Primis Financial Corp. Executes Strategic Sale-Leaseback Transaction to Enhance Financial Performance
Primis Financial Corp. Executes Sale-Leaseback Transaction
On December 8, 2025, Primis Financial Corp. (NASDAQ: FRST), through its wholly-owned subsidiary Primis Bank, revealed the initiation of a notable financial maneuver involving a sale-leaseback transaction concerning 18 branch properties. This strategic move is anticipated to not only yield a pre-tax gain of approximately $50 million but also facilitate a comprehensive restructuring of the company's balance sheet. According to Dennis J. Zember, Jr., the President and CEO, this deal marks a pivotal conclusion to a year devoted to repositioning the organization while building its capital levels and enhancing operational profits in anticipation of future growth in 2026 and 2027.
Financial Impact of the Transaction
The financial ramifications of this transaction are significant. Following the restructuring charges and associated deal expenses, the company forecasts a post-tax gain of about $38 million – equating to roughly $1.54 per share. This maneuver is projected to influence various key ratios positively, as summarized below:
| Metric | Reported 3Q25 | Restructure Impact | Proforma 3Q25 | % Change |
|---|---|---|---|---|
| ----- | ---- | ---- | ---- | --- |
| Return on Average Assets (ROAA) | 0.70% | 0.10% | 0.80% | 14.3% |
| Return on Tangible Common Equity (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% |
| CET1 - Consolidated | 8.62% | 0.70% | 9.32% | 8.1% |
|---|---|---|---|---|
| CET1 - Bank | 10.14% | 0.70% | 10.84% | 6.9% |
The arrangement will also slightly elevate recurring rental expenses by about $5.4 million annually, although expected earnings from the cash received at closing are projected to partially offset this increase.
Asset and Debt Restructuring
The planned restructuring also includes selling securities with a book value of around $144 million. Despite an anticipated pre-tax loss of $14.8 million from this deal, $50 million of the proceeds is earmarked for immediate loan growth, while the balance will be reinvested into securities boasting an improved yield of approximately 4.50%. The company expects an annual pre-tax earnings boost of about $4.3 million from this action.
In addition, optimized capital resources and anticipated earnings are set to allow Primis Financial to reduce its subordinated debt by roughly $27 million. With existing capital costs reaching about 9.50%, management is gearing up for refinancing this debt soon, aiming for further improvements in earnings.
Moreover, a planned overhaul of lower-yielding BOLI assets into more lucrative policies is also in the pipeline, with only minimal associated costs and potential annual earnings increases estimated at $1.2 million.
Looking Forward
Primis is poised to emerge from this financial year with a strong capital foundation, setting the stage for a robust start to 2026. With total assets recorded at $4.0 billion, loans amounting to $3.2 billion, and total deposits of $3.3 billion as of the end of September 2025, the bank is well-positioned to serve its individual and small- to medium-sized business clientele through its 24 branches across Virginia and Maryland, complemented by various digital banking services.
This transaction signifies a strategic leap forward for Primis Financial Corp., enhancing its capabilities to support ongoing revenue-generating strategies while keeping operational expenses low. It underscores the company's commitment to innovative financial management practices aimed at fostering long-term growth and profitability in a competitive landscape.
Topics Financial Services & Investing）
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