FRST 10-K & 10-Q changes, risk factors and insider trading

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

As of December 31, 2024,2025, we had $1.09$1.2 billion of commercial real estate loans outstanding, or 37.6%37% of our loan portfolio, including multi-family residential loans and loans secured by farmland. Commercial real estate lending typically involves higher loan principal amountsamounts, and the repayment is dependent, in large part, on 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.

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

Our unsecured consumer loan portfolio balance is $155.3$183 million, or approximately 5.3%6% of our total held for investment loan portfolio, as of December 31, 2024.2025. Included in this portfolio is $38.9$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 incomeincome, which is impacted by various factors that are outside of the control of the borrowerborrower, including macroeconomic conditions such as inflation and fluctuating interest rates. Further, aA downturn in the economy or otherjob company-specificlosses decisionscould that result inimpact a borrower losing their job could cause the borrower’s primaryability sourceto of income for repayment of themake loan to decline.payments. Each of these factors maycould cause a borrower to evaluate their debts and as a result they may prioritize paymentpayments of other debts above the consumer loanloans due to us. AlthoughIf 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 worsenworsen, borrowers may stop paying their loansloans, and itwhich 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 from that third-partyenhancement, which may not be realizable and; the inability to utilize itsuch credit enhancement could be detrimental to our financial condition and results of operations.

We receive a credit enhancement from thea third-party managing $152.1$90 million of consumer loans that are recorded on our balance sheet in both held for investment and held for sale as of December 31, 2024.2025. The credit enhancement is primarily provided through cash flows derived from loan originations. We madeelected the decision as ofon December 31, 2024 to discontinue originations of these loansloans, oneffective January 31, 2025. ThisAs decisiona willresult, causeour monthly cash receipts related to this credit enhancement to end at that point,ceased, which maycould adversely affect our financial condition and results of operations.operations while loan balances in this portfolio run-off.

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

Within theour $152.1$90 million third-party originated and serviced consumer loan portfolioportfolio, there is 25%$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, 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, 2024,2025, the amount of deferred interest on these loans was $7.0$390 million.thousand. 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 or before the end of their promotional periodperiod, a large amount of interest reimbursement will be due infrom athe shortthird-party periodservicer. of time fromIf the third-party servicer and if they cannot performreimburse thenus, we may not be able to realize any income on a significant amount ofthese loans in our portfolio, which may adversely impact the realization of the fair value of the derivative asset recognized.portfolio.

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 originatingloan 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, 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 OREOOREO, as of December 31, 2023.2024.

Economic and market conditions have been unstable,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.assets, which could negatively impact our earnings.

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 thanfrom 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.

The Bank originates residential mortgage loans through Primis Mortgage CompanyPMC, 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.

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. 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.

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. DuringIn 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 20242025, 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.

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 not do business in certain industries that are viewed as harmful to the environment or are otherwise negatively perceived, which could impact our growth.

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 bankslines of business or branches. We may not be able to expand our presence in our existing markets or successfully enter new marketsmarkets, 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 areasareas, 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 increaseincrease, which could reduce our potential returns,returns and reduce the attractiveness of these opportunities to us. We may compete with other financial services companies for acquisition opportunities, andthat many of these competitorsmay 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.

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 achievedachieved, and price and profitability targets may not prove feasible. External factors, such as compliance with regulations, competitive alternatives, and shifting market preferences,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, uponon 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 driventechnology-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 productproducts 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 CompanyWe or itsour 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 presentspresent a number of risks and challenges to the Company’sour 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 Company’sour implementation of AI technology and increase the Company’sour 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, the Companywe 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 Companywe may have limited visibility. Any of these risks could expose the Companyus to liability or adverse legal or regulatory consequences and harm the Company’sour reputation and the public perception of itsour business or the effectiveness of itsour security measures.

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 sellingcross-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.

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$93 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.infrastructure, which could expose us to operational and financial risks.

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 or reputation and expose us to significant liabilities.

As a financial institution, we are under threat of loss due to cyber-attacks and technical disruptions to the computer systems and network infrastructure we use, including those we maintain with our service providers and vendors. This risk has increased in recent years, and continues to increase, as we continue to expand customer capabilities to utilize internet and other remote channels to transact business. Two of the most significant cyber-attack risks that we face are e-fraud and compromise of sensitive customer data. E-fraud occurs when cybercriminals compromise our systems and networks, or those of our service providers and vendors, and extract funds directly from customercustomers or our accounts. The attempts to compromise sensitivesensitive, non-public personal customer data, such as account numbers and Social Security numbers, present potentially significant reputational, legal and/or regulatory costs to us. Our risk and exposure to these matters remainsremain heightened because of the evolving nature and complexity of these threats from cybercriminals, our plans to continue to provide internet banking and mobile banking channels,channels to initiate financial transactions, and our plans to develop additional remote connectivity solutions to serve our customers. While we have not experienced any material losses relating to cyber-attacks or other information security incidents, we have been subject to cyber-attacks and there can be no assurance that we will not suffer additional losses in the future.

We allow a portion 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 cause the security of the networks, information 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 for increased risk of (i) phishing, malware, and other cybersecurity attacks, (ii) vulnerability to disruptions of our information technology infrastructure and telecommunications systems for remote operations, (iii) unauthorized dissemination, access, misuse or destruction of sensitive or confidential information, (iv) our abilityinability to restore the systems in the event of a systems failure or interruption, and (v) impairment of our ability to perform critical functions, including wiring funds, all of which could expose us to risks of data or financial loss, litigation and liability and could seriously disrupt our operations and the operations of any impacted customers.

The occurrence of any successful cyber-attack could result in material adverse consequences to us including damage to our reputation, financial loss, increased operation expenses, remediation costs, and the loss of customers. We also could face litigation or additional regulatory scrutiny. Litigation or regulatory actions in turn 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 institutionsinstitutions, including the Bank.

Our ability to mitigate the adverse consequences of occurrences is in part dependent on the qualityeffectiveness of our information security proceduresprocedures, controls, and contracts and our ability to 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 attack.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 well-financedfinancially entities,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 seek to 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, including third party service providers and vendors..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.

OurIn businessdeciding exposes uswhether to fraudextend riskcredit fromor loanenter andinto depositother customers,transactions thewith partiesthird parties, we do business with, as well as from employees, contractors and vendors. We rely on financialinformation furnished by or on behalf of customers and othercounterparties, data from new and existing customers which could turn out to be fraudulent when accepting such customers, executing theirincluding financial transactionsstatements, andcredit making and purchasing loansreports and other financial assets.information. We may also rely on representations of those customers, counterparties or other third parties, such as independent auditors or property appraisers, as to the accuracy and completeness of that information. Such information could be inaccurate, including as a result of fraud on behalf of our customers, counterparties or other third parties. In times of increased economic stressstress, we are at an increased risk of fraud losses. We believecannot assure you that our underwriting and operational controls are in place towill 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.fraud. Our lending customers may also experience fraud in their businessesbusinesses, which could adversely affect their ability to repay their loans or make use of our services. Our customers’exposure and the exposure of our exposurecustomers 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 theour allowance for creditloan 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.

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 thosethese 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’sNASDAQ’s proposed clawback listing standards, which now require us and other Nasdaq-listedNASDAQ-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,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 banksus maycould increase if the number of bank failures increase or the cost of resolving failed banks increases.increase.

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 insured depository institutions insured byincluding the FDIC.Bank. Future deposit premiums paid by banks willus depend on FDIC rules, which are subject to change, the level of the DIF and the magnitude and cost of future bank failures. WeThe FDIC may befurther requiredincrease the assessment rates or impose additional special assessments in the future, which may require the Bank 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.

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.

Item 7 of our Annual Report on Form 10-K generally discusses year-to-year comparisons between the years ended December 31, 20242025 and 2023.2024. Discussions of comparisons between 20232024 and 20222023 are not included in this Form10-KForm 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, 20232024 as filed with the SEC on OctoberApril 15,29, 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.

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 a number of external economic variables in developing the allowance including the Virginia Unemployment Rate, Virginia House Price Index (“HPI”), Virginia Gross Domestic Product (“GDP”), and, National Unemployment and National Gross Domestic Product for pools of loans with borrowers outside of our local operating footprint. In determining forecasted expected losses, we use Moody’s economic variable forecasts and apply probability weights to the related economic scenarios. We also use internal factors including loan balances, credit quality, contractual life of loans, and historical loss experience. While historical credit loss experience provides the basis for the estimation of expected credit losses, adjustments to historical loss information may be made for differences in current portfolio-specific risk characteristics, environmental conditions or other relevant factors. Management’s primary qualitative factors utilized in informing qualitative adjustments to the modeled allowance calculations are loan-to-value exceptions, borrower debt service coverage exceptions, and large concentrations. As of December 31, 2025, the qualitative adjustments applied by management increased our modeled allowance that was based on historical loss information, but did not represent a material amount of our total allowance.

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, 20242025 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 resultsresult 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,values. resultingAs inof September 30, 2025, the 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 SeptemberDecember 30,31, 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.

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.

In the fourth quarter of 2024, wethe Company made the decision to cease originating new loans under the Consumer ProgramProgram, effective January 31, 2025 and moved a large portion of the portfolio, with an amortized cost of $133.2$133 million, to loans held for sale and marked them to the lower of cost or fair market value. The adjustment to fair market value resulted in additional provision expense and charge-offs of $20.0$20 million induring the fourthyear quarterended ofDecember 31, 2024. The remaining portion of the portfolio stillof approximately $39 million remained classified as held for investment of approximately $38.9 million as of December 31, 20242024. hasDuring anthe associatedfirst allowancequarter of 2025 the Company made the decision to retain until their maturity or payoff the loans previously transferred to held for creditsale. lossesThe loans were transferred back to held for investment at their then current amortized cost basis at the time of $16.3transfer, millionwhich andincluded isthe expectedprevious tofair runmarket offvalue substantiallyadjustment inas 2025.required by applicable accounting guidance.

FINANCIALOPERATIONAL HIGHLIGHTS

Balance Sheet Highlights

Net Income (Loss)

Net Interest Income and Net Interest Margin

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.

The following table presents the categories of noninterest income for the years ended December 31, 20242025 and 20232024 ($ in thousands):

The following table present the major categories of noninterest expense for the years ended December 31, 20242025 and 20232024 ($ in thousands):

The following illustrates key balance sheet categories as of December 31, 20242025 and 20232024 ($ in thousands):

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. This discussion and analysis should be read in conjunction with the condensed consolidated financial statements, the footnotes thereto, and the other financial data included in this report and in our Annual Report on Form 10-K for the year ended December 31, 2025. Results of operations for the three and six months ended MarchJune 31,30, 2026, are not necessarily indicative of results that may be achieved for any other period. The emphasis of this discussion will be on the three and six months ended MarchJune 31,30, 2026, compared to the three and six months ended MarchJune 31,30, 2025 for the condensed consolidated income statements. For the condensed consolidated balance sheets, the emphasis of this discussion will be the balances as of MarchJune 31,30, 2026 compared to December 31, 2025. This discussion and analysis contain statements that may be considered “forward-looking statements” as defined in, and subject to the protections of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. See the following section for additional information regarding forward-looking statements.

Statements and financial discussion and analysis contained in this Quarterly Report on Form 10-Q10-Q, including statements contained in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, that are not statements of historical fact constitute forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. 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 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 Quarterly Report on Form 10-Q 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 Quarterly Report on Form 10-Q (or an earlier date to the extent applicable). Except as required by applicable law, we undertake no obligation to publicly updatedupdate or revise these forward-looking statements in light of new information or future events.

Primis Financial Corp. is the bank holding company for Primis 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. Primis Bank has 24 full-service branches in Virginia and Maryland and also provides services to customers through certain online and mobile applications. As of MarchJune 31,30, 2026, Primis had $4.3$4.4 billion in total assets, $3.4$3.5 billion in total loans held for investment, $3.4 billion in total deposits and $427$434 million in total stockholders’ equity.

We organized the core bank and lines of business in a way that we believe will drive premium operating results. Our strategy centers on growing earning assets, growing non-interest deposits, and achieving higher production and profitability in our retail mortgage business and the firstsecond quarter of 2026 was reflective of progress in these areas.

Our growth strategy is focused on driving higher production and profitability in four key areas of the company identified as the core community bank, mortgage warehouse, Panacea financial lending,financial, and PMC. The following highlights key metrics from these four areas during the first quarter of 2026:

Funding for many of our strategies (all of the above excluding the core community bank) is provided exclusively by the Bank’s digital platform powered by what we believe is one of the safest and most functional deposit accounts in the nation. Because of the scalability of the platform, there is significantly less pressure on the core community bank to provide this funding and risk the profitable, decades olddecade-old relationships with core customers. The digital platform ended the firstsecond quarter of 2026 with approximately $1.0 billion of deposits with a cost of deposits of 3.79%. The digital platform successfully grew business accounts in 2026 with small business balances reaching $28$38 million as of MarchJune 31,30, 2026, up substantially from $16 million at December 31, 2025. OverApproximately 1,20074% of our digital accounts have come from referrals from otherdeposit customers and approximately 81% of our consumer accounts have been with the Bank for overat twoleast three years.

TheWe quarterexperienced strong results during the three and six months ended MarchJune 31,30, 2026 was strong,2026, earning $7$9 million and $17 million, respectively, in net income available to common shareholders, or $0.30$0.38 and $0.68 basic and diluted earnings per common share, comparedrespectively. This compares to net income available to common shareholders of $23$2 million,million and $25 million during the three and six months ended June 30, 2025, respectively, or $0.92$0.10 and $1.01 basic and diluted earnings per common share, forrespectively. During the three and six months ended MarchJune 31,30, 2025.2026 Net income available to common shareholdersresults included $25a $6 million gain on liquidation of an insurance agency investment, and during the three and six months ended June 30, 2025, results included a $7 million gain on sale of PFH shares and $32 million in sale of PFH shares and a one-time gainsgain related to the deconsolidation of PFHPFH, respectively. When excluding these gains from each period, income before income tax would have increased $9 million and $18 million during the three and six months ended MarchJune 31, 2025. When excluding the one-time gains, net income available to common shareholders grew $9 million in the first quarter of30, 2026 when compared to the same quarterperiods lastin year.2025, respectively.

The key financial drivers of the year over yearour results are noted in the following table with additional discussions following the table ($ in thousands).

Three-Month Comparison Net income available to common shareholders for the three months ended MarchJune 31,30, 2026 totaled $7$9 million, or $0.30$0.38 basic and diluted earnings per share, compared to $23$2 million, or $0.92$0.10 basic and diluted earnings per share, for the three months ended MarchJune 31,30, 2025. NetThe results reflect strong growth in net interest income availableof to common shareholders during the three months ended March 31, 2025 included a $25$9 million one-timedriven gainby relatedgrowth in interest income and flat interest expense. Provision for credit losses improved by $3 million due to the deconsolidationConsumer ofProgram PFH.loan Whenportfolio excludinglargely the one-time gain, net income availableshifting to commonamortizing shareholdersand grewimproved $9 million in the first quarter of 2026 whendelinquencies compared to the same quarter lastprior year and reflectsa anshift in the remaining loan portfolio mix to loan categories with lower reserve requirements. We also experienced a $4 million increase in noninterest income ofdriven $6 million primarily due toby higher mortgage banking income in the first quarter of 2026 driven by growth of PMC and higher loan sales and related gains. The results also reflect a $6 million increase in net interest income driven by an increase in interest and dividend income primarily from higher average loans held for investment balances. These are partially offset by an increase in noninterest expenses of $1 million driven by personnel expenses due to growth in PMC and aincreased decreaseloan sale gains. These increases were offset by higher noninterest expense driven by personnel costs and occupancy expenses, the former due to growth in noncontrollingPMC incomeand Mortgage Warehouse and the latter primarily a result of $4higher million.lease expense due to the sale-leaseback transaction executed in December 2025. Additional details of the changes in net income will be discussed in the remaining sections of this Results of Operations section.

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 ($ in thousands):

Net interest income was $32 million for the three months ending March 31, 2026, compared to $26$34 million for the three months ended MarchJune 31,30, 2026, compared to $25 million for the three months ended June 30, 2025. Net interest income increased primarily as a result of higher average LHFS and net loans balances in the firstsecond quarter of 2026 compared to same period in prior year whilealong with a 31 basis point increase in rates over this samethat time remainedon relativelynet stable.loans. Interest expense remainedwas relatively$120 flatthousand higher in the second quarter of 2026 compared to same period in prior year due primarily to $1 million higher expense on $102 million average borrowings mostly offset by lower interest expense on deposits due to lower rates on interestall bearinginterest-bearing deposit accounts despite deposit growth in all accounts except for time deposits in the current year. Our net interest margin for the three months endingended MarchJune 31,30, 2026 was 3.43%,3.45%, compared to 3.15%2.86% for the three months endingended MarchJune 31,30, 2025. Continued rebuilding of earning asset levels coupled with increased net loan rates and favorable deposit pricing was responsible for the improvement during the firstsecond quarter of 2026. Margin increased by 28 basis points primarily from higher average interest-earning asset balances and higher net interest income when comparing the three months ending March 31, 2026 to the three months ending March 31, 2025.

The Financial Condition sectionand Asset Quality sections of this MD&A provides information on our loan portfolio, past due loans, nonperforming assets and the allowance for credit losses.

Noninterest expenses increased 4%20% to $34$38 million during the three months ended MarchJune 31,30, 2026, compared to $33$32 million during the three months ended MarchJune 31,30, 2025. The increase was primarily driven by higher salaries and benefits expensesexpenses, occupancy expenses, professional fees, and occupancyother operating expenses, partially offset by declineslower indata mostprocessing of our other noninterest expense categories.expense.

Salaries and benefits expensesexpense increased $2$3 million duringin the three months ended MarchJune 31,30, 2026, compared to the same period in 2025. PMC accounted for most$2 million of the growth in salaries and benefits expense due to the significant growth of the business in the last year.year, while growth in the Mortgage Warehouse business and the core Bank comprised the remaining $1 million increase due to growth in these areas.

DataOffsetting some of the increases in noninterest expense was a decrease of $695 thousand in data processing expense decreased $661 thousand during the three months ended MarchJune 31,30, 2026, compared to the same period in 20252025. The decline in expense was driven by the reduced cost of data processing paid for our core loan and deposit systemsystems as a result of renegotiating our core data processing contract with our vendor in the second half of 2025.

The following illustrates key balance sheet categories as of MarchJune 31,30, 2026 and December 31, 2025 ($ in thousands):

LHFS increased $57$66 million during the first quarter of 2026 from December 31, 2025 primarily due to the origination for sale during the quarter of $41$33 million of Panacea Financial division commercial loans and an increase of $16$33 million in PMC loans. A majority of the Panacea loans were originated in the second quarter and are expected to be sold to another financial institution a few weeks after March 31, 2026 andduring the remainderthird isquarter anticipated to be sold to the same financial institution before June 30,of 2026. The increase in PMC loans is a result of overall increase in origination volume during the quarter.

Gross LHFI were $3.4$3.5 billion and $3.3 billion as of MarchJune 31,30, 2026 and December 31, 2025, respectively. The increase in loans was driven by growth of mortgage warehouse loans and Panacea Division commercial loans. The growth was partially offset by loan paydowns during the threesix months ended MarchJune 31,30, 2026 of consumer loans andconsumer, non-owner occupied commercial real estateestate, and residential 1-4 family loans. As of MarchJune 31,30, 2026 and December 31, 2025, a majority 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.

The composition of our loans HFI portfolio consisted of the following as of MarchJune 31,30, 2026 and December 31, 2025 ($ in thousands):

The following table sets forth the contractual maturity ranges of our LHFI portfolio and the amount of those loans with fixed and floating interest rates in each maturity range as of MarchJune 31,30, 2026 ($ in thousands):

Our highest concentration of credit by loan type is in commercial real estate. As of MarchJune 31,30, 2026, 36%35% 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.

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

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

The following table sets forth the contractual maturity ranges of our Consumer Program loan portfolio principal balances as of MarchJune 31,30, 2026, which is only originated at fixed rates ($ in thousands):

Over the past two years our Consumer Program loan portfolio comprised a significant amount of loans that had a no-interest promotional period. A majority of these have paid-off or converted to an amortization period and as of MarchJune 31,30, 2026 we only had approximately $800$250 thousand of principal amount of promotional loans that remain in a promotional period. All of these loans will end their promotional period in the next eightfour months.

The following table presents a comparison of nonperforming assets as of MarchJune 31,30, 2026 and December 31, 2025 ($ in thousands):

We believe that the allowance for credit losses as of MarchJune 31,30, 2026 is sufficient to absorb future expected credit losses in our loan portfolio based on our assessment of all known factors affecting the collectability of our loan portfolio. Our assessment involves uncertainty and judgment; therefore, the adequacy of the allowance for credit losses cannot be determined with precision and may be subject to change in future periods. In addition, bank regulatory authorities, as part of their periodic examination, may require additional charges to the provision for credit losses in future periods if the results of their reviews warrant additions to the allowance for credit losses.

Our allowance for credit losses was $46 million as of both MarchJune 31,30, 2026 and December 31, 2025. The allowance was flat during the threesix months as a result of the provision being mostly offset by net charge-offs during the period. Net charge-offs were driven by the Consumer Program portfolio and other consumercommercial loan net charge-offs.charge-offs, while meaningful recoveries were realized on the Consumer Program portfolio during the six months. The provision during the threesix months ended MarchJune 31,30, 2026 was driven by increases in growth in the commercial, commercial owner occupied, and warehouse loan portfolio balances, specific provisions determined for non-owner occupied commercial real estate loans, and charge-offs of Consumer Program loans, partially offset by a decline in commercial1-4 non-ownerfamily occupiedand multi-family residential loan balances.

Approximately half of ourOur net charge-offs were relatedprimarily driven during the three and six months ended June 30, 2026 by commercial loans and one specific borrower relationship. The borrower was in nonaccrual as of December 31, 2025 and during the six months ended June 30, 2026, we agreed to a resolution of the loan relationship resulting in $4 million of charge-offs and the remaining balance of the loans paid-off due to another financial institution providing financing to the borrower. The Consumer Program portfolio was a secondary driver of net charge-offs in both three and six months ended June 30, 2026, but was down significantly from the same periods in the prior year. During the three months ended June 30, 2026 we charged-off $1 million net of recoveries compared to $5 million during the three months ended MarchJune 31,30, 2026.2025. During the threesix months ended MarchJune 31,30, 2026,2026 we charged-off $512$2 thousandmillion net of recoveries,recoveries incompared theto Consumer$16 Program portfolio. Comparatively,million during the threesix months ended MarchJune 31,30, 2025, we charged-off $11 million, net of recoveries.2025. This significant improvement in net charge-offs related to the Consumer Program was a result of the reduction of the promotional loans in the portfolio over that time along with enhanced mitigation and collection efforts implemented by us to improve performance of the portfolio. The remaining balance of net charge-offs during the three months ended March 31, 2026 was related primarily to consumer loans in the Panacea division.

As of MarchJune 31,30, 2026, the principal balance outstanding of Consumer Program loans was $82$80 million, inclusive of a $5 million discount as a result of our prior decision to market a majority of the portfolio for sale, which has since been moved back to LHFI and will be run-off over time. These loans are accounted for like our other consumer loans and are not placed on nonaccrual because they are charged off when they become 90 days past due. The allowance and discounts on this portfolio plusare the discount amounts to $7 million, or 8%7% of the portfolio.portfolio principal balance. As of MarchJune 31,30, 2026, 94% of the outstanding principal balance was current and we had 355%457% coverage of the principal balance of loans greater than 30 days past due by the aggregate allowance and discount.

AFS and HTM investment securities totaled $179$175 million as of MarchJune 31,30, 2026, compareda todecrease of 2% from $178 million as of December 31, 2025, primarily due to purchases of AFS securities in the first quarter of 2026, partially offset by unrealized losses on AFS securities andwith paydowns, maturities, and calls of the AFS and HTM investments over the past six months mostly being offset by purchases of AFS securities during that time. We recognized no credit impairment charges related to credit losses on our HTM investment securities during the three and six months ended MarchJune 31,30, 2026.