Toggle SGML Header (+)


Section 1: 10-Q (10-Q)

brbs-10q_20200930.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2020

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                         to                         

Commission File Number: 001-39165

 

BLUE RIDGE BANKSHARES, INC.

(Exact name of registrant as specified in its charter)

 

 

Virginia

54-1470908

( State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

1807 Seminole Trail

Charlottesville, Virginia

22835

(Address of principal executive offices)

(Zip Code)

 

Registrant’s telephone number, including area code: (540) 743-6521

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock, no par value

 

BRBS

 

NYSE American

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  ☒    No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes  ☒    No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

  

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

  

Smaller reporting company

 

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes  ☐    No  

As of November 13, 2020, the registrant had 5,718,621 shares of common stock, no par value per share, outstanding.

 

 

 

 

 


 

PART I

 

FINANCIAL INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Financial Statements

 

3

 

 

 

 

 

 

 

Consolidated Balance Sheets as of September 30, 2020 (unaudited) and December 31, 2019

 

3

 

 

 

 

 

 

 

Consolidated Statements of Income for the three and nine months ended September 30, 2020 and September 30, 2019 (unaudited)

 

4

 

 

 

 

 

 

 

Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2020 and 2019 (unaudited)

 

5

 

 

 

 

 

 

 

Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three and nine months ended September 30, 2020 and 2019 (unaudited)

 

6

 

 

 

 

 

 

 

Consolidated Statements of Cash Flows for the nine months ended September 30, 2020 and 2019 (unaudited)

 

7

 

 

 

 

 

 

 

Notes to Consolidated Financial Statements (unaudited)

 

8

 

 

 

 

 

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

31

 

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures about Market Risk

 

47

 

 

 

 

 

Item 4.

 

Controls and Procedures

 

47

 

 

 

 

 

PART II

 

OTHER INFORMATION

 

48

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

48

 

 

 

 

 

Item 1A.

 

Risk Factors

 

48

 

 

 

 

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

52

 

 

 

 

 

Item 3.

 

Defaults Upon Senior Securities

 

52

 

 

 

 

 

Item 4.

 

Mine Safety Disclosures

 

52

 

 

 

 

 

Item 5.

 

Other Information

 

52

 

 

 

 

 

Item 6.

 

Exhibits

 

52

 

 

 

 

 

Signatures

 

 

 

53

 

 

 

2


PART I.    FINANCIAL INFORMATION

Item 1. Financial Statements

Blue Ridge Bankshares, Inc.

Consolidated Balance Sheets

(dollars in thousands, except share and per share data)

 

 

September 30,

2020

 

 

December 31,

2019

 

 

(unaudited)

 

 

(audited)

 

Assets

 

 

 

 

 

 

 

Cash and due from banks

$

77,596

 

 

$

60,026

 

Federal funds sold

 

-

 

 

 

480

 

Securities available for sale, at fair value

 

113,889

 

 

 

108,571

 

Securities held to maturity, at cost

 

-

 

 

 

12,192

 

Restricted equity securities, at cost

 

9,441

 

 

 

8,134

 

Loans held for sale

 

193,122

 

 

 

55,646

 

Loans, net of unearned income

 

1,039,180

 

 

 

646,834

 

Less allowance for loan losses

 

(12,123

)

 

 

(4,572

)

Loans, net

 

1,027,057

 

 

 

642,262

 

Premises and equipment, net

 

14,947

 

 

 

13,651

 

Cash surrender value of life insurance

 

15,013

 

 

 

14,734

 

Goodwill

 

19,892

 

 

 

19,915

 

Other intangible assets

 

3,022

 

 

 

3,718

 

Other assets

 

49,320

 

 

 

21,482

 

Total assets

$

1,523,299

 

 

$

960,811

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

Noninterest-bearing

$

278,584

 

 

$

177,819

 

Interest-bearing

 

636,682

 

 

 

544,211

 

Total deposits

 

915,266

 

 

 

722,030

 

Federal funds purchased

 

135

 

 

 

-

 

Other borrowings

 

459,476

 

 

 

124,800

 

Subordinated debentures, net of issuance costs

 

24,489

 

 

 

9,800

 

Other liabilities

 

24,003

 

 

 

11,844

 

Total liabilities

 

1,423,369

 

 

 

868,474

 

Stockholders’ Equity:

 

 

 

 

 

 

 

Common stock, no par value; 25,000,000 and 10,000,000 shares authorized at

   September 30, 2020 and December 31, 2019, respectively; 5,718,621 and 5,658,585

   shares issued and outstanding at September 30, 2020 and December 31, 2019,

   respectively

 

66,556

 

 

 

66,204

 

Additional paid-in capital

 

252

 

 

 

252

 

Retained earnings

 

35,107

 

 

 

25,428

 

Accumulated other comprehensive income (loss)

 

(2,210

)

 

 

229

 

 

 

99,705

 

 

 

92,113

 

Noncontrolling interest

 

225

 

 

 

224

 

Total stockholders’ equity

 

99,930

 

 

 

92,337

 

Total liabilities and stockholders’ equity

$

1,523,299

 

 

$

960,811

 

 

See accompanying notes to unaudited consolidated financial statements.

 

3


Blue Ridge Bankshares, Inc.

Consolidated Statements of Income

(dollars in thousands, except per share data)

(Unaudited)

 

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and fees on loans

 

$

13,780

 

 

$

6,927

 

 

$

35,766

 

 

$

19,640

 

Interest on taxable securities

 

 

634

 

 

 

1,133

 

 

 

2,147

 

 

 

2,601

 

Interest on nontaxable securities

 

 

30

 

 

 

56

 

 

 

119

 

 

 

183

 

Interest on federal funds sold

 

 

-

 

 

 

2

 

 

 

2

 

 

 

6

 

Total interest income

 

 

14,444

 

 

 

8,118

 

 

 

38,034

 

 

 

22,430

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest on deposits

 

 

1,515

 

 

 

1,763

 

 

 

4,889

 

 

 

4,491

 

Interest on subordinated debentures

 

 

411

 

 

 

169

 

 

 

854

 

 

 

532

 

Interest on other borrowings

 

 

689

 

 

 

750

 

 

 

1,794

 

 

 

1,920

 

Total interest expense

 

 

2,615

 

 

 

2,682

 

 

 

7,537

 

 

 

6,943

 

Net interest income

 

 

11,829

 

 

 

5,436

 

 

 

30,497

 

 

 

15,487

 

Provision for loan losses

 

 

4,000

 

 

 

570

 

 

 

8,075

 

 

 

1,465

 

Net interest income after provision for loan losses

 

 

7,829

 

 

 

4,866

 

 

 

22,422

 

 

 

14,022

 

Non-interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service charges on deposit accounts

 

 

215

 

 

 

171

 

 

 

669

 

 

 

459

 

Residential mortgage banking income, net

 

 

16,044

 

 

 

3,943

 

 

 

35,210

 

 

 

10,966

 

Income from investment in life insurance contracts

 

 

94

 

 

 

59

 

 

 

278

 

 

 

874

 

Gain on sale of guaranteed USDA loans

 

 

516

 

 

 

252

 

 

 

779

 

 

 

298

 

Other income

 

 

880

 

 

 

548

 

 

 

2,334

 

 

 

1,658

 

Total other income

 

 

17,749

 

 

 

4,973

 

 

 

39,270

 

 

 

14,255

 

Non-interest expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

11,880

 

 

 

5,079

 

 

 

30,141

 

 

 

14,149

 

Occupancy and equipment

 

 

922

 

 

 

627

 

 

 

2,653

 

 

 

1,868

 

Data processing fees

 

 

675

 

 

 

413

 

 

 

1,799

 

 

 

1,069

 

Legal, issuer, and regulatory filing fees

 

 

1,536

 

 

 

295

 

 

 

2,073

 

 

 

930

 

Advertising fees

 

 

165

 

 

 

191

 

 

 

518

 

 

 

607

 

Communications

 

 

214

 

 

 

123

 

 

 

536

 

 

 

334

 

Debit card

 

 

137

 

 

 

82

 

 

 

465

 

 

 

242

 

Audit and accounting fees

 

 

98

 

 

 

87

 

 

 

291

 

 

 

175

 

FDIC insurance

 

 

187

 

 

 

86

 

 

 

568

 

 

 

256

 

Other contractual services

 

 

516

 

 

 

89

 

 

 

870

 

 

 

270

 

Other taxes and assessments

 

 

280

 

 

 

257

 

 

 

748

 

 

 

746

 

Other operating

 

 

2,202

 

 

 

878

 

 

 

5,296

 

 

 

2,571

 

Total other expenses

 

 

18,812

 

 

 

8,207

 

 

 

45,958

 

 

 

23,217

 

Income before income tax

 

 

6,766

 

 

 

1,632

 

 

 

15,734

 

 

 

5,060

 

Income tax expense

 

 

1,707

 

 

 

379

 

 

 

3,618

 

 

 

989

 

Net income

 

$

5,059

 

 

$

1,253

 

 

$

12,116

 

 

$

4,071

 

Net (Income) loss attributable to noncontrolling interest

 

 

4

 

 

 

(3

)

 

 

(1

)

 

 

(21

)

Net Income attributable to Blue Ridge Bankshares, Inc.

 

$

5,063

 

 

$

1,250

 

 

$

12,115

 

 

$

4,050

 

Net Income available to Common Stockholders

 

$

5,063

 

 

$

1,250

 

 

$

12,115

 

 

$

4,050

 

Basic earnings per common share

 

$

0.88

 

 

$

0.29

 

 

$

2.13

 

 

$

1.01

 

Diluted earnings per common share

 

$

0.88

 

 

$

0.29

 

 

$

2.13

 

 

$

1.01

 

 

See accompanying notes to unaudited consolidated financial statements.

 

4


 

Blue Ridge Bankshares, Inc.

Consolidated Statements of Comprehensive Income

(dollars in thousands)

(Unaudited)

 

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net income

 

$

5,059

 

 

$

1,253

 

 

$

12,116

 

 

$

4,071

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross unrealized gains (losses) on securities available for sale arising during the period

 

 

331

 

 

 

1,256

 

 

 

(340

)

 

 

2,288

 

Income tax (expense) benefit

 

 

(70

)

 

 

(264

)

 

 

71

 

 

 

(480

)

 

 

 

261

 

 

 

992

 

 

 

(269

)

 

 

1,808

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gains (losses) on interest rate swaps

 

 

902

 

 

 

 

 

 

(2,956

)

 

 

(483

)

Income tax (expense) benefit

 

 

(189

)

 

 

 

 

 

621

 

 

 

102

 

 

 

 

713

 

 

 

 

 

 

(2,335

)

 

 

(381

)

Less:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reclassifications adjustment for gains included in net income

 

 

209

 

 

 

(258

)

 

 

209

 

 

 

86

 

Adjustment for income tax (expense) benefit

 

 

(44

)

 

 

54

 

 

 

(44

)

 

 

(19

)

 

 

 

165

 

 

 

(204

)

 

 

165

 

 

 

67

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income (loss), net of tax

 

 

1,139

 

 

 

788

 

 

 

(2,439

)

 

 

1,494

 

Comprehensive income

 

$

6,198

 

 

$

2,041

 

 

$

9,677

 

 

$

5,565

 

Comprehensive (income) loss attributable to noncontrolling interest

 

$

4

 

 

$

(3

)

 

$

(2

)

 

$

(21

)

Comprehensive income attributable to Blue Ridge Bankshares, Inc.

 

$

6,202

 

 

$

2,038

 

 

$

9,675

 

 

$

5,544

 

 

See accompanying notes to unaudited consolidated financial statements.


5


Blue Ridge Bankshares, Inc.

Consolidated Statements of Changes in Stockholders’ Equity

(dollars in thousands, except share and per share data)

(Unaudited)

Three Months Ended September 30, 2020 and 2019

 

Common Stock

& Related

Surplus

 

 

Contributed

Equity

 

 

Retained

Earnings

 

 

Accumulated

Other

Comprehensive

Income (Loss)

 

 

Noncontrolling

Interest

 

 

Total

 

Balance, June 30, 2019

$

38,690

 

 

$

252

 

 

$

24,886

 

 

$

88

 

 

$

218

 

 

$

64,134

 

Net income

 

 

 

 

 

 

 

1,250

 

 

 

 

 

 

3

 

 

 

1,253

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

788

 

 

 

 

 

 

788

 

Dividends on common stock ($0.1425 per share)

 

 

 

 

 

 

 

(620

)

 

 

 

 

 

 

 

 

(620

)

Issuance of restricted common stock, net of

   forfeitures

 

41

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

41

 

Noncontrolling interest capital distributions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, September 30, 2019

$

38,731

 

 

$

252

 

 

$

25,516

 

 

$

876

 

 

$

221

 

 

$

65,596

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, June 30, 2020

$

66,353

 

 

$

252

 

 

$

31,675

 

 

$

(3,349

)

 

$

229

 

 

$

95,160

 

Net income

 

 

 

 

 

 

 

5,063

 

 

 

 

 

 

(4

)

 

 

5,059

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

1,139

 

 

 

 

 

 

1,139

 

Dividends on common stock ($0.2850 per share)

 

 

 

 

 

 

 

(1,631

)

 

 

 

 

 

 

 

 

(1,631

)

Issuance of restricted common stock, net of

   forfeitures

 

203

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

203

 

Balance, September 30, 2020

$

66,556

 

 

$

252

 

 

$

35,107

 

 

$

(2,210

)

 

$

225

 

 

$

99,930

 

 

Nine Months Ended September 30, 2020 and 2019

 

Common Stock

& Related

Surplus

 

 

Contributed

Equity

 

 

Retained

Earnings

 

 

Accumulated

Other

Comprehensive

Income (Loss)

 

 

Noncontrolling

Interest

 

 

Total

 

Balance, December 31, 2018

$

16,452

 

 

$

252

 

 

$

23,321

 

 

$

(618

)

 

$

213

 

 

$

39,620

 

Net income

 

 

 

 

 

 

 

4,050

 

 

 

 

 

 

21

 

 

 

4,071

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

1,494

 

 

 

 

 

 

1,494

 

Dividends on common stock ($0.4275 per share)

 

 

 

 

 

 

 

(1,855

)

 

 

 

 

 

 

 

 

(1,855

)

Noncontrolling interest capital distributions

 

 

 

 

 

 

 

 

 

 

 

 

 

(13

)

 

 

(13

)

Issuance of restricted common stock, net of

   forfeitures

 

160

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

160

 

Issuance of common stock (1,536,731 shares), net

   of capital raise expenses

 

22,119

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

22,119

 

Balance, September 30, 2019

$

38,731

 

 

$

252

 

 

$

25,516

 

 

$

876

 

 

$

221

 

 

$

65,596

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2019

$

66,204

 

 

$

252

 

 

$

25,428

 

 

$

229

 

 

$

224

 

 

$

92,337

 

Net income

 

 

 

 

 

 

 

12,115

 

 

 

 

 

 

1

 

 

 

12,116

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

(2,439

)

 

 

 

 

 

(2,439

)

Dividends on common stock ($0.4275 per share)

 

 

 

 

 

 

 

(2,436

)

 

 

 

 

 

 

 

 

(2,436

)

Issuance of restricted common stock, net of

   forfeitures

 

352

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

352

 

Balance, September 30, 2020

$

66,556

 

 

$

252

 

 

$

35,107

 

 

$

(2,210

)

 

$

225

 

 

$

99,930

 

 

See accompanying notes to unaudited consolidated financial statements.

 

6


Blue Ridge Bankshares, Inc.

Consolidated Statements of Cash Flows

For the Nine Months Ended September 30, 2020 and 2019

(dollars in thousands)

(Unaudited)

 

 

2020

 

 

2019

 

Cash flows used in operating activities:

 

 

 

 

 

 

 

Net income

$

12,116

 

 

$

4,071

 

Adjustments to reconcile net income to net cash used in operating activities:

 

 

 

 

 

 

 

Depreciation, amortization and accretion

 

704

 

 

 

383

 

Deferred income taxes

 

85

 

 

 

9

 

Provision for loan losses

 

8,075

 

 

 

1,465

 

Proceeds from sale of loans held for sale, originated

 

652,765

 

 

 

241,112

 

Gain on sale of loans held for sale, originated

 

(27,386

)

 

 

(7,455

)

Loans held for sale, originated

 

(747,771

)

 

 

(264,625

)

Gain on sale of securities

 

(209

)

 

 

(86

)

Loss (gain) on disposal of premises and equipment

 

116

 

 

 

(2

)

Loss on sale of other real estate owned

 

 

 

 

33

 

Non-cash equity compensation, net

 

352

 

 

 

160

 

Investment amortization expense, net

 

870

 

 

 

356

 

Amortization of subordinated debt issuance costs

 

37

 

 

 

25

 

Amortization of other intangibles

 

696

 

 

 

352

 

Earnings on life insurance

 

(278

)

 

 

(874

)

Decrease in goodwill

 

23

 

 

 

 

Increase in other assets

 

(29,709

)

 

 

(9,677

)

Increase in accrued expenses

 

12,160

 

 

 

8,893

 

Net cash used in operating activities

 

(117,354

)

 

 

(25,860

)

Cash flows used in investing activities:

 

 

 

 

 

 

 

Net decrease in federal funds sold

 

480

 

 

 

261

 

Purchase of securities available for sale

 

(38,579

)

 

 

(96,743

)

Proceeds from securities available for sale

 

43,452

 

 

 

15,231

 

Proceeds from securities held for investment

 

1,210

 

 

 

2,370

 

Purchase of insurance policies

 

 

 

 

(600

)

Redemption of insurance policies

 

 

 

 

1,058

 

Net change in restricted equity securities

 

(1,307

)

 

 

(2,717

)

Net increase in loans held for investment

 

(392,870

)

 

 

(46,650

)

Net increase in loans held for sale, participations

 

(15,083

)

 

 

(20,053

)

Purchase of premises and equipment

 

(2,785

)

 

 

(507

)

Proceeds from sale of premises and equipment

 

669

 

 

 

13