Blue Ridge Bankshares(BRBS) - 2025 Q1 - Quarterly Report

PART I: FINANCIAL INFORMATION Financial Statements This section presents the unaudited consolidated financial statements for Blue Ridge Bankshares, Inc. as of March 31, 2025, and for the three-month period then ended Consolidated Balance Sheets As of March 31, 2025, total assets were $2.69 billion, a decrease from $2.74 billion at year-end 2024, primarily due to a reduction in loans held for investment Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $2,685,084 | $2,737,260 | | Loans held for investment, net | $2,036,584 | $2,088,774 | | Securities available for sale | $325,401 | $312,035 | | Total Liabilities | $2,346,795 | $2,409,472 | | Total deposits | $2,129,477 | $2,179,442 | | FHLB borrowings | $150,000 | $150,000 | | Total Stockholders' Equity | $338,289 | $327,788 | Consolidated Statements of Operations For the first quarter of 2025, the company reported a net loss of $0.43 million, a significant improvement from the $2.89 million net loss in the same period of 2024 Quarterly Statement of Operations (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Interest Income | $18,990 | $20,349 | | Total Noninterest Income | $3,072 | $7,788 | | Total Noninterest Expense | $22,951 | $32,437 | | Loss Before Income Taxes | $(889) | $(3,300) | | Net Loss | $(434) | $(2,893) | | Basic and Diluted Loss Per Share | $(0.01) | $(0.15) | Consolidated Statements of Comprehensive (Loss) Income The company recorded comprehensive income of $3.37 million for Q1 2025, a stark contrast to the comprehensive loss of $5.45 million in Q1 2024 Comprehensive (Loss) Income (in thousands) | Component | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Loss | $(434) | $(2,893) | | Other Comprehensive Income (Loss), net of tax | $3,806 | $(2,558) | | Comprehensive Net Income (Loss) | $3,372 | $(5,451) | Consolidated Statements of Changes in Stockholders' Equity Stockholders' equity increased from $327.8 million at the beginning of the period to $338.3 million at the end of Q1 2025 - Key drivers for the change in stockholders' equity in Q1 2025 were the exercise of 2,762,000 warrants for common stock, generating $6.9 million, and a $3.8 million increase from other comprehensive income[12] Consolidated Statements of Cash Flows For the first three months of 2025, cash used in operating activities was $3.6 million, cash provided by investing activities was $43.3 million, and cash used in financing activities was $43.0 million Cash Flow Summary (in thousands) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | $(3,588) | $(7,518) | | Net Cash Provided by Investing Activities | $43,254 | $44,724 | | Net Cash Used in Financing Activities | $(43,025) | $(30,159) | | Net (Decrease) Increase in Cash | $(3,359) | $7,047 | Notes to Consolidated Financial Statements The notes provide detailed disclosures on accounting policies, significant events, and compliance with the OCC Consent Order, covering key financial components and legal matters - On March 27, 2025, the Company completed the sale of its mortgage division, Monarch Mortgage, resulting in a $0.2 million loss reported in other noninterest income[20] - The Bank is subject to a consent order with the OCC from January 24, 2024, which requires it to maintain a leverage ratio of 10.0% and a total capital ratio of 13.0%. The Bank was in compliance with these ratios as of March 31, 2025[26] - In Q2 2024, the Company raised $152.1 million in net proceeds from private placements of common and preferred stock. During Q1 2025, 2,762,000 warrants were exercised, leaving 28,689,999 outstanding[22][25] - The company is involved in a putative class action lawsuit, for which it has agreed in principle to a settlement of $2.5 million, expected to be covered by insurance less a deductible[120][121] - Subsequent to the quarter end, the Company provided a notice to redeem its $15 million 2030 Note and granted 3,400,000 performance-based stock awards to executive officers[122] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial condition and results, highlighting improved net loss in Q1 2025 due to reduced noninterest expenses and compliance with regulatory capital requirements Comparison of Financial Condition Total assets decreased by $52.2 million to $2.69 billion at March 31, 2025, mainly due to a $52.1 million decline in loans held for investment Key Balance Sheet Changes (Q1 2025 vs YE 2024) | Account | Change (in millions) | Reason | | :--- | :--- | :--- | | Total Assets | $(52.2) | Decline in loans held for investment | | Total Deposits | $(50.0) | $63.4M decrease in brokered time deposits | | Stockholders' Equity | $10.5 | $6.9M from warrant exercises & $3.8M decrease in AOCI loss | Results of Operations The company's net loss narrowed to $0.4 million in Q1 2025 from $2.9 million in Q1 2024, driven by a significant reduction in noninterest expense - Net interest margin improved to 2.90% in Q1 2025 from 2.75% in Q1 2024, despite a $1.4 million decline in net interest income[153] - No provision for credit losses was recorded in Q1 2025, compared to a $1.0 million recovery in Q1 2024[154] - Noninterest expense decreased by $9.5 million (29.2%) YoY, driven by a $3.4 million reduction in salaries and benefits and the elimination of $2.6 million in regulatory remediation costs[159] - The effective income tax rate was 51.2% in Q1 2025, significantly higher than 12.3% in Q1 2024, primarily due to a favorable adjustment related to a change in the state tax rate applied to unrealized securities losses[160] Loan Portfolio and Credit Quality Gross loans held for investment decreased to $2.06 billion as of March 31, 2025, with nonperforming assets remaining stable at 0.94% of total assets Nonperforming Assets (in thousands) | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total nonperforming loans | $24,881 | $25,443 | | Total nonperforming assets | $25,160 | $25,722 | | ACL to loans held for investment | 1.12% | 1.09% | | Nonperforming assets to total assets | 0.94% | 0.94% | - The company is managing heightened risk in its Commercial Real Estate (CRE) portfolio due to the higher interest rate environment, with specific monitoring of office loans and concentration limits by property type[164][166] Deposits and Borrowings Total deposits decreased by $50.0 million in Q1 2025 to $2.13 billion, driven by a reduction in brokered deposits, while borrowings remained stable - Brokered deposits decreased to $339.1 million (15.9% of total deposits) from $402.5 million (18.5%) at year-end 2024, with the company expecting to reduce this level to 10% or less of total deposits[185][189] - Fintech-related deposits have been substantially reduced to $14.4 million as of March 31, 2025, following the exit of BaaS deposit operations in late 2024[184] - Subsequent to quarter-end, the company received regulatory non-objection to redeem a significant portion of its subordinated debt, which is expected to save over $2 million in annual interest expense[192] Liquidity and Capital Resources The company maintains a strong liquidity position with $788.8 million in available sources, and capital ratios remain well above regulatory minimums and OCC Consent Order requirements Available Liquidity as of March 31, 2025 (in thousands) | Source | Available Balance | | :--- | :--- | | Cash, Fed Funds, Unpledged Securities | $323,064 | | FHLB/FRB/Other Borrowing Capacity | $465,770 | | Total Available Liquidity | $788,834 | Bank Capital Ratios vs. Consent Order Minimums (March 31, 2025) | Ratio | Actual | Minimum Required | | :--- | :--- | :--- | | Tier 1 Leverage Ratio | 12.33% | 10.00% | | Total Risk-Based Capital Ratio | 17.93% | 13.00% | - While subject to the Consent Order, the Bank is deemed 'adequately capitalized' rather than 'well capitalized', which restricts its ability to accept brokered deposits without a waiver from the FDIC[197][205] Quantitative and Qualitative Disclosures about Market Risk The company manages interest rate risk through its ALCO using a net interest income simulation model, showing asset-sensitivity in rising rates and liability-sensitivity in falling rates Net Interest Income Sensitivity Analysis (Year 1 - as of March 31, 2025) | Rate Shock Scenario | Change in NII ($ thousands) | Change in NII (%) | | :--- | :--- | :--- | | +200 bps | $2,662 | 3.1% | | +100 bps | $1,698 | 2.0% | | Base Case | - | - | | -100 bps | $(2,919) | (3.4%) | | -200 bps | $(6,458) | (7.4%) | Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the Company's disclosure controls and procedures were effective as of March 31, 2025[223] - There were no changes in the Company's internal control over financial reporting during the first quarter of 2025 that materially affected, or are reasonably likely to materially affect, these controls[224] PART II: OTHER INFORMATION Legal Proceedings The company is party to ordinary course legal proceedings which are not expected to have a material adverse effect - For detailed information regarding legal proceedings, refer to Note 11 of the unaudited consolidated financial statements[226] Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes have been made to the risk factors disclosed in the 2024 Form 10-K[227] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period - None[228] Other Information During the quarter ended March 31, 2025, no directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement - No directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or other non-Rule 10b5-1 trading arrangement during the fiscal quarter[228] Exhibits This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL data files - Filed exhibits include CEO and CFO certifications pursuant to Rule 13(a)-14(a) and 18 U.S.C. Section 1350, as well as XBRL data files[229]