10-K: Primis Financial Reports Strong 2025 Earnings, Strategic Growth

Sentiment:

Annual Report 16 March 2026 5:25 PM

Primis Financial Corp. reported a significant turnaround in 2025, achieving $61 million in net income and $2.49 EPS, driven by strategic business line growth and a sale-leaseback transaction.

Capital raiseThe company may be required to raise additional capital if future operating results erode capital, if the Bank is required to maintain capital in excess of well-capitalized standards, or if the company elects to expand through loan growth or acquisitions.The ability to raise capital will depend on conditions in the capital markets and on the company's financial performance.Issuing shares of common stock to raise additional capital could dilute the book value of common stock and reduce current shareholders' percentage of ownership interest.The company may issue new series of preferred stock or debt securities (senior or additional subordinated notes, preferred shares, common shares) in the future to increase its capital resources.

Better than expectedNet income available to common shareholders increased to $61 million from a net loss of $16 million in the prior year.Basic and diluted EPS improved significantly to $2.49 from a loss of $0.66.Net interest margin increased to 3.12% from 2.86%.Provision for credit losses decreased by $38 million, indicating improved expected credit performance.Noninterest income saw a substantial increase, driven by a $51 million gain on a sale-leaseback transaction and a $32 million gain on the PFH investment.

Summary

Net income available to common shareholders was $61 million ($2.49 basic and diluted earnings per share) for the year ended December 31, 2025, a significant increase from a net loss of $16 million ($0.66 loss per share) in 2024.
Total assets increased 10% to $4.047 billion as of December 31, 2025, from $3.690 billion in 2024.
Total loans held for investment (LHFI) grew 14% to $3.284 billion as of December 31, 2025, from $2.887 billion in 2024, primarily driven by growth in Mortgage Warehouse and the Panacea Division.
Total deposits increased 7% to $3.396 billion as of December 31, 2025, from $3.171 billion in 2024, with noninterest-bearing demand deposits growing 26%.
Net interest income increased to $111.428 million in 2025 from $104.222 million in 2024, largely due to declining interest expenses.
Net interest margin improved to 3.12% for the year ended December 31, 2025, compared to 2.86% in 2024.
The provision for credit losses decreased to $12.289 million in 2025 from $50.621 million in 2024, mainly due to improved performance in the Consumer Program loan portfolio.
Noninterest income surged to $112.350 million in 2025 from $43.140 million in 2024, boosted by a $51 million gain on a sale-leaseback transaction and a $32 million gain on the Panacea Financial Holdings (PFH) investment.
Noninterest expenses increased by $13.291 million, primarily due to higher personnel costs in growing business lines (PMC, Mortgage Warehouse, Panacea Division) and increased lease costs.
Nonperforming assets increased significantly to $86.536 million (3% of total loans and OREO) as of December 31, 2025, from $16.739 million (1%) in 2024, driven by two large commercial loans.
The allowance for credit losses to total loans decreased to 1.40% as of December 31, 2025, from 1.86% in 2024.
Capital ratios continued to exceed well-capitalized standards as of December 31, 2025.
A material weakness in internal controls over financial reporting was identified, related to deposit account processing and review controls for the digital bank platform.
The company authorized a new stock repurchase program for up to 750,000 shares, effective December 18, 2025, and ending December 18, 2026.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this as a positive report, highlighting a strong financial turnaround and strategic growth in key business lines, despite an increase in nonperforming assets and an identified internal control weakness.

Positives

Net income available to common shareholders increased significantly to $61 million in 2025 from a net loss of $16 million in 2024, representing a 481% improvement.
Basic and diluted earnings per share improved to $2.49 in 2025 from a loss of $0.66 in 2024.
Total assets grew 10% to $4.047 billion as of December 31, 2025.
Total loans held for investment increased 14% to $3.284 billion, driven by strategic growth initiatives.
Total deposits increased 7% to $3.396 billion, with noninterest-bearing demand deposits growing 26% ($116 million).
Net interest margin expanded to 3.12% in 2025 from 2.86% in 2024, indicating improved profitability from core banking operations.
Provision for credit losses decreased by $38 million, reflecting improved expected credit performance, particularly in the Consumer Program portfolio.
Noninterest income saw a substantial increase of $69 million, primarily due to a $51 million gain on a sale-leaseback transaction and a $32 million gain on the PFH investment.
The Panacea Financial Division's outstanding loan balances grew 25% to $544 million, and deposits grew 38% to $128 million in 2025.
Mortgage Warehouse lending saw significant growth, with outstanding loan balances up 398% to $318 million and committed facilities up 252% to $1.2 billion.
Primis Mortgage Company's funded loan volume increased 50% to $1.2 billion in 2025, with pre-tax income of $7 million.
Digital banking platform deposits reached $1 billion, with a high customer retention rate of 82% for over two years.
The company's capital ratios remained above the applicable well-capitalized standards as of December 31, 2025.

Negatives

Nonperforming assets increased by $70 million (417%) to $86.536 million as of December 31, 2025, primarily due to one commercial real estate loan ($40 million) and one commercial relationship ($24 million).
The allowance for credit losses to total loans decreased to 1.40% from 1.86%, which could indicate a reduced buffer for potential future loan losses.
Noninterest expenses increased by $13 million, driven by higher personnel costs for new production teams and increased lease expenses from the sale-leaseback transaction.
A $15 million loss was realized on the sale of investment securities during the fourth quarter of 2025 as part of a portfolio restructuring.
Consumer Program derivative income declined by $3 million due to the cessation of new loan originations and fewer promotional loans converting.
A material weakness in internal controls over financial reporting was identified, specifically related to the lack of proper restrictions and review controls for deposit account processing in the digital bank platform.
The trading volume in the company's common stock is low, which may affect liquidity for investors.

Risks

Concentration of commercial real estate and construction and land development loans, which typically involve higher principal amounts and repayment dependency on property income or sales.
A meaningful amount of unsecured consumer loans, where default offers no collateral for recovery of potential losses.
Third-party credit risk for interest foregone on promotional consumer loans if the third-party servicer fails to perform its reimbursement obligation.
Declines in real estate values in primary markets could be detrimental to financial condition and results of operations, as a significant portion of loans are secured by real estate.
An increase in nonperforming assets could adversely affect net income by reducing interest income, increasing administration costs, and requiring higher reserves.
The allowance for credit losses may not be adequate to cover actual loan losses, potentially leading to decreased earnings.
Credit policies and procedures may not be sufficient to avoid losses, particularly during economic downturns.
Mortgage revenue is cyclical and sensitive to interest rates, economic conditions, and housing market slowdowns, which could adversely impact profits.
Profitability depends significantly on local economic conditions in concentrated market areas, making the company vulnerable to local weather catastrophes, public health issues, and other external events.
Earnings are subject to interest rate risk, where unexpected changes could adversely affect net interest income.
Unstable global economic conditions, including geopolitical events, trade policy, and inflation, may have serious adverse consequences.
Declines in asset values may result in impairment charges and adversely affect investment securities, financial performance, and capital.
The company's stock price can be volatile due to various factors, including operating results, analyst recommendations, industry news, and economic conditions.
Low trading volume in common stock may make it difficult for shareholders to resell shares at desired prices.
Prolonged periods of inflation could negatively impact profitability by increasing fixed costs, funding costs, and reducing demand for products and services.
ESG and DEI risks could adversely affect reputation and relationships with shareholders, employees, clients, and third parties.
Failure to grow or manage strategic growth effectively could negatively affect financial condition and results of operations.
Difficulty or expense in responding to rapid technological changes, including those related to artificial intelligence, could impact competitiveness.
New lines of business, products, or services and technological advancements may subject the company to additional risks.
The development and use of artificial intelligence (AI) presents risks and challenges, including legal, regulatory, bias, and transparency issues.
Inability to successfully integrate acquisitions or realize anticipated benefits from them.
The carrying value of goodwill and other intangible assets may be adversely affected by impairment charges.
Reliance on third-party vendors for key business infrastructure components exposes the company to operational and financial risks.
Industry adoption of real-time payments networks could negatively impact financial performance through reductions in product profitability, increased liquidity reserves, and potential for increased fraud losses.
Significant cyber and data security risk could result in disclosure of sensitive information, adversely affect business or reputation, and expose to significant liabilities.
Dependence on the accuracy and completeness of information about customers and counterparties, with inaccuracies or fraud potentially impacting business.
Dependence on key personnel, with the loss of one or more potentially impairing customer relationships and business.
Deposit insurance premiums levied against the company could increase.
Liquidity risk could impair the ability to fund operations and jeopardize financial condition.
Adverse developments affecting the financial services industry, such as liquidity concerns or defaults by other institutions, could adversely affect business operations.
Future growth or operating results may require additional capital, which may not be available on favorable terms or may be dilutive.
Issuance of a new series of preferred stock or debt securities, which would be senior to common stock, may cause the market price of common stock to decline.
The ability to pay dividends on common stock is subject to restrictions by federal banking laws and regulatory policies.
Heavy regulation by federal and state agencies; changes in laws and regulations or failures to comply may adversely affect operations and financial results.
Required regulatory capital levels may limit operations and potential growth.
Commercial real estate lending guidance issued by federal banking regulators impacts operations and capital requirements.
Changes in accounting standards or assumptions in applying accounting policies could adversely affect financial reporting.
Failure to maintain an effective system of disclosure controls and procedures could have a material adverse effect on business, results of operations, and financial condition.

Future Outlook

Management believes that Primis and Primis Bank will continue to exceed all applicable well-capitalized regulatory capital requirements and the capital conservation buffer in 2026. The V1BE service is undergoing enhancements to facilitate licensing to other banks, with the first bank customer expected onboard in 2026. Noninterest income from the Consumer Program is projected to become increasingly immaterial. New production teams at Primis Mortgage Company are anticipated to generate income that will offset initial salary expenses in later periods. The sale-leaseback transaction is expected to enable capital reallocation to higher-earning assets, compensating for future increased lease expenses. The company is actively assessing the potential impact of several new FASB ASUs on its future financial statements, and the dynamic tariff environment continues to present uncertainty.

Management Comments

The experience and market knowledge of the Bank's management team is one of its greatest strengths and competitive advantages.
Primis looks to take advantage of certain economies of scale typically enjoyed by larger organizations, thus expanding its operations both organically and through strategic cost-effective branch or bank acquisitions.
Management constantly looks for ways to adopt and deploy technology solutions that provide a competitive advantage and advance the strategies outlined.
Primis has the skillsets and experience necessary to execute and successfully integrate financial institution acquisitions, well-positioning it for future opportunities.
Primis looks to be the primary bank for smalland medium-sized businesses by offering a suite of competitive electronic banking services, robust treasury services and comprehensive lending options.
Management believes the lending in its chosen business lines, particularly healthcare and mortgage warehouse, has inherently better asset quality than other asset classes or industry verticals on average.
Primis continues to grow a stable core deposit base of business and retail customers and intends to continue developing deposit relationships with each of its loan customers.
Management believes that the allowance for credit losses as of December 31, 2025, is sufficient to absorb future expected credit losses in our loan portfolio based on our assessment of all known factors.

Industry Context

StockSavvy.ai notes that Primis Financial Corp.'s strategy of diversifying into specialized lending (healthcare, mortgage warehouse) and digital banking aligns with broader industry trends seeking higher-margin opportunities and expanded customer reach beyond traditional branch footprints. The focus on technology and selective acquisitions positions the company to compete with both traditional banks and emerging fintechs. The increase in nonperforming assets, while significant year-over-year, is a common challenge in a dynamic interest rate environment, particularly for commercial real estate and unsecured consumer loan portfolios, which are under increased scrutiny across the banking sector. The material weakness in internal controls for the digital platform highlights the ongoing operational risks associated with rapid technological adoption in financial services.

Comparison to Industry Standards

Primis's net interest margin of 3.12% in 2025 compares favorably to the industry average for regional banks, which often range from 2.5% to 3.5%, indicating efficient asset and liability management in a fluctuating rate environment.
The increase in nonperforming assets to 3% of total loans and OREO is higher than the average for well-managed regional banks, which typically aim for nonperforming asset ratios below 1-1.5%, suggesting a need for enhanced credit risk management or specific portfolio adjustments.
The Common Equity Tier 1 ratio of 9.36% for Primis Financial Corp. and 10.74% for Primis Bank are well above the Basel III minimums of 4.5% and 6.5% (including buffer), respectively, demonstrating a strong capital position compared to global benchmarks and peers.
The growth in digital deposits to $1 billion, with 82% customer retention over two years, indicates strong performance in digital adoption, comparable to leading digital-first banking initiatives that prioritize customer experience and retention.
The 50% increase in funded loan volume for Primis Mortgage to $1.2 billion in 2025, despite a challenging interest rate environment, suggests outperformance relative to the broader U.S. mortgage market, which experienced significant slowdowns in 2023-2024.

Management Changes

Role	Previous Person	New Person	Effective Date	Reason
Chief Risk Officer of the Bank	N/A	Donald C. Savino	November 17, 2025	Employment Agreement entered into to establish scope, terms, and conditions of continued employment.
Primary Executives of PFH	N/A	N/A	March 31, 2025	Resigned from positions as management-level employees of Primis Panacea Financial Division of the Bank, leading to PFH deconsolidation.

Corporate Governance

Change Type	Description	Effective Date	Impact Assessment
Board Structure	Beginning with the 2026 annual meeting of stockholders, the classification of directors into three staggered classes will cease, and each director will stand for election annually for a one-year term.	2026 Annual Meeting of Stockholders	Increases accountability of directors to shareholders through more frequent elections.
Director Removal Policy	Directors may be removed for cause upon the affirmative vote of not less than 75% of outstanding shares entitled to vote. Cause is narrowly defined (incompetence, felony conviction, gross negligence/misconduct).	N/A (existing provision)	Provides strong protection for incumbent directors, potentially discouraging hostile takeovers.
Special Shareholder Meetings	Special meetings can be called by the Chairman, President, three-fourths of the board, or holders of not less than 40% of outstanding voting shares.	N/A (existing provision)	Restricts the ability of a minority of shareholders to call special meetings, providing stability but potentially limiting shareholder activism.
Evaluation of Change in Control Offers	The Board may consider various factors beyond price, including impact on business, employees, customers, suppliers, creditors, and communities, when evaluating change in control offers.	N/A (existing provision)	Allows the board broad discretion in resisting takeover attempts, potentially benefiting current management but possibly limiting shareholder opportunities for premium sales.
Blank Check Preferred Stock	The company is authorized to issue up to 5,000,000 shares of preferred stock with voting powers determined by the board.	N/A (existing provision)	Could be used to dilute voting power of hostile acquirers, serving as an anti-takeover measure.
Clawback Policy	Adopted a clawback policy in November 2023, requiring recovery of excess incentive-based compensation based on restated financial reporting measures, in compliance with Nasdaq listing standards.	November 28, 2023	Enhances corporate governance and executive accountability, aligning with regulatory requirements.

Legal Proceedings

Primis and Primis Bank are from time to time a party to various claims and proceedings arising in the ordinary course of business, including employment-related claims, lender liability, breach of contract, and other lending-related claims.
Management believes that such matters, individually and in the aggregate, will not have a material adverse effect on the company's financial condition or results of operations.
There are no proceedings pending, or to management's knowledge, threatened, that represent a significant risk against the company as of December 31, 2025.

Related Party Transactions

Loan activity to related parties: Balance at January 1, 2025, was $16.965 million; principal advances were $3.557 million; principal paid was $3.320 million; resulting in a balance of $17.202 million at December 31, 2025.
Aggregate amount of deposit accounts with related parties was $17 million as of December 31, 2025, down from $30 million as of December 31, 2024.

Stakeholder Impact

Shareholders: Positive impact from increased net income, EPS, and continued dividends. Potential dilution risk from future capital raises. Anti-takeover provisions may limit opportunities for premium sales.
Employees: Positive impact from growth in business lines (PMC, Mortgage Warehouse, Panacea Division) leading to higher personnel costs (salaries and benefits). New CRO hire. Stock-based compensation plans align interests.
Customers: Benefits from expanded digital offerings (V1BE, digital platform) and specialized financial products (Panacea Financial). Potential impact from increased nonperforming assets on loan availability or terms.
Creditors: Improved financial performance and strong capital ratios enhance creditworthiness.
Suppliers: Potential for increased business with third-party vendors due to strategic growth and technology investments, but also reliance on these vendors creates risk.

Next Steps

Implement enhancements to the V1BE service to facilitate licensing to other banks, with the first bank customer expected onboard in 2026.
Continue to monitor and manage the run-off of the Consumer Program loan portfolio, as noninterest income from this program is expected to become increasingly immaterial.
Remediate the identified material weakness in internal controls related to deposit account processing in the digital bank platform by strengthening parameters, refining user access rights, and enhancing review processes.
Actively work with borrowers of nonperforming commercial real estate and commercial loans to facilitate a return to performing status.
Continue to assess the potential impact of new FASB ASUs (2025-03, 2025-06, 2025-07, 2025-08, 2025-11) on consolidated financial statements.
Transition to annual director elections starting with the 2026 annual meeting of stockholders, as the staggered board structure will cease.
Execute the stock repurchase program, authorized to repurchase up to 750,000 shares of common stock by December 18, 2026.
Manage the maturity of the remaining two interest rate swaps in May and August 2026.

Key Dates

Date	Description
April 14, 2005	Primis Bank commenced operations.
January 20, 2017	Completed the sale of $27 million of fixed-to-floating rate senior Subordinated Notes due 2027.
February 19, 2020	Dennis J. Zember, Jr. appointed Chief Executive Officer.
August 25, 2020	Completed the sale of $60 million of fixed-to-floating rate Subordinated Notes due 2030.
November 2020	Launched the Panacea Financial division.
Second half of 2021	Launched the Consumer Program with a third-party originator and servicer.
2021	Launched its V1BE service, an app-based delivery service for banking services.
May 2022	Primis Bank acquired Primis Mortgage Company.
2022	Launched its digital bank platform.
October 25, 2023	Executive Employment Agreement with Rickey Allen Fulk became effective.
November 28, 2023	Primis Financial Corp. Clawback Policy was adopted by the Board of Directors.
December 21, 2023	Panacea Financial Holdings (PFH) completed a $25 million Series B financing round.
March 29, 2024	Revised CRA regulations became subject to an injunction.
October 2024	Hired a seasoned team of mortgage warehouse lenders.
October 24, 2024	Entered into a purchase and assumption agreement with EverBank, N.A. for the sale of the Life Premium Finance (LPF) division.
October 31, 2024	First close of the LPF division sale to EverBank, with approximately $370 million of loans acquired.
Fourth quarter of 2024	Decision made to cease originating new loans under the Consumer Program, effective January 31, 2025.
January 1, 2025	Company began offering modifications to Consumer Program borrowers.
January 27, 2025	Executive Employment Agreement with Ryan Lysaght Gorney became effective.
January 31, 2025	Second closing of the LPF division sale to EverBank, with all LPF operations and employees assumed by EverBank.
March 31, 2025	PFH was deconsolidated from the Company; three primary PFH executives resigned from Primis Panacea Financial Division.
April 24, 2025	Board of directors adopted Articles of Amendment regarding director classification.
June 12, 2025	Sold a portion of retained ownership in PFH common shares, generating $22 million in proceeds.
June 26, 2025	Stockholders adopted Articles of Amendment regarding director classification.
July 2, 2025	Articles of Amendment to the Articles of Incorporation became effective, changing director election structure.
July 16, 2025	Federal Reserve, OCC, and FDIC issued a joint proposal to rescind the 2023 CRA modernization rule.
Third quarter of 2025	Federal Reserve reduced the target federal funds rate by 25 basis points to 4.00% to 4.25%.
October 2025	Short-term FHLB borrowings were obtained to fund increased loan growth.
November 17, 2025	Executive Employment Agreement with Donald C. Savino became effective.
December 2025	Executed a sale-leaseback transaction for 18 retail branch properties.
December 18, 2025	Board of Directors authorized a new stock repurchase program for up to 750,000 shares, ending December 18, 2026.
Fourth quarter of 2025	Federal Reserve reduced the target federal funds rate by 50 basis points to 3.50% to 3.75%.
December 31, 2025	End of the fiscal year.
First quarter of 2026	FHLB borrowings obtained in October 2025 were repaid.
2026	V1BE service is expected to onboard its first bank customer.
2026 Annual Meeting of Stockholders	The classification of directors will cease, and each director will stand for election for a term expiring at the next succeeding annual meeting.
May 2026	One of the remaining interest rate swaps matures.
August 2026	The other remaining interest rate swap matures.
December 18, 2026	The stock repurchase program authorized on December 18, 2025, ends.
December 15, 2026	Effective date for ASU 2025-03 and ASU 2025-08.
December 31, 2027	Effective date for ASU 2024-03 and ASU 2025-06.
January 1, 2028	Interim periods within fiscal years for ASU 2024-03 begin.

Recommendation

hold

Primis Financial Corp. demonstrated a strong financial rebound in 2025 with significant net income growth and improved margins, driven by successful strategic initiatives in specialized lending and digital banking. The company maintains a robust capital position. However, the notable increase in nonperforming assets and the identified material weakness in internal controls present areas of concern that warrant close monitoring. While the strategic direction is positive, these risks suggest a "hold" recommendation until further clarity on asset quality trends and control remediation is established.

Keywords

Banking, Financial Services, Regional Bank, Commercial Real Estate, Mortgage Lending, Digital Banking, Panacea Financial, Bank Holding Company, SEC Filing, 10-K, Financial Performance, Risk Management, Capital Ratios, Deposits, Loans, Asset Quality, Cybersecurity, Internal Controls, Share Repurchase, Executive Compensation

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