Primis Financial Corp. Income Taxes Disclosure
12. INCOME TAXES
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting and income tax purposes. Net deferred tax assets as of December 31, 2025 and 2024 consist primarily of the following ($ in thousands):
| 2025 | | 2024 | |||
Deferred tax assets: |
| |
| | ||
Allowance for credit losses | $ | 10,723 | $ | 12,412 | ||
Unearned loan fees and other |
| 1,691 |
| 3,201 | ||
Lease liability | 13,926 | 2,583 | ||||
Net unrealized loss on investment securities available for sale |
| 646 |
| 5,964 | ||
Federal low income housing credit carryforward |
| 274 |
| 369 | ||
Deferred compensation |
| 1,380 |
| 1,458 | ||
Capitalized research and experimental expenditures | — | 1,238 | ||||
Net operating loss | — | 5,460 | ||||
Other |
| 3,943 |
| 2,696 | ||
Valuation allowance |
| — |
| (3,457) | ||
Total deferred tax assets, net of valuation allowance |
| 32,583 |
| 31,924 | ||
Deferred tax liabilities: |
| |
| | ||
Right-of-use assets | 14,929 | 2,331 | ||||
Purchase accounting | 914 | 911 | ||||
Depreciation | 1,693 | 606 | ||||
Derivative asset | 36 | 1,007 | ||||
Other |
| 328 |
| 603 | ||
Total deferred tax liabilities |
| 17,900 |
| 5,458 | ||
Net deferred tax assets | $ | 14,683 | $ | 26,466 | ||
The Company had no valuation allowance recorded against deferred tax assets as of December 31, 2025. A valuation allowance of $3 million related to PFH was recorded against deferred tax assets as of December 31, 2024. Management believes that the realization of the remaining deferred tax assets was more likely than not based on the expectation that Primis will generate the necessary taxable income in future periods.
The Company has no unrecognized tax benefits as of December 31, 2025 or 2024. Should the accrual of any interest or penalties relative to unrecognized tax benefits be necessary, the policy is to record such accruals in income tax accounts; no such accruals existed as of December 31, 2025 or 2024. Primis and its subsidiaries file a consolidated U.S. federal income tax return and individually file numerous state income tax returns. These returns are subject to examination by taxing authorities for all years after 2021.
The provision for income taxes consists of the following for the years ended December 31, 2025, 2024 and 2023 ($ in thousands):
| 2025 | | 2024 | | 2023 | ||||
Current tax expense |
| |
| |
| | |||
Federal | $ | 7,046 | $ | 21 | $ | 1,861 | |||
State |
| 1,201 |
| 9 |
| 771 | |||
Total current tax expense |
| 8,247 |
| 30 |
| 2,632 | |||
Deferred tax expense (benefit) |
| |
| |
| | |||
Federal |
| 6,307 |
| (4,178) |
| (2,699) | |||
State |
| 159 |
| (90) |
| (1,000) | |||
Total deferred tax expense (benefit) |
| 6,466 |
| (4,268) |
| (3,699) | |||
Total income tax expense (benefit) | $ | 14,713 | $ | (4,238) | $ | (1,067) | |||
The Company operates exclusively in the United States and had no foreign income, foreign income tax expense, or foreign income taxes paid for the year ended December 31, 2025.
A reconciliation of the provision for income taxes to the amount computed by applying the 21% statutory U.S. federal income tax rate to income before income taxes after the adoption of ASU 2023-09 is as follows ($ in thousands):
| 2025 | |||||
Amount | Percent | |||||
U.S. Federal statutory tax rate |
| $ | 15,236 |
| 21.0 | % |
State and local income taxes, net of federal income tax effect (1) | 1,063 | 1.5 | ||||
Nontaxable or nondeductible items: |
| |||||
Sale of PFH common stock |
| (2,153) | (3.0) | |||
Income from bank-owned life insurance | (375) | (0.5) | ||||
Other | (6) | |||||
Tax credits: |
| | | |||
Low income housing tax credit (2) |
| (74) | (0.1) | |||
Change in valuation allowance |
| 934 | 1.3 | |||
Other |
| 88 | 0.1 | |||
$ | 14,713 | 20.3 | % | |||
| (1) | The states and local jurisdictions that contribute to the majority (greater than 50%) of the tax effect in this category include . |
| (2) | Amount is shown net of amortization of the related investments |
The income tax expense differed from the amount of income tax determined by applying the U.S. Federal income tax rate of 21% to pretax income for the years ended December 31, 2024 and 2023 due to the following ($ in thousands):
| 2024 | | 2023 | |||
Computed expected tax benefit at statutory rate | $ | (6,070) | $ | (2,348) | ||
Increase (decrease) in tax expense resulting from: |
|
| ||||
Remeasurement of deferred tax assets and liabilities | 257 | (531) | ||||
Low income housing tax credits, net of amortization | 19 | 1 | ||||
Income from bank-owned life insurance |
| (506) |
| (424) | ||
Goodwill impairment | — | 2,342 | ||||
Research and development credit | (33) | (1,150) | ||||
Valuation allowance | 2,098 | 704 | ||||
State taxes, net | (110) | 503 | ||||
Other, net |
| 107 |
| (164) | ||
$ | (4,238) | $ | (1,067) | |||
Income taxes paid (refunds received), net, disaggregated by federal and state jurisdictions are as follows for the years ending ($ in thousands):
| 2025 | | ||
| ||||
U.S. Federal | $ | (1,050) | ||
State: | ||||
North Carolina | 85 | |||
Pennsylvania | 216 | |||
Tennessee | 81 | |||
Texas |
| 97 | ||
Other |
| 88 | ||
State Subtotal |
| 567 | ||
| ||||
Total cash paid for (refunds of) income taxes, net | $ | (483) | ||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 16, 2026 | Showing above |
| 2024 | Apr 29, 2025 | |
| 2023 | Oct 15, 2024 | |
| 2022 | Mar 15, 2023 | |
| 2021 | Mar 14, 2022 | |
| 2020 | Mar 16, 2021 | |
| 2019 | Mar 16, 2020 | |
| 2018 | Mar 15, 2019 | |
| 2017 | Mar 16, 2018 | |
| 2016 | Mar 16, 2017 | |
| 2015 | Mar 15, 2016 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.