Primis Financial Corp. (NASDAQ: FRST) reported a return to profitability for the fourth quarter of 2025, supported by a significant strategic gain on sale-leaseback transactions and a targeted restructuring of its investment securities portfolio. The holding company for Primis Bank announced net income available to common shareholders of $29.5 million, or $1.20 per diluted share, for the quarter ended December 31, 2025, compared to a net loss of $23.3 million, or $0.94 per share, in the same period a year earlier.
The results reflect a period of balance sheet optimization. Total assets reached $3.97 billion at year-end, a 5.6% increase from $3.76 billion at the end of 2024. Despite the growth in headline earnings, operational performance remained impacted by one-time costs associated with the company’s transition toward specialized digital lending and a higher-rate deposit environment.
Executive Commentary and Strategic Rationale
Dennis J. Zember Jr., President and Chief Executive Officer, characterized the quarter as a pivotal moment in the company’s multi-year restructuring. Zember noted that the efforts over the past year were directed at transforming the institution into a high-performing bank with a focus on core funding and specialized lending segments. He indicated that the fourth quarter represented the conclusion of significant “heavy lifting” regarding the balance sheet.
Specifically addressing the asset sales, Zember explained that the sale-leaseback transaction allowed the company to harvest substantial embedded gains from its real estate portfolio. These proceeds were immediately utilized to offset losses from the disposal of lower-yielding investment securities. According to Zember, this repositioning was essential to improving the bank’s future earnings profile and removing “legacy drags” on the net interest margin.
Chief Financial Officer, Richard N. Farmer, added that the capital levels at the end of 2025 provide the institution with significant flexibility. Farmer emphasized that the bank is now positioned with a Tier 1 capital ratio that exceeds internal targets, allowing for more aggressive pursuit of high-yielding loan opportunities in 2026.
Financial and Operational Performance Data
A primary driver of the quarter’s fundamental performance was the expansion of the net interest margin (NIM). Primis reported a NIM of 3.28% for the fourth quarter, a 10-basis-point improvement over the third quarter of 2025 and a 38-basis-point increase from the 2.90% recorded in the prior-year period.
Key balance sheet and income metrics for the period include:
- Loan Expansion: Gross loans held for investment reached $3.28 billion, up 14.1% year-over-year. The mortgage warehouse segment was a primary catalyst, growing by $252.8 million to reach $317.5 million.
- Asset Quality: Non-performing assets (NPAs), excluding restructured loans, stood at $14.1 million, or 0.35% of total assets. The allowance for credit losses on loans was $39.5 million, representing 1.20% of total loans.
- Deposit Composition: Total deposits ended the year at $3.41 billion. Non-interest-bearing deposits rose to $554.4 million, representing 16.3% of the total deposit base, up from 13.9% at the end of 2024.
- Net Interest Income: For the full year 2025, net interest income rose to $118.7 million, compared to $105.2 million in 2024, driven by higher yields on new loan production.
Capital Position and Segment Growth
The retention of earnings and the strategic gain contributed to a 28% increase in tangible book value per share, which rose to $13.34 from $10.42 a year ago.
| Capital Ratio | Q4 2025 | Q4 2024 |
| Tangible Common Equity / Tangible Assets | 8.33% | 6.95% |
| Common Equity Tier 1 (Bank Level) | 13.78% | 12.15% |
| Total Risk-Based Capital (Bank Level) | 14.81% | 13.12% |
The company’s specialized divisions, Panacea Financial and Primis Mortgage, continued to serve as primary growth engines. Panacea, which focuses on medical professionals, saw its loan portfolio increase by 25% year-over-year. The mortgage segment reported $1.2 billion in closed loan volume for the full year 2025, a 50% increase over 2024 levels, despite broader industry headwinds in residential refinancing.
2026 Outlook and Market Context
Looking forward, Zember expressed confidence in achieving a 1.0% return on average assets (ROA) in 2026. He noted that the bank’s digital deposit strategy is successfully attracting lower-cost checking accounts, which is expected to mitigate interest expense even if the broader rate environment remains elevated.
The company also expects to realize further interest expense savings following the redemption of $27 million in subordinated debt scheduled for early 2026. While risks remain regarding the volatility of mortgage warehouse volumes and regional competition for deposits, management maintains that the current capital trajectory provides a robust buffer against macroeconomic fluctuations.