株探米国株
英語
エドガーで原本を確認する
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Table of Contents

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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FORM 10-Q

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☒    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

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For the Quarterly Period Ended September 30, 2024

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Commission File No. 001-33037

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PRIMIS FINANCIAL CORP.

(Exact name of registrant as specified in its charter)

​

Virginia

20-1417448

(State or other jurisdiction

(I.R.S. Employer Identification No.)

of incorporation or organization)

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1676 International Drive, Suite 900

McLean, Virginia 22102

(Address of principal executive offices) (zip code)

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(703) 893-7400

(Registrant’s telephone number, including area code)

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Securities registered pursuant to Section 12(b) of the Act:

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Title of each class:

Trading symbol

Name of each exchange on which registered:

Common Stock, par value $0.01 per share

FRST

NASDAQ Global Market

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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

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Yes ☐      No ☒ 

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

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Yes ☒       No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b–2 of the Exchange Act:

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Large accelerated filer ☐

Accelerated filer ☒

Smaller reporting company ☐

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Non-accelerated filer ☐

Emerging growth company ☐

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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

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As of November 29, 2024, there were 24,722,734 shares of common stock, $0.01 par value, outstanding.

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Table of Contents

PRIMIS FINANCIAL CORP.

FORM 10-Q

September 30, 2024

TABLE OF CONTENTS

    

PAGE

PART I - FINANCIAL INFORMATION

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Item 1 - Financial Statements

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Condensed Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023

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2

Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) for the three and nine months ended September 30, 2024 and 2023

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3

Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three and nine months ended September 30, 2024 and 2023

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4

Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2024 and 2023

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6

Notes to Unaudited Condensed Consolidated Financial Statements

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7

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Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations

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39

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Item 3 – Quantitative and Qualitative Disclosures about Market Risk

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57

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Item 4 – Controls and Procedures

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59

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PART II - OTHER INFORMATION

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Item 1 – Legal Proceedings

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60

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Item 1A – Risk Factors

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60

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Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds

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60

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Item 3 – Defaults Upon Senior Securities

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60

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Item 4 – Mine Safety Disclosures

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60

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Item 5 – Other Information

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60

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Item 6 - Exhibits

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61

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Signatures

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63

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Table of Contents

PRIMIS FINANCIAL CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except per share amounts)

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September 30, 

    

December 31, 

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2024

​

2023

​

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(unaudited)

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ASSETS

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Cash and cash equivalents:

 

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Cash and due from financial institutions

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$

10,854

 

$

1,863

Interest-bearing deposits in other financial institutions

​

 

66,420

 

 

75,690

Total cash and cash equivalents

​

 

77,274

 

 

77,553

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Securities available-for-sale, at fair value (amortized cost of $264,151 and $255,891, respectively)

​

 

242,543

 

 

228,420

​

​

​

​

​

​

​

Securities held-to-maturity, at amortized cost (fair value of $9,162 and $10,839, respectively)

​

 

9,766

 

 

11,650

​

​

​

​

​

​

​

Loans held for sale, at fair value

​

​

96,897

​

​

57,691

Loans held for sale, at lower of cost or market

​

​

361,825

​

​

—

Total loans held for sale

​

​

458,722

​

​

57,691

​

​

​

​

​

​

​

Loans held for investment, collateralizing secured borrowings

​

​

17,591

​

​

20,505

Loans held for investment

​

 

2,956,132

 

 

3,198,909

Less: allowance for credit losses

​

 

(51,132)

 

 

(52,209)

Net loans

​

 

2,922,591

 

 

3,167,205

​

​

​

​

​

​

​

Stock in Federal Reserve Bank (FRB) and Federal Home Loan Bank (FHLB)

​

 

20,875

 

 

14,246

Bank premises and equipment, net

​

 

19,668

 

 

20,611

Assets held for sale

​

​

9,864

​

​

6,735

Operating lease right-of-use assets

​

​

10,465

​

​

10,646

Cloud computing arrangement assets, net

​

​

8,460

​

​

10,699

Goodwill

​

 

93,459

 

 

93,459

Intangible assets, net

​

 

985

 

 

1,958

Bank-owned life insurance

​

 

66,750

 

 

67,588

Deferred tax assets, net

​

 

25,582

 

 

22,395

Consumer Program derivative asset

​

​

7,146

​

​

10,806

Other assets

​

 

50,197

 

 

54,884

Total assets

​

$

4,024,347

 

$

3,856,546

​

​

​

​

​

​

​

LIABILITIES AND STOCKHOLDERS' EQUITY

​

 

​

 

 

​

Noninterest-bearing demand deposits

​

$

421,231

 

$

472,941

Interest-bearing deposits:

​

 

​

 

 

​

NOW accounts

​

 

748,833

 

 

773,028

Money market accounts

​

 

835,099

 

 

794,530

Savings accounts

​

 

873,810

 

 

783,758

Time deposits

​

 

427,458

 

 

445,898

Total interest-bearing deposits

​

 

2,885,200

 

 

2,797,214

Total deposits

​

 

3,306,431

 

 

3,270,155

​

​

​

​

​

​

​

Securities sold under agreements to repurchase

​

 

3,677

 

 

3,044

Secured borrowings

​

​

17,495

​

​

20,393

FHLB advances

​

 

165,000

 

 

30,000

Junior subordinated debt

​

 

9,867

 

 

9,830

Senior subordinated notes

​

 

85,941

 

 

85,765

Operating lease liabilities

​

​

11,704

​

​

11,686

Other liabilities

​

 

27,169

 

 

28,080

Total liabilities

​

 

3,627,284

 

 

3,458,953

​

​

​

​

​

​

​

Commitments and contingencies (See Note 9)

​

 

​

 

 

​

​

​

​

​

​

​

​

Stockholders' equity:

​

 

  

 

 

  

Preferred stock, $0.01 par value. Authorized 5,000,000 shares; no shares issued and outstanding

​

 

—

 

 

—

Common stock, $0.01 par value. Authorized 45,000,000 shares; 24,722,734 and 24,693,172 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively

​

 

247

 

 

247

Additional paid in capital

​

 

314,066

 

 

313,548

Retained earnings

​

 

83,854

 

 

84,143

Accumulated other comprehensive loss

​

 

(17,145)

 

 

(21,777)

Total Primis stockholders' equity

​

 

381,022

 

 

376,161

Noncontrolling interests

​

​

16,041

​

​

21,432

Total stockholders' equity

​

​

397,063

​

​

397,593

Total liabilities and stockholders' equity

​

$

4,024,347

 

$

3,856,546

​

See accompanying notes to unaudited condensed consolidated financial statements.

​

2

Table of Contents

PRIMIS FINANCIAL CORP.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)

(dollars in thousands, except per share amounts) (Unaudited)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

For the Three Months Ended September 30, 

​

For the Nine Months Ended September 30, 

​

​

    

2024

    

2023

    

2024

    

2023

    

Interest and dividend income:

 

​

  

 

​

​

 

​

  

 

​

  

 

Interest and fees on loans

​

$

54,296

​

$

45,312

​

$

151,581

​

$

125,253

​

Interest and dividends on taxable securities

​

 

1,702

​

 

1,491

​

 

5,022

​

 

4,423

​

Interest and dividends on tax exempt securities

​

 

97

​

 

102

​

 

297

​

 

305

​

Interest and dividends on other earning assets

​

 

1,017

​

 

1,122

​

 

2,756

​

 

12,504

​

Total interest and dividend income

​

 

57,112

​

 

48,027

​

 

159,656

​

 

142,485

​

Interest expense:

​

 

  

​

 

​

​

 

  

​

 

​

​

Interest on deposits

​

 

25,351

​

 

21,576

​

 

72,987

​

 

61,403

​

Interest on other borrowings

​

 

3,738

​

 

2,121

​

 

8,524

​

 

8,096

​

Total interest expense

​

 

29,089

​

 

23,697

​

 

81,511

​

 

69,499

​

Net interest income

​

 

28,023

​

 

24,330

​

 

78,145

​

 

72,986

​

Provision for credit losses

​

 

7,511

​

 

1,616

​

 

17,138

​

 

11,231

​

Net interest income after provision for credit losses

​

 

20,512

​

 

22,714

​

 

61,007

​

 

61,755

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Noninterest income:

​

 

  

​

 

​

​

 

  

​

 

​

​

Account maintenance and deposit service fees

​

 

1,468

​

 

1,534

​

 

4,722

​

 

4,215

​

Income from bank-owned life insurance

​

 

431

​

 

787

​

 

1,975

​

 

1,601

​

Mortgage banking income

​

 

6,803

​

 

4,922

​

 

18,779

​

 

14,435

​

Gain on sale of loans

​

​

—

​

​

217

​

​

307

​

​

268

​

Consumer Program derivative gains

​

​

79

​

​

2,033

​

​

3,392

​

​

15,233

​

Other noninterest income

​

 

501

​

 

231

​

 

1,266

​

 

578

​

Total noninterest income

​

 

9,282

​

 

9,724

​

 

30,441

​

 

36,330

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Noninterest expenses:

​

 

  

​

 

​

​

 

  

​

 

​

​

Salaries and benefits

​

 

16,764

​

 

13,809

​

 

48,587

​

 

44,120

​

Occupancy expenses

​

 

1,248

​

 

1,633

​

 

3,988

​

 

4,671

​

Furniture and equipment expenses

​

 

1,823

​

 

1,537

​

 

5,288

​

 

4,966

​

Amortization of intangible assets

​

 

318

​

 

317

​

 

952

​

 

952

​

Virginia franchise tax expense

​

 

631

​

 

849

​

​

1,894

​

 

2,546

​

FDIC insurance assessment

​

​

545

​

​

820

​

​

1,744

​

​

2,254

​

Data processing expense

​

 

2,552

​

 

2,250

​

 

7,130

​

 

7,329

​

Marketing expense

​

​

449

​

​

377

​

​

1,407

​

​

1,467

​

Telephone and communication expense

​

 

330

​

 

356

​

 

1,017

​

 

1,149

​

Professional fees

​

 

2,914

​

 

1,118

​

 

7,255

​

 

3,055

​

Goodwill impairment

​

​

—

​

​

11,150

​

​

—

​

​

11,150

​

Fraud losses

​

​

61

​

​

267

​

​

59

​

​

2,719

​

Miscellaneous lending expenses

​

​

1,098

​

​

424

​

​

1,835

​

​

1,878

​

Other operating expenses

​

 

2,222

​

 

2,041

​

 

7,123

​

 

6,085

​

Total noninterest expenses

​

 

30,955

​

 

36,948

​

 

88,279

​

 

94,341

​

Income (loss) before income taxes

​

 

(1,161)

​

 

(4,510)

​

 

3,169

​

 

3,744

​

Income tax expense (benefit)

​

 

(304)

​

 

1,519

​

 

1,679

​

 

3,405

​

Net income (loss)

​

​

(857)

​

​

(6,029)

​

​

1,490

​

​

339

​

Net income attributable to noncontrolling interests

​

​

2,085

​

​

—

​

​

5,640

​

​

—

​

Net income (loss) attributable to Primis' common stockholders

​

$

1,228

​

$

(6,029)

​

$

7,130

​

$

339

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Other comprehensive income (loss):

​

 

  

​

 

​

​

 

  

​

 

​

​

Unrealized gain (loss) on available-for-sale securities

​

$

7,601

​

$

(5,557)

​

 

5,863

​

​

(5,850)

​

Tax expense (benefit)

​

 

1,595

​

​

(1,167)

​

 

1,231

​

​

(1,229)

​

Other comprehensive income (loss)

​

 

6,006

​

​

(4,390)

​

 

4,632

​

 

(4,621)

​

Comprehensive income (loss)

​

$

7,234

​

$

(10,419)

​

$

11,762

​

$

(4,282)

​

Earnings (loss) per share, basic

​

$

0.05

​

$

(0.24)

​

$

0.29

​

$

0.01

​

Earnings (loss) per share, diluted

​

$

0.05

​

$

(0.24)

​

$

0.29

​

$

0.01

​

    ​

See accompanying notes to unaudited condensed consolidated financial statements.

​

3

Table of Contents

PRIMIS FINANCIAL CORP.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

(dollars in thousands, except per share amounts) (Unaudited)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

For the Three Months Ended September 30, 2024

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Accumulated

​

​

​

​

​

​

​

​

​

​

​

​

​

Additional

​

​

​

Other

​

​

​

​

​

​

Common Stock

​

Paid in

​

Retained

​

Comprehensive

​

Noncontrolling

​

​

​

    

Shares

    

Amount

    

Capital

    

Earnings

    

Income (Loss)

    

Interests

    

Total

Balance - June 30, 2024

​

​

24,708,234

​

$

247

​

$

313,852

​

$

85,099

​

$

(23,151)

​

$

18,164

​

$

394,211

Net income (loss)

​

 

—

​

 

—

​

 

—

​

 

1,228

​

 

—

​

 

(2,085)

​

 

(857)

Other comprehensive income

​

​

—

​

​

—

​

​

—

​

​

—

​

​

6,006

​

​

—

​

​

6,006

Other net changes in noncontrolling interests

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

(38)

​

​

(38)

Dividends on common stock ($0.10 per share)

​

 

—

​

 

—

​

 

—

​

 

(2,473)

​

 

—

​

 

—

​

 

(2,473)

Stock option exercises

​

​

15,500

​

​

—

​

​

173

​

​

—

​

​

—

​

​

—

​

​

173

Restricted stock forfeited

​

​

(1,000)

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Stock-based compensation expense

​

 

—

​

 

—

​

 

41

​

 

—

​

 

—

​

 

—

​

 

41

Balance - September 30, 2024

​

​

24,722,734

​

$

247

​

$

314,066

​

$

83,854

​

$

(17,145)

​

$

16,041

​

$

397,063

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

For the Three Months Ended September 30, 2023

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Accumulated

​

​

​

​

​

​

​

​

​

​

​

​

​

Additional

​

​

​

Other

​

​

​

​

​

​

Common Stock

​

Paid in

​

Retained

​

Comprehensive

​

Noncontrolling

​

​

​

    

Shares

    

Amount

    

Capital

    

Earnings

    

Income (Loss)

    

Interests

    

Total

Balance - June 30, 2023

​

​

24,690,064

​

$

246

​

$

312,976

​

$

103,281

​

$

(26,081)

​

$

—

​

$

390,422

Net loss

​

 

—

​

 

—

​

 

—

​

 

(6,029)

​

 

—

​

 

—

​

 

(6,029)

Other comprehensive loss

​

​

—

​

​

—

​

​

—

​

​

—

​

​

(4,390)

​

​

—

​

​

(4,390)

Dividends on common stock ($0.10 per share)

​

 

—

​

 

—

​

 

—

​

 

(2,469)

​

 

—

​

 

—

​

 

(2,469)

Restricted stock forfeited

​

​

(3,300)

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Stock-based compensation expense

​

​

—

​

 

—

​

 

76

​

 

—

​

 

—

​

 

—

​

 

76

Balance - September 30, 2023

​

​

24,686,764

​

$

246

​

$

313,052

​

$

94,783

​

$

(30,471)

​

$

—

​

$

377,610

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

See accompanying notes to unaudited condensed consolidated financial statements.

4

Table of Contents

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

For the Nine Months Ended September 30, 2024

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Accumulated

​

​

​

​

​

​

​

​

​

​

​

​

​

Additional

​

​

​

Other

​

​

​

​

​

​

Common Stock

​

Paid in

​

Retained

​

Comprehensive

​

Noncontrolling

​

​

​

    

Shares

    

Amount

    

Capital

    

Earnings

    

Income (Loss)

    

Interests

    

Total

Balance - December 31, 2023

​

​

24,693,172

​

$

247

​

$

313,548

​

$

84,143

​

$

(21,777)

​

$

21,432

​

$

397,593

Net income (loss)

​

​

—

​

 

—

​

 

—

​

 

7,130

​

 

—

​

 

(5,640)

​

 

1,490

Other comprehensive income

​

​

—

​

​

—

​

​

—

​

​

—

​

​

4,632

​

​

—

​

​

4,632

Other net changes in noncontrolling interests

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

249

​

​

249

Dividends on common stock ($0.30 per share)

​

​

—

​

 

—

​

 

—

​

 

(7,419)

​

 

—

​

 

—

​

 

(7,419)

Stock option exercises

​

​

30,916

​

 

—

​

 

210

​

 

—

​

 

—

​

 

—

​

 

210

Restricted stock forfeited

​

​

(1,000)

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Repurchase of restricted stock

​

​

(354)

​

​

—

​

​

(4)

​

​

—

​

​

—

​

​

—

​

​

(4)

Stock-based compensation expense

​

​

—

​

 

—

​

 

312

​

 

—

​

 

—

​

 

—

​

 

312

Balance - September 30, 2024

​

​

24,722,734

​

$

247

​

$

314,066

​

$

83,854

​

$

(17,145)

​

$

16,041

​

$

397,063

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

For the Nine Months Ended September 30, 2023

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Accumulated

​

​

​

​

​

​

​

​

​

​

​

Additional

​

​

​

Other

​

​

​

​

​

​

Common Stock

​

Paid in

​

Retained

​

Comprehensive

​

Noncontrolling

​

​

​

    

Shares

    

Amount

    

Capital

    

Earnings

    

Income (Loss)

    

Interests

    

Total

Balance - December 31, 2022

​

​

24,680,097

​

$

246

​

$

312,722

​

$

101,850

​

$

(25,850)

​

$

—

​

$

388,968

Net income

​

 

—

​

 

—

​

 

—

​

 

339

​

 

—

​

 

—

​

 

339

Other comprehensive loss

​

​

—

​

​

—

​

​

—

​

​

—

​

​

(4,621)

​

​

—

​

​

(4,621)

Dividends on common stock ($0.30 per share)

​

 

—

​

 

—

​

 

—

​

 

(7,406)

​

 

—

​

 

—

​

 

(7,406)

Shares retired to unallocated

​

​

(1,033)

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Stock option exercises

​

 

8,000

​

​

—

​

​

85

​

​

—

​

​

—

​

​

—

​

​

85

Restricted stock granted

​

​

5,000

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Restricted stock forfeited

​

​

(5,300)

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Repurchase of restricted stock

​

​

—

​

​

—

​

​

(12)

​

​

—

​

​

—

​

​

—

​

​

(12)

Stock-based compensation expense

​

​

—

​

 

—

​

 

257

​

 

—

​

 

—

​

 

—

​

 

257

Balance - September 30, 2023

​

​

24,686,764

​

$

246

​

$

313,052

​

$

94,783

​

$

(30,471)

​

$

—

​

$

377,610

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

See accompanying notes to unaudited condensed consolidated financial statements.

​

​

​

​

​

​

​

​

5

Table of Contents

PRIMIS FINANCIAL CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

(dollars in thousands, except per share amounts) (Unaudited)

​

​

​

​

​

​

​

​

​

For the Nine Months Ended September 30, 

​

    

2024

    

2023

Operating activities:

 

​

  

 

​

​

Net income

​

$

1,490

​

$

339

Adjustments to reconcile net income to net cash and cash equivalents (used in) provided by operating activities:

​

 

  

​

 

​

Depreciation and amortization

​

 

6,723

​

 

6,954

Net amortization of premiums and (accretion of discounts)

​

 

(11)

​

 

(710)

Provision for credit losses

​

 

17,138

​

 

11,231

Proceeds from sales of loans

​

​

76,194

​

​

—

Net change in mortgage loans held for sale

​

​

(42,783)

​

​

(21,554)

Net gains on mortgage banking

​

​

(18,779)

​

​

(14,435)

Net gains on sale of loans

​

​

(307)

​

​

(268)

Earnings on bank-owned life insurance

​

 

(1,272)

​

 

(1,571)

Gain on bank-owned life insurance death benefit

​

​

(703)

​

​

(30)

Stock-based compensation expense

​

 

312

​

 

257

Gain on other investments

​

​

(393)

​

​

—

Goodwill impairment

​

​

—

​

​

11,150

Deferred income tax benefit

​

 

(4,418)

​

 

(3,077)

Net change in fair value of loan derivative

​

​

3,660

​

​

(11,110)

Net (increase) decrease in other assets

​

 

18,549

​

 

(24,636)

Net increase (decrease) in other liabilities

​

 

(1,368)

​

 

10,842

Net cash and cash equivalents used in operating activities

​

​

54,032

​

 

(36,618)

Investing activities:

​

 

  

​

 

  

Purchases of securities available-for-sale

​

 

(34,170)

​

 

(10,487)

Proceeds from paydowns, maturities and calls of securities available-for-sale

​

 

25,380

​

 

23,496

Proceeds from paydowns, maturities and calls of securities held-to-maturity

​

 

1,863

​

 

1,518

Net (increase) decrease in FRB and FHLB stock

​

​

(6,629)

​

​

13,019

Net change in loans held for investment

​

 

(209,673)

​

 

(240,036)

Proceeds from bank-owned life insurance death benefit

​

​

3,264

​

​

873

Proceeds from sales of bank premise and equipment and assets held for sale

​

​

3,319

​

​

—

Purchases of bank premises and equipment, net

​

 

—

​

 

(1,405)

Purchases of other investments

​

​

288

​

​

—

Net cash and cash equivalents provided by (used in) investing activities

​

 

(216,358)

​

 

(213,022)

Financing activities:

​

 

  

​

 

​

Net increase in deposits

​

 

36,276

​

 

570,937

Cash dividends paid on common stock

​

 

(7,419)

​

 

(7,406)

Proceeds from exercised stock options

​

 

210

​

 

85

Proceeds from secured borrowings, net of repayments

​

​

(2,898)

​

​

29,649

Repurchase of restricted stock

​

​

(4)

​

​

(12)

Proceeds from (repayment of) short-term FHLB advances

​

​

135,000

​

​

(325,000)

Increase (decrease) in securities sold under agreements to repurchase

​

 

633

​

 

(2,607)

Other net changes in noncontrolling interests

​

​

249

​

​

—

Net cash and cash equivalents provided by financing activities

​

 

162,047

​

 

265,646

Net change in cash and cash equivalents

​

 

(279)

​

 

16,006

Cash and cash equivalents at beginning of period

​

 

77,553

​

 

77,859

Cash and cash equivalents at end of period

​

$

77,274

​

$

93,865

Supplemental disclosure of cash flow information

​

 

  

​

 

​

Cash payments for:

​

 

  

​

 

​

Interest

​

$

80,491

​

$

66,148

Income taxes

​

$

42

​

$

3,908

Supplemental schedule of noncash activities:

​

​

  

​

​

​

Initial recognition of operating lease right-of-use assets

​

$

—

​

$

6,067

Loans held for investment transferred to loans held for sale, at lower of cost or market

​

$

361,825

​

$

8,755

​

​

​

​

​

​

​

​

See accompanying notes to unaudited condensed consolidated financial statements.

​

6

Table of Contents

​

PRIMIS FINANCIAL CORP.

Notes to Unaudited Condensed Consolidated Financial Statements

​

1.      ACCOUNTING POLICIES

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 provided services to customers through certain online and mobile applications. 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 (“PMC”), a residential mortgage lender headquartered in Wilmington, North Carolina, is a consolidated subsidiary of Primis Bank. Panacea Financial Holdings, Inc. (“PFH”), headquartered in Little Rock, Arkansas, is consolidated into the Company. 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, their practices, and ultimately the broader healthcare industry.

The accounting policies and practices of Primis and its subsidiaries conform to U.S. generally accepted accounting principles (“U.S. GAAP”) and to general practice within the banking industry. A discussion of the Company’s material accounting policies are located in our 2023 Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Form 10-K”).

Principles of Consolidation

The consolidated financial statements include the accounts of Primis and its subsidiaries Primis Bank, PMC and PFH. Significant inter-company accounts and transactions have been eliminated in consolidation. Primis consolidates subsidiaries in which it holds, directly or indirectly, more than 50 percent of the voting rights or where it exercises control. Entities where Primis holds 20 to 50 percent of the voting rights, or has the ability to exercise significant influence, or both, are accounted for under the equity method. Primis owns EVB Statutory Trust I (the “Trust”) which is an unconsolidated subsidiary and the junior subordinated debt owed to the Trust is reported as a liability of Primis. Primis consolidates PFH, as a result of the determination that it has a controlling financial interest over the entity as further described below.

We determine whether we have a controlling financial interest in an entity by first evaluating whether the entity is a voting interest entity or a variable interest entity (“VIE”) under U.S. GAAP. Voting interest entities are entities in which the total equity investment at risk is sufficient to enable the entity to finance itself independently and provides the equity holders with the obligation to absorb losses, the right to receive residual returns and the right to make decisions about the entity’s activities. We consolidate voting interest entities in which we have all, or at least a majority of, the voting interest. As defined in U.S. GAAP, VIEs are entities that lack one or more of the characteristics of a voting interest entity. A controlling financial interest in a VIE is present when an enterprise has both the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and an obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. The enterprise with a controlling financial interest, known as the primary beneficiary, consolidates the VIE. The Company has investments in VIE’s for which we are not the primary beneficiary and, as such, are not included in our consolidated financial statements. The Company also has an investment in a VIE for which we are the primary beneficiary.

On December 21, 2023, PFH completed a $24.5 million Series B financing round led by a global venture capital firm. As part of the financing round, Primis acquired approximately 19% of PFH’s common stock for an immaterial purchase price due to previous operating losses in the Bank’s Panacea Financial Division. The Company performed an analysis and determined that PFH is a VIE because it lacks one or more of the characteristics of a voting interest entity.

7

Table of Contents

The Company’s analysis further determined that it has a controlling financial interest in PFH due to the substantial historical activities between PFH and the Bank’s Panacea Financial Division coupled with the limited activities of PFH outside of its relationship with Primis as of December 31, 2023. Further, there are employees of Primis that have historically carried out substantially all of the activities of PFH. Accordingly, the Company determined it is the primary beneficiary of PFH and consolidated it as of December 31, 2023 and no circumstances have changed during the three or nine months ended September 30, 2024 that changed this prior determination.

Operating Segments

The Company, through its Bank subsidiary, provides a broad range of financial services. While the Company’s chief operating decision maker monitors the revenue streams of the various financial products and services, operations are managed and financial performance is evaluated on an organization-wide basis. Management has determined that the Company has two reportable operating segments: Primis Mortgage and Primis Bank, as discussed in Note 11 – Segment Information.

Basis of Presentation

The unaudited condensed consolidated financial statements and notes thereto have been prepared in accordance with U.S. GAAP for interim financial information and instructions for Form 10-Q and follow general practice within the banking industry. Accordingly, the unaudited condensed consolidated financial statements do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. However, in the opinion of management, all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of the results of the interim periods presented have been made. The results of operations for the interim periods are not necessarily indicative of the results that may be expected for the full year. For further information, refer to the consolidated financial statements and footnotes thereto included in the 2023 Form 10-K.

​

Reclassifications

In certain instances, amounts reported in the prior year annual audited consolidated financial statements or the interim condensed consolidated financial statements have been reclassified to conform to the current financial statement presentation.

​

Use of Estimates

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates. Estimates that are particularly susceptible to change in the near term include: the determination of the allowance for credit losses, the fair value of investment securities, the credit impairment of investment securities, the mortgage banking derivatives, interest rate swap derivatives, Consumer Program derivative, the valuation of goodwill, and deferred tax assets. Management monitors and continually reassess these at each reporting period.

Disposition of the Life Premium Finance Division

On October 24, 2024, the Company entered into a purchase and assumption agreement with EverBank, N.A. (“EverBank”) for sale of the Company’s Life Premium Finance division (“LPF”). EverBank will acquire LPF from the Company, except for a subset of mostly fixed rate and rate-capped loans that will be retained by the Bank. All of the LPF operations, including its employees, will be assumed by EverBank as part of the transaction that is expected to result in a pre-tax gain of $4.5 million for the Company, net of advisory and legal fees, at the initial closing in the fourth quarter of 2024. EverBank will acquire approximately $370 million of loans from the division with the Bank providing interim servicing until the transition of the business at the final closing which is expected on January 31, 2025. Between the first and second closings, EverBank will purchase loans generated by the division in ordinary course at par. After the second closing, EverBank will service the Bank’s retained portfolio for the duration of the portfolio. On October 31, 2024, the Company closed on the initial sale of loans in which it sold $354 million of amortized cost of loans that were on its balance sheet as of September 30, 2024.

8

Table of Contents

The remaining amount of funded loans as of September 30, 2024 to be sold to EverBank are expected to be sold on or before the second closing as described previously.

​

The Company performed an analysis of the pending transaction as of September 30, 2024, under U.S. GAAP and determined that the criteria was met for the assets of LPF (primarily loans and accrued interest) that will be sold to EverBank to be reported as loans held for sale and assets held for sale (transferred from Loans Held for Investment and other assets, respectively, at the lower of cost or market value) in the condensed consolidated balance sheet as of September 30, 2024. The Company also assessed the pending sale of LPF to determine if it should be reported under U.S. GAAP as discontinued operations of the Company in the condensed consolidated financial statements as of and for the three and nine months ended September 30, 2024 and 2023, and determined that the criteria was not met for separate presentation as discontinued operations. Notwithstanding this conclusion, the Company has presented pro forma financial information highlighting the impact of the pending transaction to its balance sheet and income statements for certain periods as required by SEC regulation S-X in its Form 8-K filing on November 6, 2024.

​

Interest Rate Swaps

The Company is subject to interest rate risk exposure in the normal course of business through its core lending operations. Primarily to help mitigate interest rate risk associated with its loan portfolio, the Company entered into interest rate swaps in May and August 2023 with a large U.S. financial institution as the counterparty. Interest rate swaps are contractual agreements whereby one party pays a floating interest rate on a notional principal amount and receives a fixed-rate payment on the same notional principal, or vice versa, for a fixed period of time. Interest rate swaps change in value with movements in benchmark interest rates, such as Prime or the Secured Overnight Financing Rate (“SOFR”). Interest rate swaps subject the Company to market risk associated with changes in interest rates, changes in interest rate volatility, as well as the credit risk that the counterparty will fail to perform. The Company’s interest rate swaps are pay-fixed and receive-floating whereby the Company receives a variable rate of interest based on SOFR.

The Company’s interest rate swaps meet the definition of derivative instruments under ASC 815, Derivatives and Hedging, and are accounted for both initially and subsequently at their fair value. The Company assessed the derivative instruments at inception and determined they met the requirements under ASC 815 to be accounted for as fair value hedges. Fair value hedge relationships mitigate exposure to the change in fair value of the hedged risk in an asset, liability or firm commitment. The Company’s interest rate swaps are fair value hedges that are accounted for using the portfolio layer method, which allows the Company to hedge the interest rate risk of prepayable loans by designating as the hedged item a stated amount of two separate and distinct closed portfolios of consumer and commercial loans that are expected to be outstanding for the designated hedge periods. Under the fair value hedging model, gains or losses attributable to the change in fair value of the derivative instruments, as well as the gains and losses attributable to the change in fair value of the hedged items, are recognized in interest income in the same income statement line item with the hedged item in the period in which the change in fair value occurs. The corresponding adjustment to the hedged asset or liability are included in the basis of the hedged items, while the corresponding change in the fair value of the derivative instruments are recorded as an adjustment to other assets or other liabilities, as applicable. The Company presents interest rate swaps on the balance sheets on a net basis when a right of offset exists, based on transactions with a single counterparty and any cash collateral paid to and/or received from that counterparty are subject to legally enforceable master netting arrangements. As of September 30, 2024, the gross amounts of interest rate swap derivative assets and liabilities were $0.3 million and $0.9 million, respectively, and are recorded in other assets in the consolidated balance sheet.

The following table represents the carrying value of the portfolio layer method hedged assets and the cumulative fair value hedging adjustments included in the carrying value of the hedged assets as of September 30, 2024 and December 31, 2023:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

September 30, 2024

​

December 31, 2023

(dollars in thousands)

​

​

Amortized Cost Basis

​

​

Hedged Asset

​

​

Basis Adjustment

​

​

Amortized Cost Basis

​

​

Hedged Asset

​

​

Basis Adjustment

Fixed rate assets

​

$

843,197

​

$

250,525

​

$

525

​

$

946,185

​

$

248,906

​

$

(1,094)

​

​

9

Table of Contents

Recent Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This ASU expands current disclosure requirements primarily through enhanced disclosures about significant segment expenses. Specifically, the ASU (i) requires disclosure of significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”), (ii) requires disclosure of an amount for other segment items by reportable segment and a description of its composition, (iii) requires providing in each interim period all current annual disclosures of a reportable segment’s profit or loss and assets, and (iv) allows an entity to provide additional measures of profit or loss used by the CODM in assessing performance and deciding how to allocate resources in addition to providing the measure for this that is most consistent with GAAP, (v) requires disclosure of the title and position of the CODM and an explanation of how the CODM uses reported measures of segment profit or loss in assessing segment performance and deciding how to allocate resources, and (vi) requires an entity that has a single reportable segment to provide all disclosures required by this ASU and Topic 280. This ASU is effective for the Company’s annual disclosures beginning for the year ended December 31, 2024 and its interim disclosures thereafter, with early adoption permitted. The Company is currently evaluating the impact of this ASU to its consolidated financial statement disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU requires annual disclosure of certain information relating to the rate reconciliation, income taxes paid by jurisdiction, income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign, and income tax expense (or benefit) from continuing operations disaggregated by federal, state, and foreign. The ASU also eliminates certain requirements relating to unrecognized tax benefits and certain deferred tax disclosure relating to subsidiaries and corporate joint ventures. This ASU is effective for the Company’s annual disclosures beginning for the year ended December 31, 2025. The Company is currently evaluating the impact of this ASU to its financial statement disclosures.

In March 2024, the FASB issued ASU 2024-01,  Compensation - Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards. This ASU adds an illustrative example to clarify how an entity should determine whether a profits interest or similar award is within the scope of ASC 718. The amendments in this standard will be effective for the Company on January 1, 2025. The Company does not believe this standard will have a material impact on its consolidated financial statements.  

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40). This ASU requires more disclosures about specific types of expenses included in the expense captions presented on the face of the income statement as well as disclosures about selling expenses, but does not change the requirements for the presentation of expenses on the face of the income statement. The amendments in this standard will be effective for the Company on January 1, 2027, and is required to be applied prospectively, with early adoption permitted. The Company does not believe this standard will have a material impact on its consolidated financial statements.

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

10

Table of Contents

2.      INVESTMENT SECURITIES

The amortized cost and fair value of available-for-sale investment securities and the related gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) were as follows (in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Amortized

​

Gross Unrealized

​

Fair

​

    

Cost

    

Gains

    

Losses

    

Value

September 30, 2024

​

​

​

​

​

​

​

​

​

​

​

​

Residential government-sponsored mortgage-backed securities

​

$

103,382

​

$

130

​

$

(11,232)

​

$

92,280

Obligations of states and political subdivisions

​

 

33,575

​

 

3

​

 

(3,010)

​

 

30,568

Corporate securities

​

 

16,000

​

 

—

​

 

(1,997)

​

 

14,003

Residential government-sponsored collateralized mortgage obligations

​

 

57,296

​

 

672

​

 

(1,135)

​

 

56,833

Government-sponsored agency securities

​

 

16,303

​

 

—

​

 

(2,027)

​

 

14,276

Agency commercial mortgage-backed securities

​

 

29,909

​

​

—

​

​

(2,956)

​

 

26,953

SBA pool securities

​

 

7,686

​

 

9

​

 

(65)

​

 

7,630

Total

​

$

264,151

​

$

814

​

$

(22,422)

​

$

242,543

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Amortized

​

Gross Unrealized

​

Fair

​

    

Cost

    

Gains

    

Losses

    

Value

December 31, 2023

​

​

​

​

​

​

​

​

​

​

​

​

Residential government-sponsored mortgage-backed securities

​

$

110,562

​

$

72

​

$

(13,826)

​

$

96,808

Obligations of states and political subdivisions

​

 

33,801

​

 

12

​

 

(3,733)

​

 

30,080

Corporate securities

​

 

16,000

​

 

—

​

 

(1,952)

​

 

14,048

Collateralized loan obligations

​

 

5,018

​

 

—

​

 

(36)

​

 

4,982

Residential government-sponsored collateralized mortgage obligations

​

 

35,927

​

 

175

​

 

(1,631)

​

 

34,471

Government-sponsored agency securities

​

 

16,267

​

 

—

​

 

(2,556)

​

 

13,711

Agency commercial mortgage-backed securities

​

 

34,059

​

​

—

​

​

(3,949)

​

 

30,110

SBA pool securities

​

 

4,257

​

 

6

​

 

(53)

​

 

4,210

Total

​

$

255,891

​

$

265

​

$

(27,736)

​

$

228,420

​

The amortized cost, gross unrecognized gains and losses, allowance for credit losses and fair value of investment securities held-to-maturity were as follows (in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Amortized

​

Gross Unrecognized

​

Allowance for

​

Fair

​

    

Cost

    

Gains

    

Losses

    

Credit Losses

    

Value

September 30, 2024

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Residential government-sponsored mortgage-backed securities

​

$

8,066

​

$

2

​

$

(561)

​

$

—

​

$

7,507

Obligations of states and political subdivisions

​

 

1,519

 

​

—

 

​

(37)

 

​

—

​

 

1,482

Residential government-sponsored collateralized mortgage obligations

​

 

181

 

​

—

 

​

(8)

 

​

—

​

 

173

Total

​

$

9,766

​

$

2

​

$

(606)

​

$

—

​

$

9,162

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Amortized

​

Gross Unrecognized

​

Allowance for

​

Fair

​

    

Cost

    

Gains

    

Losses

    

Credit Losses

    

Value

December 31, 2023

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Residential government-sponsored mortgage-backed securities

​

$

9,040

​

$

—

​

$

(754)

​

$

—

​

$

8,286

Obligations of states and political subdivisions

 

 

2,391

 

​

—

 

​

(42)

 

​

—

​

 

2,349

Residential government-sponsored collateralized mortgage obligations

 

 

219

 

​

—

 

​

(15)

 

​

—

​

 

204

Total

​

$

11,650

​

$

—

​

$

(811)

​

$

—

​

$

10,839

​

Available-for-sale investment securities of $15.9 million and $34.2 million were purchased during the three and nine months ended September 30, 2024, respectively, and $5.5 million and $10.5 million were purchased during the three and nine months ended September 30, 2023, respectively. No held-to-maturity investments were purchased during the three months and nine ended September 30, 2024 and 2023.

11

Table of Contents

No investment securities were sold during the three and nine months ended September 30, 2024 and 2023.

The amortized cost and fair value of available-for-sale and held-to-maturity investment securities as of September 30, 2024, by contractual maturity, were as follows (in thousands). Investment securities not due at a single maturity date are shown separately.

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Available-for-Sale

​

Held-to-Maturity

​

    

Amortized

    

​

​

    

Amortized

    

​

​

​

​

Cost

​

Fair Value

​

Cost

​

Fair Value

Due within one year

​

$

445

​

$

438

​

$

—

​

$

—

Due in one to five years

​

​

9,595

​

​

9,167

​

​

795

​

​

782

Due in five to ten years

​

 

38,255

​

 

34,044

​

 

724

​

 

700

Due after ten years

​

 

17,583

​

 

15,198

​

 

—

​

 

—

Residential government-sponsored mortgage-backed securities

​

 

103,382

​

 

92,280

​

 

8,066

​

 

7,507

Residential government-sponsored collateralized mortgage obligations

​

 

57,296

​

 

56,833

​

 

181

​

 

173

Agency commercial mortgage-backed securities

​

 

29,909

​

 

26,953

​

 

—

​

 

—

SBA pool securities

​

 

7,686

​

 

7,630

​

 

—

​

 

—

Total

​

$

264,151

​

$

242,543

​

$

9,766

​

$

9,162

​

Investment securities with a carrying amount of approximately $151.4 million and $200.2 million at September 30, 2024 and December 31, 2023, respectively, were pledged to secure public deposits, certain other deposits, a line of credit for advances from the FHLB of Atlanta, and repurchase agreements.

Management measures expected credit losses on held-to-maturity securities on a collective basis by major security type with each type sharing similar risk characteristics, and considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. With regard to U.S. Treasury and residential mortgage-backed securities issued by the U.S. government, or agencies thereof, it is expected that the securities will not be settled at prices less than the amortized cost basis of the securities as such securities are backed by the full faith and credit of and/or guaranteed by the U.S. government. Accordingly, no allowance for credit losses has been recorded for these securities. With regard to securities issued by states and political subdivisions and other held-to-maturity securities, management considers (i) issuer bond ratings, (ii) historical loss rates for given bond ratings, (iii) whether issuers continue to make timely principal and interest payments under the contractual terms of the securities and (iv) internal forecasts. As of September 30, 2024, Primis did not have a material allowance for credit losses on held-to-maturity securities.

As of September 30, 2024 and December 31, 2023, there were 156 and 134 investment securities available-for-sale, respectively, that were in an unrealized loss position. The unrealized losses related to investment securities available-for-sale as of September 30, 2024 and December 31, 2023, relate to changes in interest rates relative to when the investment securities were purchased, and do not indicate credit-related impairment. Primis performs quantitative analysis and if needed, a qualitative analysis in this determination. As a result of the Company’s analysis, none of the securities were deemed to require an allowance for credit losses.

12

Table of Contents

Primis has the ability and intent to retain these securities for a period of time sufficient to recover all unrealized losses.

The following tables present information regarding investment securities available-for-sale and held-to-maturity in a continuous unrealized loss position as of September 30, 2024 and December 31, 2023 by duration of time in a loss position (in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Less than 12 months

​

12 Months or More

​

Total

September 30, 2024

    

Fair

    

Unrealized

    

Fair

    

Unrealized

    

Fair

    

Unrealized

Available-for-Sale

​

value

​

Losses

​

value

​

Losses

​

value

​

Losses

Residential government-sponsored mortgage-backed securities

​

$

—

​

$

—

​

$

86,188

​

$

(11,232)

​

$

86,188

​

$

(11,232)

Obligations of states and political subdivisions

​

​

1,565

​

​

(4)

​

​

27,479

​

​

(3,006)

​

​

29,044

​

​

(3,010)

Corporate securities

​

​

—

​

​

—

​

​

14,003

​

​

(1,997)

​

​

14,003

​

​

(1,997)

Residential government-sponsored collateralized mortgage obligations

​

​

8,887

​

​

(36)

​

​

15,723

​

​

(1,099)

​

​

24,610

​

​

(1,135)

Government-sponsored agency securities

​

 

—

​

 

—

​

 

14,276

​

 

(2,027)

​

 

14,276

​

 

(2,027)

Agency commercial mortgage-backed securities

​

 

—

​

 

—

​

 

26,954

​

 

(2,956)

​

 

26,954

​

 

(2,956)

SBA pool securities

​

 

4,129

​

 

(28)

​

 

2,519

​

 

(37)

​

 

6,648

​

 

(65)

Total

​

$

14,581

​

$

(68)

​

$

187,142

​

$

(22,354)

​

$

201,723

​

$

(22,422)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Less than 12 months

​

12 Months or More

​

Total

September 30, 2024

    

Fair

    

Unrecognized

    

Fair

    

Unrecognized

    

Fair

    

Unrecognized

Held-to-Maturity

​

value

​

Losses

​

value

​

Losses

​

value

​

Losses

Residential government-sponsored mortgage-backed securities

​

$

—

​

$

—

​

$

7,435

​

$

(561)

​

$

7,435

​

$

(561)

Obligations of states and political subdivisions

​

 

—

​

 

—

​

 

901

​

 

(37)

​

 

901

​

 

(37)

Residential government-sponsored collateralized mortgage obligations

​

 

—

​

 

—

​

 

173

​

 

(8)

​

 

173

​

 

(8)

Total

​

$

—

​

$

—

​

$

8,509

​

$

(606)

​

$

8,509

​

$

(606)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Less than 12 months

​

12 Months or More

​

Total

December 31, 2023

    

Fair

    

Unrealized

    

Fair

    

Unrealized

    

Fair

    

Unrealized

Available-for-Sale

​

value

​

Losses

​

value

​

Losses

​

value

​

Losses

Residential government-sponsored mortgage-backed securities

​

$

—

​

$

—

​

$

93,782

​

$

(13,826)

​

$

93,782

​

$

(13,826)

Obligations of states and political subdivisions

​

​

3,945

​

​

(19)

​

​

23,002

​

​

(3,714)

​

​

26,947

​

​

(3,733)

Corporate securities

​

​

939

​

​

(61)

​

​

13,109

​

​

(1,891)

​

​

14,048

​

​

(1,952)

Collateralized loan obligations

​

​

—

​

​

—

​

​

4,982

​

​

(36)

​

​

4,982

​

​

(36)

Residential government-sponsored collateralized mortgage obligations

​

​

—

​

​

—

​

​

17,306

​

​

(1,631)

​

​

17,306

​

​

(1,631)

Government-sponsored agency securities

​

 

—

​

 

—

​

 

13,711

​

 

(2,556)

​

 

13,711

​

 

(2,556)

Agency commercial mortgage-backed securities

​

 

—

​

 

—

​

 

30,110

​

 

(3,949)

​

 

30,110

​

 

(3,949)

SBA pool securities

​

 

301

​

 

(1)

​

 

2,693

​

 

(52)

​

 

2,994

​

 

(53)

Total

​

$

5,185

​

$

(81)

​

$

198,695

​

$

(27,655)

​

$

203,880

​

$

(27,736)

​

13

Table of Contents

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Less than 12 months

​

12 Months or More

​

Total

December 31, 2023

    

Fair

    

Unrecognized

    

Fair

    

Unrecognized

    

Fair

    

Unrecognized

Held-to-Maturity

​

value

​

Losses

​

value

​

Losses

​

value

​

Losses

Residential government-sponsored mortgage-backed securities

​

$

—

​

$

—

​

$

8,286

​

$

(754)

​

$

8,286

​

$

(754)

Obligations of states and political subdivisions

​

 

1,373

​

 

(4)

​

 

396

​

 

(38)

​

 

1,769

​

 

(42)

Residential government-sponsored collateralized mortgage obligations

​

 

—

​

 

—

​

 

204

​

 

(15)

​

 

204

​

 

(15)

Total

​

$

1,373

​

$

(4)

​

$

8,886

​

$

(807)

​

$

10,259

​

$

(811)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

3.     LOANS AND ALLOWANCE FOR CREDIT LOSSES

The following table summarizes the composition of our loan portfolio as of September 30, 2024 and December 31, 2023 (in thousands):

​

​

​

​

​

​

​

​

    

September 30, 2024

    

December 31, 2023

Loans held for sale, at fair value

​

$

96,897

​

$

57,691

Loans held for sale, at lower of cost or market

​

​

361,825

​

​

—

Total loans held for sale

​

$

458,722

​

$

57,691

​

​

​

​

​

​

​

Loans held for investment

​

​

​

​

​

​

Loans secured by real estate:

​

​

​

 

​

​

Commercial real estate - owner occupied (1)

​

$

463,848

​

$

455,397

Commercial real estate - non-owner occupied

​

 

609,743

​

 

578,600

Secured by farmland

​

 

4,356

​

 

5,044

Construction and land development

​

 

105,541

​

 

164,742

Residential 1-4 family

​

 

607,313

​

 

606,226

Multi-family residential

​

 

169,368

​

 

127,857

Home equity lines of credit

​

 

62,421

​

 

59,670

Total real estate loans

​

 

2,022,590

​

 

1,997,536

​

​

​

​

​

​

​

Commercial loans (2)

​

 

533,998

​

 

602,623

Paycheck Protection Program loans

​

​

1,941

​

​

2,023

Consumer loans

​

 

409,754

​

 

611,583

Total Non-PCD loans

​

 

2,968,283

​

 

3,213,765

PCD loans

​

​

5,440

​

​

5,649

Total loans held for investment

​

$

2,973,723

​

$

3,219,414
(1) Includes $6.3 million and $7.7 million related to loans collateralizing secured borrowings as of September 30, 2024 and December 31, 2023, respectively.
(2) Includes $11.3 million and $12.8 million related to loans collateralizing secured borrowings as of September 30, 2024 and December 31, 2023, respectively.

The accounting policy related to the allowance for credit losses is considered a critical policy given the level of estimation, judgment, and uncertainty in the levels of the allowance required to account for the expected losses in the loan portfolio and the material effect such estimation, judgment, and uncertainty can have on the consolidated financial results.

Consumer Program Loans

The Company has $179.7 million and $199.3 million of loans outstanding in the Consumer Program as of September 30, 2024 and December 31, 2023, respectively, or 6% of our total gross loan portfolio as of each date. Loans in the Consumer Program are included within the Consumer Loans category disclosures in this footnote. As of September 30, 2024, 33% of the loans were in a promotional period requiring no payment of interest on their loans with 81% of these promotional loan periods ending in the fourth quarter of 2024 through the third quarter of 2025.

14

Table of Contents

As of December 31, 2023, 45% of the loans were in a promotional period requiring no payment of interest on their loans with 70% of these promotional loan periods ending in the second half of 2024 through the first quarter of 2025.

Accrued Interest Receivable

Accrued interest receivable on loans totaled $22.4 million and $20.1 million at September 30, 2024 and December 31, 2023, respectively, and is included in other assets in the consolidated balance sheets.

Nonaccrual and Past Due Loans

Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Loans are placed on nonaccrual status when, in management’s opinion, the borrower may be unable to meet payment obligations as they become due, as well as when required by regulatory provisions. In determining whether or not a borrower may be unable to meet payment obligations for each class of loans, we consider the borrower’s debt service capacity through the analysis of current financial information, if available, and/or current information with regards to our collateral position. Regulatory provisions would typically require the placement of a loan on nonaccrual status if (i) principal or interest has been in default for a period of 90 days or more unless the loan is both well secured and in the process of collection or (ii) full payment of principal and interest is not expected. Loans may be placed on nonaccrual status regardless of whether or not such loans are considered past due. When interest accrual is discontinued, all unpaid accrued interest is reversed. Interest income on nonaccrual loans is recognized only to the extent that cash payments are received in excess of principal due. A loan may be returned to accrual status when all the principal and interest amounts contractually due are brought current and future principal and interest amounts contractually due are reasonably assured, which is typically evidenced by a sustained period (at least six months) of repayment performance by the borrower.

​

15

Table of Contents

The following tables present the aging of the recorded investment in past due loans by class of loans held for investment as of September 30, 2024 and December 31, 2023 (in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

    

30 - 59

    

60 - 89

    

90 

    

​

​

    

​

​

    

​

​

​

​

Days

​

Days

​

Days 

​

Total

​

Loans Not

​

Total

September 30, 2024

​

Past Due

​

Past Due

​

or More

​

Past Due

​

Past Due

​

Loans

Commercial real estate - owner occupied

​

$

—

​

$

45

​

$

4,021

​

$

4,066

​

$

459,782

​

$

463,848

Commercial real estate - non-owner occupied

​

 

28,440

​

 

—

​

​

—

​

 

28,440

​

 

581,303

​

 

609,743

Secured by farmland

​

​

—

​

​

—

​

​

—

​

​

—

​

​

4,356

​

​

4,356

Construction and land development

​

 

13

​

​

662

​

​

—

​

​

675

​

​

104,866

​

 

105,541

Residential 1-4 family

​

 

2,424

​

​

975

​

​

1,538

​

​

4,937

​

​

602,376

​

 

607,313

Multi- family residential

​

​

—

​

​

—

​

​

99

​

​

99

​

​

169,269

​

​

169,368

Home equity lines of credit

​

 

287

​

​

67

​

 

398

​

​

752

​

​

61,669

​

 

62,421

Commercial loans

​

​

979

​

​

1,083

​

​

1,900

​

​

3,962

​

​

530,036

​

​

533,998

Paycheck Protection Program loans

​

​

173

​

​

—

​

​

1,713

​

​

1,886

​

​

55

​

​

1,941

Consumer loans

​

 

5,146

​

​

2,867

​

​

238

​

 

8,251

​

 

401,503

​

 

409,754

Total Non-PCD loans

​

​

37,462

​

​

5,699

​

​

9,907

​

​

53,068

​

​

2,915,215

​

​

2,968,283

PCD loans

​

​

—

​

​

118

​

​

—

​

​

118

​

​

5,322

​

​

5,440

Total

​

$

37,462

​

$

5,817

​

$

9,907

​

$

53,186

​

$

2,920,537

​

$

2,973,723

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

    

30 - 59

    

60 - 89

    

90 

    

​

​

    

​

​

    

​

​

    

​

​

Days

​

Days

​

Days 

​

Total

​

Loans Not

​

Total

​

December 31, 2023

​

Past Due

​

Past Due

​

or More

​

Past Due

​

Past Due

​

Loans

​

Commercial real estate - owner occupied

​

$

75

​

$

—

​

$

219

​

$

294

​

$

455,103

​

$

455,397

​

Commercial real estate - non-owner occupied

​

 

1,155

​

 

—

​

​

—

​

 

1,155

​

 

577,445

​

 

578,600

​

Secured by farmland

​

​

—

​

​

—

​

​

—

​

​

—

​

​

5,044

​

​

5,044

​

Construction and land development

​

 

26

​

​

143

​

​

—

​

​

169

​

​

164,573

​

 

164,742

​

Residential 1-4 family

​

 

1,850

​

​

838

​

​

1,376

​

​

4,064

​

​

602,162

​

 

606,226

​

Multi- family residential

​

​

—

​

​

—

​

​

—

​

​

—

​

​

127,857

​

​

127,857

​

Home equity lines of credit

​

 

416

​

​

378

​

 

556

​

​

1,350

​

​

58,320

​

 

59,670

​

Commercial loans

​

​

40

​

​

588

​

​

1,203

​

​

1,831

​

​

600,792

​

​

602,623

​

Paycheck Protection Program loans

​

​

18

​

​

—

​

​

1,714

​

​

1,732

​

​

291

​

​

2,023

​

Consumer loans

​

 

3,805

​

​

2,093

​

​

310

​

 

6,208

​

 

605,375

​

 

611,583

​

Total Non-PCD loans

​

​

7,385

​

​

4,040

​

​

5,378

​

​

16,803

​

​

3,196,962

​

​

3,213,765

​

PCD loans

​

​

2,061

​

​

128

​

​

1,241

​

​

3,430

​

​

2,219

​

​

5,649

​

Total

​

$

9,446

​

$

4,168

​

$

6,619

​

$

20,233

​

$

3,199,181

​

$

3,219,414

​

​

​

16

Table of Contents

​

The amortized cost, by class, of loans and leases on nonaccrual status as of September 30, 2024 and December 31, 2023, were as follows (in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

    

90 Days

    

​

Less Than

    

Total

    

Nonaccrual With

​

​

Past Due

​

​

90 Days

​

Nonaccrual

​

No Credit

September 30, 2024

​

or More

​

​

Past Due

​

Loans

​

Loss Allowance

Commercial real estate - owner occupied

​

$

4,021

​

$

441

​

$

4,462

​

$

653

Commercial real estate - non-owner occupied

​

 

—

​

 

404

​

 

404

​

 

404

Secured by farmland

​

​

—

​

​

403

​

​

403

​

​

403

Construction and land development

​

 

—

​

 

134

​

 

134

​

 

134

Residential 1-4 family

​

 

1,537

​

 

1,868

​

 

3,405

​

 

3,405

Multi- family residential

​

​

99

​

​

—

​

​

99

​

​

99

Home equity lines of credit

​

​

398

​

​

805

​

​

1,203

​

​

1,203

Commercial loans

​

 

1,900

​

 

168

​

 

2,068

​

 

135

Consumer loans

​

 

238

​

 

674

​

 

912

​

 

912

Total Non-PCD loans

​

​

8,193

​

​

4,897

​

​

13,090

​

​

7,348

PCD loans

​

​

—

​

​

1,334

​

​

1,334

​

​

1,334

Total

​

$

8,193

​

$

6,231

​

$

14,424

​

$

8,682

​

​

​

​

​

​

​

​

​

​

​

​

​

​

    

90 Days

    

​

Less Than

    

Total

    

Nonaccrual With

​

​

Past Due

​

​

90 Days

​

Nonaccrual

​

No Credit

December 31, 2023

​

or More

​

​

Past Due

​

Loans

​

Loss Allowance

Commercial real estate - owner occupied

​

$

219

​

$

469

​

$

688

​

$

688

Secured by farmland

​

​

—

​

​

480

​

​

480

​

​

480

Construction and land development

​

 

—

​

 

23

​

 

23

​

 

23

Residential 1-4 family

​

 

1,376

​

 

1,437

​

 

2,813

​

 

2,813

Home equity lines of credit

​

​

556

​

​

571

​

​

1,127

​

​

1,127

Commercial loans

​

 

1,203

​

 

576

​

 

1,779

​

 

207

Consumer loans

​

 

310

​

 

634

​

 

944

​

 

944

Total Non-PCD loans

​

​

3,664

​

​

4,190

​

​

7,854

​

​

6,282

PCD loans

​

​

1,241

​

​

—

​

​

1,241

​

​

1,241

Total

​

$

4,905

​

$

4,190

​

$

9,095

​

$

7,523

​

There were $1.7 million of Paycheck Protection Program (“PPP”) loans greater than 90 days past due and still accruing as of both September 30, 2024 and December 31, 2023, respectively.

​

17

Table of Contents

The following table presents nonaccrual loans as of September 30, 2024 by class and year of origination (in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Revolving

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Loans

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Revolving

​

Converted

​

​

​

​

​

2024

​

2023

​

2022

​

2021

 

2020

​

Prior

​

Loans

​

To Term

 

Total

Commercial real estate - owner occupied

​

$

—

​

$

—

​

$

—

​

$

210

​

$

—

​

$

4,252

​

$

—

​

$

—

​

$

4,462

Commercial real estate - non-owner occupied

​

 

—

​

 

—

​

 

—

​

 

—

​

 

—

​

 

404

​

 

—

​

 

—

​

 

404

Secured by farmland

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

403

​

​

—

​

​

—

​

​

403

Construction and land development

​

 

—

​

 

—

​

 

—

​

 

—

​

 

—

​

 

134

​

 

—

​

 

—

​

 

134

Residential 1-4 family

​

​

—

​

 

263

​

​

553

​

​

—

​

​

16

​

​

2,012

​

​

—

​

​

561

​

​

3,405

Multi- family residential

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

99

​

​

—

​

​

—

​

​

99

Home equity lines of credit

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

69

​

​

1,120

​

​

14

​

​

1,203

Commercial loans

​

 

—

​

 

—

​

 

—

​

 

383

​

 

—

​

 

928

​

 

649

​

 

108

​

 

2,068

Consumer loans

​

​

—

​

 

53

​

​

544

​

​

314

​

​

—

​

​

1

​

​

—

​

​

—

​

​

912

Total non-PCD nonaccruals

​

​

—

​

​

316

​

​

1,097

​

​

907

​

​

16

​

​

8,302

​

​

1,769

​

​

683

​

​

13,090

PCD loans

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

1,334

​

​

—

​

​

—

​

​

1,334

Total nonaccrual loans

​

$

—

​

$

316

​

$

1,097

​

$

907

​

$

16

​

$

9,636

​

$

1,769

​

$

683

​

$

14,424

​

Interest received on nonaccrual loans was $0.2 million and $0.4 million for the three and nine months ended September 30, 2024, respectively, and zero and $0.01 million for the three and nine months ended September 30, 2023, respectively.

Modifications Provided to Borrowers Experiencing Financial Difficulty

The Bank determines that a borrower may be experiencing financial difficulty if the borrower is currently delinquent on any of its debt, or if the Bank is concerned that the borrower may not be able to perform in accordance with the current terms of the loan agreement in the foreseeable future. Many aspects of the borrower’s financial situation are assessed when determining whether they are experiencing financial difficulty, particularly as it relates to commercial borrowers due to the complex nature of the loan structure, business/industry risk and borrower/guarantor structures. Concessions may include the reduction of an interest rate at a rate lower than current market rates for a new loan with similar risk, extension of the maturity date, reduction of accrued interest, or principal forgiveness. When evaluating whether a concession has been granted, the Bank also considers whether the borrower has provided additional collateral or guarantors and whether such additions adequately compensate the Bank for the restructured terms, or if the revised terms are consistent with those currently being offered to new loan customers.

The assessments of whether a borrower is experiencing financial difficulty at the time a concession has been granted is subjective in nature and management’s judgment is required when determining whether the concession results in a modification that is accounted for as a new loan or a continuation of the existing loan under U.S. GAAP.

Although each occurrence is unique to the borrower and is evaluated separately, for all portfolio segments, loans modified as a result of borrowers experiencing financial difficulty are typically modified through reductions in interest rates, reductions in payments, changing the payment terms from principal and interest to interest only, and/or extensions in term maturity.

For the three months ended September 30, 2024, two commercial loans with a total of $1.3 million in amortized cost were modified to borrowers experiencing financial difficulty, representing 0.24% of the commercial loan segment. One of these two loans, with $40 thousand in amortized cost was modified to $627 in principal payments over 83 months compared to its original $845 payments over a 60 month term. The other modification, totaling $1.2 million was modified under a forbearance agreement, to monthly payments of $8 thousand through its June 2026 maturity.

18

Table of Contents

Total contractual payments, prior to this modification, for the third quarter 2024, would have been $57 thousand.

Additionally, during the three months ended September 30, 2024, the Company also modified two non-owner occupied commercial real estate loans totaling $28.8 million in amortized cost, representing 4.7% of that loan segment. One of these loans had an amortized cost balance of $28.4 million and was restructured to allow for the extension of its interest only period for an additional 24 months. Prior to this restructure total principal and interest payments received during the quarter would have been $1.6 million, but due to the restrurcture the Company only received $0.3 million in interest only payments. The other restructured loan with $404 thousand in amortized cost included an extension of interest-only payments for an additional 18 months. This loan was originally scheduled to mature in March 2024 with payment due on the entire principal balance.

One existing modification made during the nine months ended September 30, 2024, with a total $108 thousand in amortized cost and representing 0.02% of the residential 1-4 family segment, has had two 30–59 day payment delinquencies in the last three months, however the loan is current in principal payments under the modified terms as of September 30, 2024. The modification was an interest rate concession and the Company collected $4 thousand during the quarter, but if the concession was not made the Company would have collected $5 thousand.  Another modification occurred during the nine months ending September 30, 2024 of one loan with $32 thousand in amortized cost representing 0.02% of the residential 1-4 family segment.  This loan, which has paid as agreed during the third quarter 2024, was modified from its original 8.5% interest rate to a fixed 6% interest rate for a 5-year term. Total contractual payments, prior to modification, for the third quarter 2024 would have been $714.  

The following table depicts the amortized cost basis as of September 30, 2024, of the performance of loans that have been modified to borrowers experiencing financial difficulty in the last 12 months and returned to contractual payments ($ in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Payment Status

​

    

​

    

​

​

    

​

​

    

 

​

​

​

Current

​

30-59 days past due

​

60-89 days past due

​

90 days or more

Commercial real estate - owner occupied

​

$

410

​

$

—

​

$

—

​

$

—

Residential 1-4 family

​

 

—

​

 

—

​

 

—

​

 

88

Consumer loans

​

 

226

​

 

—

​

 

​

​

 

—

Total

​

$

636

​

$

—

​

$

—

​

$

88

​

The allowance for credit losses incorporates an estimate of lifetime expected credit losses and is recorded on each asset upon asset origination or acquisition. The starting point for the estimate of the allowance for credit losses is historical loss information, which includes losses from modifications of receivables to borrowers experiencing financial difficulty.  Because the effect of most modifications made to borrowers experiencing financial difficulty is already included in the allowance for credit losses because of the measurement methodologies used to estimate the allowance, a change to the allowance for credit losses is generally not recorded upon modification. Occasionally, the Company modifies certain loans by providing principal forgiveness. When principal forgiveness is provided, the amortized cost basis of the loan is written off against the allowance. The amount of the principal forgiveness is deemed to be uncollectible; therefore, that portion of the loan is written off, resulting in a reduction of the amortized cost basis and a corresponding adjustment to the allowance for credit losses.

If it is determined that a modified loan (or portion of a loan) has subsequently been deemed uncollectible, the loan (or a portion of the loan) is written off. At that time, the amortized cost basis of the loan is reduced by the uncollectible amount and the allowance for credit losses is adjusted by the same amount.

19

Table of Contents

Credit Quality Indicators

Through its system of internal controls, Primis evaluates and segments loan portfolio credit quality using regulatory definitions for Special Mention, Substandard and Doubtful. Special Mention loans are considered to be criticized. Substandard and Doubtful loans are considered to be classified.

Special Mention loans are loans that have a potential weakness that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position.

Substandard loans may be inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful loans have all the weaknesses inherent in those classified as Substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable or improbable. Primis had no loans classified as Doubtful as of September 30, 2024 or December 31, 2023.

In monitoring credit quality trends in the context of assessing the appropriate level of the allowance for credit losses on loans, we monitor portfolio credit quality by the weighted-average risk grade of each class of loan.

20

Table of Contents

The following table presents weighted-average risk grades for all loans, by class and year of origination/renewal as of September 30, 2024 (in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Revolving

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Loans

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Revolving

​

Converted

​

​

​

​

​

2024

​

2023

​

2022

​

2021

 

2020

​

Prior

​

Loans

​

To Term

 

Total

Commercial real estate - owner occupied

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Pass

​

$

27,800

​

$

56,688

​

$

80,453

​

$

61,030

​

$

15,007

​

$

200,318

​

$

3,589

​

$

8,353

​

$

453,238

Special Mention

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

3,968

​

​

—

​

​

—

​

​

3,968

Substandard

​

​

—

​

​

—

​

​

—

​

​

210

​

​

—

​

​

6,432

​

​

—

​

​

—

​

​

6,642

Doubtful

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

$

27,800

​

$

56,688

​

$

80,453

​

$

61,240

​

$

15,007

​

$

210,718

​

$

3,589

​

$

8,353

​

$

463,848

Current period gross charge offs

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

Weighted average risk grade

​

​

3.31

​

​

3.51

​

​

3.42

​

​

3.43

​

​

3.17

​

​

3.48

​

​

3.46

​

​

3.74

​

​

3.45

Commercial real estate - nonowner occupied

​

 

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Pass

​

$

17,083

​

$

33,132

​

$

59,405

​

$

117,779

​

$

45,736

​

$

298,941

​

$

2,677

​

$

3,669

​

$

578,422

Special Mention

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

2,954

​

​

—

​

​

—

​

​

2,954

Substandard

​

​

—

​

​

—

​

​

—

​

​

28,367

​

​

—

​

​

—

​

​

—

​

​

—

​

​

28,367

Doubtful

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

$

17,083

​

$

33,132

​

$

59,405

​

$

146,146

​

$

45,736

​

$

301,895

​

$

2,677

​

$

3,669

​

$

609,743

Current period gross charge offs

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

Weighted average risk grade

​

​

3.93

​

​

3.49

​

​

3.16

​

​

4.13

​

​

3.84

​

​

3.68

​

​

3.20

​

​

2.80

​

​

3.74

Secured by farmland

​

 

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Pass

​

$

592

​

$

68

​

$

—

​

$

5

​

$

86

​

$

2,710

​

$

371

​

$

121

​

$

3,953

Special Mention

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Substandard

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

403

​

​

—

​

​

—

​

​

403

Doubtful

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

$

592

​

$

68

​

$

—

​

$

5

​

$

86

​

$

3,113

​

$

371

​

$

121

​

$

4,356

Current period gross charge offs

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

Weighted average risk grade

​

​

4.00

​

​

—

​

​

N/A

​

​

4.00

​

​

N/A

​

​

4.17

​

​

3.93

​

​

3.07

​

​

4.08

Construction and land development

​

 

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Pass

​

$

19,974

​

$

29,903

​

$

35,762

​

$

10,273

​

$

61

​

$

8,612

​

$

822

​

$

—

​

$

105,407

Special Mention

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Substandard

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

134

​

​

—

​

​

—

​

​

134

Doubtful

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

$

19,974

​

$

29,903

​

$

35,762

​

$

10,273

​

$

61

​

$

8,746

​

$

822

​

$

—

​

$

105,541

Current period gross charge offs

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

Weighted average risk grade

​

​

3.03

​

​

3.70

​

​

3.67

​

​

3.05

​

​

4.01

​

​

3.42

​

​

3.36

​

​

N/A

​

​

3.47

Residential 1-4 family

​

 

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Pass

​

$

30,114

​

$

36,036

​

$

168,609

​

$

138,508

​

$

38,900

​

$

181,136

​

$

5,894

​

$

3,536

​

$

602,733

Special Mention

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

609

​

​

—

​

​

—

​

​

609

Substandard

​

​

—

​

​

263

​

​

553

​

​

—

​

​

16

​

​

2,578

​

​

—

​

​

561

​

​

3,971

Doubtful

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

$

30,114

​

$

36,299

​

$

169,162

​

$

138,508

​

$

38,916

​

$

184,323

​

$

5,894

​

$

4,097

​

$

607,313

Current period gross charge offs

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

Weighted average risk grade

​

​

3.12

​

​

3.10

​

​

3.08

​

​

3.04

​

​

3.07

​

​

3.20

​

​

3.66

​

​

3.79

​

​

3.12

Multi- family residential

​

 

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Pass

​

$

—

​

$

453

​

$

21,746

​

$

32,433

​

$

17,296

​

$

72,341

​

$

5,117

​

$

579

​

$

149,965

Special Mention

​

​

—

​

​

—

​

​

—

​

​

18,438

​

​

—

​

​

—

​

​

—

​

​

—

​

​

18,438

Substandard

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

684

​

​

—

​

​

281

​

​

965

Doubtful

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

$

—

​

$

453

​

$

21,746

​

$

50,871

​

$

17,296

​

$

73,025

​

$

5,117

​

$

860

​

$

169,368

Current period gross charge offs

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

Weighted average risk grade

​

​

N/A

​

​

3.00

​

​

3.17

​

​

3.72

​

​

3.91

​

​

3.32

​

​

3.98

​

​

4.65

​

​

3.51

Home equity lines of credit

​

 

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Pass

​

$

90

​

$

456

​

$

345

​

$

473

​

$

45

​

$

3,037

​

$

55,913

​

$

142

​

$

60,501

Special Mention

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

(1)

​

​

32

​

​

—

​

​

31

Substandard

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

69

​

​

1,178

​

​

642

​

​

1,889

Doubtful

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

$

90

​

$

456

​

$

345

​

$

473

​

$

45

​

$

3,105

​

$

57,123

​

$

784

​

$

62,421

Current period gross charge offs

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

Weighted average risk grade

​

​

3.00

​

​

3.00

​

​

3.00

​

​

3.00

​

​

3.00

​

​

3.94

​

​

3.10

​

​

5.52

​

​

3.17

Commercial loans

​

 

​

​

 

​

​

 

​

​

 

​

​

 

​

​

 

​

​

 

​

​

 

​

​

 

​

Pass

​

$

66,284

​

$

94,575

​

$

185,499

​

$

33,562

​

$

4,408

​

$

22,983

​

$

91,785

​

$

6,729

​

$

505,825

Special Mention

​

​

—

​

​

—

​

​

22,267

​

​

—

​

​

—

​

​

1

​

​

3,417

​

​

—

​

​

25,685

Substandard

​

​

—

​

​

4

​

​

—

​

​

383

​

​

175

​

​

1,130

​

​

688

​

​

108

​

​

2,488

Doubtful

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

$

66,284

​

$

94,579

​

$

207,766

​

$

33,945

​

$

4,583

​

$

24,114

​

$

95,890

​

$

6,837

​

$

533,998

Current period gross charge offs

​

$

—

​

$

383

​

$

—

​

$

—

​

$

—

​

$

543

​

$

​

​

$

—

​

$

926

Weighted average risk grade

​

​

3.21

​

​

3.10

​

​

3.27

​

​

3.83

​

​

3.36

​

​

3.73

​

​

3.45

​

​

3.73

​

​

3.33

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

21

Table of Contents

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Revolving

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Loans

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Revolving

​

Converted

​

​

​

​

​

2024

​

2023

​

2022

​

2021

 

2020

​

Prior

​

Loans

​

To Term

 

Total

Paycheck Protection Program loans

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Pass

​

$

—

​

$

—

​

$

—

​

$

1,047

​

$

894

​

$

—

​

$

—

​

$

—

​

$

1,941

Special Mention

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Substandard

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Doubtful

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

$

—

​

$

—

​

$

—

​

$

1,047

​

$

894

​

$

—

​

$

—

​

$

—

​

$

1,941

Current period gross charge offs

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

Weighted average risk grade

​

​

N/A

​

​

N/A

​

​

N/A

​

​

2.17

​

​

2.00

​

​

N/A

​

​

N/A

​

​

N/A

​

​

2.09

Consumer loans

​

 

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Pass

​

$

188,912

​

$

18,885

​

$

166,897

​

$

22,461

​

$

612

​

$

3,162

​

$

7,105

​

$

657

​

$

408,691

Special Mention

​

​

—

​

​

4

​

​

59

​

​

—

​

​

—

​

​

46

​

​

—

​

​

—

​

​

109

Substandard

​

​

—

​

​

52

​

​

577

​

​

323

​

​

—

​

​

2

​

​

—

​

​

—

​

​

954

Doubtful

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

$

188,912

​

$

18,941

​

$

167,533

​

$

22,784

​

$

612

​

$

3,210

​

$

7,105

​

$

657

​

$

409,754

Current period gross charge offs

​

$

740

​

$

7,812

​

$

9,779

​

$

718

​

$

—

​

$

87

​

$

—

​

$

—

​

$

19,136

Weighted average risk grade

​

​

4.02

​

​

3.32

​

​

2.80

​

​

3.35

​

​

4.00

​

​

3.99

​

​

2.58

​

​

N/A

​

​

3.43

PCD

​

 

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

 

​

​

 

​

Pass

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

1,983

​

$

—

​

$

—

​

$

1,983

Special Mention

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

1,985

​

​

—

​

​

—

​

​

1,985

Substandard

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

1,472

​

​

—

​

​

—

​

​

1,472

Doubtful

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

5,440

​

$

—

​

$

—

​

$

5,440

Current period gross charge offs

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

Weighted average risk grade

​

​

N/A

​

​

N/A

​

​

N/A

​

​

N/A

​

​

N/A

​

​

3.91

​

​

N/A

​

​

N/A

​

​

3.91

Total

​

$

350,849

​

$

270,519

​

$

742,172

​

$

465,292

​

$

123,236

​

$

817,689

​

$

178,588

​

$

25,378

​

$

2,973,723

Current period gross charge offs

​

$

740

​

$

8,195

​

$

9,779

​

$

718

​

$

—

​

$

630

​

$

—

​

$

—

​

$

20,062

Weighted average risk grade

​

​

3.67

​

​

3.32

​

​

3.15

​

​

3.58

​

​

3.49

​

​

3.49

​

​

3.32

​

​

3.70

​

​

3.42

​

​

22

Table of Contents

The following table presents weighted-average risk grades for all loans, by class and year of origination/renewal as of December 31, 2023 (in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Revolving

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Loans

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Revolving

​

Converted

​

​

​

​

​

2023

​

2022

​

2021

​

2020

 

2019

​

Prior

​

Loans

​

To Term

 

Total

Commercial real estate - owner occupied

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Pass

​

$

42,262

​

$

97,259

​

$

61,316

​

$

17,914

​

$

23,675

​

$

191,674

​

$

4,054

​

$

6,503

​

$

444,657

Special Mention

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

5,368

​

​

—

​

​

—

​

​

5,368

Substandard

​

​

—

​

​

—

​

​

219

​

​

—

​

​

95

​

​

5,058

​

​

—

​

​

—

​

​

5,372

Doubtful

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

$

42,262

​

$

97,259

​

$

61,535

​

$

17,914

​

$

23,770

​

$

202,100

​

$

4,054

​

$

6,503

​

$

455,397

Current period gross charge offs

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

Weighted average risk grade

​

​

3.52

​

​

3.35

​

​

3.44

​

​

3.38

​

​

3.37

​

​

3.54

​

​

3.46

​

​

3.97

​

​

3.48

Commercial real estate - nonowner occupied

​

 

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Pass

​

$

19,474

​

$

65,355

​

$

119,065

​

$

42,781

​

$

37,446

​

$

282,497

​

$

1,847

​

$

5,856

​

$

574,321

Special Mention

​

​

—

​

​

—

​

​

—

​

​

1,529

​

​

—

​

​

2,750

​

​

—

​

​

—

​

​

4,279

Substandard

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Doubtful

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

$

19,474

​

$

65,355

​

$

119,065

​

$

44,310

​

$

37,446

​

$

285,247

​

$

1,847

​

$

5,856

​

$

578,600

Current period gross charge offs

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

1,170

​

$

—

​

$

—

​

$

1,170

Weighted average risk grade

​

​

3.09

​

​

3.35

​

​

3.08

​

​

3.83

​

​

3.95

​

​

3.64

​

​

3.44

​

​

2.86

​

​

3.50

Secured by farmland

​

 

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Pass

​

$

361

​

$

—

​

$

10

​

$

98

​

$

—

​

$

3,333

​

$

607

​

$

155

​

$

4,564

Special Mention

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Substandard

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

480

​

​

—

​

​

—

​

​

480

Doubtful

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

$

361

​

$

—

​

$

10

​

$

98

​

$

—

​

$

3,813

​

$

607

​

$

155

​

$

5,044

Current period gross charge offs

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

​

​

$

—

​

$

—

​

$

—

Weighted average risk grade

​

​

3.81

​

​

N/A

​

​

4.00

​

​

4.00

​

​

N/A

​

​

4.04

​

​

4.00

​

​

3.11

​

​

3.99

Construction and land development

​

 

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Pass

​

$

32,496

​

$

41,304

​

$

72,337

​

$

512

​

$

2,478

​

$

13,912

​

$

727

​

$

1

​

$

163,767

Special Mention

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

952

​

​

—

​

​

—

​

​

952

Substandard

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

23

​

​

—

​

​

—

​

​

23

Doubtful

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

$

32,496

​

$

41,304

​

$

72,337

​

$

512

​

$

2,478

​

$

14,887

​

$

727

​

$

1

​

$

164,742

Current period gross charge offs

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

2

​

$

—

​

$

—

​

$

2

Weighted average risk grade

​

​

3.44

​

​

3.06

​

​

3.40

​

​

3.37

​

​

3.29

​

​

3.44

​

​

3.41

​

​

4.00

​

​

3.33

Residential 1-4 family

​

 

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Pass

​

$

37,097

​

$

163,464

​

$

148,845

​

$

40,697

​

$

56,117

​

$

148,066

​

$

3,293

​

$

2,499

​

$

600,078

Special Mention

​

​

—

​

​

1,036

​

​

—

​

​

—

​

​

—

​

​

511

​

​

—

​

​

—

​

​

1,547

Substandard

​

​

—

​

​

585

​

​

—

​

​

40

​

​

160

​

​

3,328

​

​

—

​

​

488

​

​

4,601

Doubtful

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

$

37,097

​

$

165,085

​

$

148,845

​

$

40,737

​

$

56,277

​

$

151,905

​

$

3,293

​

$

2,987

​

$

606,226

Current period gross charge offs

​

$

—

​

$

—

​

$

—

​

$

—

​

$

572

​

$

198

​

$

—

​

$

—

​

$

770

Weighted average risk grade

​

​

3.10

​

​

3.10

​

​

3.04

​

​

3.07

​

​

3.08

​

​

3.25

​

​

3.62

​

​

3.50

​

​

3.12

Multi- family residential

​

 

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Pass

​

$

544

​

$

8,105

​

$

21,404

​

$

17,738

​

$

6,925

​

$

68,238

​

$

3,360

​

$

619

​

$

126,933

Special Mention

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Substandard

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

637

​

​

—

​

​

287

​

​

924

Doubtful

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

$

544

​

$

8,105

​

$

21,404

​

$

17,738

​

$

6,925

​

$

68,875

​

$

3,360

​

$

906

​

$

127,857

Current period gross charge offs

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

Weighted average risk grade

​

​

3.00

​

​

3.70

​

​

3.00

​

​

3.91

​

​

3.00

​

​

3.35

​

​

3.97

​

​

4.63

​

​

3.40

Home equity lines of credit

​

 

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Pass

​

$

521

​

$

487

​

$

417

​

$

48

​

$

72

​

$

3,012

​

$

52,923

​

$

856

​

$

58,336

Special Mention

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

111

​

​

—

​

​

111

Substandard

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

75

​

​

1,131

​

​

17

​

​

1,223

Doubtful

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

$

521

​

$

487

​

$

417

​

$

48

​

$

72

​

$

3,087

​

$

54,165

​

$

873

​

$

59,670

Current period gross charge offs

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

32

​

$

—

​

$

32

Weighted average risk grade

​

​

3.01

​

​

3.00

​

​

3.00

​

​

3.00

​

​

3.00

​

​

3.95

​

​

3.10

​

​

3.93

​

​

3.15

Commercial loans

​

 

​

​

 

​

​

 

​

​

 

​

​

 

​

​

 

​

​

 

​

​

 

​

​

 

​

Pass

​

$

155,238

​

$

269,011

​

$

50,804

​

$

5,683

​

$

2,370

​

$

30,240

​

$

78,984

​

$

7,104

​

$

599,434

Special Mention

​

​

—

​

​

—

​

​

—

​

​

21

​

​

114

​

​

—

​

​

1,180

​

​

—

​

​

1,315

Substandard

​

​

—

​

​

—

​

​

383

​

​

212

​

​

56

​

​

1,223

​

​

—

​

​

—

​

​

1,874

Doubtful

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

$

155,238

​

$

269,011

​

$

51,187

​

$

5,916

​

$

2,540

​

$

31,463

​

$

80,164

​

$

7,104

​

$

602,623

Current period gross charge offs

​

$

—

​

$

—

​

$

—

​

$

17

​

$

—

​

$

1,240

​

$

1,597

​

$

—

​

$

2,854

Weighted average risk grade

​

​

2.97

​

​

3.10

​

​

3.35

​

​

3.41

​

​

4.02

​

​

3.50

​

​

3.26

​

​

3.70

​

​

3.14

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

23

Table of Contents

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Revolving

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Loans

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Revolving

​

Converted

​

​

​

​

​

2023

​

2022

​

2021

​

2020

 

2019

​

Prior

​

Loans

​

To Term

 

Total

Paycheck Protection Program loans

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Pass

​

$

—

​

$

—

​

$

1,087

​

$

936

​

$

—

​

$

—

​

$

—

​

$

—

​

$

2,023

Special Mention

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Substandard

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Doubtful

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

$

—

​

$

—

​

$

1,087

​

$

936

​

$

—

​

$

—

​

$

—

​

$

—

​

$

2,023

Current period gross charge offs

​

$

—

​

$

—

​

$

—

​

$

​

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

Weighted average risk grade

​

​

N/A

​

​

N/A

​

​

2.00

​

​

2.00

​

​

N/A

​

​

N/A

​

​

N/A

​

​

N/A

​

​

2.00

Consumer loans

​

 

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Pass

​

$

294,825

​

$

277,640

​

$

25,695

​

$

916

​

$

89

​

$

3,661

​

$

6,998

​

$

368

​

$

610,192

Special Mention

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

63

​

​

—

​

​

—

​

​

63

Substandard

​

​

8

​

​

831

​

​

479

​

​

—

​

​

9

​

​

1

​

​

—

​

​

—

​

​

1,328

Doubtful

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

$

294,833

​

$

278,471

​

$

26,174

​

$

916

​

$

98

​

$

3,725

​

$

6,998

​

$

368

​

$

611,583

Current period gross charge offs

​

$

2,379

​

$

7,910

​

$

621

​

$

3

​

$

—

​

$

944

​

$

9

​

$

​

​

$

11,866

Weighted average risk grade

​

​

3.43

​

​

2.59

​

​

3.55

​

​

4.00

​

​

4.13

​

​

5.81

​

​

2.80

​

​

N/A

​

​

3.06

PCD

​

 

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

 

​

​

 

​

Pass

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

2,842

​

$

—

​

$

—

​

$

2,842

Special Mention

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

1,295

​

​

—

​

​

—

​

​

1,295

Substandard

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

1,512

​

​

—

​

​

—

​

​

1,512

Doubtful

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

5,649

​

$

—

​

$

—

​

$

5,649

Current period gross charge offs

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

Weighted average risk grade

​

​

N/A

​

​

N/A

​

​

N/A

​

​

N/A

​

​

N/A

​

​

4.66

​

​

N/A

​

​

N/A

​

​

4.66

Total

​

$

582,826

​

$

925,077

​

$

502,061

​

$

129,125

​

$

129,606

​

$

770,751

​

$

155,215

​

$

24,753

​

$

3,219,414

Current period gross charge offs

​

$

2,379

​

$

7,910

​

$

621

​

$

20

​

$

572

​

$

3,554

​

$

1,638

​

$

—

​

$

16,694

Weighted average risk grade

​

​

3.28

​

​

3.00

​

​

3.20

​

​

3.50

​

​

3.40

​

​

3.52

​

​

3.22

​

​

3.59

​

​

3.26

​

Revolving loans that converted to term during the three and nine months ended September 30, 2024 were as follows (in thousands):

​

​

​

​

​

​

​

​

​

​

For the three months ended September 30, 2024

​

​

For the nine months ended September 30, 2024

Residential 1-4 family

​

$

1,545

​

​

$

1,545

Commercial loans

​

 

369

​

​

 

429

Consumer loans

​

 

86

​

​

 

322

Total loans

​

$

2,000

​

​

$

2,296

​

There were no foreclosed residential real estate property held as of both September 30, 2024 and December 31, 2023. The recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure was $0.2 million and $0.8 million as of September 30, 2024 and December 31, 2023, respectively.

Allowance For Credit Losses – Loans

The allowance for credit losses on loans is a contra-asset valuation account, calculated in accordance with ASC 326 that is deducted from the amortized cost basis of loans to present the net amount expected to be collected. The amount of the allowance represents management's best estimate of current expected credit losses on loans considering available information, from internal and external sources, relevant to assessing collectability over the loans' contractual terms, adjusted for expected prepayments when appropriate.

In calculating the allowance for credit losses, most loans are segmented into pools based upon similar characteristics and risk profiles. For allowance modeling purposes, our loan pools include but are not limited to (i) commercial real estate - owner occupied, (ii) commercial real estate - non-owner occupied, (iii) construction and land development, (iv) commercial, (v) agricultural loans, (vi) residential 1-4 family and (vii) consumer loans. We periodically reassess each pool to ensure the loans within the pool continue to share similar characteristics and risk profiles and to determine whether further segmentation is necessary. For each loan pool, we measure expected credit losses over the life of each loan utilizing a combination of inputs: (i) probability of default, (ii) probability of attrition, (iii) loss given default and (iv) exposure at default.

24

Table of Contents

Internal data is supplemented by, but not replaced by, peer data when required, primarily to determine the probability of default input. The various pool-specific inputs may be adjusted for current macroeconomic assumptions. Significant macroeconomic variables utilized in our allowance models include, among other things, (i) Virginia Gross Domestic Product, (ii) Virginia House Price Index, and (iii) Virginia unemployment rates.

Management qualitatively adjusts allowance model results for risk factors that are not considered within our quantitative modeling processes but are nonetheless relevant in assessing the expected credit losses within our loan pools. Qualitative factor (“Q-Factor”) adjustments are driven by key risk indicators that management tracks on a pool-by-pool basis. 

In some cases, management may determine that an individual loan exhibits unique risk characteristics which differentiate the loan from other loans within our loan pools. In such cases, the loans are evaluated for expected credit losses on an individual basis and excluded from the collective evaluation.

The following tables present details of the allowance for credit losses on loans segregated by loan portfolio segment as of September 30, 2024 and December 31, 2023, calculated in accordance with ASC 326 (in thousands). 

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

    

Commercial

    

Commercial

    

​

​

    

​

​

    

​

​

    

​

​

    

Home

    

​

​

    

​

​

    

​

​

    

​

​

​

​

Real Estate

​

Real Estate

​

​

​

Construction

​

​

​

​

​

​

​

Equity

​

​

​

​

​

​

​

​

 

​

​

​

Owner

​

Non-owner

​

Secured by

​

and Land

​

1-4 Family

​

Multi-Family

​

Lines Of

​

Commercial

​

Consumer

​

PCD

​

 

​

September 30, 2024

​

Occupied

​

Occupied

​

Farmland

​

Development

​

Residential 

​

Residential 

​

Credit

​

Loans

​

Loans

​

Loans

​

Total

Modeled expected credit losses

​

$

4,556

​

$

4,076

​

$

1

​

$

935

​

$

6,099

​

$

1,150

​

$

536

​

$

4,387

​

$

19,038

​

$

—

​

$

40,778

Q-factor and other qualitative adjustments

​

​

316

​

​

701

​

​

20

​

​

133

​

​

403

​

​

614

​

​

20

​

​

692

​

​

—

​

​

—

​

​

2,899

Specific allocations

​

 

526

​

​

2,246

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

600

​

​

3,797

​

​

286

​

 

7,455

Total

​

$

5,398

​

$

7,023

​

$

21

​

$

1,068

​

$

6,502

​

$

1,764

​

$

556

​

$

5,679

​

$

22,835

​

$

286

​

$

51,132

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

    

Commercial

    

Commercial

    

​

​

    

​

​

    

​

​

    

​

​

    

Home

    

​

​

    

​

​

    

​

​

    

​

​

​

​

Real Estate

​

Real Estate

​

​

​

Construction

​

​

​

​

​

​

​

Equity

​

​

​

​

​

​

​

​

 

​

​

​

Owner

​

Non-owner

​

Secured by

​

and Land

​

1-4 Family

​

Multi-Family

​

Lines Of

​

Commercial

​

Consumer

​

PCD

​

 

​

December 31, 2023

​

Occupied

​

Occupied

​

Farmland

​

Development

​

Residential 

​

Residential 

​

Credit

​

Loans

​

Loans

​

Loans

​

Total

Modeled expected credit losses

​

$

3,981

​

$

5,024

​

$

2

​

$

745

​

$

4,559

​

$

1,144

​

$

332

​

$

4,493

​

$

20,098

​

$

—

​

$

40,378

Q-factor and other qualitative adjustments

​

​

274

​

​

798

​

​

29

​

​

384

​

​

379

​

​

446

​

​

32

​

​

1,246

​

​

—

​

​

—

​

​

3,588

Specific allocations

​

 

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

581

​

​

5,990

​

​

1,672

​

 

8,243

Total

​

$

4,255

​

$

5,822

​

$

31

​

$

1,129

​

$

4,938

​

$

1,590

​

$

364

​

$

6,320

​

$

26,088

​

$

1,672

​

$

52,209

​

No allowance for credit losses has been recognized for PPP loans as such loans are fully guaranteed by the SBA.

​

25

Table of Contents

Activity in the allowance for credit losses by class of loan for the three and nine months ended September 30, 2024 and 2023 is summarized below (in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Commercial

Commercial

    

​

    

​

    

​

    

​

    

​

    

​

    

​

    

​

 

​

​

Real Estate

Real Estate

​

Construction

​

​

​

​

Home Equity

​

​

​

​

​

 

​

​

Owner

Non-owner

Secured by

and Land

1-4 Family

Multi-Family

Lines Of

Commercial

Consumer

PCD

​

Three Months Ended September 30, 2024

Occupied

Occupied 

Farmland

Development

Residential

Residential 

Credit

Loans

Loans

Loans

Total

Allowance for credit losses:

​

  

​

  

​

  

​

  

​

  

​

  

​

  

​

  

​

  

​

  

​

  

Beginning balance

$

4,892

​

5,459

​

26

​

890

​

5,926

​

2,035

​

364

​

6,124

​

25,251

​

607

$

51,574

Provision (recovery)

​

475

 

1,564

 

(5)

 

178

 

576

 

(271)

 

191

 

117

 

5,007

 

(321)

​

7,511

Charge offs

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

(580)

 

(7,840)

 

—

 

(8,420)

Recoveries

 

31

 

—

 

—

 

—

 

—

 

—

 

1

 

18

 

417

 

—

 

467

Ending balance

$

5,398

$

7,023

$

21

$

1,068

$

6,502

$

1,764

$

556

$

5,679

$

22,835

$

286

$

51,132

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three Months Ended September 30, 2023

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Allowance for credit losses:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Beginning balance

$

5,067

$

9,439

$

32

$

1,286

$

4,452

$

1,993

$

326

$

6,998

$

7,016

$

1,932

$

38,541

Provision (recovery)

​

(355)

 

(1,923)

 

2

 

(110)

 

1,250

 

(230)

 

44

 

(797)

 

3,752

 

(17)

​

1,616

Charge offs

​

—

 

(183)

 

(3)

 

(2)

 

(486)

 

—

 

7

 

—

 

(3,844)

 

—

​

(4,511)

Recoveries

​

—

 

110

 

—

 

—

 

1

 

—

 

—

 

—

 

105

 

—

​

216

Ending balance

$

4,712

$

7,443

$

31

$

1,174

$

5,217

$

1,763

$

377

$

6,201

$

7,029

$

1,915

$

35,862

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Commercial

Commercial

    

​

    

​

    

​

    

​

    

​

    

​

    

​

    

​

 

​

​

Real Estate

Real Estate

​

Construction

​

​

​

​

Home Equity

​

​

​

​

​

 

​

​

Owner

Non-owner

Secured by

and Land

1-4 Family

Multi-Family

Lines Of

Commercial

Consumer

PCD

​

Nine Months Ended September 30, 2024

Occupied

Occupied 

Farmland

Development

Residential

Residential 

Credit

Loans

Loans

Loans

Total

Allowance for credit losses:

​

  

​

  

​

  

​

  

​

  

​

  

​

  

​

  

​

  

​

  

​

  

Beginning balance

$

4,255

$

5,822

$

31

$

1,129

$

4,938

$

1,590

$

364

$

6,320

$

26,088

$

1,672

$

52,209

Provision (recovery)

​

1,112

​

1,201

​

(10)

​

(61)

​

1,562

​

174

​

189

​

265

​

14,092

​

(1,386)

​

17,138

Charge offs

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

(926)

 

(19,136)

 

—

 

(20,062)

Recoveries

 

31

 

—

 

—

 

—

 

2

 

—

 

3

 

20

 

1,791

​

—

 

1,847

Ending balance

$

5,398

$

7,023

$

21

$

1,068

$

6,502

$

1,764

$

556

$

5,679

$

22,835

$

286

$

51,132

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Nine Months Ended September 30, 2023

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Allowance for credit losses:

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

Beginning balance

$

5,558

$

7,147

$

25

$

1,373

$

4,091

$

2,201

$

329

$

7,853

$

3,895

$

2,072

$

34,544

Provision (recovery)

​

(846)

​

369

​

9

​

(309)

​

1,719

​

(438)

​

46

​

123

​

10,715

​

(157)

​

11,231

Charge offs

​

—

 

(183)

 

(3)

 

(2)

 

(755)

 

—

 

—

 

(1,776)

 

(7,956)

 

—

​

(10,675)

Recoveries

​

—

 

110

 

—

 

112

 

162

 

—

 

2

 

1

 

375

​

—

​

762

Ending balance

$

4,712

$

7,443

$

31

$

1,174

$

5,217

$

1,763

$

377

$

6,201

$

7,029

$

1,915

$

35,862

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Generally, a commercial loan, or a portion thereof, is charged-off when it is determined, through the analysis of any available current financial information with regards to the borrower, that the borrower is incapable of servicing unsecured debt, there is little or no prospect for near term improvement and no realistic strengthening action of significance is pending or, in the case of secured debt, when it is determined, through analysis of current information with regards to our collateral position, that amounts due from the borrower are in excess of the calculated current fair value of the collateral. Losses on installment loans are recognized in accordance with regulatory guidelines. All other consumer loan losses are recognized when delinquency exceeds 120 cumulative days with the exception of the Consumer Program loans that are charged-off once they become 90 days past due.

​

26

Table of Contents

The following table presents loans that were evaluated for expected credit losses on an individual basis and the related specific allocations, by loan portfolio segment as of September 30, 2024 and December 31, 2023 (in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

September 30, 2024

    

December 31, 2023

​

​

Loan

​

Specific

​

Loan

​

Specific

​

​

Balance

​

Allocations

​

Balance

​

Allocations

Commercial real estate - owner occupied

​

$

6,300

​

$

526

​

$

5,404

​

$

—

Commercial real estate - non-owner occupied

​

 

28,771

​

 

2,246

​

 

—

​

 

—

Secured by farmland

​

​

403

​

​

—

​

​

480

​

​

—

Construction and land development

​

 

—

​

 

—

​

 

​

​

 

—

Residential 1-4 family

​

​

2,024

​

​

—

​

​

2,695

​

​

—

Multi- family residential

​

​

866

​

​

—

​

​

923

​

​

—

Home equity lines of credit

​

​

892

​

​

—

​

​

290

​

​

—

Commercial loans

​

 

1,934

​

 

600

​

 

2,930

​

 

581

Consumer loans

​

​

3,797

​

​

3,797

​

​

6,002

​

​

5,990

Total non-PCD loans

​

​

44,987

​

​

7,169

​

​

18,724

​

​

6,571

PCD loans

​

​

5,440

​

​

286

​

​

5,649

​

​

1,672

Total loans

​

$

50,427

​

$

7,455

​

$

24,373

​

$

8,243

​

​

The following table presents a breakdown between loans that were evaluated on an individual basis and identified as collateral dependent loans and non-collateral dependent loans, by loan portfolio segment and their collateral value as of September 30, 2024 and December 31, 2023 (in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

September 30, 2024

​

December 31, 2023

​

​

​

​

Non

​

​

​

Non

​

​

Collateral

​

Collateral

​

Collateral

​

Collateral

​

​

Dependent

​

Dependent

​

Dependent

​

Dependent

​

​

Assets (1)

​

Assets (1)

​

Assets (1)

​

Assets (1)

Commercial real estate - owner occupied

​

$

4,275

​

$

—

​

$

5,986

​

$

—

Commercial real estate - non-owner occupied

​

 

30,332

​

 

—

​

 

1,365

​

 

—

Secured by farmland

​

​

1,292

​

​

—

​

​

1,338

​

​

—

Construction and land development

​

 

—

​

 

—

​

 

65

​

 

—

Residential 1-4 family

​

​

2,866

​

​

—

​

​

3,512

​

​

—

Multi- family residential

​

​

867

​

​

—

​

​

925

​

​

—

Home equity lines of credit

​

​

891

​

​

—

​

​

289

​

​

—

Commercial loans

​

 

2,188

​

 

—

​

 

2,097

​

 

—

Consumer loans

​

​

—

​

​

—

​

​

—

​

​

393

Total loans

​

$

42,711

​

$

—

​

$

15,577

​

$

393

​

​

​

​

​

​

​

​

​

​

​

​

​

Collateral value

​

$

55,850

​

$

—

​

$

30,907

​

$

12

(1) loan balances are presented net of SBA guarantees

​

​

​

​

​

​

​

​

​

27

Table of Contents

4.      DERIVATIVES

Consumer Program Derivative

The Company has a derivative instrument in connection with its agreement with a third-party that originates loans  that are held on the Company’s balance sheet. The third-party provides credit support and reimbursement for lost interest under the agreement and the Company provides performance fees to the third-party on performing loans. Specifically, a portion of the originated loans are originated with a promotional period where interest accrues on the loans but is not owed to the Company unless and until the loan begins to amortize. If the borrower prepays the principal on the loan prior to the end of the promotional period the accrued interest is waived, but becomes due to the Company from the third-party under the agreement. This expected payment of waived interest to the Company along with performance fees due to the third-party comprise the value of the derivative. The fair value of the derivative instrument was an asset of $7.1 million and $10.8 million as of September 30, 2024 and December 31, 2023, respectively. The underlying cash flows were $7.8 million and $12.4 million as of September 30, 2024 and December 31, 2023, respectively. The Company calculates the fair value of this derivative using a discounted cash flow model using inputs that are inherently judgmental and reflect management’s best estimates of the assumptions a market participant would use to calculate the fair value. The most significant inputs and assumptions in determining the value of the derivative are noted below ($ in thousands).

​

​

​

​

​

​

​

​

​

​

​

​

​

September 30, 2024

​

​

​

​

​

​

Weighted

​

​

Low

​

High

​

Total

Remaining cumulative charge-offs

​

$

54,153

​

$

57,546

​

​

n/a

Remaining cumulative promotional prepayments

​

$

34,118

​

$

62,353

​

$

42,549

Average life (years)

​

​

n/a

​

 

n/a

​

​

0.6

Discount rate

​

​

4.04%

​

​

15.39%

​

​

15.39%

​

​

​

​

​

​

​

​

​

​

​

​

December 31, 2023

​

​

​

​

​

​

Weighted

​

​

Low

​

High

​

Average

Remaining cumulative charge-offs

​

$

25,661

​

$

35,334

​

​

n/a

Remaining cumulative promotional prepayments

​

$

41,085

​

$

75,086

​

$

49,716

Average life (years)

​

 

n/a

​

 

n/a

​

 

1.0

Discount rate

​

 

4.63%

​

 

14.64%

​

 

14.64%

​

Mortgage Banking Derivatives and Financial Instruments

The Company enters into IRLCs (“interest rate lock commitments”) to originate residential mortgage loans held for sale, at specified interest rates and within a specified period of time (generally between 30 and 90 days), with borrowers who have applied for a loan and have met certain credit and underwriting criteria. The IRLCs are adjusted for estimated costs to originate the loan as well as the probability that the mortgage loan will fund within the terms of the IRLC (the pullthrough rate). Estimated costs to originate include loan officer commissions and overrides. The pullthrough rate is estimated on changes in market conditions, loan stage, and actual borrower behavior using a historical analysis of IRLC closing rates. The Company obtains an analysis from a third party on a monthly basis to support the reasonableness of the pullthrough estimate.

Best efforts and mandatory forward loan sale commitments are commitments to sell individual mortgage loans using both best efforts and mandatory delivery at a fixed price to an investor at a future date. Forward loan sale commitments that are mandatory delivery are accounted for as derivatives and carried at fair value, determined as the amount that would be necessary to settle the derivative financial instrument at the balance sheet date. Forward loan sale commitments that are best efforts are not derivatives but can be and have been accounted for at fair value, determined in a similar manner to those that are mandatory delivery. Forward loan sale commitments are recorded on the balance sheet as derivative assets and derivative liabilities with changes in their fair values recorded in mortgage banking income in the statement of operations.

28

Table of Contents

The key unobservable inputs used in determining the fair value of IRLCs are as follows as of September 30, 2024 and December 31, 2023:

​

​

​

​

​

​

​

​

​

September 30, 2024

​

December 31, 2023

Average pullthrough rates

    

85.3

%

​

77.2

%

Average costs to originate

​

1.32

%

 

1.36

%

​

The following summarizes derivative and non-derivative financial instruments as of September 30, 2024 and December 31, 2023:

​

​

​

​

​

​

​

​

​

​

September 30, 2024

​

​

Fair

​

Notional

Derivative financial instruments:

​

Value

​

Amount

Derivative assets (1)

​

$

1,538

​

$

65,032

Derivative liabilities

​

$

—

​

$

—

(1) Pullthrough rate adjusted

​

​

​

​

​

​

​

​

September 30, 2024

​

​

Fair

​

Notional

Non-derivative financial instruments:

​

Value

​

Amount

Best efforts assets

​

$

145

​

$

12,355

​

​

​

​

​

​

​

​

​

December 31, 2023

​

​

Fair

​

Notional

Derivative financial instruments:

​

Value

​

Amount

Derivative assets (1)

​

$

611

​

$

23,077

Derivative liabilities

​

$

200

​

$

62,250

(1) Pullthrough rate adjusted

​

​

​

​

​

​

​

​

December 31, 2023

​

​

Fair

​

Notional

Non-derivative financial instruments:

​

Value

​

Amount

Best efforts assets

​

$

91

​

​

4,677

​

The notional amounts of mortgage loans held for sale not committed to investors was $45.3 million and $46.2 million as of September 30, 2024 and December 31, 2023, respectively.

​

The Company has exposure to credit loss in the event of contractual non-performance by its trading counterparties in derivative instruments that the Company uses in its rate risk management activities. The Company manages this credit risk by selecting only counterparties that the Company believes to be financially strong, spreading the risk among multiple counterparties, by placing contractual limits on the amount of unsecured credit extended to any single counterparty and by entering into netting agreements with counterparties, as appropriate.

5.      FAIR VALUE

ASC 820 establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data

29

Table of Contents

Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability

Assets and liabilities measured at fair value on a recurring basis are summarized below:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Fair Value Measurements Using

​

​

​

​

​

​

​

​

Significant

​

 

​

​

​

​

​

​

Quoted Prices in

​

Other

​

Significant

​

​

​

​

​

Active Markets for

​

Observable

​

Unobservable

​

​

Total at

​

Identical Assets

​

Inputs

​

Inputs

(dollars in thousands)

    

September 30, 2024

    

(Level 1)

    

(Level 2)

    

(Level 3)

Assets:

​

​

​

​

​

​

​

​

​

​

​

​

Available-for-sale securities

​

​

​

​

​

​

​

​

​

​

​

​

Residential government-sponsored mortgage-backed securities

​

$

92,280

​

$

—

​

$

92,280

​

$

—

Obligations of states and political subdivisions

​

 

30,568

​

 

—

​

 

30,568

​

 

—

Corporate securities

​

 

14,003

​

 

—

​

 

14,003

​

 

—

Residential government-sponsored collateralized mortgage obligations

​

 

56,833

​

 

—

​

 

56,833

​

 

—

Government-sponsored agency securities

​

 

14,276

​

 

—

​

 

14,276

​

 

—

Agency commercial mortgage-backed securities

​

 

26,953

​

 

—

​

 

26,953

​

 

—

SBA pool securities

​

 

7,630

​

 

—

​

 

7,630

​

 

—

​

 

​

242,543

 

​

—

 

​

242,543

 

​

—

Loans held for investment

​

​

250,525

​

​

—

​

​

250,525

​

​

—

Loans held for sale

​

​

96,897

​

 

—

​

 

96,897

​

 

—

Consumer Program derivative

​

​

7,146

​

​

—

​

​

—

​

​

7,146

Mortgage banking financial assets

​

​

145

​

 

—

​

 

—

​

 

145

Mortgage banking derivative assets

​

​

1,538

​

 

—

​

 

—

​

​

1,538

Total assets

​

$

598,794

​

$

—

​

$

589,965

​

$

8,829

​

​

​

​

​

​

​

​

​

​

​

​

​

​

30

Table of Contents

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Fair Value Measurements Using

​

​

​

​

​

​

​

​

Significant

​

 

​

​

​

​

​

​

Quoted Prices in

​

Other

​

Significant

​

​

​

​

​

Active Markets for

​

Observable

​

Unobservable

​

​

Total at

​

Identical Assets

​

Inputs

​

Inputs

(dollars in thousands)

    

December 31, 2023

    

(Level 1)

    

(Level 2)

    

(Level 3)

Assets:

​

​

​

​

​

​

​

​

​

​

​

​

Available-for-sale securities

 

​

  

 

​

  

 

​

  

 

​

  

Residential government-sponsored mortgage-backed securities

​

$

96,808

​

$

—

​

$

96,808

​

$

—

Obligations of states and political subdivisions

​

 

30,080

​

 

—

​

 

30,080

​

 

—

Corporate securities

​

 

14,048

​

 

—

​

 

14,048

​

 

—

Collateralized loan obligations

​

 

4,982

​

 

—

​

 

4,982

​

 

—

Residential government-sponsored collateralized mortgage obligations

​

 

34,471

​

 

—

​

 

34,471

​

 

—

Government-sponsored agency securities

​

 

13,711

​

 

—

​

 

13,711

​

 

—

Agency commercial mortgage-backed securities

​

 

30,110

​

 

—

​

 

30,110

​

 

—

SBA pool securities

​

 

4,210

​

 

—

​

 

4,210

​

 

—

​

​

​

228,420

 

​

—

 

​

228,420

 

​

—

Loans held for investment

​

​

248,906

​

​

—

​

​

248,906

​

​

—

Loans held for sale

​

​

57,691

​

 

—

​

 

57,691

​

 

—

Consumer Program derivative

​

​

10,806

​

​

—

​

​

—

​

​

10,806

Mortgage banking financial assets

​

​

91

​

 

—

​

 

—

​

 

91

Mortgage banking derivative assets

​

​

611

​

 

—

​

 

—

​

​

611

Interest rate swaps

​

​

1,068

​

​

—

​

​

1,068

​

​

—

Total assets

​

$

547,593

​

$

—

​

$

536,085

​

$

11,508

​

​

​

​

​

​

​

​

​

​

​

​

​

Liabilities:

​

​

​

​

​

​

​

​

​

​

​

​

Mortgage banking derivative liabilities

​

$

200

​

​

—

​

$

—

​

$

200

Total liabilities

​

$

200

​

$

—

​

$

—

​

$

200

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Assets measured at fair value on a non-recurring basis are summarized below:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Fair Value Measurements Using

​

​

​

​

​

​

​

​

Significant

​

​

 

​

​

​

​

​

Quoted Prices in

​

Other

​

Significant

​

​

​

​

​

Active Markets for

​

Observable

​

Unobservable

​

​

Total at

​

Identical Assets

​

Inputs

​

Inputs

(dollars in thousands)

    

September 30, 2024

    

(Level 1)

    

(Level 2)

    

(Level 3)

Collateral dependent loans

​

$

42,711

​

$

—

​

$

—

 

$

42,711

Assets held for sale

​

​

9,864

​

​

—

​

​

—

​

​

9,864

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Fair Value Measurements Using

​

​

​

​

​

​

​

​

Significant

​

​

​

​

​

​

​

​

Quoted Prices in

​

Other

​

Significant

​

​

​

​

​

Active Markets for

​

Observable

​

Unobservable

​

​

Total at

​

Identical Assets

​

Inputs

​

Inputs

(dollars in thousands)

    

December 31, 2023

    

(Level 1)

    

(Level 2)

    

(Level 3)

Collateral dependent loans

​

$

15,577

​

$

—

​

$

—

 

$

15,577

Assets held for sale

​

​

6,735

​

​

—

​

​

—

​

​

6,735

​

31

Table of Contents

​

Fair Value of Financial Instruments

The carrying amount, estimated fair values and fair value hierarchy levels of financial instruments were as follows (in thousands) for the periods indicated:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

September 30, 2024

​

December 31, 2023

​

    

Fair Value

    

Carrying

    

Fair 

    

Carrying

    

Fair 

​

​

Hierarchy Level

​

Amount

​

Value

​

Amount

​

Value

Financial assets:

 

  

 

​

  

 

​

  

 

​

  

 

​

  

Cash and cash equivalents

 

Level 1

​

$

77,274

​

$

77,274

​

$

77,553

​

$

77,553

Securities available-for-sale

 

Level 2

​

 

242,543

​

 

242,543

​

 

228,420

​

 

228,420

Securities held-to-maturity

 

Level 2

​

 

9,766

​

 

9,162

​

 

11,650

​

 

10,839

Stock in Federal Reserve Bank and Federal Home Loan Bank

 

Level 2

​

 

20,875

​

 

20,875

​

 

14,246

​

 

14,246

Preferred investment in mortgage company

 

Level 2

​

 

3,005

​

​

3,005

​

 

3,005

​

​

3,005

Net loans

 

Level 2 and 3

​

 

2,922,591

​

 

2,786,734

​

 

3,167,205

​

 

3,068,663

Loans held for sale

 

Level 2

​

 

96,897

​

​

96,897

​

 

57,691

​

​

57,691

Loans held for sale, at lower of cost or market

​

Level 3

​

​

361,825

​

​

361,825

​

​

—

​

​

—

Consumer Program derivative

​

Level 3

​

​

7,146

​

​

7,146

​

​

10,806

​

​

10,806

Mortgage banking financial assets

​

Level 3

​

​

145

​

​

145

​

​

91

​

​

91

Mortgage banking derivative assets

 

Level 3

​

 

1,538

​

 

1,538

​

 

611

​

 

611

Interest rate swaps, net

​

Level 2

​

​

—

​

​

—

​

​

1,068

​

​

1,068

Financial liabilities:

 

  

​

 

​

​

 

​

​

 

​

​

 

​

Demand deposits and NOW accounts

 

Level 2

​

$

1,170,064

​

$

1,170,064

​

$

1,245,969

​

$

1,245,969

Money market and savings accounts

 

Level 2

​

 

1,708,909

​

 

1,708,909

​

 

1,578,288

​

 

1,578,288

Time deposits

 

Level 3

​

 

427,458

​

 

427,112

​

 

445,898

​

 

443,765

Securities sold under agreements to repurchase

 

Level 1

​

 

3,677

​

 

3,677

​

 

3,044

​

 

3,044

FHLB advances

 

Level 1

​

 

165,000

​

 

165,000

​

 

30,000

​

 

30,000

Junior subordinated debt

 

Level 2

​

 

9,867

​

 

8,943

​

 

9,830

​

 

9,039

Senior subordinated notes

 

Level 2

​

 

85,941

​

 

85,701

​

 

85,765

​

 

84,513

Secured borrowings

​

Level 3

​

​

17,495

​

​

17,495

​

​

20,393

​

​

20,393

Mortgage banking derivative liabilities

​

Level 3

​

​

—

​

​

—

​

​

200

​

​

200

Interest rate swaps, net

 

Level 2

​

 

565

​

 

565

​

 

—

​

 

—

​

Carrying amount is the estimated fair value for cash and cash equivalents, loans held for sale, mortgage banking financial assets and liabilities, mortgage banking derivative assets and liabilities, Consumer Program derivative, interest rate swaps, demand deposits, savings accounts, money market accounts, FHLB advances, secured borrowings and securities sold under agreements to repurchase.  

Fair value of junior subordinated debt and senior subordinated notes are based on current rates for similar financing. Carrying amount of Federal Reserve Bank and FHLB stock is a reasonable estimate of fair value as these securities are not readily marketable and are based on the ultimate recoverability of the par value. The fair value of off-balance-sheet items is not considered material. Fair value of net loans, time deposits, junior subordinated debt, and senior subordinated notes are measured using the exit-price notion. The net loans that use level 2 inputs are related to the portfolio of loans underlying our interest rate swaps as previously discussed in “Note 1 – Accounting Policies”.

​

32

Table of Contents

​

6.      LEASES

The Company leases certain premises under operating leases. In recognizing lease right-of-use assets and related liabilities, we account for lease and non-lease components (such as taxes, insurance, and common area maintenance costs) separately as such amounts are generally readily determinable under our lease contracts. As of September 30, 2024 and December 31, 2023, the Company had operating lease liabilities totaling $11.7 million and $11.7 million, respectively, and right-of-use assets totaling $10.5 million and $10.6 million, respectively, reflected in our condensed consolidated balance sheets related to these leases. We do not currently have any financing leases. For the three months ended September 30, 2024 and 2023, our net operating lease costs were $0.5 million and $0.7 million, respectively, and for the nine months ended September 30, 2024 and 2023, our net operating lease costs were $1.6 million and $1.9 million, respectively. These net operating lease costs are reflected in occupancy expenses on our condensed consolidated statements of income (loss) and comprehensive income (loss).

The following table presents other information related to our operating leases:

​

​

​

​

​

​

​

​

​

​

​

​

For the Nine Months Ended

​

​

​

September 30, 2024

​

​

September 30, 2023

​

Other information:

​

​

​

​

​

​

​

​

Weighted-average remaining lease term - operating leases, in years

​

​

6.6

​

​

​

7.2

​

Weighted-average discount rate - operating leases

​

 

4.0

%

​

 

3.9

%

​

The following table summarizes the maturity of remaining lease liabilities:

​

​

​

​

​

​

​

​

​

​

​

As of

(dollars in thousands)

​

September 30, 2024

Lease payments due:

​

​

​

2024

​

$

489

2025

​

​

2,191

2026

​

​

2,183

2027

​

​

2,173

2028

​

​

2,104

Thereafter

​

 

4,275

Total lease payments

​

​

13,415

Less: imputed interest

​

​

(1,711)

Lease liabilities

​

$

11,704

​

     As of September 30, 2024, the Company did not have any operating lease that has not yet commenced that will create additional lease liabilities and right-of-use assets for the Company.

​

7.     DEBT AND OTHER BORROWINGS

Other borrowings can consist of FHLB convertible advances, FHLB of Atlanta overnight advances, FHLB advances maturing within one year, federal funds purchased, Federal Reserve Board Discount Window, secured borrowings and securities sold under agreements to repurchase (“repo”) that mature within one year, which are secured transactions with customers. The balance in repo accounts as of September 30, 2024 and December 31, 2023 was $3.7 million and $3.0 million, respectively.

33

Table of Contents

As of September 30, 2024 and December 31, 2023, we had pledged callable agency securities, residential government-sponsored mortgage-backed securities and collateralized mortgage obligations with a carrying value of $7.0 million and $6.8 million, respectively, to customers who require collateral for overnight repurchase agreements and deposits.

As of September 30, 2024, Primis Bank had lendable collateral value in the form of residential 1-4 family mortgages, HELOCs, commercial mortgage loans, and investment securities supporting borrowing capacity of approximately $565.9 million from the FHLB, of which the Company has used $165.0 million.

In June 2023, the Bank began participating in the Federal Reserve discount window borrowing program. As of September 30, 2024, the Bank had borrowing capacity of $752.0 million within the program and has not borrowed under the program.

In 2017, the Company assumed $10.3 million of trust preferred securities that were issued on September 17, 2003 and placed through a trust in a pooled underwriting totaling approximately $650 million. As of September 30, 2024 and December 31, 2023, there was $10.3 million outstanding, net of approximately $0.4 million and $0.5 million of debt issuance costs as of September 30, 2024 and December 31, 2023, respectively. As of September 30, 2024 and December 31, 2023, the interest rate payable on the trust preferred securities was 8.55% and 8.59%, respectively. As of September 30, 2024, all of the trust preferred securities qualified as Tier 1 capital.

On January 20, 2017, Primis completed the sale of $27.0 million of its fixed-to-floating rate senior Subordinated Notes due 2027. Interest is currently payable at an annual floating rate equal to three-month CME Term SOFR plus a tenor spread adjustment of 0.26% until maturity or early redemption. As of September 30, 2024, 40% of these Notes qualified as Tier 2 capital.

On August 25, 2020, Primis completed the sale of $60.0 million of its fixed-to-floating rate Subordinated Notes due 2030. Interest is payable at an initial annual fixed rate of 5.40% and after September 1, 2025, at a floating rate equal to a benchmark rate, which is expected to be Three-Month Term SOFR, plus a spread of 531 basis points. As of September 30, 2024, all of these notes qualified as Tier 2 capital.

​

As of September 30, 2024 and December 31, 2023, the remaining unamortized debt issuance costs related to the senior Subordinated Notes totaled $1.1 million and $1.2 million, respectively.

​

Secured Borrowings

The Company transferred $23.4 million in principal balance of loans to another financial institution in 2023 that were accounted for as secured borrowings and transferred another $1.1 million under the same agreement during the three months ended March 31, 2024. The balance of secured borrowings was $17.5 million and $20.4 million as of September 30, 2024 and December 31, 2023, respectively, and the remaining amortized cost balance of the underlying loans was $17.6 million and $20.5 million, respectively. None of the loans underlying the secured borrowings were past due 30 days or greater or on nonaccrual as of September 30, 2024 and December 31, 2023 and were all internally rated as “pass” loans as presented in our “credit quality indicators” section of “Note 3 – Loans and Allowance for Credit Losses”. The loans were included in our allowance for credit losses process and an allowance was calculated on the loans as part of their inclusion in a pool with other loans with similar credit risk characteristics. There were no charge-offs of the loans underlying the secured borrowings during the three or nine months ended September 30, 2024. The underlying loans collateralize the borrowings and cannot be sold or pledged by the Company. 

​

8.      STOCK-BASED COMPENSATION

The 2017 Equity Compensation Plan (the “2017 Plan”) has a maximum number of 750,000 shares reserved for issuance. The purpose of the 2017 Plan is to promote the success of the Company by providing greater incentives to employees, non-employee directors, consultants and advisors to associate their personal financial interests with the long-term financial success of the Company, including its subsidiaries, and with growth in stockholder value, consistent with the Company’s risk management practices.

34

Table of Contents

A summary of stock option activity for the nine months ended September 30, 2024 follows:

​

​

​

​

​

​

​

​

​

​

​

​

​

    

​

    

​

​

    

Weighted

    

 

​

​

​

​

​

Weighted

​

Average 

​

Aggregate

​

​

​

​

Average

​

Remaining

​

Intrinsic

​

​

​

​

Exercise

​

Contractual

​

Value

​

​

Shares

​

Price

​

Term

​

(in thousands)

Options outstanding, beginning of period

 

54,800

​

$

11.49

 

1.7

​

$

64

Exercised

 

(19,000)

​

​

​

​

​

​

​

​

Options outstanding, end of period

 

35,800

​

$

11.73

​

1.2

​

​

16

​

​

​

​

​

​

​

​

​

​

​

Exercisable at end of period

 

35,800

​

​

11.73

​

1.2

​

​

16

​

There was no stock-based compensation expense associated with stock options for the three and nine months ended September 30, 2024 and 2023. As of September 30, 2024, we do not have any unrecognized compensation expense associated with the stock options.

A summary of time vested restricted stock awards for the nine months ended September 30, 2024 follows:

​

​

​

​

​

​

​

​

​

​

    

​

    

Weighted

    

Weighted

    

​

​

​

​

Average

​

Average 

​

​

​

​

​

Grant-Date

​

Remaining

​

​

​

​

​

Fair Value

​

Contractual

​

​

​

Shares

​

Per Share

​

Term

​

Unvested restricted stock outstanding, beginning of period

 

40,300

​

$

13.59

​

2.3

 

Vested

 

(16,800)

​

​

14.70

 

  

 

Forfeited

 

(1,000)

​

​

9.79

 

​

 

Unvested restricted stock outstanding, end of period

 

22,500

​

$

12.93

 

2.2

​

​

Stock-based compensation expense for time vested restricted stock awards totaled $0.1 million for both the three months ended September 30, 2024 and 2023 and $0.3 million and $0.2 million for the nine months ended September 30, 2024 and 2023, respectively. As of September 30, 2024, unrecognized compensation expense associated with restricted stock awards was $0.2 million, which is expected to be recognized over a weighted average period of 2.2 years.

A summary of performance-based restricted stock units (the “Units”) for the nine months ended September 30, 2024 follows:

​

​

​

​

​

​

​

​

​

    

​

    

​

Weighted

    

Weighted

​

​

​

​

​

Average

​

Average 

​

​

​

​

​

Grant-Date

​

Remaining

​

​

​

​

​

Fair Value

​

Contractual

​

​

Shares

​

​

Per Share

​

Term

Unvested Units outstanding, beginning of period

 

244,710

​

$

11.77

 

3.1

Vested

 

(11,916)

​

​

12.24

 

  

Forfeited

 

(9,334)

​

​

10.67

 

​

Unvested Units outstanding, end of period

 

223,460

​

​

11.81

​

2.3

​

35

Table of Contents

These Units are subject to service and performance conditions. These Units vest based on the achievement of both conditions. Achievement of the performance condition will be determined at the end of the five-year performance period (the “Performance Period”) by evaluating the: 1) Company’s adjusted earnings per share compound annual growth measured for the Performance Period and 2) performance factor achieved. Payouts between performance levels will be determined based on straight line interpolation.

The Company recognized no stock-based compensation expense during the three and nine months ended September 30, 2024 and 2023 as a result of the probability of a portion of the Units vesting because it is not probable that these Units will vest. The potential unrecognized compensation expense associated with these Units was $4.2 million and $4.4 million as of September 30, 2024 and December 31, 2023, respectively.

​

9.     COMMITMENTS AND CONTINGENCIES

Financial Instruments with Off-Balance Sheet Risk

Primis is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit, standby letters of credit and guarantees of credit card accounts. These instruments involve elements of credit and funding risk in excess of the amount recognized in the consolidated balance sheets. Letters of credit are written conditional commitments issued by Primis to guarantee the performance of a customer to a third party. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers. The Company had letters of credit outstanding totaling $9.8 million and $9.6 million as of September 30, 2024 and December 31, 2023, respectively.

Our exposure to credit loss in the event of nonperformance by the other party to the financial instruments for commitments to extend credit and letters of credit is based on the contractual amount of these instruments. We use the same credit policies in making commitments and conditional obligations as we do for on-balance sheet instruments. Unless noted otherwise, we do not require collateral or other security to support financial instruments with credit risk.

Allowance For Credit Losses - Off-Balance-Sheet Credit Exposures

The allowance for credit losses on off-balance sheet credit exposures is a liability account, calculated in accordance with ASC 326, representing expected credit losses over the contractual period for which we are exposed to credit risk resulting from a contractual obligation to extend credit. No allowance is recognized if we have the unconditional right to cancel the obligation. Off-balance sheet credit exposures primarily consist of amounts available under outstanding lines of credit and letters of credit detailed above. For the period of exposure, the estimate of expected credit losses considers both the likelihood that funding will occur and the amount expected to be funded over the estimated remaining life of the commitment or other off-balance sheet exposure. The likelihood and expected amount of funding are based on historical utilization rates. The amount of the allowance represents management's best estimate of expected credit losses on commitments expected to be funded over the contractual life of the commitment. Estimating credit losses on amounts expected to be funded uses the same methodology as described for loans in “Note 3 - Loans and Allowance for Credit Losses”, as if such commitments were funded. The allowance for credit losses on off-balance-sheet credit exposures is reflected in other liabilities in our consolidated balance sheets.

The following table details activity in the allowance for credit losses on off-balance-sheet credit exposures:

​

​

​

​

​

​

​

​

​

    

2024

    

2023

​

​

​

​

​

​

Balance as of January 1

​

$

1,579

​

$

1,416

Credit loss expense

​

 

(452)

​

 

(391)

Balance as of September 30

​

$

1,127

​

$

1,025

​

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Commitments

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments are made predominately for adjustable rate loans, and generally have fixed expiration dates of up to three months or other termination clauses and usually require payment of a fee. Since many of the commitments may expire without being completely drawn upon, the total commitment amounts do not necessarily represent future cash requirements. We evaluate each customer’s creditworthiness on a case-by-case basis.

We had $121.6 million of loan commitments outstanding as of September 30, 2024, all of which contractually expire within thirty years.

As of September 30, 2024 and December 31, 2023, we had unfunded lines of credit and undisbursed construction loan funds totaling $397.7 million and $473.1 million, respectively, not all of which will ultimately be drawn. Almost all of our unfunded lines of credit and undisbursed construction loan funds are variable rate. The amount of certificate of deposit accounts maturing in less than one year was $380.6 million as of September 30, 2024, including $75.0 million of brokered CDs. Management anticipates that funding requirements for these commitments can be met in the normal course of business.

Primis also had commitments on the subscription agreements entered into for investments in non-marketable equity securities of $1.0 million and $1.6 million as of September 30, 2024 and December 31, 2023, respectively.

​

10.      EARNINGS PER SHARE

The following is a reconciliation of the denominators of the basic and diluted earnings per share (“EPS”) computations (amounts in thousands, except per share data):

​

​

​

​

​

​

​

​

​

​

    

​

​

    

Weighted

    

 

​

​

​

​

​

​

Average

​

 

​

​

​

Income 

​

Shares

​

Per Share

​

​

(Numerator)

​

(Denominator)

​

Amount

For the three months ended September 30, 2024

​

​

​

​

​

​

​

​

Basic EPS

​

$

1,228

 

24,696

​

$

0.05

Effect of dilutive stock options and unvested restricted stock

​

 

—

 

24

​

 

—

Diluted EPS

​

$

1,228

 

24,720

​

$

0.05

​

​

​

​

​

​

​

​

​

For the three months ended September 30, 2023

​

​

​

​

​

​

​

​

Basic EPS

​

$

(6,029)

 

24,642

​

$

(0.24)

Effect of dilutive stock options and unvested restricted stock

​

 

—

 

—

​

 

—

Diluted EPS

​

$

(6,029)

 

24,642

​

$

(0.24)

​

​

​

​

​

​

​

​

​

For the nine months ended September 30, 2024

​

 

  

 

  

​

 

  

Basic EPS

​

$

7,130

 

24,684

​

$

0.29

Effect of dilutive stock options and unvested restricted stock

​

 

—

 

26

​

 

—

Diluted EPS

​

$

7,130

 

24,710

​

$

0.29

​

​

​

​

​

​

​

​

​

For the nine months ended September 30, 2023

​

 

  

 

  

​

 

  

Basic EPS

​

$

339

​

24,636

​

$

0.01

Effect of dilutive stock options and unvested restricted stock

​

​

—

​

—

​

​

—

Diluted EPS

​

$

339

​

24,636

​

$

0.01

​

​

​

​

​

​

​

​

​

​

The Company had 19,000 anti-dilutive options as of September 30, 2024 and 114,650 anti-dilutive options as of September 30, 2023.

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Table of Contents

​

​

​

​

11.         SEGMENT INFORMATION

The Company's management reporting process measures the performance of its operating segment based on internal operating structure, which is subject to change from time to time. As of September 30, 2024, the Company operates two reportable segments for management reporting purposes as discussed below:

Primis Bank. This segment specializes in providing financing services to businesses in various industries and deposit-related services to businesses, consumers and other customers. The primary source of revenue for this segment is net interest income from the origination of loans.

Primis Mortgage. This segment specializes in originating mortgages in a majority of the U.S. The primary source of revenue for this segment is noninterest income and the origination and sale of mortgage loans.

The following table provides financial information for the Company's reportable segments. The information provided under the caption “Primis Bank” includes operations not considered to be reportable segments and/or general operating expenses of the Company, and includes the parent company (which includes PFH) and elimination adjustments to reconcile the results of the operating segment to the consolidated financial statements prepared in conformity with GAAP.

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

As of and for the three months ended September 30, 2024

​

As of and for the nine months ended September 30, 2024

​

    

Primis Mortgage

    

Primis Bank

    

Consolidated

    

Primis Mortgage

    

Primis Bank

    

Consolidated Company

($ in thousands)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Interest income

​

$

1,589

​

$

55,523

​

$

57,112

​

$

4,018

​

$

155,638

​

$

159,656

Interest expense

​

 

—

​

 

29,089

​

 

29,089

​

 

—

​

 

81,511

​

 

81,511

Net interest income

​

 

1,589

​

 

26,434

​

 

28,023

​

 

4,018

​

 

74,127

​

 

78,145

Provision for credit losses

​

 

—

​

​

7,511

​

​

7,511

​

 

—

​

 

17,138

​

 

17,138

Noninterest income

​

 

7,018

​

​

2,264

​

​

9,282

​

 

19,176

​

​

11,265

​

​

30,441

Noninterest expense

​

 

6,436

​

​

24,519

​

​

30,955

​

 

17,642

​

​

70,637

​

​

88,279

Income before income taxes

​

 

2,171

​

 

(3,332)

​

 

(1,161)

​

 

5,552

​

 

(2,383)

​

 

3,169

Income tax expense

​

 

519

​

​

(823)

​

​

(304)

​

 

1,330

​

​

349

​

​

1,679

Net income (loss)

​

$

1,652

​

$

(2,509)

​

$

(857)

​

$

4,222

​

$

(2,732)

​

$

1,490

Total assets

​

$

110,902

​

$

3,913,445

​

$

4,024,347

​

$

110,902

​

$

3,913,445

​

$

4,024,347

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

As of and for the three months ended September 30, 2023

​

As of and for the nine months ended September 30, 2023

​

    

Primis Mortgage

    

Primis Bank

    

Consolidated

    

Primis Mortgage

    

Primis Bank

    

Consolidated Company

($ in thousands)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Interest income

​

$

873

​

$

47,154

​

$

48,027

​

$

1,971

​

$

140,514

​

$

142,485

Interest expense

​

​

—

​

​

23,697

​

​

23,697

​

​

—

​

​

69,499

​

​

69,499

Net interest income

​

​

873

​

​

23,457

​

​

24,330

​

​

1,971

​

​

71,015

​

​

72,986

Provision for credit losses

​

​

—

​

​

1,616

​

​

1,616

​

​

—

​

​

11,231

​

​

11,231

Noninterest income

​

​

4,932

​

​

4,792

​

​

9,724

​

​

14,463

​

​

21,867

​

​

36,330

Noninterest expense

​

​

5,108

​

​

31,840

​

​

36,948

​

​

15,366

​

​

78,975

​

​

94,341

Income (loss) before income taxes

​

​

697

​

​

(5,207)

​

​

(4,510)

​

​

1,068

​

​

2,676

​

​

3,744

Income tax expense (benefit)

​

​

174

​

​

1,345

​

​

1,519

​

​

270

​

​

3,135

​

​

3,405

Net income (loss)

​

$

523

​

$

(6,552)

​

$

(6,029)

​

$

798

​

$

(459)

​

$

339

Total assets

​

$

66,384

​

$

3,772,475

​

$

3,838,859

​

$

66,384

​

$

3,772,475

​

$

3,838,859

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

38

Table of Contents

ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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;

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Table of Contents

● 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;

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Table of Contents

● 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 ECONOMICENVIRONMENT

​

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.

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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.

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Table of Contents

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.  

​

43

Table of Contents

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:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Average Balance Sheets and Net Interest Margin

​

​

​

Analysis For the Three Months Ended

​

​

​

September 30, 2024

​

September 30, 2023

​

​

​

​

​

​

Interest

​

​

​

​

​

​

Interest

​

​

​

​

​

Average

​

Income/

​

Yield/

​

Average

​

Income/

​

Yield/

​

​

    

Balance

    

Expense

    

Rate

    

Balance

    

Expense

    

Rate

    

​

​

(Dollar amounts in thousands)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Assets

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Interest-earning assets:

​

​

  

​

​

​

​

  

​

​

  

​

​

  

​

​

​

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.

44

Table of Contents

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:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Average Balance Sheets and Net Interest Margin

​

​

Analysis For the Nine Months Ended

​

​

September 30, 2024

​

September 30, 2023

​

​

​

​

​

​

Interest

​

​

​

​

​

​

Interest

​

​

​

​

​

Average

​

Income/

​

Yield/

​

Average

​

Income/

​

Yield/

​

​

    

Balance

    

Expense

    

Rate

    

Balance

    

Expense

    

Rate

    

​

​

(Dollar amounts in thousands)

Assets

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Interest-earning assets:

​

​

  

​

​

  

​

  

​

​

  

​

​

​

​

  

​

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.

45

Table of Contents

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.

​

46

Table of Contents

Noninterest Income

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

​

​

​

​

​

​

​

​

​

​

​

​

For the Three Months Ended

​

​

September 30, 

(dollars in thousands)

    

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:

​

​

​

​

​

​

​

​

​

​

​

​

For the Nine Months Ended

​

​

September 30, 

(dollars in thousands)

    

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.

47

Table of Contents

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:

​

​

​

​

​

​

​

​

​

​

​

​

For the Three Months Ended

​

​

September 30, 

(dollars in thousands)

    

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.  

​

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Table of Contents

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

​

​

​

​

​

​

​

​

​

​

​

​

For the Nine Months Ended

​

​

September 30, 

(dollars in thousands)

    

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.

​

​

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Table of Contents

FINANCIAL CONDITION

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

​

​

​

​

​

​

​

​

​

​

​

    

September 30, 

    

December 31, 

    

​

​

​

​

2024

​

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.  

​

​

50

Table of Contents

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

​

​

​

​

​

​

​

​

​

​

​

​

​

​

September 30, 2024

​

December 31, 2023

​

​

    

Amount

    

Percent

    

Amount

    

Percent

    

Loans secured by real estate:

 

​

  

 

  

 

​

  

 

  

 

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):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

After 1 Year

​

After 5 Years

​

​

​

​

​

​

​

​

 

​

​

​

​

​

Through 5 Years

​

Through 15 Years

​

After 15 Years

​

​

 

​

​

One Year

​

Fixed

​

Floating

​

Fixed

​

Floating

​

Fixed

​

Floating

​

​

 

​

    

or Less

    

Rate

    

Rate

    

Rate

    

Rate

    

Rate

    

Rate

    

Total

Loans secured by real estate:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

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

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Table of Contents

​

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

​

Amount ending

​

​

​

​

No Interest

​

No Interest

​

Total Interest

​

​

Promo Period in

​

Promo Period in

​

Promo

​

​

next 12 months

​

next 13-24 months

​

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, 

​

December 31, 

​

​

​

2024

    

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.

52

Table of Contents

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).

​

​

​

​

​

​

​

​

​

September 30, 

​

December 31, 

​

    

2024

    

2023

Available-for-sale investment securities:

 

​

  

 

​

  

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.

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Table of Contents

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.

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Table of Contents

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.

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Table of Contents

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:

​

​

​

​

​

​

​

​

​

​

​

​

Minimum

​

​

​

​

​

​

 

​

​

Required for

​

​

​

​

​

​

 

​

​

Capital

​

To Be

​

Actual Ratio at

 

​

​

Adequacy

​

 Categorized as

​

September 30, 

​

December 31, 

​

​

    

Purposes

    

 Well Capitalized (1)

    

2024

    

2023

 

Primis Financial Corp.

 

  

 

  

 

​

 

  

​

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.

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Table of Contents

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.

ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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.

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Table of Contents

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Sensitivity of EVE

 

​

​

As of September 30, 2024

 

​

​

EVE

​

EVE as a % of

 

Change in Interest Rates

​

​

​

​

$ Change

​

% Change

​

Total

​

Equity

 

in Basis Points (Rate Shock)

    

Amount

    

From Base

    

From Base

    

Assets

    

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

%

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Sensitivity of EVE

 

​

​

As of December 31, 2023

 

​

​

EVE

​

EVE as a % of

 

Change in Interest Rates

​

​

​

​

$ Change

​

% Change

​

Total

​

Equity

 

in Basis Points (Rate Shock)

    

Amount

    

From Base

    

From Base

    

Assets

    

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.

​

​

​

​

​

​

​

​

​

Sensitivity of NII

​

​

As of September 30, 2024

​

​

Adjusted NII

Change in Interest Rates

​

​

​

​

$ Change

in Basis Points (Rate Shock)

    

Amount

    

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

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Table of Contents

​

​

​

​

​

​

​

​

​

​

Sensitivity of NII

​

​

As of December 31, 2023

​

​

Adjusted NII

Change in Interest Rates

​

​

​

​

$ Change

in Basis Points (Rate Shock)

    

Amount

    

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.

ITEM 4 – CONTROLS AND PROCEDURES

(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.

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Table of Contents

The Company anticipates the material weaknesses to be fully remediated as soon as possible.

PART II - OTHER INFORMATION

ITEM 1 – LEGAL PROCEEDINGS

Primis and Primis Bank are from time to time a party, as both plaintiff and defendant, to various claims and proceedings arising in the ordinary course of the Bank’s business, including administrative and/or legal proceedings that may include employment-related claims, as well as claims of lender liability, breach of contract, and other similar lending-related claims. While the ultimate resolution of these matters cannot be determined at this time, the Bank’s management presently believes that such matters, individually and in the aggregate, will not have a material adverse effect on the Bank’s financial condition or results of operations. There are no proceedings pending, or to management’s knowledge, threatened, that represent a significant risk against Primis or Primis Bank as of September 30, 2024.

ITEM 1A – RISK FACTORS

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.

ITEM 2 – UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES

Not applicable.

ITEM 3 – DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4 – MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5 – OTHER INFORMATION

Pursuant to Item 408(a) of Regulation S-K, none of the Company's directors or executive officers adopted, terminated or modified a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the three and nine months ended September 30, 2024.

​

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Table of Contents

ITEM 6 - EXHIBITS

(a) Exhibits.

​

​

​

Exhibit No.

    

Description

​

​

​

3.1

​

Articles of Incorporation (incorporated herein by reference to Exhibit 3.1 to Primis Financial Corp.’s (formerly Southern National’s) Registration Statement on Form S-1 (Registration No. 333-136285) filed August 4, 2006)

​

​

​

3.2

​

Certificate of Amendment to the Articles of Incorporation dated January 31, 2005 (incorporated herein by reference to Exhibit 3.2 to Primis Financial Corp.’s (formerly Southern National’s) Registration Statement on Form S-1 (Registration No. 333-136285) filed on August 4, 2006)

​

​

​

3.3

​

Certificate of Amendment to the Articles of Incorporation dated April 13, 2006 (incorporated herein by reference to Exhibit 3.3 to Primis Financial Corp.’s (formerly Southern National’s) Registration Statement on Form S-1 (Registration No. 333-136285) filed on August 4, 2006)

​

​

​

3.4

​

Articles of Amendment to the Articles of Incorporation dated June 30, 2021 (incorporated herein by reference to Exhibit 3.1 to Primis Financial Corp.’s Current Report on Form 8-K filed on June 30, 2021)

​

​

​

3.5

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Amended and Restated Bylaws (incorporated herein by reference to Exhibit 3.2 to Primis Financial Corp.’s Current Report on Form 8-K filed on June 30, 2021)

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31.1*

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Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

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31.2*

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Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

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32.1**

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Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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61

Table of Contents

101

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The following materials from Primis Financial Corp. Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, formatted in Inline XBRL (Extensible Business Reporting Language), filed herewith: (i) Consolidated Balance Sheets (unaudited), (ii) Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) (unaudited), (iii) Consolidated Statement of Changes in Stockholders’ Equity (unaudited), (iv) Consolidated Statements of Cash Flows (unaudited), and (v) Notes to Consolidated Financial Statements (unaudited).

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104

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The cover Page Interactive Data File (the cover page XBRL tags are embedded in the Inline XBRL document).

+     Management contract or compensatory plan or arrangement

*      Filed with this Quarterly Report on Form 10-Q

** Furnished with this Quarterly Report on Form 10-Q Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

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62

Table of Contents

Signatures

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Primis Financial Corp.

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(Registrant)

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December 11, 2024

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/s/ Dennis J. Zember, Jr.

(Date)

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Dennis J. Zember, Jr.

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President and Chief Executive Officer

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December 11, 2024

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/s/ Matthew Switzer

(Date)

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Matthew Switzer

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Executive Vice President and Chief Financial Officer

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63

EX-31.1 2 frst-20240930xex31d1.htm EX-31.1

Exhibit 31.1

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CERTIFICATIONS

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I, Dennis J. Zember, Jr., certify that:

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1.  I have reviewed this report on Form 10-Q of Primis Financial Corp.;

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2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

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3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

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4.  The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

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a)

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

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b)

designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

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c)

evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures,  as of the end of the period covered by this report based on such evaluation; and

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d)

disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

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5.  The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

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a)

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

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b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

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Date: December 11, 2024

    

/s/ Dennis J. Zember

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Dennis J. Zember, Jr.

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President and Chief Executive Officer

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EX-31.2 3 frst-20240930xex31d2.htm EX-31.2

Exhibit 31.2

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CERTIFICATIONS

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I, Matthew Switzer, certify that:

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1.  I have reviewed this report on Form 10-Q of Primis Financial Corp.;

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2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

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3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

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4.  The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

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a)    designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

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b)    designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

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c)    evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

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d)    disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

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5.  The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

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a)    all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

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b)    any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

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Date: December 11, 2024

    

/s/ Matthew Switzer

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Matthew Switzer

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Executive Vice President and Chief Financial Officer

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EX-32.1 4 frst-20240930xex32d1.htm EX-32.1

Exhibit 32.1

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CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

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In connection with the Quarterly Report of Primis Financial Corp. (“Primis”) on Form 10-Q for the period ending September 30, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned Chief Executive Officer and Chief Financial Officer of Primis hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that based on their knowledge and belief:  1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and 2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Primis as of and for the periods covered in the Report.

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/s/ Dennis J. Zember, Jr.

    

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Dennis J. Zember, Jr.

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President and Chief Executive Officer

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/s/ Matthew Switzer

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Matthew Switzer

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Executive Vice President and Chief Financial Officer

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December 11, 2024

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