Primis in Va. returns to profitability after timely accounting move
Primis Financial in McLean, Va., posted a dramatic swing back into profitability, driven by a key strategic move: The deconsolidation of Panacea Financial Holdings.
The $3.7 billion-asset Primis earned $22.6 million in the first quarter after losing $23.3 million a quarter earlier. The results included a $24.6 million pre-tax gain after Primis deconsolidated Panacea Financial Holdings, a digital division focused on the medical, dental, and veterinary markets.
The change was driven by contractual and operational adjustments that no longer require Primis to consolidate Panacea into its financial statements. A third-party valuation pegged Primis’ retained interest at $21.2 million. Another $3.4 million gain was tied to removing the digital bank’s net assets and noncontrolling interests.
CEO Dennis Zember called the move “a welcome step in our path forward,” adding that the gain boosts capital and tangible book value while simplifying financial presentation. The company’s return on assets should improve by 10 basis points, while the efficiency ratio will drop by about 14 points.
While the deconsolidation gain grabs attention, Primis also reported normalized earnings of $5.1 million in the first quarter, with a normalized ROA of 0.56%—a meaningful improvement from recent quarters.
“Our pathway to more meaningful results is much clearer,” Zember said, outlining a strategy to return earning assets to $3.75 billion, trim IT and operations expenses, and capitalize on prior investments in talent.
Two items did weigh on the results: A $1.9 million provision for its consumer loan portfolio, which the bank moved back to “held for investment” after a failed sale process, and high professional fees tied to the accelerated change in external auditors for the company’s annual filing.
Though no longer consolidated, Panacea remains a fast-growing platform. Loans grew $40 million, or 9%, from a quarter earlier. About $94 million in deposits helped fund the loan growth. About 6,000 medical professionals and practices use the platform, with a goal to hit 10,000 by year-end
Panacea is also working on the first phase of a tech suite tailored to the healthcare space.