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~~June 30, ~~2019~~2023


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period fromto

Commission File ~~Number 033-25507~~Number: 001-39165

BLUE RIDGE BANKSHARES, INC.

(Exact ~~Name~~name of ~~Registrant~~registrant as ~~Specified~~specified in its ~~Charter)~~charter)


~~Virginia~~		~~54-1470908~~
~~State or Other Jurisdiction of~~ ~~Incorporation or Organization~~		~~I.R.S. Employer~~ ~~Identification No.~~

~~17 West Main Street, Luray,~~ Virginia		~~22835~~ 54-1838100
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1807 Seminole Trail Charlottesville, Virginia	22901
(Address of ~~Principal Executive Offices~~principal executive offices)		(Zip ~~Code~~Code)

~~(540)743-6521~~

Registrant’s ~~Telephone Number, Including Area Code~~telephone 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

~~None~~

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 ☒

~~The~~As of July 31, 2023, the registrant had ~~4,346,866~~19,191,060 shares of common stock, no par value per share, ~~outstanding as of December 13, 2019.~~outstanding.


				Blue Ridge Bankshares, Inc. Table of Contents
~~PART I~~Item	~~FINANCIAL INFORMATION~~		Page

~~Item 1.~~PART I	~~Financial Statements~~FINANCIAL INFORMATION

Item 1.	Financial Statements		3

	Consolidated Balance Sheets as of ~~September~~June 30, ~~2019~~2023 (unaudited) and December 31, ~~2018~~2022		3

	Consolidated Statements of ~~Income~~Operations for the three and six months ended ~~September~~June 30, ~~2019~~2023 and ~~September 30, 2018~~2022 (unaudited)		4

	~~Consolidated Statement of Income for the nine months ended September 30, 2019 and September 30, 2018~~		5

	Consolidated Statements of Comprehensive Income (Loss) for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2023 and ~~2018~~2022 (unaudited)		6 5

	~~Condensed~~ Consolidated Statements of Changes in Stockholders’ Equity for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2023 and ~~2018~~2022 (unaudited)		6

	Consolidated Statements of Cash Flows for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2023 and ~~2018~~2022 (unaudited)		7 8

	Notes to Consolidated Financial Statements (unaudited)		8
		10

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		26
		39

Item 3.	Quantitative and Qualitative Disclosures about Market Risk		44
		56

Item 4.	Controls and Procedures		44
		56
~~PART II~~	~~OTHER INFORMATION~~		45

~~Item 1.~~PART II	~~Legal Proceedings~~OTHER INFORMATION		45
		57
~~Item 1A.~~	~~Risk Factors~~		45

Item 2.1.	Legal Proceedings		57

Item 1A.	Risk Factors		57

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		45
		57

Item 3.	Defaults Upon Senior Securities		45
		57

Item 4.	Mine Safety Disclosures		45
		57
~~Item 5.~~	~~Other Information~~		45

Item 6.5.	~~Exhibits~~Other Information		45 57

Item 6.	Exhibits		57

Signatures			46 59

PART I. ~~FINANCIAL~~FINANCIAL INFORMATION

Item 1. Financial Statements

Blue Ridge Bankshares, Inc.

Consolidated Balance Sheets


	(unaudited)
(Dollars in thousands except share data)	June 30, 2023			December 31, 2022 (1)
ASSETS
Cash and due from banks	$	131,843		$	77,274
Federal funds sold		2,492			1,426
Securities available for sale, at fair value		340,617			354,341
Restricted equity investments		17,538			21,257
Other equity investments		22,693			23,776
Other investments		27,157			24,672
Loans held for sale		64,102			69,534
Paycheck Protection Program loans, net of deferred fees and costs		7,234			11,967
Loans held for investment, net of deferred fees and costs		2,451,697			2,399,092
Less: allowance for credit losses		(43,067	)		(22,939	)
Loans held for investment, net		2,408,630			2,376,153
Accrued interest receivable		15,474			12,393
Other real estate owned		—			195
Premises and equipment, net		22,849			23,152
Right-of-use assets		5,744			6,903
Bank owned life insurance		47,828			47,245
Goodwill		26,826			26,826
Other intangible assets		5,925			6,583
Mortgage servicing rights, net		28,246			28,991
Deferred tax asset, net		11,051			9,182
Other assets		28,175			19,175
Total assets	$	3,214,424		$	3,141,045
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing demand	$	575,989		$	640,101
Interest-bearing demand and money market deposits		1,293,754			1,318,799
Savings		131,332			151,646
Time deposits		612,019			391,961
Total deposits		2,613,094			2,502,507
FHLB borrowings		219,100			311,700
FRB borrowings		65,000			51
Subordinated notes, net		39,888			39,920
Lease liabilities		6,765			7,860
Other liabilities		39,306			19,634
Total liabilities		2,983,153			2,881,672
Commitments and contingencies (Note 12)
Stockholders’ Equity:
Common stock, no par value; 50,000,000 shares authorized at June 30, 2023 and December 31, 2022; 18,933,637 and 18,950,329 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively		196,990			195,960
Additional paid-in capital		252			252
Retained earnings		80,287			108,262
Accumulated other comprehensive loss, net of tax		(46,258	)		(45,101	)
Total stockholders’ equity		231,271			259,373
Total liabilities and stockholders’ equity	$	3,214,424		$	3,141,045

(1)

Derived from audited December 31, 2022 Consolidated Financial Statements.

~~(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.

Blue Ridge Bankshares, Inc.

Consolidated Statements of ~~Income~~Operations

~~(dollars in thousands, except share and per share data)~~(unaudited)


	For the three months ended						For the six months ended
(Dollars in thousands, except per share data)	June 30, 2023			June 30, 2022			June 30, 2023			June 30, 2022
INTEREST INCOME
Interest and fees on loans	$	34,839		$	23,787		$	74,133		$	47,686
Interest on securities, deposit accounts, and federal funds sold		4,134			2,456			7,893			4,359
Total interest income		38,973			26,243			82,026			52,045
INTEREST EXPENSE
Interest on deposits		14,624			1,541			25,955			3,097
Interest on subordinated notes		547			545			1,100			1,098
Interest on FHLB and FRB borrowings		3,399			67			7,209			92
Total interest expense		18,570			2,153			34,264			4,287
Net interest income		20,403			24,090			47,762			47,758
Provision for credit losses - loans		21,100			7,494			25,200			9,994
Provision (benefit) for credit losses - unfunded commitments		(600	)		—			(1,000	)		—
Total provision for credit losses		20,500			7,494			24,200			9,994
Net interest (loss) income after provision for credit losses		(97	)		16,596			23,562			37,764
NONINTEREST INCOME
Fair value adjustments of other equity investments		(281	)		(86	)		(332	)		9,278
Residential mortgage banking income, including MSRs		4,295			5,960			5,598			15,519
Gain on sale of guaranteed government loans		2,384			1,538			4,793			2,965
Wealth and trust management		462			414			894			805
Service charges on deposit accounts		349			327			692			642
Increase in cash surrender value of bank owned life insurance		292			276			574			548
Bank and purchase card, net		560			599			900			1,021
Other		1,675			1,162			3,900			3,506
Total noninterest income		9,736			10,190			17,019			34,284
NONINTEREST EXPENSE
Salaries and employee benefits		14,518			15,873			29,807			29,969
Occupancy and equipment		1,913			1,500			3,482			2,985
Data processing		1,131			874			2,477			1,820
Legal, issuer, and regulatory filing		2,753			618			3,987			1,000
Advertising and marketing		337			412			623			840
Communications		1,171			1,030			2,302			1,829
Audit and accounting fees		503			379			649			520
FDIC insurance		1,246			106			1,975			337
Intangible amortization		335			386			690			783
Other contractual services		3,218			999			4,157			1,533
Other taxes and assessments		803			671			1,605			1,241
Regulatory remediation		2,388			—			3,522			—
Merger-related		—			—			—			50
Other		3,736			2,478			7,623			5,108
Total noninterest expense		34,052			25,326			62,899			48,015
(Loss) income from continuing operations before income tax expense		(24,413	)		1,460			(22,318	)		24,033
Income tax (benefit) expense		(4,949	)		342			(4,458	)		5,495
Net (loss) income from continuing operations	$	(19,464	)	$	1,118		$	(17,860	)	$	18,538
Discontinued Operations
Income from discontinued operations before income taxes		—			—			—			426
Income tax expense		—			—			—			89
Net income from discontinued operations		—			—			—			337
Net (loss) income	$	(19,464	)	$	1,118		$	(17,860	)	$	18,875
Net income from discontinued operations attributable to noncontrolling interest		—			—			—			(1	)
Net (loss) income attributable to Blue Ridge Bankshares, Inc.	$	(19,464	)	$	1,118		$	(17,860	)	$	18,874
Net (loss) income available to common stockholders	$	(19,464	)	$	1,118		$	(17,860	)	$	18,874
Basic and diluted (loss) earnings per share from continuing operations	$	(1.03	)	$	0.06		$	(0.95	)	$	0.99
Basic and diluted earnings per share from discontinued operations	$	—		$	—		$	—		$	0.02
Basic and diluted (loss) earnings per share attributable to Blue Ridge Bankshares, Inc.	$	(1.03	)	$	0.06		$	(0.95	)	$	1.01

~~(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.

Blue Ridge Bankshares, Inc.

Consolidated Statements of Comprehensive Income (Loss)

~~(dollars in thousands, except share and per share data)~~(unaudited)


	For the three months ended						For the six months ended
(Dollars in thousands)	June 30, 2023			June 30, 2022			June 30, 2023			June 30, 2022
Net (loss) income	$	(19,464	)	$	1,118		$	(17,860	)	$	18,875
Other comprehensive loss:
Gross unrealized losses on securities available for sale arising during the period		(6,469	)		(20,272	)		(1,490	)		(42,859	)
Deferred income tax benefit		1,446			4,257			333			9,000
Unrealized losses on securities available for sale arising during the period, net of tax		(5,023	)		(16,015	)		(1,157	)		(33,859	)
Other comprehensive net loss		(5,023	)		(16,015	)		(1,157	)		(33,859	)
Comprehensive net loss	$	(24,487	)	$	(14,897	)	$	(19,017	)	$	(14,984	)
Comprehensive income from discontinued operations attributable to noncontrolling interest		—			—			—			(1	)
Comprehensive net loss attributable to Blue Ridge Bankshares, Inc.	$	(24,487	)	$	(14,897	)	$	(19,017	)	$	(14,985	)

~~(Unaudited)~~

   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.

Blue Ridge Bankshares, Inc.

Consolidated Statements of ~~Comprehensive Income~~Changes in Stockholders’ Equity

~~(dollars in thousands)~~(unaudited)


	For the six months ended June 30, 2023
(Dollars in thousands)	Shares of Common Stock			Common Stock		Additional Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Loss, net			Total
Balance at beginning of period		18,950,329		$	195,960	$	252	$	108,262		$	(45,101	)	$	259,373
Cumulative effect adjustment due to adoption of accounting standard, net of income taxes		—		$	—	$	—	$	(5,474	)	$	—		$	(5,474	)
Net loss		—			—		—		(17,860	)		—			(17,860	)
Other comprehensive loss		—			—		—		—			(1,157	)		(1,157	)
Dividends on common stock		—			—		—		(4,641	)		—			(4,641	)
Stock option exercises		3,750			26		—		—			—			26
Restricted stock awards, net of forfeitures		(26,842	)		936		—		—			—			936
Dividend reinvestment plan issuances		6,400			68		—		—			—			68
Balance at end of period		18,933,637		$	196,990	$	252	$	80,287		$	(46,258	)	$	231,271


	For the six months ended June 30, 2022
(Dollars in thousands)	Shares of Common Stock			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
Cumulative effect adjustment of change in accounting method, net of income taxes		—			—		—		3,542			—			—			3,542
Net income		—			—		—		18,874			—			1			18,875
Other comprehensive loss		—			—		—		—			(33,859	)		—			(33,859	)
Dividends on common stock		—			—		—		(4,552	)		—			—			(4,552	)
Stock option exercises		1,183			15		—		—			—			—			15
Restricted stock awards, net of forfeitures		(13,417	)		729		—		—			—			—			729
Disposition of noncontrolling interest		—			—		—		—			—			(229	)		(229	)
Balance at end of period		18,761,848		$	195,053	$	252	$	103,846		$	(37,491	)	$	—		$	261,660

~~(Unaudited)~~

   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


	For the three months ended June 30, 2023
(Dollars in thousands)	Shares of Common Stock			Common Stock		Additional Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Loss, net			Total
Balance at beginning of period		18,942,091		$	196,498	$	252	$	102,071		$	(41,235	)	$	257,586
Net loss		—		$	—		—		(19,464	)		—			(19,464	)
Other comprehensive loss		—			—		—		—			(5,023	)		(5,023	)
Dividends on common stock		—			—		—		(2,320	)		—			(2,320	)
Restricted stock awards, net of forfeitures		(12,210	)		457		—		—			—			457
Dividend reinvestment plan issuances		3,756			35		—		—			—			35
Balance at end of period		18,933,637		$	196,990	$	252	$	80,287		$	(46,258	)	$	231,271


	For the three months ended June 30, 2022
(Dollars in thousands)	Shares of Common Stock			Common Stock		Additional Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Loss, net			Total
Balance at beginning of period		18,771,065		$	194,679	$	252	$	105,027		$	(21,476	)	$	278,482
Net income		—			—		—		1,118			—			1,118
Other comprehensive loss		—			—		—		—			(16,015	)		(16,015	)
Dividends on common stock		—			—		—		(2,299	)		—			(2,299	)
Restricted stock awards, net of forfeitures		(9,217	)		374		—		—			—			374
Balance at end of period		18,761,848		$	195,053	$	252	$	103,846		$	(37,491	)	$	261,660

See accompanying notes to unaudited consolidated financial statements.

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

~~Blue Ridge Bankshares, Inc.~~

Consolidated Statements of Cash Flows

~~For the Nine Months Ended September 30, 2019 and 2018~~(unaudited)


	For the six months ended
(Dollars in thousands)	June 30, 2023			June 30, 2022
Cash Flows From Operating Activities
Net (loss) income from continuing operations	$	(17,860	)	$	18,538
Net income from discontinued operations		—			337
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Depreciation and amortization		877			1,038
Deferred income tax (benefit) expense		(1,242	)		3,316
Provision for credit losses - loans		25,200			9,994
Provision for credit losses - unfunded commitments		(1,000	)		—
Accretion of fair value adjustments (discounts) on acquired loans		(1,161	)		(4,058	)
Accretion of fair value adjustments (premiums) on acquired time deposits		(506	)		(833	)
Accretion of fair value adjustments (premiums) on acquired subordinated notes		(50	)		(50	)
Proceeds from sale of mortgage loans held for sale		116,540			368,217
Mortgage loans held for sale, originated		(115,528	)		(275,897	)
Gain on sale of mortgage loans		(995	)		(3,136	)
Proceeds from sale of guaranteed government loans held for sale		69,449			—
Guaranteed government loans held for sale, originated		(49,708	)		—
Gain on sale of guaranteed government loans		(4,793	)		—
Loss (gain) on disposal of premises and equipment		14			(405	)
Loss on disposal of other assets		528			—
Realized gains on sale of other equity securities		(10	)		—
Investment amortization expense, net		348			809
Amortization of subordinated debt issuance costs		18			17
Intangible amortization		690			783
Fair value adjustments of other equity investments		332			(9,278	)
Fair value adjustments attributable to mortgage servicing rights		1,364			(3,548	)
Increase in cash surrender value of bank owned life insurance		(574	)		(548	)
Increase in accrued interest receivable		(3,081	)		(665	)
(Increase) decrease in other assets		(11,277	)		399
Increase in other liabilities		19,577			5,033
Net cash provided by operating activities - continuing operations		27,152			110,063
Net cash provided by operating activities - discontinued operations		—			55
Cash provided by operating activities		27,152			110,118
Cash Flows From Investing Activities
Net increase in loans held for investment		(69,948	)		(272,026	)
Net (increase) decrease in federal funds sold		(1,066	)		8,410
Purchases of securities available for sale		—			(66,761	)
Proceeds from calls, sales, paydowns, and maturities of securities available for sale		12,690			15,163
Proceeds from sale of other real estate owned		264			70
Net decrease in Paycheck Protection Program loans		4,733			14,752
Net change in restricted equity and other investments		3,499			(4,857	)
Purchase of premises and equipment		(643	)		(221	)
Proceeds from sale of premises and equipment		55			1,937
Proceeds from sale of other assets		950			—
Proceeds from sale of LSMG		250			—
Capital calls of small business investment company funds and other investments		(2,594	)		(3,997	)
Nonincome distributions from limited liability companies		332			420
Net cash used in investing activities - continuing operations		(51,478	)		(307,110	)
Net cash provided by investing activities - discontinued operations		—			245
Cash used in investing activities		(51,478	)		(306,865	)
Cash Flows From Financing Activities:
Net (decrease) increase in demand, savings, and other interest-bearing deposits		(109,471	)		144,924
Net increase (decrease) in time deposits		220,564			(106,155	)
Common stock dividends paid		(4,641	)		(4,552	)
FHLB advances		1,080,000			135,000
FHLB repayments		(1,172,600	)		(10,000	)
FRB advances		65,000			—
FRB repayments		(51	)		(17,841	)
Stock option exercises		26			15
Dividend reinvestment plan issuances		68			—
Net cash provided by financing activities - continuing operations		78,895			141,391
Net cash provided by financing activities - discontinued operations		—			—
Cash provided by financing activities		78,895			141,391
Net increase (decrease) in cash and due from banks		54,569			(55,356	)
Cash and due from banks at beginning of period		77,274			130,548
Cash and due from banks at end of period	$	131,843		$	75,192

~~(Unaudited)~~8

   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


Supplemental Schedule of Cash Flow Information
Cash paid for:
Interest	$	28,999		$	4,395
Income taxes	$	6,656		$	575
Non-cash investing and financing activities:
Unrealized losses on securities available for sale	$	(1,490	)	$	(42,859	)
Restricted stock awards, net of forfeitures	$	936		$	729
Cumulative effect adjustment due to adoption of accounting standard, net of income taxes	$	(5,474	)	$	—
Cumulative effect adjustment of change in accounting method, net of income taxes	$	—		$	3,542

See accompanying notes to unaudited consolidated financial statements.

Notes to Consolidated Financial Statements (Unaudited)

Note 1 – ~~Summary~~Organization and Basis of ~~Significant Accounting Policies~~Presentation

~~Principles~~Blue 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 ~~Consolidation~~holding the stock of its subsidiaries, the Bank and the Financial Group.

The accompanying unaudited consolidated financial statements of ~~Blue Ridge Bankshares, Inc. (“~~the ~~Company” or “Blue Ridge”)~~Company include the accounts of ~~Blue Ridge~~the 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”) ~~for~~and general practices within the ~~interim financial information. Accordingly, these financial statements do not include all of the information~~banking 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 included~~2022.

The Company sold its majority interest in MoneyWise Payroll Solutions, Inc. (“MoneyWise”) to the holder of the minority interest in MoneyWise in the ~~joint proxy statement/prospectus~~first quarter of 2022. Income statement amounts related to MoneyWise are reported as discontinued operations for all relevant periods.

On August 29, 2022, the Bank entered into a formal written agreement (the “Written Agreement”) with the Office of the Comptroller of the Currency (the “OCC”), the Bank’s primary federal banking regulator. The Written Agreement principally concerns the Bank’s fintech line of business and requires the Bank to continue enhancing its controls for assessing and managing the third-party, Bank Secrecy Act/Anti-Money Laundering, and information technology risks stemming from its fintech partnerships. A complete copy of the Written Agreement was filed as an exhibit to a Form 8-K filed with the Securities and Exchange Commission (“SEC”) on ~~October 31, 2019.~~September 1, 2022 and can be accessed on the SEC’s website (www.sec.gov) and the Company’s website (www.blueridgebankshares.com). The Company is actively working to bring the Bank’s fintech policies, procedures, and operations into conformity with OCC directives. The Company reports that although work is progressing, many aspects of the Written Agreement require considerable time for completion, implementation, validation, and sustainability.

On May 15, 2023, the Company sold its wholesale mortgage business operating as LenderSelect Mortgage Group (“LSMG”) to a third-party for $250 thousand in cash. The ~~accompanying unaudited~~Company recorded a loss on the sale of LSMG of $553 thousand, which is reported in other noninterest income in the consolidated statements of operations for the three and six months ended June 30, 2023.

Certain amounts presented in the consolidated financial statements ~~include the accounts~~of prior periods have been reclassified to conform to current period presentations. The reclassifications had no effect on net income, net income per share, total assets, total liabilities, or stockholders’ equity as previously reported.

The Company's significant accounting policies are disclosed in Note 2 of the audited financial statements and notes for the year ended December 31, 2022 and are contained in the Company's Annual Report on Form 10-K. There have been no significant changes to the application of significant accounting policies since December 31, 2022, except as described in Note 2 - Adoption of New Accounting Standard of this Form 10-Q.

Note 2 – Adoption of New Accounting Standard

On January 1, 2023, the Company adopted Accounting Standards Update (“ASU”) No. 2016-13 - Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”) along with amendments ASU 2019-11 - Codification Improvements to Topic 326, Financial Instruments – Credit Losses, and ASU 2022-02 - Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures (“ASU 2022-02”). Together, these ASUs, referred to herein as Accounting Standards Codification (“ASC”) “ASC 326”, replace the incurred loss impairment methodology with the current expected credit loss methodology (“CECL”) and require consideration of a broader range of information to determine credit loss estimates at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. ASC 326

applies to financial assets subject to credit losses that are measured at amortized cost and certain off-balance sheet credit exposures, which include, but are not limited to, loans held for investment, leases, held to maturity (“HTM”) securities, loan commitments, and financial guarantees.

The Company adopted ASC 326 using the modified retrospective method for all financial assets measured at amortized cost and off-balance sheet credit exposures, which included loans held for investment and commitments to extend credit (loan commitments and stand-by letters of credit), respectively. The Company does not have any securities classified as HTM. Results for reporting periods beginning after January 1, 2023 are presented under ASC 326, while prior period amounts are reported in accordance with previously applicable GAAP.

The following table presents the impact to the consolidated balance sheet as the result of adopting ASC 326 effective January 1, 2023.


(Dollars in thousands)	January 1, 2023 Post-ASC 326 Adoption			December 31, 2022 Pre-ASC 326 Adoption			Impact of ASC 326 Adoption
Assets:
Loans held for investment, net of deferred fees and costs	$	2,399,757		$	2,399,092		$	665
Allowance for credit losses		(26,961	)		(22,939	)		(4,022	)
Deferred tax asset, net		10,757			9,182			1,575
Liabilities:
Reserve for unfunded commitments1		5,504			1,812			3,692
Stockholders' Equity:
Retained earnings		102,788			108,262			(5,474	)
1 Included in other liabilities on the consolidated balance sheets

Loans Held for Investment and Allowance for Credit Losses (“ACL”). Loans that management has the intent and ability to hold for the foreseeable future or until loan maturity or pay-off are reported held for investment at their outstanding principal balance adjusted for any charge-offs and net of any deferred fees (including purchase accounting adjustments) and origination costs (collectively referred to as "amortized cost"). Loan origination fees and certain direct origination costs are deferred and amortized as an adjustment of the yield using the payment terms required by the loan contract.

Loans are generally placed into nonaccrual status when they are past due 90 days or more as to either principal or interest or when, in the opinion of management, the collection of principal and/or interest is in doubt. A loan remains in nonaccrual status until the loan is current as to payment of both principal and interest or past due less than 90 days and the borrower demonstrates the ability to pay and remain current. When cash payments are received, they are applied to principal first, then to accrued interest. It is the Company's policy not to record interest income on nonaccrual loans until principal has become current. In certain instances, accruing loans that are past due 90 days or more as to principal or interest may not be placed on nonaccrual status, if the Company determines that the loans are well-secured and are in the process of collection. In accordance with ASC 326, the Company elected to exclude accrued interest from the amortized cost basis in its determination of the ACL for loans held for investment, and will instead reverse accrued but unpaid interest through interest income in the period in which the loan is placed on nonaccrual status.

The ACL represents management’s best estimate of credit losses over the remaining life of the loan portfolio. Loans are charged-off against the ACL when management believes the loan balance is no longer collectible. Subsequent recoveries of previously charged-off amounts (recoveries) are recorded as increases to the ACL. The provision for credit losses is an amount sufficient to bring the ACL to an estimated balance that management considers adequate to absorb lifetime expected losses in the Company’s held for investment loan portfolio. The ACL is a valuation account that is deducted from the loans' amortized cost basis to present the net amount expected to be collected on the loans.

Management’s determination of the adequacy of the ACL under ASC 326 is based on an evaluation of the composition of the loan portfolio, current economic conditions, historical loan loss experience, reasonable and supportable forecasts, and other risk factors. The Company uses a third-party CECL model in estimating the ACL on a quarterly basis. Loans with similar risk characteristics are collectively assessed within pools (or segments). Loss estimates within the collectively assessed population are based on a combination of pooled assumptions and loan-level characteristics. The Company has determined that using federal call codes is an appropriate loan segmentation methodology, as it is generally based on risk characteristics of a loan's underlying collateral. Using federal call codes

also allows the Company to utilize and assess publicly-available external information when developing its estimate of the ACL. The discounted cash flow ("DCF") method is the primary credit loss estimation methodology used by the Company and involves estimating future cash flows for each individual loan and discounting them back to their present value using the loan's contractual interest rate, which is adjusted for any net deferred fees, costs, premiums, or discounts existing at the loan's origination or acquisition date (also referred to as the effective interest rate). The DCF method also considers factors such as loan term, prepayment or curtailment assumptions, and other relevant economic factors that could affect future cash flows. By discounting the cash flows, this method incorporates the time value of money and reflects the credit risk inherent in the loan.

In applying future economic forecasts, the Company utilizes a forecast period of one year and then reverts to the mean of historical loss rates on a straight-line basis over the following one-year period. The Company considers economic forecasts of national gross domestic product and unemployment rates from the Federal Open Market Committee to inform the model for loss estimation. Historical loss rates used in the quantitative model are derived using both the Bank's and peer bank data obtained from publicly-available sources (i.e., federal call reports). The Bank's peer group utilized is comprised of financial institutions of relatively similar size (i.e., $3 - $5 billion of total assets) and in similar markets. Management also considers qualitative adjustments when estimating loan losses to take into account the model's quantitative limitations. Qualitative adjustments to quantitative loss factors, either negative or positive, may include considerations of trends in delinquencies, nonaccrual loans, charged-off loans, changes in volume and terms of loans, effects of changes in lending policy, experience and depth of management, regional and local economic trends and conditions, concentrations of credit, competition, and loan review results.

For those loans that do not share similar risk characteristics, the Company evaluates the ACL needs on an individual (or loan by loan) basis. This population of individually evaluated loans (or loan relationships with the same primary source of repayment) is determined on a quarterly basis and is based on whether (1) the risk grade of the loan is substandard or worse and the balance exceeds $500,000, (2) the risk grade of the loan is special mention and the balance exceeds $1,000,000, or (3) the loan's terms differ significantly from other pooled loans. Measurement of credit loss is based on the expected future cash flows of an individually evaluated loan, discounted at the loan's effective interest rate, or measured on an observable market value, if one exists, or the estimated market value of the collateral underlying the loan discounted for estimated costs to sell the collateral for collateral-dependent loans. If the net value applying these measures is less than the loan's amortized cost, a specific reserve is recorded in the ACL and charged-off in the period when management believes the loan balance is no longer collectible.

The Company’s allowance committee approves the key methodologies and assumptions, as well as the final ACL, on a quarterly basis. While management uses available information at the time of estimation to determine expected credit losses on loans, future changes in the ACL may be necessary based on changes in portfolio composition, portfolio credit quality, changes in underlying facts for individually evaluated loans, and/or economic conditions. In addition, bank regulatory agencies and the Bank’s auditors periodically review its ACL and may require an increase in the provision for credit losses or the recognition of further loan charge-offs, based on judgments different than those of management.

Upon the adoption of ASC 326, the Company recorded an increase in its ACL of $4.0 million, along with an after-tax cumulative effect adjustment, which reduced stockholders' equity by $2.6 million.

Collateral-dependent Loans

The Company has certain loans for which repayment is dependent upon the operation or sale of collateral, as the borrower is experiencing financial difficulty. The underlying collateral can vary based upon the type of loan. The following provides more detail about the types of collateral that secure collateral-dependent loans:

•

Commercial real estate loans may be secured by either owner occupied commercial real estate or non-owner occupied commercial real estate. Typically, owner occupied commercial real estate loans are secured by office buildings, warehouses, manufacturing facilities, and other commercial and industrial properties occupied by operating companies. Repayment is generally from the cash flows of the business occupying the property. Non-owner occupied commercial real estate loans are generally secured by office buildings and complexes, retail facilities, multifamily complexes, land under development, industrial properties, as well as other commercial or industrial real estate.

•

Commercial and industrial loans may be secured by non-real estate collateral such as accounts receivable, inventory, equipment, or other similar assets.

•

Residential real estate loans are typically secured by first mortgages, and in some cases could be secured by a second mortgage.

•

Home equity lines of credit are generally secured by second mortgages on residential real estate property.

•

Consumer loans are generally secured by automobiles, recreational vehicles and other personal property. Some consumer loans are unsecured, have no underlying collateral, and would not be considered collateral-dependent.

Acquired Loans

The Company has acquired loans through its mergers with Bay Banks of Virginia, Inc. in 2021 (the "Bay Banks Merger") and Virginia Community Bankshares, Inc. in 2019. Prior to the adoption of ASC 326, a portion of these loans were classified as purchased-credit impaired ("PCI") under ASC 310-30 – Loans and Debt Securities Acquired with Deteriorated Credit Quality. Upon the adoption of ASC 326, the Company elected to designate its existing PCI loans as purchased credit deteriorated ("PCD") loans using the prospective transition approach. Previously established PCI loan "pools" were eliminated, and, as a result, an increase in the ACL for PCD loans of $665 thousand was recorded, and a corresponding increase in the amortized cost basis of loans held for investment was recorded. This amount represented the then-existing credit discount. The amortized cost of PCD loans post ASC 326 adoption on January 1, 2023 was $59.3 million, which includes a non-credit discount of $5.6 million that will be accreted into interest income over the remaining contractual lives of the underlying loans.

Modified Loans

ASU 2022-22 eliminated the concept of troubled debt restructurings ("TDRs") from the accounting standards for companies that have adopted ASC 326. ASU 2022-02 requires additional disclosures for certain loan modifications and disclosures of gross charge-offs by year of origination. Specifically, loan modification disclosures in periods subsequent to the adoption of ASC 326 must be made for modifications of existing loans to borrowers who were experiencing financial difficulties at the time of the modification. The modification type must include a direct change in the timing or amount of a loan's contractual cash flows. The additional disclosures are applicable to situations where there is: principal forgiveness, an interest rate reduction, an other-than-insignificant payment delay, a term extension, or any combination thereof.

Available for Sale ("AFS") Securities. The Company evaluates the fair value and credit quality of its AFS securities portfolio on a quarterly basis. In the event the fair value of a security falls below its amortized cost basis, the security is evaluated to determine whether the decline in value was caused by changes in market interest rates or security credit quality. The primary indicators of credit quality for the Company’s AFS securities portfolio are security type and credit rating, which is influenced by a number of security-specific factors that may include obligor cash flow, geography, seniority, and others. If unrealized losses are related to credit quality, the Company estimates the credit-related loss by evaluating the present value of cash flows expected to be collected from the security with the amortized cost basis of the security. Subsequent to the adoption of ASC 326, if the present value of cash flows expected to be collected is less than the amortized cost basis of the security and a credit loss exists, then an ACL is recorded for the credit loss, limited by the amount that the fair value is less than amortized cost basis. As of December 31, 2022, the Company did not have any other-than-temporarily impaired AFS securities; therefore, upon adoption of ASC 326, an ACL on AFS securities was not warranted.

Reserve for Unfunded Commitments. The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company. The reserve for unfunded commitments is adjusted as a provision for credit loss expense. The estimate includes consideration of the likelihood that funding will occur, the existence of any third-party guarantees, and an estimate of credit losses on commitments expected to be funded using the same loss rates of similar financial instruments derived in the estimation of ACL for loans held for investment. Upon the adoption of ASC 326, the Company recorded an increase in its reserve for unfunded commitments of $3.7 million, along with an after-tax cumulative effect adjustment, which reduced stockholders' equity by $2.9 million.

Note 3 – Investment Securities and Other Investments

Investment securities classified as AFS are carried at fair value in the consolidated balance sheets. The following tables present amortized cost, fair values, and gross unrealized gains and losses of investment securities AFS as of the dates stated.


	June 30, 2023
(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available for sale
State and municipal	$	59,303	$	—	$	(8,394	)	$	50,909
U.S. Treasury and agencies		72,057		—		(11,355	)		60,702
Mortgage backed securities		227,961		9		(35,928	)		192,042
Corporate bonds		41,414		—		(4,450	)		36,964
Total investment securities	$	400,735	$	9	$	(60,127	)	$	340,617


	December 31, 2022
(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available for sale
State and municipal	$	60,018	$	—	$	(9,025	)	$	50,993
U.S. Treasury and agencies		80,073		—		(12,911	)		67,162
Mortgage backed securities		230,015		51		(33,730	)		196,336
Corporate bonds		42,909		124		(3,183	)		39,850
Total investment securities	$	413,015	$	175	$	(58,849	)	$	354,341

As of June 30, 2023 and December 31, 2022, securities with a fair value of $178.8 million and $241.9 million, respectively, were pledged to secure the Bank’s line of credit with the Federal Home Loan Bank of Atlanta (“FHLB”). As of June 30, 2023 the Company pledged securities with $108.7 million of par value (amortized cost and fair value of $109.6 million and $90.0 million, respectively) as collateral for the Bank Term Funding Program (“BTFP”) established by the Board of Governors of the Federal Reserve System on March 12, 2023. The BTFP was created in response to industry events to provide banks with additional liquidity via a secured line of credit collateralized by eligible pledged securities. In addition, securities with a fair value of $11.6 million and ~~its subsidiaries. All significant intercompany balances~~$0 were pledged as of June 30, 2023 and ~~transactions have been eliminated in consolidation.~~

~~Nature of Operations~~

~~The Company operates under the supervision and monitoring of~~December 31, 2022, respectively, to secure potential borrowings from 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 primarily in the Piedmont, Southside, and Shenandoah Valley regions of the Commonwealth of Virginia and also operates under 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 affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the 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, have been made.

~~Reclassification~~

~~Certain reclassifications have been made to prior period amounts to conform to current period presentation. None of these reclassifications are considered material and have no impact on net income.~~

~~Earnings Per Share~~

~~Accounting guidance specifies the computation, presentation and disclosure requirements for earnings per share~~ (“~~EPS”~~FRB”) for entities with publicly held common stock or potential common stock such 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.Discount Window.

~~Note 1 – Summary of Significant Accounting Policies, continued~~

The following table ~~sets forth~~presents 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 )








Net income available to common shareholders
   $ 4,049,494    $ 3,579,484    $ 1,250,064    $ 1,268,616








Weighted average common shares
   3,998,267    2,774,441    4,346,866    2,795,303
Effect of dilutive securities
   —      —      —      —








Diluted average common shares
   3,998,267    2,774,441    4,346,866    2,795,303








Earnings (losses) per common share
   $ 1.01    $ 1.29    $ 0.29    $ 0.45








Diluted earnings (losses) per common share
   $ 1.01    $ 1.29    $ 0.29    $ 0.45

~~Note 2 – Investment Securities~~

Investment securities available for sale are carried 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. The amortized cost and fair values of investment securities at September 30, 2019 and December 31, 2018 are as follows:

   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








   $ 120,148    $ 1,710    $ 118    $ 121,740








Held to maturity

State and municipal
   $ 13,117    $ 506    $ 8    $ 13,615








   $ 13,117    $ 506    $ 8    $ 13,615








Total Investment Securities
   $ 133,265    $ 2,216    $ 126    $ 135,355








   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








   $ 38,828    $ 103    $ 884    $ 38,047








Held to maturity

State and municipal
   $ 15,565    $ 78    $ 140    $ 15,503








   $ 15,565    $ 78    $ 140    $ 15,503








Total Investment Securities
   $ 54,393    $ 181    $ 1,024    $ 53,550

~~Note 2 – Investment Securities, continued~~

~~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 ~~will~~may differ from contractual maturities, ~~because borrowers~~as issuers may have the right to call or prepay obligations with or without call or prepayment penalties.


	June 30, 2023
(Dollars in thousands)	Amortized Cost		Fair Value
Due in one year or less	$	502	$	502
Due after one year through five years		34,949		31,921
Due after five years through ten years		138,894		119,581
Due after ten years		226,390		188,613
Total	$	400,735	$	340,617

   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








Total
   $ 120,148    $ 121,740    $ 13,117    $ 13,615

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 ~~at September~~and number of securities, as of the dates stated.


			June 30, 2023
			Less than 12 Months					12 Months or Greater					Total
(Dollars in thousands)	Number of Securities		Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
State and municipal		82	$	2,900	$	(74	)	$	47,119	$	(8,320	)	$	50,019	$	(8,394	)
U.S. Treasury and agencies		23		—		—			60,699		(11,355	)		60,699		(11,355	)
Mortgage backed securities		84		5,420		(367	)		178,615		(35,561	)		184,035		(35,928	)
Corporate bonds		33		12,895		(1,605	)		15,769		(2,845	)		28,664		(4,450	)
Total		222	$	21,215	$	(2,046	)	$	302,202	$	(58,081	)	$	323,417	$	(60,127	)


			December 31, 2022
			Less than 12 Months					12 Months or Greater					Total
(Dollars in thousands)	Number of Securities		Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
State and municipal		82	$	18,252	$	(2,178	)	$	31,530	$	(6,847	)	$	49,782	$	(9,025	)
U.S. Treasury and agencies		28		9,904		(1,039	)		56,686		(11,872	)		66,590		(12,911	)
Mortgage backed securities		78		39,006		(3,061	)		148,449		(30,669	)		187,455		(33,730	)
Corporate bonds		33		26,018		(2,283	)		5,675		(900	)		31,693		(3,183	)
Total		221	$	93,180	$	(8,561	)	$	242,340	$	(50,288	)	$	335,520	$	(58,849	)

The Company reviews its AFS securities portfolio for potential credit losses no less than quarterly. At June 30, ~~2019~~2023 and December 31, ~~2018 is~~2022, the majority of securities in an unrealized loss position were of investment grade; however, a few did not have a third-party investment grade available. These ungraded securities were primarily subordinated debt instruments issued by bank holding companies and are classified as ~~follows:~~corporate bonds in the tables above. Investment securities with unrealized losses are generally a result of pricing changes due to changes in the interest rate environment since purchase and not as a result of permanent credit impairment. Contractual cash flows for 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. As of June 30, 2023, there was no ACL against the Company's AFS securities portfolio.

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 )








Total
   $ 8,168    $ (12 ) $ 10,713    $ (114 ) $ 18,881    $ (126 )

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 )








Total
   $ 18,423    $ (192 ) $ 23,230    $ (832 ) $ 41,653    $ (1,024 )

~~Other~~Restricted equity investments ~~(in thousands) consist~~consisted of stock in the ~~Federal Home Loan Bank~~FHLB (carrying ~~basis $5,993), Federal Reserve stock (carrying basis $963),~~value of $10.9 million and ~~various other investments (carrying basis $899).~~

~~The Company had pledged securities (in thousands)~~$14.7 million as of ~~$97,265 and $26,408 at September~~June 30, ~~2019~~2023 and December 31, ~~2018, respectively.~~2022, respectively), stock in the FRB (carrying value of $6.1 million at both June 30, 2023 and December 31, 2022), and stock in the Bank’s correspondent bank (carrying value of $468 thousand at both June 30, 2023 and December 31, 2022). Restricted equity investments are carried at cost.

10The Company also has various other equity investments, including shares in other financial institutions and fintech companies, totaling $22.7 million and $23.8 million as of June 30, 2023 and December 31, 2022, respectively, which are carried at fair value with any gain or loss reported in the consolidated statements of operations 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 has been identified, the carrying value of the investment is written down to its estimated fair market value through a charge to earnings.

Note 34 – Loans and ACL

~~Loans~~All loan and ACL information presented as of and for the three and six months ended June 30, 2023 is in accordance with ASC 326. All loan information presented prior to this period is presented in accordance with

previously applicable GAAP. As a result, the presentation of information pre-ASC 326 and post-ASC 326 adoption will not be comparable for most disclosures.

The following table presents the amortized cost of loans held for investment, ~~outstanding at September 30, 2019 and December 31, 2018 are summarized~~including Paycheck Protection Program ("PPP") loans, as ~~follows:~~of the dates stated.


(Dollars in thousands)	June 30, 2023		December 31, 2022
Commercial and industrial	$	545,921	$	590,049
Paycheck Protection Program		7,234		11,967
Real estate – construction, commercial		165,863		183,301
Real estate – construction, residential		82,199		76,599
Real estate – mortgage, commercial		879,729		864,989
Real estate – mortgage, residential		709,565		631,772
Real estate – mortgage, farmland		5,583		6,599
Consumer		62,510		47,423
Gross loans		2,458,604		2,412,699
Less: deferred loan fees, net of costs		327		(1,640	)
Total	$	2,458,931	$	2,411,059

   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 Atlanta~~FHLB. Loans totaling ~~$126,125~~$601.9 million and ~~$104,791~~$436.0 million were pledged as of ~~September~~June 30, ~~2019~~2023 and December 31, ~~2018,~~2022, respectively. Additionally, PPP loans were pledged as collateral for the FRB's Paycheck Protection Program Liquidity Facility ("PPPLF") advances in the amount of $0 and $51 thousand as of June 30, 2023 and December 31, 2022, respectively.

The following table presents the aging of the ~~recorded~~amortized cost of loans held for investment ~~of past due loans (in thousands)~~by loan category as of ~~September~~the date stated.


	June 30, 2023
(Dollars in thousands)	Current Loans		30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days Past Due & Accruing		Nonaccrual		Total Loans
Commercial and industrial	$	482,419	$	1,654	$	—	$	—	$	61,848	$	545,921
Paycheck Protection Program		7,234		—		—		—		—		7,234
Real estate – construction, commercial		162,176		2,329		313		—		1,045		165,863
Real estate – construction, residential		80,818		727		—		—		654		82,199
Real estate – mortgage, commercial		866,968		462		1,104		—		11,195		879,729
Real estate – mortgage, residential		698,181		389		571		1,998		8,426		709,565
Real estate – mortgage, farmland		5,583		—		—		—		—		5,583
Consumer		59,530		1,370		658		405		547		62,510
Less: Deferred loan fees, net of costs		327		—		—		—		—		327
Total Loans	$	2,363,236	$	6,931	$	2,646	$	2,403	$	83,715	$	2,458,931

The following table presents the amortized cost of nonaccrual loans held for investment by loan category as of the date stated.


	June 30, 2023
(Dollars in thousands)	Nonaccrual Loans with No ACL		Nonaccrual Loans with an ACL		Total Nonaccrual Loans
Commercial and industrial	$	27	$	61,821	$	61,848
Real estate – construction, commercial		—		1,045		1,045
Real estate – construction, residential		—		654		654
Real estate – mortgage, commercial		10,102		1,093		11,195
Real estate – mortgage, residential		879		7,547		8,426
Consumer		1		546		547
Total	$	11,009	$	72,706	$	83,715

Nonaccrual loans increased $73.4 million to $83.7 million as of June 30, ~~2019 and~~2023 from $10.3 million as of December 31, ~~2018:~~2022. Of this increase, $37.3 million was due to one commercial and industrial loan that was placed on nonaccrual status in the second quarter of 2023, discussed further in the modified loans section below.

   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

The Company recognized $0 and $89 thousand of interest income from nonaccrual loans during the three and six months ended June 30, 2023, respectively.

Credit Quality Indicators

The Company categorizes loans held for investment into risk categories based on relevant information about the expected ability of borrowers to service their debt, such as current financial information, historical payment experience, collateral adequacy, credit documentation, and current economic trends, among other factors. Management considers loan risk grades to be the best indication of credit quality of its portfolio of loans held for investment. The Company uses the following definitions for loan risk grades and periodically evaluates the appropriateness of these grades across its loan portfolio. Bank regulatory agencies periodically review the Company's loan portfolio, including loan risk grades. Loan risk grades as determined by management may be changed by regulators, based on their judgment of the facts at the time of review.

~~Note~~

Risk Grade 1 – Strong: This grade is reserved for loans to the strongest of borrowers. These loans are to individuals or corporations that are well known to the Bank and are always secured with an almost guaranteed source of repayment such as a lien on a bank deposit account. Character, credit history, and ability of individuals or company principals are excellent and unquestioned. Source of income and industry of borrower appears stable. High liquidity, minimum risk, good ratios, and low handling cost are present.

Risk Grade 2 – Minimal: This grade is reserved for loans to borrowers who are deemed exceptionally strong. These loans are within guidelines and where the borrowers have documented significant overall financial strength. These loans have excellent sources of repayment, significant balance sheet liquidity, no significant identifiable risk of collection, and conform in all respects to policy, guidelines, underwriting standards, and federal and state regulations (no exceptions of any kind).

Risk Grade 3 – ~~Loans, continued~~Acceptable: This grade is reserved for loans to borrowers who are deemed strong. These loans have adequate sources of repayment, with little identifiable risk of collection. Generally, loans assigned this risk grade will demonstrate the following characteristics: (1) conformity in all respects with policy, guidelines, underwriting standards, and federal and state regulations (no exceptions of any kind), (2) documented historical cash flow that meets or exceeds required minimum guidelines, or that can be supplemented with verifiable cash flow from other sources, and (3) adequate secondary sources to liquidate the debt.

   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~~Risk Grade 4 – ~~Allowance~~Satisfactory: This grade is given to satisfactory loans containing more risk than Risk Grade 3 loans. These loans have adequate sources of repayment, with little identifiable risk of collection. Loans assigned this risk grade will demonstrate the following characteristics: (1) general conformity to the Bank's underwriting requirements, with limited exceptions to policy, product, or underwriting guidelines. All exceptions noted have documented mitigating factors that offset any additional risk associated with the exceptions noted, (2) documented historical cash flow that meets or exceeds required minimum guidelines, or that can be supplemented with verifiable cash flow from other sources, and (3) adequate secondary sources to liquidate the debt, including combinations of liquidity, liquidation of collateral, or liquidation value to the net worth of the borrower or guarantor.

Risk Grade 5 – Watch: This grade is for satisfactory loans containing acceptable but elevated risk. These loans are characterized by borrowers who have a marginal cash flow, marginal profitability, or have experienced an unprofitable year and declining financial condition. The borrower's management may be deemed to be satisfactory, the collateral securing the loan may create a loan-to-value ratio in excess of 90%, the debt service coverage ratio and global debt service coverage are unstable but mostly positive, and/or guarantor support, if any, is inadequate. Loans ~~Losses~~classified as Watch warrant additional monitoring by management.

Risk Grade 6 – Special Mention: This grade is for loans that have potential weaknesses that deserve management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the Bank's credit position at some future date. Special Mention loans are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification. Special mention credits typically exhibit underwriting guideline tolerances and/or exceptions with no mitigating factors, or emerging weaknesses that may or may not be cured as time passes.

Risk Grade 7 – Substandard: A ~~summary~~substandard loan is inadequately protected by the current sound net worth and paying capacity of ~~changes~~the obligor or of the collateral pledged, if any. Loans classified as substandard must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt; they are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected. Loans consistently not meeting the repayment schedule should be downgraded further to substandard. Loans in this category are characterized by deterioration in quality exhibited by any number of well-defined weaknesses requiring corrective action. The weaknesses may include, but are not limited to: (1) high debt to worth ratios, (2) declining or negative earnings trends, (3) declining or inadequate liquidity, (4) improper loan structure, (5) questionable repayment sources, (6) lack of well-defined secondary repayment source, and (7) unfavorable competitive comparisons. Such loans are no longer considered to be adequately protected due to the borrower's declining net worth, lack of earnings capacity, declining collateral margins, and/or unperfected collateral positions. The possibility of loss of a portion of the loan balance cannot be ruled out. The repayment ability of the borrower is marginal or weak and the loan may have exhibited excessive overdue status or extensions and/or renewals.

Risk Grade 8 – Doubtful: Loans classified doubtful have all the weaknesses inherent in loans classified substandard, plus the added characteristic that the weaknesses make collection or liquidation in full on the basis of currently existing facts, conditions, and values highly questionable and improbable. However, these loans are not yet rated as loss because certain events may occur which would salvage the Bank's position, which can include, but not limited to (1) an injection of capital, (2) alternative financing, and (3) liquidation of assets or the pledging of additional collateral. Doubtful is a temporary grade where a loss is expected but is presently not quantified with any degree of accuracy. Once the loss position is determined, the amount is charged off against the allowance for credit losses.

Risk Grade 9 – Loss: Loans classified loss are considered uncollectable and of such little value that their continuance as assets is not warranted. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer charging off the worthless loan, even though partial recovery may be effected in the future. Probable loss portions of doubtful loans ~~losses (in thousands)~~are charged off promptly against the allowance for ~~September~~credit losses.

The following table presents the amortized cost of loans held for investment by internal loan risk grade by year of origination as of June 30, ~~2019~~2023. Also presented are current period gross charge-offs by loan type for the six months ended June 30, 2023.


	Term Loans Amortized Cost Basis by Origination Year
(Dollars in thousands)	2023		2022		2021		2020		2019		Prior		Revolving Loans		Total
Commercial and industrial
Risk Grades 1 - 4	$	36,665	$	131,441	$	44,931	$	31,890	$	12,814	$	17,085	$	135,331	$	410,157
Risk Grades 5 - 6		28,363		1,904		9,964		6,793		450		1,827		17,375		66,676
Risk Grade 7		—		55,429		2,172		3,253		870		44		1,567		63,335
Risk Grade 8		—		5,338		36		—		—		—		379		5,753
Total		65,028		194,112		57,103		41,936		14,134		18,956		154,652		545,921
Current period gross charge-offs		—		198		39		—		625		9		7,224		8,095

Paycheck Protection Program
Risk Grades 1 - 4		—		—		7,234		—		—		—		—		7,234
Total		—		—		7,234		—		—		—		—		7,234

Real estate – construction, commercial
Risk Grades 1 - 4		4,684		56,296		46,538		16,193		2,345		8,865		10,820		145,741
Risk Grades 5 - 6		—		6,464		6,252		532		—		840		5,792		19,880
Risk Grade 7		—		—		—		—		—		242		—		242
Total		4,684		62,760		52,790		16,725		2,345		9,947		16,612		165,863
Current period gross charge-offs		—		—		—		—		—		28		—		28

Real estate – construction, residential
Risk Grades 1 - 4		27,215		39,151		7,998		347		1,194		71		2,046		78,022
Risk Grades 5 - 6		—		2,278		473		585		—		—		240		3,576
Risk Grade 7		21		580		—		—		—		—		—		601
Total		27,236		42,009		8,471		932		1,194		71		2,286		82,199

Real estate – mortgage, commercial
Risk Grades 1 - 4		29,516		268,410		113,715		153,897		44,080		144,333		11,689		765,640
Risk Grades 5 - 6		—		25,746		4,757		16,870		13,304		31,823		4,042		96,542
Risk Grade 7		—		—		6,307		2,180		131		8,831		98		17,547
Total		29,516		294,156		124,779		172,947		57,515		184,987		15,829		879,729

Real estate – mortgage, residential
Risk Grades 1 - 4		50,358		204,528		117,255		71,731		29,032		146,643		57,415		676,962
Risk Grades 5 - 6		35		8,570		24		1,605		2,482		6,475		1,189		20,380
Risk Grade 7		—		650		2,287		1,934		611		6,417		324		12,223
Total		50,393		213,748		119,566		75,270		32,125		159,535		58,928		709,565
Current period gross charge-offs		—		744		—		498		—		14		—		1,256

Real estate – mortgage, farmland
Risk Grades 1 - 4		—		729		1,424		—		1,549		1,624		211		5,537
Risk Grades 5 - 6		—		—		—		—		—		—		46		46
Total		—		729		1,424		—		1,549		1,624		257		5,583

Consumer
Risk Grades 1 - 4		23,641		17,070		4,779		3,875		1,854		970		9,043		61,232
Risk Grades 5 - 6		56		54		11		71		4		444		30		670
Risk Grade 7		15		159		125		118		85		106		—		608
Total		23,712		17,283		4,915		4,064		1,943		1,520		9,073		62,510
Current period gross charge-offs		571		156		131		23		41		27		1		950

Total Loans
Risk Grades 1 - 4	$	172,079	$	717,625	$	343,874	$	277,933	$	92,868	$	319,591	$	226,555	$	2,150,525
Risk Grades 5 - 6		28,454		45,016		21,481		26,456		16,240		41,409		28,714		207,770
Risk Grade 7		36		56,818		10,891		7,485		1,697		15,640		1,989		94,556
Risk Grade 8		—		5,338		36		—		—		—		379		5,753
Total	$	200,569	$	824,797	$	376,282	$	311,874	$	110,805	$	376,640	$	257,637	$	2,458,604
Total current period gross charge-offs	$	571	$	1,098	$	170	$	521	$	666	$	78	$	7,225	$	10,329

The table above includes one $5.3 million commercial and ~~December 31, 2018 is~~industrial loan classified as doubtful (risk grade 8) as of June 30, 2023, which was fully reserved as of the same date. There were no loans classified as loss (risk grade 9) as of June 30, 2023.

The following table presents an analysis of the change in the ACL by major loan segment for the period stated. Loan segments are presented as either commercial or consumer as follows:

•

Commercial – Commercial and industrial; PPP; real estate – construction, commercial; real estate – mortgage, commercial; and real estate – mortgage, farmland;

•

Consumer – real estate – construction, residential; real estate – mortgage, residential; and consumer.

   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


	For the three months ended June 30, 2023
(Dollars in thousands)	Commercial			Consumer			Total
Balance, beginning of period	$	21,279		$	8,695		$	29,974
Charge-offs		(7,326	)		(1,694	)		(9,020	)
Recoveries		887			126			1,013
Net charge-offs		(6,439	)		(1,568	)		(8,007	)
Provision for credit losses - loans		19,524			1,576			21,100
Balance, end of period	$	34,364		$	8,703		$	43,067


	For the six months ended June 30, 2023
(Dollars in thousands)	Commercial			Consumer			Total
Balance, beginning of period	$	19,269		$	3,670		$	22,939
Impact of ASC 326 adoption		(470	)		4,492			4,022
Charge-offs		(8,125	)		(2,204	)		(10,329	)
Recoveries		1,005			230			1,235
Net charge-offs		(7,120	)		(1,974	)		(9,094	)
Provision for credit losses - loans		22,685			2,515			25,200
Balance, end of period	$	34,364		$	8,703		$	43,067

The increase in the ACL during the six months ended June 30, 2023 was primarily attributable to specific reserve needs of $14.1 million for a portfolio of specialty finance loans (classified as commercial and industrial loans) and $4.0 million due to the adoption of ASC 326 effective January 1, 2023. Of the $9.0 million and $10.3 million in gross loan charge-offs for the three and six months ended June 30, 2023, respectively, $7.0 million was attributable to one commercial and industrial loan that was fully charged-off in the second quarter of 2023.

12Other than the aforementioned, there were no material changes to the assumptions, loss factors (both quantitative and qualitative), or reasonable and supportable forecasts used in the estimation of the ACL and the provision for credit losses for loans held for investment as of and for the six months ended June 30, 2023.

The following table presents the amortized cost of collateral-dependent loans as of the date stated.


(Dollars in thousands)	June 30, 2023
Commercial and industrial	$	94,743
Real estate – construction, commercial		5,792
Real estate – construction, residential		1,646
Real estate – mortgage, commercial		17,403
Real estate – mortgage, residential		1,735
Total collateral-dependent loans	$	121,319

Acquired Loans

As of June 30, 2023, the amortized cost of PCD loans totaled $57.1 million with an estimated ACL of $601 thousand. The remaining non-credit discount on PCD loans was $5.0 million as of June 30, 2023.

Modified Loans

The Company closely monitors the performance of borrowers experiencing financial difficulty to understand the effectiveness of its loan modification efforts.

~~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 presents information ~~related to impaired~~on modified loans ~~by portfolio segment, 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

~~Note 4 – Allowance 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. acquisition had remaining balances (in thousands) of $25,091 and 34,672~~ as of ~~September~~the date stated.


	June 30, 2023
(Dollars in thousands)	Number of Loans		Amortized Cost		Amortized Cost of Modified Loans to Gross Loans by Category			Financial Effect
Modification - term extension and forbearance
Commercial and industrial		1		37,250		6.82	%	See Note (1)
Real estate – mortgage, commercial		2		6,288		0.71	%	Forbearance agreements
Modification - interest-only
Real estate – mortgage, commercial		1		3,051		0.35	%	Interest-only payments for six months
Modification - term extension and interest-only
Real estate – mortgage, commercial		1		287		0.03	%	Term extension and interest-only payments for six months
Total		5	$	46,876		1.91	%
(1) This $37.3 million loan was modified via a forbearance agreement in the second quarter of 2023 under which the borrower defaulted in this same period. The Company received cash payments of $4.5 million in the six months ended June 30, 2023 for interest. This loan is collateral-dependent, is on nonaccrual status, and has a specific reserve of $8.0 million as of June 30, 2023.

The following table presents an aging analysis of the amortized cost of loans modified in the preceding 12 months as of the date stated.


	June 30, 2023
	Payment Status (Amortized Cost)
(Dollars in thousands)	Current Loans		30-89 Days Past Due		90+ Days Past Due		Nonaccrual		Total
Commercial and industrial	$	—	$	—	$	—	$	37,250	$	37,250
Real estate – mortgage, commercial		—		—		—		9,626		9,626
Total modified loans	$	—	$	—	$	—	$	46,876	$	46,876

None of the loans in the table above, other than the $37.3 million commercial and industrial loan on nonaccrual, had a payment default during the six months ended June 30, ~~2019 and~~2023.

Six residential mortgage loans with a total amortized cost of $645 thousand were in the process of foreclosure as of June 30, 2023, compared to none as of December 31, ~~2018, respectively. Of these balances three loan relationships were considered specifically impaired purchased credit-impaired loans. One~~2022.

Pre-ASC 326 Adoption Disclosures

Prior to the adoption of ~~these relationships was resolved during 2018 and~~ASC 326 on January 1, 2023, the Company ~~recovered $200 of~~calculated the ~~balance~~allowance for loan losses under the incurred loss methodology. The following disclosures are presented under this previously~~written-off.~~ ~~During~~ applicable GAAP for 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.~~ applicable prior periods.

The following table presents the ~~recorded investment in the segments~~aging of the ~~River Bancorp, Inc. purchased~~amortized cost of loans held for investment as of ~~September 30, 2019 and December 31, 2018 (in thousands):~~the date 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


	December 31, 2022
(Dollars in thousands)	Current Loans			30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days Past Due & Accruing		Nonaccrual		Total Past Due & Nonaccrual		PCI Loans		Total Loans
Commercial and industrial	$	585,487		$	488	$	279	$	—	$	2,314	$	3,081	$	1,481	$	590,049
Paycheck Protection Program		11,967			—		—		—		—		—		—		11,967
Real estate – construction, commercial		181,432			1,136		19		—		714		1,869		—		183,301
Real estate – construction, residential		73,972			1,416		1,204		—		—		2,620		7		76,599
Real estate – mortgage, commercial		799,378			6,199		297		6,234		1,658		14,388		51,223		864,989
Real estate – mortgage, residential		614,178			4,544		231		1,998		5,143		11,916		5,678		631,772
Real estate – mortgage, farmland		6,524			—		75		—		—		75		—		6,599
Consumer		45,461			880		200		28		495		1,603		359		47,423
Less: deferred loan fees, net of costs		(1,640	)		—		—		—		—		—		—		(1,640	)
Total Loans	$	2,316,759		$	14,663	$	2,305	$	8,260	$	10,324	$	35,552	$	58,748	$	2,411,059

~~Note 4 – Allowance for Loans Losses, continued~~

The following table presents the ~~Company’s~~aging of the amortized cost of PCI loans as of the date stated.


	December 31, 2022
(Dollars in thousands)	Current Loans		30-89 Days Past Due		Greater than 90 Days Past Due & Accruing		Total Loans
Commercial and industrial	$	1,481	$	—	$	—	$	1,481
Real estate – construction, commercial		7		—		—		7
Real estate – mortgage, commercial		51,223		—		—		51,223
Real estate – mortgage, residential		5,324		354		—		5,678
Consumer		359		—		—		359
Total PCI Loans	$	58,394	$	354	$	—	$	58,748

The following table presents the outstanding principal balance and related recorded investment of acquired loans included in the consolidated balance sheet as of the date stated.


(Dollars in thousands)	December 31, 2022
PCI loans
Outstanding principal balance	$	64,911
Recorded investment		58,748
Purchased performing loans
Outstanding principal balance		513,461
Recorded investment		511,752
Total acquired loans
Outstanding principal balance		578,372
Recorded investment		570,500

The following table presents the changes in accretable yield for PCI loans for the periods stated.


(Dollars in thousands)	For the three months ended June 30, 2022			For the six months ended June 30, 2022
Balance, beginning of period	$	13,337		$	16,849
Accretion		(1,750	)		(5,262	)
Reclassification of nonaccretable difference due to improvement in expected cash flows		2,515			2,515
Other changes, net		(1,157	)		(1,157	)
Balance, end of period	$	12,945		$	12,945

The following table presents a summary of the loan portfolio individually and collectively evaluated for impairment as of the date stated.


	December 31, 2022
(Dollars in thousands)	Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Total Loan Balances			Related Allowance for Loan Losses
PCI loans:
Commercial and industrial	$	—	$	1,481	$	1,481		$	—
Real estate – construction, commercial		—		7		7			—
Real estate – mortgage, commercial		—		51,223		51,223			3
Real estate – mortgage, residential		—		5,678		5,678			—
Consumer		—		359		359			—
Total PCI loans		—		58,748		58,748			3
Originated and purchased performing loans:
Commercial and industrial		39,247		549,321		588,568			15,272
Real estate – construction, commercial		521		182,773		183,294			1,637
Real estate – construction, residential		—		76,599		76,599			628
Real estate – mortgage, commercial		4,567		809,199		813,766			2,353
Real estate – mortgage, residential		835		625,259		626,094			1,760
Real estate – mortgage, farmland		—		6,599		6,599			4
Consumer		—		47,064		47,064			1,282
Total originated and purchased performing loans		45,170		2,296,814		2,341,984			22,936
Gross loans		45,170		2,355,562		2,400,732			22,939
Less: deferred loan fees, net of costs		—		—		(1,640	)		—
Total	$	45,170	$	2,355,562	$	2,399,092		$	22,939

The table above excludes PPP loans of $12.0 million as of December 31, 2022. PPP loans are fully guaranteed by the U.S. government; therefore, the Company recorded no allowance for loan losses for these loans.

The following tables present information related to impaired loans held for investment by loan type as of and for the dates stated.


	December 31, 2022
(Dollars in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance
With no specific allowance recorded:
Commercial and industrial	$	1,309	$	1,289	$	—
Real estate – construction, commercial		521		521		—
Real estate – mortgage, commercial		4,438		4,404		—
Real estate – mortgage, residential		835		834		—
With an allowance recorded:
Commercial and industrial	$	37,938	$	37,911	$	3,178
Real estate – mortgage, commercial		129		126		1
Total	$	45,170	$	45,085	$	3,179


	For the three months ended June 30, 2022				For the six months ended June 30, 2022
(Dollars in thousands)	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no specific allowance recorded:
Commercial and industrial	$	6,203	$	12	$	5,754	$	74
Real estate – construction, commercial		521		8		523		8
Real estate – mortgage, commercial		6,254		100		9,067		148
Real estate – mortgage, residential		1,441		3		1,392		17
With an allowance recorded:
Commercial and industrial	$	6,619	$	33	$	4,955	$	33
Real estate – mortgage, commercial		3,570		2		1,829		2
Real estate – mortgage, residential		58		5		59		5
Total	$	24,666	$	163	$	23,579	$	287

Impaired loans also include TDRs, and as of December 31, 2022, there were 11 TDRs totaling $1.1 million.

The following table presents the analysis of the change in the allowance for loan losses by loan type for the period stated.


(Dollars in thousands)	For the three months ended June 30, 2022			For the six months ended June 30, 2022
Allowance for loan losses, beginning of period	$	12,013		$	12,121
Charge-offs
Commercial and industrial		(1,383	)		(3,746	)
Real estate – construction		—			(123	)
Real estate – mortgage		(1,079	)		(1,093	)
Consumer		(329	)		(605	)
Total charge-offs		(2,791	)		(5,567	)
Recoveries
Commercial and industrial		2			37
Real estate – construction		4			16
Real estate – mortgage		387			391
Consumer		133			250
Total recoveries		526			694
Net charge-offs		(2,265	)		(4,873	)
Provision for loan losses		7,494			9,994
Allowance for loan losses, end of period	$	17,242		$	17,242

The following table presents the amortized cost of loans held for investment by internal loan risk grade ~~(in thousands)~~ as of ~~September~~the date stated.


	December 31, 2022
(Dollars in thousands)	Grade 1 Prime		Grade 2 Desirable		Grade 3 Good		Grade 4 Acceptable		Grade 5 Pass/Watch		Grade 6 Special Mention		Grade 7 Substandard		Total
PCI loans:
Commercial and industrial	$	—	$	—	$	—	$	1,369	$	—	$	112	$	—	$	1,481
Real estate – construction, commercial		—		—		—		7		—		—		—		7
Real estate – mortgage, commercial		—		—		—		22,778		26,059		1,700		686		51,223
Real estate – mortgage residential		—		—		—		1,453		1,985		—		2,240		5,678
Consumer		—		—		—		—		353		—		6		359
Total PCI loans		—		—		—		25,607		28,397		1,812		2,932		58,748
Originated and purchased performing loans:
Commercial and industrial		318		885		193,144		312,278		38,552		2,834		40,557		588,568
Paycheck Protection Program		11,967		—		—		—		—		—		—		11,967
Real estate – construction, commercial		—		361		14,223		156,027		8,504		3,365		814		183,294
Real estate – construction, residential		—		—		3,110		72,327		1,162		—		—		76,599
Real estate – mortgage, commercial		—		2,330		187,648		561,554		54,352		2,048		5,834		813,766
Real estate – mortgage residential		—		7,311		233,697		365,511		11,858		—		7,717		626,094
Real estate – mortgage, farmland		549		—		1,315		4,609		126		—		—		6,599
Consumer		197		—		21,330		24,731		256		—		550		47,064
Total originated and purchased performing loans		13,031		10,887		654,467		1,497,037		114,810		8,247		55,472		2,353,951
Gross loans	$	13,031	$	10,887	$	654,467	$	1,522,644	$	143,207	$	10,059	$	58,404	$	2,412,699
Less: deferred loan fees, net of costs																(1,640	)
Total															$	2,411,059

There were no loans classified as doubtful or loss as of December 31, 2022.

Note 5 – Goodwill and Other Intangible Assets

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 an 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 June 30, ~~2019~~2023 and December 31, ~~2018:~~2022, 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.


	June 30, 2023
(Dollars in thousands)	Gross Carrying Value		Accumulated Amortization			Net Carrying Value
Core deposit intangibles	$	9,626	$	(4,977	)	$	4,649
Other amortizable intangibles		3,318		(2,042	)		1,276
Total	$	12,944	$	(7,019	)	$	5,925

	December 31, 2022
(Dollars in thousands)	Gross Carrying Value		Accumulated Amortization			Net Carrying Value
Core deposit intangibles	$	9,626	$	(4,330	)	$	5,296
Other amortizable intangibles		3,282		(1,995	)		1,287
Total	$	12,908	$	(6,325	)	$	6,583

   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

~~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 $1.3 million and ~~9 (Loss). There were no loans classified in these categories~~$876 thousand at ~~September~~June 30, ~~2019~~2023 and December 31, ~~2018.~~2022, respectively, related to the servicing of the government guaranteed portion of certain loans that the Company has sold. Loan servicing assets of $405 thousand were added during the six months ended June 30, 2023. The amortization of these intangibles is included in interest and fees on loans in the consolidated statements of operations totaled ($113 thousand) and $96 thousand for the three months ended June 30, 2023 and 2022, respectively, and $4 thousand and $134 thousand for the six months ended June 30, 2023 and June 30, 2022, respectively.

The Company retains servicing rights on residential mortgages originated and sold into the secondary market. The fair value of MSR assets was $28.2 million and $29.0 million as of June 30, 2023 and December 31, 2022, respectively.

Note ~~5 -~~6 – Borrowings

FHLB Borrowings

The Bank has a line of credit from the FHLB secured by pledged qualifying real estate loans and securities. At June 30, 2023 and December 31, 2022, based on pledged collateral, the line totaled $572.7 million and $525.1 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 totaling $219.1 million and $311.7 million at June 30, 2023 and December 31, 2022, respectively. FHLB borrowings required the Bank to hold $10.9 million and $14.7 million of FHLB stock at June 30, 2023 and December 31, 2022, respectively, which is included in restricted equity investments on the consolidated balance sheets. The Bank also has letters of credit issued by the FHLB in the amount of $67.6 million as of June 30, 2023 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 $286.0 million as of June 30, 2023.

The following table presents information regarding FHLB advances outstanding as of the date stated.


	June 30, 2023
(Dollars in thousands)	Balance		Origination Date	Stated Interest Rate			Maturity Date
Fixed Rate Credit	$	50,000	3/15/2023		4.07	%	3/15/2027
Fixed Rate Credit		50,000	5/2/2023		3.87	%	5/3/2027
Fixed Rate Credit		50,000	5/4/2023		3.52	%	5/4/2028
Daily Rate Credit		69,100	5/8/2023		5.32	%	5/8/2024
Total FHLB borrowings	$	219,100

FRB Borrowings

Advances under the BTFP are up to a one-year term and are priced at the one-year overnight index swap rate plus 10 basis points, which is fixed for the term on the advance date. Advances can be repaid at any time without penalty. As of June 30, 2023, the Company had an immediately available line through the BTFP of $100.5 million, of which the Company had drawn one advance for $65.0 million, maturing May 10, 2024, with a fixed interest rate of 4.74%. As of June 30, 2023, availability through the FRB Discount Window was $11.1 million. As of June 30, 2023 and December 31, 2022, the Company had no outstanding borrowings through the FRB Discount Window.

Other Borrowings

The Company had unsecured lines of credit with correspondent banks, which totaled $28.0 million as of both June 30, 2023 and December 31, 2022. These lines bear interest at the prevailing rates for such loans and are cancellable any time by the correspondent bank. As of June 30, 2023 and December 31, 2022, none of these lines of credit with correspondent banks were drawn upon.

The Company had $39.9 million of subordinated notes, net, outstanding as of both June 30, 2023 and December 31, 2022. The Company's subordinated notes are comprised of an issuance in October 2019 maturing October 15, 2029 (the “2029 Notes”) and an issuance in May 2020 maturing June 1, 2030 (the “2030 Note”). As of June 30, 2023, the net carrying amount of the 2029 Notes was $25.1 million, inclusive of a $629 thousand purchase accounting adjustment (premium). For the three months ended June 30, 2023 and 2022, the effective interest rate on the 2029 Notes was 4.99% and 4.94%, respectively, inclusive of the amortization of the purchase accounting adjustment (premium). For the six months ended June 30, 2023 and 2022, the effective interest rate on the 2029 Notes was 5.04% and 5.01%, respectively, inclusive of the amortization of the purchase accounting adjustment (premium). As of June 30, 2023, the net carrying amount of the 2030 Note, including capitalized, unamortized debt issuance costs, was $14.8 million. For the three and six months ended June 30, 2023 and 2022, the effective interest rate on the 2030 Note was 6.10%.

Note 7 – Derivative Financial Instruments and Hedging Activities

~~During the first quarter of 2019, the~~The Company ~~entered~~enters into an interest rate swap ~~agreement (‘‘swap agreement’’) to facilitate the risk management strategies needed in order~~agreements to accommodate the needs of its banking customers. The Company mitigates the interest rate risk of entering into these ~~loan~~swap agreements by entering into equal and offsetting swap agreements with ~~a highly rated~~highly-rated third-party financial ~~institution. This~~institutions. These back-to-back swap ~~agreement is a~~agreements are free-standing ~~derivative~~derivatives 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).

The following tables present the notional and fair value of interest rate swap agreements as of ~~September 30, 2019.~~the dates stated.


	June 30, 2023
(Dollars in thousands)	Notional Amount		Fair Value
Interest rate swap agreement
Receive fixed/pay variable swaps	$	1,974	$	(95	)
Pay fixed/receive variable swaps		1,974		95

	December 31, 2022
(Dollars in thousands)	Notional Amount		Fair Value
Interest rate swap agreement
Receive fixed/pay variable swaps	$	2,178	$	(95	)
Pay fixed/receive variable swaps		2,178		95

   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 )

~~The Bank also participates in a “mandatory” delivery program for~~As part of its efforts to sell originated government guaranteed and conventional ~~mortgage loans held for sale. Under~~residential 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 close~~had entered into $9.0 million and $11.7 million of ~~such loans. This differs from a “best efforts” delivery, which sets the sale price~~rate 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 percent~~expected 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 SeptemberJune 30, ~~2019 and the year ended December 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, 20192023 and December 31, ~~2018. All shares issued to~~2022, respectively. Additionally, $10.2 million and ~~held~~$12.8 million of closed loan inventory waiting for sale were hedged by ~~the Plan~~$16.0 million and $21.5 million in forward to-be-announced mortgage-backed securities as of June 30, 2023 and December 31, 2022, respectively. Mortgage derivative assets totaled $305 thousand and $112 thousand as of June 30, 2023 and December 31, 2022, respectively, and

mortgage derivative liabilities were $0 thousand and $24 thousand as of June 30, 2023 and December 31, 2022, respectively. Mortgage derivative assets and liabilities are ~~considered outstanding~~included in other assets and other liabilities, respectively, in the ~~computation 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.~~consolidated balance sheets.

Note 78 – Stock-Based Compensation

The Company ~~has granted~~grants time-based restricted stock awards (“time-based RSAs”) to employees and directors under the Blue Ridge ~~Bank~~Bankshares, Inc. 2023 Stock Incentive Plan, which was approved by shareholders at the Company’s 2023 annual meeting of shareholders on June 14, 2023 and replaced the Company’s prior stock-based compensation plan, the Blue Ridge Bankshares, Inc. Equity Incentive ~~Plan. The restricted stock awards~~Plan, effective such date. Time-based RSAs are considered fixed awards as the number of shares and fair value isare both 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~~ ~~compensation~~requisite service period, which is generally three years. Beginning in 2022, the Company began granting performance-based restricted stock awards (“PSAs”) to employees, in addition to time-based RSAs. PSAs vest at the end of a three-year period contingent on the Company's achievement of financial goals and are being expensed on a straight-line basis over the same period with adjustments periodically based on projected achievement of the performance target, which may change the number of PSA shares that will ultimately vest. Time-based RSAs carry voting and dividend rights, while PSAs carry voting rights and are subject to deferred dividend payout restrictions.

Compensation expense recognized in the ~~Consolidated Statements~~consolidated statements of ~~Income~~operations related to ~~restricted stock awards,~~time-based RSAs and PSAs, net of ~~estimated~~ forfeitures, ~~in thousands,~~ was ~~$160~~$457 thousand and ~~$89 thousand for the nine months ended September 30, 2019 and 2018, respectively and $40 thousand and $67~~$936 thousand for the three and six months ended ~~September~~June 30, ~~2019,~~2023, respectively, and ~~2018,~~was $374 thousand and $729 thousand for the three and six months ended June 30, 2022, respectively. During the six months ended June 30, 2023, no grants of time-based RSAs or PSAs were made, while forfeitures relating to 26,841 shares of the Company's common stock resulted due to employee terminations. As of June 30, 2023, time-based RSAs and PSAs relating to 281,523 shares of the Company's common stock were outstanding, and unrecognized compensation expense related to these awards totaled $1.7 million.

During the first six months of 2023, stock options relating to 3,750 shares were exercised and stock options relating to 1,875 shares expired, resulting in stock options relating to 47,049 shares remaining outstanding as of June 30, 2023. These options were assumed by the Company in connection with the Bay Banks Merger and expire between March 2024 and December 2029.

Note 9 – Leases

The ~~fair~~Company’s long-term lease agreements are classified as operating leases and consist primarily of real estate for retail branches and office space. 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 ~~restricted stock awards at September 30, 2019 was $1.0 million.~~the dates and for the periods stated.


	For the three months ended				For the six months ended
(Dollars in thousands)	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Operating lease cost	$	526	$	654	$	1,241	$	1,210
Total lease cost		526		654		1,241		1,210
Cash paid for amounts included in the measurement of lease liabilities		546		341		1,145		1,077


(Dollars in thousands)	June 30, 2023			December 31, 2022
Right-of-use assets	$	5,744		$	6,903
Lease liabilities	$	6,765		$	7,860
Weighted average remaining lease term (years)		5.76			5.85
Weighted average discount rate		2.41	%		2.40	%

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)	June 30, 2023
Six months ending December 31, 2023	$	889
Twelve months ending December 31, 2024		1,445
Twelve months ending December 31, 2025		1,116
Twelve months ending December 31, 2026		1,049
Twelve months ending December 31, 2027		963
Thereafter		1,771
Total undiscounted cash flows		7,233
Discount		(468	)
Lease liabilities	$	6,765

Note 8–10 – 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.

~~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:~~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~~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.~~flows. Level 2 securities would include U.S. agency securities, mortgage-backed agency securities, obligations of states and political subdivisions, and certain corporate, ~~asset backed~~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 Bank~~ FRB

and ~~Federal Home Loan Bank~~FHLB stock approximates fair value based upon the redemption provisions of each entity and is therefore excluded from the following table.

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.


	June 30, 2023
(Dollars in thousands)	Total		Level 1		Level 2		Level 3
Securities available for sale
State and municipals	$	50,909	$	—	$	50,909	$	—
U.S. Treasury and agencies		60,702		—		60,702		—
Mortgage backed securities		192,042		—		184,598		7,444
Corporate bonds		36,964		—		28,665		8,299
Total securities available for sale	$	340,617	$	—	$	324,874	$	15,743
Other assets
MSR assets	$	28,246	$	—	$	—	$	28,246
Rabbi trust assets		584		584		—		—
Mortgage derivative asset		305		—		305		—
Interest rate swap asset		95		—		95		—
Other liabilities
Interest rate swap liability	$	95	$	—	$	95	$	—


	December 31, 2022
(Dollars in thousands)	Total		Level 1		Level 2		Level 3
Securities available for sale
State and municipals	$	50,993	$	—	$	50,993	$	—
U.S. Treasury and agencies		67,162		—		67,162		—
Mortgage backed securities		196,336		—		188,719		7,617
Corporate bonds		39,850		—		35,561		4,289
Total securities available for sale	$	354,341	$	—	$	342,435	$	11,906
Other assets
MSR assets	$	28,991	$	—	$	—	$	28,991
Rabbi trust assets		584		584		—		—
Mortgage derivative asset		112		—		112		—
Interest rate swap asset		95		—		95		—
Other liabilities
Mortgage derivative liability	$	24	$	—	$	24	$	—
Interest rate swap liability		95		—		95		—

   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    $ —

The following table presents the change in corporate bonds and mortgage backed securities using Level 3 inputs for the periods stated.


(Dollars in thousands)	Corporate Bonds		Mortgage Backed Securities
Balance as of December 31, 2022	$	4,289	$	7,617
Transfers from Level 2 to Level 3		4,000		—
Fair value adjustments		10		(173	)
Balance as of June 30, 2023	$	8,299	$	7,444

As of June 30, 2023, 11 corporate bonds totaling $8.3 million and six mortgage backed securities totaling $7.4 million were reported at their respective amortized cost and as Level 3 assets in the fair value hierarchy, as there were no observable market prices for similar investments. The $4.0 million transfer from Level 2 to Level 3 inputs for corporate bonds in the first six months of 2023 was attributable to one security for which a fair value could not be obtained as of June 30, 2023.

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 June 30, 2023 and December 31, 2022, the Company was servicing approximately $2.15 billion and $2.16 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 June 30, 2023. Estimated base annual servicing costs were $75.00 to $85.00 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 8.06% as of June 30, 2023. A base discount rate of 9.50% to 11.50% (9.92% weighted average discount rate) was then applied to each pool’s projected future cash flows as of June 30, 2023. 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.

~~Note 8– Fair Value, continued~~The following table presents the change in MSR assets as of the dates and for the periods stated.


(Dollars in thousands)	MSR Assets
Balance as of December 31, 2022	$	28,991
Additions		619
Fair value adjustments		(1,364	)
Balance as of June 30, 2023	$	28,246

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-downs 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.

Other Equity Investments

The fair value of other equity investments, including the Company's investments in certain fintech companies, is based on either observable market prices, if available, or observable market transactions for identical or significantly similar investments (Level 2).

Collateral-dependent Loans

Collateral-dependent loans with specific reserves are carried at fair value, which equals the estimated market value of the collateral less estimated costs to sell. Collateral may be in the form of real estate, securities, or business assets, including equipment, inventory, and accounts receivable. A 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 borrower’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 credit losses on the consolidated statements of operations.

Loans Held for Sale

Mortgage loans originated or purchased and intended for sale in the secondary market (i.e., loans held for sale) are carried at estimated market value in the aggregate. Changes in fair value are recognized in residential mortgage banking income, including MSRs, on the consolidated statements of operations (Level 2).

Certain consumer loans originated by the Bank and sourced by fintech partners are classified on the consolidated balance sheets as held for sale. After origination, these loans are sold directly to the applicable fintech partner or another investor at par, generally up to 10 days from origination. Due to the relatively short time between origination and sale, these loans are held at cost, which approximates fair value (Level 2).

Government guaranteed loans, or portions thereof, intended for sale in the secondary market are classified as held for sale on the consolidated balance sheets and carried at the lower of cost or estimated fair market value in the aggregate. The agreed upon sales price is considered fair value as all of these loans are under agreements to sell to investors at the time of origination. This amount is generally the loan’s principal amount. Changes in fair value are recognized in the Gain on Sale of Mortgages on the Consolidated Statements of Income.(Level 2).

Other Real Estate Owned (“OREO”)

Certain assets such as ~~other real estate owned (OREO)~~OREO are measured at fair value less ~~cost~~estimated costs to sell. Valuation of ~~other real estate owned~~OREO is generally determined using current appraisals from independent ~~parties, a level two input.~~appraisers (Level 2). 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 owned~~tables summarize assets that were measured at fair value on a nonrecurring basis ~~during~~as of the ~~period.~~dates stated.


	June 30, 2023
(Dollars in thousands)	Total		Level 1		Level 2		Level 3
Other equity investments	$	22,693	$	—	$	22,693	$	—
Collateral-dependent loans		78,311		—		—		78,311
Loans held for sale		64,102		—		64,102		—


	December 31, 2022
(Dollars in thousands)	Total		Level 1		Level 2		Level 3
Other equity investments	$	23,776	$	—	$	23,776	$	—
Impaired loans - Pre-ASC 326		34,888		—		—		34,888
Loans held for sale		69,534		—		69,534		—
OREO		195		—		—		195

The following tables present quantitative information about Level 3 fair value measurements as of the dates stated.


(Dollars in thousands)	Balance as of June 30, 2023		Unobservable Input	Range
Collateral-dependent loans
Discounted appraised value technique		78,311	Selling Costs		7	%

~~September 30, 2019~~

~~(In thousands)~~

~~Total~~

~~Level 1~~

~~Level 2~~

~~Level 3~~

~~Other real estate owned~~

—

   December 31, 2018
(In thousands)    Total    Level 1    Level 2    Level 3
Other real estate owned
   $ 134    $ —      $ —      $ 134


(Dollars in thousands)	Balance as of December 31, 2022		Unobservable Input	Range
Impaired loans - Pre-ASC 326
Discounted appraised value technique		34,743	Selling Costs	7% - 10%
Discounted cash flows technique		145	Discount Rate	4% - 11%
OREO
Discounted appraised value technique		195	Selling Costs		7	%

~~Fair Value At~~
~~September 30,~~
~~2019~~

~~Valuation Technique~~

~~Significant Unobservable Inputs~~

~~Range~~

~~Other real estate owned~~

—

~~Discounted appraised value~~

~~Discounted for selling costs~~

~~N/A~~

   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%

18Fair 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.


	June 30, 2023
					Fair Value Measurements
(Dollars in thousands)	Carrying Value		Fair Value		Level 1		Level 2		Level 3
Financial Assets
Cash and due from banks	$	131,843	$	131,843	$	131,843	$	—	$	—
Federal funds sold		2,492		2,492		2,492		—		—
Securities available for sale		340,617		340,617		—		324,874		15,743
Restricted equity investments		17,538		17,538		—		17,538		—
Other equity investments		22,693		22,693		—		22,693		—
Other investments		27,157		27,157		—		—		27,157
PPP loans receivable, net		7,234		7,234		—		—		7,234
Loans held for investment, net		2,408,630		2,329,532		—		—		2,329,532
Accrued interest receivable		15,474		15,474		—		15,474		—
Bank owned life insurance		47,828		47,828		—		47,828		—
MSR assets		28,246		28,246		—		—		28,246
Financial Liabilities
Noninterest-bearing demand deposits	$	575,989	$	575,989	$	575,989	$	—	$	—
Interest-bearing demand and money market deposits		1,293,754		1,293,754		—		1,293,754		—
Savings deposits		131,332		131,332		—		131,332
Time deposits		612,019		608,923		—		—		608,923
FHLB borrowings		219,100		223,296		—		223,296		—
FRB borrowings		65,000		65,000		—		65,000		—
Subordinated notes, net		39,888		37,094		—		—		37,094


	December 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	$	77,274	$	77,274	$	77,274	$	—	$	—
Federal funds sold		1,426		1,426		1,426		—		—
Securities available for sale		354,341		354,341		—		342,435		11,906
Restricted equity investments		21,257		21,257		—		21,257		—
Other equity investments		23,776		23,776		—		23,776		—
Other investments		24,672		24,672		—		—		24,672
PPP loans receivable, net		11,967		11,967		—		—		11,967
Loans held for investment, net		2,376,153		2,321,042		—		—		2,321,042
Accrued interest receivable		12,393		12,393		—		12,393		—
Bank owned life insurance		47,245		47,245		—		47,245		—
MSR assets		28,991		28,991		—		—		28,991
Financial Liabilities
Noninterest-bearing demand deposits	$	640,101	$	640,101	$	640,101	$	—	$	—
Interest-bearing demand and money market deposits		1,318,799		1,318,799		—		1,318,799		—
Savings deposits		151,646		151,646		—		151,646		—
Time deposits		391,961		352,294		—		—		352,294
FHLB borrowings		311,700		311,700		—		311,700		—
FRB borrowings		51		51		—		51		—
Subordinated notes, net		39,920		37,689		—		—		37,689

Note 11 – Minimum Regulatory Capital Requirements

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 regulators regarding components, risk weightings, and other factors.

Pursuant to the final rules implementing the Basel Committee on Banking Supervision's capital guidelines for U.S. banks (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.

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. As of June 30, 2023 and December 31, 2022, the Bank met the capital requirements to be classified as well capitalized.

As previously noted, the Company adopted CECL effective January 1, 2023. Federal and state banking regulations allow financial institutions to irrevocably elect to phase-in the after-tax cumulative effect adjustment at adoption to retained earnings (“CECL Transitional Amount”) over a three-year period. The three-year phase-in of the CECL Transitional Amount to regulatory capital will be 25%, 50%, and 25% in 2023, 2024, and 2025, respectively. The Bank made this irrevocable election effective with its first quarter 2023 call report.

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. The CECL Transitional Amount was $5.5 million, of which $1.4 million reduced the regulatory capital amounts and capital ratios as of June 30, 2023.


	June 30, 2023
	Actual					For Capital Adequacy Purposes					To Be Well Capitalized
(Dollars in thousands)	Amount		Ratio			Amount		Ratio			Amount		Ratio
Total risk based capital
(To risk-weighted assets)
Blue Ridge Bank, N.A.	$	298,815		10.77	%	$	291,324		10.50	%	$	277,451		10.00	%
Tier 1 capital
(To risk-weighted assets)
Blue Ridge Bank, N.A.	$	257,195		9.27	%	$	235,831		8.50	%	$	221,959		8.00	%
Common equity tier 1 capital
(To risk-weighted assets)
Blue Ridge Bank, N.A.	$	257,195		9.27	%	$	194,214		7.00	%	$	180,342		6.50	%
Tier 1 leverage
(To average assets)
Blue Ridge Bank, N.A.	$	257,195		7.86	%	$	130,888		4.00	%	$	163,610		5.00	%


	December 31, 2022
	Actual					For Capital Adequacy Purposes					To Be Well Capitalized
(Dollars in thousands)	Amount		Ratio			Amount		Ratio			Amount		Ratio
Total risk based capital
(To risk-weighted assets)
Blue Ridge Bank, N.A.	$	303,876		11.22	%	$	284,376		10.50	%	$	270,834		10.00	%
Tier 1 capital
(To risk-weighted assets)
Blue Ridge Bank, N.A.	$	279,125		10.31	%	$	230,122		8.50	%	$	216,586		8.00	%
Common equity tier 1 capital
(To risk-weighted assets)
Blue Ridge Bank, N.A.	$	279,125		10.31	%	$	189,513		7.00	%	$	175,976		6.50	%
Tier 1 leverage
(To average assets)
Blue Ridge Bank, N.A.	$	279,125		9.25	%	$	120,703		4.00	%	$	150,878		5.00	%

Note 12 – Commitments and Contingencies

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 June 30, 2023 and December 31, 2022, the Company had outstanding loan commitments of $679.1 million and $736.1 million, respectively.

Conditional commitments are issued by the Company in the form of 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 June 30, 2023 and December 31, 2022, commitments under outstanding financial stand-by letters of credit totaled $29.5 million and $29.8 million, respectively. The credit risk of issuing financial stand-by letters of credit can be greater than the risk involved in extending loans to customers.

Upon the adoption of ASC 326 on January 1, 2023, the Company recorded an increase in its reserve for unfunded commitments of $3.7 million. Most of this increase was attributable to higher funding assumptions of the underlying credit commitments, based on industry data available. For the three and six months ended June 30, 2023, the Company recorded a reduction in the provision for credit losses for unfunded commitments of $600 thousand and $1.0 million,

respectively, which was primarily attributable to lower balances of loan commitments. As of June 30, 2023, the reserve for unfunded commitments was $4.5 million compared to $1.8 million as of December 31, 2022.

The Company invests in various partnerships, limited liability companies, and SBIC funds. Pursuant to these investments, the Company commits to an investment amount to be fulfilled in future periods. At June 30, 2023, the Company had future commitments outstanding totaling $17.9 million related to these investments.

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 for the periods stated. 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 and PSAs. For the three and six months ended June 30, 2023, all outstanding stock options and PSAs of the Company’s ~~financial instruments are as follows:~~common stock were considered anti-dilutive and excluded from the computation of diluted EPS, due to the net loss in the same respective periods. For the three and six months ended June 30, 2022, no stock options for the Company's common stock were considered anti-dilutive and excluded from the computation of diluted EPS, and there were no outstanding PSAs during these periods.

      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


	For the three months ended					For the six months ended
(Dollars in thousands, except per share data)	June 30, 2023			June 30, 2022		June 30, 2023			June 30, 2022
Weighted average common shares outstanding, basic		18,850,625			18,766,542		18,853,553			18,769,384
Effect of dilutive securities		—			11,666		—			14,502
Weighted average common shares outstanding, dilutive		18,850,625			18,778,208		18,853,553			18,783,886

Net (loss) income:
Net (loss) income from continuing operations		(19,464	)	$	1,118	$	(17,860	)	$	18,538
Net income from discontinued operations		—			—		—			337
Net income from discontinued operations attributable to noncontrolling interest		—			—		—			(1	)
Net (loss) income attributable to Blue Ridge Bankshares, Inc.	$	(19,464	)	$	1,118	$	(17,860	)	$	18,874

Basic and diluted (loss) earnings per share:
(Loss) earnings per share from continuing operations	$	(1.03	)	$	0.06	$	(0.95	)	$	0.99
(Loss) earnings per share from discontinued operations		—			—		—			0.02
(Loss) earnings per share attributable to Blue Ridge Bankshares, Inc.	$	(1.03	)	$	0.06	$	(0.95	)	$	1.01

Note 1014 – Business Segments

The Company ~~utilizes its subsidiaries and divisions to provide multiple~~has three reportable business ~~segments including retail~~segments: commercial banking, mortgage banking, and ~~payroll processing services. Revenues~~holding company activities. The commercial banking business segment makes loans to and generates deposits from ~~retail~~individuals 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

~~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

~~Note 11 - Other Borrowed Funds~~

~~Other Borrowings of $129.6 million at September 30, 2019 are composed of advances~~its 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

~~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, and~~Company'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 fees~~division, which concentrates on ~~deposit accounts~~ ~~are fees charged to deposit customers for transaction-based, account maintenance~~individual mortgage lending and ~~overdraft services. Transaction-based fees, which are earned based on specific transactions or customer activity within a customer’s deposit account, are recognized~~sales activities. Activities at the ~~time the related transaction or activity occurs, as it is at this point when the customer’s request has been fulfilled. Account maintenance fees, which relate~~holding company (or parent 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 a~~non-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.~~35

~~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 a~~right-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 about the Company’s leases:~~

(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

~~Note 14 – Leases, continued~~

~~A maturity analysis~~statement of ~~operating lease liabilities~~operations items and ~~reconciliation~~assets by segment as of the ~~undiscounted cash flows to~~dates and for the ~~total of operating lease liabilities is as follows:~~periods stated.


	As of and for the three months ended June 30, 2023
(Dollars in thousands)	Commercial Banking			Mortgage Banking		Parent Only			Eliminations			Blue Ridge Bankshares, Inc. Consolidated
NET INTEREST INCOME
Interest income	$	38,553		$	415	$	5		$	—		$	38,973
Interest expense		17,853			170		547			—			18,570
Net interest income		20,700			245		(542	)		—			20,403
Provision for credit losses		20,500			—		—			—			20,500
Net interest income after provision for credit losses		200			245		(542	)		—			(97	)
NONINTEREST INCOME
Residential mortgage banking income, including MSRs		712			3,583		—			—			4,295
Gain on sale of guaranteed government loans		2,384			—		—			—			2,384
Service charges on deposit accounts		349			—		—			—			349
Increase in cash surrender value of bank owned life insurance		292			—		—			—			292
Other income		2,797			—		(282	)		(99	)		2,416
Total noninterest income		6,534			3,583		(282	)		(99	)		9,736
NONINTEREST EXPENSE
Salaries and employee benefits		12,233			2,285		—			—			14,518
Other operating expenses		15,917			1,392		2,324			(99	)		19,534
Total noninterest expense		28,150			3,677		2,324			(99	)		34,052
(Loss) income from continuing operations before income tax expense		(21,416	)		151		(3,148	)		—			(24,413	)
Income tax (benefit) expense		(4,322	)		34		(661	)		—			(4,949	)
Net (loss) income	$	(17,094	)	$	117	$	(2,487	)	$	—		$	(19,464	)
Total assets as of June 30, 2023	$	3,141,817		$	41,124	$	273,280		$	(241,797	)	$	3,214,424


	As of and for the three months ended June 30, 2022
(Dollars in thousands)	Commercial Banking			Mortgage Banking		Parent Only			Eliminations			Blue Ridge Bankshares, Inc. Consolidated
NET INTEREST INCOME
Interest income	$	25,725		$	337	$	181		$	—		$	26,243
Interest expense		1,402			93		658			—			2,153
Net interest income		24,323			244		(477	)		—			24,090
Provision for credit losses		7,494			—		—			—			7,494
Net interest income after provision for credit losses		16,829			244		(477	)		—			16,596
NONINTEREST INCOME
Residential mortgage banking income, including MSRs		(25	)		5,985		—			—			5,960
Gain on sale of guaranteed government loans		1,538					—			—			1,538
Service charges on deposit accounts		327			—		—			—			327
Increase in cash surrender value of bank owned life insurance		276			—		—			—			276
Other income		2,457			—		(173	)		(195	)		2,089
Total noninterest income		4,573			5,985		(173	)		(195	)		10,190
NONINTEREST EXPENSE
Salaries and employee benefits		10,916			4,957		—			—			15,873
Other operating expenses		8,506			761		381			(195	)		9,453
Total noninterest expense		19,422			5,718		381			(195	)		25,326
Income (loss) from continuing operations before income tax expense		1,980			511		(1,031	)		—			1,460
Income tax expense (benefit)		389			108		(155	)		—			342
Net income (loss) from continuing operations	$	1,591		$	403	$	(876	)	$	—		$	1,118
Total assets as of June 30, 2022	$	2,712,209		$	55,335	$	316,891		$	(284,792	)	$	2,799,643

   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


	As of and for the six months ended June 30, 2023
(Dollars in thousands)	Commercial Banking			Mortgage Banking			Parent Only			Eliminations			Blue Ridge Bankshares, Inc. Consolidated
NET INTEREST INCOME
Interest income	$	81,295		$	720		$	11		$	—		$	82,026
Interest expense		32,855			309			1,100			—			34,264
Net interest income		48,440			411			(1,089	)		—			47,762
Provision for credit losses		24,200			—			—			—			24,200
Net interest income after provision for credit losses		24,240			411			(1,089	)		—			23,562
NONINTEREST INCOME
Residential mortgage banking income, including MSRs		642			4,956			—			—			5,598
Gain on sale of guaranteed government loans		4,793			—			—			—			4,793
Service charges on deposit accounts		692			—			—			—			692
Increase in cash surrender value of bank owned life insurance		574			—			—			—			574
Other income		5,885			—			(325	)		(198	)		5,362
Total noninterest income		12,586			4,956			(325	)		(198	)		17,019
NONINTEREST EXPENSE
Salaries and employee benefits		24,861			4,946			—			—			29,807
Other operating expenses		27,127			2,877			3,286			(198	)		33,092
Total noninterest expense		51,988			7,823			3,286			(198	)		62,899
Loss from continuing operations before income tax expense		(15,162	)		(2,456	)		(4,700	)		—			(22,318	)
Income tax benefit		(2,922	)		(549	)		(987	)		—			(4,458	)
Net loss	$	(12,240	)	$	(1,907	)	$	(3,713	)	$	—		$	(17,860	)
Total assets as of June 30, 2023	$	3,141,817		$	41,124		$	273,280		$	(241,797	)	$	3,214,424


	As of and for the six months ended June 30, 2022
(Dollars in thousands)	Commercial Banking			Mortgage Banking		Parent Only			Eliminations			Blue Ridge Bankshares, Inc. Consolidated
NET INTEREST INCOME
Interest income	$	50,908		$	928	$	209		$	—		$	52,045
Interest expense		2,948			128		1,211			—			4,287
Net interest income		47,960			800		(1,002	)		—			47,758
Provision for credit losses		9,994			—		—			—			9,994
Net interest income after provision for credit losses		37,966			800		(1,002	)		—			37,764
NONINTEREST INCOME
Residential mortgage banking income, including MSRs		176			15,343		—			—			15,519
Gain on sale of guaranteed government loans		2,965			—		—			—			2,965
Service charges on deposit accounts		642			—		—			—			642
Increase in cash surrender value of bank owned life insurance		548			—		—			—			548
Other income		5,634			—		9,253			(277	)		14,610
Total noninterest income		9,965			15,343		9,253			(277	)		34,284
NONINTEREST EXPENSE
Salaries and employee benefits		20,005			9,964		—						29,969
Other operating expenses		15,087			2,697		539			(277	)		18,046
Total noninterest expense		35,092			12,661		539			(277	)		48,015
Income from continuing operations before income tax expense		12,839			3,482		7,712			—			24,033
Income tax expense		3,295			732		1,468			—			5,495
Net income from continuing operations	$	9,544		$	2,750	$	6,244		$	—		$	18,538
Discontinued Operations
Income from discontinued operations before income taxes		426			—		—			—			426
Income tax expense		89			—		—			—			89
Net income from discontinued operations		337			—		—			—			337
Net income	$	9,881		$	2,750	$	6,244		$	—		$	18,875
Net income from discontinued operations attributable to noncontrolling interest		(1	)		—		—			—			(1	)
Net income attributable to Blue Ridge Bankshares, Inc.	$	9,880		$	2,750	$	6,244		$	—		$	18,874
Total assets as of June 30, 2022	$	2,712,209		$	55,335	$	316,891		$	(284,792	)	$	2,799,643

Note 15 – ~~Subsequent Events~~Changes to Accumulated Other Comprehensive Income (Loss), net

The following tables present components of accumulated other comprehensive income (loss) for the periods stated.


	For the three months ended June 30, 2023
(Dollars in thousands)	Net Unrealized Losses on Available for Sale Securities			Transfer of Securities Held to Maturity to Available For Sale		Pension and Post-retirement Benefit Plans			Accumulated Other Comprehensive Loss, net
Balance as of April 1, 2023	$	(41,659	)	$	425	$	(1	)	$	(41,235	)
Change in net unrealized holding losses on securities available for sale, net of deferred tax benefit of $1,446		(5,023	)		—		—			(5,023	)
Balance as of June 30, 2023	$	(46,682	)	$	425	$	(1	)	$	(46,258	)

	For the three months ended June 30, 2022
(Dollars in thousands)	Net Unrealized Losses on Available for Sale Securities			Transfer of Securities Held to Maturity to Available For Sale		Pension and Post-retirement Benefit Plans			Accumulated Other Comprehensive Loss, net
Balance as of April 1, 2022	$	(21,900	)	$	425	$	(1	)	$	(21,476	)
Change in net unrealized holding losses on securities available for sale, net of deferred tax benefit of $4,257		(16,015	)		—		—			(16,015	)
Balance as of June 30, 2022	$	(37,915	)	$	425	$	(1	)	$	(37,491	)


	For the six months ended June 30, 2023
(Dollars in thousands)	Net Unrealized Losses on Available for Sale Securities			Transfer of Securities Held to Maturity to Available For Sale		Pension and Post-retirement Benefit Plans			Accumulated Other Comprehensive Loss, net
Balance as of January 1, 2023	$	(45,525	)	$	425	$	(1	)	$	(45,101	)
Change in net unrealized holding losses on securities available for sale, net of deferred tax benefit of $333		(1,157	)		—		—			(1,157	)
Balance as of June 30, 2023	$	(46,682	)	$	425	$	(1	)	$	(46,258	)

	For the six months ended June 30, 2022
(Dollars in thousands)	Net Unrealized Losses on Available for Sale Securities			Transfer of Securities Held to Maturity to Available For Sale		Pension and Post-retirement Benefit Plans			Accumulated Other Comprehensive Loss, net
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 $9,000		(33,859	)		—		—			(33,859	)
Balance as of June 30, 2022	$	(37,915	)	$	425	$	(1	)	$	(37,491	)

Note 16 – Legal Matters

~~On November 20, 2019,~~In the ordinary course of operations, the Company ~~declared~~is party to legal proceedings. Based upon information currently available, management believes that such legal proceedings, in the aggregate, will not have a ~~quarterly dividend~~material adverse effect on the Company’s business, financial condition, results of ~~$0.1425 per share payable on December 13,~~operations, or cash flows.

On August 12, 2019, ~~to shareholders of record as of December 6, 2019.~~

~~Effective December 15, 2019, the Company completed its acquisition~~a former employee of Virginia Community Bankshares, Inc. (“VCB”)~~. The merger of~~ and participant in its Employee Stock Ownership Plan (the “VCB ESOP”) filed a class action complaint against VCB, with 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~~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 ~~into~~ the ~~Bank. Pursuant~~plaintiff and other individuals may file additional lawsuits related to the ~~Merger Agreement, former holders~~VCB ESOP. The Company believes the claims are without merit and no loss has been accrued for this lawsuit.

Item 2. Management’s Discussion and Analysis of ~~shares~~Financial Condition and Results of ~~VCB common stock had the right to elect to receive either $58.00 in cash or 3.05 shares~~Operations

The following presents management’s discussion and analysis of the Company’s ~~common stock~~consolidated 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 share~~the year ended December 31, 2022 (the “2022 Form 10-K”). Results of ~~VCB common stock held,~~operations for the three and six months ended June 30, 2023 are not necessarily indicative of the results of operations for the balance of 2023, 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 so~~risks 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.

~~Item 2.~~

~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~

~~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 views~~are 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 ~~factors~~known 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 experience~~the Company’s financial performance to differ materially from ~~the anticipated results and expectations~~that expressed in such forward-looking ~~statements,~~statements: (i) the strength of the United States economy in general and ~~such differences~~the strength of the local economies in which the Company conducts operations; (ii) geopolitical conditions, including acts or threats of terrorism and/or military conflicts, or actions taken by the United States or other governments in response to acts or threats of terrorism and/or military conflicts, which could impact business and economic conditions in the United States and abroad; (iii) the residual effects of the COVID-19 pandemic, including the adverse impact on the Company’s business and operations and on the Company’s customers which may result, among other things, in increased delinquencies, defaults, foreclosures and losses on loans; (iv) the occurrence of significant natural disasters, including severe weather conditions, floods, health related issues, and other catastrophic events; (v) the Company’s management of risks inherent in its loan portfolio, the credit quality of its borrowers, and the risk of a prolonged downturn in the real estate market, which could impair the value of the Company’s collateral and its ability to sell collateral upon any foreclosure; (vi) changes in consumer spending and savings habits; (vii) deposit out flows; (viii) technological and social media changes; (ix) 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; (x) changing bank regulatory conditions, policies or programs, whether arising as new legislation or regulatory initiatives, that could lead to restrictions on activities of banks generally, or the Company’s subsidiary bank in particular, more restrictive regulatory capital requirements, increased costs, including deposit insurance premiums, regulation or prohibition of certain income producing activities or changes in the secondary market for loans and other products; (xi) the impact of changes in financial services policies, laws, and regulations, including laws, regulations and policies concerning taxes, banking, securities and insurance, and the application thereof by regulatory bodies; (xii) the impact of, and the ability to comply with, the terms of the formal written agreement between the Bank and the Office of the Comptroller of the Currency (the “OCC”); (xiii) the impact of changes in laws, regulations, and policies affecting the real estate industry; (xiv) the effect of changes in accounting policies and practices, as may be ~~material. Forward-looking statements speak only as~~adopted 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; (xv) the timely development of ~~the date they are made~~competitive new products and Blue Ridge does not assume any duty to update forward-looking statements. These forward-looking statements include, but are not limited to, statements about (i) the expected benefits of the transaction between Blue Ridge and VCB, including future financial and operating results, cost savings, enhanced revenuesservices and the ~~expected market position~~acceptance of these products and services by new and existing customers; (xvi) the ~~combined company~~willingness of users to substitute competitors’ products and services for the Company’s products and services; (xvii) the outcome of any legal proceedings that may be ~~realized~~instituted against the Company; (xviii) reputational risk and potential adverse reactions of the Company’s customers, suppliers, employees, or other business partners; (xix) the ability to maintain adequate liquidity

by retaining deposits customers and secondary funding sources, especially if the Company's or industry's reputation become damaged; (xx) maintaining capital levels adequate to support the Company's growth and to remain well-capitalized under regulatory standards; (xxi) the effects of acquisitions the Company may make, including, without limitation, the failure to achieve the expected revenue growth and/or expense savings from such transactions; (xxii) changes in the ~~transaction,~~level of the Company’s nonperforming assets and ~~(ii) Blue Ridge’s~~charge-offs; (xxiii) the Company’s involvement, from time to time, in legal proceedings and ~~VCB’s plans, objectives, expectations~~examination and ~~intentions and other statements contained~~remedial actions by regulators; (xxiv) adverse developments in ~~this Form 10-Q that are not historical facts. Other statements identified by words~~the financial industry generally, such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “targets,” “projects,” “predicts,” “potential,” “possible,” “should,” “would,” “will,” “goal,” “target” or words of similar meaning generally are intendedrecent bank failures, responsive measures to ~~identify forward-looking statements. These statements are based upon~~mitigate and manage such developments, related supervisory and regulatory actions and costs, and related impacts on customer and client behavior; (xxv) potential exposure to fraud, negligence, computer theft, and cyber-crime; (xxvi) the current beliefs and expectations of Blue Ridge’s management and are inherently subject to significant business, economic and competitive 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~~Company’s ability to pay dividends; (xxvii) the ability to manage the Company's fintech relationships, including implementing enhanced controls and

maintaining deposit levels and the quality of loans associated with these relationships; (xxviii) the Company’s involvement as a participating lender in the Paycheck Protection Program (“PPP”) as administered through the U.S. Small Business Administration; and (xxiv) other risks and factors identified in the “Risk Factors” sections and elsewhere in documents ~~Blue Ridge~~the Company files from time to time with the ~~Securities~~SEC.

The foregoing factors should not be considered exhaustive and ~~Exchange Commission.~~should be read together with other cautionary statements that are included in the 2022 Form 10-K including those discussed in the section entitled “Risk Factors.” If one or more of the factors affecting forward-looking information and statements proves incorrect, then actual results, performance or achievements could differ materially from those expressed in, or implied by, forward-looking information and statements contained in this Form 10-Q. Therefore, the Company cautions not to place undue reliance on its forward-looking information and statements. The Company will not update the forward-looking statements to reflect actual results or changes in the factors affecting the forward-looking statements. New risks and uncertainties may emerge 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.

Regulatory Matters

On August 29, 2022, the Bank entered into a formal written agreement (the “Written Agreement”) with the OCC, the Bank's primary federal banking regulator. The Written Agreement principally concerns the Bank’s fintech line of business and requires the Bank to continue enhancing its controls for assessing and managing the third-party, Bank Secrecy Act/Anti-Money Laundering, and information technology risks stemming from its fintech partnerships. A complete copy of the Written Agreement was filed as an exhibit to a Form 8-K filed with the SEC on September 1, 2022 and can be accessed on the SEC’s website (www.sec.gov) and the Company’s website (www.blueridgebankshares.com). The Company is actively working to bring the Bank’s fintech policies, procedures, and operations into conformity with OCC directives. The Company reports that although work is progressing, many aspects of the Written Agreement require considerable time for completion, implementation, validation, and sustainability. If the Company does not comply with the Written Agreement, or the OCC imposes additional measures, the Company could be subject to additional regulatory requirements or directives, including developing and maintaining capital plans, asset sales, loan reserves or impairments, limitations on growth, further regulatory sanctions, and/or other regulatory enforcement actions.

Sale of LenderSelect Mortgage Group

On May 15, 2023, the Company sold its wholesale mortgage business operating as LenderSelect Mortgage Group (“LSMG”) to a third-party for $250 thousand in cash. The Company recorded a loss on the sale of LSMG of $553 thousand, which is reported in other noninterest income in the consolidated statements of operations for the three and six months ended June 30, 2023.

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. Income statement amounts related to MoneyWise are reported as discontinued operations for all periods presented.

General

There were no changes to the Critical Accounting Policies disclosed in Item 7 of the 2022 Form 10-K, except as noted in Part I, Note 2 - Adoption of New Accounting Standard of this Form 10-Q, which describes the Company's adoption of Accounting Standards Codification (“ASC”) 326 - Financial Instruments – Credit Losses (referred herein as “ASC 326” or “CECL”), effective January 1, 2023.

~~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 differ from initial estimates.~~

statements of prior periods have been reclassified to conform to current year presentations. 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 inherent in the portfolio and is based~~reclassifications had no effect on the size and current risk characteristics 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 charged to earnings. Loans identified as losses and deemed uncollectible by management are charged to the allowance. Subsequent recoveries, if any, are credited to the allowance. 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 value of future cash flows is lower than its carrying value. The general component covers~~non-impaired~~ loans and is based on historical loss experience adjusted for qualitative factors. Historical losses are categorized into risk-similar loan pools and a loss ratio factor is applied to each group’s loan balances to determine 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.

~~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 securities~~available-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 differences in accounting standards used. Blue Ridge could be an emerging growth company 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 in~~non-convertible~~ ~~debt in a three-year period, or if the market value of its common stock held bynon-affiliates~~ ~~exceeds $700 million 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.~~

~~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 innet income, net income per share, 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.~~liabilities, or stockholders’ equity as previously reported.

Comparison of Financial Condition ~~at September~~as of June 30, ~~2019~~2023 and December 31, ~~2018~~2022

Total assets ~~at September~~were $3.21 billion as of June 30, ~~2019 were $736.2 million,~~2023, an increase of ~~$196.6~~$73.4 million ~~or 36.4%,~~ from ~~$539.6 million at~~$3.14 billion as of December 31, ~~2018. The~~2022. Most of this increase ~~in assets~~ was ~~primarily driven by growth in investment securities, both the loans held for sale~~attributable to higher cash and ~~loans held for investment portfolios, as well as other assets. Investment securities totaled $142.7~~due from banks balances, which increased $54.6 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~~$131.8 million as of ~~September~~June 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 $10.32023 from $77.3 million as of December 31, ~~2018.~~2022. Loans held for investment, excluding PPP loans, increased $52.6 million to $2.45 billion as of June 30, 2023 from $2.40 billion at December 31, 2022, an annualized growth rate of 4.39%. The allowance for credit losses (“ACL”) increased $20.1 million to $43.1 million as of June 30, 2023 from $22.9 million as of December 31, 2022. Most of this increase was attributable to $14.1 million of specific reserves for specialty finance loans, reported in commercial and industrial loans, placed on nonaccrual status in the second quarter of 2023, while $4.0 million of the year-to-date increase was due to the adoption of ASC 326 on January 1, 2023.

Total deposits as of June 30, 2023 were $2.61 billion, an increase of $110.6 million from December 31, 2022. The increase in ~~other assets~~the first six months of 2023 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.~~

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~~$220.1 million in time deposit balances, of which $211.0 million was attributable to brokered time deposits secured primarily in response to banking industry liquidity events in March 2023. Partially offsetting this increase were lower noninterest-bearing demand deposit balances of $64.1 million. Deposits related to fintech relationships increased by $17.4 million, or ~~34.1%~~2.52%, from December 31, 2022, to $707.6 million as of June 30, 2023. Fintech related deposits represented 27.1% and 27.6% of total deposits as of June 30, 2023 and December 31, 2022, respectively.

Total stockholders’ equity decreased by $28.1 million to $231.3 million as of June 30, 2023 compared to ~~$500.0~~$259.4 million at December 31, ~~2018. The increase in liabilities was concentrated in total deposit growth of $105.3~~2022. Of the decrease, $17.9 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 a net loss for the ~~implementation~~first six months of ~~ASUNo. 2016-02,~~~~Leases (Topic 842)~~ ~~and~~2023 while $5.5 million was attributable to the ~~recording~~after-tax adoption of ASC 326. The fair value of the Company’s portfolio of securities available for sale (“AFS”) decreased in the first six months of 2023, primarily as a result of a ~~lease liability on the balance sheet for property leased for branches and offices.~~

~~Total shareholders’~~modest increase in market longer-term interest rates, resulting in an after-tax decrease in stockholders’ equity ~~increased by $26.0 million~~of $1.2 million. The Company had no investment securities classified as held to ~~$65.6 million at September~~maturity as of June 30, ~~2019 compared to $39.6 million at~~2023 or 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.2022.

Comparison of Results of ~~Operation~~Operations for the ~~Nine~~Three and Six Months Ended ~~September~~June 30, ~~2019~~2023 and ~~2018~~2022

For the ~~nine~~three months ended ~~September~~June 30, ~~2019, Blue Ridge~~2023, the Company reported a net loss from continuing operations of ($19.5) million, or ($1.03) per diluted common share, compared to net income from continuing operations of ~~$4.1~~$1.1 million, ~~equal to basic and~~or $0.06 per diluted ~~income per~~ common share, ~~of $1.01.~~ for the three months ended June 30, 2022.

For the ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2023, the Company reported a net loss from continuing operations of ($17.9) million, or ($0.95) per diluted common share, compared to net income ~~was $3.6~~from continuing operations of $18.5 million, or $0.99 per diluted common share, for the six months ended June 30, 2022.

The loss from continuing operations before income taxes for the three and six months ended June 30, 2023 included a provision for credit losses on loans of $21.1 million and ~~both basic~~$25.2 million, respectively, most of which was attributable to specific reserves on specialty finance loans totaling $14.1 million. Additionally, net loan charge-offs of $8.0 million and ~~diluted earnings per share~~$9.1 million were ~~$1.29.~~recorded for the same respective periods. Also contributing to the decline in income from continuing operations before income taxes from the year-ago periods was $9.3 million of fair value adjustments for the Company's equity investments, primarily in certain fintech companies, reported in the 2022 period. For the three and six months ended June 30, 2023, income from continuing operations before income taxes included $2.4 million and $3.5 million, respectively, of costs incurred primarily for professional services related to regulatory remediation efforts in connection with the Written Agreement.

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’s~~the 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’s~~The Company’s principal ~~interest earning~~interest-earning assets are loans to ~~individuals,~~ businesses, ~~and~~ real estate investors, ~~as well as~~and individuals and 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 ~~FHLB~~Federal Home Loan Bank of Atlanta (“FHLB”) and Federal Reserve Bank of Richmond (“FRB”) advances. ~~Generally, changes in~~A common net interest income ~~are measured by the net interest rate spread and the~~measure is net interest margin. ~~The net interest rate spread is equal to the difference between the average rate earned on interest earning assets and the average rate incurred on interest-bearing liabilities. The net~~Net interest margin represents the difference between interest income and interest expense calculated as a percentage of average ~~earning~~interest-earning assets.

The following table ~~shows~~presents the average balance sheets for the ~~first nine~~three months ~~of 2019 compared to the first nine months of 2018.~~ended June 30, 2023 and 2022. 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.~~rates, as well as a volume and rate analysis of changes in net interest income for the periods stated.


	Average Balances, Income and Expense, Yields and Rates
	For the three months ended June 30,
	2023								2022									Total Increase/			Increase/(Decrease) Due to
(Dollars in thousands)	Average Balance			Interest		Yield/ Rate (1)			Average Balance			Interest			Yield/ Rate (1)			(Decrease)			Volume (2)			Rate (2)
Average Assets
Taxable securities	$	367,814		$	2,543		2.77	%	$	394,000		$	2,129			2.16	%	$	414		$	(141	)	$	555
Tax-exempt securities (3)		20,713			121		2.34	%		21,336			113			2.12	%		8			(3	)		11
Total securities		388,527			2,664		2.74	%		415,336			2,242			2.16	%		422			(145	)		567
Interest-earning deposits in other banks		121,248			1,452		4.79	%		77,703			148			0.76	%		1,304			83			1,221
Federal funds sold		3,539			45		5.09	%		44,979			90			0.80	%		(45	)		(83	)		38
Loans held for sale		56,102			396		2.82	%		42,957			348			3.24	%		48			106			(58	)
Paycheck Protection Program loans (4)		7,599			16		0.84	%		19,412			64			1.32	%		(48	)		(39	)		(9	)
Loans held for investment (4,5,6)		2,487,089			34,428		5.54	%		1,881,678			23,376			4.97	%		11,052			7,521			3,531
Total average interest-earning assets		3,064,104			39,001		5.09	%		2,482,065			26,268			4.23	%		12,733			7,444			5,289
Less: allowance for credit losses		(31,151	)							(13,619	)
Total noninterest-earning assets		244,330								232,125
Total average assets	$	3,277,283							$	2,700,571
Average Liabilities and Stockholders’ Equity:
Interest-bearing demand, money market deposits, and savings	$	1,347,499		$	8,860		2.63	%	$	1,144,418		$	690			0.24	%	$	8,170		$	122		$	8,048
Time deposits (7)		661,259			5,764		3.49	%		415,815			851			0.82	%		4,913			502			4,411
Total interest-bearing deposits		2,008,758			14,624		2.91	%		1,560,233			1,541			0.40	%		13,083			624			12,459
FHLB borrowings (8)		262,345			2,958		4.51	%		23,955			(33	)		(0.55	)%		2,991			(328	)		3,319
FRB borrowings		35,714			439		4.92	%		3,266			100			12.25	%		339			994			(655	)
Subordinated notes and other borrowings (9)		39,905			548		5.49	%		39,969			545			5.45	%		3			(1	)		4
Total average interest-bearing liabilities		2,346,722			18,569		3.17	%		1,627,423			2,153			0.53	%		16,416			1,289			15,127
Noninterest-bearing demand deposits		638,274								772,310
Other noninterest-bearing liabilities		35,170								29,700
Stockholders' equity		257,117								271,138
Total average liabilities and stockholders’ equity	$	3,277,283							$	2,700,571
Net interest income and margin (10)				$	20,432		2.67	%				$	24,115			3.89	%	$	(3,683	)	$	6,155		$	(9,838	)
Cost of funds (11)							2.49	%								0.36	%
Net interest spread (12)							1.93	%								3.70	%

(1) Annualized.
(2) 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.
(3) Computed on a fully taxable equivalent basis assuming a 22.65% and 21% income tax rate for the three months ended June 30, 2023 and 2022, respectively.
(4) Includes deferred loan fees/costs.
(5) Non-accrual loans have been included in the computations of average loan balances.
(6) Includes accretion of fair value adjustments (discounts) on acquired loans of $463 thousand and $1.3 million for the three months ended June 30, 2023 and 2022, respectively.
(7) Includes amortization of fair value adjustments (premiums) on assumed time deposits of $222 thousand and $366 thousand for the three months ended June 30, 2023 and 2022, respectively.
(8) Includes amortization of fair value adjustments (premiums) on assumed FHLB borrowings of $0 and $108 thousand for the three months ended June 30, 2023 and 2022, respectively.
(9) Includes amortization of fair value adjustments (premiums) on assumed subordinated notes of $25 thousand for both the three months ended June 30, 2023 and 2022.
(10) Net interest margin is net interest income divided by average interest-earning assets.
(11) Cost of funds is total interest expense divided by total interest-bearing liabilities and non-interest bearing demand deposits.
(12) Net interest spread is the yield on average interest-earning assets less the cost of average interest-bearing liabilities.

   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 %

~~(1)~~

~~Annualized.~~

~~(2)~~

~~Computed on a fully taxable equivalent basis.~~

~~(3)~~

~~Non-accrual~~ ~~loans have been included in the computations of average loan balances.~~

~~The~~Average interest-earning assets were $3.06 billion for the three months ended June 30, 2023 compared to $2.48 billion for the same period of 2022, a $582.0 million increase. This increase was primarily attributable to growth in average ~~interest-earning assets was primarily driven~~balances of loans held for investment, which were greater by ~~an increase~~$605.4 million in the 2023 period compared to the 2022 period, partially offset by lower average ~~investment~~balances of taxable securities, federal funds sold, and ~~average loans and resulted in increased interest income during the first nine months of 2019.~~PPP loans. Total interest income (on a taxable equivalent basis) increased $12.7 million for the three-month period ended June 30, 2023 from the same period of 2022. This increase was primarily due to higher average balances and yields, including fee income, on loans held for investment, and interest earning deposits in other banks. Higher yields in the 2023 period were primarily attributable the re-pricing of variable rate loans and new loans in the higher interest rate environment, partially offset by the reversal of interest on the previously mentioned group of specialty loans placed on nonaccrual status in the second quarter of 2023, and lower accretion of purchase accounting adjustments (discounts) on acquired loans. The reversal of interest income in the second quarter of 2023 was $4.7 million for the group of specialty finance loans placed on nonaccrual status, which had an approximate negative 75 basis point impact on the yield on loans held

for investment. Interest income for the three months ended June 30, 2023 and 2022 included accretion of discounts on acquired loans of $463 thousand and $1.3 million, respectively.

Average interest-bearing liabilities were $2.35 billion for the three months ended June 30, 2023 compared to $1.63 billion for the same period of 2022, a $719.3 million increase. Of this increase, $533.4 million was attributable to higher average balances of wholesale funding, primarily brokered time deposits and FHLB advances. Interest expense increased by ~~$6.4~~$16.4 million ~~or 39.6%,~~to $18.6 million for the ~~nine-month period~~three months ended ~~September~~June 30, ~~2019 as~~2023 compared to the same period ~~in 2018.~~

~~Interest expense~~of 2022. Cost of interest-bearing liabilities increased ~~by $3.4 million, or 94.8%~~ to ~~$6.9 million~~3.17% for the ~~nine months ended September 30, 2019 as compared to $3.6 million during the first nine months~~second quarter of ~~2018. Average interest bearing-liabilities increased by 43.4%~~2023 from 0.53% for the ~~nine-month period ended September 30, 2019, as compared to the same period in 2018, and the average~~second quarter of 2022, while cost of funds ~~increased~~were 2.49% and 0.36% for the same respective periods. Higher cost of funds in the 2023 period was primarily due to ~~1.89% during~~higher market interest rates and a shift in the ~~first nine months~~mix of ~~2019, compared~~average interest-bearing liabilities, including higher cost wholesale funding sources. Interest expense in the second quarters of 2023 and 2022 included the amortization of fair value adjustments (premium) on assumed time deposits of $222 thousand and $366 thousand, respectively, which was a reduction to ~~1.39% during the first nine months of 2018.~~interest expense.

Net interest income (on a taxable equivalent basis) for the ~~nine-month period~~three months ended ~~September~~June 30, ~~2019~~2023 was ~~$15.5~~$20.4 million as compared to ~~$12.5~~$24.1 million for the same period in ~~2018,~~2022, a decrease of $3.7 million. Net interest margin was 2.67% and 3.89% for the second quarters of 2023 and 2022, respectively. The reversal of interest income previously noted had an ~~increase of 23.9%. The increase in~~approximate negative 60 basis point impact on net interest ~~income during~~margin for the ~~period is primarily attributed to an increase~~second quarter of ~~$94.4 million in average loans held for investment~~2023. Accretion and ~~an increase in average loans held for sale outstanding~~amortization of ~~$31.1 million from the period ended September 30, 2019 compared to the same period in 2018.~~

~~Interest income~~purchase accounting adjustments had a 9 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 the~~year-to-date~~ ~~changes in the components of~~29 basis point positive effect on 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~~margin for the same period in 2018, a 61.9% increase. This increase was primarily due to an increase in 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.respective periods.

~~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.

~~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~~presents the average balance sheets for the ~~three~~six months ~~ending September~~ended June 30, ~~2019 compared to the three months ending September 30, 2018.~~2023 and 2022. 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.~~

   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 %

~~(1)~~

~~Annualized.~~

~~(2)~~

~~Computed on a fully taxable equivalent basis.~~

~~(3)~~

~~Non-accrual~~ ~~loans have been included in the computations of average loan balances.~~

~~The increase~~rates, as well as a volume and rate analysis of changes 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 as compared to the same period in 2018.

Interest expense increased by $1.4 million, or 101.1% to $2.7 million for the three months ended September 30, 2019 as compared to $1.3 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 period 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.

~~Net~~net interest income for the ~~three-month period~~periods stated.


	Average Balances, Income and Expense, Yields and Rates
	For the six months ended June 30,
	2023								2022									Total Increase/			Increase/(Decrease) Due to
(Dollars in thousands)	Average Balance			Interest		Yield/ Rate (1)			Average Balance			Interest			Yield/ Rate (1)			(Decrease)			Volume (2)			Rate (2)
Average Assets
Taxable securities	$	371,270		$	5,171		2.79	%	$	388,419		$	3,899			2.01	%	$	1,272		$	(172	)	$	1,444
Tax-exempt securities (3)		20,719			239		2.31	%		20,359			208			2.04	%		31			4			27
Total securities		391,989			5,410		2.76	%		408,778			4,107			2.01	%		1,303			(168	)		1,471
Interest-earning deposits in other banks		114,469			2,393		4.18	%		86,160			183			0.42	%		2,210			60			2,150
Federal funds sold		6,200			144		4.65	%		48,201			112			0.46	%		32			(98	)		130
Loans held for sale		48,107			678		2.82	%		58,249			969			3.33	%		(291	)		(169	)		(122	)
Paycheck Protection Program loans (4)		8,924			36		0.81	%		23,225			457			3.94	%		(421	)		(281	)		(140	)
Loans held for investment (4,5,6)		2,492,544			73,420		5.89	%		1,840,395			46,261			5.03	%		27,159			16,393			10,766
Total average interest-earning assets		3,062,233			82,081		5.36	%		2,465,008			52,089			4.23	%		29,992			15,737			14,255
Less: allowance for credit losses		(27,954	)							(12,845	)
Total noninterest-earning assets		239,584								230,652
Total average assets	$	3,273,863							$	2,682,815
Average Liabilities and Stockholders’ Equity:
Interest-bearing demand, money market deposits, and savings	$	1,317,834		$	17,119		2.60	%	$	1,113,751		$	1,275			0.23	%	$	15,844		$	234		$	15,610
Time deposits (7)		587,858			8,836		3.01	%		449,339			1,822			0.81	%		7,014			562			6,452
Total interest-bearing deposits		1,905,692			25,955		2.72	%		1,563,090			3,097			0.40	%		22,858			795			22,063
FHLB borrowings (8)		295,102			6,768		4.59	%		17,071			(22	)		(0.26	)%		6,790			(358	)		7,148
FRB borrowings		17,958			439		4.89	%		9,786			114			2.33	%		325			95			230
Subordinated notes and other borrowings (9)		39,916			1,102		5.52	%		39,969			1,099			5.50	%		3			(1	)		4
Total average interest-bearing liabilities		2,258,668			34,264		3.03	%		1,629,916			4,288			0.53	%		29,976			531			29,445
Noninterest-bearing demand deposits		723,131								745,820
Other noninterest-bearing liabilities		34,947								35,831
Stockholders' equity		257,117								271,248
Total average liabilities and stockholders’ equity	$	3,273,863							$	2,682,815
Net interest income and margin (10)				$	47,817		3.12	%				$	47,801			3.88	%	$	16		$	15,206		$	(15,190	)
Cost of funds (11)							2.30	%								0.36	%
Net interest spread (12)							2.33	%								3.70	%

(1) Annualized.
(2) 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.
(3) Computed on a fully taxable equivalent basis assuming a 22.65% and 21% income tax rate for the six months ended June 30, 2023 and 2022, respectively.
(4) Includes deferred loan fees/costs.
(5) Non-accrual loans have been included in the computations of average loan balances.
(6) Includes accretion of fair value adjustments (discounts) on acquired loans of $1.2 million and $4.1 million for the six months ended June 30, 2023 and 2022, respectively.
(7) Includes amortization of fair value adjustments (premiums) on assumed time deposits of $506 thousand and $840 thousand for the six months ended June 30, 2023 and 2022, respectively.
(8) Includes amortization of fair value adjustments (premiums) on assumed FHLB borrowings of $0 and $111 thousand for the six months ended June 30, 2023 and 20221, respectively.
(9) Includes amortization of fair value adjustments (premiums) on assumed subordinated notes of $50 thousand for both the six months ended June 30, 2023 and 2022.
(10) Net interest margin is net interest income divided by average interest-earning assets.
(11) Cost of funds is total interest expense divided by total interest-bearing liabilities and non-interest bearing demand deposits.
(12) Net interest spread is the yield on average interest-earning assets less the cost of average interest-bearing liabilities.

Average interest-earning assets were $3.06 billion for the six months ended ~~September~~June 30, ~~2019 was $5.4 million as~~2023 compared to ~~$4.4 million~~$2.47 billion for the same period ~~in 2018, an~~of 2022, a $597.2 million increase. This increase ~~of 22.5%. The increase in net interest income during the period is~~was primarily ~~attributed~~attributable to ~~an increase of $96.6 million~~growth in average balances of loans held for investment, ~~and an increase~~which increased $652.1 million in ~~average securities of $89.6 million from~~ the ~~three-month~~2023 period ~~ended September 30, 2019~~ compared to the ~~same~~2022 period, ~~in 2018.~~

~~Provision~~partially offset by lower average balances of taxable securities, federal funds sold, loans held 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~~sale, and PPP loans. Total 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~~(on a taxable equivalent basis) increased $30.0 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~~six-month period ended ~~September~~June 30, ~~2019 as compared to $5.7 million for~~2023 from the same period ~~in 2018, a 43.9% increase.~~of 2022. This increase was primarily due to higher average balances and yields, including fee income on loans held for investment and interest earning deposits in other banks. Higher yields in the 2023 period were primarily attributable to the re-pricing of variable rate loans and new loans in the higher interest rate environment, partially offset by the previously noted reversal of interest income on nonaccrual loans, and lower accretion of purchase accounting adjustments (discounts) on acquired loans. Interest income for the six months ended June 30, 2023 and 2022 included accretion of discounts on acquired loans of $1.2 million thousand and $4.1 million, respectively.

Average interest-bearing liabilities were $2.26 billion for the six months ended June 30, 2023 compared to $1.63 billion for the same period of 2022, a $628.8 million increase. Interest expense increased by $30.0 million to $34.3 million for the six months ended June 30, 2023 compared to the same period of 2022. Cost of interest-bearing liabilities increased to 3.03% for the second half of 2023 from 0.53% for the second half of 2022, while cost of funds were 2.30% and 0.36% for the same respective periods. Higher cost of funds in the 2023 period was primarily due to higher market interest rates and a shift in the mix of average interest-bearing liabilities, including higher cost wholesale funding sources. Interest expense in the first halves of 2023 and 2022 included the amortization of fair value adjustments (premium) on assumed time deposits of $506 thousand and $840 thousand, respectively, which was a reduction to interest expense.

Net interest income (on a taxable equivalent basis) was $47.8 million for both the six months ended June 30, 2023 and the same period in 2022. Net interest margin was 3.12% and 3.88% for the second halves of 2023 and 2022, respectively. The reversal of interest income previously noted had an ~~increase~~approximate negative 31 basis point impact on net interest margin for the first half of 2023. Accretion and amortization of purchase accounting adjustments had a 11 basis point and 41 basis point positive effect on net interest margin for the same respective periods.

Provision for Credit Losses. The Company recorded a provision for credit losses of $20.5 million in the second quarter of 2023 compared to $7.5 million in the second quarter of 2022. Provision for credit losses for the first halves of 2023 and 2022 was $24.2 million and $10.0 million, respectively. Provision for credit losses in the 2023 periods were primarily attributable to specific reserves on the previously noted group of specialty finance loans and net loan charge-offs, partially offset by a credit to provision for credit losses on unfunded commitments.

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)	June 30, 2023			June 30, 2022			Change $			Change %
Fair value adjustments of other equity investments	$	(281	)	$	(86	)	$	(195	)		226.7	%
Residential mortgage banking income, including MSRs		4,295			5,960			(1,665	)		(27.9	%)
Gain on sale of guaranteed government loans		2,384			1,538			846			55.0	%
Wealth and trust management		462			414			48			11.6	%
Service charges on deposit accounts		349			327			22			6.7	%
Increase in cash surrender value of bank owned life insurance		292			276			16			5.8	%
Bank and purchase card, net		560			599			(39	)		(6.5	%)
Other		1,675			1,162			513			44.1	%
Total noninterest income	$	9,736		$	10,190		$	(454	)		(4.5	%)


	For the six months ended
(Dollars in thousands)	June 30, 2023			June 30, 2022		Change $			Change %
Fair value adjustments of other equity investments	$	(332	)	$	9,278	$	(9,610	)		(103.6	%)
Residential mortgage banking income, including MSRs		5,598			15,519		(9,921	)		(63.9	%)
Gain on sale of guaranteed government loans		4,793			2,965		1,828			61.7	%
Wealth and trust management		894			805		89			11.1	%
Service charges on deposit accounts		692			642		50			7.8	%
Increase in cash surrender value of bank owned life insurance		574			548		26			4.7	%
Bank and purchase card, net		900			1,021		(121	)		(11.9	%)
Other		3,900			3,506		394			11.2	%
Total noninterest income	$	17,019		$	34,284	$	(17,265	)		(50.4	%)

Lower noninterest income in the first half of 2023 compared to the same period of 2022 was primarily attributable to lower residential mortgage banking income, including mortgage servicing rights (“MSR”), which was driven by lower mortgage volumes in the 2023 period ($107.0 million) compared to the 2022 period ($269.2 million). The change in the fair value of MSR assets was a negative $1.4 million and a positive $3.5 million for the first halves of 2023 and 2022, respectively. Also contributing to the decline in the six month period ended June 30, 2023 compared to the 2022 period was higher income from fair value adjustments of other equity investments in the 2022 period 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.

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)	June 30, 2023		June 30, 2022		Change $			Change %
Salaries and employee benefits	$	14,518	$	15,873	$	(1,355	)		(8.5	%)
Occupancy and equipment		1,913		1,500		413			27.5	%
Data processing		1,131		874		257			29.4	%
Legal, issuer, and regulatory filing		2,753		618		2,135			345.5	%
Advertising and marketing		337		412		(75	)		(18.2	%)
Communications		1,171		1,030		141			13.7	%
Audit and accounting fees		503		379		124			32.7	%
FDIC insurance		1,246		106		1,140			1,075.5	%
Intangible amortization		335		386		(51	)		(13.2	%)
Other contractual services		3,218		999		2,219			222.1	%
Other taxes and assessments		803		671		132			19.7	%
Regulatory remediation		2,388		—		2,388			100.0	%
Other		3,736		2,478		1,258			50.8	%
Total noninterest expense	$	34,052	$	25,326	$	8,726			34.5	%


	For the six months ended
(Dollars in thousands)	June 30, 2023		June 30, 2022		Change $			Change %
Salaries and employee benefits	$	29,807	$	29,969	$	(162	)		(0.5	%)
Occupancy and equipment		3,482		2,985		497			16.6	%
Data processing		2,477		1,820		657			36.1	%
Legal, issuer, and regulatory filing		3,987		1,000		2,987			298.7	%
Advertising and marketing		623		840		(217	)		(25.8	%)
Communications		2,302		1,829		473			25.9	%
Audit and accounting fees		649		520		129			24.8	%
FDIC insurance		1,975		337		1,638			486.1	%
Intangible amortization		690		783		(93	)		(11.9	%)
Other contractual services		4,157		1,533		2,624			171.2	%
Other taxes and assessments		1,605		1,241		364			29.3	%
Regulatory remediation		3,522		—		3,522			100.0	%
Merger-related		—		50		(50	)		(100.0	%)
Other		7,623		5,108		2,515			49.2	%
Total noninterest expense	$	62,899	$	48,015	$	14,884			31.0	%

Excluding regulatory remediation and merger-related expenses, noninterest expense increased $6.3 million and $11.4 million for the three and six months ended June 30, 2023, respectively, compared to the same periods of 2022. Lower salaries and employees in both comparative periods were due to lower headcount in the Company's mortgage division. Regulatory remediation expenses include consulting, legal, and other costs incurred as part of the Company's efforts to remediate the findings in the Written Agreement. Higher other contractual services expense in the 2023 periods was primarily due to outsourced BSA/AML compliance services as the Bank continues to augment its compliance staff, while higher legal expense was primarily attributable to corporate, employee ~~benefits of $1.6 million, or 48.1%,~~benefit plans, and other employment matters. Higher FDIC insurance expense relative to the prior periods was primarily due to balance sheet growth and other factors such as lower profitability and regulatory capital levels, which increase the assessment rate. Included in ~~addition to an increase in occupancy expenses of $213 thousand to $627 thousand~~other noninterest expense for the ~~three-month period ended September 30, 2019, compared~~first six months of 2023 was a $0.9 million charge related to ~~$414 thousand~~the sale of PPP loans in 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~~second quarter of ~~expenses associated with the pending merger with Virginia Community.~~2021.

Income Tax (Benefit) Expense. ~~During~~Income tax benefit from continuing operations for the three months ended ~~September~~June 30, ~~2019, Blue Ridge recognized a provision~~2023 was $5.0 million compared to income tax expense of $0.3 million for ~~income taxes~~the same period of ~~$379 thousand, for~~2022, resulting in an effective income tax rate of ~~23.2%, as~~20.3% and 23.4% for the same respective periods. Income tax benefit from continuing operations for the six months ended June 30, 2023 was $4.5 million compared to ~~a provision~~income tax expense of ~~$329 thousand,~~$5.5 million for the same period of 2022, resulting in an effective income tax rate of ~~20.6%~~20.0% and 22.8% for the ~~period ended September 30, 2018.~~same respective periods.

Analysis of Financial Condition

All loan portfolio and ACL information presented as of and for the three and six months ended June 30, 2023 is in accordance with ASC 326. All loan information presented prior to this period is presented in accordance with previously applicable GAAP. As a result, the presentation of information pre-ASC 326 and post-ASC 326 adoption will not be comparable for most disclosures.

Loan Portfolio. ~~Blue Ridge~~The Company makes loans to ~~individuals as well as~~commercial entities and to ~~commercial entities. Specific loan~~individuals. 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 customers~~loans are to borrowers located in the markets ~~serviced~~served by ~~Blue Ridge.~~the Company; however, the loans contributing to the increase in nonperforming assets and the ACL in the first six months of 2023 were primarily outside of the Company's primary geographic footprint. All loans are underwritten within specific lending policy guidelines that are designed to maximize ~~Blue Ridge’s~~the Company’s profitability within an acceptable level of business risk.

The following table ~~sets forth~~presents the ~~distribution of Blue Ridge’s~~Company’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.


	June 30, 2023						December 31, 2022
(Dollars in thousands)	Amount			Percent			Amount			Percent
Commercial and industrial	$	545,921			22.2	%	$	590,049			24.4	%
Paycheck Protection Program		7,234			0.3	%		11,967			0.5	%
Real estate – construction, commercial		165,863			6.7	%		183,301			7.6	%
Real estate – construction, residential		82,199			3.3	%		76,599			3.2	%
Real estate – mortgage, commercial		879,729			35.9	%		864,989			35.8	%
Real estate – mortgage, residential		709,565			28.9	%		631,772			26.2	%
Real estate – mortgage, farmland		5,583			0.2	%		6,599			0.3	%
Consumer		62,510			2.5	%		47,423			2.0	%
Gross loans		2,458,604			100.0	%		2,412,699			100.0	%
Less: deferred loan fees, net of costs		327						(1,640	)
Gross loans, net of deferred loans fees and costs		2,458,931						2,411,059
Less: allowance for credit losses		(43,067	)					(22,939	)
Loans held for investment, net	$	2,415,864					$	2,388,120
Loans held for sale (not included in totals above)	$	64,102					$	69,534

   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)

The following table ~~sets forth~~presents the ~~repricing characteristics and sensitivity to interest rate changes of our loan portfolio at September 30, 2019 and December 31, 2018.~~

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

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 of the allowance for loan losses, with the objective 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 income and decreased by loans~~charged-off~~ ~~(net of recoveries, if any). Management’s periodic evaluation of the adequacy of the allowance is~~remaining maturities, based on ~~past~~contractual maturity, by loan ~~loss experience, known~~type and ~~inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value~~by rate type (variable or fixed), as 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 covers~~non-classified~~ ~~loans and those loans classified that are not impaired and is~~June 30, 2023.


					Variable rate								Fixed rate
(Dollars in thousands)	Total Maturities		One Year or Less		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	$	545,921	$	136,387	$	223,659	$	189,961	$	32,824	$	874	$	185,875	$	90,897	$	89,832	$	5,146
Paycheck Protection Program		7,234		—		—		—		—		—		7,234		7,234		—		—
Real estate – construction, commercial		165,863		46,602		80,925		31,141		16,202		33,582		38,336		35,243		1,687		1,406
Real estate – construction, residential		82,199		23,415		9,858		8,797		71		990		48,926		9,712		—		39,214
Real estate – mortgage, commercial		879,729		52,847		457,901		69,902		218,050		169,949		368,981		212,808		148,736		7,437
Real estate – mortgage, residential		709,565		13,530		405,516		11,741		74,865		318,910		290,519		44,307		41,168		205,044
Real estate – mortgage, farmland		5,583		197		1,484		60		109		1,315		3,902		2,416		757		729
Consumer loans		62,510		4,933		8,615		8,454		161		—		48,962		25,955		23,003		4
Gross loans	$	2,458,604	$	277,911	$	1,187,958	$	320,056	$	342,282	$	525,620	$	992,735	$	428,572	$	305,183	$	258,980

Allowance for Credit Losses. Management makes estimates 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 discountedfacts available 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~~time the ~~fair value of~~ACL is determined. Such estimation requires significant judgment at 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.

time made. Management believes that the ~~allowance for loan losses is adequate.~~Company’s ACL was adequate as of June 30, 2023 and December 31, 2022. There can be no assurance, however, that adjustments to the ~~provision for loan losses~~ACL 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’s~~the Company’s market area; orand changes in the circumstances of particular borrowers are criteria, among others, that could ~~change and make adjustments~~increase the level of the ACL required, resulting in charges to the provision for credit losses for loans. In addition, bank regulatory agencies periodically review the Bank's ACL and may require an increase in the provision for credit losses or the recognition of further loan ~~losses necessary.~~charge-offs, based on judgments different than those of management.

The following table presents ~~a summary~~an analysis of the ~~provision~~change in the ACL by loan type, as of and ~~allowance for loan losses~~ for the periods ~~indicated:~~stated.


	As of and for the three months ended						As of and for the six months ended
(Dollars in thousands)	June 30, 2023			June 30, 2022			June 30, 2023			June 30, 2022
ACL, beginning of period	$	29,974		$	12,013		$	22,939		$	12,121
Impact of ASC 326 adoption		—			—			4,022			—
Charge-offs
Commercial and industrial		(7,326	)		(2,442	)		(8,125	)		(4,927	)
Consumer		(1,694	)		(349	)		(2,204	)		(640	)
Total charge-offs		(9,020	)		(2,791	)		(10,329	)		(5,567	)
Recoveries
Commercial and industrial		887			388			1,005			424
Consumer		126			138			230			270
Total recoveries		1,013			526			1,235			694
Net charge-offs		(8,007	)		(2,265	)		(9,094	)		(4,873	)
Provision for credit losses - loans		21,100			7,494			25,200			9,994
ACL, end of period	$	43,067		$	17,242		$	43,067		$	17,242
Ratio of net charge-offs to average loans outstanding during period:
Commercial		1.64	%		0.69	%		0.89	%		2.08	%
Consumer		0.68	%		0.83	%		0.44	%		0.66	%
Total loans		1.29	%		0.47	%		0.73	%		0.52	%

Of the $9.0 million and $10.3 million in gross loan charge-offs for the three and six months ended June 30, 2023, respectively, $7.0 million was attributable to one commercial and industrial loan that was fully charged-off in the second quarter of 2023.

(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 losses~~ACL includes specific ~~and additional allowances~~reserves for ~~impaired~~individually evaluated loans and a general allowance applicable to all loan categories; however, management has allocated the ~~allowance~~ACL 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 presents the allocation of the ~~allowance at~~ACL by loan category and the ~~end~~percentage of loans in each category to total loans as of the ~~period indicated, and~~dates stated.


	June 30, 2023					December 31, 2022
(Dollars in thousands)	$		% of Loans			$		% of Loans
Commercial and industrial	$	22,083		22.2	%	$	15,272		24.4	%
Paycheck Protection Program		—		0.3	%		—		0.5	%
Real estate – construction, commercial		3,849		6.7	%		1,637		7.6	%
Real estate – construction, residential		1,564		3.3	%		628		3.2	%
Real estate – mortgage, commercial		8,420		35.9	%		2,356		35.8	%
Real estate – mortgage, residential		5,548		28.9	%		1,760		26.2	%
Real estate – mortgage, farmland		13		0.2	%		4		0.3	%
Consumer		1,590		2.5	%		1,282		2.0	%
Total	$	43,067		100.0	%	$	22,939		100.0	%

The information in the table above excludes PPP loans, which carry no ACL as ~~a percent of~~they are fully guaranteed by the ~~applicable loan segment, is as follows:~~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-performing~~Nonperforming Assets. ~~Non-performing~~ Nonperforming assets consist of~~non-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.

~~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 include~~OREO 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.

The following ~~is a~~table presents summary of information pertaining to ~~risk elements~~nonperforming assets and~~non-performing~~ ~~assets:~~ certain asset quality ratios as of the dates stated.


(Dollars in thousands)	June 30, 2023			December 31, 2022
Nonaccrual loans	$	83,379		$	10,324
Loans past due 90 days and still accruing		2,456			8,260
Total nonperforming loans	$	85,835		$	18,584
OREO		—			195
Total nonperforming assets	$	85,835		$	18,779
ACL	$	43,067		$	22,939
Loans held for investment, including PPP loans	$	2,458,931		$	2,411,059
Loans held for investment, excluding PPP loans	$	2,451,697		$	2,399,092
Total assets	$	3,214,424		$	3,141,045
ACL to total loans held for investment, including PPP loans		1.75	%		0.95	%
ACL to total loans held for investment, excluding PPP loans		1.76	%		0.96	%
ACL to nonperforming loans		50.17	%		123.43	%
Nonperforming loans to total loans held for investment, including PPP loans		3.49	%		0.77	%
Nonperforming loans to total loans held for investment, excluding PPP loans		3.50	%		0.77	%
Nonperforming assets to total assets		2.67	%		0.60	%

The increase in nonperforming loans at June 30, 2023 compared to December 31, 2022 was primarily due to $58.1 million of specialty finance loans (classified in commercial and industrial loans) that were placed on nonaccrual status in the second quarter of 2023. The increase in the ratio of ACL to total loans held for investment, excluding PPP loans, at June 30, 2023 compared to December 31, 2022 was primarily attributable to $14.1 million of specific reserves associated with the aforementioned group of specialty finance loans, while $4.0 million was due to the adoption of ASC 326 on January 1, 2023. The remaining purchase accounting adjustments (discounts) related to loans acquired in the Bay Banks of Virginia, Inc. merger in 2021 and earlier acquisitions by the Company were $6.4 million and $7.9 million at June 30, 2023 and December 31, 2022, respectively.

Modified Loans. The Company granted certain loan modifications to borrowers experiencing financial difficulties during the six months ended June 30, 2023. The total amortized cost of these modified loans was $46.9 million, or 1.91% of gross loans held for investment, as of June 30, 2023, all of which were on nonaccrual status as of the same date.

   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 %

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 securities~~available-for-sale~~ AFS 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’s~~the Company’s AFS investment securities~~available-for-sale~~ was ~~$121.7~~$340.6 million ~~at September~~as of June 30, ~~2019, an increase of $83.7 million, or 219.98%~~2023, a decrease from ~~$38.0~~$354.3 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. Securities~~2022, primarily due to amortization of securities. As a result of a modest increase in market longer-term interest rates in the ~~investment~~first six months of 2023, the Company’s portfolio ~~classified asheld-to-maturity~~ ~~are those~~of AFS securities ~~that Blue Ridge has~~had an unrealized loss of approximately $1.5 million in the ~~intent and ability to hold to maturity and are carried at amortized cost.~~same period.

As of ~~September~~June 30, ~~2019~~2023 and December 31, ~~2018,~~2022, the majority of the investment securities portfolio consisted of securities rated ~~A to AAA~~as 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~~default. At June 30, 2023 and ~~carry the smallest degree~~December 31, 2022, securities with a fair value of ~~investment risk. Investment securities that~~$178.8 million and $241.9 million, respectively, were pledged to secure ~~public deposits totaled $13.5~~the Bank’s borrowing facility with the FHLB. As of June 30, 2023, the Company pledged securities with $108.7 million of par value (amortized cost and fair value of $109.6 million and ~~$16.8~~$90.0 million, ~~at September~~respectively) as collateral for the Bank Term Funding Program (“BTFP”) established by the Board of Governors of the Federal Reserve System. The Company also pledged securities with a fair value of $11.6 million (amortized cost of $13.4 million) as of June 30, ~~2019 and December 31, 2018, respectively.~~2023 for access to the FRB Discount Window.

~~Blue Ridge completes~~The Company reviews its AFS investment securities portfolio for ~~other-than-temporary impairment at least~~potential credit losses no less than quarterly. ~~At September 30, 2019 and December 31, 2018, only~~AFS investment ~~grade securities were in an unrealized loss position. Investment~~ securities with unrealized losses are generally a result of pricing changes due to ~~recent and negative conditions~~changes in the current ~~market~~interest 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 AFS securities prior to the recovery of the amortized cost.

No ~~other-than-temporary impairment~~ACL has been recognized for ~~the~~AFS securities ~~in Blue Ridge’s investment portfolio~~ as of ~~September~~June 30, ~~2019~~2023.

Restricted equity investments consisted of stock in the FHLB (carrying basis $10.9 million and $14.7 million at June 30, 2023 and December 31, ~~2018.~~

~~Blue Ridge holds restricted investments~~2022, respectively), stock in ~~equities~~the FRB (carrying basis of $6.1 million at both June 30, 2023 and December 31, 2022, respectively), and stock in the ~~Federal Reserve Bank of Richmond (“FRB”), FHLB, and through its~~Company’s correspondent bank ~~Community Banker’s Bank (“CBB”). At September~~(carrying basis of $468 thousand at both June 30, ~~2019 Blue Ridge owned $6.0 million of FHLB stock, $963 thousand of FRB stock,~~2023 and ~~$168 thousand of CBB stock. At~~ December 31, ~~2018, Blue Ridge owned $3.5~~2022). Restricted equity investments are carried at cost. The Company holds various other equity investments, including shares in other financial institutions and fintech companies, totaling $22.7 million and $23.8 million as of ~~FHLB stock, $813 thousand~~June 30, 2023 and December 31, 2022, respectively, which are carried at fair value with any gain or loss reported in the consolidated statements of ~~FRB stock, and $168 thousand of CBB stock.~~operations each reporting period.

The following table ~~reflects the composition of Blue Ridge’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 present~~presents the amortized cost of ~~Blue Ridge’s~~the investment portfolio by ~~their stated~~contractual maturities, as well as the weighted average yields for each of the maturity ranges ~~at September 30, 2019~~as of and ~~December 31, 2018.~~for the period stated. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.


	June 30, 2023
	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			Total Amortized Cost
Securities available for sale
State and municipal	$	—		—	%	$	6,068		2.40	%	$	32,393		1.97	%	$	20,842		1.60	%	$	59,303
U. S. Treasury and agencies		2		—	%		19,487		0.98	%		45,568		1.88	%		7,000		2.11	%		72,057
Mortgage backed securities		—		—	%		3,094		0.51	%		26,819		1.75	%		198,048		1.92	%		227,961
Corporate bonds		500		6.54	%		6,300		6.75	%		34,114		4.60	%		500		4.00	%		41,414
Total	$	502				$	34,949				$	138,894				$	226,390				$	400,735

   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

   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 Ridge~~the 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’s~~The 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 Ridge with~~ a source of fee income and cross-marketing opportunities as well as a~~low-cost~~ source of funds. Time and savings accounts, including money market deposit accounts, also provide a relatively stable~~low-cost~~ source of funding. ~~Please refer~~

Total deposits as of June 30, 2023 were $2.61 billion, an increase of $110.6 million from December 31, 2022, of which $220.1 million was due to ~~the average balance tables under “Net Interest Income” for information regarding the average balance~~higher time deposits, primarily brokered time deposits. The Company's relationships with fintech partners have resulted in approximately $707.6 million of deposits as of June 30, 2023, up from $690.2 million as of December 31, 2022. Estimated uninsured deposits totaled approximately $865.7 million as of June 30, 2023, or 33% of total deposits, compared to $1.01 billion, or 40% of total deposits, as of December 31, 2022. Excluding fintech-related deposits, estimated uninsured deposits were 26% and ~~average rates paid.~~31% of total deposits as of June 30, 2023 and December 31, 2022, respectively.

Approximately ~~45.5%~~22.0% of ~~Blue Ridge’s~~total deposits ~~at September~~as of June 30, ~~2019~~2023 were ~~made up~~composed of noninterest-bearing demand deposits compared to 25.6% as of December 31, 2022. In contrast, approximately 23.4% of total deposits as of June 30, 2023 were composed 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% at~~15.6% as of December 31, ~~2018~~2022, which was primarily due to the addition of brokered time deposits in late first quarter 2023 in response to then recent industry events. Brokered time deposits represented approximately 10.7% and 1.7% of total deposits as of June 30, 2023 and December 31, ~~2017,~~2022, respectively.

The following table presents maturities of time deposits for certificate of deposits of $250 thousand or greater as of the dates stated.


(Dollars in thousands)	June 30, 2023		December 31, 2022
Maturing in:
3 months or less	$	14,874	$	10,642
Over 3 months through 6 months		15,960		14,699
Over 6 months through 12 months		40,675		15,423
Over 12 months		12,367		35,075
	$	83,876	$	75,839

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

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 provides~~present information on the balances and interest rates on ~~total~~ borrowings as of and for the periods ~~indicated:~~stated.


	As of and for the six months ended June 30, 2023
(Dollars in thousands)	Period-End Balance		Highest Month-End Balance		Average Balance		Weighted Average Rate
FHLB borrowings	$	219,100	$	310,800	$	295,102		4.59	%
FRB borrowings		65,000		65,000		17,958		4.89	%

	As of and for the year ended December 31, 2022
(Dollars in thousands)	Period-End Balance		Highest Month-End Balance		Average Balance		Weighted Average Rate
FHLB borrowings	$	311,700	$	311,700	$	113,478		3.08	%
FRB borrowings		51		17,197		4,881		2.34	%

(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’s~~the Company’s residential, ~~multifamily~~multi-family, and commercial real estate mortgage loan portfolios, as well as ~~selected~~select investment ~~portfolio~~ securities.

Subordinated notes, net, totaled $39.9 million as of both June 30, 2023 and December 31, 2022.

Liquidity. Liquidity ~~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 depositors or other lenders or by convertingnon-cash~~ items into cash. 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~~essential to the ~~different~~Company’s business. The Company’s liquidity could be impaired by unforeseen outflows of cash, including deposits, or the inability to access the capital and/or wholesale funding markets. ~~These markets include~~This situation may arise due to circumstances that the ~~brokered certificate of deposit~~Company may be unable to control, such as general market ~~listing service deposit market, and~~disruption, negative views about the ~~federal funds market. Blue Ridge is~~Company or the financial services industry generally, or an operational problem that affects the Company or 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 has~~one-way~~ ~~authority with Promontory for both their CDARs and ICS products which provides Blue Ridge the~~third party. The Company’s ability to ~~access additional wholesale funding as needed. Blue Ridge also maintains secured lines of credit with~~borrow from other financial institutions on favorable terms or at all could be adversely affected by disruptions in 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.capital markets or other events.

~~Cash flow from amortizing assets or maturing assets also provides funding to meet the needs of depositors and borrowers.~~

~~Blue Ridge~~The Company has established a formal liquidity contingency plan ~~which~~that provides guidelines for liquidity management. ~~For Blue Ridge’s~~Pursuant to the Company’s liquidity management program, it first determines ~~Blue Ridge’s~~its current liquidity position and then forecasts liquidity based on anticipated changes in the balance sheet. In this forecast, ~~Blue Ridge~~the Company expects to maintain a liquidity cushion. ~~Blue Ridge also~~Management then stress tests ~~its~~the 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~~Management also monitors the Company’s liquidity position through cash flow forecasting and believes ~~that it has sufficient resources~~its level of liquidity is adequate to conduct the business of the Company.

Deposits are the primary source of the Company’s liquidity. Cash flow from amortizing assets or maturing assets provides funding to meet ~~its liquidity needs.~~

~~Blue Ridge~~the needs of depositors and borrowers. The Bank 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~~$28.0 million ~~at September~~as of June 30, ~~2019~~2023 and December 31, ~~2018.~~2022. These lines ~~were not drawn upon~~bear interest at ~~September~~the prevailing rates for such loan and are cancellable any time by the correspondent bank. As of June 30, ~~2019~~2023 and December 31, ~~2018.~~2022, none of these lines of credit with correspondent banks were drawn upon.

~~Liquidity~~In addition to deposits and federal funds lines, the Company has access to various wholesale funding markets. These markets include the brokered certificate of deposit market, listing service deposit market, and the federal funds market. The Company is ~~essential to Blue Ridge’s business. Blue Ridge’s liquidity could be impaired by an inability~~a member of the IntraFi Network (formerly, Promontory Interfinancial Network), which allows banking customers to access Federal Deposit Insurance Corporation (the “FDIC”) insurance protection through the ~~capital markets~~Bank on deposits that exceed FDIC insurance limits. The Company also has one-way authority with the IntraFi Network for both Certificate of Deposit Account Registry Service and Insured Cash Sweep products which provides the Company the ability to access additional wholesale funding as needed.

The Company maintains secured lines of credit with the FHLB under which the Company can borrow up to the allowable amount for the collateral pledged. As of June 30, 2023, the Company had a credit line available of $572.7 million with the FHLB with outstanding advances totaling $219.1 million and letters of credit totaling $67.6 million, leaving the remaining credit availability of $286.0 million as of the same date. The letters of credit are for the benefit of the Treasury Board of the Commonwealth of Virginia to secure public deposits.

The BTFP provides banks with additional liquidity via a secured line of credit collateralized by eligible pledged securities. Available credit is equal to the current par value of the pledged securities. Advances under the BTFP are up to a one-year term and are priced at the one-year overnight index swap rate plus 10 basis points, which is fixed for the term on the advance date. Advances can be repaid at any time without penalty. The Company had an available line of credit through the BTFP of $100.5 million as of June 30, 2023, of which the Company had drawn one advance for $65.0 million, maturing May 10, 2024, with a fixed interest rate of 4.74%, leaving the remaining credit availability of $35.5 million as of the same date.

The Company maintains access to the FRB Discount Window, under which the Company can borrow up to the allowable amount for the securities pledged as collateral. As of June 30, 2023, availability under the FRB Discount Window was $11.1 million. The Company had no outstanding borrowings through the FRB Discount Window as of June 30, 2023 or ~~by unforeseen outflows~~December 31, 2022.

The Company utilized the FRB Paycheck Protection Program Liquidity Facility to partially fund PPP loans, which collateralize the advances. As of ~~cash, including deposits. This situation may arise due~~June 30, 2023 and December 31, 2022, FRB borrowings under this facility totaled $0 and $51 thousand, respectively.

Subsequent 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~~events in early March 2023, the Company has undertaken efforts to ~~borrow from other financial institutions on favorable terms or at all could be adversely affected~~increase its borrowing capacity by ~~disruptions~~pledging additional eligible collateral with the FHLB, adding borrowing capacity by participating in the ~~capital markets or other events. Blue Ridge monitors~~BTFP, and more actively sourcing brokered deposits to enhance its liquidity ~~position daily through cash flow forecasting and monthly testing against minimum policy ratios and believes its level of~~position. The Company also added a treasury management resource to provide additional oversight to the Company's liquidity ~~and capital is adequate to conduct the business of Blue Ridge.~~position.

Capital. Capital adequacy is an important measure of financial stability and performance. ~~Blue Ridge’s~~The Company’s objectives are to maintain a level of capitalization that is sufficient to ~~sustain asset growth~~support the Company's strategic objectives.

Banks and ~~promote depositor and investor confidence.~~

~~Regulatory agencies measure~~bank holding companies are subject to various regulatory capital ~~adequacy utilizing a formula that considers~~requirements administered by the ~~individual risk profile of the financial institution. The~~federal 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 ~~ratio~~adequacy 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 1~~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 ~~risk-based assets~~qualitative 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 ~~requirement~~ of ~~2.5% of risk-weighted assets, is designed to absorb losses during periods of economic stress and is applicable to Blue Ridge Bank’s CET1~~2.50% above the adequately capitalized risk-based capital ~~Tier~~ratios for all ratios, except the tier 1 leverage ratio. If a banking organization dips into its capital ~~and total capital ratios. Including the~~ conservation buffer, ~~Blue Ridge Bank currently considers its minimum capital ratios~~it is subject to ~~be as follows: 7.00% for CET1; 8.50% for Tier 1 capital;~~limitations on certain activities, including payment of dividends, share repurchases, and ~~10.50% for Total Risk-Based capital. Banking institutions with a ratio of common equity Tier 1~~discretionary compensation to ~~risk-weighted assets above the minimum but below the conservation buffer will face constraints~~certain officers. The Banks's primary regulators may place certain restrictions on dividends ~~equity repurchases,~~paid by the Bank. The total amount of dividends which may be paid at any date is generally limited to retained earnings of the Bank.

Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and ~~compensation. Blue Ridge Bank was considered “well capitalized” for~~critically undercapitalized; although, these terms are not used to represent overall financial condition. If adequately capitalized, regulatory ~~purposes at September~~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.

As of June 30, ~~2019~~2023 and December 31, ~~2018.~~

~~As noted above, regulatory capital levels for Blue Ridge~~2022, the 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~~met the capital ~~markets~~requirements to be classified as well capitalized. There have been no conditions or events since these dates that management believes have changed the institution's categorization.

If the Bank were fail to meet ~~Blue Ridge’s growth objectives or capitalize on specific business opportunities.~~

~~The following table shows the minimum capital requirement and~~ the capital ~~position at September 30, 2019 and December 31, 2018 and 2017~~adequacy guidelines for ~~Blue Ridge Bank.~~

   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 %

~~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

~~amount of future payments Blue Ridge~~“well-capitalized” bank, it could be required to ~~make is represented by~~pay higher insurance premiums to the ~~contractual amount~~FDIC or subject to increased regulatory scrutiny. In addition, the Bank would not be able to renew or accept brokered deposits without prior regulatory approval and would be subject to interest rate restrictions on its deposit accounts.

As previously noted, the Company adopted CECL effective January 1, 2023. Federal and state banking regulations allow financial institutions to irrevocably elect to phase-in the after-tax cumulative effect adjustment at adoption to retained earnings ("CECL Transitional Amount") over a three-year period. The three-year phase-in of the ~~commitment. If~~CECL Transitional Amount to regulatory capital will be 25%, 50%, and 25% in 2023, 2024, and 2025, respectively. The Bank made this irrevocable election effective with its first quarter 2023 call report.

The following tables present the ~~commitment~~capital and capital ratios to which the Bank is ~~funded, Blue Ridge would~~subject and the amounts and ratios to be ~~entitled to seek recovery from~~adequately and well capitalized as of the ~~customer.~~dates stated. Adequately capitalized ratios include the conversation buffer, if applicable. The ~~maximum potential amount~~CECL Transitional Amount was $5.5 million, of ~~future advances on standby letters~~which $1.4 million reduced the regulatory capital amounts and capital ratios as of ~~credit available through Blue Ridge at September~~June 30, ~~2019 and December 31, 2018, totaled $1.3 million and $1.6 million, respectively.~~2023.


	June 30, 2023
	Actual					For Capital Adequacy Purposes					To Be Well Capitalized
(Dollars in thousands)	Amount		Ratio			Amount		Ratio			Amount		Ratio
Total risk based capital
(To risk-weighted assets)
Blue Ridge Bank, N.A.	$	298,815		10.77	%	$	291,324		10.50	%	$	277,451		10.00	%
Tier 1 capital
(To risk-weighted assets)
Blue Ridge Bank, N.A.	$	257,195		9.27	%	$	235,831		8.50	%	$	221,959		8.00	%
Common equity tier 1 capital
(To risk-weighted assets)
Blue Ridge Bank, N.A.	$	257,195		9.27	%	$	194,214		7.00	%	$	180,342		6.50	%
Tier 1 leverage
(To average assets)
Blue Ridge Bank, N.A.	$	257,195		7.86	%	$	130,888		4.00	%	$	163,610		5.00	%


	December 31, 2022
	Actual					For Capital Adequacy Purposes					To Be Well Capitalized
(Dollars in thousands)	Amount		Ratio			Amount		Ratio			Amount		Ratio
Total risk based capital
(To risk-weighted assets)
Blue Ridge Bank, N.A.	$	303,876		11.22	%	$	284,376		10.50	%	$	270,834		10.00	%
Tier 1 capital
(To risk-weighted assets)
Blue Ridge Bank, N.A.	$	279,125		10.31	%	$	230,122		8.50	%	$	216,586		8.00	%
Common equity tier 1 capital
(To risk-weighted assets)
Blue Ridge Bank, N.A.	$	279,125		10.31	%	$	189,513		7.00	%	$	175,976		6.50	%
Tier 1 leverage
(To average assets)
Blue Ridge Bank, N.A.	$	279,125		9.25	%	$	120,703		4.00	%	$	150,878		5.00	%

Off-Balance Sheet Activities

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 Ridge~~The Company evaluates each customer’s credit worthiness on acase-by-case ~~basis. The amount of collateral obtained,~~ basis, in a manner similar to that if deemed necessary by Blue Ridge 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.underwriting a loan. The approved commitments to extend credit that ~~was~~were available but unused ~~at September~~as of June 30, ~~2019~~2023 and December 31, ~~2018~~2022 totaled ~~$89.2~~$679.1 million and ~~$65.2~~$736.1 million, respectively.

credit totaled $29.5 million and $28.3 million, respectively. The credit risk of issuing stand-by letters of credit can be greater than the risk involved in extending loans to customers.

Upon the adoption of ASC 326 on January 1, 2023, the Company recorded an increase to its reserve for unfunded commitments of $3.7 million. For the six months ended June 30, 2023, the Company recorded a reduction to the provision for credit losses for unfunded commitments of $1.0 million, which was primarily attributable to lower balances of loan commitments. As of June 30, 2023, the reserve for unfunded commitments was $4.5 million compared to $1.8 million as of December 31, 2022.

The Company invests in various partnerships, limited liability companies, and small business investment company funds. Pursuant to these investments, the Company commits to an investment amount that may be fulfilled in future periods. At June 30, 2023, the Company had future commitments outstanding totaling $17.9 million related to these investments.

Interest Rate Risk Management

As a financial institution, ~~Blue Ridge~~the 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’s~~other 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 Ridge~~the Bank maintains. ~~Blue Ridge~~The 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’s~~monitoring 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 Ridge~~sensitivity that uses a net interest income simulation model as its primary tool to measure interest rate sensitivity. ~~Many assumptions~~Assumptions 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 Ridge~~management expects interest 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 what~~impact on net interest income ~~would be~~ based on specific changes in interest rates. The rate simulations are performed for atwo-year period and include ~~ramped~~rapid rate changes of down 100 basis points to 300 basis points and up 100 basis points to ~~400~~300 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.

The following table presents the estimated change in net interest income under various rate change scenarios. The scenarios assume rate changes occur instantaneous and in a parallel manner, which means the changes are the same on all points of the rate curve.


	June 30, 2023
	Instantaneous Parallel Rate Shock Scenario
	Change in Net Interest Income - Year 1					Change in Net Interest Income - Year 2
Change in interest rates:
+300 basis points	$	(10,808	)	(11.5	%)	$	(11,204	)	(11.1	%)
+200 basis points		(6,460	)	(6.9	%)		(6,549	)	(6.5	%)
+100 basis points		(2,818	)	(3.0	%)		(2,712	)	(2.7	%)
Base case
-100 basis points		1,332		1.4	%		774		0.8	%
-200 basis points		2,196		2.3	%		291		0.3	%
-300 basis points		3,386		3.6	%		25		(—	%)

The severity of the effect of instantaneous increases in interest rates as shown above is due to the timing of pricing change in the Company's interest-bearing liabilities compared to its interest-earning assets. A significant portion of the Company's deposits through its fintech partnerships reprice with changes in federal funds rates. Therefore, an instantaneous change in this index rate results in a relative change in deposit costs. The Company contracts with its fintech partners and continually assesses the cost of these fintech-related deposits relative to sources of fees and other noninterest income earned from these partnerships.

Stress testing the balance sheet and net interest income using instantaneous parallel shock movements in the yield curve of 100 to ~~400~~300 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’s~~the 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 based~~repricing 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, all~~future interest rate risk ~~stress tests measures were~~profile.

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 each~~Part 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

~~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 %

~~Item 3.~~

~~Quantitative and Qualitative Disclosures about Market Risk~~

~~Not required.~~

~~Item 4.~~

~~Controls and Procedures~~

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~~June 30, ~~2019~~2023 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.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

~~Item 1.~~

~~Legal Proceedings~~

There ~~are~~have been no material ~~pending~~developments in the status of the legal proceedings ~~other than~~previously disclosed in Part I, Item 3 of the Company’s 2022 Form 10-K.

In the ordinary ~~routine litigation incidental to the business, to which~~course 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, 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

Other than as set forth below, there have been no material changes to ~~which~~the risk factors disclosed in the 2022 Form 10-K. The following risk factors supplement, and should be read together with, the risk factors disclosed in the 2022 Form 10-K. Additional risks not presently known to the Company, or that it currently deems immaterial, may also adversely affect the Company's business, financial condition, or results of operations. See also “Cautionary Note About Forward-Looking Statements,” included in Part 1, Item 2, of this Form 10-Q.

The Company’s specialty finance loans may further increase its credit risk.

Over the first six months of 2023, the Company’s nonperforming loans have increased from $18.6 million, or 0.77% of total loans held for investment, excluding PPP loans, at December 31, 2022 to $85.8 million, or 3.50% of total loans held for investment, excluding PPP loans, at June 30, 2023. This increase was primarily due to a group of specialty finance loans totaling $58.1 million as of June 30, 2023 that were placed on nonaccrual status during the second quarter of 2023. The Company’s ACL as of June 30, 2023 includes $14.1 million of specific reserves for this group of loans. While management believes that the ACL was adequate as of June 30, 2023 and that the credit deterioration of this group of loans is an isolated event within the Company's loan portfolio, there can be no assurance that the Company will not experience further deterioration within this group of loans or other increases in nonperforming loans in the future.

These specialty finance loans are of higher risk than other types of loans originated by the Bank, due to the nature of the collateral, and as such, the Company's ability to pursue collections could be delayed or protracted. Any of these factors could cause the Company to incur charge-offs to the ACL, lost interest income relating to these loans, and additional increases in the loan loss reserves, any of ~~its property is subject.~~which may have a material adverse effect on earnings, liquidity, and capital.

~~Item 1A.~~

~~Risk Factors~~

~~Not required.~~Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

~~Item 2.~~

~~Unregistered Sales of Equity Securities and Use of Proceeds~~

None

~~Item 3.~~

~~Defaults Upon Senior Securities~~

~~None~~Item 3. Defaults Upon Senior Securities

~~Item 4.~~

~~Mine Safety Disclosures~~

None

~~Item 5.~~

~~Other Information~~

~~None~~Item 4. Mine Safety Disclosures

None

~~Item 6.~~

~~Exhibits~~

Item 5. Other Information

None

Item 6. Exhibits


10.1		Employment Agreement, dated as of May 7, 2023, by and between Blue Ridge Bank, National Association, and G. William Beale.


~~31.1~~ 10.2		Blue Ridge Bankshares, Inc. 2023 Stock Incentive Plan (incorporated by reference to Appendix A of Blue Ridge Bankshares, Inc.'s proxy statement for the 2023 annual meeting, filed April 28, 2023).

31.1		Rule~~15(d)~~ 13(a)-14(a) Certification of Chief Executive Officer.

31.2		Rule~~15(d)~~ 13(a)-14(a) Certification of Chief Financial Officer.

32.1		Statement of Chief Executive Officer and Chief Financial Officer ~~Pursuant~~pursuant to 18 ~~U.S.C.Section~~U.S.C. Section 1350.

101		Interactive Data Files.*

*	~~To be filed by amendment.~~	The following materials from Blue Ridge Bankshares, Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2023, formatted in Inline Extensible Business Reporting Language (XBRL), include: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income (Loss), (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 June 30, 2023, formatted in Inline XBRL (included with Exhibit 101).

SIGNATURES

~~SIGNATURES~~

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.~~
	BLUE RIDGE BANKSHARES, INC.
~~Date: December 16, 2019~~			~~By:~~	~~/s/ Brian K. Plum~~
Date: August 7, 2023	By:	~~Brian K. Plum~~ /s/ G. William Beale
		G. William Beale
		President and Chief Executive Officer

	By:	/s/ ~~Amanda G. Story~~Judy C. Gavant
		~~Amanda G. Story~~ Judy C. Gavant
		Executive Vice President and Chief Financial Officer

4659


	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


	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


	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


	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


	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


	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


	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

	$	120,148	$	1,710	$	118	$	121,740

Held to maturity
State and municipal	$	13,117	$	506	$	8	$	13,615

	$	13,117	$	506	$	8	$	13,615

Total Investment Securities	$	133,265	$	2,216	$	126	$	135,355


	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

	$	38,828	$	103	$	884	$	38,047

Held to maturity
State and municipal	$	15,565	$	78	$	140	$	15,503

	$	15,565	$	78	$	140	$	15,503

Total Investment Securities	$	54,393	$	181	$	1,024	$	53,550


	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

Total	$	120,148	$	121,740	$	13,117	$	13,615


	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


	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


	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


	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


	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


	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


	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	)


			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


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


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


(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


	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


	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


	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


	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


	Nine Months Ended September 30, 2019 vs. 2018
	Increase/ (Decrease) Due to						Total Increase/ (Decrease)
(Dollars in thousands)	Volume			Rate			Total Increase/ (Decrease)
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


	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	%


	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)