8-K: Primis Financial Corp. Appoints Crowe LLP as New Independent Auditor Following Forvis Mazars Departure

Primis Financial Corp. has appointed Crowe LLP as its new independent auditor for the fiscal year ending December 31, 2024, following the resignation of Forvis Mazars.

Summary

• Primis Financial Corp. has appointed Crowe LLP as their new independent registered public accounting firm, effective October 16, 2024.
• This change follows Forvis Mazars' decision to decline reappointment on September 17, 2024.
• The company had previously consulted with Crowe regarding the accounting treatment of a third-party loan origination agreement in 2022.
• The accounting for this agreement was later revised after consultations with another advisory firm and the SEC, leading to restatements of the 2022 and 2023 financial results.
• Forvis will continue to assist with the restatement of previously issued unaudited interim financial statements and the review of the interim financial statements for the quarter ending March 31, 2024.

Sentiment

Score: 4

Explanation: The change in auditors and the restatement of financial results are negative indicators, suggesting potential issues with the company's financial reporting and internal controls. While the company has taken steps to address these issues, the overall sentiment is cautious.

Positives

• The company has quickly secured a new auditor, Crowe LLP, following the departure of Forvis Mazars.
• The company has addressed the accounting issues related to the third-party loan origination agreement by restating its financial results.

Negatives

• The change in auditors and the need to restate financial results may raise concerns about the company's internal controls and accounting practices.
• The departure of Forvis Mazars could indicate potential disagreements or issues with the company's financial reporting.

Risks

• The restatement of financial results could lead to a loss of investor confidence.
• The change in auditors may result in additional scrutiny of the company's financial statements.
• The ongoing restatement of interim financial statements could delay the release of future financial reports.

Future Outlook

The company will continue to engage Forvis for the restatement of certain interim financial statements and the review of the interim financial statements for the quarter ending March 31, 2024.

Industry Context

The change in auditors is not uncommon, but it can be a sign of potential issues with a company's financial reporting. The restatement of financial results is also a significant event that can impact investor confidence. Companies in the financial sector are often under increased scrutiny from regulators and investors.

Comparison to Industry Standards

• The change of auditors is not unusual, but the circumstances surrounding the change, including the restatement of financials, is not ideal.
• Many companies in the financial sector use the 'Big Four' accounting firms (Deloitte, Ernst & Young, KPMG, and PwC), but it is not uncommon for smaller firms to use other auditors such as Crowe or Forvis.
• Restatements of financial results are generally viewed negatively by investors and can lead to a decline in share price.
• The SEC consultation and subsequent restatement of financials is similar to other cases where companies have had to correct accounting errors.

Stakeholder Impact

• Shareholders may be concerned about the change in auditors and the restatement of financial results.
• Employees may be affected by the increased scrutiny and potential changes in accounting practices.
• Customers and suppliers may not be directly impacted by this announcement.

Next Steps

• The company will complete the restatement of its previously-issued unaudited interim consolidated financial statements.
• The company will work with Crowe LLP on the audit of its 2024 financial statements.
• The company will continue to engage Forvis for the restatement of certain interim financial statements.

Key Dates

Keywords

auditor, accounting, financial statements, Crowe LLP, Forvis Mazars, restatement, SEC, loan origination