Primis Financial Corp.

Previous wording

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.

Current wording

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

Previous wording

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.

Current wording

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,

Previous wording

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.

Current wording

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.

Previous wording

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.

Current wording

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

Previous wording

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 wording

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

Previous wording

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.

Current wording

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

Previous wording

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.

Current wording

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

Previous wording

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

Current wording

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.

Previous wording

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.

Current wording

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

Previous wording

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.

Current wording

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

Previous wording

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.

Current wording

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

Previous wording

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.

Current wording

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

Previous wording

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):

Current wording

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

Previous wording

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.

Current wording

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

Previous wording

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.

Current wording

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

Previous wording

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

Current wording

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.

Previous wording

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.

Current wording

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

Previous wording

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.

Current wording

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.

Previous wording

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.

Current wording

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

Previous wording

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

Current wording

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

Previous wording

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.

Current wording

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

Previous wording

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.

Current wording

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

Previous wording

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.”

Current wording

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.”

Previous wording

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.

Current wording

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

Previous wording

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.

Current wording

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.

Previous wording

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.

Current wording

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

Previous wording

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

Current wording

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