Primis Boosts Panacea Stake, Manages Capital Amidst Stable Debt

TL;DR

FRST is doubling down on its fintech play with Panacea, a smart move to diversify, but watch those retained earnings.

AI Summary

Primis Financial Corp. (FRST) reported a mixed financial performance for the quarter ended June 30, 2025. While specific revenue and net income figures were not explicitly detailed in the provided excerpt, the filing indicates changes in equity and debt structures. The company's subordinated debt remained consistent at $100.0 million from December 31, 2024, to June 30, 2025. Primis increased its investment in Panacea Financial Holdings, Inc. by $10.0 million on June 12, 2025, bringing its total equity method investment to $30.0 million. The company also repurchased treasury stock, with activity noted for both the three and six months ended June 30, 2025. Retained earnings saw fluctuations, decreasing from $247.2 million on December 31, 2024, to $245.8 million on June 30, 2025. The commercial real estate portfolio segment's commercial loans were $1.5 billion as of June 30, 2025. Risks include potential impacts on the value of equity method investments and the ongoing management of its loan portfolio. Strategic outlook involves continued investment in key subsidiaries like Panacea Financial Holdings, Inc. and active capital management through share repurchases.

Why It Matters

Primis's increased investment in Panacea Financial Holdings, Inc. signals a strategic focus on specialized banking, potentially driving future growth and diversifying its revenue streams, which could be attractive to growth-oriented investors. For employees at Panacea, this could mean more resources and stability. Customers of both Primis and Panacea might see enhanced services and product offerings as the partnership deepens. In a competitive banking landscape, this targeted investment could give Primis an edge by tapping into niche markets, differentiating it from larger, more generalized financial institutions.

Risk Assessment

Risk Level: medium — The risk level is medium due to the significant equity method investment in Panacea Financial Holdings, Inc., which increased by $10.0 million to $30.0 million. While this offers growth potential, it also exposes Primis to the performance and risks associated with a non-consolidated entity. Additionally, the slight decrease in retained earnings from $247.2 million to $245.8 million over six months, despite stable subordinated debt, suggests ongoing pressure on profitability or capital allocation.

Analyst Insight

Investors should monitor the performance of Panacea Financial Holdings, Inc. closely, as Primis's increased investment ties its future more directly to this entity. Evaluate Primis's loan portfolio quality, particularly the $1.5 billion in commercial real estate loans, for any signs of deterioration in a rising interest rate environment. Consider if the strategic investment in Panacea justifies the current valuation and potential impact on future earnings.

Key Numbers

• $10.0M — Increased Investment in Panacea (Primis increased its equity method investment in Panacea Financial Holdings, Inc. by $10.0 million on June 12, 2025.)
• $30.0M — Total Panacea Investment (Total equity method investment in Panacea Financial Holdings, Inc. reached $30.0 million as of June 30, 2025.)
• $100.0M — Subordinated Debt (Subordinated debt remained stable at $100.0 million from December 31, 2024, to June 30, 2025.)
• $245.8M — Retained Earnings (Q2 2025) (Retained earnings were $245.8 million as of June 30, 2025, a decrease from $247.2 million at year-end 2024.)
• $1.5B — Commercial Real Estate Loans (Commercial loans in the commercial real estate portfolio segment totaled $1.5 billion as of June 30, 2025.)

Key Players & Entities

• Primis Financial Corp. (company) — filer of the 10-Q
• Panacea Financial Holdings, Inc. (company) — equity method investment of Primis Financial Corp.
• $10.0 million (dollar_amount) — increase in equity method investment in Panacea Financial Holdings, Inc. on June 12, 2025
• $30.0 million (dollar_amount) — total equity method investment in Panacea Financial Holdings, Inc. as of June 30, 2025
• $100.0 million (dollar_amount) — subordinated debt as of June 30, 2025, and December 31, 2024
• $247.2 million (dollar_amount) — retained earnings as of December 31, 2024
• $245.8 million (dollar_amount) — retained earnings as of June 30, 2025
• $1.5 billion (dollar_amount) — commercial loans in the commercial real estate portfolio segment as of June 30, 2025
• June 30, 2025 (date) — end of the reporting period for the 10-Q
• December 31, 2024 (date) — previous fiscal year-end for comparison

FAQ

Risk Factors

• Valuation of Equity Method Investments [medium — financial]: Primis Financial Corp. has increased its investment in Panacea Financial Holdings, Inc. to $30.0 million. Fluctuations in the value of this equity method investment could materially impact the company's financial results and equity. The company must carefully assess and report any impairment charges related to this investment.
• Commercial Real Estate Loan Portfolio Risk [high — financial]: The company holds $1.5 billion in commercial loans within its commercial real estate portfolio. Adverse economic conditions or specific market downturns in the CRE sector could lead to increased loan delinquencies, defaults, and necessitate higher provision for credit losses, impacting profitability.

Industry Context

Primis Financial Corp. operates within the commercial banking sector, which is characterized by intense competition, evolving regulatory landscapes, and sensitivity to interest rate movements. The industry is seeing a continued focus on digital transformation and customer experience, alongside ongoing concerns about credit quality, particularly in commercial real estate.

Regulatory Implications

As a financial institution, Primis is subject to stringent regulatory oversight from bodies like the Federal Reserve and state banking authorities. Compliance with capital adequacy requirements, lending standards, and consumer protection laws is paramount. Changes in regulations could impact lending practices, capital requirements, and overall profitability.

What Investors Should Do

1. Monitor the performance and valuation of the Panacea Financial Holdings, Inc. investment.
2. Analyze trends in the commercial real estate loan portfolio.
3. Evaluate the impact of share repurchases on shareholder value.
4. Observe changes in retained earnings.

Key Dates

• 2025-06-30: Quarterly Report Filing (10-Q) — Provides an update on the company's financial position and performance for the period ending June 30, 2025, including changes in equity, debt, and investments.
• 2025-06-12: Investment in Panacea Financial Holdings, Inc. — Primis increased its equity method investment by $10.0 million, bringing the total to $30.0 million, indicating strategic focus on this subsidiary.
• 2025-04-01: Start of Q2 2025 — Beginning of the second quarter, during which treasury stock repurchases and common stock transactions occurred.
• 2025-01-01: Start of H1 2025 — Beginning of the first half of the year, during which treasury stock repurchases and common stock transactions occurred.
• 2024-12-31: Year-End Financial Position — Baseline for comparison of retained earnings ($247.2 million) and subordinated debt ($100.0 million) at the end of the previous fiscal year.

Glossary

Equity Method Investment

An accounting method where an investor uses its proportionate share of the earnings or losses of an investee to recognize its investment income or loss. (Primis uses this method for its investment in Panacea Financial Holdings, Inc., meaning changes in Panacea's performance directly affect Primis's reported income.)

Subordinated Debt

Debt that ranks below other debts in terms of repayment priority in the event of liquidation or bankruptcy. (Primis maintained $100.0 million in subordinated debt, a stable component of its capital structure that typically carries higher interest rates due to its subordinate nature.)

Treasury Stock

Stock that a company has repurchased from the open market or shareholders. (Primis engaged in treasury stock repurchases, which reduces the number of outstanding shares and can increase earnings per share and return on equity.)

Retained Earnings

The cumulative amount of net income that a company has retained over time, rather than distributing as dividends. (A decrease in retained earnings from $247.2 million to $245.8 million suggests that dividends paid or share repurchases may have exceeded net income during the period.)

Commercial Real Estate Portfolio Segment

A division of a financial institution's loan portfolio specifically focused on loans made to businesses for commercial properties. (This segment represents a significant portion of Primis's loan book, with $1.5 billion in commercial loans, making it a key area of focus for risk management.)

Year-Over-Year Comparison

Compared to the prior year-end (December 31, 2024), Primis Financial Corp. saw a slight decrease in retained earnings from $247.2 million to $245.8 million as of June 30, 2025. Subordinated debt remained stable at $100.0 million. The company has actively increased its strategic investment in Panacea Financial Holdings, Inc. and engaged in treasury stock repurchases, suggesting a focus on capital deployment and shareholder returns rather than organic earnings retention.

Key Financial Figures

• $0.01 — ch registered: Common Stock, par value $0.01 per share FRST NASDAQ Global Market

Filing Documents

• frst-20250630x10q.htm (10-Q) — 8977KB
• frst-20250630xex31d1.htm (EX-31.1) — 14KB
• frst-20250630xex31d2.htm (EX-31.2) — 12KB
• frst-20250630xex32d1.htm (EX-32.1) — 13KB
• 0001558370-25-011083.txt ( ) — 36367KB
• frst-20250630.xsd (EX-101.SCH) — 77KB
• frst-20250630_cal.xml (EX-101.CAL) — 101KB
• frst-20250630_def.xml (EX-101.DEF) — 545KB
• frst-20250630_lab.xml (EX-101.LAB) — 729KB
• frst-20250630_pre.xml (EX-101.PRE) — 701KB
• frst-20250630x10q_htm.xml (XML) — 11600KB

- FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION

- Financial Statements

Item 1 - Financial Statements 4 Condensed Consolidated Balance Sheets as of June 30, 2025 and December 31, 2024 4 Condensed Consolidated Statements of Income and Comprehensive Income for the three and six months ended June 2025 and 2024 5 Condensed Consolidated Statements of Changes in Stockholders' Equity for the three and six months ended June 2025 and 2024 6 Condensed Consolidated Statements of Cash Flows for the six months ended June 2025 and 2024 7 Notes to Unaudited Condensed Consolidated Financial Statements 8

- Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations 44

– Quantitative and Qualitative Disclosures about Market Risk

Item 3 – Quantitative and Qualitative Disclosures about Market Risk 73

– Controls and Procedures

Item 4 – Controls and Procedures 75

- OTHER INFORMATION

PART II - OTHER INFORMATION

– Legal Proceedings

Item 1 – Legal Proceedings 76

– Risk Factors

Item 1A – Risk Factors 76

– Unregistered Sales of Equity Securities and Use of Proceeds

Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds 76

– Defaults Upon Senior Securities

Item 3 – Defaults Upon Senior Securities 76

– Mine Safety Disclosures

Item 4 – Mine Safety Disclosures 77

– Other Information

Item 5 – Other Information 77

- Exhibits

Item 6 - Exhibits 78

Signatures

Signatures 80 2 Table of Contents 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, who 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. ACL Allowance for credit losses 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 IRLC Interest rate lock commitments LHFI Loans Held for Investment LHFS Loans Held for Sale NII Net interest income NASDAQ National Association of Securities Dealers Automated Quotations PCA Prompt corrective action PCD Purchased credit deteriorated PPP Paycheck Protection Program SEC Securit

- FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION

- FINANCIAL STATEMENTS

ITEM 1 - FINANCIAL STATEMENTS PRIMIS FINANCIAL CORP . CONDENSED CONSOLIDATED BALANCE SHEETS ( dollars in thousands, except per share amounts) June 30, December 31, 2025 2024 (unaudited) ASSETS Cash and cash equivalents: Cash and due from financial institutions $ 7,665 $ 8,059 Interest-bearing deposits in other financial institutions 86,409 56,446 Total cash and cash equivalents 94,074 64,505 Securities available-for-sale, at fair value (amortized cost of $ 262,107 and $ 262,632 , respectively) 242,073 235,903 Securities held-to-maturity, at amortized cost (fair value of $ 8,270 and $ 8,602 , respectively) 8,850 9,448 Loans held for sale, at fair value 126,869 83,276 Loans held for sale, at lower of cost or market — 163,832 Total loans held for sale 126,869 247,108 Loans held for investment, collateralizing secured borrowings 16,528 17,287 Loans held for investment 3,113,993 2,870,160 Less: allowance for credit losses ( 45,985 ) ( 53,724 ) Net loans 3,084,536 2,833,723 Stock in Federal Reserve Bank and Federal Home Loan Bank 12,998 13,037 Bank premises and equipment, net 19,642 19,432 Assets held for sale 2,181 5,497 Operating lease right-of-use assets 9,927 10,279 Cloud computing arrangement assets, net 6,711 8,065 Goodwill 93,459 93,459 Intangible assets, net 49 665 Bank-owned life insurance 68,048 67,184 Deferred tax assets, net 19,466 26,466 Consumer Program derivative asset 1,177 4,511 Investment in Panacea Financial Holdings, Inc. common stock 6,586 — Other assets 75,080 50,833 Total assets $ 3,871,726 $ 3,690,115 LIABILITIES AND STOCKHOLDERS' EQUITY Noninterest-bearing demand deposits $ 477,705 $ 438,917 Interest-bearing deposits: NOW accounts 858,624 817,715 Money market accounts 744,321 798,506 Savings accounts 935,527 775,719 Time deposits 326,496

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View this 10-Q filing on SEC EDGAR