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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 7 of our Annual Report on Form 10-K generally discusses year-to-year comparisons between the years ended December 31, 2024 and 2023. Discussions of comparisons between 2023 and 2022 are not included in this Form10-K but can be found in “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2023 as filed with the SEC on October 15, 2024.

Management’s discussion and analysis (“MD&A”) is presented to aid the reader in understanding and evaluating the financial condition and results of operations of Primis. This discussion and analysis should be read with the consolidated financial statements, the footnotes thereto, and the other financial data included in this report.

CRITICAL ACCOUNTING ESTIMATES AND POLICIES

We follow accounting and reporting policies that conform, in all material respects, to accounting principles generally accepted in the U.S. and to general practices within the financial services industry. The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. While we base estimates on historical experience, current information and other factors deemed to be relevant, actual results could differ from those estimates.

We consider accounting estimates to be critical to reported financial results if (i) the accounting estimate requires management to make assumptions about matters that are highly uncertain and (ii) different estimates that management reasonably could have used for the accounting estimate in the current period, or changes in the accounting estimate that are reasonably likely to occur from period to period, could have a material impact on our financial statements.

Allowance for credit losses

Accounting policies related to the allowance for credit losses on financial instruments including loans and off-balance-sheet credit exposures are considered to be critical as these policies involve considerable subjective judgment and estimation by management. In the case of loans, the allowance for credit losses is a contra-asset valuation account, calculated in accordance with ASC 326, which is deducted from the amortized cost basis of loans to present the net amount expected to be collected.

In the case of off-balance-sheet credit exposures, the allowance for credit losses is a liability account, calculated in accordance with ASC 326. The allowance is reported as a component of other liabilities in our consolidated balance sheets. Adjustments to the allowance are reported in our income statement as a component of noninterest expenses.

The amount of each allowance account represents management's best estimate of current expected credit losses on these financial instruments considering available information, from internal and external sources, relevant to assessing exposure to credit loss over the contractual term of the instrument. We consider a number of external economic variables in developing the allowance including the Virginia Unemployment Rate, Virginia House Price Index (“HPI”), Virginia Gross Domestic Product (“GDP”), and, National Unemployment and National Gross Domestic Product for pools of loans with borrowers outside of our local operating footprint. In determining forecasted expected losses, we use Moody’s economic variable forecasts and apply probability weights to the related economic scenarios. We also use internal factors including loan balances, credit quality, contractual life of loans, and historical loss experience. While historical credit loss experience provides the basis for the estimation of expected credit losses, adjustments to historical loss information may be made for differences in current portfolio-specific risk characteristics, environmental conditions or other relevant factors.

Determining the appropriateness of the allowance is complex and requires judgment by management about the effect of matters that are inherently uncertain. While management utilizes its best judgment and information available, the ultimate adequacy of our allowance accounts is dependent upon a variety of factors beyond our control, including the performance of our portfolios, the economy, changes in interest rates and the view of the regulatory authorities toward classification of assets. Further, subsequent evaluations of the then-existing loan portfolio, in light of factors existing at the time of subsequent evaluation may result in significant changes to the allowance.

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Goodwill

As required under U.S. GAAP, we test goodwill for impairment at least annually and more frequently if there are indications that goodwill could be impaired. Our annual goodwill impairment testing date is September 30 and accordingly, we performed testing as of September 30, 2024 of our two reporting units that include goodwill. For our assessment of goodwill as of September 30, 2024, we performed a step one quantitative assessment to determine if the fair value of the Primis Bank and the Primis Mortgage reporting units were less than their carrying amount. As part of the testing, we engaged an independent valuation firm to quantitatively estimate the fair value of each reporting unit so that it could be compared to the carrying value in assisting us in determining if impairment existed.

Our assessment of the reporting units includes the use of three or four approaches, each receiving various weightings to determine an ultimate fair value estimate: (1) the comparable transactions method that is based on comparison to pricing ratios recently paid in the sale or merger of comparable institutions; (2) the control premium approach that is based on the Company’s trading price, adjusted for holding company assets and an industry based control premium; (3) the public market peers control premium approach that is based on market pricing ratios of similar public companies adjusted for an industry based control premium, and (4) a discounted cash flow method (an income method), taking into consideration expectations of our growth and profitability going forward. The assessment included use of various assumptions and inputs into the modeling approaches, including creating a baseline and conservative scenarios that stressed certain assumptions such as projected cash flows and the discount rate.

Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions and factors. As a result, there can be no assurance that the estimates and assumptions made for purposes of the goodwill impairment testing as of September 30, 2024 will prove to be an accurate prediction of the future. Changes in assumptions, market data (for market-based assessments), or the discount rate (for income based assessments) could produce different results that lead to higher or lower fair value determinations compared to the results of our annual impairment testing performed as of September 30, 2024. Further, because the use of inputs and assumptions are highly judgmental an analysis performed to assess the fair value of our reporting units by others may results in higher, lower, or the same fair value determination and goodwill impairment decision through the use of their judgment in application of similar inputs and assumptions as we used. As a result of our testing, we determined that the estimated fair value of both reporting units was higher than their respective carrying values, resulting in no goodwill impairment as of September 30, 2024.

Because of the decision made subsequent to September 30, 2024 to sell a majority of the Consumer Program loan portfolio, we performed a qualitative assessment as of December 31, 2024 to determine if this change to the business resulted in a change in the estimated fair value of the Primis Bank reporting unit. Based on our qualitative assessment, which included updating discounted cash flow analyses to consider the projected run-off of income from the Consumer Program, Primis determined that it was not more likely than not that the fair value of the Primis Bank reporting unit was less than its carrying value as of December 31, 2024.

Third-party originated and serviced consumer loan portfolio

In the second half of 2021, we partnered with a third-party (the “Third Party Originator/Servicer” or “TPOS”) to originate and service unsecured consumer loans through their proprietary point-of-sale technology (the “Consumer Program”). Loan options under the Consumer Program include traditional fully-amortizing loans and promotional loans with no interest, or “same-as-cash”, features if the loan is fully repaid in the promotional window. The loans are originated at par in the Bank’s name and have a term of 5 to 12 years with a much shorter effective life due to amortization and pay downs.

The Consumer Program is governed by multiple interrelated agreements including the loan agreement between the Bank and the customer and agreements with the TPOS. The structure of the Consumer Program is intended to generate loans that yield a targeted return to the Bank on a portfolio basis while also providing limited credit enhancement from the TPOS. Key characteristics of the combined arrangement include:

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Under U.S. GAAP, agreements with multiple counterparties, such as the customer and TPOS, are generally required to be accounted for separately even if the agreements are highly interrelated. As a result, we account for the Consumer Program as multiple units of account with the following impacts:

We had $152.1 million and $199.3 million of loans outstanding in the Consumer Program, or 5% and 6% of our total gross loan portfolio, as of December 31, 2024 and 2023, respectively. As of December 31, 2024, $113.2 million is included in loans held for sale at lower of cost or market as a result of our decision to pursue a sale of that portion of the portfolio. As of December 31, 2024 and 2023, $38.9 million and $199.3 million are included in loans held for investment. As of December 31, 2024, 22% of the principal balance of loans were in a promotional period requiring no payment of interest on their loans with 86% of these promotional loan periods ending during 2025.

During 2024, the TPOS requested the ability to finance its requirement to reimburse us for interest when a promotional loan pays off prior to the end of the promotional period as a result of the large volume of loans expected to end their promotional period in the second half of 2024 and first half of 2025. We agreed to provide financing in the form of a collateral secured term loan (the “TPOS Loan”) that was underwritten in accordance with our customary lending and

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underwriting policies. The loan allows for a maximum borrowing capacity of $10 million, but any borrowing above $5 million requires the TPOS to provide documentation of additional capital infusion since the original loan underwriting and approval. The TPOS Loan requires quarterly interest payments that may be capitalized to the principal of the note and the principal is due at the note maturity date of September 30, 2030. As of December 31, 2024, the balance of the note is $2.7 million.

In the fourth quarter of 2024, we made the decision to cease originating new loans under the Consumer Program effective January 31, 2025 and moved a large portion of the portfolio, with an amortized cost of $133.2 million, to loans held for sale and marked them to fair market value. The adjustment to fair market value resulted in additional provision expense and charge-offs of $20.0 million in the fourth quarter of 2024. The remaining portion of the portfolio still classified as held for investment of approximately $38.9 million as of December 31, 2024 has an associated allowance for credit losses of $16.3 million and is expected to run off substantially in 2025.

As noted, we moved a large portion of the Consumer Portfolio to held for sale as of December 31, 2024, which included a $20 million adjustment to reflect it at the lower of cost or market. The charge was taken against our allowance for credit losses in accordance with applicable regulatory guidance. The basis for determining the market price of our portfolio of loans to be held for sale included third-party bid pricing on the portfolio as a result of a marketing effort in December 2024. We received a range of bid prices based on limited diligence having been performed as of December 31, 2024, by potential third-party buyers. Following the marketing and bid process, we entered into a non-binding agreement with one of the third-parties to agree to sell the portfolio at their bid price that was contingent on the party performing additional diligence. A sales contract with final terms and pricing if the party decides to purchase the loans would be prepared and executed after completion of diligence. We determined the fair value for the portfolio as of December 31, 2024 based on a combination of the purchase price indicated in the non-binding agreement and the other bids received in the marketing process. The non-binding price was not relied upon exclusively, although weighted more heavily in our analysis, because it was non-binding and the ultimate price the party is willing to pay could change after their diligence so we considered the other bids received in our analysis to form a more comprehensive determination of fair value on the portfolio.

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 December 31, 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.

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FINANCIAL HIGHLIGHTS

Income Statement

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Balance Sheet

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RESULTS OF OPERATIONS

Net Loss

Net loss attributable to common shareholders for the year ended December 31, 2024 was $16.2 million, or $0.66 loss per basic and diluted share, compared to net loss of $7.8 million, or $0.32 loss per basic and diluted share for the year

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ended December 31, 2023. The results reflect an increase in net interest income of $5.5 million and noncontrolling interests of $6.2 million, offset by higher credit loss provisions of $18.1 million, a decline of $2.1 million in noninterest income and an increase in noninterest expense of $3.0 million. Net interest income increases were driven by higher yields on loans outpacing higher costs on deposits 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, partially offset by higher mortgage banking income and a gain on sale of a majority of our LPF loan portfolio. Noninterest expense increases were related primarily to higher salaries and benefits and professional fees compared to 2023, offset by no goodwill impairment in the current year. Additional details of the net loss 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.

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 Year Ended

​ ​ ​ ​ ​ Interest ​ ​ ​ ​ ​ ​ Interest ​ ​ ​

​ ​ Average ​ Income/ ​ Yield/ ​ Average ​ Income/ ​ Yield/ ​

​ Balance Expense Rate Balance Expense Rate

​ ​ (Dollar amounts in thousands)

Assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Interest-earning assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Allowance for credit losses ​ ​ (50,530) ​ ​ ​ ​ ​ ​ ​ (35,382) ​ ​ ​ ​ ​ ​

Total non-earning assets ​ ​ 293,074 ​ ​ ​ ​ ​ ​ ​ 296,647 ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Liabilities and stockholders' equity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Interest-bearing liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Noninterest-bearing liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Demand deposits ​ ​ 441,520 ​ ​ ​ ​ ​ ​ ​ 495,107 ​ ​ ​ ​ ​ ​

Other liabilities ​ ​ 36,422 ​ ​ ​ ​ ​ ​ ​ 35,494 ​ ​ ​ ​ ​ ​

Primis common stockholders' equity ​ ​ 373,613 ​ ​ ​ ​ ​ ​ ​ 393,302 ​ ​ ​ ​ ​ ​

Noncontrolling interest ​ ​ 18,231 ​ ​ ​ ​ ​ ​ ​ 587 ​ ​ ​ ​ ​ ​

Total stockholders' equity ​ ​ 391,844 ​ ​ ​ ​ ​ ​ ​ 393,889 ​ ​ ​ ​ ​ ​

Net interest income ​ ​ ​ ​ $ 104,222 ​ ​ ​ ​ ​ ​ $ 98,711 ​ ​ ​

Interest rate spread ​ ​ ​ ​ ​ ​ ​ 2.25 % ​ ​ ​ ​ ​ ​ 2.12 %

Net interest margin ​ ​ ​ ​ ​ ​ ​ 2.86 % ​ ​ ​ ​ ​ ​ 2.68 %

(2) Calculations include non-accruing loans in average loan amounts outstanding.

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Net interest income was $104.2 million for the year ended December 31, 2024, compared to $98.7 million for the year ended December 31, 2023. Our net interest margin for the year ended December 31, 2024 was 2.86%, compared to 2.68% for the year ended December 31, 2023. Our interest margin increased by 18 basis points as a result of yields on interest earning assets outpacing rates on interest bearing liabilities by 13 basis points along with average earning assets and liabilities both decreasing. This resulted in a $5.5 million increase in net interest income driven by a $27.2 million increase in interest income on loans in the current year compared to last year, partially offset by $12.0 million more interest costs on deposits and $9.6 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. Increase in loan interest income was driven by consumer, commercial, and commercial real estate loan 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 rates being higher during 2024 when compared to 2023, partially offset by a slight decrease in average interest-bearing liabilities during 2024. 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 half of the year in 2023, but a significant portion of that cash was swept off of our balance sheet during the second half of 2023. During the year ended December 31, 2024, that cash was redeployed to other earning assets such as investment securities and loans.

The following table summarizes changes in net interest income attributable to changes in the volume of interest-earning assets and interest-bearing liabilities compared to changes in interest rates. The change in interest, due to both rate and volume, has been proportionately allocated between rate and volume.

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ Year Ended ​

​ ​ Increase (Decrease) ​

​ ​ Due to Change in: ​

​ ​ ​ ​ ​ ​ ​ ​ Net ​

​ Volume Rate Change

​ ​ (in thousands)

Interest-earning assets: ​ ​ ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Interest-bearing liabilities: ​ ​ ​ ​ ​

NOW and other demand accounts ​ (243) ​ ​ 3,534 ​ 3,291 ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Change in net interest income ​ $ (1,373) ​ $ 6,884 ​ $ 5,511 ​

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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

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segmenting the loan portfolio by loan type and applying risk factors to each segment. The risk factors are determined by considering historical loss data, peer data, as well as applying management’s judgment.

The Company recorded a provision for credit losses of $50.6 million and $32.5 million for the years ended December 31, 2024 and 2023, respectively. The provision included amounts calculated in our normal reserve process for the Consumer Program loans which totaled $40.0 million and $29.4 million during the year ended December 31, 2024 and 2023, respectively. We had charge-offs totaling $51.0 million and $16.7 million during the year ended December 31, 2024 and 2023, respectively. During the year ended December 31, 2024 and 2023, $47.6 million and $8.8 million of charge-offs were related to the Consumer Program, respectively. There were recoveries totaling $1.9 million and $1.8 million during year ended December 31, 2024 and 2023, respectively.

Our provision for credit losses during 2024 and 2023 was driven by provisions related to the Consumer Program loan portfolio. 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. Losses on these vintages in 2024 and 2023 were $16.9 million and $7.0 million, respectively, or 61% and 79%, respectively, of total losses on the Consumer Program loan portfolio in 2024 and 2023.

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

Noninterest Income

The following table presents the categories of noninterest income for the years ended December 31, 2024 and 2023 (in thousands):

​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ For the Year Ended

​ ​ December 31,

Account maintenance and deposit service fees ​ $ 5,784 ​ $ 5,733 $ 51

Income from bank-owned life insurance ​ 2,410 ​ 2,021 ​ 389

Gain on other investments ​ ​ 408 ​ ​ 184 ​ ​ 224

​ ​ ​ ​ ​ ​ ​ ​ ​ ​

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Noninterest income decreased 4.7% to $43.1 million for the year ended December 31, 2024, compared to $45.3 million for the year ended December 31, 2023. The decrease in noninterest income was primarily related to $13.8 million in lower income on the Consumer Program derivative. This decrease was partially offset by $6.3 million of higher mortgage banking income and a $4.7 million gain on sale of our LPF portfolio. The Consumer Program derivative income declined primarily due to fair value loss adjustments on the derivative asset of $6.3 million during the year ended December 31, 2024 compared to fair value gains of $11.3 million during the year months ended December 31, 2023. The derivative asset and related gains or losses are driven by anticipated cash payments due to us from the third-party when borrowers prepay their loans in a no-interest promotional period. During the year ended 2023, the value of the derivative and related gains were primarily driven by $52.3 million of loans with a no-interest promotional period originated in the last quarter of 2022 and the first nine months of 2023 with a total of $89.4 million of loans within their promo period as of December 31, 2023. Comparatively, during the year ended 2024 a nominal amount of no-interest promotional loans were originated and $50.5 million ended their promo period, with $38.9 million of promo loans as of December 31, 2024. Offsetting the fair value loss adjustments during the year ended December 31, 2024 and adding to the gains in 2023 was $10.6 million and $6.8 million, respectively, of realized gains as a result of borrowers paying off their promotional period loans before the end of

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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 $6.3 million increase in mortgage banking income partially offset the total decline in noninterest income and was a result of the continued growth of the mortgage business in 2024 compared to 2023. During the year ended December 31, 2024 our mortgage banking income was driven by $15.8 million of sale gains compared to $8.0 million during the year ended December 31, 2023 as a result of higher sales volumes. The increase in gains on sale were partially offset with higher sales costs due to the higher volume.

Also partially offsetting the decrease in noninterest income was the pre-tax gain of $4.7 million, net of broker fees, from the sale of a majority of the LPF lending division loans in the fourth quarter of 2024.

Noninterest Expense

The following table present the major categories of noninterest expense for the years ended December 31, 2024 and 2023 (in thousands):

​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ For the Year Ended

​ ​ December 31,

Amortization of core deposit intangible ​ 1,265 ​ 1,269 ​ (4)

Telephone and communication expense ​ 1,312 ​ 1,507 ​ (195)

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Noninterest expenses were $125.6 million during the year ended December 31, 2024, compared to $122.6 million during the year ended December 31, 2023. The 2.5% increase in noninterest expenses was primarily attributable to higher salaries and benefits expense, professional fees, data processing costs, and other operating expenses in 2024, partially offset by the goodwill impairment and higher fraud losses recognized during the year ended December 31, 2023. The higher salaries and benefits expense was driven by growth in the mortgage line of business and higher overall benefits costs for our entire workforce. The increase in professional fees was related to expenses in connection with the SEC pre-clearance and restatement process. Data processing expenses increased primarily as a result of higher transaction volume. The other operating expenses increased primarily due to PFH operating expenses as a result of a full year of PFH operations compared to having just commenced operations at the end of 2023. These expenses are included as a result of the requirement to consolidate PFH under U.S. GAAP accounting rules, but the portion of these losses attributable to other stockholders is added back to our results to arrive at net income to Primis common shareholders.

The increase in noninterest expenses was partially offset by $11.2 million of goodwill impairment recognized in the third quarter of 2023. We had fraud losses during the year ended December 31, 2023 primarily related to a substantial increase in deposit account fraud, which was also seen across the industry during that time. Our fraud losses in 2024 were primarily due to losses in the Consumer Program loan portfolio. Other notable declines in expenses were seen in occupancy expenses, Virginia franchise tax, and gain (loss) on bank premises and equipment and assets held for sale. The Virginia franchise tax and FDIC insurance costs were a result of a decline in average deposits and capital in the current year

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compared to the prior year. The occupancy expense decline is primarily related to a decline in branch operating costs in 2024 as a result of our restructuring in 2023 that resulted in eight branch consolidations in the fourth quarter of 2023. Noninterest expense increases were also offset by gains on sales of premises and equipment in 2024 while in 2023 we incurred more losses due to disposal of assets and write-down of property to be sold as part of the branch consolidations.

FINANCIAL CONDITION

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

​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ December 31, December 31, ​ ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Loans held for sale, at lower of cost or market ​ ​ 163,832 ​ ​ — ​ ​ 163,832

​ ​ ​ ​ ​ ​ ​ ​ ​ ​

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Loans

Gross loans held for investment were $2.9 billion and $3.2 billion as of December 31, 2024 and 2023, respectively. Loans held for sale were $247.1 million and $57.7 million as of December 31, 2024 and 2023, respectively. Loans held for sale at fair value are loans originated by PMC which are held at fair value under a fair value option election. Loans held for sale at the lower of cost or market comprise LPF loans to be sold to EverBank by January 31, 2025 and Consumer Program loans that are currently being marketed for sale.

As disclosed in “Note 1 - Organization and Significant Accounting Policies” in Item 8. in this Form 10-K, we entered into an agreement to sell LPF loans and $50.7 million of loans to be sold under this agreement that were already funded as of December 31, 2024 have been reclassified to loans held for sale, at lower of cost or market as of December 31, 2024. The Company also made the decision as of December 31, 2024 to sell a majority of its Consumer Program loans. $133.2 million of these loans were transferred to held for sale as of December 31, 2024 and were marked-to-market based on third party bid prices received in its initial marketing efforts for the portfolio, resulting in a $20.0 million write-down through the allowance for credit losses in accordance with regulatory guidance.

As of December 31, 2024 and 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 declined by 10% in 2024, which was driven by a decline in Consumer loans primarily due to approximately $299.2 million of sales of LPF loans. The decline in Consumer loans was also driven by the transfer of $133.2 million of the Consumer Program loans into “Loans held for sale, at lower of cost or market” as of December 31, 2024 as a result of our decision to market the loans for sale. There was also a decline in the construction and land development loans due to a combination of paydowns and conversion to permanent financing. 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.

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

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ Amount Percent Amount Percent

Loans secured by real estate: ​ ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Paycheck protection program loans ​ ​ 1,927 ​ 0.1 % ​ 2,023 ​ 0.1 %

​ ​ ​ ​ ​ ​ ​

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The following table sets forth the contractual maturity ranges of our loan portfolio and the amount of those loans with fixed and floating interest rates in each maturity range as of December 31, 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

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The following table sets forth the contractual maturity ranges of our Consumer Program loan portfolio as of December 31, 2024, which is only originated at fixed rates (in thousands):

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​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

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As of December 31, 2024, we had $38.9 million of Consumer Program loans in a promotional period where interest is being deferred and will not be recognized by us until and if they exit the promotional period and the loan begins to amortize. Of this total, $0.7 million is included in held for investment and 64% end their promo period in 2025 while the remaining will end their promo period in 2026. The remaining $38.2 million of promo loans as of December 31, 2024 are included in held for sale and 87% of these end their promo period in 2025 and the remaining end in 2026.

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During the year ended December 31, 2024, $31.1 million of loans ended their no interest promo period and began to amortize and $10.1 million of these loans charged-off during the year after beginning to amortize.

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Asset Quality; Past Due Loans and Nonperforming Assets

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

​ ​ ​ ​ ​ ​ ​ ​

​ December 31, ​ December 31, ​

Loans past due 90 days and accruing interest ​ 1,713 ​ 1,714 ​

​ ​ ​ ​ ​ ​ ​ ​

SBA guaranteed amounts included in nonperforming loans ​ $ 5,921 ​ $ 3,115 ​

​ ​ ​ ​ ​ ​ ​ ​

Allowance for credit losses to total loans ​ 1.86 % 1.62 %

Allowance for credit losses to nonaccrual loans ​ 357.53 % 574.06 %

Allowance for credit losses to nonperforming loans ​ 320.94 % 483.04 %

Nonaccrual to total loans ​ 0.52 % 0.28 %

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Nonperforming assets increased as of December 31, 2024 compared to December 31, 2023, driven by an increase in nonaccrual loans of $5.9 million to $15.0 million. The increase was driven primarily by two commercial real estate loans totaling $4.2 million and one commercial loan totaling $0.7 million added to nonaccrual during the year. All of these additions during the year are secured by collateral and portions of the nonperforming asset balances at year end have partial SBA guarantees of $2.9 million.

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We identify potential problem loans based on loan portfolio credit quality. We define our potential problem loans as internally rated as substandard loans less total nonperforming assets noted above. As of December 31, 2024, our potential problem loans totaled $54.9 million. As of December 31, 2024, our total substandard loans were $71.5 million, compared to $17.2 million as of December 31, 2023. Loans rated internally as special mention loans, which is one internal credit rating higher than substandard, totaled $30.3 million as of December 31, 2024 and $14.9 million as of December 31, 2023. Increase in substandard loans was driven primarily due to four relationships totaling $54.9 million and the increase in special mention loans was related to $20 million of downgrades in 2024.

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We will generally place a loan on nonaccrual status when it becomes 90 days past due. Loans will also be placed on nonaccrual status in cases where we are uncertain whether the borrower can satisfy the contractual terms of the loan agreement. Cash payments received while a loan is categorized as nonaccrual will be recorded as a reduction of principal as long as doubt exists as to future collections.

We maintain appraisals on loans secured by real estate, particularly those categorized as nonperforming loans and potential problem loans. In instances where appraisals reflect reduced collateral values, we make an evaluation of the borrower’s overall financial condition to determine the need, if any, for impairment or write-down to their fair values. If foreclosure occurs, we record OREO at the lower of our recorded investment in the loan or fair value less our estimated costs to sell.

Our loan portfolio losses and delinquencies have been primarily limited by our underwriting standards and portfolio management practices. Whether losses and delinquencies in our portfolio will increase significantly depends upon the value of the real estate securing the loans and economic factors, such as the overall economy, rising or elevated interest rates, historically high or persistent inflation, and recessionary concerns.

We originate a portion of our consumer loans (the Consumer Program) using a third party that sources and subsequently manages the portfolio of loans. As of December 31, 2024, we had a book balance outstanding of $152.1 million which is comprised of $38.9 million in held for investment and $113.2 million of held for sale. 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 the held for investment loans balance of $38.9 million was $16.3 million as of December 31, 2024 and represented 30% of our total allowance for credit losses. Net charge-offs on this portfolio were $46.0 during the year ended December 31, 2024, and represented approximately 94% of net charge-offs recorded during the year.

​

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 and 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 of December 31, 2024 and 2023. Additionally, we experienced continued elevated levels of charge-offs in the first quarter of 2025 concentrated in these older vintages and as a result we incorporated this credit loss experience into our reserve process on these loans for the year ended December 31, 2024. The combination of the updated loss rates along with elevated charge-offs in 2024 and the first three months of 2025 has been a driver in the increase of the allowance during the year ended December 31, 2024 on the portfolio as a percentage of the portfolio balance. The newer production represented approximately 50% of the held for investment portfolio as of December 31, 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.

​

Loan Review

Our loan review program is administrated by the Chief Risk Officer and the Loan Review Manager who reports the results directly to the Audit Committee of the Board of Directors. Our 2024 loan review program (the “Program”) was approved by the Audit Committee on January 25, 2024. The Program’s annual goal is to have an overall review penetration rate of 45.0% - 50.0% of the commercial loan portfolio outstanding as of December 31, 2024. The Program incorporates a robust risk-based approach review of the Bank’s loan portfolio that will include the loan origination process and targeted portfolio and full-scope loan reviews. The Program’s review goal remains well within regulatory standards and industry best practices. In accordance with Credit Policy, the Bank’s Program will utilize and incorporate both internal and third-party external resources in a complementary fashion to achieve the objectives of the Program.

​

In 2024, the loan review program resulted in reviews on commercial loan balances totaling $955.0 million or 49.6% of the commercial loan portfolio outstanding as of December 31, 2024. The loan reviews included 45.0% performed by our internal loan review function and 55.0% by an independent third party consultant. The loan review program also reviewed $90.5 million in unfunded commitments.

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​

​

Allowance for Credit Losses

We are focused on the asset quality of our loan portfolio, both before and after a loan is made. We have established underwriting standards that we believe are effective in maintaining high credit quality in our loan portfolio. We have experienced loan officers who take personal responsibility for the loans they originate, a skilled underwriting team and highly qualified credit officers that review each loan application carefully. We have designed a credit matrix, which requires dual authority to approve any credit over $5.0 million. We have a specialty Executive Credit Officer with extensive industry experience in medical practice financing with authority up to $7.5 million and joint authority with the Chief Credit Officer up to $10.0 million. All credit exposures over $10.0 million are reviewed and approved by Executive Loan Committee consisting of all named Credit Officers with concurrence from the Chief Executive Officer on any credit in excess of $25.0 million. Loans in excess of 60% of the Bank’s legal lending limit are approved by the full Board of Directors or two outside directors.

Our allowance for credit losses is established through charges to earnings in the form of a provision for credit losses. Management evaluates the allowance at least quarterly. In addition, on a quarterly basis our Board of Directors reviews our loan portfolio, evaluates credit quality, reviews the loan loss provision and the allowance for credit losses and requests management to make changes as may be required. In evaluating the allowance, management and the Board of Directors consider the growth, composition and industry diversification of the loan portfolio, historical loan loss experience, current delinquency levels and all other known factors affecting loan collectability.

The allowance for credit losses is based on the CECL methodology and represents management’s estimate of an amount appropriate to provide for expected credit losses in the loan portfolio. This estimate is based on historical credit loss information adjusted for current conditions and reasonable and supportable forecasts applied to various loan types that compose our portfolio, including the effects of known factors such as the economic environment within our market area will have on net losses. The allowance is also subject to regulatory examinations and determination by the regulatory agencies as to the appropriate level of the allowance.

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The following table sets forth the allowance for credit losses allocated by loan category and the percent of loans in each category to total loans at the dates indicated (in thousands):

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ As of December 31,

​ ​ ​ ​ ​ Percent of ​ ​ ​ ​ Percent of ​

​ ​ Allowance ​ Loans by ​ Allowance ​ Loans by ​

​ ​ for Credit ​ Category to ​ for Credit ​ Category to ​

​ Losses Total Loans Losses Total Loans

Commercial real estate - owner occupied ​ $ 5,899 ​ 16.5 % $ 4,255 ​ 14.1 %

Commercial real estate - non-owner occupied ​ ​ 6,966 ​ 21.1 % ​ 5,822 ​ 18.0 %

Secured by farmland ​ ​ 20 ​ 0.1 % ​ 31 ​ 0.2 %

Construction and land development ​ ​ 1,203 ​ 3.5 % ​ 1,129 ​ 5.1 %

Home equity lines of credit ​ ​ 533 ​ 2.2 % ​ 364 ​ 1.9 %

Paycheck Protection Program loans ​ ​ — ​ 0.1 % ​ — ​ 0.1 %

​

The following table presents an analysis of the allowance for credit losses for the periods indicated (in thousands):

​ ​ ​ ​ ​ ​ ​ ​

​ ​ For the Years Ended December 31,

Balance, beginning of period ​ $ 52,209 ​ $ 34,544 ​

Provision charged to operations: ​ ​ ​ ​ ​ ​ ​

Recoveries credited to allowance: ​ ​ ​ ​ ​

Commercial real estate - owner occupied ​ ​ 31 ​ ​ — ​

Commercial real estate - non-owner occupied ​ ​ — ​ ​ 110 ​

Construction and land development ​ — ​ 112 ​

Residential 1-4 family ​ 2 ​ 164 ​

Home equity lines of credit ​ 3 ​ 5 ​

Commercial loans ​ ​ 20 ​ ​ 948 ​

Loans charged off: ​ ​ ​

Commercial real estate - non-owner occupied ​ ​ — ​ ​ 1,170 ​

Construction and land development ​ — ​ 2 ​

Residential 1-4 family ​ 8 ​ 770 ​

Home equity lines of credit ​ 9 ​ 32 ​

Commercial loans ​ ​ 926 ​ ​ 2,854 ​

​ ​ ​ ​ ​ ​ ​ ​

Net charge-offs to average loans, net of unearned income ​ 1.48 % 0.45 %

​

The total allowance for credit losses increased by $1.5 million to $53.7 million as of December 31, 2024, compared to $52.2 million as of December 31, 2023. This increase was primarily driven by a continued elevated provision related to the Consumer Program loans, and to a lesser extent due to increases in allowance provisions for commercial real estate, residential 1-4 family, and commercial loans. The increases in the allowance was mostly offset by charge-offs in the Consumer Program loan portfolio. The Consumer Program loans had allowance provisions of $40.0 million during the

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year ended December 31, 2024, accounting for 79% of the total credit loss provisions for the ended December 31, 2024. Offsetting the increases in these provisions were $46.0 million of net charge-offs of the Consumer Program loans, which included $20.0 million related to the decision to move a majority of the portfolio to held for sale as of December 31, 2024. Increases in the allowance were also a result of increased allowance provisions for commercial real estate loans due primarily to growth in the portfolio balances and changes in expected macroeconomic factors, increase in allowance for residential 1-4 family due to changes in prepayment and curtailment rates and expected macroeconomic factors impacting the portfolio, and an increase in allowance for commercial loans primarily driven by one relationship that was downgraded and specific reserves applied to the loans in conjunction with the downgrade.

We believe that the allowance for credit losses as of December 31, 2024 is sufficient to absorb future expected credit losses in our loan portfolio based on our assessment of all known factors affecting the collectability of our loan portfolio. Our assessment involves uncertainty and judgment; therefore, the adequacy of the allowance for credit losses cannot be determined with precision and may be subject to change in future periods. In addition, bank regulatory authorities, as part of their periodic examination, may require additional charges to the provision for credit losses in future periods if the results of their reviews warrant additions to the allowance for credit losses.

Net charge-offs were $49.1 million for the year ended December 31, 2024, up from $14.9 million for the year ended December 31, 2023. Included in net charge-offs is $46.0 million and $8.4 million for the years ended December 31, 2024 and 2023, respectively, related to the Consumer Program loan portfolio. Excluding these Consumer Program charge-offs we had a decrease in charge-offs from the prior year of $3.4 million.

As discussed previously, the increase in charge-offs on the Consumer Program loan portfolio have been driven by losses concentrated in loans originated between the third quarter of 2022 and the first quarter of 2023. Charge-offs from these vintages in 2024 were 61% of the total gross loan charge-offs, before the $20.0 million of charge-offs related to the transfer of Consumer Program loans to held for sale. During the year ended December 31, 2023 the charge-offs of Consumer Program loans in these vintages was 79% of total gross loan charge-offs. As of December 31, 2024, the amount of loans from these vintages in the held for investment loan portfolio was $19.1 million, or approximately 50% of the total $38.9 million held for investment balance. The TPOS provides limited credit enhancement through certain direct payments and the release of funds from a reserve account. These amounts are recognized in our results of operations in the period in which they become available to us. During 2024, we recognized $3.0 million in our results of operations related to this credit enhancement. See additional discussion of the credit enhancement in “Critical Accounting Estimates and Policies” in this MD&A.

Investment Securities

Our investment securities portfolio provides us with required liquidity and collateral to pledge to secure public deposits, certain other deposits, advances from the FHLB of Atlanta, and repurchase agreements.

Our investment securities portfolio is managed by our Chief Financial Officer, who has significant experience in this area, with the concurrence of our Asset/Liability Committee. In addition to our Chief Financial Officer (who is the chairman of the Asset/Liability Committee) this committee is comprised of outside directors and other senior officers of the Bank, including but not limited to our Chief Executive Officer. Investment management is performed in accordance with our investment policy, which is approved annually by the Board of Directors. Our investment policy authorizes us to invest in:

● Collateralized mortgage obligations

● U.S. Treasury securities

● SBA guaranteed loan pools

● Agency securities

● Obligations of states and political subdivisions

● Corporate debt securities, with rated securities at investment grade

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● Collateralized Loan Obligations (“CLOs”)

​

MBS are securities that have been developed by pooling a number of real estate mortgages and which are principally issued by agency/government-sponsored entities (“GSEs”) such as the GNMA, FNMA and FHLMC. These securities are deemed to have high credit ratings, and minimum regular monthly cash flows of principal and interest are guaranteed by the issuing agencies.

Collateralized mortgage obligations (“CMOs”) are bonds that are backed by pools of mortgages. The pools can be GNMA, FNMA or FHLMC pools or they can be private-label pools. The CMOs are designed so that the mortgage collateral will generate a cash flow sufficient to provide for the timely repayment of the bonds. The mortgage collateral pool can be structured to accommodate various desired bond repayment schedules, provided that the collateral cash flow is adequate to meet scheduled bond payments. This is accomplished by dividing the bonds into classes to which payments on the underlying mortgage pools are allocated. The bond’s cash flow, for example, can be dedicated to one class of bondholders at a time, thereby increasing call protection to bondholders. In private-label CMOs, losses on underlying mortgages are directed to the most junior of all classes and then to the classes above in order of increasing seniority, which means that the senior classes have enough credit protection to be given the highest credit rating by the rating agencies.

Obligations of states and political subdivisions (municipal securities) are purchased with consideration of the current tax position of the Bank. Both taxable and tax-exempt municipal bonds may be purchased, but only after careful assessment of the market risk of the security. Appropriate credit evaluation must be performed prior to purchasing municipal bonds.

Corporate bonds consist of senior and/or subordinated notes issued by banks. Bank subordinated debt, if rated, must be of investment grade and non-rated bonds are permissible if the credit-worthiness of the issuer has been properly analyzed.

CLOs are actively managed securitization vehicles formed for the purpose of acquiring and managing a diversified portfolio of senior secured corporate bank loans, otherwise known as “broadly syndicated loans”. The loan portfolio is transferred to bankruptcy-remote special-purpose vehicle, which finances the acquisition through the issuance of various classes of debt and equity securities with varying levels of senior claim on the underlying loan portfolio. CLOs must be rated AA or better at the time of purchase.

We classify our investment securities as either held-to-maturity (“HTM”) or available-for-sale (“AFS”). Debt investment securities that Primis has the positive intent and ability to hold to maturity are classified as HTM and carried at amortized cost. Investment securities classified as AFS are those debt securities that may be sold in response to changes in interest rates, liquidity needs or other similar factors. Investment securities AFS are carried at fair value, with unrealized gains or losses net of deferred taxes, included in accumulated other comprehensive income (loss) in stockholders’ equity. Our portfolio of AFS 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, AFS and HTM, totaled $245.4 million as of December 31, 2024, an increase of 2.2% from $240.1 million as of December 31, 2023, primarily due to purchases of available-for-sale securities of $43.1 million, offset by paydowns, maturities, and calls of the investments during the year. We did not sell any AFS or HTM securities during 2024 or 2023.

We recognized no credit impairment charges related to credit losses on our HTM investment securities during 2024 and an immaterial amount in 2023.

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The following table sets forth a summary of the investment securities portfolio as of the dates indicated. AFS investment securities are reported at fair value, and HTM investment securities are reported at amortized cost (in thousands).

​ ​ ​ ​ ​ ​ ​

​ ​ December 31, ​ December 31,

Available-for-sale investment securities: ​ ​

Obligations of states and political subdivisions ​ 29,705 ​ 30,080

Collateralized loan obligations ​ — ​ 4,982

Government-sponsored agency securities ​ 13,836 ​ 13,711

Agency commercial mortgage-backed securities ​ 22,178 ​ 30,110

​ ​ ​ ​ ​ ​ ​

Held-to-maturity investment securities: ​ ​

Residential government-sponsored mortgage-backed securities ​ $ 7,760 ​ $ 9,040

Obligations of states and political subdivisions ​ 1,519 ​ 2,391

Residential government-sponsored collateralized mortgage obligations ​ 169 ​ 219

​

​

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The following table sets forth the amortized cost, fair value, and weighted average yield of our investment securities by contractual maturity as of December 31, 2024. Weighted average yield is calculated as the tax-equivalent yield on a pro rata basis for each security based on its relative amortized cost. Yields on tax-exempt securities have been computed on a tax-equivalent basis. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties (in thousands).

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ Investment Securities Available-for-Sale

​ ​ ​ ​ ​ ​ ​ Weighted

​ ​ Amortized ​ ​ ​ ​ Average

​ Cost Fair Value Yield

Obligations of states and political subdivisions ​ ​ ​

Due after one year through five years ​ ​ 4,123 ​ ​ 3,831 2.79 %

Corporate securities ​ ​ ​ ​

Due after five years through ten years ​ ​ 14,000 ​ ​ 13,386 ​ 4.50 %

Government-sponsored agency securities ​ ​ ​

Due after one year through five years ​ 6,931 ​ 6,499 1.31 %

Due after five years through ten years ​ ​ 4,893 ​ ​ 3,900 ​ 1.79 %

Residential government-sponsored mortgage-backed securities ​ ​ ​

Due after one year through five years ​ 3,106 ​ 3,077 4.66 %

Residential government-sponsored collateralized mortgage obligations ​ ​ ​

Due after one year through five years ​ ​ 997 ​ ​ 978 ​ 0.03 %

Due after five years through ten years ​ 5,077 ​ 4,927 4.52 %

Agency commercial mortgage-backed securities ​ ​ ​

Due after one year through five years ​ 1,951 ​ 1,918 2.57 %

SBA pool securities ​ ​ ​

Due after one year through five years ​ ​ 617 ​ ​ 604 ​ 5.05 %

Due after five years through ten years ​ 4,360 ​ 4,201 4.45 %

​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ Investment Securities Held-to-Maturity

​ ​ ​ ​ ​ ​ ​ Weighted

​ ​ Amortized ​ ​ ​ ​ Average

​ Cost Fair Value Yield

Obligations of states and political subdivisions ​ ​ ​

Due after one year through five years ​ $ 795 ​ $ 769 2.73 %

Due after five years through ten years ​ 724 ​ 675 2.51 %

Residential government-sponsored mortgage-backed securities ​ ​ ​ ​

Due after one year through five years ​ ​ 232 ​ ​ 227 ​ 2.19 %

Due after five years through ten years ​ 3,098 ​ 2,858 2.46 %

Residential government-sponsored collateralized mortgage obligations ​ ​ ​

​

For additional information regarding investment securities refer to “Item 8. Financial Statements and Supplementary Data, Note 2 - Investment Securities.”

​

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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. 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.

Total deposits decreased 3.0% to $3.2 billion as of December 31, 2024 from $3.3 billion as of December 31, 2023. The decrease in deposits from 2023 year-end was primarily driven by a decrease in time deposits and noninterest-bearing deposits and increase in deposits swept off the balance sheet, partially offset by an increase in NOW accounts. Time deposits decreased 23.7% from $445.9 million as of December 31, 2023 to $340.2 as of December 31, 2024. Noninterest-bearing deposits decreased 7.2% from $472.9 million as of December 31, 2023 to $438.9 million as of December 31, 2024. NOW accounts increased 5.8% from $773.0 million as of December 31, 2023 to $817.7 million as of December 31, 2024. Our decline in non-interest bearing deposits was due to customers moving into higher interest earning deposit accounts, including NOW accounts, a general industry trend, and the decline in time deposits was driven by our repayment of $75.0 million of brokered deposits during the year. Year-end deposits are also net of excess amounts we sweep off balance sheet to manage liquidity. Deposits swept off balance sheet were $137 million as of December 31, 2024, compared to $113 million as of December 31, 2023.

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 $667.1 billion, or 20.8% of total deposits, as of December 31, 2024.

The following table sets forth the average balance and average rate paid on each of the deposit categories for the years ended December 31, 2024 and 2023 (in thousands):

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ Average Average Average Average

​ ​ Balance ​ Rate ​ Balance ​ Rate ​

Noninterest-bearing demand deposits ​ $ 441,520 ​ $ 495,107 ​

Interest-bearing deposits: ​ ​ ​

​

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.

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The following table sets forth the maturities of certificates of deposit of $100 thousand and over as of December 31, 2024 (in thousands):

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

3 Months ​ Months ​ Months ​ Months ​ Total

​

​

Other Borrowings

Other borrowings consist of the following (in thousands):

​ ​ ​ ​ ​ ​ ​ ​

​ ​ December 31,

Total FHLB advances ​ $ — ​ $ 30,000 ​

Securities sold under agreements to repurchase ​ 3,918 ​ 3,044 ​

​ ​ ​ ​ ​ ​ ​ ​

Weighted average interest rate on FHLB advances at year end ​ — % 5.57 %

​ ​ ​ ​ ​ ​ ​ ​

For the periods ended December 31, 2024 and 2023: ​ ​ ​

Average outstanding balance ​ $ 54,492 ​ $ 49,792 ​

Average interest rate during the year ​ 5.37 % 4.32 %

​ ​ ​ ​ ​ ​ ​ ​

Maximum month-end outstanding balance ​ $ 168,677 ​ $ 33,044 ​

​

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. We had no FHLB borrowings as of December 31, 2024, compared to total FHLB borrowings of $30.0 million as of December 31, 2023. Utilization of FHLB advances was higher during 2024 than 2023 as earning asset growth outpaced funding growth. The decrease in FHLB borrowings at the end of 2024 was primarily a result of excess liquidity generated from the LPF loan sale. As of December 31, 2024, we had $564.0 million of unused and available FHLB lines of credit.

Other borrowings can consist of FHLB convertible advances, FHLB overnight advances, other FHLB advances maturing within one year, 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 as of December 31, 2024 and 2023 was $3.9 million and $3.0 million, respectively.

We had secured borrowings as of December 31, 2024 and 2023 of $17.2 million and $20.4 million, respectively, related to loan transfers to another financial institution 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 year ended December 31, 2024, $1.1 million of additional advances were made to borrowers under the loans previously transferred and were accordingly treated as additional secured borrowings as of December 31, 2024. Additionally, during the year ended December 31, 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

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secured borrowings refer to “Item 8. Financial Statements and Supplementary Data, Note 1 –Organization and Significant Accounting Policies.”

​

Junior Subordinated Debt and Senior Subordinated Notes

For information about junior subordinated debt and senior subordinated notes and their anticipated principal repayments refer to “Item 8. Financial Statements and Supplementary Data, Note 11 – Junior Subordinated Debt and Senior Subordinated Notes.”

Interest Rate Sensitivity and 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 400 basis points, measured in 100 basis point increments) as of December 31, 2024 and 2023. All changes are within our Asset/Liability Risk Management Policy guidelines (amounts in thousands).

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ Sensitivity of EVE

​ ​ 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

​

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​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ Sensitivity of EVE

​ ​ 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

​

Our interest rate sensitivity is also monitored by management through the use of a model that generates estimates of the change in 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 December 31, 2024 and 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 December 31, 2024 and 2023 (amounts in thousands).

​

​ ​ ​ ​ ​ ​ ​

​ ​ Sensitivity of NII

​ ​ Adjusted NII

Change in Interest Rates ​ ​ ​ ​ $ Change

in Basis Points (Rate Shock) Amount From Base

​

​

​ ​ ​ ​ ​ ​ ​

​ ​ Sensitivity of NII

​ ​ Adjusted NII

Change in Interest Rates ​ ​ ​ ​ $ Change

in Basis Points (Rate Shock) Amount From Base

​

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

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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 FHLB of Atlanta and institutional certificates of deposits. In addition, we maintain federal funds lines of credit with three correspondent banks, totaling $90.0 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 the discussion previously in “Deposits and Other Borrowings” and “Item 8. Financial Statements and Supplementary Data, Note 10 – Securities Sold Under Agreements To Repurchase And Other Short-Term Borrowings, Note 11 – Junior Subordinated Debt and Senior Subordinated Notes, and Note 15 – Financial Instruments With Off-Balance-Sheet Risk.”

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 December 31, 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 December 31, 2024, Primis has no material commitments or long-term debt for capital expenditures.

Capital Resources

Capital management consists of providing equity to support both current and future operations. Primis Financial Corp. and its subsidiary, Primis Bank, are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory - and possibly additional discretionary - actions by regulators that, if undertaken, could have a direct material effect on our financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action (“PCA”), we must meet specific capital guidelines that involve quantitative measures of our assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. As of December 31, 2024 and 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 us 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 December 31, 2024, that we meet all capital adequacy requirements to which it is subject.

See “Item 1. Business, Supervision and Regulation—Capital Requirements” for more information.

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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 ​ December 31, ​ December 31, ​

Primis Financial Corp. ​ ​

Common equity tier 1 capital ratio 4.50 % n/a 8.74 % 8.96 %

Tier 1 risk-based capital ratio 6.00 % n/a 9.05 % 9.25 %

Total risk-based capital ratio 8.00 % n/a 12.53 % 13.44 %

​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Primis Bank ​ ​ ​ ​ ​ ​ ​

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 4.04% as of December 31, 2024, which exceeded the 2.50% minimum requirement below which the regulators may impose limits on distributions.

Impact of Inflation and Changing Prices

The financial statements and related financial data presented in this Annual Report on Form 10-K concerning Primis Financial Corp. have been prepared in accordance with U.S. GAAP, which require the measurement of financial position and operating results in terms of historical dollars, without considering changes in the relative purchasing power of money over time due to inflation. The primary impact of inflation on our operations is reflected in increased operating costs. Unlike most industrial companies, substantially all of the assets and liabilities of a financial institution are monetary in nature. As a result, changes in interest rates have a more significant impact on our performance than do the effects of changes in the general rate of inflation and changes in prices. Interest rates do not necessarily move in the same direction or in the same magnitude as the prices of goods and services. Many factors impact interest rates, including the decisions of the FRB, inflation, recession, changes in unemployment, the money supply, and international disorder and instability in domestic and foreign financial markets. Like most financial institutions, changes in interest rates can impact our net interest income which is the difference between interest earned from interest-earning assets, such as loans and investment securities, and interest paid on interest-bearing liabilities, such as deposits and borrowings, as well as the valuation of our assets and liabilities.

Our interest rate risk management is the responsibility of the Bank’s ALCO. The ALCO has established policies and limits for management to monitor, measure and coordinate our sources, uses and pricing of funds. The ALCO makes reports to the Board of Directors on a quarterly basis.

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Seasonality and Cycles

We do not consider our commercial banking business to be seasonal.

Off-Balance Sheet Arrangements

We are a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of our 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 us 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. We had letters of credit outstanding totaling $9.9 million and $9.6 million as of December 31, 2024 and 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.

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.

For additional information about off-balance sheet arrangements, refer to the discussion in “Item 8. Financial Statements and Supplementary Data, Note 15 – Financial Instruments With Off-Balance-Sheet 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 “Item 8. Financial Statements and Supplementary Data, Note 3 - Loans and Allowance for Credit Losses”, as if such commitments were funded.

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Item 7A. Quantitative and Qualitative Disclosures about Market Risk

This information is incorporated herein by reference from “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Annual Report on Form 10-K.

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Item 8. Financial Statements and Supplementary Data

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Report of Independent Registered Public Accounting Firm

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Shareholders, Board of Directors, and Audit Committee of Primis Financial Corp.

McLean, Virginia

​

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Opinion on the Financial Statements

​

We have audited the accompanying consolidated balance sheet of Primis Financial Corp. (the "Company") as of December 31, 2024, the related consolidated statements of income (loss) and comprehensive loss, changes in stockholders’ equity, and cash flows for the year ended December 31, 2024, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and the results of its operations and its cash flows for the year ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

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We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework: (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and our report dated April 29, 2025 expressed an adverse opinion.

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Basis for Opinion

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These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

​

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

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Critical Audit Matters

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The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

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Goodwill Impairment Evaluation – Bank Reporting Unit

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As described in Note 1 and Note 8 to the consolidated financial statements, Goodwill is evaluated for impairment on an annual basis or more frequently if events or circumstances warrant for both reporting units, Primis Bank and Primis Mortgage. A step one quantitative assessment was performed as of September 30, 2024 to determine if the fair value of the reporting units were less than their carrying amount. To determine the fair value of the reporting units, the Company utilizes a combination of valuation approaches: the comparable transactions approach, the control premium approach, the public market peers control premium approach, and the discounted cash flow approach.

We identified the evaluation of the quantitative assessment of goodwill impairment at September 30, 2024 of the Bank reporting unit as a critical audit matter because of the significant auditor judgment, audit effort and specialized skills required to audit management’s judgments and subjective assumptions used in determining the fair value estimate, including evaluating the reasonableness of management’s cash flow projections used in the discounted cash flow approach.

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The primary audit procedures we performed to address this critical audit matter included the following:

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Allowance for Credit Losses on Loans – Economic Variable Forecasts

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As described in Note 1 and Note 3 to the consolidated financial statements, for loans segmented into pools based upon similar characteristics and risk profiles, the expected credit loss is measured 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. The various pool-specific inputs may be adjusted for current macroeconomic assumptions. In determining forecasted expected losses, Moody’s economic variable forecasts are used and probability weights are applied to the related economic scenarios. A significant amount of judgment is required to assess the reasonableness of the selection of the economic scenarios and the probability weights applied.

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We identified the assessment of the economic variable forecasts as a critical audit matter because of the significant auditor judgment, audit effort and specialized skills required to audit management’s judgments used in determining the economic variable forecasts. These economic variable forecasts contribute significantly to the determination of the allowance for credit losses and changes to these assumptions could have a material effect on the Company’s financial results.

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The primary audit procedures we performed to address this critical audit matter included the following:

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o Management’s review and approval of the economic variable forecasts.

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/s/ Crowe LLP

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We have served as the Company's auditor since 2024.

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Fort Lauderdale, Florida

April 29, 2025

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Report of Independent Registered Public Accounting Firm

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Shareholders, Board of Directors, and Audit Committee of Primis Financial Corp.

McLean, Virginia

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Opinion on Internal Control over Financial Reporting

​

We have audited Primis Financial Corp.’s (the “Company”) internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework: (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, because of the effects of the material weaknesses discussed in the following paragraphs, the Company has not maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework: (2013) issued by COSO.

​

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis. The following material weaknesses have been identified and included in management's report:

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The Company did not maintain effective controls over the design and operation of its accounting determinations for transfers of financial assets, including lack of a formally designed process and procedure for identification of the complete population of loan transfers at period end.

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The Company does not have appropriate segregation of duties for independent review of new deposit accounts and file maintenance. Management does not monitor for segregation of duties between input and review. Additionally, management does not monitor or restrict employees transacting on their own accounts.

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The Company did not maintain effective controls over the design and operation of its process for evaluation of credit losses on the third party managed consumer loan portfolio including evaluating recent actual and subsequent event loss history on the portfolio relative to previous model inputs.

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We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheet of the Company as of December 31, 2024, the related consolidated statements of income (loss) and comprehensive (loss), changes in stockholders’ equity, and cash flows for the year ended December 31, 2024, and the related notes (collectively referred to as the "financial statements") and our report dated April 29, 2025 expressed an unqualified opinion. We considered the material weaknesses identified above in determining the nature, timing, and extent of audit procedures applied in our audit of the 2024 financial statements, and this report on Internal Control over Financial Reporting does not affect such report on the financial statements.

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Basis for Opinion

​

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable

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assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

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Definition and Limitations of Internal Control Over Financial Reporting

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A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

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/s/ Crowe LLP

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Fort Lauderdale, Florida

April 29, 2025

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Report of Independent Registered Public Accounting Firm

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To the Shareholders, Board of Directors, and Audit Committee

Primis Financial Corp.

​

Opinion on the Consolidated Financial Statements

We have audited, before the effects of the retrospective adjustments to the segment reporting disclosures for the adoption of Accounting Standards Update 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), discussed in Notes 1 and 18 to the consolidated financial statements, the consolidated balance sheet of Primis Financial Corp. (the “Company”) as of December 31, 2023, the related consolidated statements of income and comprehensive income (loss), changes in stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, before the effects of the retrospective adjustments to the Company’s segment reporting disclosures for the adoption of ASU 2023-07 discussed in Notes 1 and 18, the consolidated financial statements referred to above, present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

We were not engaged to audit, review, or apply any procedures to the retrospective adjustments to the Company’s segment reporting disclosures discussed in Notes 1 and 18, and accordingly, we do not express an opinion or any other form of assurance about whether such retrospective adjustments are appropriate and have been properly applied. Those adjustments were audited by Crowe LLP.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts, and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Forvis Mazars, LLP

We served as the Company’s auditor from 2013 to 2024.

Tysons, Virginia

October 15, 2024

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