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CHARLOTTESVILLE, Va., July 30, 2020 /PRNewswire/ -- Blue Ridge Bankshares, Inc. (the "Company") (NYSE American: BRBS) announced today its second quarter 2020 net income of $6,218,000, or $1.10 earnings per share, compared to $841,000, or $0.15 earnings per share, for the quarterly period ended March 31, 2020, and $1,536,000, or $0.35 earnings per share, for the quarterly period ended June 30, 2019.  The growth in quarterly earnings is primarily attributable to a significant increase in mortgage volume and the recognition of Paycheck Protection Program loan processing fees over the expected loan lives.  The positive impact of these items was partially offset by additional provisioning for loan losses driven by current economic uncertainty.

"The fierce, passionate commitment of our team was never more on display than what I have seen this year," said Brian K. Plum, President and Chief Executive Officer.  "Our team fully embraced the potential of the Paycheck Protection Program to help thousands of borrowers and lift communities.  Meanwhile our mortgage team made incredible strides improving processes and systems while facilitating record volumes to help families purchase new homes and refinance existing ones.  I could not be prouder of our team for its efforts on behalf of so many people during these uncertain times."

"We also recognize and accept that there are challenging times ahead," Plum continued.  "The economic uncertainties created by the COVID-19 pandemic will resonate for years, and in the short-term will likely create more business closures and asset quality issues.  Hopefully, we continue to see monetary and fiscal policies support small businesses and borrowers as we recover, which will help mitigate, though not entirely eliminate, the economic consequences of the pandemic.  Our team stands ready to embrace the challenge of navigating the landscape to create the best outcomes possible for our customers and communities."

Paycheck Protection Program ("PPP")

The Company funded over 2,400 PPP loans totaling approximately $350,000,000, as of June 30, 2020.  Estimated PPP processing fees earned by the Company for these loans is approximately $11 million.  The Company funded these loans, which have a statutory loan interest rate of 1.00%, using the Federal Reserve Paycheck Protection Program Liquidity Facility ("PPPLF"), which provides 100% funding at a cost of 0.35%.  PPP loans do not count toward bank regulatory ratios.

COVID-19 Response

The Company has resumed normalized branch operations, following appropriate hygienic and distancing guidelines, following the temporary redirection of branch traffic to drive-thru and digital channels in mid-March 2020.  While branch traffic has steadily improved, the Company believes digital use adoption following COVID-19 will have a meaningful impact on future customer behaviors and business investment decisions.

Asset Quality

Nonperforming loans and loans 90 days or more past due totaled $6,172,000 at June 30, 2020, an increase of $1,051,000, or 20.5%, from March 31, 2020.  The Company's provision for loan losses amounted to $3,500,000 for the second quarter of 2020, compared to $575,000 in the first quarter of 2020.  The increased provisioning in the second quarter is related to the continued uncertainty surrounding COVID-19 deferred loans and borrower ability to repay once the deferral period ends. 

The Company approved 545 loan deferrals for a total of $104,750,000, or 15.4% of the held-for-investment loan portfolio excluding PPP loans, as of July 28, 2020.  Of these deferrals, 309 loans with a balance of $40,262,000 either continued making regular payments or have resumed regular payments as of July 28, 2020.  Deferrals were granted for periods up to six months depending on the industry in which the borrower operates and the borrower's specific needs.  The Company stays in continuous contact with deferred borrowers and will reevaluate the risk rating, nonaccrual, and potential impairment status of these loans consistently during the deferral period.

The economic fallout from COVID-19 is materially impacting all parts of the economy, and especially certain industries. The information below provides the Company's exposure to these industries, utilizing the Company's NAICS coding on its loan accounting system as of July 28, 2020:

Industry by NAICS Code

Number
of
Borrowers


Total Loan
Balance

Hotels and Motels

17


$28,537,315

Bed and Breakfasts

6


2,925,578

All Other Traveler Accommodations

7


4,429,624

Full-Service Restaurants

18


3,710,002

Limited-Service Restaurants

13


4,845,102

Food Service Contractor

1


1,454,672

Religious Organizations

37


7,945,973

          TOTAL

99


$53,848,266

Balance Sheet

The Company had total assets of $1,595,446,000 at June 30, 2020, an increase of $634,635,000, or 66.05%, from December 31, 2019 and $567,841,000, or 55.3% from March 31, 2020.  The increase in total assets year-to-date and for the quarter ended June 30, 2020 was primarily driven by PPP.  Loans held for investment increased $384,279,000, or 59.4% from December 31, 2019, and $360,178,000, or 53.7%, from March 31, 2020.  Included in this increase is approximately $350,091,000 of PPP loans originated throughout the second quarter.  These loans were fully funded by the Federal Reserve's PPPLF program, resulting in a corresponding increase in other borrowed funds on the balance sheet.  Additionally, cash and due from banks increased $181,110,000, or 301.7% from December 31, 2019, and $173,978,000, or 259.1% from March 31, 2020.  Included in this increase are funds retained from new customers as a result of PPP as well as additional liquidity obtained during the uncertainty surrounding COVID-19, some of which will begin to roll off in the third quarter of 2020.  Total deposits increased $243,826,000, or 33.8%, from December 31, 2019, and $196,697,000, or 25.6% from March 31, 2020.  Noninterest DDA increased $107,412,000, or 60.4% year-to-date and $106,750,000, or 59.8% for the quarter.  These increases are also attributable to funds retained from PPP customers as well as the build-up of liquidity in response to COVID-19.

On May 28, 2020, the Company entered into a subordinated note purchase agreement under which the Company issued a subordinated note with a principal amount of $15,000,000.  The note initially bears interest at 6.000% per year, beginning December 1, 2020 to but excluding June 1, 2025, payable semi-annually in arrears. From and including June 1, 2025 through June 1, 2030, or up to an earlier redemption date, the interest rate will reset quarterly to an interest rate per year equal to the then current three-month SOFR plus 587 basis points, payable quarterly in arrears. Beginning on June 1, 2025 through maturity, the note may be redeemed, at the Company's option, on any scheduled interest payment date. The note will mature on June 1, 2030. 

The Company experienced held-for-sale loan growth of $72,150,000, or 129.7%, year-to-date, and $37,777,000, or 42.0% in the second quarter. The growth in available-for-sale loans was due to an uptick in volume created by market conditions and the continued expansion of our retail and wholesale mortgage operations. 

Income Statement

Net Interest Income

Net interest income was approximately $10,645,000 for the quarter ended June 30, 2020, compared to $8,023,000 for the first quarter of 2020, and $5,203,000 for the quarter ended June 30, 2019.  Included in second quarter net interest income was approximately $2,400,000 in net PPP related loan income.  The Company continues to experience improved deposit pricing since putting significant focus into realigning the balance sheet at the end of the first quarter as a result of the significant downward rate movements that occurred. The cost of deposits decreased from 0.95% in the first quarter to 0.65% at the end of the second quarter.  Net interest margin was down slightly in the second quarter compared to the first quarter, decreasing from 3.71% to 3.19%.  This decrease is attributable to the margin pressure created by the PPP loans and related funding costs, which resulted in the Company recognizing a 0.65% net interest margin on these loans.  The future recognition of PPP income as we enter the forgiveness phase of the program in August 2020 will greatly impact the Company's net interest margin going forward. 

Other Income

Other income for the second quarter ended June 30, 2020 was $16,524,000 compared to $4,998,000 for the quarter ended March 31, 2020.  This increase is attributable to increased mortgage volume in the second quarter due to the current rate environment along with the addition of the LenderSelect Mortgage Group on December 31, 2019, and the expansion of the Company's retail mortgage division.  Year-to-date mortgage volume for 2020 was over $400 million at June 30, 2020,  which surpassed the volume the division closed in all of 2019.    

Other Expense

Other expenses for the second quarter ended June 30, 2020 were $15,807,000 compared to $11,338,000 in the first quarter of 2020.  The majority of this increase relates to salaries and benefits.  Increased volume at the mortgage division resulted in increased commission expense being recognized.  Additionally, increased staffing in the mortgage division has been necessary to keep up with the volume levels.  The mortgage division added approximately 40 net employees in various sales and support roles since the end of the first quarter.

Mortgage Division

The Company's mortgage division, which consists of its retail and wholesale mortgage efforts, recorded net income of $5,082,000 for the second quarter and $4,378,000 year-to-date.  The primary driver of these record earnings for the mortgage division was increased volume, expansion of the retail business line and the addition of the wholesale business line with the acquisition of LenderSelect Mortgage Group in late 2019.

During the second quarter, the Company began retaining mortgage servicing rights ("MSRs"), resulting in a mortgage servicing asset of $1,596,000 at June 30, 2020.  The Company expects the retention of servicing rights will support the LenderSelect Mortgage Group's wholesale mortgage efforts by clients' members and customers being subjected to reduced cross-selling by other financial institutions.  The retention of servicing rights in retail is based on current market valuations for these rights.  The Company believes the retention of these rights in the current environment will create meaningful economic returns in the future as markets normalize.

Capital and Dividends

The Company continually monitors its capital position and is particularly focused on the potential impact that the fallout from COVID-19 will have on its capital position.  The Company remains confident in its ability to maintain capital levels at amounts required for regulatory purposes and for the payment of its common stock dividend, but the ability to maintain its dividend payment remains highly dependent on the depth and breadth of the economic impact of COVID-19.  The Company may, depending on conditions, find it necessary to suspend common stock dividends.

Non-GAAP Financial Measures

The accounting and reporting policies of the Company conform to U.S. generally accepted accounting principles ("GAAP") and prevailing practices in the banking industry.  However, management uses certain non-GAAP measures to supplement the evaluation of the Company's performance. Management believes presentations of these non-GAAP financial measures provide useful supplemental information that is essential to a proper understanding of the operating results of the Company's core businesses.  These non-GAAP disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Reconciliations of GAAP to non-GAAP measures are included at the end of this release.

Forward-Looking Statements

This release contains forward-looking statements regarding the Company. Forward-looking statements are typically identified by words such as "believe," "expect", "anticipate", "intend", "target", "estimate", "continue", "positions", "prospects", "potential", "would", "should", "could", "will" or "may". These statements include, without limitation, the Company's expectations regarding its future financial performance. These forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time, and these statements may not be realized. The following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance: (1) the impact of the ongoing COVID-19 pandemic; (2) the businesses of the Company and/or VCB may not be integrated successfully or such integration may be more difficult, time-consuming or costly than expected; (3) expected revenue synergies and cost savings from the VCB merger may not be fully realized or realized within the expected timeframe; (4) revenues following the VCB merger may be lower than expected; (5) customer and employee relationships and business operations may be disrupted by the VCB merger; (6) changes in interest rates, general economic conditions, legislation and regulation, and monetary and fiscal policies of the U.S. government, including policies of the U.S. Treasury, Office of the Comptroller of the Currency and the Board of Governors of the Federal Reserve System; (7) the quality and composition of the loan and securities portfolios, demand for loan products, deposit flows, competition, and demand for financial services in the Company's market areas; (8) the implementation of new technologies, and the ability to develop and maintain secure and reliable electronic systems; (9) accounting principles, policies, and guidelines; and (10) other risk factors detailed from time to time in filings made by the Company with the Securities and Exchange Commission ("SEC") and available on the SEC's website at www.sec.gov. The Company undertakes no obligation to update or clarify these forward-looking statements, whether as a result of new information, future events or otherwise.

 

Blue Ridge Bankshares, Inc.
















Five Quarter Summary of Selected Financial Data

















Three Months Ended



June 30, 

2020


March 31,

2020


December 31,

2019


September 30,

2019


June 30, 

2019

(Dollars and shares in thousands, except per share data)






Income Statement Data:



Unaudited



Unaudited



Unaudited



Unaudited



Unaudited

Interest and Dividend Income


$

13,167


$

10,423


$

8,457


$

8,118


$

7,641

Interest Expense



2,522



2,400



2,577



2,682



2,438

Net Interest Income



10,645



8,023



5,880



5,436



5,203

Provision for Loan Losses



3,500



575



277



570



600

Net Interest Income After Provision for Loan Losses



7,145



7,448



5,603



4,866



4,603

Noninterest Income



16,524



4,998



4,541



4,973



5,383

Noninterest Expenses



15,807



11,338



9,628



8,206



8,162

Income before income taxes



7,862



1,108



516



1,633



1,824

Income tax expense (benefit)



1,644



267



(17)



380



288

Net income



6,218



841



533



1,253



1,536

Net income attributable to noncontrolling interest



4



(9)



(3)



(3)



(5)

Net income attributable to Blue Ridge Bankshares, Inc.


$

6,222


$

832


$

530


$

1,250


$

1,531

Per Common Share Data:
















Net income-basic


$

1.10


$

0.15


$

0.10


$

0.28


$

0.35

Net income-diluted



1.10



0.15



0.10



0.28



0.35

Dividends declared



0.1425



0.1425



0.1425



0.1425



0.1425

Book value per common share



16.83



15.95



16.32



15.09



14.82

Tangible book value per common share



12.72



11.80



12.14



14.00



13.71

Balance Sheet Data:
















Assets


$

1,595,446


$

1,027,605


$

960,811


$

736,238


$

721,784

Loans held for investment



1,031,113



670,935



646,834



460,878



452,229

Loans held for sale



127,796



90,019



55,646



80,255



61,976

Securities



114,003



120,254



128,897



142,712



153,764

Deposits



965,857



769,160



722,030



520,280



498,982

Subordinated Debt, net 



24,472



9,809



9,800



9,792



9,783

Other borrowed funds



478,412



140,900



124,800



129,600



138,200

Total equity



95,159



90,274



92,338



65,597



64,134

Average common shares outstanding - basic



5,659



5,664



4,588



4,347



4,329

Average common shares outstanding - diluted



5,659



5,664



4,588



4,347



4,329

Financial Ratios:
















Return on average assets



1.90%



0.34%



0.25%



0.69%



0.95%

Return on average equity



26.83%



3.68%



2.70%



7.73%



9.69%

Total loan to deposit ratio



119.99%



98.93%



97.29%



104.01%



103.05%

Held for investment loan to deposit ratio



106.76%



87.23%



89.59%



88.58%



90.63%

Net interest margin



3.19%



3.71%



3.46%



3.16%



3.35%

Cost of deposits



0.65%



0.95%



1.29%



1.35%



1.35%

Efficiency ratio



66.78%



91.10%



94.91%



83.40%



81.73%

Capital and Credit Quality Ratios:
















Average Equity to Average Assets



7.07%



9.18%



9.31%



8.90%



9.78%

Allowance for loan losses to loans held for investment



0.80%



0.73%



0.71%



0.96%



0.90%

Nonperforming loans to total assets



0.39%



0.50%



0.54%



0.78%



0.74%

Nonperforming assets to total assets



0.39%



0.50%



0.54%



0.78%



0.77%

Net charge-offs to total loans held for investment



0.02%



0.04%



0.02%



0.05%



0.06%

Net charge-offs to average loans held for investment (Annualized)



0.09%



0.15%



0.08%



0.19%



0.26%

















Reconciliation of Non-GAAP Disclosures (Unaudited):
































Tangible Common Equity:
















Common equity (GAAP)


$

95,159


$

90,274


$

92,338


$

65,597


$

64,134

Less:  Goodwill and amortizable intangibles



(23,264)



(23,456)



(23,633)



(4,722)



(4,792)

Tangible common equity (Non-GAAP)


$

71,895


$

66,818


$

68,705


$

60,875


$

59,342

















Total shares outstanding



5,654



5,661



5,659



4,347



4,329

















Book Value per Share (GAAP)


$

16.83


$

15.95


$

16.32


$

15.09


$

14.82

Tangible Book Value per Share (Non-GAAP)


$

12.72


$

11.80


$

12.14


$

14.00


$

13.71

 

BLUE RIDGE BANKSHARES, INC.

CONSOLIDATED BALANCE SHEETS












(Unaudited)



(Audited)



(Unaudited)



June 30,



December 31,



June 30

ASSETS


2020



2019



2019










Cash and due from banks

$

241,136,065


$

60,026,071


$

21,564,192

Federal funds sold


452,000



480,000



482,000

Investment securities









Securities available for sale (at fair value) 


104,480,584



108,571,161



130,282,826

Securities held to maturity


-



12,192,139



15,204,409

Restricted investments


9,522,244



8,133,519



8,277,118










Total Investment Securities


114,002,828



128,896,819



153,764,353










Loans held for sale


127,796,410



55,646,215



61,975,712

Loans held for investment


1,031,112,962



646,833,864



452,229,287

Allowance for loan losses 


(8,206,000)



(4,572,371)



(4,053,530)










Net Loans Held for Investment


1,022,906,962



642,261,493



448,175,757










Bank premises and equipment, net 


15,410,599



13,650,556



3,366,836

Bank owned life insurance


14,918,966



14,734,261



8,812,005

Goodwill


19,892,331



19,914,942



3,306,664

Other intangible assets


3,371,749



3,718,319



1,484,976

Other assets


35,558,284



21,482,629



18,851,045










Total Assets

$

1,595,446,194


$

960,811,305


$

721,783,540










LIABILITIES



























Demand deposits









Noninterest bearing

$

285,231,678


$

177,819,205


$

88,342,159

Interest bearing


337,446,577



220,776,065



147,581,521

Savings deposits


68,754,038



62,479,898



28,959,770

Time deposits 


274,424,312



260,954,991



234,098,776










Total Deposits


965,856,605



722,030,159



498,982,226










Other borrowed funds


478,411,701



124,800,000



138,200,000

Subordinated debt, net of issuance costs


24,471,884



9,800,434



9,783,492

Other liabilities


31,546,675



11,843,037



10,683,724










Total liabilities


1,500,286,865



868,473,630



657,649,442










STOCKHOLDERS' EQUITY


















Common stock, no par value, authorized - 25,000,000 shares;









  outstanding - 5,653,621 shares at 6/30/20, 5,658,585 shares









  at 12/31/19, and 4,328,866 at 6/30/19)


66,352,576



66,204,739



38,690,128

Contributed equity


251,543



251,543



251,543

Retained earnings


31,680,380



25,428,056



24,885,858

Accumulated other comprehensive income


(3,349,457)



229,051



88,349










Total Stockholders' Equity


94,935,042



92,113,389



63,915,878

Noncontrolling interest


224,287



224,286



218,220

   Total Equity


95,159,329



92,337,675



64,134,098










Total Liabilities and Equity

$

1,595,446,194


$

960,811,305


$

721,783,540

 

BLUE RIDGE BANKSHARES, INC.

CONSOLIDATED INCOME STATEMENTS









(Unaudited)



(Unaudited)



Six Months



Six Months



Ended



Ended



June 30, 2020



June 30, 2019

INTEREST INCOME






Interest and fees on loans held for investment

$

20,678,754


$

11,943,348

Interest and fees on loans held for sale


1,307,639



770,394

Interest on federal funds sold


1,656



3,989

Interest and dividends on taxable investment securities


1,512,840



1,467,994

Interest and dividends on nontaxable investment securities


89,078



126,747







Total Interest Income


23,589,967



14,312,472







INTEREST EXPENSE






Interest on savings and interest bearing demand deposits


866,592



737,023

Interest on time deposits


2,507,912



1,990,799

Interest on borrowed funds


1,547,529



1,533,150







Total Interest Expense


4,922,033



4,260,972







Net Interest Income


18,667,934



10,051,500







PROVISION FOR LOAN LOSSES


4,075,000



895,000







Net Interest Income after Provision for Loan Losses


14,592,934



9,156,500







OTHER INCOME






Service charges on deposit accounts


454,275



287,573

Earnings on investment in life insurance


184,706



815,422

Mortgage brokerage income


5,030,003



1,863,000

Gain on sale of mortgages


12,539,090



5,160,888

Mortgage servicing income


1,596,331



-

Gain (loss) on disposal of assets


(3,554)



2,474

Gain (loss) on sale of OREO


-



(33,492)

Gain on sale of guaranteed USDA loans


262,928



46,520

Other noninterest income


1,458,284



1,139,838







Total Other Income


21,522,063



9,282,223







OTHER EXPENSES






Salaries and employee benefits


18,260,642



9,070,111

Occupancy and equipment expenses


1,731,647



1,240,532

Data processing


1,124,746



656,063

Legal and other professional fees


536,744



634,664

Advertising expense


352,811



415,406

Communications


322,011



211,669

Debit card expenses


328,366



160,287

Directors fees


115,400



122,300

Audits and examinations


191,843



88,141

FDIC insurance expense


380,776



170,000

Other contractual services


354,437



180,334

Other taxes and assessments


468,788



319,305

Other noninterest expense


2,976,441



1,742,331







Total Other Expenses


27,144,652



15,011,143







Income before Income Taxes


8,970,345



3,427,580







INCOME TAX EXPENSE


1,911,544



609,974







Net Income


7,058,801



2,817,606

Net Income attributable to noncontrolling interest


(5,559)



(18,176)

Net Income attributable to Blue Ridge Bankshares, Inc.

$

7,053,242


$

2,799,430







Net Income Available to Common Stockholders

$

7,053,242


$

2,799,430







Earnings per Share

$

1.25


$

0.73







Weighted Average Shares Outstanding


5,661,877



3,821,079

 

BLUE RIDGE BANKSHARES, INC.

CONSOLIDATED INCOME STATEMENTS









(Unaudited)



(Unaudited)



Three Months



Three Months



Ended



Ended



June 30, 2020



June 30, 2019

INTEREST INCOME






Interest and fees on loans held for investment

$

11,573,596


$

6,110,892

Interest and fees on loans held for sale


868,913



488,109

Interest on federal funds sold


47



2,851

Interest and dividends on taxable investment securities


683,539



977,147

Interest and dividends on nontaxable investment securities


40,994



62,409







Total Interest Income


13,167,089



7,641,408







INTEREST EXPENSE






Interest on savings and interest bearing demand deposits


376,670



387,212

Interest on time deposits


1,272,676



1,154,964

Interest on borrowed funds


872,853



896,298







Total Interest Expense


2,522,199



2,438,474







Net Interest Income


10,644,890



5,202,934







PROVISION FOR LOAN LOSSES


3,500,000



600,000







Net Interest Income after Provision for Loan Losses


7,144,890



4,602,934







OTHER INCOME






Service charges on deposit accounts


182,759



153,458

Earnings on investment in life insurance


91,999



760,006

Mortgage brokerage income


4,210,108



738,346

Gain on sale of mortgages


9,498,468



3,194,134

Mortgage servicing income


1,596,331



-

Gain (loss) on sale of OREO


-



(3,756)

Gain on sale of guaranteed USDA loans


242,699



46,520

Other noninterest income


702,604



494,044







Total Other Income


16,524,968



5,382,752







OTHER EXPENSES






Salaries and employee benefits


10,919,901



4,824,247

Occupancy and equipment expenses


875,226



638,908

Data processing


658,370



306,273

Legal and other professional fees


338,757



634,664

Advertising expense


128,669



220,166

Communications


187,118



101,447

Debit card expenses


170,609



78,303

Directors fees


49,100



69,150

Audits and examinations


149,170



51,756

FDIC insurance expense


230,388



170,000

Other contractual services


179,187



105,148

Other taxes and assessments


245,070



258,242

Other noninterest expense


1,675,426



703,299







Total Other Expenses


15,806,991



8,161,603







Income before Income Taxes


7,862,867



1,824,083







INCOME TAX EXPENSE


1,644,316



288,147







Net Income


6,218,551



1,535,936

Net Income attributable to noncontrolling interest


3,947



(5,068)

Net Income attributable to Blue Ridge Bankshares, Inc.


6,222,498



1,530,868







Net Income Available to Common Stockholders

$

6,222,498



1,530,868







Earnings per Share

$

1.10



0.35







Weighted Average Shares Outstanding


5,659,047



4,329,113

 

 

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