Primis Financial Corp. Q1 2026 Filing Summary
Business Context and Reporting Period
This summary covers the Quarterly Report on Form 10-Q for Primis Financial Corp. (NASDAQ: FRST) for the period ended March 31, 2026. Primis is a bank holding company for Primis Bank, a Virginia state-chartered bank with 24 branches in Virginia and Maryland. The company operates through two primary segments: Primis Bank (community banking) and Primis Mortgage Company (PMC). The company also partners with Panacea Financial Holdings (PFH) to serve the healthcare industry, though PFH was deconsolidated in March 2025.
Key Financial Metrics
| Metric | Q1 2026 | Q1 2025 | Dec 31, 2025 (Balance Sheet) |
|---|---|---|---|
| Net Income (Attributable to Common Stockholders) | $7.3 million | $22.6 million | N/A |
| Earnings Per Share (Diluted) | $0.30 | $0.92 | N/A |
| Total Assets | $4.26 billion | N/A | $4.05 billion |
| Total Loans Held for Investment | $3.40 billion | N/A | $3.28 billion |
| Total Deposits | $3.42 billion | N/A | $3.40 billion |
| Net Interest Income | $32.1 million | $26.4 million | N/A |
| Net Interest Margin | 3.43% | 3.15% | N/A |
| Provision for Credit Losses | $1.5 million | $1.6 million | N/A |
| Allowance for Credit Losses | $46.4 million | N/A | $45.9 million |
| Nonperforming Assets | $105.2 million | N/A | $86.5 million |
| Cash and Cash Equivalents | $160 million | N/A | $144 million |
Material Changes vs. Prior Period
- Net Income Decline: Reported net income decreased significantly year-over-year ($7.3M vs. $22.6M). This is primarily due to a $24.6 million one-time gain in Q1 2025 related to the deconsolidation of Panacea Financial Holdings (PFH). Excluding this one-time item, core net income increased by approximately $9 million year-over-year.
- Noninterest Income: Total noninterest income dropped to $13.6 million from $32.3 million in Q1 2025, driven by the absence of the PFH deconsolidation gain. However, organic noninterest income grew $8 million, led by a 92% increase in mortgage banking income ($10.8M) due to higher funded loan volume.
- Net Interest Income Growth: NII increased by $5.7 million year-over-year, driven by a $400 million increase in average loans held for investment. Net interest margin expanded to 3.43% from 3.15%.
- Asset Quality: Nonperforming assets increased to $105.2 million (2.35% of total assets) from $86.5 million at year-end 2025. This increase was largely driven by one commercial relationship where loans became 90+ days past due but remained accruing. Management noted these loans were brought current in April 2026.
- Loan Portfolio Growth: Loans held for investment grew by $113 million quarter-over-quarter, primarily due to growth in the Mortgage Warehouse and Panacea Division portfolios.
Guidance, Outlook, and Risks
- Operational Highlights: The company reported strong growth in its strategic pillars. Mortgage warehouse loans increased 45% quarter-over-quarter. Panacea Division loan balances grew 10% to $600 million. PMC funded loan volume increased 122% year-over-year.
- Cost Management: Noninterest expenses increased 4% year-over-year, primarily due to higher salaries (driven by PMC growth) and occupancy costs (due to a sale-leaseback transaction). However, data processing expenses decreased by $661,000 following a contract renegotiation.
- Capital Position: The company remains "well-capitalized" under regulatory standards. Common Equity Tier 1 capital ratio was 9.18% for the holding company and 10.50% for the bank as of March 31, 2026.
- Internal Controls: Management concluded that disclosure controls and procedures were not effective as of March 31, 2026, due to the continued remediation of a previously identified material weakness in internal controls over financial reporting. Management asserts the financial statements fairly present the company's condition.
- Risks: Key risks include interest rate volatility, credit quality deterioration in commercial real estate (specifically office and hotel sectors), and the successful remediation of internal control weaknesses. The company also faces risks related to the Consumer Program portfolio, though net charge-offs in this segment have improved significantly.
Investor Verification Checklist
- One-Time Gain Impact: Verify the adjusted earnings trajectory by excluding the $24.6M PFH deconsolidation gain from Q1 2025 to accurately assess organic growth.
- Asset Quality Resolution: Monitor the status of the specific commercial relationship that drove the increase in nonperforming assets, confirming the loans remain current following the April 2026 payments.
- Internal Control Remediation: Review the timeline and progress for remedying the material weakness in internal controls over financial reporting, as this impacts the reliability of future disclosures.
- Consumer Program Performance: Track the run-off of the Consumer Program portfolio and the associated net charge-offs to ensure the improvement in Q1 2026 is sustainable.
- Mortgage Banking Volume: Assess the sustainability of the 122% year-over-year growth in PMC funded loan volume and its impact on future noninterest income.