BUSINESS COMBINATION

6 Months Ended

Jun. 30, 2022

2. BUSINESS COMBINATION

On April 28, 2022, Primis Bank entered into a definitive agreement to acquire 100% of the issued and outstanding capital stock of SeaTrust, a North Carolina corporation. On May 31, 2022, Primis Bank completed the acquisition of 100% of the outstanding capital stock of SeaTrust from the seller, Community First Bank, Inc. pursuant to the Purchase Agreement, dated as of April 28, 2022 by and among the Bank, Seller, and SeaTrust. As a result, SeaTrust became a wholly owned subsidiary of Primis Bank on May 31, 2022.

Pursuant to the Purchase Agreement, the Bank paid an aggregate purchase price of $7.0 million in cash to Seller at closing and assumed $19.3 million of SeaTrust’s indebtedness under certain warehouse lending facilities.

Following the closing of the Acquisition, on June 1, 2022, the Bank changed the name of SeaTrust to Primis Mortgage Company.

In connection with the SeaTrust acquisition, the following table details the consideration paid, the initial estimated fair value of identifiable assets acquired and liabilities assumed as of the date of the acquisition, the subsequent adjustments to estimates, the final valuation of the fair value of identifiable assets acquired and liabilities assumed as of the date of the acquisition, and the resulting goodwill recorded (in thousands):


	Original		Adjustments		Final
(dollars in thousands)	Estimates		to Estimates		Valuation
Consideration paid:
Cash	$	7,000	$	—	$	7,000
Value of consideration	$	7,000	$	—	$	7,000

Assets acquired:
Cash and due from banks	$	2,446	$	—	$	2,446
Mortgage loans held for sale		20,452		—		20,452
Premises and equipment, net		124		—		124
Leases right-of-use asset		42		—		42
Derivative assets		1,199		—		1,199
Deferred tax asset, net		26		—		26
Other assets		93		—		93
Total assets		24,382		—		24,382

Liabilities assumed:
Short term borrowings		19,254		—		19,254
Leases liability		42		—		42
Derivative liabilities		221		—		221
Other liabilities		655		—		655
Total liabilities		20,172		—		20,172

Net identifiable assets acquired	$	4,210	$	—	$	4,210

Goodwill resulting from acquisition ⁽¹⁾					$	2,790

(1)	Intangibles are subject to certain post-closing adjustments.

The table below illustrates the unaudited pro forma revenue and net income of the combined entities had the acquisition taken place on January 1, 2021. The unaudited combined pro forma revenue and net income combines the historical results of SeaTrust with the Company's consolidated statements of operations for the periods listed below and, while no material adjustments were made for the estimated effect of certain fair value adjustments and other acquisition-related activity, they are not indicative of what would have occurred had the acquisition actually taken place on January 1, 2021. The pro forma financial information does not include the impact of possible business model changes, nor does it consider any potential impacts of current market conditions or revenues, expense efficiencies or other factors.


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
(dollars in thousands)	2022		2021		2022		2021
Total revenues	$	33,721	$	30,892	$	64,531	$	65,959

Net income	$	5,198	$	10,178	$	9,648	$	19,963

Included in the Company’s consolidated statements of income for the three and six months ended June 30, 2022 are $0.7 million of revenue and $0.1 million of net loss related to Primis Mortgage since its acquisition on June 1, 2022.