ANNUAL REPORT
BLUE RIDGE
BANKSHARES, INC.
Subsidiary
2015
TO OUR SHAREHOLDERS
Blue Ridge Bankshares, Inc. had an eventful year in 2015. The Company closed out the common stock offering
discussed in last year’s report in the 1st Quarter and also issued $10 million of subordinated debt in the 4th Quarter, all
while enjoying its 7th consecutive year of record net income. The Company earned just under $2.5 million for the
year. Earnings per share decreased from $2.11 in 2014 to $1.79 in 2015 due to the issuance of additional common
shares. This decline was an expected result. The common raise was done with an eye to the future, knowing that in
the short-term it would have a negative impact on earnings per share even if overall earnings increased.
The Company’s subordinated debt was issued for multiple reasons. You will note in the financials the Company
repaid its $4.5 million of preferred stock issued in 2011 through the US Treasury’s Small Business Lending Fund
(SBLF) program. The Company was able to benefit greatly from the additional capital during the time it was held,
particularly as the dividend rate on the preferred stock decreased to 1% as Blue Ridge Bank grew its qualified small
business loan portfolio. However, the rate was set to increase to 9% in February 2016. The issuance of the
subordinated debt allowed the Company the opportunity to use part of the proceeds to repay the 9%, non-tax-
deductible dividend with a 6.75% tax-deductible rate, approximately cutting the cost of the capital in half on a tax-
equivalent basis.
The remainder of the subordinated debt was issued to provide the Company additional capital to support continued
prudent growth. Blue Ridge Bank has been fortunate to enjoy strong balance sheet growth in recent years while
retaining solid asset quality ratios. The Board and management team plan to continue growing the Company in a
measured manner that we think balances risk and opportunity to create additional shareholder value and better serve
our communities and customers. The additional capital obtained through the subordinated debt issuance provides us
capital to absorb that growth at very attractive rates by historical standards.
As you comb through this report you will certainly notice things and make your own observations, but I would like to
draw your attention to a few specific areas. The Company’s balance sheet grew by just over $29.5 million in 2015,
or 12.3%. One of the primary drivers of this growth was a continued increase in the Bank’s held for investment
loans, which grew by approximately $20.4 million. On the liability side perhaps most noteworthy is growth in
noninterest demand deposits, which grew by $8.3 million, or 29.7%. While this is nice growth, we can do more.
Last year’s shareholder letter discussed the ways in which noninterest demand deposits are essential to our growth,
profitability, and value. I will not rehash those points, but suffice to say noninterest demand deposits are the
lifeblood of our business and a necessary focal point for sustainable growth and success.
I am often asked by shareholders and others about what is going on in the macroeconomy and in DC and how it
affects us. There is no easy answer, but I will try to share some thoughts. We live in a world that is more
interconnected every single day, and with continued central bank intervention at unprecedented levels that
interconnectedness will not dissipate soon. Fortunately for us we operate in a part of the country that is not
negatively impacted by the decline in oil prices, and two of our growth markets (Charlottesville and Harrisonburg)
enjoy growing, diverse local economies anchored by institutions of higher education. We are clearly not immune to
any macroeconomic weakness, but we like the profile of the local economies that we serve and in which we primarily
operate. Perhaps the most important impact on our business model at the macroeconomic level is that of interest
rates. The FOMC’s increase in December created, at least for the time being, a flatter yield curve. The traditional
banking profitability model suffers in a flatter yield curve environment. This means the emphasis on growing
noninterest checking and noninterest income sources takes on even more importance than normal. We have no way
to know for sure which way rates will go, and frankly I do not think anyone could have imagined a world in which
developed countries such as Japan and Switzerland have negative yields on their 10-year debt and the European
Central Bank continues driving interest rates further down into negative territory. Since we do not know with
certainty what will happen with rates, we maintain a balance sheet interest rate risk profile that we think will prosper
in various probable scenarios.
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Brian K. Plum
B
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resident/CEO
Pr
BLUE RIDGE BANKSHARES, INC.
FINANCIAL HIGHLIGHTS
For The Year
Net income
Net income available to common stockholders
Common stock dividends paid
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
$
$
$
$
$
$
2015
2,498,105
2,453,105
611,430
1.79
0.46
268,910,152
37,957,139
204,936,540
196,491,845
24,100,824
24,100,824
17.20
1,401,511
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
2012
1,516,362
1,318,942
282,574
1.40
0.30
208,228,537
56,372,941
136,138,597
168,737,648
18,494,435
13,994,435
14.85
942,221
$
$
2011
1,158,497
1,075,372
263,636
1.14
0.28
199,839,773
63,096,827
125,026,877
163,439,704
17,437,711
12,937,711
13.74
941,913
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
Change in earnings per common share
Increase in book value per share
0.98%
10.22%
11.05%
8.96%
8.96%
12.35%
-15.17%
7.68%
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%
0.74%
8.44%
9.79%
8.88%
6.72%
4.20%
22.81%
8.10%
0.66%
7.84%
8.58%
8.73%
6.47%
32.45%
-4.20%
6.68%
Financial Statements
BLUE RIDGE BANKSHARES, INC.
PARENT OF
BLUE RIDGE BANK
LURAY, VIRGINIA
December 31, 2015
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, 2015 and 2014,
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, 2015 and 2014, 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 7, 2016
CERTIFIED PUBLIC ACCOUNTANTS
BLUE RIDGE BANKSHARES, INC.
CONSOLIDATED BALANCE SHEETS
December 31, 2015 and 2014
ASSETS
2015
2014
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 $14,616,354
in 2015, $15,374,995 in 2014) (Note 3)
Restricted investments
Total Investment Securities
Loans held for sale (Note 4)
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 12)
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)
Subordinated debt, net of issuance costs (Note 8)
Other liabilities
Total liabilities
STOCKHOLDERS’ EQUITY
Preferred stock, $50 par value, authorized - 250,000 shares;
outstanding - 4,500 shares (Note 9)
Common stock, no par value, authorized - 5,000,000 shares;
outstanding - 1,401,511 and 1,270,555, respectively (Note 10)
Contributed equity
Retained earnings
Accumulated other comprehensive income
Unearned ESOP shares
Total Stockholders’ Equity
Total Liabilities and Stockholders’ Equity
The accompanying notes are an
integral part of this statement.
3
$
7,265,264
582,000
$
7,941,884
542,000
21,089,617
19,937,946
14,226,788
2,640,734
37,957,139
9,314,638
207,284,260
(2,347,720)
204,936,540
2,039,816
2,414,246
366,300
4,034,209
268,910,152
36,168,631
48,514,321
14,973,385
96,835,508
196,491,845
37,959,419
9,664,908
693,156
244,809,328
$
$
14,965,603
2,152,507
37,056,056
-
186,844,767
(2,121,118)
184,723,649
2,206,817
2,349,745
366,300
4,167,145
239,353,596
27,877,754
43,447,388
12,239,581
100,333,919
183,898,642
29,893,599
-
774,867
214,567,108
$
$
-
225,000
7,080,669
42,887
17,686,430
(200,956)
24,609,030
(508,206)
5,306,408
4,275,000
15,844,755
(264,675)
25,386,488
(600,000)
24,100,824
268,910,152
$
24,786,488
239,353,596
$
BLUE RIDGE BANKSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME
December 31, 2015 and 2014
2015
2014
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
Small business investment company fund income
Other noninterest income
Total Other Income
OTHER EXPENSES
Salaries and employee benefits
Occupancy and equipment expenses
Data processing
Advertising expense
Debit card expenses
Directors fees
Audits and examinations
Other taxes and assessments
Other contractual services
Other noninterest expense
Total Other Expenses
Income before Income Taxes
INCOME TAX EXPENSE (Note 15)
Net Income
Dividends to Preferred Stockholders
Net Income Available to Common Stockholders
Earnings per Share
Weighted Average Shares Outstanding
The accompanying notes are an
integral part of this statement.
4
$
9,584,629
75,728
3,655
721,115
284,107
10,669,234
$
-
219,955
1,262,851
561,703
2,044,509
8,624,725
320,000
8,304,725
304,153
64,501
-
313,155
463,509
1,145,318
2,703,414
567,429
455,603
367,385
149,878
124,000
89,099
460,376
213,751
772,876
5,903,811
3,546,232
1,048,127
2,498,105
$
$
(45,000)
2,453,105
1.79
1,370,656
$
$
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
324,043
134,197
131,500
59,220
419,367
281,372
675,349
5,698,591
2,820,414
791,352
2,029,062
(45,000)
1,984,062
2.11
938,286
BLUE RIDGE BANKSHARES, INC.
CONSOLIDATED STAEMENTS OF COMPREHENSIVE INCOME
December 31, 2015 and 2014
Net Income
$
2,498,105
$
2,029,062
2015
2014
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
98,542
(34,823)
63,719
-
-
-
230,791
(80,582)
150,209
(16,456)
5,600
(10,856)
Other comprehensive income, net of tax
63,719
139,353
Comprehensive income
$
2,561,824
$
2,168,415
The accompanying notes are an
integral part of this statement.
5
BLUE RIDGE BANKSHARES, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
December 31, 2015 and 2014
Preferred
Stock
Common
Stock
Contributed
Equity
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Unearned
ESOP Shares
Total
Balance, December 31, 2013
$
225,000
$
859,944
$
4,275,000
$
14,273,627
$
(404,028)
$
$
19,229,543
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
Balance, December 31, 2014
Comprehensive Net Income
Net income
Changes in unrealized gains on
securities available for sale, net of
deferred income tax liability of $34,823
Total Comprehensive Income
Issuance of common stock (130,956 shares), net
of capital raise expenses of $59,123
Redemption of preferred stock and contributed equity
Release of unearned ESOP shares
Preferred stock dividends
Common stock dividends
Balance, December 31, 2015
The accompanying notes are an
integral part of this statement.
2,029,062
-
-
-
-
-
(45,000)
(412,934)
15,844,755
139,353
-
-
-
-
-
(264,675)
2,498,105
-
-
-
63,719
-
-
-
-
-
-
(200,956)
$
-
-
-
-
-
(600,000)
-
-
(600,000)
-
-
-
-
-
91,794
-
-
(508,206)
$
2,029,062
139,353
2,168,415
4,446,464
(600,000)
(45,000)
(412,934)
24,786,488
2,498,105
63,719
2,561,824
1,774,261
(4,500,000)
134,681
(45,000)
(611,430)
24,100,824
-
-
-
-
-
-
-
-
-
-
-
-
-
225,000
4,446,464
-
-
-
5,306,408
-
-
-
-
4,275,000
-
-
-
-
-
-
-
-
-
-
(4,275,000)
42,887
-
-
42,887
-
-
-
(45,000)
(611,430)
17,686,430
$
$
-
(225,000)
-
-
-
-
$
1,774,261
-
-
-
-
7,080,669
$
$
6
BLUE RIDGE BANKSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
December 31, 2015 and 2014
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 increase in loans held for sale
Securities gains
Depreciation
Investment amortization expense, net
Amortization of debt refinancing fees
Amortization of subordinated debt issuance costs
Decrease (Increase) in other assets
Decrease in accrued expenses
Increase in carrying value of life insurance investments
Release of unearned ESOP shares
Total adjustments
Net Cash (Used in) 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
(Increase) 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
(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
Issuance of subordinated debt
Payment of subordinated debt issuance costs
Preferred stock dividends paid
Common stock dividends paid
Redemption of preferred stock
Issuance of common stock
Repayment of contingent ESOP liability
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
2015
2014
$
2,498,105
$
2,029,062
320,000
69,738
(9,314,638)
-
269,793
203,566
76,167
3,721
65,999
(81,712)
(64,501)
134,681
(8,317,186)
(5,819,081)
(5,358,301)
-
70,000
(81,069)
-
(16,456)
249,944
321,469
76,166
-
(312,307)
(4,908)
(65,945)
-
236,894
2,265,956
(5,344,809)
(220,674)
4,199,501
15,573,360
625,179
(40,000)
(20,532,891)
(102,792)
(183,692)
146,068
(472,486)
(21,719,414)
16,091,614
(3,498,411)
31,000,000
(22,928,571)
10,000,000
(338,813)
(45,000)
(611,430)
(4,500,000)
1,774,261
(81,775)
26,861,875
552,905
3,000
(31,006,770)
(626,118)
(580,114)
368,624
4,900
(21,275,696)
6,886,073
8,667,241
19,000,000
(16,171,428)
-
-
(25,500)
(412,934)
-
4,446,464
-
22,389,916
(676,620)
7,941,884
7,265,264
$
3,380,176
4,561,708
7,941,884
$
BLUE RIDGE BANKSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
December 31, 2015 and 2014
SUPPLEMENTAL INFORMATION
Interest paid
Income taxes paid
Preferred stock dividends accrued, not paid
Real estate acquired by foreclosure
2015
2014
$
$
2,035,732
750,000
-
-
1,675,825
800,000
11,250
70,000
The accompanying notes are an
integral part of this statement.
8
BLUE RIDGE BANKSHARES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015
Note 1.
Nature of Operations and Significant Accounting Policies:
Nature of Operations:
Blue Ridge Bankshares, Inc. ("Company") through Blue Ridge Bank ("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 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, 2015
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, 2015
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, 2015 and 2014.
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. Two-thirds of income distributions from these funds are shown as a reduction to the Bank’s
principal investment. The remaining one-third is recognized as income 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, 2015
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 7, 2016, 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, 2015 and 2014 was $275,000.
Note 3.
Investment Securities
The amortized cost and fair values of investment securities are as follows:
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
December 31, 2015
Available for Sale
Mortgage backed securities
Corporate bonds
Equity securities
Held to Maturity
State and municipal
Total Investment Securities
$ 17,962,482
3,100,000
335,636
21,398,118
14,226,788
14,226,788
$ 35,624,906
$
$
18,080
49,686
37,250
105,016
400,840
400,840
505,856
$
$
408,767
4,750
-
413,517
11,275
11,275
424,792
$ 17,571,795
3,144,936
372,886
21,089,617
14,616,354
14,616,354
$ 35,705,971
(Continued)
12
BLUE RIDGE BANKSHARES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015
Note 3.
Investment Securities (Continued)
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
Proceeds from sales, calls and maturities of available for sale securities during 2015 and 2014 were
$4,199,500 and $15,573,360, resulting in gains of $0 and $16,456 for 2015 and 2014, respectively.
During 2015 and 2014, held to maturity securities with book values of $625,179 and $552,905,
respectively, were either called or matured resulting in no gain or loss for both years.
Investment securities with an approximate fair value of $7,170,000 and $7,345,000, at
December 31, 2015 and 2014, 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, 2015, by contractual
maturity, are shown below. 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
$
-
$
- $
-
$
-
422,484
429,472
1,089,484
1,122,916
3,100,000
17,539,998
21,062,482
3,144,936
17,142,321
20,716,729
6,342,082
6,795,222
14,226,788
6,511,809
6,981,629
14,616,354
335,636
$ 21,398,118
372,888
-
$ 21,089,617 $ 14,226,788
-
$ 14,616,354
(Continued)
13
BLUE RIDGE BANKSHARES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015
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, 2015
State and
Municipal
Mortgage backed
Corporate bonds
Total
December 31, 2014
State and
Municipal
Mortgage backed
Corporate bonds
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
$
$
1,433,825 $
3,651,215
747,500
5,832,540 $
(11,275)
(53,239)
(2,500)
(67,014)
$
-
12,719,106
497,750
$ 13,216,856
$
$
-
(355,528)
(2,250)
(357,778)
$ 1,433,825 $
16,370,321
1,245,250
$ 19,049,396 $
(11,275)
(408,767)
(4,750)
(424,792)
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)
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, 2015, the Company had securities which have depreciated 2.23% 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, 2015
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, 2015
Residential loans
Commercial real estate loans
Individually
Evaluated for
Impairment
Collectively
Evaluated for
Impairment
Total
$
325 $
77,115
$
77,440
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
$
369
-
-
-
-
-
-
705
-
1,399
$
36,747
27,873
3,305
13,890
6,877
16,309
10,414
13,567
(212)
205,885
37,116
27,873
3,305
13,890
6,877
16,309
10,414
14,272
(212)
207,284
$
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
$
To allow management to better monitor risk and performance, the Bank’s loan portfolio is
disaggregated to a level that is consistent with applicable call report codes. In general, the loan
portfolio is segmented into the following categories: (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; however, each category may consist of multiple call
report codes.
(Continued)
15
BLUE RIDGE BANKSHARES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015
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 $1,399,000 and $1,475,000 in impaired loans as of December 31, 2015 and 2014,
respectively.
(Continued)
16
BLUE RIDGE BANKSHARES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015
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, 2015 and 2014 (in thousands):
Pass
Special
Mention Substandard Doubtful
Total
December 31, 2015
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
Less: Unearned revenue
Total
$ 35,873
25,876
$
$
1,153
1,997
90 $
-
- $
-
37,116
27,873
3,305
13,871
16,293
13,566
108,784
(19)
$108,765
$
-
12
11
706
3,879
-
3,879
$
-
-
3,305
7
-
-
97
-
97 $
13,890
-
16,309
5
14,272
-
112,765
5
-
(19)
5 $ 112,746
(Continued)
17
BLUE RIDGE BANKSHARES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015
Note 4.
Loans Receivable and Related Allowance for Loan Losses (Continued)
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
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, 2015 and 2014:
December 31, 2015
Performing loans
Non-performing loans
Less: Unearned revenue
Total
December 31, 2014
Performing loans
Non-performing loans
Less: Unearned revenue
Total
Residential
Loans
Home
Equity
Loans
Consumer
Loans
Total
$
$
$
$
77,191
249
77,440
(120)
77,320
Residential
Loans
71,009
98
71,107
(106)
71,001
$
$
$
$
6,877
-
6,877
(14)
6,863
Home
Equity
Loans
5,293
-
5,293
(9)
5,284
$
$
$
$
10,365
49
10,414
(59)
10,355
$
$
94,433
298
94,731
(193)
94,538
Consumer
Loans
Total
4,534
2
4,536
(37)
4,499
$
$
80,836
100
80,936
(152)
80,784
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, 2015 and 2014
(in thousands):
(Continued)
18
BLUE RIDGE BANKSHARES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015
Note 4.
Loans Receivable and Related Allowance for Loan Losses (Continued)
December 31, 2015
Current
30-59 Days
Past Due
60 - 89
Days Past
Due
90 Days+
Past Due
Total Past
Due
Non-
Accrual
Total
Loans
$
76,969
$
222
$
$
222
$
249 $ 77,440
Residential loans
Commercial real estate loans
Non owner-occupied/multi-
family
Owner-occupied & farmland
Construction loans
Residential construction loans
Commercial construction &
36,359
27,873
3,305
raw land loans
Home equity loans
Consumer loans
Commercial/farm loans
Municipal/other loans
Unearned income on loans
Total
13,878
6,877
9,852
16,235
14,272
(212)
$ 205,408
$
757
-
-
-
-
413
-
-
-
1,392
$
-
-
-
-
-
-
78
-
-
-
78
$
$
-
-
-
-
-
-
22
-
-
-
22 $
757
-
-
-
-
513
-
-
-
1,492
$
-
-
-
37,116
27,873
3,305
12
-
49
74
-
-
13,890
6,877
10,414
16,309
14,272
(212)
384 $ 207,284
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
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, 2015
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: changes in lending policies and
procedures, changes in international, national, regional, and local conditions, changes in the nature
and volume of the portfolio and terms of loans, changes in the experience, depth, and ability of
lending management, changes in the volume and severity of past due loans and other similar
conditions, changes in the quality of the organization’s loan review system, changes in the value of
underlying collateral for dependent loans, the existence and effect of any concentrations of credit
and changes in the levels of such concentrations, and the effect of other external factors.
Management reviews the loan portfolio on a monthly 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, 2015 and 2014. Activity in the allowance
is presented for the each of the twelve months ended December 31, 2015 and 2014 (in thousands):
ALLL Balance at
December 31, 2014
Charge-offs
Recoveries
Provision
ALLL Balance at
December 31, 2015
Commercial
$
415
-
-
3
$
418
Individually evaluated for
impairment
$
-
Collectively evaluated for
impairment
$
418
Commercial
Real
Estate
Consumer Residential Municipal
Total
$
$
$
$
746
-
-
(66)
680
45
635
$
$
$
$
208
(113)
20
361
476
-
476
$
$
$
$
484
-
-
3
487
40
447
$
$
$
$
268
-
-
19
287
250
37
$
$
$
$
2,121
(113)
20
320
2,348
335
2,013
(Continued)
20
BLUE RIDGE BANKSHARES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015
Note 4.
Loans Receivable and Related Allowance for Loan Losses (Continued)
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
The following is a summary of the changes in the allowance for loan losses for the years ended
December 31, 2015 and 2014 (in thousands):
Balance, beginning
Charge-offs
Recoveries
Provision
Balance, ending
2015
2014
$
$
2,121
(113)
20
320
2,348
$
$
2,071
(24)
4
70
2,121
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, 2015 loans with a carrying amount of $44.0 million were pledged to secure short-
term and long-term borrowings with the Federal Home Loan Bank.
Loans held for sale consists of the Bank’s commitment to purchase up to $10,000,000 in residential
mortgage loan fundings originated primarily in Virginia, Pennsylvania, New Jersey and Florida by
another financial institution. The Bank reviews loan documentation for each specific mortgage
prior to funding to ensure it conforms to the terms of the agreement. The mortgages funded through
this program must have already obtained a purchase commitment (takeout) from another financial
institution as part of the conditions of the Bank’s funding. The Bank earns 30-day LIBOR plus
2.25% on all loans held in this category. The balance of loans held for sale was $9,314,638 and $0
at December 31, 2015 and 2014, respectively.
(Continued)
21
BLUE RIDGE BANKSHARES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015
Note 4.
Loans Receivable and Related Allowance for Loan Losses (Continued)
Nonaccrual loans were approximately $384,000 and $131,000 at December 31, 2015 and 2014,
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 has a loan with a balance of approximately $706,000 and $771,000 at December 31, 2015
and 2014 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, 2015
and 2014. The municipality believes the amortized balance of the obligation is approximately
$25,000 at December 31, 2015.
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
2015
2,188,154
2,167,081
154,837
4,510,072
2,470,256
2,039,816
$
$
2014
2,161,858
2,164,393
169,031
4,495,282
2,288,465
2,206,817
$
$
Depreciation expense for 2015 and 2014 was $269,793 and $249,944, respectively.
Note 6.
Time Deposits
The aggregate amounts of certificates of deposit, with a minimum denomination of $250,000 were
$15,189,000 and $11,694,000 at December 31, 2015 and 2014, respectively.
Time deposits include brokered deposits purchased through the Certificate of Deposit Account
Registry Service (CDARS). The balance of these time deposits was approximately $2,680,886 and
$9,478,000 at December 31, 2015 and 2014, 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, 2015, the Bank could have purchased up to approximately
$40,000,000 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.
(Continued)
22
BLUE RIDGE BANKSHARES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015
Note 6.
Time Deposits (Continued)
At December 31, 2015, the scheduled maturities of time deposits are as follows:
2016
2017
2018
2019
2020
2021 and beyond
Total
Maturities
$ 49,298,841
22,485,633
8,100,748
9,831,008
6,398,651
720,627
$ 96,835,508
Note 7.
Borrowings
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, 2015, the Bank had borrowings from FHLB that totaled
$37,657,000. The interest rate on the borrowings range from .34% to 3.95% depending on the
structure and maturity. The borrowings at year-end also required the Bank to own $1,815,300 of
FHLB stock. This amount is included with restricted investments on the consolidated balance
sheets.
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:
2016
2017
2018
2019
Total principal
Capitalized refinancing fees
FHLB borrowings, net
Maturities
$
$
17,700,000
-
14,957,000
5,000,000
37,657,000
(215,806)
37,441,194
At December 31, 2015, the Bank had fixed rate advances from the Federal Home Loan Bank of
Atlanta (FHLB) totaling $29,585,572.
(Continued)
23
BLUE RIDGE BANKSHARES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015
Note 7.
Borrowings (Continued)
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. The
Company has guaranteed the loan, which carried a balance of $518,225 and $600,000 at
December 31, 2015 and 2014, respectively. The balance is included in other borrowed funds on the
consolidated balance sheet. Repayment of the loan comes 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 are released each year as the loan is repaid. The Company
also pledged securities from its AFS portfolio with an approximate fair value of $289,000. 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, 2015 and December 31, 2014.
Note 8.
Subordinated Debt
On November 20, 2015, the Company entered into a Subordinated Note Purchase Agreement (the
“Purchase Agreement”) with 14 institutional accredited investors under which the Company issued an
aggregate of $10,000,000 of subordinated notes (the “Notes”) to the institutional accredited investors.
The Notes have a maturity date of December 1, 2025. The Notes bear interest, payable on the 1st of
June and December of each year, commencing June 1, 2016, at a fixed rate of 6.75% per year for the
first five years, and thereafter will bear a floating interest rate of LIBOR plus 512.8 basis points. The
Notes are not convertible into common stock or preferred stock and are not callable by the holders.
The Company has the right to redeem the Notes, in whole or in part, without premium or penalty, at
any interest payment date on or after December 1, 2020 and prior to the maturity date, but in all cases
in a principal amount with integral multiples of $1,000, plus interest accrued and unpaid through the
date of redemption. If an event of default occurs, such as the bankruptcy of the Company, the holder
of a Note may declare the principal amount of the Note to be due and immediately payable. The
Notes are unsecured, subordinated obligations of the Company and will rank junior in right of
payment to the Company’s existing and future senior indebtedness. The Notes qualify as Tier 2
capital for regulatory reporting.
As part of the transaction, the Company incurred issuance costs totaling $338,813. These costs are
being amortized over the life of the Notes. The following table summarizes the balance of the Notes
and related issuance costs at December 31, 2015:
Subordinated debt
Unamortized issuance costs
Subordinated debt, net
$
$
10,000,000
(335,092)
9,664,908
(Continued)
24
BLUE RIDGE BANKSHARES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015
Note 9.
Preferred Stock
The Company is authorized to issue 250,000 shares of preferred stock at a par value of $50 per share.
In 2011, 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 was 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%. In December 2015, the Company fully redeemed the shares using proceeds from the
Subordinated Debt issuance described in Note 8.
Note 10.
Common Stock
The Company has 5,000,000 shares of no par value authorized common stock of which 1,401,511 and
1,270,555 shares were issued and outstanding at December 31, 2015 and 2014, respectively.
Note 11. Other Real Estate Owned (Foreclosed Assets)
The Bank had the following amounts in Other Real Estate Owned at December 31, 2015 and 2014:
Real Estate Held
Land
1-4 Family
Estimated Realizable Value
2015
2014
$
$
-
70,000
70,000
$
$
140,000
70,000
210,000
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 property currently held in
Other Real Estate Owned was obtained during 2014. 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 12. 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.
(Continued)
25
BLUE RIDGE BANKSHARES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015
Note 13.
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.
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, 2015 and 2014:
$
Financial Assets
Cash and short-term investments
Federal funds sold
Investment securities
Loans held for sale
Net loans held for investment
Accrued interest receivable
Bank-owned life insurance
Financial Liabilities
Deposits
Other borrowed funds
Subordinated debt, net
Accrued interest payable
2014
$
2015
$
Carrying
Amount
7,265,264
582,000
37,957,139
9,314,638
204,936,540
873,295
2,414,246
196,491,845
37,959,419
9,664,908
149,590
Fair Value
7,265,264
582,000
38,346,705
9,314,638
211,798,362
873,295
2,414,246
196,578,000
38,487,225
9,664,908
149,590
$
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
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 sale: Loans held for sale are usually held for a short period of time ranging from 10 to
60 days. The carrying value of these loans approximates their fair value.
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.
(Continued)
26
BLUE RIDGE BANKSHARES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015
Note 13.
Disclosures About Fair Value of Financial Instruments (Continued)
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.
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 14.
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.
(Continued)
27
BLUE RIDGE BANKSHARES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015
Note 14.
Fair Value Measurements (Continued)
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.
Fair values of assets and liabilities measured on a recurring basis at December 31, 2015 and 2014 are
as follows:
Fair Value Measurements at Reporting Date Using
Fair Value
(Level 1)
(Level 2)
(Level 3)
December 31, 2015
Available for-sale securities
Bank-owned life insurance
Total
$ 21,089,617 $
2,414,246
$ 23,503,863 $
December 31, 2014
Available for-sale securities
Bank-owned life insurance
Total
$ 19,937,946 $
2,349,745
$ 22,287,691 $
-
-
-
-
-
-
$ 21,089,617 $
2,414,246
$ 23,503,863 $
$ 19,937,946 $
2,349,745
$ 22,287,691 $
-
-
-
-
-
-
Gains and losses (realized and unrealized) included in earnings for the year are reported in noninterest
income as follows:
December 31, 2015:
Total gains included in earnings for the year
Change in unrealized gains or losses relating to assets still held at
year end
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
$
$
$
$
-
98,542
16,456
214,335
(Continued)
28
BLUE RIDGE BANKSHARES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015
Note 14.
Fair Value Measurements (Continued)
Fair values of assets measured on a non-recurring basis at December 31, 2015 and 2014 are as
follows:
Fair Value Measurements at Reporting Date Using
Fair Value
(Level 1)
(Level 2)
(Level 3)
December 31, 2015
Other real estate owned
Total
December 31, 2014
Other real estate owned
Total
$
$
$
$
70,000
70,000
210,000
210,000
$
$
$
$
-
-
-
-
$
$
$
$
-
-
-
-
$
$
$
$
70,000
70,000
210,000
210,000
For level 3 assets and liabilities measured at fair value on a recurring basis or non-recurring basis as of
December 31, the significant unobservable inputs used in the fair value measurements were as
follows:
Fair Value At
December 31,
2015
Valuation Technique
Other real estate owned
$ 70,000
Discounted appraised value
Significant Unobservable Inputs
Discounted for selling costs and
age of appraisals
Range
15%-35%
Fair Value At
December 31,
2014
Valuation Technique
Other real estate owned
$ 210,000
Discounted appraised value
Significant Unobservable Inputs
Discounted for selling costs and
age of appraisals
Range
15%-35%
(Continued)
29
BLUE RIDGE BANKSHARES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015
Note 15.
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:
2015
2014
Income taxes computed at the applicable federal
income tax rate
Tax exempt municipal income
Income from life insurance
Other, net
Income Tax Expense
$
$
1,218,557
(153,461)
(21,930)
4,961
1,048,127
The current and deferred components of income tax expense are as follows:
Current tax expense
Deferred tax expense
Income Tax Expense
2015
$
$
1,117,865
(69,738)
1,048,127
$
$
$
$
962,147
(151,767)
(22,421)
3,393
791,352
2014
710,283
81,069
791,352
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
2015
2014
$
$
1,317,608
(340,238)
977,370
$
$
1,320,122
(385,668)
934,454
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 2012 to 2015 are subject to
examination by the Internal Revenue Service and the Virginia Department of Taxation.
Note 16.
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, 2015 and 2014, total expenses attributable to this plan were $92,621 and
$78,031, respectively.
(Continued)
30
BLUE RIDGE BANKSHARES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015
Note 16.
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, 2015, 6,557 shares had been released from the suspended shares resulting in a
remaining balance of 36,300 unallocated ESOP shares. The fair value of unallocated shares as of
December 31, 2015 was $689,700. All shares issued to 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 $65,000 and $60,000 for contributions to the Plan
in 2015 and 2014, respectively. Compensation expense with regards to allocated shares is determined
based on the fair value of the stock at the date of allocation and totaled $126,000 for 2015. Dividends
on shares released are recorded as dividends paid on common stock in the statement of Stockholders’
Equity (totaled $3,000 in 2015) and dividends on unreleased shares are recorded as compensation
expense (totaled $18,000 in 2015). The Plan held 53,200 total shares of Company stock at December
31, 2015 and 2014.
Note 17.
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 $19,465,000 and $10,846,000 as of December 31, 2015 and 2014,
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 18.
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 $1,039,132 for its interest in five Small Business Investment Company
(SBIC)
funds. The Bank funded $1,160,868 of its total $2,400,000 investment prior to
December 31, 2015, 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.
(Continued)
31
BLUE RIDGE BANKSHARES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015
Note 19.
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.
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, 2015, the aggregate future minimum rental commitments (base rents) under this
noncancellable operating lease are as follows:
For the year ending December 31,
2016
2017
2018
2019
2020
Thereafter
Total
Annual
Payments
$
161,170
164,275
135,060
74,743
74,743
446,603
$ 1,056,594
Rent expense for 2015 and 2014 was $178,470 and $153,568, respectively.
Note 20.
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)
32
BLUE RIDGE BANKSHARES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015
Note 21.
Transactions With Related Parties
During the year, officers, directors, and principal shareholders 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:
2015
2014
Total loans, beginning of year
Changes in related parties
Advances
Curtailments
Total loans, end of year
$ 5,613,000
-
3,394,000
(2,763,000)
$ 6,244,000
$
$
2,142,000
2,855,000
1,475,000
(859,000)
5,613,000
The Bank held related party deposits of approximately $3,163,000 and $3,474,000 at
December 31, 2015 and 2014, respectively.
Note 22.
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, 2016, Blue Ridge Bank could pay
dividends to Blue Ridge Bankshares, Inc. of approximately $5,734,000 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, 2015, that the Bank meets all capital adequacy
requirements to which it is subject.
(Continued)
33
BLUE RIDGE BANKSHARES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015
Note 22.
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, Common Equity Tier 1, 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
To Be Well Capitalized
Under the Prompt
Corrective Action
Provisions
Amount
Ratio
As of December 31, 2015
Total risk based capital
(To risk rated assets)
Blue Ridge Bankshares $
$
Blue Ridge Bank
26,570
30,774
14.05% $
16.45% $
15,124
14,962
8.0%
8.0% $
N/A
18,703
N/A
10.0%
Tier I capital
(To risk rated assets)
Blue Ridge Bankshares $
$
Blue Ridge Bank
24,222
28,436
12.81% $
15.20% $
11,343
11,222
6.0%
6.0% $
N/A
14,962
N/A
8.0%
Common equity tier 1 capital
(To risk rated assets)
Blue Ridge Bankshares $
$
Blue Ridge Bank
24,222
28,436
12.81% $
15.20% $
8,507
8,416
4.5%
4.5% $
N/A
12,157
N/A
6.5%
Tier I capital
(To average assets)
Blue Ridge Bankshares $
$
Blue Ridge Bank
24,222
28,436
9.53% $
10.86% $
10,165
10,476
4.0%
4.0% $
N/A
13,095
N/A
5.0%
Actual
Amount
Ratio
For Capital
Adequacy Purposes
Ratio
Amount
To Be Well Capitalized
Under the Prompt
Corrective Action
Provisions
Amount
Ratio
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%
$
$
$
N/A
16,080
N/A
10%
N/A
9,648
N/A
6%
N/A
11,578
N/A
5%
(Continued)
34
BLUE RIDGE BANKSHARES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015
Note 22.
Regulatory Matters (Continued)
On July 7, 2013 the Federal Reserve Board approved the Basel III Final Rule which began
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 changed minimum capital ratios and raised 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 phase in of this buffer began 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 23.
Recent Accounting Pronouncements and Changes
In January 2014, the FASB issued ASU 2014-04, Receivables (Topic 310) – Troubled Debt
Restructurings by Creditors. ASU 2014-04 is intended to reduce diversity by clarifying when an in
substance repossession or foreclosure occurs, that is, when a creditor should be considered to have
received physical possession of residential real property collateralizing a consumer mortgage loan
such that the loan receivable should be derecognized and the real estate property recognized. ASU
2014-04 is effective for annual periods beginning after December 15, 2014. Adoption by the Company
did not have a material impact on the consolidated financial statements and related disclosures.
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606).
ASU 2014-09 is intended to clarify the principles for recognizing revenue and to develop a common
revenue standard for U.S. GAAP. ASU 2014-09 is effective for annual reporting periods beginning
after December 15, 2018. Adoption by the Company is not expected to have a material impact on the
consolidated financial statements and related disclosures.
In June 2014, the FASB issued ASU 2014-11, Transfers and Servicing (Topic 860) – Repurchase-to-
Maturity Transactions, Repurchase Financings, and Disclosures. ASU 2014-11 is intended to clarify
the accounting for and improve the disclosures related to repurchase-to-maturity transactions and
is effective for annual periods beginning after
repurchase financings.
December 15, 2014. Adoption by the Company did not have a material impact on the consolidated
financial statements and related disclosures.
ASU 2014-11
In January 2016, ASU No. 2016-01 Financial Instruments – Overall (Subtopic 825-10) was issued by
the FASB. The amendments address certain aspects of recognition, measurement, presentation, and
disclosure of financial instruments. The amendments will be effective for fiscal years beginning after
December 15, 2018. The Company is currently evaluating the impact of these amendments on its
financial statements.
(Continued)
35
BOARD OF DIRECTORS
Mensel D. Dean, Jr.
Partner
PBMares, LLP
John H. H. Graves
President/CEO
Luray Caverns Corporation
Brian K. Plum
President/CEO
Blue Ridge Bank
OFFICERS AND EMPLOYEES
CORPORATE
Management and Administration
Brian K. Plum
President
Chief Executive Officer
Dorothy M. Welch
VP Strategic Engagement
Sharon D. Nauman
Accounting Assistant
BSA and Compliance
Ann M. Mann, Chief Compliance Officer
Ashley N. Marshall
Brandy L. Rothgeb
Retail Investments
Adam J. Powell, Investment Advisor
BRANCHES
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
Carlie S. Billings
Miranda D. Cave
Jill M. Taylor
Betty J. White
Brittany L. Eslin
Kathy A. Huffman
Larry Dees
Chairman of the Board
Retired Certified Public Accountant
James E. Gander, II
Farmer
Robert S. Janney
Attorney at Law
Janney & Janney, PLC
William W. Stokes
Chief Financial Officer
Bio-Cat, Inc.
Richard L. Masincup
Retired Tax Auditor
Malcolm R. Sullivan, Jr.
Chairman
Sullivan Mechanical Contractors, Inc.
Benjamin T. Horne, IV
Executive Vice President
Chief Lending Officer
Amanda G. Story
Chief Financial Officer
Craig. H. Richards
Director of Risk Management
Sharon S. Lamb
Assistant Cashier
Operations
Cynthia D. Fravel, VP
Kimberly D. Dinges
Patricia B. Painter
Pamela G. Seal
Credit Administration
Julie A. Catron, Assistant VP
Crystal D. Alger
Melissa A. Deeds
James C. Rushing, III
Shenandoah
Timothy W. Bailey, Assistant VP
Rebecca K. Dovel
Brittney D. Hinegardner
Calla M. E. Gray
Harrisonburg
Jonathan B. Comer, Market President
Aimme M. Knight
Tina S. Bright
Birdena J. Short
Charlottesville
Kelly A. Potter, Market President
Lisa S. Engstler
Cheryl M. Melton
McGaheysville
Crystal L. Breeden Burker, Assistant Branch Manager
Paula R. Morris
Pamela M. Taylor
Darlene M. Turner