Blue Ridge Bankshares, Inc.
2014Annual Report
Subsidiary
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unities, and sha
and shareholde
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continue to be
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Bank
prom
enhan
ow each of you
k. Make sure
mote Blue Rid
ncements to th
u, as a shareho
your accoun
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he value of yo
older with dire
ts are here, e
Your efforts, c
ur shares in ou
ect ties to our
ncourage frie
combined wit
ur joint invest
success, want
nds and fami
h ours, will
ment.
ts to help. Ple
ly to bank he
solidify our p
ease always be
ere, and alway
position for t
e an advocate f
ys look for op
the future and
e
for Blue Ridg
pportunities to
o
er
d offer furthe
Pleas
743-6
se always feel
6521 or by e-m
free to contac
mail at bplum@
ct me with any
@mybrb.com.
y ideas or que
. I would love
estions you hav
e to hear from
ave. I work fo
m you.
or you. I can b
be reached by
0-
y phone at 540
Since
erely
Brian
Presi
n K. Plum
dent/CEO
BLUE RIDGE BANKSHARES, INC.
FINANCIAL HIGHLIGHTS
For The Year
Net income
Net income available to common stockholders
Common stock dividends declared
Earnings per common share
Dividends per common share
At Year End
Total assets
Total investments
Net loans
Deposits
Total stockholders' equity
Common stockholders' equity
Book value per common share
Number of common stock shares outstanding
$
$
$
$
2014
2,029,062
1,984,062
412,934
2.11
0.44
239,353,596
37,056,056
184,723,649
183,898,642
24,786,488
20,286,488
15.97
1,270,555
2013
1,844,604
1,637,349
318,223
1.75
0.34
214,724,007
47,712,416
153,786,879
168,345,328
19,229,543
14,729,543
15.76
934,539
Key Ratios
Return on average assets
Return on average equity
Return on average common equity
Total stockholders' equity to assets
Common stockholders' equity to assets
Increase in assets
Increase in earnings per common share
Increase in book value per share
0.89%
9.22%
11.33%
10.36%
8.48%
11.47%
20.57%
1.30%
0.87%
9.78%
11.40%
8.96%
6.86%
3.12%
25.00%
6.12%
Financial Statements
BLUE RIDGE BANKSHARES, INC.
PARENT OF
BLUE RIDGE BANK
LURAY, VIRGINIA
December 31, 2014
CONTENTS
Page
INDEPENDENT AUDITOR’S REPORT....................................................................................................... 1
FINANCIAL STATEMENTS
Consolidated Balance Sheets ........................................................................................................................ 3
Consolidated Statements of Income ............................................................................................................. 4
Consolidated Statements of Comprehensive Income................................................................................... 5
Consolidated Statements of Changes in Stockholders’ Equity.................................................................... 6
Consolidated Statements of Cash Flows ...................................................................................................... 7
Notes to the Consolidated Financial Statements .......................................................................................... 9
INDEPENDENT AUDITOR’S REPORT
The Board of Directors
Blue Ridge Bankshares, Inc.
Luray, Virginia
Report on the Financial Statements
We have audited the accompanying consolidated financial statements of Blue Ridge Bankshares,
Inc. and subsidiaries, which comprise the consolidated balance sheets as of December 31, 2014 and 2013,
and the related consolidated statements of income, changes in stockholders’ equity, comprehensive
income, and cash flows for the years then ended, and the related notes to the financial statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated
financial statements in accordance with accounting principles generally accepted in the United States of
America; this includes the design, implementation, and maintenance of internal control relevant to the
preparation and fair presentation of financial statements that are free from material misstatement, whether
due to fraud or error
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our
audit. We conducted our audit in accordance with auditing standards generally accepted in the United
States of America. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial statements are free of material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s
judgment, including the assessment of the risks of material misstatement of the financial statements,
whether due to fraud or error. In making those risk assessments, the auditor considers internal control
relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to
design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An
audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of
significant accounting estimates made by management, as well as evaluating the overall presentation of the
consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.
Your Success is Our Focus
124 Newman Avenue • Harrisonburg, VA 22801-4004 • 540-434-6736 • Fax: 540-434-3097 • www.BEcpas.com
Opinion
In our opinion, the consolidated financial statements referred to above present fairly, in all
material respects, the financial position of Blue Ridge Bankshares, Inc. and subsidiaries as of
December 31, 2014 and 2013, and the results of their operations and their cash flows for the years then
ended in accordance with accounting principles generally accepted in the United States of America.
Harrisonburg, Virginia
March 6, 2015
CERTIFIED PUBLIC ACCOUNTANTS
BLUE RIDGE BANKSHARES, INC.
CONSOLIDATED BALANCE SHEETS
December 31, 2014 and 2013
ASSETS
Cash and due from banks (Note 2)
Federal funds sold
Investment securities
Securities available for sale (at fair value) (Note 3)
Securities held to maturity (fair value of $15,374,995
in 2014, $15,407,134 in 2013) (Note 3)
Restricted investments
Total Investment Securities
Loans held for investment (Note 4)
Allowance for loan losses (Note 4)
Net Loans Held for Investment
Bank premises and equipment, net (Note 5)
Bank owned life insurance (Note 1)
Goodwill (Note 11)
Other assets
Total Assets
LIABILITIES
Deposits
Demand deposits
Noninterest bearing
Interest bearing
Savings deposits
Time deposits (Note 6)
Total Deposits
Other borrowed funds (Note 7)
Other liabilities
Total liabilities
STOCKHOLDERS’ EQUITY
Preferred stock, $50 par value, authorized - 250,000 shares;
outstanding - 4,500 shares (Note 8)
Common stock, no par value, authorized - 5,000,000 shares;
outstanding - 1,270,555 and 934,539, respectively (Note 9)
Contributed equity
Retained earnings
Accumulated other comprehensive income (loss)
Unearned ESOP shares
Total Stockholders’ Equity
Total Liabilities and Stockholders’ Equity
The accompanying notes are an
integral part of this statement.
3
2014
2013
$
7,941,884
$
4,561,708
542,000
545,000
19,937,946
30,406,638
14,965,603
2,152,507
37,056,056
15,411,778
1,894,000
47,712,416
186,844,767
(2,121,118)
155,858,186
(2,071,307)
184,723,649
153,786,879
2,206,817
2,349,745
366,300
4,167,145
1,830,643
2,283,800
366,300
3,637,261
$
239,353,596
$
214,724,007
$
27,877,754
43,447,388
12,239,581
100,333,919
183,898,642
29,893,599
774,867
$
23,450,958
42,726,208
10,501,484
91,666,678
168,345,328
26,388,861
760,275
214,567,108
195,494,464
225,000
225,000
5,306,408
4,275,000
15,844,755
(264,675)
25,386,488
(600,000)
859,944
4,275,000
14,273,627
(404,028)
19,229,543
-
24,786,488
19,229,543
$
239,353,596
$
214,724,007
BLUE RIDGE BANKSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME
December 31, 2014 and 2013
INTEREST INCOME
Interest and fees on loans held for investment
Interest and fees on loans held for sale
Interest on federal funds sold
Interest and dividends on taxable investment securities
Interest and dividends on nontaxable investment securities
Total Interest Income
INTEREST EXPENSE
Interest on savings and interest bearing demand deposits
Interest on time deposits
Interest on borrowed funds
Total Interest Expense
Net Interest Income
PROVISION FOR LOAN LOSSES
Net Interest Income after Provision for Loan Losses
OTHER INCOME
Service charges on deposit accounts
Earnings on investment in life insurance
Securities gains
Gain on disposal of assets
Small business investment company fund income
Other noninterest income
Total Other Income
OTHER EXPENSES
Salaries and employee benefits
Occupancy and equipment expenses
Data processing
Audits and examinations
Advertising expense
Directors fees
Debit card expenses
Other taxes and assessments
Other noninterest expense
Total Other Expenses
Income before Income Taxes
INCOME TAX EXPENSE (Note 14)
Net Income
2014
2013
$
8,168,968
-
3,269
817,229
301,015
9,290,481
185,265
1,086,901
411,945
1,684,111
7,606,370
70,000
7,536,370
279,807
65,945
16,456
-
180,026
440,401
982,635
2,689,071
553,514
430,958
59,220
324,043
131,500
134,197
419,367
956,721
5,698,591
2,820,414
791,352
2,029,062
$
6,931,126
181,802
2,557
842,515
308,676
8,266,676
166,218
1,029,832
375,709
1,571,759
6,694,917
310,000
6,384,917
298,984
68,500
66,562
110,419
-
451,299
995,764
2,265,760
466,495
366,104
136,944
266,659
103,750
127,829
320,376
772,468
4,826,385
2,554,296
709,692
1,844,604
Dividends to Preferred Stockholders
Net Income Available to Common Stockholders
Earnings per Common Share
Weighted Average Shares Outstanding
(45,000)
1,984,062
$
(207,255)
1,637,349
$
$
2.11
$
1.75
938,286
936,535
The accompanying notes are an
integral part of this statement.
4
BLUE RIDGE BANKSHARES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
December 31, 2014 and 2013
Net Income
$
2,029,062
$
1,844,604
2014
2013
Other comprehensive income:
Gross unrealized gains (losses) arising during the period
Adjustment for income tax expense
Less:
Reclassification adjustment for gains included in net income
Adjustment for income tax expense
230,791
(80,582)
(699,177)
237,720
150,209
(461,457)
(16,456)
5,600
(10,856)
(66,562)
22,630
(43,932)
Other comprehensive income (loss), net of tax
139,353
(505,389)
Comprehensive income
$
2,168,415
$
1,339,215
The accompanying notes are an
integral part of this statement.
5
BLUE RIDGE BANKSHARES, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
December 31, 2014 and 2013
Preferred
Stock
Common
Stock
Contributed
Equity
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Unearned
ESOP
Shares
Total
Balance, December 31, 2012
$
225,000
$
938,573
$
4,275,000
$
12,954,501
$
101,361
$
-
$
18,494,435
Comprehensive Net Income
Net income
Changes in unrealized gains on
securities available for sale, net of
deferred income tax asset of $260,350
Total Comprehensive Income
Common stock purchased and retired (8,200 shares)
Issuance of common stock (518 shares)
Preferred stock dividends
Common stock dividends
-
-
-
-
-
-
-
-
-
-
(86,281)
7,652
-
-
-
-
-
-
-
-
-
Balance, December 31, 2013
225,000
859,944
4,275,000
14,273,627
Comprehensive Net Income
Net income
Changes in unrealized gains on
securities available for sale, net of
deferred income tax liability of $74,982
Total Comprehensive Income
Issuance of common stock (336,016 shares), net
of capital raise expenses of $258,320
Contingent ESOP liability
Preferred stock dividends
Common stock dividends
-
-
-
-
-
-
-
-
-
-
4,446,464
-
-
-
-
-
-
-
-
-
1,844,604
-
-
-
-
-
(207,255)
(318,223)
(505,389)
-
-
-
-
-
(404,028)
2,029,062
-
-
-
139,353
-
-
-
(45,000)
(412,934)
-
-
-
-
-
(600,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
1,844,604
(505,389)
1,339,215
(86,281)
7,652
(207,255)
(318,223)
19,229,543
2,029,062
139,353
2,168,415
4,446,464
(600,000)
(45,000)
(412,934)
Balance, December 31, 2014
$
225,000
$
5,306,408
$
4,275,000
$
15,844,755
$
(264,675)
$
(600,000)
$
24,786,488
The accompanying notes are an
intergral part of this statement.
6
BLUE RIDGE BANKSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
December 31, 2014 and 2013
CASH FLOWS FROM OPERATING ACTIVITIES
Net income
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses
Deferred income taxes
Net decrease in loans held for sale
Gain on disposition of assets
Securities gains
Gain on sale of other real estate owned
Depreciation
Investment amortization expense, net
Amortization of debt refinancing fees
(Increase) Decrease in other assets
Increase (Decrease) in accrued expenses
Increase in carrying value of life insurance investments
Total adjustments
Net Cash Provided by Operating Activities
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of securities available for sale
Purchases of securities held to maturity
Proceeds from calls, maturities, sales, paydowns and maturities of
securities available for sale
Proceeds from calls, maturities, sales, paydowns and maturities of
securities held for investment
Decrease in federal funds sold
Net increase in loans held for investment
Purchase of bank premises and equipment
Capital calls of SBIC funds and other investments
Nonincome distributions from limited liability companies
Proceeds from sale of assets
(Increase) Decrease in restricted investments
Net Cash Used in Investing Activities
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in demand and savings deposits
Net change in time deposits
Federal Home Loan Bank advances
Federal Home Loan Bank repayments
Preferred stock dividends paid
Common stock dividends paid
Purchase of common stock
Issuance of common stock
Net Cash Provided by Financing Activities
CASH AND CASH EQUIVALENTS
Net increase in cash and cash equivalents
Cash and Cash Equivalents, Beginning of Year
Cash and Cash Equivalents, End of Year
The accompanying notes are an
integral part of this statement.
7
2014
2013
$
2,029,062
$
1,844,604
70,000
(81,069)
-
-
(16,456)
-
249,944
321,469
76,166
(312,307)
(4,908)
(65,945)
236,894
2,265,956
310,000
163,539
10,792,727
(110,419)
(66,562)
(2,300)
199,681
758,602
76,169
207,445
100,024
(68,500)
12,360,406
14,205,010
(5,344,809)
(220,674)
(14,173,080)
(3,329,152)
15,573,360
24,369,855
552,905
3,000
(31,006,770)
(626,118)
(580,114)
368,624
-
4,900
630,621
3,103,000
(28,751,009)
(140,179)
(162,500)
244,321
208,227
(295,500)
(21,275,696)
(18,295,396)
6,886,073
8,667,241
19,000,000
(16,171,428)
(25,500)
(412,934)
-
4,446,464
22,389,916
6,069,421
(6,461,741)
55,450,000
(49,471,431)
(209,335)
(318,223)
(86,281)
7,652
4,980,062
3,380,176
4,561,708
7,941,884
$
889,676
3,672,032
4,561,708
$
BLUE RIDGE BANKSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
December 31, 2014 and 2013
SUPPLEMENTAL INFORMATION
Interest Paid
Income taxes paid
Preferred stock dividends accrued, not paid
Real estate acquired by foreclosure
2014
2013
$
1,675,825
800,000
11,250
70,000
$
1,588,631
540,000
30,750
175,000
The accompanying notes are an
integral part of this statement.
8
BLUE RIDGE BANKSHARES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2014
Note 1.
Nature of Operations and Significant Accounting Policies:
Nature of Operations:
Blue Ridge Bankshares, Inc. ("Company") through Blue Ridge Bank, Inc. ("Bank") operates under a
charter issued by the Commonwealth of Virginia and provides commercial banking services. As a
state chartered bank, the Bank is subject to regulation by the Virginia Bureau of Financial Institutions
and The Federal Reserve Bank of Richmond. The Bank provides services to customers located
primarily in the Piedmont and Shenandoah Valley regions of the Commonwealth of Virginia.
Consolidation Policy:
The consolidated financial statements include the accounts of Blue Ridge Bankshares, Inc. and its
wholly-owned subsidiaries, Blue Ridge Bank, Inc. and PVB Properties, LLC. All significant
intercompany balances and transactions have been eliminated.
Use of Estimates in the Preparation of Financial Statements:
In preparing the financial statements, management is required to make estimates and assumptions that
affect the reported amounts in those statements. Actual results could differ significantly from those
estimates. A material estimate that is particularly susceptible to significant changes is the
determination of the allowance for loan losses, which is sensitive to changes in local and national
economic conditions.
Cash and Cash Equivalents:
Cash and cash equivalents include cash on hand and correspondent balances in other financial
institutions.
Investment Securities:
Management determines the appropriate classification of securities at the time of purchase. If
management has the intent and the Company has the ability at the time of purchase to hold securities
until maturity, they are classified as held to maturity and carried at amortized historical cost. Securities
not intended to be held to maturity are classified as available for sale and carried at fair value.
Securities available for sale are intended to be used as part of the Company’s asset and liability
management strategy and may be sold in response to changes in interest rates, prepayment risk or
other similar factors.
Amortization of premiums and accretion of discounts on securities are reported as adjustments to
interest income using the effective interest method. Realized gains and losses on dispositions are
based on the net proceeds and the adjusted book value of the securities sold using the specific
identification method. Unrealized gains and losses on investment securities available for sale are based
on the difference between book value and fair value of each security. These gains and losses are
credited or charged to shareholders’ equity, whereas realized gains and losses flow through the
Company’s current earnings.
(Continued)
9
BLUE RIDGE BANKSHARES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2014
Note 1.
Nature of Operations and Significant Accounting Policies (Continued):
Loans:
Loans that management has the intent and ability to hold for the foreseeable future or until maturity
or payoff are stated at their outstanding unpaid principal balances, net of an allowance for loan
losses and any deferred fees or costs. Interest income is accrued on the unpaid principal balance.
Loan origination fees and costs are deferred and recognized as an adjustment of the yield (interest
income) of the related loans. The Company is generally amortizing these amounts over the
contractual life of the loan that are carried on the balance sheet net of any unearned discount and the
allowance for loan losses. Interest income on loans is based generally on the daily amount of principal
outstanding.
The accrual of interest on impaired loans is discontinued when, in the opinion of management, the
interest income recognized will not be collected. Receipts on impaired loans are applied to principal
until the loan is brought current and collection is reasonably assured. Loans are considered past due
based on the contractual terms of the loan.
Allowance for Loan Losses:
The allowance for loan losses is maintained at a level believed to be adequate by management to
absorb probable losses inherent in the portfolio and is based on the size and current risk
characteristics of the loan portfolio, an assessment of individual problem loans and actual loss
experience, current economic events in specific industries and other pertinent factors such as
regulatory guidance and general economic conditions. The allowance is established through a
provision for loan losses charged to earnings. Loans identified as losses and deemed uncollectible
by management are charged to the allowance. Subsequent recoveries, if any, are credited to the
allowance. The allowance for loan losses is evaluated on a regular basis by management.
The allowance consists of specific, general and unallocated components. The specific component
relates to loans that are classified as impaired, for which an allowance is established when the fair
value of the loan is lower than its carrying value. The general component covers non-impaired loans
and is based on historical loss experience adjusted for qualitative factors. Historical losses are
categorized into risk-similar loan pools and a loss ratio factor is applied to each group’s loan
balances to determine the allocation. The loss ratio factor is based on average loss history for the
current year and two prior years.
Qualitative and environmental factors include external risk factors that management believes affect
the overall lending environment of the Company. Environmental factors that management of the
Company routinely analyze include levels and trends in delinquencies and impaired loans, levels
and trends in charge-offs and recoveries, trends in volume and terms of loans, effects of changes in
risk selection and underwriting practices, experience, ability, depth of lending management and
staff, national and local economic trends, conditions such as unemployment rates, housing statistics,
banking industry conditions, and the effect of changes in credit concentrations. Determination of
the allowance is inherently subjective as it requires significant estimates, including the amounts and
timing of expected future cash flows on impaired loans, estimated losses on pools of homogeneous
loans based on historical loss experience and consideration of current economic trends, all of which
may be susceptible to significant change.
(Continued)
10
BLUE RIDGE BANKSHARES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2014
Note 1.
Nature of Operations and Significant Accounting Policies (Continued):
There have been no significant changes to the methods used to determine the allowance for loan
losses during the years ended December 31, 2014 and 2013.
Loan Charge-off Policies:
Consumer loans are generally fully or partially charged down to the fair value of collateral securing
the asset when the loan is 120 days past due unless the loan is well secured and in the process of
collection. All other loans are generally charged down to the net realizable value when the loan is
90 days past due or when current information confirms all or part of a specific loan to be
uncollectible.
Bank Owned Life Insurance:
The Bank owns and is the beneficiary of several single premium life insurance contracts insuring
key employees of the Bank. The policies are stated at cash surrender value, with changes in value
recorded in income for the year.
Small Business Investment Company (SBIC) Fund Income:
The Bank has an interest in several Small Business Investment Company funds. The Bank’s
obligations to these funds are satisfied in the form of capital calls that occur during the commitment
period. Income distributions from these funds are shown as a reduction to the Bank’s principal
investment for an approximate period of three years, after which the Bank begins to recognize fifty
percent of the distributions as income (if the investment shows profitability) until the investment
principal has been recovered. At that time all distributions in excess of initial investment are
recognized as income.
Advertising Costs:
Advertising costs are expensed as incurred.
Bank Premises and Equipment:
Bank premises and equipment are stated at cost, less any accumulated depreciation. Depreciation is
recognized over the estimated useful lives of the assets on a straight-line basis. Maintenance and
repairs are charged to operations as incurred. Gains and losses on dispositions are reflected in
noninterest income or expense.
Income Taxes:
Amounts provided for income tax expense are based on income reported for financial statement
purposes rather than amounts currently payable under income tax laws. Deferred taxes, which arise
principally from temporary differences between the period in which certain income and expenses are
recognized for financial accounting purposes and the period in which they affect taxable income, are
included in the amounts provided for income taxes.
(Continued)
11
BLUE RIDGE BANKSHARES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2014
Note 1.
Nature of Operations and Significant Accounting Policies (Continued):
Earnings Per Share:
Earnings per share are based on the weighted average number of shares outstanding.
Financial Instruments:
In the ordinary course of business the Bank has entered into commitments to extend credit. Such
financial instruments are recorded in the financial statements when they are funded.
Reclassified Amounts:
Certain amounts have been reclassified from prior year financial statements to ensure consistent
presentation with current year amounts. These reclassifications are for presentation purposes, and
have no impact on overall financial information.
Subsequent Events:
Subsequent events have been evaluated through March 6, 2015, the date the financial statements
were available to be issued.
Note 2.
Cash and Due From Banks
The Bank has compensating balance agreements with its correspondent bank and The Federal Reserve
Bank of Richmond. The total included in cash and due from banks related to these agreements at
December 31, 2014 and 2013 was $275,000.
Note 3.
Investment Securities
The amortized cost and fair values of investment securities are as follows:
December 31, 2014
Available for Sale
Mortgage backed securities
Corporate bonds
Equity securities
Held to Maturity
State and municipal
Mortgage backed securities
Total Investment Securities
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
$ 18,940,505
1,032,928
355,816
20,329,249
14,965,424
179
14,965,603
$ 35,294,852
$
$
41,768
6,106
20,000
67,874
436,306
-
436,306
504,180
$
$
440,787
18,390
-
459,177
26,914
-
26,914
486,091
$ 18,541,486
1,020,644
375,816
19,937,946
15,374,816
179
15,374,995
$ 35,312,941
(Continued)
12
BLUE RIDGE BANKSHARES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2014
Note 3.
Investment Securities (Continued)
December 31, 2013
Available for Sale
Mortgage backed securities
Corporate bonds
Equity securities
Held to Maturity
State and municipal
Mortgage backed securities
Total Investment Securities
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
$ 28,427,935
1,975,462
613,731
31,017,128
15,408,700
3,078
15,411,778
$ 46,428,906
$
$
143,572
20,235
24,345
188,152
343,376
18
343,394
531,546
$
$
777,170
6,905
14,567
798,642
$ 27,794,337
1,988,792
623,509
30,406,638
348,026
12
348,038
1,146,680
15,404,050
3,084
15,407,134
$ 45,813,772
Proceeds from sales, calls and maturities of available for sale securities during 2014 and 2013 were
$15,573,360 and $24,369,855, resulting in gains of $16,456 and $66,562 for 2014 and 2013,
respectively.
During 2014 and 2013, held to maturity securities with book values of $552,905 and $630,621,
respectively, were either called or matured resulting in no gain or loss for both years.
Investment securities with an approximate fair value of $7,345,000 and $3,119,000, at
December 31, 2014 and 2013, respectively, were pledged to secure public deposits and for other
purposes required by law and as collateral for the Bank’s line of credit with the Federal Home Loan
Bank of Atlanta.
The amortized cost and fair value of investment securities at December 31, 2014, by contractual
maturity, are shown on the following page. Expected maturities will differ from contractual maturities
because borrowers may have the right to call or prepay obligations with or without prepayment
penalties.
Amounts maturing:
Within one year
After one year through five
years
After five years through ten
years
After ten years
Equity investments with no
maturity
Total
Securities Available for Sale
Amortized
Cost
Fair
Value
Securities Held to Maturity
Amortized
Cost
Fair
Value
$
532,928
$
539,034 $
179
$
179
589,595
603,505
327,864
333,852
500,000
18,350,910
19,973,433
481,610
17,937,981
19,562,130
6,778,433
7,859,127
14,965,603
6,982,109
8,058,855
15,374,995
355,816
$ 20,329,249
375,816
-
$ 19,937,946 $ 14,965,603
-
$ 15,374,995
(Continued)
13
BLUE RIDGE BANKSHARES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2014
Note 3.
Investment Securities (Continued):
Information pertaining to securities with gross unrealized losses aggregated by investment category
and length of time that securities have been in a continuous loss position is as follows:
December 31, 2014
State and
Municipal
Mortgage backed
Corporate bonds
Total
December 31, 2013
State and
Municipal
Mortgage backed
Corporate bonds
Equity securities
Total
Less than 12 Months
Gross
Unrealized
Losses
Fair
Value
12 Months or Greater
Gross
Unrealized
Losses
Fair
Value
Total
Gross
Unrealized
Losses
Fair
Value
$
326,481 $
3,588,514
-
$
3,914,995 $
(8,519)
(59,469)
-
(67,988)
$ 1,235,857
10,671,946
481,610
$ 12,389,413
$
$
(18,395) $ 1,562,338 $
(381,318)
(18,390)
(418,103)
14,260,460
481,610
$ 16,304,408 $
(26,914)
(440,787)
(18,390)
(486,091)
Less than 12 Months
Gross
Unrealized
Losses
Fair
Value
12 Months or Greater
Gross
Unrealized
Losses
Fair
Value
Total
Gross
Unrealized
Losses
Fair
Value
$
5,514,512 $ (310,991)
(134,941)
5,254,104
(6,905)
993,095
(100)
8,400
$ 11,770,111 $ (452,937)
$
462,965
14,207,225
-
364,155
$ 15,034,345
$
$
(37,035) $ 5,977,477 $
(642,229)
-
(14,467)
(693,731)
(348,026)
(777,170)
(6,905)
(14,567)
$ 26,804,456 $ (1,146,668)
19,461,329
993,095
372,555
Management evaluates securities for other-than-temporary impairment on a quarterly basis, and
more frequently when economic or market concerns warrant such evaluation. Consideration is given
to (1) the length of time and the extent to which the fair value has been less than cost, (2) the
financial condition and near-term prospects of the issuer, and (3) the intent and ability of the
Company to retain its investment in the issuer for a period of time sufficient to allow for any
anticipated recovery in fair value.
At December 31, 2014, the Company had securities which have depreciated 2.98% in value from
the amortized cost. Included in this total are fourteen securities that have been in a continuous loss
position for more than twelve months. In analyzing an issuer’s financial condition, management
considers whether the securities are issued by the federal government or its agencies, whether
downgrades by bond rating agencies have occurred, and the results of reviews of the issuer’s
financial condition. As management has the ability and intent to hold debt securities until maturity,
or for the foreseeable future if classified as available-for-sale, no declines are deemed to be other-
than-temporary.
(Continued)
14
BLUE RIDGE BANKSHARES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2014
Note 4.
Loans Receivable and Related Allowance for Loan Losses
The following table summarizes the primary segments of the loan portfolio (in thousands):
December 31, 2014
Residential loans
Commercial real estate loans
Individually
Evaluated for
Impairment
Collectively
Evaluated for
Impairment
Total
$
329 $
70,778
$
71,107
Non owner-occupied & multi-family
Owner-occupied & farmland
Construction loans
Residential construction
Commercial construction & raw land
Home equity loans
Consumer loans
Commercial/farm loans
Municipal/other loans
Unearned income on loans
Total
$
373
-
-
-
-
-
-
770
-
1,472
$
41,805
24,556
2,224
11,449
5,293
4,536
14,391
10,542
(201)
185,373
42,178
24,556
2,224
11,449
5,293
4,536
14,391
11,312
(201)
186,845
$
December 31, 2013
Residential loans
Commercial real estate loans
Individually
Evaluated for
Impairment
Collectively
Evaluated for
Impairment
Total
$
111 $
61,416
$
61,527
Non owner-occupied & multi-family
Owner-occupied & farmland
Construction loans
Residential construction
Commercial construction & raw land
Home equity loans
Consumer loans
Commercial/farm loans
Municipal/other loans
Unearned income on loans
Total
$
-
908
-
-
-
-
-
-
-
1,019
$
21,612
34,284
809
10,385
2,547
1,510
11,712
10,666
(102)
154,839
21,612
35,192
809
10,385
2,547
1,510
11,712
10,666
(102)
155,858
$
The segments of the Bank’s loan portfolio are disaggregated to a level that allows management to
monitor risk and performance. In reviewing risk, management has determined there to be several
different risk categories within the loan portfolio. The allowance for loan losses consists of amounts
applicable to: (i) the commercial loan portfolio; (ii) the commercial real estate loan portfolio;
(iii) the municipal loan portfolio; (iv) the consumer loan portfolio; and, (v) the residential loan
portfolio.
(Continued)
15
BLUE RIDGE BANKSHARES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2014
Note 4.
Loans Receivable and Related Allowance for Loan Losses (Continued)
The commercial loan segment consists of loans made for the purpose of financing the activities of
commercial customers. The commercial real estate (“CRE”) loan segment includes both non-owner
occupied and owner occupied CRE loans, in addition to multifamily residential and commercial real
estate construction loans. The municipal loan segment includes loans made to local governments
and governmental authorities in the normal course of their operations. The consumer loans consist
of motor vehicle loans, savings account loans, personal lines of credit, overdraft loans, other types
of secured consumer loans, and unsecured personal loans. The residential loan segment is made up
of fixed rate and adjustable rate single-family amortizing term loans, which are primarily first liens,
and also includes the Bank’s home equity loan portfolio, which are generally second liens.
Management establishes the allowance for loan losses based upon its evaluation of the pertinent
factors underlying the types and quality of loans in the portfolio. Commercial loans and commercial
real estate loans are reviewed on a regular basis with a focus on larger loans along with loans which
have experienced past payment or financial deficiencies. Certain loans including commercial and
other loans which are experiencing payment or financial difficulties, loans in industries for which
economic trends are negative and loans which are of heightened concern to management are
included on the Bank’s “watch list”. Watch list loans, if significant, and larger commercial loans
and commercial real estate loans which are 90 days or more past due are selected for impairment
testing. These loans are analyzed to determine if they are “impaired”, which means that it is
probable that all amounts will not be collected according to the contractual terms of the loan
agreement.
Factors considered by management in evaluating impairment include payment status, collateral
value, and the probability of collecting scheduled principal and interest payments when due.
Management determines the significance of payment delays and payment shortfalls on a case-by-
case basis, taking into consideration all of the circumstances surrounding the loan and the borrower,
including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and
the amount of the shortfall in relation to the principal and interest owed.
The Bank does not separately evaluate individual consumer and residential mortgage loans for
impairment, unless such loans are part of a larger relationship that is impaired, or are classified as a
troubled debt restructuring agreement.
Once the determination has been made that a loan is impaired, the determination of whether a
specific allocation of the allowance is necessary is measured by comparing the recorded investment
in the loan to the fair value of the loan using one of three methods: (a) the present value of expected
future cash flows discounted at the loan’s effective interest rate; (b) the loan’s observable market
price; or (c) the fair value of the collateral less selling costs. The method is selected on a loan-by-
loan basis, with management primarily utilizing the fair value of collateral method, which is
required for loans that are collateral dependent. The evaluation of the need and amount of a specific
allocation of the allowance and whether a loan can be removed from impairment status is made on a
monthly basis. The Bank’s policy for recognizing interest income on impaired loans does not differ
from its overall policy for interest recognition.
The Bank had $1,475,000 and $1,019,000 in impaired loans as of December 31, 2014 and 2013,
respectively.
(Continued)
16
BLUE RIDGE BANKSHARES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2014
Note 4.
Loans Receivable and Related Allowance for Loan Losses (Continued)
Management uses a nine point internal risk rating system to monitor the credit quality of the overall
loan portfolio. The first five categories are considered not criticized, and are aggregated as “Pass”
rated. The criticized rating categories utilized by management generally follow Bank regulatory
definitions. The Special Mention category includes assets that are currently protected but are
potentially weak, resulting in an undue and unwarranted credit risk, but not to the point of justifying
a Substandard classification. Loans in the Substandard category have well-defined weaknesses that
jeopardize the orderly liquidation of the debt, and have a distinct possibility that some loss will be
sustained if the weaknesses are not corrected. All loans greater than 90 days past due are considered
Substandard. Loans in the Doubtful category have all the weaknesses found in Substandard loans,
with the added provision that the weaknesses make collection of debt in full highly questionable and
improbable. Any portion of a loan that has been charged off is placed in the Loss category.
To help ensure that risk ratings are accurate and reflect the present and future capacity of borrowers
to repay a loan as agreed, the Bank has a structured loan rating process with both internal and
external oversight. The Bank’s loan officers are responsible for the timely and accurate risk rating
of the loans in their portfolios at origination and on an ongoing basis. The loan processing
department confirms the appropriate risk grade at origination and monitors all subsequent changes
to risk ratings. The Bank’s Loan Committee reviews risk grades when approving a loan and
approves all risk rating changes, except those made within the pass risk ratings. The Bank engages
an external consultant to conduct loan reviews on an annual basis of all relationships greater than
$1,300,000. The internal audit function of the Bank reviews a sample of new loans throughout the
year. The Bank’s process requires the review and evaluation of an impaired loan to be updated at
least quarterly. Loans in the Special Mention and Substandard categories that are collectively
evaluated for impairment are given separate consideration in the determination of the allowance.
The following table presents the classes of the loan portfolio summarized by the aggregate Pass and
the criticized categories of Special Mention, Substandard, and Doubtful within the internal risk
rating system as of December 31, 2014 and 2013 (in thousands):
Pass
Special
Mention Substandard Doubtful
Total
December 31, 2014
Commercial real estate loans
Non owner-occupied & multi-
family
Owner-occupied & farmland
Construction loans
Residential construction loans
Commercial construction & raw
land loans
Commercial/farm loans
Municipal/other loans
Purchased Loan Premiums
Less: Unearned revenue
Total
$ 38,867
24,556
$
$
3,311
-
2,224
11,440
14,359
10,541
101,987
174
(223)
$101,938
$
-
-
18
771
4,100
-
-
4,100
$
- $
-
-
9
-
-
9
-
-
9 $
- $
-
42,178
24,556
-
2,224
-
14
-
14
-
-
11,449
14,391
11,312
106,110
174
(223)
14 $ 106,061
(Continued)
17
BLUE RIDGE BANKSHARES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2014
Note 4.
Loans Receivable and Related Allowance for Loan Losses (Continued)
Pass
Special
Mention Substandard Doubtful
Total
December 31, 2013
Commercial real estate loans
Non owner-occupied & multi-
family
Owner-occupied & farmland
Construction loans
Residential construction loans
Commercial construction & raw
land loans
Commercial/farm loans
Municipal/other loans
Purchased Loan Premiums
Less: Unearned revenue
Total
$ 18,188
33,530
$
$
3,424
754
- $
908
- $
-
21,612
35,192
809
10,140
11,410
9,603
83,680
255
(236)
$ 83,699
$
-
233
267
1,063
5,741
-
-
5,741
$
-
-
809
12
-
-
920
-
-
920 $
-
35
-
35
-
-
35 $
10,385
11,712
10,666
90,376
255
(236)
90,395
The following table presents (in thousands) the classes of the loan portfolio for which loan
performance is the primary credit quality indicator as of December 31, 2014 and 2013:
December 31, 2014
Performing loans
Non-performing loans
Less: Unearned revenue
Total
December 31, 2013
Performing loans
Non-performing loans
Less: Unearned revenue
Total
Residential
Loans
Home
Equity
Loans
Consumer
Loans
Total
$
$
$
$
71,009
98
71,107
(106)
71,001
Residential
Loans
61,527
-
61,527
(92)
61,435
$
$
$
$
5,293
-
5,293
(9)
5,284
Home
Equity
Loans
2,547
-
2,547
(6)
2,541
$
$
$
$
4,534
2
4,536
(37)
4,499
$
$
80,836
100
80,936
(152)
80,784
Consumer
Loans
Total
1,505
5
1,510
(23)
1,487
$ 65,579
5
65,584
(121)
$ 65,463
An allowance for loan and lease losses (“ALLL”) is maintained to absorb losses from the loan
portfolio. The ALLL is based on management’s continuing evaluation of the risk characteristics and
credit quality of the loan portfolio, assessment of current economic conditions, diversification and
size of the portfolio, adequacy of collateral, past and anticipated loss experience, and the amount of
non-performing loans. Management further monitors the performance and credit quality of the loan
portfolio by analyzing the age of the portfolio as determined by the length of time a recorded
payment is past due. The following table presents the classes of the loan portfolio summarized by
the aging categories of performing loans and nonaccrual loans as of December 31, 2014 and 2013
(in thousands):
(Continued)
18
BLUE RIDGE BANKSHARES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2014
Note 4.
Loans Receivable and Related Allowance for Loan Losses (Continued)
December 31, 2014
Current
30-59 Days
Past Due
60 - 89
Days Past
Due
$
70,872
$
32
$
Residential loans
Commercial real estate loans
Non owner-occupied/multi-
family
Owner-occupied & farmland
Construction loans
Residential construction loans
Commercial construction &
42,178
24,556
2,224
raw land loans
Home equity loans
Consumer loans
Commercial/farm loans
Municipal/other loans
Unearned income on loans
Total
11,449
5,293
4,467
14,360
11,296
(201)
$ 186,494
$
-
-
-
-
-
45
-
-
-
77
$
90 Days+
Past Due
Total Past
Due
Non-
Accrual
Total
Loans
$
105 $
137
$
98 $
71,107
-
-
-
-
-
11
-
-
-
116 $
$
-
-
-
-
-
67
-
16
-
220
$
-
-
-
42,178
24,556
2,224
-
-
2
31
-
-
11,449
5,293
4,536
14,391
11,312
(201)
131 $ 186,845
-
-
-
-
-
-
11
-
16
-
27
December 31, 2013
Current
30-59 Days
Past Due
60 - 89
Days Past
Due
90 Days+
Past Due
Total Past
Due
Non-
Accrual
Total
Loans
$
61,413
$
95
$
19
$
Residential loans
Commercial real estate loans
Non owner-occupied/multi-
family
Owner-occupied & farmland
Construction loans
Residential construction loans
Commercial construction &
21,612
35,192
809
raw land loans
Home equity loans
Consumer loans
Commercial/farm loans
Municipal/other loans
Unearned income on loans
Total
10,385
2,547
1,501
11,609
10,666
(102)
$ 155,632
$
-
-
-
-
-
4
82
-
-
181
$
-
-
-
-
-
-
-
-
-
19
$
-
-
-
-
-
-
-
-
-
-
-
$
114
$
-
-
-
-
-
4
82
-
-
200
$
$
-
-
-
-
$ 61,527
21,612
35,192
809
-
-
5
21
-
-
10,385
2,547
1,510
11,712
10,666
(102)
26 $ 155,858
The classes described above provide the starting point for the ALLL analysis. Management tracks
the historical net charge-off activity by loan class. A historical charge-off factor is calculated and
applied to each class. Loans that are collectively evaluated for impairment are analyzed with general
allowances being made as appropriate. For general allowances, historical loss trends are used in the
estimation of losses in the current portfolio. Other qualitative factors are also considered.
(Continued)
19
BLUE RIDGE BANKSHARES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2014
Note 4.
Loans Receivable and Related Allowance for Loan Losses (Continued)
“Pass” rated credits are segregated from “Criticized” credits for the application of qualitative
factors. Management has identified a number of qualitative factors which it uses to supplement the
historical charge-off factor because these factors are likely to cause estimated credit losses
associated with the existing loan pools to differ from historical loss experience. The qualitative
factors are evaluated quarterly and updated using information obtained from internal, regulatory,
and governmental sources. The Bank’s qualitative factors consist of: national and local economic
trends and conditions; levels of and trends in delinquency rates and non-accrual loans; levels of and
trends in the Bank’s borrowers in bankruptcy; trends in volumes and terms of loans; effects of
changes in lending policies and strategies; and concentrations of credit from a loan type, industry
and/or geographic standpoint.
Management reviews the loan portfolio on a quarterly basis using a defined, consistently applied
process in order to make appropriate and timely adjustments to the ALLL. When information
confirms all or part of specific loans to be uncollectible, these amounts are promptly charged off
against the ALLL.
The following tables summarize the primary segments of the ALLL, segregated into the amount
required for loans individually evaluated for impairment and the amount required for loans
collectively evaluated for impairment as of December 31, 2014 and 2013. Activity in the allowance
is presented for the each of the twelve months ended December 31, 2014 and 2013 (in thousands):
ALLL Balance at
December 31, 2013
Charge-offs
Recoveries
Provision
ALLL Balance at
December 31, 2014
Commercial
$
306
-
-
109
$
415
Individually evaluated for
impairment
$
-
Collectively evaluated for
impairment
$
415
Commercial
Real
Estate
Consumer Residential Municipal
Total
$
$
$
$
1,073
-
-
(327)
746
52
694
$
$
$
$
56
(24)
4
172
208
-
208
$
$
$
$
322
-
-
162
484
45
439
$
$
$
$
314
-
-
(46)
268
234
34
$
$
$
$
2,071
(24)
4
70
2,121
331
1,790
(Continued)
20
BLUE RIDGE BANKSHARES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2014
Note 4.
Loans Receivable and Related Allowance for Loan Losses (Continued)
ALLL Balance at
December 31, 2012
Charge-offs
Recoveries
Provision
ALLL Balance at
December 31, 2013
Commercial
$
284
-
-
22
$
306
Individually evaluated for
impairment
$
-
Collectively evaluated for
impairment
$
306
Commercial
Real
Estate
Consumer Residential Municipal
Total
$
$
$
$
751
-
-
322
1,073
63
1,010
$
$
$
$
43
(34)
13
34
56
-
56
$
$
$
$
360
-
-
(38)
322
-
322
$
$
$
$
344
-
-
(30)
314
250
64
$
$
$
$
1,782
(34)
13
310
2,071
313
1,758
The following is a summary of the changes in the allowance for loan losses for the years ended
December 31, 2014 and 2013 (in thousands):
Balance, beginning
Charge-offs
Recoveries
Provision
Balance, ending
2014
2013
$
$
2,071
(24)
4
70
2,121
$
$
1,782
(34)
13
310
2,071
The allowance for loan losses is based on estimates, and actual losses will vary from current
estimates. Management believes that the granularity of the homogeneous pools and the related
historical loss ratios and other qualitative factors, as well as the consistency in the application of
assumptions, result in an ALLL that is representative of the risk found in the components of the
portfolio at any given date.
At December 31, 2014 loans with a carrying amount of $47.0 million were pledged to secure short-
term and long-term borrowings with the Federal Home Loan Bank.
Nonaccrual loans were approximately $131,000 and $26,000 at December 31, 2014 and 2013,
respectively. The Bank is not committed to lend additional funds to borrowers whose loans are
considered impaired or whose loans have been modified.
The Bank had a loan with a balance of approximately $771,000 and $833,000 at December 31, 2014
and 2013 that was involved in bankruptcy litigation. The loan was for the benefit of a municipality.
Funds advanced for the loan were held in the custody of the company that declared bankruptcy,
resulting in the municipality not taking in its direct possession the full note amount. The municipality
has continued to make payments on the note and it was current at December 31, 2014 and 2013.
(Continued)
21
BLUE RIDGE BANKSHARES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2014
Note 5.
Bank Premises and Equipment
Bank premises and equipment are summarized as follows:
Buildings and land
Furniture, fixtures and equipment
Software
Total Cost
Less: Accumulated depreciation
Total, net of depreciation
2014
2,161,858
2,164,393
169,031
4,495,282
2,288,465
2,206,817
$
$
2013
1,993,632
1,894,732
221,343
4,109,707
2,279,064
1,830,643
$
$
Depreciation expense for 2014 and 2013 was $249,944 and $199,681, respectively.
Note 6.
Time Deposits
The aggregate amounts of certificates of deposit, with a minimum denomination of $100,000 were
$59,623,000 and $50,554,000 at December 31, 2014 and 2013, respectively.
Time deposits include brokered deposits purchased through the Certificate of Deposit Account
Registry Service (CDARS). The balance of these time deposits was approximately $9,478,000 and
$15,231,000 at December 31, 2014 and 2013, respectively. As long as the Bank maintains its current
rating through CDARS rating service, it may purchase deposits up to 15% of its assets as of the most
recent quarter end. At December 31, 2014, the Bank could have purchased up to approximately
$35,900,000 in deposits through CDARS. The decision to utilize this funding depends on the Bank’s
liquidity needs and the pricing of CDARS deposits compared to other potential funding sources.
At December 31, 2014, the scheduled maturities of time deposits are as follows:
2015
2016
2017
2018
2019
2020 and beyond
Total
Maturities
$ 37,668,632
31,697,449
16,715,465
6,859,125
6,474,127
919,121
$ 100,333,919
The Bank has a line of credit from the Federal Home Loan Bank of Atlanta (FHLB) secured by the
Bank’s real estate loan portfolio and certain pledged securities. The FHLB will lend up to 25% of
the Bank’s total assets at the prior quarter end, subject to certain eligibility requirements, including
adequate collateral. At December 31, 2014, the Bank had borrowings from FHLB that totaled
$29,585,572. The interest rate on the borrowings range from .40% to 3.95% depending on the
structure and maturity. The borrowings at year-end also required the Bank to own $1,524,100 of
FHLB’s stock. This amount is included with restricted investments on the consolidated balance
sheets.
(Continued)
22
BLUE RIDGE BANKSHARES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2014
Note 7.
Borrowings
During 2012, the Bank refinanced $11,000,000 of its fixed rate debt to take advantage of the low
rate interest environment by extending maturities. The refinancing of this debt created fees of
approximately $457,000, which were capitalized according to accounting standards and are included
on the balance sheet as a reduction of the outstanding principal. This amount is being amortized
over the life of the new debt.
The principal on FHLB borrowings matures as follows:
2015
2016
2017
2018
2019
Total principal
Capitalized refinancing fees
FHLB borrowings, net
Maturities
2,128,572
7,500,000
-
14,957,000
5,000,000
29,585,572
(291,973)
29,293,599
$
$
At December 31, 2013, the Bank had fixed rate advances from the Federal Home Loan Bank of
Atlanta (FHLB) totaling $26,757,000.
In December 2014, the Company issued stock as part of a private placement capital raise. The
Bank’s Employee Stock Ownership Plan (“ESOP”) purchased stock as part of this raise and
borrowed $600,000 from Community Bankers’ Bank to fund the purchase. The loan carries an
interest rate of 4.50% and is to be repaid in seven annual installments of principal and interest
beginning January 1, 2016. The Company has guaranteed the loan and it is included in other
borrowed funds on the consolidated balance sheet. Repayment will come from the Bank’s annual
discretionary contribution to the ESOP, as well as the Bank’s matching component to employee’s
elective deferrals into the 401(k) plan, the proceeds of which are contributed to the ESOP. The
shares purchased with the proceeds of this loan are being used as collateral and are therefore
restricted. A prorated portion of the restricted shares will be released each year as the loan is repaid.
The Company also pledged securities from its AFS portfolio with an approximate fair value of
$263,000. These securities are included in restricted investments on the consolidated balance sheet.
In addition the Bank has established lines of credit for federal funds purchases of $5,000,000 with
its correspondent bank. The balance was zero at December 31, 2014 and December 31, 2013.
Note 8.
Preferred Stock
The Company is authorized to issue 250,000 shares of preferred stock at a par value of $50 per share.
The Company issued 4,500 shares of Senior Non-Cumulative Perpetual Preferred Stock, Series A to
the United States Department of Treasury as part of the Small Business Lending Fund (SBLF)
program. The shares were issued at $1,000 per share, which is also the liquidation value, for a total
issuance of $4,500,000. Dividend rates fluctuated with the amount of qualified small business lending
as defined by the SBLF program. As of December 31, 2014, the dividend rate was 1.00%. The
dividend rate will become 9.00% during 2016 if the preferred stock is still outstanding.
(Continued)
23
BLUE RIDGE BANKSHARES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2014
Note 9.
Common Stock
The Company has 5,000,000 shares of no par value authorized common stock of which 1,270,555 and
934,539 shares were issued and outstanding at December 31, 2014 and 2013, respectively.
Note 10. Other Real Estate Owned (Foreclosed Assets)
The Bank had the following amounts in Other Real Estate Owned at December 31, 2014 and 2013:
Real Estate Held
Land
1-4 Family
Estimated Realizable Value
2014
2013
$
$
140,000
70,000
210,000
$
$
140,000
-
140,000
The estimated realizable value is the net amount Bank management expects to realize from the sale of
the foreclosed upon real estate. The net realizable amount takes into account realtor commissions and
other anticipated costs associated with the disposition of real estate. The properties currently held in
Other Real Estate Owned were obtained during 2012 and 2014, respectively. Adjustments to reduce
the loan balance to net realizable value at the time the property was acquired were made to the
Allowance for Loan Losses. Bank Management continues to monitor the properties for changes in
value. Any decline in value would be charged to operations.
Expenses associated with the maintenance and upkeep of Other Real Estate Owned are recorded as
Other Real Estate Expense. The balance of Other Real Estate Owned is included with other assets on
the Company’s consolidated balance sheets.
Note 11. Goodwill
The balance in goodwill is the result of a branch acquisition in Charlottesville in 2011. The Bank
purchased the branch in an effort to expand its geographic service area by targeting an attractive
market with the potential to provide continued balance sheet growth and new opportunities for the
Bank. Bank management will evaluate at least annually the recorded value of the goodwill. In the
event the asset suffers a decline in value based on criteria established in governing accounting
standards, an impairment will be recorded.
Note 12.
Disclosures About Fair Value of Financial Instruments
In accordance with the requirements of U.S. GAAP, fair value disclosure estimates are being made for
like-kind financial instruments. Fair value estimates are based on present value of expected future
cash flows, quoted market prices of similar financial instruments, if available, and other valuation
techniques. These valuations are significantly affected by the discount rates, cash flow assumptions
and risk assumptions used. Therefore, the fair value estimates may not be substantiated by
comparison to independent markets and are not intended to reflect the proceeds that may be realizable
in an immediate settlement of the financial instruments.
(Continued)
24
BLUE RIDGE BANKSHARES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2014
Note 12.
Disclosures About Fair Value of Financial Instruments (Continued)
U.S. GAAP excludes certain items from the disclosure requirements, and accordingly, the aggregate
fair value of amounts presented do not represent the underlying value of the Company. Management
does not have the intention to dispose of a significant portion of its financial instruments and,
therefore, the unrealized gains or losses should not be interpreted as a forecast of future earnings and
cash flows.
The following table represents the estimates of fair value of financial instruments as of
December 31, 2014 and 2013:
Financial Assets
Cash and short-term investments
Federal funds sold
Investment Securities
Net loans held for investment
Accrued interest receivable
Bank-owned life insurance
$
Financial Liabilities
Deposits
Other borrowed funds
Accrued interest payable
2013
$
2014
$
Carrying
Amount
7,941,884
542,000
37,056,056
184,723,649
786,782
2,349,745
183,898,642
29,893,599
175,842
Fair Value
7,941,884
542,000
37,465,448
192,789,000
786,782
2,349,745
184,899,000
30,383,000
175,842
$
Carrying
Amount
4,561,708
545,000
47,712,416
153,786,879
751,464
2,283,800
168,345,328
26,388,861
167,556
Fair Value
4,561,708
545,000
47,707,772
158,381,000
751,464
2,283,800
169,816,000
26,651,000
167,556
The following methods and assumptions are used to estimate the fair value of financial instruments:
Cash and short term investments: The carrying amount for cash and short-term investments is a
reasonable estimate of fair value. Short-term investments consist of certificates of deposit in other
banks.
Investment securities: Fair values for investment securities are based on quoted market prices, if
available. If market prices are not available, quoted market prices of similar securities are used.
Loans held for investment: The fair value of loans held for investment is based on a discounted value
of the estimated future cash flow expected to be received through the earlier of the loan payout or the
loan repricing date. The interest rate applied in the discounted cash flow method reflects average
current rates on similar loans adjusted for relative risk and maturity. Fair values of impaired loans are
estimated based on estimates of net realization of underlying collateral.
Deposits: The carrying amount is considered a reasonable estimate of fair value for demand and
savings deposits and other variable rate deposit accounts. The fair value of fixed maturity certificates
of deposit is estimated by a discounted cash flow method using the interest rates currently offered for
deposits of similar remaining maturities.
Other borrowed funds: The fair value of fixed maturity obligations is estimated by a discounted cash
flow method using the interest rates currently offered for borrowings of similar remaining maturities.
(Continued)
25
BLUE RIDGE BANKSHARES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2014
Note 12.
Disclosures About Fair Value of Financial Instruments (Continued)
Accrued interest receivable and payable: The carrying amounts of accrued interest receivable and
payable approximate their fair values.
Bank-owned life insurance: The carrying and fair value amount of bank-owned life insurance is based
on the present value of the receivable from the executive. The cash surrender values of the policies
exceed the carrying amounts as of the balance sheet date.
Off-balance sheet instruments: The fair value of commitments is estimated using the fees currently
charged to enter into similar agreements, taking into account the remaining terms of the agreements
and the present credit standing of the customers. The amount of fees currently charged on
commitments is determined to be insignificant and therefore the fair value and carrying value of off-
balance sheet instruments are not shown.
Note 13.
Fair Value Measurements
U.S. GAAP defines fair value, establishes a framework for measuring fair value, establishes a three-
level valuation hierarchy for disclosure of fair value measurement and enhances disclosure
requirements for fair value measurements. The valuation hierarchy is based upon the transparency
of inputs to the valuation of an asset or liability as of the measurement date. The three levels are
defined as follows:
Level 1 -
Inputs to the valuation methodology are quoted prices (unadjusted) for identical
assets or liabilities in active markets.
Level 2 -
Inputs to the valuation methodology include quoted prices for similar assets and
liabilities in active markets, and inputs that are observable for the asset or
liabilities, either directly or indirectly, for substantially the full term of the
financial instrument.
Level 3 -
Inputs to the valuation methodology are unobservable and significant to the fair
value measurement.
The following sections provide a description of the valuation methodologies used for instruments
measured at fair value, as well as the general classification of such instruments pursuant to the
valuation hierarchy:
Securities: Where quoted prices are available in an active market, securities are classified within
Level 1 of the valuation hierarchy. Level 1 securities would include highly liquid government
bonds, mortgage products and exchange traded equities. If quoted market prices are not available,
then fair values are estimated by using pricing models or quoted prices of securities with similar
characteristics. Level 2 securities would include U.S. agency securities, mortgage-backed agency
securities, obligations of states and political subdivisions and certain corporate, asset backed and
other securities. In certain cases where there is limited activity or less transparency around inputs to
the valuation, securities are classified within Level 3 of the valuation hierarchy. Currently, all of the
Company’s securities are considered to be Level 2 securities.
(Continued)
26
BLUE RIDGE BANKSHARES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2014
Note 13.
Fair Value Measurements (Continued)
Fair values of assets and liabilities measured on a recurring basis at December 31, 2014 and 2013 are
as follows:
Fair Value Measurements at Reporting Date Using
Fair Value
(Level 1)
(Level 2)
(Level 3)
December 31, 2014
Available for-sale securities
Bank-owned life insurance
Total
$ 19,937,946 $
2,349,745
$ 22,287,691 $
December 31, 2013
Available for-sale securities
Bank-owned life insurance
Total
$ 30,406,638 $
2,283,800
$ 32,690,438 $
-
-
-
-
-
-
$ 19,937,946 $
2,349,745
$ 22,287,691 $
$ 30,406,638 $
2,283,800
$ 32,690,438 $
-
-
-
-
-
-
Gains and losses (realized and unrealized) included in earnings for the year are reported in noninterest
income as follows:
December 31, 2014:
Total gains included in earnings for the year
Change in unrealized gains or losses relating to assets still held at
year end
December 31, 2013:
Total gains included in earnings for the year
Change in unrealized gains or losses relating to assets still held at
year end
$
$
$
$
16,456
214,335
66,562
(765,741)
Fair values of assets measured on a non-recurring basis at December 31, 2014 and 2013 are as
follows:
Fair Value Measurements at Reporting Date Using
Fair Value
(Level 1)
(Level 2)
(Level 3)
December 31, 2014
Other real estate owned
Impaired loans
Total
December 31, 2013
Other real estate owned
Impaired loans
Total
$
$
$
$
210,000
-
210,000
140,000
-
140,000
27
$
$
$
$
(Continued)
-
-
-
-
-
-
$
$
$
$
-
-
-
-
-
-
$
$
$
$
210,000
-
210,000
140,000
-
140,000
BLUE RIDGE BANKSHARES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2014
Note 14.
Income Taxes
A reconciliation between the amount of total income taxes and the amount computed by multiplying
income by the applicable federal income tax rates is as follows:
2014
2013
Income taxes computed at the applicable federal
income tax rate
Tax exempt municipal income
Income from life insurance
Other, net
Income Tax Expense
$
$
962,147
(151,767)
(22,421)
3,393
791,352
The current and deferred components of income tax expense are as follows:
Current tax expense
Deferred tax expense
Income Tax Expense
2014
710,283
81,069
791,352
$
$
$
$
$
$
874,492
(143,816)
(23,290)
2,306
709,692
2013
873,231
(163,539)
709,692
Deferred tax assets have been provided for temporary differences related to the allowance for loan
losses, recognition of loan fee income, and deferred compensation agreements. Deferred tax liabilities
have been provided for temporary differences related to depreciation and unrealized securities gains.
The net deferred tax asset was made up of the following:
Deferred tax assets
Deferred tax liabilities
Net Deferred Tax Asset
2014
2013
$
$
1,320,122
(385,668)
934,454
$
$
1,341,723
(254,217)
1,087,506
This amount has been included as part of other assets on the balance sheet.
The federal and Virginia income tax returns of the Company for 2011 to 2014 are subject to
examination by the Internal Revenue Service and the Virginia Department of Taxation.
Note 15.
Employee Benefits
The Bank has a 401(k) Profit Sharing Plan that covers eligible employees. Employees may make
voluntary contributions subject to certain limits based on federal tax laws. The Bank matches 100
percent of an employee’s contribution up to five percent of his or her salary. The Bank’s Board of
Directors may make additional contributions at its discretion. Employees become eligible to
participate after one year of continuous service and the benefits vest over a five-year period. For the
years ended December 31, 2014 and 2013, total expenses attributable to this plan were $78,031 and
$73,312, respectively.
(Continued)
28
BLUE RIDGE BANKSHARES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2014
Note 15.
Employee Benefits (Continued)
In 2013, the Company established an Employee Stock Ownership Plan (ESOP) that covers eligible
employees. Benefits in the Plan vest over a five-year period. Contributions to the plan are made at the
discretion of the Board of Directors, and may include both the matching component to employees’
elective deferrals into the 401(k) plan and discretionary profit contributions. In December 2014, the
ESOP borrowed $600,000 and used the proceeds to purchase 42,857 common shares from the
Company. Shares purchased with the borrowed funds are allocated and released to participants over
the repayment period of the loan using a formula that considers current contributions to service the
debt compared to total expected contributions over the amortization period of the loan. As of
December 31, 2014, no shares had been released from the suspended shares. Since no payments had
been made on the debt and no shares released, the contingent liability of the Company to service this
debt of $600,000 is shown as a reduction of stockholders’ equity on the balance sheet. All shares
issued and held by the Plan are considered outstanding in the computation of earnings per share. The
Plan or the Company is required to purchase shares from separated employees at a price determined
by a third party appraisal.
The Company recognized discretionary expenses of $60,000 and $51,484 for contributions to the Plan
in 2014 and 2013, respectively.
The Plan held 53,200 shares of Company stock at
December 31, 2014.
Note 16.
Financial Instruments With Off-Balance-Sheet Risk
In the normal course of business, to meet the credit needs of its customers, the Bank has made
commitments to extend credit of $10,846,000 and $21,408,000 as of December 31, 2014 and 2013,
respectively. These commitments represent a credit risk which is not recognized in the consolidated
balance sheet. The Bank uses the same credit policies in making commitments as it does for the loans
reflected in the balance sheet. Commitments to extend credit are generally made for a period of one
year and interest rates are determined when funds are disbursed. Collateral and other security for the
loans are determined on a case-by-case basis. 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 distribution of commitments to extend credit approximates the distribution of loans
outstanding.
Note 17.
Commitments and Contingencies
In the ordinary course of business, the Bank has various outstanding commitments and contingent
liabilities that are not reflected in the accompanying consolidated financial statements. The
commitments include a total of $922,824 for its interest in five Small Business Investment Company
funds. The Bank funded $977,176 of its total $2,100,000 investment prior to
(SBIC)
December 31, 2014, and anticipates capital calls for the remaining amount to occur during the next
one to three years. Management does not anticipate any loss resulting from these commitments.
Note 18.
Lease Commitments
The Bank leases real property in McGaheysville, Virginia for a branch that began operations in
March 2003. The lease term commenced March 1, 2003 and continues for fifteen years, with five
optional one year extensions. Base annual rent, including utilities, is $36,300 or $3,025 per month,
adjusted annually for inflation as listed by the Consumer Price Index.
(Continued)
29
BLUE RIDGE BANKSHARES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2014
Note 18.
Lease Commitments (Continued)
The Bank leases real property in Albemarle County, Virginia for a branch that began operations in
May 2012. The lease term commenced May 1, 2012 and continues for seven years with two optional
five year extensions. Base annual rent, including utilities, is $81,400, or $6,783 per month, increasing
at 2% annually.
The Bank leases real property in Harrisonburg, Virginia for a branch that began operations in
April 2014. The lease term commenced April 1, 2014 and continues for fifteen years with two
optional five year extensions. Base annual rent is $43,470, or $3,623 per month, adjusted annually for
inflation as listed by the Consumer Price Index.
At December 31, 2014, the aggregate future minimum rental commitments (base rents) under this
noncancellable operating lease are as follows:
For the year ending December 31,
2015
2016
2017
2018
2019
Thereafter
Total
Annual
Payments
$
161,170
161,170
164,275
135,060
74,743
494,213
$ 1,190,631
Rent expense for 2014 and 2013 was $153,568 and $128,548, respectively.
Note 19.
Concentration of Credit Risk
The majority of the Bank’s loans are made to customers in the Bank’s trade area and a substantial
portion of the loans are secured by real estate. Accordingly, the ultimate collectibility of the Bank’s
loan portfolio is susceptible to changes in local economic conditions including the agribusiness sector
and the real estate market. A summary of loans by type is shown in Note 4. Collateral required by the
Bank is determined on an individual basis depending on the nature of the loan and the financial
condition of the borrower. In addition, investment in state and municipal securities include
governmental entities within the Bank’s market area.
(Continued)
30
BLUE RIDGE BANKSHARES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2014
Note 20.
Transactions With Related Parties
During the year, officers and directors and their related interests were customers of and had
transactions with the Bank during the normal course of business. These transactions were made on
substantially the same terms as those prevailing for other customers and did not involve any abnormal
risk. Loan transactions to such related parties are shown in the following schedule:
Total loans, beginning of year
Changes in related parties
Advances
Curtailments
Total loans, end of year
2014
2013
$ 2,142,000
2,855,000
1,475,000
(859,000)
$ 5,613,000
$
$
1,690,000
900,000
1,512,000
(1,960,000)
2,142,000
The Bank held related party deposits of approximately $3,474,000 and $3,285,000 at
December 31, 2014 and 2013, respectively.
Note 21.
Regulatory Matters
The principal source of funds of Blue Ridge Bankshares, Inc. is dividends paid by its subsidiary
bank. The various regulatory authorities impose restrictions on dividends paid by a state bank. A
state bank cannot pay dividends (without the consent of state banking authorities) in excess of the
total net profits (net income less dividends paid) of the current year to date and the combined
retained net profits of the previous two years. As of January 1, 2015, Blue Ridge Bank could pay
dividends to Blue Ridge Bankshares, Inc. of approximately $3,965,000 without the permission of
regulatory authorities. The ability to pay such a dividend would additionally be affected by the
subsidiary bank’s capital availability.
The Bank is subject to various regulatory capital requirements administered by the federal banking
agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly
discretionary actions by regulators that, if undertaken, could have a direct material effect on the
Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for
prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative
measures of the Bank’s assets, liabilities, and certain off-balance-sheet items as calculated under
regulatory accounting practices. The Bank’s capital amounts and classification are also subject to
qualitative judgments by the regulators about components, risk weightings, and other factors.
Quantitative measures established by regulation to ensure capital adequacy require the Bank to
maintain minimum ratios (set forth in the following table) of total and Tier I capital (as defined in the
regulations) to risk-weighted assets (as defined), and of Tier I capital (as defined) to average assets (as
defined). Management believes, as of December 31, 2014, that the Bank meets all capital adequacy
requirements to which it is subject.
(Continued)
31
BLUE RIDGE BANKSHARES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2014
Note 21.
Regulatory Matters (Continued)
The Bank is considered well capitalized under the regulatory framework for prompt corrective action.
To remain categorized as well capitalized, the Bank will have to maintain minimum total risk-based,
Tier 1 risk-based, and Tier 1 leverage ratios as disclosed in the table below. There are no conditions or
events since the most recent notification that management believes have changed the Bank’s prompt
corrective action category.
Actual
Amount
Ratio
For Capital
Adequacy Purposes
Ratio
Amount
As of December 31, 2014
Total risk based capital
(To risk rated assets)
Blue Ridge Bankshares $
$
Blue Ridge Bank
27,079
26,491
16.76% $
16.47% $
12,922
12,864
Tier I capital
(To risk rated assets)
Blue Ridge Bankshares $
$
Blue Ridge Bank
24,958
24,480
15.45% $
15.22% $
Tier I capital
(To average assets)
Blue Ridge Bankshares $
$
Blue Ridge Bank
24,958
24,480
10.99% $
10.57% $
6,461
6,432
9,082
9,262
8%
8%
4%
4%
4%
4%
Actual
Amount
Ratio
For Capital
Adequacy Purposes
Ratio
Amount
As of December 31, 2013
Total risk based capital
(To risk rated assets)
Blue Ridge Bankshares $
$
Blue Ridge Bank
21,608
19,933
16.21% $
15.04% $
10,662
10,605
Tier I capital
(To risk rated assets)
Blue Ridge Bankshares $
$
Blue Ridge Bank
19,537
18,271
14.66% $
13.78% $
Tier I capital
(To average assets)
Blue Ridge Bankshares $
$
Blue Ridge Bank
19,537
18,271
9.24% $
8.57% $
5,331
5,303
8,459
8,531
8%
8%
4%
4%
4%
4%
To Be Well Capitalized
Under the Prompt
Corrective Action
Provisions
Amount
Ratio
N/A
16,080
N/A
10%
N/A
9,648
N/A
6%
N/A
11,578
N/A
5%
To Be Well Capitalized
Under the Prompt
Corrective Action
Provisions
Amount
Ratio
N/A
13,257
N/A
10%
N/A
7,954
N/A
6%
N/A
10,664
N/A
5%
$
$
$
$
$
$
(Continued)
32
BLUE RIDGE BANKSHARES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2014
Note 21.
Regulatory Matters (Continued)
On July 7, 2013 the Federal Reserve Board approved Basel III Final Rule to begin implementation
January 1, 2015. The desired overall objective of Basel III is to improve the banking sector’s ability
to absorb shocks arising from financial and economic stress. The Final Rule changes minimum
capital ratios and raises the Tier 1 Risk Weighted Assets to 6% from 4%. In addition, the new rules
will require a bank to maintain a capital conservation buffer that starts at 0.625% beginning in 2016
and reaches 2.50% by 2019. The new rules will be phased in beginning in 2015 with complete
compliance required by 2019. Generally, the Basel III Final Rule will require banks to maintain
higher levels of common equity and regulatory capital.
Note 22.
New Accounting Standards
In February 2013, ASU No. 2013-02 - Comprehensive Income was issued to improve the reporting
of reclassifications out of accumulated other comprehensive income by requiring an entity to
present, either on the face of the statement where net income is presented or in the notes, significant
amounts reclassified out of accumulated other comprehensive income by the respective line items of
net income but only if the amount reclassified is required under U.S. GAAP to be reclassified to net
income in its entirety in the same reporting period. For other amounts that are not required under
U.S. GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference
to other disclosures required under U.S. GAAP that provide additional detail about those amounts.
The amendment was effective for the current reporting period.
In July 2013, the FASB issued ASU 2013-11, Income Taxes (Topic 740) - Presentation of an
Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss or a Tax
Credit Carryforward Exists. ASU 2013-11 is intended to clarify the presentation of an unrecognized
tax benefit when a net operating loss carryforward, a similar tax loss or a tax credit carryforward
exists. This presentation had not been addressed in Topic 740 and there was diversity in reporting
practices in those instances. ASU 2013-11 requires an unrecognized tax benefit to be presented as a
liability and not netted against a deferred tax asset. The amendments are effective for fiscal years,
and interim periods within those years, beginning after December 15, 2014. Early adoption is
permitted.
Accounting Standards Update (ASU) No. 2014-04, Receivables - Troubled Debt Restructurings by
Creditors - Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans
upon Foreclosure was issued by the FASB on January 20, 2014. The amendments are intended to
clarify when a creditor should be considered to have received physical possession of residential real
estate property collateralizing a consumer mortgage loan such that the loan should be derecognized
and the real estate recognized. These amendments clarify that an in substance repossession or
foreclosure occurs, and a creditor is considered to have received physical possession of residential
real estate property collateralizing a consumer mortgage loan, upon either: (a) the creditor obtaining
legal title to the residential real estate property upon completion of a foreclosure; or (b) the
borrower conveying all interest in the residential real estate property to the creditor to satisfy that
loan through completion of a deed in lieu of foreclosure or through a similar legal agreement.
Additional disclosures are required. The amendments are effective for annual periods beginning
after December 15, 2014, and
interim periods within annual periods beginning after
December 15, 2015.
(Continued)
33
BLUE RIDGE BANKSHARES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2014
Note 22.
New Accounting Standards (Continued)
On May 28, 2014, the FASB issued ASU 2014-09 – Revenue from Contracts with Customers,
which requires an entity to recognize the amount of revenue to which it expects to be entitled for the
transfer of promised goods or services to customers. The ASU will replace most existing revenue
recognition guidance in U.S. GAAP when it becomes effective. The core principle of the new
guidance is that entity should recognize revenue to depict the transfer of promised goods or services
to customers in an amount that reflects the consideration to which the entity expects to be entitled in
exchange for those goods or services. To achieve the core principle, an entity should apply the
following steps: (1) identify the contract with the customer, (2) identify the performance obligations
in the contract, (3) determine the transaction price, (4) allocate the transaction price to the
performance obligations in the contract, and (5) recognize revenue when the performance obligation
is satisfied. The new guidance is effective for the Company’s annual reporting periods beginning
after December 15, 2017, and
interim periods within annual periods beginning after
December 15, 2018, early application permitted no earlier than public entity effective date. The
Company is evaluating the effect that ASU 2014-09 will have on its consolidated financial
statements and related disclosures; however, the Company does not currently expect the new
guidance to have a material effect on its financial statements.
In June 2014, the FASB issued ASU 2014-11 – Transfers and Servicing: Repurchase-to-Maturity
Transactions, Repurchase Financings, and Disclosures, which changes the accounting for
repurchase-to-maturity transactions to secured borrowing accounting. Additionally, for repurchase
financing arrangements, the amendments of this ASU require separate accounting for a transfer of a
financial asset executed contemporaneously with a repurchase agreement with the same
counterparty, which will result in secured borrowing accounting for the repurchase agreement. The
ASU is effective for the first annual period beginning after December 15, 2014 and interim period
beginning after December 15, 2015. Earlier application is not permitted. The Company does not
expect the adoption of this guidance to have a material impact on the consolidated financial
statements.
In August 2014, the FASB issued ASU 2014-14 – Receivables – Troubled Debt Restructurings by
Creditors: Classification of Certain Government-Guaranteed Mortgage Loans upon Foreclosure
which requires de-recognition of mortgage loan and recognition of other receivable if the loan has a
government guarantee (e.g. FHA/VA) and upon foreclosure if the following is met: 1) the loan has a
government guarantee that is not separable from the loan before foreclosure; 2) at the time of
foreclosure, the creditor has the intent to convey the real estate property to the guarantor and make a
claim on the guarantee, and the creditor has the ability to recover under that claim; and, 3) at the
time of foreclosure, any amount of the claim that is determined on the basis of the fair value of the
real estate is fixed. The other receivable should be measured based on the amount of the loan
balance (principal and interest) expected to be recovered from the guarantor. The guidance is
effective for annual periods ending after December 15, 2015, and interim periods beginning after
December 15, 2015. The Company does not expect the adoption of this guidance to have a material
impact on the consolidated financial statements.
(Continued)
34
BLUE RIDGE BANKSHARES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2014
Note 22.
New Accounting Standards (Continued)
In January 2014, the Private Company Council (PCC) of the FASB issued ASU 2014-02
Intangibles—Goodwill and Other (Topic 350): Accounting for Goodwill which allows an
accounting alternative for subsequent measurement of goodwill for private business entities. The
guidance allows for amortization of goodwill in lieu of annual impairment testing up to a ten year
period or less than ten years if the entity demonstrates that another useful life is more appropriate.
An entity that elects the accounting alternative is further required to make an accounting policy
election to test goodwill for impairment at either the entity level or the reporting unit level.
Goodwill should be tested for impairment when a triggering event occurs that indicates that the fair
value of an entity (or a reporting unit) may be below its carrying amount. The accounting
alternative, if elected, should be applied prospectively in annual periods beginning after
December 15, 2014, and interim periods within annual periods beginning after December 15, 2015
Other accounting standards have been issued by the FASB that are not currently applicable to the
Company or are not expected to have a material impact on the Company’s financial statements.
(Continued)
35
Board of Directors
Mensel D. Dean, Jr.
Partner
Larry Dees
Retired Certified Public Accountant
James E. Gander, II
Farmer
PBMares, LLP
John H. H. Graves
President/CEO
Luray Caverns Corporation
Brian K. Plum
President/CEO
Blue Ridge Bank
Robert S. Janney
Attorney at Law
Janney & Janney, PLC
Richard T. Spurzem
Real Estate Investor
Malcolm R. Sullivan, Jr.
Chairman
Sullivan Mechanical Contractors, Inc.
Officers and Employees
Richard L. Masincup
Retired Tax Auditor
William W. Stokes
Chief Financial Officer
Bio-Cat, Inc.
CORPORATE
Operations
Cynthia D. Fravel, Vice President
Kimberly D. Dinges
Patricia B. Painter
Pamela G. Seal
Compliance
Ashley N. Marshall
Brandy L. Rothgeb
Credit Administration
Julie A. Catron, Assistant Vice President
Crystal D. Alger
Melissa A. Deeds
James C. Rushing, III
Retail Investments
Adam J. Powell, Investment Advisor
Management and Administration
Brian K. Plum, President/CEO
Benjamin T. Horne, IV, Executive Vice President/CLO
Amanda G. Story, CFO
Ann M. Mann, Chief Compliance Officer
Craig H. Richards, Director of Risk Management
Timothy C. Peifer, VP – Retail Market Manager
R. Steven Landes, VP – Market Development
Rebekah F. Painter, Marketing Director
Sharon S. Lamb, Assistant Cashier
Sharon D. Nauman, Accounting Assistant
LURAY
Juanita A. Woodward, Office Manager
Jason P. Blosser, Director of Dealer Lending
Kimberly F. Good, Loan Officer
Cheryl E. Petefish, Loan Officer
Donna S. Dofflemyer, Loan Officer
Miranda D. Cave
Jill M. Taylor
Betty J. White
Brittany L. Eslin
Lisa M. Turner
SHENANDOAH
Timothy W. Bailey, Assistant Vice President
Rebecca K. Dovel
Brittney D. Hinegardner
Paula R. Morris
MCGAHEYSVILLE
Crystal L. Breeden Burker, Assistant Branch Manager
Darlene M. Turner
Pamela M. Taylor
CHARLOTTESVILLE
Kelly A. Potter, Vice President – Commercial Lending
Laura S. Breeden, Branch Manager
Lisa S. Engstler
Cheryl M. Melton
HARRISONBURG
Jonathan B. Comer, Commercial Lender
Aimme M. Knight, Relationship Banker
Amy D. Shenk
Tina S. Bright