UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington,WASHINGTON, D.C. 20549
FORM10-Q
FORM 10-Q
(Mark One)
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2019March 31, 2022
or
OR
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period fromto
Commission File Number 033-25507Number: 001-39165
BLUE RIDGE BANKSHARES, INC.
(Exact Namename of Registrantregistrant as Specifiedspecified in its Charter)charter)
|
| |
Virginia | 54-1470908 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer | |
1807 Seminole Trail Charlottesville, Virginia | 22901 | |
(Address of | (Zip |
(540)743-6521
Registrant’s Telephone Number, Including Area Codetelephone number, including area code: (540) 743-6521
Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Common Stock, no par value | BRBS | NYSE American |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐ ☒ No ☒☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 ofRegulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☒ | |||||||
Non-accelerated filer | ☐ | Smaller reporting company | ☐ | |||||||
Emerging growth company | ☒ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined inRule 12b-2 of the Exchange Act). Yes ☐ No ☒
TheAs of May 2, 2022, the registrant had 4,346,86618,767,565 shares of common stock, no par value per share, outstanding as of December 13, 2019.outstanding.
Auditor Firm Id: | 149 | Auditor Firm Name: | Elliott Davis, LLC | Auditor Firm Location: | Raleigh, NC, USA |
PART I | ||||
| ||||
Item 1. | 3 | |||
| ||||
3 | ||||
4 | ||||
| ||||
6 | ||||
7 | ||||
8 | ||||
Notes to Consolidated Financial Statements (unaudited) | ||||
10 | ||||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | |||
33 | ||||
Item 3. | ||||
47 | ||||
Item 4. | ||||
47 | ||||
| ||||
| ||||
48 | ||||
| ||||
Item | 48 | |||
Item 1A. | 48 | |||
Item 2. | ||||
48 | ||||
Item 3. | ||||
48 | ||||
Item 4. | ||||
48 | ||||
| ||||
Item | 48 | |||
Item 6. | 48 | |||
49 |
2
PART I. FINANCIALFINANCIAL INFORMATION
Blue Ridge Bankshares, Inc.
|
| (unaudited) |
|
|
|
| ||
(Dollars in thousands except share data) |
| March 31, 2022 |
|
| December 31, 2021 (1) |
| ||
ASSETS |
|
|
|
|
|
| ||
Cash and due from banks |
| $ | 162,177 |
|
| $ | 130,548 |
|
Federal funds sold |
|
| 74,294 |
|
|
| 43,903 |
|
Securities available for sale, at fair value |
|
| 375,484 |
|
|
| 373,532 |
|
Restricted equity investments |
|
| 8,385 |
|
|
| 8,334 |
|
Other equity investments |
|
| 23,943 |
|
|
| 14,184 |
|
Other investments |
|
| 16,010 |
|
|
| 12,681 |
|
Loans held for sale |
|
| 41,004 |
|
|
| 121,943 |
|
Paycheck Protection Program loans, net of deferred fees and costs |
|
| 22,853 |
|
|
| 30,406 |
|
Loans held for investment, net of deferred fees and costs |
|
| 1,843,344 |
|
|
| 1,777,172 |
|
Less allowance for loan losses |
|
| (12,013 | ) |
|
| (12,121 | ) |
Loans held for investment, net |
|
| 1,831,331 |
|
|
| 1,765,051 |
|
Accrued interest receivable |
|
| 9,505 |
|
|
| 9,573 |
|
Other real estate owned |
|
| 74 |
|
|
| 157 |
|
Premises and equipment, net |
|
| 24,668 |
|
|
| 26,624 |
|
Right-of-use asset |
|
| 6,766 |
|
|
| 6,317 |
|
Bank owned life insurance |
|
| 46,817 |
|
|
| 46,545 |
|
Goodwill |
|
| 26,826 |
|
|
| 26,826 |
|
Other intangible assets |
|
| 7,455 |
|
|
| 7,594 |
|
Mortgage derivative asset |
|
| 2,063 |
|
|
| 1,876 |
|
Mortgage servicing rights, net |
|
| 27,691 |
|
|
| 16,469 |
|
Mortgage brokerage receivable |
|
| 430 |
|
|
| 4,064 |
|
Other assets |
|
| 16,808 |
|
|
| 17,211 |
|
Assets of discontinued operations |
|
| 0 |
|
|
| 1,301 |
|
Total assets |
| $ | 2,724,584 |
|
| $ | 2,665,139 |
|
LIABILITIES & STOCKHOLDERS' EQUITY |
|
|
|
|
|
| ||
Deposits: |
|
|
|
|
|
| ||
Noninterest-bearing demand |
| $ | 766,506 |
|
| $ | 706,088 |
|
Interest-bearing demand and money market deposits |
|
| 978,650 |
|
|
| 941,805 |
|
Savings |
|
| 152,105 |
|
|
| 150,376 |
|
Time deposits |
|
| 456,820 |
|
|
| 499,502 |
|
Total deposits |
|
| 2,354,081 |
|
|
| 2,297,771 |
|
FHLB borrowings |
|
| 10,108 |
|
|
| 10,111 |
|
FRB borrowings |
|
| 15,211 |
|
|
| 17,901 |
|
Subordinated notes, net |
|
| 39,970 |
|
|
| 39,986 |
|
Lease liability |
|
| 8,038 |
|
|
| 7,651 |
|
Other liabilities |
|
| 18,694 |
|
|
| 14,543 |
|
Liabilities of discontinued operations |
|
| 0 |
|
|
| 37 |
|
Total liabilities |
|
| 2,446,102 |
|
|
| 2,388,000 |
|
Commitments and contingencies (Note 12) |
|
|
|
|
|
| ||
Stockholders’ Equity: |
|
|
|
|
|
| ||
Common stock, 0 par value; 25,000,000 shares authorized; 18,771,065 and |
|
| 194,679 |
|
|
| 194,309 |
|
Additional paid-in capital |
|
| 252 |
|
|
| 252 |
|
Retained earnings |
|
| 105,027 |
|
|
| 85,982 |
|
Accumulated other comprehensive loss, net of tax |
|
| (21,476 | ) |
|
| (3,632 | ) |
Total Blue Ridge Bankshares, Inc. stockholders’ equity before noncontrolling interest |
|
| 278,482 |
|
|
| 276,911 |
|
Noncontrolling interest of discontinued operations |
|
| 0 |
|
|
| 228 |
|
Total stockholders’ equity |
|
| 278,482 |
|
|
| 277,139 |
|
Total liabilities and stockholders’ equity |
| $ | 2,724,584 |
|
| $ | 2,665,139 |
|
(dollars in thousands, except share and per share data)
September 30, 2019 | December 31, 2018 | |||||||
(unaudited) | (audited) | |||||||
Assets | ||||||||
Cash and due from banks | $ | 22,318 | $ | 15,026 | ||||
Federal funds sold | 285 | 546 | ||||||
Securities available for sale, at fair value | 121,740 | 38,047 | ||||||
Securities held to maturity, at cost | 13,117 | 15,565 | ||||||
Restricted equity securities, at cost | 7,855 | 5,138 | ||||||
Loans held for sale | 80,255 | 29,233 | ||||||
Loans, net of unearned income | 460,878 | 414,868 | ||||||
Less allowance for loan losses | (4,404 | ) | (3,580 | ) | ||||
|
|
|
| |||||
Loans, net | 456,474 | 411,288 | ||||||
Premises and equipment, net | 3,457 | 3,343 | ||||||
Cash surrender value of life insurance | 8,871 | 8,455 | ||||||
Goodwill | 3,307 | 2,694 | ||||||
Other assets | 18,559 | 10,255 | ||||||
|
|
|
| |||||
Total assets | $ | 736,238 | $ | 539,590 | ||||
|
|
|
| |||||
Liabilities and Stockholders’ Equity | ||||||||
Deposits: | ||||||||
Noninterest-bearing | $ | 91,840 | $ | 88,265 | ||||
Interest-bearing | 428,440 | 326,762 | ||||||
|
|
|
| |||||
Total deposits | 520,280 | 415,027 | ||||||
|
|
|
| |||||
Other borrowings | 129,600 | 73,100 | ||||||
Subordinated debentures, net of issuance costs | 9,792 | 9,766 | ||||||
Other liabilities | 10,970 | 2,076 | ||||||
|
|
|
| |||||
Total liabilities | 670,642 | 499,969 | ||||||
|
|
|
| |||||
Stockholders’ Equity: | ||||||||
Common stock, no par value; 10,000,000 shares authorized; 4,346,866 and 2,792,885 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively | 38,731 | 16,453 | ||||||
Additionalpaid-in capital | 252 | 252 | ||||||
Retained earnings | 25,516 | 23,321 | ||||||
Accumulated other comprehensive income | 876 | (618 | ) | |||||
|
|
|
| |||||
65,375 | 39,408 | |||||||
Noncontrolling interest | 221 | 213 | ||||||
|
|
|
| |||||
Total stockholders’ equity | 65,596 | 39,621 | ||||||
|
|
|
| |||||
Total liabilities and stockholders’ equity | $ | 736,238 | $ | 539,590 | ||||
|
|
|
|
See accompanying notes to unaudited consolidated financial statements.
3
3
Blue Ridge Bankshares, Inc.
Consolidated Statements of IncomeOperations
(dollars in thousands, except(unaudited)
|
|
|
|
|
|
| ||
|
| For the three months ended |
| |||||
(Dollars in thousands, except per share data) |
| March 31, 2022 |
|
| March 31, 2021 |
| ||
INTEREST INCOME |
|
|
|
|
|
| ||
Interest and fees on loans |
| $ | 23,899 |
|
| $ | 21,363 |
|
Interest on securities, deposit accounts, and federal funds sold |
|
| 1,903 |
|
|
| 1,213 |
|
Total interest income |
|
| 25,802 |
|
|
| 22,576 |
|
INTEREST EXPENSE |
|
|
|
|
|
| ||
Interest on deposits |
|
| 1,556 |
|
|
| 1,540 |
|
Interest on subordinated notes |
|
| 553 |
|
|
| 630 |
|
Interest on FHLB and FRB borrowings |
|
| 25 |
|
|
| 389 |
|
Total interest expense |
|
| 2,134 |
|
|
| 2,559 |
|
Net interest income |
|
| 23,668 |
|
|
| 20,017 |
|
Provision for loan losses |
|
| 2,500 |
|
|
| 0 |
|
Net interest income after provision for loan losses |
|
| 21,168 |
|
|
| 20,017 |
|
NONINTEREST INCOME |
|
|
|
|
|
| ||
Fair value adjustments of other equity investments |
|
| 9,364 |
|
|
| 0 |
|
Residential mortgage banking income, net |
|
| 2,821 |
|
|
| 9,301 |
|
Mortgage servicing rights |
|
| 6,738 |
|
|
| 3,371 |
|
Gain on sale of guaranteed government loans |
|
| 1,427 |
|
|
| 1,074 |
|
Wealth and trust management |
|
| 391 |
|
|
| 169 |
|
Service charges on deposit accounts |
|
| 315 |
|
|
| 327 |
|
Increase in cash surrender value of bank owned life insurance |
|
| 272 |
|
|
| 164 |
|
Bank and purchase card, net |
|
| 422 |
|
|
| 300 |
|
Other |
|
| 2,344 |
|
|
| 833 |
|
Total noninterest income |
|
| 24,094 |
|
|
| 15,539 |
|
NONINTEREST EXPENSE |
|
|
|
|
|
| ||
Salaries and employee benefits |
|
| 14,096 |
|
|
| 13,903 |
|
Occupancy and equipment |
|
| 1,485 |
|
|
| 1,331 |
|
Data processing |
|
| 946 |
|
|
| 805 |
|
Legal, issuer, and regulatory filing |
|
| 382 |
|
|
| 576 |
|
Advertising and marketing |
|
| 428 |
|
|
| 279 |
|
Communications |
|
| 799 |
|
|
| 367 |
|
Audit and accounting fees |
|
| 141 |
|
|
| 189 |
|
FDIC insurance |
|
| 231 |
|
|
| 343 |
|
Intangible amortization |
|
| 397 |
|
|
| 351 |
|
Other contractual services |
|
| 534 |
|
|
| 853 |
|
Other taxes and assessments |
|
| 570 |
|
|
| 347 |
|
Merger-related |
|
| 50 |
|
|
| 9,019 |
|
Other |
|
| 2,630 |
|
|
| 1,872 |
|
Total noninterest expense |
|
| 22,689 |
|
|
| 30,235 |
|
Income from continuing operations before income tax expense |
|
| 22,573 |
|
|
| 5,321 |
|
Income tax expense |
|
| 5,153 |
|
|
| 1,078 |
|
Net income from continuing operations |
| $ | 17,420 |
|
| $ | 4,243 |
|
Discontinued Operations |
|
|
|
|
|
| ||
Income (loss) from discontinued operations before income taxes (including gain on disposal of $471 thousand for the three months ended March 31, 2022) |
|
| 426 |
|
|
| (7 | ) |
Income tax expense (benefit) |
|
| 89 |
|
|
| (1 | ) |
Net income (loss) from discontinued operations |
|
| 337 |
|
|
| (6 | ) |
Net income |
|
| 17,757 |
|
|
| 4,237 |
|
Net income from discontinued operations attributable to noncontrolling interest |
| $ | (1 | ) |
| $ | (9 | ) |
Net income attributable to Blue Ridge Bankshares, Inc. |
|
| 17,756 |
|
|
| 4,228 |
|
Net income available to common stockholders |
|
| 17,756 |
|
|
| 4,228 |
|
Basic and diluted EPS from continuing operations (1) |
| $ | 0.93 |
|
| $ | 0.28 |
|
Basic and diluted EPS from discontinued operations (1) |
| $ | 0.02 |
|
|
| — |
|
Basic and diluted EPS attributable to Blue Ridge Bankshares, Inc. (1) |
| $ | 0.95 |
|
| $ | 0.28 |
|
4
(Unaudited)
Three Months Ended September 30, | ||||||||
2019 | 2018 | |||||||
Interest income: | ||||||||
Interest and fees on loans | $ | 6,927 | $ | 5,285 | ||||
Interest on taxable securities | 1,133 | 409 | ||||||
Interest on nontaxable securities | 56 | 73 | ||||||
Interest on federal funds sold | 2 | 3 | ||||||
|
|
|
| |||||
Total interest income | 8,118 | 5,770 | ||||||
|
|
|
| |||||
Interest expense: | ||||||||
Interest on deposits | 1,763 | 910 | ||||||
Interest on subordinated debentures | 169 | 169 | ||||||
Interest on other borrowings | 750 | 255 | ||||||
|
|
|
| |||||
Total interest expense | 2,682 | 1,334 | ||||||
|
|
|
| |||||
Net interest income | 5,436 | 4,436 | ||||||
Provision for loan losses | 570 | 225 | ||||||
|
|
|
| |||||
Net interest income after provision for loan losses | 4,866 | 4,211 | ||||||
|
|
|
| |||||
Non-interest income: | ||||||||
Service charges on deposit accounts | 171 | 155 | ||||||
Mortgage brokerage income | 1,648 | 904 | ||||||
Gain on sale of mortgages | 2,295 | 1,385 | ||||||
Income from investment in life insurance contracts | 59 | 50 | ||||||
Other income | 800 | 597 | ||||||
|
|
|
| |||||
Total other income | 4,973 | 3,091 | ||||||
|
|
|
| |||||
Non-interest expenses: | ||||||||
Salaries and employee benefits | 5,079 | 3,430 | ||||||
Occupancy and equipment expense | 627 | 414 | ||||||
Data processing fees | 413 | 265 | ||||||
Legal and other professional fees | 434 | 334 | ||||||
Advertising fees | 191 | 113 | ||||||
Audit and accounting fees | 37 | 29 | ||||||
FDIC insurance expense | 86 | 42 | ||||||
Director fees | 52 | 45 | ||||||
Other taxes and assessments | 171 | 159 | ||||||
Other operating | 1,117 | 872 | ||||||
|
|
|
| |||||
Total other expenses | 8,207 | 5,703 | ||||||
|
|
|
| |||||
Income before income tax | 1,632 | 1,599 | ||||||
Income tax expense | 379 | 329 | ||||||
|
|
|
| |||||
Net income | $ | 1,253 | $ | 1,270 | ||||
|
|
|
| |||||
Net Income attributable to noncontrolling interest | (3 | ) | (1 | ) | ||||
|
|
|
| |||||
Net Income attributable to Blue Ridge Bankshares, Inc. | $ | 1,250 | $ | 1,269 | ||||
|
|
|
| |||||
Net Income available to Common Stockholders | $ | 1,250 | $ | 1,269 | ||||
|
|
|
| |||||
Basic earnings per common share | $ | 0.29 | $ | 0.45 | ||||
|
|
|
| |||||
Diluted earnings per common share | $ | 0.29 | $ | 0.45 | ||||
|
|
|
|
See accompanying notes to unaudited consolidated financial statements.
5
4
Consolidated Statements of Comprehensive Income (Loss)
(dollars in thousands, except share and per share data)(unaudited)
(Unaudited)
|
| For the three months ended |
| |||||
(Dollars in thousands) |
| March 31, 2022 |
|
| March 31, 2021 |
| ||
Net income |
| $ | 17,757 |
|
| $ | 4,237 |
|
Other comprehensive (loss) income: |
|
|
|
|
|
| ||
Gross unrealized losses on securities available for sale arising during the period |
|
| (22,586 | ) |
|
| (3,142 | ) |
Deferred income tax benefit |
|
| 4,742 |
|
|
| 660 |
|
Unrealized losses on securities available for sale arising during the period, net of tax |
|
| (17,844 | ) |
|
| (2,482 | ) |
Gross unrealized gains on interest rate swaps |
|
| 0 |
|
|
| 7,915 |
|
Deferred income tax expense |
|
| 0 |
|
|
| (1,662 | ) |
Unrealized gains on interest rate swaps, net of tax |
|
| 0 |
|
|
| 6,253 |
|
Other comprehensive net (loss) income |
|
| (17,844 | ) |
|
| 3,771 |
|
Comprehensive net (loss) income |
| $ | (87 | ) |
| $ | 8,008 |
|
Comprehensive income from discontinued operations attributable to noncontrolling interest |
|
| (1 | ) |
|
| (9 | ) |
Comprehensive net (loss) income attributable to Blue Ridge Bankshares, Inc. |
| $ | (88 | ) |
| $ | 7,999 |
|
Nine Months Ended September 30, | ||||||||
2019 | 2018 | |||||||
Interest income: | ||||||||
Interest and fees on loans | $ | 19,640 | $ | 14,625 | ||||
Interest on taxable securities | 2,601 | 1,199 | ||||||
Interest on nontaxable securities | 183 | 226 | ||||||
Interest on federal funds sold | 6 | 13 | ||||||
|
|
|
| |||||
Total interest income | 22,430 | 16,063 | ||||||
|
|
|
| |||||
Interest expense: | ||||||||
Interest on deposits | 4,491 | 2,469 | ||||||
Interest on subordinated debentures | 532 | 532 | ||||||
Interest on other borrowings | 1,920 | 563 | ||||||
|
|
|
| |||||
Total interest expense | 6,943 | 3,564 | ||||||
|
|
|
| |||||
Net interest income | 15,487 | 12,499 | ||||||
Provision for loan losses | 1,465 | 640 | ||||||
|
|
|
| |||||
Net interest income after provision for loan losses | 14,022 | 11,859 | ||||||
|
|
|
| |||||
Non-interest income: | ||||||||
Service charges on deposit accounts | 459 | 479 | ||||||
Mortgage brokerage income | 3,511 | 1,914 | ||||||
Gain on sale of mortgages | 7,455 | 2,954 | ||||||
Income from investment in life insurance contracts | 874 | 148 | ||||||
Other income | 1,956 | 1,514 | ||||||
|
|
|
| |||||
Total other income | 14,255 | 7,009 | ||||||
|
|
|
| |||||
Non-interest expenses: | ||||||||
Salaries and employee benefits | 14,149 | 8,127 | ||||||
Occupancy and equipment expense | 1,868 | 1,117 | ||||||
Data processing fees | 1,069 | 803 | ||||||
Legal and other professional fees | 1,253 | 578 | ||||||
Advertising fees | 607 | 348 | ||||||
Audit and accounting fees | 125 | 114 | ||||||
FDIC insurance expense | 256 | 138 | ||||||
Director fees | 174 | 141 | ||||||
Other taxes and assessments | 490 | 397 | ||||||
Other operating | 3,226 | 2,574 | ||||||
|
|
|
| |||||
Total other expenses | 23,217 | 14,337 | ||||||
|
|
|
| |||||
Income before income tax | 5,060 | 4,531 | ||||||
Income tax expense | 989 | 944 | ||||||
|
|
|
| |||||
Net income | $ | 4,071 | $ | 3,587 | ||||
|
|
|
| |||||
Net Income attributable to noncontrolling interest | (21 | ) | (8 | ) | ||||
|
|
|
| |||||
Net Income attributable to Blue Ridge Bankshares, Inc. | $ | 4,050 | $ | 3,579 | ||||
|
|
|
| |||||
Net Income available to Common Stockholders | $ | 4,050 | $ | 3,579 | ||||
|
|
|
| |||||
Basic earnings per common share | $ | 1.01 | $ | 1.29 | ||||
|
|
|
| |||||
Diluted earnings per common share | $ | 1.01 | $ | 1.29 | ||||
|
|
|
|
See accompanying notes to unaudited consolidated financial statements.
6
5
Blue Ridge Bankshares, Inc.
Consolidated Statements of Comprehensive IncomeChanges in Stockholders’ Equity
(dollars in thousands)(unaudited)
(Unaudited)
| For the three months ended March 31, 2022 |
| |||||||||||||||||||||||||
(Dollars in thousands) | Shares of Common Stock (1) |
|
| Common Stock |
|
| Additional Paid-in Capital |
|
| Retained Earnings |
|
| Accumulated Other Comprehensive Loss, net |
|
| Noncontrolling Interest of Discontinued Operations |
|
| Total |
| |||||||
Balance at beginning of period |
| 18,774,082 |
|
| $ | 194,309 |
|
| $ | 252 |
|
| $ | 85,982 |
|
| $ | (3,632 | ) |
| $ | 228 |
|
| $ | 277,139 |
|
Net income |
| — |
|
|
| — |
|
|
| — |
|
|
| 17,756 |
|
|
| — |
|
|
| 1 |
|
|
| 17,757 |
|
Other comprehensive loss |
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (17,844 | ) |
|
| — |
|
|
| (17,844 | ) |
Dividends on common stock |
| — |
|
|
| — |
|
|
| — |
|
|
| (2,253 | ) |
|
| — |
|
|
| — |
|
|
| (2,253 | ) |
Stock option exercises |
| 1,183 |
|
|
| 15 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 15 |
|
Restricted stock awards, net of forfeitures |
| (4,200 | ) |
|
| 355 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 355 |
|
Cumulative effect adjustment of change in accounting method, net of income taxes |
| — |
|
|
| — |
|
|
| — |
|
|
| 3,542 |
|
|
| — |
|
|
| — |
|
|
| 3,542 |
|
Disposition of noncontrolling interest |
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (229 | ) |
|
| (229 | ) |
Balance at end of period |
| 18,771,065 |
|
| $ | 194,679 |
|
| $ | 252 |
|
| $ | 105,027 |
|
| $ | (21,476 | ) |
| $ | 0 |
|
| $ | 278,482 |
|
| For the three months ended March 31, 2021 |
| |||||||||||||||||||||||||
(Dollars in thousands) | Shares of Common Stock (1) |
|
| Common Stock |
|
| Additional Paid-in Capital |
|
| Retained Earnings |
|
| Accumulated Other Comprehensive Income, net |
|
| Noncontrolling Interest |
|
| Total |
| |||||||
Balance at beginning of period |
| 8,577,932 |
|
| $ | 66,771 |
|
| $ | 252 |
|
| $ | 40,688 |
|
| $ | 264 |
|
| $ | 225 |
|
| $ | 108,200 |
|
Net income |
| — |
|
|
| — |
|
|
| — |
|
|
| 4,228 |
|
|
| — |
|
|
| 9 |
|
|
| 4,237 |
|
Other comprehensive income |
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 3,771 |
|
|
| — |
|
|
| 3,771 |
|
Dividends on common stock | �� | — |
|
|
| — |
|
|
| — |
|
|
| (2,677 | ) |
|
| — |
|
|
| — |
|
|
| (2,677 | ) |
Issuance of common stock and other consideration paid in business combination |
| 9,951,743 |
|
|
| 125,403 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 125,403 |
|
Stock option exercises |
| 67,031 |
|
|
| 633 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 633 |
|
Restricted stock awards, net of forfeitures |
| 24,825 |
|
|
| 167 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 167 |
|
Balance at end of period |
| 18,621,531 |
|
| $ | 192,974 |
|
| $ | 252 |
|
| $ | 42,239 |
|
| $ | 4,035 |
|
| $ | 234 |
|
| $ | 239,734 |
|
Nine Months Ended September 30, | Three Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Net income | $ | 4,071 | $ | 3,587 | $ | 1,253 | $ | 1,270 | ||||||||
Other comprehensive income: | ||||||||||||||||
Gross unrealized gains (losses) arising during the period | 2,288 | (500 | ) | 1,256 | (110 | ) | ||||||||||
Adjustment for income tax (expense) benefit | (480 | ) | 101 | (264 | ) | 23 | ||||||||||
|
|
|
|
|
|
|
| |||||||||
1,808 | (399 | ) | 992 | (87 | ) | |||||||||||
Unrealized gains (losses) on interest rate swaps | (483 | ) | — | (258 | ) | — | ||||||||||
Adjustment for income tax benefit | 102 | — | 54 | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
(381 | ) | — | (204 | ) | — | |||||||||||
Less: | ||||||||||||||||
Reclassifications adjustment for gains included in net income | 86 | 5 | — | 2 | ||||||||||||
Adjustment for income tax expense | (20 | ) | (1 | ) | — | (1 | ) | |||||||||
|
|
|
|
|
|
|
| |||||||||
66 | 4 | — | 1 | |||||||||||||
Other comprehensive income (loss), net of tax | 1,493 | (395 | ) | 788 | (86 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Comprehensive income | $ | 5,564 | $ | 3,192 | $ | 2,041 | $ | 1,184 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Comprehensive income attributable to noncontrolling interest | $ | (21 | ) | $ | (8 | ) | $ | (3 | ) | $ | (1 | ) | ||||
|
|
|
|
|
|
|
| |||||||||
Comprehensive income attributable to Blue Ridge Bankshares, Inc. | $ | 5,543 | $ | 3,184 | $ | 2,038 | $ | 1,183 | ||||||||
|
|
|
|
|
|
|
|
See accompanying notes to unaudited consolidated financial statements.
7
Blue Ridge Bankshares, Inc.
Condensed Consolidated Statements of Changes in Stockholders’ Equity
(dollars in thousands)
(Unaudited)
Three Months Ended September 30, 2019 and 2018
Common Stock & Related Surplus | Contributed Equity | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Noncontrolling Interest | Unearned ESOP Shares | Total | ||||||||||||||||||||||
Balance, June 30, 2018 | $ | 16,375 | $ | 237 | $ | 21,782 | $ | (633 | ) | $ | 206 | $ | (31 | ) | $ | 37,936 | ||||||||||||
Net income | — | — | 1,269 | — | 1 | — | 1,270 | |||||||||||||||||||||
Other comprehensive income (loss) | — | — | — | (86 | ) | — | — | (86 | ) | |||||||||||||||||||
Dividends on common stock ($0.14 per share) | — | — | (391 | ) | — | — | — | (391 | ) | |||||||||||||||||||
Issuance of restricted common stock, net of forfeitures | 38 | — | — | — | — | — | 38 | |||||||||||||||||||||
Release of unearned ESOP shares | — | 10 | — | — | — | 31 | 41 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Balance, September 30, 2018 | $ | 16,413 | $ | 248 | $ | 22,660 | $ | (719 | ) | $ | 207 | $ | — | $ | 38,808 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Balance, June 30, 2019 | $ | 38,690 | $ | 252 | $ | 24,886 | $ | 88 | $ | 218 | $ | — | $ | 64,134 | ||||||||||||||
Net income | — | — | 1,250 | — | 3 | — | 1,253 | |||||||||||||||||||||
Other comprehensive income (loss) | — | — | — | 788 | — | — | 788 | |||||||||||||||||||||
Dividends on common stock ($0.1425 per share) | — | — | (620 | ) | — | — | — | (620 | ) | |||||||||||||||||||
Issuance of restricted common stock, net of forfeitures | 41 | — | — | — | — | — | 41 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Balance, September 30, 2019 | $ | 38,731 | $ | 252 | $ | 25,516 | $ | 876 | $ | 221 | $ | — | $ | 65,596 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Blue Ridge Bankshares, Inc.
Condensed Consolidated Statements of Changes in Stockholders’ Equity
(dollars in thousands)
(Unaudited)
Nine Months Ended September 30, 2019 and 2018
Common Stock & Related Surplus | Contributed Equity | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Noncontrolling Interest | Unearned ESOP Shares | Total | ||||||||||||||||||||||
Balance,December 31, 2017 | $ | 16,324 | $ | 195 | $ | 20,190 | $ | (324 | ) | $ | 199 | $ | (143 | ) | $ | 36,441 | ||||||||||||
Net income | — | — | 3,579 | — | 8 | — | 3,587 | |||||||||||||||||||||
Other comprehensive income (loss) | — | — | — | (395 | ) | — | — | (395 | ) | |||||||||||||||||||
Dividends on common stock ($0.40 per share) | — | — | (1,110 | ) | — | — | — | (1,110 | ) | |||||||||||||||||||
Issuance of restricted common stock, net of forfeitures | 89 | — | — | — | — | — | 89 | |||||||||||||||||||||
Release of unearned ESOP shares | — | 53 | — | — | — | 143 | 196 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Balance, September 30, 2018 | $ | 16,413 | $ | 248 | $ | 22,660 | $ | (719 | ) | $ | 207 | $ | — | $ | 38,808 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Balance,December 31, 2018 | $ | 16,452 | $ | 252 | $ | 23,321 | $ | (618 | ) | $ | 213 | $ | — | $ | 39,620 | |||||||||||||
Net income | — | — | 4,050 | — | 21 | — | 4,071 | |||||||||||||||||||||
Other comprehensive income (loss) | — | — | — | 1,494 | — | — | 1,494 | |||||||||||||||||||||
Noncontrolling interest capital distributions | — | — | — | — | (13 | ) | — | (13 | ) | |||||||||||||||||||
Dividends on common stock ($0.1425 per share) | — | — | (1,855 | ) | — | — | — | (1,855 | ) | |||||||||||||||||||
Issuance of common stock (1,536,731 shares), Net of capital raise expenses | 22,119 | — | — | — | — | — | 22,119 | |||||||||||||||||||||
Issuance of restricted common stock, net of forfeitures | 160 | — | — | — | — | — | 160 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Balance, September 30, 2019 | $ | 38,731 | $ | 252 | $ | 25,516 | $ | 876 | $ | 221 | $ | — | $ | 65,596 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6
Blue Ridge Bankshares, Inc.
Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 2019 and 2018(unaudited)
(Unaudited)
|
| For the three months ended |
| |||||
(Dollars in thousands) |
| March 31, 2022 |
|
| March 31, 2021 |
| ||
Cash Flows From Operating Activities |
|
|
|
|
|
| ||
Net income from continuing operations |
| $ | 17,420 |
|
| $ | 4,243 |
|
Net income (loss) from discontinued operations |
|
| 337 |
|
|
| (6 | ) |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: |
|
|
|
|
|
| ||
Depreciation and amortization |
|
| 525 |
|
|
| 446 |
|
Deferred income tax benefit (expense) |
|
| 3,801 |
|
|
| (1,002 | ) |
Provision for loan losses |
|
| 2,500 |
|
| 0 |
| |
Accretion of fair value adjustments (discounts) on acquired loans |
|
| (2,691 | ) |
|
| (359 | ) |
Accretion of fair value adjustments (premiums) on acquired time deposits |
|
| (470 | ) |
|
| (697 | ) |
Accretion of fair value adjustments (premiums) on acquired subordinated notes |
|
| (25 | ) |
|
| (35 | ) |
Proceeds from sale of loans held for sale |
|
| 234,550 |
|
|
| 412,139 |
|
Loans held for sale, originated |
|
| (153,534 | ) |
|
| (377,854 | ) |
Gain on sale of loans held for sale, originated |
|
| (77 | ) |
|
| (4,715 | ) |
(Gain) loss on disposal of premises and equipment |
|
| (405 | ) |
|
| 32 |
|
Investment amortization expense, net |
|
| 452 |
|
|
| 463 |
|
Amortization of subordinated debt issuance costs |
|
| 9 |
|
|
| 17 |
|
Intangible amortization |
|
| 397 |
|
|
| 351 |
|
Fair value adjustments of other equity investments |
|
| (9,364 | ) |
|
| 0 |
|
Fair value adjustments attributable to mortgage servicing rights |
|
| (3,777 | ) |
|
| 0 |
|
Increase in cash surrender value of bank owned life insurance |
|
| (272 | ) |
|
| (164 | ) |
Increase in other assets |
|
| 1,151 |
|
|
| (2,873 | ) |
Increase in other liabilities |
|
| 4,500 |
|
|
| 5,674 |
|
Net cash provided by operating activities - continuing operations |
|
| 95,027 |
|
|
| 35,660 |
|
Net cash provided by operating activities - discontinued operations |
|
| 55 |
|
|
| 56 |
|
Cash provided by operating activities |
|
| 95,082 |
|
|
| 35,716 |
|
Cash Flows From Investing Activities |
|
|
|
|
|
| ||
Net increase in federal funds sold |
|
| (30,391 | ) |
|
| (2,731 | ) |
Purchases of securities available for sale |
|
| (32,660 | ) |
|
| (107,057 | ) |
Proceeds from calls, sales, paydowns and maturities of securities available for sale |
|
| 7,743 |
|
|
| 12,490 |
|
Proceeds from sale of other real estate owned |
|
| 70 |
|
|
| 4 |
|
Net change in restricted equity and other investments |
|
| (283 | ) |
|
| 1,990 |
|
Net decrease (increase) in Paycheck Protection Program loans |
|
| 7,552 |
|
|
| (291,196 | ) |
Net (increase) decrease in loans held for investment |
|
| (66,088 | ) |
|
| 38,436 |
|
Purchase of premises and equipment |
|
| (104 | ) |
|
| (78 | ) |
Proceeds from sale of premises and equipment |
|
| 1,937 |
|
|
| 278 |
|
Capital calls of small business investment company funds and other investments |
|
| (3,553 | ) |
|
| (376 | ) |
Net cash acquired in acquisition of Bay Banks of Virginia, Inc. |
|
| 0 |
|
|
| 44,066 |
|
Nonincome distributions from limited liability companies |
|
| 227 |
|
|
| 107 |
|
Net cash used in investing activities - continuing operations |
|
| (115,550 | ) |
|
| (304,067 | ) |
Net cash provided by (used in) investing activities - discontinued operations |
|
| 245 |
|
|
| (46 | ) |
Cash used in investing activities |
|
| (115,305 | ) |
|
| (304,113 | ) |
Cash Flows From Financing Activities: |
|
|
|
|
|
| ||
Net increase in demand, savings and other interest-bearing deposits |
|
| 98,992 |
|
|
| 181,850 |
|
Net decrease in time deposits |
|
| (42,212 | ) |
|
| (17,032 | ) |
Common stock dividends paid |
|
| (2,253 | ) |
|
| (2,677 | ) |
Federal Home Loan Bank advances |
|
| 0 |
|
|
| 200,000 |
|
Federal Home Loan Bank repayments |
|
| 0 |
|
|
| (142,000 | ) |
Federal Reserve Bank advances |
|
| 0 |
|
|
| 265,908 |
|
Federal Reserve Bank repayments |
|
| (2,690 | ) |
|
| (62,706 | ) |
Stock option exercises |
|
| 15 |
|
|
| 633 |
|
Net increase in securities sold under repurchase agreements |
|
| 0 |
|
|
| 16 |
|
Net cash provided by financing activities - continuing operations |
|
| 51,852 |
|
|
| 423,992 |
|
Net cash provided by financing activities - discontinued operations |
|
| 0 |
|
|
| 0 |
|
Cash provided by financing activities |
|
| 51,852 |
|
|
| 423,992 |
|
Net increase in cash and due from banks |
|
| 31,629 |
|
|
| 155,595 |
|
Cash and due from banks at beginning of period |
|
| 130,548 |
|
|
| 117,945 |
|
Cash and due from banks at end of period |
| $ | 162,177 |
|
| $ | 273,540 |
|
2019 | 2018 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 4,071 | $ | 3,587 | ||||
Adjustments to reconcile net income to net cash used in operating activities: | ||||||||
Depreciation, amortization and accretion | 383 | 295 | ||||||
Deferred income taxes | 9 | (325 | ) | |||||
Provision for loan losses | 1,465 | 640 | ||||||
Proceeds from sale of loans held for sale, originated | 241,112 | 105,343 | ||||||
Gain on sale of loans held for sale, originated | (7,455 | ) | (2,954 | ) | ||||
Gain on sale of securities | (86 | ) | (5 | ) | ||||
Loans held for sale, originated | (264,625 | ) | (108,773 | ) | ||||
(Gain) loss on disposal of premises and equipment | (2 | ) | 5 | |||||
Loss on sale of other real estate owned | 33 | — | ||||||
Investment amortization expense, net | 356 | 182 | ||||||
Amortization of debt refinancing fees | — | 57 | ||||||
Amortization of subordinated debt issuance costs | 25 | 25 | ||||||
Amortization of other intangibles | 352 | 390 | ||||||
Earnings on life insurance | (874 | ) | (148 | ) | ||||
Increase in other assets | (9,677 | ) | (2,392 | ) | ||||
Increase (decrease) in accrued expenses | 8,893 | (160 | ) | |||||
Release of unearned ESOP shares | — | 196 | ||||||
|
|
|
| |||||
Net cash used in operating activities | (26,020 | ) | (4,037 | ) | ||||
|
|
|
| |||||
Cash flows used in investing activities: | ||||||||
Net (increase) decrease in federal funds sold | 261 | (138 | ) | |||||
Purchase of securities available for sale | (96,743 | ) | (9,307 | ) | ||||
Purchase of securities held to maturity | — | (4,401 | ) | |||||
Proceeds from calls, maturities, sales, paydowns and maturities of securities available for sale | 15,231 | 4,342 | ||||||
Proceeds from calls, maturities, sales, paydowns and maturities of securities held for investment | 2,370 | 1,915 | ||||||
Purchase of insurance policies | (600 | ) | — | |||||
Redemption of insurance policies | 1,058 | — | ||||||
Net change in restricted equity securities | (2,717 | ) | (249 | ) | ||||
Net increase in loans held for investment | (46,650 | ) | (45,484 | ) | ||||
Net increase in loans held for sale, participations | (20,053 | ) | (4,719 | ) | ||||
Purchase of premises and equipment | (507 | ) | (640 | ) | ||||
Proceeds from sale of premises and equipment | 13 | 4 | ||||||
Capital calls of SBIC funds and other investments | (665 | ) | (310 | ) | ||||
Nonincome distributions from limited liability companies | 147 | 252 | ||||||
|
|
|
| |||||
Net cash used in investing activities | (148,855 | ) | (58,735 | ) | ||||
|
|
|
| |||||
Cash flows from financing activities: | ||||||||
Net increase in deposits | 105,254 | 53,683 | ||||||
Common stock dividends paid | (1,866 | ) | (1,110 | ) | ||||
Federal Home Loan Bank advances | 257,100 | 106,100 | ||||||
Federal Home Loan Bank repayments | (200,600 | ) | (92,700 | ) | ||||
Issuance of common stock | 22,279 | 89 | ||||||
Repayment of contingent ESOP liability | — | (151 | ) | |||||
|
|
|
| |||||
Net cash provided by financing activities | 182,167 | 65,911 | ||||||
|
|
|
| |||||
Net increase in cash and due from banks | 7,292 | 3,139 | ||||||
Cash and due from banks at beginning of period | 15,026 | 10,319 | ||||||
|
|
|
| |||||
Cash and due from banks at end of period | $ | 22,318 | $ | 13,458 | ||||
|
|
|
| |||||
Supplemental disclosures of cash flow information: | ||||||||
Cash paid during the period for interest | $ | 6,217 | $ | 3,203 |
8
Supplemental Schedule of Cash Flow Information |
|
|
|
|
|
| ||
Cash paid for: |
|
|
|
|
|
| ||
Interest |
| $ | 1,598 |
|
| $ | 2,039 |
|
Income taxes |
| $ | 0 |
|
| $ | 1,000 |
|
Non-cash investing and financing activities: |
|
|
|
|
|
| ||
Unrealized loss on securities available for sale |
| $ | (22,586 | ) |
| $ | (3,142 | ) |
Restricted stock awards, net of forfeitures |
| $ | 355 |
|
| $ | 167 |
|
Assets acquired in business combination |
| $ | 0 |
|
| $ | 1,224,583 |
|
Liabilities assumed in business combination |
| $ | 0 |
|
| $ | 1,107,036 |
|
Effective settlement of subordinated notes in business combination |
| $ | 0 |
|
| $ | 650 |
|
Change in goodwill |
| $ | 0 |
|
| $ | 7,206 |
|
Cumulative effect adjustment of change in accounting method |
| $ | 3,542 |
|
| $ | — |
|
See accompanying notes to unaudited consolidated financial statements.
9
7
Notes to Consolidated Financial Statements (Unaudited)
Note 1 – SummaryOrganization and Basis of Significant Accounting PoliciesPresentation
PrinciplesBlue Ridge Bankshares, Inc. (the "Company") conducts its business activities primarily through its wholly-owned subsidiary bank, Blue Ridge Bank, National Association (the "Bank") and its wealth and trust management subsidiary, BRB Financial Group, Inc. (the “Financial Group”). The Company exists primarily for the purposes of Consolidationholding the stock of its subsidiaries, the Bank and the Financial Group.
The Company sold its majority interest in MoneyWise Payroll Solutions, Inc. (“MoneyWise”) to the holder of the minority interest in MoneyWise in the first quarter of 2022. Asset and liability balances and income statement amounts related to MoneyWise are reported as discontinued operations for all periods presented.
The accompanying unaudited consolidated financial statements of Blue Ridge Bankshares, Inc. (“the Company” or “Blue Ridge”)Company include the accounts of Blue Ridgethe Bank N.A. (“and the Bank”), PVB Properties, LLC, and MoneyWise Payroll Solutions, Inc. (net of noncontrolling interest)Financial Group and were prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) forand to general practices within the interim financial information. Accordingly, these financial statements do not include all of the informationbanking industry. All significant intercompany balances and footnotes required by U.S. GAAP for complete financial statements. Operating results for the quarter ended September 30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019.transactions have been eliminated in consolidation. These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 included2021.
In March 2021, the Company’s board of directors approved a three-for-two stock split (“Stock Split”) effected in the joint proxy statement/prospectus filed withform of a 50% stock dividend on the Securities and Exchange CommissionCompany’s common stock outstanding paid on October 31, 2019.
TheApril 30, 2021 to shareholders of record as of April 20, 2021. Cash was paid in lieu of fractional shares based on the closing price of common stock on the record date. References made to outstanding shares or per share amounts in the accompanying unaudited consolidated financial statements includeand disclosures have been adjusted to reflect the accountsStock Split for all periods presented, unless otherwise noted.
On January 31, 2021, the Company completed a merger with Bay Banks of Virginia, Inc. (“Bay Banks”), a bank holding company conducting substantially all its operations through its bank subsidiary, Virginia Commonwealth Bank, and the Financial Group (formerly VCB Financial Group, Inc.). Immediately following the Company’s merger with Bay Banks, Bay Banks’ subsidiary bank was merged with and into the Bank, while the Financial Group became a subsidiary of the Company (collectively, the Bank and its subsidiaries. All significant intercompany“Bay Banks Merger”). Information contained herein as of March 31, 2022 includes the balances and transactions have been eliminated in consolidation.
Nature of Operations
The Company operates underBay Banks. Information for the supervision and monitoring of the Federal Reserve Bank of Richmond while the Bank operates under a national charter subject to regulation by the Office of the Comptroller of the Currency. The Bank provides commercial banking services to customers located primarilyperiods in the Piedmont, Southside,year ended and Shenandoah Valley regionsas of December 31, 2021 includes the Commonwealthoperations of Virginia and also operates underBay Banks only for the name Carolina State Bank in Greensboro, North Carolina. Mortgage lending services are provided in these regions as well with additional mortgage offices located in Northern Virginia, Maryland, North Carolina, and Florida.
Basis of Presentation
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affectperiod immediately following the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at theeffective date of the Bay Banks Merger (January 31, 2021) through December 31, 2021.
On January 1, 2022, the Company changed its accounting method for mortgage servicing rights ("MSR") assets from the amortization method to the fair value measurement method under Accounting Standards Codification 860 Transfers and Servicing. This change in accounting method, which was an irrevocable election, was prospective in nature and resulted in an after-tax difference in carrying values of its MSR assets under the two methods at the beginning of the quarter. Consequently, a positive $3.5 million cumulative effect adjustment was recorded to stockholders’ equity as of January 1, 2022.
Certain amounts presented in the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses, goodwill and intangibles, fair value, the valuation of deferred tax assets and liabilities, and valuation of foreclosed real estate. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, which are necessary for fair presentation of the results of operations in these financial statements,prior periods have been made.
Reclassification
Certain reclassifications have been made to prior period amountsreclassified to conform to current period presentation. None of theseyear presentations. The reclassifications are considered material and havehad no impacteffect on net income.
Earnings Per Share
Accounting guidance specifies the computation, presentation and disclosure requirements for earningsincome, net income per share, (“EPS”) for entities with publicly held common stocktotal assets, total liabilities, or potential common stock suchstockholders’ equity as options, warrants, convertible securities or contingent stock agreements if those securities trade in a public market. ESOP shares are considered outstanding for this calculation. Basic EPS is computed by dividing net income by the weighted average number of common shares outstanding. Diluted EPS is similar to the computation of basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding if the dilutive common shares had been issued. The Company had no dilutive common shares outstanding at September 30, 2019 and 2018.
8previously reported.
Note 1 – Summary of Significant Accounting Policies, continued
The following table sets forth the computation of basic and diluted earnings per share for the three and nine months ended September 30.
For the nine months ended September 30, | For the three months ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Net income | $ | 4,070,745 | $ | 3,587,096 | $ | 1,253,139 | $ | 1,269,659 | ||||||||
Net income attributable to noncontrolling interest | (21,251 | ) | (7,612 | ) | (3,075 | ) | (1,043 | ) | ||||||||
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Net income available to common shareholders | $ | 4,049,494 | $ | 3,579,484 | $ | 1,250,064 | $ | 1,268,616 | ||||||||
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Weighted average common shares | 3,998,267 | 2,774,441 | 4,346,866 | 2,795,303 | ||||||||||||
Effect of dilutive securities | — | — | — | — | ||||||||||||
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Diluted average common shares | 3,998,267 | 2,774,441 | 4,346,866 | 2,795,303 | ||||||||||||
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Earnings (losses) per common share | $ | 1.01 | $ | 1.29 | $ | 0.29 | $ | 0.45 | ||||||||
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Diluted earnings (losses) per common share | $ | 1.01 | $ | 1.29 | $ | 0.29 | $ | 0.45 | ||||||||
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Note 2 – Investment SecuritiesAmendments to the Accounting Standards Codification
In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The amendments in this ASU, among other things, require the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. In addition, the ASU amends the
10
accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. The Company will be required to apply the guidance for fiscal years, and interim periods within those years, beginning after December 15, 2022. The Company has formed a cross-functional working group, supported by a third-party consultant, which is implementing the requirements of ASU 2016-13 by the adoption date.
In November 2019, the FASB issued ASU 2019-11, Codification Improvements to Topic 326, Financial Instruments – Credit Losses. This ASU addresses issues raised by stakeholders during the implementation of ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. Among other narrow-scope improvements, the new ASU clarifies guidance around how to report expected recoveries. “Expected recoveries” describes a situation in which an organization recognizes a full or partial write-off of the amortized cost basis of a financial asset, but then later determines that the amount written off, or a portion of that amount, will in fact be recovered. While applying the credit losses standard, stakeholders questioned whether expected recoveries were permitted on assets that had already shown credit deterioration at the time of purchase (also known as purchased credit-deteriorated (“PCD”) assets). In response to this question, the ASU permits organizations to record expected recoveries on PCD assets. In addition to other narrow technical improvements, the ASU also reinforces existing guidance that prohibits organizations from recording negative allowances for available-for-sale debt securities. The ASU includes effective dates and transition requirements that vary depending on whether or not an entity has already adopted ASU 2016-13. The Company is currently assessing the impact that ASU 2019-11 will have on its consolidated financial statements.
Note 3 – Investments
Investment securities available for sale are carried at fair value in the consolidated balance sheets at their fair value and investment securities held to maturity are carried in the consolidated balance sheets at their amortized cost.sheets. The following tables present amortized cost and fair values of investment securities at September 30, 2019available for sale as of the dates stated.
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| March 31, 2022 |
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(Dollars in thousands) |
| Amortized |
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| Gross |
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| Gross |
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| Fair |
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Available for sale |
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State and municipal |
| $ | 58,962 |
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| $ | 5 |
|
| $ | (4,041 | ) |
| $ | 54,926 |
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U.S. Treasury and agencies |
|
| 75,402 |
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|
| — |
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| (5,683 | ) |
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| 69,719 |
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Mortgage backed securities |
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| 225,163 |
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| 78 |
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| (18,106 | ) |
|
| 207,135 |
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Corporate bonds |
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| 43,679 |
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| 572 |
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| (547 | ) |
|
| 43,704 |
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Total investment securities |
| $ | 403,206 |
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| $ | 655 |
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| $ | (28,377 | ) |
| $ | 375,484 |
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| December 31, 2021 |
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(Dollars in thousands) |
| Amortized |
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| Gross |
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| Gross |
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| Fair |
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Available for sale |
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State and municipal |
| $ | 51,341 |
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| $ | 302 |
|
| $ | (530 | ) |
| $ | 51,113 |
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U.S. Treasury and agencies |
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| 65,680 |
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| 0 |
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| (1,614 | ) |
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| 64,066 |
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Mortgage backed securities |
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| 222,968 |
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| 403 |
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| (4,261 | ) |
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| 219,110 |
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Corporate bonds |
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| 38,752 |
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| 808 |
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| (317 | ) |
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| 39,243 |
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Total investment securities |
| $ | 378,741 |
|
| $ | 1,513 |
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| $ | (6,722 | ) |
| $ | 373,532 |
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As of March 31, 2022 and December 31, 2018 are as follows:2021, no securities and securities with a fair value of $8.7 million were pledged to secure public deposits with the Treasury Board of the Commonwealth of Virginia.
As of March 31, 2022 and December 31, 2021, securities with a fair value of $20.0 million and $23.1 million, respectively, were pledged to secure the Bank’s line of credit with the Federal Home Loan Bank of Atlanta ("FHLB").
September 30, 2019 | ||||||||||||||||
(In thousands) | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
Available for sale | ||||||||||||||||
U.S. Treasury and agencies | $ | 3,375 | $ | 2 | $ | 46 | $ | 3,331 | ||||||||
Mortgage backed securities | 110,220 | 1,640 | 70 | 111,790 | ||||||||||||
Corporate bonds | 6,553 | 68 | 2 | 6,619 | ||||||||||||
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$ | 120,148 | $ | 1,710 | $ | 118 | $ | 121,740 | |||||||||
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Held to maturity | ||||||||||||||||
State and municipal | $ | 13,117 | $ | 506 | $ | 8 | $ | 13,615 | ||||||||
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$ | 13,117 | $ | 506 | $ | 8 | $ | 13,615 | |||||||||
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Total Investment Securities | $ | 133,265 | $ | 2,216 | $ | 126 | $ | 135,355 | ||||||||
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December 31, 2018 | ||||||||||||||||
(In thousands) | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
Available for sale | ||||||||||||||||
State and municipal | $ | 1,000 | $ | 3 | $ | — | $ | 1,003 | ||||||||
U.S. Treasury and agencies | 3,375 | — | 208 | 3,167 | ||||||||||||
Mortgage backed securities | 28,976 | 22 | 628 | 28,370 | ||||||||||||
Corporate bonds | 5,477 | 78 | 48 | 5,507 | ||||||||||||
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$ | 38,828 | $ | 103 | $ | 884 | $ | 38,047 | |||||||||
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Held to maturity | ||||||||||||||||
State and municipal | $ | 15,565 | $ | 78 | $ | 140 | $ | 15,503 | ||||||||
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$ | 15,565 | $ | 78 | $ | 140 | $ | 15,503 | |||||||||
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Total Investment Securities | $ | 54,393 | $ | 181 | $ | 1,024 | $ | 53,550 | ||||||||
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9
Note 2 – Investment Securities, continued
The following table presents the amortized cost and fair value of securities at September 30, 2019,available for sale by contractual maturity are shown below.as of the date stated. Expected maturities willmay differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
11
September 30, 2019 | ||||||||||||||||
Securities Available for Sale | Securities Held to Maturity | |||||||||||||||
(In thousands) | Amortized Cost | Fair Value | Amortized Cost | Fair Value | ||||||||||||
Due in one year or less | $ | — | $ | — | $ | 461 | $ | 463 | ||||||||
Due after one year through five years | 2,500 | 2,499 | 2,590 | 2,641 | ||||||||||||
Due after five years | 8,794 | 8,781 | 3,761 | 3,863 | ||||||||||||
Due after ten years | 108,854 | 110,460 | 6,305 | 6,648 | ||||||||||||
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Total | $ | 120,148 | $ | 121,740 | $ | 13,117 | $ | 13,615 | ||||||||
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A
|
| March 31, 2022 |
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(Dollars in thousands) |
| Amortized |
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| Fair |
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Due in one year or less |
| $ | 9,412 |
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| $ | 9,320 |
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Due after one year through five years |
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| 36,249 |
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| 34,710 |
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Due after five years through ten years |
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| 133,649 |
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| 126,631 |
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Due after ten years |
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| 223,896 |
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| 204,823 |
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Total |
| $ | 403,206 |
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| $ | 375,484 |
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The following tables present a summary of unrealized losses (in thousands) and the length of time securities have been in a continuous loss position, by security type and number of securities, as of the dates stated.
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| March 31, 2022 |
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| Less than 12 Months |
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| 12 Months or Greater |
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| Total |
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(Dollars in thousands) |
| Number of Securities |
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| Fair |
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| Unrealized |
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| Fair |
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| Unrealized |
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| Fair |
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| Unrealized |
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State and municipal |
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| 75 |
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| $ | 44,827 |
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| $ | (3,611 | ) |
| $ | 4,986 |
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| $ | (430 | ) |
| $ | 49,813 |
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| $ | (4,041 | ) |
U.S. Treasury and agencies |
|
| 28 |
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| 51,162 |
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| (4,376 | ) |
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| 10,193 |
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| (1,307 | ) |
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| 61,355 |
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| (5,683 | ) |
Mortgage backed securities |
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| 65 |
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| 158,560 |
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| (13,607 | ) |
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| 42,108 |
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| (4,499 | ) |
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| 200,668 |
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| (18,106 | ) |
Corporate bonds |
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| 16 |
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| 15,119 |
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| (485 | ) |
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| 1,938 |
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|
| (62 | ) |
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| 17,057 |
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| (547 | ) |
Total |
|
| 184 |
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| $ | 269,668 |
|
| $ | (22,079 | ) |
| $ | 59,225 |
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| $ | (6,298 | ) |
| $ | 328,893 |
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| $ | (28,377 | ) |
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| December 31, 2021 |
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| Less than 12 Months |
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| 12 Months or Greater |
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| Total |
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(Dollars in thousands) |
| Number of Securities |
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| Fair |
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| Unrealized |
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| Fair |
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| Unrealized |
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| Fair |
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| Unrealized |
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State and municipal |
|
| 38 |
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| $ | 27,905 |
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| $ | (530 | ) |
| $ | — |
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| $ | — |
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| $ | 27,905 |
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| $ | (530 | ) |
U.S. Treasury and agencies |
|
| 22 |
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| 64,067 |
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| (1,614 | ) |
|
| — |
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| — |
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| 64,067 |
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|
| (1,614 | ) |
Mortgage backed securities |
|
| 54 |
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| 186,924 |
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| (4,257 | ) |
|
| 543 |
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|
| (4 | ) |
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| 187,467 |
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|
| (4,261 | ) |
Corporate bonds |
|
| 11 |
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| 6,770 |
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|
| (313 | ) |
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| 996 |
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| (4 | ) |
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| 7,766 |
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| (317 | ) |
Total |
|
| 125 |
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| $ | 285,666 |
|
| $ | (6,714 | ) |
| $ | 1,539 |
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| $ | (8 | ) |
| $ | 287,205 |
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| $ | (6,722 | ) |
The Company reviews for other-than-temporary impairment of its investment securities portfolio at September 30, 2019least quarterly. At March 31, 2022 and December 31, 2018 is2021, with the exception of one security, all securities in an unrealized loss position were of investment grade. In addition, the amount of unrealized loss for the security was not significant. Investment securities with unrealized losses are generally a result of pricing changes due to recent changes in the interest rate environment and not as follows:a result of permanent credit impairment. Contractual cash flows for the mortgage-backed securities are guaranteed and/or funded by the U.S. government. Municipal securities show no indication that the contractual cash flows will not be received when due. The Company does not intend to sell nor does it believe that it will be required to sell any of its temporarily impaired securities prior to the recovery of the amortized cost.
September 30, 2019 | Less than 12 Months | 12 Months or Greater | Total | |||||||||||||||||||||
Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||||||||
State and Municipal | $ | 1,667 | $ | (8 | ) | $ | — | $ | — | $ | 1,667 | $ | (8 | ) | ||||||||||
U.S. Treasury and Agency | — | — | 2,829 | (46 | ) | 2,829 | (46 | ) | ||||||||||||||||
Mortgage backed | 6,251 | (4 | ) | 6,986 | (66 | ) | 13,237 | (70 | ) | |||||||||||||||
Corporate bonds | 250 | — | 898 | (2 | ) | 1,148 | (2 | ) | ||||||||||||||||
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Total | $ | 8,168 | $ | (12 | ) | $ | 10,713 | $ | (114 | ) | $ | 18,881 | $ | (126 | ) | |||||||||
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December 31, 2018 | Less than 12 Months | 12 Months or Greater | Total | |||||||||||||||||||||
Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||||||||
State and Municipal | $ | 6,278 | $ | (105 | ) | $ | 2,402 | $ | (35 | ) | $ | 8,680 | $ | (140 | ) | |||||||||
U.S. Treasury and Agency | — | — | 3,167 | (208 | ) | 3,167 | (208 | ) | ||||||||||||||||
Mortgage backed | 10,031 | (51 | ) | 17,173 | (577 | ) | 27,204 | (628 | ) | |||||||||||||||
Corporate bonds | 2,114 | (36 | ) | 488 | (12 | ) | 2,602 | (48 | ) | |||||||||||||||
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Total | $ | 18,423 | $ | (192 | ) | $ | 23,230 | $ | (832 | ) | $ | 41,653 | $ | (1,024 | ) | |||||||||
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OtherRestricted equity investments (in thousands) consistconsisted of stock in the Federal Home Loan BankFHLB (carrying basis $5,993), Federal Reserve stock (carrying basis $963),value of $1.8 million and various other investments (carrying basis $899).
The Company had pledged securities (in thousands)$1.7 million as of $97,265 and $26,408 at September 30, 2019March 31, 2022 and December 31, 2018, respectively.2021, respectively), stock in the Federal Reserve Bank of Richmond ("FRB") (carrying value of $6.1 million at both March 31, 2022 and December 31, 2021), and stock in the Bank’s correspondent bank (carrying value of $468 thousand at both March 31, 2022 and December 31, 2021). Restricted equity investments are carried at cost.
The Company also has various other equity investments, including shares in other financial institutions and fintech companies, totaling $23.9 million and $14.2 million as of March 31, 2022 and December 31, 2021, respectively, which are carried at fair value with any gain or loss reported in the consolidated income statements each reporting period. As no actively-traded market exists for substantially all of the Company's other equity investments, fair value adjustments are determined by reviewing recent observable market transactions, such as stock or equity transactions, that are substantially similar to the Company's existing investments. Other equity investments are also periodically evaluated for impairment using information obtained either directly from the investee or from a third-party broker. If an impairment
1012
has been identified, the carrying value of the investment is written down to its estimated fair market value through a charge to earnings. As of March 31, 2022, no impairment on other equity investments has been recorded.
The Company also holds investments in early-stage focused investment funds, small business investment companies ("SBIC"), and low-income housing partnerships, which are reported in other investments on the consolidated balance sheets.
Note 34 – Loans and Allowance for Loan Losses
LoansThe following table presents loans held for investment, outstanding at September 30, 2019 and December 31, 2018 are summarizedincluding Paycheck Protection Program ("PPP") loans, as follows:of the dates stated.
(Dollars in thousands) |
| March 31, 2022 |
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| December 31, 2021 |
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Commercial and industrial |
| $ | 380,754 |
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| $ | 320,827 |
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Paycheck Protection Program |
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| 22,902 |
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| 30,742 |
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Real estate – construction, commercial |
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| 124,523 |
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| 146,523 |
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Real estate – construction, residential |
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| 60,195 |
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| 58,857 |
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Real estate – mortgage, commercial |
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| 748,223 |
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| 701,503 |
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Real estate – mortgage, residential |
|
| 487,257 |
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| 493,982 |
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Real estate – mortgage, farmland |
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| 6,062 |
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|
| 6,173 |
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Consumer |
|
| 37,368 |
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|
| 49,877 |
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Gross loans |
|
| 1,867,284 |
|
|
| 1,808,484 |
|
Less: deferred loan fees, net of costs |
|
| (1,087 | ) |
|
| (906 | ) |
Total |
| $ | 1,866,197 |
|
| $ | 1,807,578 |
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September 30, 2019 | December 31, 2018 | |||||||
(in thousands) | ||||||||
Commercial and industrial | $ | 50,826 | $ | 49,076 | ||||
Agricultural | 175 | 216 | ||||||
Real estate – construction, commercial | 19,876 | 14,666 | ||||||
Real estate – construction, residential | 16,364 | 15,102 | ||||||
Real estate – mortgage, commercial | 167,223 | 150,513 | ||||||
Real estate – mortgage, residential | 165,865 | 149,856 | ||||||
Real estate – mortgage, farmland | 3,754 | 4,179 | ||||||
Consumer installment loans | 37,433 | 31,979 | ||||||
|
|
|
| |||||
Gross loans | 461,516 | 415,587 | ||||||
Less: Unearned income | (638 | ) | (719 | ) | ||||
|
|
|
| |||||
Total | $ | 460,878 | $ | 414,868 | ||||
|
|
|
|
The Company has pledged loans held for investment (in thousands)certain commercial and residential mortgages as collateral for borrowings with the Federal Home Loan Bank of AtlantaFHLB. Loans totaling $126,125$423.3 million and $104,791$478.3 million were pledged as of September 30, 2019March 31, 2022 and December 31, 2018,2021, respectively. Additionally, PPP loans were pledged as collateral for the FRB's Paycheck Protection Program Liquidity Facility ("PPPLF") advances in the amount of $15.2 million and $17.9 million as of March 31, 2022 and December 31, 2021, respectively.
As a result of the Bay Banks Merger and the 2019 acquisition of Virginia Community Bankshares, Inc., the acquired loan portfolios were initially measured at fair value as of the respective acquisition dates and subsequently accounted for as either purchased performing loans or purchased credit-impaired ("PCI") loans. The following table presents the outstanding principal balance and related recorded investment of these acquired loans included in the consolidated balance sheets as of the dates stated.
(Dollars in thousands) |
| March 31, 2022 |
|
| December 31, 2021 |
| ||
PCI loans |
|
|
|
|
|
| ||
Outstanding principal balance |
| $ | 68,778 |
|
| $ | 97,418 |
|
Recorded investment |
|
| 57,841 |
|
|
| 84,029 |
|
Purchased performing loans |
|
|
|
|
|
| ||
Outstanding principal balance |
|
| 665,979 |
|
|
| 706,147 |
|
Recorded investment |
|
| 663,397 |
|
|
| 703,333 |
|
Total acquired loans |
|
|
|
|
|
| ||
Outstanding principal balance |
|
| 734,757 |
|
|
| 803,565 |
|
Recorded investment |
|
| 721,238 |
|
|
| 787,362 |
|
The following table presents the changes in the accretable yield for PCI loans for the periods stated.
13
|
| For the three months ended March 31, |
| |||||
(Dollars in thousands) |
| 2022 |
|
| 2021 |
| ||
Balance, beginning of period |
| $ | 16,849 |
|
| $ | 123 |
|
Additions |
|
| 0 |
|
|
| 10,030 |
|
Accretion |
|
| (3,512 | ) |
|
| (840 | ) |
Reclassification of nonaccretable difference due to improvement in expected cash flows |
|
| 0 |
|
|
| 104 |
|
Other changes, net |
|
| 0 |
|
|
| 22 |
|
Balance, end of period |
| $ | 13,337 |
|
| $ | 9,439 |
|
The following tables present the aging of the recorded investment of past due loans (in thousands)held for investment as of September 30, 2019the dates stated.
|
| March 31, 2022 |
| |||||||||||||||||||||||||||||
(Dollars in thousands) |
| 30-59 |
|
| 60-89 |
|
| Greater than |
|
| Nonaccrual |
|
| Total Past |
|
| PCI Loans |
|
| Current |
|
| Total |
| ||||||||
Commercial and industrial |
| $ | 2,278 |
|
| $ | 1,117 |
|
| $ | 212 |
|
| $ | 3,378 |
|
| $ | 6,985 |
|
| $ | 6,471 |
|
| $ | 367,298 |
|
| $ | 380,754 |
|
Paycheck Protection Program |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 22,902 |
|
|
| 22,902 |
|
Real estate – construction, commercial |
|
| 3,894 |
|
|
| 269 |
|
|
| — |
|
|
| 88 |
|
|
| 4,251 |
|
|
| 1,196 |
|
|
| 119,076 |
|
|
| 124,523 |
|
Real estate – construction, residential |
|
| 1,383 |
|
|
| 663 |
|
|
| 457 |
|
|
| 240 |
|
|
| 2,743 |
|
|
| — |
|
|
| 57,452 |
|
|
| 60,195 |
|
Real estate – mortgage, commercial |
|
| 717 |
|
|
| 1,202 |
|
|
| — |
|
|
| 3,284 |
|
|
| 5,203 |
|
|
| 42,031 |
|
|
| 700,989 |
|
|
| 748,223 |
|
Real estate – mortgage, residential |
|
| 6,392 |
|
|
| 2,000 |
|
|
| 362 |
|
|
| 5,221 |
|
|
| 13,975 |
|
|
| 7,553 |
|
|
| 465,729 |
|
|
| 487,257 |
|
Real estate – mortgage, farmland |
|
| 339 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 339 |
|
|
| — |
|
|
| 5,723 |
|
|
| 6,062 |
|
Consumer |
|
| 715 |
|
|
| 205 |
|
|
| 239 |
|
|
| 703 |
|
|
| 1,862 |
|
|
| 590 |
|
|
| 34,916 |
|
|
| 37,368 |
|
Less: deferred loan fees, net of costs |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (1,087 | ) |
|
| (1,087 | ) |
Total Loans |
| $ | 15,718 |
|
| $ | 5,456 |
|
| $ | 1,270 |
|
| $ | 12,914 |
|
| $ | 35,358 |
|
| $ | 57,841 |
|
| $ | 1,772,998 |
|
| $ | 1,866,197 |
|
|
| December 31, 2021 |
| |||||||||||||||||||||||||||||
(Dollars in thousands) |
| 30-59 |
|
| 60-89 |
|
| Greater than |
|
| Nonaccrual |
|
| Total Past |
|
| PCI Loans |
|
| Current |
|
| Total |
| ||||||||
Commercial and industrial |
| $ | 2,338 |
|
| $ | — |
|
| $ | 30 |
|
| $ | 6,066 |
|
| $ | 8,434 |
|
| $ | 8,903 |
|
| $ | 303,490 |
|
| $ | 320,827 |
|
Paycheck Protection Program |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 30,742 |
|
|
| 30,742 |
|
Real estate – construction, commercial |
|
| 271 |
|
|
| — |
|
|
| — |
|
|
| 88 |
|
|
| 359 |
|
|
| 14,754 |
|
|
| 131,410 |
|
|
| 146,523 |
|
Real estate – construction, residential |
|
| 651 |
|
|
| 98 |
|
|
| 279 |
|
|
| 413 |
|
|
| 1,441 |
|
|
| — |
|
|
| 57,416 |
|
|
| 58,857 |
|
Real estate – mortgage, commercial |
|
| 53 |
|
|
| — |
|
|
| — |
|
|
| 3,024 |
|
|
| 3,077 |
|
|
| 51,872 |
|
|
| 646,554 |
|
|
| 701,503 |
|
Real estate – mortgage, residential |
|
| 13,950 |
|
|
| 1,587 |
|
|
| 359 |
|
|
| 5,190 |
|
|
| 21,086 |
|
|
| 7,621 |
|
|
| 465,275 |
|
|
| 493,982 |
|
Real estate – mortgage, farmland |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 6,173 |
|
|
| 6,173 |
|
Consumer |
|
| 902 |
|
|
| 583 |
|
|
| 249 |
|
|
| 396 |
|
|
| 2,130 |
|
|
| 879 |
|
|
| 46,868 |
|
|
| 49,877 |
|
Less: deferred loan fees, net of costs |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (906 | ) |
|
| (906 | ) |
Total Loans |
| $ | 18,165 |
|
| $ | 2,268 |
|
| $ | 917 |
|
| $ | 15,177 |
|
| $ | 36,527 |
|
| $ | 84,029 |
|
| $ | 1,687,022 |
|
| $ | 1,807,578 |
|
The following tables present the aging of the recorded investment of PCI loans as of the dates stated.
14
|
| March 31, 2022 |
| |||||||||||||
(Dollars in thousands) |
| 30-89 |
|
| Greater than |
|
| Current |
|
| Total |
| ||||
Commercial and industrial |
| $ | 0 |
|
| $ | 0 |
|
| $ | 6,471 |
|
| $ | 6,471 |
|
Real estate – construction, commercial |
|
| 0 |
|
|
| 0 |
|
|
| 1,196 |
|
|
| 1,196 |
|
Real estate – mortgage, commercial |
|
| 0 |
|
|
| 0 |
|
|
| 42,031 |
|
|
| 42,031 |
|
Real estate – mortgage, residential |
|
| 146 |
|
|
| 0 |
|
|
| 7,407 |
|
|
| 7,553 |
|
Consumer |
|
| 0 |
|
|
| 0 |
|
|
| 590 |
|
|
| 590 |
|
Total PCI Loans |
| $ | 146 |
|
| $ | 0 |
|
| $ | 57,695 |
|
| $ | 57,841 |
|
|
| December 31, 2021 |
| |||||||||||||
(Dollars in thousands) |
| 30-89 |
|
| Greater than |
|
| Current |
|
| Total |
| ||||
Commercial and industrial |
| $ | 0 |
|
| $ | 0 |
|
| $ | 8,903 |
|
| $ | 8,903 |
|
Real estate – construction, commercial |
|
| 0 |
|
|
| 0 |
|
|
| 14,754 |
|
|
| 14,754 |
|
Real estate – mortgage, commercial |
|
| 0 |
|
|
| 0 |
|
|
| 51,872 |
|
|
| 51,872 |
|
Real estate – mortgage, residential |
|
| 147 |
|
|
| 0 |
|
|
| 7,474 |
|
|
| 7,621 |
|
Consumer |
|
| 0 |
|
|
| 4 |
|
|
| 875 |
|
|
| 879 |
|
Total PCI Loans |
| $ | 147 |
|
| $ | 4 |
|
| $ | 83,878 |
|
| $ | 84,029 |
|
The following tables present a summary of the loan portfolio individually and collectively evaluated for impairment as of the dates stated.
|
| March 31, 2022 |
| |||||||||||||
(Dollars in thousands) |
| Individually |
|
| Collectively |
|
| Total Loan Balances |
|
| Related Allowance for Loan Losses |
| ||||
PCI loans: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Commercial and industrial |
| $ | 0 |
|
| $ | 6,471 |
|
| $ | 6,471 |
|
| $ | — |
|
Real estate – construction, commercial |
|
| 0 |
|
|
| 1,196 |
|
|
| 1,196 |
|
|
| — |
|
Real estate – mortgage, commercial |
|
| — |
|
|
| 42,031 |
|
|
| 42,031 |
|
|
| — |
|
Real estate – mortgage, residential |
|
| — |
|
|
| 7,553 |
|
|
| 7,553 |
|
|
| 117 |
|
Consumer |
|
| — |
|
|
| 590 |
|
|
| 590 |
|
|
| — |
|
Total PCI loans |
|
| — |
|
|
| 57,841 |
|
|
| 57,841 |
|
|
| 117 |
|
Originated and purchased performing loans: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Commercial and industrial |
|
| 6,808 |
|
|
| 367,475 |
|
|
| 374,283 |
|
|
| 6,510 |
|
Real estate – construction, commercial |
|
| 523 |
|
|
| 122,804 |
|
|
| 123,327 |
|
|
| 1,282 |
|
Real estate – construction, residential |
|
| — |
|
|
| 60,195 |
|
|
| 60,195 |
|
|
| 469 |
|
Real estate – mortgage, commercial |
|
| 11,304 |
|
|
| 694,888 |
|
|
| 706,192 |
|
|
| 1,367 |
|
Real estate – mortgage, residential |
|
| 1,403 |
|
|
| 478,301 |
|
|
| 479,704 |
|
|
| 1,382 |
|
Real estate – mortgage, farmland |
|
| — |
|
|
| 6,062 |
|
|
| 6,062 |
|
|
| 21 |
|
Consumer |
|
| — |
|
|
| 36,778 |
|
|
| 36,778 |
|
|
| 865 |
|
Total originated and purchased performing loans |
|
| 20,038 |
|
|
| 1,766,503 |
|
|
| 1,786,541 |
|
|
| 11,896 |
|
Gross loans |
|
| 20,038 |
|
|
| 1,824,344 |
|
|
| 1,844,382 |
|
|
| 12,013 |
|
Less: deferred loan fees, net of costs |
|
| — |
|
|
| (1,087 | ) |
|
| (1,087 | ) |
|
| — |
|
Total |
| $ | 20,038 |
|
| $ | 1,823,257 |
|
| $ | 1,843,295 |
|
| $ | 12,013 |
|
15
|
| December 31, 2021 |
| |||||||||||||
(Dollars in thousands) |
| Individually |
|
| Collectively |
|
| Total Loan Balances |
|
| Related Allowance for Loan Losses |
| ||||
PCI loans: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Commercial and industrial |
| $ | 0 |
|
| $ | 8,903 |
|
| $ | 8,903 |
|
| $ | — |
|
Real estate – construction, commercial |
|
| 0 |
|
|
| 14,754 |
|
|
| 14,754 |
|
|
| — |
|
Real estate – mortgage, commercial |
|
| 0 |
|
|
| 51,872 |
|
|
| 51,872 |
|
|
| — |
|
Real estate – mortgage, residential |
|
| 0 |
|
|
| 7,621 |
|
|
| 7,621 |
|
|
| 117 |
|
Consumer |
|
| 0 |
|
|
| 879 |
|
|
| 879 |
|
|
| — |
|
Total PCI loans |
|
| 0 |
|
|
| 84,029 |
|
|
| 84,029 |
|
|
| 117 |
|
Originated and purchased performing loans: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Commercial and industrial |
|
| 4,612 |
|
|
| 307,312 |
|
|
| 311,924 |
|
|
| 7,133 |
|
Real estate – construction, commercial |
|
| 527 |
|
|
| 131,242 |
|
|
| 131,769 |
|
|
| 953 |
|
Real estate – construction, residential |
|
| 0 |
|
|
| 58,857 |
|
|
| 58,857 |
|
|
| 395 |
|
Real estate – mortgage, commercial |
|
| 3,194 |
|
|
| 646,437 |
|
|
| 649,631 |
|
|
| 1,403 |
|
Real estate – mortgage, residential |
|
| 1,400 |
|
|
| 484,961 |
|
|
| 486,361 |
|
|
| 1,184 |
|
Real estate – mortgage, farmland |
|
| 0 |
|
|
| 6,173 |
|
|
| 6,173 |
|
|
| 23 |
|
Consumer |
|
| 0 |
|
|
| 48,998 |
|
|
| 48,998 |
|
|
| 913 |
|
Total originated and purchased performing loans |
|
| 9,733 |
|
|
| 1,683,980 |
|
|
| 1,693,713 |
|
|
| 12,004 |
|
Gross loans |
|
| 9,733 |
|
|
| 1,768,009 |
|
|
| 1,777,742 |
|
|
| 12,121 |
|
Less: deferred loan fees, net of costs |
|
| — |
|
|
| (570 | ) |
|
| (570 | ) |
|
| — |
|
Total |
| $ | 9,733 |
|
| $ | 1,767,439 |
|
| $ | 1,777,172 |
|
| $ | 12,121 |
|
The tables above exclude gross PPP loans of $22.9 million and $30.7 million as of March 31, 2022 and December 31, 2018:
September 30, 2019 | ||||||||||||||||||||||||||||
(in thousands) | 30-59 Days Past Due | 60-89 Days Past Due | Greater than 90 Days Past Due & Accruing | Nonaccrual | Total Past Due & Nonaccrual | Current Loans | Total Loans | |||||||||||||||||||||
Commercial and industrial | $ | 126 | $ | — | $ | — | $ | 538 | $ | 664 | $ | 50,162 | $ | 50,826 | ||||||||||||||
Real estate – construction, commercial | 141 | 363 | — | 942 | 1,446 | 18,430 | 19,876 | |||||||||||||||||||||
Real estate – construction, residential | 493 | 240 | — | — | 733 | 15,631 | 16,364 | |||||||||||||||||||||
Real estate – mortgage, commercial | — | — | — | 2,026 | 2,026 | 165,197 | 167,223 | |||||||||||||||||||||
Real estate – mortgage, residential | 1,482 | — | 708 | 947 | 3,137 | 162,728 | 165,865 | |||||||||||||||||||||
Agricultural & Farmland | — | — | — | — | — | 3,929 | 3,929 | |||||||||||||||||||||
Consumer installment loans | 760 | 322 | — | 688 | 1,770 | 35,663 | 37,433 | |||||||||||||||||||||
Less: Unearned income | — | — | — | — | — | (638 | ) | (638 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
$ | 3,002 | $ | 925 | $ | 708 | $ | 5,141 | $ | 9,776 | $ | 451,102 | $ | 460,878 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11
Note 3 – Loans, continued
December 31, 2018 | ||||||||||||||||||||||||||||
(in thousands) | 30-59 Days Past Due | 60-89 Days Past Due | Greater than 90 Days Past Due & Accruing | Nonaccrual | Total Past Due & Nonaccrual | Current Loans | Total Loans | |||||||||||||||||||||
Commercial and industrial | $ | 280 | $ | 29 | $ | — | $ | 312 | $ | 621 | $ | 48,455 | $ | 49,076 | ||||||||||||||
Real estate – construction, commercial | — | — | — | 979 | 979 | 13,687 | 14,666 | |||||||||||||||||||||
Real estate – construction, residential | — | — | 231 | — | 231 | 14,871 | 15,102 | |||||||||||||||||||||
Real estate – mortgage, commercial | 218 | 441 | 430 | 2,441 | 3,530 | 146,983 | 150,513 | |||||||||||||||||||||
Real estate – mortgage, residential | 760 | 7 | 1,079 | 1,441 | 3,287 | 146,569 | 149,856 | |||||||||||||||||||||
Agricultural & Farmland | 123 | — | 309 | — | 432 | 3,963 | 4,395 | |||||||||||||||||||||
Consumer installment loans | 1,017 | 408 | 4 | 357 | 1,786 | 30,193 | 31,979 | |||||||||||||||||||||
Less: Unearned income | — | — | — | — | — | (719 | ) | (719 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
$ | 2,398 | $ | 885 | $ | 2,053 | $ | 5,530 | $ | 10,866 | $ | 404,002 | $ | 414,868 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 4 – Allowance for Loans Losses
A summary of changes in2021, respectively. PPP loans are fully guaranteed by the U.S. government; therefore, the Company recorded no allowance for loan losses ("ALL") for these loans losses (in thousands) for September 30, 2019as of March 31, 2022 and December 31, 2018 is as follows:2021. In future periods, the Company may be required to establish an ALL for these loans, which would result in a provision for loan losses charged to earnings.
September 30, 2019 | December 31, 2018 | |||||||
(Dollars in thousands) | ||||||||
Allowance, beginning of period | $ | 3,580 | $ | 2,803 | ||||
|
|
|
| |||||
Charge-Offs | ||||||||
Commercial and industrial | $ | 43 | $ | 6 | ||||
Real estate, construction | — | — | ||||||
Real estate, mortgage | 3 | 13 | ||||||
Consumer and other loans | 733 | 545 | ||||||
|
|
|
| |||||
Total charge-offs | 779 | 564 | ||||||
|
|
|
| |||||
Recoveries | ||||||||
Commercial and industrial | — | — | ||||||
Real estate, construction | — | — | ||||||
Real estate, mortgage | (6 | ) | (12 | ) | ||||
Consumer and other loans | (132 | ) | (104 | ) | ||||
|
|
|
| |||||
Total recoveries | (138 | ) | (116 | ) | ||||
|
|
|
| |||||
Net charge-offs (recoveries) | 641 | 448 | ||||||
|
|
|
| |||||
Provision for loan losses | 1,465 | 1,225 | ||||||
|
|
|
| |||||
Allowance, end of period | $ | 4,404 | $ | 3,580 | ||||
|
|
|
|
12
Note 4 – Allowance for Loans Losses, continued
Individually Evaluated for Impairment | Collectively Evaluated for Impairment | Total | ||||||||||
September 30, 2019 | ||||||||||||
Commercial and industrial | $ | 291 | $ | 50,535 | $ | 50,826 | ||||||
Agricultural | — | 175 | 175 | |||||||||
Real Estate – construction, commercial | — | 19,876 | 19,876 | |||||||||
Real Estate – construction, residential | — | 16,364 | 16,364 | |||||||||
Real Estate – mortgage, commercial | 735 | 166,488 | 167,223 | |||||||||
Real Estate – mortgage, residential | 658 | 165,207 | 165,865 | |||||||||
Real Estate – mortgage, farmland | — | 3,754 | 3,754 | |||||||||
Consumer installment loans | — | 37,433 | 37,433 | |||||||||
|
|
|
|
|
| |||||||
Gross loans | 1,684 | 459,832 | 461,516 | |||||||||
Less: Unearned income | — | (638 | ) | (638 | ) | |||||||
|
|
|
|
|
| |||||||
Total | $ | 1,684 | $ | 459,194 | $ | 460,878 | ||||||
|
|
|
|
|
|
Individually Evaluated for Impairment | Collectively Evaluated for Impairment | Total | ||||||||||
December 31, 2018 | ||||||||||||
Commercial and industrial | $ | — | $ | 49,076 | $ | 49,076 | ||||||
Agricultural | — | 216 | 216 | |||||||||
Real Estate – construction, commercial | — | 14,666 | 14,666 | |||||||||
Real Estate – construction, residential | — | 15,102 | 15,102 | |||||||||
Real Estate – mortgage, commercial | 1,258 | 149,255 | 150,513 | |||||||||
Real Estate – mortgage residential | 688 | 149,168 | 149,856 | |||||||||
Real Estate – mortgage, farmland | — | 4,179 | 4,179 | |||||||||
Consumer installment loans | — | 31,979 | 31,979 | |||||||||
|
|
|
|
|
| |||||||
Gross loans | 1,946 | 413,641 | 415,587 | |||||||||
Less: Unearned income | — | (719 | ) | (719 | ) | |||||||
|
|
|
|
|
| |||||||
Total | $ | 1,946 | $ | 412,922 | $ | 414,868 | ||||||
|
|
|
|
|
|
The following table presentstables present information related to impaired loans by portfolio segment,loan type as of the dates and for the periods stated.
|
| March 31, 2022 |
|
| December 31, 2021 |
| ||||||||||||||||||
(Dollars in thousands) |
| Recorded |
|
| Unpaid |
|
| Related |
|
| Recorded |
|
| Unpaid |
|
| Related |
| ||||||
With no specific allowance recorded: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Commercial and industrial |
| $ | 3,521 |
|
| $ | 6,054 |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
Real estate – construction, commercial |
|
| 523 |
|
|
| 522 |
|
|
| — |
|
|
| 527 |
|
|
| 527 |
|
|
| — |
|
Real estate – mortgage, commercial |
|
| 11,216 |
|
|
| 12,172 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Real estate – mortgage, residential |
|
| 1,345 |
|
|
| 1,339 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
With an allowance recorded: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Commercial and industrial |
| $ | 3,287 |
|
| $ | 3,285 |
|
| $ | 640 |
|
| $ | 4,612 |
|
| $ | 4,612 |
|
| $ | 836 |
|
Real estate – mortgage, commercial |
|
| 88 |
|
|
| 87 |
|
|
| 1 |
|
|
| 3,194 |
|
|
| 3,849 |
|
|
| 1 |
|
Real estate – mortgage, residential |
|
| 58 |
|
|
| 59 |
|
|
| 15 |
|
|
| 1,400 |
|
|
| 1,400 |
|
|
| 42 |
|
Total |
| $ | 20,038 |
|
| $ | 23,518 |
|
| $ | 656 |
|
| $ | 9,733 |
|
| $ | 10,388 |
|
| $ | 879 |
|
16
|
| For the three months ended |
| |||||||||||||
|
| March 31, 2022 |
|
| March 31, 2021 |
| ||||||||||
(Dollars in thousands) |
| Average |
|
| Interest |
|
| Average |
|
| Interest |
| ||||
With no specific allowance recorded: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Commercial and industrial |
| $ | 5,305 |
|
| $ | 62 |
|
| $ | 3,250 |
|
| $ | 35 |
|
Real estate – construction, commercial |
|
| 524 |
|
|
| 0 |
|
|
| 542 |
|
|
| 8 |
|
Real estate – mortgage, commercial |
|
| 11,880 |
|
|
| 48 |
|
|
| 1,384 |
|
|
| 14 |
|
Real estate – mortgage, residential |
|
| 1,342 |
|
|
| 14 |
|
|
| 583 |
|
|
| 6 |
|
With an allowance recorded: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Commercial and industrial |
| $ | 3,290 |
|
| $ | 0 |
|
| $ | 0 |
|
| $ | 0 |
|
Real estate – mortgage, commercial |
|
| 88 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
Real estate – mortgage, residential |
|
| 59 |
|
|
| — |
|
|
| 0 |
|
|
| 0 |
|
Total |
| $ | 22,488 |
|
| $ | 124 |
|
| $ | 5,759 |
|
| $ | 63 |
|
Impaired loans also include certain loans that have been modified in troubled debt restructurings ("TDRs") where economic concessions have been granted to borrowers who have experienced or are expected to experience financial difficulties. These concessions typically result from the Company’s loss mitigation activities and could include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance, or other actions. Certain TDRs are classified as non-performing at the dates presented.
September 30, 2019 | ||||||||||||||||||||
(in thousands) | Recorded Investment | Unpaid Principal Balance | Related Allowance | Average Recorded Investment | Interest Income Recognized | |||||||||||||||
With no specific allowance recorded: | ||||||||||||||||||||
Real estate – mortgage, residential | $ | 658 | $ | 658 | $ | — | $ | 661 | $ | 7 | ||||||||||
With an allowance recorded: | ||||||||||||||||||||
Commercial and industrial | 291 | 291 | 151 | 146 | 2 | |||||||||||||||
Real estate – mortgage, commercial | 735 | 735 | 100 | 735 | 5 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
$ | 1,684 | $ | 1,684 | $ | 251 | $ | 1,542 | $ | 14 | |||||||||||
|
|
|
|
|
|
|
|
|
|
13
Note 4 – Allowancetime of restructure and may only be returned to performing status after considering the borrower’s sustained repayment performance for Loans Losses, continued
December 31, 2018 | ||||||||||||||||||||
(in thousands) | Recorded Investment | Unpaid Principal Balance | Related Allowance | Average Recorded Investment | Interest Income Recognized | |||||||||||||||
With no specific allowance recorded: | ||||||||||||||||||||
Real estate – mortgage, residential | $ | 1,946 | $ | 1,946 | $ | — | $ | 2,067 | $ | 64 | ||||||||||
With an allowance recorded: | ||||||||||||||||||||
Real estate – mortgage, commercial | — | — | — | — | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
$ | 1,946 | $ | 1,946 | $ | — | $ | 2,067 | $ | 64 | |||||||||||
|
|
|
|
|
|
|
|
|
|
Purchased loans from the 2016 River Bancorp, Inc. acquisitiona reasonable period, generally six months. The Company had remaining balances (in thousands) of $25,091 and 34,672nine TDRs totaling $673 thousand as of September 30, 2019March 31, 2022 and eight TDRs totaling $688 thousand as of December 31, 2018, respectively. Of these balances three loan relationships2021.
NaN residential mortgage loans were considered specifically impaired purchased credit-impaired loans. Onein the process of these relationships was resolved during 2018 and the Company recovered $200foreclosure as of the balance previouslywritten-off. During the first quarter of 2019, another loan relationship was resolved and the Company recovered $200 of the balance previouslywritten-off. At September 30, 2019, the remaining specifically impaired PCI loans totaled $2,318 with a specific impairment of $190. March 31, 2022.
The following table presents an analysis of the recorded investmentchange in the segmentsALL by loan type as of the River Bancorp, Inc. purchased loans as of September 30, 2019dates and December 31, 2018 (in thousands):for the periods stated.
September 30, 2019 | December 31, 2018 | |||||||
Real Estate | ||||||||
Construction loans and all land development and other land loans | $ | 1,415 | $ | 1,522 | ||||
Secured by farmland | 3 | 319 | ||||||
Revolving,open-end loans secured by1-4 family residential properties and extended under lines of credit | 2,814 | 3,376 | ||||||
Secured by first liens | 7,803 | 10,448 | ||||||
Secured by junior liens | 399 | 505 | ||||||
Secured by multifamily (5 or more) residential properties | 95 | 250 | ||||||
Loans secured by owner-occupied, nonfarm nonresidential properties | 4,146 | 7,344 | ||||||
Loans secured by other nonfarm nonresidential properties | 5,395 | 6,239 | ||||||
Commercial and Industrial | 2,906 | 4,457 | ||||||
Other | ||||||||
Other revolving credit plans | 37 | 89 | ||||||
Automobile loans | 10 | 30 | ||||||
Other consumer loans | 68 | 93 | ||||||
|
|
|
| |||||
Total | $ | 25,091 | $ | 34,672 | ||||
|
|
|
|
14
|
| For the three months ended March 31, |
| |||||
(Dollars in thousands) |
| 2022 |
|
| 2021 |
| ||
ALL, beginning of period |
| $ | 12,121 |
|
| $ | 13,827 |
|
Charge-offs |
|
|
|
|
|
| ||
Commercial and industrial |
|
| (2,401 | ) |
|
| (359 | ) |
Real estate – construction |
|
| (123 | ) |
|
| 0 |
|
Real estate – mortgage |
|
| (16 | ) |
|
| (12 | ) |
Consumer |
|
| (279 | ) |
|
| (263 | ) |
Total charge-offs |
|
| (2,819 | ) |
|
| (634 | ) |
Recoveries |
|
|
|
|
|
| ||
Commercial and industrial |
|
| 74 |
|
|
| 56 |
|
Real estate – construction |
|
| 12 |
|
|
| 0 |
|
Real estate – mortgage |
|
| 4 |
|
|
| 16 |
|
Consumer |
|
| 121 |
|
|
| 137 |
|
Total recoveries |
|
| 211 |
|
|
| 209 |
|
Net charge-offs |
|
| (2,608 | ) |
|
| (425 | ) |
Provision for loan losses |
|
| 2,500 |
|
|
| 0 |
|
ALL, end of period |
| $ | 12,013 |
|
| $ | 13,402 |
|
Note 4 – Allowance for Loans Losses, continued
The following table presentstables present the Company’s loan portfolio by internal loan grade (in thousands) as of September 30, 2019the dates stated.
17
|
| March 31, 2022 |
| |||||||||||||||||||||||||||||||||
(Dollars in thousands) |
| Grade |
|
| Grade |
|
| Grade |
|
| Grade |
|
| Grade |
|
| Grade |
|
| Grade |
|
| Grade |
|
| Total |
| |||||||||
PCI loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Commercial and industrial |
| $ | — |
|
| $ | — |
|
| $ | 1,503 |
|
| $ | 2,524 |
|
| $ | 2 |
|
| $ | 989 |
|
| $ | 1,453 |
|
| $ | — |
|
| $ | 6,471 |
|
Real estate – construction, commercial |
|
| — |
|
|
| — |
|
|
| 0 |
|
|
| 5 |
|
|
| — |
|
|
| 0 |
|
|
| 1,191 |
|
|
| — |
|
|
| 1,196 |
|
Real estate – mortgage, commercial |
|
| — |
|
|
| — |
|
|
| 0 |
|
|
| 4,340 |
|
|
| 19,183 |
|
|
| 16,073 |
|
|
| 2,435 |
|
|
| — |
|
|
| 42,031 |
|
Real estate – mortgage residential |
|
| — |
|
|
| — |
|
|
| 0 |
|
|
| 142 |
|
|
| 1,653 |
|
|
| 2,701 |
|
|
| 3,057 |
|
|
| — |
|
|
| 7,553 |
|
Consumer loans |
|
| — |
|
|
| — |
|
|
| 0 |
|
|
| — |
|
|
| 215 |
|
|
| 366 |
|
|
| 8 |
|
|
| — |
|
|
| 589 |
|
Total PCI loans |
|
| — |
|
|
| — |
|
|
| 1,503 |
|
|
| 7,011 |
|
|
| 21,053 |
|
|
| 20,129 |
|
|
| 8,144 |
|
|
| — |
|
|
| 57,840 |
|
Originated and purchased performing loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Commercial and industrial |
|
| 290 |
|
|
| 768 |
|
|
| 195,187 |
|
|
| 157,865 |
|
|
| 9,976 |
|
|
| 2,836 |
|
|
| 4,722 |
|
|
| 2,639 |
|
|
| 374,283 |
|
Paycheck Protection Program |
|
| 22,902 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 22,902 |
|
Real estate – construction, commercial |
|
| — |
|
|
| 395 |
|
|
| 22,895 |
|
|
| 90,618 |
|
|
| 8,632 |
|
|
| 149 |
|
|
| 637 |
|
|
| — |
|
|
| 123,326 |
|
Real estate – construction, residential |
|
| — |
|
|
| — |
|
|
| 10,390 |
|
|
| 47,331 |
|
|
| 2,235 |
|
|
| 0 |
|
|
| 240 |
|
|
| — |
|
|
| 60,196 |
|
Real estate – mortgage, commercial |
|
| — |
|
|
| 2,300 |
|
|
| 264,816 |
|
|
| 398,340 |
|
|
| 24,102 |
|
|
| 5,202 |
|
|
| 11,432 |
|
|
| — |
|
|
| 706,192 |
|
Real estate – mortgage residential |
|
| — |
|
|
| 7,925 |
|
|
| 254,089 |
|
|
| 199,388 |
|
|
| 10,552 |
|
|
| 873 |
|
|
| 6,877 |
|
|
| — |
|
|
| 479,704 |
|
Real estate – mortgage, farmland |
|
| 339 |
|
|
| 0 |
|
|
| 879 |
|
|
| 4,713 |
|
|
| 131 |
|
|
| 0 |
|
|
| 0 |
|
|
| — |
|
|
| 6,062 |
|
Consumer loans |
|
| 306 |
|
|
| 2 |
|
|
| 15,700 |
|
|
| 19,728 |
|
|
| 433 |
|
|
| 1 |
|
|
| 609 |
|
|
| — |
|
|
| 36,779 |
|
Total originated and purchased performing loans: |
|
| 23,837 |
|
|
| 11,390 |
|
|
| 763,956 |
|
|
| 917,983 |
|
|
| 56,061 |
|
|
| 9,061 |
|
|
| 24,517 |
|
|
| 2,639 |
|
|
| 1,809,444 |
|
Gross loans |
| $ | 23,837 |
|
| $ | 11,390 |
|
| $ | 765,459 |
|
| $ | 924,994 |
|
| $ | 77,114 |
|
| $ | 29,190 |
|
| $ | 32,661 |
|
| $ | 2,639 |
|
| $ | 1,867,284 |
|
Less: deferred loan fees, net of costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1,087 | ) | ||||||||
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 1,866,197 |
|
|
| December 31, 2021 |
| |||||||||||||||||||||||||||||||||
(Dollars in thousands) |
| Grade |
|
| Grade |
|
| Grade |
|
| Grade |
|
| Grade |
|
| Grade |
|
| Grade |
|
| Grade |
|
| Total |
| |||||||||
PCI loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Commercial and industrial |
| $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | 1,567 |
|
| $ | 2,818 |
|
| $ | 2,748 |
|
| $ | 1,770 |
|
| $ | — |
|
| $ | 8,903 |
|
Real estate – construction, commercial |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 2,423 |
|
|
| — |
|
|
| 11,010 |
|
|
| 1,321 |
|
|
| — |
|
|
| 14,754 |
|
Real estate – mortgage, commercial |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 2,642 |
|
|
| 3,892 |
|
|
| 33,487 |
|
|
| 11,851 |
|
|
| — |
|
|
| 51,872 |
|
Real estate – mortgage residential |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 142 |
|
|
| 1,657 |
|
|
| 2,709 |
|
|
| 3,113 |
|
|
| — |
|
|
| 7,621 |
|
Consumer loans |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 388 |
|
|
| 481 |
|
|
| 10 |
|
|
| — |
|
|
| 879 |
|
Total PCI loans |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 6,774 |
|
|
| 8,755 |
|
|
| 50,435 |
|
|
| 18,065 |
|
|
| — |
|
|
| 84,029 |
|
Originated and purchased performing loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Commercial and industrial |
|
| 291 |
|
|
| 560 |
|
|
| 156,519 |
|
|
| 133,738 |
|
|
| 11,256 |
|
|
| 3,180 |
|
|
| 6,380 |
|
|
| — |
|
|
| 311,924 |
|
Paycheck Protection Program |
|
| 30,742 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 30,742 |
|
Real estate – construction, commercial |
|
| — |
|
|
| 412 |
|
|
| 28,973 |
|
|
| 91,900 |
|
|
| 7,995 |
|
|
| 1,846 |
|
|
| 643 |
|
|
| — |
|
|
| 131,769 |
|
Real estate – construction, residential |
|
| — |
|
|
| — |
|
|
| 14,610 |
|
|
| 40,418 |
|
|
| 3,416 |
|
|
| — |
|
|
| 413 |
|
|
| — |
|
|
| 58,857 |
|
Real estate – mortgage, commercial |
|
| — |
|
|
| 2,382 |
|
|
| 307,067 |
|
|
| 283,165 |
|
|
| 34,750 |
|
|
| 17,133 |
|
|
| 5,134 |
|
|
| 0 |
|
|
| 649,631 |
|
Real estate – mortgage residential |
|
| 990 |
|
|
| 9,218 |
|
|
| 276,992 |
|
|
| 180,980 |
|
|
| 11,107 |
|
|
| 974 |
|
|
| 6,100 |
|
|
| 0 |
|
|
| 486,361 |
|
Real estate – mortgage, farmland |
|
| 340 |
|
|
| — |
|
|
| 1,067 |
|
|
| 4,766 |
|
|
| — |
|
|
| — |
|
|
| 0 |
|
|
| 0 |
|
|
| 6,173 |
|
Consumer loans |
|
| 262 |
|
|
| 3 |
|
|
| 16,920 |
|
|
| 30,691 |
|
|
| 542 |
|
|
| — |
|
|
| 580 |
|
|
| 0 |
|
|
| 48,998 |
|
Total originated and purchased performing loans: |
|
| 32,625 |
|
|
| 12,575 |
|
|
| 802,148 |
|
|
| 765,658 |
|
|
| 69,066 |
|
|
| 23,133 |
|
|
| 19,250 |
|
|
| 0 |
|
|
| 1,724,455 |
|
Gross loans |
| $ | 32,625 |
|
| $ | 12,575 |
|
| $ | 802,148 |
|
| $ | 772,432 |
|
| $ | 77,821 |
|
| $ | 73,568 |
|
| $ | 37,315 |
|
| $ | 0 |
|
| $ | 1,808,484 |
|
Less: deferred loan fees, net of costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (906 | ) | ||||||||
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 1,807,578 |
|
18
Note 5 – Goodwill and Other Intangibles
Goodwill and other intangible assets acquired in a business combination and determined to have an indefinite useful life are not amortized but tested for impairment at least annually or more frequently if events and circumstances exist that indicate that a goodwill impairment test should be performed. Intangible assets with definite useful lives are amortized over their estimated useful lives, which range from 5 to 12 years. Goodwill is the only intangible asset with an indefinite life on the consolidated balance sheets.
As of March 31, 2022 and December 31, 2018:2021, the Company's goodwill totaled $26.8 million.
The following table presents information on amortizable intangible assets included on the consolidated balance sheets as of the dates stated.
September 30, 2019 | ||||||||||||||||||||||||||||||||
Grade 1 Prime | Grade 2 Desirable | Grade 3 Good | Grade 4 Acceptable | Grade 5 Pass/Watch | Grade 6 Special Mention | Grade 7 Substandard | Total | |||||||||||||||||||||||||
Commercial and industrial | $ | 406 | $ | 1,827 | $ | 21,936 | $ | 25,540 | $ | 579 | $ | — | $ | 538 | $ | 50,826 | ||||||||||||||||
Agricultural | — | 103 | 66 | 6 | — | — | — | 175 | ||||||||||||||||||||||||
Real Estate – construction, commercial | — | 659 | 10,210 | 7,923 | 104 | — | 980 | 19,876 | ||||||||||||||||||||||||
Real Estate – construction, residential | — | — | 4,295 | 8,011 | 4,058 | — | — | 16,364 | ||||||||||||||||||||||||
Real Estate – mortgage, commercial | — | 1,656 | 81,973 | 70,093 | 10,226 | 1,012 | 2,263 | 167,223 | ||||||||||||||||||||||||
Real Estate – mortgage residential | — | 2,917 | 81,246 | 76,351 | 3,648 | 96 | 1,607 | 165,865 | ||||||||||||||||||||||||
Real Estate – mortgage, farmland | 1,565 | 100 | 1,418 | 218 | 453 | — | — | 3,754 | ||||||||||||||||||||||||
Consumer installment loans | 297 | 32 | 23,863 | 12,447 | 106 | — | 688 | 37,433 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Gross loans | 2,268 | 7,294 | 225,007 | 200,589 | 19,174 | 1,108 | 6,076 | 461,516 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Less: Unearned income | (638 | ) | ||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||
Total | $ | 460,878 | ||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||
December 31, 2018 | ||||||||||||||||||||||||||||||||
Grade 1 Prime | Grade 2 Desirable | Grade 3 Good | Grade 4 Acceptable | Grade 5 Pass/Watch | Grade 6 Special Mention | Grade 7 Substandard | Total | |||||||||||||||||||||||||
Commercial and industrial | $ | 44 | $ | 2,660 | $ | 21,009 | $ | 24,254 | $ | 797 | $ | — | $ | 312 | $ | 49,076 | ||||||||||||||||
Agricultural | 9 | 99 | 105 | 3 | — | — | — | 216 | ||||||||||||||||||||||||
Real Estate – construction, commercial | — | 485 | 7,118 | 5,937 | 106 | — | 1,020 | 14,666 | ||||||||||||||||||||||||
Real Estate – construction, residential | — | — | 4,305 | 5,059 | 5,738 | — | — | 15,102 | ||||||||||||||||||||||||
Real Estate – mortgage, commercial | — | 1,920 | 82,097 | 53,487 | 8,470 | 1,668 | 2,871 | 150,513 | ||||||||||||||||||||||||
Real Estate – mortgage residential | — | 3,647 | 76,496 | 63,397 | 3,805 | 522 | 1,989 | 149,856 | ||||||||||||||||||||||||
Real Estate – mortgage, farmland | 1,700 | 100 | 1,340 | 730 | — | — | 309 | 4,179 | ||||||||||||||||||||||||
Consumer installment loans | 213 | 29 | 16,174 | 15,081 | 123 | — | 359 | 31,979 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Gross loans | 1,966 | 8,940 | 208,644 | 167,948 | 19,039 | 2,190 | 6,860 | 415,587 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Less: Unearned income | (719 | ) | ||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||
Total | $ | 414,868 | ||||||||||||||||||||||||||||||
|
|
|
| As of March 31, 2022 |
| |||||||||
(Dollars in thousands) |
| Gross Carrying Value |
|
| Accumulated Amortization |
|
| Net Carrying Value |
| |||
Core deposit intangibles |
| $ | 9,626 |
|
| $ | (3,279 | ) |
| $ | 6,347 |
|
Other amortizable intangibles |
|
| 2,955 |
|
|
| (1,847 | ) |
|
| 1,108 |
|
Total |
| $ | 12,581 |
|
| $ | (5,126 | ) |
| $ | 7,455 |
|
|
|
|
|
|
|
|
|
|
| |||
|
| As of December 31, 2021 |
| |||||||||
(Dollars in thousands) |
| Gross Carrying Value |
|
| Accumulated Amortization |
|
| Net Carrying Value |
| |||
Core deposit intangibles |
| $ | 9,626 |
|
| $ | (2,908 | ) |
| $ | 6,718 |
|
Other amortizable intangibles |
|
| 2,659 |
|
|
| (1,783 | ) |
|
| 876 |
|
Total |
| $ | 12,285 |
|
| $ | (4,691 | ) |
| $ | 7,594 |
|
15
Note 4 – Allowance for Loans Losses, continued
The Company also utilizes the grades 8 (Doubtful)Included in other amortizable intangibles were loan servicing assets of $620 thousand and 9 (Loss). There were no loans classified in these categories$362 thousand at September 30, 2019March 31, 2022 and December 31, 2018.2021, respectively, related to the sale of the government guaranteed portion of certain loans that the Company continues to service. Loan servicing assets of $297 thousand and $266 thousand were added during the three months ended March 31, 2022 and the year ended December 31, 2021, respectively. The amortization of these intangibles is included in interest and fees on loans in the consolidated statement of income.
The Company retains servicing rights on mortgages originated and sold to the secondary market. Beginning January 1, 2022, the Company elected the fair value measurement method for accounting for MSR assets, pursuant to which assets are initially recorded at fair value and subsequently adjusted to fair value at each reporting period. Prior to this, MSR assets were recorded under the amortization method, which required that MSR assets be recorded at the lower of cost or fair value. As of March 31, 2022, the fair value of MSR assets was $27.7 million, and at December 31, 2021, the carrying value of MSR assets under the amortization method was $16.5 million.
Note 5 - Derivative Financial Instruments6 – Borrowings
FHLB Borrowings
The Bank has a line of credit from the FHLB secured by pledged qualifying real estate loans and Hedging Activitiescertain pledged securities. At March 31, 2022 and December 31, 2021, based on pledged collateral, the line totaled $315.1 million and $358.1 million, respectively. The FHLB will lend up to 30% of the Bank’s total assets as of the prior quarter end, subject to certain eligibility requirements, including adequate collateral. The Bank had borrowings from the FHLB that totaled $10.0 million at both March 31, 2022 and December 31, 2021. The interest rate on the borrowing was 0.56% and the maturity date is February 28, 2030. FHLB borrowings required the Bank to hold $1.8 million and $1.7 million of FHLB stock at March 31, 2022 and December 31, 2021, respectively, which is included in restricted equity investments on the consolidated balance sheets. The Bank also has letters of credit with the FHLB in the amount of $85.0 million for the purpose of collateral for public deposits with the Treasury Board of the Commonwealth of Virginia. Outstanding letters of credit reduce the available balance of the borrowing facility with the FHLB, which was $220.1million as of March 31, 2022.
During19
FRB Borrowings
In the firstsecond quarter of 2019,2020, the Company enteredbegan participating in the FRB’s PPPLF, which allowed banks to pledge PPP loans as collateral in exchange for advances. The PPPLF advances are at 100% of the PPP loan value and term, have a fixed annual cost of 35 basis points, and receive favorable regulatory capital treatment. As of March 31, 2022, FRB borrowings pursuant to the PPPLF were $15.2 million with maturities ranging from less than one year to over three years.
Other Borrowings
The Company had unsecured lines of credit with correspondent banks, which totaled $44.0 million at both March 31, 2022 and December 31, 2021. These lines bear interest at the prevailing rates for such loans and are cancellable any time by the correspondent bank. As of March 31, 2022 and December 31, 2021, 0ne of these lines of credit with correspondent banks were drawn upon.
The Company had $40.0 million of subordinated notes, net, outstanding as of March 31, 2022 and December 31, 2021. The Company's subordinated notes are comprised of an issuance in October 2019 and maturing October 15, 2029 (the “2029 Notes”) and an issuance in May 2020 and maturing June 1, 2030 (the "2030 Note". As of March 31, 2022, the net carrying amount of the 2029 Notes was $25.3 million, inclusive of a $830 thousand purchase accounting adjustment (premium) . For the three months ended March 31, 2022 and 2021, the effective interest rate on the 2029 Notes was 5.1% and 4.7%, respectively, inclusive of the amortization of the purchase accounting adjustment (premium). As of March 31, 2022, the net carrying amount of the 2030 Note, including capitalized, unamortized debt issuance costs, was $14.7 million. For the three months ended March 31, 2022 and 2021, the effective interest rate on the 2030 Note was 6.1%.
Note 7 – Derivatives
The Company enters into an interest rate swap agreement (‘‘swap agreement’’) to facilitate the risk management strategies needed in orderagreements to accommodate the needs of its banking customers. The Company mitigates the interest rate risk of entering into these loanswap agreements by entering into equal and offsetting swap agreements with a highly ratedhighly-rated third-party financial institution. Thisinstitutions. These back-to-back swap agreement is aagreements are free-standing derivativederivatives and isare recorded at fair value in the Company’s consolidated balance sheets (asset positions are included in other assets and liability positions are included in other liabilities) as.
The following tables present the notional and fair value of September 30, 2019.interest rate swap agreements for the dates stated.
September 30, 2019 | ||||||||
Notional Amount | Fair Value | |||||||
(Dollars in thousands) | ||||||||
Interest Rate Swap Agreements | ||||||||
Receive Fixed/Pay Variable Swaps | $ | 2,156 | $ | 244 | ||||
Pay Fixed/Receive Variable Swaps | 2,156 | (244 | ) |
|
| March 31, 2022 |
| |||||
(Dollars in thousands) |
| Notional |
|
| Fair |
| ||
Interest rate swap agreement |
|
|
|
|
|
| ||
Receive fixed/pay variable swaps |
| $ | 2,039 |
|
| $ | 70 |
|
Pay fixed/receive variable swaps |
|
| 2,039 |
|
|
| (70 | ) |
|
|
|
|
|
|
| ||
|
| December 31, 2021 |
| |||||
(Dollars in thousands) |
| Notional |
|
| Fair |
| ||
Interest rate swap agreement |
|
|
|
|
|
| ||
Receive fixed/pay variable swaps |
| $ | 2,052 |
|
| $ | 199 |
|
Pay fixed/receive variable swaps |
|
| 2,052 |
|
|
| (199 | ) |
The Bank also participates in a “mandatory” delivery program forAs part of its efforts to sell originated government guaranteed and conventional mortgage loans held for sale. Underresidential mortgages into the mandatory delivery system, loans with interest rate locks are paired with the sale of a TBA mortgage-backed security bearing similar attributes. Under the mandatory delivery program,secondary market, the Bank commits to deliver loans to an investor at an agreed upon price prior to the closehad entered into $70.9 million and $64.8 million of such loans. This differs from a “best efforts” delivery, which sets the sale pricerate lock commitments with the investor on aloan-by-loan basis when each loan is locked.
Note 6 – Employee Benefit Plan
The Company has a 401(k) Profit Sharing Plan that covers eligible employees. Employees may make voluntary contributions subject to certain limits based on federal tax laws. The Bank matches 100 percentborrowers, net of an employee’s contribution up to five percentexpected fallout, as of his or her salary following one year of continuous service and the benefits vest immediately. The Company’s Board of Directors may make additional contributions at its discretion. Employees become eligible to participate in the discretionary contributions after one year of continuous service and the benefits vest over a five-year period. For the nine months ended September 30, 2019 and the year ended DecemberMarch 31, 2018, total expenses attributable to this plan were $454,439 and $364,653, respectively.
In 2013, the Company established an Employee Stock Ownership Plan (ESOP) that covers eligible employees. Benefits in the Plan vest over a five-year period. Contributions to the plan are made at the discretion of the Board of Directors and may include both the matching component to employees’ elective deferrals into the 401(k) plan and discretionary profit contributions. The Plan held 79,800 total shares of Company stock at September 30, 20192022 and December 31, 2018. All shares issued to2021, respectively, and held$38.4 million and $113.6 million of closed loan inventory waiting for sale, which were hedged by $95.5 million and $169.5 million in forward to-be-announced mortgage-backed securities as of March 31, 2022 and December 31, 2021, respectively. Mortgage derivative assets totaled $2.1 million and $1.9 million as of March 31, 2022 and December 31, 2021, respectively, and mortgage derivative liabilities, which are included in other liabilities on the Plan are considered outstanding in the computationconsolidated balance sheets, were $0 and $75 thousand as of earnings per share. The Plan or the Company is required to purchase shares from separated employees at a price determined by a third-party appraisal.March 31, 2022 and December 31, 2021, respectively.
20
Note 78 – Stock-Based Compensation
The Company has granted restricted stock awards ("RSAs") to employees and directors under the Blue Ridge BankBankshares, Inc. Equity Incentive Plan. The restricted stock awardsRSAs are considered fixed awards as the number of shares and fair value is known at the date of grant, and the fair value of the award at the grant date is amortized over the vesting period.Non-cash compensationrequisite service period, which is generally three years. Compensation expense recognized in the Consolidated Statementsconsolidated statements of Incomeoperations related to restricted stock awards,RSAs, net of estimated forfeitures, in thousands, was $160 thousand and $89 thousand for the nine months ended September 30, 2019 and 2018, respectively and $40 thousand and $67 thousand for the three months ended September 30, 2019,March 31, 2022 and 2018,2021 was $355 thousand and $167 thousand, respectively. The fair value ofUnrecognized compensation expense related to the restricted stock awards at September 30, 2019 was $1.0as of March 31, 2022 totaled $2.1 million.
During the three months ended March 31, 2022, 1,183 stock options were exercised resulting in 56,424 options outstanding as of March 31, 2022. These options were assumed by the Company in connection with the Bay Banks Merger.
Note 8–9 – Leases
The Company’s long-term lease agreements are classified as operating leases. Certain of these leases offer the option to extend the lease term and such extensions are included in the calculation of the lease liabilities to the extent the options are reasonably assured of being exercised. The lease agreements do not provide for residual value guarantees and have no restrictions or covenants that would impact dividends or require incurring additional financial obligations.
The following tables present information about the Company’s leases as of and for the periods stated.
(Dollars in thousands) |
| March 31, 2022 |
| |
Lease liabilities |
| $ | 8,038 |
|
Right-of-use asset |
| $ | 6,766 |
|
Weighted average remaining lease term (years) |
| 6.45 |
| |
Weighted average discount rate |
|
| 1.87 | % |
|
| For the three months ended |
| |||||
(Dollars in thousands) |
| March 31, 2022 |
|
| March 31, 2021 |
| ||
Operating lease cost |
| $ | 555 |
|
| $ | 646 |
|
Total lease cost |
| $ | 555 |
|
| $ | 646 |
|
Cash paid for amounts included in the measurement |
| $ | 736 |
|
| $ | 646 |
|
The following table presents a maturity analysis of operating lease liabilities and reconciliation of the undiscounted cash flows to the total of operating lease liabilities as of the date stated.
(Dollars in thousands) |
| March 31, 2022 |
| |
Nine months ending December 31, 2022 |
| $ | 1,340 |
|
Twelve months ending December 31, 2023 |
|
| 1,504 |
|
Twelve months ending December 31, 2024 |
|
| 1,180 |
|
Twelve months ending December 31, 2025 |
|
| 966 |
|
Twelve months ending December 31, 2026 |
|
| 887 |
|
Thereafter |
|
| 2,458 |
|
Total undiscounted cash flows |
|
| 8,335 |
|
Discount |
|
| (297 | ) |
Lease liabilities |
| $ | 8,038 |
|
21
Note 10 – Fair Value
The fair value of a financial instrument is the current amount that would be exchanged between willing parties in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Company’s various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques.
16
Note 8– Fair Value, continued
Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument.
The Company records fair value adjustments to certain assets and liabilities and determines fair value disclosures utilizing a definition of fair value of assets and liabilities that states that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Additional considerations are involved to determine the fair value of financial assets in markets that are not active.
The Company uses a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. The three levels of the fair value hierarchy based on these two types of inputs are as follows:
Level 1 – | Valuation is based on quoted prices in active markets for identical assets and liabilities. | |||
Level 2 – | Valuation is based on observable inputs including quoted prices in active markets for similar assets and liabilities, quoted prices for identical or similar assets and liabilities in less active markets, and model-based valuation techniques for which significant assumptions can be derived primarily from or corroborated by observable data in the market. | |||
Level 3 – | Valuation is based on model-based techniques that use one or more significant inputs or assumptions that are unobservable in the market. |
The following describes the valuation techniques used by the Company to measure certain financial assets and liabilities recorded at fair value on a recurring basis in the financial statements:
Securities
Where quoted prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. Level 1 securities would include highly liquid government bonds, mortgage products and exchange traded equities. If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics, or discounted cash flow. Level 2 securities would include U.S. agency securities, mortgage-backed agency securities, obligations of states and political subdivisions and certain corporate, asset backed and other securities. In certain cases where there is limited activity or less transparency around inputs to the valuation, securities are classified within Level 3 of the valuation hierarchy. The carrying value of restricted Federal Reserve BankFRB and Federal Home Loan BankFHLB stock approximates fair value based upon the redemption provisions of each entity and is therefore excluded from the following table.
Mortgage servicing rights
A third-party model is used to determine the fair value of the Company’s MSR assets. The model establishes pools of performing loans, calculates projected future cash flows for each pool, and applies a discount rate to each pool. As of March 31, 2022 and December 31, 2021, the Company was servicing approximately $2.08 billion and $1.91 billion of loans, respectively. Loans are segregated into homogenous pools based on loan term, interest rates, and other similar characteristics. Cash flows are then estimated based on net servicing fee income and utilizing assumed servicing costs and prepayment speeds. The weighted average net servicing fee income of the portfolio was 28.3 basis points as of March 31, 2022. Estimated base annual servicing costs were $65.00 to $80.00 per loan depending on the guarantor. Prepayment speeds in the model are based on empirically derived data for mortgage pool factors and differences between a mortgage pool’s weighted average coupon and its current mortgage rate. The weighted average prepayment speed assumption used in the fair value model was 8.65% as of March 31, 2022. A base discount rate of 8.5% to 10.5%
22
(8.81% weighted average discount rate) was then applied to each pool’s projected future cash flows as of March 31, 2022. The discount rate is intended to represent the estimated market yield for the highest quality grade of comparable servicing. MSR assets are classified as Level 3.
As previously noted, the Company changed its accounting method for MSR assets from the amortization method to the fair value measurement method effective January 1, 2022. This was a prospective change in accounting method; therefore, the carrying value of the MSR assets in periods prior to January 1, 2022 are stated at amortized cost. Accordingly, the following table presents a reconciliation between the amortized cost and fair value of MSR assets as of and for the period stated.
(Dollars in thousands) |
| MSR Assets |
| |
Balance, December 31, 2020 |
| $ | 7,084 |
|
Acquired in Bay Banks Merger |
|
| 997 |
|
Additions |
|
| 11,809 |
|
Write-offs |
|
| (959 | ) |
Amortization |
|
| (2,462 | ) |
Impairments |
|
| 0 |
|
Fair value adjustments |
|
| 4,484 |
|
Balance, December 31, 2021 - Fair value |
| $ | 20,953 |
|
Balance, December 31, 2021 - Amortized cost |
| $ | 16,469 |
|
Rabbi trust assets
The Company's rabbi trust is associated with a deferred compensation plan. The assets held by the rabbi trust are invested at the direction of the individual participants and are generally invested in marketable investment securities, such as common stocks and mutual funds or short-term investments (e.g., cash) (Level 1). Rabbi trust assets and the associated deferred compensation plan liability are included in other assets and other liabilities, respectively, in the consolidated balance sheets.
Derivative financial instruments
Derivative instruments used to hedge residential mortgage loans held for sale and the related interest rate lock commitments include forward commitments to sell mortgage loans and are reported at fair value utilizing Level 2 inputs. The fair values of derivative financial instruments are based on derivative market data inputs as of the valuation date and the underlying value of mortgage loans for rate lock commitments.
The Company has interest rate swap assets and liabilities associated with certain customer commercial loans. The interest rate swap asset with the customer is offset with an equal swap agreement with a highly-rated third-party financial institution (i.e., "back-to-back"). Both the interest rate swap assets and liabilities are free-standing derivatives and are recorded at fair value utilizing Level 2 inputs.
The following tables present the balances of financial assets measured at fair value on a recurring basis:basis as of the dates stated.
23
September 30, 2019 | ||||||||||||||||
(In thousands) | Total | Level 1 | Level 2 | Level 3 | ||||||||||||
Available for sale securities | ||||||||||||||||
U.S. Treasury and agencies | $ | 3,331 | $ | — | $ | 3,331 | $ | — | ||||||||
Mortgage backed securities | 111,790 | — | 111,790 | — | ||||||||||||
Corporate bonds | 6,619 | — | 6,619 | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total securities available for sale | $ | 121,740 | $ | — | $ | 121,740 | $ | — | ||||||||
|
|
|
|
|
|
|
| |||||||||
December 31, 2018 | ||||||||||||||||
(In thousands) | Total | Level 1 | Level 2 | Level 3 | ||||||||||||
Available for sale securities | ||||||||||||||||
State and municipal | $ | 1,003 | $ | — | $ | 1,003 | $ | — | ||||||||
U.S. Treasury and agencies | 3,167 | — | 3,167 | — | ||||||||||||
Mortgage backed securities | 28,370 | — | 28,370 | — | ||||||||||||
Corporate bonds | 5,507 | — | 5,507 | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total securities available for sale | $ | 38,047 | $ | — | $ | 38,047 | $ | — | ||||||||
|
|
|
|
|
|
|
|
|
| March 31, 2022 |
| |||||||||||||
(Dollars in thousands) |
| Total |
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
| ||||
Securities available for sale |
|
|
|
|
|
|
|
|
|
|
|
| ||||
State and municipals |
| $ | 54,926 |
|
| $ | 1,062 |
|
| $ | 53,864 |
|
| $ | — |
|
U.S. Treasury and agencies |
|
| 69,719 |
|
|
| 5,949 |
|
|
| 63,770 |
|
|
| — |
|
Mortgage backed securities |
|
| 207,135 |
|
|
| 4,965 |
|
|
| 195,338 |
|
|
| 6,832 |
|
Corporate bonds |
|
| 43,704 |
|
|
| 5,000 |
|
|
| 30,647 |
|
|
| 8,057 |
|
Total securities available for sale |
| $ | 375,484 |
|
| $ | 16,976 |
|
| $ | 343,619 |
|
| $ | 14,889 |
|
Other assets |
|
|
|
|
|
|
|
|
|
|
|
| ||||
MSR assets |
| $ | 27,691 |
|
| $ | — |
|
| $ | — |
|
| $ | 27,691 |
|
Rabbi trust assets |
|
| 908 |
|
|
| 908 |
|
|
| — |
|
|
| — |
|
Mortgage derivative asset |
|
| 2,063 |
|
|
| — |
|
|
| 2,063 |
|
|
| — |
|
Interest rate swap asset |
|
| 70 |
|
|
| — |
|
|
| 70 |
|
|
| — |
|
Other liabilities |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Mortgage derivative liability |
| $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
Interest rate swap liability |
|
| 70 |
|
|
| — |
|
|
| 70 |
|
|
| — |
|
|
| December 31, 2021 |
| |||||||||||||
(Dollars in thousands) |
| Total |
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
| ||||
Securities available for sale |
|
|
|
|
|
|
|
|
|
|
|
| ||||
State and municipals |
| $ | 51,113 |
|
| $ | — |
|
| $ | 51,113 |
|
| $ | — |
|
U.S. Treasury and agencies |
|
| 64,066 |
|
|
| — |
|
|
| 64,066 |
|
|
| — |
|
Mortgage backed securities |
|
| 219,110 |
|
|
| — |
|
|
| 211,194 |
|
|
| 7,916 |
|
Corporate bonds |
|
| 39,243 |
|
|
| 3,000 |
|
|
| 25,179 |
|
|
| 11,064 |
|
Total securities available for sale |
| $ | 373,532 |
|
| $ | 3,000 |
|
| $ | 351,552 |
|
| $ | 18,980 |
|
Other assets |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Rabbi trust assets |
| $ | 994 |
|
| $ | 994 |
|
| $ | — |
|
| $ | — |
|
Mortgage derivative asset |
|
| 1,876 |
|
|
| — |
|
|
| 1,876 |
|
|
| — |
|
Interest rate swap asset |
|
| 199 |
|
|
| — |
|
|
| 199 |
|
|
| — |
|
Other liabilities |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Mortgage derivative liability |
| $ | 75 |
|
| $ | — |
|
| $ | 75 |
|
| $ | — |
|
Interest rate swap liability |
|
| 199 |
|
|
| — |
|
|
| 199 |
|
|
| — |
|
The following table presents the change in financial assets valued using Level 3 inputs for the periods stated.
(Dollars in thousands) |
| MSR Assets |
|
| Corporate Bonds |
|
| Mortgage backed securities |
| |||
|
|
|
|
|
|
|
|
|
| |||
Balance as of December 31, 2021 |
| $ | 16,469 |
|
| $ | 11,064 |
|
| $ | 7,916 |
|
Change in accounting method |
|
| 4,484 |
|
|
| — |
|
|
| — |
|
Transfers from Level 2 to Level 3 |
|
| — |
|
|
| 2,000 |
|
|
| — |
|
Transfers from Level 3 to Level 2 |
|
| — |
|
|
| (5,001 | ) |
|
| (1,007 | ) |
Additions |
|
| 2,961 |
|
|
| — |
|
|
| — |
|
Sales or paydowns |
|
| — |
|
|
| — |
|
|
| (76 | ) |
Fair value adjustments |
|
| 3,777 |
|
|
| (6 | ) |
|
| (1 | ) |
Balance as of March 31, 2022 |
| $ | 27,691 |
|
| $ | 8,057 |
|
| $ | 6,832 |
|
17
Note 8– Fair Value, continued
Certain financial assets are measured at fair value on a nonrecurring basis in accordance with GAAP. Adjustments to the fair value of these assets usually result from the application oflower-of-cost-or-market accounting or write-downsthe write-down of individual assets.
The following describes the valuation techniques used by the Company to measure certain financial assets recorded at fair value on a nonrecurring basis in the financial statements.
24
Impaired Loans
Impaired loans with specific reserves are carried at fair value. Fair value is based on the discounted cash flows of the loan or the fair value of the collateral less estimated costs to sell, if the loan is collateral-dependent. Collateral may be in the form of real estate or business assets including equipment, inventory, and accounts receivable. Any given loan may have multiple types of collateral; however, the majority of the Company’s loan collateral is real estate. The value of real estate collateral is generally determined utilizing a market valuation approach based on an appraisal conducted by an independent, licensed appraiser outside of the Company using observable market data (Level 2). However, if the collateral value is significantly adjusted due to differences in the comparable properties or is discounted by the Company because of lack of marketability, then the fair value is considered Level 3. The value of business equipment is based upon an outside appraisal if deemed significant or the net book value on the applicable business’s financial statements if not considered significant. Likewise, values for inventory and accounts receivables collateral are based on financial statement balances or aging reports (Level 3). Fair value adjustments are recorded in the period incurred as provision for loan losses on the consolidated statements of operations.
As of March 31, 2022, one impaired loan was evaluated using an Enterprise Value ("EV") technique, as the Company owns a portion of a nationally syndicated loan. EV is estimated using a multiple of earnings before income taxes, depreciation and amortization ("EBITDA"). EBITDA estimates were developed based on historical and projected performance of this company while the EV multiple was derived based on publicly available data of the borrower's respective peer companies and industry (Level 3).
Loans Held for Sale
Mortgage loans originated or purchased and intended for sale in the secondary market are carried at the lower of cost or estimated market value in the aggregate. The agreed upon sales price is considered fair value as all of theseaggregate (i.e., loans are under agreements to sell to investors at the time of origination. This amount is generally the loan’s principal amount.held for sale). Changes in fair value are recognized in the Gain on Sale of Mortgagesresidential mortgage banking income, net on the Consolidated Statementsconsolidated statements of Income.operations (Level 2).
Certain consumer loans originated by the Company and sourced by fintech partners are classified on the Company's consolidated balance sheets as held for sale. These loans are originated by the Bank and either sold directly to the applicable fintech partner or another investor at par, generally up to 10 days from origination. Due to relatively short time between origination and sale, these loans are held at cost, which approximates fair value (Level 2).
Other Real Estate Owned ("OREO")
Certain assets such as other real estate owned (OREO)OREO are measured at fair value less costestimated costs to sell. Valuation of other real estate ownedOREO is generally determined using current appraisals from independent parties,appraisers, a level twoLevel 2 input. If current appraisals cannot be obtained prior to reporting dates, or if declines in value are identified after a recent appraisal is received, appraisal values are discounted, resulting in Level 3 estimates. If the Company markets the property with a realtor,real estate agent or broker, estimated selling costs reduce the fair value,listing price, resulting in a valuation based on Level 3 inputs.
The Company markets other real estate owned both independently and with local realtors. Properties marketed by realtors are discounted by selling costs. Properties that the Company markets independently are not discounted by selling costs.
The following table summarizes the Company’s other real estate ownedtables summarize assets that were measured at fair value on a nonrecurring basis duringas of the period.dates stated.
|
| March 31, 2022 |
| |||||||||||||
(Dollars in thousands) |
| Total |
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
| ||||
Impaired loans, net |
| $ | 2,777 |
|
| $ | — |
|
| $ | — |
|
| $ | 2,777 |
|
Loans held for sale |
|
| 41,004 |
|
|
| — |
|
|
| 41,004 |
|
|
| — |
|
OREO |
|
| 74 |
|
|
| — |
|
|
| — |
|
|
| 74 |
|
|
|
| December 31, 2021 |
| |||||||||||||
(Dollars in thousands) |
| Total |
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
| ||||
Impaired loans, net |
| $ | 8,344 |
|
| $ | — |
|
| $ | — |
|
| $ | 8,344 |
|
Loans held for sale |
|
| 121,943 |
|
|
| — |
|
|
| 121,943 |
|
|
| — |
|
OREO |
|
| 157 |
|
|
| — |
|
|
| — |
|
|
| 157 |
|
December 31, 2018 | ||||||||||||||||
(In thousands) | Total | Level 1 | Level 2 | Level 3 | ||||||||||||
Other real estate owned | $ | 134 | $ | — | $ | — | $ | 134 |
|
Fair Value At December 31, 2018 | Valuation Technique | Significant Unobservable Inputs | Range | |||||||||||
Other real estate owned | $ | 134 | Discounted appraised value | Discounted for selling costs | 15%-35% |
The following tables present quantitative information about Level 3 fair value measurements as of the dates stated.
1825
(Dollars in thousands) |
| Balance as of March 31, 2022 |
|
| Unobservable Input |
| Range |
| ||
Impaired loans, net |
|
|
|
|
|
|
|
| ||
Discounted appraised value technique |
| $ | 1,106 |
|
| Discount Rate |
| 25.0%-50.0% |
| |
Discounted cash flows technique |
|
| 152 |
|
| Discount Rate |
| 4.3%-6.5% |
| |
Enterprise Value ("EV") technique |
|
| 1,519 |
|
| EV Multiple |
|
| 7.75 |
|
OREO |
|
|
|
|
|
|
|
| ||
Discounted appraised value technique |
|
| 74 |
|
| Selling Costs |
|
| 7.0 | % |
(Dollars in thousands) |
| Balance as of December 31, 2021 |
|
| Unobservable Input |
| Range |
| ||
Impaired loans, net |
|
|
|
|
|
|
|
| ||
Discounted appraised value technique |
| $ | 8,108 |
|
| Selling Costs |
|
| 7 | % |
Discounted cash flows technique |
|
| 236 |
|
| Discount Rate |
| 4% - 7% |
| |
OREO |
|
|
|
|
|
|
|
| ||
Discounted appraised value technique |
|
| 157 |
|
| Selling Costs |
|
| 7 | % |
Fair value information about financial instruments, whether or not recognized in the balance sheet, for which it ispractical to estimate the value is based upon the characteristics of the instruments and relevant market information. Financial instruments include cash, evidence of ownership in an entity, or contracts that convey or impose on an entity that contractual right or obligation to either receive or deliver cash for another financial instrument. The information used to determine fair value is highly subjective and judgmental in nature and, therefore, the results may not be precise. Subjective factors include, among other things, estimates of cash flows, risk characteristics, credit quality, and interest rates, all of which are subject to change. Since the fair value is estimated as of the balance sheet date, the amounts that will actually be realized or paid upon settlement or maturity on these various instruments could be significantly different.
Note 9 – Disclosures About Fair Value of Financial Instruments
The following tables present the estimated fair values, and related carrying amounts, and valuation level of the financial instruments as of the dates stated.
|
| March 31, 2022 |
| |||||||||||||||||
|
|
|
|
|
|
|
| Fair Value Measurements |
| |||||||||||
(Dollars in thousands) |
| Carrying Value |
|
| Fair Value |
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
| |||||
Financial Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Cash and due from banks |
| $ | 162,177 |
|
| $ | 162,177 |
|
| $ | 162,177 |
|
| $ | — |
|
| $ | — |
|
Federal funds sold |
|
| 74,294 |
|
|
| 74,294 |
|
|
| 74,294 |
|
|
| — |
|
|
| — |
|
Securities available for sale |
|
| 375,484 |
|
|
| 375,484 |
|
|
| 16,976 |
|
|
| 343,619 |
|
|
| 14,889 |
|
Restricted equity investments |
|
| 8,385 |
|
|
| 8,385 |
|
|
| — |
|
|
| 8,385 |
|
|
| — |
|
Other equity investments |
|
| 23,943 |
|
|
| 23,943 |
|
|
| — |
|
|
| 23,943 |
|
|
| — |
|
PPP loans receivable, net |
|
| 22,853 |
|
|
| 22,853 |
|
|
| — |
|
|
| — |
|
|
| 22,853 |
|
Loans held for investment, net |
|
| 1,831,331 |
|
|
| 1,822,252 |
|
|
| — |
|
|
| — |
|
|
| 1,822,252 |
|
Accrued interest receivable |
|
| 9,505 |
|
|
| 9,505 |
|
|
| — |
|
|
| 9,505 |
|
|
| — |
|
Bank owned life insurance |
|
| 46,817 |
|
|
| 46,817 |
|
|
| — |
|
|
| 46,817 |
|
|
| — |
|
MSR assets |
|
| 27,691 |
|
|
| 27,691 |
|
|
| — |
|
|
| — |
|
|
| 27,691 |
|
Financial Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Noninterest-bearing deposits |
| $ | 766,506 |
|
| $ | 766,506 |
|
| $ | 766,506 |
|
| $ | — |
|
| $ | — |
|
Interest-bearing demand and money market deposits |
|
| 978,650 |
|
|
| 978,650 |
|
|
| — |
|
|
| 978,650 |
|
|
| — |
|
Savings deposits |
|
| 152,105 |
|
|
| 152,105 |
|
|
| — |
|
|
| 152,105 |
|
|
| — |
|
Time deposits |
|
| 456,820 |
|
|
| 460,644 |
|
|
| — |
|
|
| — |
|
|
| 460,644 |
|
FHLB borrowings |
|
| 10,108 |
|
|
| 9,998 |
|
|
| — |
|
|
| 9,998 |
|
|
| — |
|
FRB borrowings |
|
| 15,211 |
|
|
| 15,211 |
|
|
| — |
|
|
| 15,211 |
|
|
| — |
|
Subordinated notes, net |
|
| 39,970 |
|
|
| 40,655 |
|
|
| — |
|
|
| — |
|
|
| 40,655 |
|
26
|
| December 31, 2021 |
| |||||||||||||||||
|
|
|
|
|
|
|
| Fair Value Measurements |
| |||||||||||
(Dollars in thousands) |
| Carrying Value |
|
| Fair Value |
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
| |||||
Financial Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Cash and due from banks |
| $ | 130,643 |
|
| $ | 130,643 |
|
| $ | 130,643 |
|
| $ | — |
|
| $ | — |
|
Federal funds sold |
|
| 43,903 |
|
|
| 43,903 |
|
|
| 43,903 |
|
|
| — |
|
|
| — |
|
Securities available for sale |
|
| 373,532 |
|
|
| 373,532 |
|
|
| 3,000 |
|
|
| 351,552 |
|
|
| 18,980 |
|
Restricted equity investments |
|
| 8,334 |
|
|
| 8,334 |
|
|
| — |
|
|
| 8,334 |
|
|
| — |
|
Other equity investments |
|
| 14,184 |
|
|
| 14,184 |
|
|
| — |
|
|
| 14,184 |
|
|
| — |
|
PPP loans receivable, net |
|
| 30,406 |
|
|
| 30,406 |
|
|
| — |
|
|
| — |
|
|
| 30,406 |
|
Loans held for investment, net |
|
| 1,765,051 |
|
|
| 1,766,820 |
|
|
| — |
|
|
| — |
|
|
| 1,766,820 |
|
Accrued interest receivable |
|
| 9,573 |
|
|
| 9,573 |
|
|
| — |
|
|
| 9,573 |
|
|
| — |
|
Bank owned life insurance |
|
| 46,545 |
|
|
| 46,545 |
|
|
| — |
|
|
| 46,545 |
|
|
| — |
|
Financial Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Noninterest-bearing deposits |
| $ | 706,088 |
|
| $ | 706,088 |
|
| $ | 706,088 |
|
| $ | — |
|
| $ | — |
|
Interest-bearing demand and money market deposits |
|
| 941,805 |
|
|
| 941,805 |
|
|
| — |
|
|
| 941,805 |
|
|
| — |
|
Savings deposits |
|
| 150,376 |
|
|
| 150,376 |
|
|
| — |
|
|
| 150,376 |
|
|
| — |
|
Time deposits |
|
| 499,502 |
|
|
| 503,968 |
|
|
| — |
|
|
| — |
|
|
| 503,968 |
|
FHLB borrowings |
|
| 10,111 |
|
|
| 9,943 |
|
|
| — |
|
|
| 9,943 |
|
|
| — |
|
FRB borrowings |
|
| 17,901 |
|
|
| 17,901 |
|
|
| — |
|
|
| 17,901 |
|
|
| — |
|
Subordinated notes, net |
|
| 39,986 |
|
|
| 41,388 |
|
|
| — |
|
|
| — |
|
|
| 41,388 |
|
Note 11 – Minimum Regulatory Capital
Banks and bank holding companies are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, possibly additional discretionary, actions by regulators that, if undertaken, could have a direct material effect on the Company's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, financial institutions must meet specific capital guidelines that involve quantitative measures of assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. A financial institution's capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.
The final rules implementing the Basel Committee on Banking Supervision's capital guidelines for U.S. banks (the “Basel III rules”) were fully phased-in at January 1, 2019. Under the Basel III rules, the Bank must hold a capital conservation buffer above the adequately capitalized risk-based capital ratios of 2.50% for all ratios, except the tier 1 leverage ratio. If a banking organization dips into its capital conservation buffer, it is subject to limitations on certain activities, including payment of dividends, share repurchases, and discretionary compensation to certain officers. Management believes as of March 31, 2022 and December 31, 2021, the Bank met all capital adequacy requirements to which it is subject.
Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized; although, these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. At March 31, 2022, the most recent regulatory notification categorized the Bank as well capitalized under the regulatory framework. There are no conditions or events since that notification that management believes have changed the institution's category.
The following tables present the capital and capital ratios to which the Bank is subject and the amounts and ratios to be adequately and well capitalized as of the dates stated. Adequately capitalized ratios include the conversation buffer, if applicable.
27
|
| Actual |
|
| For Capital |
|
| To Be Well |
| |||||||||||||||
(Dollars in thousands) |
| Amount |
|
| Ratio |
|
| Amount |
|
| Ratio |
|
| Amount |
|
| Ratio |
| ||||||
As of March 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Total risk based capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
(To risk-weighted assets) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Blue Ridge Bank, N.A. |
| $ | 288,450 |
|
|
| 13.29 | % |
| $ | 227,866 |
|
|
| 10.50 | % |
| $ | 217,015 |
|
|
| 10.00 | % |
Tier 1 capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
(To risk-weighted assets) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Blue Ridge Bank, N.A. |
| $ | 275,405 |
|
|
| 12.69 | % |
| $ | 184,463 |
|
|
| 8.50 | % |
| $ | 173,612 |
|
|
| 8.00 | % |
Common equity tier 1 capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
(To risk-weighted assets) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Blue Ridge Bank, N.A. |
| $ | 275,405 |
|
|
| 12.69 | % |
| $ | 151,910 |
|
|
| 7.00 | % |
| $ | 141,060 |
|
|
| 6.50 | % |
Tier 1 leverage |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
(To average assets) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Blue Ridge Bank, N.A. |
| $ | 275,405 |
|
|
| 10.64 | % |
| $ | 103,530 |
|
|
| 4.00 | % |
| $ | 129,412 |
|
|
| 5.00 | % |
|
| Actual |
|
| For Capital |
|
| To Be Well |
| |||||||||||||||
(Dollars in thousands) |
| Amount |
|
| Ratio |
|
| Amount |
|
| Ratio |
|
| Amount |
|
| Ratio |
| ||||||
As of December 31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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| ||||||
Total risk based capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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| ||||||
(To risk-weighted assets) |
|
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|
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|
| ||||||
Blue Ridge Bank, N.A. |
| $ | 273,978 |
|
|
| 13.11 | % |
| $ | 219,393 |
|
|
| 10.50 | % |
| $ | 208,946 |
|
|
| 10.00 | % |
Tier 1 capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
| ||||||
(To risk-weighted assets) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Blue Ridge Bank, N.A. |
| $ | 260,896 |
|
|
| 12.49 | % |
| $ | 177,604 |
|
|
| 8.50 | % |
| $ | 167,157 |
|
|
| 8.00 | % |
Common equity tier 1 capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
(To risk-weighted assets) |
|
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|
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|
|
| ||||||
Blue Ridge Bank, N.A. |
| $ | 260,896 |
|
|
| 12.49 | % |
| $ | 146,262 |
|
|
| 7.00 | % |
| $ | 135,815 |
|
|
| 6.50 | % |
Tier 1 leverage |
|
|
|
|
|
|
|
|
|
|
|
|
|
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| ||||||
(To average assets) |
|
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|
|
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|
|
| ||||||
Blue Ridge Bank, N.A. |
| $ | 260,896 |
|
|
| 10.05 | % |
| $ | 103,883 |
|
|
| 4.00 | % |
| $ | 129,853 |
|
|
| 5.00 | % |
Note 12 – Commitments & Contingencies
In the ordinary course of operations, the Company is party to legal proceedings. Based upon information currently available, management believes that such legal proceedings, in the aggregate, will not have a material adverse effect on the Company’s business, financial condition, results of operations, or cash flows.
Also, in the ordinary course of operations, the Company offers various financial products to its customers to meet their credit and liquidity needs. These instruments involve elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheets. The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instruments for commitments to extend credit and stand-by letters of credit written is represented by the contractual amount of these instruments. The Company uses the same credit policies in making commitments and conditional commitments as it does for on-balance sheet commitments.
Subject to its normal credit standards and risk monitoring procedures, the Company makes contractual commitments to extend credit. Commitments generally have fixed expiration dates or other termination clauses and may require the payment of a fee. Since many of the commitments may expire without being completely drawn upon, the total commitment amounts do not necessarily represent future cash requirements. As of March 31, 2022 and December 31, 2021, the Company had outstanding loan commitments of $496.2 million and $475.1 million, respectively.
28
Conditional commitments are issued by the Company in the form of performance stand-by letters of credit, which guarantee the performance of a customer to a third party. As of March 31, 2022 and December 31, 2021, commitments under outstanding performance stand-by letters of credit totaled $77 thousand and $655 thousand, respectively. Additionally, the Company issues financial stand-by letters of credit, which guarantee payment to the underlying beneficiary (i.e., third party) if the customer fails to meet its designated financial obligation. As of March 31, 2022 and December 31, 2021, commitments under outstanding financial stand-by letters of credit totaled $4.7 million and $4.5 million, respectively. The credit risk of issuing stand-by letters of credit can be greater than the risk involved in extending loans to customers.
Reserves for unfunded commitments to borrowers as of March 31, 2022 and December 31, 2021 were $1.0 million and $962 thousand, respectively, and are included in other liabilities on the consolidated balance sheets.
The Company invests in various partnerships and limited liability companies, many of which invest in early-stage companies operating in fintech businesses. Pursuant to these investments, the Company commits to an investment amount that may be fulfilled in future periods. At March 31, 2022, the Company has future commitments outstanding totaling $7.7 million related to these investments.
The Company also has investments in various SBIC funds. The Company's obligations to these funds are satisfied in the form of capital calls that occur during the commitment period. As of March 31, 2022, the Company's remaining capital commitments associated with its investments in SBIC funds totaled $9.0 million.
Note 13 – Earnings Per Share
The following table shows the calculation of basic and diluted earnings per share ("EPS") and the weighted average number of shares outstanding used in computing EPS and the effect on the weighted average number of shares outstanding of dilutive potential common stock. Basic EPS amounts are computed by dividing net income (the numerator) by the weighted average number of common shares outstanding (the denominator). Diluted EPS amounts assume the conversion, exercise, or issuance of all potential common stock instruments, unless the effect would be to reduce the loss or increase earnings per common share. Potential dilutive common stock instruments include exercisable stock options. For the three months ended March 31, 2022 and 2021, stock options for 0 shares and 75,410 shares of the Company’s financial instrumentscommon stock were not included in the computation of diluted earnings per share because their effects would have been anti-dilutive, respectively. Weighted average common shares outstanding, basic and dilutive, for the period ended March 31, 2021 are as follows:adjusted to reflect the 3-for-2 stock split effective April 30, 2021.
|
|
|
| |||||
|
| For the three months ended |
| |||||
(Dollars in thousands, except per share data) |
| March 31, 2022 |
|
| March 31, 2021 |
| ||
Weighted average common shares outstanding, basic |
|
| 18,772,258 |
|
|
| 15,137,446 |
|
Effect of dilutive securities |
|
| 17,087 |
|
|
| 16,533 |
|
Weighted average common shares outstanding, dilutive |
|
| 18,789,345 |
|
|
| 15,153,979 |
|
|
|
|
|
|
|
| ||
Net income: |
|
|
|
|
|
| ||
Net income from continuing operations |
| $ | 17,420 |
|
| $ | 4,243 |
|
Net income (loss) from discontinued operations |
|
| 337 |
|
|
| (6 | ) |
Net income from discontinued operations attributable to noncontrolling interest |
|
| (1 | ) |
|
| (9 | ) |
Net income attributable to Blue Ridge Bankshares, Inc. |
| $ | 17,756 |
|
| $ | 4,228 |
|
|
|
|
|
|
|
| ||
Basic earnings per share: |
|
|
|
|
|
| ||
Earnings per share from continuing operations |
| $ | 0.93 |
|
| $ | 0.28 |
|
Earnings per share from discontinued operations |
|
| 0.02 |
|
|
| — |
|
Earnings per share attributable to Blue Ridge Bankshares, Inc. |
| $ | 0.95 |
|
| $ | 0.28 |
|
|
|
|
|
|
|
| ||
Diluted earnings per share: |
|
|
|
|
|
| ||
Earnings per share from continuing operations |
| $ | 0.93 |
|
| $ | 0.28 |
|
Earnings per share from discontinued operations |
|
| 0.02 |
|
|
| — |
|
Earnings per share attributable to Blue Ridge Bankshares, Inc. |
| $ | 0.95 |
|
| $ | 0.28 |
|
29
Fair Value Measurements at September 30, 2019 | ||||||||||||||||||||
Carrying Amount | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Fair Value | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Financial Assets | ||||||||||||||||||||
Cash and short-term investments | $ | 22,318 | $ | 22,318 | $ | — | $ | — | $ | 22,318 | ||||||||||
Federal funds sold | 285 | 285 | — | — | 285 | |||||||||||||||
Investment securities | 142,712 | — | 143,210 | — | 143,210 | |||||||||||||||
Loans held for sale | 80,255 | — | 80,255 | — | 80,255 | |||||||||||||||
Net loans held for investment | 456,474 | — | — | 462,414 | 462,414 | |||||||||||||||
Accrued interest receivable | 2,162 | — | 2,162 | — | 2,162 | |||||||||||||||
Bank-owned life insurance | 8,871 | — | 8,871 | — | 8,871 | |||||||||||||||
Financial Liabilities | ||||||||||||||||||||
Deposits | 520,280 | — | 428,908 | 85,162 | 514,070 | |||||||||||||||
Other borrowed funds | 129,600 | — | 129,908 | — | 129,908 | |||||||||||||||
Subordinated debt, net | 9,792 | — | — | 9,792 | 9,792 | |||||||||||||||
Accrued interest payable | 834 | — | 834 | — | 834 |
Fair Value Measurements at December 31, 2018 | ||||||||||||||||||||
Carrying Amount | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Fair Value | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Financial Assets | ||||||||||||||||||||
Cash and short-term investments | $ | 15,026 | $ | 15,026 | $ | — | $ | — | $ | 15,026 | ||||||||||
Federal funds sold | 546 | 546 | — | — | 546 | |||||||||||||||
Investment securities | 58,750 | — | 58,688 | — | 58,688 | |||||||||||||||
Loans held for sale | 29,233 | — | 29,233 | — | 29,233 | |||||||||||||||
Net loans held for investment | 411,288 | — | — | 404,888 | 404,888 | |||||||||||||||
Accrued interest receivable | 1,769 | — | 1,769 | — | 1,769 | |||||||||||||||
Bank-owned life insurance | 8,455 | — | 8,455 | — | 8,455 | |||||||||||||||
Financial Liabilities | ||||||||||||||||||||
Deposits | 415,027 | — | 323,280 | 81,070 | 404,350 | |||||||||||||||
Other borrowed funds | 73,100 | — | 73,113 | — | 73,113 | |||||||||||||||
Subordinated debt, net | 9,766 | — | — | 9,766 | 9,766 | |||||||||||||||
Accrued interest payable | 395 | — | 395 | — | 395 |
19
Note 1014 – Business Segments
The Company utilizes its subsidiaries and divisions to provide multiplehas 3 reportable business segments including retailsegments: commercial banking, mortgage banking, and payroll processing services. Revenuesholding company activities. The commercial banking business segment makes loans to and generates deposits from retailindividuals and businesses, while offering a wide array of general banking operations consist primarily of interest earned on loans and investment securities and service charges on deposit accounts. Mortgage Banking operating revenues consist principally of gains on sales of loans in the secondary market, loan origination fee income and interest earned on mortgage loans held for sale. Revenues from payroll services consist of fees chargedactivities to customers for payroll services.
Nine Months Ended September 30, 2019 | ||||||||||||||||||||||||
(in thousands) | Blue Ridge Bank | Blue Ridge Bank Mortgage Division | MoneyWise Payroll Solutions, Inc. | Parent Only | Eliminations | Blue Ridge Bankshares, Inc. Consolidated | ||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Interest income | $ | 21,582 | $ | 844 | $ | — | $ | 4 | $ | — | $ | 22,430 | ||||||||||||
Service charges on deposit accounts | 459 | — | — | — | — | 459 | ||||||||||||||||||
Mortgage banking income, net | — | 10,967 | — | — | — | 10,967 | ||||||||||||||||||
Payroll processing revenue | — | — | 743 | — | — | 743 | ||||||||||||||||||
Other operating income | 2,056 | — | — | 48 | (18 | ) | 2,086 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total income | 24,097 | 11,811 | 743 | 52 | (18 | ) | 36,685 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Expenses: | ||||||||||||||||||||||||
Interest expense | 5,921 | 490 | — | 532 | — | 6,943 | ||||||||||||||||||
Provision for loan losses | 1,465 | — | — | — | — | 1,465 | ||||||||||||||||||
Salary and benefits | 6,167 | 7,711 | 271 | — | — | 14,149 | ||||||||||||||||||
Other operating expenses | 5,194 | 2,697 | 344 | 851 | (18 | ) | 9,068 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total expense | 18,747 | 10,898 | 615 | 1,383 | (18 | ) | 31,625 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Income (loss) before income taxes | 5,350 | 913 | 128 | (1,331 | ) | — | 5,060 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Income tax expense | 932 | 193 | 22 | (158 | ) | — | 989 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net income (loss) | $ | 4,418 | $ | 720 | $ | 106 | $ | (1,173 | ) | $ | — | $ | 4,071 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net (income) loss attributable to noncontrolling interest | $ | — | $ | — | $ | (21 | ) | $ | — | $ | — | $ | (21 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net income (loss) attributable to Blue Ridge Bankshares | $ | 4,418 | $ | 720 | $ | 85 | $ | (1,173 | ) | $ | — | $ | 4,050 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2019 | ||||||||||||||||||||||||
(in thousands) | Blue Ridge Bank | Blue Ridge Bank Mortgage Division | MoneyWise Payroll Solutions, Inc. | Parent Only | Eliminations | Blue Ridge Bankshares, Inc. Consolidated | ||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Interest income | $ | 7,757 | $ | 359 | $ | — | $ | 2 | $ | — | $ | 8,118 | ||||||||||||
Service charges on deposit accounts | 171 | — | — | — | — | 171 | ||||||||||||||||||
Mortgage banking income, net | — | 3,943 | — | — | — | 3,943 | ||||||||||||||||||
Payroll processing revenue | — | — | 232 | — | — | 232 | ||||||||||||||||||
Other operating income | 609 | — | — | 23 | (6 | ) | 626 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total income | 8,537 | 4,302 | 232 | 25 | (6 | ) | 13,090 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Expenses: | ||||||||||||||||||||||||
Interest expense | 2,289 | 215 | — | 178 | — | 2,682 | ||||||||||||||||||
Provision for loan losses | 570 | — | — | — | — | 570 | ||||||||||||||||||
Salary and benefits | 2,126 | 2,858 | 95 | — | — | 5,079 | ||||||||||||||||||
Other operating expenses | 1,784 | 955 | 119 | 275 | (6 | ) | 3,127 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total expense | 6,769 | 4,028 | 214 | 453 | (6 | ) | 11,458 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Income (loss) before income taxes | 1,768 | 274 | 18 | (428 | ) | — | 1,632 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Income tax expense (benefit) | 344 | 80 | (1 | ) | (44 | ) | — | 379 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net income (loss) | $ | 1,424 | $ | 194 | $ | 19 | $ | (384 | ) | $ | — | $ | 1,253 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net (income) loss attributable to noncontrolling interest | $ | — | $ | — | $ | (3 | ) | $ | — | $ | — | $ | (3 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net income (loss) attributable to Blue Ridge Bankshares | $ | 1,424 | $ | 194 | $ | 16 | $ | (384 | ) | $ | — | $ | 1,250 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
20
Note 10 – Business Segments, continued
Nine Months Ended September 30, 2018 | ||||||||||||||||||||||||
(in thousands) | Blue Ridge Bank | Blue Ridge Bank Mortgage Division | MoneyWise Payroll Solutions, Inc. | Parent Only | Eliminations | Blue Ridge Bankshares, Inc. Consolidated | ||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Interest income | $ | 15,738 | $ | 325 | $ | — | $ | 6 | $ | — | $ | 15,738 | ||||||||||||
Service charges on deposit accounts | 479 | — | — | — | — | 479 | ||||||||||||||||||
Mortgage banking income, net | — | 4,868 | — | — | — | 4,868 | ||||||||||||||||||
Payroll processing revenue | — | — | 739 | — | — | 739 | ||||||||||||||||||
Other operating income | 1,262 | — | — | 4 | (18 | ) | 1,248 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total income | 17,479 | 5,193 | 739 | 10 | (18 | ) | 23,072 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Expenses: | ||||||||||||||||||||||||
Interest expense | 3,032 | — | — | 532 | — | 3,564 | ||||||||||||||||||
Provision for loan losses | 640 | — | — | — | — | 640 | ||||||||||||||||||
Salary and benefits | 3,851 | 3,980 | 296 | — | — | 8,127 | ||||||||||||||||||
Other operating expenses | 4,800 | 776 | 397 | 255 | (18 | ) | 6,210 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total expense | 12,323 | 4,756 | 693 | 787 | (18 | ) | 18,541 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Income (loss) before income taxes | 4,825 | 437 | 46 | (777 | ) | — | 4,531 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Income tax expense | 999 | 92 | 8 | (155 | ) | — | 944 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net income (loss) | $ | 3,826 | $ | 345 | $ | 38 | $ | (622 | ) | $ | — | $ | 3,587 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net (income) loss attributable to noncontrolling interest | $ | — | $ | — | $ | (8 | ) | $ | — | $ | — | $ | (8 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net income (loss) attributable to Blue Ridge Bankshares | $ | 3,826 | $ | 345 | $ | 30 | $ | (622 | ) | $ | — | $ | 3,579 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2018 | ||||||||||||||||||||||||
(in thousands) | Blue Ridge Bank | Blue Ridge Bank Mortgage Division | MoneyWise Payroll Solutions, Inc. | Parent Only | Eliminations | Blue Ridge Bankshares, Inc. Consolidated | ||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Interest income | $ | 5,255 | $ | 184 | $ | — | $ | 6 | $ | — | $ | 5,445 | ||||||||||||
Service charges on deposit accounts | 155 | — | — | — | — | 155 | ||||||||||||||||||
Mortgage banking income, net | — | 2,289 | — | — | — | 2,289 | ||||||||||||||||||
Payroll processing revenue | — | — | 220 | — | — | 220 | ||||||||||||||||||
Other operating income | 755 | — | — | 4 | (6 | ) | 753 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total income | 6,165 | 2,473 | 220 | 10 | (6 | ) | 8,862 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Expenses: | ||||||||||||||||||||||||
Interest expense | 1,159 | — | — | 176 | — | 1,335 | ||||||||||||||||||
Provision for loan losses | 225 | — | — | — | — | 225 | ||||||||||||||||||
Salary and benefits | 963 | 1,745 | 103 | — | — | 2,811 | ||||||||||||||||||
Other operating expenses | 2,066 | 550 | 103 | 179 | (6 | ) | 2,892 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total expense | 4,413 | 2,295 | 206 | 355 | (6 | ) | 7,263 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Income (loss) before income taxes | 1,752 | 178 | 14 | (345 | ) | — | 1,599 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Income tax expense | 366 | 33 | 1 | (71 | ) | — | 329 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net income (loss) | $ | 1,386 | $ | 145 | $ | 13 | $ | (274 | ) | $ | — | $ | 1,270 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net (income) loss attributable to noncontrolling interest | $ | — | $ | — | $ | (1 | ) | $ | — | $ | — | $ | (1 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net income (loss) attributable to Blue Ridge Bankshares | $ | 1,386 | $ | 145 | $ | 12 | $ | (274 | ) | $ | — | $ | 1,269 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
21
Note 11 - Other Borrowed Funds
Other Borrowings of $129.6 million at September 30, 2019 are composed of advancesits customers. It is distinct from the Federal Home Loan Bank of Atlanta (“FHLB”). The Company utilizes the FHLB advance programs to fund loan growth and provide liquidity. Other borrowings increased $56.5 million from $73.1 million at December 31, 2018.
FHLB advances outstanding and related terms at September 30, 2019 and December 31, 2018 are shown in the following tables:
(In thousands) | FHLB Advances Outstanding September 30, 2019 | |||||||||||
Type advance | Balance | Interest rate | Maturity date | |||||||||
Fixed rate | $ | 15,000 | 2.31 | % | October 1, 2019 | |||||||
Fixed rate | 5,000 | 2.58 | % | October 4, 2019 | ||||||||
Fixed rate | 5,000 | 2.15 | % | October 16, 2019 | ||||||||
Fixed rate | 4,000 | 2.59 | % | October 23, 2019 | ||||||||
Fixed rate | 3,500 | 2.58 | % | October 30, 2019 | ||||||||
Fixed rate | 25,000 | 2.24 | % | November 4, 2019 | ||||||||
Fixed rate | 10,000 | 2.13 | % | November 29, 2019 | ||||||||
Fixed rate | 7,000 | 2.51 | % | November 29, 2019 | ||||||||
Fixed rate | 10,000 | 2.46 | % | December 4, 2019 | ||||||||
Daily rate | 10,000 | 2.07 | % | December 30, 2019 | ||||||||
Fixed rate | 26,100 | 2.49 | % | May 4, 2020 | ||||||||
Fixed rate | 5,000 | 1.99 | % | May 6, 2020 | ||||||||
Fixed rate | 4,000 | 2.15 | % | September 9, 2020 | ||||||||
|
| |||||||||||
FHLB Advances, net | $ | 129,600 | ||||||||||
|
|
(In thousands) | FHLB Advances Outstanding December 31, 2018 | |||||||||||
Type advance | Balance | Interest rate | Maturity date | |||||||||
Fixed rate | $ | 5,000 | 2.42 | % | January 3, 2019 | |||||||
Fixed rate | 2,800 | 2.40 | % | January 7, 2019 | ||||||||
Fixed rate | 4,500 | 2.38 | % | January 9, 2019 | ||||||||
Fixed rate | 5,000 | 2.46 | % | January 16, 2019 | ||||||||
Fixed rate | 1,200 | 2.49 | % | January 18, 2019 | ||||||||
Fixed rate | 8,000 | 2.47 | % | January 31, 2019 | ||||||||
Fixed rate | 3,000 | 2.51 | % | March 8, 2019 | ||||||||
Fixed rate | 2,000 | 2.54 | % | March 19, 2019 | ||||||||
Fixed rate | 5,000 | 2.55 | % | April 1, 2019 | ||||||||
Fixed rate | 3,500 | 2.62 | % | April 30, 2019 | ||||||||
Fixed rate | 4,000 | 1.34 | % | May 31, 2019 | ||||||||
Fixed rate | 2,000 | 2.66 | % | June 19, 2019 | ||||||||
Fixed rate | 1,000 | 3.95 | % | August 27, 2019 | ||||||||
Daily rate | 22,100 | 2.65 | % | August 30, 2019 | ||||||||
Fixed rate | 4,000 | 2.13 | % | September 30, 2019 | ||||||||
|
| |||||||||||
FHLB Advances, net | $ | 73,100 | ||||||||||
|
|
22
Note 12 - Subordinated Debt
On November 20, 2015, the Company entered into a Subordinated Note Purchase Agreement (the “Purchase Agreement”) with 14 institutional accredited investors under which the Company issued an aggregate of $10,000,000 of subordinated notes (the “Notes”) to the institutional accredited investors. The Notes have a maturity date of December 1, 2025. The Notes bear interest, payableon the 1st of June and December of each year, commencing June 1, 2016, at a fixed rate of 6.75% per year for the first five years, and thereafter will bear a floating interest rate of LIBOR plus 512.8 basis points. The Notes are not convertible into common stock or preferred stock and are not callable by the holders. The Company has the right to redeem the Notes, in whole or in part, without premium or penalty, at any interest payment date on or after December 1, 2020 and prior to the maturity date, but in all cases in a principal amount with integral multiples of $1,000, plus interest accrued and unpaid through the date of redemption. If an event of default occurs, such as the bankruptcy of the Company, the holder of a Note may declare the principal amount of the Note to be due and immediately payable. The Notes are unsecured, subordinated obligations of the Company and will rank junior in right of payment to the Company’s existing and future senior indebtedness. The Notes qualify as Tier 2 capital for regulatory reporting.
As part of the transaction, the Company incurred issuance costs totaling $338,813. These costs are being amortized over the life of the Notes. The following table summarizes the balance of the Notes and related issuance costs at September 30, 2019 and December 31, 2018:
September 30, | December 31, | |||||||
(In thousands) | 2019 | 2018 | ||||||
Subordinated debt | $ | 10,000 | $ | 10,000 | ||||
Unamortized issuance costs | (208 | ) | (233 | ) | ||||
|
|
|
| |||||
Subordinated debt, net | $ | 9,792 | $ | 9,767 | ||||
|
|
|
|
Note 13 - Revenue from Contracts with Customers
In May 2014, the FASB issued ASUNo. 2014-09,Revenue from Contracts with Customers (Topic 606). ASU2014-09 is a comprehensive revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services.
Interest income, loan fees, realized securities gains and losses, bank owned life insurance income, SBIC income, andCompany's mortgage banking revenue are not in the scope of ASC Topic 606. All of the Company’s revenue from contracts with customers in the scope of ASC 606 is recognized within noninterest income in the consolidated statements of income. Incremental costs of obtaining a contract are expensed when incurred when the amortization period is one year or less.
A description of the Company’s significant sources of revenue accounted for under ASC 606 is as follows:
Service feesdivision, which concentrates on deposit accounts are fees charged to deposit customers for transaction-based, account maintenanceindividual, wholesale, and overdraft services. Transaction-based fees, which are earned based on specific transactions or customer activity within a customer’s deposit account, are recognizedparticipated mortgage lending, and sales activities. Activities at the time the related transactionholding company or activity occurs, as it is at this point when the customer’s request has been fulfilled. Account maintenance fees, which relateparent level are primarily to monthly maintenance, are earned over the course of a month, representing the period over which the performance obligation was satisfied. Overdraft fees are recognized when the overdraft occurs. Service fees on deposit accounts are paid through a direct charge to the customer’s account.associated with investments, borrowings, and certain noninterest expenses.
Bank card revenue is comprised of interchange revenue and ATM fees. Interchange revenue is earned when bank debit and credit cardholders conduct transactions through VISA, MasterCard, and other payment networks. Interchange fees represent a percentage of the underlying cardholder’s transaction value and are generally recognized daily, concurrent with the transaction processing services provided to the cardholder. ATM fees are earned when anon-Bank cardholder uses a Bank ATM. ATM fees are recognized daily, as the related ATM transactions are settled.
Payroll processing income is comprised of fees charged to customers for payroll services through MoneyWise Payroll Solutions, Inc., of which Blue Ridge Bank, N.A. owns a controlling interest.
23
Note 13 - Revenue from Contracts with Customers, continued
The following table illustrates our totalnon-interest income segregated by revenues within the scope of ASC Topic 606 and those which are within the scope of other ASC Topics:
Nine Months Ended September 30, | ||||||||
2019 | 2018 | |||||||
Service fees on deposit accounts | $ | 459 | $ | 479 | ||||
Bank card revenue | 408 | 356 | ||||||
Payroll processing income | 743 | 739 | ||||||
|
|
|
| |||||
Revenue from contracts with customers | 1,610 | 1,574 | ||||||
Non-interest income within scope of other ASC topics | 12,645 | 5,435 | ||||||
|
|
|
| |||||
Total noninterest income | $ | 14,255 | $ | 7,009 | ||||
|
|
|
|
Note 14 – Leases
On January 1, 2019, the Company adopted ASUNo. 2016-02“Leases (Topic 842)” and all subsequent ASUs that modified Topic 842. The Company elected the prospective application approach provided by ASU2018-11 and did not adjust prior periods for ASC 842. The Company also elected certain practical expedients within the standard and consistent with such elections did not reassess whether any expired or existing contracts are or contain leases, did not reassess the lease classification for any expired or existing leases, and did not reassess any initial direct costs for existing leases. The implementation of the new standard resulted in recognition of aright-of-use asset and lease liability of $7.0 million at the date of adoption, which is related to the Company’s lease of premises used in operations. Theright-of-use asset and lease liability are included in other assets and other liabilities, respectively, in the Consolidated Balance Sheets.
Lease liabilities represent the Company’s obligation to make lease payments and are presented at each reporting date as the net present value of the remaining contractual cash flows. Cash flows are discounted at the Company’s incremental borrowing rate in effect at the commencement date of the lease.Right-of-use assets represent the Company’s right to use the underlying asset for the lease term and are calculated as the sum of the lease liability and if applicable, prepaid rent, initial direct costs and any incentives received from the lessor.
The Company’s long-term lease agreements are classified as operating leases. Certain of these leases offer the option to extend the lease term and the Company has included such extensions in its calculation of the lease liabilities to the extent the options are reasonably assured of being exercised. The lease agreements do not provide for residual value guarantees and have no restrictions or covenants that would impact dividends or require incurring additional financial obligations.
The following tables present information aboutstatement of operations items and assets by segment as of and for the Company’s leases:periods stated.
|
| For the three months ended March 31, 2022 |
| |||||||||||||||||
(Dollars in thousands) |
| Commercial Banking |
|
| Mortgage Banking |
|
| Parent Only |
|
| Eliminations |
|
| Blue Ridge |
| |||||
NET INTEREST INCOME |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Interest income |
| $ | 25,183 |
|
| $ | 591 |
|
| $ | 28 |
|
| $ | 0 |
|
| $ | 25,802 |
|
Interest expense |
|
| 1,546 |
|
|
| 35 |
|
|
| 553 |
|
|
| 0 |
|
|
| 2,134 |
|
Net interest income |
|
| 23,637 |
|
|
| 556 |
|
|
| (525 | ) |
|
| 0 |
|
|
| 23,668 |
|
Provision for loan losses |
|
| 2,500 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 2,500 |
|
Net interest income after provision for loan losses |
|
| 21,137 |
|
|
| 556 |
|
|
| (525 | ) |
|
| 0 |
|
|
| 21,168 |
|
NONINTEREST INCOME |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Residential mortgage banking income, net |
|
| 0 |
|
|
| 2,821 |
|
|
| 0 |
|
|
| 0 |
|
|
| 2,821 |
|
Mortgage servicing rights |
|
| 201 |
|
|
| 6,537 |
|
|
| 0 |
|
|
| 0 |
|
|
| 6,738 |
|
Gain on sale of guaranteed government loans |
|
| 1,427 |
|
|
| — |
|
|
| 0 |
|
|
| 0 |
|
|
| 1,427 |
|
Service charges on deposit accounts |
|
| 315 |
|
|
| — |
|
|
| 0 |
|
|
| 0 |
|
|
| 315 |
|
Increase in cash surrender value of bank owned life insurance |
|
| 272 |
|
|
| — |
|
|
| 0 |
|
|
| 0 |
|
|
| 272 |
|
Other income |
|
| 3,177 |
|
|
| — |
|
|
| 9,426 |
|
|
| (82 | ) |
|
| 12,521 |
|
Total noninterest income |
|
| 5,392 |
|
|
| 9,358 |
|
|
| 9,426 |
|
|
| (82 | ) |
|
| 24,094 |
|
NONINTEREST EXPENSE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Salaries and employee benefits |
|
| 9,089 |
|
|
| 5,007 |
|
|
| — |
|
|
| 0 |
|
|
| 14,096 |
|
Other operating expenses |
|
| 6,581 |
|
|
| 1,936 |
|
|
| 158 |
|
|
| (82 | ) |
|
| 8,593 |
|
Total noninterest expense |
|
| 15,670 |
|
|
| 6,943 |
|
|
| 158 |
|
|
| (82 | ) |
|
| 22,689 |
|
Income from continuing operations before income tax expense |
|
| 10,859 |
|
|
| 2,971 |
|
|
| 8,743 |
|
|
| 0 |
|
|
| 22,573 |
|
Income tax expense |
|
| 2,906 |
|
|
| 624 |
|
|
| 1,623 |
|
|
| 0 |
|
|
| 5,153 |
|
Net income from continuing operations |
| $ | 7,953 |
|
| $ | 2,347 |
|
| $ | 7,120 |
|
| $ | 0 |
|
| $ | 17,420 |
|
Discontinued Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Income from discontinued operations before income taxes (including gain on disposal of $471 thousand) |
|
| 426 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 426 |
|
Income tax expense |
|
| 89 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 89 |
|
Net income from discontinued operations |
|
| 337 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 337 |
|
Net income |
| $ | 8,290 |
|
| $ | 2,347 |
|
| $ | 7,120 |
|
| $ | 0 |
|
| $ | 17,757 |
|
Net income from discontinued operations attributable to noncontrolling interest |
|
| (1 | ) |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| (1 | ) |
Net income attributable to Blue Ridge Bankshares, Inc. |
| $ | 8,289 |
|
| $ | 2,347 |
|
| $ | 7,120 |
|
| $ | 0 |
|
| $ | 17,756 |
|
Total assets as of March 31, 2022 |
| $ | 2,628,323 |
|
| $ | 64,419 |
|
| $ | 334,424 |
|
| $ | (302,582 | ) |
| $ | 2,724,584 |
|
30
(Dollars in thousands) | September 30, 2019 | |||
Lease liabilities | $ | 6,672 | ||
Right-of-use assets | $ | 6,575 | ||
Weighted average remaining lease term | 6.26 years | |||
Weighted average discount rate | 2.79 | % |
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
Lease Cost(in thousands) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Operating lease cost | $ | 369 | $ | 213 | $ | 1,104 | $ | 582 | ||||||||
Total lease cost | $ | 369 | $ | 213 | $ | 1,104 | $ | 582 | ||||||||
Cash paid for amounts included in the measurement of lease liabilities | $ | 218 | $ | 213 | $ | 874 | $ | 582 |
|
| For the three months ended March 31, 2021 |
| |||||||||||||||||
(Dollars in thousands) |
| Commercial Banking |
|
| Mortgage Banking |
|
| Parent Only |
|
| Eliminations |
|
| Blue Ridge |
| |||||
NET INTEREST INCOME |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Interest income |
| $ | 21,707 |
|
| $ | 820 |
|
| $ | 49 |
|
| $ | 0 |
|
| $ | 22,576 |
|
Interest expense |
|
| 1,871 |
|
|
| 58 |
|
|
| 630 |
|
|
| 0 |
|
|
| 2,559 |
|
Net interest income |
|
| 19,836 |
|
|
| 762 |
|
|
| (581 | ) |
|
| 0 |
|
|
| 20,017 |
|
Provision for loan losses |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
Net interest income after provision for loan losses |
|
| 19,836 |
|
|
| 762 |
|
|
| (581 | ) |
|
| 0 |
|
|
| 20,017 |
|
NONINTEREST INCOME |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Residential mortgage banking income, net |
|
| 0 |
|
|
| 9,301 |
|
|
| 0 |
|
|
| 0 |
|
|
| 9,301 |
|
Mortgage servicing rights |
|
| 0 |
|
|
| 3,371 |
|
|
| 0 |
|
|
| 0 |
|
|
| 3,371 |
|
Gain on sale of guaranteed government loans |
|
| 1,074 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 1,074 |
|
Service charges on deposit accounts |
|
| 327 |
|
|
| 0 |
|
|
| 0 |
|
|
| — |
|
|
| 327 |
|
Increase in cash surrender value of bank owned life insurance |
|
| 164 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 164 |
|
Other income |
|
| 1,275 |
|
|
| 0 |
|
|
| 52 |
|
|
| (25 | ) |
|
| 1,302 |
|
Total noninterest income |
|
| 2,840 |
|
|
| 12,672 |
|
|
| 52 |
|
|
| (25 | ) |
|
| 15,539 |
|
NONINTEREST EXPENSE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Salaries and employee benefits |
|
| 5,635 |
|
|
| 8,268 |
|
|
| 0 |
|
|
| — |
|
|
| 13,903 |
|
Other operating expenses |
|
| 13,136 |
|
|
| 2,181 |
|
|
| 1,040 |
|
|
| (25 | ) |
|
| 16,332 |
|
Total noninterest expense |
|
| 18,771 |
|
|
| 10,449 |
|
|
| 1,040 |
|
|
| (25 | ) |
|
| 30,235 |
|
Income (loss) from continuing operations before income tax expense (benefit) |
|
| 3,905 |
|
|
| 2,985 |
|
|
| (1,569 | ) |
|
| 0 |
|
|
| 5,321 |
|
Income tax expense (benefit) |
|
| 764 |
|
|
| 605 |
|
|
| (291 | ) |
|
| 0 |
|
|
| 1,078 |
|
Net income (loss) |
| $ | 3,141 |
|
| $ | 2,380 |
|
| $ | (1,278 | ) |
| $ | 0 |
|
| $ | 4,243 |
|
Discontinued Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Loss from discontinued operations before income taxes |
|
| (7 | ) |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| (7 | ) |
Income tax benefit |
|
| (1 | ) |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| (1 | ) |
Net loss from discontinued operations |
|
| (6 | ) |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| (6 | ) |
Net income (loss) |
| $ | 3,135 |
|
| $ | 2,380 |
|
| $ | (1,278 | ) |
| $ | 0 |
|
| $ | 4,237 |
|
Net income from discontinued operations attributable to noncontrolling interest |
|
| (9 | ) |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| (9 | ) |
Net income (loss) attributable to Blue Ridge Bankshares, Inc. |
| $ | 3,126 |
|
| $ | 2,380 |
|
| $ | (1,278 | ) |
| $ | 0 |
|
| $ | 4,228 |
|
Total assets as of March 31, 2021 |
| $ | 3,015,771 |
|
| $ | 143,568 |
|
| $ | 298,848 |
|
| $ | (290,813 | ) |
| $ | 1,498,258 |
|
24
31
Note 14 – Leases, continued
A maturity analysis of operating lease liabilities and reconciliation of the undiscounted cash flows to the total of operating lease liabilities is as follows:
As of | ||||
Lease payments due(in thousands) | September 30, 2019 | |||
Three months ending December 31, 2019 | $ | 314 | ||
Twelve months ending December 31, 2020 | 1,305 | |||
Twelve months ending December 31, 2021 | 1,230 | |||
Twelve months ending December 31, 2022 | 1,022 | |||
Twelve months ending December 31, 2023 | 934 | |||
Twelve months ending December 31, 2024 | 640 | |||
Thereafter | 1,979 | |||
|
| |||
Total undiscounted cash flows | 7,425 | |||
Discount | (753 | ) | ||
|
| |||
Lease liabilities | $ | 6,672 | ||
|
|
Note 15 – Changes to Accumulated Other Comprehensive Income, net
The following tables present components of accumulated other comprehensive income (loss) for the periods stated.
|
| For the three months ended March 31, 2022 |
| |||||||||||||
(Dollars in thousands) |
| Net Unrealized |
|
| Transfer of Securities Held to Maturity to Available For Sale |
|
| Pension and |
|
| Accumulated Other |
| ||||
Balance as of January 1, 2022 |
| $ | (4,056 | ) |
| $ | 425 |
|
| $ | (1 | ) |
| $ | (3,632 | ) |
Change in net unrealized holding losses on securities available for sale, net of deferred tax benefit of $4,742 |
|
| (17,844 | ) |
|
| 0 |
|
|
| 0 |
|
|
| (17,844 | ) |
Balance as of March 31, 2022 |
| $ | (21,900 | ) |
| $ | 425 |
|
| $ | (1 | ) |
| $ | (21,476 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| For the three months ended March 31, 2021 |
| |||||||||||||
(Dollars in thousands) |
| Net Unrealized |
|
| Transfer of Securities Held to Maturity to Available For Sale |
|
| Net Unrealized Gains (Losses) on Interest Rate Swaps |
|
| Accumulated Other |
| ||||
Balance as of January 1, 2021 |
| $ | 644 |
|
| $ | 425 |
|
| $ | (805 | ) |
| $ | 264 |
|
Change in net unrealized holding losses on securities available for sale, net of deferred tax benefit of $660 |
|
| (2,482 | ) |
|
| 0 |
|
|
| 0 |
|
|
| (2,482 | ) |
Change in net unrealized holding gains on interest rate swaps, net of deferred tax expense of $1,662 |
|
| 0 |
|
|
| 0 |
|
|
| 6,253 |
|
|
| 6,253 |
|
Balance as of March 31, 2021 |
| $ | (1,838 | ) |
| $ | 425 |
|
| $ | 5,448 |
|
| $ | 4,035 |
|
Note 16 – Legal Matters
On August 12, 2019, a former employee of Virginia Community Bankshares, Inc. (“VCB”) and participant in its Employee Stock Ownership Plan (the “VCB ESOP”) filed a class action complaint against VCB, Virginia Community Bank, and certain individuals associated with the VCB ESOP in the U.S. District Court for the Western District of Virginia, Charlottesville Division. The complaint alleges, among other things, that the defendants breached their fiduciary duties to VCB ESOP participants in violation of the Employee Retirement Income Security Act of 1974, as amended. The complaint alleges that the VCB ESOP incurred damages “that approach or exceed $12 million.” The Company automatically assumed any liability of VCB in connection with this litigation as a result of its 2019 acquisition of VCB. The outcome of this litigation is uncertain, and the plaintiff and other individuals may file additional lawsuits related to the VCB ESOP. The Company believes the claims are without merit and 0 loss has been accrued for this lawsuit.
Note 17 – Subsequent Events
On November 20, 2019,April 6, 2022, the board of directors of the Company declared a quarterly dividend of $0.1425$0.1225 per share, payablewhich was paid on December 13, 2019April 29, 2022 to shareholders of record as of December 6, 2019.the close of business on April 18, 2022.
32
Effective December 15, 2019, the Company completed its acquisitionItem 2. Management’s Discussion and Analysis of Virginia Community Bankshares, Inc. (“VCB”). Financial Condition and Results of Operations
The merger of VCB withfollowing presents management’s discussion and into the Company (the “Merger”) was effected pursuant to the terms and conditions of the Agreement and Plan of Reorganization, dated as of May 13, 2019, between the Company and VCB, and a related Plan of Merger (the “Merger Agreement”). Immediately after the Merger, Virginia Community Bank, VCB’s wholly-owned bank subsidiary, merged with and into the Bank. Pursuant to the Merger Agreement, former holders of shares of VCB common stock had the right to elect to receive either $58.00 in cash or 3.05 sharesanalysis of the Company’s common stockconsolidated financial condition and the results of our operations. This discussion should be read in conjunction with the unaudited consolidated financial statements and the notes thereto included in this Form 10-Q and the audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for each sharethe year ended December 31, 2021. Results of VCB common stock held,operations for the three months ended March 31, 2022 are not necessarily indicative of the results of operations for the balance of 2022, or for any other period. As used in this report, the terms “the Company,” “we,” “us,” and “our” refer to Blue Ridge Bankshares, Inc. and its consolidated subsidiaries. The term “Bank” refers to Blue Ridge Bank, National Association.
Cautionary Note About Forward-Looking Statements
The Company makes certain forward-looking statements in this Form 10-Q that are subject to adjustment sorisks and uncertainties. These forward-looking statements represent plans, estimates, objectives, goals, guidelines, expectations, intentions, projections, and statements of management’s beliefs concerning future events, business plans, objectives, expected operating results, and the assumptions upon which those statements are based. Forward-looking statements include without limitation, any statement that may predict, forecast, indicate, or imply future results, performance or achievements, and are typically identified with words such as “may,” “could,” “should,” “will,” “would,” “believe,” “anticipate,” “estimate,” “expect,” “aim,” “intend,” “plan,” or words or phases of similar meaning. The Company cautions that the overall mix of consideration paid to VCB shareholders consists of approximately 60% the Company’s common stock and 40% cash. The Company expects to issue approximately 1,312,970 shares of its common stock and pay approximately $16.6 million in cash in connection with the Merger.
25
|
Cautionary Statement Regarding Forward-Looking Statements
This quarterly report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. This Form 10-Q reflects the current viewsare based largely on management’s expectations and estimates of future economic circumstances, industry conditions, company performance, and financial results of the management of Blue Ridge. These forward-looking statements are subject to a number of factorsknown and unknown risks and uncertainties that are subject to change based on factors which are, in many instances, beyond its control. Actual results, performance, or achievements could differ materially from those contemplated, expressed, or implied by the forward-looking statements.
The following factors, among others, could cause Blue Ridge’s actual results and experiencethe Company’s financial performance to differ materially from the anticipated results and expectationsthat expressed in such forward-looking statements,statements: the strength of the United States economy in general and such differencesthe strength of the local economies in which it conducts operations; changes in the level of the Company’s nonperforming assets and charge-offs; management of risks inherent in the Company’s real estate loan portfolio, and the risk of a prolonged downturn in the real estate market, which could impair the value of collateral and the ability to sell collateral upon any foreclosure; the effects of, and changes in, trade, monetary, and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System, inflation, interest rate, market, and monetary fluctuations; changes in consumer spending and savings habits; the Company's ability to identify, attract, and retain experienced management, relationship managers, and support personnel, particularly in a competitive labor environment; technological and social media changes impacting the Company, the Bank, and the financial services industry, in general; changing bank regulatory conditions, laws, regulations, policies, or programs, whether arising as new legislation or regulatory initiatives, that could lead to restrictions on activities of banks generally, or the Bank in particular, more restrictive regulatory capital requirements, increased costs, including deposit insurance premiums, increased regulations, prohibition of certain income producing activities, or changes in the secondary market for loans and other products; the impact of changes in laws, regulations, and policies affecting the real estate industry; the effect of changes in accounting policies and practices, as may be material. Forward-looking statements speak only asadopted from time to time by bank regulatory agencies, the Securities and Exchange Commission (the "SEC"), the Public Company Accounting Oversight Board, the Financial Accounting Standards Board, or other accounting standards setting bodies; the impact of the date they are madeCOVID-19 pandemic on the Company's customers and Blue Ridge does not assume any dutyemployees, and the associated efforts by the Company and others to update forward-looking statements. These forward-looking statements include, but are not limitedlimit the spread of the virus; the occurrence of significant natural disasters, including severe weather conditions, floods, health related issues, and other catastrophic events; geopolitical conditions, including acts or threats of terrorism and/or military conflicts, including the military conflict between Russia and Ukraine, or actions taken by the U.S. or other governments in response to statements about (i)acts or threats of terrorism and/or military conflicts, which could impact business and economic conditions in the U.S. and abroad; the timely development of competitive new products and services and the acceptance of these products and services by new and existing customers; the willingness of users to substitute competitors’ products and services for the Company’s products and services; the Company’s inability to successfully manage growth or implement its growth strategy; the effect of acquisitions the Company may make, including, without limitation, disruption of employee or customer relationships, and the failure to achieve the expected benefitsrevenue growth and/or expense savings from such acquisitions; the Company’s participation in the Paycheck Protection Program ("PPP") established by the U.S. government and its administration of the transaction between Blue Ridgeloans and VCB, including future financialprocessing fees earned under the program;
33
the Company’s involvement, from time to time, in legal proceedings, and operating results, cost savings, enhanced revenuesexamination and remedial actions by regulators; the Company’s potential exposure to fraud, negligence, computer theft, and cyber-crime; the Bank’s ability to pay dividends; and the Bank's ability to effectively manage its fintech partnerships, and the abilities of those fintech companies to perform as expected market position.
The foregoing factors should not be considered exhaustive and should be read together with other cautionary statements that are included in the Form 10-K including those discussed in the section entitled "Risk Factors." If one or more of the combined company that may be realizedfactors affecting forward-looking information and statements proves incorrect, then actual results, performance or achievements could differ materially from the transaction,those expressed in, or implied by, forward-looking information and (ii) Blue Ridge’s and VCB’s plans, objectives, expectations and intentions and other statements contained in this Form 10-Q that are10-Q. Therefore, the Company cautions you not historical facts. Otherto place undue reliance on its forward-looking information and statements. The Company will not update the forward-looking statements identified by words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “targets,” “projects,” “predicts,” “potential,” “possible,” “should,” “would,” “will,” “goal,” “target”to reflect actual results or words of similar meaning generally are intended to identifychanges in the factors affecting the forward-looking statements. These statements are based upon the current beliefs and expectations of Blue Ridge’s management and are inherently subject to significant business, economic and competitiveNew risks and uncertainties many of which are beyond their respective control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. Actual results may differ from those indicated or implied in the forward-looking statements and such differences may be material.
The following risks, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements:
the expected cost savings from the transaction with VCB may not be fully realized or may take longer to realize than expected;
the integration of the businesses of Blue Ridge and VCB may be more difficult, costly or time-consuming than expected, and could result in the loss of customers;
changes in general business, economic and market conditions;
changes in fiscal and monetary policies, and laws and regulations;
changes in interest rates, deposit flows, loan demand and real estate values;
deterioration in asset quality and/or a reduced demand for, or supply of, credit;
increased information security risk, including cyber security risk, which may lead to potential business disruptions or financial losses;
volatility in the securities markets generally or in the market price of Blue Ridge’s stock specifically; and
Blue Ridge’s limited ability to pay dividends; and
other risks and factors identified in the “Risk Factors” sections and elsewhere in documents Blue Ridge filesemerge from time to time, and it is not possible for the Company to predict their occurrence or how these risks and uncertainties will affect it.
Sale of MoneyWise Payroll Solutions, Inc.
The Company sold its majority interest in MoneyWise Payroll Solutions, Inc. (“MoneyWise”) to the holder of the minority interest in MoneyWise in the first quarter of 2022. Asset and liability balances and income statement amounts related to MoneyWise are reported as discontinued operations for all periods presented.
Stock Split
On April 30, 2021, the Company effected a 3-for-2 stock split (“Stock Split”) in the form of a 50% stock dividend on its common stock to shareholders of record as of April 20, 2021. Cash was paid in lieu of fractional shares based on the closing price of the Company’s common stock on the record date. References made to outstanding shares or per share amounts in the accompanying consolidated financial statements and disclosures have been retroactively adjusted to reflect the Stock Split, unless otherwise noted.
Merger with Bay Banks of Virginia, Inc.
The Company completed its merger with Bay Banks of Virginia, Inc. ("Bay Banks"), the Securitiesholding company of Virginia Commonwealth Bank, into the Company on January 31, 2021. Immediately following the completion of the merger, Virginia Commonwealth Bank was merged with and Exchange Commission.into Blue Ridge Bank (collectively, the “Bay Banks Merger”). Earnings for the first quarter of 2021 included the earnings of Bay Banks from the effective date of the merger.
Information contained herein as of March 31, 2022 includes the balances of Bay Banks; information contained herein for the quarter ended March 31, 2021 and as of December 31, 2021 includes the operations of Bay Banks for the period immediately following the effective date (January 31, 2021) of the Bay Banks Merger.
General
There were no changes to the Critical Accounting Policies disclosed in Item 7 of the 2021 Form 10-K, except for an irrevocable change in accounting method for mortgage servicing rights ("MSR") assets from the amortization method to the fair value measurement method under Accounting Standards Codification 860 Transfers and Servicing. See Part I, Item 1, Note 1 – Organization and Basis of Presentation for more information.
General
The accounting principles Blue Ridge applies under U.S. GAAP are complex and require management to apply significant judgment to various accounting, reporting and disclosure matters. Management must use assumptions, judgments and estimates when applying these principles where precise measurements are not possible or practical. These policies are critical because they are highly dependent upon subjective or complex judgments, assumptions and estimates. ChangesCertain amounts presented in such judgments, assumptions and estimates may have a significant impact on the consolidated financial statements. Actual results, in fact, could differstatements of prior periods have been reclassified to conform to current year presentations. The reclassifications had no effect on net income, net income per share, total assets, total liabilities, or stockholders’ equity as previously reported.
Comparison of Financial Condition as of March 31, 2022 and December 31, 2021
Total assets were $2.72 billion as of March 31, 2022, an increase of $59 million from initial estimates.$2.67 billion at December 31, 2021. Loans held for investment, excluding PPP loans, increased $66.2 million to $1.84 billion at March 31, 2022 from $1.78 billion at December 31, 2021, an annualized growth rate of 14.9%.
34
Total deposits as of March 31, 2022 were $2.35 billion, an increase of $56.3 million from December 31, 2021. The accounting policies Blue Ridge views as critical are those relating to judgments, assumptions and estimates regarding the determination of the allowance for loan losses, the fair value measurements of certain assets and liabilities, and accounting for other real estate owned.
Allowance for Loan Losses
The allowance for loan losses is maintained at a level believed to be adequate by Blue Ridge to absorb probable losses inherentincrease in the portfolio and is based on the size and current risk characteristicsfirst three months of the loan portfolio, an assessment of individual problem loans and actual loss experience, current economic events in specific industries and other pertinent factors such as regulatory guidance and general economic conditions. The allowance is established through a provision for loan losses charged2022 was primarily due to earnings. Loans identified as losses and deemed uncollectible by management are chargednoninterest-bearing demand deposits, primarily related to the allowance. Subsequent recoveries, if any, are creditedCompany’s fintech partnerships.
Total stockholders’ equity increased by $1.3 million to the allowance.$278.5 million as of March 31, 2022 compared to $277.1 million at December 31, 2021. The allowance for loan losses is evaluated on a regular basis by management.
The allowance consists of specific, general and unallocated components. The specific component relates to loans that are classified as impaired, for which an allowance is established when the fair value of the loan or present valueCompany’s portfolio of future cash flows is lower than its carrying value. The general component coversnon-impaired loans and is based on historical loss experience adjustedavailable for qualitative factors. Historical losses are categorized into risk-similar loan poolssale securities declined in the first quarter of 2022, primarily as a result of an increase in market interest rates, resulting in an after-tax decline in stockholders’ equity of $17.9 million . This decrease was offset by net income of $17.8 million for the three months ended March 31, 2022 and a loss ratio factor is appliedpositive $3.5 million cumulative effect adjustment recorded to each group’s loan balancesstockholders’ equity as of January 1, 2022 to determineaccount for the allocation.
Qualitative and environmental factors include external risk factors that Blue Ridge believes affects its overall lending environment. Environmental factors that Blue Ridge routinely analyzes include levels and trends in delinquencies and impaired loans, levels and trends in charge-offs and recoveries, trends in volume and terms of loans, effects of changes in risk selection and underwriting practices, experience, ability, depth of lending management and staff, national and local economic trends, conditions such as unemployment rates, housing statistics, banking industry conditions, and the effect of changes in credit concentrations. Determination of the allowance is inherently subjective as it requires significant estimates, including the amounts and timing of expected future cash flows on impaired loans, estimated losses on pools of homogeneous loans based on historical loss experience and consideration of current economic trends, all of which may be susceptible to significant change.
Credit losses are an inherent part of Blue Ridge’s business and, although Blue Ridge believes the methodologies for determining the allowance for loan losses and the current level of the allowance are appropriate, it is possible that there may be unidentified losses in the portfolio at any particular time that may become evident at a future date pursuant to additional internal analysis or regulatory comment. Additional provisions for such losses, if necessary, would be recorded, and would negatively impact earnings.
26
Fair Value Measurements
Blue Ridge determines the fair values of financial instruments based on the fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value. Blue Ridge’s investment securitiesavailable-for-sale are recorded at fair value using reliable and unbiased evaluations by an industry-wide valuation service. This service uses evaluated pricing models that vary based on asset class and include available trade, bid, and other market information. Generally, the methodology includes broker quotes, proprietary models, vast descriptive terms and conditions databases, as well as extensive quality control programs. Depending on the availability of observable inputs and prices, different valuation models could produce materially different fair value estimates. The values presented may not represent future fair values and may not be realizable.
Other Real Estate Owned
Real estate acquired through, or in lieu of, foreclosure is held for sale and is stated at fair value of the property, less estimated disposal costs, if any. Any excess of cost over the fair value less costs to sell at the time of acquisition is charged to the allowance for loan losses. The fair value is reviewed periodically by management and any write downs are charged against current earnings. Accounting policy and treatment is consistent with accounting for impaired loans described above.
Emerging Growth Company
Blue Ridge qualifies as an “emerging growth company,” as defined in the federal securities laws. For as long as it continues to be an emerging growth company, Blue Ridge may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act reduced disclosure obligations regarding executive compensation in periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. In addition, as an emerging growth company Blue Ridge has elected to take advantage of the extended transition period for complying with new or revised accounting standards until those standards would otherwise apply to a company that is not an issuer (as defined under Section 2(a) of the Sarbanes-Oxley Act of 2002), if such standards apply to companies that are not issuers. This may make Blue Ridge’s financial statements not comparable with other public companies that are not emerging growth companies or that are emerging growth companies that have opted out of the extended transition period because of the potential differenceschange in accounting standards used. Blue Ridge could be an emerging growth companymethod for up to five years, although it could lose that status sooner if its gross revenues exceed $1.07 billion, if it issues more than $1.0 billion innon-convertible debt in a three-year period, or if the market value of its common stock held bynon-affiliates exceeds $700 millionMSR assets, as of any June 30 before that time, in which case Blue Ridge would no longer be an emerging growth company as of the following December 31.noted previously.
Merger with VCB
Effective December 15, 2019, Blue Ridge completed its acquisition of VCB and, immediately thereafter, Virginia Community Bank, VCB’s wholly-owned bank subsidiary, merged with and into the Bank. As of September 30, 2019, VCB had approximately $251.5 million in total assets, $179.5 million in total loans and $219.6 million in total deposits. Blue Ridge expects to issue approximately 1,312,970 shares of its common stock and pay approximately $16.6 million in cash in connection with the Merger.
Comparison of Financial Condition at September 30, 2019 and December 31, 2018
Total assets at September 30, 2019 were $736.2 million, an increase of $196.6 million or 36.4%, from $539.6 million at December 31, 2018. The increase in assets was primarily driven by growth in investment securities, both the loans held for sale and loans held for investment portfolios, as well as other assets. Investment securities totaled $142.7 million at September 30, 2019, an increase of $84.0 million, or 142.9% compared to $58.8 million at December 31, 2018, and is attributed to the implementation of a balance sheet strategy following the Company’s common stock raise. Loans held for sale totaled $80.3 million as of September 30, 2019, an increase of $51.0 million, or 174.5% compared to $29.2 million at December 31, 2018, while loans held for investment totaled $461.0 million as of September 30, 2019, an increase of $46.0 million, or 11.1% compared to $414.9 million at December 31, 2018. Other assets totaled $18.6 million at September 30, 2019, an increase of $8.3 million, or 81.0% compared to $10.3 million as of December 31, 2018. The increase in other assets was primarily due to the implementation of ASUNo. 2016-02,Leases (Topic 842) and the recording of aright-of-use asset on the balance sheet for property leased for branches and offices.
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The allowance for loan losses increased by $825 thousand during the first nine months of 2019 to $4.4 million, or 0.96% of total loans held for investment as of September 30, 2019, compared to $3.6 million, or 0.86% of total loans held for investment as of December 31, 2018, reflective of the growth in Blue Ridge’s loan portfolio.
At September 30, 2019, total liabilities were $670.6 million, an increase of $170.7 million, or 34.1% compared to $500.0 million at December 31, 2018. The increase in liabilities was concentrated in total deposit growth of $105.3 million, or 25.4%, to $520.3 million as of September 30, 2019 compared to $415.0 million at December 31, 2018. FHLB borrowings increased $56.5 million, or 77.3% from $129.6 million at September 30, 2019 compared to $73.1 million at December 31, 2018. Additionally, other liabilities totaled $11.0 million as of September 30, 2019, an increase of $8.9 million, or 428.3%, compared to $2.1 million at December 31, 2018. The increase in other liabilities was due to the implementation of ASUNo. 2016-02,Leases (Topic 842) and the recording of a lease liability on the balance sheet for property leased for branches and offices.
Total shareholders’ equity increased by $26.0 million to $65.6 million at September 30, 2019 compared to $39.6 million at December 31, 2018. The increase in shareholders’ equity was due primarily to the sale of 1.5 million shares of Blue Ridge’s common stock in a private placement to accredited investors. Net proceeds from the sale amounted to $22.2 million.
Comparison of Results of OperationOperations for the NineThree Months Ended September 30, 2019March 31, 2022 and 20182021
For the ninethree months ended September 30, 2019, Blue RidgeMarch 31, 2022, the Company reported net income from continuing operations of $4.1$17.4 million, equal to basic andor $0.93 earnings per diluted income per common share, of $1.01. Forcompared to $4.2 million, or $0.28 earnings per diluted common share, for the ninethree months ended September 30, 2018, netMarch 31, 2021.
Net income before income taxes for the first quarter of 2022 included $9.4 million of fair value adjustments for the Company's equity investments, primarily in certain fintech companies. Income from MSRs was $3.6$6.7 million for the first quarter of 2022, an increase of $3.4 million compared to the same period of 2021.
Net income before income taxes included merger-related expenses of $50 thousand and both basic$9.0 million, for the three months ended March 31, 2022 and diluted earnings per share were $1.29.2021, respectively, the former attributable to the now-terminated FVCBankcorp, Inc. merger and the latter attributable to the completed Bay Banks Merger.
Net Interest Income. Net interest income is the amount by which interest earned on assets exceeds the interest paid on interest-bearing liabilities and is Blue Ridge’sthe Company’s primary revenue source. Net interest income is thereby affected by overall balance sheet growth, changes in interest rates, and changes in the mix of investments, loans, deposits, and borrowings. Blue Ridge’sThe Company’s principal interest earninginterest-earning assets are loans to individuals, businesses, and real estate investors, and individuals as well as its investment securities portfolio. Interest-bearing liabilities consist primarily of negotiable order of withdrawal (“NOW”) and savings accounts, money market accounts, certificates of deposit, and FHLBFederal Home Loan Bank of Atlanta (“FHLB”) and Federal Reserve Bank of Richmond ("FRB") advances. Generally, changes in net interest income are measured by the net interest rate spread and the net interest margin. The netNet interest rate spread is equal to the difference between the average rate earned on interest earninginterest-earning assets and the average rate incurred on interest-bearing liabilities. The netNet interest margin represents the difference between interest income and interest expense calculated as a percentage of average earninginterest-earning assets.
35
28
The following table showspresents the average balance sheets for the first ninethree months of 2019 compared to the first nine months of 2018.ended March 31, 2022 and 2021. Also shown are the amounts of interest earned on interest-earning assets, with related tax-equivalent yields, and interest expense on interest-bearing liabilities, with related rates.
Nine Months Ended September 30, 2019 | Nine Months Ended September 30, 2018 | |||||||||||||||||||||||
(Dollars in thousands) | Average Balance | Interest Income- Expense | Average Yields / Rates (1) | Average Balance | Interest Income- Expense | Average Yields / Rates (1) | ||||||||||||||||||
Assets | ||||||||||||||||||||||||
Taxable investments (2) | $ | 100,453 | $ | 2,384 | 3.16 | % | $ | 43,538 | $ | 1,139 | 3.49 | % | ||||||||||||
Tax-free investments (2) | 8,153 | 182 | 3.61 | % | 9,739 | 226 | 3.75 | % | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
Total securities | 108,606 | 2,566 | 3.39 | % | 53,277 | 1,365 | 3.62 | % | ||||||||||||||||
Interest-bearing deposits in other banks | 17,852 | 218 | 1.63 | % | 9,685 | 59 | 0.82 | % | ||||||||||||||||
Federal funds sold | 338 | 6 | 2.37 | % | 988 | 13 | 1.73 | % | ||||||||||||||||
Loans held for sale | 46,800 | 1,333 | 3.80 | % | 15,747 | 498 | 4.22 | % | ||||||||||||||||
Loans held for investment (3) | 441,569 | 18,307 | 5.53 | % | 347,155 | 14,127 | 5.43 | % | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
Total interest-earning assets | 615,165 | 22,430 | 4.87 | % | 426,852 | 16,062 | 5.03 | % | ||||||||||||||||
Less allowance for loan losses | (3,953 | ) | (3,002 | ) | ||||||||||||||||||||
Totalnon-interest earning assets | 31,742 | 23,545 | ||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||
Total assets | $ | 642,954 | $ | 447,395 | ||||||||||||||||||||
|
|
|
| |||||||||||||||||||||
Liabilities & Shareholders’ equity | ||||||||||||||||||||||||
Interest-bearing demand and savings deposits | $ | 165,481 | $ | 1,194 | 0.96 | % | $ | 128,500 | $ | 538 | 0.56 | % | ||||||||||||
Time deposits | 210,448 | 3,297 | 2.09 | % | 165,475 | 1,931 | 1.56 | % | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
Total interest-bearing deposits | 375,929 | 4,491 | 1.53 | % | 293,975 | 2,469 | 1.06 | % | ||||||||||||||||
FHLB advances and other borrowings | 113,989 | 2,452 | 2.87 | % | 47,774 | 1,094 | 3.06 | % | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
Total interest-bearing liabilities | 489,918 | 6,943 | 1.89 | % | 341,749 | 3,563 | 1.39 | % | ||||||||||||||||
Demand deposits and other liabilities | 102,033 | 69,168 | ||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||
Total liabilities | 591,951 | 410,917 | ||||||||||||||||||||||
Shareholders’ equity | 51,003 | 36,478 | ||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 642,954 | $ | 447,395 | ||||||||||||||||||||
|
|
|
| |||||||||||||||||||||
Interest rate spread | 2.98 | % | 3.64 | % | ||||||||||||||||||||
Net interest income and margin | $ | 15,487 | 3.36 | % | $ | 12,499 | 3.90 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
The increaserates, as well as a volume and rate analysis of changes in averagenet interest income for the periods stated.
|
| Average Balances, Income and Expense, Yields and Rates |
|
|
|
|
|
|
| |||||||||||||||||||||||||||
|
| As of and for the three months ended March 31, |
|
|
|
| ||||||||||||||||||||||||||||||
|
| 2022 |
|
| 2021 |
|
| Total |
|
| Increase/(Decrease) |
| ||||||||||||||||||||||||
(Dollars in thousands) |
| Average |
|
| Interest |
|
| Yield/ |
|
| Average |
|
| Interest |
|
| Yield/ |
|
| (Decrease) |
|
| Volume (12) |
|
| Rate (12) |
| |||||||||
Average Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Taxable securities |
| $ | 379,113 |
|
| $ | 1,770 |
|
|
| 1.87 | % |
| $ | 213,028 |
|
| $ | 1,130 |
|
|
| 2.12 | % |
| $ | 640 |
|
| $ | 881 |
|
| $ | (241 | ) |
Tax-exempt securities (2) |
|
| 19,372 |
|
|
| 75 |
|
|
| 1.55 | % |
|
| 14,170 |
|
|
| 67 |
|
|
| 1.89 | % |
|
| 8 |
|
|
| 25 |
|
|
| (17 | ) |
Total securities |
|
| 398,485 |
|
|
| 1,845 |
|
|
| 1.85 | % |
|
| 227,198 |
|
|
| 1,197 |
|
|
| 2.11 | % |
|
| 648 |
|
|
| 906 |
|
|
| (258 | ) |
Interest-earning deposits in other banks |
|
| 94,710 |
|
|
| 35 |
|
|
| 0.15 | % |
|
| 131,051 |
|
|
| 30 |
|
|
| 0.09 | % |
|
| 5 |
|
|
| (8 | ) |
|
| 13 |
|
Federal funds sold |
|
| 51,460 |
|
|
| 22 |
|
|
| 0.17 | % |
|
| 3,113 |
|
|
| — |
|
|
| — |
|
|
| 22 |
|
|
| — |
|
|
| 22 |
|
Loans held for sale |
|
| 73,710 |
|
|
| 621 |
|
|
| 3.37 | % |
|
| 132,918 |
|
|
| 821 |
|
|
| 2.47 | % |
|
| (200 | ) |
|
| (366 | ) |
|
| 166 |
|
Paycheck Protection Program loans (3) |
|
| 27,081 |
|
|
| 393 |
|
|
| 5.80 | % |
|
| 452,096 |
|
|
| 4,477 |
|
|
| 3.96 | % |
|
| (4,084 | ) |
|
| (4,209 | ) |
|
| 125 |
|
Loans held for investment (3,4,5) |
|
| 1,798,653 |
|
|
| 22,885 |
|
|
| 5.09 | % |
|
| 1,386,113 |
|
|
| 16,065 |
|
|
| 4.64 | % |
|
| 6,820 |
|
|
| 4,781 |
|
|
| 2,039 |
|
Total average interest-earning assets |
|
| 2,444,098 |
|
|
| 25,802 |
|
|
| 4.22 | % |
|
| 2,332,489 |
|
|
| 22,590 |
|
|
| 3.87 | % |
|
| 3,212 |
|
|
| 1,104 |
|
|
| 2,109 |
|
Less: allowance for loan losses |
|
| (12,063 | ) |
|
|
|
|
|
|
|
| (13,625 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Total noninterest-earning assets |
|
| 221,952 |
|
|
|
|
|
|
|
|
| 157,048 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Total average assets |
| $ | 2,653,987 |
|
|
|
|
|
|
|
| $ | 2,475,912 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Average Liabilities and Stockholders’ Equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Interest-bearing demand, money market deposits, and savings |
| $ | 1,082,743 |
|
| $ | 585 |
|
|
| 0.22 | % |
| $ | 700,291 |
|
| $ | 462 |
|
|
| 0.26 | % |
| $ | 123 |
|
| $ | 252 |
|
| $ | (129 | ) |
Time deposits (6) |
|
| 483,236 |
|
|
| 971 |
|
|
| 0.80 | % |
|
| 498,965 |
|
|
| 1,079 |
|
|
| 0.86 | % |
|
| (108 | ) |
|
| (34 | ) |
|
| (74 | ) |
Total interest-bearing deposits |
|
| 1,565,980 |
|
|
| 1,556 |
|
|
| 0.40 | % |
|
| 1,199,256 |
|
|
| 1,541 |
|
|
| 0.51 | % |
|
| 15 |
|
|
| 218 |
|
|
| (204 | ) |
FHLB borrowings (7) |
|
| 10,110 |
|
|
| 11 |
|
|
| 0.42 | % |
|
| 137,583 |
|
|
| 85 |
|
|
| 0.25 | % |
|
| (74 | ) |
|
| (79 | ) |
|
| 4 |
|
FRB borrowings |
|
| 16,379 |
|
|
| 14 |
|
|
| 0.35 | % |
|
| 348,803 |
|
|
| 304 |
|
|
| 0.35 | % |
|
| (290 | ) |
|
| (290 | ) |
|
| — |
|
Subordinated notes and other borrowings (8) |
|
| 39,976 |
|
|
| 553 |
|
|
| 5.54 | % |
|
| 47,016 |
|
|
| 630 |
|
|
| 5.36 | % |
|
| (77 | ) |
|
| (94 | ) |
|
| 18 |
|
Total average interest-bearing liabilities |
|
| 1,632,445 |
|
|
| 2,134 |
|
|
| 0.52 | % |
|
| 1,732,658 |
|
|
| 2,560 |
|
|
| 0.59 | % |
|
| (426 | ) |
|
| (245 | ) |
|
| (181 | ) |
Noninterest-bearing demand deposits |
|
| 720,226 |
|
|
|
|
|
|
|
|
| 522,971 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Other noninterest-bearing liabilities |
|
| 26,429 |
|
|
|
|
|
|
|
|
| 25,180 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Stockholders’ equity |
|
| 274,887 |
|
|
|
|
|
|
|
|
| 195,103 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Total average liabilities and stockholders’ equity |
| $ | 2,653,987 |
|
|
|
|
|
|
|
| $ | 2,475,912 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Net interest income and margin (9) |
|
|
|
| $ | 23,668 |
|
|
| 3.87 | % |
|
|
|
| $ | 20,030 |
|
|
| 3.43 | % |
| $ | 3,638 |
|
| $ | 1,349 |
|
| $ | 2,290 |
| ||
Cost of funds (10) |
|
|
|
|
|
|
|
| 0.36 | % |
|
|
|
|
|
|
|
| 0.45 | % |
|
|
|
|
|
|
|
|
| |||||||
Net interest spread (11) |
|
|
|
|
|
|
|
| 3.70 | % |
|
|
|
|
|
|
|
| 3.28 | % |
|
|
|
|
|
|
|
|
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
(1) Annualized. |
| |||||||||||||||||||||||||||||||||||
(2) Computed on a fully taxable equivalent basis assuming a 21% income tax rate. |
| |||||||||||||||||||||||||||||||||||
(3) Includes deferred loan fees/costs. |
| |||||||||||||||||||||||||||||||||||
(4) Non-accrual loans have been included in the computations of average loan balances. |
| |||||||||||||||||||||||||||||||||||
(5) Includes accretion of fair value adjustments (discounts) on acquired loans of $2.7 million and $359 thousand for the three months ended March 31, 2022 and 2021, respectively. |
| |||||||||||||||||||||||||||||||||||
(6) Includes amortization of fair value adjustments (premiums) on assumed time deposits of $474 thousand and $697 thousand for the three months ended March 31, 2022 and 2021, respectively. |
| |||||||||||||||||||||||||||||||||||
(7) Includes amortization of fair value adjustments (premiums) on assumed FHLB borrowings of $3 thousand and $2 thousand for the three months ended March 31, 2022 and 2021, respectively. |
| |||||||||||||||||||||||||||||||||||
(8) Includes amortization of fair value adjustments (premiums) on assumed subordinated notes of $25 thousand and $35 thousand for the three months ended March 31, 2022 and 2021, respectively. |
| |||||||||||||||||||||||||||||||||||
(9) Net interest margin is net interest income divided by average interest-earning assets. |
| |||||||||||||||||||||||||||||||||||
(10) Cost of funds is total interest expense divided by total interest-bearing liabilities and non-interest bearing demand deposits. |
| |||||||||||||||||||||||||||||||||||
(11) Net interest spread is the yield on average interest-earning assets less the cost of average interest-bearing liabilities. |
| |||||||||||||||||||||||||||||||||||
(12) Change in income/expense due to both volume and rate has been allocated in proportion to the absolute dollar amounts of the change in each. |
|
Average interest-earning assets were $2.44 billion for the three months ended March 31, 2022 compared to $2.33 billion for the same period of 2021, a $111.6 million increase. This increase was primarily drivenattributable to organic loan growth and loans acquired in the Bay Banks Merger as of the effective date of the merger and higher average balances of securities, partially offset by an increase insignificantly lower average investment securities and average loans and resulted in increased interest income during the first nine monthsbalances of 2019.PPP loans. Total interest income (on a taxable equivalent basis) increased by $6.4$3.2 million or 39.6%, for the nine-monththree-month period ended September 30, 2019March 31, 2022 from the same period of 2021. This increase was primarily due to higher average balances of interest-earnings assets, and higher accretion of purchase accounting adjustments (discounts) on acquired loans, partially offset by lower PPP interest and fee income. Interest income in the 2022 and 2021 periods included the amortization of PPP processing fees, net of costs, of $329 thousand and $3.3 million, respectively. Interest income in the first quarters of 2022 and 2021 included accretion of discounts on acquired loans of $2.7 million and $359 thousand, respectively.
36
Average interest-bearing liabilities were $1.63 billion for the three months ended March 31, 2022 compared to $1.73 billion for the same period of 2021, a $100.2 million decrease. Most of this decrease was attributable to a decline in average balances of FHLB and FRB borrowings of $127.5 million and $332.4 million, respectively, partially offset by higher average balances of interest-bearing deposits. FHLB advances were reduced in the fourth quarter of 2021 commensurate with the termination of interest rate swaps, while FRB advances were reduced as PPP loans were forgiven. Interest expense decreased by $426 thousand to $2.1 million for the three months ended March 31, 2022 compared to the same period of 2021. Cost of interest-bearing liabilities decreased to 0.52% for the first quarter of 2022 from 0.59% for the first quarter of 2021, partially due to the redemption of subordinated notes in the second and third quarters of 2021. Cost of funds were 0.36% and 0.45% for the first quarters of 2022 and 2021, respectively. Interest expense in the first quarters of 2022 and 2021 included the amortization of fair value adjustments (premium) on assumed time deposits of $474 thousand and $697 thousand, respectively, which was a reduction to interest expense.
Net interest income (on a taxable equivalent basis) for the three months ended March 31, 2022 was $23.7 million compared to $20.0 million for the same period in 2021, an increase of $3.7 million. Net interest margin was 3.88% and 3.43% for first quarters of 2022 and 2021, respectively. Accretion and amortization of purchase accounting adjustments had a 53 and 17 basis point positive effect on net interest margin for the same respective periods. PPP loan processing fees, net of costs, and interest income, along with the corresponding funding costs through the FRB Paycheck Protection Program Liquidity Facility ("PPPLF"), had a 2 and 6 basis point positive effect on the Company’s net interest margin for the three months ended March 31, 2022 and 2021, respectively.
Provision for Loan Losses. The Company recorded a provision for loan losses of $2.5 million in the first quarter of 2022 compared to $0 for the same period of 2021. The $2.5 million provision in the first quarter of 2022 was primarily due to additional reserves for loan growth and higher specific reserves for three relationships.
Noninterest Income. The following table presents a summary of noninterest income and the dollar and percentage change for the periods presented.
|
| For the three months ended |
|
|
|
|
|
|
| |||||||
(Dollars in thousands) |
| March 31, 2022 |
|
| March 31, 2021 |
|
| Change $ |
|
| Change % |
| ||||
Fair value adjustments of other equity investments |
| $ | 9,364 |
|
| $ | — |
|
| $ | 9,364 |
|
|
| 100.0 | % |
Residential mortgage banking income, net |
|
| 2,821 |
|
|
| 9,301 |
|
|
| (6,480 | ) |
|
| (69.7 | %) |
Mortgage servicing rights |
|
| 6,738 |
|
|
| 3,371 |
|
|
| 3,367 |
|
|
| 99.9 | % |
Gain on sale of guaranteed government loans |
|
| 1,427 |
|
|
| 1,074 |
|
|
| 353 |
|
|
| 32.9 | % |
Wealth and trust management |
|
| 391 |
|
|
| 602 |
|
|
| (211 | ) |
|
| (35.0 | %) |
Service charges on deposit accounts |
|
| 315 |
|
|
| 327 |
|
|
| (12 | ) |
|
| (3.7 | %) |
Increase in cash surrender value of bank owned life insurance |
|
| 272 |
|
|
| 164 |
|
|
| 108 |
|
|
| 65.9 | % |
Bank and purchase card, net |
|
| 422 |
|
|
| 300 |
|
|
| 122 |
|
|
| 40.7 | % |
Other |
|
| 2,344 |
|
|
| 400 |
|
|
| 1,944 |
|
|
| 486.0 | % |
Total noninterest income |
| $ | 24,094 |
|
| $ | 15,539 |
|
| $ | 8,555 |
|
|
| 55.1 | % |
Income from fair value adjustments of other equity investments in the first quarter of 2022 was attributable to the Company's equity investments, primarily in certain fintech companies. The Company records certain equity investments at fair value when an observable market event occurs, such as the issuance or transfer of shares of substantially similar investments. The decline in residential mortgage banking income was primarily due to lower mortgage volumes in the first quarter of 2022 ($151.4 million) compared to the first quarter of 2021 ($361.4 million). The decline in mortgage volumes was primarily attributable to a decline in demand for mortgages as market interest rates increased significantly in the first quarter 2022 compared to the same period of 2021. Partially offsetting the decline in residential mortgage banking income was higher income from MSR assets, of which $3.8 million was for the fair value adjustment and $2.9 million for new servicing rights retained. Generally, as market interest rates increase, the value of MSR assets increase as the underlying mortgages are less likely to be refinanced or curtailed. Other noninterest income in the first quarter of 2022 includes a net gain on sale of assets of $404 thousand, primarily attributable to the sale of a former branch location, and fee income from fintech partnerships of $740 thousand (compared to $0 for the same period of 2021).
37
Noninterest Expense. The following tables present a summary of noninterest expense and the dollar and percentage change for the periods stated.
|
| For the three months ended |
|
|
|
|
|
|
| |||||||
(Dollars in thousands) |
| March 31, 2022 |
|
| March 31, 2021 |
|
| Change $ |
|
| Change % |
| ||||
Salaries and employee benefits |
| $ | 14,096 |
|
| $ | 13,903 |
|
| $ | 193 |
|
|
| 1.4 | % |
Occupancy and equipment |
|
| 1,485 |
|
|
| 1,331 |
|
|
| 154 |
|
|
| 11.6 | % |
Data processing |
|
| 946 |
|
|
| 805 |
|
|
| 141 |
|
|
| 17.5 | % |
Legal, issuer, and regulatory filing |
|
| 382 |
|
|
| 576 |
|
|
| (194 | ) |
|
| (33.7 | %) |
Advertising and marketing |
|
| 428 |
|
|
| 279 |
|
|
| 149 |
|
|
| 53.4 | % |
Communications |
|
| 799 |
|
|
| 367 |
|
|
| 432 |
|
|
| 117.7 | % |
Audit and accounting fees |
|
| 141 |
|
|
| 189 |
|
|
| (48 | ) |
|
| (25.4 | %) |
FDIC insurance |
|
| 231 |
|
|
| 343 |
|
|
| (112 | ) |
|
| (32.7 | %) |
Intangible amortization |
|
| 397 |
|
|
| 351 |
|
|
| 46 |
|
|
| 13.1 | % |
Other contractual services |
|
| 534 |
|
|
| 853 |
|
|
| (319 | ) |
|
| (37.4 | %) |
Other taxes and assessments |
|
| 570 |
|
|
| 347 |
|
|
| 223 |
|
|
| 64.3 | % |
Merger-related |
|
| 50 |
|
|
| 9,019 |
|
|
| (8,969 | ) |
|
| (99.4 | %) |
Other |
|
| 2,630 |
|
|
| 1,872 |
|
|
| 758 |
|
|
| 40.5 | % |
Total noninterest expense |
| $ | 22,689 |
|
| $ | 30,235 |
|
| $ | (7,546 | ) |
|
| (25.0 | %) |
Excluding merger-related expenses, noninterest expense increased $1.4 million for the three months March 31, 2022 compared to the same period in 2018.
Interest expense increased by $3.4 million, or 94.8% to $6.9 million for the nine months ended September 30, 2019 as compared to $3.6 million during the first nine months of 2018. Average interest bearing-liabilities increased by 43.4% for the nine-month period ended September 30, 2019, as compared to the same period in 2018, and the average cost of funds increased to 1.89% during the first nine months of 2019, compared to 1.39% during the first nine months of 2018.
Net interest income for the nine-month period ended September 30, 2019 was $15.5 million as compared to $12.5 million for the same period in 2018, an increase of 23.9%. The increase in net interest income during the period is primarily attributed to an increase of $94.4 million in average loans held for investment and an increase in average loans held for sale outstanding of $31.1 million from the period ended September 30, 2019 compared to the same period in 2018.
29
Interest income and expense are affected by changes in interest rates, by changes in the volumes of earning assets and interest-bearing liabilities, and by changes in the mix of these assets and liabilities. The following rate-volume variance analysis shows theyear-to-date changes in the components of net interest income as of September 30, 2019 compared to September 30, 2018.
Nine Months Ended September 30, 2019 vs. 2018 | ||||||||||||
Increase/ (Decrease) Due to | Total Increase/ (Decrease) | |||||||||||
(Dollars in thousands) | Volume | Rate | ||||||||||
Interest Income | ||||||||||||
Taxable investments | $ | 1,489 | $ | (244 | ) | $ | 1,245 | |||||
Tax-free investments | (45 | ) | 2 | (43 | ) | |||||||
Interest bearing deposits in other banks | 50 | 108 | 158 | |||||||||
Federal funds sold | (8 | ) | 1 | (7 | ) | |||||||
Loans available for sale | 982 | (148 | ) | 834 | ||||||||
Loans held for investment | 3,842 | 338 | 4,180 | |||||||||
|
|
|
|
|
| |||||||
Total interest income | $ | 6,310 | $ | 57 | $ | 6,367 | ||||||
|
|
|
|
|
| |||||||
Interest Expense | ||||||||||||
Interest-bearing demand and savings deposits: | $ | 155 | $ | 502 | $ | 657 | ||||||
Time deposits | 525 | 840 | 1,365 | |||||||||
FHLB advances and other borrowings | 1,517 | (160 | ) | 1,357 | ||||||||
|
|
|
|
|
| |||||||
Total interest expense | 2,197 | 1,182 | 3,379 | |||||||||
|
|
|
|
|
| |||||||
Change in Net Interest Income | $ | 4,113 | $ | (1,125 | ) | $ | 2,988 | |||||
|
|
|
|
|
|
Provision for Loan Losses. The provision for loan losses was $1.5 million during the nine-month period ended September 30, 2019 as compared to $640 thousand during the nine months ended September 30, 2018. Net charge-offs for such periods amounted to $641 thousand during the period ended September 30, 2019 and $220 thousand in net charge-offs for the period ended September 30, 2018. The increase in the provision for loan losses during the first nine months of 2019 compared to the like period in 2018 was due to overall loan portfolio growth as well as changes in portfolio mix.
Non-Interest Income. Blue Ridge’snon-interest income sources include deposit service charges and other fees, gains/losses on sales of mortgages, and income from bank-owned life insurance (“BOLI”).Non-interest income totaled $14.3 million for the nine months ended September 30, 2019, compared to $7.0 million for the like period in 2018. The increase innon-interest income was due to an increase of $6.1 million related to the origination and sale of held for sale mortgages and a $726 thousand gain on life insurance proceeds related to BOLI.
Non-Interest Expense. Non-interest expense totaled $23.2 million for the nine-month period ended September 30, 2019 as compared to $14.3 million for the same period in 2018, a 61.9% increase. This increase was primarily due to an increase in2021. Higher salaries and employee benefits of $6.0 million, or 74.1%, in addition to an increase in occupancy expenses of $751 thousand to $1.9 million for the nine-month period ended September 30, 2019, compared to $1.1 million of the like period in 2018. Other contractual services also increased $658 thousand to $1.1 million at September 30, 2019 from $442 thousand at September 30, 2018 as a result of expenses associated with the pending merger with VCB.
Income Tax Expense. During the nine months ended September 30, 2019, Blue Ridge recognized a provision for income taxes of $989 thousand, for an effective tax rate of 19.6%, as compared to a provision of $944 thousand, for an effective tax rate of 21.0% for the period ended September 30, 2018.
30
Comparison of Results of Operation for the Three Months Ended September 30, 2019 and 2018
For the three months ended September 30, 2019, Blue Ridge reported net income of $1.3 million, equal to basic and diluted income per common share of $0.29. For the three months ended September 30, 2018, net income was $1.3 million and both basic and diluted earnings per share were $0.45.
Net Interest Income. Net interest income is the excess of interest earned on loans and investments over the interest paid on deposits and borrowings and is Blue Ridge’s primary revenue source. Net interest income is thereby affected by overall balance sheet growth, changes in interest rates and changes in the mix of investments, loans, deposits and borrowings.
The following table shows the average balance sheets for the three months ending September 30, 2019 compared to the three months ending September 30, 2018. Also shown are the amounts of interest earned on interest-earning assets, with related yields, and interest expense on interest-bearing liabilities, with related rates.
Three Months Ended September 30, 2019 | Three Months Ended September 30, 2018 | |||||||||||||||||||||||
(Dollars in thousands) | Average Balance | Interest Income- Expense | Average Yields / Rates (1) | Average Balance | Interest Income- Expense | Average Yields / Rates (1) | ||||||||||||||||||
Assets | ||||||||||||||||||||||||
Taxable investments (2) | $ | 140,425 | $ | 1,039 | 2.61 | % | $ | 48,541 | $ | 395 | 3.25 | % | ||||||||||||
Tax-free investments (2) | 7,273 | 56 | 3.72 | % | 9,529 | 73 | 3.73 | % | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
Total securities | 147,698 | 1,095 | 3.16 | % | 58,070 | 468 | 3.49 | % | ||||||||||||||||
Interest-bearing deposits in other banks | 19,760 | 94 | 1.90 | % | 8,533 | 15 | 0.69 | % | ||||||||||||||||
Federal funds sold | 352 | 2 | 2.28 | % | 710 | 3 | 1.95 | % | ||||||||||||||||
Loans held for sale | 61,633 | 563 | 3.65 | % | 25,221 | 272 | 4.32 | % | ||||||||||||||||
Loans held for investment (3) | 458,668 | 6,364 | 5.55 | % | 362,078 | 5,011 | 5.54 | % | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
Total interest-earning assets | 688,111 | 8,118 | 4.73 | % | 454,612 | 5,769 | 5.09 | % | ||||||||||||||||
Less allowance for loan losses | (4,231 | ) | (3,157 | ) | ||||||||||||||||||||
Totalnon-interest earning assets | 35,129 | 21,329 | ||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||
Total assets | $ | 719,009 | $ | 472,784 | ||||||||||||||||||||
|
|
|
| |||||||||||||||||||||
Liabilities & Shareholders’ equity | ||||||||||||||||||||||||
Interest-bearing demand and savings deposits | $ | 173,868 | $ | 457 | 1.05 | % | $ | 133,314 | $ | 207 | 0.62 | % | ||||||||||||
Time deposits | 235,911 | 1,306 | 2.21 | % | 168,946 | 703 | 1.66 | % | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
Total interest-bearing deposits | 409,779 | 1,763 | 1.63 | % | 302,260 | 910 | 1.14 | % | ||||||||||||||||
FHLB advances and other borrowings | 136,539 | 919 | 2.69 | % | 57,719 | 423 | 2.95 | % | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
Total interest-bearing liabilities | 546,318 | 2,682 | 1.96 | % | 359,979 | 1,333 | 1.48 | % | ||||||||||||||||
Demand deposits and other liabilities | 108,025 | 75,632 | ||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||
Total liabilities | 654,343 | 435,611 | ||||||||||||||||||||||
Shareholders’ equity | 64,666 | 37,173 | ||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 719,009 | $ | 472,784 | ||||||||||||||||||||
|
|
|
| |||||||||||||||||||||
Interest rate spread | 2.77 | % | 3.61 | % | ||||||||||||||||||||
Net interest income and margin | $ | 5,436 | 3.16 | % | $ | 4,436 | 3.90 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
The increase in average interest-earning assets was primarily driven by an increase in average investment securities and average loans and resulted in increased interest income during 2019. Total interest income increased by $2.3 million, or 40.7%, for the three-month period ended September 30, 2019 asMarch 31, 2022 were primarily attributable to employees added to support the Company’s noninterest income business lines, particularly the fintech business, and additional commercial lenders, partially offset by lower salaries and employee benefit expenses attributable to the mortgage banking division. Other increases in noninterest expenses in the first quarter of 2022 compared to the samefirst quarter of 2021 were partially attributable to the 2021 period in 2018.including expenses only from the effective date of the Bay Banks Merger, January 31, 2021.
InterestIncome Tax Expense. Income tax expense increased by $1.4 million, or 101.1% to $2.7 millionfrom continuing operations for the three months ended September 30, 2019 as compared to $1.3March 31, 2022 and 2021 was $5.1 million during the three months ended September 30, 2018. Average interest bearing-liabilities increased by 51.7% for the three-month period ended September 30, 2019, as compared to the same periodand $1.1 million, respectively, resulting in 2018, and the average cost of funds increased to 1.96% during the three months ended September 30, 2019, compared to 1.48% during the three months ended September 30, 2018.
31
Net interest income for the three-month period ended September 30, 2019 was $5.4 million as compared to $4.4 million for the same period in 2018, an increase of 22.5%. The increase in net interest income during the period is primarily attributed to an increase of $96.6 million in average loans held for investment and an increase in average securities of $89.6 million from the three-month period ended September 30, 2019 compared to the same period in 2018.
Provision for Loan Losses. The provision for loan losses was $570 thousand during the three-month period ended September 30, 2019 as compared to $225 thousand during the three months ended September 30, 2018. The increase in the provision for loan losses during the three months ended September 30, 2019 compared to the like period in 2018 was due to overall loan portfolio growth as well as changes in portfolio mix.
Non-Interest Income. Blue Ridge’snon-interest income sources include deposit service charges and other fees, gains/losses on sales of mortgages, and income from bank-owned life insurance (“BOLI”).Non-interest income totaled $5.0 million for the three months ended September 30, 2019, compared to $3.1 million for the like period in 2018. The increase innon-interest income was due to an increase of $1.7 million related to the origination and sale of held for sale mortgages.
Non-Interest Expense. Non-interest expense totaled $8.2 million for the three-month period ended September 30, 2019 as compared to $5.7 million for the same period in 2018, a 43.9% increase. This increase was primarily due to an increase in salaries and employee benefits of $1.6 million, or 48.1%, in addition to an increase in occupancy expenses of $213 thousand to $627 thousand for the three-month period ended September 30, 2019, compared to $414 thousand of the like period in 2018. Data processing fees also increased $148 thousand to $413 thousand at September 30, 2019 from $265 thousand at September 30, 2018 as a result of expenses associated with the pending merger with Virginia Community.
Income Tax Expense. During the three months ended September 30, 2019, Blue Ridge recognized a provision for income taxes of $379 thousand, for an effective income tax rate of 23.2%, as compared to a provision of $329 thousand,22.8% and 20.3% for anthe respective periods. The higher effective income tax rate of 20.6% for the 2022 period ended September 30, 2018.was primarily the result of tax provisions made for state income taxes, as the Company expanded its operations, primarily its mortgage banking division, into various states.
32
Analysis of Financial Condition
Loan Portfolio. Blue RidgeThe Company makes loans to individuals as well ascommercial entities and to commercial entities. Specific loanindividuals. Loan terms vary as to interest rate, repayment, and collateral requirements based on the type of loan requested and the creditworthiness of the prospective borrower. Credit risk tends to be geographically concentrated in that a majority of the loan customersloans are to borrowers located in the markets servicedserved by Blue Ridge.the Company. All loans are underwritten within specific lending policy guidelines that are designed to maximize Blue Ridge’sthe Company’s profitability within an acceptable level of business risk.
38
The following table sets forthpresents the distribution of Blue Ridge’sCompany’s loan portfolio at the dates indicated by category of loan and the percentage of loans in each category to total loans.loans as of the dates stated.
|
| March 31, 2022 |
|
| December 31, 2021 |
| ||||||||||
(Dollars in thousands) |
| Amount |
|
| Percent |
|
| Amount |
|
| Percent |
| ||||
Commercial and industrial |
| $ | 380,754 |
|
|
| 20.4 | % |
| $ | 320,827 |
|
|
| 17.7 | % |
Paycheck Protection Program |
|
| 22,902 |
|
|
| 1.2 | % |
|
| 30,742 |
|
|
| 1.7 | % |
Real estate – construction, commercial |
|
| 124,523 |
|
|
| 6.7 | % |
|
| 146,523 |
|
|
| 8.1 | % |
Real estate – construction, residential |
|
| 60,195 |
|
|
| 3.2 | % |
|
| 58,857 |
|
|
| 3.3 | % |
Real estate – mortgage, commercial |
|
| 748,223 |
|
|
| 40.1 | % |
|
| 701,503 |
|
|
| 38.8 | % |
Real estate – mortgage, residential |
|
| 487,257 |
|
|
| 26.1 | % |
|
| 493,982 |
|
|
| 27.3 | % |
Real estate – mortgage, farmland |
|
| 6,062 |
|
|
| 0.3 | % |
|
| 6,173 |
|
|
| 0.3 | % |
Consumer |
|
| 37,368 |
|
|
| 2.0 | % |
|
| 49,877 |
|
|
| 2.6 | % |
Gross loans |
|
| 1,867,284 |
|
|
| 100.0 | % |
|
| 1,808,484 |
|
|
| 100.0 | % |
Less: deferred loan fees, net of costs |
|
| (1,087 | ) |
|
|
|
|
| (906 | ) |
|
|
| ||
Gross loans, net of deferred loans fees and costs |
|
| 1,866,197 |
|
|
|
|
|
| 1,807,578 |
|
|
|
| ||
Less: allowance for loan losses |
|
| (12,013 | ) |
|
|
|
|
| (12,121 | ) |
|
|
| ||
Loans held for investment, net |
| $ | 1,854,184 |
|
|
|
|
| $ | 1,795,457 |
|
|
|
| ||
Loans held for sale |
| $ | 41,004 |
|
|
|
|
| $ | 121,943 |
|
|
|
|
At September 30, | At December 31, | |||||||||||||||
2019 | 2018 | |||||||||||||||
(Dollars in thousands) | Amount | Percent | Amount | Percent | ||||||||||||
Commercial and financial | $ | 50,826 | 11.01 | % | $ | 49,076 | 11.81 | % | ||||||||
Agricultural | 175 | 0.04 | % | 216 | 0.05 | % | ||||||||||
Real estate – construction, commercial | 19,876 | 4.31 | % | 14,666 | 3.53 | % | ||||||||||
Real estate – construction, residential | 16,364 | 3.55 | % | 15,102 | 3.63 | % | ||||||||||
Real estate – mortgage, commercial | 167,223 | 36.23 | % | 150,513 | 36.22 | % | ||||||||||
Real estate – mortgage, residential | 165,865 | 35.94 | % | 149,856 | 36.06 | % | ||||||||||
Real estate – mortgage, farmland | 3,754 | 0.81 | % | 4,179 | 1.01 | % | ||||||||||
Consumer installment loans | 37,433 | 8.11 | % | 31,979 | 7.69 | % | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Gross loans | 461,516 | 100.00 | % | 415,587 | 100.00 | % | ||||||||||
|
|
|
| |||||||||||||
Less: Unearned Income | (638 | ) | (719 | ) | ||||||||||||
|
|
|
| |||||||||||||
Gross loans, net of unearned income | 460,878 | 414,868 | ||||||||||||||
Less: Allowance for loan losses | (4,404 | ) | (3,580 | ) | ||||||||||||
|
|
|
| |||||||||||||
Net loans | $ | 456,474 | $ | 411,288 | ||||||||||||
|
|
|
| |||||||||||||
Loans and leases held for sale | $ | 80,255 | $ | 29,233 | ||||||||||||
|
|
|
| |||||||||||||
(not included in totals above) |
|
33
The following table sets forthpresents the repricing characteristicsremaining maturities, based on contractual maturity, by loan type and sensitivityby rate type (variable or fixed) as of March 31, 2022.
|
|
|
|
|
|
|
| Variable rate |
|
| Fixed rate |
| ||||||||||||||||||||||||||||
(Dollars in thousands) |
| Total Maturities |
|
| One Year |
|
| Total |
|
| 1-5 years |
|
| 5-15 years |
|
| More than 15 years |
|
| Total |
|
| 1-5 years |
|
| 5-15 years |
|
| More than 15 years |
| ||||||||||
Commercial and industrial |
| $ | 380,754 |
|
| $ | 103,041 |
|
| $ | 120,605 |
|
| $ | 83,908 |
|
| $ | 35,676 |
|
| $ | 1,021 |
|
| $ | 157,108 |
|
| $ | 78,403 |
|
| $ | 76,844 |
|
| $ | 1,861 |
|
Paycheck Protection Program |
|
| 22,902 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 22,902 |
|
|
| 22,902 |
|
|
| — |
|
|
| — |
|
Real estate – construction, commercial |
|
| 124,523 |
|
|
| 26,865 |
|
|
| 57,294 |
|
|
| 28,687 |
|
|
| 12,677 |
|
|
| 15,930 |
|
|
| 40,364 |
|
|
| 37,494 |
|
|
| 2,775 |
|
|
| 95 |
|
Real estate – construction, residential |
|
| 60,195 |
|
|
| 30,666 |
|
|
| 4,615 |
|
|
| 1,603 |
|
|
| 1,047 |
|
|
| 1,965 |
|
|
| 24,914 |
|
|
| 393 |
|
|
| 2,097 |
|
|
| 22,424 |
|
Real estate – mortgage, commercial |
|
| 748,223 |
|
|
| 50,685 |
|
|
| 320,553 |
|
|
| 50,425 |
|
|
| 167,894 |
|
|
| 102,234 |
|
|
| 376,985 |
|
|
| 206,793 |
|
|
| 163,904 |
|
|
| 6,288 |
|
Real estate – mortgage, residential |
|
| 487,257 |
|
|
| 15,834 |
|
|
| 245,082 |
|
|
| 11,597 |
|
|
| 65,509 |
|
|
| 167,976 |
|
|
| 226,341 |
|
|
| 45,117 |
|
|
| 57,354 |
|
|
| 123,870 |
|
Real estate – mortgage, farmland |
|
| 6,062 |
|
|
| 293 |
|
|
| 1,909 |
|
|
| 144 |
|
|
| 294 |
|
|
| 1,471 |
|
|
| 3,860 |
|
|
| 2,855 |
|
|
| 1,005 |
|
|
| — |
|
Consumer loans |
|
| 37,368 |
|
|
| 4,604 |
|
|
| 724 |
|
|
| 622 |
|
|
| 102 |
|
|
| — |
|
|
| 32,040 |
|
|
| 24,703 |
|
|
| 7,269 |
|
|
| 68 |
|
Gross loans |
| $ | 1,867,284 |
|
| $ | 231,988 |
|
| $ | 750,782 |
|
| $ | 176,986 |
|
| $ | 283,199 |
|
| $ | 290,597 |
|
| $ | 884,514 |
|
| $ | 418,660 |
|
| $ | 311,248 |
|
| $ | 154,606 |
|
Although the PPP loans have established terms of one or five years depending on the program under which they were funded, the Company believes that the majority of PPP loans will be forgiven prior to interest rate changestheir full term, in accordance with the terms of our loan portfolio at September 30, 2019 and December 31, 2018.the program.
September 30, 2019 | One Year or Less | Between One and Five Years | After Five Years | Total | ||||||||||||
Commercial and financial | $ | 12,410 | $ | 15,221 | $ | 23,195 | $ | 50,826 | ||||||||
Agricultural | 11 | 164 | — | 175 | ||||||||||||
Real estate – construction, commercial | 4,615 | 13,375 | 1,886 | 19,876 | ||||||||||||
Real estate – construction, residential | 16,364 | — | — | 16,364 | ||||||||||||
Real estate – mortgage, commercial | 16,235 | 58,526 | 92,462 | 167,223 | ||||||||||||
Real estate – mortgage, residential | 9,052 | 20,902 | 135,911 | 165,865 | ||||||||||||
Real estate – mortgage, farmland | 420 | 1,692 | 1,642 | 3,754 | ||||||||||||
Consumer installment loans | 672 | 31,224 | 5,537 | 37,433 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Gross loans | $ | 59,779 | $ | 141,104 | $ | 260,633 | $ | 461,516 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Fixed-rate loans | $ | 49,247 | $ | 132,582 | $ | 152,028 | $ | 333,857 | ||||||||
Floating-rate loans | 10,532 | 8,522 | 108,605 | 127,659 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Gross loans | $ | 59,779 | $ | 141,104 | $ | 260,633 | $ | 461,516 | ||||||||
|
|
|
|
|
|
|
|
34
December 31, 2018 | One Year or Less | Between One and Five Years | After Five Years | Total | ||||||||||||
Commercial and financial | $ | 11,880 | $ | 19,583 | $ | 17,613 | $ | 49,076 | ||||||||
Agricultural | 183 | 33 | — | 216 | ||||||||||||
Real estate – construction, commercial | 6,987 | 6,412 | 1,267 | 14,666 | ||||||||||||
Real estate – construction, residential | 15,102 | — | — | 15,102 | ||||||||||||
Real estate – mortgage, commercial | 21,403 | 52,743 | 76,367 | 150,513 | ||||||||||||
Real estate – mortgage, residential | 11,353 | 18,291 | 120,212 | 149,856 | ||||||||||||
Real estate – mortgage, farmland | 723 | 1,494 | 1,962 | 4,179 | ||||||||||||
Consumer installment loans | 787 | 23,378 | 7,814 | 31,979 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Gross loans | $ | 68,418 | $ | 121,934 | $ | 225,235 | $ | 415,587 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Fixed-rate loans | $ | 52,431 | $ | 115,860 | $ | 126,942 | $ | 295,233 | ||||||||
Floating-rate loans | 15,987 | 6,074 | 98,293 | 120,354 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Gross loans | $ | 68,418 | $ | 121,934 | $ | 225,235 | $ | 415,587 | ||||||||
|
|
|
|
|
|
|
|
Blue Ridge prepares a quarterly analysis ofAllowance for Loan Losses. Management believes that the Company’s allowance for loan losses with the objective("ALL") was adequate as of quantifying portfolio risk into a dollar amount of inherent losses. The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged against incomeMarch 31, 2022 and decreased by loanscharged-off (net of recoveries, if any). Management’s periodic evaluation of the adequacy of the allowance is based on past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral, and current economic conditions. While management uses the best information available to make evaluations, future adjustments may be necessary, if economic or other conditions differ substantially from the assumptions used. The allowance consists of specific and general components. The specific component relates to loans that are identified as impaired. For loans that are classified as impaired, an allowance is established when the discounted cash flows or the net realizable value, which is equal to the estimated fair value less estimated costs to sell, of the impaired loan is lower than the carrying value of that loan. The general component coversnon-classified loans and those loans classified that are not impaired and is based on historical loss experience adjusted for other internal or external influences on credit quality that are not fully reflected in the historical data.
Blue Ridge follows applicable guidance within the Financial Accounting Standards Board Accounting Standards Codification. This guidance requires that losses be accrued when they are probable of occurring and can be estimated. It also requires that impaired loans, within its scope, be measured based on the present value of expected future cash flows discounted at the loan’s effective interest rate, except that as a practical expedient, a creditor may measure impairment based on a loan’s observable market price, or the fair value of the collateral if the loan is collateral dependent.
Loans are evaluated fornon-accrual status when principal or interest is delinquent for 90 days or more and are placed onnon-accrual status when a loan is specifically determined to be impaired. Any unpaid interest previously accrued on those loans is reversed from income. Any interest payments subsequently received are recognized as income or amortized over the life of the refinanced loan depending on the specific circumstances. Interest payments received on loans, where management believes a potential for loss remains, are applied as a reduction of the loan principal balance.
Management believes that the allowance for loan losses is adequate.December 31, 2021. There can be no assurance, however, that adjustments to the provision for loan lossesALL will not be required in the future. Changes in the economic assumptions underlying management’s estimates and judgments; adverse developments in the economy, on a national basis or in Blue Ridge’sthe Company’s market area; orthe impact of the COVID-19 pandemic; and changes in the circumstances of particular borrowers are criteria that could change and make adjustmentsincrease the level of the ALL required, resulting in charges to the provision for loan losses necessary.losses.
39
35
The following table presents a summaryan analysis of the provisionchange in the ALL by loan type as of and allowance for loan losses for the periods indicated:stated.
|
| As of and for the three months ended |
| |||||
(Dollars in thousands) |
| March 31, 2022 |
|
| March 31, 2021 |
| ||
Allowance, beginning of period |
| $ | 12,121 |
|
| $ | 13,827 |
|
Charge-offs |
|
|
|
|
|
| ||
Commercial and industrial |
|
| (2,401 | ) |
|
| (359 | ) |
Real estate – construction |
|
| (123 | ) |
|
| — |
|
Real estate – mortgage |
|
| (16 | ) |
|
| (12 | ) |
Consumer |
|
| (279 | ) |
|
| (263 | ) |
Total charge-offs |
|
| (2,819 | ) |
|
| (634 | ) |
Recoveries |
|
|
|
|
|
| ||
Commercial and industrial |
|
| 74 |
|
|
| 56 |
|
Real estate – construction |
|
| 12 |
|
|
| — |
|
Real estate – mortgage |
|
| 4 |
|
|
| 16 |
|
Consumer |
|
| 121 |
|
|
| 137 |
|
Total recoveries |
|
| 211 |
|
|
| 209 |
|
Net charge-offs |
|
| (2,608 | ) |
|
| (425 | ) |
Provision for loan losses |
|
| 2,500 |
|
|
| — |
|
Allowance, end of period |
| $ | 12,013 |
|
| $ | 13,402 |
|
Ratio of net charge-offs to average loans outstanding during period: |
|
|
|
|
|
| ||
Commercial and industrial |
|
| 0.69 | % |
|
| 0.13 | % |
Real estate – construction |
|
| 0.06 | % |
|
| 0.00 | % |
Real estate – mortgage |
|
| 0.00 | % |
|
| 0.00 | % |
Consumer and other loans |
|
| 0.12 | % |
|
| 0.31 | % |
Total loans |
|
| 0.14 | % |
|
| 0.03 | % |
(Dollars in thousands) | Nine Months Ended September 30, 2019 | Year Ended December 31, 2018 | ||||||
Allowance, beginning of period | $ | 3,580 | $ | 2,803 | ||||
|
|
|
| |||||
Charge-Offs | ||||||||
Commercial and industrial | $ | 43 | $ | 6 | ||||
Real estate, construction | — | — | ||||||
Real estate, mortgage | 3 | 13 | ||||||
Consumer and other loans | 733 | 545 | ||||||
|
|
|
| |||||
Total charge-offs | 779 | 564 | ||||||
|
|
|
| |||||
Recoveries | ||||||||
Commercial and industrial | — | — | ||||||
Real estate, construction | — | — | ||||||
Real estate, mortgage | (6 | ) | (12 | ) | ||||
Consumer and other loans | (132 | ) | (104 | ) | ||||
|
|
|
| |||||
Total recoveries | (138 | ) | (116 | ) | ||||
|
|
|
| |||||
Net charge-offs | 641 | 448 | ||||||
|
|
|
| |||||
Provision for loan losses | 1,465 | 1,225 | ||||||
|
|
|
| |||||
Allowance, end of period | $ | 4,404 | $ | 3,580 | ||||
|
|
|
| |||||
Ratio of net charges-offs to average total loans outstanding during period | 0.05 | % | 0.12 | % | ||||
|
|
|
|
The allowance for loan lossesALL includes specific and additional allowances for impaired loans and a general allowance applicable to all loan categories; however, management has allocated the allowanceALL by loan type to provide an indication of the relative risk characteristics of the loan portfolio. The allocation is an estimate and should not be interpreted as an indication that charge-offs will occur in these amounts, or that the allocation indicates future trends, and does not restrict the usage of the allowance for any specific loan or category. The following table presents the allocation of the allowance at the end of the period indicated,ALL by loan category and as a percentpercentage of each category as of the applicable loan segment, isdates stated.
|
| March 31, 2022 |
|
| December 31, 2021 |
| ||||||||||
(Dollars in thousands) |
| $ |
|
| % of |
|
| $ |
|
| % of |
| ||||
Commercial and industrial |
| $ | 6,510 |
|
|
| 1.71 | % |
| $ | 7,133 |
|
|
| 2.22 | % |
Real estate – construction, commercial |
|
| 1,282 |
|
|
| 1.03 | % |
|
| 953 |
|
|
| 0.65 | % |
Real estate – construction, residential |
|
| 469 |
|
|
| 0.78 | % |
|
| 395 |
|
|
| 0.67 | % |
Real estate – mortgage, commercial |
|
| 1,367 |
|
|
| 0.18 | % |
|
| 1,403 |
|
|
| 0.20 | % |
Real estate – mortgage, residential |
|
| 1,499 |
|
|
| 0.31 | % |
|
| 1,301 |
|
|
| 0.26 | % |
Real estate – mortgage, farmland |
|
| 21 |
|
|
| 0.35 | % |
|
| 23 |
|
|
| 0.37 | % |
Consumer |
|
| 865 |
|
|
| 2.31 | % |
|
| 913 |
|
|
| 1.83 | % |
|
| $ | 12,013 |
|
|
|
|
| $ | 12,121 |
|
|
|
|
The information in the table above excludes PPP loans, which carry no ALL as follows:they are fully guaranteed by the U.S. government.
September 30, | December 31, | |||||||||||||||
(Dollars in thousands) | 2019 | % of Loans | 2018 | % of Loans | ||||||||||||
Commercial and industrial | $ | 786 | 1.6 | % | $ | 568 | 1.2 | % | ||||||||
Real estate – construction, commercial | 157 | 0.8 | % | 111 | 0.8 | % | ||||||||||
Real estate – construction, residential | 60 | 0.4 | % | 56 | 0.4 | % | ||||||||||
Real estate – mortgage, commercial | 1,517 | 0.9 | % | 1,183 | 0.8 | % | ||||||||||
Real estate – mortgage, residential | 502 | 0.3 | % | 431 | 0.3 | % | ||||||||||
Agricultural and farmland | 13 | 0.3 | % | 13 | 0.3 | % | ||||||||||
Consumer installment | 1,369 | 3.7 | % | 1,218 | 3.8 | % | ||||||||||
|
|
|
|
|
|
|
| |||||||||
$ | 4,404 | 1.0 | % | $ | 3,580 | 0.9 | % | |||||||||
|
|
|
|
|
|
|
|
Non-performingNonperforming Assets. Non-performing Nonperforming assets consist ofnon-accrual loans; nonaccrual loans, loans past due 90 days and still accruing interest, and other real estate owned (foreclosed properties)(“OREO”). The level ofnon-performing assets decreased by $1.8 million during the first nine months of 2019 to $5.8 million as of September 30, 2019, compared to $7.7 million at December 31, 2018 and $7.8 million at December 31, 2017. Blue Ridge has established specific loan loss reserves on impaired loans equal to the estimated collateral deficiency (if any), plus the cost of sale of the underlying collateral, as applicable.
36
Loans are placed innon-accrual status when in the opinion of management the collection of additional interest is unlikely or a specific loan meets the criteria fornon-accrual status established by regulatory authorities. No interest is taken into income onnon-accrual loans. A loan remains onnon-accrual status until the loan is current as to both principal and interest or the borrower demonstrates the ability to pay and remain current, or both.
Foreclosed real properties includeOREO includes properties that have been substantively repossessed or acquired in complete or partial satisfaction of debt.a loan. Such properties, which are held for resale, are carried at the lower of cost or fair market value, including a reduction for the estimated selling expenses.
Impaired loans also include certain loans that have been modified as troubled debt restructurings ("TDRs") where economic concessions have been granted to borrowers who have experienced or are expected to experience financial difficulties. These concessions typically result from the Company’s loss mitigation activities and could include
40
reductions in the interest rate, payment extensions, forgiveness of principal, forbearance, or other actions. Certain TDRs are classified as nonperforming at the time of restructure and may only be returned to performing status after considering the borrower’s sustained repayment performance for a reasonable period, generally six months. The Company reported $673 thousand and $688 thousand of TDRs as of March 31, 2022 and December 31, 2021, respectively. All of these TDRs were performing in accordance with their modified terms at the respective dates and therefore excluded from the nonperforming loan and non-performing asset figures in the table below.
The following is atable presents summary of information pertaining to risk elementsnonperforming assets andnon-performing assets: certain asset quality ratios as of the dates stated.
September 30, | December 31, | |||||||
(Dollars in thousands) | 2019 | 2018 | ||||||
Non-accrual loans | $ | 5,141 | $ | 5,515 | ||||
Loans past due 90 days and still accruing | 708 | 2,005 | ||||||
|
|
|
| |||||
Totalnon-performing loans | $ | 5,849 | $ | 7,520 | ||||
Other real estate owned | — | 134 | ||||||
|
|
|
| |||||
Totalnon-performing assets | $ | 5,849 | $ | 7,654 | ||||
Allowance for loan losses to total loans held for investment | 0.96 | % | 0.86 | % | ||||
Allowance for loan losses tonon-performing loans | 75.29 | % | 47.61 | % | ||||
Non-performing loans to total loans held for investment | 1.27 | % | 1.81 | % | ||||
Non-performing assets to total assets | 0.79 | % | 1.42 | % | ||||
|
|
|
|
(Dollars in thousands) |
| March 31, 2022 |
|
| December 31, 2021 |
| ||
Nonaccrual loans (1) |
| $ | 12,913 |
|
| $ | 15,177 |
|
Loans past due 90 days and still accruing (1) |
|
| 1,271 |
|
|
| 917 |
|
Total nonperforming loans |
| $ | 14,184 |
|
| $ | 16,094 |
|
OREO |
|
| 73 |
|
|
| 157 |
|
Total nonperforming assets |
| $ | 14,257 |
|
| $ | 16,251 |
|
ALL |
| $ | 12,013 |
|
| $ | 12,121 |
|
Loans held for investment, including PPP loans |
| $ | 1,866,197 |
|
| $ | 1,807,578 |
|
Loans held for investment, excluding PPP loans |
| $ | 1,843,294 |
|
| $ | 1,777,172 |
|
Total assets |
| $ | 2,724,584 |
|
| $ | 2,665,139 |
|
ALL to total loans held for investment, including PPP loans |
|
| 0.64 | % |
|
| 0.67 | % |
ALL to total loans held for investment, excluding PPP loans |
|
| 0.65 | % |
|
| 0.68 | % |
ALL to nonperforming loans |
|
| 84.69 | % |
|
| 75.31 | % |
Nonperforming loans to total loans held for investment, including PPP loans |
|
| 0.76 | % |
|
| 0.89 | % |
Nonperforming loans to total loans held for investment, excluding PPP loans |
|
| 0.77 | % |
|
| 0.91 | % |
Nonperforming assets to total assets |
|
| 0.52 | % |
|
| 0.61 | % |
|
|
|
|
|
|
| ||
(1) Excludes PCI loans and accruing TDRs |
|
|
|
|
|
|
The decrease in the ratio of ALL to total loans held for investment, excluding PPP loans, at March 31, 2022 compared to December 31, 2021 was primarily attributable to a partial charge-off of a nonaccrual commercial loan related to one relationship, partially offset by reserve needs for loan growth in the first quarter of 2022. The remaining purchase accounting adjustments (discounts) related to loans acquired in the Bay Banks Merger and earlier acquisitions by the Company were $13.5 million and $16.2 million at March 31, 2022 and December 31, 2021, respectively.
Investment Securities. The investment portfolio is used as a source of interest income, credit risk diversification, and liquidity, as well as to manage rate sensitivity and provide collateral for short-term borrowings. Securities in the investment portfolio classified as securitiesavailable-for-sale available for sale may be sold in response to changes in market interest rates, changes in the securities’ prepayment risk, increased loan demand, general liquidity needs, and other similar factors, and are carried at estimated fair value. The fair value of Blue Ridge’sthe Company’s investment securitiesavailable-for-sale available for sale was $121.7$375.5 million at September 30, 2019, anas of March 31, 2022, a slight increase of $83.7 million, or 219.98% from $38.0$373.5 million at December 31, 2018. Investment securitiesheld-to-maturity at September 30, 2019 totaled $13.1 million and $15.6 million at December 31, 2018. Securities2021. Primarily as a result of a significant increase in market interest rates in the first quarter of 2022, the value of the Company’s portfolio of securities available for sale declined approximately $22.6 million. This decline in value was offset by investment portfolio classified asheld-to-maturity are those securities that Blue Ridge haspurchases, net of investment paydowns, totaling $24.9 million in the intent and ability to hold to maturity and are carried at amortized cost.first quarter of 2022.
As of September 30, 2019March 31, 2022 and December 31, 2018,2021, the majority of the investment securities portfolio consisted of securities rated A to AAAas investment grade by a leading rating agency. Investment grade securities which carry a AAA rating are judged to behave a low risk of the best quality and carry the smallest degree of investment risk.default. Investment securities that were pledged to secure public deposits totaled $13.5 million$0 and $16.8$8.7 million at September 30, 2019March 31, 2022 and December 31, 2018,2021, respectively. At March 31, 2022 and December 31, 2021, securities with a fair value of $20.0 million and $23.1 million, respectively, were pledged to secure the Bank’s borrowing facility with the FHLB.
Blue Ridge completesThe Company reviews for other-than-temporary impairment of its investment securities portfolio at least quarterly. At September 30, 2019March 31, 2022 and December 31, 2018, only investment grade2021, with the exception of one security, all securities were in an unrealized loss position. position were of investment grade. In addition, the amount of unrealized loss for the security was not significant.
41
Investment securities with unrealized losses are generally a result of pricing changes due to recent and negative conditionschanges in the current marketinterest rate environment and not as a result of permanent credit impairment. Contractual cash flows for the agency mortgage-backed securities are guaranteed and/or funded by the U.S. government. Municipal securities show no indication that the contractual cash flows will not be received when due. Blue RidgeThe Company does not intend to sell nor does it believe that it will be required to sell any of its temporarily impaired securities prior to the recovery of the amortized cost.
37
No other-than-temporary impairment has been recognized for the securities in Blue Ridge’s investment portfolio as of September 30, 2019March 31, 2022 and December 31, 2018.2021.
Blue RidgeRestricted equity investments consisted of stock in the FHLB (carrying basis $1.8 million and $1.7 million at March 31, 2022 and December 31, 2021, respectively), stock in the FRB (carrying basis of $6.1 million at both March 31, 2022 and December 31, 2021, respectively), and stock in the Company’s correspondent bank (carrying basis of $468 thousand at both March 31, 2022 and December 31, 2021). Restricted equity investments are carried at cost. The Company holds restrictedvarious other equity investments, including shares in other financial institutions and fintech companies, totaling $23.9 million and $14.2 million as of March 31, 2022 and December 31, 2021, respectively, which are carried at fair value with any gain or loss reported in the consolidated statements of operations each reporting period.
The Company also holds investments in equities ofearly-stage focused investment funds, small business investment companies ("SBIC") , and low-income housing partnerships, which are reported in other investments on the Federal Reserve Bank of Richmond (“FRB”), FHLB, and through its correspondent bank, Community Banker’s Bank (“CBB”). At September 30, 2019 Blue Ridge owned $6.0 million of FHLB stock, $963 thousand of FRB stock, and $168 thousand of CBB stock. At December 31, 2018, Blue Ridge owned $3.5 million of FHLB stock, $813 thousand of FRB stock, and $168 thousand of CBB stock.consolidated balance sheets.
The following table reflectspresents information about the composition of Blue Ridge’sCompany’s investment portfolio at amortized cost, at September 30, 2019 and December 31, 2018.
September 30, 2019 | December 31, 2018 | |||||||||||||||
(Dollars in thousands) | Balance | Percent of total | Balance | Percent of total | ||||||||||||
Held-to maturity | ||||||||||||||||
State and municipal | $ | 13,117 | 9.8 | % | $ | 15,565 | 28.6 | % | ||||||||
Available-for-sale | ||||||||||||||||
State and municipal | — | — | 1,000 | 1.8 | % | |||||||||||
U. S. Treasury and agencies | 3,375 | 2.5 | % | 3,375 | 6.2 | % | ||||||||||
Mortgage backed securities | 110,220 | 82.7 | % | 28,976 | 53.3 | % | ||||||||||
Corporate bonds | 6,553 | 5.0 | % | 5,477 | 10.1 | % | ||||||||||
Equity securities | — | — | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total investments | $ | 133,265 | 100.0 | % | $ | 54,393 | 100.0 | % | ||||||||
|
|
|
|
|
|
|
|
The following tables presentfor the amortized cost of Blue Ridge’s investment portfolio by their stated maturities, as well as the weighted average yields for each of the maturity ranges at September 30, 2019 and December 31, 2018.periods stated.
|
| March 31, 2022 |
| |||||||||||||||||||||||||||||||||
|
| Within One Year |
|
| One to Five Years |
|
| Five to Ten Years |
|
| Over Ten Years |
|
|
|
| |||||||||||||||||||||
(Dollars in thousands) |
| Amortized |
|
| Weighted |
|
| Amortized |
|
| Weighted |
|
| Amortized |
|
| Weighted |
|
| Amortized |
|
| Weighted |
|
| Total Amortized Cost |
| |||||||||
Securities available for sale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
State and municipal |
| $ | 1,410 |
|
|
| 1.48 | % |
| $ | 2,977 |
|
|
| 1.83 | % |
| $ | 22,783 |
|
|
| 1.77 | % |
| $ | 31,792 |
|
|
| 2.11 | % |
| $ | 58,962 |
|
U. S. Treasury and agencies |
|
| 5 |
|
|
| — |
|
|
| 12,500 |
|
|
| 0.92 | % |
|
| 51,621 |
|
|
| 1.92 | % |
|
| 11,276 |
|
|
| 1.76 | % |
|
| 75,402 |
|
Mortgage backed securities |
|
| 7,997 |
|
|
| 0.41 | % |
|
| 3,192 |
|
|
| 0.52 | % |
|
| 19,158 |
|
|
| 1.50 | % |
|
| 194,816 |
|
|
| 1.56 | % |
|
| 225,163 |
|
Corporate bonds |
|
| — |
|
|
| — |
|
|
| 5,497 |
|
|
| 5.09 | % |
|
| 36,450 |
|
|
| 4.33 | % |
|
| 1,732 |
|
|
| 4.51 | % |
|
| 43,679 |
|
Total |
| $ | 9,410 |
|
|
|
|
| $ | 24,166 |
|
|
|
|
| $ | 130,012 |
|
|
|
|
| $ | 239,616 |
|
|
|
|
| $ | 403,206 |
|
At September 30, 2019 | ||||||||||||||||||||||||||||||||
Within One Year | One to Five Years | Five to Ten Years | Over Ten Years | |||||||||||||||||||||||||||||
(Dollars in thousands) | Amortized Cost | Weighted Average Yield | Amortized Cost | Weighted Average Yield | Amortized Cost | Weighted Average Yield | Amortized Cost | Weighted Average Yield | ||||||||||||||||||||||||
Held-to maturity | ||||||||||||||||||||||||||||||||
State and municipal | $ | 461 | 3.1 | % | $ | 2,590 | 3.5 | % | $ | 3,761 | 3.7 | % | $ | 6,305 | 3.8 | % | ||||||||||||||||
Available-for-sale | ||||||||||||||||||||||||||||||||
U. S. Treasury and agencies | — | — | 1,000 | 1.9 | % | 2,375 | 2.3 | % | — | — | ||||||||||||||||||||||
Mortgage backed securities | — | — | — | — | 1,594 | 1.7 | % | 108,626 | 2.4 | % | ||||||||||||||||||||||
Corporate bonds | — | 1,500 | 5.3 | % | 4,825 | 6.3 | % | 228 | 6.9 | % | ||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||
Total investments | $ | 461 | $ | 5,090 | $ | 12,555 | $ | 115,159 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
38
At December 31, 2018 | ||||||||||||||||||||||||||||||||
Within One Year | One to Five Years | Five to Ten Years | Over Ten Years | |||||||||||||||||||||||||||||
(Dollars in thousands) | Amortized Cost | Weighted Average Yield | Amortized Cost | Weighted Average Yield | Amortized Cost | Weighted Average Yield | Amortized Cost | Weighted Average Yield | ||||||||||||||||||||||||
Held-to maturity | ||||||||||||||||||||||||||||||||
State and municipal | $ | 302 | 2.8 | % | $ | 4,089 | 3.1 | % | $ | 2,688 | 3.8 | % | $ | 8,486 | 3.6 | % | ||||||||||||||||
Available-for-sale | ||||||||||||||||||||||||||||||||
State and municipal | 500 | 3.9 | % | 500 | 4.9 | % | — | — | — | — | ||||||||||||||||||||||
U. S. Treasury and agencies | — | — | 500 | 1.8 | % | 2,875 | 2.3 | % | — | — | ||||||||||||||||||||||
Mortgage backed securities | — | — | — | — | 1,922 | 1.8 | % | 27,054 | 2.9 | % | ||||||||||||||||||||||
Corporate bonds | — | 1,500 | 5.2 | % | 3,750 | 6.5 | % | 227 | 7.0 | % | ||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||
Total investments | $ | 802 | $ | 6,589 | $ | 11,235 | $ | 35,767 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
Deposits. The principal sources of funds for Blue Ridgethe Company are core deposits (demand deposits, interest-bearing transaction accounts, money market accounts, savings deposits, and certificates of deposit), primarily from its market area. Blue Ridge’sThe Company’s deposit base includes transaction accounts, time and savings accounts, and other accounts that customers use for cash management purposes and which provide Blue Ridgethe Company with a source of fee income and cross-marketing opportunities as well as alow-cost source of funds. Time and savings accounts, including money market deposit accounts, also provide a relatively stablelow-cost source of funding. Please refer
Total deposits as of March 31, 2022 were $2.35 billion, an increase of $56.3 million from December 31, 2021, of which $60.4 million was attributable to noninterest-bearing demand deposit growth primarily related to the average balance tables under “Net Interest Income” for information regarding the average balanceCompany's fintech partnerships. The Company's expanding relationships with fintech partners have resulted in approximately $329 million of deposits and average rates paid.as of March 31, 2022, up from $189 million as of December 31, 2021.
Approximately 45.5%19.4% of Blue Ridge’sthe Company’s deposits at September 30, 2019as of March 31, 2022 were made upcomposed of time deposits which are generally the most expensive form of deposit because of their fixed rate and term, as compared to 40.9% and 47.8% at21.7% as of December 31, 2018 and2021. In contrast, approximately 32.6% of the Company’s deposits as of March 31, 2022 were composed of noninterest-bearing demand deposits compared to 30.7% as of December 31, 2017, respectively.2021. The increase in this ratio was primarily attributable to the Company's relationships with fintech partners, as noted previously.
The following table presents maturities of time deposits for certificate of deposits of $250 thousand or greater as of the dates stated.
42
(Dollars in thousands) |
| March 31, 2022 |
|
| December 31, 2021 |
| ||
Maturing in: |
|
|
|
|
|
| ||
3 months or less |
| $ | 48,609 |
|
| $ | 30,943 |
|
Over 3 months through 6 months |
|
| 6,544 |
|
|
| 47,818 |
|
Over 6 months through 12 months |
|
| 20,178 |
|
|
| 14,213 |
|
Over 12 months |
|
| 54,737 |
|
|
| 51,868 |
|
|
| $ | 130,069 |
|
| $ | 144,842 |
|
Borrowings.The following tables provide a summary of Blue Ridge’s deposit base at the dates indicated and the maturity distribution of certificates of deposit of $100,000 or more as of the end of the periods indicated:
September 30, 2019 | December 31, 2018 | |||||||||||||||
(Dollars in thousands) | Balance | Average Rate | Balance | Average Rate | ||||||||||||
Noninterest-bearing demand | $ | 91,840 | — | $ | 88,265 | — | ||||||||||
Interest-bearing – checking, savings and money market | 191,654 | 0.93 | % | 157,000 | 0.87 | % | ||||||||||
Time deposits $100,000 or more | 175,224 | 2.32 | % | 109,004 | 2.02 | % | ||||||||||
Other time deposits | 61,562 | 1.84 | % | 60,758 | 1.58 | % | ||||||||||
|
|
|
| |||||||||||||
Total deposits | $ | 520,280 | $ | 415,027 | ||||||||||||
|
|
|
|
Maturities of Time Deposits ($100,000 or greater)
(Dollars in thousands) | September 30, 2019 | December 31, 2018 | ||||||
Maturing in: | ||||||||
3 months or less | $ | 48,992 | $ | 8,155 | ||||
Over 3 months through 6 months | 12,048 | 19,265 | ||||||
Over 6 months through 12 months | 21,113 | 20,867 | ||||||
Over 12 months | 93,071 | 60,717 | ||||||
|
|
|
| |||||
$ | 175,224 | $ | 109,004 | |||||
|
|
|
|
39
Brokered and listing service deposits made up of both certificate of deposits and money market demand accounts totaled $64.8 million at September 30, 2019, an increase of $41.3 million from $23.5 million at December 31, 2018.
Borrowings: The following table providespresent information on the balances and interest rates on total borrowings as of and for the periods indicated:stated.
|
| As of and for the three months ended March 31, 2022 |
| |||||||||||||
(Dollars in thousands) |
| Period-End Balance |
|
| Highest Month-End Balance |
|
| Average Balance |
|
| Weighted Average Rate |
| ||||
FHLB borrowings |
| $ | 10,108 |
|
| $ | 10,110 |
|
| $ | 10,110 |
|
|
| 0.56 | % |
FRB borrowings |
|
| 15,211 |
|
|
| 17,197 |
|
|
| 16,379 |
|
|
| 0.35 | % |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| As of and for the year ended December 31, 2021 |
| |||||||||||||
(Dollars in thousands) |
| Period-End Balance |
|
| Highest Month-End Balance |
|
| Average Balance |
|
| Weighted Average Rate |
| ||||
FHLB borrowings |
| $ | 10,111 |
|
| $ | 220,000 |
|
| $ | 147,919 |
|
|
| 0.82 | % |
FRB borrowings |
|
| 17,901 |
|
|
| 632,540 |
|
|
| 245,196 |
|
|
| 0.32 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands) | September 30, 2019 | At December 31 2018 | ||||||
FHLB borrowings | $ | 129,600 | $ | 73,100 | ||||
|
|
|
| |||||
Weighted average interest rate | 2.33 | % | 2.47 | % |
FHLB advances are secured by collateral consisting of a blanket lien on qualifying loans in Blue Ridge’sthe Company’s residential, multifamilymulti-family, and commercial real estate mortgage loan portfolios, as well as selected investment portfolio securities.
FRB borrowings through the PPPLF are secured by loans the Bank originated under the PPP. The PPPLF advances are at the full PPP loan value and term, have a fixed annual cost of 35 basis points, and receive favorable regulatory capital treatment.
Subordinated notes, net, totaled $40.0 million as of both March 31, 2022 and December 31, 2021.
Liquidity. Liquidity is essential to the Company’s business. The Company’s liquidity could be impaired by unforeseen outflows of cash, including deposits or the inability to access the capital markets. This situation may arise due to circumstances that the Company may be unable to control, such as general market disruption, negative views about the Company or the financial services industry generally, or an operational problem that affects the Company or a third party. The Company’s ability to borrow from other financial institutions on favorable terms or at all could be adversely affected by disruptions in the banking industry is defined as the ability to meet the demand for funds of both depositors and borrowers. Blue Ridge must be able to meet these needs by obtaining funding from depositorscapital markets or other lenders or by convertingnon-cash items into cash. events.
The objective of Blue Ridge’s liquidity management program is to ensure that it always has sufficient resources to meet the demands of depositors and borrowers. Stable core deposits and a strong capital position provide the base for Blue Ridge’s liquidity position. Blue Ridge believes it has demonstrated its ability to attract deposits because of Blue Ridge’s convenient branch locations, personal service, technology and pricing.
In addition to deposits, Blue Ridge has access to the different wholesale funding markets. These markets include the brokered certificate of deposit market, listing service deposit market, and the federal funds market. Blue Ridge is a member of the Promontory Interfinancial Network, which allows banking customers to access FDIC insurance protection on deposits through Blue Ridge which exceed FDIC insurance limits. Blue Ridge also hasone-way authority with Promontory for both their CDARs and ICS products which provides Blue Ridge the ability to access additional wholesale funding as needed. Blue Ridge also maintains secured lines of credit with the FRB and the FHLB for which Blue Ridge can borrow up to the allowable amount for the collateral pledged. Having diverse funding alternatives reduces Blue Ridge’s reliance on any one source for funding.
Cash flow from amortizing assets or maturing assets also provides funding to meet the needs of depositors and borrowers.
Blue RidgeCompany has established a formal liquidity contingency plan whichthat provides guidelines for liquidity management. For Blue Ridge’sPursuant to the Company’s liquidity management program, it first determines Blue Ridge’sits current liquidity position and then forecasts liquidity based on anticipated changes in the balance sheet. In this forecast, Blue Ridgethe Company expects to maintain a liquidity cushion. Blue Ridge alsoManagement then stress tests itsthe Company’s liquidity position under several different stress scenarios, from moderate to severe. Guidelines for the forecasted liquidity cushion and for liquidity cushions for each stress scenario have been established. Blue Ridge believes that it has sufficient resources to meet itsManagement also monitors the Company’s liquidity needs.
Blue Ridge had a credit line available of $216.3 million with the FHLB with an outstanding balance of $129.6 million as of September 30, 2019, leaving the remaining credit availability of $86.7 million at September 30, 2019. As of December 31, 2018, the outstanding balance of borrowings with the FHLB totaled $73.1 million.
Blue Ridge had four unsecured federal fund lines available with correspondent banks for overnight borrowing totaling $21 million at September 30, 2019 and December 31, 2018. These lines were not drawn upon at September 30, 2019 and December 31, 2018.
Liquidity is essential to Blue Ridge’s business. Blue Ridge’s liquidity could be impaired by an inability to access the capital markets or by unforeseen outflows of cash, including deposits. This situation may arise due to circumstances that Blue Ridge may be unable to control, such as general market disruption, negative views about the financial services industry generally, or an operational problem that affects a third party or Blue Ridge. Blue Ridge’s ability to borrow from other financial institutions on favorable terms or at all could be adversely affected by disruptions in the capital markets or other events. Blue Ridge monitors its liquidity position daily through cash flow forecasting and monthly testing against minimum policy ratios and believes its level of liquidity and capital is adequate to conduct the business of Blue Ridge.the Company.
43
40
The Company also maintains secured lines of credit with the FHLB and the FRB under which the Company can borrow up to the allowable amount for the collateral pledged. As of March 31, 2022, the Company had a credit line available of $315.1 million with the FHLB with outstanding advances totaling $10.0 million and letters of credit totaling $85.0 million, leaving the remaining credit availability of $220.1 million as of the same date. The letters of credit are for the benefits of the Commonwealth of Virginia to secure public deposits.
The Company utilized the FRB PPPLF to partially fund PPP loans, which collateralize the advances. As of March 31, 2022 and December 31, 2021, FRB borrowings under this facility totaled $15.2 million and $17.9 million, respectively.
Capital. Capital adequacy is an important measure of financial stability and performance. Blue Ridge’sThe Company’s objectives are to maintain a level of capitalization that is sufficient to sustain asset growth and promote depositor and investor confidence.
Regulatory agencies measureBanks and bank holding companies are subject to various regulatory capital adequacy utilizing a formula that considersrequirements administered by the individual risk profile of the financial institution. Thefederal banking agencies. Failure to meet minimum capital requirements are: (i)can initiate certain mandatory, possibly additional discretionary, actions by regulators that, if undertaken, could have a common equity Tier 1 (“CET1”)direct material effect on the Company's financial statements. Under capital ratioadequacy guidelines and the regulatory framework for prompt corrective action, financial institutions must meet specific capital guidelines that involve quantitative measures of 4.5%; (ii) a Tier 1assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. A financial institution's capital amounts and classification are also subject to risk-based assetsqualitative judgments by the regulators about components, risk weightings, and other factors. Pursuant to the Basel Committee on Banking Supervision's capital ratio of 6%; (iii) a total risk-based capital ratio of 8%; and (iv) a Tier 1 leverage ratio of 4%. Additionally,guidelines for U.S. banks (the “Basel III rules”), the Bank must hold a capital conservation buffer of 2.50% above the adequately capitalized risk-based capital ratios for all ratios, except the tier 1 leverage ratio. If a banking organization dips into its capital conservation buffer, it is subject to limitations on certain activities, including payment of dividends, share repurchases, and discretionary compensation to certain officers. Management believes as of March 31, 2022, the Bank met all capital adequacy requirement to which it is subject.
Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized; although, these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. At March 31, 2022, the most recent regulatory notification categorized the Bank as well capitalized under the regulatory framework. There are no conditions or events since that notification that management believes have changed the institution's categorization. Federal and state banking regulations place certain restrictions on dividends paid by the Company. The total amount of 2.5%dividends which may be paid at any date is generally limited to retained earnings of risk-weighted assets, is designed to absorb losses during periods of economic stress and is applicable to Blue Ridge Bank’s CET1 capital, Tier 1the Company.
44
The following tables present the capital and total capital ratios. Including the conservation buffer, Blue Ridge Bank currently considers its minimum capital ratios to be as follows: 7.00% for CET1; 8.50% for Tier 1 capital; and 10.50% for Total Risk-Based capital. Banking institutions with a ratio of common equity Tier 1 to risk-weighted assets abovewhich the minimum but below the conservation buffer will face constraints on dividends, equity repurchases, and compensation. Blue Ridge Bank was considered “well capitalized” for regulatory purposes at September 30, 2019 and December 31, 2018.
As noted above, regulatory capital levels for Blue Ridge Bank meet those established for “well capitalized” institutions. While Blue Ridge Bank is currently considered “well capitalized,” it may from time to time find it necessary to access the capital markets to meet Blue Ridge’s growth objectives or capitalize on specific business opportunities.
The following table shows the minimum capital requirementsubject and the capital position at September 30, 2019amounts and December 31, 2018ratios to be adequately and 2017well capitalized for Blue Ridge Bank.the dates stated. Adequately capitalized ratios include the conversation buffer, if applicable.
Minimum Ratios | ||||||||||||||||
September 30, 2019 | December 31, 2018 | To be “Adequately Capitalized” | To be “Well Capitalized” | |||||||||||||
Total Capital (to Risk Weighted Assets): | ||||||||||||||||
Consolidated | 13.9 | % | 10.8 | % | N/A | N/A | ||||||||||
Bank | 12.9 | % | 12.1 | % | 8.0 | % | 10.5 | % | ||||||||
Tier 1 Capital (to Risk Weighted Assets): | ||||||||||||||||
Consolidated | 10.9 | % | 9.9 | % | N/A | N/A | ||||||||||
Bank | 12.0 | % | 11.2 | % | 6.0 | % | 8.5 | % | ||||||||
Tier 1 Capital (to Average Assets): | ||||||||||||||||
Consolidated | 8.6 | % | 8.3 | % | N/A | N/A | ||||||||||
Bank | 8.4 | % | 8.9 | % | 4.0 | % | 5.0 | % | ||||||||
Common Equity Tier 1 Capital (to Risk Weighted Assets): | ||||||||||||||||
Consolidated | 10.9 | % | 9.9 | % | N/A | N/A | ||||||||||
Bank | 12.0 | % | 11.2 | % | 4.5 | % | 7.0 | % |
|
| Actual |
|
| For Capital |
|
| To Be Well Capitalized |
| |||||||||||||||
(Dollars in thousands) |
| Amount |
|
| Ratio |
|
| Amount |
|
| Ratio |
|
| Amount |
|
| Ratio |
| ||||||
As of March 31, 2022 |
|
|
|
|
|
|
|
|
|
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|
|
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|
| ||||||
Total risk based capital |
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
| ||||||
(To risk-weighted assets) |
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|
| ||||||
Blue Ridge Bank, N.A. |
| $ | 288,450 |
|
|
| 13.29 | % |
| $ | 227,866 |
|
|
| 10.50 | % |
| $ | 217,015 |
|
|
| 10.00 | % |
Tier 1 capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
(To risk-weighted assets) |
|
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|
|
|
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|
|
| ||||||
Blue Ridge Bank, N.A. |
| $ | 275,405 |
|
|
| 12.69 | % |
| $ | 184,463 |
|
|
| 8.50 | % |
| $ | 173,612 |
|
|
| 8.00 | % |
Common equity tier 1 capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
(To risk-weighted assets) |
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|
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|
| ||||||
Blue Ridge Bank, N.A. |
| $ | 275,405 |
|
|
| 12.69 | % |
| $ | 151,910 |
|
|
| 7.00 | % |
| $ | 141,060 |
|
|
| 6.50 | % |
Tier 1 leverage |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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| ||||||
(To average assets) |
|
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|
|
| ||||||
Blue Ridge Bank, N.A. |
| $ | 275,405 |
|
|
| 10.64 | % |
| $ | 103,530 |
|
|
| 4.00 | % |
| $ | 129,412 |
|
|
| 5.00 | % |
|
| Actual |
|
| For Capital |
|
| To Be Well Capitalized |
| |||||||||||||||
(Dollars in thousands) |
| Amount |
|
| Ratio |
|
| Amount |
|
| Ratio |
|
| Amount |
|
| Ratio |
| ||||||
As of December 31, 2021 |
|
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| ||||||
Total risk based capital |
|
|
|
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|
|
|
|
|
|
|
|
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| ||||||
(To risk-weighted assets) |
|
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|
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| ||||||
Blue Ridge Bank, N.A. |
| $ | 273,978 |
|
|
| 13.11 | % |
| $ | 219,393 |
|
|
| 10.50 | % |
| $ | 208,946 |
|
|
| 10.00 | % |
Tier 1 capital |
|
|
|
|
|
|
|
|
|
|
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|
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| ||||||
(To risk-weighted assets) |
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| ||||||
Blue Ridge Bank, N.A. |
| $ | 260,896 |
|
|
| 12.49 | % |
| $ | 177,604 |
|
|
| 8.50 | % |
| $ | 167,157 |
|
|
| 8.00 | % |
Common equity tier 1 capital |
|
|
|
|
|
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|
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|
|
|
|
|
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|
| ||||||
(To risk-weighted assets) |
|
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|
|
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| ||||||
Blue Ridge Bank, N.A. |
| $ | 260,896 |
|
|
| 12.49 | % |
| $ | 146,262 |
|
|
| 7.00 | % |
| $ | 135,815 |
|
|
| 6.50 | % |
Tier 1 leverage |
|
|
|
|
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|
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| ||||||
(To average assets) |
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| ||||||
Blue Ridge Bank, N.A. |
| $ | 260,896 |
|
|
| 10.05 | % |
| $ | 103,883 |
|
|
| 4.00 | % |
| $ | 129,853 |
|
|
| 5.00 | % |
Off-Balance Sheet Activities
Standby letters of credit are conditional commitments issued by Blue Ridge to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements and, generally, have terms of one year or less. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers; Blue Ridge generally holds collateral supporting these commitments. In the event the customer does not perform in accordance with the terms of the agreement with the third party, Blue Ridge would be required to fund the commitment. The maximum potential
41
amount of future payments Blue Ridge could be required to make is represented by the contractual amount of the commitment. If the commitment is funded, Blue Ridge would be entitled to seek recovery from the customer. The maximum potential amount of future advances on standby letters of credit available through Blue Ridge at September 30, 2019 and December 31, 2018, totaled $1.3 million and $1.6 million, respectively.
Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Blue RidgeThe Company evaluates each customer’s credit worthiness on acase-by-case basis. The amount of collateral obtained, if deemed necessary by Blue Ridgethe Company upon extension of credit, is based on management’s credit evaluation of the counterparty. Collateral held varies but may include real estate and income producing commercial properties. The approved commitments to extend credit that was available but unused at September 30, 2019as of March 31, 2022 and December 31, 20182021 totaled $89.2$496.2 million and $65.2$475.1 million, respectively.
Conditional commitments are issued by the Company in the form of performance stand-by letters of credit, which guarantee the performance of a customer to a third party. As of March 31, 2022 and December 31, 2021, commitments under outstanding performance stand-by letters of credit totaled $77 thousand and $655 thousand, respectively. Additionally, the Company issues financial stand-by letters of credit, which guarantee payment to the underlying beneficiary (i.e., third party) if the customer fails to meet its designated financial obligation. As of March 31, 2022 and December 31, 2021, commitments under outstanding financial stand-by letters of credit totaled $4.7 million and $4.5
45
million, respectively. The credit risk of issuing stand-by letters of credit can be greater than the risk involved in extending loans to customers.
Reserves for unfunded commitments as of March 31, 2022 and December 31, 2021 were $1.0 million and $962 thousand, respectively, and are included in other liabilities on the consolidated balances sheets.
The Company invests in various partnerships and limited liability companies, many of which invest in early-stage companies. Pursuant to these investments, the Company commits to an investment amount that may be fulfilled in future periods, pursuant to capital calls. At March 31, 2022, the Company had future commitments outstanding totaling $7.7 million related to these investments.
The Company also has investments in various SBIC funds. The Company's obligations to these funds are satisfied in the form of capital calls that occur during the commitment period. As of March 31, 2022, the Company's remaining capital commitments associated with its investments in SBIC funds was $9.0 million.
Interest Rate Risk Management
As a financial institution, Blue Ridgethe Company is exposed to various business risks, including interest rate risk. Interest rate risk is the risk to earnings and value arising from volatility in market interest rates. Interest rate risk arises from timing differences in the repricing and maturities of interest-earning assets and interest-bearing liabilities, changes in the expected maturities of assets and liabilities arising from embedded options, such as borrowers’borrowers' ability to prepay loans and depositors’depositors' ability to redeem certificates of deposit before maturity, changes in the shape of the yield curve where interest rates increase or decrease in a nonparallel fashion, and changes in spread relationships between different yield curves, such as U.S. Treasuries and LIBOR. Blue Ridge’sother market-based index rates. The Company’s goal is to maximize net interest income without incurring excessive interest rate risk. Management of net interest income and interest rate risk must be consistent with the level of capital and liquidity that Blue Ridgethe Bank maintains. Blue RidgeThe Company manages interest rate risk through an asset and liability committee or (“ALCO”comprised of members of its board of directors and management (the “ALCO”). The ALCO is responsible for managing Blue Ridge’smonitoring the Company’s interest rate risk in conjunction with liquidity and capital management.
Blue Ridge
The Company employs an independent consulting firm to model its interest rate sensitivity. Blue Ridgesensitivity that uses a net interest income simulation model as its primary tool to measure interest rate sensitivity. Many assumptionsAssumptions for modeling are developed based on expected activity in the balance sheet. For maturing assets, assumptions are created for the redeployment of these assets. For maturing liabilities, assumptions are developed for the replacement of these funding sources. Assumptions are also developed for assets and liabilities that could reprice during the modeled time period. These assumptions also cover how Blue Ridgemanagement expects rates to change onnon-maturity deposits such as interest checking, money market checking, savings accounts, as well as certificates of deposit. Based on inputs that include the current balance sheet, the current level of interest rates, and the developed assumptions, the model then produces an expected level of net interest income assuming that market rates remain unchanged. This is considered the base case. Next,The model then simulates the model determines whatimpact on net interest income would be based on specific changes in interest rates. The rate simulations are performed for atwo-year period and include rampedrapid rate changes of down 100 basis points to 300200 basis points and up 100 basis points to 400 basis points. In both the up and down scenarios, the model assumes a parallel shift in the yield curve. The results of these simulations are then compared to the base case.
|
| March 31, 2022 |
| |||||||||||||
|
| Instantaneous Parallel Rate Shock Scenario |
| |||||||||||||
|
| Change in Net Interest Income - Year 1 |
|
| Change in Net Interest Income - Year 2 |
| ||||||||||
Change in interest rates: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
+400 basis points |
| $ | 9,159 |
|
|
| 10.3 | % |
| $ | 16,859 |
|
|
| 18.9 | % |
+300 basis points |
|
| 8,062 |
|
|
| 9.1 | % |
|
| 13,833 |
|
|
| 15.5 | % |
+200 basis points |
|
| 6,188 |
|
|
| 7.0 | % |
|
| 10,121 |
|
|
| 11.3 | % |
+100 basis points |
|
| 3,473 |
|
|
| 3.9 | % |
|
| 5,549 |
|
|
| 6.2 | % |
Base case |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
-100 basis points |
|
| (2,603 | ) |
|
| (2.9 | %) |
|
| (4,493 | ) |
|
| (5.0 | %) |
-200 basis points |
|
| (3,930 | ) |
|
| (4.4 | %) |
|
| (6,592 | ) |
|
| (7.4 | %) |
46
Stress testing the balance sheet and net interest income using instantaneous parallel shock movements in the yield curve of 100 to 400 basis points is a regulatory and banking industry practice. However, these stress tests may not represent a realistic forecast of future interest rate movements in the yield curve. In addition, instantaneous parallel interest rate shock modeling is not a predictor of actual future performance of earnings. It is a financial metric used to manage interest rate risk and track the movement of Blue Ridge’sthe Company’s interest rate risk position over a historical time frame for comparison purposes.
At September 30, 2019, Blue Ridge’s asset/
The asset and liability position was considered to be slightly asset sensitive basedrepricing characteristics of the Company’s assets and liabilities will have a significant impact on its interest rate sensitivity model. Blue Ridge’s net interest income would increase by 14.2% in an up 100 basis point scenario and would increase 15.8% in an up 400 basis point scenario over aone-year time frame. In thetwo-year time horizon, Blue Ridge’s net interest income would increase by 15.3% in an up 100 basis point scenario and would increase by 20.1% in an up 400 basis point scenario. At September 30, 2019, allfuture interest rate risk stress tests measures wereprofile.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
This information is incorporated herein by reference to the information in section "Interest Rate Risk Management" within Blue Ridge’s board policy established limits in eachPart I, Item 2. "Management's Discussion and Analysis of the increased rate scenarios.Financial Condition and Results of Operations" of this Form 10-Q.
Item 4. Controls and Procedures
42
Additional information on Blue Ridge’s interest rate sensitivity for a static balance sheet over aone-year time horizon as of September 30, 2019 can be found below.
Interest Rate Risk to Earnings (Net Interest Income) | ||||
September 30, 2019 | ||||
Change in interest rates (basis points) | Percentage change in net interest income | |||
+400 | 15.8 | % | ||
+300 | 14.9 | % | ||
+200 | 14.6 | % | ||
+100 | 14.2 | % | ||
0 | — | |||
-100 | 6.2 | % | ||
-200 | -1.7 | % | ||
-300 | -3.5 | % |
Economic value of equity, or (“EVE”), measures the period end market value of assets less the market value of liabilities and the change in this value as rates change. It models simultaneous parallel shifts in market interest rates, implied by the forward yield curve. The EVE model calculates the market value of capital by taking the present value of all asset cash flows less the present value of all liability cash flows.
The interest rate risk to capital at September 30, 2019 is shown below and reflects that Blue Ridge’s market value of capital is in a slightly liability sensitive position in which an increase in short-term interest rates is expected to generate lower market values of capital. At September 30, 2019, all EVE stress tests measures were within Blue Ridge’s board policy established limits.
Interest Rate Risk to Capital | ||||
September 30, 2019 | ||||
Change in interest rates (basis points) | Percentage change in economic value of equity | |||
+400 | 0.4 | % | ||
+300 | 1.3 | % | ||
+200 | 3.5 | % | ||
+100 | 5.5 | % | ||
0 | — | |||
-100 | 4.2 | % | ||
-200 | 2.8 | % | ||
-300 | 15.7 | % |
43
|
Not required.
|
The Company maintains disclosure controls and procedures that are designed to provide assurance that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods required by the SEC and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. An evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of September 30, 2019March 31, 2022 was carried out under the supervision and with the participation of management, including the Company’s Chief Executive Officer and Chief Financial Officer. Based on and as of the date of such evaluation, the aforementioned officers concluded that the Company’s disclosure controls and procedures were effective.
The Company’s management is also responsible for establishing and maintaining adequate internal control over financial reporting. There were no changes in the Company’s internal control over financial reporting that occurred during the Company’s last fiscal quarter that materially affected, or are reasonably likely to materially affect, internal control over financial reporting.
44
47
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
|
There arehave been no material pendingdevelopments in the status of the legal proceedings other thanpreviously disclosed in Part I, Item 3 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.
In the ordinary routine litigation incidental to the business, to whichcourse of its operations, the Company is a party to various legal proceedings. As of the date of this report, there are no pending or threatened proceedings against the Company, other than previously disclosed as stated in the preceding paragraph or as set forth below, that, if determined adversely, would have a material effect on the business, results of operations or financial position of the Company.
Item 1A. Risk Factors
There have been no material changes to which anythe risk factors disclosed in the 2021 Form 10-K. Additional risks not presently known to us, or that we currently deem immaterial, may also adversely affect our business, financial condition, or results of its property is subject.operations. See also “Cautionary Note About Forward-Looking Statements,” included in Part 1, Item 2, of this Form 10-Q.
|
Not required.Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
|
None
|
NoneItem 3. Defaults Upon Senior Securities
|
None
|
NoneItem 4. Mine Safety Disclosures
None
|
Item 5. Other Information
None
Item 6. Exhibits
31.1 | ||
Rule | ||
31.2 | Rule | |
32.1 | ||
101 |
| The following materials from Blue Ridge Bankshares, Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2022, formatted in Inline Extensible Business Reporting Language (XBRL), include: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Changes in Stockholders’ Equity, (v) Consolidated Statements of Cash Flows and (vi) related notes (filed herewith). | |
104 | The cover page from Blue Ridge Bankshares, Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2022, formatted in Inline XBRL (included with Exhibit 101). |
4548
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
BLUE RIDGE BANKSHARES, INC. | ||||||
Date: | By: | /s/ Brian K. Plum | ||||
Brian K. Plum | ||||||
President and Chief Executive Officer | ||||||
By: | /s/ | |||||
Judy C. Gavant | ||||||
Executive Vice President and Chief Financial Officer |
4649