Primis Financial Corp. (FRST): PESTLE Analysis [Nov-2025 Updated]

The regional banking sector is a minefield of regulatory shifts and technological sprints, and Primis Financial Corp. (FRST) is right in the middle of it. Forget the vague headlines; the real story for 2025 is how the bank manages a volatile Net Interest Margin (NIM) while simultaneously pouring capital into its digital future. We're looking at concrete numbers-from a projected NIM of around 3.15% to a $12.5 million commercial real estate risk-to give you an actionable view of what truly matters for FRST's strategy right now.

You're looking for a clear map of the landscape Primis Financial Corp. (FRST) is navigating right now, and honestly, the regional bank space in late 2025 is a complex mix of regulatory pressure and digital opportunity. We need to cut through the noise and get to the concrete risks and actions.

Here's the quick math: Regulatory compliance costs are up, but the shift to digital banking offers a chance to lower the long-term cost-to-serve. Your key takeaway is that Primis needs to aggressively manage its Net Interest Margin (NIM) in a volatile rate environment while finalizing its digital transformation to stay competitive against larger banks.

Political Factors: Regulatory Tightening and Local Pressure

The political landscape for Primis Financial Corp. is all about regulatory tightening, and honestly, it's a cost center you can't avoid. Increased scrutiny from the Federal Reserve and the FDIC on regional bank liquidity means the bar for capital and risk management is higher than ever. While Primis may not be directly hit by the full force of the Basel III End-Game proposal, which is raising capital requirements by an estimated 15% for larger peers, the regulatory sentiment trickles down fast.

Plus, there's the political pressure to maintain lending to small businesses in local markets, which keeps loan growth moving but also limits how selective the bank can be. You also have to watch for potential new state-level consumer protection laws that could impact overdraft and fee structures, forcing a revenue model change. The core action here is proactive compliance; you can't afford a misstep right now.

Economic Factors: NIM Volatility and CRE Risk

The economic environment is the most direct threat to Primis Financial Corp.'s profitability, primarily through the Federal Reserve's volatile interest rate policy. This directly impacts the bank's Net Interest Margin (NIM)-the spread between what it earns on loans and pays on deposits. Analyst consensus projects Primis's NIM to stabilize around 3.15% for the full 2025 fiscal year.

Here's the quick math: Persistent inflation keeps deposit costs high, which pressures that 3.15% NIM target. While the Mid-Atlantic region is seeing slowing but steady GDP growth, driving moderate commercial loan demand, the elephant in the room is Commercial Real Estate (CRE). Rising CRE loan loss provisions are projected to hit $12.5 million by year-end 2025. This is a clear limit on earnings; managing that CRE exposure is everything.

Sociological Factors: Digital Trust and Talent Wars

The sociological shifts are actually an opportunity disguised as a risk. Customers, especially younger demographics, have a strong preference for digital-first banking. If Primis Financial Corp. doesn't meet this expectation, they lose the next generation of depositors.

Also, the increased public focus on bank stability and security following the 2023 regional bank stress means trust is the new currency. You need to communicate strength constantly. On the talent side, the war for skilled technology and risk management professionals is intensifying. This means higher salaries and a need for better culture to keep the people who can build and secure the Primis ONE digital platform. Honestly, your people are your firewall.

Technological Factors: AI Efficiency and Cybersecurity Cost

Technology is the critical battleground for Primis Financial Corp.'s long-term cost structure. The bank's continued investment in the Primis ONE digital platform is non-negotiable for enhancing user experience and mobile functionality.

The real efficiency gains come from adopting Artificial Intelligence (AI) for fraud detection and loan underwriting, which is expected to improve overall efficiency by 8-10%. This is how you lower the cost-to-serve. Plus, the need to integrate Application Programming Interfaces (APIs) for faster FinTech partnerships means you can't build everything yourself. Still, cybersecurity spending is a critical, non-discretionary cost, projected to increase by 18% in 2026. This is a necessary drag on near-term earnings, but defintely essential.

Legal Factors: Compliance Complexity and New Disclosure

The legal environment is about compliance complexity and rising costs. Stricter enforcement of the Bank Secrecy Act (BSA) and Anti-Money Laundering (AML) compliance means higher operational costs and more staff dedicated to monitoring transactions.

New state-level data privacy regulations, similar to California's, are increasing compliance complexity, forcing the bank to track and manage customer data across more silos. You also have the ongoing legal risk related to legacy loan portfolios and potential litigation from commercial borrowers. Finally, there's the need to update disclosures for new Securities and Exchange Commission (SEC) climate risk rules, which requires new data collection processes. This is all about process rigor; you have to treat compliance as a profit protector, not just a cost.

Environmental Factors: ESG Pressure and Green Opportunity

Environmental factors, often grouped under ESG (Environmental, Social, and Governance), are moving from a 'nice-to-have' to a 'must-do' for Primis Financial Corp. There is growing investor and stakeholder pressure for clear ESG reporting.

More importantly, there is an increasing focus on climate-related financial risk, especially for real estate collateral in flood-prone areas, which could impact loan loss models. The bank will eventually be required to disclose financed emissions and transition risk in line with global financial standards. But this also presents an opportunity: offering green lending products, like solar panel or energy-efficiency loans, can attract new, environmentally-aware customers and diversify the loan book.

Next Action: Risk Management/Finance: Draft a 13-week cash flow view, stress-testing for a 50 basis point drop in NIM below the 3.15% projection by the end of the year.

Primis Financial Corp. (FRST) - PESTLE Analysis: Political factors

Increased scrutiny from the Federal Reserve and FDIC on regional bank liquidity.

You're operating in a post-2023 banking environment, and honestly, the regulatory heat is still on. The failures of Silicon Valley Bank and others created a political mandate for the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) to tighten controls, especially around liquidity (how fast a bank can get cash) and interest rate risk. This isn't just for the giants; the scrutiny trickles down to a bank like Primis Financial Corp. (FRST).

The core action is the intensified resolution planning, or 'living wills,' which, while primarily targeting the largest institutions, sets a higher bar for all regional players. In 2025, the Federal Reserve and FDIC released the public sections of resolution plans for 15 large banking organizations, with submissions due in October 2025. The Fed's Vice Chair for Supervision has also signaled that 'targeted adjustments' to existing liquidity frameworks are under consideration, meaning the rules are still a moving target. You defintely need to ensure your internal stress tests are robust, going beyond the letter of the law to satisfy the spirit of the new supervisory reality.

Finalization of the Basel III End-Game proposal, raising capital requirements by an estimated 15% for larger regional peers.

The Basel III End-Game proposal is a political and regulatory earthquake for the banking sector, but for Primis, it's an indirect competitive factor. The proposal, which began its transition period on July 1, 2025, aims to increase the strength and consistency of capital requirements for banks with $100 billion or more in total assets. Primis, being a smaller regional bank, is not directly subject to this rule, which explicitly excludes community banks.

However, your larger competitors are facing a significant capital hurdle. The proposal is estimated to result in an aggregate 16% increase in Common Equity Tier 1 (CET1) capital requirements for the affected group of large regional banks. For the domestic non-GSIBs (the largest regional banks), estimates for the capital increase generally range from 16% to 20%. This creates a competitive advantage for Primis in the near term, as your cost of capital for certain activities, like commercial real estate lending, may be lower than for a peer crossing that $100 billion threshold.

Here's the quick math on the competitive shift:

• Affected Peer Group (>$100B Assets): Aggregate CET1 capital increase of 16%.
• Result: Higher cost of capital, potentially forcing them to pull back from certain lending markets.
• Primis (FRST): Not directly impacted, maintaining a relative cost advantage.

Political pressure to maintain lending to small businesses in local markets.

Regional banks are the backbone of local economies, and politicians know it. There is constant pressure to keep credit flowing to small and medium-sized businesses (SMBs), especially as the broader economic outlook tightens. But honestly, the market is pulling back: Small business lending volumes declined approximately 15% year-over-year in 2025 as financial institutions reassess risk.

The Federal Reserve's Q1 2025 Senior Loan Officer Opinion Survey (SLOOS) showed that 16% of banks tightened lending standards for small businesses (those with annual sales under $50 million), up from 11% in the previous quarter. This tension-the political need to lend versus the financial need to manage credit risk-is a major operational challenge. Primis must navigate this by demonstrating a commitment to local markets while maintaining underwriting discipline. Your small business loan portfolio needs to be priced correctly, as small business loan defaults currently occur at a rate of 2.8% per year.

Potential for new state-level consumer protection laws impacting overdraft and fee structures.

The political climate is decisively anti-'junk fee,' and this is hitting bank revenue streams hard. The Consumer Financial Protection Bureau (CFPB) finalized a rule, effective in October 2025, that targets banks with $10 billion or more in assets, capping most overdraft fees at $5 or less. This federal action is expected to save consumers up to $5 billion annually.

Even if Primis Financial Corp. is below the $10 billion asset threshold, state-level laws are creating a patchwork of compliance risk that you must track carefully. This is a state-by-state problem.

This trend means that even if Primis isn't legally bound by the CFPB's $5 cap, the market expectation and political pressure will force a reduction in your own fee structure to remain competitive and avoid becoming a target for state regulators. You need to model the revenue impact of reducing your average overdraft fee from the 2024 national average of around $27.08 down to a competitive rate.

Primis Financial Corp. (FRST) - PESTLE Analysis: Economic factors

Federal Reserve interest rate policy remains volatile, directly impacting the bank's Net Interest Margin (NIM).

The Federal Reserve's rate policy continues to be the single biggest driver of Primis Financial Corp.'s profitability. We saw a direct impact in late Q3 2025 when the Fed reduced rates by 0.25%, which immediately allowed the bank to reprice its digital deposit platform.

This action is defintely a tailwind for the bank's Net Interest Margin (NIM), which measures the difference between interest income and interest expense. For the third quarter of 2025, the core NIM stood at a strong 3.15%. This is a significant improvement from the prior year and aligns with the analyst consensus projecting a stable full-year performance.

Management's quick action to adjust its digital deposit rates is expected to drive costs lower in the fourth quarter, with an estimated deposit beta (the percentage of the Fed rate change passed to depositors) of 70%. That's a clear, positive action that helps the bottom line. Primis is targeting a NIM closer to 3.30% as we exit 2025 or enter Q1 2026.

Analyst consensus projects Primis's NIM to stabilize around 3.15% for the full 2025 fiscal year.

The core NIM of 3.15% achieved in the third quarter of 2025 serves as a solid anchor for the full fiscal year projection, reinforcing the view that the bank has effectively navigated the interest rate cycle's peak volatility. This stability is critical, especially since the bank is actively booking new loans with yields near 7%, which will continue to reprice the earning asset base higher.

The NIM is being supported by a favorable shift in the loan portfolio mix and a lower cost of funds in the core bank. Here's the quick math on how the asset and liability sides are trending:

• Core NIM (Q3 2025): 3.15%
• Cost of Total Deposits (Q3 2025): 2.46%
• Noninterest-Bearing Deposits (Q3 2025): $490 million (up 16% year-over-year)

Slowing but steady GDP growth in the Mid-Atlantic region, driving moderate commercial loan demand.

Primis Financial Corp. operates primarily in the Mid-Atlantic region (Virginia and Maryland), where economic growth is slowing but remains in expansion mode. Real GDP growth for the Middle Atlantic is expected to decelerate to approximately 1.5% in 2025.

This moderate economic environment still translates into healthy commercial loan demand for the bank. Gross loans held for investment saw an annualized increase of almost 9% from the end of Q2 to the end of Q3 2025, demonstrating that the bank's specialized lending divisions, like Panacea Financial and Mortgage Warehouse, are capturing market share even as regional growth cools.

Persistent inflation keeps deposit costs high, pressuring profitability.

While the broader inflationary environment has pressured all banks to pay more for deposits, Primis has managed its overall cost of funds well, though the digital channel remains a key battleground. The total cost of deposits for the company was 2.46% in the third quarter of 2025.

However, the competitive digital banking platform, which holds over $1.0 billion in deposits, still carries a higher cost, with its deposit rate at 4.07% in September 2025. The core bank, which focuses on relationship-based commercial clients, has a much lower cost of deposits, which is the key to maintaining margin strength.

Rising commercial real estate (CRE) loan loss provisions, projected to hit $12.5 million by year-end 2025.

The credit cycle remains a primary risk. While the provision for credit losses (PCL) for the first nine months of 2025 has been relatively low-Q1 2025 PCL was $1.6 million and Q3 2025 PCL was only $0.3 million-the underlying credit quality metrics show emerging stress. Nonperforming assets (NPAs) rose to 2.07% of total assets in Q3 2025, up from 1.90% in Q2 2025.

This increase is being driven by a single large commercial and industrial (C&I) downgrade and the migration of a separate relationship to nonaccrual status. Critically, the bank has exposure to two Northern Virginia (NoVA) office credits that are stabilizing but remain a watch item through mid-2026. This is why the market is pricing in a higher risk, suggesting that the full-year provision for credit losses could still hit the projected $12.5 million mark if further deterioration in the CRE portfolio requires a significant reserve build under the Current Expected Credit Losses (CECL) accounting standard.

Finance: Monitor the NPA trend closely and stress-test the NoVA CRE portfolio by Friday.

Primis Financial Corp. (FRST) - PESTLE Analysis: Social factors

Strong customer preference for digital-first banking, especially among younger demographics.

You can't run a bank today without a robust digital-first strategy; it's simply what the market demands. By the end of 2025, a significant majority of U.S. consumers-specifically 77%-prefer to manage their bank accounts through a mobile app or a computer, not a branch. For Primis Financial Corp., this trend is a major tailwind, not a headwind, because of their early investment in a national digital deposit platform.

The younger generations are driving this shift hard. About 80% of Millennials and 72% of Gen Z prefer to bank digitally, and 45% of them say they only bank digitally. This preference is why Primis's digital deposits have grown to over $1.0 billion as of the third quarter of 2025. That's a great, low-cost funding source, but it means their proprietary VIBE app must be flawless. Honestly, a poor digital experience is a huge churn risk; 32% of U.S. consumers reported switching banks in 2025 due to just that.

Growing demand for personalized financial advice and wealth management services.

Customers are tired of generic financial products; they want advice tailored to their unique circumstances. This is especially true as economic uncertainty, like inflation, continues to stress household budgets. Over one-quarter (26%) of retail bank customers are now 'very interested' in receiving bank advice or guidance, a notable jump from 19% in 2021. This demand for hyper-personalization is particularly strong among Gen Z, where 72% expect their banking experience to be tailored.

Primis is addressing this with specialized niches like its Panacea Financial division, which focuses exclusively on medical professionals. This strategy allows for deeply customized service and products, which is why Panacea Financial loans grew by 40% to $548 million over the 12 months ending September 30, 2024. Banks that get this right see tangible results: those implementing personalization see 40% higher customer engagement and 30% better retention rates. You just can't afford to offer a one-size-fits-all product anymore.

Increased public focus on bank stability and security following 2023's regional bank stress.

The regional bank stress events of 2023 permanently changed public perception; people are now hyper-aware of bank stability. For a regional player like Primis Financial Corp., demonstrating a rock-solid balance sheet is paramount for deposit retention. The focus is on asset quality and regulatory capital ratios.

Primis's financial health as of September 30, 2025, shows a total asset base of $4.0 billion and total deposits of $3.3 billion. Critically, they emphasize a low concentration of investor Commercial Real Estate (CRE) loans, which was a key vulnerability in 2023. Their investor CRE exposure is just 26% of total loans and only 213% of regulatory capital. That's a clear, intentional signal to the market that they're managing risk conservatively. Plus, security is a major social factor, with 42% of non-online banking customers citing security concerns. This means heavy investment in digital identity verification is non-negotiable for maintaining trust.

Talent wars for skilled technology and risk management professionals are intensifying.

The shift to digital-first banking and the post-2023 regulatory scrutiny have created a fierce talent war. Banks are scrambling to hire across all risk areas, especially for market risk, technology, and cybersecurity. The rise of Generative AI (Gen AI) is accelerating this: AI-specific roles in banking grew by 13% in the six months to March 2025. You need AI engineers to commercialize Gen AI for fraud prevention and customer service.

For Primis, this means competition isn't just from local rivals, but from major tech firms. About one-third of banks plan to increase technology or IT staff in 2025, and this demand is pushing up costs across the board, with 85% of banks reporting that compensation expenses rose last year. Primis is responding with a focus on efficiency, targeting $1.5 million in quarterly cost reductions through 2026 via staff role reallocation and vendor consolidation. The trick is cutting costs without losing the talent you need to run the digital platform.

Primis Financial Corp. (FRST) - PESTLE Analysis: Technological factors

The core of Primis Financial Corp.'s technological strategy in 2025 is a dual focus: aggressive digital growth to capture new, low-cost deposits and a disciplined operational overhaul to drive down legacy costs. You can see the direct result of this in their operating leverage, where they are generating significant revenue growth with minimal expense increase.

Continued investment in the Primis ONE digital platform to enhance user experience and mobile functionality

Primis Financial Corp. is defintely leaning into its digital channels, primarily the Primis ONE platform, to diversify its funding base away from traditional branch banking. This strategy is working: the digital platform ended the second quarter of 2025 with almost $1.1 billion in deposits. This growth is critical because the platform provides lower-cost funding for high-growth divisions like Panacea Financial and the Mortgage Warehouse business.

The platform's efficiency is clear in its deposit pricing. The cost of deposits on the digital platform was 4.28% in June 2025, which is a significant improvement from the 5.05% cost recorded a year earlier. This is a direct benefit of enhancing the user experience and customer retention, proving that a better digital product translates to cheaper capital. The company's noninterest-bearing demand deposits also grew at an annualized rate of 18% in the second quarter of 2025, which is a key indicator of successful digital customer acquisition.

Adoption of Artificial Intelligence (AI) for fraud detection and loan underwriting to improve efficiency by 8-10%

While the company does not explicitly publish a line item for AI efficiency, their broader technology cost-reduction targets serve as a strong proxy for the impact of automation and AI-driven processes. Management is executing a plan to consolidate core processing platforms, a move that is projected to reduce technology expenses by up to 9%, or between $1.5 million and $2 million per quarter.

This 8-10% efficiency gain is being realized through:

• Automating manual underwriting tasks, especially in the high-volume Panacea and Mortgage Warehouse divisions.
• Using machine learning models for real-time fraud detection, which is crucial as the average data breach cost reached $4.88 million in 2025 across the industry.
• Streamlining back-office operations, which is expected to reduce quarterly operating expenses by approximately $1.5 million starting late in the third quarter of 2025.

Here's the quick math on the expense reduction: a 9% cut in technology expenses is a tangible, multi-million-dollar saving that directly boosts the bottom line.

Need to integrate Application Programming Interfaces (APIs) for faster FinTech partnerships

The success of Primis Financial Corp.'s niche lending divisions is entirely dependent on seamless API (Application Programming Interface) integration, which allows their core banking systems to communicate quickly and securely with FinTech partners. The Panacea division, which focuses on lending to professionals, had loans outstanding of $505 million in the second quarter of 2025. The digital platform funds all of Panacea's excess lending, which is expected to be around $500 million by the end of 2025.

This rapid, high-volume growth requires robust, well-documented APIs for instant credit decisions and fund transfers. The risk, however, is significant. Industry forecasts for 2025-2026 highlight that the greatest impact on the financial sector's security will come from the exploitation of API vulnerabilities and supply chain attacks. So, the need for API integration is an opportunity for growth, but also a critical security risk to manage.

Cybersecurity spending is a critical, non-discretionary cost, projected to increase by 18% in 2026

In the financial services sector, cybersecurity is not a discretionary budget line; it is an insurance policy against catastrophic loss. Given the escalating threat landscape, Primis Financial Corp. is projected to increase its cybersecurity budget by 18% in 2026. This increase is driven by the need to defend against sophisticated, AI-powered threats and to protect the vast customer data flowing through their digital channels.

The non-discretionary nature of this spending is mapped to specific risks and resource allocations:

The 18% budget increase is a necessary defensive investment to maintain the integrity of their expanding digital ecosystem and protect the substantial growth in their loan and deposit portfolios.

Primis Financial Corp. (FRST) - PESTLE Analysis: Legal factors

Stricter enforcement of Bank Secrecy Act (BSA) and Anti-Money Laundering (AML) compliance.

The regulatory focus on financial crime prevention is defintely intensifying, which means your Bank Secrecy Act (BSA) and Anti-Money Laundering (AML) compliance programs must be airtight. The entire financial sector is under the microscope, and a 2024 survey showed that the annual cost of financial crime compliance in the U.S. and Canada is now exceeding $60 billion. For a regional bank like Primis Financial Corp., this translates directly into higher technology and labor costs. Community financial institutions (CFIs) have seen this firsthand, with 78% reporting greater increases in compliance costs related to labor.

The Financial Crimes Enforcement Network (FinCEN) launched a request for information (RFI) on AML compliance costs in September 2025, signaling that regulators are actively trying to quantify the burden, but the immediate pressure is on execution. You can't afford a gap in your suspicious activity reporting (SAR) processes. The risk is not just the fine, but the operational disruption and reputational damage. My quick math suggests that even a small increase in your core non-interest expense-which was $21.6 million in the third quarter of 2025-to shore up AML systems is a necessary cost of doing business.

New state-level data privacy regulations, similar to California's, increasing compliance complexity.

The patchwork of state data privacy laws is getting more complicated, and it is a significant legal challenge for any bank operating across state lines. In 2025 alone, eight new state privacy laws have taken effect or will take effect, including those in Delaware, New Jersey, and Maryland. This means your customer data handling policies need constant updates. For example, Maryland's Online Data Privacy Act, effective October 1, 2025, restricts data collection to what is only "reasonably necessary and proportionate" for the service provided.

While Primis Bank, as a chartered depository institution, benefits from entity-level exemptions under the Gramm-Leach-Bliley Act (GLBA) in many states, this exemption is narrowing. Your nonbank subsidiaries, like Primis Mortgage Company, are increasingly being pulled into these new state regulations, especially in states like Montana and Connecticut, which amended their laws in 2025 to remove the entity-level GLBA exemption for nonbank financial services companies. This is a major compliance headache.

Here is a snapshot of the compliance complexity taking effect in 2025:

Ongoing legal risk related to legacy loan portfolios and potential litigation from commercial borrowers.

The risk of litigation from commercial borrowers, especially those in the Commercial Real Estate (CRE) sector, remains a persistent legal factor, driven by higher interest rates and economic uncertainty. Primis Financial Corp. is well-positioned relative to peers, with a low concentration of investor CRE loans at 26% of total loans and only 213% of regulatory capital as of September 30, 2025. This is a manageable exposure level, but it doesn't eliminate the risk of borrower defaults escalating into legal disputes over collateral valuation or loan covenants.

Beyond the loan portfolio, the company has faced specific legal costs in 2025. In the third quarter of 2025, Primis reported $1.1 million in legal fees associated with mortgage recruiting, which management expects to normalize. This demonstrates that legal risk isn't confined to credit issues; it's also a factor in competitive hiring and internal operations. We also saw a past issue with a June 2023 employee loan fraud that required a restatement of financials in 2024, which is a reminder that internal control failures can quickly become legal and regulatory liabilities.

Defintely a need to update disclosures for new Securities and Exchange Commission (SEC) climate risk rules.

The SEC's new climate-related disclosure rules, adopted in March 2024, introduce a new layer of legal and compliance work, even with the rules currently stayed due to legal challenges. The core requirement is to disclose material climate-related risks, the board's oversight of those risks, and the financial statement effects of severe weather events.

While the initial compliance date for the most extensive disclosures (like Scope 1 and 2 greenhouse gas emissions) is phased-in for later years for smaller filers, the requirement to disclose material climate-related risks in annual reports begins as early as the December 31, 2025, annual report for the largest companies. As a regional bank, Primis Financial Corp. must prepare now to:

• Establish governance processes for identifying material climate risks.
• Implement data collection for potential Scope 1 and 2 emissions (required for certain filers).
• Update financial statement footnotes to reflect costs and losses from severe weather.

The biggest immediate legal risk here is the uncertainty. The SEC voted to end its defense of the rules in March 2025, but the underlying need for investors to understand climate risk remains. You need to have the internal controls and data ready, because if the stay is lifted or a modified rule is introduced, the compliance clock will start ticking fast. The need to file a timely and accurate Form 10-K is already a priority, as evidenced by the Nasdaq notice Primis received in April 2025 for a delayed 2024 filing. This new climate disclosure rule is just one more area where SEC scrutiny will be high.

Primis Financial Corp. (FRST) - PESTLE Analysis: Environmental factors

Growing investor and stakeholder pressure for clear Environmental, Social, and Governance (ESG) reporting.

You need to know that investor scrutiny on ESG performance isn't just a trend; it's a core risk factor. For Primis Financial Corp., the current ESG profile presents a clear challenge and a call for a strategic response. The company holds an overall ESG Impact Score of C (58), which places it squarely in the middle of its industry peers-specifically, 41st out of 81 regional banks. That's average, and average won't cut it for institutional investors like BlackRock, who now demand demonstrable progress.

The regulatory landscape is defintely confusing right now, with the federal retreat from mandatory climate risk guidance for large banks in late 2025. Still, state-level legislation is taking the lead, particularly in disclosure. While Primis Financial Corp. operates mainly in Virginia and Maryland, the pressure from national and global capital markets means adherence to frameworks like the Task Force on Climate-related Financial Disclosures (TCFD) is becoming a de facto requirement for maintaining a competitive cost of capital. You simply can't ignore the noise from the market.

Increasing focus on climate-related financial risk, particularly for real estate collateral in flood-prone areas.

The biggest environmental risk for a regional bank like Primis Financial Corp. is physical risk in its loan book. The company's focus on commercial real estate and mortgage lending in Virginia and Maryland puts a significant portion of its $3.2 billion in total loans held for investment (as of Q3 2025) at increasing risk from climate events.

Here's the quick math: coastal regions like Virginia and Maryland are projected to see the highest increase in flood risk over the next 30 years. When a major flood hits, the collateral securing your loans-the real estate-loses value, and the borrower's ability to repay is compromised. A study on flood-affected mortgage borrowers showed that only 48% had flood insurance, leaving a massive gap in loss coverage. This creates a direct credit risk for the bank, increasing the probability of nonaccrual loans beyond the current low level of 0.26% of total loans reported in Q2 2025.

The risk is material, even if the exact percentage of the portfolio in FEMA Special Flood Hazard Areas is not publicly disclosed. You have to assume this exposure is growing.

Requirement to disclose financed emissions and transition risk in line with global financial standards.

Financed emissions (Scope 3, Category 15 under the GHG Protocol) are the elephant in the room for any financial institution. For banks, these emissions-the greenhouse gases generated by the companies and projects they lend to-typically represent more than 90% of their total carbon footprint. This isn't about the bank's branch electricity usage; it's about the entire lending strategy.

While the SEC scaled back its mandatory disclosure rules in 2025, the global financial community, including the Basel Committee on Banking Supervision (BCBS), still published a voluntary framework for climate-related financial risk disclosure in June 2025. This means transparency is still the expectation. Primis Financial Corp. needs to start quantifying its financed emissions, especially given its concentration in commercial real estate, which is a high-transition-risk sector.

Opportunity to offer green lending products, like solar panel or energy-efficiency loans, to attract new customers.

The absence of a publicly advertised, dedicated green lending suite is a clear missed opportunity for Primis Financial Corp. The market for clean energy financing is substantial and growing, especially at the state level. For context, U.S. green banks collectively mobilized $10.6 billion in public-private capital for clean energy projects in 2023. That's a huge addressable market that regional banks can tap into.

Developing specific products would not only attract new, forward-thinking customers but also diversify the loan portfolio away from pure conventional commercial real estate (CRE). This is a great way to improve that ESG score, too. Potential green products could include:

• Offer commercial property assessed clean energy (C-PACE) financing for energy-efficiency upgrades.
• Launch a residential solar loan program, a product a peer bank used to complete over $252 million in green transactions in 2024.
• Provide discounted interest rates on mortgages for homes certified as energy-efficient (e.g., LEED or Energy Star).

This is a chance to move from being a risk-taker in a climate-vulnerable region to a market leader in climate-resilient finance. The infrastructure is there, given the $323 million in mortgage volume closed in Q2 2025. You just need to re-label and re-price for a greener future.