Primis Financial Corp. Announces Sale-Leaseback Transaction

Rhea-AI Summary

Primis Financial (NASDAQ: FRST) announced a sale-leaseback covering 18 branch properties that generated approximately $58 million of proceeds and a pretax gain of $48–50 million. After restructuring charges and taxes the company expects a $38 million after-tax gain or $1.54 per share, and projects a 13.2% increase in tangible book value to $13.25 per share.

The company expects recurring earnings to rise 15.0%, net interest margin to expand to 3.46%, CET1 to increase by 0.70 points (to 9.32% consolidated), and annual pre-tax earnings tailwinds from securities, debt and BOLI actions totaling roughly $8.5 million.

Positive

• After-tax gain of $38 million or $1.54 per share
• Tangible book value up 13.2% to $13.25
• Recurring net income +15.0% (to $7.857 million pro forma)
• Net interest income +$2.231 million (+7.7%) to $31.263 million
• CET1 consolidated +0.70 points to 9.32%
• Estimated annual pre-tax earnings uplift of $4.3M (securities) + $3.0M (debt) + $1.2M (BOLI)

Negative

• Recurring occupancy expense increase of $5.4 million per year
• Planned securities sales carry an estimated pre-tax loss of $14.8 million
• Non-interest expense increases by $1.34 million pro forma
• Outstanding subordinated debt currently costs ~9.50% and requires refinancing

Key Figures

Pre-tax gain $50 million Sale-leaseback transaction covering 18 branch properties

After-tax gain $38 million Net gain after restructuring charges and deal expenses

Gain per share $1.54 per share Net benefit from transaction and restructuring

TBV accretion 13.2 % Increase in Tangible Book Value versus reported 3Q25

Recurring earnings lift 15.0 % Increase in recurring earnings attributed to the transaction

Sale proceeds $58 million Proceeds from sale-leaseback of 18 branches

Securities loss $14.8 million Estimated pre-tax loss on sale of ~$144M securities at 1.92% yield

Earnings improvement $4.3 million annually Estimated pre-tax earnings boost from securities portfolio restructuring

Market Reality Check

$11.69 Last Close

Volume Volume 44,886 versus 20-day average 75,082 (relative volume 0.6x). low

Technical Price $11.69 is above 200-day MA $10.29 and 7.2% below 52-week high $12.60.

Peers on Argus

Peers show a mixed tape: NECB +0.73%, FINW +0.72%, while PKBK -0.17%, WSBF -1.05%, FDBC -1.39%, suggesting today’s restructuring news for FRST is more stock-specific than sector-driven.

Historical Context

Date	Event	Sentiment	Move	Catalyst
Oct 23	Q3 2025 earnings	Positive	-1.7%	Stronger earnings, higher NIM, growth in digital deposits and specialty lending.
Oct 06	Earnings call notice	Neutral	-0.2%	Announcement of Q3 2025 earnings release date and investor conference call.
Jul 24	Q2 2025 earnings	Positive	+0.3%	Higher net income, Panacea-related gain, and ongoing cost reductions.
Jul 08	Earnings call notice	Neutral	-0.9%	Scheduled Q2 2025 results release and conference call for investors.
Jun 25	Tech partnership	Positive	-1.5%	Adoption of Lenders Cooperative platform for SBA and commercial lending.

Pattern Detected

Recent history shows multiple instances where positive operational or earnings news was followed by modest negative price reactions, indicating a tendency for the stock to sometimes sell off on good news.

Recent Company History

This announcement continues a 2025 pattern of balance sheet and earnings repositioning for Primis. In Q2 2025, the company reported higher net income and realized gains from a partial Panacea sale. Subsequent Q3 2025 earnings highlighted improved net interest margin and strong specialty lending growth. Operationally, Primis also invested in SBA and commercial lending tech in June 2025. Despite generally constructive fundamentals, past earnings and strategic updates have at times seen muted or negative one-day price moves, which provides useful context for interpreting this new sale-leaseback and restructuring package.

Market Pulse Summary

This announcement details a comprehensive balance sheet and earnings restructuring, highlighted by a $50 million pre-tax gain, $38 million after-tax benefit and 13.2% tangible book value accretion. Management outlines portfolio sales, debt paydowns, and BOLI adjustments designed to lift recurring earnings by 15.0%. In context of prior 2025 earnings and strategic updates, investors may focus on execution risk, realized returns on reinvested assets, and whether pro forma metrics like ROAA and net interest margin track close to these outlined expectations.

Key Terms

subordinated debt financial

"position the Company to reduce its outstanding subordinated debt by approximately"

Subordinated debt is a type of loan that is paid back after other debts have been settled if a company encounters financial trouble. It is considered riskier for lenders because they have lower priority in getting repaid, similar to being last in line during a payout. For investors, this means higher potential returns in exchange for taking on more risk.

CET1 regulatory

"CET1 – Consolidated | | 8.62 % | | 0.70 % | | 9.32 %"

CET1, or Common Equity Tier 1, is a measure of a bank's core financial strength, representing its most reliable and high-quality capital, primarily made up of shareholders' equity like common stock. It acts like a financial safety buffer, helping the bank absorb losses and stay stable during economic downturns. For investors, a strong CET1 ratio indicates a bank's resilience and overall health.

AI-generated analysis. Not financial advice.

Accretive to TBV by 13.2% and Recurring Earnings by 15.0%

MCLEAN, Va., Dec. 8, 2025 /PRNewswire/ -- Primis Bank (the "Bank"), the wholly-owned subsidiary of Primis Financial Corp. (NASDAQ: FRST) ("Primis" or the "Company"), today announced it has entered into a sale-leaseback transaction covering 18 branch properties. The transaction itself has a pre-tax gain of $50 million and provided the Bank a unique opportunity to restructure several areas of the balance sheet, improve operating earnings and build capital levels to support the growth expected in 2026 and 2027.

Dennis J. Zember, Jr., President and Chief Executive Officer of the Company stated, "This transaction as we close out 2025 is the finishing touch on a great year of repositioning the Company.  We have rebuilt tangible book value and capital levels by realizing some embedded gains and strengthened the earnings outlook materially with 12 months of profitable growth and now this restructure.  Because of this transaction, we are starting 2026 with the capital we need to support several mature strategies that are growing revenue with very little operating expense burden."

On a net basis, after restructuring charges and deal expenses, the Company expects a gain of $38 million after tax or $1.54 per share. The impact on the Company's key ratios is seen below (against reported 3Q25 results and assuming full implementation of restructuring which is expected to be complete in the first quarter of 2026):

Consolidated Impact		Reported 3Q25		Impacts of Restructure		Proforma 3Q25		% Change
ROAA		0.70 %		0.10 %		0.80 %		14.3 %
ROTCE		9.45 %		0.16 %		9.61 %		1.7 %
Net Interest Margin		3.18 %		0.28 %		3.46 %		8.8 %
Efficiency Ratio		79.0 %		-2.0 %		77.0 %		(2.5 %)
Tangible Book Value		$11.71		$1.54		$13.25		13.2 %
TCE / TA		7.47 %	%	0.96 %		8.43 %	%	12.9 %
CET1 – Consolidated		8.62 %		0.70 %		9.32 %		8.1 %
CET1 – Bank		10.14 %		0.70 %		10.84 %		6.9 %

 

Sale-Leaseback Transaction:
The Company's proceeds from the sale is approximately $58 million, resulting in a pretax gain of $48 million after transaction related expenses.  Recurring rental expense is expected to increase occupancy expense by approximately $5.4 million per year, net of depreciation, which the Company expects to be offset to some degree by $1.8 million per year of earnings on the cash received at closing.

Securities Portfolio Restructuring: 
The Bank intends to sell securities with a book value of approximately $144 million and a weighted average yield of 1.92% at an estimated pre-tax loss of $14.8 million.  Approximately $50 million of proceeds will fund near-term loan growth with the remainder reinvested in securities at approximately 4.50%.  Pre-tax earnings improvement from this restructuring is estimated to be $4.3 million annually.

Subordinated Debt Paydown and Refinance
The stronger capital position, earnings forecast and cash levels at the parent company position the Company to reduce its outstanding subordinated debt by approximately $27 million.  The remainder of the subordinated debt has reduced capital advantages, is callable and currently costs approximately 9.50%.  Management expects to refinance this issuance in the near future.  Collectively, our subordinated debt strategies are expected to improve pre-tax earnings by approximately $3.0 million.

BOLI Restructuring
The Bank intends to restructure lower yielding BOLI assets into higher yielding policies and funding incremental required policies.  The one-time costs associated with the transaction are expected to be less than $100 thousand while earnings improvement is estimated at $1.2 million annually.

Roll forward of 3Q25 Earnings
A roll forward of the Company's earnings reflecting the expected impact of the transaction and subsequent restructuring is seen below:

Consolidated Impact		Reported 3Q25		Impacts of Restructure		Proforma 3Q25		% Change
Net Interest Income		29,032		2,231		31,263		7.7 %
Provision		(49)		-		(49)		0.0 %
Non-int Income		11,969		365		12,334		3.0 %
Non-int Expense		32,313		1,340		33,653		4.1 %
Pre-Tax Income		8,737		1,255		9,992		14.4 %
Tax Expense		1,907		228		2,135		12.0 %
Net Income		6,830		1,027		7,857		15.0 %

 

About Primis Financial Corp.

As of September 30, 2025, Primis had $4.0 billion in total assets, $3.2 billion in total loans held for investment and $3.3 billion in total deposits. Primis Bank provides a range of financial services to individuals and small- and medium-sized businesses through twenty-four full-service branches in Virginia and Maryland and provides services to customers through certain online and mobile applications.

 

Contacts:	Address:
Dennis J. Zember, Jr., President and CEO	Primis Financial Corp.
Matthew A. Switzer, EVP and CFO	1676 International Drive, Suite 900
Phone: (703) 893-7400	McLean, VA 22102
Primis Financial Corp., NASDAQ Symbol FRST
Website: www.primisbank.com

 

Forward-Looking Statements

This press release and certain of our other filings with the Securities and Exchange Commission contain statements that constitute "forward-looking statements" within the meaning of, and subject to the protections of, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are forward-looking statements. Such statements can generally be identified by such words as "may," "plan," "contemplate," "anticipate," "believe," "intend," "continue," "expect," "project," "predict," "estimate," "could," "should," "would," "will," and other similar words or expressions of the future or otherwise regarding the outlook for the Company's future business and financial performance and/or the performance of the banking industry and economy in general. These forward-looking statements include, but are not limited to, our expectations regarding our future operating and financial performance, including the preliminary estimated financial and operating information presented herein, which is subject to adjustment; our outlook and long-term goals for future growth and new offerings and services; our expectations regarding net interest margin; expectations on our growth strategy, expense management, capital management and future profitability; expectations on credit quality and performance; and the assumptions underlying our expectations.

Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve known and unknown risks and uncertainties which may cause the actual results, performance or achievements of the Company to be materially different from the future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements are based on the information known to, and current beliefs and expectations of, the Company's management and are subject to significant risks and uncertainties. Actual results may differ materially from those contemplated by such forward-looking statements. Factors that might cause such differences include, but are not limited to: instability in global economic conditions and geopolitical matters; the impact of current and future economic and market conditions generally (including seasonality) and in the financial services industry, nationally and within our primary market areas; changes in interest rates, inflation, loan demand, real estate values, or competition, as well as labor shortages and supply chain disruptions; the impact of tariffs, trade policies, and trade wars (including reduced consumer spending, lower economic growth or recession, reduced demand for U.S. exports, disruptions to supply chains, and decreased demand for other banking products and services); the Company's ability to implement its various strategic and growth initiatives, including those discussed in this release and its recently established Panacea Financial Division, digital banking platform, V1BE fulfillment service, Mortgage Warehouse division and Primis Mortgage Company; the risks associated with the Life Premium Finance sale, including failure to achieve the expected impact to our operating results; competitive pressures among financial institutions increasing significantly; changes in applicable laws, rules, or regulations, including changes to statutes, regulations or regulatory policies or practices; changes in management's plans for the future; credit risk associated with our lending activities; changes in accounting principles, policies, or guidelines; adverse results from current or future litigation, regulatory examinations or other legal and/or regulatory actions; potential impacts of adverse developments in the banking industry highlighted by high-profile bank failures, including impacts on customer confidence, deposit outflows, liquidity and the regulatory response thereto; potential increases in the provision for credit losses; our ability to identify and address increased cybersecurity risks, including those impacting vendors and other third parties; fraud or misconduct by internal or external actors, which we may not be able to prevent, detect or mitigate; acts of God or of war or other conflicts, acts of terrorism, pandemics or other catastrophic events that may affect general economic conditions; action or inaction by the federal government, including as a result of any prolonged government shutdown; and other general competitive, economic, political, and market factors, including those affecting our business, operations, pricing, products, or services.

Forward-looking statements speak only as of the date on which such statements are made. These forward-looking statements are based upon information presently known to the Company's management and are inherently subjective, uncertain and subject to change due to any number of risks and uncertainties, including, without limitation, the risks and other factors set forth in the Company's filings with the Securities and Exchange Commission, the Company's Annual Report on Form 10-K for the year ended December 31, 2024, under the captions "Cautionary Note Regarding Forward-Looking Statements" and "Risk Factors," and in the Company's Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made, or to reflect the occurrence of unanticipated events. Readers are cautioned not to place undue reliance on these forward-looking statements.

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SOURCE Primis Financial Corp.

FAQ

What did Primis Financial (FRST) announce on December 8, 2025?

Primis announced an 18-branch sale-leaseback that produced ~$58M proceeds and a pretax gain of $48–50M.

How much is the after-tax gain per share from Primis Financial's sale-leaseback (FRST)?

The company expects an after-tax gain of $38M, equal to about $1.54 per share.

How will the FRST transaction affect tangible book value and CET1?

Pro forma tangible book value rises 13.2% to $13.25; consolidated CET1 increases by 0.70 points to 9.32%.

What recurring cost will increase after Primis Financial's sale-leaseback (FRST)?

Recurring occupancy expense is expected to rise by about $5.4M per year, partly offset by cash earnings.

What is the estimated annual earnings improvement from Primis's securities, debt and BOLI actions (FRST)?

The company estimates roughly $4.3M from securities, $3.0M from subordinated debt actions, and $1.2M from BOLI restructuring.

When does Primis expect the restructure to be fully implemented for pro forma metrics (FRST)?

Management expects full implementation of restructuring in the first quarter of 2026.