UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, ~~2024~~2025

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-33037

PRIMIS FINANCIAL CORP.

(Exact name of registrant as specified in its charter)

Virginia

(State or other jurisdiction of

incorporation or organization)

20-1417448

(I.R.S. Employer

Identification No.)

1676 International Drive, Suite 900

McLean, Virginia 22102

(Address of principal executive offices) (Zip code)

(703) 893-7400

(Registrant’s telephone number including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading symbol	Name of each exchange on which registered
Common Stock, $0.01 par value	FRST	Nasdaq Global Market

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b – 2 of the Exchange Act.:

Large accelerated filer ☐	Accelerated filer ☒	Smaller reporting company ☐	Emerging growth company ☐

Non-accelerated filer ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issues its audit report. ☒ Yes ☐ No

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. Yes ☐ No ☒

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). Yes ☐ No ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

The aggregate market value of voting stock held by non-affiliates of the registrant as of June 30, ~~2024~~2025 was approximately $~~227~~233.98 million based on the closing price of the common stock on such date.

The number of shares of common stock outstanding as of ~~April~~ 15February 27, ~~2025~~2026 was 24,~~722~~699,~~734~~185.

DOCUMENT INCORPORATED BY REFERENCE

Parts of the registrant’s Proxy Statement for the registrant’s 2026 Annual Meeting of Stockholders are incorporated by reference into Part III of this Annual Report on Form 10-K.

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PRIMIS FINANCIAL CORP.

FORM 10-K

TABLE OF CONTENTS


PART I
		Page
Item 1.	Business	56
Item 1A.	Risk Factors	2223
Item 1B.	Unresolved Staff Comments	3940
Item 1C.	Cybersecurity	3940
Item 2.	Properties	41
Item 3.	Legal Proceedings	41
Item 4.	Mine Safety Disclosures	41

PART II

Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	4142
Item 6.	[Reserved]	4344
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4445
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	6973
Item 8.	Financial Statements and Supplementary Data	6973
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	~~137~~141
Item 9A.	Controls and Procedures	~~137~~141
Item 9B.	Other Information	~~139~~142

PART III

Item 10.	Directors, Executive Officers and Corporate Governance	~~139~~143
Item 11.	Executive Compensation	~~145~~143
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	~~162~~143
Item 13.	Certain Relationships and Related Transactions, and Director Independence	~~164~~143
Item 14.	Principal Accounting Fees and Services	~~165~~143

PART IV

Item 15.	Exhibits and Financial Statement Schedules	~~168~~144
Item 16.	Form 10-K Summary	~~170~~147
	Signatures	148

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GLOSSARY OF ACRONYMS AND DEFINED TERMS

In this Annual Report on Form 10-K, 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.



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
CBLR	Community Bank Leverage Ratio
CECL	Current expected credit losses
CEO	Chief Executive Officer
CFO	Chief Financial Officer
CFPB	Consumer Financial Protection Bureau
CIO	Chief Information Officer
CLO	Collateralized Loan Obligations
CMBS	Commercial mortgage backed securities
CMO	Collateralized mortgage obligations
CRA	Community Reinvestment Act
CRO	Chief Risk Officer
DEI	Diversity, equity and inclusion
DIF	Deposit Insurance Fund
Dodd-Frank Act	Dodd-Frank Wall Street Reform and Consumer Protection Act
EPS	Earnings per share
ERM	Enterprise Risk Management
ERMC	Enterprise Risk Management Committee
ESG	Environmental, social and governance
EVE	Economic value of equity
FASB	Financial Accounting Standards Board
FDIC	Federal Deposit Insurance Corporation
FDICIA	Federal Deposit Insurance Corporation Improvement Act of 1991
FHLB	Federal Home Loan Bank of Atlanta
FHLMC	Federal Home Loan Mortgage Corporation
FNMA	Federal National Mortgage Association
FRB	Federal Reserve Bank
FOMC	Federal Open Market Committee
FVO	Fair value option
GAAP	U.S. generally accepted accounting principles
GNMA	Government National Mortgage Association
GSE	Government-sponsored entities
HTM	Held-to-maturity
IRLC	Interest rate lock commitments
IT	Information Technology

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LHFI	Loans held for investment
LHFS	Loans held for sale
MBS	Mortgage-backed securities
MD&A	Management’s Discussion and Analysis of Financial Condition and Results of Operations
NII	Net interest income
NIST	National Institute of Standards and Technology
NASDAQ	National Association of Securities Dealers Automated Quotations
OCC	Office of the Comptroller of the Currency
OFAC	Office of Foreign Assets Control
OREO	Other real estate owned
PCA	Prompt corrective action
PCD	Purchased credit deteriorated
PPP	Paycheck Protection Program
PRN	Pro re nata
SABL	Secured Asset Based Lending
SBA	Small Business Administration
SEC	Securities and Exchange Commission
SOFR	Secured Overnight Financing Rate
TBA	To-Be-Announced Mortgage-Backed Securities Trades
TPOS	Third Party Originator/Servicer
VBFI	Virginia Bureau of Financial Institutions
VIE	Variable interest entity

CAUTIONARY NOTE

REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains statements about future expectations, activities and events that constitute forward-looking statements within the meaning of, and subject to the protection of, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act and are intended to be covered by the safe harbor provided by the same. Forward-looking statements are not historical facts and are instead based on current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are inherently subject to risks, assumptions and uncertainties that are difficult to predict. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. The words “believe,” “may,” “forecast,” “should,” “anticipate,” “contemplate,” “estimate,” “expect,” “project,” “predict,” “intend,” “continue,” “would,” “could,” “hope,” “might,” “assume,” “objective,” “seek,” “plan,” “strive” or similar words, or the negatives of these words, identify forward-looking statements.

Forward-looking statements involve risks and uncertainties that may cause our actual results to differ materially from the expectations of future results we express or imply in any forward-looking statements. In addition to the other factors discussed in the “Risk Factors” section of this Annual Report on Form 10-K, factors that could contribute to those differences include, but are not limited to:

●

the effects of future economic, business and market conditions and disruptions in the credit and financial markets, domestic and foreign;

●

potential increases in the provision for credit losses and other general competitive, economic, political, and market factors, including those affecting our business, operations, pricing, products, or services;

●

uncertainties surrounding geopolitical events, trade policy, taxation policy and federal monetary policy, which continue to impact the outlook for future economic growth (including an economic downturn or recession), including the U.S. imposition of tariffs on other countries and consideration of responsive actions by these nations or the expansion of import fees and tariffs among a larger group of nations, which is bringing greater ambiguity to the outlook for future economic growth;

●

fraudulent and negligent acts by loan applicants, mortgage brokers and our employees;

● our ability to recover certain losses related to fraudulent loans under the Company's insurance policies and to successfully complete the claims process and minimize the financial impact of these loans;4

●Table ~~our~~of ability to implement our various strategic and growth initiatives, including our Panacea Financial Division, digital banking platform, V1BE fulfillment service and Primis Mortgage Company as well as our cost saving project to reduce administrative and branch expenses;Contents

●

our ability to implement our various strategic and growth initiatives, including our Panacea Financial Division, digital banking platform, V1BE fulfillment service, Mortgage Warehouse lending, and Primis Mortgage Company, as well as our cost saving projects to reduce technology vendor expenses and administrative and branch expenses;

●

adverse results from current or future litigation, regulatory examinations or other legal and/or regulatory actions;

●

changes in the local economies in our market areas which adversely affect our customers and their ability to transact profitable business with us, including the ability of our borrowers to repay their loans according to their terms or a change in the value of the related collateral;

●

changes in interest rates, inflation, stagflation, loan demand, real estate values, or competition, as well as labor shortages, supply chain disruptions, the threat of recession and volatile equity capital markets;

●

changes in the availability of funds resulting in increased costs or reduced liquidity, as well as the adequacy of our cash flow from operations and borrowings to meet our short-term liquidity needs;

●

a deterioration or downgrade in the credit quality and credit agency ratings of the investment securities in our investment securities portfolio;

●

impairment concerns and risks related to our investment securities portfolio of collateralized mortgage obligations, agency mortgage-backed securities and obligations of states and political subdivisions;

●

the incurrence and impairment of goodwill associated with current or future acquisitions and adverse short-term effects on our results of operations;

●

increased credit risk in our assets and increased operating risk caused by a material change in commercial, consumer and/or real estate loans as a percentage of our total loan portfolio, including as a result of rising or elevated interest rates, inflation and recessionary concerns;

●

the concentration of our loan portfolio in loans collateralized by real estate;

●

our level of construction and land development and commercial real estate loans;

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●

risk related to a third-party’s ability to satisfy its contractual obligation to reimburse us for waived interest on loans with promotional features that pay off early;

●

our ability to identify and address potential cybersecurity risks on our systems and/or third party vendors and service providers on which we rely, heightened by the developments in generative artificial intelligence and increased use of our virtual private network platform, including data security breaches, credential stuffing, malware, “denial-of-service” attacks, “hacking” and identity theft, a failure of which could disrupt our business and result in the disclosure of and/or misuse or misappropriation of confidential or proprietary information, disruption or damage to our systems, increased costs, losses, or adverse effects to our reputation;

●

changes in the levels of loan prepayments and the resulting effects on the value of our loan portfolio;

●

the failure of assumptions and estimates underlying the establishment of and provisions made for credit losses;

●

our ability to expand and grow our business and operations, including the acquisition of additional banks, and our ability to realize the cost savings and revenue enhancements we expect from such activities;

● government intervention in the U.S. financial system, including the effects of legislative, tax, accounting and regulatory actions and reforms, ~~including the Dodd-Frank Wall Street Reform~~ and ~~Consumer Protection Act (~~the “Dodd-Frank Act”), the Jumpstart Our Business Startups Act, the Consumer Financial Protection Bureau, the capital ratios of Basel III as adopted by the federal banking authorities, the Tax Cuts and Jobs Act of 2017 and the CARES Act, as well as the possibility that the U.S. could default on its debt obligations and the risk of inflation and interest rate increases resulting from monetary and fiscal stimulus response, which may have unanticipated adverse effects on our customers, and our financial condition and results of operations;

● ~~uncertainties~~the ~~surrounding~~implementation ~~geopolitical~~of ~~events,~~a ~~trade~~regulatory ~~policy,~~reform ~~taxation~~agenda ~~policy,~~under ~~and~~the ~~monetary~~presidential ~~policy~~administration ~~which~~that ~~continue~~is tosignificantly ~~impact~~different ~~the~~than ~~outlook~~that ~~for~~of ~~future~~the ~~economic~~prior ~~growth~~administration, ~~including~~impacting ~~U.S. imposition of tariffs against Mexico~~rulemaking, ~~Canada~~supervision, ~~and~~examination ~~China~~ and ~~consideration~~enforcement ofpriorities ~~responsive actions by these nations or the expansion~~ of ~~import fees and tariffs among a larger group of nations, which is bringing greater ambiguity to~~ the ~~outlook~~federal ~~for~~banking ~~future economic growth~~agencies;

● the potential implementation of a regulatory reform agenda under the new presidential administration that is significantly different than that of the prior administration, impacting rulemaking, supervision, examination and enforcement priorities of the federal banking agencies;

●

increased competition for deposits and loans adversely affecting rates and terms;

●

the continued service of key management personnel;

●

the potential payment of interest on demand deposit accounts to effectively compete for customers;

● the potential environmental liability risk associated with properties that we assume upon foreclosure;

●

increased asset levels and changes in the composition of assets and the resulting impact on our capital levels and regulatory capital ratios;

●

risks of current or future mergers and acquisitions, including the related time and cost of implementing transactions and the potential failure to achieve expected gains, revenue growth or expense savings;

●

increases in regulatory capital requirements for banking organizations generally, which may adversely affect our ability to expand our business or could cause us to shrink our business;

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●

acts of God or of war or other conflicts, civil unrest, acts of terrorism, pandemics or other catastrophic events that may affect general economic conditions;

●

changes in accounting policies, rules and practices and applications or determinations made thereunder;

● any inability or failure to implement and maintain effective internal control over financial reporting and/or disclosure control or inability to expediently remediate our existing material weaknesses in our internal controls deemed ineffective;

●

failure to maintain effective internal controls and procedures, including the ability to remediate identified material weaknesses in internal control over financial reporting expediently;

●

the risk that our deferred tax assets could be reduced if future taxable income is less than currently estimated, if corporate tax rates in the future are less than current rates, or if sales of our capital stock trigger limitations on the amount of net operating loss carryforwards that we may utilize for income tax purposes;

●

our ability to attract and retain qualified employees, including as a result of heightened labor shortages;

● risks related to ~~diversity, equity and inclusion (“~~DEI”) and ~~environmental, social and governance (“~~ESG”) strategies and initiatives, the scope and pace of which could alter our reputation and shareholder, associate, customer and third-party affiliations or result in litigation in connection with anti-DEI and anti-ESG laws, rules or activism;

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● our ability to de-consolidate Panacea Financial Holdings, Inc. (“PFH”) and recognize gains on our investment in PFH common stock as a result of de-consolidation;

●

negative publicity and the impact on our reputation;

●

our ability to realize the value of derivative assets that are recorded at fair value due to changes in fair value driven by actual results being materially different than our assumptions;

●

our ability to grow the mortgage warehouse business and achievement of certain margin results; and

● other factors and risks described under “Risk Factors” herein and in any of the reports that we file with the ~~Securities and Exchange Commission (the “Commission” or “~~SEC”) under the Exchange Act..

Forward-looking statements are not guarantees of performance or results and should not be relied upon as representing management’s views as of any subsequent date. A forward-looking statement may include a statement of the assumptions or bases underlying the forward-looking statement. We believe we have chosen these assumptions or bases in good faith and that they are reasonable. We caution you, however, that assumptions or bases almost always vary from actual results, and the differences between assumptions or bases and actual results can be material. When considering forward-looking statements, you should refer to the risk factors and other cautionary statements in this Annual Report on Form 10-K and in our periodic and current reports filed with the SEC for specific factors that could cause our actual results to be different from those expressed or implied by our forward-looking statements. These statements speak only as of the date of this Annual Report on Form 10-K (or an earlier date to the extent applicable). Except as required by applicable law, we undertake no obligation to ~~update~~ publicly updated or revise these forward-looking statements in light of new information or future events.

PART I

Item 1. Business

Overview

Primis Financial Corp. ~~(“Primis,” “we,” “us,” “our” or the “Company”)~~ is the bank holding company for Primis Bank ~~(“Primis Bank” or the “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.

As of December 31, ~~2024~~2025, Primis had $34.70 billion in total assets, $23.93 billion in total loans held for investment, $3.24 billion in total deposits and $~~365.0~~423 million in total stockholders’ equity. As of December 31, ~~2024~~2025, Primis Bank had ~~twenty-four~~24 full-service branches in Virginia and Maryland and also provides services to customers through certain online and mobile applications. ~~Twenty-two~~Headquartered ~~full-service retail branches are~~ in ~~Virginia and two full-service retail branches are in Maryland. The Company is headquartered in~~ McLean, Virginia, ~~and~~the Company has an administrative office in Glen Allen, Virginia and an operations center in Atlee, Virginia. ~~Primis Mortgage Company~~PMC, a residential mortgage lender headquartered in Wilmington, North Carolina, is a consolidated subsidiary of Primis Bank. PFH ~~is a consolidated subsidiary of Primis and~~ 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, ~~veterinarians, dentists,~~ their practices, and ultimately the broader healthcare industry. ~~Primis~~PFH ~~Bank’s~~was ~~deposits~~deconsolidated ~~are~~from ~~insured,~~the upCompany toon ~~applicable~~March ~~limits~~31, by2025, ~~the~~as ~~Federal~~further ~~Deposit Insurance Corporation (the “FDIC”).~~

We make our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act available free of charge on our website at www.primisbank.com as soon as reasonably practicable after we electronically file such material with the SEC. These reports are also available without charge on the SEC’s website at www.sec.gov.6

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discussed below in “PFH Deconsolidation and Sale of Shares”. The operating results of PFH were included in the Company’s consolidated operating results through March 31, 2025. Primis Bank’s deposits are insured, up to applicable limits, by the FDIC.

Strategy

Primis is focused on building a new, innovative, and better banking experience for its consumers and small and medium-sized businesses. The Bank intends to grow its business, expand its customer base and improve profitability by focusing on the following three areas:

51. Maintaining a strong and efficient community bank in desirable markets.

~~Table~~a. ofThe ~~Contents~~Bank maintains twenty-four office locations in attractive markets in Virginia, Maryland and the Greater Washington, D.C. market

1b. ~~Maintaining~~In athese ~~strong~~markets, ~~and~~we ~~efficient~~increased ~~community~~deposits ~~bank~~per inbranch ~~core~~(excluding ~~markets;~~digital platform deposits) to $100 million as of December 31, 2025 versus $69 million as of December 31, 2021

a2. ~~The~~Supplementing ~~Bank~~core ~~maintains~~community ~~twenty-four~~bank ~~office~~growth ~~locations~~and inprofitability ~~attractive~~with ~~markets~~business inlines ~~Virginia~~that ~~and~~we ~~the~~believe ~~Greater~~can ~~Washington,~~generate ~~D.C.~~above-average ~~market~~risk-adjusted returns such as:

ba. InThe ~~these~~Panacea ~~markets~~Financial weDivision, ~~increased~~the ~~deposits~~Bank’s ~~per~~health-care ~~branch~~focused ~~(excluding~~brand ~~digital~~which ~~platform~~ended ~~deposits)~~2025 towith $~~91.1~~544 million asof loans and $128 million of deposits. This was up from December 31, 2024 ~~versus~~when loans were $~~69.1~~434 million asand ofdeposits ~~December~~were ~~31,~~$92 ~~2021~~million.

2b. ~~Supplementing~~Primis ~~core~~Mortgage ~~community~~Company, ~~bank~~the ~~growth~~Bank’s ~~and~~retail ~~profitability~~mortgage ~~with~~company ~~business~~which ~~lines~~had ~~that~~funded ~~can~~production ~~generate~~of ~~above-average~~approximately ~~risk-adjusted~~$1.2 ~~returns~~billion ~~such~~in ~~as:~~2025, up from approximately $800 million in 2024; and

ac. ~~The~~Mortgage ~~Panacea~~Warehouse ~~Financial Division~~Lending, which focuses on lending to the ~~Bank’s~~independent ~~health-care~~mortgage ~~focused~~company ~~brand~~space and which ended ~~2024~~2025 with approximately $~~433~~1.82 ~~million~~billion ofin ~~loans~~approved ~~and~~lines, $~~92.3~~318 million ofin ~~deposits.~~outstanding ~~This~~loan ~~was~~balances upand ~~from~~$29 ~~December~~million ~~31,~~of ~~2023~~low ~~when~~or ~~loans~~no ~~were~~interest ~~$322.8~~customer ~~million and~~ deposits ~~were $56~~.~~1 million.~~

b3. ~~Primis~~Perfecting ~~Mortgage~~enhanced ~~Company,~~digital ~~the~~offerings ~~Bank’s~~that ~~retail~~allow ~~mortgage~~Primis ~~company~~to ~~with~~attract ~~production~~and ofretain ~~approximately~~deposit ~~$800~~customers ~~million~~at inscale 43both ~~states~~ in ~~2024,~~and upout ~~from~~of ~~$600~~our ~~million in 2023; and~~footprint.

ca. ~~Mortgage~~Deposits ~~Warehouse~~on ~~Lending,~~ the Bank’s ~~recently~~digital ~~expanded~~platform ~~business~~ended ~~line~~2025 ~~focused~~at on$992 ~~lending~~million towith ~~the~~an ~~independent~~average ~~mortgage~~balance ~~company~~of ~~space~~$48 thousand. As of December 31, 2025, 82% of those customers had been with ~~approximately~~the ~~$400~~Bank’s ~~million~~digital inplatform ~~approved~~for ~~lines~~more than 2 years.

3. Perfecting enhanced digital offerings that allow Primis to attract new deposit customers at scale both in and out of our footprint.

a. Deposits on the Bank’s digital platform ended 2024 at $985.5 million with an average balance of $56 thousand, compared to $909.4 million with an average balance of $64 thousand as of December 31, 2023.

Critical to executing this approach:

●

Utilizing the Primis Management Team’s Strength. The experience and market knowledge of the Bank’s management team is one of its greatest strengths and competitive advantages. Since the Company’s board of directors appointed Mr. Dennis J. Zember, Jr. as the Chief Executive Officer, effective February 19, 2020, Mr. Zember has added several members to the executive management team. These additional members all bring strong expertise and years of experience.

● Leveraging the Existing Foundation for Additional Growth. Based on the management team’s depth of experience and ~~certain~~previous infrastructure investments, Primis looks to take advantage of certain economies of scale typically enjoyed by larger organizations, thus expanding its operations both organically and through strategic cost-effective branch or bank acquisitions. Primis’ investments in data processing, risk management infrastructure, and the staff and branch network will support a much larger asset base. Primis is committed to controlling additional growth in a manner designed to minimize risk and to maintain strong capital ratios.

● Investing in Technology to Differentiate the Bank in the Marketplace. The success of the Bank’s ~~digital~~technology ~~platform~~offerings, ~~was~~particularly ~~the~~its ~~direct~~digital ~~result~~platform ~~of a visionary approach to crafting new products~~ and ~~services.~~its ~~Management~~V1BE ~~constantly~~app-based ~~looks~~fulfillment ~~for~~offering, ~~ways~~was tothe ~~adopt~~direct ~~and~~result ~~deploy~~of ~~technology solutions that provide~~ a ~~competitive advantage and advance the strategies outlined above.~~

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visionary approach to crafting new products and services. Management constantly looks for ways to adopt and deploy technology solutions that provide a competitive advantage and advance the strategies outlined above.

● ~~Continuing~~Pursuing ~~to Pursue~~ Selective Acquisition Opportunities. Primis has the skillsets and experience necessary to ~~acquire~~execute and successfully integrate financial ~~institutions,~~institution ~~banks, and branches~~acquisitions. This, along with its strong capital position, well-positions Primis to take advantage of acquisition opportunities.

●

Focusing on the Business Owner. Primis looks to be the primary bank for small- and medium-sized businesses by offering a suite of competitive electronic banking services, robust treasury services and comprehensive lending options. We believe that Primis’ localized decision-making capabilities, prompt credit decisions, and superior customer service, supported by a highly experienced and knowledgeable management team, offers Primis a distinct competitive advantage in the marketplace.

● Focusing on Asset Quality and Underwriting. Strong asset quality is of primary importance. ~~Therefore,~~Management ~~despite~~believes the ~~growth~~lending in ~~the~~its ~~Bank’s~~chosen ~~loan~~business ~~portfolio~~lines, ~~Primis~~particularly healthcare and mortgage warehouse, has ~~taken~~inherently ~~measures~~better toasset ~~ensure~~quality than other asset classes or industry verticals on average. Because of the growth in these businesses lines, management also believes it ~~maintains~~can abe ~~strong~~more ~~asset~~selective ~~quality~~when bylending ~~upholding~~in its ~~well-defined~~core ~~underwriting~~markets, ~~standards~~which should lead to steady growth for the Bank with attractive relative asset quality over time.

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●

Building a Stable Core Deposit Base. Primis continues to grow a stable core deposit base of business and retail customers. Primis intends to continue its practice of developing a deposit relationship with each of its loan customers.

BANKING SERVICES

Our principal business is the acquisition of deposits from the general public through our branch offices, digital platform, and deposit intermediaries and the use of these deposits to fund our loan and investment security portfolios. We seek to be a full -service bank that provides a wide variety of financial services to our middle market corporate clients as well as to our retail clients. We are an active commercial lender, and also invest funds in mortgage-backed securities, collateralized mortgage obligations, securities issued by agencies of the federal government and obligations of states and political subdivisions.

Lending Activities Overview

Primis offers a wide range of commercial banking services; however, we are focused on making loans secured primarily by commercial real estate and other types of secured and unsecured commercial loans to small and medium-sized businesses in a number of industries, as well as loans to individuals for a variety of purposes, including home equity lines of credit. We are aan ~~Small Business Administration (“~~SBA”) lender with Preferred Lending Partner ~~(“PLP”)~~ status that allows us to offer this program nationwide. We also invest in real estate-related securities, including collateralized mortgage obligations and agency mortgage -backed securities. Our principal sources of funds for loans and investing in securities are deposits and, to a lesser extent, borrowings.

The following is a discussion of each of the major types of lending in which we engage. For more information on our lending activities, see “Item 7. Management’s Discussion and Analysis of Financial Condition” (“MD&A”).

Commercial Lending

Commercial Business Lending. These loans consist of lines of credit, revolving credit facilities, demand loans, term loans, equipment loans, SBA loans, stand-by letters of credit, and unsecured loans. Commercial business loans are generally secured by business assets, equipment, accounts receivable, inventory and other collateral, such as readily marketable stocks and bonds with adequate margins, cash value in life insurance policies and savings and time deposits at ~~Primis~~the Bank.

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Commercial Real Estate Lending. Commercial real estate lending includes loans for permanent financing. Commercial real estate lending typically involves higher loan principal amounts and the repayment of loans is dependent, in large part, on sufficient income from the properties securing the loans to cover operating expenses and debt service. Owner occupied real estate is evaluated in conjunction with the operations of the business.

Construction Lending. Primis provides construction loans for commercial, multi-family, assisted living and other non-residential properties, and builder/developer lines for established companies in our market footprint. Construction loan borrowers are generally pre-qualified for the permanent loan by us or a third party.

Secured Asset Based Lending ~~(SABL)~~. Primis has developed a proprietary Asset Based Lending software system that allows the Bank to monitor the collateral of its commercial borrowers who have pledged their working assets (accounts receivables and other qualifying assets such as inventory) as collateral. SABL has the ability to track other offsets (e.g. other loans the customer has with the Bank) to the line of credit. SABL serves to provide more stringent controls and supervision that this type of lending requires.

SBA Lending. Primis has developed expertise in the federally guaranteed SBA programs. The SBA programs provide economic development programs which finance start-up and expansion of small businesses. We are a nationwide Preferred Lender. As an SBA Preferred Lender, our pre-approved status allows us to quickly respond to customers’ needs. Under the SBA program, we generally originate and fund SBA 7(a) and 504 loans. Benefits to Primis are low LTV commercial loans and government guarantees up to 80%.

7Panacea Practice Solutions. The Bank, through its Panacea Financial division, provides financing for medical, dental and veterinary businesses. Financing purposes cover a range of borrower needs, including acquisition, start-up, expansion, real estate purchase and refinance, leasehold, equipment financing, as well as practice buy-ins.

~~Table~~Mortgage Warehouse Lending. Primis provides warehouse lending lines of ~~Contents~~credit to residential mortgage originators. Program parameters and underwriting guidelines are processed and monitored through our Warehouse Loan System to ensure program compliance.

Lender. As an SBA Preferred Lender, our pre-approved status allows us to quickly respond to customers’ needs. Under the SBA program, we generally originate and fund SBA 7(a) and 504 loans. Benefits to Primis are low LTV commercial loans and government guarantees up to 80%.

Panacea Practice Solutions. Primis, through its Panacea Financial division, provides financing for medical, dental and veterinary businesses. Financing purposes cover a range of needs of the borrowers to include acquisition, start-up, expansion, real estate purchase and refinance, leasehold, equipment financing, as well as practice buy-ins.

Mortgage Warehouse Lending. Primis provides warehouse lending lines of credit to residential mortgage originators. Program parameters and underwriting guidelines are processed and monitored through our Warehouse Loan System (WLS) to ensure program compliance.

Consumer Lending

Primis offers various types of secured and unsecured consumer loans. We make consumer loans primarily for personal, family or household purposes.

Residential Mortgage. Primis originates residential mortgage loans for its portfolio through ~~Primis Mortgage Company~~PMC. Primis also purchases originated residential mortgages from our Warehouse Line clients, as well as other loan originators. We have no sub-prime loans.

Residential Construction. Primis originates residential construction loans through PMC and other Warehouse Line clients. Primis provides short-term construction management for these loans, which have a permanent mortgage take-out.

Home Equity Lines of Credit. Primis offers credit lines secured by primary residential properties with maximum loan-to-values of 80%. The product provides for a 10 year draw period followed by a 20 year repayment period.

Secured Personal Loans. Primis offers secured personal loans for a variety of purposes including auto, motorcycle, boats, and recreational vehicles. Pledged collateral could also include marketable securities and certificates of deposits.

Life Premium Finance (“LPF”). Primis previously offered life insurance premium financing. ~~The~~These ~~loan~~loans ~~was~~were utilized to pay the annual premiums due on ~~the~~ whole or universal life ~~policy~~policies. ~~The~~These ~~loan~~loans ~~was~~were fully secured by the cash value of the policy and personal liquid assets of the borrower or guarantor. We ~~made~~sold ~~the decision in 2024 to sell~~ a majority of these loans to ~~another~~EverBank, ~~financial~~N.A. ~~institution~~(“EverBank”) ~~and~~in ~~will~~2024 and no longer beoffer ~~offering~~ these loans as of January 31, 2025. ~~Most~~Additional ofdiscussion ~~the loans were sold as~~ of ~~December~~this ~~31,~~sale ~~2024~~can ~~with the remaining to~~ be ~~sold~~found onbelow ~~our balance sheet~~ in ~~held~~“Lines ~~for~~of ~~sale.~~Business” ~~The~~and ~~loans that are not being sold will remain~~ in ~~held~~the ~~for~~MD&A ~~investment~~section ~~and run-off through their scheduled maturity date. Additional discussion~~ of this ~~decision can be found in the MD&A~~Report.

Unsecured Personal Loans. Primis offers unsecured personal loans up to $50,000 and overdraft protection loans up to $10,000, based on specified underwriting criteria. We also offer these types of loans through an agreement with a third-party that sources and originates them for us based on our credit underwriting criteria. In 2024 we made the decision to discontinue, as of January 31, 2025, the program with the third-party to source and originate these loans and are seeking to sell a majority of the existing portfolio we have on our balance sheet. Additional discussion of this decision can be found in the MD&A.9

Panacea Consumer Loans. Panacea Financial offers several unsecured consumer loan products to include student loan refinancing and pro re nata (“PRN’) loans. PRN loans may be utilized by graduating doctors to fund costs as they move into their chosen professions. Strict criteria has been established around these products.

Because future loan losses are so closely intertwined with our underwriting policy, we have instituted what management believes is a stringent loan underwriting policy. Our underwriting guidelines are tailored for particular credit types, including lines of credit, revolving credit facilities, demand loans, term loans, equipment loans, real estate loans, SBA loans, stand-by letters of credit and unsecured loans. We have instituted a no exceptions policy for our consumer credit programs.

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Unsecured Personal Loans. Primis offers unsecured personal loans up to $50,000 and overdraft protection loans up to $10,000, based on specified underwriting criteria. We also offered these types of loans through an agreement with a third-party that sources and originates them for us based on our credit underwriting criteria. In 2024, we made the decision to discontinue the program with the third-party that sources and originates these loans, effective January 31, 2025, and are running-off the existing portfolio on our balance sheet. Additional discussion of this decision can be found in the MD&A.

Panacea Consumer Loans. Panacea Financial offers several unsecured consumer loan products, including student loan refinancing and PRN loans. PRN loans may be utilized by in-school, in-training and in-practice doctors, veterinarians and dentists to fund costs associated with their chosen professions. Strict credit underwriting criteria has been established around these products.

Deposit Activities Overview

We offer a broad range of deposit products, including checking, NOW, savings, and money market accounts and certificates of deposit, supporting the needs of businesses and individuals. We actively pursue business relationships by utilizing the business contacts of our senior management, other bank officers and our directors, thereby capitalizing on our knowledge of our local market areas.

Commercial deposit products are enhanced by a robust suite of treasury and cash management services, including:

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Investment/sweep accounts

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Wire transfer services

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Employer services/payroll processing services

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Zero balance accounts

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Night depository services

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Depository transfers

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Merchant services (third party)

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ACH originations

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Business debit cards

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Controlled disbursement accounts

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Remote deposit capture

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Mobile and online banking

Other products and services offered by the Bank include: ~~Debit~~debit cards, ATM services, notary services, and wire transfer.

Lines of Businesses

Panacea Financial. In November 2020, the Company launched the Panacea Financial division, which focuses on providing unique financial products and services for the medical, dental and veterinary communities. Panacea Financial offers personal loans, student debt refinance and practice loans as well as deposit products nationally. Panacea Financial has partnerships with 39 national and state associations. Additionally, its In-Training Medical/Dental School Loan Refinance product allows physicians and dentists that are in training the opportunity to refinance their student debt at a lower interest rate, while benefiting from affordable monthly payments during training. As of December 31, ~~2024~~2025, Panacea Financial had approximately $~~433.8~~544 million in outstanding loans. The division has successfully built a nationally-recognized brand ~~with a growing team of industry-leading commercial bankers experienced in providing financial services to its target communities across the United States.~~

Life Premium Financing. The Company launched a division in the fourth quarter of 2021 focused on financing life insurance premiums for high net worth individuals across the United States. On October 24, 2024, the Company entered into a purchase and assumption agreement with EverBank, N.A. (“EverBank”) for sale of the Company’s Life Premium Finance division (“LPF”). EverBank acquired LPF from the Company, except for a subset of mostly fixed rate and rate-capped loans that were retained by the Bank. All of the LPF operations, including its employees, were assumed by EverBank following the close of the transaction, which occured on January 31, 2025. As of December 31, 2024, we had sold a majority of the loans under the agreement to EverBank with $50.7 million to be sold on or before the transaction close date of January 31, 2025, recorded in held for sale. The portfolio being retained by the Bank had outstanding balances, net of deferred fees, of $147.1 million as of December 31, 2024 and was recorded in loans held for investment.10

Primis Mortgage Company. In May 2022, Primis Bank acquired Primis Mortgage Company (previously SeaTrust Mortgage Company), a regional residential mortgage company headquartered in Wilmington, North Carolina. Primis Mortgage Company has since expanded to offer residential mortgages in the majority of the U.S. Residential mortgage loans originated through Primis Mortgage Company are primarily sold in the secondary market for fee income. During the year ended December 31, 2024, Primis Mortgage originated $776.5 million of loans.

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with a growing team of industry-leading commercial bankers experienced in providing financial services to its target communities across the United States.

Life Premium Financing. The Company launched a division in the fourth quarter of 2021 focused on financing life insurance premiums for high net-worth individuals across the United States. On October 24, 2024, the Company entered into a purchase and assumption agreement with EverBank for sale of the Company’s LPF division. EverBank acquired LPF from the Company, except for a subset of mostly fixed rate and rate-capped loans that were retained by the Bank and are currently being run-off. All of the LPF operations, including its employees, were assumed by EverBank following the close of the transaction, on January 31, 2025.

Primis Mortgage Company. In May 2022, Primis Bank acquired Primis Mortgage Company (previously SeaTrust Mortgage Company), a regional residential mortgage company headquartered in Wilmington, North Carolina. Primis Mortgage Company has since expanded to offer residential mortgages in the majority of the U.S. Residential mortgage loans originated through Primis Mortgage Company are primarily sold in the secondary market for fee income. During the year ended December 31, 2025, Primis Mortgage originated over $1 billion of loans.

Warehouse Lending. Mortgage warehouse lending involves providing temporary funding to independent mortgage companies that originate residential loans for sale in the secondary market. The loans are predominantly secured by marketable residential mortgages underwritten to agency guidelines. The underlying mortgage is typically funded on the warehouse line for 10 to 15 days before being sold to upstream investors. In October 2024, we hired a seasoned team of mortgage warehouse lenders from another bank that had recently decided to exit the warehouse lending business. This team has grown our warehouse lending business since that time leveraging their years of experience and industry contacts. As of December 31, 2025, we had over $1 billion of commitments with 125 customers.

Digital Banking

In 2021, Primis launched its V1BE service, the first bank delivery app for on-demand ordering of branch services. V1BE brings in-branch banking services ~~right~~directly to the customer~~’s doorstep~~, including cash delivery/withdrawals, cash pick-up/deposits, check deposits, change orders, cashier checks, and the instant issue of replacement debit cards. V1BE was initially piloted in the Richmond market but now covers the majority of our footprint, including the greater Washington, D.C. region. With V1BE, Primis is able to support any market and grow customer relationships without the need for a large branch presence. During 2025 we expanded into other markets to support a growing customer base and are implementing enhancements to make V1BE easier to license to other banks and expect to have our first bank customer onboard in 2026.

In 2022, Primis successfully launched its digital bank platform. The platform includes an all-new mobile banking application that provides a quick and seamless account opening process all from within the app. ~~During~~As ~~2023 we brought in approximately $1.0 billion in deposits through our digital platform and as~~ of December 31, ~~2024~~2025, ~~and 2023~~ the balance of digital deposits ~~was~~were $1.0 billion ~~and $0~~.~~9 billion, respectively.~~

Funding and Revenue Sources

The principal sources of funds for our lending and investment activities are deposits, repayment of loans, prepayments from mortgage-backed securities, repayments of maturing investment securities, ~~Federal Home Loan Bank (“~~FHLB”) advances and other borrowed money.

Principal sources of revenue are interest and fees on loans and investment securities as well as fee income derived from the maintenance of deposit accounts and income from bank-owned life insurance policies. Our principal expenses include interest paid on deposits, advances from the FHLB, junior subordinated debt, senior subordinated notes and other borrowings, and other operating expenses.

CREDIT ADMINISTRATION

Because future loan losses are so closely intertwined with our underwriting policy, we have instituted what management believes are well-defined loan underwriting criteria and portfolio management practices. Our underwriting guidelines are tailored for particular credit types, including lines of credit, revolving credit facilities, demand loans, term loans, equipment loans, real estate loans, SBA loans, stand-by letters of credit and unsecured loans. We will make extensions of credit based, among other factors, on the potential borrower’s creditworthiness and likelihood of repayment.

The Board of Directors has delegated assignment of individual credit authorities up to $10 million to the Chief Executive Officer and Chief Credit Officer. For loans up to $5.0 million, we have named Credit Officers. We also have two Specialty Executive Credit Officers, each with extensive industry specific experience with individual credit authority to $7.5 million. These individual lending authorities are based on the individual’s technical ability and experience. All credits over $10 million are reviewed and approved by Executive Loan Committee, as defined in credit policy. For approval of third-party originated loans, we have delegated authority within an approved framework. All credit extensions in excess of 60% of the Bank’s legal lending limit are also reviewed and approved by the Board of Directors. As of December 31, 2024, our legal lending limit was approximately $57.9 million. 11

~~Portfolio~~Table ~~management is an integral part~~ of sound credit practices. The responsible relationship manager in conjunction with credit administration will service loan credits through their life cycle. Primis has a dedicated Special Assets team that provides oversight on credit collection activities, to include legal negotiations, forbearance agreements, collateral sale, foreclosures and management of other real estate owned (“OREO”). This coordinated approach to credit provides a high quality portfolio. Credit Administration is responsible for monthly reporting to the Board of Directors on asset quality and performance.Contents

guidelines are tailored for individual credit types, including lines of credit, revolving credit facilities, demand loans, term loans, equipment loans, real estate loans, SBA loans, stand-by letters of credit and unsecured loans. We will make extensions of credit based, among other factors, on the potential borrower’s creditworthiness and likelihood of repayment.

The Board of Directors has delegated assignment of individual credit authorities up to $10 million to the Chief Executive Officer and Chief Credit Officer. For loans up to $5 million, we have named Credit Officers. We also have a Specialty Executive Credit Officer with extensive industry specific experience with individual credit authority up to $7.5 million. These individual lending authorities are based on the individual’s technical ability and experience. All credits over $10 million are reviewed and approved by the Executive Loan Committee, as defined in our credit policy. For approval of third-party originated loans, we have delegated authority within an approved framework. All credit extensions in excess of 60% of the Bank’s legal lending limit are also reviewed and approved by the Board of Directors. As of December 31, 2025, our legal lending limit was approximately $63 million.

Portfolio management is an integral part of sound credit practices. The responsible relationship manager in conjunction with credit administration will service loan credits through their life cycle. Primis has a dedicated Special Assets team that provides oversight on credit collection activities, to include legal negotiations, forbearance agreements, collateral sale, foreclosures and management of OREO. We believe that coordinated approach to credit supports a high-quality portfolio. Credit Administration is responsible for monthly reporting to the Board of Directors on asset quality and performance.

COMPETITION

The banking business is highly competitive, and our profitability depends principally on our ability to compete in the market areas in which our banking operations are located. We experience substantial competition in attracting and retaining deposits and in lending funds. The primary factors we encounter in competing for deposits are convenient office locations and rates offered. Direct competition for deposits comes from other commercial bank and thrift institutions, money market mutual funds and corporate and government securities which may offer more attractive rates than insured depository institutions are willing to pay. The primary factors we encounter in competing for loans include, among others, interest rate and loan origination fees and the range of services offered. Competition for origination of loans normally comes from other commercial banks, thrift institutions, mortgage bankers, mortgage brokers, insurance companies and fintech or digital lending companies. We have been able to compete effectively with other financial institutions by:

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and rates offered. Direct competition for deposits comes from other commercial bank and thrift institutions, money market mutual funds and corporate and government securities which may offer more attractive rates than insured depository institutions are willing to pay. The primary factors we encounter in competing for loans include, among others, interest rate and loan origination fees and the range of services offered. Competition for origination of loans normally comes from other commercial banks, thrift institutions, mortgage bankers, mortgage brokers, insurance companies and fintech or digital lending companies. We have been able to compete effectively with other financial institutions by:

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emphasizing customer service and technology;

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establishing long-term customer relationships and building customer loyalty; and

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providing products and services designed to address the specific needs of our customers.

HUMAN CAPITAL

At Primis, we are committed to ensuring that our employees reach their personal, professional and financial peaks. We are attracting, developing, retaining and planning for the succession of key talent and executives to achieve our strategic objectives. Primis is continually investing in our workforce to further emphasize inclusivity and recognizing that diverse perspectives, backgrounds, and experiences strengthen our ability to meet the needs of our associates, communities, clients and shareholders and to foster our employees' growth and career development. As of December 31, ~~2024~~2025, we had ~~592~~593 employees, nearly all of whom are full-time and of which approximately 63% were female and 2023% were minorities. All of our employees are chosen on the basis of their qualifications and merit.

Employee Feedback. Fostering an inclusive environment requires that all employees are heard. Our Intranet contains the “Employee Voice,” which is a vehicle for employees to make suggestions, asks questions or voice opinions regarding the Company’s practices.

Recruitment. While the majority of our employees reside in Virginia, our recruitment efforts are both local and nationwide. We utilize a wide range of recruitment vehicles ranging from college recruitment sites such as “Handshake”, a “V3” program to recruit veterans to posting on popular job boards and conducting nationwide profile searches to find diverse and qualified candidates. Primis realizes that great people know other great people, so we also offer a referral bonus to our employees.

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Benefits. Primis offers a comprehensive and competitive benefits package to meet a variety of individual needs. We offer three different medical plans, two of which allow ~~for~~ the employee to make contributions and receive an employer match on a Health Savings Account. In addition to dental insurance, supplemental insurance and a 401k, we offer employer paid short-term and long-term disability and life insurance. Our employees also enjoy an incentive for participating in our Wellness Program.

Development. All new employees benefit from training to learn how to utilize our key systems. New employees are also required to complete multiple learning modules that cover important compliance and regulatory requirements in the banking industry. Continuing education and advanced training is offered to employees throughout their tenure. We encourage all employees to obtain job related training by covering the cost of the classes and/or learning materials and tests. Our talent acquisition, development and retention focus ~~was~~is on rewarding merit and achievement while nurturing and progressing skilled talent across various business segments.

Volunteerism. Primis is committed to the communities we serve and to supporting our employees in their volunteerism. Each employee receives ~~eight~~up to sixteen paid hours to volunteer in their community or charity of choice each year. We maintain a commitment to the prosperity of each community we serve, donating to community, civic and philanthropic organizations in ~~2024~~2025. In addition to providing financial products built for the needs of our customers, we use associate volunteerism and corporate philanthropy to build strong community partnerships. Our employees volunteered ~~179~~225 hours in ~~2024~~2025.

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SUPERVISION AND REGULATION

~~Bank holding companies and banks are extensively regulated under federal and state law.~~ This discussion is a summary and is qualified in its entirety by reference to the particular statutory and regulatory provisions described below, and is not intended to be an exhaustive description of the statutes or regulations applicable to Primis or the Bank. The business of Primis and the Bank is subject to extensive regulation and supervision under federal and state law, including oversight by the Board of Governors of the Federal Reserve System (“Federal Reserve”) and the ~~Virginia Bureau of Financial Institutions (“~~VBFI”), a regulatory division of the Virginia State Corporation Commission, as well as applicable regulation by the FDIC.

Changes in laws and regulations may alter the structure, regulation and competitive relationships of financial institutions. In addition, bank regulatory agencies may issue enforcement actions, policy statements, interpretive letters and similar written guidance applicable to us. It cannot be predicted whether and in what form new laws and regulations, or interpretations thereof, may be adopted or the extent to which the business of Primis and the Bank may be affected thereby, but they may have a material adverse effect on our business, operations, and earnings.

Violations of laws and regulations, or other unsafe and unsound practices, may result in regulatory agencies imposing fines or penalties, cease and desist orders, or taking other enforcement actions. Under certain circumstances, these agencies may enforce these remedies directly against officers, directors, employees and other parties participating in the affairs of a bank or bank holding company. Under federal and state laws and regulations pertaining to the safety and soundness of insured depository institutions, federal and state banking regulators have the authority to compel or restrict certain actions on our part if they determine that we have insufficient capital or other resources, or are otherwise operating in a manner that may be deemed to be inconsistent with safe and sound banking practices. Under this authority, our bank regulators can require us or our subsidiaries to enter into informal or formal supervisory agreements, including board resolutions, memoranda of understanding, written agreements and consent or cease and desist orders, pursuant to which we would be required to take identified corrective actions to address cited concerns and to refrain from taking certain actions.

If we become subject to and are unable to comply with the terms of any future regulatory actions or directives, supervisory agreements, or orders, then we could become subject to additional, heightened supervisory actions and orders, possibly including consent orders, prompt corrective action restrictions and/or other regulatory actions, including prohibitions on the payment of dividends on our common stock and preferred stock. If our regulators were to take such additional supervisory actions, then we could, among other things, become subject to significant restrictions on our ability to develop any new business, as well as restrictions on our existing business, and we could be required to raise additional capital, dispose of certain assets and liabilities within a prescribed period of time, or both. The terms of any such ~~supervisory action could have a material negative effect on our business, reputation, operating flexibility, financial condition, and the value of our capital stock.~~

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supervisory action could have a material negative effect on our business, reputation, operating flexibility, financial condition, and the value of our capital stock.

Supervision, regulation, and examination of Primis, the Bank, and our respective subsidiaries by the appropriate regulatory agencies, as described herein, are intended primarily for the protection of consumers, bank depositors, ~~and~~ the ~~Deposit Insurance Fund (“~~DIF”) of ~~The~~the ~~Federal Deposit Insurance Corporation (“~~FDIC”), and the U.S. banking and financial system, rather than holders of our capital stock.

Bank Holding Company Regulation

Primis is subject to extensive supervision and regulation by the Federal Reserve pursuant to the Bank Holding Company Act of 1956, as amended (the “Bank Holding Company Act”). We are required to file with the Federal Reserve periodic reports and such other information as the Federal Reserve may request. Ongoing supervision is provided through regular examinations by the Federal Reserve and other means that allow the regulators to gauge management’s ability to identify, assess and control risk in all areas of operations in a safe and sound manner and to ensure compliance with laws and regulations. In addition to regulation by the Federal Reserve as a bank holding company, Primis is subject to supervision and regulation by the VBFI under the banking and general business corporation laws of the Commonwealth of Virginia.

Activity Limitations. Primis is registered with the Federal Reserve as a bank holding company under the Bank Holding Company Act and has elected to be a financial holding company. As a financial holding company, Primis is permitted to engage directly or indirectly in a broader range of activities than those permitted for a bank holding company. Bank holding companies generally are limited to the business of banking, managing or controlling banks, and other activities that the Federal Reserve determines to be closely related to banking, or managing or controlling banks as to be a proper incident thereto. Bank holding companies are prohibited from acquiring or obtaining control of more than five percent (5%) of the outstanding voting interests of any company that engages in activities other than those activities permissible for bank holding companies. Financial holding companies, such as us, may also engage in activities that are considered to be financial in nature, as well as those incidental or, if so determined by the Federal Reserve, complementary to financial activities. Primis and the Bank must each remain “well-capitalized” and “well-managed” and the Bank must receive a Community Reinvestment Act (“CRA”) rating of at least “Satisfactory” at its most recent examination in order for the Company to maintain its status as a financial holding company. In addition, the Federal Reserve has the power to order a financial holding company or its subsidiaries to terminate any non-banking activity or terminate its ownership or control of any non-bank subsidiary, when it has reasonable cause to believe that continuation of such activity or such ownership or control constitutes a serious risk to the financial safety, soundness, or stability of any bank subsidiary of that financial holding company. As further described below, each of Primis and the Bank is well-capitalized as of December 31, 2025, and Primis Bank achieved a rating of “Satisfactory” in its most recent CRA evaluation.

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engage directly or indirectly in a broader range of activities than those permitted for a bank holding company. Bank holding companies generally are limited to the business of banking, managing or controlling banks, and other activities that the Federal Reserve determines to be closely related to banking, or managing or controlling banks as to be a proper incident thereto. Bank holding companies are prohibited from acquiring or obtaining control of more than five percent (5%) of the outstanding voting interests of any company that engages in activities other than those activities permissible for bank holding companies. Examples of activities that the Federal Reserve has determined to be permissible are making, acquiring, brokering, or servicing loans; leasing personal property; providing certain investment or financial advice; performing certain data processing services; acting as agent or broker in selling credit life insurance and other insurance products in certain locations; and performing certain insurance underwriting activities. The Bank Holding Company Act does not place geographic limits on permissible non-banking activities of bank holding companies. Financial holding companies, such as us, may also engage in activities that are considered to be financial in nature, as well as those incidental or, if so determined by the Federal Reserve, complementary to financial activities. Primis and the Bank must each remain “well-capitalized” and “well-managed” and the Bank must receive a Community Reinvestment Act (“CRA”) rating of at least “Satisfactory” at its most recent examination in order for the Company to maintain its status as a financial holding company. In addition, the Federal Reserve has the power to order a financial holding company or its subsidiaries to terminate any non-banking activity or terminate its ownership or control of any non-bank subsidiary, when it has reasonable cause to believe that continuation of such activity or such ownership or control constitutes a serious risk to the financial safety, soundness, or stability of any bank subsidiary of that financial holding company. As further described below, each of Primis and the Bank is well-capitalized as of December 31, 2024, and Primis Bank achieved a rating of “Satisfactory” in its most recent CRA evaluation.

Source of Strength Obligations. A bank holding company is required to act as a source of financial and managerial strength to its subsidiary bank. The term “source of financial strength” means the ability of a company, such as us, that directly or indirectly owns or controls an insured depository institution, such as the Bank, to provide financial assistance to such insured depository institution in the event of financial distress. The appropriate federal banking agency for the depository institution (in the case of the Bank, this agency is the Federal Reserve) may require reports from us to assess our ability to serve as a source of strength and to enforce compliance with the source of strength requirements by requiring us to provide financial assistance to the Bank in the event of financial distress. If we were to enter bankruptcy or become subject to the orderly liquidation process established by the Dodd-Frank Act, any commitment by us to a federal bank regulatory agency to maintain the capital of the Bank would be assumed by the bankruptcy trustee or the FDIC, as appropriate, and entitled to a priority of payment. In addition, the FDIC provides that any insured depository institution generally will be liable for any loss incurred by the FDIC in connection with the default of, or any assistance provided by the FDIC to, a commonly controlled insured depository institution. The Bank is an FDIC-insured depository institution and thus subject to these requirements.

Acquisitions. The Bank Holding Company Act requires every bank holding company to obtain the prior approval of the Federal Reserve or waiver of such prior approval before it (1) acquires ownership or control of any voting shares of any bank if, after such acquisition, such bank holding company will own or control more than five percent (5%) of the voting shares of such bank, (2) acquires all of the assets of a bank, or (3) merges with any other bank holding company. In reviewing a proposed covered acquisition, among other factors, the Federal Reserve considers (1) the financial and managerial resources of the companies involved, including pro forma capital ratios; (2) the risk to the stability of the United States banking or financial system; (3) the convenience and needs of the communities to be served, including performance under the CRA; and (4) the effectiveness of the companies in combatting money laundering. The Federal Reserve also reviews any indebtedness to be incurred by a bank holding company in connection with a proposed acquisition to ensure that the bank holding company can service such indebtedness without adversely affecting its ability to serve as a source of strength to its bank subsidiaries. Well capitalized and well managed bank holding companies are permitted to acquire control of banks in any state, subject to federal regulatory approval, without regard to whether such a transaction is prohibited by the laws of any state. However, a bank holding company may not, following an interstate acquisition, control more than 10% of nationwide insured deposits or 30% of deposits within any state in which the acquiring bank operates.

Change in Control. Federal law restricts the amount of voting stock of a bank holding company or a bank that a person (including an entity) may acquire without the prior approval of banking regulators. Under the federal Change in Bank Control Act and the regulations thereunder, a person or group must give advance notice to and obtain approval from

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In reviewing a proposed covered acquisition, among other factors, the Federal Reserve ~~before~~considers ~~acquiring~~(1) ~~control~~the offinancial ~~any~~and ~~bank~~managerial ~~holding~~resources ~~company,~~of ~~such~~the ascompanies ~~Primis.~~involved, ~~The~~including ~~Change~~pro informa ~~Bank~~capital ~~Control~~ratios; ~~Act~~(2) ~~creates~~the arisk ~~rebuttable~~to ~~presumption~~the stability of ~~control~~the ifUnited aStates ~~person~~banking or ~~group~~financial ~~acquires~~system; (3) the ~~power~~convenience and needs of the communities to ~~vote~~be ~~10%~~served, orincluding ~~more~~performance under the CRA; and (4) the effectiveness of ~~our~~the ~~outstanding~~companies ~~common~~in ~~stock~~combatting money laundering. The ~~overall~~Federal ~~effect~~Reserve ofalso ~~such~~reviews ~~laws~~any isindebtedness to ~~make~~be itincurred ~~more~~by ~~difficult~~a tobank ~~acquire~~holding company in connection with a proposed acquisition to ensure that the bank holding company orcan service such indebtedness without adversely affecting its ability to serve as a source of strength to its bank bysubsidiaries. ~~tender~~Well ~~offer~~capitalized orand ~~similar~~well ~~means~~managed ~~than~~bank itholding ~~might~~companies beare permitted to acquire control of ~~another~~banks ~~type~~in ofany ~~corporation. Consequently~~state, ~~shareholders~~subject ofto ~~the~~federal ~~Company~~regulatory ~~may~~approval, bewithout ~~less~~regard ~~likely~~ to ~~benefit~~whether ~~from~~such ~~the~~a ~~rapid~~transaction ~~increases~~is inprohibited ~~stock~~by ~~prices~~the ~~that~~laws ~~may~~of ~~result~~any ~~from~~state. ~~tender~~However, ~~offers~~a orbank ~~similar~~holding ~~efforts~~company tomay ~~acquire~~not, ~~control~~following ofan ~~other~~interstate ~~companies.~~acquisition, ~~Investors~~control ~~should~~more bethan ~~aware~~10% of ~~these~~nationwide ~~requirements~~insured ~~when~~deposits ~~acquiring~~or ~~shares~~30% of ~~our~~deposits ~~stock~~within any state in which the acquiring bank operates.

~~Virginia~~Change ~~Law~~in Control. ~~Certain~~Federal ~~state~~law ~~corporation~~restricts ~~laws~~the ~~may~~amount ~~have~~of voting stock of a bank holding company or a bank that a person (including an ~~anti-takeover~~entity) ~~affect~~may acquire without the prior approval of banking regulators. ~~Virginia~~Under ~~law~~the ~~restricts~~federal ~~transactions~~Change ~~between~~in aBank ~~Virginia~~Control ~~corporation~~Act and ~~its~~the ~~affiliates~~regulations thereunder, a person or group must give advance notice to and ~~potential~~obtain ~~acquirers~~approval from the Federal Reserve before acquiring control of any bank holding company, such as Primis. The ~~following~~Change ~~discussion~~in ~~summarizes~~Bank Control Act creates a rebuttable presumption of control if a person or group acquires the ~~two~~power ~~Virginia~~to ~~statutes~~vote 10% or more of our outstanding common stock. The overall effect of such laws is to make it more difficult to acquire a bank holding company or a bank by tender offer or similar means than it might be to acquire control of another type of corporation. Consequently, shareholders of the Company may be less likely to benefit from the rapid increases in stock prices that may ~~discourage~~result anfrom ~~attempt~~tender offers or similar efforts to acquire control of ~~Primis~~other companies. Investors should be aware of these requirements when acquiring shares of our stock.

Virginia Code Sections 13.1-725 – 727.1 govern “Affiliated Transactions.” These provisions, with several exceptions discussed below, require approval by the holders of at least two-thirds of the remaining voting shares of material acquisition transactions between a Virginia corporation and any holder of more than 10% of its outstanding voting shares. Affiliated Transactions include mergers, share exchanges, material dispositions of corporate assets not in the ordinary course of business, any dissolution of the corporation proposed by or on behalf of an interested shareholder, or any reclassification, including a reverse stock split, recapitalization, or merger of the corporation with its subsidiaries which increases the percentage of voting shares owned beneficially by any 10% shareholder by more than 5%.

These provisions were designed to deter certain takeovers of Virginia corporations. In addition, the statute provides that, by affirmative vote of a majority of the voting shares other than shares owned by any 10% shareholder, a corporation can adopt an amendment to its articles of incorporation or bylaws providing that the Affiliated Transactions provisions shall not apply to the corporation. Primis “opted out” of the Affiliated Transactions provisions when it incorporated.

Virginia law also provides that shares acquired in a transaction that would cause the acquiring person’s voting strength to meet or exceed any of the three thresholds (20%, 33.33% or 50%) have no voting rights for those shares exceeding that threshold, unless granted by a majority vote of shares not owned by the acquiring person. This provision empowers an acquiring person to require the Virginia Corporation to hold a special meeting of shareholders to consider the matter within 50 days of the request. Primis also “opted out” of this provision at the time of its incorporation.

Governance and Financial Reporting Obligations. We are required to comply with various corporate governance and financial reporting requirements under the Sarbanes-Oxley Act of 2002, as well as rules and regulations adopted by the SEC, the Public Company Accounting Oversight Board, and NASDAQ. In particular, we are required to include management and independent registered public accounting firm reports on internal controls as part of our Annual Report on Form 10-K in order to comply with Section 404 of the Sarbanes-Oxley Act. We have evaluated our controls, including compliance with the SEC rules on internal controls, and have and expect to continue to spend significant amounts of time and money on compliance with these rules. Our failure to comply with these internal control rules may materially adversely affect our reputation, ability to obtain the necessary certifications to financial statements, and the values of our securities.

~~Corporate~~Virginia ~~Governance~~Law. ~~The~~ Certain ~~Dodd-Frank~~state ~~Act~~corporation ~~addressed~~laws ~~many~~may ~~investor~~have ~~protections,~~an ~~corporate~~anti-takeover ~~governance,~~effect. ~~and~~Virginia ~~executive~~law ~~compensation~~restricts ~~matters~~transactions ~~that~~between ~~will~~a ~~affect~~Virginia ~~most~~corporation ~~U.S. publicly~~and ~~traded~~its ~~companies.~~affiliates ~~The~~and ~~Dodd-Frank~~potential ~~Act (1) granted shareholders of U~~acquirers.~~S. publicly~~ ~~traded~~The ~~companies~~following andiscussion ~~advisory~~summarizes ~~vote~~the ontwo ~~executive~~Virginia ~~compensation;~~statutes ~~(2) enhanced~~that ~~independence~~may ~~requirements~~discourage ~~for~~an ~~Compensation~~attempt ~~Committee members; and (3) required companies listed on national securities exchanges~~ to ~~adopt~~acquire ~~incentive-based~~control ~~compensation~~of ~~claw-back policies for executive officers~~Primis.

~~Incentive~~These ~~Compensation.~~provisions ~~Our~~were ~~compensation~~designed ~~practices are subject~~ to ~~oversight~~deter bycertain ~~the~~takeovers ~~Federal~~of ~~Reserve~~Virginia ~~and~~corporations. byIn ~~other~~addition, ~~financial~~the ~~regulatory~~statute ~~agencies.~~provides ~~The~~that, ~~federal~~a ~~banking~~corporation's ~~regulators~~initial ~~issued~~articles ~~joint~~of ~~guidance~~incorporation onmay ~~executive~~expressly ~~compensation~~provide ~~designed to ensure~~ that the ~~incentive~~corporation ~~compensation~~shall ~~policies~~not ofbe ~~banking~~governed ~~organizations~~by ~~take~~the ~~into~~Affiliated ~~account~~Transactions ~~risk~~provisions ~~factors~~ and ~~are~~that ~~consistent~~by ~~with~~affirmative ~~the~~vote ~~safety~~of ~~and~~a ~~soundness~~majority of the ~~organization.~~voting ~~The~~shares ~~guidance~~other ~~also~~than ~~provided~~shares ~~that~~owned ~~supervisory~~by ~~findings~~any ~~with~~10% ~~respect~~shareholder, toa ~~incentive~~corporation ~~compensation~~can ~~should~~adopt bean ~~incorporated~~amendment ~~into~~to ~~the organization’s supervisory ratings, which can affect~~ its ~~ability~~articles toof ~~make~~incorporation ~~acquisitions~~ or ~~other~~bylaws ~~corporate~~providing ~~decisions. The guidance further provided~~ that the ~~regulators~~Affiliated ~~may~~Transactions ~~pursue~~provisions ~~enforcement~~shall ~~actions~~not ~~against~~apply ato ~~banking~~the ~~organization~~corporation. ifPrimis ~~its~~“opted ~~incentive~~out” ~~compensation~~of ~~and~~the ~~related~~Affiliated ~~risk~~Transactions ~~management,~~provisions ~~control~~when orit ~~governance~~ incorporated.

14Virginia law also provides that shares acquired in a transaction that would cause the acquiring person’s voting strength to meet or exceed any of the three thresholds (20%, 33.33% or 50%) have no voting rights for those shares exceeding that threshold, unless granted by a majority vote of shares not owned by the acquiring person. This provision empowers an acquiring person to require the Virginia Corporation to hold a special meeting of shareholders to consider whether to vote on granting voting rights to control shares within 50 days of the request, unless the acquiring person agrees to another date. Primis also “opted out” of these provisions at the time of its incorporation.

Governance and Financial Reporting Obligations. We are required to comply with various corporate governance and financial reporting requirements under the Sarbanes-Oxley Act of 2002, as well as rules and regulations adopted by the SEC, the Public Company Accounting Oversight Board, and NASDAQ. In particular, we are required to include management and independent registered public accounting firm reports on internal controls as part of our Annual Report on Form 10-K in order to comply with Section 404 of the Sarbanes-Oxley Act. We have evaluated our controls, including

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~~processes~~compliance ~~pose~~with ~~a risk to~~ the ~~organization’s~~SEC ~~safe~~rules ~~and~~on ~~sound~~internal ~~practices. Enforcement actions may be taken against a banking organization if its incentive compensation arrangements~~controls, ~~or related risk-management control or governance processes, pose a risk to the organization’s safety~~ and ~~soundness,~~have and ~~the~~expect ~~organization is not taking prompt and effective measures~~ to ~~correct~~continue ~~the deficiencies. In addition, the Dodd-Frank Act required the federal banking agencies and the SEC~~ to ~~issue~~spend ~~regulations~~significant ~~requiring~~amounts covered financial institutions to prohibit incentive compensation arrangements that encourage inappropriate risks by providing compensation that is excessive or that could lead to material financial loss to the institution. In October 2022, the SEC adopted final rules implementing the incentive-based compensation recovery (“clawback”) provisions mandated by Section 954 of ~~the~~time ~~Dodd-Frank Act. The final rules directed U.S. stock exchanges to require listed companies to implement, disclose~~ and ~~enforce~~money ~~clawback policies to recover excess incentive-based compensation that current or former executive officers received based~~ on ~~financial~~compliance ~~reporting~~with ~~measures~~these ~~that are later restated~~rules. InOur ~~June~~failure ~~2023,~~to ~~the~~comply ~~SEC~~with ~~approved~~these ~~the~~internal ~~proposed~~control ~~clawback~~rules ~~listing~~may ~~standards~~materially ofadversely ~~the~~affect ~~Nasdaq~~our ~~Stock Market~~reputation, ~~LLC~~ability ~~(“Nasdaq”), which required Nasdaq-listed companies,~~ to ~~(i)~~obtain ~~adopt and implement a compliant clawback policy; (ii) file~~ the ~~clawback~~necessary ~~policy~~certifications ~~as an exhibit~~ to ~~their~~financial ~~annual~~statements, ~~reports;~~ and ~~(iii) provide certain disclosures relating to any compensation recovery triggered by~~ the ~~clawback~~values ~~policy. Our clawback policy was approved by the board in November 2023 and is included as Exhibit 97~~ of ~~this~~our ~~Annual Report on Form 10-K~~securities.

~~Shareholder~~Incentive ~~Say-On-Pay Votes~~Compensation. The Dodd-Frank Act ~~requires~~required ~~public~~the ~~companies~~federal banking agencies and the SEC to ~~take~~establish ~~shareholders’~~joint ~~votes~~rules onor ~~proposals~~guidelines ~~addressing~~for ~~compensation~~financial ~~(known~~institutions with more than $1 billion in assets, such as ~~say-~~us and the Bank, which prohibit incentive compensation arrangements that the agencies determine to encourage inappropriate risks by the institution. The federal banking agencies issued proposed rules in 2011 and previously issued guidance on~~-pay)~~ sound incentive compensation policies. In 2016, the ~~frequency~~federal banking agencies and the SEC proposed rules that would, depending upon the assets of athe ~~say-on-pay~~institution, ~~vote~~directly regulate incentive compensation arrangements and would require enhanced oversight and recordkeeping. As of December 31, 2025, these rules have not been implemented. In addition, the Dodd-Frank Act required the federal banking agencies and the ~~golden~~SEC ~~parachutes~~to ~~available~~issue regulations requiring covered financial institutions to ~~executives~~prohibit inincentive ~~connection~~compensation ~~with~~arrangements ~~change~~that encourage inappropriate risks by providing compensation that is excessive or that could lead to material financial loss to the institution. In October 2022, the SEC adopted final rules implementing the incentive-inbased compensation recovery (“clawback”) provisions mandated by Section 954 of the Dodd-~~control~~Frank ~~transactions~~Act. ~~Public~~The final rules directed U.S. stock exchanges to require listed companies ~~must~~to ~~give~~implement, ~~shareholders~~disclose ~~the~~and ~~opportunity~~enforce clawback policies to ~~vote~~recover excess incentive-based compensation that current or former executive officers received based on financial reporting measures that are later restated. In June 2023, the ~~compensation~~SEC atapproved ~~least~~the ~~every~~proposed ~~three~~clawback ~~years~~listing standards of the Nasdaq Stock Market, LLC, which required Nasdaq-listed companies, to (i) adopt and implement a compliant clawback policy; (ii) file the ~~opportunity~~clawback policy as an exhibit to ~~vote~~their onannual ~~frequency~~reports; atand ~~least~~(iii) ~~every~~provide ~~six~~certain ~~years,~~disclosures ~~indicating~~relating ~~whether~~to any compensation recovery triggered by the ~~say-on-pay~~clawback ~~vote~~policy. ~~should~~Our beclawback ~~held~~policy ~~annually,~~was ~~biennially,~~approved orby ~~triennially~~the board in November 2023 and is incorporated by reference as Exhibit 97 of this Annual Report on Form 10-K.

Shareholder Say-On-Pay Votes. The Dodd-Frank Act requires public companies to take shareholders’ votes on proposals addressing compensation (known as say-on-pay), the frequency of a say-on-pay vote, and the golden parachutes available to executives in connection with change-in-control transactions. Public companies must give shareholders the opportunity to vote on compensation at least every three years and the opportunity to vote on frequency at least every six years, indicating whether the say-on-pay vote should be held annually, biennially, or triennially.

Anti-tying rules. A bank holding company and its subsidiaries are prohibited from engaging in certain tying arrangements in connection with extensions of credit, leases or sales of property, or furnishing of services.

Capital Requirements

Primis and the Bank are each required under federal law to maintain certain minimum capital levels based on ratios of capital to total assets and capital to risk-weighted assets. The required capital ratios are minimums, and the federal banking agencies may determine that a banking organization, based on its size, complexity, or risk profile, must maintain a higher level of capital in order to operate in a safe and sound manner. Risks such as concentration of credit risks and the risk arising from non-traditional activities, as well as the institution’s exposure to a decline in the economic value of its capital due to changes in interest rates, and an institution’s ability to manage those risks are important factors that are to be ~~taken~~considered ~~into account~~ in assessing an institution’s overall capital adequacy. The following is a brief description of the relevant provisions of these capital rules and their potential impact on our capital levels.

Primis and the Bank are each subject to the following risk-based capital ratios: a common equity Tier 1 ("CET1") risk-based capital ratio, a Tier 1 risk-based capital ratio, which includes CET1 and additional Tier 1 capital, and a total risk-based capital ratio, which includes Tier 1 and Tier 2 capital. CET1 is primarily comprised of the sum of common stock instruments and related surplus net of treasury stock, plus retained earnings and certain qualifying minority interests, less certain adjustments and deductions, including with respect to goodwill, intangible assets, mortgage servicing assets and deferred tax assets subject to temporary timing differences. Additional Tier 1 capital is primarily comprised of noncumulative perpetual preferred stock, tier 1 minority interests and grandfathered trust preferred securities. Tier 2 capital consists of instruments disqualified from Tier 1 capital, including qualifying subordinated debt, other preferred stock and certain hybrid capital instruments, and a limited amount of loan loss reserves up to a maximum of 1.25% of risk-weighted assets, subject to certain eligibility criteria. The capital rules also define the risk-weights assigned to assets and off-balance sheet items to determine the risk-weighted asset components of the risk-based capital rules, including, for example, certain “high volatility” commercial real estate, past due assets, structured securities and equity holdings.

The leverage capital ratio, which serves as a minimum capital standard, is the ratio of Tier 1 capital to quarterly average total consolidated assets net of goodwill, certain other intangible assets, and certain required deduction items. The required minimum leverage ratio for all banks is 4%.16

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sheet items to determine the risk-weighted asset components of the risk-based capital rules, including, for example, certain “high volatility” commercial real estate, past due assets, structured securities and equity holdings.

In addition, effective January 1, 2019, the capital rules require a capital conservation buffer of CET1 of 2.5% above each of the minimum capital ratio requirements (CET1, Tier 1, and total risk-based capital), which is designed to absorb losses during periods of economic stress. These buffer requirements must be met for a bank or bank holding company to be able to pay dividends, engage in share buybacks or make discretionary bonus payments to executive management without restriction.

The ~~Federal Deposit Insurance Corporation Improvement Act of 1991 (“~~FDICIA”), among other things, requires the federal bank regulatory agencies to take “prompt corrective action” regarding depository institutions that do not meet minimum capital requirements. FDICIA establishes five regulatory capital tiers: “well capitalized”, “adequately capitalized”, “undercapitalized”, “significantly undercapitalized”, and “critically undercapitalized”. A depository institution’s capital tier will depend upon how its capital levels compare to various relevant capital measures and certain other factors, as established by regulation. FDICIA generally prohibits a depository institution from making any capital distribution (including payment of a dividend) or paying any management fee to its holding company if the depository institution would thereafter be undercapitalized. The FDICIA imposes progressively more restrictive restraints on operations, management and capital distributions, depending on the category in which an institution is classified.

To be well-capitalized, the Bank must maintain at least the following capital ratios:

●6.5% CET1 to risk-weighted assets;

●8.0% Tier 1 capital to risk-weighted assets;

●10.0% Total capital to risk-weighted assets; and

●5.0% leverage ratio.

The Federal Reserve has not yet revised the well-capitalized standard for bank holding companies to reflect the higher capital requirements imposed under the current capital rules. For purposes of the Federal Reserve’s Regulation Y, bank holding companies, such as Primis, must maintain a Tier 1 risk-based capital ratio of 6.0% or greater and a total risk-based capital ratio of 10.0% or greater to be well-capitalized. If the Federal Reserve were to apply the same or a similar well-capitalized standard to bank holding companies as that applicable to the Bank, Primis’ capital ratios as of December 31, ~~2024~~2025 would exceed such revised well-capitalized standard. Also, the Federal Reserve may require bank holding companies, including Primis, to maintain capital ratios substantially in excess of mandated minimum levels, depending upon general economic conditions and a bank holding company’s particular condition, risk profile and growth plans.

Failure to be well-capitalized or to meet minimum capital requirements could result in certain mandatory and possible additional discretionary actions by regulators that, if undertaken, could have an adverse material effect on our operations or financial condition. Failure to meet minimum capital requirements could also result in restrictions on Primis’ or the Bank’s ability to pay dividends or otherwise distribute capital or to receive regulatory approval of applications or other restrictions on its growth.

Both Primis and the Bank’s regulatory capital ratios were above the applicable well-capitalized standards and met the capital conservation buffer as of December 31, ~~2024~~2025. Based on current estimates, we believe that Primis and the Bank will continue to exceed all applicable well-capitalized regulatory capital requirements and the capital conservation buffer in ~~2025~~2026.

On October 29, 2019, the federal banking agencies jointly issued a final rule to simplify the regulatory capital requirements for eligible banks and holding companies with less than $10 billion in consolidated assets that opt into the ~~Community Bank Leverage Ratio (“~~CBLR”) framework. A qualifying community banking organization with total consolidated assets of less than $10 billion that exceeds the CBLR threshold would be exempt from the agencies’ current capital framework, including the risk-based capital requirements and capital conservation buffer described above, and would be deemed well-capitalized under the agencies’ prompt corrective action regulations. Under the final rule, if a qualifying community banking organization elects to use the CBLR framework, it will be considered “well-capitalized” so long as its CBLR is greater than 9%. Primis does not use the CBLR framework.

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capital requirements and capital conservation buffer described above, and would be deemed well-capitalized under the agencies’ prompt corrective action regulations. Under the final rule, if a qualifying community banking organization elects to use the CBLR framework, it will be considered “well-capitalized” so long as its CBLR is greater than 9%. Primis does not use the CBLR framework.

Payment of Dividends

Primis is a legal entity separate and distinct from the Bank and other subsidiaries. Its primary source of cash, other than securities offerings, is dividends from the Bank. Under the Federal Deposit Insurance Act, no dividends may be paid by an insured bank if the bank is in arrears in the payment of any insurance assessment due to the FDIC. The payment of dividends by the Bank may also be affected by other regulatory requirements and policies, such as the maintenance of adequate capital. If, in the opinion of the applicable regulatory authority, a bank under its jurisdiction is engaged in, or is about to engage in, an unsafe or unsound practice (which, depending on the financial condition of the bank, could include the payment of dividends), such authority may require, after notice and hearing, that the bank cease and desist from that practice. The Federal Reserve has formal and informal policies which provide that insured banks should generally pay dividends only out of current operating earnings.

Under a Federal Reserve policy adopted in 2009, the board of directors of a bank holding company must consider certain factors to ensure that its dividend level is prudent relative to maintaining a strong financial position, and is not based on overly optimistic earnings scenarios, such as potential events that could affect its ability to pay, while still maintaining a strong financial position. As a general matter, the Federal Reserve has indicated that the board of directors of a bank holding company should consult with the Federal Reserve and eliminate, defer or significantly reduce the bank holding company’s dividends if:

●

its net income available to shareholders for the past four quarters, net of dividends previously paid during that period, is not sufficient to fully fund the dividends;

●

its prospective rate of earnings retention is not consistent with its capital needs and overall current and prospective financial condition; or

●

it will not meet, or is in danger of not meeting, its minimum regulatory capital adequacy ratios.

Bank Regulation

The operation of the Bank is subject to state and federal statutes applicable to state banks and the regulations of the Federal Reserve, the FDIC and the ~~Consumer Financial Protection Bureau (“~~CFPB”). The operations of the Bank may also be subject to applicable ~~Office of the Comptroller of the Currency (“~~OCC”) regulation to the extent state banks are granted parity with national banks. Such statutes and regulations relate to, among other things, required reserves, investments, loans, mergers and consolidations, issuances of securities, payments of dividends, establishment of branches, consumer protection and other aspects of the Bank’s operations. Violations of laws and regulations, or other unsafe and unsound practices, may result in these agencies imposing fines or penalties, cease and desist orders, or taking other enforcement actions. Under certain circumstances, these agencies may enforce these remedies directly against officers, directors, employees and other parties participating in the affairs of a bank or bank holding company.

Safety and Soundness. The Federal Deposit Insurance Act requires the federal prudential bank regulatory agencies, such as the Federal Reserve, to prescribe, by regulation or guideline, operational and managerial standards for all insured depository institutions relating to: (1) internal controls; (2) information systems and audit systems; (3) loan documentation; (4) credit underwriting; (5) interest rate risk exposure; and (6) asset quality. The agencies also must prescribe standards for asset quality, earnings, and stock valuation, as well as standards for compensation, fees and benefits. The federal banking agencies have adopted regulations and Interagency Guidelines Establishing Standards for Safety and Soundness to implement these required standards. These guidelines set forth the safety and soundness standards used to identify and address problems at insured depository institutions before capital becomes impaired. Under the regulations, if a regulator determines that a bank fails to meet any standards prescribed by the guidelines, the regulator may require the bank to ~~submit an acceptable plan to achieve compliance, consistent with deadlines for the submission and review of such safety and soundness compliance plans.~~

Examinations. The Bank is subject to regulation, reporting, and periodic examinations by the Federal Reserve and the VBFI. These regulatory authorities routinely examine the Bank’s reserves, loan and investment quality, consumer compliance, management policies, procedures and practices and other aspects of operations. The Federal Reserve has adopted the Federal Financial Institutions Examination Council’s (“FFIEC”) rating system and assigns each financial institution a confidential composite rating based on an evaluation and rating of six essential components of an institution’s

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~~financial~~submit ~~condition~~an ~~and~~acceptable ~~operations,~~plan ~~including~~to ~~Capital~~achieve ~~Adequacy~~compliance, ~~Asset~~consistent ~~Quality,~~with ~~Management,~~deadlines ~~Earnings,~~for ~~Liquidity~~the submission and ~~Sensitivity~~review toof ~~Market~~such ~~Risk,~~safety asand ~~well~~soundness ascompliance ~~the quality of risk management practices~~plans.

Examinations. The Bank is subject to regulation, reporting, and periodic examinations by the Federal Reserve and the VBFI. These regulatory authorities routinely examine the Bank’s reserves, loan and investment quality, consumer compliance, management policies, procedures and practices and other aspects of operations. The Federal Reserve has adopted the Federal Financial Institutions Examination Council’s rating system and assigns each financial institution a confidential composite rating based on an evaluation and rating of six essential components of an institution’s financial condition and operations, including Capital Adequacy, Asset Quality, Management, Earnings, Liquidity and Sensitivity to Market Risk, as well as the quality of risk management practices.

Consumer Protection. The Dodd-Frank Act established the CFPB, an independent regulatory authority housed within the Federal Reserve having centralized authority, including examination and enforcement authority, for consumer protection in the banking industry. The CFPB has rule writing, examination, and enforcement authority with regard to the Bank’s (and Primis’) compliance with a wide array of consumer financial protection laws, including the Truth in Lending Act, the Real Estate Settlement Procedures Act, the Truth in Savings Act, the Electronic Funds Transfer Act, the Equal Credit Opportunity Act, the Home Mortgage Disclosure Act, the S.A.F.E. Mortgage Licensing Act, the Fair Credit Reporting Act (except Sections 615(e) and 628), the Fair Debt Collection Practices Act, and the Gramm-Leach-Bliley Act (sections 502 through 509 relating to privacy), among others. The CFPB has broad authority to enforce a prohibition on unfair, deceptive, or abusive acts and practices. Authority to supervise and examine Primis and the Bank for compliance with federal consumer laws remains largely with the Federal Reserve. However, the CFPB may participate in examinations on a “sampling basis” and may refer potential enforcement actions against such institutions to their primary regulators. In addition, the Dodd-Frank Act permits states to adopt consumer protection laws and regulations that are stricter than those regulations promulgated by the CFPB, and state attorneys general are permitted to enforce consumer protection rules adopted by the CFPB against certain institutions.

Deposit Insurance Assessments. The ~~Deposit Insurance Fund (“~~DIF”) of the FDIC insures the deposits of the Bank generally up to a maximum of $250,000 per depositor, per insured bank, for each account ownership category. The FDIC charges insured depository institutions quarterly premiums to maintain the DIF. Deposit insurance assessments are based on average total consolidated assets minus its average tangible equity and take into account certain risk-based financial ratios and other factors. The assessment rate schedule can change from time to time, at the discretion of the FDIC, subject to certain limits.

As of ~~June~~September 30, ~~2020~~2025, the DIF reserve ratio ~~fell~~reached to 1.3040%, ~~below~~exceeding the statutory minimum of 1.35%. The FDIC, as required under the Federal Deposit Insurance Act, established a plan on September 15, 2020 to restore the DIF reserve ratio to meet or exceed the statutory minimum of 1.35% within eight years. On October 18, 2022, the FDIC adopted a final plan and increased the initial base deposit insurance assessment rate schedules uniformly by 2 basis points, beginning in the first quarterly assessment period of 2023. The ~~increased~~FDIC ~~assessment~~could ~~rate~~further ~~schedules~~increase ~~will~~the ~~remain~~deposit ininsurance ~~effect~~assessments ~~until~~for ~~the~~certain ~~reserve~~insured ~~ratio~~depository ~~meets~~institutions, orincluding ~~exceeds~~Primis ~~2 percent~~Bank, ~~absent~~if ~~further~~the ~~action~~DIF byreserve ~~the~~ratio ~~FDIC~~is not maintained.

Insurance of deposits may be terminated by the FDIC upon a finding that an institution has engaged in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations or has violated any applicable law, regulation, rule, order or condition imposed by a bank’s federal regulatory agency. In addition, the Federal Deposit Insurance Act provides that, in the event of the liquidation or other resolution of an insured depository institution, the claims of depositors of the institution, including the claims of the FDIC as subrogee of insured depositors, and certain claims for administrative expenses of the FDIC as a receiver, will have priority over other general unsecured claims against the institution, including those of the parent bank holding company.

Insider Transactions. The Federal Reserve has adopted regulations that restrict preferential loans and loan amounts to “affiliates” and “insiders” of banks, require banks to keep information on loans to major shareholders and executive officers, and bar certain director and officer interlocks between financial institutions.

Reserves. The Bank is subject to Federal Reserve regulations that require the Bank to maintain reserves against transaction accounts (primarily checking accounts). These reserve requirements are subject to annual adjustment by the ~~Federal Reserve. Effective March 26, 2020, reserve requirement ratios were reduced to zero percent.~~

Anti-Money Laundering. A continued focus of governmental policy relating to financial institutions in recent years has been combating money laundering and terrorist financing. The USA PATRIOT Act broadened the application of anti-money laundering regulations to apply to additional types of financial institutions such as broker-dealers, investment advisors and insurance companies, and strengthened the ability of the U.S. Government to help prevent, detect and prosecute international money laundering and the financing of terrorism. The principal provisions of Title III of the USA PATRIOT Act require that regulated financial institutions, including state member banks: (i) establish an anti-money

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~~laundering~~Federal program that includes training and audit components; (ii) comply with regulations regarding the verification of the identity of any person seeking to open an account; (iii) take additional required precautions with non-UReserve.S. ~~owned~~Effective ~~accounts;~~March ~~and~~26, ~~(iv)~~2020, ~~perform~~reserve ~~certain~~requirement ~~verification~~ratios ~~and~~were ~~certification~~reduced ~~of money laundering risk for their foreign correspondent banking relationships. Failure of a financial institution~~ to ~~comply~~zero ~~with~~percent ~~the USA PATRIOT Act’s requirements could have serious legal~~ and ~~reputational~~remain ~~consequences~~at ~~for~~that ~~the~~level ~~institution.~~as ~~Primis Bank has augmented its systems and procedures to meet the requirements~~ of ~~these~~December ~~regulations and will continue to revise and update its policies~~31, ~~procedures and controls to reflect changes required by law~~2025.

Anti-Money Laundering. A continued focus of governmental policy relating to financial institutions in recent years has been combating money laundering and terrorist financing. The USA PATRIOT Act broadened the application of anti-money laundering regulations to apply to additional types of financial institutions such as broker-dealers, investment advisors and insurance companies, and strengthened the ability of the U.S. Government to help prevent, detect and prosecute international money laundering and the financing of terrorism. The principal provisions of Title III of the USA PATRIOT Act require that regulated financial institutions, including state member banks: (i) establish an anti-money laundering program that includes training and audit components; (ii) comply with regulations regarding the verification of the identity of any person seeking to open an account; (iii) take additional required precautions with non-U.S. owned accounts; and (iv) perform certain verification and certification of money laundering risk for their foreign correspondent banking relationships. Failure of a financial institution to comply with the USA PATRIOT Act’s requirements could have serious legal and reputational consequences for the institution. Primis Bank has augmented its systems and procedures to meet the requirements of these regulations and will continue to revise and update its policies, procedures and controls to reflect changes required by law.

FinCEN has adopted rules that require financial institutions to obtain beneficial ownership information with respect to legal entities with which such institutions conduct business, subject to certain exclusions and exemptions. Bank regulators are focusing their examinations on anti-money laundering compliance, and we continue to monitor and augment, where necessary, our anti-money laundering compliance programs.

Bank regulators routinely examine institutions for compliance with these anti-money laundering obligations and have been active in imposing “cease and desist” and other regulatory orders and money penalty sanctions against institutions found to be in violation of these requirements. OnIn ~~January 1~~2024, ~~2021,~~US ~~Congress~~federal ~~passed~~regulators ~~federal~~proposed ~~legislation~~amendments ~~that~~to ~~made~~modernize ~~sweeping~~Anti-Money ~~changes~~Laundering to(AML) ~~federal~~and ~~anti~~Countering the Financing of Terrorism (CFT) program requirements. Aligned with the Anti-~~money~~Money ~~laundering~~Laundering ~~laws~~Act of 2020, ~~including~~the ~~changes~~rules ~~that~~mandate ~~will~~a berisk-based ~~implemented~~approach inrequiring ~~subsequent~~institutions ~~years~~to identify, evaluate, and document risks based on business activities and national priorities.

Economic Sanctions. The ~~Office of Foreign Assets Control (“~~OFAC”) is responsible for helping to ensure that U.S. entities do not engage in transactions with certain prohibited parties, as defined by various Executive Orders and acts of Congress. OFAC publishes, and routinely updates, lists of names of persons and organizations suspected of aiding, harboring or engaging in terrorist acts, including the Specially Designated Nationals and Blocked Persons List. If we find a name on any transaction, account or wire transfer that is on an OFAC list, we must undertake certain specified activities, which could include blocking or freezing the account or transaction requested, and we must notify the appropriate authorities.

Concentrations in Lending. During 2006, the federal bank regulatory agencies released guidance on “Concentrations in Commercial Real Estate Lending” (the “Guidance”) and advised financial institutions of the risks posed by CRE lending concentrations. The Guidance requires that appropriate processes be in place to identify, monitor and control risks associated with real estate lending concentrations. Higher allowances for credit losses and capital levels may also be required. The Guidance is triggered when CRE loan concentrations exceed either:

●

Total reported loans for construction, land development, and other land of 100% or more of a bank’s total risk based capital; or

● Total reported loans secured by multifamily and nonfarm nonresidential properties and loans for construction, land development, and other land of 300% or more of a bank’s total risk -based capital.

The Guidance also applies when a bank has a sharp increase in CRE loans or has significant concentrations of CRE secured by a particular property type.

Community Reinvestment Act. The Bank is subject to the provisions of the CRA, which imposes a continuing and affirmative obligation, consistent with their safe and sound operation, to help meet the credit needs of entire communities where the bank accepts deposits, including low- and moderate-income neighborhoods. The Federal Reserve’s assessment of the Bank’s CRA record is made available to the public. Further, a less than satisfactory CRA rating will slow, if not preclude, expansion of banking activities and prevent a company from becoming or remaining a financial holding company. Federal CRA regulations require, among other things, that evidence of discrimination against applicants on a prohibited basis, and illegal or abusive lending practices be considered in the CRA evaluation. On October 24, 2023, the OCC, the FRB, and FDIC issued a final rule to modernize their respective CRA regulations. The revised rules substantially alter the methodology for assessing compliance with the CRA, with material aspects taking effect January 1, 2026 and revised data reporting requirements taking effect January 1, 2027. Among other things, the revised rules evaluate lending outside traditional assessment areas generated by the growth of non-branch delivery systems, such as online and mobile banking, apply a metrics-based benchmarking approach to assessment, and clarify eligible CRA activities. The final rules were challenged in federal court and a preliminary injunction was granted in March 2024 enjoining implementation of the rules. The effective dates will be extended for each day the injunction remains in place, pending the resolution of the

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~~lawsuit~~preclude, expansion of banking activities and prevent a company from becoming or remaining a financial holding company. IfFederal ~~the~~CRA ~~final~~regulations ~~rules~~require, ~~are~~among ~~reinstated~~other things, ~~they~~that ~~are~~evidence ~~likely~~of todiscrimination ~~make~~against itapplicants ~~more~~on ~~challenging~~a prohibited basis, and/ illegal or ~~costly~~abusive lending practices be considered in the CRA evaluation. In 2023 the Federal Reserve, OCC, and FDIC issued a final rule to modernize their respective CRA regulations. The revised rules would substantially alter the methodology for assessing compliance with the ~~Bank~~CRA, with material aspects taking effect January 1, 2026 and revised data reporting requirements taking effect January 1, 2027. The revised CRA regulations have been subject to ~~receive~~an injunction since March 29, 2024. On July 16, 2025, the Federal Reserve, OCC, and FDIC issued a ~~rating~~joint ofproposal atto ~~least~~rescind ~~“satisfactory”~~the on2023 ~~its~~modernization rule. The agencies continue to apply the CRA ~~exam~~rules as they existed before the 2023 modernization, considering the injunction and pending finalization of the recission of the modernization rule.

Consumer Regulation. Activities of the Bank are subject to a variety of statutes and regulations designed to protect consumers. These laws and regulations include, among numerous other things, provisions that:

●

limit the interest and other charges collected or contracted for by the Bank, including rules respecting the terms of credit cards and of debit card overdrafts;

●

govern the Bank’s disclosures of credit terms to consumer borrowers;

●

require the Bank to provide information to enable the public and public officials to determine whether it is fulfilling its obligation to help meet the housing needs of the community it serves;

●

prohibit the Bank from discriminating on the basis of race, creed or other prohibited factors when it makes decisions to extend credit;

●

govern the manner in which the Bank may collect consumer debts; and

●

prohibit unfair, deceptive or abusive acts or practices in the provision of consumer financial products and services.

Mortgage Rules. Pursuant to rules adopted by the CFPB, banks that make residential mortgage loans are required to make a good faith determination that a borrower has the ability to repay a mortgage loan prior to extending such credit, require that certain mortgage loans contain escrow payments, obtain new appraisals under certain circumstances, comply with integrated mortgage disclosure rules, and follow specific rules regarding the compensation of loan originators and the servicing of residential mortgage loans.

Transactions with affiliates. There are various restrictions that limit the ability of the Bank to finance, pay dividends or otherwise supply funds to Primis or other affiliates. In addition, banks are subject to certain restrictions under Section 23A and B of the Federal Reserve Act on certain transactions, including any extension of credit to its bank holding company or any of its other affiliates, on investments in the securities thereof, and on the taking of such securities as collateral for loans to any borrower.

Privacy and Cybersecurity. The Bank is subject to federal and state banking regulations that limit its ability to disclose non-public information about consumers to non-affiliated third parties. These limitations require us to periodically disclose our privacy policies to consumers and allow consumers to prevent disclosure of certain personal information to a non-affiliated third party under certain circumstances. Consumers also have the option to direct banks and other financial institutions not to share information about transactions and experiences with affiliated companies for the purpose of marketing products or services. Banking institutions are required to implement a comprehensive information security program that includes administrative, technical, and physical safeguards to ensure the security and confidentiality of customer records and information. These security and privacy policies and procedures for the protection of confidential and personal information are in effect across our lines of business. Furthermore, the federal banking regulators regularly issue guidance regarding cybersecurity intended to enhance cyber risk management. A financial institution is expected to implement multiple lines of defense against cyber-attacks and ensure that their risk management procedures address the risk posed by potential cyber threats. A financial institution is further expected to maintain procedures to effectively respond to a cyber-attack and resume operations following any such attack. Primis has adopted and implemented policies and procedures to comply with these privacy, information security, and cybersecurity requirements. The federal banking agencies require banks to notify their regulators within 36 hours of a “computer-security incident” that rises to the level of a “notification incident.”

Non-Discrimination Policies. Primis Bank is also subject to, among other things, the provisions of the Equal Credit Opportunity Act and the Fair Housing Act, both of which prohibit discrimination based on race or color, religion, national origin, sex, and familial status in any aspect of a consumer or commercial credit or residential real estate transaction. The Department of Justice, and the federal bank regulatory agencies have issued an Interagency Policy Statement on Discrimination in Lending that provides guidance to financial institutions in determining whether discrimination exists, how the agencies will respond to lending discrimination, and what steps lenders might take to prevent discriminatory lending practices. The DOJ has increased its efforts to prosecute what it regards as violations of the ECOA and FHA.

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~~Audit Reports. Insured institutions with total assets of $500 million or more must submit annual audit reports prepared by independent auditors to federal and state regulators. In some instances~~origin, ~~the audit report of the institution’s holding company can be used to satisfy this requirement. Independent auditors must receive examination reports~~sex, ~~supervisory agreements~~ and ~~reports~~familial ofstatus ~~enforcement~~in ~~actions.~~any ~~For~~aspect ~~insured institutions with total assets~~ of ~~$1.0~~a ~~billion~~consumer or ~~more,~~commercial ~~financial~~credit ~~statements~~or ~~prepared~~residential inreal ~~accordance~~estate ~~with U~~transaction.S. ~~GAAP,~~The ~~management’s~~Department ~~certifications~~of ~~concerning responsibility for the financial statements~~Justice, ~~internal controls~~ and ~~compliance~~the ~~with~~federal ~~legal~~bank ~~requirements~~regulatory ~~designated~~agencies byhave ~~the~~issued ~~FDIC, and~~ an ~~attestation~~Interagency byPolicy ~~the~~Statement ~~independent~~on ~~auditor~~Discrimination ~~regarding~~in ~~the~~Lending ~~statements~~that ofprovides ~~management~~guidance ~~relating~~ to ~~the~~financial ~~internal controls must be submitted. For insured~~ institutions ~~with~~in ~~total~~determining ~~assets~~whether ofdiscrimination ~~more than $3.0 billion~~exists, ~~independent~~how ~~auditors~~the ~~may~~agencies bewill ~~required~~respond to ~~review~~lending ~~quarterly~~discrimination, ~~financial~~and ~~statements.~~what ~~The~~steps ~~FDICIA~~lenders ~~requires~~might ~~that~~take ~~institutions~~to ~~with~~prevent ~~total~~discriminatory ~~assets~~lending ~~of $1~~practices.0 ~~billion or more have independent audit committees, consisting of outside directors only.~~ The ~~committees~~Department of ~~insured~~Justice ~~institutions~~has ~~with~~increased ~~total~~its ~~assets~~efforts ofto ~~$3.0~~prosecute ~~billion~~what orit ~~more~~regards ~~must~~as ~~include~~violations ~~members~~of ~~with~~the ~~experience~~Equal inCredit ~~banking~~Opportunity orAct ~~financial management, must have access to outside counsel,~~ and ~~must~~Federal ~~not~~Housing ~~include representatives of large customers~~Administration.

Audit Reports. Effective January 1, 2026, certain changes in FDICIA audit requirements took effect. Insured institutions with total assets of $1 billion or more, such as the Bank, must submit annual audit reports prepared by independent auditors to federal and state regulators. In some instances, the audit report of the institution’s holding company can be used to satisfy this requirement. Independent auditors must receive examination reports, supervisory agreements and reports of enforcement actions. Further, the Bank’s audit committee must be comprised of mainly independent members.

The Bank is no longer subject to certain requirements under the changes. Under the revised thresholds, for insured institutions with total assets of $5 billion or more, financial statements prepared in accordance with U.S. GAAP, management’s certifications concerning responsibility for the financial statements, internal controls and compliance with legal requirements designated by the FDIC, and an attestation by the independent auditor regarding the statements of management relating to the internal controls must be submitted. Further, independent auditors may be required to review quarterly financial statements, and such institutions must have independent audit committees consisting of outside directors only, must also include members with experience in banking or financial management, must have access to outside counsel, and must not include representatives of large customers.

The foregoing is only a brief summary of certain statutes, rules, and regulations that may affect Primis and the Bank. Numerous other statutes and regulations also will have an impact on the operations of Primis and the Bank. Supervision, regulation and examination of banks by the regulatory agencies are intended primarily for the protection of depositors, not shareholders.

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Item 1A. Risk Factors

An investment in our common stock involves risks. The following is a description of the material risks and uncertainties that Primis Financial Corp. believes affect its business and should be considered before making an investment in our common stock. Additional risks and uncertainties that we are unaware of, or that we currently deem immaterial, also may become important factors that affect us and our business. If any of the risks described in this Annual Report on Form 10-K were to actually occur, our financial condition, results of operations and cash flows could be materially and adversely affected. If this were to happen, the value of our common stock could decline significantly and you could lose part or all of your investment. This Form 10-K also contains forward-looking statements that may not be realized as a result of certain factors, including, but not limited to, the risks described herein and in our other public filings with the SEC. Please refer to the section in this Form 10-K entitled “Special Cautionary Notice Regarding Forward-Looking Statements” for additional information regarding forward-looking statements.

Summary

Our business is subject to a number of risks, including risks that may prevent us from achieving our business objectives or may adversely affect our business, financial condition, results of operations, cash flows and prospects. These risks are discussed more fully after the summary, and risks include, but are not limited to, the following:

● We are subject to risks related to our concentration of ~~construction~~commercial ~~and~~real ~~land~~estate ~~development~~ and ~~commercial~~construction ~~real~~and ~~estate~~land development loans.

● We have a meaningful amount of consumer loans that are unsecured and if the borrower defaults on the loan, we have no ~~recourse to~~ collateral ~~in which~~ to recover ~~any~~ potential losses.

● A portion of our consumer loan portfolio is originated and serviced by a third-party and includes a credit enhancement, ~~from that third-party~~ which may not be realizable; the inability to utilize such credit enhancement could be detrimental to our financial condition and results of operations.

● A significant amount of our third-party serviced consumer loans were originated ~~with~~during a zero -interest promotional period, exposing us to ~~the~~third-party credit risk for interest foregone in the event of borrower prepayment; the failure of such third-party ~~that~~to isperform ~~providing~~under its reimbursement obligation could be detrimental to usour ~~for~~financial ~~interest~~condition ~~foregone~~and results of operations.

●

A significant amount of our loans are secured by real estate and any declines in real estate values in our primary markets could be detrimental to our financial condition and results of operations.

●

If our nonperforming assets increase, our earnings will suffer.

●

If our allowance for credit losses is not adequate to cover actual loan losses, our earnings will decrease.

●

We are subject to credit quality risks and our credit policies may not be sufficient to avoid losses.

●

Our mortgage revenue is cyclical and is sensitive to the level of interest rates, changes in economic conditions, decreased economic activity, and slowdowns in the housing market, any of which could adversely impact our profits.

● Our profitability depends significantly on local economic conditions in the areas where our operations and loans are concentrated, and our geographic concentration makes us vulnerable to local weather catastrophes, public health issues, and other external events, which could adversely affect our results of operations and financial condition.

● Our ~~business~~earnings isare subject to interest rate risk ~~and variations in interest rates may negatively affect our financial performance~~.

●

Unstable global economic conditions may have serious adverse consequences on our business, financial condition, and operations.

●

Declines in asset values may result in impairment charges and adversely affect the value of our investment securities, financial performance and capital.

● The value of an estimated reimbursement due from a third-party that originated consumer loans with promotional features on our behalf is recorded in our balance sheet at fair value as a derivative and actual results and a significant decline in the third-party’s credit risk may impact the value of the derivative and our ability to realize that value.

● We may be unable to sell loans at the estimated market price utilized to record them in held for sale

●

Our stock price can be volatile.

●

The trading volume in our common stock is less than that of other larger financial services companies.

●

Inflation could negatively impact our business, our profitability and our stock price.

● ESG and ~~diversity, equity and inclusion (“~~DEI”) risks could adversely affect our reputation and shareholder, employee, client, and third party relationships and may negatively affect our stock price.

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●

Our business strategy includes strategic growth, and our financial condition and results of operations could be negatively affected if we fail to grow or fail to manage our growth effectively.

●

We must respond to rapid technological changes and these changes may be more difficult or expensive than anticipated.

●

New lines of business, products or services and technological advancements may subject us to additional risks.

●

The development and use of artificial intelligence presents risks and challenges that may adversely impact our business.

●

We may not be able to successfully integrate our acquisitions or to realize the anticipated benefits of them.

●

The carrying value of goodwill and other intangible assets may be adversely affected.

● We rely on third-party vendors to provide key components of our business infrastructure, which could expose us to operational and financial risks.

● WeIndustry ~~face~~adoption ~~significant~~of ~~cyber~~real-time ~~and~~payments ~~data~~networks ~~security risk that~~ could ~~result~~negatively inimpact ~~the~~financial ~~disclosure~~performance ofthrough ~~sensitive,~~reductions ~~confidential~~in ~~and/or~~product ~~nonpublic personal information~~profitability, ~~adversely~~increased ~~affect~~liquidity ~~our~~reserves ~~business~~and orthe ~~reputation~~potential ~~and~~for ~~expose~~increased usfraud tolosses, ~~significant~~among ~~liabilities~~other risks.

● ~~Our~~We face significant cyber and data security risk that could result in the disclosure of or access to sensitive, confidential and/or nonpublic personal information, adversely affect our business isor ~~susceptible~~reputation and expose us to ~~fraud~~significant liabilities.

●

Financial services companies depend on the accuracy and completeness of information about customers and counterparties and inaccuracies in such information, including as a result of fraud, could adversely impact our business, financial condition and results of operations.

●

We are dependent on key personnel and the loss of one or more of those key personnel could impair our relationship with our customers and adversely affect our business.

● Deposit insurance premiums levied against ~~banks~~us ~~may~~could increase ~~if the number of bank failures increase or the cost of resolving failed banks increases~~.

●

Liquidity risk could impair our ability to fund operations and jeopardize our financial condition, results of operations and cash flows.

● Adverse developments affecting the financial services industry, such as actual events or concerns involving liquidity, defaults or non-performance by financial institutions or transactional counterparties, could adversely affect our current and projected business operations and its financial condition and results of operations.

●

Future growth or operating results may require us to raise additional capital, but that capital may not be available, be available on unfavorable terms or may be dilutive.

●

We may issue a new series of preferred stock or debt securities, which would be senior to our common stock and may cause the market price of our common stock to decline.

●

We currently intend to pay dividends on our common stock; however, our future ability to pay dividends is subject to restrictions.

● ~~Changes~~We inare ~~applicable~~heavily regulated by federal and state agencies; changes in laws and regulations or failures to comply with such laws and regulations may adversely affect our operations and our financial results.

● As a regulated entity, Primis and the Bank must maintain certain required levels of regulatory capital that may limit our operations and potential growth.

●

We are subject to commercial real estate lending guidance issued by the federal banking regulators that impacts our operations and capital requirements.

●

Changes in accounting standards or assumptions in applying accounting policies could adversely affect us.

●

Failure to maintain an effective system of disclosure controls and procedures could have a material adverse effect on our business, results of operations and financial condition and could impact the price of our common stock.

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Credit Risks

We are subject to risks related to our concentration of ~~construction~~commercial ~~and~~real ~~land~~estate ~~development~~ and ~~commercial~~construction ~~real~~and ~~estate~~land development loans.

As of December 31, ~~2024~~2025, we had $~~101~~1.2 ~~million~~billion of ~~construction~~commercial ~~and~~real ~~land~~estate ~~development~~ loans outstanding, or ~~3.5~~37% of our loan portfolio., ~~Construction~~including ~~and~~multi-family ~~land~~residential ~~development~~loans and loans ~~are~~secured ~~subject~~by tofarmland. ~~risks~~Commercial ~~during~~real ~~the~~estate ~~construction~~lending ~~phase~~typically ~~that~~involves ~~are~~higher ~~not~~loan ~~present~~principal amounts, and the repayment is dependent, in ~~standard~~large ~~residential~~part, ~~real~~on ~~estate~~sufficient income from the properties securing the loan to cover operating expenses and debt service. As of December 31, 2025, we had $42 million in nonperforming commercial real estate loans. ~~These risks include:~~

As of December 31, 2025, we had $132 million of construction and land development loans outstanding, or 4% of our loan portfolio. Construction and land development loans are subject to risks during the construction phase that are not present in standard residential real estate and commercial real estate loans. These risks include:

●

the viability of the contractor;

●

the contractor’s ability to successfully complete the project, to meet deadlines and time schedules and to stay within cost estimates, especially in the event of supply disruptions and labor shortages; and

●

concentrations of such loans with a single contractor and its affiliates.

Real estate construction and land development loans may involve the disbursement of substantial funds with repayment dependent, in part, on the success of the ultimate project rather than the ability of a borrower or guarantor to repay the loan and also present risks of default in the event of declines in property values or volatility in the real estate market during the construction phase. Our practice, in the majority of instances, is to secure the personal guaranty of individuals in support of our real estate construction and land development loans which provides us with an additional source of repayment. As of December 31, 2025, we did not have any nonperforming construction and land development loans. However, if one or more of our larger borrowers were to default on their construction and land development loans and we did not have alternative sources of repayment through personal guarantees or other sources, or if any of the aforementioned risks were to occur, we could incur significant losses.

23We have a meaningful amount of consumer loans that are unsecured and if the borrower defaults on the loan, we have no collateral to recover potential losses.

Our unsecured consumer loan portfolio balance is $183 million, or approximately 6% of our total held for investment loan portfolio, as of December 31, 2025. Included in this portfolio is $90 million of loans sourced based on our credit underwriting criteria and managed by a third party. Consumer loan repayment is primarily driven by the borrower’s personal income, which is impacted by various factors that are outside of the control of the borrower, including macroeconomic conditions such as inflation and fluctuating interest rates. A downturn in the economy or job losses could impact a borrower’s ability to make loan payments. Each of these factors could cause a borrower to evaluate their debts and prioritize payments of other debts above consumer loans due to us. If macroeconomic conditions and the economy worsen, borrowers may stop paying their loans, which could in turn require us to increase our provision for credit losses and adversely affect our financial condition and results of operations.

A portion of our consumer loan portfolio is originated and serviced by a third-party and includes a credit enhancement, which may not be realizable; the inability to utilize such credit enhancement could be detrimental to our financial condition and results of operations.

We receive credit enhancement from a third-party managing $90 million of consumer loans that are recorded on our balance sheet in held for investment as of December 31, 2025. The credit enhancement is primarily provided through cash flows derived from loan originations. We elected on December 31, 2024 to discontinue originations of these loans, effective January 31, 2025. As a result, our monthly cash receipts related to this credit enhancement ceased, which could adversely affect our financial condition and results of operations while loan balances in this portfolio run-off.

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~~construction~~A ~~phase.~~significant ~~Our~~amount ~~practice, in the majority~~ of ~~instances, is to secure the personal guaranty of individuals in support of~~ our ~~real~~third-party ~~estate~~serviced ~~construction~~consumer ~~and land development~~ loans ~~which~~were ~~provides~~originated usduring ~~with~~a anzero-interest ~~additional~~promotional ~~source of repayment. As of December 31~~period, ~~2024,~~exposing weus ~~did~~to ~~not~~third-party ~~have~~credit ~~any~~risk ~~nonperforming~~for ~~construction~~interest ~~and~~foregone ~~land~~in ~~development~~the ~~loans.~~event ~~If one or more~~ of ~~our~~borrower ~~larger~~prepayment; ~~borrowers~~the ~~were~~failure ~~to default on their construction and land development loans, and we did not have alternative sources~~ of ~~repayment~~such ~~through~~third-party ~~personal~~to ~~guarantees~~perform orunder ~~other~~its ~~sources,~~reimbursement orobligation ifcould ~~any~~be ofdetrimental ~~the aforementioned risks were~~ to ~~occur,~~our wefinancial ~~could~~condition ~~incur~~and ~~significant~~results ~~losses~~of operations.

AsWithin our $90 million third-party originated and serviced consumer loan portfolio, there is $3 million of the portfolio that is in a promotional zero interest rate period as of December 31, ~~2024~~2025. The loans in these promotional interest periods legally accrue interest at the stated rate of the note agreement, webut ~~had~~the $1interest is not required to be paid during the promotional period.09 ~~billion~~Further, if the borrower repays all of ~~commercial~~the ~~real~~principal ~~estate~~on ~~loans~~the ~~outstanding~~note prior to the end of the promotional period the accrued interest is waived, orbut 37if there is any principal balance remaining at the end of the promotional period the borrower must repay all of the interest that has accrued.6% As of ~~our~~December ~~loan~~31, ~~portfolio~~2025, ~~including~~the ~~multi-family~~amount ~~residential~~of ~~loans~~deferred ~~and~~interest on these loans ~~secured~~was by$390 ~~farmland~~thousand. Through ~~Commercial~~an ~~real~~agreement ~~estate~~with ~~lending~~the ~~typically~~third-party ~~involves~~servicer, ~~higher~~we ~~loan~~are entitled to payment of all accrued interest that is waived on loans that repay all principal ~~amounts~~within ~~and~~the promotional period. If a high percentage of these loans repay at or before the ~~repayment~~end isof ~~dependent~~their promotional period, ina large ~~part,~~amount onof ~~sufficient~~interest ~~income~~reimbursement will be due from the ~~properties~~third-party ~~securing~~servicer. If the ~~loan~~third-party servicer cannot reimburse us, we may not be able to ~~cover~~realize ~~operating~~any ~~expenses~~income ~~and~~on ~~debt~~these ~~service~~loans in our portfolio.

WeAs ~~have~~of aDecember ~~meaningful~~31, ~~amount~~2025, we had $10 million aggregate receivable on our balance sheet due from the third-party related to prior reimbursements of ~~consumer~~interest on promotional loans ~~that~~where ~~are~~borrowers ~~unsecured~~paid ~~and~~in iffull prior to the ~~borrower~~end ~~defaults~~of onthe promotional period. Of this amount, $8 million is included in a commercial loan extended to the third-party under our normal loan weorigination ~~have~~and nocredit ~~recourse~~underwriting process to ~~collateral~~allow inthe ~~which~~third-party a deferred payment schedule to ~~recover~~support ~~any~~their ~~potential~~operational ~~losses~~and cash flow needs. Should the third party be unable to make the scheduled payments under this commercial loan once they become due or be unable to pay the $2 million trade receivable due, it may adversely affect our financial condition and results of operations.

Our unsecured consumer loan portfolio balance is $155.3 million, or approximately 5.3% of our total held for investment loan portfolio, as of December 31, 2024. Included in this portfolio is $38.9 million of loans sourced based on our credit underwriting criteria and managed by a third party. Consumer loan repayment is primarily driven by the borrower’s personal income which is impacted by various factors that are outside of the control of the borrower including macroeconomic conditions such as inflation and interest rates. Further, a downturn in the economy or other company-specific decisions that result in a borrower losing their job could cause the borrower’s primary source of income for repayment of the loan to decline. Each of these factors may cause a borrower to evaluate their debts and as a result they may prioritize payment of other debts above the consumer loan due to us. Although macroeconomic conditions and the economy are currently stable, such conditions can change relatively quick and may not remain at current levels. If conditions change and macroeconomic conditions and the economy worsen borrowers may stop paying their loans and it could require us to increase our provision for credit losses and adversely affect our financial condition and results of operations.

A portion of our consumer loan portfolio is originated and serviced by a third-party and includes a credit enhancement from that third-party which may not be realizable and the inability to utilize it could be detrimental to our financial condition and results of operations.

We receive a credit enhancement from the third-party managing $152.1 million of consumer loans that are recorded on our balance sheet in both held for investment and held for sale as of December 31, 2024. The credit enhancement is primarily provided through cash flows derived from loan originations. We made the decision as of December 31, 2024 to discontinue originations of these loans on January 31, 2025. This decision will cause monthly cash receipts related to this credit enhancement to end at that point, which may adversely affect our financial condition and results of operations.

A significant amount of our third-party serviced consumer loans were originated with a zero interest promotional period exposing us to the credit risk of the third-party that is providing reimbursement to us for interest foregone in the event of borrower prepayment and failure of the third-party to perform under its reimbursement obligation could be detrimental to our financial condition and results of operations.

Within the $152.1 million third-party originated and serviced consumer loan portfolio there is 25% of the portfolio that is in a promotional interest period as of December 31, 2024. The loans in these promotional interest periods legally accrue interest at the stated rate of the note agreement, but the interest is not required to be paid during the promotional period. Further, if the borrower repays all of the principal on the note prior to the end of the promotional period the accrued interest is waived, but if there is any principal balance remaining at the end of the promotional period the borrower must repay all of the interest that has accrued. As of December 31, 2024, the amount of deferred interest on these loans was $7.0 million. Through an agreement with the third-party servicer, we are entitled to payment of all accrued interest that is waived on loans that repay all principal within the promotional period. There is a large concentration of these loans originated within proximity to each other resulting in 86% of the current balance of promotional loans ending their promotional period during 2025. If a high percentage of these loans repay at the end of their promotional period a large amount of interest reimbursement will be due in a short period of time from the third-party servicer and if they cannot perform then we may

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not be able to realize any income on a significant amount of loans in our portfolio, which may adversely impact the realization of the fair value of the derivative asset recognized.

A significant amount of our loans are secured by real estate and any declines in real estate values in our primary markets could be detrimental to our financial condition and results of operations.

Real estate lending (including commercial, construction, land development, and residential loans) is a large portion of our loan portfolio, constituting $2.0 billion, or approximately ~~69.3~~61% of our total loan portfolio, as of December 31, ~~2024~~2025. Although residential and commercial real estate values are currently strong in our market area, such values may not remain elevated. If loans that are collateralized by real estate become troubled during a time when market conditions are declining or have declined, then we may not be able to realize the full value of the collateral that we anticipated at the time of ~~originating the~~ loan origination, which could require us to increase our provision for credit losses and adversely affect our financial condition and results of operations.

As of December 31, ~~2024~~2025, ~~43.2~~37% of our loan portfolio was comprised of loans secured by commercial real estate, including multi-family residential loans and loans secured by farmland. As of December 31, ~~2024~~2025, $~~651.8~~639 million, or approximately ~~22.6~~19% of our total loans, were secured by single-family residential real estate. This includes $~~588.8~~577 million in residential 1-4 family loans and $~~63.0~~62 million in home equity lines of credit. If housing prices in our market areas do not remain strong or deteriorate, we may experience an increase in nonperforming loans, provision for credit losses and charge-offs. If we are required to liquidate the collateral securing a loan to satisfy the debt during a period of reduced real estate values, our earnings and capital could be adversely affected.

If our nonperforming assets increase, our earnings will suffer.

As of December 31, ~~2024~~2025, our nonperforming assets (which consist of nonaccrual loans, loans past due 90 days and accruing and OREO) totaled $~~16.7~~87 million, or ~~0.58~~3% of total loans and OREO, which is an increase of $~~5.9~~70 million, or ~~54.9~~417%, compared with nonperforming assets of $~~10.8~~17 million, or ~~0.34~~1% of total ~~non-covered~~ loans and OREO, as of December 31, ~~2023~~2024.

Economic and market conditions have been unstable recently, and although we believe that our nonperforming assets as a percentage of total loans and OREO remains manageable, we may incur losses if there is an increase in nonperforming assets in the future. Our nonperforming assets adversely affect our net income in various ways. We do not record interest income on nonaccrual loans or OREO, thereby adversely affecting our net interest income, and increasing loan administration costs. When we take collateral in foreclosures and similar proceedings, we are required to mark the related loan to the then fair value of the collateral, which may ultimately result in a loss. We must reserve for expected losses, which is established through a current period charge to the provision for credit losses as well as from time to time, as appropriate, a write down of the value of properties in our OREO portfolio to reflect changing market values. Additionally, there are legal fees associated with the resolution of problem assets as well as carrying costs such as taxes, insurance and maintenance related to our OREO. Further, the resolution of nonperforming assets requires the active involvement of management, which can distract them from more profitable activity. Finally, an increase in the level of nonperforming assets increases our regulatory risk profile. There can be no assurance that we will not experience future increases in nonperforming assets.

~~If our allowance for credit losses is not adequate to cover actual loan losses, our earnings will decrease.~~26

As a lender, we are exposed to the risk that our borrowers may not repay their loans according to the terms of these loans, and the collateral securing the payment of these loans may be insufficient to ensure repayment. We make various assumptions and judgments about the collectability of our loan portfolio, including the creditworthiness of the borrowers and the value of the real estate and other assets serving as collateral for the repayment of many of our loans. 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. If our assumptions prove to be incorrect or if we experience significant loan losses, our current allowance may not be sufficient to cover actual loan losses and adjustments may be necessary to allow for different economic conditions or adverse developments in our loan portfolio. A material addition to

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administration costs. When we take collateral in foreclosures and similar proceedings, we are required to mark the ~~allowance~~related loan to the then fair value of the collateral, which may ultimately result in a loss. We must reserve for expected losses, which is established through a current period charge to the provision for credit losses ~~could~~as ~~cause~~well as from time to time, as appropriate, a write down of the value of properties in our ~~earnings~~OREO portfolio to ~~decrease~~reflect changing market values. ~~Due~~Additionally, there are legal fees associated with the resolution of problem assets as well as carrying costs such as taxes, insurance and maintenance related to our OREO. Further, the ~~relatively~~resolution ~~unseasoned~~of ~~nature~~nonperforming assets requires the active involvement of ~~portions~~management, which can distract them from more profitable activity. Finally, an increase in the level of nonperforming assets increases our ~~loan~~regulatory ~~portfolio,~~risk profile. There can be no assurance that we ~~may~~will not experience anfuture ~~increase~~increases in ~~delinquencies~~nonperforming ~~and~~assets, ~~losses~~which ascould ~~these~~negatively ~~loans~~impact ~~continue~~our ~~to mature~~earnings.

InIf ~~addition, federal regulators periodically review~~ our allowance for credit losses ~~and~~is ~~may~~not ~~require~~adequate us to ~~increase~~cover ~~our~~actual ~~provision~~loan ~~for credit~~ losses ~~or recognize further charge-offs~~, ~~based on judgments different than those of~~ our ~~management.~~earnings ~~Any~~will ~~significant increase in our allowance for credit losses or charge-offs required by these regulatory agencies would result in a~~ decrease ~~in net income and capital and could have a material adverse effect on our results of operations and financial condition~~.

In addition, federal regulators periodically review our allowance for credit losses and may require us to increase our provision for credit losses or recognize further charge-offs, based on judgments different from those of our management. Any significant increase in our allowance for credit losses or charge-offs required by these regulatory agencies would result in a decrease in net income and capital and could have a material adverse effect on our results of operations and financial condition.

We are subject to credit quality risks and our credit policies may not be sufficient to avoid losses.

We are subject to the risk of losses resulting from the failure of borrowers, guarantors and related parties to pay interest and principal amounts on their loans. Although we maintain credit policies and credit underwriting, monitoring and collection procedures, these policies and procedures may not prevent losses, particularly during periods in which the local, regional or national economy suffers a general decline. If borrowers fail to repay their loans, our financial condition and results of operations would be adversely affected.

The Bank originates residential mortgage loans through ~~Primis~~PMC, ~~Mortgage Company~~ which lends to borrowers nationwide. The success of our mortgage business is dependent upon its ability to originate loans and sell them to investors, in each case at or near current volumes. Loan production levels are sensitive to changes in the level of interest rates and changes in economic conditions. Loan production levels may suffer if we experience a slowdown in housing markets, tightening credit conditions or increasing interest rates. Any sustained period of decreased activity caused by fewer refinancing transactions, higher interest rates, housing price pressure, or loan underwriting restrictions would adversely affect our mortgage originations and, consequently, could significantly reduce our income from mortgage activities. As a result, these conditions would also adversely affect our financial condition and results of operations.

Deteriorating economic conditions may also cause home buyers to default on their mortgages. In certain cases, where we have originated loans and sold them to investors, we may be required to repurchase loans or provide a financial settlement to investors if it is proven that the borrower failed to provide full and accurate information on, or related to, their loan application, if appraisals for such properties have not been acceptable or if the loan was not underwritten in accordance with the loan program specified by the loan investor. In the ordinary course of business, we record an indemnification reserve relating to mortgage loans previously sold based on historical statistics and loss rates. If such reserves were insufficient to cover claims from investors, such repurchases or settlements would adversely affect our financial condition and results of operations.

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accordance with the loan program specified by the loan investor. In the ordinary course of business, we record an indemnification reserve relating to mortgage loans previously sold based on historical statistics and loss rates. If such reserves were insufficient to cover claims from investors, such repurchases or settlements would adversely affect our financial condition and results of operations.

Market Risks

Our profitability depends significantly on local economic conditions in the areas where our operations and loans are concentrated, and our geographic concentration makes us vulnerable to local weather catastrophes, public health issues, and other external events, which could adversely affect our results of operations and financial condition.

We operate in a mixed market environment with influences from both rural and urban areas. Our profitability depends on the general economic conditions in our market areas of Northern Virginia, Maryland, Washington, D.C., Charlottesville, Northern Neck, Middle Peninsula, Richmond, Hampton Roads and the surrounding areas. Unlike larger banks that are more geographically diversified, we provide banking and financial services to clients primarily in these market areas. As of December 31, ~~2024~~2025, a significant portion of our commercial real estate, real estate construction and residential real estate loans were made to borrowers in our market area. The local economic conditions in this area have a significant impact on our commercial, real estate and construction and consumer loans, the ability of the borrowers to repay these loans and the value of the collateral securing these loans. In addition, if the population or income growth in these market areas slows, stops or declines, income levels, deposits and housing starts could be adversely affected and could result in the curtailment of our expansion, growth and profitability. Political conditions, including a change in presidential administrations and related policies, executive orders, and laws, could also impact our earnings.

Our ~~business~~earnings isare subject to interest rate risk ~~and variations in interest rates may negatively affect our financial performance~~.

~~The~~Our ~~majority~~earnings ofand cash flows are largely dependent upon our ~~assets~~net ~~and~~interest ~~liabilities~~income. ~~are~~Net ~~monetary~~interest inincome ~~nature~~is ~~and~~the ~~subject~~difference usbetween tointerest ~~significant~~income ~~risk~~earned ~~from~~on ~~changes~~interest inearning assets such as loans and securities and interest ~~rates~~expense paid on interest bearing liabilities such as deposits and borrowed funds. ~~These~~Interest rates are highly sensitive to many factors that are beyond our control, including the rate of inflation, general economic conditions and ~~the~~ policies of ~~the~~various ~~Federal Reserve and other~~ governmental and regulatory agencies (in particular, the Federal Reserve). ~~Like~~From ~~most~~July ~~financial~~2023 ~~institutions,~~through ~~changes~~August inof ~~interest~~2024, ~~rates~~the ~~can~~federal ~~impact~~funds ~~our~~rate ~~net~~remained ~~interest~~steady ~~income~~at as5.25% ~~well~~to as5.50%. ~~the~~In ~~valuation~~each of ~~our~~the ~~assets~~third and ~~liabilities,~~fourth ~~which~~quarters isof 2024, the ~~difference~~Federal ~~between~~Reserve ~~interest~~reduced ~~earned~~the ~~from~~target ~~interest-earning~~federal ~~assets,~~funds ~~such~~rate asby ~~loans~~50 ~~and~~basis ~~investment~~points ~~securities,~~to ~~and~~4.25% ~~interest~~to ~~paid~~4.50%. onIn ~~interest-bearing~~the ~~liabilities~~third quarter of 2025, ~~such~~the asFederal ~~deposits~~Reserve ~~and~~reduced ~~borrowings.~~the Wetarget ~~expect~~federal ~~that~~funds werate ~~will~~by ~~periodically~~25 ~~experience~~basis ~~“gaps”~~points into ~~the~~4.00% ~~interest~~to ~~rate~~4.25%. ~~sensitivities~~In ofthe ~~our~~fourth ~~assets~~quarter ~~and~~of ~~liabilities~~2025, ~~meaning~~the ~~that~~Federal ~~either~~Reserve ~~our~~reduced ~~interest-bearing~~the ~~liabilities~~target ~~will~~federal befunds ~~more~~rate ~~sensitive~~by 50 basis points to ~~changes~~3.50% into ~~market~~3.75%. ~~interest~~Uncertainty regarding future rates ~~than~~could negatively impact our ~~interest-earning~~cost ~~assets,~~of orborrowing ~~vice~~and ~~versa.~~reduce Inthe ~~either~~amount ~~event,~~of ifmoney ~~market~~our ~~interest~~customers ~~rates~~borrow ~~should~~or ~~move~~adversely ~~contrary~~affect their ability to ~~our~~repay ~~position,~~outstanding ~~this~~loan ~~“gap”~~balances ~~will~~that ~~negatively~~may ~~impact~~increase ~~our~~due ~~earnings.~~to adjustments in their variable rates.

~~Based~~Changes onin ~~our~~monetary ~~analysis of the interest rate sensitivity of our assets~~policy, ~~an increase in the general level of~~ interest rates, ~~may negatively affect~~ the ~~market~~yield ~~value of the portfolio equity as well as negatively affect our net interest income since a majority of our assets are fixed rate loans. Additionally~~curve, anor ~~increase~~market inrisk ~~interest rates may~~spreads, ~~among~~or ~~other~~a ~~things~~prolonged, ~~reduce~~flat ~~the~~or ~~demand~~inverted ~~for~~yield ~~loans~~curve ~~and~~could ~~our~~influence ~~ability~~not toonly ~~originate loans as well as increase our funding costs. A decrease in~~ the ~~general level of~~ interest ~~rates~~we ~~may~~receive ~~affect us through, among other things, increased prepayments~~ on ~~our~~loans ~~loan~~ and ~~mortgage-backed~~ securities ~~portfolios,~~and ~~but also allow us to reduce funding costs. Accordingly, changes in~~ the ~~level~~amount of ~~market~~ interest ~~rates~~we ~~affect~~pay ~~our net yield~~ on ~~interest-earning~~deposits ~~assets, loan origination volume, loan~~ and ~~mortgage-backed securities portfolios~~borrowings, ~~funding,~~but ~~and~~such ~~our overall results. While it is expected that the FRB will hold the target federal funds rate steady in the first half of 2025, we are unable to predict~~ changes incould ~~interest~~also ~~rates, which are affected by factors beyond our control, including inflation, deflation, recession, unemployment, money supply, and other changes in financial markets.~~affect:

~~Although~~• our ~~asset~~ability ~~liability management strategy is designed~~ to ~~keep~~originate ~~our~~loans ~~risk within acceptable parameters, it may not be able to prevent changes in interest rates from having a material adverse effect on our results of operations~~ and ~~financial~~obtain ~~condition.~~deposits;

~~Unstable~~• ~~global~~our ~~economic~~ability ~~conditions~~to ~~may~~retain ~~have~~deposits ~~serious~~in ~~adverse~~an ~~consequences~~uncertain onrate ~~our business, financial condition, and operations.~~environment;

We• ~~are~~net ~~operating~~interest inrate anspreads ~~uncertain economic environment. The global credit~~ and ~~financial~~net markets have experienced extreme volatility and disruptions over the past few years, including severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates, high rates of inflation, and uncertainty about economic stability and a potential recession. The U.S. government's decisions regarding its debt ceiling and the possibility that the U.S. could default on its debt obligations may cause further interest rate adjustments, disrupt access to capital markets, and deepen recessionary conditions. While our management team continually monitors market conditions and economic factors, throughout our footprint, we are unable to predict the duration or severity of such margins;

27• our ability to enter into instruments to hedge against interest rate risk;

•

the fair value of our financial assets and liabilities; and

•

the average duration of our loan and securities portfolio.

If the interest rates paid on deposits and other borrowings increase at a faster rate than the interest rates received on loans and other investments, our net interest income, and therefore earnings, could be adversely affected. Earnings could also be adversely affected if the interest rates received on loans and other investments fall more quickly than the interest rates paid on deposits and other borrowings.

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~~conditions~~Any ~~or factors. If conditions were to worsen nationally~~substantial, ~~regionally,~~unexpected or ~~locally,~~prolonged ~~then~~change ~~we could see a sharp increase~~ in ~~our~~market ~~total~~interest ~~net~~rates ~~charge-offs and also be required to significantly increase our allowance for credit losses. Furthermore, the demand for loans and our other products and services~~ could decline. An increase in our non-performing assets and related increases in our provision for loan losses, coupled with a potential decrease in the demand for loans and other products and services, could negatively affect our business and could have a material adverse effect on our ~~capital,~~ financial condition, and results of operations~~, and future growth~~. Our clients may also be adversely impacted by changes in regulatory, trade (including tariffs), and tax policies and laws, all of which could reduce demand for loans and adversely impact our borrowers' ability to repay our loans.

Unstable global economic conditions may have serious adverse consequences on our business, financial condition, and operations.

We are operating in an uncertain economic environment. The global credit and financial markets have experienced extreme volatility and disruptions over the past few years, including severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates, high rates of inflation, and uncertainty about economic stability and a potential recession. The U.S. government's decisions regarding appointments at the Federal Reserve, its debt ceiling and the possibility that the U.S. could default on its debt obligations may cause further interest rate adjustments, disrupt access to capital markets, and deepen recessionary conditions. Further, disagreements between the U.S. and significant trading partners over economic or political matters such as international trade may result in new or continued sanctions, tariffs and other similar restrictions on trade and investment between countries, which may result in supply chain disruptions and increased costs that could negatively affect us, our customers and our counterparties. In addition, conflicts between countries such as the Russian military action against Ukraine and ongoing conflicts in the Middle East, could lead to regional instability, a rise in commodity prices, increase inflationary pressures and market volatility, and thereby have an indirect effect on us even when we do not have material exposure to such countries. While our management team continually monitors market conditions and economic factors, throughout our footprint, we are unable to predict the duration or severity of such conditions or factors. If conditions were to worsen nationally, regionally, or locally, then we could see a sharp increase in our total net charge-offs and also be required to significantly increase our allowance for credit losses. Furthermore, the demand for loans and our other products and services could decline. An increase in our non-performing assets and related increases in our provision for loan losses, coupled with a potential decrease in the demand for loans and other products and services, could negatively affect our business and could have a material adverse effect on our capital, financial condition, results of operations, and future growth.

The U.S. government announced changes to its trade policies in 2025 and significantly increased tariffs on certain imports under emergency authorities, including the International Emergency Economic Powers Act (“IEEPA”). In February 2026, the Supreme Court of the United States ruled that IEEPA does not authorize the President to impose tariffs. The current tariff environment remains dynamic and uncertain, including regarding potential refunds of tariffs paid under IEEPA, and the U.S. government could respond with replacement measures under other legal authorities. Replacement measures and changes to tariffs and other trade restrictions may lead to continuing uncertainty and volatility in the U.S. and global financial markets and economic conditions which could cause adverse changes in the availability, terms and cost of capital. Additionally, potential tariffs or other U.S. trade policy measures have triggered and may trigger additional retaliatory actions by other countries such as China. Increased tariffs and trade restrictions may cause the prices of our customers’ products to increase, which could reduce demand for such products, or reduce our customers’ margins, and adversely impact their revenues, financial results, and ability to service debt, which in turn, could adversely impact our business, financial condition and results of operations. Our clients may also be adversely impacted by changes in regulatory and tax policies and laws, all of which could reduce demand for loans and adversely impact our borrowers' ability to repay our loans.

There can be no assurance that further deterioration in markets and confidence in economic conditions will not occur. Our general business strategy may be adversely affected by any such economic downturn or recession, volatile business environment, hostile third-party action, or continued unpredictable and unstable market conditions. The effects of any economic downturn or recession could continue for many years after the downturn or recession is considered to have ended.

Declines in asset values may result in impairment charges and adversely affect the value of our investment securities, financial performance and capital.

We maintain an investment securities portfolio that includes, but is not limited to, collateralized mortgage obligations, agency mortgage-backed securities and municipal securities. The market value of investment securities may be affected by factors other than the underlying performance of the issuer or composition of the bonds themselves, such as ratings downgrades, adverse changes in the business climate and a lack of liquidity for resales of certain investment securities. At each reporting period, we evaluate investment securities and other assets for impairment indicators. We may be required to record impairment charges in our income statements through an allowance for credit losses if our investment securities suffer a decline in value below their amortized cost. During the years ended December 31, 2023 and 2022, we incurred an insignificant amount of impairment charges related to credit losses on our investment securities and in 2024 we did not experience any impairment of our investment securities. If in future periods we determine that a significant impairment has occurred, we would be required to charge against earnings the credit-related portion of the impairment, which could have a material adverse effect on our financial condition and results of operations in the periods in which the impairments occur.

A portion of our income on a portfolio of consumer loans with promotional features is due from a third-party that originated the loans on our behalf. The value of this estimated reimbursement is recorded in our balance sheet at fair value as a derivative and actual results and a significant decline in the third-party’s credit risk may impact the value of the derivative and our ability to realize that value which could affect our financial performance and results of operations.29

We record a derivative asset as of December 31, 2024, which mostly reflects our estimate of the fair value of the interest reimbursement due to us from the third-party loan servicer that manages an unsecured consumer loan portfolio with promotional features for us. This derivative asset reflects the interest anticipated to be waived to borrowers under the assumed pre-payment of the borrowers’ loans that the third party will be required to pay to us. The derivative is required to be valued at fair value under U.S. GAAP with the use of various assumptions including borrower pre-payment, expected credit losses, and the third-party servicer’s credit risk. Assumptions used to determine the value of the derivative are sensitive to various factors not within our control that include borrower repayment risk and the credit risk of the third-party servicer. These assumptions are determined based on the information available to the Company as of each balance sheet date. Actual results that differ significantly from our prior assumptions may result in an inability to realize the value of the derivative and require updates to future fair value calculations of the derivative which could result in a significant increase or decrease in the derivative value that is recorded in our results of operations, which could have a material adverse effect on our financial condition and results of operations in future periods.

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each reporting period, we evaluate investment securities and other assets for impairment indicators. We may be ~~unable~~required to ~~sell~~record ~~loans~~impairment atcharges ~~the~~in ~~estimated~~our ~~market~~income ~~price~~statements ~~utilized~~through an allowance for credit losses if our investment securities suffer a decline in value below their amortized cost. In 2025, we did not experience any impairment of our investment securities. If in future periods we determine that a significant impairment has occurred, we would be required to ~~record~~charge ~~them~~against earnings the credit-related portion of the impairment, which could have a material adverse effect on our financial condition and results of operations in ~~held~~the ~~for~~periods ~~sale~~in which the impairments occur.

We have $113.2 million of Consumer Program loans in held for sale at the lower of cost or market as of December 31, 2024 that were recorded at their estimated fair value. At the time we transferred the loans to held for sale we recorded a $20 million write-down of the loans through the allowance for credit losses to reflect their estimated fair value that resulted in an equal amount of additional provision expense recorded in our income statement. The fair value of these loans are required to be re-evaluated at each reporting period until they are sold and any subsequent change in estimated fair value recorded as an additional adjustment to their value in the balance sheet with an equal charge to the income statement. Further, market conditions impacting the value of these loans could change and result in us selling the loans at a market price that is less than the value recorded on our balance sheet as of December 31, 2024, which would result in additional losses recorded in income at the time of sale.

Our stock price can be volatile.

Stock price volatility may make it more difficult for you to resell your common stock when you want and at prices you find attractive. Our stock price can fluctuate significantly in response to a variety of factors including, among other things:

●

actual or anticipated variations in quarterly results of operations;

●

recommendations by securities analysts;

●

operating and stock price performance of other companies that investors deem comparable to us;

●

news reports relating to trends, concerns and other issues in the financial services industry;

●

perceptions in the marketplace regarding us and/or our competitors;

●

new technology used, or services offered, by competitors;

●

significant acquisitions or business combinations, strategic partnerships, joint ventures or capital commitments by or involving us or our competitors;

●

failure to integrate acquisitions or realize anticipated benefits from acquisitions;

●

changes in valuations of Goodwill and other Intangible Assets;

●

changes in government regulations; and

●

geopolitical conditions such as acts or threats of terrorism, military conflicts or pandemics.

General market fluctuations, industry factors and general economic and political conditions and events, such as economic slowdowns or recessions, interest rate changes or credit loss trends, could also cause our stock price to decrease regardless of operating results.

The trading volume in our common stock is less than that of other larger financial services companies.

Although our common stock is listed for trading on the NASDAQ Global Market, the trading volume is low, and you are not assured liquidity with respect to transactions in our common stock. A public trading market having the desired characteristics of depth, liquidity and orderliness depends on the presence in the marketplace of willing buyers and sellers of our common stock at any given time. This presence depends on the individual decisions of investors and general economic and market conditions over which we have no control. Given the lower trading volume of our common stock, significant sales of our common stock, or the expectation of these sales, could cause our stock price to fall.

Inflation could negatively impact our business, our profitability and our stock price.

Prolonged periods of inflation may impact our profitability by negatively impacting our fixed costs and expenses, including increasing funding costs and expense related to talent acquisition and retention, and negatively impacting the demand for our products and services. Additionally, inflation may lead to a decrease in consumer and client’s purchasing power and negatively affect the need or demand for our products and services. If significant inflation continues, our business could be negatively affected by, among other things, decreases in loan collateral values and increased default rates leading to credit losses which could decrease our appetite for new credit extensions. These inflationary pressures could result in missed earnings and budgetary projections causing our stock price to suffer.

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ESG and DEI risks could adversely affect our reputation and shareholder, employee, client, and third party relationships and may negatively affect our stock price.

Our business faces increasing public, investor, activist, legislative and regulatory scrutiny related to ESG, anti-ESG, DEI and anti-DEI activities and developments. We risk damage to our brand and reputation if we fail to act responsibly in a number of areas, such as DEI, environmental stewardship, including with respect to climate change, human capital management, support for our local communities, corporate governance, and transparency, or fail to consider ESG factors in our business operations.

Furthermore, as a result of our diverse base of clients and business partners, we may face potential negative publicity based on the identity of our clients or business partners and the public’s (or certain segments of the public’s) view of those entities. Such publicity may arise from traditional media sources or from social media and may increase rapidly in size and scope. If our client or business partner relationships were to become intertwined in such negative publicity, our ability to attract and retain clients, business partners, and employees may be negatively impacted, and our stock price may also be negatively impacted. Additionally, we may face pressure to not do business in certain industries that are viewed as harmful to the environment or are otherwise negatively perceived, which could impact our growth.30

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a number of areas, such as DEI, environmental stewardship, including with respect to climate change, human capital management, support for our local communities, corporate governance, and transparency, or fail to consider ESG factors in our business operations.

Furthermore, as a result of our diverse base of clients and business partners, we may face potential negative publicity based on the identity of our clients or business partners and the public’s (or certain segments of the public’s) view of those entities. Such publicity may arise from traditional media sources or from social media and may increase rapidly in size and scope. If our client or business partner relationships were to become intertwined in such negative publicity, our ability to attract and retain clients, business partners, and employees may be negatively impacted, and our stock price may also be negatively impacted. Additionally, we may face pressure not to do business in certain industries that are viewed as harmful to the environment or are otherwise negatively perceived, which could impact our growth.

Additionally, investors and shareholder advocates are placing ever increasing emphasis on how corporations address ESG issues in their business strategy when making investment decisions and when developing their investment theses and proxy recommendations. We may incur meaningful costs with respect to our ESG efforts and if such efforts are negatively perceived, our reputation and stock price may suffer.

In response to ESG developments (including, in particular, DEI initiatives), there are increasing instances of anti-ESG legislation and anti-DEI executive orders, adverse media coverage, regulation, and litigation that could have unintended impacts on ordinary banking operations and increase litigation or reputational risk related to actions we choose to take and impact the results of our operations. If legislatures in the states in which we operate or Congress adopts legislation intended to protect certain industries by limiting or prohibiting consideration of business and industry factors in lending activities, certain portions of our lending operations may be impacted.

Operational Risks

Our business strategy includes strategic growth, and our financial condition and results of operations could be negatively affected if we fail to grow or fail to manage our growth effectively.

We intend to continue pursuing a growth strategy for our business. Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by growing companies such as the continuing need for infrastructure and personnel, the time and costs inherent in integrating a series of different operations and the ongoing expense of acquiring and staffing new ~~banks~~lines of business or branches. We may not be able to expand our presence in our existing markets or successfully enter new markets, and any expansion could adversely affect our results of operations. Failure to manage our growth effectively could have a material adverse effect on our business, future prospects, financial condition or results of operations, and could adversely affect our ability to successfully implement our business strategy. Our ability to grow successfully will depend on a variety of factors, including the continued availability of desirable business opportunities, the competitive responses from other financial institutions in our market areas, and our ability to manage our growth.

Although there can be no assurance of success or the availability of branch or financial services acquisitions in the future, we may seek to supplement our internal growth through attractive acquisitions. We cannot predict the number, size or timing of acquisitions, or whether any such acquisition will occur at all. Our acquisition efforts have traditionally focused on targeted entities in markets in which we currently operate and markets in which we believe we can compete effectively. However, as consolidation of the financial services industry continues, the competition for suitable acquisition candidates may increase and, as the number of appropriate targets decreases, the prices for potential acquisitions could increase, which could reduce our potential returns, and reduce the attractiveness of these opportunities to us. We may compete with other financial services companies for acquisition opportunities, ~~and~~that ~~many~~may ~~of these competitors~~ have greater financial resources than we do and may be able to pay more for an acquisition than we are able or willing to pay.

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We must respond to rapid technological changes and these changes may be more difficult or expensive than anticipated.

IfThe ~~competitors~~financial ~~introduce new products and~~ services ~~embodying new technologies, or if new~~ industry ~~standards~~is ~~and~~continually ~~practices~~undergoing ~~emerge,~~rapid ~~our~~technological ~~existing~~change ~~product~~with ~~and~~frequent ~~service~~introductions ~~offerings,~~of ~~technology and systems may become obsolete. Further, if we fail to adopt or develop~~ new ~~technologies~~technology-driven ~~or to adapt our~~ products and services toincluding ~~emerging~~those ~~industry~~related ~~standards,~~to weor ~~may~~involving ~~lose~~artificial ~~current and future customers~~intelligence, ~~which~~machine ~~could have a material adverse effect on our business~~learnings, ~~financial~~blockchain ~~condition~~ and ~~results~~other ofdistributed ~~operations~~ledger technologies. The ~~financial~~effective ~~services~~use ~~industry is changing rapidly and in order to remain competitive, we must continue to enhance and improve the functionality and features~~ of ~~our~~technology ~~products,~~increases ~~services~~efficiency and ~~technologies. These changes may be more difficult or expensive than we anticipate.~~

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enables financial institutions to better serve customers and reduce costs. Our future success depends, in part, upon our ability to address the needs of our customers by using technology to provide products and services that will satisfy customer demands, as well as to create additional efficiencies in our operations. Many of our competitors have substantially greater resources to invest in technological improvements. We may not be able to effectively implement new technology-driven products and services or be successful in marketing these products and services to our customers, and even if we implement such products and services, we may incur substantial costs in doing so. Failure to successfully keep pace with technological changes affecting the financial services industry could have a material adverse impact on our business, financial condition and results of operations.

New lines of business, products or services and technological advancements may subject us to additional risks.

From time to time, we implement new lines of business or offer new products and services within existing lines of business. There are substantial risks and uncertainties associated with these efforts, particularly in instances where the markets are not fully developed. In developing and marketing new lines of business and/or new products and services we invest significant time and resources. Initial timetables for the introduction and development of new lines of business and/or new products or services may not be achieved, and price and profitability targets may not prove feasible. External factors, such as compliance with regulations, competitive alternatives, and shifting market preferences, may also impact the successful implementation of a new line of business or a new product or service.

The financial services industry is continually undergoing rapid technological change with frequent introductions of new technology-driven products and services (including those related to or involving artificial intelligence, machine learning, blockchain and other distributed ledger technologies), and an established and growing demand for mobile and other phone and computer banking applications. Our future success depends, in part, ~~upon~~on our ability to address the needs of our customers by using technology to provide products and services that will satisfy customer demands, as well as to create additional efficiencies in our operations. Many of our competitors may have substantially greater resources to invest in technological improvements. We may not be able to effectively implement new technology -driven products and services or be successful in marketing these products and services to our customers. In addition, our implementation of certain new technologies, such as those related to artificial intelligence, automation and algorithms, in our business processes may have unintended consequences due to their limitations or our failure to use them effectively. In addition, cloud technologies are also critical to the operation of our systems, and our reliance on cloud technologies is growing. Failure to successfully keep pace with technological change affecting the financial services industry could have a material adverse effect on our business, financial condition and results of operations.

Furthermore, any new line of business, new ~~product~~products or service and/or new technology could have a significant impact on the effectiveness of our system of internal controls. Failure to successfully manage these risks in the development and implementation of new lines of business, new products or services and/or new technologies could have a material adverse effect on our business, financial condition and results of operations.

The development and use of artificial intelligence (AI) presents risks and challenges that may adversely impact our business.

~~The~~We ~~Company~~ or ~~its~~our third-party (or fourth party) vendors, clients or counterparties may develop or incorporate AI technology in certain business processes, services, or products. The development and use of AI ~~presents~~present a number of risks and challenges to ~~the~~our ~~Company’s~~ business. The legal and regulatory environment relating to AI is uncertain and rapidly evolving, both in the U.S. and internationally, and includes regulatory schemes targeted specifically at AI as well as provisions in intellectual property, privacy, consumer protection, employment, and other laws applicable to the use of AI. These evolving laws and regulations could require changes in ~~the~~our ~~Company’s~~ implementation of AI technology and increase ~~the~~our ~~Company’s~~ compliance costs and the risk of non-compliance. AI models, particularly generative AI models, may produce output or take action that is incorrect, that reflects biases included in the data on which they are trained, that results in the release of private, confidential, or proprietary information, that infringes on the intellectual property rights of others, or that is otherwise harmful. In addition, the complexity of many AI models makes it difficult to understand why they are generating particular outputs. This limited transparency increases the challenges associated with assessing the proper operation of AI models, understanding and monitoring the capabilities of the AI models, reducing erroneous output, eliminating bias, and complying with regulations that require documentation or explanation of the basis on which decisions are made. Further, we may rely on AI models

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~~eliminating bias, and complying with regulations that require documentation or explanation of the basis on which decisions are made. Further, the Company may rely on AI models~~ developed by third parties, and, to that extent, would be dependent in part on the manner in which those third parties develop and train their models, including risks arising from the inclusion of any unauthorized material in the training data for their models and the effectiveness of the steps these third parties have taken to limit the risks associated with the output of their models, matters over which ~~the~~we ~~Company~~ may have limited visibility. Any of these risks could expose ~~the~~us ~~Company~~ to liability or adverse legal or regulatory consequences and harm ~~the~~our ~~Company’s~~ reputation and the public perception of ~~its~~our business or the effectiveness of ~~its~~our security measures.

We may not be able to successfully integrate our acquisitions or to realize the anticipated benefits of them.

A successful integration of each acquired business with ours will depend substantially on our ability to successfully consolidate operations, corporate cultures, systems and procedures and to eliminate redundancies and costs. While we have substantial experience in successfully integrating institutions we have acquired, we may encounter difficulties during integration, such as:

●

the loss of key employees;

●

the disruption of operations and businesses;

●

loan and deposit attrition, customer loss and revenue loss;

●

possible inconsistencies in standards, control procedures and policies;

●

unexpected issues with expected branch closures; and/or

●

unexpected issues with costs, operations, personnel, technology and credit;

all of which could divert resources from regular banking operations. Additionally, general market and economic conditions or governmental actions affecting the financial industry generally may inhibit our successful merger integrations.

Further, we acquire businesses with the expectation that these mergers or acquisitions will result in various benefits including, among other things, benefits relating to enhanced revenues, a strengthened market position for the combined company, cross -selling opportunities, technology, cost savings and operating efficiencies. Achieving the anticipated benefits of these mergers and acquisitions is subject to a number of uncertainties, including whether we integrate these institutions in an efficient and effective manner, and general competitive factors in the marketplace. Failure to achieve these anticipated benefits could result in a reduction in the price of our shares as well as in increased costs, decreases in the amount of expected revenues and diversion of management's time and energy and could materially and adversely affect our business, financial condition and operating results.

The carrying value of goodwill and other intangible assets may be adversely affected.

When we complete an acquisition, goodwill and other intangible assets are often recorded on the date of acquisition as an asset. Current accounting guidance requires goodwill to be tested for impairment, and we perform such impairment analysis at least annually. A significant adverse change in expected future cash flows or sustained adverse change in the value of our common stock could require the asset to become impaired. If impaired, we would incur a charge to earnings that would have a significant impact on the results of operations. Our carrying value of goodwill and net amortizable intangibles were approximately $93.5 million and $~~0.7~~36 ~~million~~thousand, respectively, as of December 31, ~~2024~~2025.

We rely on third-party vendors to provide key components of our business infrastructure, which could expose us to operational and financial risks.

Third-party vendors provide key components of our business operations such as data processing, recording and monitoring transactions, online banking interfaces and services, Internet connections and network access. We have selected these third-party vendors carefully and have conducted the due diligence consistent with regulatory guidance and best practices. While we have ongoing programs to review third-party vendors and assess risk, we do not control their actions. Any problems caused by these third parties, including those resulting from disruptions in communication services provided by a vendor, failure of a vendor to handle current or higher volumes, cyber-attacks and compromises at a vendor, failure of a vendor to provide services for any reason or poor performance of services, could adversely affect our ability to deliver products and services to our customers and otherwise conduct our business. Financial or operational difficulties of a third-

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party vendor could also hurt our operations if those difficulties interfere with the vendor’s ability to serve us. Furthermore, our vendors could also be sources of operational and information security risk to us, including from breakdowns or failures of their own systems or capacity constraints. Replacing these third-party vendors could also create significant delay and expense. Accordingly, use of such third parties creates an unavoidable inherent risk to our business operations.

WeIndustry ~~face~~adoption ~~significant~~of ~~cyber~~real-time ~~and~~payments ~~data~~networks ~~security risk that~~ could ~~result~~negatively inimpact ~~the~~financial ~~disclosure~~performance ofthrough ~~sensitive,~~reductions ~~confidential~~in ~~and/or~~product ~~nonpublic personal information~~profitability, ~~adversely~~increased ~~affect~~liquidity ~~our~~reserves ~~business~~and orthe ~~reputation~~potential ~~and~~for ~~expose~~increased usfraud tolosses, ~~significant~~among ~~liabilities~~other risks.

AsWith athe ~~financial~~launch ~~institution, we are under threat~~ of ~~loss due to cyber~~real-~~attacks~~time ~~and~~payments ~~technical disruptions to the computer systems and network infrastructure we use~~networks, ~~including~~such ~~those~~as weRTP® ~~maintain~~from ~~with~~The ~~our~~Clearing ~~service~~House ~~providers~~ and ~~vendors.~~FedNow® ~~This~~from ~~risk~~the ~~has~~Federal ~~increased in recent years~~Reserve, ~~and~~instantaneous ~~continues~~cash tosettlement ~~increase,~~capabilities asare weavailable ~~continue~~24 tohours ~~expand~~a ~~customer~~day ~~capabilities to utilize internet~~ and ~~other~~7 ~~remote~~days ~~channels~~a ~~to transact business~~week. ~~Two~~The implications of the ~~most~~new ~~significant~~settlement ~~cyber-attack~~capabilities ~~risks that we face~~ are ~~e-fraud~~far ~~and~~reaching ~~compromise of sensitive customer data. E-fraud occurs when cybercriminals compromise our systems~~ and ~~networks,~~have ornot ~~those~~yet ofsignificantly ~~our~~affected ~~service~~the ~~providers~~banking ~~and vendors, and extract funds directly from customer or our accounts~~industry. ~~The~~As ~~attempts~~market toadoption ~~compromise sensitive customer data~~increases, ~~such~~we asmay ~~account~~be ~~numbers~~required ~~and~~to ~~Social~~hold ~~Security~~more ~~numbers, present~~liquidity ~~potentially~~reserves ~~significant~~in ~~reputational,~~cash ~~legal and/or regulatory costs~~ to ~~us.~~facilitate ~~Our~~cash ~~risk~~settlement ~~and~~activity ~~exposure~~outside ~~to these matters remains heightened because~~ of ~~the~~traditional ~~evolving~~business ~~nature~~hours. ~~and~~Additionally, ~~complexity~~instantaneous ofsettlement ~~these~~will ~~threats~~likely ~~from~~reduce ~~cybercriminals,~~float ~~our~~benefits ~~plans~~associated towith ~~continue~~providing todeposit ~~provide internet banking~~ and ~~mobile~~ banking ~~channels~~services, ~~and~~as ~~our~~well ~~plans~~as topose ~~develop~~incremental ~~additional~~fraud ~~remote~~risk ~~connectivity~~due ~~solutions~~ to ~~serve~~a ~~our~~reduced ~~customers.~~ability ~~While we have not experienced any material losses relating~~ to ~~cyber-attacks~~reverse orfraudulent ~~other~~transactions ~~information~~due ~~security incidents, we have been subject~~ to ~~cyber-attacks~~the ~~and~~speed ~~there~~of ~~can~~money ~~be no assurance that we will not suffer additional losses in the future~~movement.

We ~~allow~~face asignificant ~~portion~~cyber ~~of our employees to work remotely from their homes on a full-time or hybrid schedule. Technology in employees’ homes may not be as robust as in our offices~~ and ~~could~~data ~~cause the~~ security ofrisk ~~the~~that ~~networks,~~could ~~information~~result ~~systems, applications, and other tools available to employees to be more limited or less reliable than~~ in our offices. The continuation of these work-from-home measures also introduces additional operational risk, including increased cybersecurity risks. These cybersecurity risks, and all those described above, include the ~~potential~~disclosure ~~for increased risk~~ of ~~(i)~~or ~~phishing,~~access ~~malware, and other cybersecurity attacks, (ii) vulnerability~~ to ~~disruptions of our information technology infrastructure and telecommunications systems for remote operations~~sensitive,~~(iii)~~ ~~unauthorized~~confidential ~~dissemination, misuse~~ and/or ~~destruction~~nonpublic ofpersonal ~~sensitive or confidential~~ information, ~~(iv)~~adversely affect our ~~ability~~business ~~to restore the systems in the event of a systems failure~~ or ~~interruption,~~reputation and ~~(v) impairment of our ability to perform critical functions, including wiring funds, all of which could~~ expose us to ~~risks~~significant ~~of data or financial loss, litigation and liability and could seriously disrupt our operations and the operations of any impacted customers~~liabilities.

As ~~The~~a ~~occurrence~~financial institution, we are under threat of ~~any~~loss due to cyber-~~attack~~attacks ~~could~~and ~~result~~technical indisruptions ~~material~~to ~~adverse~~the ~~consequences~~computer tosystems usand network infrastructure we use, including ~~damage~~those towe maintain with our ~~reputation,~~service ~~financial~~providers ~~loss,~~and vendors. This risk has increased ~~operation~~in ~~expenses~~recent years, ~~remediation~~and ~~costs~~continues to increase, as we continue to expand customer capabilities to utilize internet and ~~the~~other ~~loss~~remote ofchannels ~~customers~~to transact business. WeTwo ~~also~~of ~~could~~the most significant cyber-attack risks that we face ~~litigation~~are ore-fraud ~~additional~~and ~~regulatory~~compromise ~~scrutiny~~of sensitive customer data. ~~Litigation~~E-fraud occurs when cybercriminals compromise our systems and networks, or ~~regulatory~~those ~~actions~~of inour ~~turn~~service ~~could~~providers ~~lead~~and tovendors, ~~significant~~and ~~liability~~extract funds directly from customers or ~~other~~our ~~sanctions~~accounts. The attempts to compromise sensitive, ~~including~~non-public ~~fines~~personal ~~and~~customer ~~penalties~~data, ~~(which~~such ~~may~~as ~~not~~account benumbers ~~covered~~and bySocial ~~our~~Security ~~insurance~~numbers, ~~policies)~~present potentially significant reputational, legal and/or ~~reimbursement~~regulatory costs to us. Our risk and exposure to these matters remain heightened because of ~~customers~~the ~~adversely~~evolving ~~affected~~nature byand acomplexity ~~security~~of ~~incident.~~these ~~Even~~threats iffrom wecybercriminals, doour ~~not~~plans ~~suffer~~to ~~any~~continue ~~material~~to ~~adverse~~provide ~~consequences~~internet asbanking aand ~~result~~mobile ofbanking ~~other~~channels ~~future~~to ~~events~~initiate financial transactions, ~~successful~~and ~~attacks~~our orplans ~~systems~~to ~~failures~~develop atadditional ~~the~~remote ~~Bank~~connectivity orsolutions atto serve our customers. While we have not experienced any material losses relating to cyber-attacks or other ~~financial~~information ~~institutions~~security ~~could~~incidents, ~~lead~~we have been subject to acyber-attacks ~~general~~and ~~loss~~there ofcan ~~customer~~be ~~confidence~~no inassurance ~~financial~~that ~~institutions~~we ~~including~~will not suffer additional losses in the ~~Bank~~future.

~~Our~~We ~~ability~~allow toa ~~mitigate~~portion ~~the adverse consequences~~ of ~~occurrences is in part dependent on the quality of~~ our ~~information~~employees ~~security~~to ~~procedures~~work ~~and~~remotely ~~contracts~~from ~~and~~their ~~our~~homes ~~ability~~on toa ~~anticipate~~full-time ~~the~~or ~~timing~~hybrid ~~and~~schedule. ~~nature~~Technology ofin ~~any~~employees’ ~~such~~homes ~~event~~may ~~that~~not ~~occurs.~~be Inas ~~recent years,~~robust weas ~~have~~in ~~incurred~~our ~~significant~~offices ~~expense~~and ~~towards~~could ~~improving~~cause the ~~reliability~~security of ~~our~~the ~~systems~~networks, ~~and~~information ~~their~~systems, ~~security from attack. Nonetheless~~applications, ~~there~~and ~~remains~~other ~~the~~tools ~~risk~~available ~~that~~to weemployees ~~may~~to be ~~materially~~more ~~harmed~~limited byor ~~cyber-attacks~~less ~~and~~reliable ~~information~~than ~~security incidents~~ in ~~the~~our ~~future~~offices. ~~Methods~~The ~~used~~continuation toof ~~attack~~these ~~information~~work-from-home ~~systems~~measures ~~change~~also ~~frequently~~introduces ~~(with~~additional ~~generally~~operational ~~increasing sophistication)~~risk, ~~often~~including ~~are~~increased ~~not~~cybersecurity ~~recognized~~risks. ~~until~~These ~~launched~~cybersecurity ~~against a target~~risks, ~~may~~and beall ~~supported~~those bydescribed ~~foreign governments~~above, ~~criminal~~include ~~organizations,~~the orpotential ~~other~~for ~~well-financed~~increased ~~entities,~~risk ~~and~~of ~~may~~(i) ~~originate~~phishing, ~~from~~malware, ~~less regulated~~ and ~~remote~~other ~~areas~~cybersecurity ~~around the world. As a result~~attacks, we(ii) ~~may~~vulnerability ~~be unable~~ to ~~prevent~~disruptions ~~these methods in advance~~ of ~~attacks,~~our ~~including~~information bytechnology ~~implementing~~infrastructure ~~adequate~~and ~~preventive~~telecommunications ~~measures.~~systems Iffor ~~such~~remote anoperations, ~~attack~~(iii) ~~does~~unauthorized ~~occur~~dissemination, weaccess, ~~might~~misuse ~~not~~or bedestruction ~~able~~of tosensitive ~~fix it timely~~ or ~~adequately.~~confidential Weinformation, ~~seek~~(iv) toour ~~engage~~inability ~~in due diligence and monitoring~~ to ~~limit~~restore the ~~risk~~systems ~~that~~in ~~such~~the anevent ~~attack~~of ~~relates~~a tosystems ~~products~~failure or ~~services~~interruption, ~~provided~~and by(v) ~~others,~~impairment ~~including~~of ~~third~~our ~~party~~ability ~~service~~to ~~providers~~perform ~~and~~critical ~~vendors..~~functions, Inincluding ~~addition~~wiring funds, asall ~~the~~of ~~regulatory~~which ~~environment~~could ~~related~~expose us to ~~information~~risks ~~security,~~of data ~~collection~~or ~~and~~financial ~~use~~loss, litigation and ~~privacy~~liability ~~becomes increasingly rigorous, with new~~ and ~~constantly~~could ~~changing~~seriously ~~requirements~~disrupt ~~applicable to~~ our ~~business,~~operations ~~compliance~~and ~~with~~the ~~those~~operations ~~requirements~~of ~~could~~any ~~also~~impacted ~~result in additional costs~~customers.

33 The occurrence of any successful cyber-attack could result in material adverse consequences including damage to our reputation, financial loss, increased operation expenses, remediation costs, and loss of customers. We also could face litigation or additional regulatory scrutiny. Litigation or regulatory actions could lead to significant liability or other sanctions, including fines and penalties (which may not be covered by our insurance policies) or reimbursement of customers adversely affected by a security incident. Even if we do not suffer any material adverse consequences as a result of other future events, successful attacks or systems failures at the Bank or at other financial institutions could lead to a general loss of customer confidence in financial institutions, including the Bank.

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Our ~~business~~ability to mitigate the adverse consequences of occurrences is ~~susceptible~~in part dependent on the effectiveness of our information security procedures, controls, and contracts and our ability to ~~fraud~~anticipate the timing and nature of any such event that occurs. In recent years, we have incurred significant expense towards improving the reliability of our systems and their security from attacks. Nonetheless, there remains the risk that we may be materially harmed by cyber-attacks and information security incidents in the future. Methods used to attack information systems change frequently (with generally increasing sophistication), often are not recognized until launched against a target, may be supported by foreign governments, criminal organizations, or other financially motivated threat actors, and may originate from less regulated and remote areas around the world. As a result, we may be unable to prevent these methods in advance of attacks, including by implementing adequate preventive measures. If such an attack does occur, we might not be able to fix it timely or adequately. We engage in due diligence and monitoring of third parties, including service providers and vendors, to limit the risk that such an attack relates to products or services provided by others. In addition, as the regulatory environment related to information security, data collection and use, and privacy becomes increasingly rigorous, with new and constantly changing requirements applicable to our business, compliance with those requirements could also result in additional costs.

~~Our~~In ~~business~~deciding ~~exposes~~whether us to ~~fraud~~extend ~~risk~~credit ~~from~~or ~~loan~~enter ~~and~~into ~~deposit~~other ~~customers,~~transactions ~~the~~with third parties, we dorely ~~business~~on ~~with,~~information asfurnished ~~well~~by asor ~~from~~on ~~employees~~behalf of customers and counterparties, ~~contractors~~including financial statements, credit reports and ~~vendors~~other financial information. We may also rely on ~~financial~~representations ~~and~~of those customers, counterparties or other ~~data~~third ~~from~~parties, ~~new~~such ~~and~~as ~~existing~~independent ~~customers~~auditors ~~which~~or ~~could~~property ~~turn~~appraisers, ~~out~~as to bethe ~~fraudulent~~accuracy ~~when~~and ~~accepting~~completeness ~~such~~of ~~customers~~that information. Such information could be inaccurate, ~~executing~~including ~~their~~as ~~financial~~a ~~transactions~~result ~~and~~of ~~making~~fraud ~~and~~on ~~purchasing~~behalf ~~loans~~of ~~and~~our customers, counterparties or other ~~financial~~third ~~assets~~parties. In times of increased economic stress, we are at an increased risk of fraud losses. We ~~believe~~cannot assure you that our underwriting and operational controls ~~are~~will ~~in place to~~ prevent or detect such fraud, ~~but we cannot provide assurance that these controls will be effective in detecting fraud~~ or that we will not experience fraud losses or incur costs or other damage related to such fraud~~, at levels that adversely affect financial results or reputation~~. Our ~~lending~~ customers may also experience fraud in their businesses, which could adversely affect their ability to repay their loans or make use of our services. Our ~~customers’~~exposure and ~~our~~the exposure of our customers to fraud may increase our financial risk and reputation risk as it may result in unexpected loan losses that exceed those that have been provided for in ~~the~~our allowance for ~~credit~~loan losses. Reliance on inaccurate or misleading information from our customers, counterparties and other third parties, including as a result of fraud, could have a material adverse impact on our business, financial condition and results of operations.

We are dependent on key personnel and the loss of one or more of those key personnel could impair our relationship with our customers and adversely affect our business.

Many community banks attract customers based on the personal relationships that the banks’ officers and customers establish with each other and the confidence that the customers have in the officers. We significantly depend on the continued service and performance of our key management personnel. We also believe our management team’s depth and breadth of experience in the banking industry is integral to executing our business plan. The loss of the services of members of our senior management team or other key employees or the inability to attract additional qualified personnel as needed could have a material adverse effect on our business.

Our compensation practices are subject to review and oversight by the Federal Reserve, the FDIC and other regulators. The federal banking agencies have issued and oversee compliance with joint guidance on executive compensation designed to help ensure that a banking organization’s incentive compensation policies do not encourage imprudent risk taking and are consistent with the safety and soundness of the organization. In addition, the Dodd-Frank Act required ~~those~~these federal banking agencies, along with the SEC, to adopt rules to require reporting of incentive compensation and to prohibit certain compensation arrangements. In October 2022, the SEC adopted final rules requiring national securities exchanges, including Nasdaq where we are currently listed, to establish new listing standards relating to policies for the recovery of erroneously awarded incentive-based compensation, which are often referred to as “clawback policies.” The final rules directed U.S. stock exchanges to require listed companies to implement, disclose and enforce clawback policies to recover excess incentive-based compensation that current or former executive officers received based on financial reporting measures that are later restated. In June 2023, the SEC approved the ~~Nasdaq~~NASDAQ’s proposed clawback listing standards, which now require us and other ~~Nasdaq~~NASDAQ-listed companies to (i) adopt and implement a compliant clawback policy; (ii) file the clawback policy as an exhibit to our annual reports; and (iii) provide certain disclosures relating to any compensation recovery triggered by the clawback policy. If, as a result of complying with these rules, we are unable to attract and retain qualified employees, or do so at rates necessary to maintain our competitive position, or if the compensation costs required ~~to attract and retain employees become more significant, our performance, including our competitive position, could be materially adversely affected.~~

~~Deposit insurance premiums levied against banks may increase if the number of bank failures increase or the cost of resolving failed banks increases.~~ 35

The FDIC maintains a Deposit Insurance Fund (“DIF”) to protect insured depositors in the event of bank failures. The DIF is funded by fees assessed on depository institutions insured by the FDIC. Future deposit premiums paid by banks will depend on FDIC rules, which are subject to change, the level of the DIF and the magnitude and cost of future bank failures. We may be required to pay significantly higher FDIC premiums if market developments change such that the DIF balance is reduced or the FDIC changes its rules to require higher premiums.

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to attract and retain employees become more significant, our performance, including our competitive position, could be materially adversely affected.

Deposit insurance premiums levied against us could increase.

The DIF is funded by fees assessed on insured depository institutions including the Bank. Future deposit premiums paid by us depend on FDIC rules, which are subject to change, the level of the DIF and the magnitude and cost of future bank failures. The FDIC may further increase the assessment rates or impose additional special assessments in the future, which may require the Bank to pay significantly higher FDIC premiums.

Liquidity Risks

Liquidity risk could impair our ability to fund operations and jeopardize our financial condition, results of operations and cash flows.

Liquidity is essential to our business. Our ability to implement our business strategy will depend on our ability to obtain funding for loan originations, working capital, possible acquisitions and other general corporate purposes. An inability to raise funds through deposits, borrowings, securities sold under agreements to repurchase, the sale of loans and other sources could have a substantial negative effect on our liquidity. We anticipate that our retail and commercial deposits will be sufficient to meet our funding needs in the foreseeable future. We may rely on deposits obtained through intermediaries, FHLB advances, and other wholesale funding sources to obtain the funds necessary to implement our growth strategy.

Our access to funding sources in amounts adequate to finance our activities or on terms which are acceptable to us could be impaired by factors that affect us specifically or the financial services industry or economy in general, including a decrease in the level of our business activity as a result of a downturn in the markets in which our loans are concentrated or adverse regulatory action against us. Our ability to borrow could also be impaired by factors that are not specific to us, such as a disruption in the financial markets or negative views and expectations about the prospects for the financial services industry. Access to liquidity may also be negatively impacted by the value of our securities portfolio, if liquidity and/or business strategy necessitate the sales of securities in a loss position. To the extent we are not successful in obtaining such funding, we will be unable to implement our strategy as planned which could have a material adverse effect on our financial condition, results of operations and cash flows.

Adverse developments affecting the financial services industry, such as actual events or concerns involving liquidity, defaults or non-performance by financial institutions or transactional counterparties, could adversely affect our current and projected business operations and its financial condition and results of operations.

Actual events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions, transactional counterparties or other companies in the financial services industry or the financial services industry generally, or concerns or rumors about any events of these kinds or other similar risks, have in the past and may in the future lead to market-wide liquidity problems. If any parties with whom we conduct business are unable to access deposits with another financial institution, funds pursuant to such instruments or lending arrangements with such a financial institution, such parties’ credit quality, ability to pay their obligations to us, or to enter into new commercial arrangements requiring additional payments ~~to us~~ could be adversely affected. Uncertainty remains over liquidity concerns in the broader financial services industry. Additionally, confidence in the safety and soundness of regional banks specifically or the banking system ~~generally~~ could impact where customers choose to maintain deposits, which could materially adversely impact our liquidity, loan funding capacity, ability to raise funds, and results of operations. Similar impacts have occurred in the past, such as during the 2008-2010 financial crisis.

Although we assess our funding relationships as we believe necessary or appropriate, our access to funding sources and other arrangements in amounts adequate to finance or capitalize our current and projected future business operations could be significantly impaired by factors that affect us, our customers, the financial institutions with which we have arrangements directly, or the financial services industry or economy in general. These factors could include, among others, events such as liquidity constraints or failures, the ability to perform our obligations under various types of financial, credit or liquidity agreements or arrangements, disruptions or instability in the financial services industry or financial markets, or concerns or negative expectations about the prospects for companies in the financial services industry. These factors could involve financial institutions or financial services industry companies with which we or our customers have financial or business relationships, but could also include factors involving financial markets or the financial services industry generally.

Additionally, we could be impacted by current or future negative perceptions and expectations about the prospects for the financial services industry which could worsen over time and result in downward pressure on, and continued or accelerated volatility of, bank securities. 36

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Weor ~~may~~concerns ~~also~~or ~~face~~negative ~~increased~~expectations ~~regulatory~~about ~~scrutiny – in~~ the ~~course~~prospects offor ~~routine~~companies examinations and otherwise – and new regulations directed towards banks of similar size to the Bank, which may increase the Company’s costs of doing business and reduce its profitability. Among other things, there may be an increased focus by both regulators and investors on deposit composition, the level of uninsured deposits, losses embedded in the ~~held-to-maturity~~financial ~~portion~~services ~~of our securities portfolio, contingent liquidity, CRE composition and concentration, capital position and our general oversight and internal control structures regarding the foregoing~~industry. As ~~primarily~~These afactors ~~commercial~~could ~~bank,~~involve ~~the~~financial ~~Bank~~institutions ~~has an elevated degree of uninsured deposits compared to larger national banks~~ or ~~smaller~~financial ~~community~~services ~~banks~~industry companies with awhich ~~stronger~~we ~~focus on retail deposits, and also maintains a robust CRE portfolio. As a result, the Bank could face increased scrutiny~~ or beour ~~viewed~~customers ~~as higher risk by regulators and the investor community. In addition, bank failures~~ have ~~and~~financial ~~could in the future prompt the FDIC to increase deposit insurance costs. Increases in funding, deposit insurance,~~ or ~~other~~business ~~costs~~relationships asbut ~~a result of these types of events have and~~ could inalso ~~the~~include ~~future~~factors ~~materially~~involving ~~adversely affect our~~ financial ~~condition~~markets ~~and~~or ~~results of operations. Further,~~ the ~~disruption~~financial ~~following~~services ~~these~~industry ~~types of events have and could in the future generate significant market trading volatility among publicly traded bank holdings companies and, in particular, regional banks like us~~generally.

We may also face increased regulatory scrutiny – in the course of routine examinations and otherwise – and new regulations directed towards banks of similar size to the Bank, which may increase our costs of doing business and reduce our profitability. Among other things, there may be an increased focus by both regulators and investors on deposit composition, the level of uninsured deposits, losses embedded in the held-to-maturity portion of our securities portfolio, contingent liquidity, CRE composition and concentration, capital position and our general oversight and internal control structures regarding the foregoing. As a commercial bank, the Bank has an elevated degree of uninsured deposits compared to larger national banks or smaller community banks with a stronger focus on retail deposits and also maintains a robust CRE portfolio. As a result, the Bank could face increased scrutiny or be viewed as higher risk by regulators and the investor community. In addition, bank failures have and could in the future prompt the FDIC to increase deposit insurance costs. Increases in funding, deposit insurance, or other costs as a result of these types of events have and could in the future materially adversely affect our financial condition and results of operations. Further, the disruption following these types of events has and could in the future generate significant market trading volatility among publicly traded bank holdings companies and, in particular, regional banks like us.

Capital Adequacy Risks

Future growth or operating results may require us to raise additional capital, but that capital may not be available, be available on unfavorable terms or may be dilutive.

Primis Bank is required by the FRB to maintain adequate levels of capital to support our operations. In the event that our future operating results erode capital, if the Bank is required to maintain capital in excess of well-capitalized standards, or if we elect to expand through loan growth or acquisitions, we may be required to raise additional capital. Our ability to raise capital will depend on conditions in the capital markets, which are outside our control, and on our financial performance. Accordingly, we cannot be assured of our ability to raise capital on favorable terms when needed, or at all. If we cannot raise additional capital when needed, we will be subject to increased regulatory supervision and the imposition of restrictions on our growth and business. These outcomes could negatively impact on our ability to operate or further expand our operations through acquisitions or the establishment of additional branches and may result in increases in operating expenses and reductions in revenues that could have a material adverse effect on our financial condition and results of operations. In addition, in order to raise additional capital, we may need to issue shares of our common stock that would dilute the book value of our common stock and reduce our current shareholders’ percentage of ownership interest to the extent they do not participate in future offerings.

We may issue a new series of preferred stock or debt securities, which would be senior to our common stock and may cause the market price of our common stock to decline.

We have issued $27.0 million in aggregate principal amount of 5.875% Fixed-to-Floating Rate Subordinated Notes due January 31, 2027 and $60.0 million of fixed-to-floating rate Subordinated Notes due 2030. In the future, we may increase our capital resources by making additional offerings of debt or equity securities, which may include senior or additional subordinated notes, classes of preferred shares and/or common shares. Holders of our common stock are not entitled to preemptive rights or other protections against dilution. Preferred shares and debt, if issued, have a preference on liquidating distributions or a preference on dividend or interest payments that could limit our ability to make a distribution to the holders of our common stock. Future issuances and sales of parity preferred stock, or the perception that such issuances and sales could occur, may also cause prevailing market price for our common stock to decline and may adversely affect our ability to raise additional capital in the financial markets at times and prices favorable to us. Further issuances of our common stock could be dilutive to holders of our common stock.

~~We currently intend to pay dividends on our common stock; however, our future ability to pay dividends is subject to restrictions.~~37

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~~that~~We ~~bank~~currently ~~holding~~intend ~~companies~~to ~~should~~pay ~~not maintain a level of cash~~ dividends ~~that~~on ~~undermines~~our ~~the~~common ~~bank~~stock; ~~holding~~however, ~~company’s~~our future ability to ~~serve~~pay asdividends ais ~~source~~subject ~~of strength~~ to ~~its banking subsidiaries~~restrictions.

Our principal source of funds to pay dividends on our common stock is cash dividends that we receive from the Bank. The payment of dividends by the Bank to us is subject to certain restrictions imposed by federal banking laws, regulations and authorities. The federal banking statutes prohibit federally insured banks from making any capital distributions (including a dividend payment) if, after making the distribution, the institution would be "under capitalized" as defined by statute. In addition, the relevant federal regulatory agencies have authority to prohibit an insured bank from engaging in an unsafe or unsound practice, as determined by the agency, in conducting an activity. The payment of dividends could be deemed to constitute such an unsafe or unsound practice, depending on the financial condition of the Bank. Regulatory authorities could impose administratively stricter limitations on the ability of the Bank to pay dividends to us if such limits were deemed appropriate to preserve certain capital adequacy requirements.

Regulatory Risks

We are heavily regulated by federal and state agencies; changes in laws and regulations or failures to comply with such laws and regulations may adversely affect our operations and our financial results.

We and the Bank are subject to extensive regulation, supervision and examination by federal and state banking authorities. Any change in applicable regulations or federal or state legislation could have a substantial impact on us and the Bank, and our respective operations. Additional legislation and regulations may be enacted or adopted in the future that could significantly affect our powers, authority and operations or the powers, authority and operations of the Bank, which could have a material adverse effect on our financial condition and results of operations.

Further, bank regulatory authorities have the authority to bring enforcement actions against banks and their holding companies for unsafe or unsound practices in the conduct of their businesses or for violations of any law, rule or regulation, any condition imposed in writing by the appropriate bank regulatory agency or any written agreement with the agency. Possible enforcement actions against us could include the issuance of a cease-and-desist order that could be judicially enforced, the imposition of civil monetary penalties, the issuance of directives to increase capital or enter into a strategic transaction, whether by merger or otherwise, with a third party, the appointment of a conservator or receiver, the termination of insurance on deposits, the issuance of removal and prohibition orders against institution-affiliated parties, and the enforcement of such actions through injunctions or restraining orders. The exercise of this regulatory discretion and power may have a negative impact on us. See the discussion above at Supervision and Regulation for an additional discussion of the extensive regulation and supervision ~~the~~we ~~Company and the Bank~~ are subject to.

As a regulated entity, Primis and the Bank must maintain certain required levels of regulatory capital that may limit our operations and potential growth.

As further described above under Supervision and Regulation—Capital Requirements, Primis and the Bank each are subject to various regulatory capital requirements administered by the FRB.

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 the Bank’s and our consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities and certain off-balance sheet commitments as calculated under these regulations.

As of December 31, 2024, Primis and the Bank exceeded the amounts required to be well capitalized with respect to all four required capital ratios. As of December 31, 2024, Primis’ leverage, CET1 risk-based capital, Tier 1 risk-based capital and Total risk-based capital ratios were 7.76%, 8.74%, 9.05%, and 12.53%, respectively. As of December 31, 2024, the Bank’s leverage, CET1 risk-based capital, Tier 1 risk-based capital and Total risk-based capital ratios were 9.10%, 10.78%, 10.78% and 12.04%, respectively.38

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As of December 31, 2025, Primis and the Bank exceeded the amounts required to be well capitalized with respect to all four required capital ratios. As of December 31, 2025, Primis’ leverage, CET1 risk-based capital, Tier 1 risk-based capital and Total risk-based capital ratios were 8.80%, 9.36%, 9.64%, and 12.40%, respectively. As of December 31, 2025, the Bank’s leverage, CET1 risk-based capital, Tier 1 risk-based capital and Total risk-based capital ratios were 9.74%, 10.74%, 10.74% and 11.99%, respectively.

Many factors affect the calculation of Primis and the Bank’s risk-based assets and its ability to maintain the level of capital required to achieve acceptable capital ratios. For example, changes in risk weightings of assets relative to capital and other factors may combine to increase the amount of risk-weighted assets in the Tier 1 risk-based capital ratio and the Total risk-based capital ratio. Any increases in its risk-weighted assets will require a corresponding increase in its capital to maintain the applicable ratios. In addition, recognized loan losses in excess of amounts reserved for such losses, loan impairments, impairment losses on investment securities and other factors will decrease the Bank’s capital, thereby reducing the level of the applicable ratios.

Primis and the Bank’s failure to remain well capitalized for bank regulatory purposes could affect customer confidence, our ability to grow, our costs of funds and FDIC insurance costs, our ability to pay dividends on our capital stock, our ability to make acquisitions, and on our business, results of operations and financial condition. Under FRB rules, if the Bank ceases to be a well-capitalized institution for bank regulatory purposes, the interest rates that it pays on deposits and its ability to accept, renew or rollover brokered deposits may be restricted. As of December 31, ~~2024~~2025, we did not have any brokered certificates of deposits.

We are subject to commercial real estate lending guidance issued by the federal banking regulators that impacts our operations and capital requirements.

The federal banking regulators have issued final guidance regarding concentrations in commercial real estate lending directed at institutions that have particularly high concentrations of commercial real estate loans within their lending portfolios. This guidance suggests that institutions whose commercial real estate loans exceed certain percentages of capital should implement heightened risk management practices appropriate to their concentration risk and may be required to maintain higher capital ratios than institutions with lower concentrations in commercial real estate lending. Based on our commercial real estate concentration as of December 31, ~~2024~~2025, we believe that we are operating within the guidelines. However, increases in our commercial real estate lending could subject us to additional supervisory analysis. We cannot guarantee that any risk management practices we implement will be effective toin ~~prevent~~preventing losses relating to our commercial real estate portfolio. Management has implemented controls to monitor our commercial real estate lending concentrations, but we cannot predict the extent to which this guidance will continue to impact our operations or capital requirements.

Changes in accounting standards or assumptions in applying accounting policies could adversely affect us.

Our accounting policies and methods are fundamental to how we record and report on our financial condition and results of operations. Some of these policies require use of estimates and assumptions that may affect the reported value of our assets or liabilities and results of operations and are critical because they require management to make difficult, subjective and complex judgments about matters that are inherently uncertain. If those assumptions, estimates or judgments were incorrectly made, we may be required to correct and restate prior-period financial statements. Accounting standard-setters and those who interpret the accounting standards, the SEC, banking regulators and our independent registered public accounting firm may also amend or even reverse their previous interpretations or positions on how various standards should be applied. These changes may be difficult to predict and could impact on how we prepare and report our financial statements. In some cases, we may be required to apply a new or revised standard retrospectively, resulting in us revising prior-period financial statements.

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Financial Reporting Risks

Failure to maintain an effective internal control environment could result in us not being able to accurately report our financial results, prevent or detect fraud, or provide timely and reliable financial information pursuant to our reporting obligations, which could have a material adverse effect on our business, financial condition, and results of operations. Further, it could cause our investors to lose confidence in the financial information we report, which could affect the trading price of our common stock.

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Management regularly reviews and updates our disclosure controls and procedures, including our internal control over financial reporting. Any system of controls, however well designed and operated, is based in part on certain assumptions and can provide only reasonable, not absolute, assurances that the objectives of the system are met. Any failure or circumvention of our controls and procedures or failure to comply with regulations related to controls and procedures could have a material adverse effect on our business, results of operations and financial condition.

During the year end December 31, 2023, management identified material weaknesses in its internal controls over financial reporting related to (i) properly assessing the accounting treatment for certain loan transfer transactions, (ii) properly assessing the accounting treatment for an agreement with a third-party to originate and manage a portfolio of consumer loans, and (iii) a process to evaluate expected credit losses on its third-party originated and managed consumer loan portfolio. Management also identified a material weakness in its internal controls over financial reporting related to (ii) above during the year ended December 31, 2022. While management believes it has put effective controls in place to remediate the previously identified material weaknesses, the controls have not been operating for a sufficient amount of time to conclude that the material weakness has been fully remediated. If management fails to timely and effectively remediate the deficiency in its control environment for these accounting issues it could result in additional incorrect accounting application to similar transactions in the future which may have a material adverse effect on our financial condition.

Item 1B. Unresolved Staff Comments

Primis Financial Corp. does not have any unresolved staff comments from the SEC to report for the year ended December 31, ~~2024~~2025.

Item 1C. Cybersecurity

The Company has developed and maintains a Cyber and Information Security program that aligns with applicable regulatory guidance and industry best practices, and is intended to ensure the confidentiality, integrity, and availability of the Company’s critical systems and information, including employee and customer non-public personal information, financial data, and non-public information about the Company. Cybersecurity risk is a key factor in assessing the Company’s overall operational and regulatory risk and is a component of the Company’s overall Enterprise Risk Management framework. The Cyber and ~~Strategy~~Information Security program is designed, in part, to identify risks to sensitive information, protect that information, detect threats and events, and maintain an appropriate response and recovery capability to help ensure resilience against information security incidents.

The Company has designed the Cyber and Information Security program based in part on the NIST Cybersecurity Framework. Use of the NIST Cybersecurity Framework does not imply that the Company meets any particular technical standards, specifications, or requirements, but rather the NIST Cybersecurity Framework is used as a guide to help identify, assess, and manage cybersecurity risks relevant to the Company’s business.

The ~~Bank’s~~Cyber ~~information~~and ~~security~~Information Security program is ~~designed~~led toby ~~protect~~the ~~sensitive,~~CIO ~~confidential,~~ and ~~non-public~~the ~~personal information~~designated ~~from~~Information ~~unauthorized~~Security ~~access~~Officer, ~~use,~~who ~~disclosure,~~manages ~~alteration,~~the orday-to-day ~~destruction,~~cybersecurity ~~and~~operations. toGovernance ~~maintain~~of the ~~confidentiality,~~program ~~integrity,~~is provided by the Information Technology Steering Committee and ~~availability~~the Board of ~~our~~Directors’ ~~information~~Risk ~~assets,~~Committee. ~~including~~The ~~employee~~CIO ~~and~~periodically ~~customer~~attends ~~non-public~~Board ~~personal~~Risk ~~information,~~Committee ~~financial~~meetings ~~data,~~ and ~~internal~~provides ~~operational~~quarterly ~~information~~cybersecurity updates to this Board committee. Our ~~Chief~~CIO ~~Information~~helps ~~Officer~~facilitate ~~(“CIO”)~~the ~~manages~~involvement ~~our~~of ~~information~~the ~~security~~Board ~~strategy~~Risk Committee in oversight of potentially material cybersecurity incidents and ~~development~~risks asand ~~overseen~~supports bythe ~~our~~information ~~overarching~~security ~~Enterprise~~risk ~~Risk~~oversight ~~Management~~responsibilities ~~(“ERM”)~~of ~~program.~~the Board and the Board Risk Committee.

The Company’s IT team monitors its networks and systems to detect potential suspicious or malicious events, monitors threat intelligence sources to research evolving threats, investigates the potential impact to the Company, reviews controls to detect and defend against those threats, and proactively adjusts controls against those threats. A third-party managed security service provider supplements the IT team’s efforts to provide 24 hours a day, seven days a week network monitoring coverage. The Company also performs periodic vulnerability scans and penetration testing.

~~The~~Other ~~Bank~~important components of the Company’s ~~cybersecurity~~Cyber ~~program,~~and ~~including~~Information ~~our~~Security ~~information~~program ~~security~~include ~~policies,~~maintaining isa ~~designed~~Cyber toand ~~align~~Information ~~with~~Security ~~regulatory~~Risk ~~guidance~~Assessment, and ~~industry~~policies ~~practices.~~and Toprocedures ~~protect~~that ~~our~~define ~~information~~the ~~systems,~~program ~~network,~~ and ~~information~~establish ~~assets~~standards ~~from~~for ~~cybersecurity~~safe ~~threats~~storage, wehandling, ~~use~~and ~~various~~secure ~~security~~disposal ~~tools,~~of ~~products,~~customer and ~~processes~~employee ~~that~~information. ~~help~~All ~~identify,~~employees ~~prevent,~~receive ~~investigate,~~cyber and ~~remediate~~information ~~cybersecurity~~security ~~threats~~training during employment orientation and ~~security~~at ~~incidents~~least annually thereafter.

The Bank’s Network Team monitors threat intelligence sources to research evolving threats, investigates the potential impact to financial services companies, examines company controls to detect and defend against those threats, and proactively adjusts company defenses against those threats. The Network Team also actively monitors the Bank’s networks and systems to detect suspicious or malicious events, and contracts with third-party consultants to perform penetration testing and routine vulnerability scans. A third-party managed security service provider supplements our efforts to provide 24 hours a day, seven days a week coverage.

We maintain policies and procedures for the safe storage, handling, and secure disposal of customer and employee information. Each employee is expected to be responsible for the security and confidentiality of customer information, and we communicate this responsibility to employees upon hiring and regularly throughout their employment. Annually, we provide employees with mandatory security awareness training. The curriculum includes the recognition and appropriate handling of potential phishing emails, which could place sensitive customer or employee information at risk. We employ a number of technical controls to mitigate the risk of phishing emails targeting employees.

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As part of our information security program, we have adopted a Cyber Incident Response Plan (“Incident Response Plan”) which is administered by our CIO who closely coordinates with the Bank’s Information Technology team. The Incident Response Plan describes the Bank’s processes, procedures, and responsibilities for responding to cybersecurity incidents, and identifies those team members responsible for assessing potential security incidents, declaring an incident, and initiating a response. The Incident Response Plan outlines action steps for investigating, containing, and remediating a cybersecurity incident, and includes procedures for escalation and reporting of potentially significant cybersecurity incidents to the Bank’s Executive Management, including the Chief Executive Officer (“CEO”), Chief Financial Officer (“CFO”), Chief Risk Officer (“CRO”), and the Board of Directors. We regularly test the Incident Response Plan, including through tabletop exercises, and document lessons learned. As necessary, the Company may retain a third-party firm to assist with forensic investigation and management of cybersecurity incidents.

The Bank conducts due diligence prior to engaging third-party service providers which have access to the Bank’s networks, systems, and/or customer or employee data. Risk assessments are performed using Service Organization Controls (SOC) reports, self-attestation questionnaires, and other tools. Third-party service providers are required to comply with the Bank’s policies regarding non-public personal information and information security. Third parties processing non-public personal information are contractually required to meet legal and regulatory obligations to protect customer data against security threats or unauthorized access. After contract execution, Primis conducts ongoing monitor of third-party service providers/vendors on a risk-based approach.

We continue to optimize our business continuity and disaster recovery plans aligned to the pervasive nature of cybersecurity incidents and threats. We also increased our cyber insurance which aligned to strengthen our internal systems. While the Bank has encountered, and will continue to encounter, cyber incidents in the normal course of business, to date, the Bank has not experienced a cybersecurity incident that has materially impacted our business strategy, financial condition, or results of operation. Despite our ongoing efforts to continually strengthen our cybersecurity program, there can be no assurance that our cybersecurity risk management processes and measures described will be fully implemented, complied with, or effective in safeguarding our systems and information. We face risks from certain cybersecurity threats that, if realized, could reasonably be expected to materially affect our business strategy, financial condition, or results of operation. See “Item 1A. Risk Factors – Operational Risks” in this 10-K for additional information.

Cybersecurity Governance

Our Board of Directors is responsible for overseeing the Bank’s business and affairs, including risks associated with cybersecurity threats. The ERM Committee (“ERMC”) of the Board has primary responsibility for overseeing the Bank’s comprehensive ERM program, including its cybersecurity program. The ERM program assists the Executive Management in identifying, assessing, monitoring, and managing risk, including cybersecurity risk, in a rapidly changing environment. Cybersecurity matters and assessments are regularly included in both Audit Committee (“AC”) and ERMC meetings.

The Board’s oversight of cybersecurity risk is supported by our CIO. The CIO attends ERMC meetings and provides cybersecurity updates to these Board committees on a quarterly basis. Our CRO, in conjunction with our CIO, facilitates the involvement of the ERMC in oversight of potentially significant cybersecurity incidents.

The Bank’s CIO directs the Bank’s information security program and our information technology risk management. In this role, in addition to the responsibilities discussed above, the CIO manages the Bank’s information security and day-to-day cybersecurity operations and supports the information security risk oversight responsibilities of the Board and its committees. The CIO is also responsible for the Bank’s information technology governance, risk, and compliance program and ensures that high level risks receive appropriate attention. Led by our CIO, the Network Team examines risks to the Bank’s information systems and assets, designs and implements security solutions, monitors the environment, and provides responses to threats. Our CIO has worked in the financial services industry for over 20 years and held similar roles at other financial institutions including four years as a Chief Information Officer. Our CRO has over three decades of experience in risk management, and our Network Team collectively has over 19 years of experience in cybersecurity operations.

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The Company has adopted a Cyber Incident Response Plan which describes the Company’s procedures for responding to cybersecurity incidents and identifies response team members. The Cyber Incident Response team is responsible for evaluating potential incidents, containing, responding to, and remediating cybersecurity incidents, and communicating significant cybersecurity incidents to Executive Management and the Board of Directors. The Company maintains sufficient business continuity planning processes to ensure recovery and resumption of its operations after a cyberattack.

The Company has deployed a formal vendor management program to create standards when evaluating third-party service providers that may have access to the Company’s networks, systems, and/or customer or employee data. Third-party service providers are required to comply with the Company’s policies regarding the safeguarding of non-public personal information. After contract execution, the Company’s third-party service providers are monitored utilizing a risk-based evaluation process.

Our acting CIO has worked in the financial services industry for over 20 years and held similar roles at other financial institutions including five years as a Chief Technology Officer & Chief Innovation Officer at another bank.

While the Company has encountered, and will continue to encounter, cyber incidents in the normal course of business, to date, the Company has not experienced a cybersecurity incident that has, or is reasonably likely to have, materially impacted its business strategy, financial condition, or results of operation. Despite ongoing efforts to continually strengthen the Cyber and Information Security program, there is no absolute assurance that the program will be fully implemented, complied with, or effective in safeguarding the Company’s networks, systems, and information. See “Item 1A. Risk Factors – Operational Risks” in this 10-K for additional information.

Item 2. Properties

Primis Financial Corp.’s principal office is located at 1676 International Drive, McLean, Virginia. We have an administrative office in Glen Allen, Virginia and an operations center in Atlee, Virginia. Including these main locations, we own 324 properties and ~~leases~~lease 2047 properties,. ~~all~~The majority of ~~which~~our ~~are~~properties ~~used~~owned asand ~~branch~~leased ~~locations~~are or for ~~housing~~ operational units in Virginia, Maryland, Texas, Tennessee and ~~Virginia~~North Carolina. As of December 31, ~~2024~~2025, Primis Bank had twenty-four full-service branches in Virginia and Maryland, and also provided services to customers through certain online and mobile applications. Twenty-two full-service retail branches are in Virginia and two full-service retail branches are in Maryland.

During 2025, the Company executed a sale-leaseback transaction selling 18 of its retail branch properties that included land, land improvements and buildings and subsequently entering into a lease for the same properties. For additional details, see Note 1 - Organization and Significant Accounting Policies, in Part II, Item 8. of this 10-K.

We believe our facilities are in good operating condition, are suitable and adequate for our operational needs and are adequately insured.

Item 3. Legal Proceedings

Primis and Primis Bank are from time to time a party, as both plaintiff and defendant, to various claims and proceedings arising in the ordinary course of our business, including administrative and/or legal proceedings that may include employment-related claims, as well as claims of lender liability, breach of contract, and other similar lending-related claims. While the ultimate resolution of these matters cannot be determined at this time, the ~~Bank~~Company’s management presently believes that such matters, individually and in the aggregate, will not have a material adverse effect on our financial condition or results of operations. There are no proceedings pending, or to management’s knowledge, threatened, that represent a significant risk against ~~Primis~~the orCompany ~~Primis Bank~~ as of December 31, ~~2024~~2025.

Item 4. Mine Safety Disclosures.

Not applicable.

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PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Common Stock Market Prices

Primis’ common stock is traded on the ~~Nasdaq~~NASDAQ ~~Global Market~~ under the symbol “FRST”. There were 24,~~722~~699,~~734~~185 shares of our common stock outstanding at the close of business on ~~April~~February 1527, ~~2025~~2026, which were held by 1,~~099~~056 shareholders of record. As of that date, the closing price of our common stock on the NASDAQ Global Market was $813.2421.

Recent Sales of Unregistered Securities

None.

Securities Authorized for Issuance under Equity Compensation Plans

As of December 31, ~~2024~~2025, Primis had outstanding stock options granted under the 2010 Stock Awards and Incentive Plan (the “2010 Plan”) and the 2017 Equity Compensation Plan (the “2017 Plan”), which were approved by its shareholders. The following table provides information as of December 31, ~~2024~~2025 regarding Primis’ equity compensation plans under which our equity securities are authorized for issuance:


							Number of securities
							remaining available for
							future issuance under
		Number of securities		Weighted average			equity compensation plans
		to be issued upon exercise		exercise price of			(excluding securities reflected
		of outstanding options			outstanding options		in column A)
Plan category		A		B			C
Equity compensation plans approved by security holders		17,800		$	11.99		250,216
Equity compensation plans not approved by security holders		—			—		—
Total		17,800		$	11.99		250,216

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				Number of securities
				remaining available for
				future issuance under
	Number of securities	Weighted average		equity compensation plans
	to be issued upon exercise	exercise price of		(excluding securities reflected
	of outstanding options		outstanding options	in column A)
Plan category	A	B		C
Equity compensation plans approved by security holders	35,800	$	11.73	380,916
Equity compensation plans not approved by security holders	—		—	—
Total	35,800	$	11.73	380,916

Issuer Purchases of Equity Securities

On December 1918, ~~2024~~2025, the Board of Directors of the Company authorized a stock repurchase program (the “Stock Repurchase Program”) under which the Company may repurchase up to ~~740~~750,~~600~~000 shares of its common stock. The Stock Repurchase Program began on December 1918, ~~2024~~2025, near the end of the previously authorized repurchase plan, and will end on December 1918, ~~2025~~2026.

Repurchases under the Stock Repurchase Program ~~may~~could be made from time to time through open market purchases, privately negotiated transactions or such other manners as will comply with applicable laws and regulations. The timing and actual number of shares repurchased ~~will~~depended ~~depend~~ on a variety of factors including price, corporate and regulatory requirements, market conditions and other corporate liquidity requirements and priorities.

The Stock Repurchase Program ~~does~~did not obligate the Company to purchase any particular number of shares and there iswas no guarantee as to the exact number of shares that ~~will~~could be repurchased by the Company. The Stock Repurchase Program ~~may~~could be suspended, modified or terminated by the Company at any time and for any reason, without prior notice.

There were no repurchases made during 2024 under the Stock Repurchase Program or previous stock repurchase programs.

Dividends

We declared the first cash dividend on our common stock in February 2012, and each quarter thereafter through 2024. There are a number of restrictions on our ability to pay dividends. It is the policy of the FRB that bank holding companies should pay cash dividends on common stock only out of income available over the past year and only if prospective earnings retention is consistent with the organization’s expected future needs and financial condition. The policy provides that bank holding companies should not maintain a level of cash dividends that undermines the bank holding company’s ability to serve as a source of strength to its banking subsidiaries. Banking regulations require maintaining certain capital levels and may limit the dividends paid by the Bank to Primis or by Primis to shareholders. The Company’s ability to pay dividends to stockholders is largely dependent upon the dividends it receives from the Bank, and the Bank is subject to regulatory limitations on the amount of cash dividends it may pay.

Performance Graph

The following chart compares the cumulative total shareholder return on Primis common stock during the five years ended December 31, 2024, with the cumulative total return of the Russell 2000 Index and the NASDAQ Bank Index for the same period. Dividend reinvestment has been assumed. This comparison assumes $100 invested on December 31,

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~~2019~~The infollowing ~~Primis~~table ~~common~~sets ~~stock,~~forth ~~the~~information ~~Russell~~regarding ~~2000~~purchases ~~Index~~of ~~and~~our ~~the~~common ~~NASDAQ~~stock ~~Bank~~related ~~Index.~~to ~~The~~our ~~historical~~share ~~stock~~repurchase ~~price~~program ~~performance~~made ~~for~~by ~~Primis~~us ~~common~~or ~~stock shown~~ on ~~the~~our ~~graph~~behalf ~~below~~during isthe ~~not~~three ~~necessarily~~months ~~indicative~~ended ofDecember ~~future~~31, ~~stock performance.~~2025:


	2019	2020	2021	2022	2023	2024
Primis Financial Corp.	100.00	76.87	98.12	79.61	88.81	84.65
Russell 2000 Index	100.00	119.96	137.74	109.59	128.14	142.93
NASDAQ Bank Index	100.00	89.37	124.84	101.92	95.12	111.03


Issuer Purchases of Equity Securities
					Approximate
				Total Number of	Dollar Value of
				Shares	Shares that May
	Total			Purchased as	Yet be
	Number of	Average		Part of Publicly	Purchased
	Shares	Price Paid		Announced Plan	Under the Plan
Period	Purchased	Per Share		or Program	or Program ⁽¹⁾
Oct 1-31, 2025	—	$	—	—	$	8,065,134
Nov 1-30, 2025	—		—	—		8,316,938
Dec 1-31, 2025	—		—	—		10,432,500
Total	—	$	—	—

(1)

In December 2025, our Board of Directors approved a new share repurchase program authorizing the purchase of up to 750,000 shares of our outstanding common stock beginning on December 18, 2025 and ending on December 18, 2026. This share repurchase authorization replaced our prior share repurchase program authorization that authorized up to 740,600 shares to be repurchased. The actual amount and timing of future share repurchase, if any, will depend on market and economic conditions, regulatory rules, applicable SEC rules, and various other factors.

Dividends

We declared the first cash dividend on our common stock in February 2012, and each quarter thereafter through 2025. There are a number of restrictions on our ability to pay dividends. It is the policy of the FRB that bank holding companies should pay cash dividends on common stock only out of income available over the past year and only if prospective earnings retention is consistent with the organization’s expected future needs and financial condition. The policy provides that bank holding companies should not maintain a level of cash dividends that undermines the bank holding company’s ability to serve as a source of strength to its banking subsidiaries. Banking regulations require maintaining certain capital levels and may limit the dividends paid by the Bank to Primis or by Primis to shareholders. The Company’s ability to pay dividends to stockholders is largely dependent upon the dividends it receives from the Bank, and the Bank is subject to regulatory limitations on the amount of cash dividends it may pay.

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Performance Graph

The following chart compares the cumulative total shareholder return on Primis common stock during the five years ended December 31, 2025, with the cumulative total return of the Russell 2000 Index and the NASDAQ Bank Index for the same period. Dividend reinvestment has been assumed. This comparison assumes $100 invested on December 31, 2020 in Primis common stock, the Russell 2000 Index and the NASDAQ Bank Index. The historical stock price performance for Primis common stock shown on the graph below is not necessarily indicative of future stock performance.


		2020		2021		2022		2023		2024		2025
Primis Financial Corp.		100.00		127.63		103.56		115.52		110.11		136.41
Russell 2000 Index		100.00		114.82		91.35		106.82		119.14		134.40
NASDAQ Bank Index		100.00		142.91		119.65		115.54		139.30		149.15

Item 6. [Reserved]

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 7 of our Annual Report on Form 10-K generally discusses year-to-year comparisons between the years ended December 31, ~~2024~~2025 and ~~2023~~2024. Discussions of comparisons between ~~2023~~2024 and ~~2022~~2023 are not included in this ~~Form10~~Form 10-K, but can be found in “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, ~~2023~~2024 as filed with the SEC on ~~October~~April 1529, ~~2024~~2025.

~~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~~the Company. This discussion and analysis should be read with the consolidated financial statements, the footnotes thereto, and the other financial data included in this report.

CRITICAL ACCOUNTING ESTIMATES AND POLICIES

We follow accounting and reporting policies that conform, in all material respects, to accounting principles generally accepted in the U.S. and to general practices within the financial services industry. The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. While we base estimates on historical experience, current information and other factors deemed to be relevant, actual results could differ from those estimates.

We consider accounting estimates to be critical to reported financial results if (i) the accounting estimate requires management to make assumptions about matters that are highly uncertain and (ii) different estimates that management reasonably could have used for the accounting estimate in the current period, or changes in the accounting estimate that are reasonably likely to occur from period to period, could have a material impact on our financial statements.

Allowance for credit losses

Accounting policies related to the allowance for credit losses on financial instruments including loans and off-balance-sheet credit exposures are considered to be critical as these policies involve considerable subjective judgment and estimation by management. In the case of loans, the allowance for credit losses is a contra-asset valuation account, calculated in accordance with ASC 326, which is deducted from the amortized cost basis of loans to present the net amount expected to be collected.

In the case of off-balance-sheet credit exposures, the allowance for credit losses is a liability account, calculated in accordance with ASC 326. The allowance is reported as a component of other liabilities in our consolidated balance sheets. Adjustments to the allowance are reported in our income statement as a component of noninterest expenses.

The amount of each allowance account represents management's best estimate of current expected credit losses on these financial instruments considering available information, from internal and external sources, relevant to assessing exposure to credit loss over the contractual term of the instrument. We ~~consider~~use ainternal ~~number~~factors ofincluding ~~external~~loan ~~economic~~balances, ~~variables~~credit inquality, ~~developing~~contractual ~~the~~life ~~allowance~~of ~~including~~loans, ~~the~~and ~~Virginia~~historical ~~Unemployment~~loss ~~Rate,~~experience. ~~Virginia~~While ~~House~~historical ~~Price~~credit ~~Index~~loss ~~(“HPI”),~~experience ~~Virginia~~provides ~~Gross~~the ~~Domestic~~basis ~~Product~~for ~~(“GDP”),~~the ~~and,~~estimation ~~National~~of ~~Unemployment~~expected ~~and~~credit ~~National~~losses, ~~Gross~~adjustments ~~Domestic~~to ~~Product~~historical ~~for~~loss ~~pools~~information ofmay ~~loans~~be ~~with~~made ~~borrowers~~for ~~outside~~differences ofin ~~our~~current ~~local~~portfolio-specific ~~operating~~risk ~~footprint.~~characteristics, Inenvironmental ~~determining~~conditions ~~forecasted~~or ~~expected~~other ~~losses,~~relevant wefactors. ~~use Moody~~Management’s ~~economic~~primary ~~variable~~qualitative ~~forecasts~~factors ~~and~~utilized ~~apply~~in ~~probability~~informing ~~weights~~qualitative adjustments to the ~~related~~modeled ~~economic~~allowance ~~scenarios.~~calculations Weare ~~also use internal factors including~~ loan-to-value ~~balances~~exceptions, ~~credit~~borrower ~~quality,~~debt ~~contractual~~service ~~life~~coverage ~~of loans~~exceptions, and ~~historical~~large ~~loss experience~~concentrations. ~~While~~As ~~historical~~of ~~credit~~December ~~loss~~31, ~~experience~~2025, ~~provides~~ the ~~basis~~qualitative ~~for~~adjustments ~~the~~applied ~~estimation~~by ofmanagement ~~expected~~increased ~~credit~~our ~~losses,~~modeled ~~adjustments~~allowance tothat was based on historical loss information, ~~may~~but bedid ~~made~~not ~~for~~represent ~~differences~~a inmaterial ~~current~~amount ~~portfolio-specific~~of ~~risk~~our ~~characteristics,~~total ~~environmental conditions or other relevant factors~~allowance.

~~Determining~~We ~~the~~consider ~~appropriateness~~a number of ~~the~~external ~~allowance~~economic isvariables ~~complex~~in ~~and~~developing ~~requires~~the ~~judgment~~allowance byincluding ~~management about~~ the ~~effect~~Virginia ofUnemployment ~~matters~~Rate, ~~that~~Virginia ~~are~~House ~~inherently~~Price ~~uncertain.~~Index, ~~While~~Virginia ~~management~~Gross ~~utilizes~~Domestic ~~its~~Product ~~best judgment~~ and ~~information~~National ~~available,~~Unemployment ~~the~~and ~~ultimate~~National ~~adequacy~~Gross ofDomestic ~~our~~Product ~~allowance~~for ~~accounts~~pools isof ~~dependent~~loans ~~upon~~with aborrowers ~~variety~~outside of ~~factors beyond~~ our ~~control,~~local ~~including~~operating ~~the~~footprint. ~~performance~~One of ~~our portfolios,~~ the ~~economy,~~most ~~changes~~significant inand ~~interest~~judgmental ~~rates~~assumptions ~~and~~is the ~~view~~selection and application of ~~the~~expected ~~regulatory~~economic ~~authorities~~forecasts. ~~toward~~In ~~classification~~determining offorecasted ~~assets.~~expected ~~Further~~losses, ~~subsequent~~we ~~evaluations~~use ofMoody’s ~~the~~economic ~~then-existing~~variable ~~loan~~forecasts ~~portfolio,~~and inapply ~~light~~probability ofweights ~~factors~~to ~~existing~~the atrelated ~~the~~economic ~~time~~scenarios. ofDue ~~subsequent~~to ~~evaluation~~the ~~may~~inherent ~~result~~uncertainty in ~~significant~~the ~~changes~~macroeconomic toforecasts, ~~the~~we ~~allowance.~~evaluate a baseline

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scenario, as well as a downside macroeconomic scenario to assess the most reasonable scenario based on review of the variable forecasts for each scenario, comparison to expectations, and sensitivity of variations in each scenario. The Moody’s forecast scenarios are reviewed by management quarterly and probability weightings are assigned based on management’s judgment. As of December 31, 2025, management concluded on a more neutral weighting of baseline versus downside scenario. While management uses its judgment, there is no certainty that future economic conditions will resemble the neutral weighting applied to our modeling and others could examine the same data and arrive at a different judgment around weighting of the economic scenario that when applied to the model could result in a smaller or larger allowance than the one we determined.

Determining the appropriateness of the allowance is complex and requires judgment by management about the effect of matters that are inherently uncertain. While management utilizes its best judgment and information available, the ultimate adequacy of our allowance accounts is dependent upon a variety of factors beyond our control, including the performance of our portfolios, the economy, changes in interest rates and the view of the regulatory authorities toward classification of assets. Further, subsequent evaluations of the then-existing loan portfolio, in light of factors existing at the time of subsequent evaluation may result in significant changes to the allowance.

Goodwill

As required under U.S. GAAP, we test goodwill for impairment at least annually and more frequently if there are indications that goodwill could be impaired. Our annual goodwill impairment testing date is September 30 and accordingly, we performed testing as of September 30, ~~2024~~2025 of our two reporting units that include goodwill. For our assessment of goodwill as of September 30, ~~2024~~2025, we performed a step one quantitative assessment to determine if the fair value of the Primis Bank and the Primis Mortgage reporting units were less than their carrying amount. As part of the testing, we engaged an independent valuation firm to quantitatively estimate the fair value of each reporting unit so that it could be compared to the carrying value in assisting us in determining if impairment existed.

Our assessment of the reporting units includes the use of three or four approaches, each receiving various weightings to determine an ultimate fair value estimate: (1) the comparable transactions method that is based on comparison to pricing ratios recently paid in the sale or merger of comparable institutions; (2) the control premium approach that is based on the Company’s trading price, adjusted for holding company assets and an industry based control premium; (3) the public market peers control premium approach that is based on market pricing ratios of similar public companies adjusted for an industry based control premium, and (4) a discounted cash flow method (an income method), taking into consideration expectations of our growth and profitability going forward. The assessment included use of various assumptions and inputs into the modeling approaches, including creating a baseline and conservative scenarios that stressed certain assumptions such as projected cash flows and the discount rate.

Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions and factors. As a result, there can be no assurance that the estimates and assumptions made for purposes of the goodwill impairment testing as of September 30, ~~2024~~2025 will prove to be an accurate prediction of the future. Changes in assumptions, market data (for market-based assessments), or the discount rate (for income based assessments) could produce different results that lead to higher or lower fair value determinations compared to the results of our annual impairment testing performed as of September 30, ~~2024~~2025. Further, because the use of inputs and assumptions are highly judgmental an analysis performed to assess the fair value of our reporting units by others may ~~results~~result in higher, lower, or the same fair value determination and goodwill impairment decision through the use of their judgment in application of similar inputs and assumptions as we used. As a result of our testing, we determined that the estimated fair value of both reporting units was higher than their respective carrying values. As of September 30, ~~resulting~~2025, inthe estimated fair value of the Primis Bank and Primis Mortgage reporting units was 118% and 117%, respectively, of the carrying value of the reporting units, and no goodwill impairment was required. The Company performed a qualitative assessment to identify any triggering events as of ~~September~~December 3031, ~~2024~~2025 and determined there were not any triggering events that would indicate that it was not more likely than not that the fair value of either reporting unit was less than its carrying value.

Because of the decision made subsequent to September 30, 2024 to sell a majority of the Consumer Program loan portfolio, we performed a qualitative assessment as of December 31, 2024 to determine if this change to the business resulted in a change in the estimated fair value of the Primis Bank reporting unit. Based on our qualitative assessment, which included updating discounted cash flow analyses to consider the projected run-off of income from the Consumer Program, Primis determined that it was not more likely than not that the fair value of the Primis Bank reporting unit was less than its carrying value as of December 31, 2024.

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Third-party originated and serviced consumer loan portfolio

In the second half of 2021, we partnered with a ~~third-party (the “Third Party Originator/Servicer” or “~~TPOS”) to originate and service unsecured consumer loans through their proprietary point-of-sale technology (the “Consumer Program”). Loan options under the Consumer Program include traditional fully-amortizing loans and promotional loans with no interest, or “same-as-cash”, features if the loan is fully repaid in the promotional window. The loans are originated at par in the Bank’s name and have a term of 5 to 12 years with a much shorter effective life due to amortization and pay downs.

The Consumer Program is governed by multiple interrelated agreements including the loan agreement between the Bank and the customer and agreements with the TPOS. The structure of the Consumer Program is intended to generate loans that yield a targeted return to the Bank on a portfolio basis while also providing limited credit enhancement from the TPOS. Key characteristics of the combined arrangement include:

●

The TPOS contributes funds to a reserve account at the time of origination to be used for future charge-offs if necessary.

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●

When a promotional loan pays off prior to the end of the promotional period, the customer owes no interest on the loan and any interest accrued during the period is waived. In that event, the TPOS reimburses the Bank for the interest the customer otherwise would have paid if the promotional period didn’t exist.

● Excess yield on the portfolio after realized charge-offs and above an agreed upon target rate due to the Bank is paid to the TPOS as a “~~performance~~Performance ~~fee~~Fee.”

● In the event charge-offs exceed the amount available as a ~~performance~~Performance ~~fee~~Fee, the TPOS remits a portion of current period ~~originations~~origination fees to reimburse for losses and, if necessary, releases funds from the reserve account.

● If charge-offs exceed the amounts above, they roll over to future periods to offset potential ~~performance~~Performance ~~fees~~Fees and subsequent reserve account fundings related to the portfolio.

Under U.S. GAAP, agreements with multiple counterparties, such as the customer and TPOS, are generally required to be accounted for separately even if the agreements are highly interrelated. As a result, we account for the Consumer Program as multiple units of account with the following impacts:

●

The loans are accounted for as one unit of account under U.S. GAAP including revenue recognition and inclusion in our CECL allowance methodology.

o

No interest income is recognized on promotional loans until the expiration of the promotional period. If the customer doesn’t pay off the loan prior to that expiration, deferred interest from the beginning of the loan becomes the obligation of the customer and is billed straight-line over the remaining life of the loan. We recognize the accumulated deferred interest at the time of expiration discounted for the time value of money with the discount amortized over the remaining life of the loan.

●

The agreement that governs the Performance Fee and interest reimbursement from the TPOS is a separate unit of account and meets the definition of a derivative under U.S. GAAP and is accounted for at fair value in our financial statements. The primary drivers of the derivative value include estimated prepayment activity on promotional loans that would trigger reimbursement from the TPOS to us and estimated excess yield above projected credit losses that would lead to performance fee payments from us to the TPOS. The credit risk of the third-party and discount rates used in the calculation also impact the value of the derivative. Changes in the fair value of the derivative are recorded as gains or losses in noninterest income. Additional details on the inputs to the derivative value can be found in Item 8. Financial Statements and Supplementary Data, Note 4 – Derivatives, in this Form 10-K.

~~● Noninterest income each period includes actual amounts received during the period for interest reimbursement and amounts paid by the TPOS under the limited credit enhancement described above.~~47

● Noninterest expense each period includes actual amounts paid during the period for performance fees and servicing fees as defined in our agreement with the TPOS.

We had $152.1 million and $199.3 million of loans outstanding in the Consumer Program, or 5% and 6% of our total gross loan portfolio, as of December 31, 2024 and 2023, respectively. As of December 31, 2024, $113.2 million is included in loans held for sale at lower of cost or market as a result of our decision to pursue a sale of that portion of the portfolio. As of December 31, 2024 and 2023, $38.9 million and $199.3 million are included in loans held for investment. As of December 31, 2024, 22% of the principal balance of loans were in a promotional period requiring no payment of interest on their loans with 86% of these promotional loan periods ending during 2025.

During 2024, the TPOS requested the ability to finance its requirement to reimburse us for interest when a promotional loan pays off prior to the end of the promotional period as a result of the large volume of loans expected to end their promotional period in the second half of 2024 and first half of 2025. We agreed to provide financing in the form of a collateral secured term loan (the “TPOS Loan”) that was underwritten in accordance with our customary lending and

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~~underwriting~~● ~~policies.~~Noninterest ~~The~~income ~~loan~~each ~~allows~~period ~~for~~includes aamounts ~~maximum~~due ~~borrowing~~during ~~capacity of $10 million, but any borrowing above $5 million requires~~ the ~~TPOS~~period tofor ~~provide documentation of additional capital infusion since the original loan underwriting and approval. The TPOS Loan requires quarterly~~ interest ~~payments~~reimbursement ~~that may be capitalized to the principal of the note~~ and ~~the~~amounts ~~principal~~paid isby ~~due at~~ the ~~note~~TPOS ~~maturity~~under ~~date of September 30, 2030. As of December 31, 2024,~~ the ~~balance~~limited ofcredit ~~the~~enhancement ~~note~~described ~~is $2~~above.~~7 million.~~

In● ~~the~~Noninterest ~~fourth~~expense ~~quarter~~each ofperiod ~~2024,~~includes weactual ~~made~~amounts ~~the~~due ~~decision~~during ~~to cease originating new loans under~~ the ~~Consumer~~period ~~Program effective January 31, 2025 and moved a large portion of the portfolio, with an amortized cost of $133.2 million, to loans held~~ for ~~sale~~Performance ~~and~~Fees ~~marked them to fair market value. The adjustment to fair market value resulted in additional provision expense~~ and ~~charge-offs~~servicing offees ~~$20.0~~as ~~million~~defined in ~~the~~our ~~fourth~~agreement ~~quarter~~with ~~of 2024. The remaining portion of~~ the ~~portfolio still classified as held for investment of approximately $38~~TPOS.~~9 million as of December 31, 2024 has an associated allowance for credit losses of $16.3 million and is expected to run off substantially in 2025.~~

AsIn ~~noted, we moved a large portion of~~ the ~~Consumer~~fourth ~~Portfolio~~quarter ~~to held for sale as~~ of ~~December 31,~~ 2024, ~~which~~the ~~included~~Company amade ~~$20~~the ~~million~~decision ~~adjustment~~ to ~~reflect~~cease itoriginating atnew ~~the~~loans ~~lower~~under ofthe ~~cost~~Consumer orProgram, ~~market.~~effective ~~The~~January ~~charge~~31, ~~was~~2025 ~~taken~~and ~~against~~moved ~~our~~a ~~allowance~~large ~~for~~portion ~~credit~~of ~~losses~~the inportfolio, ~~accordance~~ with ~~applicable~~an ~~regulatory~~amortized ~~guidance.~~cost ~~The basis for determining the market price~~ of ~~our~~$133 ~~portfolio~~million, ofto loans ~~to be~~ held for sale ~~included~~and ~~third-party~~marked ~~bid~~them ~~pricing~~to on the ~~portfolio~~lower asof acost ~~result~~or offair amarket ~~marketing~~value. ~~effort~~The inadjustment ~~December~~to ~~2024.~~fair Wemarket ~~received~~value aresulted ~~range~~in ofadditional ~~bid~~provision ~~prices~~expense ~~based~~and oncharge-offs ~~limited~~of ~~diligence~~$20 ~~having~~million ~~been~~during ~~performed~~the asyear ofended December 31, 2024~~, by potential third-party buyers~~. ~~Following~~The ~~the~~remaining ~~marketing~~portion ~~and bid process, we entered into a non-binding agreement with one~~ of the ~~third-parties to agree to sell the~~ portfolio at their bid price that was contingent on the party performing additional diligence. A sales contract with final terms and pricing if the party decides to purchase the loans would be prepared and executed after completion of ~~diligence.~~approximately We$39 ~~determined~~million ~~the~~remained ~~fair~~classified ~~value~~as held for ~~the~~investment ~~portfolio~~ as of December 31, 2024. ~~based~~During onthe afirst ~~combination~~quarter of 2025 the ~~purchase~~Company ~~price~~made ~~indicated in~~ the ~~non-binding~~decision ~~agreement~~to ~~and~~retain ~~the~~until ~~other~~their ~~bids~~maturity ~~received~~or inpayoff the ~~marketing~~loans ~~process.~~previously ~~The~~transferred ~~non-binding~~to ~~price~~held ~~was~~for ~~not~~sale. ~~relied~~The ~~upon~~loans ~~exclusively,~~were ~~although~~transferred ~~weighted~~back ~~more~~to ~~heavily~~held infor ~~our~~investment ~~analysis,~~at ~~because~~their itthen ~~was~~current ~~non-binding~~amortized ~~and~~cost ~~the~~basis ~~ultimate~~at ~~price~~ the ~~party~~time isof ~~willing~~transfer, towhich ~~pay~~included ~~could change after their diligence so we considered~~ the ~~other~~previous ~~bids~~fair ~~received~~market invalue ~~our~~adjustment ~~analysis~~as torequired ~~form~~by aapplicable ~~more~~accounting ~~comprehensive determination of fair value on the portfolio~~guidance.

~~OVERVIEW~~We had $90 million and $152 million of loans outstanding in the Consumer Program, or 3% and 5% of our total gross loan portfolio, as of December 31, 2025 and 2024, respectively. As of December 31, 2025, all of the Consumer Program loans were in loans held for investment. As of December 31, 2024, $113 million was included in loans held for sale at lower of cost or market and $39 million in the consumer loans category in loans held for investment. Loans in the Consumer Program that are held for investment are included within the Consumer Loan category disclosures in in this 10-K. As of December 31, 2025, 3% of the loans, or $3 million, were in a promotional period, with 80% of these promotional loan periods ending through the second quarter of 2026.

Primis Financial Corp. (“Primis,” “we,” “us,” “our” or the “Company”) is the bank holding company for Primis Bank (“Primis Bank” or the “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. As of December 31, 2024, Primis Bank had twenty-four full-service branches in Virginia and Maryland and also provides services to customers through certain online and mobile applications. Twenty-two full-service retail branches are in Virginia and two full-service retail branches are in Maryland. The Company is headquartered in McLean, Virginia and has an administrative office in Glen Allen, Virginia and an operations center in Atlee, Virginia. Primis Mortgage Company, a residential mortgage lender headquartered in Wilmington, North Carolina, is a consolidated subsidiary of Primis Bank. PFH is a consolidated subsidiary of Primis and 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.

While Primis Bank offers a wide range of commercial banking services, it focuses on making loans secured primarily by commercial real estate and other types of secured and unsecured commercial loans to small and medium-sized businesses in a number of industries, as well as loans to individuals for a variety of purposes. Primis Bank invests in real estate-related securities, including collateralized mortgage obligations and agency mortgage backed securities. Primis Bank’s principal sources of funds for loans and investing in securities are deposits and, to a lesser extent, borrowings. Primis Bank offers a broad range of deposit products, including checking (NOW), savings, money market accounts and certificates of deposit. Primis Bank actively pursues business relationships by utilizing the business contacts of its senior management, other bank officers and its directors, thereby capitalizing on its knowledge of its local market areas.

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~~FINANCIAL~~OPERATIONAL HIGHLIGHTS

~~Income~~Executive ~~Statement~~Overview

●We ~~Net~~organized ~~loss~~the ~~attributable~~core tobank ~~common~~and ~~shareholders~~lines ~~for~~of ~~the~~business ~~year~~in ~~ended~~a ~~December~~way ~~31,~~that ~~2024~~we ~~totaled~~believe ~~$16.2~~will ~~million,~~drive orpremium $0operating results.66 ~~loss~~Our ~~per~~strategy ~~basic~~centers ~~and~~on ~~per~~growing ~~diluted~~earning ~~share,~~assets ~~compared~~back to ~~net~~previous ~~loss~~levels after the sale of ~~$7.8~~our ~~million~~Life Premium Finance division in January 2025, orgrowing ~~$0.32~~non-interest ~~loss~~deposits, ~~per~~and ~~basic~~achieving higher production and ~~diluted~~profitability ~~share~~in ~~for~~our ~~the~~retail ~~year~~mortgage ~~ended~~business. ~~December~~We 31continued to execute successfully during 2025 on our strategies, ~~2023.~~which included the following key highlights:

● Net interest income increased $5.5 million, or 5.6% to $104.2 million for the year ended December 31, 2024, compared to $98.7 million for the year ended December 31, 2023.

● Net interest margin increased to 2.86% for the year ended December 31, 2024, compared to 2.68% for the year ended December 31, 2023.

● Yield on loans held for investment increased to 6.02% during the year ended December 31, 2024 compared to 5.44% during the year ended December 31, 2023. Cost of deposits increased to 2.91% for the year ended December 31, 2024, compared to 2.49% for the year ended December 31, 2023.

● Provision for credit losses were $50.6 million for the year ended December 31, 2024, compared to $32.5 million for the year ended December 31, 2023. The provision in both years was driven by the Consumer Program portfolio that had provisions of $40.0 million and $29.4 million during the years ended December 31, 2024 and 2023, respectively. In 2024, $20.0 million of the provision related to the write-down of the portion of the Consumer Program portfolio being transferred to held for sale.

● We realized a $4.7 million gain on the sale of the LPF loan portfolio, which is recorded in noninterest income.

~~Balance~~Core ~~Sheet~~Community Bank

● ~~Total~~The ~~assets~~core asBank’s ofloan ~~December~~portfolio ~~31,~~was ~~2024~~essentially ~~were~~flat at $32.71 billion, aat ~~decrease~~December of31, ~~4.3%~~2025, compared to $2.2 billion at December 31, ~~2023~~2024. The core Bank has low concentrations of investor commercial real estate loans as a percentage of the overall loan portfolio.

● ~~Total~~The ~~loans~~core ~~held~~Bank’s cost of deposits was 1.74% for ~~investment,~~the asyear ofended December 31, ~~2024~~2025, ~~were~~compared $to 2.915% ~~billion,~~for athe ~~decrease~~year ofended ~~$332.0~~December ~~million~~31, ~~or 10~~2024.3 Approximately 23%, ~~from~~of the core Bank’s deposit base at December 31, ~~2023~~2025, are noninterest bearing deposits.

● ~~Loans~~The ~~held~~core ~~for~~Bank ~~sale~~had aszero ofbrokered ~~December~~deposits ~~31,~~and ~~2024~~low ~~included~~utilization ~~$163.8~~of ~~million~~FHLB ~~held~~borrowings at ~~the~~December ~~lower~~31, ~~of cost or market that comprised LPF loans under contract to be sold in January~~ 2025 ~~and Consumer Program loans being marketed for sale~~.

● Total deposits were $3.2 billion at December 31, 2024, a decrease of 3.0% compared to December 31, 2023.

● Non-interest bearing demand deposits decreased to $438.9 million, or 13.8% of total deposits, as of December 31, 2024, compared to 14.5% of total deposits as of December 31, 2023. Time deposits also decreased to 10.7% of total deposits as of December 31, 2024 compared to 13.6% of total deposits as of December 31, 2023.

● The ratio of gross loans (excluding loans held for sale) to deposits declined to 91.1% as of December 31, 2024, from 98.4% as of December 31, 2023.

● We sold $392.4 million of principal balance of LPF loans to a third party and transferred $133.2 million of Consumer Program loans to held for sale due to our marketing efforts to sell the loans.

● We started a mortgage warehousing line of business which had $63.8 million of principal outstanding as of December 31, 2024, which was yielding an average of Secured Overnight Financing Rate (“SOFR”) plus 340 basis points.

● Allowance for credit losses to total loans was 1.86% at December 31, 2024, compared to 1.62% at December 31, 2023. Excluding the allowance on the Consumer Program loan portfolio the allowance to total loans was 1.29% as of December 31, 2024.

● Asset quality declined slightly from year end with nonperforming assets as a percent of total assets (excluding SBA guarantees) at 0.29% as of December 31, 2024 compared to 0.20% as of December 31, 2023.

● Book value per share of $14.23 as of December 31, 2024, representing a decrease of $1.00 from December 31, 2023, driven by net losses and payment of common stock dividends during the year ended December 31, 2024.

Panacea Financial Division of the Bank

●

Outstanding loan balances grew 25% to $544 million during the year ended December 31, 2025 from $434 million as of December 31, 2024. The year-over-year growth was despite a $54 million loan sale in December 2025.

●

Outstanding deposits were $128 million as of December 31, 2025, up 38% from December 31, 2024.

Mortgage Warehouse

●

Outstanding loan balances as of December 31, 2025 were $318 million, up 398% from $64 million as of December 31, 2024.

●

Mortgage warehouse funded approximately 14% of the outstanding loans with associated customer noninterest bearing deposit balances, which totaled $29 million as of December 31, 2025.

●

Committed facilities were up 252% to $1.2 billion as of December 31, 2025, compared to $349 million as of December 31, 2024.

Primis Mortgage

●

Funded loan volume was $1.2 billion during the year ended December 31, 2025, up 50% from the year ended December 31, 2024.

●

Pre-tax income for PMC was $7 million and $6 million for the year ended December 31, 2025 and 2024, respectively. The year ended December 31, 2025 was impacted by approximately $1 million of personnel costs related to new production teams hired at the end of the first quarter of 2025.

Changes in the relationship with PFH during the first quarter of 2025 resulted in a determination to de-consolidate PFH as of March 31, 2025. The deconsolidation resulted in recognition of a $25 million gain during the year ended December 31, 2025, as a result of recording the fair value of our retained interest in common stock of PFH. As a result of the de-consolidation. we no longer include PFH’s financial results in our financial results after March 31, 2025. In June 2025, we sold a portion of our retained ownership in PFH common shares generating proceeds of $22 million and an additional gain during the year ended December 31, 2025 of $7 million. As of December 31, 2025, we continued to hold approximately 467 thousand shares in PFH recorded in our balance sheet at a fair value of $7 million. PFH continues to work with the Panacea Financial Division of the Bank to originate loans, some of which the Bank will retain, and others which will be sold to investors and other financial institutions.

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SUMMARY OF FINANCIAL RESULTS

Results of Operations Highlights

We experienced significant improvement in financial performance during the year ended December 31, 2025 compared to the year ended December 31, 2024. Net income available to common shareholders for the year ended December 31, 2025 totaled $61 million, or $2.49 basic and diluted earnings per share, compared to a net loss of $16 million, or $0.66 loss per basic and per diluted share, for the year ended December 31, 2024, resulting in an increase year-over-year of $78 million, or 481%. The key financial drivers of the improvement are noted in the following table with additional discussions following the table ($ in thousands).


		Year Ended
		December 31, 2025
		compared to
		December 31, 2024

Net interest income		$	7,206
Provision for credit losses			38,332
Noninterest income			69,210
Noninterest expenses			(13,291)
Provision for income taxes			(18,951)
Noncontrolling interest			(4,858)
Net income attributable to Primis' common stockholders		$	77,648

●

Net interest income increases were driven by declines in interest expenses in 2025 compared to 2024. The interest expense declines were driven by lower average deposit and borrowing balances combined with lower interest rates. During the year ended December 31, 2025 we also had lower average loan balances primarily as a result of the sale of the Life Premium Finance portfolio and significant interest income reversals on the Consumer Program loans due to higher credit losses on these loans, both of which drove interest income down compared to the prior year.

●

Net interest margin increased to 3.12% for the year ended December 31, 2025, compared to 2.86% for the year ended December 31, 2024. The significant driver of this increase were the changes in net interest income as noted above along with a 47 basis points decrease in our cost of funds, driven by the increase in average noninterest bearing deposits.

●

The provision for loan losses decrease during the year ended December 31, 2025 was driven by less reserves in the Consumer Program loan portfolio in 2025 due to higher reserves and charge-offs in 2024 along with enhanced loss mitigation efforts in 2025 that resulted in improved portfolio performance. The provision on the remaining loan portfolio was flat year over year due to a decline in provision related to $54 million of sold loan in December 2025, offset by higher provision on specific commercial and commercial real estate loans during the year.

●

Noninterest income increased during the year ended December 31, 2025 compared to 2024, primarily due to a $51 million gain on the sale-leaseback transaction in the fourth quarter of 2025 and from the $32 million gain on our PFH investment. There was also higher income from mortgage banking activity during the year ended December 31, 2025 compared to the same period in 2024. These gains were partially offset by a $14 million loss on sale of investment securities due to the portfolio restructuring during the fourth quarter of 2025 and a $3 million decline in Consumer Program income primarily due to ending loan originations under the program in January 2025 along with less promo loans ending their promo period in 2025 compared to 2024.

●

The sale-leaseback transaction was undertaken to monetize branch real estate, increase on-balance-sheet liquidity, and provide additional financial flexibility to support our strategic growth initiatives while maintaining continued operational control of our branch locations. The transaction specifically allows us to reallocate capital held on real estate assets to higher-earning assets like loans and securities. The sale-leaseback will add to our operating expenses in future years, but we believe the deployment of the funds received in the transaction into interest earning assets will compensate for the future increase in lease expense.

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●

Noninterest expense increased during the year ended December 31, 2025 compared to 2024 primarily driven by higher personnel costs due to growth in PMC, Mortgage Warehouse, and the Panacea Division of the Bank. We also had higher FDIC insurance assessments and higher occupancy expenses due to increased lease costs in 2025. These were partially offset by fraud losses in 2024 that did not reoccur in 2025, lower miscellaneous lending expenses, and lower core deposit intangible amortization.

Balance Sheet Highlights

●

Total assets increased 10% as of December 31, 2025 when compared to December 31, 2024, primarily due to growth in loans driven by lending at PMC, Mortgage Warehouse, and the Panacea Division.

●

Total LHFI as of December 31, 2025 were $3.3 billion, an increase of $396 million, or 14%, from December 31, 2024. The increase was led by growth in the Mortgage Warehouse loans of $254 million and Panacea Division loans of $110 million since December 31, 2024.

●

Total deposits were $3.4 billion at December 31, 2025, compared to $3.2 billion at December 31, 2024, with growth centered in noninterest bearing demand deposits that grew $116 million, or 26%. Growth was partially driven by increases in deposit account balances in Mortgage Warehouse and the Panacea Division. We had no wholesale deposit funding at December 31, 2025.

●

The ratio of gross loans (excluding loans held for sale) to deposits increased to 96.7% at December 31, 2025, from 91.1% at December 31, 2024.

●

Allowance for credit losses to total loans was down 46 basis points to 1.40% as of December 31, 2025, compared to 1.86% as of December 31, 2024. The decline was driven by improved expected performance in the Consumer Program portfolio due to the significant decline in promotional loans that drove prior credit losses along with enhanced loss mitigation efforts during 2025. The improvement was also impacted by a changing mix of the Bank’s loan portfolio to loan categories with lower reserve requirements and the sales of Panacea Division loans.

●

Asset quality declined from year end with nonperforming assets as a percentage of total assets (excluding SBA guarantees) at 2.03% as of December 31, 2025, compared to 0.29% as of December 31, 2024, a 174 basis point change. This decline was primarily driven by one commercial real estate loan and one commercial relationship comprised of two loans that were placed on nonaccrual in 2025. We have individual reserves on these loans of approximately 18% and are actively working with the borrowers to facilitate a return to performing status.

●

Our capital ratios continued to exceed requirements to be considered well capitalized as of December 31, 2025, with increases in Common Equity Tier 1 and Tier 1 capital ratios of 62 and 59 basis points, respectively, compared to December 31, 2024 and decrease in total risk-based capital of 13 basis points, compared to December 31, 2024.

RESULTS OF OPERATIONS

Net Income (Loss)

Net ~~loss~~income ~~attributable~~available to common shareholders for the year ended December 31, ~~2024~~2025 ~~was~~totaled $~~16.2~~61 million, or $02.6649 ~~loss per~~ basic and diluted earnings per share, compared to net loss of $~~7.8~~16 million, or $0.3266 loss per basic and per diluted share, for the year ended December 31, 2024. The results reflect an increase in noninterest income of $69 million, primarily due to a $51 million gain on a sale-leaseback transaction, $32 million in gains on our investment in PFH, and an increase of $8 million in mortgage banking income, partially offset by a $15 million loss on investment portfolio restructuring in the fourth quarter of 2025. We also had $38 million less provisions for credit losses primarily driven by improvement in the Consumer Program loan portfolio and a $7 million increase in our net interest income driven by lower interest expenses in the current year on deposits and borrowings. These increases were partially offset by an increase in noninterest expenses of $13 million driven primarily by higher personnel costs due to growth in PMC, Mortgage Warehouse, and the Panacea Division of the Bank and an increase in income tax provisions of $19 million from higher pre-tax earnings. Additional details of the changes in net income will be discussed in the remaining sections of this Results of Operations section.

4851

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~~ended~~ December 31, 2023. The results reflect an increase in net interest income of $5.5 million and noncontrolling interests of $6.2 million, offset by higher credit loss provisions of $18.1 million, a decline of $2.1 million in noninterest income and an increase in noninterest expense of $3.0 million. Net interest income increases were driven by higher yields on loans outpacing higher costs on deposits and the increase in noncontrolling interests were related to losses attributable to other stockholders of an entity that we are required to consolidated under U.S. GAAP in which we own approximately 19%. Noninterest income declines were driven by lower Consumer Program derivative income, partially offset by higher mortgage banking income and a gain on sale of a majority of our LPF loan portfolio. Noninterest expense increases were related primarily to higher salaries and benefits and professional fees compared to 2023, offset by no goodwill impairment in the current year. Additional details of the net loss will be discussed in the remaining sections of this Results of Operations section.

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:

Average Balance Sheets and Net Interest Margin

Analysis For the Year Ended

December 31, ~~2024~~2025

December 31, ~~2023~~2024

Interest

Average

Income/

Yield/

Average

Income/

Yield/

Balance

Expense

Rate

Balance

Expense

Rate

(Dollar amounts in thousands)

Assets

Interest-earning assets:

Loans held for sale

85142,~~485~~973

57,~~571~~406

65.5218

4485,~~643~~485

25,~~806~~571

6.2952

Loans, net of deferred fees (1) (2)

3,~~231~~089,~~206~~537

~~194~~181,~~369~~499

65.0287

3,~~126~~231,~~717~~206

~~169~~194,~~982~~369

56.4402

Investment securities

~~245~~240,~~323~~463

7,~~213~~569

23.9415

~~237~~245,~~452~~323

67,~~373~~213

2.6894

Other earning assets

82100,~~757~~591

3,~~816~~968

43.6194

~~281~~82,~~052~~757

133,~~457~~816

4.7961

Total earning assets

3,~~644~~573,~~771~~564

~~210~~200,~~969~~442

5.7961

3,~~689~~644,~~864~~771

~~192~~210,~~618~~969

5.2279

Allowance for credit losses

(5043,~~530~~872)

(3550,~~382~~530)

Total non-earning assets

~~293~~289,~~074~~253

~~296~~293,~~647~~074

Total assets

3,~~887~~818,~~315~~945

3,~~951~~887,~~129~~315

Liabilities and stockholders' equity

Interest-bearing liabilities:

NOW and other demand accounts

~~772~~824,~~099~~985

1817,~~695~~794

2.4216

~~784~~772,~~680~~099

1518,~~404~~695

12.9642

Money market accounts

~~829~~760,~~331~~971

2620,~~923~~534

32.2570

~~831~~829,~~196~~331

2326,~~717~~923

23.8525

Savings accounts

~~825~~873,~~129~~794

3329,~~462~~880

43.0642

~~777~~825,~~143~~129

2933,~~774~~462

34.8306

Time deposits

~~421~~326,~~058~~331

1611,~~582~~229

3.9444

~~474~~421,~~178~~058

1416,~~795~~582

3.1294

Total interest-bearing deposits

2,~~847~~786,~~617~~081

9579,~~662~~437

32.3685

2,~~867~~847,~~197~~617

8395,~~690~~662

23.9236

Borrowings

~~169~~139,~~912~~714

119,~~085~~577

6.5285

~~159~~169,~~442~~912

1011,~~217~~085

6.4152

Total interest-bearing liabilities

32,~~017~~925,~~529~~795

~~106~~89,~~747~~014

3.5404

3,~~026~~017,~~639~~529

93106,~~907~~747

3.1054

Noninterest-bearing liabilities:

Demand deposits

~~441~~473,~~520~~734

~~495~~441,~~107~~520

Other liabilities

3640,~~422~~681

3536,~~494~~422

Total liabilities

3,~~495~~440,~~471~~210

3,~~557~~495,~~240~~471

Primis common stockholders' equity

~~373~~375,~~613~~740

~~393~~373,~~302~~613

Noncontrolling interest

182,~~231~~996

~~587~~18,231

Total stockholders' equity

~~391~~378,~~844~~735

~~393~~391,~~889~~844

Total liabilities and stockholders' equity

3,~~887~~818,~~315~~945

3,~~951~~887,~~129~~315

Net interest income

~~104~~111,~~222~~428

98104,~~711~~222

Interest rate spread

2.2557

2.1225

Net interest margin

23.8612

2.6886

(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 $111 million for the year ended December 31, 2025, compared to $104 million for the year ended December 31, 2024. Net interest income increased as a result of interest-bearing liability costs declining more than the decline in interest-earning asset income which was significantly impacted by the sale of the Life Premium Finance loan portfolio and income reversals on charged-off Consumer Program loans. Our net interest margin for the year ended December 31, 2025 was 3.12%, compared to 2.86% for the year ended December 31, 2024. Margin increased by 26 basis points primarily from higher net interest income on lower average interest-earning assets over those periods.

●

Average earning assets decreased $71 million, or 2%, primarily due to a decline in average total loans of $84 million, or 3%. Decline in average loan balances was driven primarily by the sale of approximately $400 million of our Life Premium Finance loan portfolio in the fourth quarter of 2024 and the decision to run-off the remaining retained life premium finance loans and the decline in average balances of Consumer Program loans of $102 million due to a combination of charge-offs and paydowns. These average loan balance declines were partially offset by continued growth of average Panacea Division loans of $138 million and Mortgage Warehouse loan of $153 million during the year ended December 31, 2025 compared to the same period in 2024. We also had growth in average loans held for sale at PMC of $57 million, or 67%

●

Average interest-bearing liabilities declined by $92 million largely due to maturing time deposits driving average time deposit balances down by $95 million. We also experienced declines in average money market accounts of $68 million, partially offset by growth in demand deposits of $53 million and savings balances of $49 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 51 basis points, in large part due to a decline in the Fed Funds borrowing rate during the year of 75 basis points, which influences our deposit pricing. Interest paid on average borrowings decreased by $2 million due to a decline of $30 million in average borrowings from the prior year.

●

Yields on average interest earning assets decreased 18 basis points driven by lower yields on LHFS and LHFI during the year ended December 31, 2025 compared to the same period in 2024. The sale of our life premium finance loans, which earned higher yields than our average loan portfolio yield, and the significant reversals of Consumer Program loan income due to charge-offs of promotional loans during the year ended December 31, 2025 drove the overall earning asset yield decline. The drop in benchmark lending rates since the year ended December 31, 2024 also impacted the decline as newer production was generally at lower rates in 2025 compared to 2024. Partially offsetting lower loan yields was an increase in yield on investments of 21 basis points during the year ended December 31, 2025 compared to same period in 2024 due to the normal paydowns of investments and reinvesting proceeds in higher yielding securities during the year. Yields on all of our interest bearing deposits declined meaningfully during the year ended December 31, 2025 compared to the year ended December 31, 2024, with declines of 26 to 64 basis points across the portfolio, primarily driven by the decline in benchmark borrowing rates by 75 basis points over that time.

Net interest income was $104.2 million for the year ended December 31, 2024, compared to $98.7 million for the year ended December 31, 2023. Our net interest margin for the year ended December 31, 2024 was 2.86%, compared to 2.68% for the year ended December 31, 2023. Our interest margin increased by 18 basis points as a result of yields on interest earning assets outpacing rates on interest bearing liabilities by 13 basis points along with average earning assets and liabilities both decreasing. This resulted in a $5.5 million increase in net interest income driven by a $27.2 million increase in interest income on loans in the current year compared to last year, partially offset by $12.0 million more interest costs on deposits and $9.6 million less income on other earning assets. Higher lending rates fueled by an increase in benchmark rates and the redeployment of excess cash into higher yielding assets drove interest income. Increase in loan interest income was driven by consumer, commercial, and commercial real estate loan income. The cost of interest bearing liabilities increased primarily due to increases in rates on all interest-bearing liabilities as a result of benchmark interest rates being higher during 2024 when compared to 2023, partially offset by a slight decrease in average interest-bearing liabilities during 2024. The interest on other earning assets declined alongside a decline in average other interest bearing assets as a result of our decision to sweep excess cash off balance sheet beginning at the end of second quarter of 2023. We had raised approximately $1.0 billion in interest bearing deposits in our digital platform during the first six months of 2023 and that amount earned interest for half of the year in 2023, but a significant portion of that cash was swept off of our balance sheet during the second half of 2023. During the year ended December 31, 2024, that cash was redeployed to other earning assets such as investment securities and loans.

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The following table summarizes changes in net interest income attributable to changes in the volume of interest-earning assets and interest-bearing liabilities compared to changes in interest rates. The change in interest, due to both rate and volume, has been proportionately allocated between rate and volume.


	Year Ended
	December 31, ~~2024~~2025 vs. ~~2023~~2024
	Increase (Decrease)
	Due to Change in:
					Net
	Volume		Rate		Change
	(in thousands)
Interest-earning assets:
Loans held for sale	$	2,~~662~~978	$	~~103~~(1,143)	$	21,~~765~~835
Loans, net of deferred fees		5(8,~~825~~392)		18(4,~~562~~478)		24(12,~~387~~870)
Investment securities		~~246~~(167)		~~594~~523		~~840~~356
Other earning assets		~~(9,161)~~462		(~~480~~310)		~~(9,641)~~152

Total interest-earning assets		(~~428~~5,119)		18(5,~~779~~408)		18(10,~~351~~527)

Interest-bearing liabilities:
NOW and other demand accounts		~~(243)~~1,516		3(2,~~534~~417)		~~3,291~~(901)
Money market accounts		(532,096)		3(4,~~259~~293)		3(6,~~206~~389)
Savings accounts		12,~~894~~160		1(5,~~794~~742)		(3,~~688~~582)
Time deposits		(13,~~333~~429)		3(1,~~120~~924)		1(5,~~787~~353)
Total interest-bearing deposits		~~265~~(1,849)		11(14,~~707~~376)		11(16,~~972~~225)
Borrowings		~~680~~(2,110)		~~188~~602		~~868~~(1,508)
Total interest-bearing liabilities		~~945~~(3,959)		11(13,~~895~~774)		12(17,~~840~~733)

Change in net interest income	$	(1,~~373~~160)	$	68,~~884~~366	$	57,~~511~~206

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.

50For the year ended December 31, 2025 and 2024, we had provision for credit losses of $12 million and $51 million, respectively. Decline in provision for credit losses for the year ended December 31, 2025 compared to December 31, 2024 was driven by higher provisions in 2024 primarily related to the Consumer Program loans. We had elevated credit losses during 2024 concentrated in the promotional portion of the Consumer Program portfolio that were largely originated between the third quarter of 2022 and first quarter of 2023 that were exiting their promotional period and defaulting. Due to the majority of these promotional loans ending their promotions in 2024 or the first quarter of 2025, significant reserving in 2024 for these loans, and coupled with our enhanced loss mitigation efforts in 2025, our provisioning for this portfolio was only $1 million during the year ended December 31, 2025, compared to $40 million during the year ended December 31, 2024.

Excluding the provisioning on the Consumer Program portfolio, our provision for credit losses on the remaining loan portfolio was flat year over year. 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.

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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.

The Company recorded a provision for credit losses of $50.6 million and $32.5 million for the years ended December 31, 2024 and 2023, respectively. The provision included amounts calculated in our normal reserve process for the Consumer Program loans which totaled $40.0 million and $29.4 million during the year ended December 31, 2024 and 2023, respectively. We had charge-offs totaling $51.0 million and $16.7 million during the year ended December 31, 2024 and 2023, respectively. During the year ended December 31, 2024 and 2023, $47.6 million and $8.8 million of charge-offs were related to the Consumer Program, respectively. There were recoveries totaling $1.9 million and $1.8 million during year ended December 31, 2024 and 2023, respectively.

Our provision for credit losses during 2024 and 2023 was driven by provisions related to the Consumer Program loan portfolio. Our provision for credit losses related to the Consumer Program loan portfolio were primarily driven by charge-offs centered around loans originated from the third quarter of 2022 through the first quarter of 2023. Losses on these vintages in 2024 and 2023 were $16.9 million and $7.0 million, respectively, or 61% and 79%, respectively, of total losses on the Consumer Program loan portfolio in 2024 and 2023.

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

The following table presents the categories of noninterest income for the years ended December 31, ~~2024~~2025 and ~~2023~~2024 ($ in thousands):


	For the Year Ended
	December 31,
(dollars in thousands)	~~2024~~2025		~~2023~~2024		Change
Account maintenance and deposit service fees	$	5,~~784~~664	$	5,~~733~~784	$	51(120)
Income from bank-owned life insurance		21,~~410~~785		2,~~021~~410		~~389~~(625)
Mortgage banking income		23,919		17,645		6,274
Gains on Panacea Financial Holdings investment		32,342		—		32,342
Gain on other investments		408		184		224
Mortgage banking income		32,387		23,919		8,468
Gain on sale of Life Premium Finance portfolio, net of broker fees		4,723		—		4,723
Gains on sale of loans		1,929		303		1,626
Consumer Program income		4,320		18,120		(13,800)
Gain on sale-leaseback		50,573		—		50,573
Other noninterest income		1,576		1,547		29
Loss on sales of investment securities		(14,777)		—		(14,777)
Total noninterest income	$	43,140	$	45,250	$	(2,110)
Gains on other investments		159		408		(249)
Gain on sale of Life Premium Finance portfolio, net of broker fees		—		4,723		(4,723)
Consumer Program derivative income		1,340		4,320		(2,980)
Other noninterest income		948		1,273		(325)
Total noninterest income	$	112,350	$	43,140	$	69,210

Noninterest income ~~decreased~~increased ~~4.7~~160% to $~~43.1~~112 million for the year ended December 31, ~~2024~~ 2025, compared to $~~45.3~~43 million for the year ended December 31, ~~2023~~ 2024. The ~~decrease~~increase in noninterest income was primarily ~~related~~driven toby a $~~13.8~~51 million ingain ~~lower income~~ on the ~~Consumer~~sale-leaseback ~~Program~~transaction ~~derivative.~~in ~~This~~the ~~decrease~~fourth ~~was~~quarter ~~partially offset by $6.3 million~~ of ~~higher~~2025 ~~mortgage banking income~~ and athe $~~4.7~~32 million gain on ~~sale~~our ofPFH ~~our~~investment, ~~LPF~~which ~~portfolio.~~comprised ~~The~~the ~~Consumer~~gain ~~Program~~on ~~derivative~~deconsolidation ~~income~~of ~~declined~~PFH ~~primarily~~in ~~due~~the tofirst ~~fair~~quarter ~~value~~of ~~loss~~2025 ~~adjustments~~and gain on the ~~derivative~~sale ~~asset~~ of ~~$6.3~~a ~~million~~portion ~~during~~of ~~the~~our ~~year~~retained ~~ended~~ownership ~~December~~in ~~31,~~PFH ~~2024~~and ~~compared to~~ fair value ~~gains~~adjustments ofin ~~$11.3~~2025 ~~million~~to ~~during~~ the ~~year~~remaining ~~months~~common ~~ended~~share ~~December~~investment ~~31, 2023~~retained. The ~~derivative~~increase ~~asset~~was ~~and~~also ~~related gains or losses are~~ driven partially by ~~anticipated~~$8 ~~cash~~million ~~payments~~of ~~due~~higher toincome us from ~~the~~mortgage ~~third-party~~banking ~~when~~activity ~~borrowers~~during ~~prepay~~2025 ~~their~~compared ~~loans~~to ~~in a no-interest promotional period~~2024. ~~During~~The ~~the~~increase ~~year~~in ~~ended~~mortgage ~~2023,~~banking ~~the~~income ~~value~~was ofdue ~~the~~to ~~derivative~~higher ~~and~~gain ~~related~~on ~~gains~~sale ~~were~~income ~~primarily~~ driven by $~~52.3~~922 million ~~of loans with a no-interest promotional period originated~~ in ~~the~~loan ~~last~~sales ~~quarter~~during ~~of 2022 and~~ the ~~first~~year ~~nine~~ended ~~months~~December of31, 2025 ~~2023~~compared ~~with~~to ~~a total of~~ $~~89.4~~706 million of ~~loans~~sales ~~within~~in ~~their~~2024, ~~promo~~a ~~period as of December~~ 31,% ~~2023~~increase. ~~Comparatively,~~We ~~during~~also ~~the~~had ~~year~~$2 ~~ended~~million ~~2024 a nominal amount~~ of ~~no-interest~~additional ~~promotional~~income ~~loans~~in ~~were~~2025 ~~originated~~compared ~~and~~to ~~$50.5~~2024 ~~million~~due ~~ended~~to ~~their~~gains ~~promo~~on ~~period,~~sales ~~with $38.9 million~~ of ~~promo~~ loans ~~as of December 31, 2024~~. ~~Offsetting~~The ~~the~~largest ~~fair~~portion ~~value~~of ~~loss adjustments during~~ the ~~year~~gain ~~ended~~in ~~December~~2025 ~~31,~~was ~~2024~~due ~~and adding~~ to the ~~gains~~sale inof ~~2023 was~~ $~~10.6~~54 million ~~and $6.8 million, respectively,~~ of ~~realized~~Panacea ~~gains~~Division asloans ato ~~result~~another offinancial ~~borrowers~~institution ~~paying~~resulting ~~off~~in ~~their~~over ~~promotional~~$1 ~~period~~million ~~loans before the end~~ of gains.

51The increases were partially offset by a $15 million loss on sale on investment securities in the fourth quarter of 2025 that resulted from our decision to restructure the portfolio by selling securities at lower yields and purchasing securities earning higher yields, declines in Consumer Program derivative income, a $5 million gain on sale of our LPF portfolio in 2024, and income from bank-owned life insurance as a result of several one-time death benefit gains in 2024 that did not re-occur in 2025.

The decline in Consumer Program related income was a combination of less income earned from the third-party on origination of loans, which ended in January of 2025, and less reimbursement due to us when borrowers paid off their promotional loans before the end of the promotional period. These two items resulted in a combined decline of $5 million in income when comparing the year ended December 31, 2025 to the same period in 2024. Partially offsetting this decline was $2 million in lower derivative fair value losses during the year ended December 31, 2025 compared to 2024. The decline was a result of the promotional loan population declining at a faster pace during the year ended December 31, 2024 compared to the year ended December 31, 2025 and also because the promotional loan balances were at a lower starting point at the beginning of 2025 compared to January 1, 2024. Noninterest income from the Consumer Program is expected

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~~the~~to ~~promotional~~be ~~period~~increasingly ~~which~~immaterial ~~triggers~~going ~~payment~~forward ~~from~~as ~~the~~promotional ~~derivative~~loans ~~counterparty~~have ofdeclined ~~the~~to ~~interest~~only ~~accrued~~$3 ~~during~~million at the ~~promotional~~end ~~period,~~of ~~along~~2025 ~~with~~and ~~other~~we ~~income~~are ~~due~~no tolonger usoriginating ~~under~~these ~~the agreement~~loans.

The $6.3 million increase in mortgage banking income partially offset the total decline in noninterest income and was a result of the continued growth of the mortgage business in 2024 compared to 2023. During the year ended December 31, 2024 our mortgage banking income was driven by $15.8 million of sale gains compared to $8.0 million during the year ended December 31, 2023 as a result of higher sales volumes. The increase in gains on sale were partially offset with higher sales costs due to the higher volume.

Also partially offsetting the decrease in noninterest income was the pre-tax gain of $4.7 million, net of broker fees, from the sale of a majority of the LPF lending division loans in the fourth quarter of 2024.

Noninterest Expense

The following table present the major categories of noninterest expense for the years ended December 31, ~~2024~~2025 and ~~2023~~2024 ($ in thousands):


	For the Year Ended
	December 31,
(dollars in thousands)	~~2024~~2025		~~2023~~2024		Change
Salaries and benefits	$	6679,~~615~~059	$	5866,~~765~~615	$	712,~~850~~444
Occupancy expenses		56,~~415~~864		65,~~239~~415		~~(824)~~1,449
Furniture and equipment expenses		7,~~327~~488		67,~~381~~327		~~946~~161
Amortization of core deposit intangible		~~1,265~~602		1,~~269~~265		(4663)
Virginia franchise tax expense		2,~~525~~307		32,~~395~~525		(~~870~~218)
FDIC insurance assessment		23,~~549~~731		2,~~929~~549		~~(380)~~1,182
Data processing expense		10,~~564~~676		910,~~545~~564		~~1,019~~112
Marketing expense		12,~~906~~156		1,~~819~~906		87250
Telephone and communication expense		1,~~312~~272		1,~~507~~312		(~~195~~40)
(Gain) loss on bank premises and equipment and assets held for sale		(463)		476		(939)
Professional fees		10,877		10,384		493
Professional fees		10,384		4,641		5,743
Fraud losses		232		2,039		(1,807)
Goodwill impairment		—		11,150		(11,150)
Miscellaneous lending expenses		2,599		3,280		(681)
Fraud losses		2,039		3,311		(1,272)
Other operating expenses		11,072		10,463		609
Miscellaneous lending expenses		3,280		3,006		274
Total noninterest expenses	$	138,935	$	125,644	$	13,291
Other operating expenses		10,926		8,167		2,759
Total noninterest expenses	$	125,644	$	122,600	$	3,044

~~Noninterest~~The ~~expenses~~higher ~~were~~salaries ~~$125.6~~and ~~million~~benefits ~~during~~expense ~~the~~of ~~year ended December 31, 2024, compared to~~ $~~122.6~~12 million ~~during~~for the year ended December 31, 2025 ~~2023.~~compared ~~The~~to ~~2.5%~~the ~~increase~~same period in ~~noninterest~~2024 ~~expenses~~ was driven primarily ~~attributable~~due to ~~higher~~additions ~~salaries~~of ~~and~~several ~~benefits~~lending ~~expense,~~teams ~~professional~~at ~~fees~~PMC, ~~data~~one ~~processing~~of ~~costs,~~which ~~and~~is ~~other~~the ~~operating~~top ~~expenses~~mortgage originator in ~~2024~~the Nashville, ~~partially~~TN ~~offset~~market byand the ~~goodwill~~other ~~impairment~~is ~~and~~the ~~higher~~fourth ~~fraud~~ranked ~~losses~~VA ~~recognized~~lender ~~during~~in the ~~year~~country. ~~ended~~These ~~December~~teams ~~31,~~drove ~~2023.~~the ~~The higher~~ salaries and benefits expense ~~was~~increase ~~driven~~in by2025 ~~growth~~due into ~~the~~their ~~mortgage~~salary ~~line~~draws ofwhile ~~business~~they ~~and~~rebuilt ~~higher~~their ~~overall~~portfolios. ~~benefits~~These ~~costs~~teams ~~for~~are ~~our~~ultimately ~~entire~~expected ~~workforce.~~to ~~The~~generate ~~increase~~production inthat ~~professional~~will ~~fees~~exceed ~~was~~these ~~related~~initial salary draws, which should help to ~~expenses~~generate inincome ~~connection~~that ~~with~~offsets the ~~SEC~~salary ~~pre-clearance~~expenses ~~and~~in ~~restatement~~later ~~process~~periods. ~~Data~~Increase ~~processing~~in ~~expenses~~salaries ~~increased~~and ~~primarily~~benefits aswas aalso ~~result~~from ofthe ~~higher~~growth ~~transaction~~in ~~volume.~~salaries ~~The~~and ~~other~~benefit ~~operating~~ expenses ~~increased~~in ~~primarily~~the ~~due~~Panacea toDivision ~~PFH~~and ~~operating~~Mortgage ~~expenses~~Warehouse asbusinesses, aeach ~~result~~increasing of$1 amillion ~~full~~when ~~year~~comparing ofthe ~~PFH~~year-to-date ~~operations~~periods ~~compared~~in 2025 to ~~having~~2024. ~~just~~Increase ~~commenced~~in ~~operations~~salaries atand ~~the~~benefits ~~end~~for ofthe ~~2023.~~year ~~These~~ended ~~expenses~~December ~~are~~31, 2025 also included as$3 amillion ~~result~~related ofto ~~the~~restricted ~~requirement~~stock compensation expenses in 2025 compared to ~~consolidate~~$1 ~~PFH~~million ~~under~~in U2024.S. ~~GAAP~~The ~~accounting~~$2 ~~rules,~~million ~~but~~increase ~~the~~is ~~portion~~a result of ~~these~~strong ~~losses~~financial ~~attributable~~performance toin ~~other~~2025 ~~stockholders~~along iswith ~~added~~improved ~~back~~expectations toof ~~our~~future ~~results~~performance toresulting ~~arrive~~in ata ~~net~~higher ~~income~~expectation toof ~~Primis~~issued ~~common~~restricted ~~shareholders~~stock eventually vesting.

~~The~~Occupancy ~~increase in noninterest~~ expenses ~~was~~increased ~~partially offset by~~ $~~11.2~~1 million offor ~~goodwill impairment recognized in~~ the ~~third quarter of 2023. We had fraud losses during the~~ year ended December 31, 2025 ~~2023~~compared ~~primarily related~~ to ~~a substantial increase in deposit account fraud, which was also seen across~~ the ~~industry~~year ~~during~~ended ~~that~~December ~~time. Our fraud losses in~~ 31, 2024, ~~were~~ primarily due to ~~losses~~increase in ~~the~~lease ~~Consumer~~expenses ~~Program~~driven ~~loan~~by ~~portfolio.~~several ~~Other~~additional ~~notable~~leases ~~declines~~ in ~~expenses~~2025, ~~were~~increased ~~seen~~annual inrent ~~occupancy~~on ~~expenses,~~existing ~~Virginia franchise tax~~leases, and ~~gain~~one ~~(loss)~~month onof ~~bank~~lease ~~premises~~expense ~~and~~related ~~equipment~~to ~~and~~the ~~assets~~new ~~held~~master lease for ~~sale.~~the ~~The~~18 ~~Virginia~~branches ~~franchise~~sold ~~tax~~ and ~~FDIC~~leased ~~insurance~~back ~~costs were a result of a decline~~ in ~~average~~December ~~deposits and capital~~ in the ~~current~~sale ~~year~~lease-back transaction.

52FDIC insurance expense increased $1 million during the year ended December 31, 2025 compared to the same period in 2024 primarily due to an increase in our assessment base as a result of our financial restatements in 2024 and the changes in asset quality during 2025.

These expense increases were partially offset by TPOS vendor fraud in 2024 that did not reoccur, less core deposit intangible amortization that fully amortized by June 30, 2025, and lower miscellaneous lending expenses due to less loan collection costs and lower mortgage loan repurchase provisions in 2025 compared to 2024.

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compared to the prior year. The occupancy expense decline is primarily related to a decline in branch operating costs in 2024 as a result of our restructuring in 2023 that resulted in eight branch consolidations in the fourth quarter of 2023. Noninterest expense increases were also offset by gains on sales of premises and equipment in 2024 while in 2023 we incurred more losses due to disposal of assets and write-down of property to be sold as part of the branch consolidations.

FINANCIAL CONDITION

The following illustrates key balance sheet categories as of December 31, ~~2024~~2025 and ~~2023~~2024 ($ in thousands):


	December 31,		December 31,
	~~2024~~2025		~~2023~~2024		Change
Total cash and cash equivalents	$	143,607	$	64,505	$	79,102
Securities available-for-sale		171,377		235,903		(64,526)
Securities held-to-maturity		6,981		9,448		(2,467)
Loans held for sale, at fair value		166,066		83,276		82,790
Loans held for sale, at lower of cost or market		—		163,832		(163,832)
Net loans		3,237,800		2,833,723		404,077
Other assets		321,557		299,428		22,129
Total assets	$	4,047,388	$	3,690,115	$	357,273

Total cash and cash equivalents	$	64,505	$	77,553	$	(13,048)
Total deposits	$	3,395,585	$	3,171,035	$	224,550
Securities available-for-sale		235,903		228,420		7,483
Borrowings		139,487		116,991		22,496
Securities held-to-maturity		9,448		11,650		(2,202)
Other liabilities		89,420		37,107		52,313
Loans held for sale, at fair value		83,276		57,691		25,585
Total liabilities		3,624,492		3,325,133		299,359
Loans held for sale, at lower of cost or market		163,832		—		163,832
Total equity		422,896		364,982		57,914
Net loans		2,833,723		3,167,205		(333,482)
Total liabilities and equity	$	4,047,388	$	3,690,115	$	357,273
Other assets		299,428		314,027		(14,599)
Total assets	$	3,690,115	$	3,856,546	$	(166,431)

Total deposits	$	3,171,035	$	3,270,155	$	(99,120)
Borrowings		116,991		149,032		(32,041)
Other liabilities		37,107		39,766		(2,659)
Total liabilities		3,325,133		3,458,953		(133,820)
Total equity		364,982		397,593		(32,611)
Total liabilities and equity	$	3,690,115	$	3,856,546	$	(166,431)

~~Loans~~

~~Gross~~LOAN loans held for investment were $2.9 billion and $3.2 billion as of December 31, 2024 and 2023, respectively. Loans held for sale were $247.1 million and $57.7 million as of December 31, 2024 and 2023, respectively. Loans held for sale at fair value are loans originated by PMC which are held at fair value under a fair value option election. Loans held for sale at the lower of cost or market comprise LPF loans to be sold to EverBank by January 31, 2025 and Consumer Program loans that are currently being marketed for sale.PORTFOLIO

AsLoans ~~disclosed~~Held in “Note 1 - Organization and Significant Accounting Policies” in Item 8. in this Form 10-K, we entered into an agreement to sell LPF loans and $50.7 million of loans to be sold under this agreement that were already funded as of December 31, 2024 have been reclassified to loans held for sale, at lower of cost or market as of December 31, 2024. The Company also made the decision as of December 31, 2024 to sell a majority of its Consumer Program loans. $133.2 million of these loans were transferred to held for sale as of December 31, 2024 and were marked-to-market based on third party bid prices received in its initial marketing efforts for the portfolio, resulting in a $20.0 million write-down through the allowance for credit losses in accordance with regulatory guidance. Sale

AsLHFS ofat ~~December 31,~~fair ~~2024~~value ~~and~~increased ~~2023,~~$81 amillion ~~majority~~from ofDecember ~~our~~31, ~~loans~~2024 ~~were~~ to ~~customers~~December ~~located~~31, in2025 ~~Virginia~~due ~~and~~to ~~Maryland.~~growth Weat ~~are~~PMC ~~not~~during ~~dependent~~the onyear ~~any~~and ~~single~~timing ~~customer or group~~ of ~~customers~~origination ~~whose~~and ~~insolvency~~sale ~~would~~of ~~have~~loans aat ~~material~~year ~~adverse~~end. ~~effect~~LHFS onat ~~our~~the ~~operations.~~lower ~~Our~~of ~~gross~~cost ~~loans~~or ~~held~~market ~~for investment~~ declined by ~~10%~~$164 inmillion ~~2024, which was driven by a decline in Consumer loans~~ primarily due to ~~approximately $299.2 million of sales of LPF loans. The decline in Consumer loans was also driven by~~ the ~~transfer~~sale of $~~133.2~~51 million of ~~the~~LPF ~~Consumer Program~~ loans ~~into “Loans held for sale~~, atpaydowns ~~lower~~ of ~~cost~~Consumer orProgram ~~market” as of December 31~~LHFS, ~~2024~~and asthe atransfer ~~result~~back ~~of our decision~~ to ~~market~~net ~~the~~ loans ~~for sale. There was also a decline in the construction and land development loans due to a combination~~ of ~~paydowns~~$102 ~~and~~million ~~conversion to permanent financing. The declines were partially offset by growth in multi-family residential and non-owner and owner occupied commercial real estate. The majority~~ of ~~this~~Consumer ~~growth~~Program ~~was~~loans ~~concentrated~~ in ~~loan~~2025 ~~growth~~after in the ~~Panacea~~decision ~~division~~to ~~with~~retain ~~loans~~these ~~that~~for ~~are~~the ~~diversified~~foreseeable ~~geographically~~future ~~and~~or ~~are~~until ~~spread across the nation~~maturity.

53Loans Held for Investment

Gross LHFI were $3.3 billion and $2.9 billion as of December 31, 2025 and 2024, respectively. The increase in loans held for investment was driven by growth of mortgage warehouse loans and Panacea Division commercial loans, both of which were the primary driver of the $362 million increase in commercial loans seen below. LHFI also increased in 2025 due to the transfer back from LHFS of Consumer Program loans into the consumer loans category of LHFI, resulting in $51 million more Consumer Program loans in LHFI at December 31, 2025 compared to December 31, 2024. The growth was partially offset by the sale of $54 million of commercial loans in the Panacea Division and loan paydowns during the year ended December 31, 2025 of loans secured by real estate. As of December 31, 2025 and 2024, over 50% 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.

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The composition of our loans ~~held~~HFI ~~for investment~~ portfolio consisted of the following as of December 31, ~~2024~~2025 and ~~2023~~2024 ($ in thousands):


	December 31, ~~2024~~2025				December 31, ~~2023~~2024
	Amount		Percent		Amount		Percent
Loans secured by real estate:
Commercial real estate - owner occupied	$	~~475~~510,~~898~~088	1615.5	%	$	~~455~~475,~~397~~898	1416.15	%
Commercial real estate - non-owner occupied		~~610~~567,~~482~~091	2117.13	%		~~578~~610,~~600~~482	1821.01	%
Secured by farmland		3,~~711~~408	0.1	%		53,~~044~~711	0.21	%
Construction and land development		~~101~~131,~~243~~757	34.50	%		~~164~~101,~~742~~243	53.15	%
Residential 1-4 family		~~588~~576,~~859~~866	2017.45	%		~~606~~588,~~226~~859	1820.84	%
Multi- family residential		~~158~~140,~~426~~261	5.4.3	%		~~127~~158,~~857~~426	45.04	%
Home equity lines of credit		6261,~~954~~738	21.29	%		5962,~~670~~954	12.92	%
Total real estate loans		21,~~001~~991,~~573~~209	6960.26	%		12,~~997~~001,~~536~~573	6269.02	%

Commercial loans		~~608~~970,~~595~~492	2129.16	%		~~602~~608,~~623~~595	1821.71	%
Paycheck protection program loans		1,~~927~~719	0.1	%		21,~~023~~927	0.1	%
Consumer loans		~~270~~315,~~063~~407	9.46	%		~~611~~270,~~583~~063	199.04	%
Total Non-PCD loans		23,~~882~~278,~~158~~827	99.89	%		32,~~213~~882,~~765~~158	99.8	%
PCD loans		54,~~289~~856	0.21	%		5,~~649~~289	0.2	%
Total loans	$	23,~~887~~283,~~447~~683	100.0	%	$	32,~~219~~887,~~414~~447	100.0	%

The following table sets forth the contractual maturity ranges of our ~~loan~~LHFI portfolio and the amount of those loans with fixed and floating interest rates in each maturity range as of December 31, ~~2024~~2025 ($ in thousands):

After 1 Year

After 5 Years

Through 5 Years

Through 15 Years

After 15 Years

One Year

Fixed

Floating

Fixed

Floating

Fixed

Floating

or Less

Rate

Total

Loans secured by real estate:

Commercial real estate - owner occupied

3229,~~917~~094

8160,~~757~~956

2336,~~087~~770

~~152~~204,~~937~~362

~~131~~128,~~855~~943

13,~~687~~000

5146,~~658~~963

~~475~~510,~~898~~088

Commercial real estate - non-owner occupied

8988,~~229~~049

~~163~~166,~~028~~569

3435,~~895~~700

8074,~~354~~221

8174,~~319~~817

9,~~498~~207

~~152~~118,~~159~~528

~~610~~567,~~482~~091

Secured by farmland

~~904~~941

~~811~~590

7576

—215

~~740~~525

—

1,~~181~~061

3,~~711~~408

Construction and land development

5077,~~184~~226

112,~~910~~322

2636,~~777~~053

~~6,359~~—

156,~~982~~114

—

3142

~~101~~131,~~243~~757

Residential 1-4 family

728,~~106~~260

5143,~~767~~681

17,~~197~~589

2320,~~683~~669

5038,~~297~~541

6766,~~595~~075

~~371~~362,~~214~~051

~~588~~576,~~859~~866

Multi- family residential

1652,~~708~~874

8930,~~427~~555

1428,~~138~~904

—

136,~~978~~122

—

2421,~~175~~806

~~158~~140,~~426~~261

Home equity lines of credit

42,~~508~~603

~~3,223~~131

6,~~547~~814

4328

~~2,845~~686

21106

4551,~~767~~370

6261,~~954~~738

Total real estate loans

~~201~~279,~~556~~047

~~391~~314,~~923~~804

~~122~~161,~~716~~906

~~263~~299,~~376~~495

~~297~~255,~~016~~748

78,~~801~~388

~~646~~601,~~185~~821

21,~~001~~991,~~573~~209

Commercial loans

~~129~~124,~~935~~598

9087,~~663~~028

84388,~~371~~098

~~264~~322,~~697~~415

3546,~~243~~027

1,~~069~~033

21,~~617~~293

~~608~~970,~~595~~492

Paycheck protection program loans

~~884~~1,719

~~870~~-

—

~~173~~—

—

1,~~927~~719

Consumer loans

4108,~~483~~552

~~134~~78,~~605~~146

5359,~~651~~527

6860,~~435~~721

6,~~915~~810

1,~~969~~646

~~270~~315,~~063~~407

Total Non-PCD loans

~~336~~513,~~858~~916

~~618~~479,~~061~~978

~~260~~609,~~738~~531

~~596~~682,~~681~~631

~~339~~308,~~174~~585

81,~~839~~067

~~648~~603,~~807~~119

23,~~882~~278,~~158~~827

PCD loans

12,~~244~~332

21,~~503~~108

2688

—

~~1,130~~957

~~386~~371

—

54,~~289~~856

Total loans

~~338~~516,~~102~~248

~~620~~481,~~564~~086

~~260~~609,~~764~~619

~~596~~682,~~681~~631

~~340~~309,~~304~~542

8281,~~225~~438

~~648~~603,~~807~~119

23,~~887~~283,~~447~~683

Our highest concentration of credit by loan type is in commercial real estate. As of December 31, 2025, 37% 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.

54We 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

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~~The~~credit ~~following~~administration ~~table~~function, ~~sets~~approval ~~forth~~process, ~~the~~credit ~~contractual~~policy, ~~maturity~~and ~~ranges~~risk ofmanagement ~~our~~committee, ~~Consumer~~as ~~Program~~well ~~loan~~as ~~portfolio~~through asour ofseasoned ~~December~~bankers ~~31,~~that ~~2024,~~focus ~~which~~on islending ~~only~~to ~~originated~~borrowers atwith ~~fixed~~proven ~~rates~~track (records in ~~thousands):~~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 December 31, 2025 and 2024 ($ in thousands):


	December 31, 2025				December 31, 2024
	Amount		Percent		Amount		Percent
Commercial real estate - non-owner occupied
Hotel/ Motel	$	163,487	28.8	%	$	190,077	31.1	%
Office		131,638	23.2	%		136,046	22.3	%
Retail		80,918	14.3	%		97,748	16.0	%
Assisted living		54,382	9.6	%		58,191	9.5	%
Mixed use		44,626	7.9	%		49,419	8.1	%
Warehouse/ Industrial		20,691	3.6	%		21,454	3.5	%
Daycare/Schools/Churches		10,760	1.9	%		8,851	1.4	%
Self-storage		10,402	1.8	%		5,833	1.0	%
Leisure/Recreational		10,695	1.9	%		4,598	0.8	%
Other		39,492	7.0	%		38,265	6.3	%
Total Commercial real estate - non-owner occupied	$	567,091	100.0	%	$	610,482	100.0	%


	One Year or Less		After One Year to Five Years		After Five Through Ten Years		After Ten Years		Total
Consumer Program Loans, held for sale, at lower of cost or market (1)	$	937	$	66,738	$	41,373	$	24,115	$	133,163
Consumer Program Loans, held for investment		75		17,537		6,937		14,417		38,966
Total Consumer Program Loans	$	1,012	$	84,275	$	48,310	$	38,532	$	172,129

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 percentage as of December 31, 2025 and 2024 ($ in thousands):

(1) Amounts exclude $20.0 million of fair market value adjustments related to our transfer of the portfolio to held for sale as of December 31, 2024.

As of December 31, 2024, we had $38.9 million of Consumer Program loans in a promotional period where interest is being deferred and will not be recognized by us until and if they exit the promotional period and the loan begins to amortize. Of this total, $0.7 million is included in held for investment and 64% end their promo period in 2025 while the remaining will end their promo period in 2026. The remaining $38.2 million of promo loans as of December 31, 2024 are included in held for sale and 87% of these end their promo period in 2025 and the remaining end in 2026.


	December 31, 2025					December 31, 2024
Commercial real estate - non-owner occupied - Office Portfolio ⁽¹⁾	Loan count		Amount	Weighted Average Loan-to-Value		Loan count		Amount	Weighted Average Loan-to-Value
Commercial medical office	10	$	9,303	66.7	%	5	$	7,020	66.9	%
Commercial office building	28		108,586	65.9	%	31		110,675	66.3	%
Commercial office/ warehouse	12		13,749	36.8	%	12		18,351	37.8	%
Total	50	$	131,638	62.9	%	48	$	136,046	62.5	%

~~During~~The ~~the~~shift ~~year~~to ~~ended~~work-from-home ~~December~~and ~~31,~~hybrid ~~2024,~~work ~~$31.1~~environments ~~million~~has caused a decreased utilization of ~~loans~~office ~~ended~~space. ~~their~~As nosuch, ~~interest~~we ~~promo~~have ~~period~~additional ~~and~~monitoring ~~began~~for our exposure to ~~amortize~~office ~~and~~space, ~~$10.1~~within ~~million~~our non-owner occupied commercial real estate portfolio, including periodic credit risk assessment of ~~these~~expiring ~~loans~~office ~~charged~~leases for most of the office portfolio. We do not currently finance large, high-~~off~~rise, ~~during~~or major metropolitan central business district office buildings, and the ~~year~~office ~~after~~portfolio ~~beginning~~is togenerally ~~amortize~~in suburban markets with good occupancy levels that have improved from last year.

~~Asset~~Consumer ~~Quality;~~Program ~~Past Due~~ Loans ~~and Nonperforming Assets~~

The following table ~~presents~~sets aforth ~~comparison~~the contractual maturity ranges of ~~nonperforming~~our ~~assets~~Consumer Program loan portfolio as of December 31, ~~2024~~2025, ~~and~~which ~~2023~~is only originated at fixed rates ($ in thousands):


	December 31,			December 31,
	2024			2023
Nonaccrual loans	$	15,026		$	9,095
Loans past due 90 days and accruing interest		1,713			1,714
Total nonperforming assets		16,739			10,809

SBA guaranteed amounts included in nonperforming loans	$	5,921		$	3,115

Allowance for credit losses to total loans		1.86	%		1.62	%
Allowance for credit losses to nonaccrual loans		357.53	%		574.06	%
Allowance for credit losses to nonperforming loans		320.94	%		483.04	%
Nonaccrual to total loans		0.52	%		0.28	%
Nonperforming assets excluding SBA guaranteed loans to total assets		0.29	%		0.20	%

Nonperforming assets increased as of December 31, 2024 compared to December 31, 2023, driven by an increase in nonaccrual loans of $5.9 million to $15.0 million. The increase was driven primarily by two commercial real estate loans totaling $4.2 million and one commercial loan totaling $0.7 million added to nonaccrual during the year. All of these additions during the year are secured by collateral and portions of the nonperforming asset balances at year end have partial SBA guarantees of $2.9 million.


	One Year or Less		After One Year to Five Years		After Five Through Ten Years		After Ten Years		Total
Total Consumer Program Loans ⁽¹⁾	$	325	$	25,797	$	64,613	$	6,263	$	96,998

(1)

Does not include $7 million of remaining fair market value adjustments related to the original $20 million write-down of the portfolio when transferred to LHFS as of December 31, 2024.

We identify potential problem loans based on loan portfolio credit quality. We define our potential problem loans as internally rated as substandard loans less total nonperforming assets noted above. As of December 31, 2024, our potential problem loans totaled $54.9 million. As of December 31, 2024, our total substandard loans were $71.5 million, compared to $17.2 million as of December 31, 2023. Loans rated internally as special mention loans, which is one internal credit rating higher than substandard, totaled $30.3 million as of December 31, 2024 and $14.9 million as of December 31, 2023. Increase in substandard loans was driven primarily due to four relationships totaling $54.9 million and the increase in special mention loans was related to $20 million of downgrades in 2024.59

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WeThe ~~will~~following ~~generally~~table ~~place~~describes athe ~~loan~~period onover ~~nonaccrual~~which ~~status~~our ~~when~~Consumer itProgram ~~becomes~~loans 90that ~~days~~are ~~past~~currently ~~due.~~in ~~Loans~~a ~~will~~no ~~also~~interest bepromotional ~~placed~~period onwill ~~nonaccrual~~exit ~~status~~that inpromotional ~~cases~~period ~~where~~and webegin ~~are~~to ~~uncertain~~amortize. ~~whether~~All ~~the~~these ~~borrower~~promotional ~~can~~loans ~~satisfy~~generally ~~the~~amortize ~~contractual~~over ~~terms~~four ofyears from the ~~loan~~date ~~agreement.~~they ~~Cash~~exit ~~payments~~the ~~received~~promotional ~~while~~period aif ~~loan~~not isprepaid ~~categorized~~before asthe ~~nonaccrual~~end ~~will be recorded as a reduction~~ of ~~principal~~the aspromotional ~~long~~period as($ ~~doubt~~in ~~exists as to future collections.~~ thousands):

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.


	Amount ending		Amount ending
	No Interest		No Interest		Total outstanding
	Promotional Period in		Promotional Period in		Promotional
	next 6 months		7-12 months		as of 12/31/25
Consumer Program Loans	$	2,240	$	566	$	2,806

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.

We originate a portion of our consumer loans (the Consumer Program) using a third party that sources and subsequently manages the portfolio of loans. As of December 31, 2024, we had a book balance outstanding of $152.1 million which is comprised of $38.9 million in held for investment and $113.2 million of held for sale. These loans are accounted for similar to 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 the held for investment loans balance of $38.9 million was $16.3 million as of December 31, 2024 and represented 30% of our total allowance for credit losses. Net charge-offs on this portfolio were $46.0 during the year ended December 31, 2024, and represented approximately 94% of net charge-offs recorded during the year.

The Company tightened its origination criteria in regard to this portfolio in April of 2023 and from that point forward we generally originated loans to consumer borrowers being managed by the third party with FICO scores over 720, whereas prior periods loan production included approximately 40% of loans to borrowers with weaker credit scores. This older vintage lower credit score portion of the portfolio has driven the uptick in related charge-offs during 2023 and 2024 and necessitated the update of the Company’s expected loss rates on this portfolio for purposes of determining the allowance for credit losses as of December 31, 2024 and 2023. Additionally, we experienced continued elevated levels of charge-offs in the first quarter of 2025 concentrated in these older vintages and as a result we incorporated this credit loss experience into our reserve process on these loans for the year ended December 31, 2024. The combination of the updated loss rates along with elevated charge-offs in 2024 and the first three months of 2025 has been a driver in the increase of the allowance during the year ended December 31, 2024 on the portfolio as a percentage of the portfolio balance. The newer production represented approximately 50% of the held for investment portfolio as of December 31, 2024 and is expected to improve the quality mix of the portfolio and result in lower realized net charge-offs and provisions for credit losses in future periods.

~~Loan~~During ~~Review~~the year ended December 31, 2025, $36 million of Consumer Program loans either paid off during the no interest promotional period or converted to amortizing at the end of the promotional period. As of December 31, 2025, 94% of Consumer Program loans outstanding are current, 4% are past due 1-30 days, and the remaining 2% are past due greater than 30 days.

Our loan review program is administrated by the Chief Risk Officer and the Loan Review Manager who reports the results directly to the Audit Committee of the Board of Directors. Our 2024 loan review program (the “Program”) was approved by the Audit Committee on January 25, 2024. The Program’s annual goal is to have an overall review penetration rate of 45.0% - 50.0% of the commercial loan portfolio outstanding as of December 31, 2024. The Program incorporates a robust risk-based approach review of the Bank’s loan portfolio that will include the loan origination process and targeted portfolio and full-scope loan reviews. The Program’s review goal remains well within regulatory standards and industry best practices. In accordance with Credit Policy, the Bank’s Program will utilize and incorporate both internal and third-party external resources in a complementary fashion to achieve the objectives of the Program.

InASSET 2024, the loan review program resulted in reviews on commercial loan balances totaling $955.0 million or 49.6% of the commercial loan portfolio outstanding as of December 31, 2024. The loan reviews included 45.0% performed by our internal loan review function and 55.0% by an independent third party consultant. The loan review program also reviewed $90.5 million in unfunded commitments. QUALITY

56Nonperforming Assets

The following table presents a comparison of nonperforming assets as of December 31, 2025 and 2024 ($ in thousands):


		December 31,			December 31,
		2025			2024
Nonaccrual loans		$	84,823		$	15,026
Loans past due 90 days and accruing interest			1,713			1,713
Total nonperforming assets		$	86,536		$	16,739

SBA guaranteed amounts included in nonperforming loans		$	4,482		$	5,921

Allowance for credit losses to total loans			1.40	%		1.86	%
Allowance for credit losses to nonaccrual loans			54.09	%		357.53	%
Allowance for credit losses to nonperforming loans			53.02	%		320.94	%
Nonaccrual to total loans			2.59	%		0.52	%
Nonperforming assets excluding SBA guaranteed loans to total assets			2.03	%		0.29	%

Nonperforming assets increased $70 million, or 417%, as of December 31, 2025 compared to December 31, 2024, which was driven by an increase in nonaccrual loans. The increase in nonaccrual was primarily due to the addition of one commercial real estate loan with a $40 million amortized cost balance that was past due 60- 90 days as of December 31, 2025 and one commercial relationship comprised of two loans totaling $24 million in amortized cost that was nonaccruing, but not past due as of December 31, 2025.

The commercial real estate loan is delinquent due to turnover in tenant occupancy on the underlying office asset leading to reduced lease income. Leasing activity has become more stabilized in the DC market, and the asset is seeing strong interest in new lease negotiations. We have a lien on the underlying collateral which is Class A office space in a desirable location in northern Virginia. The borrower is actively seeking new tenants for vacant office space in the building. We assess expected credit losses on this loan individually and have a $7 million individual reserve against the loan, or 18% of its amortized cost balance, as of December 31, 2025.

The commercial loans were placed on nonaccrual early in the third quarter of 2025. The loans were utilized originally by the customer to support a business acquisition into an existing business. Stabilization of operations had a longer trajectory than originally forecast. The company became profitable at the end of 2024 and has shown steady improvement during 2025. We have subsequently entered into a forbearance agreement with the borrower who is satisfactorily performing under the terms of agreement as of December 31, 2025. We assess expected credit losses on this loan

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individually and obtained a third-party valuation of the business in 2025 to assist in determining the $5 million individual reserve against the loan, or 20% of its amortized cost balance, as of December 31, 2025.

We identify potential problem loans based on loan portfolio credit quality. We define our potential problem loans as internally rated as substandard or worse, less total nonperforming assets noted above. As of December 31, 2025, our potential problem loans totaled $60 million.

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.

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 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.

Loan Review

We rely on a combination of first and second line of defense processes to measure the overall quality of our loan portfolio. From a first line perspective, each loan is assigned a risk rating ranging from one to nine, with loans closer to a rating of one having less risk. This risk rating scale is our primary credit quality indicator that is reviewed periodically by management, while delinquency status is a secondary risk indicator we also monitor. From a second line of defense perspective, we have a loan review function independent of credit administration that reports to the Company’s CRO and performs a risk-based review of a sample of commercial loans and loan relationships to evaluate credit quality and adherence to underwriting standards.

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. We have designed a credit matrix, which requires dual authority to approve any credit over $5.0 million. We have a specialty Executive Credit Officer with extensive industry experience in medical practice financing with authority up to $7.5 million and joint authority with the Chief Credit Officer up to $10.0 million. All credit exposures over $10.0 million are reviewed and approved by Executive Loan Committee consisting of all named Credit Officers with concurrence from the Chief Executive Officer on any credit in excess of $25.0 million. Loans in excess of 60% of the Bank’s legal lending limit are approved by the full Board of Directors or two outside directors.

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.

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


	As of December 31,					As of December 31,
	~~2024~~2025				~~2023~~	2024
			Percent of					~~Percent of~~	Percent of
	Allowance		Loans by		~~Allowance~~	Allowance		~~Loans by~~	Loans by
	for Credit		Category to		~~for Credit~~	for Credit		~~Category to~~	Category to
	Losses		Total Loans		~~Losses~~	Losses		~~Total~~ ~~Loans~~	Total Loans
Commercial real estate - owner occupied	$	5,~~899~~682	1615.5	%	$	~~4,255~~$	5,899	~~14.1~~	%16.5	%
Commercial real estate - non-owner occupied		615,~~966~~329	2117.13	%		~~5,822~~	6,966	~~18.0~~	%21.1	%
Secured by farmland		2030	0.1	%		31	20	~~0.2~~	%0.1	%
Construction and land development		~~1,203~~748	34.50	%		~~1,129~~	1,203	~~5.1~~	%3.5	%
Residential 1-4 family		6,~~819~~852	2017.45	%		~~4,938~~	6,819	~~18.8~~	%20.4	%
Multi- family residential		1,~~620~~368	5.4.3	%		~~1,590~~	1,620	~~4.0~~	%5.4	%
Home equity lines of credit		~~533~~428	21.29	%		~~364~~	533	~~1.9~~	%2.2	%
Commercial loans		1011,~~794~~197	2129.16	%		~~6,320~~	10,794	~~18.7~~	%21.1	%
Paycheck Protection Program loans		—	0.1	%		—	—	~~0.1~~	%0.1	%
Consumer loans		194,~~625~~249	9.46	%		~~26,088~~	19,625	~~19.0~~	%9.4	%
PCD loans		~~245~~—	0.21	%		~~1,672~~	245	~~0.2~~	%0.2	%
Total	$	5345,~~724~~883	100.0	%		~~52,209~~$	53,724	~~100.0~~	%100.0	%

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


	For the ~~Years~~Year Ended December 31,
	~~2024~~2025			~~2023~~2024
Balance, beginning of period	$	5253,~~209~~724		$	3452,~~544~~209
Provision charged to operations:
Total provisions		5012,~~621~~289			3250,~~540~~621
Recoveries credited to allowance:
Commercial real estate - owner occupied		31—			—31
Commercial real estate - non-owner occupied		—			110
Residential 1-4 family		—			2
Construction and land development		—			112
Home equity lines of credit		5			3
Residential 1-4 family		2			164
Commercial loans		—			20
Home equity lines of credit		3			5
Consumer loans		14,198			1,873
Commercial loans		20			948
Total recoveries		14,203			1,929
Consumer loans		1,873			480
Total		80,216			104,759
Total recoveries		1,929			1,819
Loans charged off:
Loans charged off:
Residential 1-4 family		72			8
Commercial real estate - non-owner occupied		—			1,170
Home equity lines of credit		—			9
Construction and land development		—			2
Commercial loans		935			926
Residential 1-4 family		8			770
Consumer loans		33,326			50,092
Home equity lines of credit		9			32
Total loans charged-off		34,333			51,035
Commercial loans		926			2,854
Net charge-offs		20,130			49,106
Consumer loans		50,092			11,866
Balance, end of period	$	45,883		$	53,724
Total loans charged-off		51,035			16,694
Net charge-offs		49,106			14,875
Balance, end of period	$	53,724		$	52,209

Net charge-offs to average loans, net of unearned income		10.4865	%		01.4548	%

~~The~~We ~~total~~believe that the allowance for credit losses ~~increased~~as byof ~~$1.5~~December ~~million~~31, 2025 is sufficient to ~~$53.7~~absorb ~~million~~future asexpected ofcredit ~~December~~losses ~~31,~~in ~~2024,~~our ~~compared~~loan toportfolio ~~$52.2~~based ~~million~~on asour assessment of ~~December~~all ~~31,~~known ~~2023.~~factors ~~This~~affecting ~~increase~~the ~~was~~collectability ~~primarily~~of ~~driven~~our byloan aportfolio. ~~continued~~Our ~~elevated~~assessment ~~provision~~involves ~~related~~uncertainty toand judgment; therefore, the ~~Consumer~~adequacy ~~Program~~of ~~loans,~~the ~~and~~allowance tofor acredit ~~lesser~~losses ~~extent~~cannot ~~due~~be todetermined ~~increases~~with inprecision ~~allowance~~and ~~provisions~~may ~~for~~be ~~commercial~~subject ~~real~~to ~~estate,~~change ~~residential~~in ~~1-4~~future ~~family~~periods. In addition, ~~and~~bank ~~commercial~~regulatory ~~loans.~~authorities, ~~The~~as ~~increases~~part inof ~~the~~their ~~allowance~~periodic ~~was~~examination, ~~mostly~~may ~~offset~~require byadditional ~~charge-offs~~charges into the ~~Consumer~~provision ~~Program~~for ~~loan~~credit ~~portfolio.~~losses ~~The~~in ~~Consumer~~future ~~Program~~periods ~~loans~~if ~~had~~the ~~allowance~~results ~~provisions~~ of ~~$40.0~~their ~~million~~reviews ~~during~~warrant additions to the allowance for credit losses.

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~~year~~Our ~~ended~~allowance ~~December~~for ~~31,~~credit ~~2024,~~losses ~~accounting~~was ~~for~~$46 ~~79%~~million as of ~~the~~December ~~total~~31, 2025, ~~credit~~compared ~~loss~~to ~~provisions~~$54 ~~for~~million ~~the~~as ~~ended~~of December 31, 2024. ~~Offsetting~~The ~~the~~$8 ~~increases~~million indecrease ~~these~~was ~~provisions~~driven ~~were~~by $~~46.0~~29 million ofin net charge-offs ofduring the year ended December 31, 2025, primarily a result of Consumer Program loans, ~~which~~and ~~included~~less ~~$20.0~~provision ~~million~~for ~~related~~credit tolosses. ~~the~~Our ~~decision~~provision tofor ~~move~~credit alosses ~~majority~~decreased of$38 million during the ~~portfolio~~year toended ~~held~~December ~~for~~31, ~~sale~~2025 ascompared ofto ~~December~~the ~~31,~~same periods in 2024., ~~Increases~~primarily related to improved performance in the ~~allowance~~Consumer ~~were~~Program ~~also~~portfolio as a result of ~~increased~~the ~~allowance~~significant ~~provisions~~decline ~~for~~in ~~commercial~~promotional ~~real~~loans ~~estate~~that ~~loans~~drove ~~due~~prior ~~primarily~~credit tolosses ~~growth~~and ina changing mix of the Bank’s loan portfolio ~~balances~~to ~~and~~loan ~~changes~~categories inwith ~~expected~~lower ~~macroeconomic~~reserve ~~factors,~~requirements. ~~increase~~Partially inoffsetting ~~allowance~~these declines were specific provisions for ~~residential~~expected ~~1-4~~credit ~~family~~losses ~~due~~of to$7 ~~changes~~million inon ~~prepayment~~the ~~and~~individually ~~curtailment~~evaluated ~~rates~~commercial ~~and~~real ~~expected~~estate ~~macroeconomic~~loan ~~factors~~that ~~impacting~~was ~~the~~60 ~~portfolio,~~- 90 days past due and anproactively ~~increase~~placed inon ~~allowance~~nonaccrual ~~for~~during ~~commercial~~the ~~loans~~year ~~primarily~~ended ~~driven~~December by31, 2025. Additional ~~one~~discussion ~~relationship~~of ~~that~~the ~~was~~change ~~downgraded~~in ~~and~~the ~~specific~~provision ~~reserves~~for ~~applied~~credit tolosses ~~the~~is ~~loans~~included in ~~conjunction~~this ~~with~~MD&A in the ~~downgrade.~~“Provision for Credit Losses” section.

WeNet ~~believe~~charge-offs ~~that~~were primarily related to the ~~allowance~~Consumer ~~for~~Program ~~credit~~portfolio ~~losses~~during asthe ofyear ended December 31, 2025 and 2024. isDuring ~~sufficient~~the toyear ~~absorb~~ended ~~future~~December ~~expected~~31, 2025, ~~credit~~we ~~losses~~charged off $18 million, net of recoveries, in ~~our~~the ~~loan~~Consumer Program portfolio. ~~based~~Comparatively, onduring ~~our~~the ~~assessment~~year ofended ~~all~~December ~~known~~31, 2024, ~~factors~~we ~~affecting~~charged ~~the~~off ~~collectability~~$46 ofmillion, ~~our~~net ~~loan~~of ~~portfolio~~recoveries. ~~Our~~The ~~assessment~~majority ~~involves~~of ~~uncertainty~~these ~~and~~charge-offs ~~judgment;~~related ~~therefore,~~to loans originated from the ~~adequacy~~third quarter of 2022 through the ~~allowance~~first ~~for~~quarter of 2023 where we experienced significant credit ~~losses~~weaknesses. ~~cannot~~Included bein ~~determined~~Consumer ~~with~~Program ~~precision~~net ~~and~~charge-offs ~~may~~during be2025 ~~subject~~were $13 million of recoveries related to ~~change~~charge-offs intaken ~~future~~as ~~periods.~~of InDecember ~~addition~~31, ~~bank~~2024 ~~regulatory~~to ~~authorities,~~record asthe ~~part~~loans at the lower of ~~their~~cost ~~periodic~~or ~~examination,~~market ~~may~~when ~~require~~we ~~additional~~made ~~charges~~the decision to move a substantial portion of the ~~provision~~loans ~~for~~to ~~credit~~HFS. ~~losses~~As inpreviously ~~future~~discussed, ~~periods~~we ifsubsequently decided to retain the ~~results~~loans ofand they were moved back into LHFI at their ~~reviews~~then ~~warrant~~amortized ~~additions~~cost tobalance inclusive of the ~~allowance~~prior ~~for~~charge-offs. ~~credit~~When ~~losses~~excluding the Consumer Program net charge-offs, we had net charge-offs of $2 million and $3 million during the year ended December 31, 2025 and 2024, respectively, on the remainder of our LHFI portfolio.

~~Net~~We ~~charge-offs~~have ~~were~~experienced ~~$49~~a majority of our losses in the Consumer Program on promotional loans originated in the third quarter of 2022 through the first quarter of 2023.1 ~~million~~Our allowance methodology for the Consumer Program was updated during the year ended December 31, 2024 to consider promotional loan maturity, upespecially ~~from~~around ~~$14.9~~these ~~million~~earlier ~~for~~vintages, ~~the~~and ~~year~~amount ~~ended~~of ~~December~~first 31payment defaults with eventual charge-off, ~~2023.~~which ~~Included~~was ina ~~net~~key driver to the heightened overall charge-offs isin ~~$46~~2024.0 Almost ~~million~~all ~~and~~of ~~$8.4~~these ~~million~~earlier ~~for~~vintages ~~the~~have ~~years~~since ended their promotional period and began to amortize prior to December 31, ~~2024~~2025. ~~and~~As ~~2023~~a result, ~~respectively~~we believe that any remaining loans in these older vintages, ~~related~~along with newer vintage promotional loans that end their promotional period over the next four quarters have been considered in our reserving methodology based on our loss experience from 2024 to the ~~Consumer~~first ~~Program~~quarter ~~loan~~of ~~portfolio.~~2025 ~~Excluding~~with ~~these~~the ~~Consumer~~earlier ~~Program~~vintage ~~charge-offs~~promotional loans. Additionally, we ~~had~~have also implemented enhanced loss mitigation efforts that include working with promotional loan borrowers both prior to the end of the promotional period and once a ~~decrease~~borrower defaults in ~~charge-offs~~order ~~from~~to maximize collectability. A combination of these factors, along with the ~~prior~~remaining ~~year~~balance of promotional loans of only $3.4 million, resulted in our lower provisioning for the year ended December 31, 2025 and lower ending allowance balance at December 31, 2025.

As ~~discussed~~of ~~previously~~December 31, 2025, the ~~increase~~principal inbalance ~~charge-offs~~outstanding onof ~~the~~ Consumer Program ~~loan portfolio have been driven by losses concentrated in~~ loans ~~originated~~was ~~between~~$97 ~~the~~million, ~~third~~excluding ~~quarter~~a of$7 ~~2022~~million ~~and~~discount ~~the~~as ~~first~~a ~~quarter~~result of ~~2023.~~our ~~Charge-offs~~prior ~~from~~decision ~~these~~to ~~vintages~~market ina ~~2024~~majority ~~were 61%~~ of the ~~total~~portfolio ~~gross~~for ~~loan charge-offs~~sale, ~~before~~which ~~the~~has ~~$20.0~~since ~~million~~been ofmoved ~~charge-offs~~back ~~related~~ to ~~the~~LHFI ~~transfer~~and ofwill ~~Consumer~~be ~~Program~~run-off ~~loans~~over ~~to held for sale~~time. ~~During~~These ~~the~~loans ~~year~~are ~~ended~~accounted ~~December~~for ~~31,~~like ~~2023~~our ~~the~~other ~~charge-offs~~consumer ~~of Consumer Program~~ loans inand ~~these~~are ~~vintages~~not ~~was~~placed ~~79%~~on ofnonaccrual ~~total~~because ~~gross~~they ~~loan~~are ~~charge-offs.~~charged Asoff ofwhen ~~December~~they ~~31,~~become ~~2024,~~90 ~~the~~days ~~amount~~past ofdue. ~~loans~~The ~~from~~allowance ~~these~~on ~~vintages~~this inportfolio plus the ~~held~~discount ~~for~~amounts ~~investment~~to ~~loan portfolio was~~ $~~19.1~~8 million, oras ~~approximately 50%~~ of ~~the~~December ~~total~~31, ~~$38~~2025.9 ~~million~~As ~~held for investment balance. The TPOS provides limited credit enhancement through certain direct payments and the release~~ of ~~funds~~December ~~from~~31, 2025, a94% ~~reserve account. These amounts are recognized in our results~~ of ~~operations in~~ the ~~period~~outstanding inprincipal ~~which~~balance ~~they~~was ~~become available to us. During 2024~~current, weresulting ~~recognized $3.0 million~~ in ~~our~~148% ~~results~~coverage ofby ~~operations~~the ~~related~~aggregate toallowance ~~this~~and ~~credit~~discount ~~enhancement. See additional discussion~~ of the ~~credit~~non-current ~~enhancement~~principal ~~in “Critical Accounting Estimates and Policies” in this MD&A~~balances.

~~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 of Atlanta, and repurchase agreements.

Our investment securities portfolio is managed by our Chief Financial Officer, who has significant experience in this area, with the concurrence of our Asset/Liability Committee. In addition to our Chief Financial Officer (who is the chairman of the Asset/Liability Committee) this committee is comprised of outside directors and other senior officers of the Bank, including but not limited to our Chief Executive Officer. Investment management is performed in accordance with our investment policy, which is approved annually by the Board of Directors. Our investment policy authorizes us to invest in:63

●Table ~~Government~~of National Mortgage Association (“GNMA”), Federal National Mortgage Association (“FNMA”) and the Federal Home Loan Mortgage Corporation (“FHLMC”) residential mortgage-backed securities (“MBS”) and commercial mortgage backed securities (“CMBS”)Contents

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.

Our investment securities portfolio is managed by our CFO, who has significant experience in this area, with the concurrence of our ALCO. In addition to our CFO (who is the chairman of the ALCO) this committee is comprised of outside directors and other senior officers of the Bank, including but not limited to our CEO and Treasurer. Investment management is performed in accordance with our investment policy, which is approved annually by the Board of Directors. Our investment policy authorizes us to invest in:

●

GNMA, FNMA and the FHLMC residential MBS and CMBS

●

Collateralized mortgage obligations

●

U.S. Treasury securities

●

SBA guaranteed loan pools

●

Agency securities

●

Obligations of states and political subdivisions

●

Corporate debt securities, with rated securities at investment grade

59● CLOs

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● Collateralized Loan Obligations (“CLOs”)

MBS are securities that have been developed by pooling a number of real estate mortgages and which are principally issued by agency/~~government-sponsored~~ ~~entities (“~~GSEs”) such as the GNMA, FNMA and FHLMC. These securities are deemed to have high credit ratings, and minimum regular monthly cash flows of principal and interest are guaranteed by the issuing agencies.

~~Collateralized mortgage obligations (“~~CMOs”) are bonds that are backed by pools of mortgages. The pools can be GNMA, FNMA or FHLMC pools or they can be private-label pools. The CMOs are designed so that the mortgage collateral will generate a cash flow sufficient to provide for the timely repayment of the bonds. The mortgage collateral pool can be structured to accommodate various desired bond repayment schedules, provided that the collateral cash flow is adequate to meet scheduled bond payments. This is accomplished by dividing the bonds into classes to which payments on the underlying mortgage pools are allocated. The bond’s cash flow, for example, can be dedicated to one class of bondholders at a time, thereby increasing call protection to bondholders. In private-label CMOs, losses on underlying mortgages are directed to the most junior of all classes and then to the classes above in order of increasing seniority, which means that the senior classes have enough credit protection to be given the highest credit rating by the rating agencies.

Obligations of states and political subdivisions (municipal securities) are purchased with consideration of the current tax position of the Bank. Both taxable and tax-exempt municipal bonds may be purchased, but only after careful assessment of the market risk of the security. Appropriate credit evaluation must be performed prior to purchasing municipal bonds.

Corporate bonds consist of senior and/or subordinated notes issued by banks. Bank subordinated debt, if rated, must be of investment grade and non-rated bonds are permissible if the credit-worthiness of the issuer has been properly analyzed.

CLOs are actively managed securitization vehicles formed for the purpose of acquiring and managing a diversified portfolio of senior secured corporate bank loans, otherwise known as “broadly syndicated loans”. The loan portfolio is transferred to bankruptcy-remote special-purpose vehicle, which finances the acquisition through the issuance of various classes of debt and equity securities with varying levels of senior claim on the underlying loan portfolio. CLOs must be rated AA or better at the time of purchase.

WeAFS ~~classify~~and ~~our investment securities as either held-to-maturity (“~~HTM”) ~~or available-for-sale (“AFS”). Debt~~ investment securities ~~that~~totaled ~~Primis~~$178 ~~has~~million ~~the~~as ~~positive~~of ~~intent~~December ~~and~~31, 2025, ~~ability~~a todecrease ~~hold~~of to27% ~~maturity~~from ~~are~~$245 ~~classified~~million as ~~HTM~~of ~~and~~December ~~carried~~31, at2024, ~~amortized~~primarily ~~cost.~~due ~~Investment~~to ~~securities~~sale ~~classified~~of as$144 ~~AFS~~million ~~are those debt securities that may be sold~~ in ~~response~~book tovalue ~~changes~~of ininvestment ~~interest rates, liquidity needs or other similar factors. Investment~~ securities ~~AFS~~during ~~are carried at fair value~~2025, ~~with~~improvement in unrealized ~~gains or~~ losses ~~net~~on ~~of deferred taxes, included in accumulated other comprehensive income (loss) in stockholders’ equity. Our portfolio of~~ AFS securities ~~currently~~and ~~contains~~paydowns, amaturities, ~~material~~and ~~amount~~calls of ~~unrealized~~the ~~mark-to-market~~AFS ~~adjustments~~and ~~due~~HTM toinvestments ~~increases~~over inthe ~~market~~past ~~interest~~year, ~~rates~~partially ~~since~~offset ~~the~~by ~~original~~purchases ~~purchase~~ of ~~many~~AFS ofsecurities ~~these~~during ~~securities~~that time. We ~~intend~~recognized tono ~~hold~~credit ~~these~~impairment ~~securities until maturity or recovery of the value and do not anticipate realizing any losses on the investments.~~

Investment securities, AFS and HTM, totaled $245.4 million as of December 31, 2024, an increase of 2.2% from $240.1 million as of December 31, 2023, primarily due to purchases of available-for-sale securities of $43.1 million, offset by paydowns, maturities, and calls of the investments during the year. We did not sell any AFS or HTM securities during 2024 or 2023.64

We recognized no credit impairment charges related to credit losses on our HTM investment securities during 2024 and an immaterial amount in 2023.

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~~The~~charges ~~following~~related ~~table~~to ~~sets~~credit ~~forth~~losses aon ~~summary~~our ofHTM ~~the~~ investment securities ~~portfolio~~during asthe ofyear ~~the~~ended ~~dates~~December ~~indicated~~31, 2025. ~~AFS~~We decided to sell the $144 million of investment securities ~~are~~in ~~reported~~2025 atas ~~fair~~an ~~value~~opportunity to restructure the portfolio into better yielding investments over the long-term, taking advantage also of gains during the year in the sale-leaseback and ~~HTM~~PFH ~~investment~~transactions to offset the $15 million of realized losses upon sale of the securities. ~~are~~The ~~reported~~average atcoupon ~~amortized~~of ~~cost~~the ~~(in~~aggregate ~~thousands)~~investments sold was 2.98% and we partially replaced the $144 million of sold investments with $75 million of par value AFS securities with an average coupon of 4.22%.


	December 31,		December 31,
	2024		2023
Available-for-sale investment securities:
Residential government-sponsored mortgage-backed securities	$	91,407	$	96,808
Obligations of states and political subdivisions		29,705		30,080
Corporate securities		15,080		14,048
Collateralized loan obligations		—		4,982
Residential government-sponsored collateralized mortgage obligations		56,390		34,471
Government-sponsored agency securities		13,836		13,711
Agency commercial mortgage-backed securities		22,178		30,110
SBA pool securities		7,307		4,210
Total	$	235,903	$	228,420

Held-to-maturity investment securities:
Residential government-sponsored mortgage-backed securities	$	7,760	$	9,040
Obligations of states and political subdivisions		1,519		2,391
Residential government-sponsored collateralized mortgage obligations		169		219
Total	$	9,448	$	11,650

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).


		December 31,			December 31,
		2025			2024
Available-for-sale investment securities:
Residential government-sponsored mortgage-backed securities		$	71,806		$	91,407
Obligations of states and political subdivisions			5,778			29,705
Corporate securities			6,579			15,080
Residential government-sponsored collateralized mortgage obligations			63,807			56,390
Government-sponsored agency securities			—			13,836
Agency commercial mortgage-backed securities			16,965			22,178
SBA pool securities			6,442			7,307
Total		$	171,377		$	235,903

Held-to-maturity investment securities:
Residential government-sponsored mortgage-backed securities		$	5,462		$	7,760
Obligations of states and political subdivisions			1,519			1,519
Residential government-sponsored collateralized mortgage obligations			—			169
Total		$	6,981		$	9,448

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.

For additional information regarding investment securities refer to “Item 8. Financial Statements and Supplementary Data, Note 2 - Investment Securities” in this Form 10-K.

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The following table sets forth the amortized cost, fair value, and weighted average yield of our investment securities by contractual maturity as of December 31, ~~2024~~2025. Weighted average yield is calculated as the tax-equivalent yield on a pro rata basis for each security based on its relative amortized cost. Yields on tax-exempt securities have been computed on a tax-equivalent basis. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties ($ in thousands).


	Investment Securities Available-for-Sale
					Weighted
	Amortized				Average
	Cost		Fair Value		Yield
Obligations of states and political subdivisions
Due less than one year	$	~~1,460~~795	$	~~1,437~~791	2.5016	%
Due after one year through five years		41,~~123~~355		31,~~831~~358	25.7915	%
Due after five years through ten years		162,~~867~~965		142,~~747~~562	2.2338	%
Due after ten years		111,~~050~~205		91,~~690~~067	23.0460	%
		336,~~500~~320		295,~~705~~778	23.2416	%
Corporate securities
Due after five years through ten years		14,000		13,386	4.50	%
Due after one year through five years		5,000		4,786	8.05	%
Due after ten years		2,000		1,694	4.50	%
Due after five years through ten years		2,000		1,793	4.50	%
		167,000		156,~~080~~579	47.5003	%
Government-sponsored agency securities
Residential government-sponsored mortgage-backed securities
Due after one year through five years		62,~~931~~975		63,~~499~~002	14.3155	%
Due after five years through ten years		47,~~893~~083		36,~~900~~597	12.7993	%
Due after ten years		462,~~491~~120		362,~~437~~207	24.0947	%
		1672,~~315~~178		1371,~~836~~806	14.6733	%
Residential government-sponsored mortgage-backed securities
Residential government-sponsored collateralized mortgage obligations
Due within a year		1,717		1,706	2.25	%
Due after five years through ten years		11,999		12,268	5.31	%
Due after one year through five years		3,106		3,077	4.66	%
Due after ten years		51,217		51,539	4.96	%
Due after five years through ten years		18,984		16,719	2.01	%
		63,216		63,807	5.03	%
Due after ten years		81,848		69,905	2.11	%
Agency commercial mortgage-backed s

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