0.01 basic and diluted earnings per share for the nine months ended September 30, 2023.
- Total assets as of September 30, 2024 were $4.0 billion, an increase of 4.4% compared to December 31, 2023.
- Total loans held for investment as of September 30, 2024 were $3.0 billion, a decrease of $0.2 million, or 7.6%, from December 31, 2023. When including the “loans held for sale, at the lower of cost or market” which are LPF loans that we transferred from held for investment to held for sale at quarter end in anticipation of sale, loans increased 3.6% from December 31, 2023.
- Total deposits were $3.3 billion as of September 30, 2024, an increase of 1.1% compared to December 31, 2023.
- Non-time deposits increased to $2.9 billion as of September 30, 2024, an increase of $54.7 million, or 1.9%, compared to December 31, 2023.
- The ratio of gross loans (excluding loans held for sale) to deposits decreased to 90% at September 30, 2024, from 98% at December 31, 2023.
- Net interest margin of 2.97% in the third quarter of 2024 was up from 2.70% in the third quarter of 2023.
- Net interest income increased during both the three and nine months ended September 30, 2024 compared to the same periods in 2023.
- Noninterest income declined during both the three and nine months ended September 30, 2024 and 2023, but noninterest expenses were down during each of these periods by more than the noninterest income declines.
- Allowance for credit losses to total loans was 1.72% as of September 30, 2024, compared to 1.62% as of December 31, 2023.
- Asset quality remained relatively stable from year end with nonperforming assets as a percent of total assets (excluding SBA guarantees) at 0.25% as of September 30, 2024 compared to 0.20% as of December 31, 2023.

### RESULTS OF OPERATIONS

### Net Income

***Three-Month Comparison.*** Net income available to common shareholders for the three months ended September 30, 2024 totaled $1.2 million, or $0.05 basic and diluted earnings per share, compared to a net loss of $6.0 million, or $0.24 basic and diluted earnings per share for the three months ended September 30, 2023. The increase in net income during the three months ended September 30, 2024 compared to the three months ended September 30, 2023 was driven primarily by $3.7 million higher net interest income, $6.0 million lower noninterest expense, partially offset by $0.4 million lower noninterest income, and $5.9 million higher provision for credit losses on loans. The net interest income increase was driven by higher average interest earning balances and higher yields on those balances and the decrease in noninterest expenses was driven by the goodwill impairment charge in 2023 compared to the current year. Additional details of the changes in net income will be discussed in the remaining sections of this Results of Operations section.

***Nine-Month Comparison.*** Net income available to common shareholders for the nine months ended September 30, 2024 totaled $7.1 million, or $0.29 basic and diluted earnings per share, compared to $0.3 million, or $0.01 basic and diluted earnings per share for the nine months ended September 30, 2023. The results reflect an increase in net interest income of $5.2 million, a decrease in noninterest expense of $6.1 million and noncontrolling interests of $5.6 million offset by a decline of $5.9 million in noninterest income and higher provision of $5.2 million. Net interest margin increases were driven by higher average loan balances and yields and the increase in noncontrolling interests were related to losses attributable to other stockholders of an entity that we are required to consolidated under U.S. GAAP in which we own approximately 19%. Noninterest income declines were driven by lower Consumer Program derivative income and noninterest expense decreases also included the goodwill impairment charge in the prior year compared to the current year as discussed above for the three months ended. Additional details of the 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.

***Three-Month Comparison.*** Net interest income was $28.0 million for the three months ended September 30, 2024, compared to $24.3 million for the three months ended September 30, 2023. Our net interest margin for the three months ended September 30, 2024 was 2.97%, compared to 2.70% for the three months ended September 30, 2023. Margin increased by 27 basis points as a result of growth in yield on interest earning assets outpacing the growth in rates paid on interest bearing liabilities by 24 basis points, partially offset by growth in average interest earning assets. Net interest income grew $3.7 million, driven by $9.1 million in interest income growth primarily as a result of loan growth at higher rates compared to the prior year. The higher lending rates 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. The cost of interest bearing liabilities increased primarily due to benchmark interest rate increases in all deposits and growth of $78 million in average deposits and growth of $119 million in average borrowings that were utilized for funding of the average loan growth that outpaced deposit growth in the quarter.

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:

*(Dollar amounts in thousands)*

| ​ ​ ​ ​ ​ ​ ​ ​ ​ Assets Interest-earning assets: | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ | ​ ​ Average Balance Sheets and Net Interest Margin Analysis For the Three Months Ended September 30, 2024 ​ ​ Average Balance ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ | ​ ​ Interest Income/ Expense ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ Yield/ ​ Rate ​ ​ ​ ​ ​ | ​ ​ September 30, 2023 ​ ​ Average Balance ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ | ​ ​ Interest Income/ Expense ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ ​ Yield/ ​ Rate ​ ​ ​ ​ ​ ​ ​ |
| --- | --- | --- | --- | --- | --- | ---: | --- | --- | --- | --- | ---: |
| Loans held for sale | ​ | $98,110 | ​ | $1,589 | ​ | 6.44% | $55,775 | ​ | $873 | ​ | 6.21% |
| Loans, net of deferred fees (1) (2) | ​ | ​ 3,324,157 | ​ | ​ 52,707 | ​ | 6.31% | ​ 3,193,236 | ​ | ​ 44,439 | ​ | 5.52% |
| Investment securities | ​ | ​ 242,631 | ​ | ​ 1,799 | ​ | 2.95% | ​ 234,601 | ​ | ​ 1,593 | ​ | 2.69% |
| Other earning assets | ​ | ​ 83,405 | ​ | ​ 1,017 | ​ | 4.85% | ​ 93,159 | ​ | ​ 1,122 | ​ | 4.78% |
| **Total earning assets** | ​ | ​ 3,748,303 | ​ | ​ 57,112 | ​ | 6.06% | ​ 3,576,771 | ​ | ​ 48,027 | ​ | 5.33% |
| Allowance for credit losses | ​ | ​ (49,966) | ​ | ​ ​ | ​ | ​ ​ | ​ (37,262) | ​ | ​ ​ | ​ | ​ ​ |
| Total non-earning assets | ​ | ​ 293,681 | ​ | ​ ​ | ​ | ​ ​ | ​ 305,300 | ​ | ​ ​ | ​ | ​ ​ |
| **Total assets** | ​ | $3,992,018 | ​ | ​ ​ | ​ | ​ ​ | $3,844,809 | ​ | ​ ​ | ​ | ​ ​ |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| **Liabilities and stockholders' equity** | ​ | ​ | ​ | ​ | ​ | ​ ​ | ​ | ​ | ​ | ​ | ​ ​ |
| Interest-bearing liabilities: | ​ | ​ | ​ | ​ | ​ | ​ ​ | ​ | ​ | ​ | ​ | ​ ​ |
| NOW and other demand accounts | ​ | $748,202 | ​ | $4,630 | ​ | 2.46% | $806,339 | ​ | $4,460 | ​ | 2.19% |
| Money market accounts | ​ | ​ 859,988 | ​ | ​ 7,432 | ​ | 3.44% | ​ 850,892 | ​ | ​ 6,555 | ​ | 3.06% |
| Savings accounts | ​ | ​ 866,375 | ​ | ​ 8,918 | ​ | 4.10% | ​ 703,809 | ​ | ​ 6,760 | ​ | 3.81% |
| Time deposits | ​ | ​ 425,238 | ​ | ​ 4,371 | ​ | 4.09% | ​ 460,961 | ​ | ​ 3,801 | ​ | 3.27% |
| **Total interest-bearing deposits** | ​ | ​ 2,899,803 | ​ | ​ 25,351 | ​ | 3.48% | ​ 2,822,001 | ​ | ​ 21,576 | ​ | 3.03% |
| Borrowings | ​ | ​ 238,994 | ​ | ​ 3,738 | ​ | 6.22% | ​ 119,797 | ​ | ​ 2,121 | ​ | 7.02% |
| **Total interest-bearing liabilities** | ​ | ​ 3,138,797 | ​ | ​ 29,089 | ​ | 3.69% | ​ 2,941,798 | ​ | ​ 23,697 | ​ | 3.20% |
| Noninterest-bearing liabilities: | ​ | ​ | ​ | ​ | ​ | ​ ​ | ​ | ​ | ​ | ​ | ​ ​ |
| Demand deposits | ​ | ​ 421,908 | ​ | ​ ​ | ​ | ​ ​ | ​ 472,485 | ​ | ​ ​ | ​ | ​ ​ |
| Other liabilities | ​ | ​ 36,527 | ​ | ​ ​ | ​ | ​ ​ | ​ 39,303 | ​ | ​ ​ | ​ | ​ ​ |
| **Total liabilities** | ​ | ​ 3,597,232 | ​ | ​ ​ | ​ | ​ ​ | ​ 3,453,586 | ​ | ​ ​ | ​ | ​ ​ |
| Primis common stockholders' equity | ​ | ​ 377,314 | ​ | ​ ​ | ​ | ​ ​ | ​ 391,223 | ​ | ​ ​ | ​ | ​ ​ |
| Noncontrolling interest | ​ | ​ 17,472 | ​ | ​ ​ | ​ | ​ ​ | ​ — | ​ | ​ ​ | ​ | ​ ​ |
| **Total stockholders' equity** | ​ | ​ 394,786 | ​ | ​ ​ | ​ | ​ ​ | ​ 391,223 | ​ | ​ ​ | ​ | ​ ​ |
| **Total liabilities and stockholders' equity** | ​ | $3,992,018 | ​ | $28,023 | ​ | ​ ​ | $3,844,809 | ​ | $24,330 | ​ | ​ ​ |
| Interest rate spread | ​ | ​ ​ | ​ | ​ ​ | ​ | 2.37% | ​ ​ | ​ | ​ ​ | ​ | 2.13% |
| Net interest margin | ​ | ​ ​ | ​ | ​ ​ | ​ | 2.97% | ​ ​ | ​ | ​ ​ | ​ | 2.70% |

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

(2) Calculations include non-accruing loans and loans held for sale at lower of cost or market, that were transferred on the last day of the quarter, in average loan amounts outstanding.

***Nine-Month Comparison.*** Net interest income was $78.1 million for the nine months ended September 30, 2024, compared to $73.0 million for the nine months ended September 30, 2023. Our net interest margin for the nine months ended September 30, 2024 was 2.85%, compared to 2.61% for the nine months ended September 30, 2023. Our interest margin increased by 24 basis points as a result of yields on interest earning assets outpacing rates on interest bearing liabilities by 18 basis points and less average assets during the year compared to the same period last year. This resulted in a $5.2 million increase in net interest income driven by a $24.3 million increase in interest income on loans in the current year compared to last year, partially offset by $11.6 million more interest costs on deposits and $9.7 million less income on other earning assets. Higher lending rates fueled by an increase in benchmark rates and the redeployment of excess cash into higher yielding assets drove interest income. The cost of interest bearing liabilities increased primarily due to increases in rates on all interest-bearing liabilities as a result of benchmark interest rate increases, partially offset by a 1% decrease in average interest-bearing liabilities. The interest on other earning assets declined alongside a decline in average other interest bearing assets as a result of our decision to sweep excess cash off balance sheet beginning at the end of second quarter of 2023. We had raised approximately $1.0 billion in interest bearing deposits in our digital platform during the first six months of 2023 and that amount earned interest for six of the nine months ended September 30, 2023, but most of that cash was swept off of our balance sheet during the nine months ended September 30, 2024 or redeployed to other earning assets such as investment securities and loans.

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:

*(Dollar amounts in thousands)*

| ​ ​ ​ ​ ​ ​ ​ ​ Assets Interest-earning assets: | ​ ​ ​ ​ ​ ​ ​ ​ ​ | ​ ​ Average Balance Sheets and Net Interest Margin Analysis For the Nine Months Ended September 30, 2024 ​ ​ Average Balance ​ ​ ​ | ​ ​ ​ ​ ​ | ​ ​ Interest Income/ Expense ​ ​ ​ | ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ Yield/ ​ Rate ​ ​ ​ | ​ ​ September 30, 2023 ​ ​ Average Balance ​ ​ ​ | ​ ​ ​ ​ ​ | ​ ​ Interest Income/ Expense ​ ​ ​ ​ | ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ Yield/ ​ Rate ​ ​ ​ |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Loans held for sale | ​ | $80,530 | ​ | $4,017 | ​ | 6.66% | $43,384 | ​ | $1,964 | ​ | 6.05% |
| Loans, net of deferred fees (3) (4) | ​ | ​ 3,266,111 | ​ | ​ 147,564 | ​ | 6.04% | ​ 3,099,224 | ​ | ​ 123,289 | ​ | 5.32% |
| Investment securities | ​ | ​ 242,706 | ​ | ​ 5,319 | ​ | 2.93% | ​ 240,525 | ​ | ​ 4,728 | ​ | 2.63% |
| Other earning assets | ​ | ​ 78,076 | ​ | ​ 2,756 | ​ | 4.72% | ​ 348,831 | ​ | ​ 12,504 | ​ | 4.79% |
| **Total earning assets** | ​ | ​ 3,667,423 | ​ | ​ 159,656 | ​ | 5.82% | ​ 3,731,964 | ​ | ​ 142,485 | ​ | 5.10% |
| Allowance for credit losses | ​ | ​ (50,929) | ​ | ​ ​ | ​ | ​ ​ | ​ (35,722) | ​ | ​ ​ | ​ | ​ ​ |
| Total non-earning assets | ​ | ​ 295,815 | ​ | ​ ​ | ​ | ​ ​ | ​ 296,197 | ​ | ​ ​ | ​ | ​ ​ |
| **Total assets** | ​ | $3,912,309 | ​ | ​ ​ | ​ | ​ ​ | $3,992,439 | ​ | ​ ​ | ​ | ​ ​ |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| **Liabilities and stockholders' equity** | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Interest-bearing liabilities: | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| NOW and other demand accounts | ​ | $766,800 | ​ | $13,924 | ​ | 2.43% | $785,480 | ​ | $11,070 | ​ | 1.88% |
| Money market accounts | ​ | ​ 832,531 | ​ | ​ 20,732 | ​ | 3.33% | ​ 844,752 | ​ | ​ 17,587 | ​ | 2.78% |
| Savings accounts | ​ | ​ 844,531 | ​ | ​ 25,876 | ​ | 4.09% | ​ 775,024 | ​ | ​ 21,915 | ​ | 3.78% |
| Time deposits | ​ | ​ 426,557 | ​ | ​ 12,455 | ​ | 3.90% | ​ 481,813 | ​ | ​ 10,831 | ​ | 3.01% |
| **Total interest-bearing deposits** | ​ | ​ 2,870,419 | ​ | ​ 72,987 | ​ | 3.40% | ​ 2,887,069 | ​ | ​ 61,403 | ​ | 2.84% |
| Borrowings | ​ | ​ 172,942 | ​ | ​ 8,524 | ​ | 6.58% | ​ 172,662 | ​ | ​ 8,096 | ​ | 6.27% |
| **Total interest-bearing liabilities** | ​ | ​ 3,043,361 | ​ | ​ 81,511 | ​ | 3.58% | ​ 3,059,731 | ​ | ​ 69,499 | ​ | 3.04% |
| Noninterest-bearing liabilities: | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Demand deposits | ​ | ​ 440,172 | ​ | ​ ​ | ​ | ​ ​ | ​ 500,459 | ​ | ​ ​ | ​ | ​ ​ |
| Other liabilities | ​ | ​ 35,344 | ​ | ​ ​ | ​ | ​ ​ | ​ 35,457 | ​ | ​ ​ | ​ | ​ ​ |
| **Total liabilities** | ​ | ​ 3,518,877 | ​ | ​ ​ | ​ | ​ ​ | ​ 3,595,647 | ​ | ​ ​ | ​ | ​ ​ |
| Primis common stockholders' equity | ​ | ​ 374,154 | ​ | ​ ​ | ​ | ​ ​ | ​ 396,792 | ​ | ​ ​ | ​ | ​ ​ |
| Noncontrolling interest | ​ | ​ 19,278 | ​ | ​ ​ | ​ | ​ ​ | ​ — | ​ | ​ ​ | ​ | ​ ​ |
| **Total stockholders' equity** | ​ | ​ 393,432 | ​ | ​ ​ | ​ | ​ ​ | ​ 396,792 | ​ | ​ ​ | ​ | ​ ​ |
| **Total liabilities and stockholders' equity** | ​ | $3,912,309 | ​ | ​ ​ | ​ | ​ ​ | $3,992,439 | ​ | ​ ​ | ​ | ​ ​ |
| Net interest income | ​ | ​ ​ | ​ | $78,145 | ​ | ​ ​ | ​ ​ | ​ | $72,986 | ​ | ​ ​ |
| Interest rate spread | ​ | ​ ​ | ​ | ​ ​ | ​ | 2.24% | ​ ​ | ​ | ​ ​ | ​ | 2.06% |
| Net interest margin | ​ | ​ ​ | ​ | ​ ​ | ​ | 2.85% | ​ ​ | ​ | ​ ​ | ​ | 2.61% |

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

(4) Calculations include non-accruing loans and loans held for sale at lower of cost or market, that were transferred on the last day of the quarter, 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.

The Company recorded a provision for credit losses for the three months ended September 30, 2024 and 2023, of $7.5 million and $1.6 million, respectively. The provision included amounts calculated in our normal reserve process for the Consumer Program loans which totaled $4.0 million and $2.1 million during the three months ended September 30, 2024 and 2023, respectively. Our provision for credit losses during the three months ended September 30, 2024 was driven by provisions related to two loans evaluated individually for credit losses during the quarter and resulting in $3.1 million of specific reserves. We also had $4.0 million of provisions related to the Consumer Program loan portfolio calculated as part of our normal reserve process primarily due to credit losses on loans originated from the third quarter of 2022 through the first quarter of 2023 that have continued to show credit weaknesses.

The provisions were driven in part by net charge-offs during the periods which were $8.0 million and $4.3 million during the three months ended September 30, 2024 and 2023, respectively. During the three months ended September 30, 2024 and 2023, $6.7 million and $2.1 million, respectively, of net charge-offs were related to the Consumer Program loans. These charge-offs were primarily related to loans originated from the third quarter of 2022 to the first quarter of 2023. Excluding the Consumer Program loan charge-offs we had net charge-offs of $1.3 million and $2.2 million during the three months ended September 30, 2024 and 2023, respectively.

The Company recorded a provision for credit losses for the nine months ended September 30, 2024 and 2023, of $17.1 million and $11.2 million, respectively. The provision included amounts calculated in our normal reserve process for the Consumer Program loans which totaled $12.6 million and $8.2 million during the nine months ended September 30, 2024 and 2023, respectively. Our provision for credit losses related to the Consumer Program loan portfolio were primarily driven by charge-offs centered around loans originated from the third quarter of 2022 through the first quarter of 2023 as previously noted. Excluding the provision amounts related to the Consumer Program portfolio, we recorded a provision for credit losses of $4.5 million and $3.1 million for the nine months ended September 30, 2024 and 2023, respectively. The higher provision in the nine months ended September 30, 2024 was driven by the previously mentioned specific reserves on two loans during the quarter.

The provisions were driven in part by net charge-offs during the periods which were $18.2 million and $9.9 million during the nine months ended September 30, 2024 and 2023, respectively. During nine months ended September 30, 2024 and 2023, $15.4 million and $5.4 million, respectively, of net charge-offs were related to the Consumer Program loans. These charge-offs were primarily related to loans originated from the third quarter of 2022 to the first quarter of 2023 as previously discussed. Excluding the Consumer Program loan charge-offs we had net charge-offs of $2.8 million and $4.5 million during the nine months ended September 30, 2024 and 2023, 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 September 30, 2024 and 2023:

*(dollars in thousands)*

| ​ ​ ​ | ​ ​ ​ | ​ ​ For the Three Months Ended September 30, 2024 | ​ | ​ ​ 2023 | ​ | ​ ​ Change |
| --- | --- | ---: | --- | ---: | --- | --- |
| Account maintenance and deposit service fees | ​ | $1,468 | ​ | $1,534 |  | $(66) |
| Income from bank-owned life insurance | ​ | 431 | ​ | 787 |  | ​ (356) |
| Mortgage banking income | ​ | 6,803 | ​ | 4,922 |  | ​ 1,881 |
| Gain on sale of loans | ​ | ​ — | ​ | ​ 217 | ​ | ​ (217) |
| Consumer Program derivative gains | ​ | ​ 79 | ​ | ​ 2,033 | ​ | ​ (1,954) |
| Other noninterest income | ​ | 501 | ​ | 231 |  | ​ 270 |
| **Total noninterest income** | ​ | $9,282 | ​ | $9,724 | ​ | $(442) |

Noninterest income decreased 5% to $9.3 million for the three months ended September 30, 2024, compared to $9.7 million for the three months ended September 30, 2023. The decrease in noninterest income was primarily related to $2.0 million of lower Consumer Program derivative income and $0.4 million of lower income from bank-owned life insurance, partially offset by an increase in mortgage banking income. The increase in mortgage banking income was a result of the continued growth of the mortgage business in 2024 compared to 2023. During the three months ended September 30, 2024 we realized $5.5 million on sale gains compared to $1.9 million during the three months ended September 30, 2023 as a result of higher sales volumes. The gains were partially offset by fair value losses on mortgage derivative assets and various loan sale costs driven by higher volumes. The decrease in income on bank-owned life insurance was driven by one-time death benefit gains during the prior year quarter of $0.4 million. The Consumer Program derivative income declined primarily due to fair value loss adjustments on the derivative asset of $2.8 million during the three months ended September 30, 2024 compared to fair value gains of $9 thousand during the three months ended September 30, 2023. Offsetting the fair value loss adjustments during the three months ended September 30, 2024 and 2023 was $2.9 million and $2.0 million, respectively, of realized gains 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.

The following table presents the major categories of noninterest income for the nine months ended September 30, 2024 and 2023:

*(dollars in thousands)*

| ​ ​ ​ | ​ ​ ​ | ​ ​ For the Nine Months Ended September 30, 2024 | ​ | ​ ​ 2023 | ​ | ​ ​ Change |
| --- | --- | ---: | --- | ---: | --- | --- |
| Account maintenance and deposit service fees | ​ | $4,722 | ​ | $4,215 |  | $507 |
| Income from bank-owned life insurance | ​ | 1,975 | ​ | 1,601 |  | ​ 374 |
| Mortgage banking income | ​ | 18,779 | ​ | 14,435 |  | ​ 4,344 |
| Gain on sale of loans | ​ | ​ 307 | ​ | ​ 268 | ​ | ​ 39 |
| Consumer Program derivative gains | ​ | ​ 3,392 | ​ | ​ 15,233 | ​ | ​ (11,841) |
| Other noninterest income | ​ | 1,266 | ​ | 578 |  | ​ 688 |
| **Total noninterest income** | ​ | $30,441 | ​ | $36,330 |  | $(5,889) |
| **​** | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |

Noninterest income decreased 16% to $30.4 million for the nine months ended September 30, 2024, compared to $36.3 million for the nine months ended September 30, 2023. The decrease in noninterest income was primarily driven by declines in Consumer Program derivative income, partially offset by $4.3 million of higher mortgage banking income. The Consumer Program derivative income declined primarily due to fair value loss adjustments on the derivative asset of $3.7 million during the nine months ended September 30, 2024 compared to fair value gains of $11.1 million during the nine months ended September 30, 2023. The derivative asset and related gains 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 nine months of 2023, the value of the derivative and related gains were primarily driven by $62.1 million of loans with a no- interest promotional period originated in the last quarter of 2022 and the first nine months of 2023. Comparatively, during the nine months of 2024 a nominal amount of no-interest promotional loans was originated and the existing ones were beginning to exit their promo period. Offsetting the fair value loss adjustments during the nine months ended September 30, 2024 and adding to the gains in 2023 was $7.1 million and $4.1 million, respectively, of realized gains 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.

The increase in mortgage banking income was a result of the continued growth of the mortgage business in 2024 compared to 2023. During the nine months ended September 30, 2024 we realized $12.0 million on sale gains compared to $7.0 million during the nine months ended September 30, 2023 as a result of higher sales volumes. The gains on sale were partially offset with higher sales costs due to the higher volume. The decrease in noninterest income was also partially offset by an increase in income on account maintenance and deposit fees due to higher volume of accounts and transactions in 2024 as a result of the deposit growth since 2023.

### Noninterest Expense

The following table presents the major categories of noninterest expense for the three months ended September 30, 2024 and 2023:

*(dollars in thousands)*

| ​ ​ ​ | ​ ​ ​ | ​ ​ For the Three Months Ended September 30, 2024 | ​ | ​ ​ 2023 | ​ | ​ ​ Change |
| --- | --- | ---: | --- | ---: | --- | ---: |
| Salaries and benefits | ​ | $16,764 | ​ | $13,809 | ​ | $2,955 |
| Occupancy expenses | ​ | 1,248 | ​ | 1,633 | ​ | (385) |
| Furniture and equipment expenses | ​ | 1,823 | ​ | 1,537 | ​ | 286 |
| Amortization of core deposit intangible | ​ | 318 | ​ | 317 | ​ | 1 |
| Virginia franchise tax expense | ​ | 631 | ​ | 849 | ​ | (218) |
| FDIC insurance assessment | ​ | ​ 545 | ​ | ​ 820 | ​ | ​ (275) |
| Data processing expense | ​ | 2,552 | ​ | 2,250 | ​ | 302 |
| Marketing expense | ​ | ​ 449 | ​ | ​ 377 | ​ | ​ 72 |
| Telephone and communication expense | ​ | 330 | ​ | 356 | ​ | (26) |
| Professional fees | ​ | 2,914 | ​ | 1,118 | ​ | 1,796 |
| Goodwill impairment | ​ | ​ — | ​ | ​ 11,150 | ​ | ​ (11,150) |
| Fraud losses | ​ | ​ 61 | ​ | ​ 267 | ​ | ​ (206) |
| Miscellaneous lending expenses | ​ | ​ 1,098 | ​ | 424 | ​ | 674 |
| Other operating expenses | ​ | 2,222 | ​ | 2,041 | ​ | 181 |
| **Total noninterest expenses** | ​ | $30,955 | ​ | $36,948 | ​ | $(5,993) |

Noninterest expenses declined 16% to $31.0 million during the three months ended September 30, 2024, compared to $36.9 million during the three months ended September 30, 2023. The decline was primarily driven by the goodwill impairment of $11.2 million recognized during the three months ended September 30, 2023. The decrease was partially offset by higher salaries and benefits expenses, professional fees, and miscellaneous lending expenses in 2024. The higher salaries and benefits expense was driven by growth in the mortgage line of business and the Panacea division. The increase in professional fees was related to the SEC pre-clearance and restatement process. The higher miscellaneous lending expenses was driven by increased servicing costs paid to the third-party that services the Consumer Program loan portfolio for us.

The following table presents the major categories of noninterest expense for the nine months ended September 30, 2024 and 2023:

*(dollars in thousands)*

| ​ ​ ​ | ​ ​ ​ | ​ ​ For the Nine Months Ended September 30, 2024 | ​ | ​ ​ 2023 | ​ | ​ ​ Change |
| --- | --- | ---: | --- | ---: | --- | ---: |
| Salaries and benefits | ​ | $48,587 | ​ | $44,120 | ​ | $4,467 |
| Occupancy expenses | ​ | 3,988 | ​ | 4,671 | ​ | (683) |
| Furniture and equipment expenses | ​ | 5,288 | ​ | 4,966 | ​ | 322 |
| Amortization of core deposit intangible | ​ | 952 | ​ | 952 | ​ | — |
| Virginia franchise tax expense | ​ | 1,894 | ​ | 2,546 | ​ | (652) |
| FDIC insurance assessment | ​ | ​ 1,744 | ​ | ​ 2,254 | ​ | ​ (510) |
| Data processing expense | ​ | 7,130 | ​ | 7,329 | ​ | (199) |
| Marketing expense | ​ | ​ 1,407 | ​ | ​ 1,467 | ​ | ​ (60) |
| Telephone and communication expense | ​ | 1,017 | ​ | 1,149 | ​ | (132) |
| Professional fees | ​ | 7,255 | ​ | 3,055 | ​ | 4,200 |
| Goodwill impairment | ​ | ​ — | ​ | ​ 11,150 | ​ | ​ (11,150) |
| Fraud losses | ​ | ​ 59 | ​ | ​ 2,719 | ​ | ​ (2,660) |
| Miscellaneous lending expenses | ​ | ​ 1,835 | ​ | 1,878 | ​ | (43) |
| Other operating expenses | ​ | 7,123 | ​ | 6,085 | ​ | 1,038 |
| **Total noninterest expenses** | ​ | $88,279 | ​ | $94,341 | ​ | $(6,062) |
| **​** | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |

Noninterest expenses declined 6% to $88.3 million during the three months ended September 30, 2024, compared to $94.3 million during the three months ended September 30, 2023. Decreases in expenses were seen across almost all expense categories but the decline was primarily driven by goodwill impairment and fraud losses (recoveries). Our decline in expenses was partially offset by increases in salaries and benefits and professional fees. The fraud losses during the nine months ended September 30, 2023 was primarily related to a substantial increase in deposit account fraud, which was also seen across the industry during that time. Other notable declines in expenses were seen in occupancy expenses, Virginia franchise tax, and FDIC insurance costs. The latter two categories were a result of a decline in average deposits and capital from the prior year. The occupancy expense decline is primarily related to the nine months of 2024 not including branch costs related to our branch restructuring in fourth quarter of 2023, while the nine months ended September 30, 2023 included these costs. The partially offsetting expense increases during the nine months ended September 30, 2024 compared to 2023 in professional fees and salaries and benefits was primarily for the same reasons as discussed above for the three months ended September 30, 2024 compared to 2023.

### FINANCIAL CONDITION

The following illustrates key balance sheet categories as of September 30, 2024 and December 31, 2023 (in thousands):

| ​ ​ ​ ​ | ​ ​ ​ | ​ ​ September 30, 2024 ​ ​ | ​ ​ ​ | ​ ​ December 31, 2023 ​ ​ | ​ ​ ​ | ​ ​ ​ ​ Change ​ ​ |
| --- | --- | ---: | --- | --- | --- | --- |
| Total cash and cash equivalents | ​ | $77,274 | ​ | $77,553 | ​ | $(279) |
| Securities available-for-sale | ​ | 242,543 | ​ | 228,420 | ​ | 14,123 |
| Securities held-to-maturity | ​ | 9,766 | ​ | ​ 11,650 | ​ | ​ (1,884) |
| Loans held for sale, at fair value | ​ | 96,897 | ​ | ​ 57,691 | ​ | ​ 39,206 |
| Loans held for sale, at lower of cost or market | ​ | ​ 361,825 | ​ | ​ — | ​ | ​ 361,825 |
| Net loans | ​ | 2,922,591 | ​ | ​ 3,167,205 | ​ | ​ (244,614) |
| Other assets | ​ | 313,451 | ​ | ​ 314,027 | ​ | ​ (576) |
| **Total assets** | ​ | $4,024,347 | ​ | $3,856,546 | ​ | $167,801 |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Total deposits | ​ | $3,306,431 | ​ | $3,270,155 | ​ | $36,276 |
| Borrowings | ​ | ​ 281,980 | ​ | ​ 149,032 | ​ | ​ 132,948 |
| Other liabilities | ​ | ​ 38,873 | ​ | ​ 39,766 | ​ | ​ (893) |
| Total liabilities | ​ | ​ 3,627,284 | ​ | ​ 3,458,953 | ​ | ​ 168,331 |
| Total equity | ​ | ​ 397,063 | ​ | ​ 397,593 | ​ | ​ (530) |
| **Total liabilities and equity** | ​ | $4,024,347 | ​ | $3,856,546 | ​ | $167,801 |

### Loans

Gross loans held for investment were $3.0 billion and $3.2 billion as of September 30, 2024 and December 31, 2023, respectively. As disclosed in “Note 1 - Accounting Policies” in this Form 10-Q, we entered into an agreement to sell approximately $370 million of LPF loans and the amount of those loans that were already funded as of September 30, 2024 have been reclassified to “loans held for sale, at lower of cost or market” as of September 30, 2024, which is the entire increase in that balance sheet category since year end and represents a large portion of the decrease in “net loans” since year end.

As of September 30, 2024 and December 31, 2023, 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. Our gross loans held for investment portfolio declined 8% from year end, which was driven by the reclassified LPF loans to held for sale at September 30. When considering the LPF held for sale loans, our gross loans grew 4% in 2024. Our decline in gross loans held for investment as of September 30 was driven by decline in Consumer and Commercial loans driven by the LPF transfer and declines in the construction and land development portfolio due to paydows of loans in that portfolio. The declines were partially offset by growth in multi-family residential and non-owner and owner occupied commercial real estate. The majority of this growth was concentrated in loan growth in the Panacea division with loans that are diversified geographically and are spread across the nation.

The composition of our loans held for investment portfolio consisted of the following as of September 30, 2024 and December 31, 2023 (in thousands):

| ​ ​ ​ Loans secured by real estate: | ​ ​ | ​ ​ September 30, 2024 Amount ​ | ​ | ​ ​ ​ Percent | ​ ​ December 31, 2023 Amount ​ | ​ | ​ ​ ​ Percent |
| --- | --- | ---: | --- | ---: | ---: | --- | ---: |
| Commercial real estate - owner occupied | ​ | $463,848 |  | 15.6% | $455,397 |  | 14.1% |
| Commercial real estate - non-owner occupied | ​ | 609,743 |  | 20.5% | 578,600 |  | 18.0% |
| Secured by farmland | ​ | 4,356 |  | 0.1% | 5,044 |  | 0.2% |
| Construction and land development | ​ | 105,541 |  | 3.5% | 164,742 |  | 5.1% |
| Residential 1-4 family | ​ | 607,313 |  | 20.4% | 606,226 |  | 18.8% |
| Multi- family residential | ​ | 169,368 |  | 5.7% | 127,857 |  | 4.0% |
| Home equity lines of credit | ​ | 62,421 |  | 2.1% | 59,670 |  | 1.9% |
| Total real estate loans | ​ | 2,022,590 |  | 68.0% | 1,997,536 |  | 62.0% |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ ​ | ​ | ​ ​ |
| Commercial loans | ​ | 533,998 |  | 18.0% | 602,623 |  | 18.7% |
| Paycheck protection program loans | ​ | ​ 1,941 | ​ | 0.1% | ​ 2,023 | ​ | 0.1% |
| Consumer loans | ​ | 409,754 |  | 13.8% | 611,583 |  | 19.0% |
| Total Non-PCD loans | ​ | 2,968,283 |  | 99.8% | 3,213,765 |  | 99.8% |
| PCD loans | ​ | ​ 5,440 | ​ | 0.2% | ​ 5,649 | ​ | 0.2% |
| Total loans | ​ | $2,973,723 | ​ | 100.0% | $3,219,414 | ​ | 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 September 30, 2024 (in thousands):

| ​ ​ ​ ​ ​ Loans secured by real estate: | ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ One Year or Less ​ ​ | ​ ​ ​ ​ ​ | ​ ​ After 1 Year Through 5 Years Fixed Rate ​ ​ | ​ ​ ​ | ​ ​ Floating Rate ​ ​ | ​ ​ ​ ​ ​ | ​ ​ After 5 Years Through 15 Years Fixed Rate ​ ​ | ​ ​ ​ | ​ ​ Floating Rate ​ ​ | ​ ​ ​ ​ ​ | ​ ​ ​ ​ After 15 Years Fixed Rate ​ ​ | ​ ​ ​ ​ | ​ ​ ​ ​ Floating Rate ​ ​ | ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ Total ​ ​ |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Commercial real estate - owner occupied | ​ | $24,224 | ​ | $87,471 | ​ | $22,411 | ​ | $141,538 | ​ | $129,847 | ​ | $1,701 | ​ | $56,656 | ​ | $463,848 |
| Commercial real estate - non-owner occupied | ​ | ​ 116,652 | ​ | ​ 168,629 | ​ | ​ 30,497 | ​ | ​ 53,178 | ​ | ​ 78,025 | ​ | ​ 9,566 | ​ | ​ 153,196 | ​ | ​ 609,743 |
| Secured by farmland | ​ | ​ 1,197 | ​ | ​ 982 | ​ | ​ 75 | ​ | ​ 119 | ​ | ​ 769 | ​ | ​ — | ​ | ​ 1,214 | ​ | ​ 4,356 |
| Construction and land development | ​ | ​ 61,797 | ​ | ​ 1,683 | ​ | ​ 18,070 | ​ | ​ 5,571 | ​ | ​ 18,376 | ​ | ​ — | ​ | ​ 44 | ​ | ​ 105,541 |
| Residential 1-4 family | ​ | ​ 19,149 | ​ | ​ 43,420 | ​ | ​ 17,235 | ​ | ​ 24,692 | ​ | ​ 51,177 | ​ | ​ 68,086 | ​ | ​ 383,554 | ​ | ​ 607,313 |
| Multi- family residential | ​ | ​ 10,113 | ​ | ​ 95,717 | ​ | ​ 14,818 | ​ | ​ — | ​ | ​ 22,816 | ​ | ​ — | ​ | ​ 25,904 | ​ | ​ 169,368 |
| Home equity lines of credit | ​ | **​** 4,643 | ​ | ​ 3,229 | ​ | ​ 6,618 | ​ | ​ 45 | ​ | ​ 3,699 | ​ | ​ 14 | ​ | ​ 44,173 | ​ | ​ 62,421 |
| Total real estate loans | ​ | ​ 237,775 | ​ | ​ 401,131 | ​ | ​ 109,724 | ​ | ​ 225,143 | ​ | ​ 304,709 | ​ | ​ 79,367 | ​ | ​ 664,741 | ​ | ​ 2,022,590 |
| Commercial loans | ​ | ​ 111,686 | ​ | 105,301 | ​ | ​ 40,289 | ​ | ​ 233,617 | ​ | ​ 39,395 | ​ | ​ 1,077 | ​ | ​ 2,633 | ​ | ​ 533,998 |
| Paycheck protection program loans | ​ | ​ 894 | ​ | ​ 874 | ​ | ​ — | ​ | ​ 173 | ​ | ​ — | ​ | ​ — | ​ | ​ — | ​ | ​ 1,941 |
| Consumer loans | ​ | **​** 5,175 | ​ | ​ 276,167 | ​ | ​ 49,496 | ​ | ​ 70,069 | ​ | ​ 6,849 | ​ | ​ 1,993 | ​ | ​ 5 | ​ | ​ 409,754 |
| Total Non-PCD loans | ​ | ​ 355,530 | ​ | ​ 783,473 | ​ | ​ 199,509 | ​ | ​ 529,002 | ​ | ​ 350,953 | ​ | ​ 82,437 | ​ | ​ 667,379 | ​ | ​ 2,968,283 |
| PCD loans | ​ | 1,319 | ​ | ​ 2,546 | ​ | ​ 31 | ​ | ​ — | ​ | ​ 1,156 | ​ | ​ 388 | ​ | ​ — | ​ | 5,440 |
| Total loans | ​ | $356,849 | ​ | $786,019 | ​ | $199,540 | ​ | $529,002 | ​ | $352,109 | ​ | $82,825 | ​ | $667,379 | ​ | $2,973,723 |

The following table sets forth the contractual maturity ranges of our Consumer Program loan portfolio as of September 30, 2024, which is only originated at fixed rates (in thousands):

| ​ ​ | ​ | ​ ​ One Year or Less | ​ ​ | ​ ​ After One Year to Five Years | ​ ​ | ​ ​ After Five Through Ten Years | ​ ​ | ​ ​ After Ten Years | ​ ​ | ​ ​ Total |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Consumer Program Loans | ​ | $479 | ​ | $109,242 | ​ | $44,034 | ​ | $25,924 | ​ | $179,679 |

51

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 No Interest Promo Period in next 12 months | ​ ​ ​ ​ ​ | ​ ​ Amount ending No Interest Promo Period in next 13-24 months | ​ ​ ​ ​ ​ | ​ ​ ​ Total Interest Promo as of 9/30/24 |
| --- | --- | ---: | --- | ---: | --- | ---: |
| Consumer Program Loans | ​ | $48,394 | ​ | $11,270 | ​ | $59,664 |

During the three months ended September 30, 2024, $13.6 million of loans paid off during the no interest promo period and $11.7 million of loans ended their no interest promo period and began to amortize. During the nine months ended September 30, 2024, $22.9 million of loans paid off during the no interest promo period and $19.2 million of loans ended their no interest promo period and began to amortize.

### Asset Quality; Past Due Loans and Nonperforming Assets

The following table presents a comparison of nonperforming assets as of September 30, 2024 and December 31, 2023 (in thousands):

| ​ ​ ​ | ​ ​ | ​ ​ ​ September 30, ​ 2024 | ​ ​ ​ December 31, ​ 2023 |
| --- | --- | ---: | ---: |
| Nonaccrual loans | ​ | $14,424 ​ | $9,095 ​ |
| Loans past due 90 days and accruing interest | ​ | 1,714 ​ | 1,714 ​ |
| Total nonperforming assets | ​ | 16,138 ​ | 10,809 ​ |
| **​** | ​ | ​ ​ ​ | ​ ​ ​ |
| SBA guaranteed amounts included in nonperforming loans | ​ | $5,954 ​ | $3,115 ​ |
| ​ | ​ | ​ ​ ​ | ​ ​ ​ |
| Allowance for credit losses to total loans | ​ | 1.72% | 1.62% |
| Allowance for credit losses to nonaccrual loans | ​ | 354.48% | 574.06% |
| Allowance for credit losses to nonperforming loans | ​ | 316.85% | 483.04% |
| Nonaccrual to total loans | ​ | 0.49% | 0.28% |
| Nonperforming assets excluding SBA guaranteed loans to total assets | ​ | 0.25% | 0.20% |

Nonperforming assets were up during the nine months of 2024, driven by an increase in nonaccrual loans of $5.3 million to $14.4 million. The increase was driven primarily by two commercial real estate loans totalling $4.2 million, one commercial loan totalling $0.7 million, one 1-4 family junior lien secured loan totalling $0.2 million and one home equity line of credit loan totalling $0.2 million added to nonaccrual during the year. All of these additions during the year are secured by collateral and portions of the balances that remain from year end have partial SBA guarantees. Despite the increase in nonaccrual loans, our levels of nonaccruals to total loans and nonaccruals to total assets is still under 0.50% for both. 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 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.

We originate a portion of our consumer loans (the Consumer Program) using a third party that sources and subsequently manages the portfolio of loans. As of September 30, 2024, the principal balance outstanding was $179.7 million. 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 $19.5 million as of September 30, 2024 and represented 44% of our total allowance for credit losses. Net charge-offs on this portfolio were $4.0 million and $12.6 million during the three and nine months ended September 30, 2024, respectively, and represented approximately 50% and 69%, respectively, of net charge-offs recorded during the periods.

The Company tightened its origination criteria in regard to this portfolio in April of 2023 and from that point forward we generally originated loans to consumer borrowers being managed by the third party with FICO scores over 720, whereas prior periods loan production included approximately 40% of loans to borrowers with weaker credit scores. This older vintage lower credit score portion of the portfolio has driven the uptick in related charge-offs during 2023 which continued into the first six months of 2024 and necessitated the update of the Company’s expected loss rates on this portfolio for purposes of determining the allowance for credit losses as discussed in our Annual Report on Form 10-K for 2023. This updated loss rate has been a driver in the increase of the allowance on the portfolio. The newer production represented approximately 38% of the portfolio as of September 30, 2024 and is expected to improve the quality mix of the portfolio and result in lower realized net charge-offs and provisions for credit losses in future periods.

### 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).

| ​ ​ ​ Available-for-sale investment securities: | ​ ​ | ​ ​ September 30, 2024 ​ | ​ ​ | ​ ​ December 31, 2023 ​ |
| --- | --- | ---: | --- | ---: |
| Residential government-sponsored mortgage-backed securities | ​ | $92,280 | ​ | $96,808 |
| Obligations of states and political subdivisions | ​ | 30,568 | ​ | 30,080 |
| Corporate securities | ​ | 14,003 | ​ | 14,048 |
| Collateralized loan obligations | ​ | — | ​ | 4,982 |
| Residential government-sponsored collateralized mortgage obligations | ​ | 56,833 | ​ | 34,471 |
| Government-sponsored agency securities | ​ | 14,276 | ​ | 13,711 |
| Agency commercial mortgage-backed securities | ​ | 26,953 | ​ | 30,110 |
| SBA pool securities | ​ | 7,630 | ​ | 4,210 |
| Total | ​ | $242,543 | ​ | $228,420 |
| ​ | ​ | ​ ​ | ​ | ​ ​ |
| Held-to-maturity investment securities: | ​ |  | ​ |  |
| Residential government-sponsored mortgage-backed securities | ​ | $8,066 | ​ | $9,040 |
| Obligations of states and political subdivisions | ​ | 1,519 | ​ | 2,391 |
| Residential government-sponsored collateralized mortgage obligations | ​ | 181 | ​ | 219 |
| Total | ​ | $9,766 | ​ | $11,650 |

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 $252.3 million as of September 30, 2024, an increase of 5.1% from $240.1 million as of December 31, 2023, primarily due to purchases of available-for-sale securities, partially offset by paydowns, maturities, and calls of the investments over the past nine months. We recognized no credit impairment charges related to credit losses on our held-to-maturity investment securities during the three and nine months ended September 30, 2024 and an immaterial amount of credit impairment charges were taken during the three and nine months ended September 30, 2023.

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 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 $3.3 billion as of September 30, 2024, a 1% increase from December 31, 2023. The increase in deposits from year end was primarily driven by growth in money market and savings accounts due to our competitive rates on these products. Savings accounts increased 12% from $783.8 million as of December 31, 2023 to $873.8 million as of September 30, 2024. Money market accounts increased 5% from $794.5 million as of December 31, 2023 to $835.1 million as of September 30, 2024. 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.

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 $820.4 million, or 25% of total deposits, as of September 30, 2024.

#### 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 September 30, 2024 and December 31, 2023, total FHLB borrowings were $165.0 million and $30.0 million, respectively. As of September 30, 2024, we had $300.9 million of unused and available FHLB lines of credit. Subsequent to September 30, 2024, we repaid all of our outstanding

FHLB advances of $165.0 million with excess liquidity from the LPF loan sale. This increased our available FHLB lines of credit by a similar amount following repayment.

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 September 30, 2024 and December 31, 2023 was $3.7 million and $3.0 million, respectively.

We had secured borrowings of $17.5 million and $20.4 million as of September 30, 2024 and December 31, 2023, respectively, related to loan transfers to other financial institutions during 2023 and the first nine months of 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. During the three and nine months ended September 30, 2024, additional advances were made to borrowers under the loans previously transferred in 2023 and were accordingly treated as additional secured borrowings as of September 30, 2024. Additionally, during the three and nine months ended September 30, 2024, we voluntarily repurchased $3.5 million of the loans included in the original failed loan sales from one of the other institutions which drove the decline in our balance of secured borrowers and the loans held for investment collateralizing secured borrowings. 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 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 September 30, 2024, 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 September 30, 2024, 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 September 30, 2024 and December 31, 2023, 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 September 30, 2024, 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:

| ​ ​ ​ ​ ​ ​ Primis Financial Corp. | ​ ​ ​ ​ ​ | ​ ​ Minimum ​ Required for ​ Capital ​ Adequacy ​ Purposes | ​ ​ ​ ​ ​ ​ To Be ​ Categorized as ​ Well Capitalized (1) | ​ ​ ​ ​ ​ ​ Actual Ratio at September 30, ​ 2024 ​ | ​ ​ ​ ​ December 31, ​ 2023 ​ |
| --- | --- | ---: | --- | ---: | ---: |
| Leverage ratio |  | 4.00% | n/a | 8.20% | 8.37% |
| Common equity tier 1 capital ratio |  | 4.50% | n/a | 8.23% | 8.96% |
| Tier 1 risk-based capital ratio |  | 6.00% | n/a | 8.51% | 9.25% |
| Total risk-based capital ratio |  | 8.00% | n/a | 11.68% | 13.44% |
| ​ | ​ | ​ ​ | ​ ​ | ​ ​ | ​ ​ |
| **Primis Bank** |  | ​ | ​ ​ | ​ ​ | ​ ​ |
| Leverage ratio |  | 4.00% | 5.00% | 9.73% | 9.80% |
| Common equity tier 1 capital ratio |  | 7.00% | 6.50% | 10.38% | 10.88% |
| Tier 1 risk-based capital ratio |  | 8.50% | 8.00% | 10.38% | 10.88% |
| Total risk-based capital ratio |  | 10.50% | 10.00% | 11.63% | 12.12% |

(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 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 3.63% as of September 30, 2024, 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, 2023. 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, 2023. 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 nine months of 2024. Notwithstanding, we are providing an update to the Goodwill discussion from our Form 10-K to describe the results of our annual impairment testing performed during the quarter.

Goodwill

As discussed in our Form 10-K for the year ended December 31, 2023, we are required to test goodwill for impairment at least annually and that test is performed as of September 30 of each year. Our goodwill is allocated to our two reporting units, Primis Bank and Primis Mortgage, and as of September 30, 2024, $90.7 million of goodwill is allocated to the Primis Bank reporting unit and $2.7 million is allocated to the Primis Mortgage reporting unit. As of September 30, 2024, we elected to forgo a qualitative assessment allowed under U.S. GAAP and performed a quantitative assessment to test goodwill for impairment. As part of our impairment assessment, the fair value of each reporting unit was estimated using a combination of a market and income approach. The income approach is a valuation technique under which we estimate future cash flows using the financial forecast from the perspective of an unrelated market participant and a terminal value was then applied to the projected cash flow stream. Future estimated cash flows were discounted to their present value to calculate the estimated fair value. The market valuation approach evaluated transactions of comparable banks and considered market pricing ratios of public bank peers. As of September 30, 2024, the estimated fair value significantly exceeded the carrying value of the Primis Mortgage reporting unit and no goodwill impairment was required.

As of September 30, 2024, the estimated fair value of the Primis Bank reporting unit was 111% of the carrying value of the reporting unit, and no goodwill impairment was required. Fair value determinations utilized in the quantitative goodwill impairment test for the Primis Bank reporting unit required considerable judgment and is sensitive to changes in underlying assumptions, estimates, and market factors. Estimating the fair value of the reporting unit requires us to make assumptions and estimates regarding future plans, as well as industry, economic, and regulatory conditions. These assumptions and estimates at September 30 included estimated future annual interest income and interest expense, lending and deposit interest rates, Fed borrowing rates, discount rates, growth rates of the bank and its loan and deposit portfolio, credit losses on the loan portfolio, and other market factors. We also make assumptions in certain testing methodologies about the composition of our peers and market acquisition transactions related to banks that we believe are similar to us. If current expectations of future growth rates, interest rates, provision for credit losses, and margins are not met, if market factors outside of our control, such as discount rates, Fed borrowing rates, or inflation, change, or if management’s expectations or plans otherwise change, including updates to long-term operating plans, then the fair value of the reporting unit may decline below its carrying value and result in goodwill impairment in the future.

## Market risk

As filed, 6,448 characters.

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 September 30, 2024 and December 31, 2023. All changes are within our Asset/Liability Risk Management Policy guidelines.

| ​ ​ ​ ​ Change in Interest Rates in Basis Points (Rate Shock) | ​ ​ ​ ​ ​ | ​ ​ Sensitivity of EVE As of September 30, 2024 EVE ​ ​ Amount | ​ ​ | ​ ​ $ Change From Base | ​ ​ ​ ​ ​ % Change ​ From Base | ​ ​ EVE as a % of Total ​ Assets | ​ ​ Equity Book Value |
| --- | --- | ---: | --- | ---: | ---: | ---: | ---: |
| Up 400 | ​ | $290,085 | ​ | $(116,209) | (28.60)% | 7.21% | 73.06% |
| Up 300 | ​ | 315,683 | ​ | (90,611) | (22.30)% | 7.84% | 79.50% |
| Up 200 | ​ | 340,802 | ​ | (65,492) | (16.12)% | 8.47% | 85.83% |
| Up 100 | ​ | 381,722 | ​ | (24,572) | (6.05)% | 9.49% | 96.14% |
| Base | ​ | 406,294 | ​ | — | —% | 10.10% | 102.32% |
| Down 100 | ​ | 417,311 | ​ | 11,017 | 2.71% | 10.37% | 105.10% |
| Down 200 | ​ | 409,703 | ​ | 3,409 | 0.84% | 10.18% | 103.18% |
| Down 300 | ​ | 393,244 | ​ | (13,050) | (3.21)% | 9.77% | 99.04% |
| Down 400 | ​ | 366,629 | ​ | (39,665) | (9.76)% | 9.11% | 92.34% |

| ​ ​ ​ ​ Change in Interest Rates in Basis Points (Rate Shock) | ​ ​ ​ ​ ​ | ​ ​ Sensitivity of EVE As of December 31, 2023 EVE ​ ​ Amount | ​ ​ | ​ ​ $ Change From Base | ​ ​ ​ ​ ​ % Change ​ From Base | ​ ​ EVE as a % of Total ​ Assets | ​ ​ Equity Book Value |
| --- | --- | ---: | --- | ---: | ---: | ---: | ---: |
| Up 400 | ​ | $428,175 | ​ | $(54,019) | (11.20)% | 11.10% | 107.69% |
| Up 300 | ​ | 438,298 | ​ | (43,896) | (9.10)% | 11.37% | 110.24% |
| Up 200 | ​ | 447,711 | ​ | (34,483) | (7.15)% | 11.61% | 112.61% |
| Up 100 | ​ | 471,457 | ​ | (10,737) | (2.23)% | 12.22% | 118.58% |
| Base | ​ | 482,194 | ​ | — | —% | 12.50% | 121.28% |
| Down 100 | ​ | ​ 486,399 | ​ | 4,205 | 0.87% | 12.61% | 122.34% |
| Down 200 | ​ | 477,430 | ​ | (4,764) | (0.99)% | 12.38% | 120.08% |
| Down 300 | ​ | ​ 456,987 | ​ | (25,207) | (5.23)% | 11.85% | 114.94% |
| Down 400 | ​ | 417,079 | ​ | (65,115) | (13.50)% | 10.81% | 104.90% |

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 September 30, 2024 and December 31, 2023 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 September 30, 2024 and December 31, 2023.

| ​ ​ ​ ​ Change in Interest Rates in Basis Points (Rate Shock) | ​ ​ ​ ​ ​ | ​ ​ Sensitivity of NII As of September 30, 2024 Adjusted NII ​ ​ Amount | ​ ​ | ​ ​ $ Change From Base |
| --- | --- | ---: | --- | ---: |
| Up 400 | ​ | $97,718 | ​ | $(12,832) |
| Up 300 | ​ | 100,559 | ​ | (9,991) |
| Up 200 | ​ | 103,361 | ​ | (7,189) |
| Up 100 | ​ | 107,472 | ​ | (3,078) |
| Base | ​ | 110,550 | ​ | — |
| Down 100 | ​ | 112,571 | ​ | 2,021 |
| Down 200 | ​ | 112,928 | ​ | 2,378 |
| Down 300 | ​ | 112,879 | ​ | 2,329 |
| Down 400 | ​ | 113,139 | ​ | 2,589 |

58

| ​ ​ ​ ​ Change in Interest Rates in Basis Points (Rate Shock) | ​ ​ ​ ​ ​ | ​ ​ Sensitivity of NII As of December 31, 2023 Adjusted NII ​ ​ Amount | ​ ​ | ​ ​ $ Change From Base |
| --- | --- | ---: | --- | ---: |
| Up 400 | ​ | $98,539 | ​ | $(16,112) |
| Up 300 | ​ | 101,939 | ​ | (12,712) |
| Up 200 | ​ | 105,326 | ​ | (9,325) |
| Up 100 | ​ | 110,513 | ​ | (4,138) |
| Base | ​ | 114,651 | ​ | — |
| Down 100 | ​ | 117,230 | ​ | 2,579 |
| Down 200 | ​ | 118,099 | ​ | 3,448 |
| Down 300 | ​ | 118,114 | ​ | 3,463 |
| Down 400 | ​ | 119,065 | ​ | 4,414 |

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. Sensitivity of EVE and NII are modeled using different assumptions and approaches.

## Controls and procedures

As filed, 3,087 characters.

*(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) utilizing the framework established in “Internal Control – Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission. 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 2023 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 and nine months ended September 30, 2024, 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 nine months ended September 30, 2024 that materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting. During the nine months ended September 30, 2024, 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 2023 Annual Report on Form 10-K. While management believes it has put effective controls in place to remediate the previously identified material weaknesses, the controls have not been operating for a sufficient amount of time to conclude that the material weakness has been fully remediated. The

Company will continue to operate and test the new controls until it believes they have been operating effectively for a sufficient amount of time. The Company anticipates the material weaknesses to be fully remediated as soon as possible.

## Risk factors

As filed, 846 characters.

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 2023 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 2023 Form 10-K.

Filed Dec 11, 2024.
Source: SEC EDGAR, the filing index for accession 0001558370-24-016161. Last ingested by Listed: Oct 24, 2026, 15:09 ET. No prices; not investment advice.