Primis Financial will sell a portion of its stake in doctor-focused fintech Panacea Financial Holdings for $22 million, which it will use to fund a share repurchase program and accelerate growth, the Virginia bank announced last week.
Primis signed a nonbinding term sheet with an undisclosed buyer 2½ months after the bank deconsolidated Panacea from its balance sheet in March.
The $3.7 billion-asset bank did not disclose how much of its portion would be included in the sale, but added that it expects to record between $6.5 million and $7 million in pre-tax gains because the sale price exceeded the carrying value as of March 31.
“Repurchase of our shares right now is accretive to tangible book value and communicates managements' confidence in our operating results,” Primis CEO Dennis J. Zember, Jr. said in a prepared statement. “Incremental margins in our core bank and in our lines of business are better now than they have been in several years and importantly the growth has very little to no operating expense lift."
Primis invested in Panacea in 2020, creating a new division of the bank exclusively focused on serving the financial needs of the medical community. The move came amid myriad challenges from the COVID-19 pandemic.
According to Panacea’s website, co-founders Drs. Ned Palmer and Michael Jerkins noticed that “banks didn’t understand the financial needs of doctors,” so they created Panacea to address the gap. Since its founding, the Little Rock, Arkansas-based fintech has exclusively served physicians, dentists and veterinarians.
Panacea’s success has far exceeded original expectations, both in terms of growth and the value it created for stakeholders, Zember said last week.
“While this transaction represents an opportunistic monetization of a portion of our investment, it does not alter our conviction in Panacea's long-term potential or our support for its mission,” Zember said in a release. “We remain a committed partner and are confident that Panacea will continue to be a disruptive force, delivering scalable, tech-enabled financial solutions to doctors and their practices nationwide.”
Zember added the bank is “confident in the continued momentum from this strategy and [we] believe that it serves as a success case study for an industry searching for valuable, organic growth ideas.”
This is Primis’ second major sale in the past year following that of its insurance premium financing business Life Premium Finance to EverBank, which was announced in October. Life Premium Finance offers loans to high-net-worth individuals, trusts or related businesses to cover the annual premiums due on life insurance policies, and Primis sold its $370 million portfolio to EverBank for $6 million.
Primis did not return multiple requests for comment.
