Blue Ridge Bankshares (BRBS) 8-K Blue Ridge Bankshares, Inc. Announces Second Quarter Earnings

Exhibit 99.1

Blue Ridge Bankshares, Inc. Announces Second Quarter Earnings

Charlottesville, Va., July 30, 2020 – Blue Ridge Bankshares, Inc. (the “Company”) (NYSE American: BRBS) announced today its second quarter 2020 net income of $6,218,000, or $1.10 earnings per share, compared to $841,000, or $0.15 earnings per share, for the quarterly period ended March 31, 2020, and $1,536,000, or $0.35 earnings per share, for the quarterly period ended June 30, 2019. The growth in quarterly earnings is primarily attributable to a significant increase in mortgage volume and the recognition of Paycheck Protection Program loan processing fees over the expected loan lives. The positive impact of these items was partially offset by additional provisioning for loan losses driven by current economic uncertainty.

“The fierce, passionate commitment of our team was never more on display than what I have seen this year,” said Brian K. Plum, President and Chief Executive Officer. “Our team fully embraced the potential of the Paycheck Protection Program to help thousands of borrowers and lift communities. Meanwhile our mortgage team made incredible strides improving processes and systems while facilitating record volumes to help families purchase new homes and refinance existing ones. I could not be prouder of our team for its efforts on behalf of so many people during these uncertain times.”

“We also recognize and accept that there are challenging times ahead,” Plum continued. “The economic uncertainties created by the COVID-19 pandemic will resonate for years, and in the short-term will likely create more business closures and asset quality issues. Hopefully we continue to see monetary and fiscal policies support small businesses and borrowers as we recover, which will help mitigate, though not entirely eliminate, the economic consequences of the pandemic. Our team stands ready to embrace the challenge of navigating the landscape to create the best outcomes possible for our customers and communities.”

Paycheck Protection Program (“PPP”)

The Company funded over 2,400 PPP loans totaling approximately $350,000,000, as of June 30, 2020. Estimated PPP processing fees earned by the Company for these loans is approximately $11 million. The Company funded these loans, which have a statutory loan interest rate of 1.00%, using the Federal Reserve Paycheck Protection Program Liquidity Facility (“PPPLF”), which provides 100% funding at a cost of 0.35%. PPP loans do not count toward bank regulatory ratios.

COVID-19 Response

The Company has resumed normalized branch operations, following appropriate hygienic and distancing guidelines, following the temporary redirection of branch traffic to drive-thru and digital channels in mid-March 2020. While branch traffic has steadily improved, the Company believes digital use adoption following COVID-19 will have a meaningful impact on future customer behaviors and business investment decisions.

Asset Quality

Nonperforming loans and loans 90 days or more past due totaled $6,172,000 at June 30, 2020, an increase of $1,051,000, or 20.5%, from March 31, 2020. The Company’s provision for loan losses amounted to $3,500,000 for the second quarter of 2020, compared to $575,000 in the first quarter of 2020. The increased provisioning in the second quarter is related to the continued uncertainty surrounding COVID-19 deferred loans and borrower ability to repay once the deferral period ends.

The Company approved 545 loan deferrals for a total of $104,750,000, or 15.4% of the held-for-investment loan portfolio excluding PPP loans, as of July 28, 2020. Of these deferrals, 309 loans with a balance of $40,262,000 either continued making regular payments or have resumed regular payments as of July 28,

2020. Deferrals were granted for periods up to six months depending on the industry in which the borrower operates and the borrower’s specific needs. The Company stays in continuous contact with deferred borrowers and will reevaluate the risk rating, nonaccrual, and potential impairment status of these loans consistently during the deferral period.

The economic fallout from COVID-19 is materially impacting all parts of the economy, and especially certain industries. The information below provides the Company’s exposure to these industries, utilizing the Company’s NAICS coding on its loan accounting system as of July 28, 2020:

Industry by NAICS Code	Number of Borrowers		Total Loan Balance
Hotels and Motels		17	$	28,537,315
Bed and Breakfasts		6		2,925,578
All Other Traveler Accommodations		7		4,429,624
Full-Service Restaurants		18		3,710,002
Limited-Service Restaurants		13		4,845,102
Food Service Contractor		1		1,454,672
Religious Organizations		37		7,945,973
TOTAL		99	$	53,848,266

Balance Sheet

The Company had total assets of $1,595,446,000 at June 30, 2020, an increase of $634,635,000, or 66.05%, from December 31, 2019 and $567,841,000, or 55.3% from March 31, 2020. The increase in total assets year-to-date and for the quarter ended June 30, 2020 was primarily driven by PPP. Loans held for investment increased $384,279,000, or 59.4% from December 31, 2019, and $360,178,000, or 53.7%, from March 31, 2020. Included in this increase is approximately $350,091,000 of PPP loans originated throughout the second quarter. These loans were fully funded by the Federal Reserve’s PPPLF program, resulting in a corresponding increase in other borrowed funds on the balance sheet. Additionally, cash and due from banks increased $181,110,000, or 301.7% from December 31, 2019, and $173,978,000, or 259.1% from March 31, 2020. Included in this increase are funds retained from new customers as a result of PPP as well as additional liquidity obtained during the uncertainty surrounding COVID-19, some of which will begin to roll off in the third quarter of 2020. Total deposits increased $243,826,000, or 33.8%, from December 31, 2019, and $196,697,000, or 25.6% from March 31, 2020. Noninterest DDA increased $107,412,000, or 60.4% year-to-date and $106,750,000, or 59.8% for the quarter. These increases are also attributable to funds retained from PPP customers as well as the build-up of liquidity in response to COVID-19.

On May 28, 2020, the Company entered into a subordinated note purchase agreement under which the Company issued a subordinated note with a principal amount of $15,000,000. The note initially bears interest at 6.000% per year, beginning December 1, 2020 to but excluding June 1, 2025, payable semi-annually in arrears. From and including June 1, 2025 through June 1, 2030, or up to an earlier redemption date, the interest rate will reset quarterly to an interest rate per year equal to the then current three-month SOFR plus 587 basis points, payable quarterly in arrears. Beginning on June 1, 2025 through maturity, the note may be redeemed, at the Company’s option, on any scheduled interest payment date. The note will mature on June 1, 2030.

The Company experienced held-for-sale loan growth of $72,150,000, or 129.7%, year-to-date, and $37,777,000, or 42.0% in the second quarter. The growth in available-for-sale loans was due to an uptick in volume created by market conditions and the continued expansion of our retail and wholesale mortgage operations.

Income Statement

Net Interest Income

Net interest income was approximately $10,645,000 for the quarter ended June 30, 2020, compared to $8,023,000 for the first quarter of 2020, and $5,203,000 for the quarter ended June 30, 2019. Included in second quarter net interest income was approximately $2,400,000 in net PPP related loan income. The Company continues to experience improved deposit pricing since putting significant focus into realigning the balance sheet at the end of the first quarter as a result of the significant downward rate movements that occurred. The cost of deposits decreased from 0.95% in the first quarter to 0.65% at the end of the second quarter. Net interest margin was down slightly in the second quarter compared to the first quarter, decreasing from 3.71% to 3.19%. This decrease is attributable to the margin pressure created by the PPP loans and related funding costs, which resulted in the Company recognizing a 0.65% net interest margin on these loans. The future recognition of PPP income as we enter the forgiveness phase of the program in August 2020 will greatly impact the Company’s net interest margin going forward.

Other Income

Other income for the second quarter ended June 30, 2020 was $16,524,000 compared to $4,998,000 for the quarter ended March 31, 2020. This increase is attributable to increased mortgage volume in the second quarter due to the current rate environment along with the addition of the LenderSelect Mortgage Group on December 31, 2019, and the expansion of the Company’s retail mortgage division. Year-to-date mortgage volume for 2020 was over $400 million at June 30, 2020, which surpassed the volume the division closed in all of 2019.

Other Expense

Other expenses for the second quarter ended June 30, 2020 were $15,807,000 compared to $11,338,000 in the first quarter of 2020. The majority of this increase relates to salaries and benefits. Increased volume at the mortgage division resulted in increased commission expense being recognized. Additionally, increased staffing in the mortgage division has been necessary to keep up with the volume levels. The mortgage division added approximately 40 net employees in various sales and support roles since the end of the first quarter.

Mortgage Division

The Company’s mortgage division, which consists of its retail and wholesale mortgage efforts, recorded net income of $5,082,000 for the second quarter and $4,378,000 year-to-date. The primary driver of these record earnings for the mortgage division was increased volume, expansion of the retail business line and the addition of the wholesale business line with the acquisition of LenderSelect Mortgage Group in late 2019.

During the second quarter, the Company began retaining mortgage servicing rights (“MSRs”), resulting in a mortgage servicing asset of $1,596,000 at June 30, 2020. The Company expects the retention of servicing rights will support the LenderSelect Mortgage Group’s wholesale mortgage efforts by clients’ members and customers being subjected to reduced cross-selling by other financial institutions. The retention of servicing rights in retail is based on current market valuations for these rights. The Company believes the retention of these rights in the current environment will create meaningful economic returns in the future as markets normalize.

Capital and Dividends

The Company continually monitors its capital position and is particularly focused on the potential impact that the fallout from COVID-19 will have on its capital position. The Company remains confident in its ability to maintain capital levels at amounts required for regulatory purposes and for the payment of its common stock dividend, but the ability to maintain its dividend payment remains highly dependent on the depth and breadth of the economic impact of COVID-19. The Company may, depending on conditions, find it necessary to suspend common stock dividends.

Non-GAAP Financial Measures

The accounting and reporting policies of the Company conform to U.S. generally accepted accounting principles (“GAAP”) and prevailing practices in the banking industry. However, management uses certain non-GAAP measures to supplement the evaluation of the Company’s performance. Management believes presentations of these non-GAAP financial measures provide useful supplemental information that is essential to a proper understanding of the operating results of the Company’s core businesses. These non-GAAP disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Reconciliations of GAAP to non-GAAP measures are included at the end of this release.

Forward-Looking Statements

This release contains forward-looking statements regarding the Company. Forward-looking statements are typically identified by words such as “believe,” “expect”, “anticipate”, “intend”, “target”, “estimate”, “continue”, “positions”, “prospects”, “potential”, “would”, “should”, “could”, “will” or “may”. These statements include, without limitation, the Company’s expectations regarding its future financial performance. These forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time, and these statements may not be realized. The following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance: (1) the impact of the ongoing COVID-19 pandemic; (2) the businesses of the Company and/or VCB may not be integrated successfully or such integration may be more difficult, time-consuming or costly than expected; (3) expected revenue synergies and cost savings from the VCB merger may not be fully realized or realized within the expected timeframe; (4) revenues following the VCB merger may be lower than expected; (5) customer and employee relationships and business operations may be disrupted by the VCB merger; (6) changes in interest rates, general economic conditions, legislation and regulation, and monetary and fiscal policies of the U.S. government, including policies of the U.S. Treasury, Office of the Comptroller of the Currency and the Board of Governors of the Federal Reserve System; (7) the quality and composition of the loan and securities portfolios, demand for loan products, deposit flows, competition, and demand for financial services in the Company’s market areas; (8) the implementation of new technologies, and the ability to develop and maintain secure and reliable electronic systems; (9) accounting principles, policies, and guidelines; and (10) other risk factors detailed from time to time in filings made by the Company with the Securities and Exchange Commission (“SEC”) and available on the SEC’s website at www.sec.gov. The Company undertakes no obligation to update or clarify these forward-looking statements, whether as a result of new information, future events or otherwise.

Blue Ridge Bankshares, Inc.

Consolidated Balance Sheets

	(Unaudited)			(Audited)			(Unaudited)
	June 30,			December 31,			June 30
	2020			2019			2019
ASSETS
Cash and due from banks	$	241,136,065		$	60,026,071		$	21,564,192
Federal funds sold		452,000			480,000			482,000
Investment securities
Securities available for sale (at fair value)		104,480,584			108,571,161			130,282,826
Securities held to maturity		—			12,192,139			15,204,409
Restricted investments		9,522,244			8,133,519			8,277,118
Total Investment Securities		114,002,828			128,896,819			153,764,353
Loans held for sale		127,796,410			55,646,215			61,975,712
Loans held for investment		1,031,112,962			646,833,864			452,229,287
Allowance for loan losses		(8,206,000	)		(4,572,371	)		(4,053,530	)
Net Loans Held for Investment		1,022,906,962			642,261,493			448,175,757
Bank premises and equipment, net		15,410,599			13,650,556			3,366,836
Bank owned life insurance		14,918,966			14,734,261			8,812,005
Goodwill		19,892,331			19,914,942			3,306,664
Other intangible assets		3,371,749			3,718,319			1,484,976
Other assets		35,558,284			21,482,629			18,851,045
Total Assets	$	1,595,446,194		$	960,811,305		$	721,783,540
LIABILITIES
Demand deposits
Noninterest bearing	$	285,231,678		$	177,819,205		$	88,342,159
Interest bearing		337,446,577			220,776,065			147,581,521
Savings deposits		68,754,038			62,479,898			28,959,770
Time deposits		274,424,312			260,954,991			234,098,776
Total Deposits		965,856,605			722,030,159			498,982,226
Other borrowed funds		478,411,701			124,800,000			138,200,000
Subordinated debt, net of issuance costs		24,471,884			9,800,434			9,783,492
Other liabilities		31,546,675			11,843,037			10,683,724
Total liabilities		1,500,286,865			868,473,630			657,649,442
STOCKHOLDERS’ EQUITY
Common stock, no par value, authorized—25,000,000 shares; outstanding—5,653,621 shares at 6/30/20, 5,658,585 shares at 12/31/19, and 4,328,866 at 6/30/19)		66,352,576			66,204,739			38,690,128
Contributed equity		251,543			251,543			251,543
Retained earnings		31,680,380			25,428,056			24,885,858
Accumulated other comprehensive income		(3,349,457	)		229,051			88,349
Total Stockholders’ Equity		94,935,042			92,113,389			63,915,878
Noncontrolling interest		224,287			224,286			218,220
Total Equity		95,159,329			92,337,675			64,134,098
Total Liabilities and Equity	$	1,595,446,194		$	960,811,305		$	721,783,540

Blue Ridge Bankshares, Inc.

Consolidated Statements of Income

	(Unaudited)			(Unaudited)
	Six Months			Six Months
	Ended			Ended
	June 30, 2020			June 30, 2019
INTEREST INCOME
Interest and fees on loans held for $10,645,000	$	20,678,754		$	11,943,348
Interest and fees on loans held for sale		1,307,639			770,394
Interest on federal funds sold		1,656			3,989
Interest and dividends on taxable investment securities		1,512,840			1,467,994
Interest and dividends on nontaxable investment securities		89,078			126,747
Total Interest Income		23,589,967			14,312,472
INTEREST EXPENSE
Interest on savings and interest bearing demand deposits		866,592			737,023
Interest on time deposits		2,507,912			1,990,799
Interest on borrowed funds		1,547,529			1,533,150
Total Interest Expense		4,922,033			4,260,972
Net Interest Income		18,667,934			10,051,500
PROVISION FOR LOAN LOSSES		4,075,000			895,000
Net Interest Income after Provision for Loan Losses		14,592,934			9,156,500
OTHER INCOME
Service charges on deposit accounts		454,275			287,573
Earnings on investment in life insurance		184,706			815,422
Mortgage brokerage income		5,030,003			1,863,000
Gain on sale of mortgages		12,539,090			5,160,888
Mortgage servicing income		1,596,331			—
Gain (loss) on disposal of assets		(3,554	)		2,474
Gain (loss) on sale of OREO		—			(33,492	)
Gain on sale of guaranteed USDA loans		262,928			46,520
Other noninterest income		1,458,284			1,139,838
Total Other Income		21,522,063			9,282,223
OTHER EXPENSES
Salaries and employee benefits		18,260,642			9,070,111
Occupancy and equipment expenses		1,731,647			1,240,532
Data processing		1,124,746			656,063
Legal and other professional fees		536,744			634,664
Advertising expense		352,811			415,406
Communications		322,011			211,669
Debit card expenses		328,366			160,287
Directors fees		115,400			122,300
Audits and examinations		191,843			88,141
FDIC insurance expense		380,776			170,000
Other contractual services		354,437			180,334
Other taxes and assessments		468,788			319,305
Other noninterest expense		2,976,441			1,742,331
Total Other Expenses		27,144,652			15,011,143
Income before Income Taxes		8,970,345			3,427,580
INCOME TAX EXPENSE		1,911,544			609,974
Net Income		7,058,801			2,817,606
Net Income attributable to noncontrolling interest		(5,559	)		(18,176	)
Net Income attributable to Blue Ridge Bankshares, Inc.	$	7,053,242		$	2,799,430
Net Income Available to Common Stockholders	$	7,053,242		$	2,799,430
Earnings per Share	$	1.25		$	0.73
Weighted Average Shares Outstanding		5,661,877			3,821,079

Blue Ridge Bankshares, Inc.

Consolidated Statements of Income

	(Unaudited)		(Unaudited)
	Three Months		Three Months
	Ended		Ended
	June 30, 2020		June 30, 2019
INTEREST INCOME
Interest and fees on loans held for investment	$	11,573,596	$	6,110,892
Interest and fees on loans held for sale		868,913		488,109
Interest on federal funds sold		47		2,851
Interest and dividends on taxable investment securities		683,539		977,147
Interest and dividends on nontaxable investment securities		40,994		62,409
Total Interest Income		13,167,089		7,641,408
INTEREST EXPENSE
Interest on savings and interest bearing demand deposits		376,670		387,212
Interest on time deposits		1,272,676		1,154,964
Interest on borrowed funds		872,853		896,298
Total Interest Expense		2,522,199		2,438,474
Net Interest Income		10,644,890		5,202,934
PROVISION FOR LOAN LOSSES		3,500,000		600,000
Net Interest Income after Provision for Loan Losses		7,144,890		4,602,934
OTHER INCOME
Service charges on deposit accounts		182,759		153,458
Earnings on investment in life insurance		91,999		760,006
Mortgage brokerage income		4,210,108		738,346
Gain on sale of mortgages		9,498,468		3,194,134
Mortgage servicing income		1,596,331		—
Gain (loss) on sale of OREO		—		(3,756	)
Gain on sale of guaranteed USDA loans		242,699		46,520
Other noninterest income		702,604		494,044
Total Other Income		16,524,968		5,382,752
OTHER EXPENSES
Salaries and employee benefits		10,919,901		4,824,247
Occupancy and equipment expenses		875,226		638,908
Data processing		658,370		306,273
Legal and other professional fees		338,757		634,664
Advertising expense		128,669		220,166
Communications		187,118		101,447
Debit card expenses		170,609		78,303
Directors fees		49,100		69,150
Audits and examinations		149,170		51,756
FDIC insurance expense		230,388		170,000
Other contractual services		179,187		105,148
Other taxes and assessments		245,070		258,242
Other noninterest expense		1,675,426		703,299
Total Other Expenses		15,806,991		8,161,603
Income before Income Taxes		7,862,867		1,824,083
INCOME TAX EXPENSE		1,644,316		288,147
Net Income		6,218,551		1,535,936
Net Income attributable to noncontrolling interest		3,947		(5,068	)
Net Income attributable to Blue Ridge Bankshares, Inc.	$	6,222,498		1,530,868
Net Income Available to Common Stockholders	$	6,222,498		1,530,868
Earnings per Share	$	1.10		0.35
Weighted Average Shares Outstanding		5,659,047		4,329,113

Blue Ridge Bankshares, Inc.

Five Quarter Summary of Selected Financial Highlights

	Three Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,
(Dollars and shares in thousands, except per share data)	2020			2020			2019			2019			2019
	Unaudited			Unaudited			Unaudited			Unaudited			Unaudited
Income Statement Data:
Interest and Dividend Income	$	13,167		$	10,423		$	8,457		$	8,118		$	7,641
Interest Expense		2,522			2,400			2,577			2,682			2,438
Net Interest Income		10,645			8,023			5,880			5,436			5,203
Provision for Loan Losses		3,500			575			277			570			600
Net Interest Income After Provision for Loan Losses		7,145			7,448			5,603			4,866			4,603
Noninterest Income		16,524			4,998			4,541			4,973			5,383
Noninterest Expenses		15,807			11,338			9,628			8,206			8,162
Income before income taxes		7,862			1,108			516			1,633			1,824
Income tax expense (benefit)		1,644			267			(17	)		380			288
Net income		6,218			841			533			1,253			1,536
Net income attributable to noncontrolling interest		4			(9	)		(3	)		(3	)		(5	)
Net income attributable to Blue Ridge Bankshares, Inc.	$	6,222		$	832		$	530		$	1,250		$	1,531
Per Common Share Data:
Net income-basic	$	1.10		$	0.15		$	0.10		$	0.28		$	0.35
Net income-diluted		1.10			0.15			0.10			0.28			0.35
Dividends declared		0.1425			0.1425			0.1425			0.1425			0.1425
Book value per common share		16.83			15.95			16.32			15.09			14.82
Tangible book value per common share		12.72			11.80			12.14			14.00			13.71
Balance Sheet Data:
Assets	$	1,595,446		$	1,027,605		$	960,811		$	736,238		$	721,784
Loans held for investment		1,031,113			670,935			646,834			460,878			452,229
Loans held for sale		127,796			90,019			55,646			80,255			61,976
Securities		114,003			120,254			128,897			142,712			153,764
Deposits		965,857			769,160			722,030			520,280			498,982
Subordinated Debt, net		24,472			9,809			9,800			9,792			9,783
Other borrowed funds		478,412			140,900			124,800			129,600			138,200
Total equity		95,159			90,274			92,338			65,597			64,134
Average common shares outstanding—basic		5,659			5,664			4,588			4,347			4,329
Average common shares outstanding—diluted		5,659			5,664			4,588			4,347			4,329
Financial Ratios:
Return on average assets		1.90	%		0.34	%		0.25	%		0.69	%		0.95	%
Return on average equity		26.83	%		3.68	%		2.70	%		7.73	%		9.69	%
Total loan to deposit ratio		119.99	%		98.93	%		97.29	%		104.01	%		103.05	%
Held for investment loan to deposit ratio		106.76	%		87.23	%		89.59	%		88.58	%		90.63	%
Net interest margin		3.19	%		3.71	%		3.46	%		3.16	%		3.35	%
Cost of deposits		0.65	%		0.95	%		1.29	%		1.35	%		1.35	%
Efficiency ratio		66.78	%		91.10	%		94.91	%		83.40	%		81.73	%
Capital and Credit Quality Ratios:
Average Equity to Average Assets		7.07	%		9.18	%		9.31	%		8.90	%		9.78	%
Allowance for loan losses to loans held for investment		0.80	%		0.73	%		0.71	%		0.96	%		0.90	%
Nonperforming loans to total assets		0.39	%		0.50	%		0.54	%		0.78	%		0.74	%
Nonperforming assets to total assets		0.39	%		0.50	%		0.54	%		0.78	%		0.77	%
Net charge-offs to total loans held for investment		0.02	%		0.04	%		0.02	%		0.05	%		0.06	%
Net charge-offs to average loans held for investment (Annualized)		0.09	%		0.15	%		0.08	%		0.19	%		0.26	%
Reconciliation of Non-GAAP Disclosures (Unaudited):
Tangible Common Equity:
Common equity (GAAP)	$	95,159		$	90,274		$	92,338		$	65,597		$	64,134
Less: Goodwill and amortizable intangibles		(23,264	)		(23,456	)		(23,633	)		(4,722	)		(4,792	)
Tangible common equity (Non-GAAP)	$	71,895		$	66,818		$	68,705		$	60,875		$	59,342
Total shares outstanding		5,654			5,661			5,659			4,347			4,329
Book Value per Share (GAAP)	$	16.83		$	15.95		$	16.32		$	15.09		$	14.82
Tangible Book Value per Share (Non-GAAP)	$	12.72		$	11.80		$	12.14		$	14.00		$	13.71