Primis Financial Corp. FRST Form 10-Q filing Q2 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

BOLI Bank-owned Life Insurance

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 STATEMENTS 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 June 30, 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 prior to deconsolidation were included in the Company’s consolidated operating results during the six months ended June 30, 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 the 2025 Consolidated Financial Statements included in the Company’s 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 VIEs 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 estimates 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 June 30, 2026, the gross amounts of interest rate swap derivative assets and liabilities were $0 and $115 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. As of June 30, 2026 the Company has one remaining swap that matures in August of 2026.

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 June 30, 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 $6 million and $14 million were purchased during the three and six months ended June 30, 2026, respectively and $10 million and $18 million were purchased during the three and six months ended June 30, 2025. No HTM investments were purchased during the three and six months ended June 30, 2026 and 2025. No investment securities were sold during the three and six months ended June 30, 2026 and 2025.

The amortized cost and fair value of AFS and HTM investment securities as of June 30, 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 $161 million and $26 million at June 30, 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 June 30, 2026, Primis did not have a material allowance for credit losses on HTM securities.

As of June 30, 2026 and December 31, 2025, there were 53 and 40, respectively, of investment securities AFS that were in an unrealized loss position. The unrealized losses related to investment securities AFS as of June 30, 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 part of the Company’s assessment it reviews third-party credit ratings and considered the severity of the impairment. A majority of the Company's mortgage-backed securities were issued by the Federal Home Loan Mortgage Corporation, Federal National Mortgage Association, Government National Mortgage Association, or SBA, each of which is a government agency or government-sponsored entity and guarantees the repayment of its securities. The Company does not intend to sell these securities, and it is more likely than not that the Company will not be required to sell these securities before recovery of the amortized cost. As a result of the Company’s analysis, none of the securities were deemed to require an allowance for credit loss.

The following tables present information regarding investment securities AFS and HTM in a continuous unrealized loss position as of June 30, 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 June 30, 2026 and December 31, 2025 ($ in thousands):

(1) Includes $5 million and $6 million related to loans collateralizing secured borrowings as of June 30, 2026 and December 31, 2025, respectively.

(2) Includes $9 million related to loans collateralizing secured borrowings as of June 30, 2026 and December 31, 2025.

Consumer Program Loans

The Company had $75 million and $90 million of amortized cost balance of loans outstanding in the Consumer Program as of June 30, 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 June 30, 2026, less than 1% of the loans were in a promotional period requiring no payment of interest, with these remaining promotional loans ending their promotional period in the third quarter of 2026.

Accrued Interest Receivable

Accrued interest receivable on loans totaled $16 million and $18 million as of June 30, 2026 and December 31, 2025, respectively, and is included in other assets in the condensed 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 June 30, 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 June 30, 2026 and December 31, 2025, were 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 June 30, 2026 and December 31, 2025.

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The following table presents nonaccrual loans as of June 30, 2026 by class and year of origination ($ in thousands):

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Interest received on nonaccrual loans was immaterial and $736 thousand for the three and six months ended June 30, 2026, respectively, and was immaterial for both the three and six months ended 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 and six months ended June 30, 2026 and the related percentage of the class of the loan portfolio period-end balance by the type of modification as of June 30, 2026, excluding Consumer Program loans ($ in thousands):

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The following table depicts the amortized cost basis as of June 30, 2026, of the performance of loans 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 and six months ended June 30, 2026 and 2025, by the type of modification ($ in thousands):

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(1)Amounts reflect amount of principal forgiveness

The following table provides a status as of June 30, 2026 of the amortized cost of Consumer Program loans modified over the last twelve 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.

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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 allowance for credit losses on loans, we monitor 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 June 30, 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 and six months ended June 30, 2026 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 was $1 million as of June 30, 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 June 30, 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 and six months ended June 30, 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 exceed 90 days past due.

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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 June 30, 2026 and December 31, 2025 ($ in thousands):

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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 condensed consolidated statements of income.

The key unobservable inputs used in determining the fair value of IRLCs are as follows as of June 30, 2026 and December 31, 2025:

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The following summarizes derivative and non-derivative financial instruments as of June 30, 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 $92 million and $90 million as of June 30, 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, 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 June 30, 2026 and December 31, 2025, the Company had operating lease liabilities totaling $61 million and right-of-use assets totaling $64 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 June 30, 2026 and 2025, our net operating lease costs were $2 million and $1 million, respectively, and for the six months ended June 30, 2026 and 2025, our net operating lease costs were $4 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 June 30, 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 and six months ended June 30, 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 June 30, 2026 and December 31, 2025 was $4 million.

As of June 30, 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 $8 million and $6 million, respectively, to customers who require collateral for overnight repurchase agreements and deposits.

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

(1) Advances under the short-term borrowing line at 3.88% interest, maturing in October 2026.

As of June 30, 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 $639 million from the FHLB.

The Bank has the ability to borrow from the Federal Reserve discount window borrowing program. As of June 30, 2026, the Bank had borrowing capacity of $484 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 June 30, 2026 and December 31, 2025, there was $10 million outstanding, net of approximately $357 thousand and $381 thousand of debt issuance costs as of June 30, 2026 and December 31, 2025, respectively. As of June 30, 2026 and December 31, 2025, the interest rate payable on the trust preferred securities was 6.88% and 6.91%, respectively. As of June 30, 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 senior 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 June 30, 2026 and December 31, 2025, 80% of these notes qualified as Tier 2 capital.

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As of both June 30, 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 June 30, 2026 and December 31, 2025, respectively. The Company did not transfer any principal balance of loans to another financial institution during the three and six months ended June 30, 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 $14 million and $15 million as of June 30, 2026 and December 31, 2025, respectively. None of the loans underlying the secured borrowings were past due 30 days or greater or on nonaccrual as of June 30, 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 and six months ended June 30, 2026. The underlying loans collateralize the borrowings and cannot be sold or pledged by the Company.

8. STOCK-BASED COMPENSATION

The 2017 Equity Compensation Plan (the “2017 Plan”) 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 six months ended June 30, 2026, follows:

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There was no stock-based compensation expense associated with stock options for the three and six months ended June 30, 2026 and 2025. As of June 30, 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 six months ended June 30, 2026, follows:

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Stock-based compensation expense for time vested restricted stock awards totaled $78 thousand and $18 thousand for the three months ended June 30, 2026 and 2025, respectively, and $145 thousand and $49 thousand for the six months ended June 30, 2026 and 2025, respectively. As of June 30, 2026, unrecognized compensation expense associated with restricted stock awards was $738 thousand, which is expected to be recognized over the remaining contractual term.

A summary of performance-based restricted stock units (the “Units”) for the six months ended June 30, 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 $254 thousand and $296 thousand stock-based compensation expense during the three and six months ended June 30, 2026, respectively and zero during 2025 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 June 30, 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 $18 million and $20 million as of June 30, 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. Primis evaluates each customer’s creditworthiness on a case-by-case basis. Since many of the commitments may expire without being completely drawn upon, the total commitment amounts do not necessarily represent future cash requirements.

The Company had $195 million in mortgage loan commitments outstanding as of June 30, 2026, related to approved mortgage loan applications, although not all approved applications will ultimately fund.

As of June 30, 2026 and December 31, 2025, the Company had unfunded lines of credit and undisbursed construction loan funds totaling $577 million and $567 million, respectively, not all of which are expected to be drawn. Virtually all of our 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 $275 million as of June 30, 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 June 30, 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 did not have any anti-dilutive options for the three and six months ended June 30, 2026 and had 19,000 for the three and six months ended June 30, 2025.

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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 six months ended June 30, 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 loan 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, 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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