Primis Financial Reports Strong Profit Turnaround, Strategic Gains Amidst Rising NPAs & Internal Control Weakness

summarizeSummary

Primis Financial Corp. reported a significant turnaround to net income and EPS for 2025, driven by strategic asset sales and improved net interest margin, but also disclosed a material weakness in internal controls and a substantial increase in nonperforming assets.

check_boxKey Events

• Significant Financial Turnaround

  The company reported net income of $61 million ($2.49 EPS) for the year ended December 31, 2025, a substantial reversal from a net loss of $16 million (-$0.66 EPS) in 2024.

• Strategic Gains Boost Noninterest Income

  Noninterest income surged due to a $51 million gain from a sale-leaseback transaction of 18 retail branch properties and a $32 million gain from the deconsolidation and partial sale of its investment in Panacea Financial Holdings (PFH).

• Material Weakness in Internal Controls Identified

  Auditors issued an adverse opinion on the effectiveness of internal control over financial reporting as of December 31, 2025, citing a material weakness related to insufficient restrictions and review controls for deposit account processing in the digital bank platform.

• Sharp Increase in Nonperforming Assets

  Nonperforming assets increased by 417% to $87 million as of December 31, 2025, up from $17 million in 2024, primarily driven by two large commercial loans placed on nonaccrual status.

auto_awesomeAnalysis

The 10-K reveals a dramatic improvement in Primis Financial Corp.'s profitability, with a substantial swing from a net loss to significant net income and EPS. This turnaround was bolstered by strategic initiatives, including a profitable sale-leaseback of branch properties and gains from the deconsolidation and partial sale of its PFH investment. The company also demonstrated improved net interest margin due to lower funding costs. However, these positive developments are overshadowed by critical concerns: a 417% increase in nonperforming assets, indicating deteriorating loan quality, and an adverse opinion from auditors regarding a material weakness in internal controls over financial reporting, specifically related to digital bank deposit processing. While management has outlined remediation plans for the control weakness, these issues introduce significant operational and credit risk, warranting close investor attention despite the strong headline financial performance.