Primis Financial to sell part of Panacea Financial stake in $22m deal after deconsolidation shift

Primis Financial Corp. (NASDAQ: FRST) has announced the signing of a non-binding term sheet to divest a portion of its ownership in Panacea Financial Holdings, Inc., a healthcare-focused fintech company. The partial sale is expected to yield approximately $22 million in gross proceeds and generate a pre-tax gain between $6.5 million and $7.0 million, driven by a favorable premium over the carrying value of the investment as of March 31, 2025.

This development follows the deconsolidation of Panacea Financial Holdings from Primis Financial Corp.’s consolidated financials during the first quarter of 2025. The American regional bank now sees the monetization as a timely opportunity to recycle capital into strategic growth levers such as its share repurchase program and organic expansion efforts, without significantly altering its long-term partnership with the fintech disruptor.

Why did Primis Financial decide to monetize part of its stake in Panacea Financial in 2025?

According to Dennis J. Zember, Jr., President and Chief Executive Officer of Primis Financial Corp., the proposed divestment represents a tactical realization of value at a time when margins and internal growth potential are at multiyear highs. The gain from the sale will enable the bank to act more assertively on its capital allocation strategies, particularly in repurchasing outstanding shares—a move Zember emphasized as “accretive to tangible book value.”

Primis Financial Corp. has seen notable improvements in incremental operating margins across both its core banking unit and affiliated business lines. Zember noted that these improvements have been achieved with minimal increases in operating expenses, signaling enhanced efficiency across the board. This context gives the American regional lender confidence that it can reinvest proceeds from the Panacea transaction without diluting profitability metrics.

While the transaction signals an opportunistic divestment, Zember was careful to reaffirm Primis Financial Corp.’s continued belief in Panacea Financial Holdings’ long-term vision and disruptive model. He framed the move as a partial monetization rather than an exit, stating that Primis remains a committed strategic partner in the health-tech lending platform’s mission to scale digitally enabled financial services for healthcare professionals.

How has Panacea Financial’s growth trajectory justified this divestment timing for Primis?

Panacea Financial Holdings has emerged as a high-performing portfolio asset for Primis Financial Corp. since its initial investment. Originally incubated as a vertical fintech venture targeting the needs of medical professionals—such as doctors, dentists, and veterinarians—Panacea has exceeded early expectations in terms of both loan growth and value creation.

The fintech platform specializes in practice loans, student refinancing, and tailored checking solutions, and has gained attention for streamlining healthcare banking through a digital-first, compliant infrastructure. Zember described its expansion as a “success case study” of organic fintech-led disruption in traditional sectors like banking.

While detailed financial performance metrics for Panacea Financial Holdings were not disclosed, the implied valuation from the proposed sale exceeds the recorded carrying value on Primis’s books as of March 31, 2025. That premium has enabled the bank to book an expected gain of up to $7 million pre-tax, thereby affirming the market’s confidence in Panacea’s current and future prospects.

Primis Financial Corp. did not provide specifics on the buyer of the stake or the transaction’s structure, but the non-binding term sheet is expected to close subject to customary conditions. No regulatory red flags were mentioned in the June 12, 2025, release, indicating a low-friction pathway to finalization.

What does this transaction mean for Primis Financial’s capital strategy and shareholder returns?

As of the end of the first quarter of 2025, Primis Financial Corp. reported total assets of $3.7 billion, total loans held for investment of $2.9 billion, and total deposits of $3.2 billion. Operating across twenty-four full-service branches in Virginia and Maryland, the regional bank has increasingly emphasized digital innovation and capital efficiency in recent quarters.

Zember indicated that the proceeds from the Panacea sale will be directed toward strategic priorities including share repurchases, growth acceleration within the core bank, and potential future investments. Analysts tracking the mid-sized regional bank segment have noted that in a higher interest rate environment, banks like Primis Financial Corp. are under pressure to demonstrate capital discipline while seeking margin-enhancing opportunities.

The executive team’s decision to pursue a partial monetization also suggests a broader capital recycling strategy, wherein fintech investments are harvested when they mature while retaining strategic influence. This method may resonate with institutional investors seeking banks that can generate non-interest income through innovation-linked investments.

How are institutional investors likely to interpret this stake sale in the current market context?

Institutional sentiment around regional banks remains mixed in 2025 amid persistent concerns about net interest margin compression and deposit outflows. However, analysts have highlighted that banks with non-core earnings visibility, especially through fintech or asset monetization, are likely to gain favor.

Primis Financial Corp.’s announcement demonstrates proactive capital management and confidence in internal valuation, which could help support its stock performance on the NASDAQ under the ticker FRST. The bank’s transparency regarding expected gains, use of proceeds, and retained involvement with Panacea offers a reassuring narrative to both retail and institutional investors.

Although this is not a full exit from Panacea Financial Holdings, the American regional bank is signaling to the market that it is willing to crystallize gains at opportune moments while continuing to participate in future upside potential. This hybrid approach could act as a model for other regional banks incubating or partnering with niche fintechs.

What is the forward-looking outlook for Primis Financial after this transaction?

Going forward, Primis Financial Corp. is expected to finalize the transaction and recognize the capital gains in its financials, likely in the second or third quarter of 2025. No additional disclosures were made about the company’s broader fintech portfolio or new investment initiatives, but the tone of the statement indicates that further capital optimization efforts may be in consideration.

The reaffirmation of confidence in Panacea Financial Holdings’ growth model suggests that Primis will remain active in the evolving ecosystem of vertical fintech banking, particularly those addressing underserved professional sectors. Market watchers will likely track whether similar monetization opportunities emerge within Primis’s ecosystem or whether the proceeds are used for bolt-on acquisitions or digital infrastructure upgrades.

While Zember did not directly comment on dividend adjustments or M&A potential, the robust internal performance he cited suggests a management team focused on leveraging core efficiency gains alongside monetized investment gains to deliver stronger shareholder value.