Primis Financial Corp. Delivers Strong Q2 2026 Results, Announces Digital Core Conversion and Sustained Earnings Growth
Key Financial Highlights for Q2 2026
- Net income available to common shareholders: \$9.4 million, or \$0.38 per diluted share, a significant increase from \$2.4 million, or \$0.10 per diluted share, for Q2 2025.
- Six months YTD net income: \$16.7 million, or \$0.68 per diluted share, compared to \$25.1 million, or \$1.01 per diluted share, for the same period in 2025.
- Pre-tax pre-provision operating net income: \$11.7 million for Q2 2026, up from \$4.1 million in Q2 2025.
- Net interest income: \$33.8 million in Q2 2026, up 34.1% year-over-year.
- Net interest margin: Improved to 3.45% from 2.86% in Q2 2025.
- ROAA (Return on Average Assets): 0.90% for the quarter, up from 0.26% a year ago.
- Tangible book value per share: \$13.72, up 19.5% from \$11.48 in Q2 2025.
- Total assets: \$4.4 billion; Total loans held for investment: \$3.5 billion; Total deposits: \$3.4 billion.
- Quarterly dividend: \$0.10 per share, maintaining a 59-quarter streak.
Strategic and Operational Highlights
- Major Digital Core Conversion: Primis is set to convert its entire bank to a digital, real-time core platform, with an anticipated \$6.1 million positive earnings impact (split evenly between revenue and expense improvements). Implementation will begin in Q4 2026, with full impact expected by mid-2027. This move is expected to drive superior operating leverage and significantly enhance both customer experience and technological capabilities.
- Pre-tax gain from asset sales: The company recorded a \$5.9 million pre-tax gain from the sale of Bearing Insurance, offset by a provision for loan losses related to a large office CRE loan and a \$0.9 million lawsuit settlement.
- Nonperforming assets (NPAs): Declined by 37% during the quarter, with allowance to NPAs increasing to 73%. NPAs now represent 1.45% of total assets, down from 2.35% last quarter. The provision for credit losses was \$5.5 million, largely due to one major nonaccrual credit; core net charge-offs were 0.53% of average loans.
- Dividend continuity: The Board declared a \$0.10 per share dividend, payable August 21, 2026, continuing its uninterrupted streak.
Divisional Performance and Growth Initiatives
Core Community Bank
- 24 banking offices in Virginia and Maryland, comprising about two-thirds of the company’s balance sheet.
- Low investor CRE concentration (23% of total loans; only 188% of regulatory capital).
- Loan pipeline reached \$158 million at June 30, 2026, up 28% sequentially.
- Cost of deposits fell to 1.60% in Q2 2026 from 1.79% in Q2 2025; zero brokered deposits.
- Proprietary app (V1BE) for commercial depositors: Over \$450 million in deposits have used the service, driving \$70 million in new relationships.
- Non-interest-bearing deposits are a robust 21% of core deposits, underpinned by digital offerings.
Primis Mortgage
- Closed mortgage volume of \$421 million in Q2 2026, up 30% year-over-year, despite macro headwinds.
- Construction-to-permanent loan volume at \$34 million, up from \$26 million y/y.
- Pre-tax earnings from mortgage operations surged to \$2.2 million from just \$0.1 million a year ago.
Mortgage Warehouse
- Outstanding balances hit \$544 million, up 18% sequentially and 195% from Q2 2025.
- Average loan balances were \$426 million in Q2 2026, a 24% increase from Q1 and 226% y/y.
- Noninterest-bearing deposit funding averaged 11% of the warehouse balance sheet.
Panacea Financial
- Loans outstanding at \$617 million (including held for sale), up 11% annualized from March 2026.
- Loans held for investment at \$583 million, up 18% annualized from March.
- Deposits at Panacea up 52% year-over-year to \$169 million.
- Panacea remains the top-rated “Bank for doctors” on Google, serving over 7,500 professionals and practices nationwide.
- Sold \$51 million of loans in Q2; \$33 million classified as held-for-sale at quarter end.
Digital Platform
- Digital deposits ended Q2 at approximately \$1.0 billion, with cost of deposits dropping to 3.79% from 4.27% y/y.
- Small business account balances grew to \$38 million from \$16 million at year-end 2025.
- Digital customer “stickiness” is high, with 74% banking for at least three years.
Core Consolidation Initiative
- The digital core conversion is expected to deliver \$6.1 million in combined revenue and expense improvements:
- \$3 million from account consolidation and fee optimization (late 2026).
- \$2.4 million from printing/statement service consolidation (by January 2027).
- \$0.7 million from contract/consulting expense reductions (starting Q4 2026, fully realized by Q2 2027).
- Amortization of digital platform development costs (\$0.8 million/quarter) ends Q3 2027, improving reported net income thereafter.
Detailed Financials and Ratios
- Noninterest income: \$22.0 million in Q2 2026 (includes \$5.9 million gain from insurance disposal), up from \$18.0 million in Q2 2025.
- Mortgage banking income: \$11.4 million, up 44.3% y/y.
- Noninterest expense: \$38.2 million in Q2 2026, up from \$31.9 million y/y. Core operating burden (excluding mortgage, Panacea, and one-offs) was \$24.9 million, up from \$22.3 million. Notable one-time items: \$1.1 million for mortgage lawsuit settlement, \$0.4 million in loan-related costs, \$0.2 million for marketing, and \$0.9 million for shelf/BOLI/core conversion projects.
- Efficiency ratio: 68.5% (GAAP); 76.5% (operating).
- Allowance for credit losses: 1.33% of loans, down from 1.47% y/y.
- Gross loans to deposits: 100.6% (up from 93.7% y/y).
- Net charge-offs: 0.65% annualized (0.53% core, excluding consumer portfolio).
- Total capital ratios: Robust capital with common equity to assets at 9.96%, tangible common equity to tangible assets at 7.99%, and total risk-based capital ratio at 12.32%.
- Deposit growth: Total deposits up 3.1% y/y; noninterest bearing demand deposits up 5.9% y/y.
- FHLB advances: \$300 million at June 30, 2026, up from \$25 million at year-end 2025 and none at Q2 2025 (indicates active balance sheet management).
- Tax expense: \$2.7 million for Q2, effective tax rate expected at 22% for rest of 2026.
Management Commentary and Outlook
“We delivered another quarter of improving results and continued momentum. Our ROA climbed to 0.90% in the second quarter, more than three times where it was a year ago. Just as noteworthy, NPAs declined by 37% during the quarter and our allowance to NPAs increased to 73%… We have identified substantial earnings enhancements related to our announcement to convert the entire bank to our digital, real-time core. The total earnings impact of \$6.1 million is equally centered on revenue and expense improvements and should be incrementally in place beginning in the fourth quarter of 2026. This project will afford us another year of the superior operating leverage that we have been demonstrating while putting the entire bank on the most sales-focused real time core available in our industry.” – Dennis J. Zember, Jr., President and CEO
Potential Price Sensitive/Shareholder Impactful Matters
- Digital Core Conversion: Expected \$6.1 million in recurring earnings enhancement, split between revenue and cost reductions, potentially boosting future EPS and ROE.
- Continued deposit and loan growth, with robust capital ratios: Supports future expansion, dividend continuity, and resilience to economic shocks.
- Sharp reduction in NPAs and improved asset quality: De-risks the portfolio, likely to be viewed positively by investors.
- Dividend continuity: 59 consecutive quarters, signaling strong capital management and shareholder focus.
- Increased FHLB borrowings and positive earnings surprises from asset sales (insurance divestiture): Demonstrates proactive balance sheet and capital allocation strategies.
- Strong performance in mortgage and Panacea divisions: Diversifies revenue, withstands macro headwinds, and positions for continued growth.
Upcoming Event
Primis management will host a conference call to discuss these results on Friday, July 24, 2026 at 10:00 a.m. (ET). A webcast and call-in details are available on the company’s website.
Conclusion
Primis Financial Corp. has reported a robust quarter, featuring strong net income growth, margin expansion, significant improvements in asset quality, and an ambitious digital transformation initiative. The anticipated earnings boost from the digital core conversion, ongoing loan and deposit growth, and enhanced efficiency are all potentially price-moving developments. Investors should closely monitor the rollout of the digital core, the realization of cost/revenue enhancements, and management’s continued focus on balance sheet strength.
Disclaimer
This article summarizes information from Primis Financial Corp.’s Q2 2026 earnings release and is intended for informational purposes only. It does not constitute investment advice or a recommendation. Forward-looking statements are inherently subject to risks and uncertainties. Investors should conduct their own due diligence and consult with a financial advisor before making investment decisions.
