Blue Ridge Bankshares(BRBS) - 2025 Q2 - Quarterly Results

markdown [Overview](index=1&type=section&id=Blue%20Ridge%20Bankshares%2C%20Inc.%20Announces%202025%20Second%20Quarter%20Results) [Second Quarter 2025 Financial Highlights](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Highlights) The company returned to profitability in Q2 2025, reporting net income of $1.3 million, a significant improvement from the net loss in the previous quarter and the same quarter last year. For the first half of 2025, the company reported net income of $0.9 million, reversing a substantial loss from the first half of 2024 Quarterly Financial Performance | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Net Income (Loss) | $1.3 million | ($0.4 million) | ($11.4 million) | | Diluted EPS | $0.01 | ($0.01) | ($0.47) | First Half Financial Performance | Metric | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | | Net Income (Loss) | $0.9 million | ($14.3 million) | | Diluted EPS | $0.01 | ($0.66) | [Message from the CEO](index=1&type=section&id=A%20Message%20From%20Blue%20Ridge%20Bankshares%2C%20Inc.%20President%20and%20CEO%2C%20G.%20William%20%27Billy%27%20Beale) CEO G. William "Billy" Beale highlighted the company's return to profitability as a sign of future sustainable earnings. Key positive trends include a growing net interest margin (3.15%) due to lower deposit costs, improved noninterest income, and significant reductions in noninterest expenses through headcount cuts. The focus is now shifting from regulatory remediation to community bank growth - The company's net interest margin grew to **3.15%** for the quarter, primarily driven by lower deposit costs[6](index=6&type=chunk) - Noninterest expense was reduced by almost **$1.0 million** from the first quarter, with an expectation of further reductions as the company nears completion of regulatory remediation activities[7](index=7&type=chunk) - Headcount was reduced by **109** in the first half of 2025 and by **170** since the end of Q2 2024, contributing to expense savings[7](index=7&type=chunk) - The company is shifting its focus from remediation activities ('fixers') to growing its community bank ('growers')[8](index=8&type=chunk)[9](index=9&type=chunk) [Sale of Monarch Mortgage](index=2&type=section&id=Sale%20of%20Monarch%20Mortgage) The company completed the sale of its Monarch Mortgage division on March 27, 2025. The transaction resulted in a minor loss of $0.2 million, and all related loan activities were concluded by the end of Q2 2025 - The sale of the Monarch Mortgage division was completed on **March 27, 2025**[9](index=9&type=chunk) - The sale resulted in a **$0.2 million loss**, which was reported in other noninterest income for the year-to-date 2025 period[9](index=9&type=chunk) [Detailed Financial Performance](index=2&type=section&id=Detailed%20Financial%20Performance) [Q2 2025 Key Metrics Analysis](index=2&type=section&id=Q2%202025%20Highlights) The company's Q2 2025 performance showed significant improvement across key metrics. Net income turned positive, driven by a 25 basis point expansion in net interest margin to 3.15% and a $1.0 million reduction in noninterest expenses. Capital ratios strengthened, exceeding regulatory requirements, and asset quality remained stable with a slight decrease in nonperforming loans [Net Income](index=2&type=section&id=Net%20Income) The company reported net income of $1.3 million in Q2 2025, a turnaround from a $0.4 million loss in Q1 2025. The quarter's results were influenced by $0.3 million in severance costs and a $1.3 million benefit from a recovery related to a former fintech BaaS partner Net Income and Special Items (QoQ) | Metric | Q2 2025 | Q1 2025 | | :--- | :--- | :--- | | **Net Income (Loss)** | **$1.3M** | **($0.4M)** | | Severance Costs | $0.3M | $0.7M | | BaaS Partner Recovery | $1.3M | - | | Mortgage Division Sale Loss | - | $0.2M | [Net Interest Income and Net Interest Margin (NIM)](index=2&type=section&id=Net%20Interest%20Income%20%2F%20Net%20Interest%20Margin) Net interest income increased to $19.8 million from $19.0 million in the prior quarter. The net interest margin improved significantly to 3.15% from 2.90%, primarily due to a 19 basis point reduction in the cost of interest-bearing deposits. The company also redeemed $15.0 million of subordinated notes Net Interest Income & Margin (QoQ) | Metric | Q2 2025 | Q1 2025 | | :--- | :--- | :--- | | Net Interest Income | $19.8M | $19.0M | | Net Interest Margin | 3.15% | 2.90% | - The improvement in NIM was primarily driven by a decline in the cost of deposits, which fell by **19 basis points** from the prior quarter[11](index=11&type=chunk) - The company redeemed its **$15.0 million, 6.0% fixed-to-floating rate subordinated note** on **June 1, 2025**[11](index=11&type=chunk) - A partial redemption of **$10.0 million** of the 2029 subordinated notes was completed on **July 15, 2025**[12](index=12&type=chunk) [Capital](index=3&type=section&id=Capital) Capital ratios improved quarter-over-quarter, with the Bank's tier 1 leverage ratio increasing to 12.89% and the total risk-based capital ratio rising to 18.91%. These levels comfortably exceed the minimums required by the OCC Consent Order. The tangible common equity to tangible total assets ratio also increased to 13.4% Bank Capital Ratios (June 30, 2025 vs March 31, 2025) | Ratio | June 30, 2025 | March 31, 2025 | | :--- | :--- | :--- | | Tier 1 Leverage Ratio | 12.89% | 12.33% | | Tier 1 Risk-Based Capital | 17.86% | 16.88% | | Total Risk-Based Capital | 18.91% | 17.93% | - The Bank's capital ratios exceeded the OCC Consent Order minimums of **10.00% for tier 1 leverage** and **13.00% for total risk-based capital**[15](index=15&type=chunk) - The ratio of tangible common stockholders' equity to tangible total assets increased to **13.4%** from **12.5%** at the prior quarter end[15](index=15&type=chunk) [Asset Quality](index=3&type=section&id=Asset%20Quality) Asset quality remained stable, with nonperforming loans decreasing slightly to $24.0 million, or 0.94% of total assets. The company reported a recovery of credit losses of $0.7 million, driven by loan portfolio reductions. Net loan charge-offs were minimal at $0.5 million for the quarter Asset Quality Metrics (QoQ) | Metric | June 30, 2025 | March 31, 2025 | | :--- | :--- | :--- | | Nonperforming Loans | $24.0M (0.94% of assets) | $24.9M (0.93% of assets) | | (Recovery) of Credit Losses | ($0.7M) | $0 | | ACL to Total Loans | 1.11% | 1.12% | | Net Loan Charge-offs | $0.5M | ($0.1M) | [Noninterest Income and Expense](index=4&type=section&id=Noninterest%20Income%20%2F%20Noninterest%20Expense) Noninterest income was stable at $3.2 million, supported by higher service charges on deposit accounts. Noninterest expense decreased by $1.0 million to $22.0 million, mainly due to a recovery related to a former fintech partner, which offset severance costs and new PSA expenses. Headcount was reduced from 351 to 333 during the quarter - Noninterest income was **$3.2 million**, up slightly from **$3.1 million** in Q1, primarily due to higher service charges on deposit accounts[19](index=19&type=chunk) - Noninterest expense decreased by **$1.0 million** to **$22.0 million** compared to Q1 2025. This was mainly due to a recovery of non-credit-related amounts from a former fintech BaaS partner[19](index=19&type=chunk) - Salaries and benefits expense was **$13.0 million**, which included **$0.3 million in severance** and **$2.0 million in PSA expense**. Excluding these items, the underlying expense declined by **$1.2 million** due to headcount reductions from **351 to 333**[19](index=19&type=chunk) [Income Tax](index=4&type=section&id=Income%20Tax) The company recorded an income tax expense of $0.5 million in Q2 2025, corresponding to an effective tax rate of 27.0%. This is a normalization from the 51.2% effective tax rate in Q1 2025, which was skewed by a favorable adjustment related to state tax rates Income Tax (QoQ) | Metric | Q2 2025 | Q1 2025 | | :--- | :--- | :--- | | Income Tax Expense (Benefit) | $0.5M | ($0.5M) | | Effective Tax Rate | 27.0% | 51.2% | - The higher effective tax rate in Q1 2025 was driven by a **$0.3 million favorable adjustment** related to a change in state tax rates[18](index=18&type=chunk) [Income Statement Analysis (YTD and YoY)](index=5&type=section&id=Income%20Statement) For the first six months of 2025, the company achieved net income of $0.9 million, a stark contrast to the $14.3 million loss in the first half of 2024. The improvement was driven by a significant reduction in noninterest expenses, particularly in salaries, consulting, and regulatory remediation, and a recovery of credit losses, which more than offset lower net interest income and noninterest income compared to the prior year - Net interest income for Q2 2025 was **$19.8 million**, down slightly from **$20.1 million** in Q2 2024, due to lower average loan balances[21](index=21&type=chunk) - Noninterest income for Q2 2025 was **$3.2 million**, a significant improvement from **$0.3 million** in Q2 2024. The prior-year period included an **$8.5 million non-cash negative fair value adjustment** on a fintech equity investment[28](index=28&type=chunk) - Noninterest expense for Q2 2025 decreased by **$7.3 million** to **$22.0 million** compared to Q2 2024, reflecting a smaller workforce, completion of regulatory directives, and the transition to a community banking model[29](index=29&type=chunk) - A recovery of credit losses of **$0.7 million** was reported for Q2 2025, compared to a provision of **$3.1 million** in Q2 2024[27](index=27&type=chunk) [Balance Sheet Analysis](index=5&type=section&id=Balance%20Sheet) The company continued to shrink its balance sheet in Q2 2025, with total assets decreasing by $129.6 million to $2.56 billion. This was driven by planned reductions in loans and deposits as the company exits non-core activities. Total deposits fell by $119.2 million to $2.01 billion, including a $43.0 million decline in brokered deposits. Liquidity remains strong, with available sources covering 183.3% of uninsured deposits Key Balance Sheet Items (QoQ) | Metric | June 30, 2025 | March 31, 2025 | | :--- | :--- | :--- | | Total Assets | $2.56 billion | $2.69 billion | | Loans Held for Investment | $1.98 billion | $2.06 billion | | Total Deposits | $2.01 billion | $2.13 billion | - Liquidity sources totaled **$750.0 million**, representing **183.3%** of uninsured deposits as of June 30, 2025[25](index=25&type=chunk) - Brokered deposits declined by **$43.0 million** during the quarter to **$296.1 million**. The company received an extension from the FDIC to accept, renew, or rollover brokered deposits through **December 2025**[33](index=33&type=chunk) [Financial Statements and Other Information](index=7&type=section&id=Financial%20Statements%20and%20Other%20Information) [Consolidated Financial Statements](index=11&type=section&id=Consolidated%20Financial%20Statements) This section provides the detailed unaudited consolidated financial statements for Blue Ridge Bankshares, Inc. as of June 30, 2025. It includes the Consolidated Balance Sheets, Consolidated Statements of Income for the three and six months ended June 30, 2025 and 2024, a summary of selected quarterly financial data, and a reconciliation of non-GAAP measures - Presents the Consolidated Balance Sheets as of **June 30, 2025**, and **December 31, 2024**[45](index=45&type=chunk) - Presents the Consolidated Statements of Income for the three and six months ended **June 30, 2025**, and **June 30, 2024**[46](index=46&type=chunk)[47](index=47&type=chunk) - Provides a Quarter Summary of Selected Financial Data for the last five quarters and a Reconciliation of Non-GAAP Financial Measures[48](index=48&type=chunk)[49](index=49&type=chunk) [Forward-Looking Statements and Risk Factors](index=8&type=section&id=Forward-Looking%20Statements) The company provides a standard safe harbor statement, cautioning that forward-looking statements are subject to numerous risks and uncertainties. Key risks highlighted include the macroeconomic environment, the ability to comply with the OCC Consent Order, managing fintech relationships, credit quality of the loan portfolio, and maintaining adequate liquidity and capital - The company's performance is subject to risks from the US economy, interest rates, and inflation[40](index=40&type=chunk) - A primary risk is the ability to comply with the **January 24, 2024 Consent Order** with the OCC, including its heightened capital requirements and other restrictions[40](index=40&type=chunk) - Other significant risks include managing the wind-down of fintech partnerships, the credit quality of the loan portfolio, and maintaining adequate liquidity[41](index=41&type=chunk) [Non-GAAP Financial Measures](index=7&type=section&id=Non-GAAP%20Financial%20Measures) The company uses non-GAAP financial measures such as tangible book value per common share and the ratio of tangible common equity to tangible total assets to supplement GAAP-based evaluation. Management believes these provide useful information for understanding the company's financial condition. A reconciliation of GAAP to non-GAAP measures is provided at the end of the release - Management uses non-GAAP measures including tangible assets, tangible common equity, tangible book value per common share, and tangible common equity to tangible total assets to supplement its evaluation[37](index=37&type=chunk) - These non-GAAP disclosures are not a substitute for GAAP and may not be comparable to measures presented by other companies[38](index=38&type=chunk) - Reconciliations of GAAP to non-GAAP measures are included at the end of the press release[38](index=38&type=chunk)[49](index=49&type=chunk)