UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
☒ | ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2023
☐ | TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number: 001-33037
A. Full title of the plan and the address of the plan, if different from that of the issuer named below:
SBA Defined Contribution Plan for Primis Bank
B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:
PRIMIS FINANCIAL CORP.
1676 International Drive, Suite 900
McLean, Virginia 22102
Financial Statements and Supplemental Schedules
December 31, 2023 and 2022
SBA Defined Contribution Plan for Primis Bank
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SBA Defined Contribution Plan for Primis Bank
Financial Statements and Supplemental Schedules
December 31, 2023 and 2022
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Financial Statements | | |
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Supplemental Schedule | | |
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Schedule H, Line 4i – Schedule of Assets (Held at End of Year) | | 13 |
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Report of Independent Registered Public Accounting Firm
Plan Administrator and Plan Participants
SBA Defined Contribution Plan for Primis Bank
Glen Allen, Virginia
Opinion on the Financial Statements
We have audited the accompanying statements of net assets available for benefits of the SBA Defined Contribution Plan for Primis Bank (the “Plan”) as of December 31, 2023 and 2022, the related statement of changes in net assets available for benefits for the year ended December 31, 2023, and the related notes and schedules (collectively referred to as the “financial statements”). In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2023 and 2022, and the changes in net assets available for benefits for the year ended December 31, 2023 in conformity with accounting principles generally accepted in the United States of America.
Basis of Opinion
These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Plan in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Plan is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Report on Supplemental Information
The supplemental information in the schedule of assets (held at end of year) and schedule of reportable transactions as of and for the year ended December 31, 2023, has been subjected to audit procedures performed in conjunction with the audit of the Plan’s financial statements. The supplemental schedules are the responsibility of the Plan’s management. Our audit procedures included determining whether the supplemental schedules reconcile to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental schedules. In forming our opinion on the supplemental schedules, we evaluated whether the supplemental schedules, including their form and content, are presented in conformity with the Department of
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Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. In our opinion, the supplemental schedules are fairly stated, in all material respects, in relation to the basic financial statements taken as a whole.
We have not been able to determine the specific year we began serving consecutively as the auditor of the Plan’s financial statements; however, we are aware that we have been the Plan’s auditor consecutively since at least 2008.
Winston-Salem, North Carolina
June 28, 2024
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SBA Defined Contribution Plan for Primis Bank
Statements of Net Assets Available for Benefits
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| | | | | | | December 31, | |||
| | | | | | | 2023 |
| | 2022 |
Investments at fair value | | | | | | $ | 35,803,636 | | $ | 29,028,550 |
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Receivables | | | | | | | | | | |
Contributions receivable | | | | | | | 162,588 | | | 132,305 |
Notes receivable from participants | | | | | | | 495,126 | | | 465,927 |
| | | | | | | 657,714 | | | 598,232 |
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Net assets available for benefits | | | | | | $ | 36,461,350 | | $ | 29,626,782 |
The accompanying notes are an integral part of these financial statements.
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SBA Defined Contribution Plan for Primis Bank
Statement of Changes in Net Assets Available for Benefits
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Year Ended December 31, 2023 | | | | |||
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Increases to net assets attributed to: | | | | | | |
Investment income | | | | | | |
Net appreciation in fair value of investments | | | | | $ | 4,778,718 |
Interest and dividends | | | | | | 319,688 |
Total investment income | | | | | | 5,098,406 |
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Interest income on notes receivable from participants | | | | | | 28,308 |
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Contributions | | | | | | |
Participant | | | | | | 2,954,833 |
Employer | | | | | | 1,663,063 |
Rollover | | | | | | 526,215 |
Total contributions | | | | | | 5,144,111 |
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Total additions | | | | | | 10,270,825 |
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Deductions from net assets attributed to: | | | | | | |
Benefits paid to participants | | | | | | 3,225,004 |
Administrative expenses | | | | | | 211,253 |
Total deductions | | | | | | 3,436,257 |
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Net increase | | | | | | 6,834,568 |
Net assets available for benefits: | | | | | | |
Beginning of year | | | | | | 29,626,782 |
End of year | | | | | $ | 36,461,350 |
The accompanying notes are an integral part of these financial statements.
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SBA Defined Contribution Plan for Primis Bank
December 31, 2023 and 2022
1. Description of Plan
The following description of the SBA Defined Contribution Plan for Primis Bank (the “Plan”) provides only general information. Participants should refer to the Plan agreement for a more complete description of the Plan’s provisions.
General
The Plan is a defined contribution plan covering substantially all employees of Primis Bank, the wholly-owned subsidiary of Primis Financial Corp. The management of the Company controls and manages the operation and administration of the Plan. Voya Financial served as the custodian as of December 31, 2023 and 2022. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).
Contributions
Each year, participants may contribute up to 100 percent of pretax annual compensation except irregular wage items, as defined in the plan document, as pre-tax and/or Roth after-tax elective deferrals, subject to Internal Revenue Code (“IRC”) limitations. Participants who have attained age 50 before the end of the plan year are eligible to make catch-up contributions. Participants may also contribute amounts representing distributions from other qualified plans and certain individual retirement accounts. Upon satisfying the Plan’s eligibility criteria, a participant will be automatically enrolled in the Plan to defer 3% of annual compensation on a pre-tax basis unless the participant (i) elects not to defer any annual compensation, or (ii) elects to defer a different percentage of annual compensation. The employer may make an Employer Base Contribution for each Plan year in such amount, if any, which the employer shall determine. The employer shall make a Qualified Automatic Safe Harbor Contribution for each Plan year in the amount of a discretionary percentage to be determined by the employer on a year to year basis. Contributions are subject to certain limitations.
Investment Options
Participants direct the investment of their accounts into various investment options offered by the Plan. The Plan currently offers employer stock, common collective trust funds, a money market fund and mutual funds as investment options for participants.
Participant Accounts
Each participant’s account is credited with the participant’s contribution and allocations of the Company’s contributions, and plan earnings (losses), and charged with benefit payments and transaction fees. Allocations are based on participant earnings or account balances, as defined. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account.
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Vesting
Participants are immediately vested in their contributions plus actual earnings thereon. Vesting in the Company’s contributions is based on years of service, as defined in the Plan. Participants are 100 percent vested after two years of credited service.
Notes Receivable from Participants
Participants may borrow from their fund accounts a minimum of $1,000 up to a maximum equal to the lesser of $50,000 or 50% of their vested account balance. The loans are secured by the balance in the participant’s account and bear interest at rates which are commensurate with local prevailing rates as determined by the plan administrator. At December 31, 2023, outstanding loans bore interest rates ranging from 3.50% to 8.75%. Principal and interest are paid ratably through payroll deductions.
Payment of Benefits
On termination of service, a participant may elect to receive an amount equal to the value of the participant’s vested interest in his or her account in a lump sum payment or annuity as defined in the plan document. In-service hardship withdrawals are permitted from a rollover account. In-service severe hardship withdrawals are permitted from the pre-tax account.
Forfeitures
At December 31, 2023 and 2022, forfeited nonvested accounts were $195,332 and $119,249, respectively. During 2023, $58,317 of the forfeited nonvested accounts were used to reduce employer contributions. During 2022, none of the forfeited nonvested accounts were used to reduce employer contributions.
2. Summary of Significant Accounting Policies
Basis of Accounting
The financial statements of the Plan are prepared on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America (“GAAP”).
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts of assets, liabilities and changes therein, and disclosure of contingent assets and liabilities. Accordingly, actual results may differ from those estimates and assumptions.
Investment Valuation and Income Recognition
Investments are reported at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. See Note 3 for discussion of fair value measurements.
Purchases and sales of securities are recorded on a trade-date basis. Interest income from notes receivable from participants is recorded when received. Other interest income is recorded on the accrual basis.
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Dividends are recorded on the ex-dividend date. Net depreciation includes the Plan’s gains and losses on investments bought and sold as well as held during the year.
Notes Receivable from Participants
Notes receivable from participants are measured at their unpaid principal balance. Delinquent notes receivable from participants are reclassified as distributions based upon the terms of the plan document.
Payment of Benefits
Benefits are recorded upon distribution.
Administrative Expenses
The Plan’s administrative expenses are paid by either the Plan or the Company, as provided by the plan document. Certain administrative functions are performed by employees of the Company. No such employee receives compensation from the Plan.
Subsequent Events
The Company performed a review of events subsequent to the balance sheet date through the date the financial statements were issued and determined that there were no such events requiring recognition or disclosure in the financial statements.
3. Fair Value Measurements
Fair value as defined under GAAP is an exit price, representing the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include:
| ● | Level 1: Observable inputs such as quoted prices in active markets. |
| ● | Level 2: Inputs other than quoted prices in active markets that are either directly or indirectly observable. |
| ● | Level 3: Unobservable inputs about which little or no market data exists, therefore requiring an entity to develop its own assumptions. |
Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Plan’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels.
Following is a description of the valuation methodologies used for assets measured at fair value. There have been no changes in the methodologies used at December 31, 2023 and 2022.
When quoted prices are available in active markets for identical instruments, investment securities are classified within Level 1 of the fair value hierarchy. Level 1 investments include mutual funds, money market funds and the Company’s common stock. The fair value of the Plan’s investment in the Company’s common stock is determined by the closing price reported on NASDAQ.
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The common collective trusts are valued at the closing net asset value (“NAV”) of the units held by the Plan at year end based on information provided and certified by the custodians as the practical expedient to estimate fair value. The practical expedient would not be used if it is determined to be probable that the funds will sell the investment for an amount different from the reported NAV. Participant transactions (purchases and sales) may occur daily. The common collective trusts are not required to be classified within a level of the fair value hierarchy.
The following tables set forth by level within the fair value hierarchy the Plan’s assets accounted for at fair value on a recurring basis as of December 31, 2023 and 2022:
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| | Fair Value as of December 31, 2023 | ||||||
| | Level 1 | | Level 2 | | Level 3 | | Total |
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Mutual funds | $ | 7,110,299 | $ | - | $ | - | $ | 7,110,299 |
Primis common stock | | 1,363,777 | | - | | - | | 1,363,777 |
Money market fund | | 202,718 | | - | | - | | 202,718 |
Total | $ | 8,676,794 | $ | - | $ | - | $ | 8,676,794 |
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Investments measured at net asset value: | | | | | | | | |
Common collective trusts:* | | | | | | | | |
Stable value fund | | | | | | | | 1,023,757 |
Wilmington Trust MFS | | | | | | | | 2,259,341 |
Target retirement trusts | | | | | | | | 23,843,744 |
Total common collective trusts | | | | | | | | 27,126,842 |
Total investments | | | | | | | $ | 35,803,636 |
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| | Fair Value as of December 31, 2022 | ||||||
| | Level 1 | | Level 2 | | Level 3 | | Total |
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Mutual funds | $ | 7,064,220 | $ | - | $ | - | $ | 7,064,220 |
Primis common stock | | 1,471,580 | | - | | - | | 1,471,580 |
Money market fund | | 126,313 | | - | | - | | 126,313 |
Total | $ | 8,662,113 | $ | - | $ | - | $ | 8,662,113 |
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Investments measured at net asset value: | | | | | | | | |
Common collective trusts:* | | | | | | | | |
Stable value fund | | | | | | | | 1,111,810 |
Target retirement trusts | | | | | | | | 19,254,627 |
Total common collective trusts | | | | | | | | 20,366,437 |
Total investments | | | | | | | $ | 29,028,550 |
*Represents investment in common collective trusts consisting of equity securities in domestic and foreign corporations and various fixed-income securities. There are no unfunded commitments. Certain withdrawals for other than normal benefit payments and participant directed transfers may require up to 12 months’ notice.
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The preceding methods described may produce a fair value calculation that may not be indicative of net realizable value or reflective of future values. Furthermore, although the Plan believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.
4. Exempt Party-In-Interest Transactions
Certain Plan investments held during the year are shares of mutual funds managed by Voya Financial. Fees paid by the Plan for investment management services were included as a reduction of the return earned on each fund. Voya Financial is the custodian of the Plan and, therefore, these transactions qualify as exempt party-in-interest transactions. Fees paid by the Plan during the year ended December 31, 2023 and 2022 for administrative services were $211,253 and $182,520, respectively to Voya Financial.
At December 31, 2023 and 2022, the Plan held 107,723 and 124,184 shares, respectively, of the Company’s common stock. During 2023, the Plan did not record any dividend income related to the Company’s common stock.
5. Plan Termination
Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of plan termination, participants would become 100 percent vested in their accounts.
6. Tax Status
The Plan has not obtained a determination letter from the Internal Revenue Service (“IRS”) stating that the Plan was in compliance with the applicable requirements of the IRC. The Plan is relying on the IRS approval of the prototype plan that it is utilizing. The IRS has determined and informed the document sponsor by a letter dated June 30, 2020 that the prototype plan document was designed in accordance with applicable sections of the IRC. The plan administrator believes that the Plan is currently designed and being operated in compliance with the applicable requirements of the IRC. Therefore, the plan administrator believes that the Plan was qualified and the related trust was tax exempt as of the financial statement date.
GAAP requires plan management to evaluate tax positions taken by the Plan and recognize a tax liability (or asset) if the Plan has taken an uncertain position that more likely than not would not be sustained upon examination by the IRS. The plan administrator has analyzed the tax positions taken by the Plan, and has concluded that as of December 31, 2023 and 2022, there are no uncertain positions taken or expected to be taken that would require recognition of a liability (or asset) or disclosure in the financial statements. The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress.
7. Risks and Uncertainties
The Plan invests in various investment securities. Investment securities, in general, are exposed to various risks, such as interest rate, credit, and overall market volatility. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect participants’ account balances and the amounts reported in the statements of net assets available for benefits.
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8. Reconciliation of Financial Statements to Form 5500
The following is a reconciliation of net assets available for benefits per the accompanying 2023 and 2022 financial statements to Schedule H of Form 5500:
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| | December 31, | ||||
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| | 2023 |
| | 2022 |
Net assets available for benefits per the financial statements | | $ | 36,461,350 | | $ | 29,626,782 |
Participant and employer receivable not reported on Form 5500 | | | (162,588) | | | (132,305) |
Net assets available for benefits per the Form 5500 | | $ | 36,298,762 | | $ | 29,494,477 |
The following is a reconciliation of net increase in net assets available for benefits per the financial statements for the year ended December 31, 2023, to Schedule H of Form 5500:
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Net increases in net assets available for benefits per the financial statements | | $ | 6,834,568 |
Change in receivables not reported on Form 5500 | | | (30,283) |
Net increase per Form 5500 | | $ | 6,804,285 |
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SBA Defined Contribution Plan for Primis Bank
Schedule of Assets (Held at End of Year)
EIN 20-2453966 Plan 002
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December 31, 2023 | | | | | | | | |
(a) lessor or similar party | (b) Identity of issue, borrower | (c) Description of investment including maturity date, rate of interest, collateral, par or maturity value | | (d) Cost ** | | | (e) Current value | |
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Common collective trust: | ||||||||
| Goldman Sachs | | Stable Value Fund | | | | $ | 1,023,757 |
| Wilmington MFS | | Growth Fund | | | | | 2,259,341 |
| Vanguard | | Institutional Target Retirement Income Trust II | | | | | 2,485,772 |
| Vanguard | | Target Retirement 2020 Trust II | | | | | 461,791 |
| Vanguard | | Target Retirement 2025 Trust II | | | | | 4,641,125 |
| Vanguard | | Target Retirement 2030 Trust II | | | | | 3,077,548 |
| Vanguard | | Target Retirement 2035 Trust II | | | | | 3,357,548 |
| Vanguard | | Target Retirement 2040 Trust II | | | | | 2,532,552 |
| Vanguard | | Target Retirement 2045 Trust II | | | | | 3,176,860 |
| Vanguard | | Target Retirement 2050 Trust II | | | | | 2,140,559 |
| Vanguard | | Target Retirement 2055 Trust II | | | | | 1,116,574 |
| Vanguard | | Target Retirement 2060 Trust II | | | | | 651,238 |
| Vanguard | | Target Retirement 2065 Trust II | | | | | 150,207 |
| Vanguard | | Target Retirement 2070 Trust II | | | | | 51,970 |
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Mutual funds: | ||||||||
* | Voya | | Intermediate Bond Fund | | | | | 408,197 |
| Fidelity | | U.S. Bond Index Fund | | | | | 222,987 |
| Fidelity | | 500 Index Fund | | | | | 1,838,180 |
| Fidelity | | Extended Market Index Fund | | | | | 119,167 |
| Fidelity | | Total International Index Fund | | | | | 175,174 |
| Vanguard | | Equity Income Fund | | | | | 1,364,814 |
| JP Morgan | | Mid-Cap Growth Fund | | | | | 678,579 |
| Victory | | Mid-Cap Value Fund | | | | | 425,734 |
| Wasatch | | Small Growth Fund | | | | | 793,379 |
| PIMCO | | RAE US Small Fund Institutional Class | | | | | 322,740 |
| PIMCO | | Real Return Fund | | | | | 41,500 |
| Cohen & Steers | | Real Estate Securities Fund | | | | | 180,622 |
| JP Morgan | | Emerging Markets Equity Fund | | | | | 198,924 |
| American Funds | | EuroPacific Growth Fund | | | | | 340,302 |
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* | Primis | | Common stock, 107,723 shares | | | | | 1,363,777 |
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* | Voya | | Money market fund | | | | | 202,718 |
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* | Participant loans*** | | Maturing through 2030, interest rates ranging from 3.50% to 8.75%, collateralized by participant accounts | | - | | | 495,126 |
| | | | $ | - | | $ | 36,298,762 |
* Party-in-interest
** Cost information omitted for participant-directed accounts.
*** The accompanying financial statements classify participant loans as notes receivable from participants.
See accompanying report of independent registered public accounting firm.
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SBA Defined Contribution Plan for Primis Bank
Schedule of Reportable Transactions
Schedule H, Line 4j
EIN 20-2453966 Plan 002
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Year ended December 31, 2023 | | | | | | | | | | | | | | | | |||
| (a) Identity of party involved | | (b) Description of investment including maturity date, rate of interest, collateral, par or maturity value | | | (c) Purchase Price | | | (d) Selling Price | | | (g) Cost of Asset | | | (h) Current Value of Asset on Transaction Date | | | (i) Net Gain/ (Loss) |
| | | | | | | | | | | | | | | | | | |
Category (i)* - Single Transactions in Excess of Five Percent of Total Plan Assets: | ||||||||||||||||||
| MFS | | Growth Fund | | $ | - | | $ | 2,182,240 | | $ | 1,994,340 | | $ | 2,182,240 | | $ | 187,900 |
| Wilmington MFS | | Growth Fund | | | 2,182,240 | | | - | | | 2,182,240 | | | 2,182,240 | | | - |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
Category (iii)* - Series of Transactions in Excess of Five Percent of Total Plan Assets: | ||||||||||||||||||
| MFS | | Growth Fund | | $ | - | | $ | 2,221,525 | | $ | 1,767,825 | | $ | 2,221,525 | | $ | 453,700 |
| Wilmington MFS | | Growth Fund | | | 2,254,447 | | | - | | | 2,254,447 | | | 2,254,447 | | | - |
| | | | | | | | | | | | | | | | | | |
* There were no category (ii) or (iv) transactions reportable for the year.
See accompanying report of independent registered public accounting firm.
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Exhibit Index
Exhibit 23.1 |
| Consent of Forvis Mazars, LLP, Independent Registered Public Accounting Firm dated June 28, 2024. |
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Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, Primis Financial Corp., as Plan Administrator of the SBA Defined Contribution Plan for Primis Bank, has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
| SBA DEFINED CONTRIBUTION PLAN |
| FOR PRIMIS BANK |
| By: Primis Financial Corp., |
| Plan Administrator |
|
|
DATE: June 28, 2024 | /s/ Matthew Switzer |
| Matthew Switzer |
| Executive Vice President and Chief Financial Officer |
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