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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
June 30,
2025
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission File Number:
001-39165
BLUE RIDGE BANKSHARES, INC.
(Exact name of registrant as specified in its charter)
Virginia
54-1838100
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
1801 Bayberry Court, Suite 101
Richmond
,
Virginia
23226
(Address of principal executive offices)
(Zip Code)
Registrant’s telephone number, including area code: (
888
)
331-6521
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading
Symbol(s)
Name of each exchange on which registered
Common Stock, no par value
BRBS
NYSE
American
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes
☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation 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, a non-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 Rule 12b-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 in Rule 12b-2 of the Exchange Act). Yes ☐ No
☒
As of July 31
, 2025, the registrant had
92,125,959
sha
res of common stock, no par value per share, outstanding.
Loans held for investment, net of deferred fees and costs
1,978,585
2,111,797
Less: allowance for credit losses
(
21,974
)
(
23,023
)
Loans held for investment, net
1,956,611
2,088,774
Accrued interest receivable
11,711
12,537
Premises and equipment, net
20,718
21,394
Right-of-use asset
7,270
7,962
Other intangible assets
3,230
3,859
Deferred tax asset, net
26,157
27,312
Other assets
13,073
12,067
Total assets
$
2,555,439
$
2,737,260
LIABILITIES & STOCKHOLDERS’ EQUITY
Deposits:
Noninterest-bearing demand
$
432,939
$
452,690
Interest-bearing demand and money market
624,108
598,875
Savings
101,560
100,857
Time
851,659
1,027,020
Total deposits
2,010,266
2,179,442
FHLB borrowings
150,000
150,000
Subordinated notes, net
24,928
39,789
Lease liabilities
7,969
8,613
Other liabilities
18,011
31,628
Total liabilities
2,211,174
2,409,472
Commitments and contingencies (Note 7)
Stockholders’ Equity:
Common stock,
no
par value;
150,000,000
shares authorized at June 30, 2025 and December 31, 2024, respectively; and
92,174,530
and
84,972,610
shares issued and outstanding at June 30, 2025 and December 31, 2024, respectively
334,634
322,791
Additional paid-in capital
29,687
29,687
Retained earnings
18,634
17,772
Accumulated other comprehensive loss, net of tax
(
38,690
)
(
42,462
)
Total stockholders’ equity
344,265
327,788
Total liabilities and stockholders’ equity
$
2,555,439
$
2,737,260
(1)
Derived from audited
December 31, 2024
Consolidated Financial Statements.
See accompanying notes to unaudited consolidated financial statements.
3
Blue Ridge Bankshares, Inc.
Consolidated Stat
ements of Operations
(unaudited)
For the three months ended
For the six months ended
(Dollars in thousands, except per share data)
June 30, 2025
June 30, 2024
June 30, 2025
June 30, 2024
INTEREST INCOME
Interest and fees on loans
$
30,730
$
36,196
$
61,884
$
74,542
Interest on securities, deposit accounts, and federal funds sold
4,006
4,435
8,202
8,620
Total interest income
34,736
40,631
70,086
83,162
INTEREST EXPENSE
Interest on deposits
12,802
17,272
26,994
35,757
Interest on subordinated notes
646
552
1,382
1,112
Interest on FHLB and FRB borrowings
1,447
2,722
2,879
5,859
Total interest expense
14,895
20,546
31,255
42,728
Net interest income
19,841
20,085
38,831
40,434
(Recovery of) provision for credit losses - loans
(
700
)
3,600
(
700
)
3,600
Recovery of credit losses - unfunded commitments
—
(
500
)
—
(
1,500
)
Total (recovery of) provision for credit losses
(
700
)
3,100
(
700
)
2,100
Net interest income after (recovery of) provision for credit losses
20,541
16,985
39,531
38,334
NONINTEREST INCOME
Fair value adjustments of other equity investments
(
82
)
(
8,537
)
(
155
)
(
8,544
)
Residential mortgage banking income
312
3,090
1,268
5,754
Mortgage servicing rights ("MSRs")
(
139
)
2,019
(
137
)
2,748
Wealth and trust management
409
623
863
1,143
Service charges on deposit accounts
721
386
1,178
747
Increase in cash surrender value of bank owned life insurance
8
333
16
670
Bank and purchase card, net
626
513
1,193
755
Other
1,389
1,845
2,090
4,787
Total noninterest income
3,244
272
6,316
8,060
NONINTEREST EXPENSE
Salaries and employee benefits
13,000
14,932
25,610
30,977
Occupancy and equipment
1,129
1,303
2,510
2,827
Technology and communication
2,565
2,332
5,349
4,611
Legal and regulatory filings
395
363
834
810
Advertising and marketing
128
183
319
480
Audit fees
459
295
1,037
1,450
FDIC insurance
1,027
1,817
2,124
3,194
Intangible amortization
234
276
478
563
Other contractual services
433
1,857
1,028
3,665
Other taxes and assessments
955
588
1,876
1,531
Regulatory remediation
—
1,397
—
4,041
Other
1,684
3,965
3,795
7,596
Total noninterest expense
22,009
29,308
44,960
61,745
Income (loss) before income tax expense
1,776
(
12,051
)
887
(
15,351
)
Income tax expense (benefit)
480
(
616
)
25
(
1,023
)
Net income (loss)
$
1,296
$
(
11,435
)
$
862
$
(
14,328
)
Dividends on preferred stock
—
150
—
150
Net income (loss) attributable to common shareholders
$
1,296
$
(
11,585
)
$
862
$
(
14,478
)
Basic and diluted income (loss) per common share
$
0.01
$
(
0.47
)
$
0.01
$
(
0.66
)
See accompanying notes to unaudited consolidated financial statements.
4
Blue Ridge Bankshares, Inc.
Consolidated Statements
of Comprehensive Income (Loss)
(unaudited)
For the three months ended
For the six months ended
(Dollars in thousands)
June 30, 2025
June 30, 2024
June 30, 2025
June 30, 2024
Net income (loss)
$
1,296
$
(
11,435
)
$
862
$
(
14,328
)
Other comprehensive income (loss):
Gross unrealized (losses) gains on securities available for sale arising during the period
(
41
)
3,941
5,182
1,012
Deferred income tax benefit (expense)
7
(
862
)
(
1,410
)
(
491
)
Reclassification of net loss on securities available for sale included in net income
—
67
—
67
Deferred income tax benefit
—
(
15
)
—
(
15
)
Other comprehensive (loss) income, net of tax
(
34
)
3,131
3,772
573
Comprehensive net income (loss)
$
1,262
$
(
8,304
)
$
4,634
$
(
13,755
)
See accompanying notes to unaudited consolidated financial statements.
5
Blue Ridge Bankshares, Inc.
Consolidated Statements
of Changes in Stockholders’ Equity
(unaudited)
For the six months ended June 30, 2025
(Dollars in thousands)
Shares of Common Stock
Common Stock
Additional Paid-in Capital
Retained Earnings
Accumulated Other Comprehensive (Loss) Income, net
Total
Balance at beginning of period
84,972,610
$
322,791
$
29,687
$
17,772
$
(
42,462
)
$
327,788
Net income
—
—
—
862
—
862
Other comprehensive income
—
—
—
—
3,772
3,772
Exercise of warrants to purchase common stock
3,778,000
9,445
—
—
—
9,445
Restricted stock awards, net of forfeitures
3,423,920
2,398
—
—
—
2,398
Balance at end of period
92,174,530
$
334,634
$
29,687
$
18,634
$
(
38,690
)
$
344,265
For the three months ended June 30, 2025
(Dollars in thousands)
Shares of Common Stock
Common Stock
Additional Paid-in Capital
Retained Earnings
Accumulated Other Comprehensive (Loss) Income, net
Total
Balance at beginning of period
87,777,849
$
329,920
$
29,687
$
17,338
$
(
38,656
)
$
338,289
Net income
—
—
—
1,296
—
1,296
Other comprehensive income
—
—
—
—
(
34
)
(
34
)
Exercise of warrants to purchase common stock
1,016,000
2,540
—
—
—
2,540
Restricted stock awards, net of forfeitures
3,380,681
2,174
—
—
—
2,174
Balance at end of period
92,174,530
$
334,634
$
29,687
$
18,634
$
(
38,690
)
$
344,265
6
For the six months ended June 30, 2024
(Dollars in thousands)
Shares of Common Stock
Shares of Series C Preferred Stock
Common Stock
Series C Preferred Stock
Additional Paid-in Capital
Retained Earnings
Accumulated Other Comprehensive (Loss) Income, net
Total
Balance at beginning of period
19,198,379
—
$
197,636
$
—
$
252
$
33,157
$
(
45,056
)
$
185,989
Net loss
—
—
—
—
—
(
14,328
)
—
(
14,328
)
Other comprehensive income
—
—
—
—
—
—
573
573
Issuance of stock and warrants from Private Placements, net of issuance costs
53,922,000
2,732
102,434
137
49,903
—
—
152,474
Restricted stock awards, net of forfeitures
383,268
—
906
—
—
—
—
906
Balance at end of period
73,503,647
2,732
$
300,976
$
137
$
50,155
$
18,829
$
(
44,483
)
$
325,614
For the three months ended June 30, 2024
(Dollars in thousands)
Shares of Common Stock
Shares of Series C Preferred Stock
Common Stock
Series C Preferred Stock
Additional Paid-in Capital
Retained Earnings
Accumulated Other Comprehensive (Loss) Income, net
Total
Balance at beginning of period
19,584,040
—
$
198,004
$
—
$
252
$
30,264
$
(
47,614
)
$
180,906
Net loss
—
—
—
—
—
(
11,435
)
—
(
11,435
)
Other comprehensive income
—
—
—
—
—
—
3,131
3,131
Issuance of stock and warrants from Private Placements, net of issuance costs
53,922,000
2,732
102,434
137
49,903
—
—
152,474
Restricted stock awards, net of forfeitures
(
2,393
)
—
538
—
—
—
—
538
Balance at end of period
73,503,647
2,732
$
300,976
$
137
$
50,155
$
18,829
$
(
44,483
)
$
325,614
See accompanying notes to unaudited consolidated financial statements.
7
Blue Ridge Bankshares, Inc.
Consolidated Statem
ents of Cash Flows
(unaudited)
For the six months ended
(Dollars in thousands)
June 30, 2025
June 30, 2024
Cash Flows From Operating Activities
Net income (loss)
$
862
$
(
14,328
)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization
703
811
Deferred income tax expense
1,408
505
(Recovery of ) provision for credit losses - loans
(
700
)
3,600
Recovery of credit losses - unfunded commitments
—
(
1,500
)
Accretion of fair value adjustments on acquired loans, time deposits, and subordinated notes
(
845
)
(
831
)
Fair value adjustments of other equity investments
155
8,544
Net adjustments attributable to mortgage servicing rights
137
(
2,748
)
Increase in cash surrender value of bank owned life insurance
(
16
)
(
670
)
Proceeds from sale of mortgage loans held for sale
42,075
132,141
Mortgage loans held for sale, originated
(
34,316
)
(
131,359
)
Gain on sale of mortgage loans
(
541
)
(
616
)
Proceeds from sale of guaranteed government loans held for sale
—
1,616
Guaranteed government loans held for sale, originated
—
(
293
)
Gain on sale of guaranteed government loans
—
(
102
)
Loss (gain) on disposal of premises and equipment, other investments, other assets, and other real estate owned
250
(
257
)
Investment amortization expense, net
145
276
Amortization of subordinated debt issuance costs
188
17
Intangible amortization
478
563
Decrease in accrued interest receivable
826
795
Decrease in other assets
10,809
1,784
Decrease other liabilities
(
14,550
)
(
10,281
)
Cash provided by (used in) operating activities
7,068
(
12,333
)
Cash Flows From Investing Activities
Purchase of securities available for sale
(
21,174
)
—
Proceeds from calls, sales, paydowns, and maturities of securities available for sale
10,643
14,457
Net decrease (increase) in federal funds sold
210
(
768
)
Proceeds from sale of other investments, other assets, MSRs, and other real estate owned
395
11,570
Capital calls of SBIC funds and other investments
(
1,544
)
(
2,161
)
Nonincome distributions from limited liability companies
53
482
Net decrease in loans held for investment
133,821
151,406
Proceeds from surrender of bank owned life insurance policies
212
6,677
Net change in restricted equity and other investments
346
(
100
)
Purchase of premises and equipment
(
152
)
(
209
)
Cash provided by investing activities
122,810
181,354
Cash Flows From Financing Activities
Net increase (decrease) in demand, savings, and other interest-bearing deposits
6,185
(
327,090
)
Net (decrease) increase in time deposits
(
175,301
)
87,075
FHLB advances
—
586,000
FHLB repayments
—
(
593,100
)
FRB repayments
—
(
65,000
)
Subordinated note repayments
(
15,000
)
—
Proceeds from Private Placements, net of issuance costs
—
152,474
Exercises of warrants to purchase common stock
9,445
—
Cash used in financing activities
(
174,671
)
(
159,641
)
Net (decrease) increase in cash and due from banks
(
44,793
)
9,380
Cash and due from banks and restricted cash at beginning of period
175,992
121,151
Cash and due from banks and restricted cash at end of period
$
131,199
$
130,531
Supplemental Schedule of Cash Flow Information
Cash paid for:
Interest
$
33,155
$
43,425
Income taxes
$
2,160
$
6
Non-cash investing and financing activities:
Loans held for investment transferred to other non-real estate owned
$
222
$
—
Unrealized gains on securities available for sale
$
5,537
$
1,012
Restricted stock awards, net of forfeitures
$
2,398
$
906
See accompanying notes to unaudited consolidated financial statements.
8
Notes to Consolidated Financial Statements (Unaudited)
Note 1 – Organization and Basis of Presentation
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 holding the stock of its subsidiaries, the Bank and the Financial Group.
The accompanying unaudited consolidated financial statements of the Company include the accounts of the Bank and the Financial Group and were prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and general practices within the banking industry. All significant intercompany balances and 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, 2024 (the “2024 Form 10-K”).
The Company's significant accounting policies are disclosed in Note 2 of the audited financial statements for the year ended December 31, 2024 included in the 2024 Form 10-K. There have been no significant changes to the application of significant accounting policies since December 31, 2024.
Certain amounts presented in the consolidated financial statements of prior periods have been reclassified to conform to current year presentations. The reclassifications had no effect on net income, net income per share, total assets, total liabilities, or stockholders’ equity as previously reported.
Sale of Mortgage Division
On March 27, 2025, the Company completed the previously announced sale of its mortgage division operating as Monarch Mortgage. The sale included the transfer of certain assets and leases and resulted in a $
0.2
million loss, reported in other noninterest income. As of June 30, 2025, the Company had closed, funded, and sold the loans that were in process at the time of the sale.
This transaction did not meet the criteria for classification as a discontinued operation under Accounting Standards Codification ("ASC") 205-20, Presentation of Financial Statements – Discontinued Operations, and is therefore reported within continuing operations as of and for all periods stated herein.
Private Placements
In the second quarter of 2024, the Company closed private placements in which it issued and sold shares of its common and preferred stock for gross proceeds of $
161.6
million (collectively, the "Private Placements"). In June 2024, the Company’s shareholders approved an amendment to the Company's articles of incorporation authorizing the issuance of additional shares of common stock, thus enabling the conversion of the preferred shares issued in the Private Placements into shares of the Company’s common stock. The conversion occurred on June 28, 2024 and November 7, 2024. Capital proceeds received, net of issuance costs, from the Private Placements totaled $
152.1
million.
The Private Placements also included the issuance of warrants to purchase common stock at $
2.50
per share.
The table below presents information pertaining to warrants to purchase the Company’s common stock as of and for the period stated.
As of and for the six months ended June 30, 2025
Warrants Issued April 3, 2024
Warrants Issued June 13, 2024
Total Warrants
Warrants outstanding at beginning of period
29,027,999
2,424,000
31,451,999
Warrants exercised during the period (1)
(
3,778,000
)
—
(
3,778,000
)
Warrants outstanding at end of period
25,249,999
2,424,000
27,673,999
Remaining exercise term (years)
3.76
3.95
(1)
1,016,000
warrants were exercised during the three months ended June 30, 2025.
9
Regulatory Matters
The Bank entered into a consent order with the Office of the Comptroller of the Currency (the "OCC") on January 24, 2024 (the "Consent Order"), which generally incorporates the provisions of the formal written agreement (the "Written Agreement") entered into between the Bank and the OCC on August 29, 2022, as well as adding new provisions. The Written Agreement principally concerned the Bank’s fintech operations and required 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. The Consent Order adds time frames by which certain of the directives are required, requires the Bank to submit a strategic plan and a capital plan, and places further restrictions on the Company’s fintech operations. The Consent Order also requires the Bank to maintain a leverage ratio of
10.0
% and a total capital ratio of
13.0
%, referred to as minimum capital ratios. As of
June 30, 2025 and December 31, 2024, the Bank’s capital ratios exceeded these minimum capital ratios. The Company believes it has made significant progress towards meeting the requirements of the Consent Order. Complete copies of the Written Agreement and the Consent Order are included as Exhibits 10.9 and 10.10, respectively, to the 2024 Form 10-K.
Recent Accounting Pronouncements (Issued But Not Adopted)
Improvements to Income Tax Disclosures
. In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2023-09–Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires disclosure of disaggregated income taxes paid, prescribes standard categories for components of the effective tax rate reconciliation, and modifies other income tax-related disclosures. This standard is effective for annual periods beginning after December 15, 2024, with early adoption permitted. The ASU requires prospective application by providing the revised disclosures for the period ending December 31, 2025, and continuing to provide the pre-ASU disclosures for the prior periods, or alternately applying the amendments retrospectively by providing the revised disclosures for all periods presented. The Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements, but it will result in expanded income tax-related disclosures beginning with its 2025 Form 10-K.
Improvements to Expense Disaggregation Disclosures.
In January 2025, the FASB issued ASU 2025-01–Income Statement–Reporting Comprehensive Income–Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which amended the effective date of ASU 2024-03 to clarify that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. The Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements, but it will result in expanded income statement expense disaggregation disclosures beginning with its financial statements for the year ending December 31, 2027.
Note 2 – In
vestment Securities and Other Investments
Investment securities classified as available for sale ("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, 2025
(Dollars in thousands)
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
Available for sale
Mortgage backed securities
$
211,685
$
97
$
(
33,170
)
$
178,612
U.S. Treasury and agencies
79,082
—
(
8,094
)
70,988
State and municipal
49,763
—
(
6,396
)
43,367
Corporate bonds
37,425
43
(
2,477
)
34,991
Total investment securities
$
377,955
$
140
$
(
50,137
)
$
327,958
10
December 31, 2024
(Dollars in thousands)
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
Available for sale
Mortgage backed securities
$
199,453
$
—
$
(
35,015
)
$
164,438
U.S. Treasury and agencies
79,430
—
(
9,975
)
69,455
State and municipal
50,233
—
(
7,296
)
42,937
Corporate bonds
38,453
—
(
3,248
)
35,205
Total investment securities
$
367,569
$
—
$
(
55,534
)
$
312,035
As of June 30, 2025 and December 31, 2024
, securities with a fair value of $
177.0
million and $
268.9
million, respectively, were pledged to secure the Bank’s borrowings facility with the Federal Home Loan Bank of Atlanta ("FHLB").
As of June 30, 2025 and December 31, 2024
, securities with fair values of $
0
and $
16.3
million, respectively, were pledged to secure borrowing capacity with the Federal Reserve Bank of Richmond ("FRB") Discount Window, of which there were
no
outstanding advances as of either date.
The following table presents the amortized cost and fair value of securities available for sale by contractual maturity as of the date 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, 2025
(Dollars in thousands)
Amortized
Cost
Fair
Value
Due in one year or less
$
3,146
$
3,079
Due after one year through five years
61,242
57,450
Due after five years through ten years
103,510
91,549
Due after ten years
210,057
175,880
Total
$
377,955
$
327,958
The following tables present fair value and gross unrealized losses, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, as of the dates stated.
The reference point for determining when securities are in an unrealized loss position is period-end; therefore, it is possible that a security's market value exceeded its amortized cost on other days during the past twelve-month period. Excluded from the tables below were securities whose amortized cost equaled their fair value or were in an unrealized gain position as of the dates stated totaling $
18.1
million and $
1.1
million, as of
June 30, 2025 and December 31, 2024, respectively.
June 30, 2025
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
Mortgage backed securities
88
$
17,874
$
(
55
)
$
147,641
$
(
33,115
)
$
165,515
$
(
33,170
)
U.S. Treasury and agencies
29
—
—
70,987
(
8,094
)
70,987
(
8,094
)
State and municipal
67
1,286
(
7
)
41,221
(
6,389
)
42,507
(
6,396
)
Corporate bonds
37
—
—
30,847
(
2,477
)
30,847
(
2,477
)
Total
221
$
19,160
$
(
62
)
$
290,696
$
(
50,075
)
$
309,856
$
(
50,137
)
11
December 31, 2024
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
Mortgage backed securities
85
$
11,637
$
(
107
)
$
152,802
$
(
34,908
)
$
164,439
$
(
35,015
)
U.S. Treasury and agencies
29
—
—
69,453
(
9,975
)
69,453
(
9,975
)
State and municipal
70
2,040
(
42
)
40,531
(
7,254
)
42,571
(
7,296
)
Corporate bonds
42
3,803
(
21
)
30,653
(
3,227
)
34,456
(
3,248
)
Total
226
$
17,480
$
(
170
)
$
293,439
$
(
55,364
)
$
310,919
$
(
55,534
)
At June 30, 2025 and December 31, 2024
, the majority of securities in an unrealized loss position were of investment grade; however, a portion of the portfolio does not have a third-party investment grade available (securities with fair values of $
27.3
million and $
29.3
million, respectively). These securities were primarily subordinated debt instruments issued by bank holding companies that are classified as corporate bonds in the tables above. The Company evaluated the issuers of these individually, observing that each issuer had strong capital ratios and profitability, thereby indicating limited exposure to asset quality or liquidity issues and resulted in no identifiable credit losses. Contractual cash flows for mortgage backed securities and U.S. Treasury and agencies are guaranteed and/or funded by the U.S. government and government agencies. State and municipal securities showed no indication that the contractual cash flows would 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 impaired securities prior to the recovery of the amortized cost. As of
June 30, 2025 and December 31, 2024, there was no allowance for credit losses ("ACL") for the Company's securities AFS portfolio. Any impairment that has not been recorded through an ACL is recognized in accumulated other comprehensive income (loss).
Restricted equity investments consiste
d of stock in the FHLB (carrying value of $
9.1
million and $
9.4
million as of
June 30, 2025 and December 31, 2024
, respectively), FRB stock (carrying value of $
9.3
million and
$
9.4
million
at June 30, 2025 and December 31, 2024, respectively), and stock in the Company’s correspondent bank (carrying value of
$
0.5
million at
both June 30, 2025 and December 31, 2024). Restricted equity investments are carried at cost.
The Company has various other equity investments, including an investment in a fintech company and limited partnerships, totaling $
4.6
mi
llion and
$
4.8
million as of June 30, 2025 and December 31, 2024, respectively.
The Company also holds other investments, primarily in early-stage focused investment funds, which totaled
$
20.9
million an
d $
19.4
million as of
June 30, 2025 and December 31, 2024, respectively, and
are reported in other investments on the consolidated balance sheets.
Note 3 – Loan
s and ACL
The following table presents the amortized cost of loans held for investment as of the dates stated.
(Dollars in thousands)
June 30, 2025
December 31, 2024
Commercial and industrial
$
323,976
$
354,904
Real estate – construction, commercial
78,476
114,491
Real estate – construction, residential
52,031
51,807
Real estate – commercial
810,978
847,842
Real estate – residential
671,317
692,253
Real estate – farmland
4,723
5,520
Consumer
36,237
43,938
Gross loans held for investment
1,977,738
2,110,755
Deferred costs, net of loan fees
847
1,042
Total
$
1,978,585
$
2,111,797
The Company has pledged certain commercial and residential mortgage loans as collateral for borrowings with the FHLB. Loans totaling $
749.7
million and $
797.7
million were pledged with the FHLB as of
June 30, 2025 and December 31, 2024, respectively. Additionally, t
he Company has pledged certain construction, and commercial and industrial loans totaling $
75.1
million and $
91.6
million as of
June 30, 2025 and December 31, 2024, respectively, as collateral for borrowings with the FRB Discount Window.
12
The following tables present the aging of the recorded investment of loans held for investment by loan category as of the dates stated.
June 30, 2025
(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
$
311,082
$
1,049
$
1,042
$
1,643
$
9,160
$
323,976
Real estate – construction, commercial
78,476
—
—
—
—
78,476
Real estate – construction, residential
51,877
154
—
—
—
52,031
Real estate – commercial
803,361
511
3,073
—
4,033
810,978
Real estate – residential
659,398
930
2,745
—
8,244
671,317
Real estate – farmland
4,723
—
—
—
—
4,723
Consumer
34,051
1,078
201
238
669
36,237
Deferred costs, net of loan fees
847
—
—
—
—
847
Total
$
1,943,815
$
3,722
$
7,061
$
1,881
$
22,106
$
1,978,585
December 31, 2024
(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
$
339,893
$
1,335
$
1,232
$
2,259
$
10,185
$
354,904
Real estate – construction, commercial
114,238
—
33
—
220
114,491
Real estate – construction, residential
51,807
—
—
—
—
51,807
Real estate – commercial
842,982
625
—
—
4,235
847,842
Real estate – residential
680,406
3,874
476
—
7,497
692,253
Real estate – farmland
5,520
—
—
—
—
5,520
Consumer
41,295
1,296
300
227
820
43,938
Deferred costs, net of loan fees
1,042
—
—
—
—
1,042
Total
$
2,077,183
$
7,130
$
2,041
$
2,486
$
22,957
$
2,111,797
The following tables present the recorded investment of nonaccrual loans held for investment with and without an ACL by loan category as of the dates stated.
June 30, 2025
(Dollars in thousands)
Nonaccrual Loans with No ACL
Nonaccrual Loans with an ACL
Total Nonaccrual Loans
Commercial and industrial
$
353
$
8,807
$
9,160
Real estate – commercial
1,125
2,908
4,033
Real estate – residential
1,607
6,637
8,244
Consumer
—
669
669
Total
$
3,085
$
19,021
$
22,106
December 31, 2024
(Dollars in thousands)
Nonaccrual Loans with No ACL
Nonaccrual Loans with an ACL
Total Nonaccrual Loans
Commercial and industrial
$
778
$
9,407
$
10,185
Real estate – construction, commercial
—
220
220
Real estate – commercial
—
4,235
4,235
Real estate – residential
1,669
5,828
7,497
Consumer
—
820
820
Total
$
2,447
$
20,510
$
22,957
The Company recognized $
30
thousand and $
148
thousand of interest income on nonaccrual loans during the
three and six months ended June 30, 2025
, respectively, compared to $
122
thousand and $
187
thousand for the same respective periods in
2024.
13
The following table presents accrued interest receivable by loan type reversed from interest income associated with loans held for investment that were placed on nonaccrual status for the periods stated.
For the three months ended June 30,
For the six months ended June 30,
(Dollars in thousands)
2025
2024
2025
2024
Commercial and industrial
$
6
$
267
$
58
$
324
Real estate – construction, commercial
—
—
—
25
Real estate – commercial
2
14
2
65
Real estate – residential
65
44
67
54
Consumer
4
3
7
8
Total
$
77
$
328
$
134
$
476
Credit Quality Indicators
The Company segments loans held for investment into risk categories based on relevant information about the expected ability of borrowers to repay debt, such as current financial information, historical payment performance, experience, collateral adequacy, credit documentation, and current economic trends, among other factors. Management assigns loan risk grades by a numerical system as an indication of credit quality of its portfolio of loans held for investment. The Company uses the following definitions for loan risk ratings and periodically evaluates the appropriateness of these ratings across its loan portfolio. Independent third-party loan reviews are performed periodically on the Company's loan portfolio and such reviews validate management's determination of loan risk grades. Bank regulatory agencies also periodically review the Company's loan portfolio, including loan risk grades and may, on occasion, change a grade based on their judgment of the facts at the time of review.
Risk Grade 1 – Strong:
This grade is for the strongest of loans. These loans are extended to individuals or businesses where the probability of default is extremely low to the Bank and secured with liquid collateral where the loss given default is unlikely because of the source of repayment such as a lien on a deposit account held at the Bank. Character, credit history, and ability of individuals or company principals are excellent. High liquidity, minimum risk, strong ratios, and low servicing cost are present.
Risk Grade 2 – Minimal:
This grade is for loans deemed exceptionally strong. These loans are within established guidelines and where the borrowers have documented significant overall financial strength with consistent and predictable cash flows. These loans have excellent sources of repayment, significant balance sheet liquidity, no significant identifiable risk of collection, and conform in all respects to policy, underwriting standards, and federal and state regulations (no exceptions of any kind). In addition, guarantor support, when provided, is deemed as excellent.
Risk Grade 3 – Acceptable:
This grade is for loans deemed strong. These loans have adequate sources of repayment, with a minimal 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. In addition, guarantor support, when provided, is deemed strong.
Risk Grade 4 – Satisfactory:
This grade is for satisfactory loans containing more but deemed acceptable risk, and where the borrower is deemed as sound. These loans have adequate sources of repayment, with minimal identifiable risk of collection. Loans assigned with 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, and 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. In addition, guarantor support, when provided, is deemed as satisfactory.
Risk Grade 5 – Watch:
This grade is for satisfactory loans containing acceptable but elevated risk. These loans are characterized by borrowers who exhibit signs of financial stress or are experiencing unstable or unfavorable change(s) adversely impacting the current or expected financial condition. The borrower's management is considered to be satisfactory; however, the collateral securing the loan may have decreased in value, the debt service coverage ratio is inconsistent or breakeven but mostly positive, and/or guarantor support, if any, is deemed limited or marginal. Loans classified as Watch warrant additional monitoring by management.
14
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 potentially at a 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 do not conform to established guidelines and/or exceptions without mitigating factors, or have emerging weaknesses that may or may not be remedied with the passage of time.
Risk Grade 7 – Substandard:
This grade is for loans inadequately protected by the current sound net worth and paying capacity of 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; characterized by the distinct
possibility
that the Bank will sustain some loss if the deficiencies are not corrected. The probability of default is highly likely and may have already occurred
. 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) current or expected unprofitable operations, (2) inadequate debt service coverage, (3) declining or inadequate liquidity, (4) improper loan structure, (5) questionable or weak repayment sources, and (6) lack of well-defined secondary repayment source. There is a distinct possibility of loss and the Bank will sustain loss if the deficiencies remain uncorrected.
Risk Grade 8 – Doubtful:
Loans classified Doubtful have all the weaknesses inherent in loans classified Substandard, with 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 the Bank expects a loss but is presently not quantified with any degree of accuracy. Once the loss position is determined, the amount is recorded and charged off against the ACL.
Risk Grade 9 – Loss:
Loans classified Loss are deemed uncollectible and of such little value that continuance as assets held for investment is no longer 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 occur in the future.
Probable loss amounts, either principal or interest, deemed uncollectible are charged off promptly against the ACL.
15
The following table presents the recorded investment of loans held for investment by internal loan risk grade by year of origination as of
June 30, 2025. There were no loans classified as loss (risk grade 9) as of the same date. Also presented are current period gross charge-offs by loan type for the six months ended June 30, 2025.
Term Loans Recorded Investment Basis by Origination Year
(Dollars in thousands)
2025
2024
2023
2022
2021
Prior
Revolving Loans
Total
Commercial and industrial
Risk Grades 1 - 4
$
5,579
$
10,041
$
11,821
$
50,243
$
11,492
$
26,355
$
99,294
$
214,825
Risk Grades 5 - 6
200
368
23,881
36,538
5,792
5,512
10,722
83,013
Risk Grade 7
—
303
3,036
5,972
12,964
1,849
1,947
26,071
Risk Grade 8
—
—
—
—
67
—
—
67
Total
5,779
10,712
38,738
92,753
30,315
33,716
111,963
323,976
Current period gross charge-offs
—
369
30
4,103
—
109
50
4,661
Real estate – construction, commercial
Risk Grades 1 - 4
1,504
6,608
2,641
43,841
4,709
6,813
56
66,172
Risk Grades 5 - 6
169
—
1,082
—
700
10,224
—
12,175
Risk Grade 7
—
—
114
—
15
—
—
129
Total
1,673
6,608
3,837
43,841
5,424
17,037
56
78,476
Current period gross charge-offs
—
—
—
—
—
—
—
—
Real estate – construction, residential
Risk Grades 1 - 4
14,826
11,275
1,183
394
—
53
683
28,414
Risk Grades 5 - 6
540
—
—
3,187
19,423
—
—
23,150
Risk Grade 7
—
—
—
467
—
—
—
467
Total
15,366
11,275
1,183
4,048
19,423
53
683
52,031
Current period gross charge-offs
—
—
—
—
—
—
—
—
Real estate – commercial
Risk Grades 1 - 4
10,255
4,603
34,844
190,611
112,137
252,503
18,229
623,182
Risk Grades 5 - 6
—
522
3,381
82,100
8,494
47,189
4,383
146,069
Risk Grade 7
—
1,560
—
26,928
10,029
1,871
—
40,388
Risk Grade 8
—
—
—
—
1,339
—
—
1,339
Total
10,255
6,685
38,225
299,639
131,999
301,563
22,612
810,978
Current period gross charge-offs
—
—
—
—
—
63
—
63
Real estate – residential
Risk Grades 1 - 4
4,221
2,205
69,989
220,306
108,735
191,408
53,931
650,795
Risk Grades 5 - 6
575
456
165
739
974
4,810
227
7,946
Risk Grade 7
141
—
1,200
1,903
2,457
6,319
554
12,574
Risk Grade 8
—
—
—
—
—
1
1
2
Total
4,937
2,661
71,354
222,948
112,166
202,538
54,713
671,317
Current period gross charge-offs
—
—
—
—
—
16
107
123
Real estate – farmland
Risk Grades 1 - 4
—
145
—
993
1,212
1,938
147
4,435
Risk Grades 5 - 6
63
—
129
—
96
—
—
288
Total
63
145
129
993
1,308
1,938
147
4,723
Current period gross charge-offs
—
—
—
—
—
—
—
—
Consumer
Risk Grades 1 - 4
2,078
4,529
13,590
6,832
1,026
785
5,815
34,655
Risk Grades 5 - 6
—
120
190
243
90
32
—
675
Risk Grade 7
—
74
263
365
149
56
—
907
Risk Grade 8
—
—
—
—
—
—
—
—
Total
2,078
4,723
14,043
7,440
1,265
873
5,815
36,237
Current period gross charge-offs
71
347
118
463
28
8
—
1,035
Total Loans
Risk Grades 1 - 4
$
38,463
$
39,406
$
134,068
$
513,220
$
239,311
$
479,855
$
178,155
$
1,622,478
Risk Grades 5 - 6
1,547
1,466
28,828
122,807
35,569
67,767
15,332
273,316
Risk Grade 7
141
1,937
4,613
35,635
25,614
10,095
2,501
80,536
Risk Grade 8
—
—
—
—
1,406
1
1
1,408
Total
$
40,151
$
42,809
$
167,509
$
671,662
$
301,900
$
557,718
$
195,989
$
1,977,738
Total current period gross charge-offs
$
71
$
716
$
148
$
4,566
$
28
$
196
$
157
$
5,882
16
The following table presents the recorded investment of loans held for investment by internal loan risk grade by year of origination as of December 31, 2024. There were no loans classified as loss (risk grade 9) as of the same date.
Term Loans Recorded Investment Basis by Origination Year
(Dollars in thousands)
2024
2023
2022
2021
2020
Prior
Revolving Loans
Total
Commercial and industrial
Risk Grades 1 - 4
$
13,883
$
13,559
$
64,530
$
14,600
$
17,405
$
15,760
$
98,867
$
238,604
Risk Grades 5 - 6
672
24,430
37,503
10,201
5,183
979
15,092
94,060
Risk Grade 7
944
2,248
5,173
10,462
562
1,247
1,521
22,157
Risk Grade 8
—
—
—
82
—
1
—
83
Total
15,499
40,237
107,206
35,345
23,150
17,987
115,480
354,904
Real estate – construction, commercial
Risk Grades 1 - 4
6,219
6,277
65,560
7,776
5,405
4,792
399
96,428
Risk Grades 5 - 6
—
1,090
—
7,567
4,770
4,235
—
17,662
Risk Grade 7
—
116
—
24
—
261
—
401
Total
6,219
7,483
65,560
15,367
10,175
9,288
399
114,491
Real estate – construction, residential
Risk Grades 1 - 4
19,574
8,861
7,837
13,971
—
57
990
51,290
Risk Grades 5 - 6
193
—
—
—
—
—
—
193
Risk Grade 7
—
169
155
—
—
—
—
324
Total
19,767
9,030
7,992
13,971
—
57
990
51,807
Real estate – commercial
Risk Grades 1 - 4
4,747
34,698
245,563
118,435
142,211
133,856
21,323
700,833
Risk Grades 5 - 6
535
5,092
64,677
7,002
14,604
23,104
4,184
119,198
Risk Grade 7
1,565
—
9,970
10,380
2,945
1,355
25
26,240
Risk Grade 8
—
—
—
1,379
—
192
—
1,571
Total
6,847
39,790
320,210
137,196
159,760
158,507
25,532
847,842
Real estate – residential
Risk Grades 1 - 4
2,815
66,780
225,159
114,682
64,548
143,002
53,498
670,484
Risk Grades 5 - 6
853
—
2,303
1,295
318
2,378
95
7,242
Risk Grade 7
—
736
2,153
2,113
1,454
5,822
2,249
14,527
Total
3,668
67,516
229,615
118,090
66,320
151,202
55,842
692,253
Real estate – farmland
Risk Grades 1 - 4
147
—
997
1,239
—
2,753
149
5,285
Risk Grades 5 - 6
—
135
—
100
—
—
—
235
Total
147
135
997
1,339
—
2,753
149
5,520
Consumer
Risk Grades 1 - 4
5,944
17,211
8,716
1,650
1,034
486
7,283
42,324
Risk Grades 5 - 6
74
133
225
99
32
3
—
566
Risk Grade 7
87
330
332
184
63
24
28
1,048
Total
6,105
17,674
9,273
1,933
1,129
513
7,311
43,938
Total Loans
Risk Grades 1 - 4
$
53,329
$
147,386
$
618,362
$
272,353
$
230,603
$
300,706
$
182,509
$
1,805,248
Risk Grades 5 - 6
2,327
30,880
104,708
26,264
24,907
30,699
19,371
239,156
Risk Grade 7
2,596
3,599
17,783
23,163
5,024
8,709
3,823
64,697
Risk Grade 8
—
—
—
1,461
—
193
—
1,654
Total
$
58,252
$
181,865
$
740,853
$
323,241
$
260,534
$
340,307
$
205,703
$
2,110,755
17
The following tables present an analysis of the change in the ACL by loan segment for the periods stated.
For the three months ended June 30, 2025
(Dollars in thousands)
Commercial and industrial
Real estate – construction, commercial
Real estate – construction, residential
Real estate – commercial
Real estate – residential
Real estate – farmland
Consumer
Total
ACL, beginning of period
$
5,726
$
1,992
$
552
$
5,998
$
8,171
$
18
$
669
$
23,126
Provision for (recovery of) credit losses - loans
147
(
720
)
(
154
)
(
119
)
(
69
)
(
3
)
218
(
700
)
Charge-offs
(
2,537
)
—
—
—
(
107
)
—
(
448
)
(
3,092
)
Recoveries
2,510
—
—
—
6
—
124
2,640
Net charge-offs
(
27
)
—
—
—
(
101
)
—
(
324
)
(
452
)
ACL, end of period
$
5,846
$
1,272
$
398
$
5,879
$
8,001
$
15
$
563
$
21,974
For the three months ended June 30, 2024
(Dollars in thousands)
Commercial and industrial
Real estate – construction, commercial
Real estate – construction, residential
Real estate – commercial
Real estate – residential
Real estate – farmland
Consumer
Total
ACL, beginning of period
$
13,619
$
3,596
$
919
$
9,832
$
6,338
$
18
$
703
$
35,025
Provision for (recovery of) credit losses - loans
3,451
(
408
)
(
143
)
430
(
57
)
—
327
3,600
Charge-offs
(
11,982
)
—
(
39
)
—
(
44
)
—
(
545
)
(
12,610
)
Recoveries
1,828
—
—
—
3
—
190
2,021
Net charge-offs
(
10,154
)
—
(
39
)
—
(
41
)
—
(
355
)
(
10,589
)
ACL, end of period
$
6,916
$
3,188
$
737
$
10,262
$
6,240
$
18
$
675
$
28,036
For the six months ended June 30, 2025
(Dollars in thousands)
Commercial and industrial
Real estate – construction, commercial
Real estate – construction, residential
Real estate – commercial
Real estate – residential
Real estate – farmland
Consumer
Total
ACL, beginning of period
$
5,767
$
2,057
$
540
$
5,963
$
7,933
$
18
$
745
$
23,023
(Recovery of) provision for credit losses - loans
(
42
)
(
785
)
(
142
)
(
359
)
184
(
3
)
447
(
700
)
Charge-offs
(
4,661
)
—
—
(
63
)
(
123
)
—
(
1,035
)
(
5,882
)
Recoveries
4,782
—
—
338
7
—
406
5,533
Net recoveries (charge-offs)
121
—
—
275
(
116
)
—
(
629
)
(
349
)
ACL, end of period
$
5,846
$
1,272
$
398
$
5,879
$
8,001
$
15
$
563
$
21,974
For the six months ended June 30, 2024
(Dollars in thousands)
Commercial and industrial
Real estate – construction, commercial
Real estate – construction, residential
Real estate – commercial
Real estate – residential
Real estate – farmland
Consumer
Total
ACL, beginning of period
$
13,787
$
4,024
$
1,094
$
9,929
$
6,286
$
15
$
758
$
35,893
Provision for (recovery of) credit losses - loans
3,708
(
836
)
(
318
)
333
(
18
)
3
728
3,600
Charge-offs
(
13,939
)
—
(
39
)
—
(
44
)
—
(
1,290
)
(
15,312
)
Recoveries
3,360
—
—
—
16
—
479
3,855
Net charge-offs
(
10,579
)
—
(
39
)
—
(
28
)
—
(
811
)
(
11,457
)
ACL, end of period
$
6,916
$
3,188
$
737
$
10,262
$
6,240
$
18
$
675
$
28,036
18
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 (recovery of) credit losses for loans held for investment as of and for the three and six months ended June 30, 2025.
Excluded from the ACL as of both June 30, 2025 and December 31, 2024
was $
10.0
million and $
10.7
million of accrued interest attributable to loans held for investment, respectfully, which is included in accrued interest receivable on the consolidated balance sheet.
The following table presents the amortized cost of collateral-dependent loans that are individually evaluated for credit losses as of the dates stated.
(Dollars in thousands)
June 30, 2025
December 31, 2024
Commercial and industrial
$
23,033
$
42,723
Real estate – construction, commercial
114
116
Real estate – commercial
41,755
26,994
Real estate – residential
6,378
9,586
Total collateral-dependent loans
$
71,280
$
79,419
Acquired Loans
As of June 30, 2025 and December 31, 2024
, the amortized cost of purchased credit deteriorated ("PCD") loans totaled $
39.1
million and $
43.8
million, respectively, with an estimated ACL of $
0.2
million and $
0.3
million, respectively. The remaining non-credit discount on PCD loans was $
2.5
million and $
3.0
million as of
June 30, 2025 and December 31, 2024, respectively.
Troubled Loan Modifications
The Company closely monitors the performance of borrowers experiencing financial difficulty and grants certain loan modifications it would otherwise not consider. The Company refers to such loan modifications as troubled loan modifications ("TLMs").
The following table presents the amortized cost of loans designated as TLMs, categorized by loan type and type of concession granted, for the period stated.
For the six months ended June 30,
2025
2024
(Dollars in thousands)
Number of Loans
Recorded Investment
% of Recorded Investment to Gross Loans by Category
Number of Loans
Recorded Investment
% of Recorded Investment to Gross Loans by Category
Combined - term extension and deferral
Commercial and industrial
1
$
2,024
0.62
%
—
$
—
0.00
%
Total combined - term extension and deferral
1
$
2,024
—
$
—
Combined - term extension and interest rate reduction
Commercial and industrial
—
$
—
1
$
225
0.06
%
Total combined - term extension and interest rate reduction
—
$
—
1
$
225
Interest forgiveness
Real estate – residential
1
$
141
0.02
%
—
$
—
0.00
%
Total interest forgiveness
1
$
141
—
$
—
Total
2
$
2,165
1
$
225
19
During the first quarter of 2025, the borrower of a commercial and industrial loan, which has been on nonaccrual status since the second quarter of 2024, was granted an
18-month
term extension and principal deferral, extending the loan's maturity to a total of
72 months
. Interest-only payments are due through the extended term, with a principal balloon payment due at the revised maturity date of
June 2027
. Also in the first quarter of 2025,
three
loans partially charged off in 2024 to a single borrower were refinanced into a single residential mortgage loan, which included the forgiveness of $
40
thousand of accrued interest.
For the three months ended June 30, 2025 and 2024
, the Company did
no
t grant any new TLMs.
The following tables present an aging analysis of the amortized cost of loans designated as TLMs as of the dates stated.
June 30, 2025
(Dollars in thousands)
Current
Loans
30-89
Days
Past Due
Greater than
90 Days Past
Due &
Accruing
Nonaccrual
Total
Commercial and industrial
$
723
$
—
$
—
$
4,451
$
5,174
Real estate – construction, residential
—
154
—
—
154
Real estate – commercial
1,761
—
—
2,992
4,753
Real estate – residential
330
—
—
491
821
Consumer loans
—
—
—
8
8
Total modified loans
$
2,814
$
154
$
—
$
7,942
$
10,910
December 31, 2024
(Dollars in thousands)
Current
Loans
30-89
Days
Past Due
Greater than
90 Days Past
Due &
Accruing
Nonaccrual
Total
Commercial and industrial
$
554
$
—
$
—
$
2,745
$
3,299
Real estate – construction, residential
155
—
—
—
155
Real estate – commercial
1,773
—
—
2,999
4,772
Real estate – residential
194
—
—
500
694
Consumer loans
—
—
—
10
10
Total modified loans
$
2,676
$
—
$
—
$
6,254
$
8,930
As of June 30, 2025 and December 31, 2024, there were
no
unfunded c
ommitments to borrowers with TLMs.
20
The following table presents the amortized cost of loans designated as TLMs that were modified in the preceding twelve months and had a payment default during the periods stated.
As of and for the six months ended June 30,
2025
2024
(Dollars in thousands)
Number of Loans
Amortized Cost
% of Amortized Cost to Gross Loans by Category
Number of Loans
Amortized Cost
% of Amortized Cost to Gross Loans by Category
Combined - term extension and deferral
Commercial and industrial
—
$
—
0.00
%
2
$
16,929
4.22
%
Total combined - term extension and deferral
—
$
—
2
$
16,929
Interest forgiveness
Real estate – residential
1
$
141
0.02
%
—
$
—
0.00
%
Total interest forgiveness
1
$
141
—
$
—
Payment deferral 6-9 months
Commercial and industrial
—
$
—
0.00
%
1
$
183
0.05
%
Real estate – residential
1
491
0.07
%
1
557
0.08
%
Total payment deferral
1
$
491
2
$
740
Total
2
$
632
4
$
17,669
As of June 30, 2025
,
nine
residential mortgage loans with a total amortized cost of $
1.6
million were in the process of foreclosure.
Note 4 – Borrowings
FHLB Borrowings
The Bank has a borrowing facility from the FHLB secured by pledged qualifying commercial and residential mortgage loans and securities. 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 $
150.0
million at both
June 30, 2025 and December 31, 2024. The FHL
B borrowings required the Bank to hold $
9.1
million and $
9.4
million of FHLB stock at June 30, 2025 and December 31, 2024, respectively, which is included in restricted equity investments on the consolidated balance sheets.
At both June 30, 2025 and December 31, 2024,
the Bank also had letters of credit outstanding with the FHLB in the amount of $
51.2
million, of which $
50.0
million was for the purpose of collateral for public deposits with the Treasury Board of the Commonwealth of Virginia as of the same dates. Outstanding letters of credit reduce the available balance of the borrowing facility with the FHLB.
At June 30, 2025 and December 31, 2024
, the secured facility totaled $
583.3
million and $
696.0
million, respectively, based on pledged collateral.
Available balances on the FHLB credit facility were $
382.2
million and $
494.9
million as of
June 30, 2025 and December 31, 2024, respectively. The decline in the secured capacity of the FHLB credit facility as of June 30, 2025 from the prior year end was primarily due to the release of securities held as collateral.
The following table presents information regarding FHLB advances outstanding as of both
June 30, 2025 and December 31, 2024.
(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
Total FHLB borrowings
$
150,000
21
At June 30, 2025
, 1-4 family residential loans, multi-family residential loans, and commercial real estate loans classified as held for investment with a lendable value of $
415.3
million and securities with a lendable value of $
168.0
million were pledged for the borrowing facility with the FHLB.
FRB Borrowings
The Company may obtain advances from the FRB through its Discount Window. Advances through the FRB Discount Window are secured by qualifying pledged construction and commercial and industrial loans. The Company had secured borrowing capacity with the FRB Discount Window of $
75.1
million and $
105.7
million as of
June 30, 2025 and December 31, 2024
, respectively, of which the Company had
no
outstanding advances as of either date.
Other Borrowings
The Company had an unsecured line of credit with a correspondent bank available for overnight borrowing, which totaled
$
10.0
mi
llion as of both June 30, 2025 and December 31, 2024. This line bears interest at the prevailing rates for such loans and is cancelable any time by the correspondent bank. As of both June 30, 2025 and December 31, 2024, the Company had no outstanding advances on this secured line.
Subordinated Notes
The Company had $
24.9
million and $
39.8
million of subordinated notes, net, outstanding as of
June 30, 2025 and December 31, 2024, respectively. Prior to June 1, 2025, the Company's subordinated notes had been comprised of a
$
15
million issuance in May 2020 maturing
June 1, 2030
(the “2030 Note”) and a
$
25
million issuance in October 2019 maturing
October 15, 2029
(the “2029 Notes”).
On
June 1, 2025
,
the Company completed the $
15.0
million redemption of the 2030 Note. The interest rate on the 2030 Note was
6.0
% up to the redemption date. Interest expense on the 2030 Note was $
0.2
million for both the
three months ended June 30, 2025 and 2024
, and $
0.4
million and $
0.5
million for the
six months ended June 30, 2025 and 2024, respectively.
The 2029 Notes bore interest at
5.625
% per annum, through October 14, 2024, payable
semi-annually
in arrears. From October 15, 2024 through October 15, 2029, or up to an early redemption date, the interest rate resets quarterly to an interest rate per annum equal to the then current three-month Secured Overnight Funding Rate plus
433.5
basis points,
payable
quarterly in arrears.
As of June 30, 2025
, the 2029 Notes bore an annual interest rate of
8.59
%. As of
June 30, 2025
, the net carrying amount of the 2029 Notes was $
24.9
million, inclusive of a $
0.4
million purchase accounting adjustment (premium
). For the three months ended June 30, 2025 and 2024,
the effective interest rate on the 2029 Notes was
7.86
% a
nd
5.08
%, respectively, inclusive of the amortization of the purchase accounting adjustment (premium). For the six months ended June 30, 2025 and 2024,
the effective interest rate on the 2029 Notes was
7.96
% a
nd
5.15
%, respectively, i
nclusive of the amortization of the purchase accounting adjustment (premium).
Note 5 – 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.
The three levels of input that may be used to measure fair value 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.
22
The following tables present the balances of financial assets measured at fair value on a recurring basis as of the dates stated.
June 30, 2025
(Dollars in thousands)
Total
Level 1
Level 2
Level 3
Securities available for sale
Mortgage backed securities
$
178,612
$
—
$
178,612
$
—
U.S. Treasury and agencies
70,988
—
70,988
—
State and municipals
43,367
—
43,367
—
Corporate bonds
34,991
—
34,491
500
Total securities available for sale
$
327,958
$
—
$
327,458
$
500
Other assets
Mortgage servicing rights assets
$
249
$
—
$
—
$
249
Rabbi trust assets
643
643
—
—
Interest rate swap asset
56
—
56
—
Other liabilities
Interest rate swap liability
57
—
57
—
December 31, 2024
(Dollars in thousands)
Total
Level 1
Level 2
Level 3
Securities available for sale
Mortgage backed securities
$
164,438
$
—
$
164,438
$
—
U.S. Treasury and agencies
69,455
—
69,455
—
State and municipals
42,937
—
42,937
—
Corporate bonds
35,205
—
34,455
750
Total securities available for sale
$
312,035
$
—
$
311,285
$
750
Other assets
Mortgage servicing rights assets
$
386
$
—
$
—
$
386
Rabbi trust assets
600
600
—
—
Mortgage derivative asset
140
—
140
—
Interest rate swap asset
95
—
95
—
Other liabilities
Interest rate swap liability
$
95
$
—
$
95
$
—
As of June 30, 2025 and December 31, 2024
, one corporate bond totaling $
0.5
million
and two corporate bonds totaling $
0.8
million, respectively, were reported at their respective amortized cost basis a
nd as Level 3 assets in the fair value hierarchy, as there were no observable market prices for similar investments. For the six months ended June 30, 2025
, fair value adjustments to MSR assets totaling $
0.1
million were recorded.
The following tables summarize assets that were measured at fair value on a nonrecurring basis as of the dates stated.
June 30, 2025
(Dollars in thousands)
Total
Level 1
Level 2
Level 3
Other equity investments
$
4,641
$
—
$
1,635
$
3,006
Collateral-dependent loans
3,916
—
—
3,916
Loans held for sale
12,380
—
12,380
—
Other non-real estate owned (1)
222
—
—
222
(1) Included in other assets on the consolidated balance sheets.
23
December 31, 2024
(Dollars in thousands)
Total
Level 1
Level 2
Level 3
Other equity investments
$
4,834
$
—
$
1,828
$
3,006
Collateral-dependent loans
6,954
—
—
6,954
Loans held for sale
30,976
—
30,976
—
Other real estate owned ("OREO") (1)
279
—
—
279
(1) Included in other assets on the consolidated balance sheets.
The following tables present quantitative information about Level 3 fair value measurements of assets measured on a nonrecurring basis as of the dates stated.
(Dollars in thousands)
Balance as of June 30, 2025
Unobservable Input
Range
Other equity investments
Probability weighted expected return technique
$
3,006
Discount Rate
20
%
Collateral-dependent loans
Discounted appraised value technique
3,916
Selling Costs
5
% -
7
%
Other non-real estate owned (1)
Discounted cash flows technique
222
Discount Rate
20
%
(1) Included in other assets on the consolidated balance sheets.
(Dollars in thousands)
Balance as of December 31, 2024
Unobservable Input
Range
Other equity investments
Probability weighted expected return technique
$
3,006
Discount Rate
20
%
Collateral-dependent loans
Discounted appraised value technique
6,954
Selling Costs
7
% -
15
%
OREO
(1)
Discounted sales price technique
279
Selling Costs
7
%
(1) Included in other assets on the consolidated balance sheets.
24
The following tables present the estimated fair values, related carrying amounts, and valuation level of the financial instruments as of the dates stated.
June 30, 2025
Fair Value Measurements
(Dollars in thousands)
Carrying Value
Fair Value
Level 1
Level 2
Level 3
Financial Assets
Cash and due from banks
$
131,199
$
131,199
$
131,199
$
—
$
—
Federal funds sold
628
628
628
—
—
Securities available for sale
327,958
327,958
—
327,458
500
Restricted equity investments
18,925
18,925
—
18,925
—
Other equity investments
4,641
4,641
—
1,635
3,006
Other investments
20,938
20,938
—
—
20,938
Loans held for sale
12,380
12,380
—
12,380
—
Loans held for investment, net
1,956,611
1,880,118
—
—
1,880,118
Accrued interest receivable
11,711
11,711
—
11,711
—
Bank owned life insurance
887
887
—
887
—
MSR assets
249
249
—
—
249
Financial Liabilities
Noninterest-bearing demand
$
432,939
$
432,939
$
432,939
$
—
$
—
Interest-bearing demand and money market
624,108
624,108
—
624,108
—
Savings
101,560
101,560
—
101,560
—
Time
851,659
852,616
—
—
852,616
FHLB borrowings
150,000
150,659
—
150,659
—
Subordinated notes, net
24,928
23,996
—
—
23,996
December 31, 2024
Fair Value Measurements
(Dollars in thousands)
Carrying Value
Fair Value
Level 1
Level 2
Level 3
Financial Assets
Cash and due from banks
$
173,533
$
173,533
$
173,533
$
—
$
—
Restricted cash
2,459
2,459
2,459
—
—
Federal funds sold
838
838
838
—
—
Securities available for sale
312,035
312,035
—
311,285
750
Restricted equity investments
19,275
19,275
—
19,275
—
Other equity investments
4,834
4,834
—
1,828
3,006
Other investments
19,405
19,405
—
—
19,405
Loans held for sale
30,976
30,976
—
30,976
—
Loans held for investment, net
2,088,774
1,998,668
—
—
1,998,668
Accrued interest receivable
12,537
12,537
—
12,537
—
Bank owned life insurance
1,083
1,083
—
1,083
—
MSR assets
386
386
—
—
386
Financial Liabilities
Noninterest-bearing demand
$
452,690
$
452,690
$
452,690
$
—
$
—
Interest-bearing demand and money market
598,875
598,875
—
598,875
—
Savings
100,857
100,857
—
100,857
—
Time
1,027,020
1,029,199
—
—
1,029,199
FHLB borrowings
150,000
152,782
—
152,782
—
Subordinated notes, net
39,789
38,765
—
—
38,765
25
Note 6
– 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 the regulators about 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, banks must hold a capital conservation buffer of
2.50
% above the adequately capitalized risk-based capital ratios for all ratios, except the tier 1 leverage ratio. If a banking organization dips into its capital conservation buffer, it is subject to limitations on certain activities, including payment of dividends, share repurchases, and discretionary compensation to certain officers. Federal and state banking regulations place certain additional restrictions on dividends paid by the Company.
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 undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required.
In addition to the foregoing capital requirements, the Bank is subject to minimum capital ratios set forth in the Consent Order that are higher than those required for capital adequacy purposes generally. The Bank is required to
maintain a leverage ratio of
10.00
% and a total capital ratio of
13.00
%. As of
June 30, 2025 and December 31, 2024, the Bank met these minimum capital ratios. Until the Consent Order has been lifted, the Bank is deemed to be less than well capitalized, thus adequately capitalized.
The Company adopted ASC 326, Financial Instruments - Credit Losses (referred to herein as "current expected credit losses" or "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 to retained earnings (the "CECL Transitional Amount") over a three-year period. The three-year phase-in of the CECL Transitional Amount to regulatory capital was
25
% and
50
% in 2023 and 2024, respectively, and is
25
% in 2025. The Bank made this irrevocable election effective with its first quarter 2023 call report.
The following tables present the capital ratios to which banks are subject to be adequately and well capitalized, as well as the capital and capital ratios for the Bank as of the dates stated. Adequately capitalized ratios include the conservation buffer, if applicable. The following table also includes the capital adequacy ratios to which bank holding companies are subject. Also presented are the minimum capital ratios set forth in the Consent Order for the Bank and the related capital amounts for both the leverage ratio and the total capital ratio. The CECL Transitional Amount was $
8.1
million, of which $
6.1
million and $
4.1
million reduced the regulatory capital amounts and capital ratios as of
June 30, 2025 and December 31, 2024, respectively.
June 30, 2025
Actual
For Capital Adequacy Purposes
To Be Well Capitalized
Minimum Capital Ratios
(Dollars in thousands)
Amount
Ratio
Amount
Ratio
Amount
Ratio
Amount
Ratio
Total risk based capital (to risk-weighted assets)
Blue Ridge Bank, N.A.
$
361,482
18.90
%
$
200,823
10.50
%
$
191,260
10.00
%
$
248,638
13.00
%
Blue Ridge Bankshares, Inc.
$
412,164
21.37
%
$
154,296
8.00
%
n/a
n/a
n/a
n/a
Tier 1 capital (to risk-weighted assets)
Blue Ridge Bank, N.A.
$
341,443
17.86
%
$
162,501
8.50
%
$
152,942
8.00
%
n/a
n/a
Blue Ridge Bankshares, Inc.
$
372,097
19.29
%
$
115,738
6.00
%
n/a
n/a
n/a
n/a
Common equity tier 1 capital (to risk-weighted assets)
Blue Ridge Bank, N.A.
$
341,443
17.86
%
$
133,824
7.00
%
$
124,265
6.50
%
n/a
n/a
Blue Ridge Bankshares, Inc.
$
372,097
19.29
%
$
86,803
4.50
%
n/a
n/a
n/a
n/a
Tier 1 leverage (to average assets)
Blue Ridge Bank, N.A.
$
341,443
12.89
%
$
105,956
4.00
%
$
132,445
5.00
%
$
264,890
10.00
%
Blue Ridge Bankshares, Inc.
$
372,097
13.93
%
$
106,848
4.00
%
n/a
n/a
n/a
n/a
26
December 31, 2024
Actual
For Capital Adequacy Purposes
To Be Well Capitalized
Minimum Capital Ratios
(Dollars in thousands)
Amount
Ratio
Amount
Ratio
Amount
Ratio
Amount
Ratio
Total risk based capital (to risk-weighted assets)
Blue Ridge Bank, N.A.
$
358,848
17.26
%
$
218,260
10.50
%
$
207,866
10.00
%
$
270,226
13.00
%
Blue Ridge Bankshares, Inc.
$
414,28
4
19.79
%
$
167,444
8.00
%
n/a
n/a
n/a
n/a
Tier 1 capital (to risk-weighted assets)
Blue Ridge Bank, N.A.
$
340,386
16.38
%
$
176,687
8.50
%
$
166,293
8.00
%
n/a
n/a
Blue Ridge Bankshares, Inc.
$
360,933
17.24
%
$
125,583
6.00
%
n/a
n/a
n/a
n/a
Common equity tier 1 capital (to risk-weighted assets)
Blue Ridge Bank, N.A.
$
340,386
16.38
%
$
145,507
7.00
%
$
135,113
6.50
%
n/a
n/a
Blue Ridge Bankshares, Inc.
$
360,933
17.24
%
$
94,187
4.50
%
n/a
n/a
n/a
n/a
Tier 1 leverage (to average assets)
Blue Ridge Bank, N.A.
$
340,386
11.80
%
$
115,364
4.00
%
$
144,204
5.00
%
$
288,409
10.00
%
Blue Ridge Bankshares, Inc.
$
360,933
12.43
%
$
116,169
4.00
%
n/a
n/a
n/a
n/a
Note 7 – 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, 2025 and December 31, 2024
, the Company had outstanding loan commitments of $
273.8
million and $
283.2
million, respectively
. Of these amounts, $
111.4
million and $
108.4
million were unconditionally cancelable at the sole discretion of the Company as of the same respective dates.
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, 2025 and December 31, 2024, commitments under outstanding financial stand-by letters of credit totaled
$
13.5
million and $
12.5
mil
lion, respectively. The credit risk of issuing stand-by letters of credit can be greater than the risk involved in extending loans to customers.
The Company recorded
no
provision for credit losses for unfunded commitments for either the three months or six months ended
June 30, 2025. The reserve for unfunded commitments, which is included in other liabilities on the consolidated balance sheets, w
as $
0.9
million as of
both June 30, 2025 and December 31, 2024.
As part of the sale of substantially all of its MSR assets portfolio during 2024, the Company recorded a reserve for estimated putbacks, transition costs, and unearned sales proceeds. The putbacks relate to industry-standard items, including prepayments or early delinquencies of the underlying mortgages, all of which are subject to term limits per the respective sales agreements. The reserve for unearned sales proceeds relates to the Company providing certain documentation to the buyers.
During the second quarter of 2025, the Company received $
0.3
million of previously unearned sale proceeds, which resulted in a corresponding release of the reserve and was reported as a reduction in other noninterest expense. As of
June 30, 2025 and December 31, 2024
, the reserve was $
1.4
million and $
1.8
million, respectively, and was included in other liabilities on the consolidated balance sheet.
The Company has investments in various partnerships and limited liability companies. Pursuant to these investments, the Company commits to an investment amount that may be fulfilled in future periods. At June 30, 2025
, the Company had future commitments outstanding totaling $
5.6
million related to these investments.
27
Note 8
– Stock-Based Compensation
The Company has granted restricted stock awards (“time-based RSAs”) to employees and directors, and performance-based restricted stock awards (“PSAs”) to employees, under equity incentive plans that have been approved by the Company's shareholders. Time-based RSAs vest over time and are considered fixed awards as the number of shares and fair value is known at the date of grant. The fair value of the award at the grant date is amortized over the requisite service period, which is generally
three years
. PSAs vest at the end of a specified period contingent on the Company's achievement of financial goals and are expensed on a straight-line basis over the performance period, with adjustments periodically based on projected achievement of a performance goal.
On April 29, 2025, the Company granted PSAs totaling
3,400,000
shares of common stock to certain executive officers. The vesting of these awards is contingent upon the Company achieving specified profitability thresholds over three one-year performance measurement periods. Stock-based compensation expense, reported as a component of salaries and employee benefits in the consolidated statements of operations, was $
2.2
million and $
2.3
million for the
three and six months ended June 30, 2025
, respectively, compared to $
0.3
million and $
0.5
million for the
three and six months ended June 30, 2024, respectively.
The following table presents time-based RSA and PSA activity as of the dates and for the periods stated.
Time-based RSAs
PSAs
Shares (1)
Weighted Average Fair Value
Shares
Weighted Average Fair Value
Shares unvested and outstanding, December 31, 2024
585,700
$
3.63
116,830
$
11.43
Granted
96,322
3.53
3,400,000
3.54
Vested
(
141,147
)
2.72
—
—
Forfeited
(
41,557
)
4.51
(
20,939
)
13.01
Shares unvested and outstanding, June 30, 2025
499,318
$
3.80
3,495,891
$
3.68
(1) Shares totaling
9,906
were withheld as payment of taxes in the six months ending June 30, 2025.
Note 9 – Earnings Per S
hare
The following table shows the calculation of basic and diluted earnings per share ("EPS"), the weighted average number of shares outstanding used in computing EPS, the effect on the weighted average number of shares outstanding of dilutive potential common stock for the periods stated, and the weighted average number of shares excluded from the computation of diluted EPS because their effects would have been anti-dilutive.
For the three months ended June 30,
For the six months ended June 30,
(Dollars in thousands, except per share data)
2025
2024
2025
2024
Net income (loss)
$
1,296
$
(
11,435
)
$
862
$
(
14,328
)
Less preferred stock dividends
—
150
—
150
Net income (loss) available to common stockholders
$
1,296
$
(
11,585
)
$
862
$
(
14,478
)
Weighted average common shares outstanding, basic
88,257,659
24,477,007
87,136,670
21,827,669
Effect of dilutive securities
324,684
—
173,876
—
Weighted average common shares outstanding, dilutive
88,582,343
24,477,007
87,310,546
21,827,669
Basic and diluted income (loss) per common share
$
0.01
$
(
0.47
)
$
0.01
$
(
0.66
)
Weighted average anti-dilutive shares excluded from diluted EPS
PSAs
1,570,384
—
829,134
—
Stock options
49
—
100
—
Total weighted average anti-dilutive shares
1,570,433
—
829,234
—
28
Note 10
– Segment Reporting
The Chief Operating Decision Maker (the "CODM") evaluates each of the Company's segments based on net income (loss), using segment financial information compiled utilizing
the accounting policies listed in Note 2 of the 2024 Form 10-K. The profitability of the segment helps the CODM evaluate staffing levels, assess available cash for allocation to projects and resources, and make informed decisions on whether the segment's activities should be modified to align with the Company’s overall near- and long-term strategies.
Until March 2025, the Company operated through
three
reportable business segments: commercial banking, mortgage banking, and holding company activities. The commercial banking business segment makes loans to and generates deposits from individuals and businesses, while offering a wide array of general financial services to its customers. The mortgage banking segment, which operated as Monarch Mortgage and focused on residential mortgage origination and sales activities, was sold in March 2025. The Company has closed, funded, and sold the loans that were in process at the time of the sale; it is therefore presented as a reportable segment for all periods stated for comparative purposes. Activities at the holding company or parent level are primarily associated with investments, borrowings, and certain noninterest expenses
.
Information about reportable segments, and reconciliation of such information to the consolidated financial statements follows, as of the dates and periods stated.
As of and for the three months ended June 30, 2025
(Dollars in thousands)
Commercial Banking
Mortgage Banking
Parent Only
Eliminations
Blue Ridge
Bankshares,
Inc.
Consolidated
NET INTEREST INCOME
Interest income
$
34,681
$
55
$
—
$
—
$
34,736
Interest expense
14,249
—
646
—
14,895
Net interest income
20,432
55
(
646
)
—
19,841
Recovery of credit losses
(
700
)
—
—
—
(
700
)
Net interest income after recovery of credit losses
21,132
55
(
646
)
—
20,541
NONINTEREST INCOME
Fair value adjustments of other equity investments
—
—
(
82
)
—
(
82
)
Residential mortgage banking income
92
220
—
—
312
Mortgage servicing rights
—
(
139
)
—
—
(
139
)
Other
3,255
—
—
(
102
)
3,153
Total noninterest income
3,347
81
(
82
)
(
102
)
3,244
NONINTEREST EXPENSE
Salaries and employee benefits
12,228
772
—
—
13,000
Occupancy and equipment
1,116
13
—
—
1,129
Technology and communication
2,175
390
—
—
2,565
Other
4,812
219
386
(
102
)
5,315
Total noninterest expense
20,331
1,394
386
(
102
)
22,009
Income (loss) before income tax expense
4,148
(
1,258
)
(
1,114
)
—
1,776
Income tax expense (benefit)
944
(
230
)
(
234
)
—
480
Net income (loss)
$
3,204
$
(
1,028
)
$
(
880
)
$
—
$
1,296
Total assets
$
2,517,642
$
18,445
$
370,393
$
(
351,041
)
$
2,555,439
29
As of and for the three months ended June 30, 2024
(Dollars in thousands)
Commercial Banking
Mortgage Banking
Parent Only
Eliminations
Blue Ridge
Bankshares,
Inc.
Consolidated
NET INTEREST INCOME
Interest income
$
40,179
$
452
$
—
$
—
$
40,631
Interest expense
19,775
219
552
—
20,546
Net interest income
20,404
233
(
552
)
—
20,085
Provision for credit losses
3,100
—
—
—
3,100
Net interest income after provisiom for credit losses
17,304
233
(
552
)
—
16,985
NONINTEREST INCOME
Fair value adjustments of other equity investments
—
—
(
8,537
)
—
(
8,537
)
Residential mortgage banking income
—
3,090
—
—
3,090
Mortgage servicing rights
—
2,019
—
—
2,019
Other
3,793
—
—
(
93
)
3,700
Total noninterest income
3,793
5,109
(
8,537
)
(
93
)
272
NONINTEREST EXPENSE
Salaries and employee benefits
13,582
1,339
11
—
14,932
Occupancy and equipment
1,195
108
—
—
1,303
Technology and communication
2,008
324
—
—
2,332
Regulatory remediation
1,397
—
—
—
1,397
Other
8,494
750
193
(
93
)
9,344
Total noninterest expense
26,676
2,521
204
(
93
)
29,308
(Loss) income before income tax expense
(
5,579
)
2,821
(
9,293
)
—
(
12,051
)
Income tax (benefit) expense
758
575
(
1,949
)
—
(
616
)
Net (loss) income
$
(
6,337
)
$
2,246
$
(
7,344
)
$
—
$
(
11,435
)
Total assets
$
2,883,732
$
41,433
$
372,515
$
(
364,608
)
$
2,933,072
As of and for the six months ended June 30, 2025
(Dollars in thousands)
Commercial Banking
Mortgage Banking
Parent Only
Eliminations
Blue Ridge
Bankshares,
Inc.
Consolidated
NET INTEREST INCOME
Interest income
$
69,905
$
181
$
—
$
—
$
70,086
Interest expense
29,833
40
1,382
—
31,255
Net interest income
40,072
141
(
1,382
)
—
38,831
Recovery of credit losses
(
700
)
—
—
—
(
700
)
Net interest income after recovery of credit losses
40,772
141
(
1,382
)
—
39,531
NONINTEREST INCOME
Fair value adjustments of other equity investments
—
—
(
155
)
—
(
155
)
Residential mortgage banking income
398
870
—
—
1,268
Mortgage servicing rights
—
(
137
)
—
—
(
137
)
Other
5,538
—
—
(
198
)
5,340
Total noninterest income
5,936
733
(
155
)
(
198
)
6,316
NONINTEREST EXPENSE
Salaries and employee benefits
23,770
1,840
—
—
25,610
Occupancy and equipment
2,446
64
—
—
2,510
Technology and communication
4,539
810
—
—
5,349
Other
10,450
555
684
(
198
)
11,491
Total noninterest expense
41,205
3,269
684
(
198
)
44,960
Income (loss) before income tax expense
5,503
(
2,395
)
(
2,221
)
—
887
Income tax expense (benefit)
974
(
483
)
(
466
)
—
25
Net income (loss)
$
4,529
$
(
1,912
)
$
(
1,755
)
$
—
$
862
Total assets
$
2,517,642
$
18,445
$
370,393
$
(
351,041
)
$
2,555,439
30
As of and for the six months ended June 30, 2024
(Dollars in thousands)
Commercial Banking
Mortgage Banking
Parent Only
Eliminations
Blue Ridge
Bankshares,
Inc.
Consolidated
NET INTEREST INCOME
Interest income
$
82,378
$
784
$
—
$
—
$
83,162
Interest expense
41,251
365
1,112
—
42,728
Net interest income
41,127
419
(
1,112
)
—
40,434
Provision for credit losses
2,100
—
—
—
2,100
Net interest income after provision for credit losses
39,027
419
(
1,112
)
—
38,334
NONINTEREST INCOME
Fair value adjustments of other equity investments
—
—
(
8,544
)
—
(
8,544
)
Residential mortgage banking income
—
5,754
—
—
5,754
Mortgage servicing rights
—
2,748
—
—
2,748
Other
8,277
—
17
(
192
)
8,102
Total noninterest income
8,277
8,502
(
8,527
)
(
192
)
8,060
NONINTEREST EXPENSE
Salaries and employee benefits
27,750
3,183
44
—
30,977
Occupancy and equipment
2,585
242
—
—
2,827
Technology and communication
3,969
642
—
—
4,611
Regulatory remediation
4,041
—
—
—
4,041
Other
17,509
1,510
462
(
192
)
19,289
Total noninterest expense
55,854
5,577
506
(
192
)
61,745
(Loss) income before income tax expense
(
8,550
)
3,344
(
10,145
)
—
(
15,351
)
Income tax expense (benefit)
437
661
(
2,121
)
—
(
1,023
)
Net (loss) income
$
(
8,987
)
$
2,683
$
(
8,024
)
$
—
$
(
14,328
)
Total assets
$
2,883,732
$
41,433
$
372,515
$
(
364,608
)
$
2,933,072
Included in other expenses are costs for legal and regulatory filings, audit fees, other contractual services, and other miscellaneous expenses.
The Company had no transactions wi
th a single customer that in the aggregate resulted in revenues exceeding
10
% of consolidated total revenues for the
three and six months ended June 30, 2025 and 2024
.
Note 11 – 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,
(Dollars in thousands)
2025
2024
Balance at beginning of period
$
(
38,656
)
$
(
47,614
)
Change in net unrealized holding losses on securities available for sale, net of deferred income tax benefit (expense) of $
7
and ($
862
), respectively
(
34
)
3,079
Reclassification for previously unrealized net losses on securities available for sale, net of deferred income tax benefit of $
15
—
52
Balance at end of period
$
(
38,690
)
$
(
44,483
)
For the six months ended June 30,
(Dollars in thousands)
2025
2024
Balance at beginning of period
$
(
42,462
)
$
(
45,056
)
Change in net unrealized holding losses on securities available for sale, net of deferred income tax expense of $
1,410
and $
491
, respectively
3,772
521
Reclassification for previously unrealized net losses on securities available for sale, net of deferred income tax benefit of $
15
—
52
Balance at end of period
$
(
38,690
)
$
(
44,483
)
31
Note 12 – Legal Matters
In the ordinary course of operations, the Company is party to legal proceedings. Based upon information currently available, management believes that such legal proceedings, in the aggregate and excluding those noted below, will not have a material adverse effect on the Company’s business, financial condition, results of operations, or cash flows.
On December 20, 2024, a former Deputy Bank Secrecy Act Officer and manager at the Bank filed suit against the Company and the Company’s and the Bank’s Chief Executive Officer, in the Circuit Court of the City of Richmond (Virginia) alleging that she was retaliated against and constructively discharged in violation of the Virginia Whistleblower Protection Act, Va. Code § 40.1-27.3, and
Bowman v. State Bank of Keysville
, 331 S.E.2d 797 (Va. 1985). On December 30, 2024, the Company removed the matter to the United States District Court for the Eastern District of Virginia, where it subsequently filed a motion to dismiss. On July 18, 2025, the court granted the Company’s motion to dismiss. The Company believes the plaintiff’s claims are without merit and will continue to defend itself vigorously in the matter. The case caption is
Porter v. Blue Ridge Bankshares, Inc.
(No. 3:24-cv-909 (E.D. Va.)).
On December 5, 2023, an alleged shareholder of the Company commenced a putative class action in the U.S. District Court for the Eastern District of New York (No. 1:23-cv-08944) (
Russell Hunter v. Blue Ridge Bankshares, Inc., et al.
) on behalf of himself and any persons or entities who purchased the publicly traded stock of the Company between February 3, 2023, and October 31, 2023, both dates inclusive (the “Action”). The complaint alleges violations of federal securities laws against the Company and certain of its current and former officers based on alleged material misstatements and omissions related to accounting judgments in the Company’s filings with the Securities and Exchange Commission. The complaint seeks certification of a class action, unspecified damages, and attorney’s fees. The putative class representative filed an amended complaint, and the Company filed a letter seeking permission to file a motion to dismiss. The parties engaged in non-binding mediation on December 5, 2024, during which the parties agreed in principle to settlement terms for $
2.5
million.
The Company submitted an insurance claim for this amount, less a deductible that was expensed in 2024. On February 4, 2025, the plaintiff filed an unopposed motion for preliminary approval of the proposed class action settlement, which, if granted, will settle the Action and any claims related to the Action or that could have been brought in the Action by the parties, the parties’ counsel, or settlement class members (the “Motion”). The Motion expressly disclaims any fault, liability, or wrongdoing on the part of the Company. The Company’s outside legal counsel has effected service, pursuant to 28 U.S.C. § 1715, of the Motion and related court filings to the Company’s federal and state regulators as well as to Attorneys General for all U.S. states and territories.
On June 6, 2025, the court conducted a preliminary fairness hearing regarding the Motion. On June 11, 2025, the federal magistrate judge recommended that the court grant the Motion. On July 5, 2025, the court adopted the magistrate’s report and recommendation, and on July 25, 2025, the court granted preliminary approval of the settlement, effective July 5, 2025. Also on July 25, 2025, the court set a final settlement approval hearing date of October 29, 2025. On July 29, 2025, the defendants satisfied their payment obligations under the settlement.
Note 13 – Subsequent Events
On June 2, 2025, the Company provided to the holders of its 2029 Notes a notice of partial redemption at the next interest payment date. On July 15, 2025, the Company redeemed $
10.0
million of the 2029 Notes.
Subsequent to June 30, 2025, the Company placed a $
4.8
million multifamily loan on nonaccrual status. The loan was current as to principal and interest as of July 31, 2025. The Company believes based on the payment performance, strength of the guarantors and value of the collateral that future credit losses, if any, will not be significant to the Company's financial statements.
32
Item 2. Management’s Discussion and Analysis o
f Financial Condition and Results of Operations
The following presents management’s discussion and analysis of the Company’s consolidated financial condition and the results of the Company's 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 the Company's Annual Report on Form 10-K for the year ended December 31, 2024 (the
“
2024 Form 10-K
”
). Results of operations for the three and six months ended June 30, 2025 are not necessarily indicative of the results of operations for the balance of 2025, 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 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 forward-looking statements are based largely on management’s expectations and are subject to a number of 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 the Company’s financial performance to differ materially from that expressed in such forward-looking statements:
•
the strength of the United States economy in general and the strength of the local economies in which the Company conducts operations;
•
the effects of, and changes in, the macroeconomic environment and financial market conditions, including monetary and fiscal policies, interest rates, and inflation;
•
the impact of, and the ability to comply with, the terms of the Consent Order, as defined below, with the Office of the Comptroller of the Currency ("OCC"), including the heightened capital requirements and other restrictions therein, and other regulatory directives;
•
the imposition of additional regulatory actions or restrictions for noncompliance with the Consent Order or otherwise;
•
the Company’s involvement in, and the outcome of, any litigation, legal proceedings, or enforcement actions that may be instituted against the Company;
•
reputational risk and potential adverse reactions of the Company’s customers, suppliers, employees, or other business partners;
•
the Company’s ability to manage its fintech relationships, including implementing enhanced controls, complying with the OCC directives and applicable laws and regulations, and managing the final phases of the wind down of these partnerships;
•
the quality and composition of the Company’s loan and investment portfolios, including changes in the level of the Company’s nonperforming assets and charge-offs;
•
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;
•
the ability to maintain adequate liquidity by growing and retaining deposits and secondary funding sources, especially if the Company's or its industry's reputation become damaged;
•
the ability to maintain capital levels adequate to support the Company's business and to comply with the Consent Order directives;
33
•
the ability of the Company to implement cost-saving initiatives and efficiency measures, as well as increase earning assets, in order to yield acceptable levels of profitability;
•
the ability to generate sufficient future taxable income for the Company to realize its deferred tax assets, including the net operating loss carryforward;
•
the timely development of competitive products and services and the acceptance of these products and services by new and existing customers;
•
changes in consumer spending and savings habits;
•
the willingness of users to substitute competitors’ products and services for the Company’s products and services;
•
the impact of unanticipated outflows of deposits;
•
technological and social media changes;
•
potential exposure to fraud, negligence, computer theft, and cyber-crime;
•
adverse developments in the financial industry generally, such as bank failures, responsive measures to mitigate and manage such developments, supervisory and regulatory actions and costs, and related impacts on customer and client behavior;
•
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 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;
•
the impact of changes in financial services policies, laws, and regulations, including laws, regulations, and policies concerning taxes, banking, securities, real estate and insurance, the application thereof by bank regulatory bodies, and the three branches of the federal government;
•
the effect of changes in accounting standards, policies, and practices as may be adopted from time to time;
•
estimates of the fair value and other accounting values, subject to impairment assessments, of certain of the Company’s assets and liabilities;
•
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;
•
the economic impact of duties, tariffs, or other barriers or restrictions on trade, any retaliatory countermeasures, and the volatility and uncertainty arising therefrom;
•
the occurrence or continuation of widespread health emergencies or pandemics, significant natural disasters, severe weather conditions, floods, and other catastrophic events;
•
other risks and factors identified in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections and elsewhere in the 2024 Form 10-K and in this Form 10-Q and in filings the Company makes from time to time with the Securities and Exchange Commission (“SEC”).
The foregoing factors should not be considered exhaustive and should be read together with other cautionary statements that are included in the 2024 Form 10-K and this Form 10-Q, including those discussed in the section entitled "Risk Factors" in those filings. 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.
34
Sale of Mortgage Division
On March 27, 2025, the Company completed the previously announced sale of its mortgage division operating as Monarch Mortgage. The sale, which included the transfer of certain assets and leases, resulted in a $0.2 million loss, primarily due to the write-off of fixed assets and lease impairment, and is reported in other noninterest income. As of June 30, 2025, the Company had closed, funded, and sold the loans that were in process at the time of the sale.
This transaction did not meet the criteria for classification as a discontinued operation under Accounting Standards Codification ("ASC") 205-20, Presentation of Financial Statements – Discontinued Operations, and is therefore reported within continuing operations as of and for all periods stated herein.
Regulatory Matters
On January 24, 2024, the Bank consented to the issuance of the Consent Order by the OCC ("Consent Order"). The Consent Order generally incorporates the provisions of the formal written agreement (the "Written Agreement") entered into between the Bank and the OCC on August 29, 2022, as well as adding new provisions. The Written Agreement principally concerned the Bank’s fintech operations and required 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. The Consent Order adds time frames by which certain of the directives are required, requires the Bank to submit a strategic plan and a capital plan, and places further restrictions on the Company’s fintech operations. The Consent Order also requires the Bank to maintain a leverage ratio of 10.0% and a total capital ratio of 13.0%, referred to as minimum capital ratios. As of June 30, 2025 and December 31, 2024, the Bank’s capital ratios exceeded these minimum capital ratios. The Company believes it has made significant progress towards meeting the requirements of the Consent Order. Complete copies of the Written Agreement and the Consent Order are included as Exhibits 10.9 and 10.10, respectively, of the 2024 Form 10-K.
Private Placements
In the second quarter of 2024, the Company closed private placements in which it issued and sold shares of its common and preferred stock for gross proceeds of $161.6 million (collectively, the "Private Placements"). On June 20, 2024, the Company’s shareholders approved an amendment to the Company's articles of incorporation authorizing the issuance of additional shares of common stock, thus enabling the conversion of the preferred shares issued in the Private Placements into shares of the Company’s common stock. The conversion occurred on June 28, 2024 and November 7, 2024. Capital proceeds received, net of issuance costs, from the Private Placements totaled $152.1 million. The Private Placements also included the issuance of warrants to purchase common stock at $2.50 per share.
The table below presents information pertaining to warrants to purchase the Company’s common stock as of and for the period stated.
As of and for the six months ended June 30, 2025
Warrants Issued April 3, 2024
Warrants Issued June 13, 2024
Total Warrants
Warrants outstanding at beginning of period
29,027,999
2,424,000
31,451,999
Warrants exercised during the period (1)
(3,778,000
)
—
(3,778,000
)
Warrants outstanding at end of period
25,249,999
2,424,000
27,673,999
Remaining exercise term (years)
3.76
3.95
(1) 1,016,000 warrants were exercised during the three months ended June 30, 2025.
General
There were no changes to the Critical Accounting Policies disclosed in Item 7 of the 2024 Form 10-K.
Certain amounts presented in the consolidated financial statements of prior periods have been reclassified to conform to current year presentations. The reclassifications had no effect on net income, net income per share, total assets, total liabilities, or stockholders’ equity as previously reported.
35
Comparison of Financial Condition as of June 30, 2025 and December 31, 2024
Total assets were $2.56 billion as of June 30, 2025, a decrease of $181.8 million from $2.74 billion as of December 31, 2024. Most of this decrease was attributable to a decline in loans held for investment, which decreased $133.2 million to $1.98 billion as of June 30, 2025, from $2.11 billion as of December 31, 2024. Of the decline in loans held for investment, $35.1 million was due to a continuation of the Company's actions beginning in 2024 to purposefully and selectively reduce balances of loans where borrowers did not represent in-market relationships. The allowance for credit losses ("ACL") was $22.0 million and $23.0 million as of June 30, 2025 and December 31, 2024, respectively.
Total deposits were $2.01 billion as of June 30, 2025, a net decrease of $169.2 million from December 31, 2024. The decline in the first six months of 2025 was primarily due to a $106.4 million decrease in brokered time deposits.
Total stockholders’ equity increased by $16.5 million to $344.3 million as of June 30, 2025, compared to $327.8 million at December 31, 2024, primarily due to additional capital of $9.4 million from the exercise of warrants to purchase common stock and a $3.8 million decrease in after-tax unrealized losses in the Company’s portfolio of securities available for sale.
Comparison of Results of Operations for the Three and Six Months Ended June 30, 2025 and 2024
For the three months ended June 30, 2025, the Company reported net income of $1.3 million, or $0.01 per diluted common share, compared to a net loss of $11.4 million, or ($0.47) per diluted common share, for the same period of 2024.
For the six months ended June 30, 2025, the Company reported net income of $0.9 million, or $0.01 per diluted common share, compared to a net loss of $14.3 million, or ($0.66) per diluted common share, for the same period of 2024.
Net income for the six months ended June 30, 2025 included after-tax severance costs of $0.8 million and an after-tax benefit of $1.0 million – primarily the recovery of non-credit-related amounts in the second quarter of 2025 reserved for in the prior year – as the Company concluded outstanding exit activities with a former fintech banking-as-a-service (“BaaS”) partner. The net loss for the six months ended June, 30, 2024 included a $6.7 million after-tax negative fair value adjustment recorded for an equity investment in a fintech company. After-tax regulatory remediation expenses in connection with the Consent Order for both the three and six months ended June 30, 2025 were $0, compared to $1.1 million and $3.1 million of after tax-costs incurred for the same respective periods in 2024. Net interest income for the three and six months ended June 30, 2025 was $19.8 million and $38.8 million, respectively, a decline of $0.2 million and $1.6 million from the same periods in 2024.
Interest income for the three and six months ended June 30, 2025 was $34.7 million and $70.1 million, a decrease of $5.9 million and $13.1 million from the same respective periods in 2024, primarily due to the decline in average balances of interest earning assets. Interest expense was $14.9 million and $31.3 million for the three and six months ended June 30, 2025, a decrease of $5.7 million and $11.5 million from the same respective periods in 2024, largely driven by the decline in average balances and costs of interest-bearing deposits.
Net Interest Income.
Net interest income is the excess of interest earned on loans, investments, and other interest-earning assets less the interest paid on deposits and borrowings and is the Company’s primary revenue source. Net interest income is thereby affected by overall balance sheet size, changes in interest rates, and changes in the mix of investments, loans, deposits, and borrowings.
36
The following table presents the average balance sheets for the three months ended June 30, 2025 and 2024. 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, 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,
2025
2024
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
$
336,749
$
2,574
3.06
%
$
324,381
$
2,399
2.96
%
$
175
$
91
$
84
Tax-exempt securities (3)
12,346
82
2.66
%
12,570
80
2.55
%
2
(1
)
3
Total securities
349,095
2,656
3.04
%
336,951
2,479
2.94
%
177
90
87
Interest-earning deposits in other banks
127,656
1,359
4.26
%
135,283
1,891
5.59
%
(532
)
(107
)
(425
)
Federal funds sold
860
10
4.65
%
6,079
83
5.46
%
(73
)
(71
)
(2
)
Loans held for sale
24,150
1,394
23.09
%
64,379
2,212
13.74
%
(818
)
(1,382
)
564
Loans held for investment (4,5,6)
2,024,075
29,336
5.80
%
2,343,495
33,984
5.80
%
(4,648
)
(4,632
)
(16
)
Total average interest-earning assets
2,525,836
34,755
5.50
%
2,886,187
40,649
5.63
%
(5,894
)
(6,102
)
208
Less: allowance for credit losses
(23,091
)
(34,594
)
Total noninterest-earning assets
128,153
233,544
Total average assets
$
2,630,898
$
3,085,137
Average Liabilities and Stockholders’ Equity:
Interest-bearing demand, money market, and savings
$
729,730
$
3,162
1.73
%
$
958,671
$
6,170
2.57
%
$
(3,008
)
$
(1,473
)
$
(1,535
)
Time (7)
905,453
9,640
4.26
%
980,324
11,102
4.53
%
(1,462
)
(848
)
(614
)
Total interest-bearing deposits
1,635,183
12,802
3.13
%
1,938,995
17,272
3.56
%
(4,470
)
(2,321
)
(2,149
)
FHLB borrowings
150,000
1,447
3.86
%
221,359
2,410
4.35
%
(963
)
(777
)
(186
)
FRB borrowings
—
—
—
27,857
313
4.49
%
(313
)
(313
)
—
Subordinated notes and other borrowings (8)
34,553
646
7.48
%
39,860
551
5.53
%
95
(73
)
168
Total average interest-bearing liabilities
1,819,736
14,895
3.27
%
2,228,071
20,546
3.69
%
(5,651
)
(3,484
)
(2,167
)
Noninterest-bearing demand deposits
441,422
494,762
Other noninterest-bearing liabilities
30,609
44,262
Stockholders' equity
339,131
318,042
Total average liabilities and stockholders’ equity
$
2,630,898
$
3,085,137
Net interest income and margin (9)
$
19,860
3.15
%
$
20,103
2.79
%
$
(243
)
$
(2,618
)
$
2,375
Cost of funds (10)
2.63
%
3.02
%
Net interest spread (11)
2.23
%
1.95
%
(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 22.32% and 21.89% income tax rate for the three months ended June 30, 2025 and 2024, 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 $370 thousand and $274 thousand for the three months ended June 30, 2025 and 2024, respectively.
(7) Includes amortization of fair value adjustments (premiums) on assumed time deposits of $25 thousand and $81 thousand for the three months ended June 30, 2025 and 2024, respectively.
(8) Includes amortization of fair value adjustments (premiums) on assumed subordinated notes of $25 thousand for both the three months ended June 30, 2025 and 2024, respectively.
(9) Net interest margin is net interest income divided by average interest-earning assets.
(10) Cost of funds is total interest expense divided by total interest-bearing liabilities and non-interest bearing demand deposits.
(11) Net interest spread is the yield on average interest-earning assets less the cost of average interest-bearing liabilities.
Average balances of interest-earning assets decreased $360.4 million to $2.53 billion for the three months ended June 30, 2025 compared to $2.89 billion for the same period of 2024. Relative to the year-ago period, this decrease reflected primarily lower average balances of loans held for investment. The yield on average loans held for investment was 5.80% for both the second quarter of 2025 and the second quarter of 2024. Interest income for the three months ended June 30, 2025 and 2024 included accretion of discounts on acquired loans of $0.4 million and $0.3 million, respectively.
Average balances of interest-bearing liabilities decreased $408.3 million to $1.82 billion for the three months ended June 30, 2025 compared to $2.23 billion for the same period of 2024. The decline relative to the comparative periods was primarily due to the exit of fintech Banking-as-a-Service ("BaaS") deposit operations and the payoff of wholesale funding.
37
Cost of funds was 2.63% for the second quarter of 2025 compared to 3.02% for the second quarter of 2024, while cost of deposits was 2.47% and 2.84%, for the same respective periods. Lower cost of funds and lower cost of deposits in the 2025 periods relative to the year-ago periods were primarily due to the exit of higher cost fintech BaaS deposit operations and the reduction in wholesale deposits. Cost of deposits, excluding wholesale deposits, was 1.01% for the second quarter of 2025 compared to 2.28% for the second quarter of 2024.
Net interest income (on a taxable equivalent basis) for the three months ended June 30, 2025 was $19.9 million compared to $20.1 million for the same period in 2024. The decline in the second quarter of 2025 compared to the second quarter of 2024 was primarily attributable to lower interest and fee income on loans due to lower average balances. This decline was partially offset by lower average balances and rates paid on interest-bearing demand accounts and lower average balances of wholesale funding. Net interest margin was 3.15% and 2.79% for the second quarter of 2025 and 2024, respectively. Accretion and amortization of purchase accounting adjustments had a 7 and 5 basis point positive effect on net interest margin for the same respective periods.
The following table presents the average balance sheets for the six months ended June 30, 2025 and 2024. Also shown are the amounts of interest earned on interest-earning assets, with related tax-equivalent yields, and interest
38
expense on interest-bearing liabilities, with related 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 six months ended June 30,
2025
2024
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
$
330,945
$
4,994
3.02
%
$
331,110
$
4,837
2.92
%
$
157
$
(2
)
$
159
Tax-exempt securities (3)
12,410
163
2.63
%
12,596
157
2.49
%
6
(2
)
8
Total securities
343,355
5,157
3.00
%
343,706
4,994
2.91
%
163
(4
)
168
Interest-earning deposits in other banks
145,116
3,057
4.21
%
132,324
3,447
5.21
%
(390
)
333
(723
)
Federal funds sold
1,121
25
4.46
%
7,874
213
5.41
%
(188
)
(183
)
(5
)
Loans held for sale
26,788
2,760
20.61
%
61,012
4,132
13.54
%
(1,372
)
(2,318
)
946
Loans held for investment (4,5,6)
2,056,638
59,124
5.75
%
2,381,423
70,410
5.91
%
(11,286
)
(9,603
)
(1,682
)
Total average interest-earning assets
2,573,018
70,123
5.45
%
2,926,339
83,196
5.69
%
(13,073
)
(11,775
)
(1,297
)
Less: allowance for credit losses
(22,920
)
(35,234
)
Total noninterest-earning assets
125,957
233,679
Total average assets
$
2,676,055
$
3,124,784
Average Liabilities and Stockholders’ Equity:
Interest-bearing demand, money market, and savings
$
724,909
$
6,512
1.80
%
$
1,035,366
$
13,838
2.67
%
$
(7,326
)
$
(4,149
)
$
(3,177
)
Time (7)
947,238
20,482
4.32
%
975,637
21,919
4.49
%
(1,437
)
(638
)
(799
)
Total interest-bearing deposits
1,672,147
26,994
3.23
%
2,011,003
35,757
3.56
%
(8,763
)
(4,787
)
(3,976
)
FHLB borrowings
150,000
2,879
3.84
%
222,592
4,779
4.29
%
(1,900
)
(1,559
)
(341
)
FRB borrowings
—
—
—
46,429
1,080
4.65
%
(1,080
)
(1,080
)
—
Subordinated notes and other borrowings (8)
37,159
1,382
7.44
%
39,853
1,112
5.58
%
270
(75
)
345
Total average interest-bearing liabilities
1,859,306
31,255
3.36
%
2,319,877
42,728
3.68
%
(11,473
)
(7,501
)
(3,972
)
Noninterest-bearing demand deposits
449,743
507,619
Other noninterest-bearing liabilities
29,210
46,317
Stockholders' equity
337,796
250,971
Total average liabilities and stockholders’ equity
$
2,676,055
$
3,124,784
Net interest income and margin (9)
$
38,868
3.02
%
$
40,468
2.77
%
$
(1,600
)
$
(4,274
)
$
2,675
Cost of funds (10)
2.71
%
3.02
%
Net interest spread (11)
2.09
%
2.00
%
(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 22.32% and 21.89% income tax rate for the six months ended June 30, 2025 and 2024, 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 $736 thousand and $603 thousand for the six months ended June 30, 2025 and 2024, respectively.
(7) Includes amortization of fair value adjustments (premiums) on assumed time deposits of $60 thousand and $178 thousand for the six months ended June 30, 2025 and 2024, respectively.
(8) Includes amortization of fair value adjustments (premiums) on assumed subordinated notes of $49 thousand and $50 thousand for the six months ended June 30, 2025 and 2024, respectively.
(9) Net interest margin is net interest income divided by average interest-earning assets.
(10) Cost of funds is total interest expense divided by total interest-bearing liabilities and non-interest bearing demand deposits.
(11) Net interest spread is the yield on average interest-earning assets less the cost of average interest-bearing liabilities.
Average interest-earning assets were $2.57 billion for the six months ended June 30, 2025 compared to $2.93 billion for the same period of 2024, a $353.3 million decrease. This decrease was primarily attributable to declines in average balances of loans held for investment and loans held for sale, which decreased $324.8 million and $34.2 million, respectively, partially offset by higher average balances of interest-earning deposits in other banks. Total interest income (on a taxable equivalent basis) decreased $13.1 million for the six months ended June 30, 2025 from the same period of 2024. This decrease was primarily due to lower average balances on loans held for investment and loans held for sale. Interest income on loans held for investment for the six months ended June 30, 2024 included $0.7 million of interest received as a result of the payoff of a nonaccrual loan, which had a 6 and 5 basis point positive effect on the yield on loans held for investment and net interest margin, respectively. Interest income for the six months ended June 30, 2025 and 2024 included accretion of discounts on acquired loans of $0.7 million and $0.6 million, respectively.
Average interest-bearing liabilities were $1.86 billion for the six months ended June 30, 2025 compared to $2.32 billion for the same period of 2024, a $460.6 million decrease. Interest expense decreased by $11.5 million to $31.3
39
million for the six months ended June 30, 2025 compared to the same period of 2024. Cost of interest-bearing liabilities decreased to 3.36% for the second half of 2025 from 3.68% for the second half of 2024, while cost of funds were 2.71% and 3.02% for the same respective periods. Lower cost of funds in the 2025 period was primarily due to the exit of higher cost fintech BaaS deposit operations. Interest expense in the first halves of 2025 and 2024 included the amortization of fair value adjustments (premium) on assumed time deposits of $0.1 million and $0.2 million, respectively, which was a reduction to interest expense.
Net interest income (on a taxable equivalent basis) was $38.9 million for the six months ended June 30, 2025 compared to $40.5 million for the same period in 2024. Net interest margin was 3.02% and 2.77% for the first halves of 2025 and 2024, respectively. Accretion and amortization of purchase accounting adjustments had a 7 basis point and 6 basis point positive effect on net interest margin for the same respective periods.
Provision for Credit Losses
. A recovery of credit losses of $0.7 million was reported for both the three and six months ended June 30, 2025, compared to a $3.1 million provision for credit losses for both the three and six months ended June 30, 2024. The recovery in the 2025 periods resulted from declines in balances of loans held for investment, partially offset by specific reserves and charge-offs for two out-of-market loans purchased in prior years. The provision for credit losses in the 2024 periods was related primarily to certain purchased loans and increased reserves for the non-guaranteed portion of government-guaranteed loans, which offset lower reserve needs due to loan portfolio balance reductions.
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, 2025
June 30, 2024
Change $
Change %
Fair value adjustments of other equity investments
$
(82
)
$
(8,537
)
$
8,455
(99.0
%)
Residential mortgage banking income
312
3,090
(2,778
)
(89.9
%)
Mortgage servicing rights ("MSRs")
(139
)
2,019
(2,158
)
(106.9
%)
Wealth and trust management
409
623
(214
)
(34.3
%)
Service charges on deposit accounts
721
386
335
86.8
%
Increase in cash surrender value of bank owned life insurance
8
333
(325
)
(97.6
%)
Bank and purchase card, net
626
513
113
22.0
%
Other
1,389
1,845
(456
)
(24.7
%)
Total noninterest income
$
3,244
$
272
$
2,972
1,092.6
%
For the six months ended
(Dollars in thousands)
June 30, 2025
June 30, 2024
Change $
Change %
Fair value adjustments of other equity investments
$
(155
)
$
(8,544
)
$
8,389
(98.2
%)
Residential mortgage banking income
1,268
5,754
(4,486
)
(78.0
%)
Mortgage servicing rights ("MSRs")
(137
)
2,748
(2,885
)
(105.0
%)
Wealth and trust management
863
1,143
(280
)
(24.5
%)
Service charges on deposit accounts
1,178
747
431
57.7
%
Increase in cash surrender value of bank owned life insurance
16
670
(654
)
(97.6
%)
Bank and purchase card, net
1,193
755
438
58.0
%
Other
2,090
4,787
(2,697
)
(56.3
%)
Total noninterest income
$
6,316
$
8,060
$
(1,744
)
(21.6
%)
The decline in mortgage banking income in the three and six months ended June 30, 2025 compared to the same periods of 2024 was due to the previously mentioned sale of the mortgage division, and the decline in mortgage servicing income over the same period was attributable to the sale of the majority of MSR assets portfolio in the third and fourth quarters of 2024. Higher service charges on deposits accounts in the 2025 periods compared to the same periods of 2024 were primarily due to the execution of a project to more closely align products and pricing with competitors in the markets in which the Bank operates. The decline in bank owned life insurance income in the 2025 periods compared to the same periods of 2024 was due to the surrender of policies at their cash surrender values impacting the last half of 2024. The decline in other noninterest income was driven by the decrease in the number of fintech indirect lending relationships, which contributed $0.5 million and $2.5 million of noninterest income in the six months ended June 30, 2025 and 2024, respectively.
40
Noninterest Expense.
The following table presents 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, 2025
June 30, 2024
Change $
Change %
Salaries and employee benefits
$
13,000
$
14,932
$
(1,932
)
(12.9
%)
Occupancy and equipment
1,129
1,303
(174
)
(13.4
%)
Technology and communication
2,565
2,332
233
10.0
%
Legal and regulatory filings
395
363
32
8.8
%
Advertising and marketing
128
183
(55
)
(30.1
%)
Audit fees
459
295
164
55.6
%
FDIC insurance
1,027
1,817
(790
)
(43.5
%)
Intangible amortization
234
276
(42
)
(15.2
%)
Other contractual services
433
1,857
(1,424
)
(76.7
%)
Other taxes and assessments
955
588
367
62.4
%
Regulatory remediation
—
1,397
(1,397
)
(100.0
%)
Other
1,684
3,965
(2,281
)
(57.5
%)
Total noninterest expense
$
22,009
$
29,308
$
(7,299
)
(24.9
%)
For the six months ended
(Dollars in thousands)
June 30, 2025
June 30, 2024
Change $
Change %
Salaries and employee benefits
$
25,610
$
30,977
$
(5,367
)
(17.3
%)
Occupancy and equipment
2,510
2,827
(317
)
(11.2
%)
Technology and communication
5,349
4,611
738
16.0
%
Legal and regulatory filings
834
810
24
3.0
%
Advertising and marketing
319
480
(161
)
(33.5
%)
Audit fees
1,037
1,450
(413
)
(28.5
%)
FDIC insurance
2,124
3,194
(1,070
)
(33.5
%)
Intangible amortization
478
563
(85
)
(15.1
%)
Other contractual services
1,028
3,665
(2,637
)
(72.0
%)
Other taxes and assessments
1,876
1,531
345
22.5
%
Regulatory remediation
—
4,041
(4,041
)
(100.0
%)
Other
3,795
7,596
(3,801
)
(50.0
%)
Total noninterest expense
$
44,960
$
61,745
$
(16,785
)
(27.2
%)
Excluding regulatory remediation, noninterest expense decreased $5.9 million and $12.7 million for the three and six months ended June 30, 2025, respectively, from the same periods of 2024. These declines relative to the prior periods were primarily due to lower expenses for salaries and employee benefits, other contractual services, and other noninterest expense. The decline in salaries and employee benefits in the three and six months ended June 30, 2025 reflected a reduction in headcount as the Company continues to right-size its workforce, with the completion of certain regulatory directives and the transitioning to a more traditional community banking model. As of June 30, 2025 and 2024, the Company had 333 and 503 employees, respectively. Included in salaries and employee benefits expense were severance costs of $0.3 million and $1.0 million for the three and six months ended June 30, 2025, compared to $0 for the same respective periods in 2024. Also included in salaries and employee benefits expense for the three and six months ended June 30, 2025 was $2.0 million of expense for performance-based restricted stock awards relating to 3,400,000 shares of the Company's common stock granted to certain executive officers, which vest contingent upon the Company achieving specified profitability thresholds over three one-year performance measurement periods.
The decrease in other noninterest expense was partially due to the second quarter of 2025 recovery of non-credit-related amounts reserved for in the prior year, upon the conclusion of exit activities with a former fintech BaaS partner. Also contributing to the decline in other noninterest expense in the 2025 periods compared to the same periods of 2024 were lower mortgage servicing fees due to the first quarter of 2025 sale of Monarch Mortgage, in addition to the 2024 periods including $0.9 million of excise taxes related to the surrender of bank owned life insurance policies. Lower regulatory remediation costs and contractual services in the 2025 period reflect a reduction in the use of outside consulting services, also due to the completion of certain regulatory directives.
41
Income Tax Expense
. For the three and six months ended June 30, 2025, effective tax rates were 27.0% and 2.8%, respectively, compared to 5.1% and 6.7% for the three and six months ended June 30, 2024. The higher effective income tax rate for the three months ended June 30, 2025 was primarily driven by the potential elimination of deductibility of compensation costs in future taxable periods, while the lower effective rate for the six months ended June 30, 2025 was primarily driven by the effects of a $0.3 million favorable adjustment related to a change in the state tax rate applied to the accumulated unrealized loss on the available for sale securities portfolio. The effective income tax rates for both 2024 periods were primarily attributable to $2.0 million of provision expense recognized in the second quarter of 2024 upon surrendering bank owned life insurance policies, representing the tax effect of the life-to-date income earned on the policies. Taxes on such earnings were previously permanently deferred but became subject to tax upon the surrender of the policies.
Analysis of Financial Condition
Loan Portfolio.
The Company makes loans to commercial entities and to individuals. Loan terms vary as to interest rate, repayment, and collateral requirements based on the type of loan and the creditworthiness of the borrower. Credit risk tends to be geographically concentrated in that a majority of the loans are to borrowers located in the markets served by the Company. All loans are underwritten within specific lending policy guidelines that are designed to maximize the Company’s profitability within an acceptable level of business risk
.
The following table presents the Company’s loan portfolio by category of loan and the percentage of loans in each category to total loans as of the dates stated.
June 30, 2025
December 31, 2024
(Dollars in thousands)
Amount
Percent
Amount
Percent
Commercial and industrial
$
323,976
16.4
%
$
354,904
16.8
%
Real estate – construction, commercial
78,476
4.0
%
114,491
5.4
%
Real estate – construction, residential
52,031
2.6
%
51,807
2.4
%
Real estate – commercial
810,978
41.1
%
847,842
40.2
%
Real estate – residential
671,317
33.9
%
692,253
32.8
%
Real estate – farmland
4,723
0.2
%
5,520
0.3
%
Consumer
36,237
1.8
%
43,938
2.1
%
Gross loans held for investment
1,977,738
100.0
%
2,110,755
100.0
%
Deferred costs, net of loan fees
847
1,042
Gross loans held for investment, net of deferred costs
1,978,585
2,111,797
Less: allowance for credit losses
(21,974
)
(23,023
)
Net loans
$
1,956,611
$
2,088,774
Loans held for sale
(not included in totals above)
$
12,380
$
30,976
The following table presents the Company’s portfolio of commercial real estate loans by property type as of the dates stated.
June 30, 2025
December 31, 2024
(Dollars in thousands)
Amount
Percent
Amount
Percent
Commercial real estate – owner occupied
$
192,655
23.7
%
$
193,608
22.8
%
Commercial real estate – non-owner occupied
Hospitality
122,608
15.1
%
120,910
14.3
%
Multi-family
173,790
21.4
%
186,619
22.0
%
Retail
99,503
12.3
%
104,363
12.3
%
Office
72,742
9.0
%
73,871
8.7
%
Mixed use
49,357
6.1
%
49,666
5.9
%
Warehouse and industrial
37,214
4.6
%
39,830
4.7
%
Other
63,109
7.8
%
78,975
9.3
%
Total real estate – commercial
$
810,978
100.0
%
$
847,842
100.0
%
42
The current lending environment for commercial real estate (“CRE”) loans has heightened risk due to a higher interest rate environment. Potential negative impacts include higher debt service burdens for floating rate loans and fixed rate loans originated in a lower rate environment that mature and require renewal or refinancing. As these loans mature, they may be repriced at significantly higher interest rates, leading to increased debt service costs that can strain borrowers' ability to meet payment obligations. In some cases, the higher cost of refinancing may lead to loan defaults, particularly if property cash flows have not increased relatively.
Additionally, collateral values overall may be impaired by higher capitalization rates, further complicating refinancing efforts and increasing credit risk to the Bank. Certain CRE collateral types have experienced declining occupancy, demand, and rental rates, which could potentially lead to material declines in property level economics and further weaken borrowers' ability to service their debt.
The Bank’s credit administration department led by its Chief Credit Officer performs periodic analyses of emerging trends by geography where the Bank has the largest concentrations by CRE property type. These analyses include all real estate property types and geographic markets represented in the loan portfolio and are provided to the Bank's board of directors to assess whether the CRE lending strategy and risk appetite continue to be appropriate, considering changes in local market conditions and the Bank’s exposure to collateral type concentrations. Also, concentration limits by real estate collateral type are approved and monitored by the board of directors. As of June 30, 2025, the Bank is in compliance with all limits.
The following tables present the remaining maturities, based on contractual maturity, by loan type and by rate type (variable or fixed), as of June 30, 2025.
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
$
323,976
$
94,006
$
124,589
$
98,237
$
24,924
$
1,428
$
105,381
$
39,239
$
48,070
$
18,072
Real estate – construction, commercial
78,476
15,397
49,343
8,588
14,906
25,849
13,736
12,862
874
—
Real estate – construction, residential
52,031
45,590
1,576
1,264
—
312
4,865
799
—
4,066
Real estate – commercial
810,978
73,335
453,982
121,208
154,860
177,914
283,661
178,033
96,549
9,079
Real estate – residential
671,317
13,686
384,287
16,778
69,839
297,670
273,344
33,265
31,388
208,691
Real estate – farmland
4,723
—
2,005
147
225
1,633
2,718
1,823
178
717
Consumer loans
36,237
2,108
5,011
4,920
91
—
29,118
26,097
3,021
—
Gross loans
$
1,977,738
$
244,122
$
1,020,793
$
251,142
$
264,845
$
504,806
$
712,823
$
292,118
$
180,080
$
240,625
Allowance for Credit Losses
. In determining the adequacy of the Company’s ACL, management makes estimates based on facts available at the time the ACL is determined. Such estimation requires significant judgment at the time made. Management believes that the Company’s ACL was adequate as of June 30, 2025 and December 31, 2024. There can be no assurance, however, that adjustments to the 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 the Company’s market area, and changes in the circumstances of particular borrowers are criteria, among others, that could 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, on occasion, require an increase in the ACL or the recognition of further loan charge-offs, based on their judgment of the facts at the time of their review that may differ than that of management.
43
The following table presents an analysis of the change in the ACL by loan type as of and for the periods stated.
For the three months ended June 30, 2025
(Dollars in thousands)
Commercial and industrial
Real estate – construction, commercial
Real estate – construction, residential
Real estate – commercial
Real estate – residential
Real estate – farmland
Consumer
Total
ACL, beginning of period
$
5,726
$
1,992
$
552
$
5,998
$
8,171
$
18
$
669
$
23,126
Provision for (recovery of ) credit losses - loans
147
(720
)
(154
)
(119
)
(69
)
(3
)
218
(700
)
Charge-offs
(2,537
)
—
—
—
(107
)
—
(448
)
(3,092
)
Recoveries
2,510
—
—
—
6
—
124
2,640
Net charge-offs
(27
)
—
—
—
(101
)
—
(324
)
(452
)
ACL, end of period
$
5,846
$
1,272
$
398
$
5,879
$
8,001
$
15
$
563
$
21,974
Ratio of net charge-offs to average loans outstanding
0.03
%
0.00
%
0.00
%
0.00
%
0.06
%
0.00
%
3.17
%
0.09
%
For the three months ended June 30, 2024
(Dollars in thousands)
Commercial and industrial
Real estate – construction, commercial
Real estate – construction, residential
Real estate – commercial
Real estate – residential
Real estate – farmland
Consumer
Total
ACL, beginning of period
$
13,619
$
3,596
$
919
$
9,832
$
6,338
$
18
$
703
$
35,025
Provision for (recovery of) credit losses - loans
3,451
(408
)
(143
)
430
(57
)
—
327
3,600
Charge-offs
(11,982
)
—
(39
)
—
(44
)
—
(545
)
(12,610
)
Recoveries
1,828
—
—
—
3
—
190
2,021
Net charge-offs
(10,154
)
—
(39
)
—
(41
)
—
(355
)
(10,589
)
ACL, end of period
$
6,916
$
3,188
$
737
$
10,262
$
6,240
$
18
$
675
$
28,036
Ratio of net charge-offs to average loans outstanding
8.54
%
0.00
%
0.24
%
0.00
%
0.02
%
0.00
%
2.49
%
1.81
%
For the six months ended June 30, 2025
(Dollars in thousands)
Commercial and industrial
Real estate – construction, commercial
Real estate – construction, residential
Real estate – commercial
Real estate – residential
Real estate – farmland
Consumer
Total
ACL, beginning of period
$
5,767
$
2,057
$
540
$
5,963
$
7,933
$
18
$
745
$
23,023
(Recovery of) provision for credit losses - loans
(42
)
(785
)
(142
)
(359
)
184
(3
)
447
(700
)
Charge-offs
(4,661
)
—
—
(63
)
(123
)
—
(1,035
)
(5,882
)
Recoveries
4,782
—
—
338
7
—
406
5,533
Net recoveries (charge-offs)
121
—
—
275
(116
)
—
(629
)
(349
)
ACL, end of period
$
5,846
$
1,272
$
398
$
5,879
$
8,001
$
15
$
563
$
21,974
Ratio of net recoveries (charge-offs) to average loans outstanding
-0.14
%
0.00
%
0.00
%
-0.14
%
0.07
%
0.00
%
5.86
%
0.07
%
For the six months ended June 30, 2024
(Dollars in thousands)
Commercial and industrial
Real estate – construction, commercial
Real estate – construction, residential
Real estate – commercial
Real estate – residential
Real estate – farmland
Consumer
Total
ACL, beginning of period
$
13,787
$
4,024
$
1,094
$
9,929
$
6,286
$
15
$
758
$
35,893
Provision for (recovery of) credit losses - loans
3,708
(836
)
(318
)
333
(18
)
3
728
3,600
Charge-offs
(13,939
)
—
(39
)
—
(44
)
—
(1,290
)
(15,312
)
Recoveries
3,360
—
—
—
16
—
479
3,855
Net charge-offs
(10,579
)
—
(39
)
—
(28
)
—
(811
)
(11,457
)
ACL, end of period
$
6,916
$
3,188
$
737
$
10,262
$
6,240
$
18
$
675
$
28,036
Ratio of net charge-offs to average loans outstanding
8.52
%
0.00
%
0.23
%
0.00
%
0.02
%
0.00
%
5.64
%
1.93
%
The ACL includes specific reserves for individually evaluated loans and a general allowance applicable to all loan categories; however, management has allocated the 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 table presents the allocation of the ACL by loan category and the percentage of loans in each category to total loans as of the dates stated.
44
June 30, 2025
December 31, 2024
(Dollars in thousands)
ACL Amount
% of
Loans
ACL Amount
% of
Loans
Commercial and industrial
$
5,846
16.4
%
$
5,767
16.8
%
Real estate – construction, commercial
1,272
4.0
%
2,057
5.4
%
Real estate – construction, residential
398
2.6
%
540
2.4
%
Real estate – commercial
5,879
41.1
%
5,963
40.2
%
Real estate – residential
8,001
33.9
%
7,933
32.8
%
Real estate – farmland
15
0.2
%
18
0.3
%
Consumer
563
1.8
%
745
2.1
%
Total
$
21,974
100.0
%
$
23,023
100.0
%
Nonperforming Assets.
The following table presents a summary of nonperforming assets and various measures as of the dates stated.
(Dollars in thousands)
June 30, 2025
December 31, 2024
Nonaccrual loans held for investment
$
22,106
$
22,957
Loans past due 90 days and still accruing
1,881
2,486
Total nonperforming loans
$
23,987
$
25,443
Other real estate owned ("OREO") (1)
—
279
Other non-real estate owned (1)
222
—
Total nonperforming assets
$
24,209
$
25,722
Loans held for sale
$
12,380
$
30,976
Loans held for investment
1,978,585
2,111,797
Total loans
$
1,990,965
$
2,142,773
Total assets
$
2,555,439
$
2,737,260
ACL on loans held for investment
$
21,974
$
23,023
ACL to loans held for investment
1.11
%
1.09
%
ACL to nonaccrual loans
99.40
%
100.29
%
ACL to nonperforming loans
91.61
%
90.49
%
Nonaccrual loans to loans held for investment
1.12
%
1.09
%
Nonperforming loans to loans held for investment
1.20
%
1.20
%
Nonperforming loans to total assets
0.94
%
0.93
%
Nonperforming assets to total assets
0.95
%
0.94
%
(1) Included in other assets on the consolidated balance sheets.
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. OREO includes properties that have been substantively repossessed or acquired in complete or partial satisfaction of debt. Such properties, which are held for resale, are initially stated at fair value, including a reduction for the estimated selling expenses, which becomes the carrying value. In subsequent periods, such properties are stated at the lower of the restated carrying value or fair value.
Investment Securities.
The investment portfolio is used as a source of interest income, credit risk diversification, and liquidity, as well as to manage interest 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, securities’ prepayment risk, liquidity needs, and other similar factors, and are carried at estimated fair value. The fair value of the Company’s AFS investment securities portfolio was $328.0 million as of June 30, 2025, an increase of $15.9 million from $312.0 million at December 31, 2024, primarily due to the purchase of securities in the first half of 2025. As a result of elevated market interest rates, the Company’s portfolio of AFS securities had unrealized losses of approximately $50.1 million and $55.5 million as of June 30, 2025 and December 31, 2024, respectively, of
45
which approximately 82% and 81%, respectively, were related to securities backed by U.S. government agencies as of the same dates.
As of June 30, 2025 and December 31, 2024, the majority of the investment securities portfolio consisted of securities rated investment grade by a leading rating agency. Investment grade securities are judged to have a low risk of default, to be of the best quality, and to carry the smallest degree of investment risk. At June 30, 2025 and December 31, 2024, securities with a fair value of $177.0 million and $268.9 million,
respectively, were pledged to secure the Bank’s borrowing facility with the Federal Home Loan Bank of Atlanta ("FHLB"). As of June 30, 2025 and December 31, 2024, the Company had pledged securities with a fair value of $0 and $16.3 million, respectively, as collateral for the Federal Reserve Bank of Richmond ("FRB") Discount Window. The decline in pledged securities as of June 30, 2025 from December 31, 2024 at both FHLB and FRB reflects the release of securities held as collateral.
The Company reviews its AFS investment securities portfolio for potential credit losses at least quarterly. AFS investment securities with unrealized losses are generally a result of pricing changes due to changes in the current interest rate environment and not as a result of permanent credit impairment. The Company does not intend to sell nor does it believe that it will be required to sell, any of its impaired securities prior to the recovery of the amortized cost. No ACL has been recognized for AFS securities as of both June 30, 2025 and December 31, 2024.
Restricted equity investments consisted of stock in the FHLB (carrying basis $9.1 million and $9.4 million at June 30, 2025 and December 31, 2024, respectively), FRB stock (carrying value of $9.3 million and $9.4 million at June 30, 2025 and December 31, 2024, respectively), and stock in the Company’s correspondent bank (carrying value of $0.5 million at both June 30, 2025 and December 31, 2024). Restricted equity investments are carried at cost.
The Company has various other equity investments, including an investment in a fintech company and limited partnerships, totaling $4.6 million and $4.8 million as of June 30, 2025 and December 31, 2024, respectively.
The Company also holds investments in early-stage focused investment funds and low-income housing partnerships, which totaled $20.9 million and $19.4 million as of June 30, 2025 and December 31, 2024, respectively, and are reported in other investments on the consolidated balance sheets.
The following table presents the amortized cost of the investment portfolio by contractual maturities, as well as the weighted average yields for each of the maturity ranges as of and 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, 2025
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
Mortgage backed securities
$
—
—
$
1,254
2.79
%
$
13,472
2.15
%
$
196,959
2.37
%
$
211,685
U. S. Treasury and agencies
2,501
0.87
%
37,212
1.21
%
34,110
2.20
%
5,259
1.91
%
79,082
State and municipal
645
4.39
%
12,951
2.42
%
28,828
2.17
%
7,339
2.58
%
49,763
Corporate bonds
—
—
9,825
7.20
%
27,100
4.42
%
500
4.00
%
37,425
Total
$
3,146
$
61,242
$
103,510
$
210,057
$
377,955
Deposits.
The principal sources of funds for the Company are deposits, including transaction accounts (demand deposits and money market accounts), time deposits, and savings accounts, of customers in the Company’s primary geographic market area. Such customers provide the Bank a source of fee income and cross-marketing opportunities and are generally a lower cost source of funding for the Bank.
In prior years, deposits sourced through fintech partnerships, inclusive of fintech BaaS deposits, were a significant source of deposits for the Company. In the fourth quarter of 2024, the Company completed the exit of its fintech BaaS deposit operations, thus substantially reducing its fintech-related deposit exposure to approximately 1.0% of deposits as of December 31, 2024, consisting of corporate accounts of a few companies in the fintech sector. As of June 30, 2025 and December 31, 2024, fintech-related deposits totaled $13.0 million and $21.3 million, respectively.
Brokered deposit balances are sourced through intermediaries and are an unsecured source of funding for the Bank. Brokered deposits were added throughout 2023 and early 2024 to enhance liquidity in light of financial industry events that began in March 2023 and in anticipation of the exit of the Company's fintech BaaS deposit operations. Brokered deposits represented approximately 14.7% and 18.5% of total deposits as of June 30, 2025 and December 31, 2024, respectively, which consisted entirely of time deposits at June 30, 2025. The Bank has a liquidity management program,
46
with oversight by the Bank’s asset and liability committee (the “ALCO”), that sets forth guidelines for the desired maximum level of brokered deposits, which is 20.0% of total deposits. In recent quarters, the Company has reduced levels of brokered deposits and expects to continue to reduce levels in future periods to a level of 10.0% or less of total deposits. As certain brokered deposits have multiple-year terms, the Company expects brokered deposits to be a funding source for several years.
Total deposits decreased $169.2 million from $2.18 billion as of December 31, 2024 to $2.01 billion as of June 30, 2025, as:
•
Deposits, excluding fintech-related and brokered deposits, decreased $54.4 million from approximately $1.76 billion as of December 31, 2024 to approximately $1.70 billion as of June 30, 2025;
•
Brokered deposits decreased $106.4 million from approximately $402.5 million, or 18.5% of total deposits, as of December 31, 2024 to approximately $296.1 million, or 14.7% of total deposits, as of June 30, 2025; and
•
Fintech-related deposits decreased $8.3 million from approximately $21.3 million as of December 31, 2024 to approximately $13.0 million as of June 30, 2025. Of the decline, fintech BaaS deposits decreased $0.2 million from December 31, 2024.
Estimated uninsured deposits totaled approximately $409.2 million as of June 30, 2025, or 20.4% of total deposits, compared to $399.3 million, or 18.0% of total deposits, as of December 31, 2024.
The following table presents a summary of average deposits and the weighted average rate paid for the periods stated.
For the six months ended
June 30, 2025
June 30, 2024
(Dollars in thousands)
Average
Balance
Average Rate
Average
Balance
Average Rate
Noninterest-bearing demand
$
449,743
—
$
507,619
—
Interest-bearing:
Demand
242,640
0.45
%
532,744
2.48
%
Savings
102,512
3.92
%
112,475
4.62
%
Money market
379,757
2.08
%
390,147
2.38
%
Time
947,238
4.32
%
975,637
4.49
%
Total interest-bearing
$
1,672,147
$
2,011,003
Total average deposits
$
2,121,890
$
2,518,622
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, 2025
December 31, 2024
Maturing in:
3 months or less
$
46,068
$
38,758
Over 3 months through 6 months
26,854
33,845
Over 6 months through 12 months
41,882
60,308
Over 12 months
26,211
31,117
$
141,015
$
164,028
47
Borrowings.
The Company uses short-term and long-term borrowings from various sources, including FHLB advances and FRB advances, to fund assets and operations. The following tables present information on the balances and interest rates on borrowings as of and for the periods stated.
June 30, 2025
(Dollars in thousands)
Period-End Balance
Highest Month-End Balance
Average Balance
Weighted Average Rate
FHLB borrowings
$
150,000
$
150,000
$
150,000
3.84
%
December 31, 2024
(Dollars in thousands)
Period-End Balance
Highest Month-End Balance
Average Balance
Weighted Average Rate
FHLB borrowings
$
150,000
$
280,000
$
213,003
4.27
%
FRB borrowings
—
65,000
23,087
4.68
%
FHLB advances are secured by collateral consisting of a blanket lien on qualifying pledged loans in the Company’s residential, multi-family, and commercial real estate mortgage loan portfolios, as well as select investment securities. FRB advances through the FRB Discount Window are secured by qualifying pledged construction and commercial and industrial loans.
The Company had $24.9 million and $39.8 million of subordinated notes, net, outstanding as of June 30, 2025 and December 31, 2024, respectively. Prior to June 1, 2025, the Company's subordinated notes had been comprised of a $15 million issuance in May 2020 maturing June 1, 2030 (the “2030 Note”) and a $25 million issuance in October 2019 maturing October 15, 2029 (the “2029 Notes”).
On June 1, 2025, the Company completed the $15.0 million redemption of the 2030 Note. The interest rate on the 2030 Note was 6.0% up to the redemption date. Interest expense on the 2030 Note was $0.2 million for both the three months ended June 30, 2025 and 2024, respectively, and $0.4 million and $0.5 million for the six months ended June 30, 2025 and 2024, respectively.
The 2029 Notes bore interest at 5.625% per annum, through October 14, 2024, payable semi-annually in arrears. From October 15, 2024 through October 15, 2029, or up to an early redemption date, the interest rate resets quarterly to an interest rate per annum equal to the then current three-month Secured Overnight Funding Rate ("SOFR") plus 433.5 basis points, payable quarterly in arrears. As of June 30, 2025, the 2029 Notes bore an annual interest rate of 8.59%. As of June 30, 2025, the net carrying amount of the 2029 Notes was $24.9 million, inclusive of a $0.4 million purchase accounting adjustment (premium). For the three months ended June 30, 2025 and 2024, the effective interest rate on the 2029 Notes was 7.86% and 5.08%, respectively, inclusive of the amortization of the purchase accounting adjustment (premium). For the six months ended June 30, 2025 and 2024, the effective interest rate on the 2029 Notes was 7.96% and 5.15%, respectively, inclusive of the amortization of the purchase accounting adjustment (premium).
On June 2, 2025, the Company provided to the holders of its 2029 Notes a notice of partial redemption at the next interest payment date, July 15, 2025. On July 15, 2025, the Company completed the redemption of $10.0 million of the 2029 Notes.
Liquidity
. Liquidity is essential to the Company’s business. The Company’s liquidity could be impaired by unforeseen outflows of cash, including deposits, or the inability to access the capital and/or wholesale funding markets. This situation may arise due to circumstances that the Company may be unable to control, such as general market disruption, negative views about the Company or the financial services industry generally, or an operational problem that affects the Company or a third party. The Company’s ability to borrow from other financial institutions on favorable terms or at all could be adversely affected by disruptions in the markets in which they operate or other events.
Deposits are the primary source of the Company’s liquidity. Cash flows from amortizing or maturing assets also provide funding to meet the liquidity needs of the Company. Deposits are sourced from the Bank’s customers and, as needed, through brokered deposit markets. The brokered deposit markets are accessed through brokers or through the IntraFi Network (“IntraFi”), of which the Bank is a member. IntraFi facilitates the Bank attaining brokered deposits via an on-line marketplace. The Bank also utilizes IntraFi's reciprocal deposit services to offer its high-value customers access to Federal Deposit Insurance Corporation ("FDIC") insurance through IntraFi's network of banks.
48
While subject to the Consent Order, the Bank may not be deemed to be “well capitalized,” which restricts it from accepting, renewing, or rolling over brokered deposits except in compliance with certain applicable restrictions under federal law. The Bank received approvals from the FDIC allowing the Bank to accept, renew, or rollover brokered deposits for consecutive six-month periods through December 2025 and limited to the amount of maturities during these periods. The Company expects to continue to seek waivers of this prohibition in the future; however, there is no assurance that such waivers will be approved or that the Company will be able to rely on brokered deposits as a source of funding in the future.
The Company has established a formal liquidity contingency plan that provides guidelines for liquidity management. Pursuant to the Company’s liquidity contingency plan, liquidity needs are forecasted based on anticipated changes in the balance sheet. In this forecast, the Company expects to maintain a liquidity cushion. Management then stress tests 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 and are reviewed by the Bank's ALCO. Management also monitors the Company’s liquidity position on a day-to-day basis through daily cash monitoring and short- and long-term cash flow forecasting and believes its sources of liquidity are adequate to conduct the business of the Company.
The following table presents information on the available sources of liquidity as of the date stated.
(Dollars in thousands)
Capacity
Less: Outstanding Borrowings
Available Balance
Cash and due from banks
$
131,199
Fed funds sold
628
Unpledged securities available for sale
150,936
Total
$
282,763
Borrowings
FHLB
$
583,344
$
201,160
(1)
$
382,184
FRB
75,060
—
75,060
Unsecured line of credit
10,000
—
10,000
Total
$
668,404
$
201,160
$
467,244
Available liquidity as of June 30, 2025
$
750,007
(1) Outstanding borrowings are comprised of advances of $150.0 million and letters of credit totaling $51.2 million, of which $50.0 million served as collateral for public deposits with the Treasury Board of the Commonwealth of Virginia.
Uninsured deposits at June 30, 2025 were $409.2 million. In the unlikely event that uninsured deposit balances leave the Bank over a short period of time, management could more than satisfy the demand with cash on-hand and FHLB borrowing capacity.
Capital.
Capital adequacy is an important measure of financial stability and performance. The Company’s objectives are to maintain a level of capitalization that is sufficient to support the Company's strategic objectives.
Banks and bank holding companies are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, possibly additional discretionary, actions by regulators that, if undertaken, could have a direct material effect on the Company's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, financial institutions must meet specific capital guidelines that involve quantitative measures of assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. A financial institution's capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.
Banks must hold a capital conservation buffer of 2.50% above the adequately capitalized risk-based capital ratios for all ratios except the Tier 1 leverage ratio. If a banking organization dips into its capital conservation buffer, it is subject to limitations on certain activities, including payment of dividends, share repurchases, and discretionary compensation to certain officers. Additionally, regulators may place certain restrictions on dividends paid by banks.
Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized; although, these terms are not used to
49
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.
The Consent Order requires the Bank to achieve and maintain minimum capital requirements that are higher than those required for capital adequacy purposes. Specifically, the Bank is required to maintain a leverage ratio of 10.0% and a total capital ratio of 13.0%. As of June 30, 2025 and December 31, 2024, the Bank met these minimum capital ratios. Until the Bank has been released from the Consent Order, the Bank is deemed to be less than well capitalized, thus adequately capitalized.
Because the Bank may not be deemed to be “well capitalized” while subject to the Consent Order, it could be required to pay higher insurance premiums to the FDIC, obtain approval prior to acquiring branches or opening new lines of business, and be subject to increased regulatory scrutiny such as limitations on asset growth.
The Company adopted ASC 326, Financial Instruments - Credit Losses (referred to herein as "current expected credit losses" or "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 is 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 ratios to which banks are subject to be adequately and well capitalized, as well as the capital and capital ratios for the Bank as of the dates stated. Adequately capitalized ratios include the conversation buffer, if applicable. The following table also includes the capital adequacy ratios to which bank holding companies are subject. Also presented are the minimum capital ratios set forth in the Consent Order for the Bank with the corresponding capital amounts for both the leverage ratio and the total capital ratio as of both June 30, 2025 and December 31, 2024. The CECL Transitional Amount was $8.1 million, of which $6.1 million and $4.1 million reduced the regulatory capital amounts and capital ratios as of June 30, 2025 and December 31, 2024, respectively.
June 30, 2025
Actual
For Capital
Adequacy Purposes
To Be Well Capitalized
Minimum Capital Ratios
(Dollars in thousands)
Amount
Ratio
Amount
Ratio
Amount
Ratio
Amount
Ratio
Total risk based capital (to risk-weighted assets)
Blue Ridge Bank, N.A.
$
361,482
18.90
%
$
200,823
10.50
%
$
191,260
10.00
%
$
248,638
13.00
%
Blue Ridge Bankshares, Inc.
$
412,164
21.37
%
$
154,296
8.00
%
n/a
n/a
n/a
n/a
Tier 1 capital (to risk-weighted assets)
Blue Ridge Bank, N.A.
$
341,443
17.86
%
$
162,501
8.50
%
$
152,942
8.00
%
n/a
n/a
Blue Ridge Bankshares, Inc.
$
372,097
19.29
%
$
115,738
6.00
%
n/a
n/a
n/a
n/a
Common equity tier 1 capital (to risk-weighted assets)
Blue Ridge Bank, N.A.
$
341,443
17.86
%
$
133,824
7.00
%
$
124,265
6.50
%
n/a
n/a
Blue Ridge Bankshares, Inc.
$
372,097
19.29
%
$
86,803
4.50
%
n/a
n/a
n/a
n/a
Tier 1 leverage (to average assets)
Blue Ridge Bank, N.A.
$
341,443
12.89
%
$
105,956
4.00
%
$
132,445
5.00
%
$
264,890
10.00
%
Blue Ridge Bankshares, Inc.
$
372,097
13.93
%
$
106,848
4.00
%
n/a
n/a
n/a
n/a
December 31, 2024
Actual
For Capital
Adequacy Purposes
To Be Well Capitalized
Minimum Capital Ratios
(Dollars in thousands)
Amount
Ratio
Amount
Ratio
Amount
Ratio
Amount
Ratio
Total risk based capital (to risk-weighted assets)
Blue Ridge Bank, N.A.
$
358,848
17.26
%
$
218,260
10.50
%
$
207,866
10.00
%
$
270,226
13.00
%
Blue Ridge Bankshares, Inc.
$
414,284
19.79
%
$
167,444
8.00
%
n/a
n/a
n/a
n/a
Tier 1 capital (to risk-weighted assets)
Blue Ridge Bank, N.A.
$
340,386
16.38
%
$
176,687
8.50
%
$
166,293
8.00
%
n/a
n/a
Blue Ridge Bankshares, Inc.
$
360,933
17.24
%
$
125,583
6.00
%
n/a
n/a
n/a
n/a
Common equity tier 1 capital (to risk-weighted assets)
Blue Ridge Bank, N.A.
$
340,386
16.38
%
$
145,507
7.00
%
$
135,113
6.50
%
n/a
n/a
Blue Ridge Bankshares, Inc.
$
360,933
17.24
%
$
94,187
4.50
%
n/a
n/a
n/a
n/a
Tier 1 leverage (to average assets)
Blue Ridge Bank, N.A.
$
340,386
11.80
%
$
115,364
4.00
%
$
144,204
5.00
%
$
288,409
10.00
%
Blue Ridge Bankshares, Inc.
$
360,933
12.43
%
$
116,169
4.00
%
n/a
n/a
n/a
n/a
50
Commitments and Contingencies
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 and involve the same credit risk and evaluation as making a loan to a customer. 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. The Company evaluates each customer’s credit worthiness on a case-by-case basis, in a manner similar to that if underwriting a loan. As of June 30, 2025 and December 31, 2024, the Company had outstanding loan commitments of $273.8 million and $283.2 million, respectively. Of these amounts, $111.4 million and $108.4 million were unconditionally cancelable at the sole discretion of the Company as of the same respective dates.
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, 2025 and December 31, 2024, commitments under outstanding financial stand-by letters of credit totaled $13.5 million and $12.5 million, respectively. The credit risk of issuing stand-by letters of credit can be greater than the risk involved in extending loans to customers.
The Company recorded no provision for credit losses for unfunded commitments for either the three months or six months ended June 30, 2025. As of both June 30, 2025 and December 31, 2024, the reserve for unfunded commitments was $0.9 million and is included in other liabilities on the consolidated balance sheets.
As part of the sale of substantially all of its MSR portfolio during 2024, the Company recorded a reserve for estimated putbacks, transition costs, and unearned sales proceeds. The putbacks relate to industry-standard items, including prepayments or early delinquencies of the underlying mortgages, all of which are subject to term limits per the respective sales agreements. The reserve for unearned sales proceeds relates to the Company providing certain documentation to the buyers. During the second quarter of 2025, the Company received $0.3 million of previously unearned sale proceeds, which resulted in a corresponding release of the reserve. As of June 30, 2025 and December 31, 2024, the reserve was $1.4 million and $1.8 million, respectively, and was included in other liabilities on the consolidated balance sheet.
The Company has investments in various partnerships and limited liability companies. Pursuant to these investments, the Company commits to an investment amount that may be fulfilled in future periods. At June 30, 2025, the Company had future commitments outstanding totaling $5.6 million related to these investments.
Interest Rate Risk Management
As a financial institution, 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 cash flows of interest-earning assets and interest-bearing liabilities, changes in the expected cash flows of assets and liabilities arising from embedded options, such as borrowers' ability to prepay loans and 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 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 the Bank maintains. The Company manages interest rate risk through the ALCO comprised of members of management, with oversight by a committee of its board of directors. The ALCO is responsible for monitoring the Company’s interest rate risk in conjunction with liquidity and capital management, pursuant to policy guidelines approved by the board of directors.
The Company employs an independent firm to model its interest rate sensitivity that uses a net interest income simulation model as its primary tool to measure interest rate sensitivity. 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 management expects rates to change on non-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 produces an expected level of net interest income assuming that market rates remain unchanged. This is considered the base case. The model then simulates what net interest income would be based on specific changes in interest rates. The rate simulations are performed for a
51
two-year period and include rapid rate changes of down 100 basis points to 400 basis points and up 100 basis points to 400 basis points. The results of these simulations are then compared to the base case.
The following tables present the estimated change in net interest income under various rate change scenarios as of the dates presented. 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. Estimated changes set forth below are dependent on material assumptions, such as those previously discussed.
June 30, 2025
Instantaneous Parallel Rate Shock Scenario
Change in Net Interest Income - Year 1
Change in Net Interest Income - Year 2
Change in interest rates:
+400 basis points
$
453
0.6
%
$
2,814
3.2
%
+300 basis points
1,295
1.6
%
3,126
3.6
%
+200 basis points
1,537
1.9
%
2,866
3.3
%
+100 basis points
1,135
1.4
%
1,911
2.2
%
Base case
-100 basis points
(2,428
)
(3.0
%)
(3,632
)
(4.2
%)
-200 basis points
(5,367
)
(6.7
%)
(8,301
)
(9.5
%)
-300 basis points
(7,936
)
(9.9
%)
(12,343
)
(14.2
%)
-400 basis points
(10,378
)
(12.9
%)
(16,072
)
(18.4
%)
December 31, 2024
Instantaneous Parallel Rate Shock Scenario
Change in Net Interest Income - Year 1
Change in Net Interest Income - Year 2
Change in interest rates:
+400 basis points
$
3,288
3.8
%
$
6,628
6.7
%
+300 basis points
3,347
3.8
%
5,842
5.9
%
+200 basis points
2,877
3.3
%
4,610
4.7
%
+100 basis points
1,798
2.1
%
2,751
2.8
%
Base case
-100 basis points
(2,978
)
(3.4
%)
(4,205
)
(4.3
%)
-200 basis points
(6,468
)
(7.4
%)
(9,650
)
(9.8
%)
-300 basis points
(9,831
)
(11.2
%)
(15,174
)
(15.4
%)
-400 basis points
(12,664
)
(14.5
%)
(19,666
)
(20.0
%)
Stress testing the balance sheet and net interest income using instantaneous parallel rate shock movements in the yield curve 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 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 the Company’s interest rate risk position over a historical time frame for comparison purposes.
The asset and liability repricing characteristics of the Company’s assets and liabilities will have a significant impact on its future interest rate risk profile.
Item 3. Quantitative and Qualitati
ve Disclosures about Market Risk
This information is incorporated herein by reference to the information in section "Interest Rate Risk Management" within Part I, Item 2. "Management's Discussion and Analysis of Financial Condition and Results of Operations" of this Form 10-Q.
Item 4. Controls
and Procedures
Evaluation of Disclosure 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
52
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 June 30, 2025 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.
53
PART II. OTHER
INFORMATION
Item 1. Legal
Proceedings
In the ordinary course of operations, the Company is party to legal proceedings. Based upon information currently available, management believes that such legal proceedings, in the aggregate, will not have a material adverse effect on the Company’s business, financial condition, results of operations, or cash flows.
For information regarding legal proceedings in which the Company is involved, please see Note 12 to the unaudited consolidated financial statements included in this Form 10-Q.
Item 1A. Ri
sk Factors
There have been no material changes to the risk factors disclosed in the 2024 Form 10-K. Additional risks not presently known to the Company, or that are currently deemed 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.
Item 2. Unregistered Sales of Equi
ty Securities and Use of Proceeds
There were no repurchases of the Company's common stock as part of a stock repurchase program during the three months ended June 30, 2025. However, when incentive stock awards vest, employees and directors may elect to have the Company withhold shares of the Company’s common stock as payment for income and payroll taxes. For the three months ended June 30, 2025, no shares were withheld as payment for income and payroll taxes.
Item 3. Defaults Upo
n Senior Securities
None
Item 4. Mine Saf
ety Disclosures
None
Item 5. Other
Information
During the fiscal quarter ended June 30, 2025
, none of the Company’s directors or officers (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934)
adopted
or
terminated
a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408(a) of Regulation S-K).
The following materials from Blue Ridge Bankshares, Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2025, 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, 2025, formatted in Inline XBRL (included with Exhibit 101).
54
SIGNAT
URES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
BLUE RIDGE BANKSHARES, INC.
Date: August 6, 2025
By:
/s/ G. William Beale
G. William Beale
President and Chief Executive Officer
By:
/s/ Judy C. Gavant
Judy C. Gavant
Executive Vice President and Chief Financial Officer
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