Primis Financial Corp. FRST Form 10-Q filing Q1 FY2026

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GLOSSARY OF ACRONYMS AND DEFINED TERMS

In this Quarterly Report on Form 10-Q, except as otherwise indicated or the context suggests otherwise, references to the “Company” refers to Primis Financial Corp., and the terms “Primis”, “we”, “us” and “our” refer to the Company and its subsidiaries, including Primis Bank, which we refer to as “Primis Bank” or the “Bank.”

“PMC” refers to Primis Mortgage Company, a residential mortgage lender headquartered in Wilmington, North Carolina, a consolidated subsidiary of Primis Bank.

“PFH” refers to Panacea Financial Holdings, Inc., headquartered in Little Rock, Arkansas, which 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 the broader healthcare industry.

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ACL Allowance for credit losses

AFS Available-for-sale

ALCO Asset-Liability Committee

ASC Accounting Standards Codification

ASU Accounting Standards Update

Basel III Basel Committee's 2010 Regulatory Capital Framework

CECL Current expected credit losses

CEO Chief Executive Officer

CFO Chief Financial Officer

DEI Diversity, equity and inclusion

Dodd-Frank Act Dodd-Frank Wall Street Reform and Consumer Protection Act

EPS Earnings per share

ESG Environmental, social and governance

EVE Economic value of equity

FASB Financial Accounting Standards Board

FDIC Federal Deposit Insurance Corporation

FHLB Federal Home Loan Bank of Atlanta

FRB Federal Reserve Bank

FOMC Federal Open Market Committee

FVO Fair value option

GAAP U.S. generally accepted accounting principles

HTM Held-to-maturity

IRLC Interest rate lock commitments

LHFI Loans held for investment

LHFS Loans held for sale

MD&A Management’s Discussion and Analysis of Financial Condition and Results of Operations

NII Net interest income

NASDAQ National Association of Securities Dealers Automated Quotations

OREO Other real estate owned

PCA Prompt corrective action

PCD Purchased credit deteriorated

PPP Paycheck Protection Program

PRN Pro re nata

SEC Securities and Exchange Commission

SOFR Secured Overnight Financing Rate

VIE Variable interest entity

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PART I - FINANCIAL INFORMATION

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ITEM 1 - FINANCIAL STATEMENTS

PRIMIS FINANCIAL CORP**.**CONDENSED CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except per share amounts)

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See accompanying notes to unaudited condensed consolidated financial statements.

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PRIMIS FINANCIAL CORP.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

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

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See accompanying notes to unaudited condensed consolidated financial statements.

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PRIMIS FINANCIAL CORP**.CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY(dollars in thousands, except per share amounts) (Unaudited)

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See accompanying notes to unaudited condensed consolidated financial statements.

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PRIMIS FINANCIAL CORP**.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(dollars in thousands, except per share amounts) (Unaudited)

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See accompanying notes to unaudited condensed consolidated financial statements.

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PRIMIS FINANCIAL CORP.

Notes to Unaudited Condensed Consolidated Financial Statements

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1. ACCOUNTING POLICIES

The Company

Primis Financial Corp. (NASDAQ: FRST) is the bank holding company for Primis Bank, a Virginia state-chartered bank, that commenced operations on April 14, 2005. Primis Bank provides a range of financial services to individuals and small and medium-sized businesses. As of March 31, 2026, Primis Bank had 24 full-service branches in Virginia and Maryland and also provides services to customers through certain online and mobile applications. Headquartered in McLean, Virginia, the Company has an administrative office in Glen Allen, Virginia and an operations center in Atlee, Virginia. PMC, a residential mortgage lender headquartered in Wilmington, North Carolina, is a consolidated subsidiary of Primis Bank. PFH owns the rights to the Panacea Financial brand and its intellectual property and partners with the Bank to offer a suite of financial products and services for doctors, their practices, and ultimately the broader healthcare industry. PFH was deconsolidated from the Company on March 31, 2025, and their operating results were included in the Company’s consolidated operating results during the three months ended March 31, 2025.

Basis of Financial Information

The accounting policies and practices of Primis and its subsidiaries conform to GAAP and follow general practices within the banking industry. A discussion of the Company’s material accounting policies is located in our 2025 Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Form 10-K”).

These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the 2025 Form 10-K. Certain prior period amounts have been reclassified to conform to current period presentation. None of these reclassifications had a material effect on the Company’s financial statements. See Note 1 “Summary of Significant Accounting Policies” in the “Notes to the Consolidated Financial Statements” contained in Item 8 “Financial Statements and Supplementary Data” in the Company’s 2025 Form 10-K for additional information on the Company’s accounting policies. There have not been any significant changes to the Company’s accounting policies from those disclosed in the Company’s 2025 Form 10-K that could have a material effect on the Company’s financial statements.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of Primis and its subsidiaries, Primis Bank and PMC. The results of operations for PFH are included in the Company’s results of operations until its deconsolidation as of March 31, 2025. Significant inter-company accounts and transactions have been eliminated in consolidation. Primis consolidates subsidiaries in which it holds, directly or indirectly, more than 50 percent of the voting rights or where it exercises control. Entities where Primis holds 20 to 50 percent of the voting rights, or has the ability to exercise significant influence, or both, are accounted for under the equity method. Primis owns EVB Statutory Trust I (the “Trust”), which is an unconsolidated subsidiary and the junior subordinated debt owed to the Trust is reported as a liability of Primis.

We determine whether we have a controlling financial interest in an entity by first evaluating whether the entity is a voting interest entity or a VIE under GAAP. Voting interest entities are entities in which the total equity investment at risk is sufficient to enable the entity to finance itself independently and provides the equity holders with the obligation to absorb losses, the right to receive residual returns and the right to make decisions about the entity’s activities. We consolidate voting interest entities in which we have all, or at least a majority of, the voting interest. As defined in GAAP, VIEs are entities that lack one or more of the characteristics of a voting interest entity. A controlling financial interest in a VIE is present when an enterprise has both the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and an obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. The enterprise with a controlling financial interest, known as the primary beneficiary, consolidates the VIE.

The Company has investments in VIE’s for which we are not the primary beneficiary and, as such, are not included in our consolidated financial statements.

Basis of Presentation

The unaudited condensed consolidated financial statements and notes thereto have been prepared in accordance with GAAP for interim financial information and instructions for Form 10-Q and follow general practice within the banking industry. Accordingly, the unaudited condensed consolidated financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. However, in the opinion of management, all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of the results of the interim periods presented have been made. The results of operations for the interim periods are not necessarily indicative of the results that may be expected for the full year. For further information, refer to the consolidated financial statements and footnotes thereto included in the 2025 Form 10-K.

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Use of Estimates

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

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Operating Segments

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

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Interest Rate Swaps

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

As of March 31, 2026, the gross amounts of interest rate swap derivative assets and liabilities were $27 thousand and $142 thousand, respectively, and are recorded net in other assets on the consolidated balance sheets. As of December 31, 2025, the gross amounts of interest rate swap derivative assets and liabilities were $100 thousand and $300 thousand, respectively, and are recorded net in other assets on the consolidated balance sheets. One of the Company’s three interest rate swaps matured in May of 2025 and the remaining two swaps mature in May and August of 2026, respectively.

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The following table represents the carrying value of the portfolio layer method hedged assets and the cumulative fair value hedging adjustments included in the carrying value of the hedged assets as of March 31, 2026 and December 31, 2025:

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Recent Accounting Pronouncements

There are no accounting pronouncements issued since December 31, 2025 that the Company currently believes would have a material impact to the Company’s financial position or results of operations upon the pronouncement’s effective date.

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2. INVESTMENT SECURITIES

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

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

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AFS investment securities of $8 million and $9 million were purchased during the three months ended March 31, 2026 and 2025, respectively. No HTM investments were purchased during the three months ended March 31, 2026 and 2025. No investment securities were sold during the three months ended March 31, 2026 and 2025.

The amortized cost and fair value of AFS and HTM investment securities as of March 31, 2026, by contractual maturity, were as follows ($ in thousands). Investment securities not due at a single maturity date are shown separately.

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Investment securities with a carrying amount of approximately $168 million and $26 million at March 31, 2026 and December 31, 2025, respectively, were pledged to secure public deposits, certain other deposits, a line of credit for advances from the FHLB of Atlanta and repurchase agreements.

Management measures expected credit losses on HTM securities on a collective basis by major security type with each type sharing similar risk characteristics and considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. Regarding U.S. Treasury and residential mortgage-backed securities issued by the U.S. government, or agencies thereof, it is expected that the securities will not be settled at prices less than the amortized cost basis of the securities as such securities are backed by the full faith and credit of and/or guaranteed by the U.S. government. Accordingly, no allowance for credit losses has been recorded for these securities. Regarding securities issued by states and political subdivisions and other HTM securities, management considers (i) issuer bond ratings, (ii) historical loss rates for given bond ratings, (iii) whether issuers continue to make timely principal and interest payments under the contractual terms of the securities and (iv) internal forecasts. As of March 31, 2026, Primis did not have a material allowance for credit losses on HTM securities.

As of March 31, 2026 and December 31, 2025, there were 45 and 40, respectively, of investment securities AFS that were in an unrealized loss position. The unrealized losses related to investment securities AFS as of March 31, 2026 and December 31, 2025, relate to changes in interest rates relative to when the investment securities were purchased, and do not indicate credit-related impairment. Primis performs quantitative analysis and if needed, a qualitative analysis in this determination. As a result of the Company’s analysis, none of the securities were deemed to require an allowance for credit loss. Primis has the ability and intent to retain these securities for a period of time sufficient to recover all unrealized losses.

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The following tables present information regarding investment securities AFS and HTM in a continuous unrealized loss position as of March 31, 2026 and December 31, 2025 by duration of time in a loss position ($ in thousands):

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3. LOANS AND ALLOWANCE FOR CREDIT LOSSES

The following table summarizes the composition of our loan portfolio as of March 31, 2026 and December 31, 2025 ($ in thousands):

(1) Includes $6 million related to loans collateralizing secured borrowings as of both March 31, 2026 and December 31, 2025.

(2) Includes $9 million related to loans collateralizing secured borrowings as of both March 31, 2026 and December 31, 2025.

Consumer Program Loans

The Company had $82 million and $90 million of amortized cost balance of loans outstanding in the Consumer Program as of March 31, 2026 and December 31, 2025, respectively, or 2% and 3%, respectively of our total gross loan portfolio as of each date. Loans in the Consumer Program are included within the consumer loans category disclosures in this footnote. As of March 31, 2026, 1% of the loans were in a promotional period requiring no payment of interest, with approximately 50% of these promotional loan periods ending through the second quarter of 2026.

Accrued Interest Receivable

Accrued interest receivable on loans totaled $19 million and $18 million as of March 31, 2026 and December 31, 2025, respectively, and is included in other assets in the consolidated balance sheets.

Nonaccrual and Past Due Loans

Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Loans are placed on nonaccrual status when, in management’s opinion, the borrower may be unable to meet payment obligations as they become due, as well as when required by regulatory provisions. In determining whether or not a borrower may be unable to meet payment obligations for each class of loans, Primis considers the borrower’s debt service capacity through the analysis of current financial information, if available, and/or current information with regards to the Company’s collateral position. Regulatory provisions typically require the placement of a loan on nonaccrual status if (i) principal or interest has been in default for a period of 90 days or more unless the loan is both well secured and in the process of collection or (ii) full payment of principal and interest is not expected. Loans may be placed on nonaccrual status regardless of whether or not such loans are considered past due. When interest accrual is

discontinued, all unpaid accrued interest is reversed. Interest income on nonaccrual loans is recognized only to the extent that cash payments are received in excess of principal due. A loan may be returned to accrual status when all the principal and interest amounts contractually due are brought current and future principal and interest amounts contractually due are reasonably assured, which is typically evidenced by a sustained period (at least six months) of repayment performance by the borrower.

The following tables present the aging of the recorded investment in past due loans by class of loans held for investment as of March 31, 2026 and December 31, 2025 ($ in thousands):

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The amortized cost, by class, of loans and leases on nonaccrual status as of March 31, 2026 and December 31, 2025, was as follows ($ in thousands):

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There were $2 million of PPP loans greater than 90 days past due and still accruing as of both March 31, 2026 and December 31, 2025.

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The following table presents nonaccrual loans as of March 31, 2026 by class and year of origination ($ in thousands):

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Interest received on nonaccrual loans was $722 thousand for the three months ended March 31, 2026, and immaterial for the three months ended March 31, 2025.

Modifications Provided to Borrowers Experiencing Financial Difficulty

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

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

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

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

that portion of the loan is written off, resulting in a reduction of the amortized cost basis and a corresponding adjustment to the allowance for credit losses.

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

The following table provides a summary of the amortized cost basis of loan modifications to borrowers experiencing financial difficulty during the three months ended March 31, 2026 and 2025 and the related percentage of the class of the loan portfolio period-end balance by the type of modification as of March 31, 2026 and 2025, excluding Consumer Program loans ($ in thousands):

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The following table depicts the performance of loans as of March 31, 2026, at amortized cost, that have been modified to borrowers experiencing financial difficulty in the last 12 months ($ in thousands):

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Consumer Program Modifications

The Company began offering modifications to Consumer Program borrowers beginning on January 1, 2025, in an attempt to enhance collections of delinquent loans and mitigate charge-offs. The primary type of modifications were principal forgiveness of portions of outstanding principal owed and a combination of term modifications to extend maturity dates and interest rate reductions (primarily on promotional loans).

The following table provides a summary of the loan modifications to Consumer Program borrowers experiencing financial difficulty during the three months ended March 31, 2026 and 2025, by the type of modification ($ in thousands):

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The following table provides a status as of March 31, 2026 of the amortized cost of Consumer Program loans modified in the last 12 months by the type of modification ($ in thousands):

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Credit Quality Indicators

For each class of loan, the primary credit quality indicator used for evaluating credit quality and estimating the ACL is risk rating categories of Pass, Pass/Watch, Special Mention, Substandard, and Doubtful. Through its system of internal controls, Primis evaluates and segments loan portfolio credit quality using regulatory definitions for Pass, Special Mention, Substandard, and Doubtful. Special Mention loans are considered “criticized”, while loans classified as Substandard or Doubtful are considered “classified”.

The risk levels, as described below, do not necessarily follow the regulatory definitions of risk levels with the same name. A general description of the characteristics of the risk levels follows:

Pass is determined by the following criteria:

• Risk rated 1 loans have little or no risk and are generally secured by cash or cash equivalents;
• Risk rated 2 loans have minimal risk to well qualified borrowers and no significant questions as to safety;
• Risk rated 3 loans are satisfactory loans with strong borrowers and secondary sources of repayment;
• Risk rated 4 loans are satisfactory loans with borrowers not as strong as risk rated 3 loans and may exhibit a greater degree of financial risk based on the type of business supporting the loan.

In the first quarter of 2026, the Company expanded its risk grade matrix to include Risk Grade 5 – “Pass/Watch” that is determined by the following criteria:

• Risk rated 5 loans are pass loans that warrant more than the normal level of supervision and have the possibility of an event occurring that may weaken the borrower’s ability to repay.

Special Mention is determined by the following criteria:

• Risk rated 6 loans are special mention loans that have increasing potential weaknesses beyond those at which the loan originally was granted and if not addressed could lead to inadequately protecting the Company’s credit position.

Substandard is determined by the following criteria:

• Risk rated 7 loans are substandard loans and are inadequately protected by the current sound worth or paying capacity of the obligor or the collateral pledged. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

Doubtful is determined by the following criteria:

• Risk rated 8 loans are doubtful of collection and the possibility of loss is high, but pending specific borrower plans for recovery, its classification as a loss is deferred until its more exact status is determined.
• Risk rated 9 loans are loans which are considered uncollectable and of such little value that their continuance as bankable assets is not warranted.

In monitoring credit quality trends in the context of assessing the appropriate level of the ACL on loans, the Company monitors portfolio credit quality by the weighted-average risk grade of each class of loan.

The following table presents weighted-average risk grades for all loans, by class and year of origination/renewal as of March 31, 2026 ($ in thousands):

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The following table presents weighted-average risk grades for all loans, by class and year of origination/renewal as of December 31, 2025 ($ in thousands):

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Revolving loans that were converted to term loans during the three months ended March 31, 2026 and 2025 were as follows ($ in thousands):

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The recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure were $1 million at both March 31, 2026 and December 31, 2025.

Allowance For Credit Losses – Loans

The allowance for credit losses on loans is a contra-asset valuation account, calculated in accordance with ASC 326 that is deducted from the amortized cost basis of loans to present the net amount expected to be collected. The amount of the allowance represents management's best estimate of current expected credit losses on loans considering available information, from internal and external sources, relevant to assessing collectability over the loans' contractual terms, adjusted for expected prepayments when appropriate. The accounting policy related to the allowance for credit losses is considered a critical policy given the level of estimation, judgment, and uncertainty in the levels of the allowance required to account for the expected losses in the loan portfolio and the material effect such estimation, judgment, and uncertainty can have on the consolidated financial results.

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

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

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

In some cases, management may determine that an individual loan exhibits unique risk characteristics which differentiate the loan from other loans within our loan pools. In such cases, the loans are evaluated for expected credit losses on an individual basis and excluded from the collective evaluation. No allowance for credit losses has been recognized for PPP loans as such loans are fully guaranteed by the SBA.

The following tables present details of the allowance for credit losses on loans segregated by loan portfolio segment as of March 31, 2026 and December 31, 2025, calculated in accordance with ASC 326 ($ in thousands).

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Activity in the allowance for credit losses by class of loan for the three months ended March 31, 2026 and 2025 is summarized below ($ in thousands):

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

The following table presents the principal balance of loans that were evaluated for expected credit losses on an individual basis and the related specific allocations, by loan portfolio segment as of March 31, 2026 and December 31, 2025 ($ in thousands):

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A loan is collateral dependent when the borrower is experiencing financial difficulty and repayment of the loan is expected to be provided substantially through the sale of the collateral. The expected credit loss for collateral-dependent loans is measured as the difference between the amortized cost basis of the loan and the fair value of the collateral, adjusted for the estimated cost to sell. Fair value estimates for collateral-dependent loans are derived from appraised values based on the current market value or the “as is” value of the collateral, normally from recently received and reviewed appraisals.

The Company calculates expected credit losses on collateral-dependent loans as described when foreclosure is probable and also elects to apply it in instances when foreclosure is not probable as allowed by ASC 326.

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Commercial real estate, loans secured by farmland, construction and land development, residential 1-4 family, multi-family, and home equity line of credit loans are secured by liens on real estate properties. Commercial loans are secured by business assets (inventory, equipment, receivables), residential real estate, and other non-real estate collateral. There have been no significant changes in collateral securing any of our collateral-dependent loans from December 31, 2025 to March 31, 2026. The following table presents a breakdown between loans at amortized cost that were evaluated on an individual basis and identified as collateral dependent loans and non-collateral dependent loans, by loan portfolio segment and their collateral value as of March 31, 2026 and December 31, 2025 ($ in thousands).

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(1) Loan balances include PCD loans and are presented net of SBA guarantees.

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4. DERIVATIVES

Mortgage Banking Derivatives and Financial Instruments

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

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

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The key unobservable inputs used in determining the fair value of IRLCs are as follows as of March 31, 2026 and December 31, 2025:

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The following summarizes derivative and non-derivative financial instruments as of March 31, 2026 and December 31, 2025 ($ in thousands):

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(1) Pull through rate adjusted.

The notional amounts of mortgage loans held for sale not committed to investors was $102 million and $90 million as of March 31, 2026 and December 31, 2025, respectively.

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

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5. FAIR VALUE

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

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data

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

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

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

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Fair Value of Financial Instruments

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

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

The fair value of junior subordinated debt and senior subordinated notes are based on current rates for similar financing. Carrying amount of Federal Reserve Bank and FHLB stock is a reasonable estimate of fair value as these securities are not readily marketable and are based on the ultimate recoverability of the par value. Fair value of off-balance-sheet items is not considered material. The fair value of net loans, loans held for sale at the lower of cost or market, time deposits, junior subordinated debt, and senior subordinated notes are measured using the exit-price notion. The net loans that use level 2 inputs are related to the portfolio of loans underlying interest rate swaps.

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6. LEASES

The Company leases certain premises under operating leases. In recognizing lease right-of-use assets and related liabilities, the Company accounts for lease and non-lease components (such as taxes, insurance, and common area maintenance costs) separately as such amounts are generally readily determinable under the lease contracts.

As of March 31, 2026 and December 31, 2025, the Company had operating lease liabilities totaling $61 million and right-of-use assets totaling $65 million and $66 million, respectively, reflected in our condensed consolidated balance sheets related to these leases. The Company does not currently have any financing leases. For the three months ended March 31, 2026 and 2025, net operating lease costs were $2 million and $1 million, respectively. These net operating lease costs are reflected in occupancy expenses on the condensed consolidated statements of income.

The following table presents other information related to operating leases:

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The following table summarizes the maturity of remaining lease liabilities:

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As of March 31, 2026, the Company did not have any operating lease that has not yet commenced that would create additional lease liabilities and right-of-use assets. The amount of expense related to short-term leases recognized for the three months ended March 31, 2026 and 2025 was immaterial.

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7. DEBT AND OTHER BORROWINGS

Other borrowings can consist of FHLB convertible advances, FHLB overnight advances, FHLB advances maturing within one year, federal funds purchased, Federal Reserve Board Discount Window, secured borrowings and securities sold under agreements to repurchase (“repo”) that mature within one year, which are secured transactions with customers. The balance in repo accounts as of both March 31, 2026 and December 31, 2025 was $4 million.

As of March 31, 2026 and December 31, 2025, we had pledged callable agency securities, residential government-sponsored mortgage-backed securities and collateralized mortgage obligations with a carrying value of $7 million and $6 million, respectively, to customers who require collateral for overnight repurchase agreements and deposits.

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Other borrowings consist of the following ($ in thousands):

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As of March 31, 2026, Primis Bank had lendable collateral value in the form of residential 1-4 family mortgages, HELOCs, commercial mortgage loans, and investment securities supporting borrowing capacity of approximately $662 million from the FHLB, of which the Company has the full amount available to borrow less our current advances outstanding.

The Bank has the ability to borrow from the Federal Reserve discount window borrowing program. As of March 31, 2026, the Bank had borrowing capacity of $493 million within the program but has not utilized it.

In 2017, the Company assumed $10 million of trust preferred securities that were issued on September 17, 2003 and placed through a trust in a pooled underwriting totaling approximately $650 million. As of March 31, 2026 and December 31, 2025, there was $10 million outstanding, net of approximately $369 thousand and $381 thousand of debt issuance costs as of March 31, 2026 and December 31, 2025, respectively. As of March 31, 2026 and December 31, 2025, the interest rate payable on the trust preferred securities was 6.89% and 6.91%, respectively. As of March 31, 2026, all of the trust preferred securities qualified as Tier 1 capital.

On January 20, 2017, Primis completed the sale of $27 million of its fixed-to-floating rate senior Subordinated Notes due 2027. The Company repaid these notes on January 31, 2026.

On August 25, 2020, Primis completed the sale of $60 million of its fixed-to-floating rate Subordinated Notes due 2030. Interest is payable on these notes at a floating rate equal to Three-Month Term SOFR, plus a spread of 531 basis points. As of March 31, 2026 and December 31, 2025, 80% of these notes qualified as Tier 2 capital.

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As of both March 31, 2026, and December 31, 2025, the remaining unamortized debt issuance costs related to the senior Subordinated Notes totaled approximately $1 million.

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Secured Borrowings

The balance of secured borrowings was $14 million and $15 million as of March 31, 2026 and December 31, 2025, respectively. The Company did not transfer any principal balance of loans to another financial institution during the three months ended March 31, 2026 or during the year ended December 31, 2025, that were accounted for as secured borrowings. The remaining amortized cost balance of the underlying loans was $15 million as of both March 31, 2026 and December 31, 2025. None of the loans underlying the secured borrowings were past due 30 days or greater or on nonaccrual as of March 31, 2026 and December 31, 2025, and were all internally rated as “pass” loans as presented in our “credit quality indicators” section of “Note 3 – Loans and Allowance for Credit Losses”. The loans were included in our allowance for credit losses process and an allowance was calculated on the loans as part of their inclusion in a pool with other loans with similar credit risk characteristics. There were no charge-offs of the loans underlying the secured borrowings during the three months ended March 31, 2026. The underlying loans collateralize the borrowings and cannot be sold or pledged by the Company.

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8. STOCK-BASED COMPENSATION

The 2017 Equity Compensation Plan (the “2017 Plan”) was replaced during 2025 and previously had a maximum number of 750,000 shares reserved for issuance. No further awards will be granted under the 2017 Plan, but the plan will remain in effect only so long as awards granted under the plan remain outstanding. The 2017 Plan was replaced during 2025 with the 2025 Omnibus Incentive Plan (the “2025 Plan”), which has a maximum of 600,000 shares reserved for issuance. The purpose of the 2025 Plan, similar to the 2017 Plan, is to promote the success of the Company by providing greater incentives to employees, non-employee directors, consultants and advisors to associate their personal financial interests with the long-term financial success of the Company, including its subsidiaries, and with growth in stockholder value, consistent with the Company’s risk management practices.

A summary of stock option activity for the three months ended March 31, 2026, follows:

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There was no stock-based compensation expense associated with stock options for the three months ended March 31, 2026 and 2025. As of March 31, 2026, we do not have any unrecognized compensation expense associated with the stock options.

A summary of time vested restricted stock award activity for the three months ended March 31, 2026, follows:

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Stock-based compensation expense for time vested restricted stock awards totaled $67 thousand and $31 thousand for the three months ended March 31, 2026 and 2025, respectively. As of March 31, 2026, unrecognized compensation expense associated with restricted stock awards was $504 thousand, which is expected to be recognized over the remaining contractual term.

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A summary of performance-based restricted stock units (the “Units”) for the three months ended March 31, 2026, follows:

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These Units are subject to service and performance conditions and vest based on the achievement of both conditions. Achievement of the performance condition will be determined at the end of the five-year performance period for awards granted prior to 2025 by evaluating the: (1) Company’s adjusted earnings per share compound annual growth measured for the performance period and (2) performance factor achieved. Achievement of the performance condition will be determined at the end of the three-year performance period for awards granted in 2025 by evaluating the: (1) Company’s return on average assets versus peers; (2) growth in noninterest bearing deposits versus peers; (3) total shareholder return versus peers; and (4) performance factor achieved. Payouts between performance levels will be determined based on straight line interpolation. Upon vesting, payout will be primarily Company common shares but based on the terms of the award and performance factor achieved some payouts may be in cash.

The Company recognized $42 thousand and zero stock-based compensation expense during the three months ended March 31, 2026, and 2025, respectively, as a result of the probability of a portion of the Units vesting. The potential unrecognized compensation expense associated with these Units was approximately $2 million and $3 million as of March 31, 2026 and December 31, 2025, respectively.

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9. COMMITMENTS AND CONTINGENCIES

Financial Instruments with Off-Balance Sheet Risk

Primis is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit, standby letters of credit and guarantees of credit card accounts. These instruments involve elements of credit and funding risk in excess of the amounts recognized in the consolidated balance sheets. Letters of credit are written conditional commitments issued by Primis to guarantee the performance of a customer to a third party. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers. The Company had letters of credit outstanding totaling $19 million and $20 million as of March 31, 2026 and December 31, 2025, respectively.

The Company’s 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. Primis uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments. Unless noted otherwise, Primis does not require collateral or other security to support financial instruments with credit risk.

Allowance For Credit Losses - Off-Balance Sheet Credit Exposures

The allowance for credit losses on off-balance sheet credit exposures is a liability account, calculated in accordance with ASC 326, representing expected credit losses over the contractual period for which Primis is exposed to credit risk resulting from a contractual obligation to extend credit. No allowance is recorded if the Company has the unconditional right to cancel the obligation. Off-balance sheet credit exposures primarily consist of amounts available under outstanding lines of credit and letters of credit detailed above. For the period of exposure, the estimate of expected credit losses

considers both the likelihood that funding will occur and the amount expected to be funded over the estimated remaining life of the commitment or other off-balance sheet exposure. The likelihood and expected amount of funding are based on historical utilization rates. The amount of the allowance represents management's best estimate of expected credit losses on commitments expected to be funded over the contractual life of the commitment. Estimating credit losses on amounts expected to be funded uses the same methodology as described for loans in Note 3 - Loans and Allowance for Credit Losses, as if such commitments were funded. The allowance for credit losses on off-balance sheet credit exposures is reflected in other liabilities in the condensed consolidated balance sheets.

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

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Commitments

Commitments to extend credit are agreements to lend to a customer if 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. Primis evaluates each customer’s creditworthiness on a case-by-case basis.

The Company had $215 million in mortgage loan commitments outstanding as of March 31, 2026, related to approved mortgage loan applications, although not all approved applications will ultimately fund.

As of March 31, 2026 and December 31, 2025, the Company had unfunded lines of credit and undisbursed construction loan funds totaling $588 million and $567 million, respectively, not all of which are expected to be drawn. Virtually all of the unfunded lines of credit and undisbursed construction loan funds are variable rate instruments. The amount of certificate of deposit accounts maturing in less than one year was $278 million as of March 31, 2026. Management anticipates that funding requirements for these commitments will be met in the normal course of business.

Primis also had outstanding commitments under subscription agreements entered into for investments in non-marketable equity securities of $1 million as of both March 31, 2026 and December 31, 2025.

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10. EARNINGS PER SHARE

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

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The Company had 7,589 and 35,800 anti-dilutive options as of March 31, 2026 and March 31, 2025, respectively.

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11. SEGMENT INFORMATION

The Company’s reportable operating segments are determined based on its internal organizational structure, which is overseen by the CEO, the Company’s designated Chief Operating Decision Maker. While the CEO consults with key members of his leadership team, the ultimate responsibility for making operational decisions and resource allocations resides with the CEO. For the three months ended March 31, 2026 and 2025, the Company’s internal organizational structure and resulting management reporting was concentrated around the Bank and Primis Mortgage, which resulted in the Company determining these to be its two reportable segments.

Primis’ organizational structure and its operational segments are determined by attributes such as products, services, and customer base, which are then aggregated based on similarities around these attributes. The operating results for each segment are regularly reviewed by the CEO using a broad set of financial and operational data. Key financial data utilized by the CEO to assess financial performance and allocate resources includes loan and deposit growth, certain direct expenses, net interest income and mortgage banking income, along with overall net income attributable to Primis’ common shareholders. The CEO also considers actual results compared to budgeted results in these metrics when assessing performance and making determinations related to resource allocations. The following is a description of the Company’s reportable segments.

Primis Bank. This segment specializes in providing financing services to businesses in various industries along with consumer and residential loans to individuals. The segment also provides deposit-related services to businesses, non-profits, municipalities, and individual consumers. The primary source of revenue for this segment is interest income from the origination of loans, while the primary expenses are interest expenses on deposits, provisions for credit losses, personnel costs, and data processing expenses.

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

The following table provides financial information for the Company's reportable segments. In addition to the Company’s two reportable segments as described above, the caption “Other” has been included to provide reconciliation of the Company’s consolidated results and includes operational costs that are not a part of the two reportable segments but

don’t qualify to be considered a separate reportable segment. “Other” primarily includes the Primis Bank Holding Company and PFH (for the three months ended March 31, 2025), which are generally cost centers to the consolidated entity, along with elimination adjustments to reconcile the results of the reportable segments to the consolidated financial statements prepared in conformity with GAAP.

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(1) Other includes Primis Bank Holding Company and intercompany eliminations.

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(1) Other includes Primis Bank Holding Company, PFH, and intercompany eliminations.

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

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 in conjunction with the condensed consolidated financial statements, the footnotes thereto, and the other financial data included in this report and in our Annual Report on Form 10-K for the year ended December 31, 2025. Results of operations for the three months ended March 31, 2026, are not necessarily indicative of results that may be achieved for any other period. The emphasis of this discussion will be on the three months ended March 31, 2026, compared to the three months ended March 31, 2025 for the condensed consolidated income statements. For the condensed consolidated balance sheets, the emphasis of this discussion will be the balances as of March 31, 2026 compared to December 31, 2025. This discussion and analysis contain statements that may be considered “forward-looking statements” as defined in, and subject to the protections of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. See the following section for additional information regarding forward-looking statements.

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OVERVIEW

Primis Financial Corp. is the bank holding company for Primis 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. Primis Bank has 24 full-service branches in Virginia and Maryland and also provides services to customers through certain online and mobile applications. As of March 31, 2026, Primis had $4.3 billion in total assets, $3.4 billion in total loans held for investment, $3.4 billion in total deposits and $427 million in total stockholders’ equity.

We organized the core bank and lines of business in a way that we believe will drive premium operating results. Our strategy centers on growing earning assets, growing non-interest deposits, and achieving higher production and profitability in our retail mortgage business and the first quarter of 2026 was reflective of progress in these areas.

OPERATIONAL HIGHLIGHTS

Executive Overview

Our growth strategy is focused on driving higher production and profitability in four key areas of the company identified as the core community bank, mortgage warehouse, Panacea financial lending, and PMC. The following highlights key metrics from these four areas during the first quarter of 2026:

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Core Community Bank

• $66 million of closed loans in the first quarter of 2026 with a pipeline of $123 million as of March 31, 2026.
• Low concentrations of investor commercial real estate loans, making up just 25% of total loans as of March 31, 2026.
• The core Bank’s cost of deposits was 1.59% in the first quarter of 2026, compared to 1.83% in the first quarter of 2025. Approximately 23% of the core Bank’s deposit base as of March 31, 2026, are noninterest bearing deposits.
• The core Bank had zero brokered deposits.

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Panacea Financial Division of the Bank

• Outstanding loan balances grew 10% to $600 million during the three months ended March 31, 2026 from $544 million as of December 31, 2025. The balance as of March 31, 2026 included $38 million classified as HFS that subsequently sold in April 2026.
• Outstanding deposits were $153 million as of March 31, 2026, up 20% from December 31, 2025.

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Mortgage Warehouse

• Outstanding loan balances as of March 31, 2026 were $460 million, up 45% from $318 million as of December 31, 2025.
• Mortgage warehouse funded on average approximately 12% of its outstanding loans with associated customer noninterest bearing deposit balances during the three months ended March 31, 2026.

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Primis Mortgage Company

• Funded loan volume was $367 million in the first quarter of 2026, up 122% from the first quarter of 2025.
• Pre-tax earnings was $2 million during the three months ended March 31, 2026 compared to $800 thousand during the three months ended March 31, 2025, an increase of 162%.

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Funding for many of our strategies (all of the above excluding the core community bank) is provided exclusively by the Bank’s digital platform powered by what we believe is one of the safest and most functional deposit accounts in the nation. Because of the scalability of the platform, there is significantly less pressure on the core community bank to provide this funding and risk the profitable, decades old relationships with core customers. The digital platform ended the first quarter of 2026 with approximately $1.0 billion of deposits with a cost of deposits of 3.79%. The digital platform successfully grew business accounts in 2026 with small business balances reaching $28 million as of March 31, 2026, up substantially from $16 million at December 31, 2025. Over 1,200 of our digital accounts have come from referrals from other customers and approximately 81% of our consumer accounts have been with the Bank for over two years.

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SUMMARY OF FINANCIAL RESULTS

Results of Operations Highlights

The quarter ended March 31, 2026 was strong, earning $7 million, or $0.30 basic and diluted earnings per common share, compared to net income available to common shareholders of $23 million, or $0.92 basic and diluted earnings per common share, for the three months ended March 31, 2025. Net income available to common shareholders included $25 million in one-time gains related to the deconsolidation of PFH during the three months ended March 31, 2025. When excluding the one-time gains, net income available to common shareholders grew $9 million in the first quarter of 2026 when compared to the same quarter last year.

The key financial drivers of the year over year results are noted in the following table with additional discussions following the table ($ in thousands).

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• The net interest income increase was driven by an increase in interest and dividend income and flat interest expense in 2026 compared to 2025. The interest income increases were driven primarily by $400 million higher average loans held for investment balances, while we maintained flat interest expense due to lower rates on interest bearing deposit accounts despite a growth in those accounts of $144 million. We also grew noninterest bearing deposits by an average of $87 million from the three months ended March 31, 2025 to March 31, 2026, reducing the need to seek additional higher cost borrowings.
• Net interest margin increased to 3.43% for the three months ended March 31, 2026, compared to 3.15% for the three months ended March 31, 2025. Continued rebuilding of earning asset levels coupled with favorable deposit pricing was responsible for the improvement during the first quarter of 2026.
• Noninterest income declined by $19 million during the three month period of 2026 compared to 2025 primarily driven by the $25 million one-time gain on de-consolidation of PFH. When excluding the one-time gain, noninterest income grew $8 million driven by $5 million higher mortgage banking income, $700 thousand higher Consumer Program derivative income, and $600 thousand higher loan sale gains. The increase in mortgage banking income gains was a result of 122% increase in funded loan volume and subsequent sale of a large amount of these funded loans during the quarter along with a $2 million increase in fair value gains on the portfolio in the first quarter of 2026 compared to the same quarter in 2025.
• Noninterest expense increased $1 million, or 4%, primarily due to increases in personnel and occupancy expenses. Personnel expenses grew primarily as a result of PMC due to the significant growth of the business year-over-year and occupancy expenses grew primarily as a result of increased lease expense related to the sale-leaseback transaction in December of 2025. We experienced declines in most remaining noninterest expense categories, led by $700 thousand less data processing and $700 thousand less other operating expenses, as a result of our new data processing contract executed in the second half of 2025 and continued overall expense discipline across the company.

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Balance Sheet Highlights

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• Total assets increased to $4.3 billion, or 5%, as of March 31, 2026 when compared to December 31, 2025 primarily due to growth in PMC, Mortgage Warehouse, and the Panacea Division that drove growth in LHFI and LHFS.
• Total LHFI as of March 31, 2026 were $3.4 billion, an increase of $113 million, or 3%, from December 31, 2025. The increase was led by growth in the Mortgage Warehouse loans of $142 million since December 31, 2025.
• Total deposits increased $28 million or 1%, from December 31, 2025 to March 31, 2026. Increases were seen in money market and savings, partially offset by declines in NOW and noninterest bearing demand accounts. Growth was partially driven by increased Mortgage Warehouse business and Panacea Division deposit account balances. We have no wholesale deposit funding as of March 31, 2026.
• The ratio of gross loans (excluding loans held for sale) to deposits increased to 99.2% as of March 31, 2026, from 96.7% as of December 31, 2025.
• Allowance for credit losses to total loans was down 3 basis points to 1.37% as of March 31, 2026, compared to 1.40% as of December 31, 2025. The decline was driven by continued decline in promo and overall balances in the Consumer Program portfolio and a changing mix of the Bank’s loan portfolio to loan categories with lower reserve requirements.
• Asset quality declined from year end with nonperforming assets as a percentage of total assets (excluding SBA guarantees) at 2.35% as of March 31, 2026, compared to 2.03% as of December 31, 2025, a 32 basis point change. This decline was primarily driven by one commercial relationship comprising two loans that became 90 days past due as of March 31, 2026, but were still accruing. The borrower subsequently made multiple payments in April that brought the loans under 40 days past due. Excluding this relationship, our asset quality was stable from December 31, 2025 to March 31, 2026.
• Our capital ratios continued to exceed requirements to be considered well capitalized as of March 31, 2026, with decreases in Common Equity Tier 1 and Tier 1 and total risk-based capital of 18, 19 and 39 basis points, respectively, compared to December 31, 2025.

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RESULTS OF OPERATIONS

Net Income

Net income available to common shareholders for the three months ended March 31, 2026 totaled $7 million, or $0.30 basic and diluted earnings per share, compared to $23 million, or $0.92 basic and diluted earnings per share, for the three months ended March 31, 2025. Net income available to common shareholders during the three months ended March 31, 2025 included a $25 million one-time gain related to the deconsolidation of PFH. When excluding the one-time gain, net income available to common shareholders grew $9 million in the first quarter of 2026 when compared to the same quarter last year and reflects an increase in noninterest income of $6 million primarily due to higher mortgage banking income in the first quarter of 2026 driven by growth of PMC and higher loan sales and related gains. The results also reflect a $6 million increase in net interest income driven by an increase in interest and dividend income primarily from higher average loans held for investment balances. These are partially offset by an increase in noninterest expenses of $1 million driven by personnel expenses due to growth in PMC and a decrease in noncontrolling income of $4 million. Additional details of the changes in net income will be discussed in the remaining sections of this Results of Operations section.

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Net Interest Income and Net Interest Margin

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:

(1) Includes loan fees in both interest income and the calculation of the yield on loans.

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

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Net interest income was $32 million for the three months ending March 31, 2026, compared to $26 million for the three months ended March 31, 2025. Net interest income increased primarily as a result of higher average net loans balances in the first quarter of 2026 compared to same period in prior year while rates over this same time remained relatively stable. Interest expense remained relatively flat due to lower rates on interest bearing deposit accounts despite deposit growth in the current year. Our net interest margin for the three months ending March 31, 2026 was 3.43%, compared to 3.15% for the three months ending March 31, 2025. Continued rebuilding of earning asset levels coupled with favorable deposit pricing was responsible for the improvement during the first quarter of 2026. Margin increased by 28 basis points primarily from higher average interest-earning asset balances and higher net interest income when comparing the three months ending March 31, 2026 to the three months ending March 31, 2025.

• Average earning assets increased by $395 million, or 12%, primarily due to an increase in average total loans of $388 million, or 13%, and growth in other earning assets of $75 million, or 86%, partially offset by a decrease in average investment securities of $69 million, or 28%. Average earning asset balances were driven higher by a $400 million increase in average loans held for investment balances which was primarily a result of continued growth of average Panacea Division loans and Mortgage Warehouse loans during the three months ended March 31, 2026 compared to the same period in 2025.
• Average interest-bearing liabilities increased by $208 million largely due to growth in average savings deposit balances of $168 million. We also experienced growth in NOW and demand deposits of $33 million, partially offset by declines in average money market deposit accounts of $38 million and time deposit balances of $19 million. The increase in demand deposits was driven by growth in the Panacea Division and Mortgage Warehouse business, each of which has been successful in growing deposits alongside their loan growth. Rates on average interest-bearing deposits declined 28 basis points in total, despite a growth in those accounts, due to lower rates on interest bearing deposit accounts. Interest paid on average borrowings increased $1 million due to an increase of $64 million in average borrowings compared to the first quarter of the prior year.
• Yields on average interest earning assets increased by 3 basis points comparing the three months ended March 31, 2026 to 2025. The increase was primarily driven by higher yields on investments of 124 basis points during the three months ending March 31, 2026 compared to the three months ending March 31, 2025 due to the reinvestment in higher yielding securities in fourth quarter of 2025. Partially offsetting higher investment yields was a decrease in yield on other earning assets of 27 basis points. Yields on interest-bearing liabilities declined by 20 basis points during the three months ending March 31, 2026 compared to the three months ending March 31, 2025, primarily driven by the decline in benchmark borrowing rates over that time.

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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 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.

For both the three months ended March 31, 2026 and 2025, we had a provision for credit losses of $2 million. The provision was flat when comparing the three months ended March 31, 2026 to March 31, 2025 as a result of provision increases in our commercial, commercial owner occupied, and warehouse loan portfolio growth being largely offset by net charge-offs in the consumer loan portfolio. See additional discussion in the Asset Quality section of this MD&A.

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

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Noninterest income decreased 58% to $14 million for the three months ended March 31, 2026, compared to $32 million for the three months ended March 31, 2025. Noninterest income included a $25 million one-time gain related to the deconsolidation of PFH during the three months ended March 31, 2025. When excluding the one-time gain, noninterest income for the three months ended March 31, 2026 grew $8 million compared to the same period in 2025. The increase was primarily driven by $5 million of higher income from mortgage banking activity during the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The 92% increase in mortgage banking income was related to an increase in funded loan volume and subsequent sale of a large amount of these funded loans during the first quarter of 2026 along with a $2 million increase in fair value gains on the portfolio in the first quarter of 2026 compared to the same quarter in 2025.

Noninterest income also had increases year-over-year as a result of gains on sale of loans of $567 thousand during the three months ended March 31, 2026, primarily related to the sale of the guaranteed portion of SBA loans driven by the Panacea Division. Consumer Program related income increased $688 thousand, driven by positive fair value adjustments on the related derivative in the first quarter of 2026 compared to negative adjustments in the same quarter in 2025. Noninterest income from the Consumer Program is expected to be increasingly immaterial going forward as promotional loans continue to decline. Meanwhile, we anticipate additional gains from loan sales during the remainder of the year generated by the Panacea Division.

Income from bank-owned life insurance increased $47 thousand for the three months ended March 31, 2026 compared to March 31, 2025. The Company is currently in the process of restructuring its bank-owned life insurance portfolio which is anticipated to improve noninterest income by approximately $1.2 million annually, beginning late in the second quarter of 2026.

Noninterest Expense

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Noninterest expenses increased 4% to $34 million during the three months ended March 31, 2026, compared to $33 million during the three months ended March 31, 2025. The increase was primarily driven by higher salaries and benefits expenses and occupancy expenses, partially offset by declines in most of our other noninterest expense categories.

Salaries and benefits expenses increased $2 million during the three months ended March 31, 2026, compared to the same period in 2025. PMC accounted for most of the growth in salaries and benefits due to the significant growth of the business in the last year.

Occupancy expenses grew $1 million during the three months ended March 31, 2026, compared to the three months ended March 31, 2025, primarily as a result of increased lease expense related to the sale-leaseback transaction executed in December of 2025.

Data processing expense decreased $661 thousand during the three months ended March 31, 2026, compared to the same period in 2025 driven by the reduced cost of data processing for our core loan and deposit system as a result of renegotiating our core data processing contract with our vendor in the second half of 2025.

Professional fees decreased $365 thousand in the first quarter of 2026 compared to the first quarter of 2025 primarily due to legal, accounting, and audit related costs in the current year starting to normalize after the prior year increases that were attributable to specific non-recurring accounting events. Other operating expenses decreased $720 thousand during the three months ended March 31, 2026, compared to the same period in 2025 attributable to continued overall general expense discipline across the company.

FINANCIAL CONDITION

The following illustrates key balance sheet categories as of March 31, 2026 and December 31, 2025 ($ in thousands):

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LOAN PORTFOLIO

Loans Held for Sale

LHFS increased $57 million during the first quarter of 2026 from December 31, 2025 primarily due to the origination for sale during the quarter of $41 million of Panacea Financial division commercial loans and an increase of $16 million in PMC loans. A majority of the Panacea loans were sold to another financial institution a few weeks after March 31, 2026 and the remainder is anticipated to be sold to the same financial institution before June 30, 2026. The increase in PMC loans is a result of overall increase in origination volume during the quarter.

Loans Held for Investment

Gross LHFI were $3.4 billion and $3.3 billion as of March 31, 2026 and December 31, 2025, respectively. The increase in loans was driven by growth of mortgage warehouse loans and Panacea Division commercial loans. The growth was partially offset by loan paydowns during the three months ended March 31, 2026 of consumer loans and non-owner occupied commercial real estate loans. As of March 31, 2026 and December 31, 2025, 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.

The composition of our loans HFI portfolio consisted of the following as of March 31, 2026 and December 31, 2025 ($ in thousands):

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The following table sets forth the contractual maturity ranges of our LHFI portfolio and the amount of those loans with fixed and floating interest rates in each maturity range as of March 31, 2026 ($ in thousands):

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Our highest concentration of credit by loan type is in commercial real estate. As of March 31, 2026, 36% of our loan portfolio was comprised of loans secured by commercial real estate, including multi-family residential loans and loans secured by farmland. Commercial real estate loans are generally viewed as having a higher risk of default than residential real estate loans and depend on cash flows from the owner’s business or the property’s tenants to service the debt. The borrower’s cash flows may be affected significantly by general economic conditions, a downturn in the local economy, or in occupancy rates in the market where the property is located, any of which could increase the likelihood of default.

We seek to mitigate risks attributable to our most highly concentrated portfolios and our portfolios that pose unique risks to our balance sheet through our credit underwriting and monitoring processes, including oversight by a centralized credit administration function, approval process, credit policy, and risk management committee, as well as through our seasoned bankers that focus on lending to borrowers with proven track records in markets with which we are familiar.

The following table presents the composition of the industry classification for commercial real estate non-owner occupied loans as a percentage of total loans for the periods ended March 31, 2026 and December 31, 2025 ($ in thousands):

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The following table presents the composition of office portfolio loans for commercial real estate non-owner occupied loans, their loan count and their weighted average loan-to-value as of March 31, 2026 and December 31, 2025 ($ in thousands):

(1) The office portfolio is a subset of our Commercial real estate non-owner occupied loans.

The shift to work-from-home and hybrid work environments has caused a decreased utilization of office space. As such, we have additional monitoring for our exposure to office space, within our non-owner occupied commercial real estate portfolio, including periodic credit risk assessment of expiring office leases for most of the office portfolio. We do not currently finance large, high-rise, or major metropolitan central business district office buildings, and the office portfolio is generally in suburban markets with strong occupancy levels.

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Consumer Program Loans

The following table sets forth the contractual maturity ranges of our Consumer Program loan portfolio as of March 31, 2026, which is only originated at fixed rates ($ in thousands):

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Over the past two years our Consumer Program loan portfolio comprised a significant amount of loans that had a no-interest promotional period. A majority of these have paid-off or converted to an amortization period and as of March 31, 2026 we only had approximately $800 thousand of principal amount of promotional loans that remain in a promotional period. All of these loans will end their promotional period in the next eight months.

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ASSET QUALITY

Nonperforming Assets

The following table presents a comparison of nonperforming assets as of March 31, 2026 and December 31, 2025 ($ in thousands):

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Nonperforming assets increased $19 million, or 22%, as of March 31, 2026 compared to December 31, 2025, which was driven by an increase in loans past due greater than 90 days and still accruing interest. This increase was driven by one relationship comprised of two commercial loans to a small business located within our core community bank lending footprint. Subsequent to March 31, 2026, multiple payments were made to the loans that resulted in the status of each loan reducing to approximately 40 days past due.

We will generally place a loan on nonaccrual status when it becomes 90 days past due, with the exception of most consumer loans, which are charged off at 120 days past due and Consumer Program loans, which are charged off once they reach 90 days past due. Loans will also be placed on nonaccrual status in cases where we are uncertain whether the borrower can satisfy the contractual terms of the loan agreement. Cash payments received while a loan is categorized as nonaccrual will be recorded as a reduction of principal as long as doubt exists as to future collections.

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

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.

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.

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.

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

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

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We believe that the allowance for credit losses as of March 31, 2026 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.

Our allowance for credit losses was $46 million as of both March 31, 2026 and December 31, 2025. The allowance was flat during the three months as a result of the provision being mostly offset by net charge-offs during the period. Net charge-offs were driven by the Consumer Program portfolio and other consumer loan net charge-offs. The provision during the three months ended March 31, 2026 was driven by increases in growth in the commercial, commercial owner occupied, and warehouse loan portfolio balances, partially offset by a decline in commercial non-owner occupied loan balances.

Approximately half of our net charge-offs were related to the Consumer Program portfolio during the three months ended March 31, 2026. During the three months ended March 31, 2026, we charged-off $512 thousand net of recoveries, in the Consumer Program portfolio. Comparatively, during the three months ended March 31, 2025, we charged-off $11 million, net of recoveries. This significant improvement in net charge-offs related to the Consumer Program was a result of the reduction of the promotional loans in the portfolio over that time along with enhanced mitigation and collection efforts implemented by us to improve performance of the portfolio. The remaining balance of net charge-offs during the three months ended March 31, 2026 was related primarily to consumer loans in the Panacea division.

As of March 31, 2026, the principal balance outstanding of Consumer Program loans was $82 million, inclusive of a $5 million discount as a result of our prior decision to market a majority of the portfolio for sale, which has since been moved back to LHFI and will be run-off over time. These loans are accounted for like our other consumer loans and are not placed on nonaccrual because they are charged off when they become 90 days past due. The allowance on this portfolio plus the discount amounts to $7 million, or 8% of the portfolio. As of March 31, 2026, 94% of the outstanding principal balance was current and we had 355% coverage of the principal balance of loans greater than 30 days past due by the aggregate allowance and discount.

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, and repurchase agreements.

AFS and HTM investment securities totaled $179 million as of March 31, 2026, compared to $178 million as of December 31, 2025, primarily due to purchases of AFS securities in the first quarter of 2026, partially offset by unrealized losses on AFS securities and paydowns, maturities, and calls of the AFS and HTM investments during that time. We recognized no credit impairment charges related to credit losses on our HTM investment securities during the three months ended March 31, 2026.

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).

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Debt investment securities that we have the positive intent and ability to hold to maturity are classified as HTM and are 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.

For additional information regarding investment securities refer to “Note 2 - Investment Securities” in this Form 10-Q.

DEPOSITS AND OTHER BORROWINGS

Deposits

Our deposits are diversified in type and by underlying customers and lack significant concentration in any type of customer (i.e. commercial, consumer, government) or industry. The variety of deposit accounts we offer allows us to be competitive in obtaining funds and in responding to the threat of disintermediation (the flow of funds away from depository institutions such as banking institutions into direct investment vehicles such as government and corporate securities). Our ability to attract and maintain deposits, and the effect of such retention on our cost of funds, has been, and will continue to be significantly affected by the general economy and market rates of interest.

Total deposits increased by $28 million to $3.4 billion as of March 31, 2026 from $3.4 billion at December 31, 2025. The mix of deposits changed during the three months ended March 31, 2026, including an increase in money market,

savings and time deposit balances of $59 million, offset by a decline in lower-cost demand and NOW deposit balances of $31 million. Deposits are net of excess amounts we sweep off balance sheet to manage liquidity, but we had no swept deposits as of both March 31, 2026 and December 31, 2025.

Approximately $1.0 billion of our total deposits at both March 31, 2026 and December 31, 2025 are from our digital banking platform with a substantial portion of these deposits from customers outside of our local branch footprint. As of March 31, 2026, approximately 81% of the customers on the digital platform have been with us for at least two years.

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 accounts 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 $873 million, or 25% of total deposits at the Bank, as of March 31, 2026.

The following table sets forth the average balance and average rate paid on each of the deposit categories for the nine months ended March 31, 2026 and 2025 ($ in thousands):

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Other Borrowings

We borrow funds on a short-term basis 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 FHLB with purchases of FHLB stock and other collateral acceptable to the FHLB. As of March 31, 2026 and December 31, 2025, we had $230 million and $25 million of FHLB borrowings, respectively. The borrowings from the FHLB during the three months ended March 31, 2026 are short-term borrowings and were obtained primarily to fund increased loan growth experienced during the quarter. As of March 31, 2026, we had $242 million of unused and available FHLB lines of credit as well as $493 million of available credit with the FRB, secured by excess collateral pledged to the FHLB and FRB in the form of loans and investment securities.

We had secured borrowings of $14 million and $15 million as of March 31, 2026 and December 31, 2025, respectively. 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. For additional information on secured borrowings refer to “Note 7 –Debt and Other Borrowings” in this Form 10-Q.

JUNIOR SUBORDINATED DEBT AND SENIOR SUBORDINATED NOTES

On January 31, 2026, we repaid $27 million of our fixed-to-floating rate senior Subordinated Notes due 2027. At the time of repayment, interest was payable at a floating rate equal to three-month CME Term SOFR plus a tenor spread adjustment of 0.26%. The full benefit to our interest expense and interest margin of repayment is anticipated to be realized beginning in the second quarter of 2026.

For information about junior subordinated debt and senior subordinated notes and their anticipated principal repayments refer to “Note 7 –Debt and Other Borrowings.”

LIQUIDITY AND FUNDS MANAGEMENT

The objective of our liquidity management is to ensure the ability to meet our financial obligations. These obligations include the payment of deposits on demand or at maturity, the repayment of borrowings at maturity and the ability to fund commitments and other new business opportunities. We obtain funding from a variety of sources, including customer deposit accounts, customer certificates of deposit and payments on our loans and investments. If our level of core deposits is 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 and institutional certificates of deposits. In addition, we maintain federal funds lines of credit with two correspondent banks, totaling $75 million, and utilize securities sold under agreements to repurchase and reverse repurchase agreement borrowings from approved securities dealers as needed. For additional information about borrowings and anticipated principal repayments refer to the discussion previously in “Deposits and Other Borrowings”, “Note 7 –Debt and Other Borrowings” and “Note 9 – Commitments and Contingencies”.

We prepare a cash flow forecast on a 30, 60 and 90 day basis along with a one and two year basis. These projections incorporate expected cash flows on loans, investment securities, and deposits based on data used to prepare our interest rate risk analyses. As of March 31, 2026, we were 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 March 31, 2026, we had no material commitments or long-term debt for capital expenditures.

Impact of Inflation and Changing Prices

The financial statements and related financial data presented in Item 1 “Financial Statements” of this Quarterly Report have been prepared in accordance with 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 the effects of changes in the general rate of inflation and changes in prices do. 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.

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 March 31, 2026 and December

31, 2025, 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 March 31, 2026, that we meet all capital adequacy requirements to which we are subject.

The following table provides a comparison of the leverage and risk-weighted capital ratios of Primis Financial Corp. and Primis Bank at the periods indicated to the minimum and well-capitalized required regulatory standards:

(1) Prompt corrective action provisions are not applicable at the bank holding company level.

Bank regulatory agencies have approved regulatory capital guidelines (“Basel III”) aimed at strengthening existing capital requirements for banking organizations. The Basel III Capital Rules require Primis Financial Corp. and Primis Bank to maintain (i) a minimum ratio of Common Equity Tier 1 capital to risk-weighted assets of at least 4.5%, plus a 2.5% “capital conservation buffer”, (ii) a minimum ratio of Tier 1 capital to risk-weighted assets of at least 6.0%, plus the capital conservation buffer, (iii) a minimum ratio of Total capital to risk-weighted assets of at least 8.0%, plus the capital conservation buffer and (iv) a minimum leverage ratio of 4.0%. Failure to meet minimum capital requirements may result in certain actions by regulators which could have a direct material effect on the consolidated financial statements.

Primis Financial Corp. and Primis Bank remain well-capitalized under Basel III capital requirements. Primis Bank had a capital conservation buffer of 3.76% and 3.99% as of March 31, 2026 and December 31, 2025, respectively, which exceeded the 2.50% minimum requirement below which the regulators may impose limits on distributions.

CRITICAL ACCOUNTING POLICIES

The critical accounting policies are discussed in the MD&A in our Annual Report on Form 10-K for the year ended December 31, 2025. Significant accounting policies and changes in accounting principles and effects of new accounting pronouncements are discussed in “Note 1 - Organization and Significant Accounting Policies” in the Form 10-K for the year ended December 31, 2025. Disclosures regarding changes in our significant accounting policies since year end and the effects of new accounting pronouncements are included in “Note 1 - Accounting Policies” in this Form 10-Q. There have been no changes to the significant accounting policies during the three months ended March 31, 2026.

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