BLUE RIDGE BANKSHARES, INC. 10-Q

10-Q 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 March 31, 2023 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 54-1838100 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 1807 Seminole Trail Charlottesville , Virginia 22901 (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 May 3, 2023, the registrant had 18,942,513 shares of common stock, no par value per share, outstanding. Blue Ridge Bankshares, Inc. Table of Contents Item Page PART I FINANCIAL INFORMATION Item 1. Financial Statements 3 Consolidated Balance Sheets as of March 31, 2023 (unaudited) and December 31, 2022 3 Consolidated Statements of Operations for the three months ended March 31, 2023 and 2022 (unaudited) 4 Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2023 and 2022 (unaudited) 5 Consolidated Statements of Changes in Stockholders’ Equity for the three months ended March 31, 2023 and 2022 (unaudited) 6 Consolidated Statements of Cash Flows for the three months ended March 31, 2023 and 2022 (unaudited) 8 Notes to Consolidated Financial Statements (unaudited) 10 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 38 Item 3. Quantitative and Qualitative Disclosures about Market Risk 52 Item 4. Controls and Procedures 52 PART II OTHER INFORMATION 53 Item 1. Legal Proceedings 53 Item 1A. Risk Factors 53 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 53 Item 3. Defaults Upon Senior Securities 53 Item 4. Mine Safety Disclosures 53 Item 5. Other Information 53 Item 6. Exhibits 53 Signatures 54 2 PART I. FINAN CIAL INFORMATION Item 1. Financi al Statements Blue Ridge Bankshares, Inc. Consolidated B alance Sheets (unaudited) (Dollars in thousands except share data) March 31, 2023 December 31, 2022 (1) ASSETS Cash and due from banks $ 226,374 $ 77,274 Federal funds sold 1,976 1,426 Securities available for sale, at fair value 351,990 354,341 Restricted equity investments 18,388 21,257 Other equity investments 22,960 23,776 Other investments 26,538 24,672 Loans held for sale 76,528 69,534 Paycheck Protection Program loans, net of deferred fees and costs 7,988 11,967 Loans held for investment, net of deferred fees and costs 2,448,992 2,399,092 Less: allowance for credit losses ( 29,974 ) ( 22,939 ) Loans held for investment, net 2,419,018 2,376,153 Accrued interest receivable 14,915 12,393 Other real estate owned — 195 Premises and equipment, net 23,244 23,152 Right-of-use asset 6,470 6,903 Bank owned life insurance 47,536 47,245 Goodwill 26,826 26,826 Other intangible assets 6,196 6,583 Mortgage servicing rights, net 27,095 28,991 Deferred tax asset, net 9,605 9,182 Other assets 21,264 19,175 Total assets $ 3,334,911 $ 3,141,045 LIABILITIES & STOCKHOLDERS’ EQUITY Deposits: Noninterest-bearing demand $ 594,518 $ 640,101 Interest-bearing demand and money market deposits 1,326,655 1,318,799 Savings 143,530 151,646 Time deposits 696,344 391,961 Total deposits 2,761,047 2,502,507 FHLB borrowings 239,100 311,700 FRB borrowings — 51 Subordinated notes, net 39,904 39,920 Lease liabilities 7,398 7,860 Other liabilities 29,876 19,634 Total liabilities 3,077,325 2,881,672 Commitments and contingencies (Note 12) Stockholders’ Equity: Common stock, no par value; 50,000,000 shares authorized at March 31, 2023 and December 31, 2022; 18,942,091 and 18,774,082 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively 196,498 195,960 Additional paid-in capital 252 252 Retained earnings 102,071 108,262 Accumulated other comprehensive loss, net of tax ( 41,235 ) ( 45,101 ) Total stockholders’ equity 257,586 259,373 Total liabilities and stockholders’ equity $ 3,334,911 $ 3,141,045 (1) Derived from audited December 31, 2022 Consolidated Financial Statements. See accompanying notes to unaudited consolidated financial statements. 3 Blue Ridge Bankshares, Inc. Consolidated Stat ements of Operations (unaudited) For the three months ended (Dollars in thousands, except per share data) March 31, 2023 March 31, 2022 INTEREST INCOME Interest and fees on loans $ 39,294 $ 23,899 Interest on securities, deposit accounts, and federal funds sold 3,759 1,903 Total interest income 43,053 25,802 INTEREST EXPENSE Interest on deposits 11,331 1,556 Interest on subordinated notes 553 553 Interest on FHLB and FRB borrowings 3,810 25 Total interest expense 15,694 2,134 Net interest income 27,359 23,668 Provision for credit losses - loans 4,100 2,500 Provision (benefit) for credit losses - unfunded commitments ( 400 ) — Total provision for credit losses 3,700 2,500 Net interest income after provision for credit losses 23,659 21,168 NONINTEREST INCOME Fair value adjustments of other equity investments ( 51 ) 9,364 Residential mortgage banking income, including MSRs 1,303 9,559 Gain on sale of guaranteed government loans 2,409 1,427 Wealth and trust management 432 391 Service charges on deposit accounts 343 315 Increase in cash surrender value of bank owned life insurance 282 272 Bank and purchase card, net 340 422 Other 2,225 2,344 Total noninterest income 7,283 24,094 NONINTEREST EXPENSE Salaries and employee benefits 15,289 14,096 Occupancy and equipment 1,569 1,485 Data processing 1,346 946 Legal 1,234 382 Advertising and marketing 286 428 Communications 1,131 799 Audit and accounting fees 146 141 FDIC insurance 729 231 Intangible amortization 355 397 Other contractual services 939 534 Other taxes and assessments 802 570 Regulatory remediation 1,134 — Merger-related — 50 Other 3,887 2,630 Total noninterest expense 28,847 22,689 Income from continuing operations before income tax expense 2,095 22,573 Income tax expense 491 5,153 Net income from continuing operations $ 1,604 $ 17,420 Discontinued Operations Income from discontinued operations before income taxes — 426 Income tax expense — 89 Net income from discontinued operations — 337 Net income $ 1,604 $ 17,757 Net income from discontinued operations attributable to noncontrolling interest — ( 1 ) Net income attributable to Blue Ridge Bankshares, Inc. $ 1,604 $ 17,756 Net income available to common stockholders $ 1,604 $ 17,756 Basic and Diluted EPS from continuing operations $ 0.09 $ 0.93 See accompanying notes to unaudited consolidated financial statements. 4 Blue Ridge Bankshares, Inc. Consolidated Statements of Comprehensive Income (Loss) (unaudited) For the three months ended (Dollars in thousands) March 31, 2023 March 31, 2022 Net income $ 1,604 $ 17,757 Other comprehensive income (loss): Gross unrealized gains (losses) on securities available for sale arising during the period 4,979 ( 22,586 ) Deferred income tax (expense) benefit ( 1,113 ) 4,742 Unrealized gains (losses) on securities available for sale arising during the period, net of tax 3,866 ( 17,844 ) Other comprehensive gain (loss), net of tax 3,866 ( 17,844 ) Comprehensive net income (loss) $ 5,470 $ ( 87 ) Comprehensive net income from discontinued operations attributable to noncontrolling interest — ( 1 ) Comprehensive net income (loss) attributable to Blue Ridge Bankshares, Inc. $ 5,470 $ ( 88 ) See accompanying notes to unaudited consolidated financial statements. 5 Blue Ridge Bankshares, Inc. Consolidated Statements of Changes in Stockholders’ Equity (unaudited) For the three months ended March 31, 2023 (Dollars in thousands) Shares of Common Stock Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive (Loss) Income, net Total Balance at beginning of period 18,950,329 $ 195,960 $ 252 $ 108,262 $ ( 45,101 ) $ 259,373 Cumulative effect adjustment due to adoption of accounting standard, net of income taxes — — — ( 5,474 ) — ( 5,474 ) Net income — — — 1,604 — 1,604 Other comprehensive income — — — — 3,866 3,866 Dividends on common stock — — — ( 2,321 ) — ( 2,321 ) Stock option exercises 3,750 26 — — — 26 Restricted stock awards, net of forfeitures ( 14,632 ) 479 — — — 479 Dividend reinvestment plan issuances 2,644 33 — — — 33 Balance at end of period 18,942,091 $ 196,498 $ 252 $ 102,071 $ ( 41,235 ) $ 257,586 6 For the three months ended March 31, 2022 (Dollars in thousands) Shares of Common Stock Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss, net Noncontrollin g Interest of Discontinued Operations Total Balance at beginning of period 18,774,082 194,309 252 85,982 ( 3,632 ) 228 277,139 Cumulative effect adjustment of change in accounting method, net of income taxes — — — 3,542 — — 3,542 Net income — — — 17,756 — 1 17,757 Other comprehensive loss — — — — ( 17,844 ) — ( 17,844 ) Dividends on common stock — — — ( 2,253 ) — — ( 2,253 ) Stock option exercises 1,183 15 — — — — 15 Restricted stock awards, net of forfeitures ( 4,200 ) 355 — — — — 355 Disposition of noncontrolling interest — — — — — ( 229 ) ( 229 ) Balance at end of period 18,771,065 $ 194,679 $ 252 $ 105,027 $ ( 21,476 ) $ — $ 278,482 See accompanying notes to unaudited consolidated financial statements. 7 Blue Ridge Bankshares, Inc. Consolidated Statem ents of Cash Flows (unaudited) For the three months ended (Dollars in thousands) March 31, 2023 March 31, 2022 Cash Flows From Operating Activities Net income from continuing operations $ 1,604 $ 17,420 Net income from discontinued operations — 337 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 444 525 Deferred income tax (benefit) expense ( 462 ) 3,801 Provision for credit losses 3,700 2,500 Accretion of fair value adjustments (discounts) on acquired loans ( 688 ) ( 2,691 ) Accretion of fair value adjustments (premiums) on acquired time deposits ( 284 ) ( 470 ) Accretion of fair value adjustments (premiums) on acquired subordinated notes ( 25 ) ( 25 ) Proceeds from sale of mortgage loans held for sale 51,748 234,550 Mortgage loans held for sale, originated ( 45,231 ) ( 153,534 ) Gain on sale of mortgage loans ( 364 ) ( 77 ) Proceeds from sale of guaranteed government loans held for sale 33,049 — Guaranteed government loans held for sale, originated ( 32,024 ) — Gain on sale of guaranteed government loans ( 2,409 ) — Loss (gain) on disposal of other assets 11 ( 405 ) Realized gains on sale of other equity securities ( 10 ) — Investment amortization expense, net 162 452 Amortization of subordinated debt issuance costs 9 9 Intangible amortization 355 397 Fair value adjustments of other equity investments 51 ( 9,364 ) Fair value adjustments attributable to mortgage servicing rights 2,138 ( 3,777 ) Increase in cash surrender value of bank owned life insurance ( 282 ) ( 272 ) Increase in accrued interest receivable ( 2,522 ) ( 2,820 ) (Increase) decrease in other assets ( 4,374 ) 3,971 Increase in reserve for unfunded commitments 3,292 70 Increase in other liabilities 6,488 4,430 Net cash provided by operating activities - continuing operations 14,376 95,027 Net cash provided by operating activities - discontinued operations — 55 Cash provided by operating activities 14,376 95,082 Cash Flows From Investing Activities Net increase in loans held for investment ( 61,529 ) ( 66,088 ) Net increase in federal funds sold ( 550 ) ( 30,391 ) Purchases of securities available for sale — ( 32,660 ) Proceeds from calls, sales, paydowns, and maturities of securities available for sale 7,972 7,743 Proceeds from sale of other real estate owned 264 70 Net decrease in Paycheck Protection Program loans 3,979 7,552 Net change in restricted equity and other investments 2,561 ( 283 ) Purchase of premises and equipment ( 536 ) ( 104 ) Proceeds from sale of other assets 193 1,937 Capital calls of small business investment company funds and other investments ( 1,682 ) ( 3,553 ) Nonincome distributions from SBIC funds and other investments 141 227 Net cash used in investing activities - continuing operations ( 49,187 ) ( 115,550 ) Net cash provided by investing activities - discontinued operations — 245 Cash used in investing activities ( 49,187 ) ( 115,305 ) 8 Cash Flows From Financing Activities Net (decrease) increase in demand, savings, and other interest-bearing deposits ( 45,843 ) 98,992 Net increase (decrease) in time deposits 304,667 ( 42,212 ) Common stock dividends paid ( 2,321 ) ( 2,253 ) FHLB advances 510,000 — FHLB repayments ( 582,600 ) — FRB repayments ( 51 ) ( 2,690 ) Stock option exercises 26 15 Dividend reinvestment plan issuances 33 — Net cash provided by financing activities - continuing operations 183,911 51,852 Net cash provided by financing activities - discontinued operations — — Cash provided by financing activities 183,911 51,852 Net increase in cash and due from banks 149,100 31,629 Cash and due from banks at beginning of period 77,274 130,548 Cash and due from banks at end of period $ 226,374 $ 162,177 Supplemental Schedule of Cash Flow Information Cash paid for: Interest $ 13,203 $ 1,598 Income taxes $ 6 $ — Non-cash investing and financing activities: Unrealized gains (losses) on securities available for sale $ 4,979 $ ( 22,586 ) Restricted stock awards, net of forfeitures $ 479 $ 355 Cumulative effect adjustment due to adoption of accounting standard, net of income taxes $ ( 5,474 ) $ — Cumulative effect adjustment of change in accounting method, net of income taxes $ — $ 3,542 See accompanying notes to unaudited consolidated financial statements. 9 Notes to Consolidated Financial Statements (Unaudited) Note 1 – Organization and Basis of Presentation Blue Ridge Bankshares, Inc. (the “Company”) conducts its business activities primarily through its wholly-owned subsidiary bank, Blue Ridge Bank, National Association (the “Bank”) and its wealth and trust management subsidiary, BRB Financial Group, Inc. (the “Financial Group”). The Company exists primarily for the purposes of holding the stock of its subsidiaries, the Bank and the Financial Group. The accompanying unaudited consolidated financial statements of the Company include the accounts of the Bank and the Financial Group and were prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and general practices within the banking industry. All significant intercompany balances and transactions have been eliminated in consolidation. These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. The Company sold its majority interest in MoneyWise Payroll Solutions, Inc. (“MoneyWise”) to the holder of the minority interest in MoneyWise in the first quarter of 2022. Asset and liability balances and income statement amounts related to MoneyWise are reported as discontinued operations for all relevant periods. On August 29, 2022, the Bank entered into a formal written agreement (the “Written Agreement”) with the Office of the Comptroller of the Currency (the “OCC”), the Bank’s primary federal banking regulator. The Written Agreement principally concerns the Bank’s fintech line of business and requires the Bank to continue enhancing its controls for assessing and managing the third-party, Bank Secrecy Act/Anti-Money Laundering, and information technology risks stemming from its fintech partnerships. A complete copy of the Written Agreement was filed as an exhibit to a Form 8-K filed with the Securities and Exchange Commission (“SEC”) on September 1, 2022 and can be accessed on the SEC’s website ( www.sec.gov ) and the Company’s website ( www.blueridgebankshares.com . The Company is actively working to bring the Bank’s fintech policies, procedures, and operations into conformity with OCC directives. The Company reports that although work is progressing, many aspects of the Written Agreement require considerable time for completion, implementation, validation, and sustainability. Certain amounts presented in the consolidated financial statements of prior periods have been reclassified to conform to current period presentations. The reclassifications had no effect on net income, net income per share, total assets, total liabilities, or stockholders’ equity as previously reported. The Company's significant accounting policies are disclosed in Note 2 of the audited financial statements and notes for the year ended December 31, 2022 and are contained in the Company's Annual Report on Form 10-K. There have been no significant changes to the application of significant accounting policies since December 31, 2022, except as described in Note 2 - Adoption of New Accounting Standard of this Form 10-Q. Note 2 – Adoption of New Accounting Standard On January 1, 2023, the Company adopted Accounting Standards Update (“ASU”) No. 2016-13 - Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”) along with amendments ASU 2019-11 - Codification Improvements to Topic 326, Financial Instruments – Credit Losses, and ASU 2022-02 - Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures (“ASU 2022-02”). Together, these ASUs, referred to herein as Accounting Standards Codification (“ASC”) “ASC 326”, replace the incurred loss impairment methodology with the current expected credit loss methodology (“CECL”) and require consideration of a broader range of information to determine credit loss estimates at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. ASC 326 applies to financial assets subject to credit losses that are measured at amortized cost and certain off-balance sheet credit exposures, which include, but are not limited to, loans held for investment, leases, held to maturity (“HTM”) securities, loan commitments, and financial guarantees. 10 The Company adopted ASC 326 using the modified retrospective method for all financial assets measured at amortized cost and off-balance sheet credit exposures, which included loans held for investment and commitments to extend credit (loan commitments and stand-by letters of credit), respectively. The Company does not have any securities classified as HTM. Results for reporting periods beginning after January 1, 2023 are presented under ASC 326 while prior period amounts are reported in accordance with previously applicable GAAP. The following table presents the impact to the consolidated balance sheet as the result of adopting ASC 326 effective January 1, 2023. (Dollars in thousands) January 1, 2023 Post-ASC 326 Adoption December 31, 2022 Pre-ASC 326 Adoption Impact of ASC 326 Adoption Assets: Loans held for investment, net of deferred fees and costs $ 2,399,757 $ 2,399,092 $ 665 Allowance for credit losses ( 26,961 ) ( 22,939 ) ( 4,022 ) Deferred tax asset, net 10,757 9,182 1,575 Liabilities: Reserve for unfunded commitments 1 5,504 1,812 3,692 Stockholders' Equity: Retained earnings 102,788 108,262 ( 5,474 ) 1 Included in other liabilities on the consolidated balance sheets Loans Held for Investment and Allowance for Credit Losses (“ACL”). Loans that management has the intent and ability to hold for the foreseeable future or until loan maturity or pay-off are reported held for investment at their outstanding principal balance adjusted for any charge-offs and net of any deferred fees (including purchase accounting adjustments) and origination costs (collectively referred to as "amortized cost"). Loan origination fees and certain direct origination costs are deferred and amortized as an adjustment of the yield using the payment terms required by the loan contract. Loans are generally placed into nonaccrual status when they are past due 90 days or more as to either principal or interest or when, in the opinion of management, the collection of principal and/or interest is in doubt. A loan remains in nonaccrual status until the loan is current as to payment of both principal and interest or past due less than 90 days and the borrower demonstrates the ability to pay and remain current. When cash payments are received, they are applied to principal first, then to accrued interest. It is the Company's policy not to record interest income on nonaccrual loans until principal has become current. In certain instances, accruing loans that are past due 90 days or more as to principal or interest may not go on nonaccrual status if the Company determines that the loans are well-secured and are in the process of collection. In accordance with ASC 326, the Company elected to exclude accrued interest from the amortized cost basis in its determination of the ACL for loans held for investment, and will instead reverse accrued but unpaid interest through interest income in the period in which the loan is placed on nonaccrual status. The ACL represents management’s best estimate of credit losses over the remaining life of the loan portfolio. Loans are charged-off against the ACL when management believes the loan balance is no longer collectible. Subsequent recoveries of previously charged-off amounts (recoveries) are recorded as increases to the ACL. The provision for credit losses is an amount sufficient to bring the ACL to an estimated balance that management considers adequate to absorb lifetime expected losses in the Company’s held for investment loan portfolio. The ACL is a valuation account that is deducted from the loans' amortized cost basis to present the net amount expected to be collected on the loans. Management’s determination of the adequacy of the ACL under ASC 326 is based on an evaluation of the composition of the loan portfolio current economic conditions, historical loan loss experience, reasonable and supportable forecasts, and other risk factors. The Company uses a third-party CECL model as part of its estimation of the ACL on a quarterly basis. Loans with similar risk characteristics are collectively assessed within pools (or segments). Loss estimates within the collectively assessed population are based on a combination of pooled assumptions and loan-level characteristics. The Company has determined that using federal call codes is an appropriate loan segmentation methodology, as it is generally based on risk characteristics of a loan's underlying collateral. Using federal call codes also allows the Company to utilize and assess publicly-available external information when developing its estimate of the ACL. The discounted cash flow ("DCF") method is the primary credit loss estimation methodology used by the Company and involves estimating future cash flows for each individual loan and discounting them back to their present value using the loan's contractual interest rate, which is adjusted for any net deferred fees, costs, premiums, or 11 discounts existing at the loan's origination or acquisition date (also referred to as the effective interest rate). The DCF method also considers factors such as loan term, prepayment or curtailment assumptions, and other relevant economic factors that could affect future cash flows. By discounting the cash flows, the method incorporates the time value of money and reflects the credit risk inherent in the loan. In applying future economic forecasts, the Company utilizes a forecast period of one year and then reverts to the mean of historical loss rates on a straight-line basis over the following one-year period. The Company considers economic forecasts of national gross domestic product and unemployment rates from the Federal Open Market Committee to inform the model for loss estimation. Historical loss rates used in the quantitative model were derived using both the Bank's and peer bank data obtained from publicly-available sources (i.e., federal call reports). The Bank's peer group utilized is comprised of financial institutions of relatively similar size (i.e., $ 3 - $ 5 billion of total assets) and in similar markets. Management also considers qualitative adjustments when estimating loan losses to take into account the model's quantitative limitations. Qualitative adjustments to quantitative loss factors, either negative or positive, may include considerations of trends in delinquencies, nonaccrual loans, charged-off loans, changes in volume and terms of loans, effects of changes in lending policy, experience and depth of management, regional and local economic trends and conditions, and concentrations of credit, competition, and loan review results. For those loans that do not share similar risk characteristics, the Company evaluates the ACL needs on an individual (or loan by loan) basis. This population of individually evaluated loans (or loan relationships with the same primary source of repayment) is determined on a quarterly basis and is based on whether (1) the risk grade of the loan i s substandard or worse and the balance exceeds $ 500,000 or (2) the risk grade of the loan is special mention, the balance exceeds $ 3,000,000 , and the loan's terms differ significantly from other pooled loans. Measurement of credit loss is based on the expected future cash flows of an individually evaluated loan, discounted at the loan's effective interest rate, or measured on an observable market value, if one exists, or the estimated market value of the collateral underlying the loan, discounted to consider estimated costs to sell the collateral for collateral-dependent loans. If the net value is less than the loan's amortized cost, a specific reserve in the ACL is recorded, which is charged-off in the period when management believes the loan balance is no longer collectible. The Company’s Allowance Committee approves the key methodologies and assumptions, as well as the final ACL on a quarterly basis. While management uses available information at the time of estimation to determine expected credit losses on loans, future changes in the ACL may be necessary based on changes in portfolio composition, portfolio credit quality, and/or economic conditions. In addition, bank regulatory agencies and the Bank’s auditors periodically review its ACL and may require an increase in the provision for credit losses or the recognition of further loan charge-offs, based on judgments different than those of management. Upon the adoption of ASC 326, the Company recorded an increase in its ACL of $ 4.0 million, along with an after-tax cumulative effect adjustment, which reduced stockholders' equity by $ 2.6 million. Collateral-dependent Loans The Company has certain loans for which repayment is dependent upon the operation or sale of collateral, as the borrower is experiencing financial difficulty. The underlying collateral can vary based upon the type of loan. The following provides more detail about the types of collateral that secure collateral-dependent loans: • Commercial real estate loans may be secured by either owner occupied commercial real estate or non-owner occupied investment commercial real estate. Typically, owner occupied commercial real estate loans are secured by office buildings, warehouses, manufacturing facilities, and other commercial and industrial properties occupied by operating companies. Repayment is generally from the cash flows of the business occupying the property. Non-owner occupied commercial real estate loans are generally secured by office buildings and complexes, retail facilities, multifamily complexes, land under development, industrial properties, as well as other commercial or industrial real estate. • Commercial and industrial loans may be secured by non-real estate collateral such as accounts receivable, inventory, equipment, or other similar assets. • Residential real estate loans are typically secured by first mortgages, and in some cases could be secured by a second mortgage. 12 • Home equity lines of credit are generally secured by second mortgages on residential real estate property. • Consumer loans are generally secured by automobiles, motorcycles, recreational vehicles and other personal property. Some consumer loans are unsecured, have no underlying collateral, and would not be considered collateral-dependent. Acquired Loans The Company has acquired loans through its mergers with Bay Banks of Virginia, Inc. in 2021 (the "Bay Banks Merger") and Virginia Community Bankshares, Inc. in 2019. Prior to the adoption of ASC 326, a portion of these loans were classified as purchased-credit impaired ("PCI") under ASC 310-30 – Loans and Debt Securities Acquired with Deteriorated Credit Quality. Upon the adoption of ASC 326, the Company elected to designate its existing PCI loans as purchased credit deteriorated ("PCD") loans using the prospective transition approach. Previously established PCI loan "pools" were eliminated, and, as a result, an increase in the ACL for PCD loans of $ 665 thousand was recorded, and a corresponding increase in the amortized cost basis of loans held for investment was recorded. The amortized cost of PCD loans post ASC 326 adoption on January 1, 2023 was $ 59.3 million, which includes a non-credit discount of $ 5.6 million that will be accreted into interest income over the remaining contractual lives of the underlying loans. Modified Loans ASU 2022-22 eliminated the concept of troubled debt restructurings ("TDRs") from the accounting standards for companies that have adopted ASC 326. ASU 2022-02 also requires additional disclosures for certain loan modifications and disclosures of gross charge-offs by year of origination. Specifically, loan modification disclosures in periods subsequent to the adoption of ASC 326 must be made for modifications of existing loans to borrowers who were experiencing financial difficulties at the time of the modification. The modification type must include a direct change in the timing or amount of a loan's contractual cash flows. The additional disclosures are applicable to situations where there is: principal forgiveness, an interest rate reduction, an other-than-insignificant payment delay, a term extension, or any combination thereof. Available for Sale ("AFS") Securities. The Company evaluates the fair value and credit quality of its AFS securities portfolio on a quarterly basis. In the event the fair value of a security falls below its amortized cost basis, the security is evaluated to determine whether the decline in value was caused by changes in market interest rates or security credit quality. The primary indicators of credit quality for the Company’s AFS securities portfolio are security type and credit rating, which is influenced by a number of security-specific factors that may include obligor cash flow, geography, seniority, and others. If unrealized losses are related to credit quality, the Company estimates the credit-related loss by evaluating the present value of cash flows expected to be collected from the security with the amortized cost basis of the security. Subsequent to the adoption of ASC 326, if the present value of cash flows expected to be collected is less than the amortized cost basis of the security and a credit loss exists, then an ACL is recorded for the credit loss, limited by the amount that the fair value is less than amortized cost basis. As of December 31, 2022, the Company did not have any other-than-temporarily impaired AFS securities. Therefore, upon adoption of ASC 326, the Company determined that an ACL on AFS securities was not warranted. Reserve for Unfunded Commitments . The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company. The reserve for unfunded commitments is adjusted as a provision for credit loss expense. The estimate includes consideration of the likelihood that funding will occur, the existence of any third-party guarantees, and an estimate of credit losses on commitments expected to be funded using the same loss rates of similar financial instruments derived in the estimation of ACL for loans held for investment. Upon the adoption of ASC 326, the Company recorded an increase in its reserve for unfunded commitments of $ 3.7 million, along with an after-tax cumulative effect adjustment, which reduced stockholders' equity by $ 2.9 million. 13 Note 3 – In vestment Securities and Other Investments Investment securities classified as AFS are carried at fair value in the consolidated balance sheets. The following tables present amortized cost, fair values, and gross unrealized gains and losses of investment securities AFS as of the dates stated. March 31, 2023 (Dollars in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Available for sale State and municipal $ 59,408 $ — $ ( 7,747 ) $ 51,661 U.S. Treasury and agencies 72,051 — ( 9,898 ) 62,153 Mortgage backed securities 231,761 19 ( 32,461 ) 199,319 Corporate bonds 42,420 32 ( 3,595 ) 38,857 Total investment securities $ 405,640 $ 51 $ ( 53,701 ) $ 351,990 December 31, 2022 (Dollars in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Available for sale State and municipal $ 60,018 $ — $ ( 9,025 ) $ 50,993 U.S. Treasury and agencies 80,073 — ( 12,911 ) 67,162 Mortgage backed securities 230,015 51 ( 33,730 ) 196,336 Corporate bonds 42,909 124 ( 3,183 ) 39,850 Total investment securities $ 413,015 $ 175 $ ( 58,849 ) $ 354,341 As of March 31, 2023 and December 31, 2022 , securities with a fair value of $ 242.8 million and $ 241.9 million, respectively, were pledged to secure the Bank’s line of credit with the Federal Home Loan Bank of Atlanta ("FHLB"). As of March 31, 2023, the Company pledged securities with $ 29.9 million of par value (amortized cost and fair value of $ 29.8 million and $ 25.5 million, respectively) as collateral for the Bank Term Funding Program (“BTFP”) established by the Board of Governors of the Federal Reserve System (the “Federal Reserve”). The BTFP was created and announced on March 12, 2023 in response to industry events to provide banks with additional liquidity via a secured line of credit collateralized by eligible pledged securities. Available credit is equal to the current par value of the pledged securities. Advances under the BTFP are up to a one-year term and are priced at the one-year overnight index swap rate plus 10 basis points, which is fixed for the term on the advance date. The following table presents the amortized cost and fair value of securities available for sale by contractual maturity as of the date stated. Expected maturities may differ from contractual maturities, as issuers may have the right to call or prepay obligations with or without call or prepayment penalties. March 31, 2023 (Dollars in thousands) Amortized Cost Fair Value Due in one year or less $ 1,502 $ 1,499 Due after one year through five years 52,227 47,470 Due after five years through ten years 129,729 114,220 Due after ten years 222,182 188,801 Total $ 405,640 $ 351,990 14 The following tables present a summary of unrealized losses and the length of time securities have been in a continuous loss position, by security type and number of securities, as of the dates stated. March 31, 2023 Less than 12 Months 12 Months or Greater Total (Dollars in thousands) Number of Securities Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses State and municipal 80 $ 3,265 $ ( 92 ) $ 46,807 $ ( 7,655 ) $ 50,072 $ ( 7,747 ) U.S. Treasury and agencies 26 4,885 ( 115 ) 57,264 ( 9,783 ) 62,149 ( 9,898 ) Mortgage backed securities 81 11,475 ( 408 ) 179,759 ( 32,053 ) 191,234 ( 32,461 ) Corporate bonds 34 20,801 ( 1,729 ) 12,724 ( 1,866 ) 33,525 ( 3,595 ) Total 221 $ 40,426 $ ( 2,344 ) $ 296,554 $ ( 51,357 ) $ 336,980 $ ( 53,701 ) December 31, 2022 Less than 12 Months 12 Months or Greater Total (Dollars in thousands) Number of Securities Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses State and municipal 82 $ 18,252 $ ( 2,178 ) $ 31,530 $ ( 6,847 ) $ 49,782 $ ( 9,025 ) U.S. Treasury and agencies 28 9,904 ( 1,039 ) 56,686 ( 11,872 ) 66,590 ( 12,911 ) Mortgage backed securities 78 39,006 ( 3,061 ) 148,449 ( 30,669 ) 187,455 ( 33,730 ) Corporate bonds 33 26,018 ( 2,283 ) 5,675 ( 900 ) 31,693 ( 3,183 ) Total 221 $ 93,180 $ ( 8,561 ) $ 242,340 $ ( 50,288 ) $ 335,520 $ ( 58,849 ) The Company reviews its AFS securities portfolio for potential credit losses at least quarterly. At March 31, 2023 and December 31, 2022, the majority of securities in an unrealized loss position were of investment grade; however, a few did not have a third-party investment grade available. These ungraded securities were primarily subordinated debt instruments issued by bank holding companies and are classified as corporate bonds in the in the tables above. Investment securities with unrealized losses are generally a result of pricing changes due to changes in the interest rate environment since purchase and not as a result of permanent credit impairment. Contractual cash flows for mortgage backed securities are guaranteed and/or funded by the U.S. government. Municipal securities show no indication that the contractual cash flows will not be received when due. The Company does not intend to sell, nor does it believe that it will be required to sell, any of its temporarily impaired securities prior to the recovery of the amortized cost. As of March 31, 2023, there is no ACL against the Company's AFS securities portfolio. Restricted equity investments consiste d of stock in the FHLB (carrying value of $ 11.8 million and $ 14.7 million as of March 31, 2023 and December 31, 2022, respectively), stock in the Federal Reserve Bank of Richmond ("FRB") (carrying value of $ 6.1 m illion at both March 31, 2023 and December 31, 2022), and stock in the Bank’s correspondent bank (carrying value of $ 468 thousand at both March 31, 2023 and December 31, 2022). Restricted equity investments are carried at cost. The Company also has various other equity investments, including shares in other financial institutions and fintech companies, totaling $ 23.0 million and $ 23.8 million as of March 31, 2023 and December 31, 2022 , respectively, which are carried at fair value with any gain or loss reported in the consolidated statements of operations each reporting period. As no actively traded market exists for substantially all of the Company's other equity investments, fair value adjustments are determined by reviewing recent observable market transactions, such as stock or equity transactions, that are substantially similar to the Company's existing investments. Other equity investments are also periodically evaluated for impairment using information obtained either directly from the investee or from a third-party broker. If an impairment has been identified, the carrying value of the investment is written down to its estimated fair market value through a charge to earnings. Note 4 – Loans and ACL All loan and ACL information presented as of and for the three months ended March 31, 2023 is in accordance with ASC 326. All loan information presented prior to this period is presented in accordance with previously applicable 15 GAAP. As a result, the presentation of information pre-ASC 326 and post-ASC 326 adoption will not be comparable for most disclosures. The following table presents the amortized cost of loans held for investment, including Paycheck Protection Program ("PPP") loans, as of the dates stated. (Dollars in thousands) March 31, 2023 December 31, 2022 Commercial and industrial $ 571,095 $ 590,049 Paycheck Protection Program 7,988 11,967 Real estate – construction, commercial 180,149 183,301 Real estate – construction, residential 92,403 76,599 Real estate – mortgage, commercial 867,916 864,989 Real estate – mortgage, residential 672,473 631,772 Real estate – mortgage, farmland 6,394 6,599 Consumer 58,907 47,423 Gross loans 2,457,325 2,412,699 Less: deferred loan fees, net of costs ( 345 ) ( 1,640 ) Total $ 2,456,980 $ 2,411,059 The Company has pledged certain commercial and residential mortgages as collateral for borrowings with the FHLB. Loans totaling $ 531.8 million and $ 436.0 million were pledged as of March 31, 2023 and December 31, 2022 , respectively. Additionally, PPP loans were pledged as collateral for the FRB's Paycheck Protection Program Liquidity Facility ("PPPLF") advances in the amount of $ 0 and $ 51 thousand as of March 31, 2023 and December 31, 2022, respectively. The following table presents the aging of the amortized cost of loans held for investment by loan category as of March 31, 2023. March 31, 2023 (Dollars in thousands) Current Loans 30-59 Days Past Due 60-89 Days Past Due Greater than 90 Days Past Due & Accruing Nonaccrual Total Loans Commercial and industrial $ 561,261 $ 1,122 $ 61 $ — $ 8,651 $ 571,095 Paycheck Protection Program 7,988 — — — — 7,988 Real estate – construction, commercial 177,739 1,106 867 — 437 180,149 Real estate – construction, residential 91,616 399 388 — — 92,403 Real estate – mortgage, commercial 855,385 960 — — 11,571 867,916 Real estate – mortgage, residential 658,290 4,153 585 1,998 7,447 672,473 Real estate – mortgage, farmland 6,394 — — — — 6,394 Consumer 56,891 1,246 150 169 451 58,907 Less: Deferred loan fees, net of costs ( 345 ) — — — — ( 345 ) Total Loans $ 2,415,219 $ 8,986 $ 2,051 $ 2,167 $ 28,557 $ 2,456,980 The following table presents the amortized cost of nonaccrual loans held for investment by loan category as of the date stated. March 31, 2023 (Dollars in thousands) Nonaccrual Loans with No ACL Nonaccrual Loans with an ACL Total Nonaccrual Loans Commercial and industrial $ 186 $ 8,465 $ 8,651 Real estate – construction, commercial — 437 437 Real estate – mortgage, commercial 10,108 1,463 11,571 Real estate – mortgage, residential 592 6,855 7,447 Consumer 2 449 451 Total $ 10,888 $ 17,669 $ 28,557 The table above excludes PPP loans of $ 8.0 million as of March 31, 2023 . PPP loans are fully guaranteed by the U.S. government; therefore, the Company reports them as accruing loans. The Company received $ 378 thousand of interest payments from nonaccrual loans during the three months ended March 31, 2023. 16 Credit Quality Indicators The Company categorizes loans held for investment into risk categories based on relevant information about the expected ability of borrowers to service their debt, such as current financial information, historical payment experience, collateral adequacy, credit documentation, and current economic trends, among other factors. Management considers loan risk grades to be the best indication of credit quality of its portfolio of loans held for investment. The Company uses the following definitions for loan risk ratings and periodically evaluates the appropriateness of these ratings across its loan portfolio: Risk Grade 1 – Strong: This grade is reserved for loans to the strongest of borrowers. These loans are to individuals or corporations that are well known to the Bank and are always secured with an almost guaranteed source of repayment such as a lien on a bank deposit account. Character, credit history, and ability of individuals or company principals are excellent and unquestioned. Source of income and industry of borrower appears stable. High liquidity, minimum risk, good ratios, and low handling cost are present. Risk Grade 2 – Minimal: This grade is reserved for loans to borrowers who are deemed exceptionally strong. These loans are within guidelines and where the borrowers have documented significant overall financial strength. These loans have excellent sources of repayment, significant balance sheet liquidity, no significant identifiable risk of collection, and conform in all respects to policy, guidelines, underwriting standards, and federal and state regulations (no exceptions of any kind). Risk Grade 3 – Acceptable: This grade is reserved for loans to borrowers who are deemed strong. These loans have adequate sources of repayment, with little identifiable risk of collection. Generally, loans assigned this risk grade will demonstrate the following characteristics: (1) conformity in all respects with policy, guidelines, underwriting standards, and federal and state regulations (no exceptions of any kind), (2) documented historical cash flow that meets or exceeds required minimum guidelines, or that can be supplemented with verifiable cash flow from other sources, and (3) adequate secondary sources to liquidate the debt. Risk Grade 4 – Satisfactory: This grade is given to satisfactory loans containing more risk than Risk Grade 3 loans. These loans have adequate sources of repayment, with little identifiable risk of collection. Loans assigned this risk grade will demonstrate the following characteristics: (1) general conformity to the Bank's underwriting requirements, with limited exceptions to policy, product, or underwriting guidelines. All exceptions noted have documented mitigating factors that offset any additional risk associated with the exceptions noted, (2) documented historical cash flow that meets or exceeds required minimum guidelines, or that can be supplemented with verifiable cash flow from other sources, and (3) adequate secondary sources to liquidate the debt, including combinations of liquidity, liquidation of collateral, or liquidation value to the net worth of the borrower or guarantor. Risk Grade 5 – Watch: This grade is for satisfactory loans containing acceptable but elevated risk. These loans are characterized by borrowers who have a marginal cash flow, marginal profitability, or have experienced an unprofitable year and declining financial condition. The borrower's management may be deemed to be satisfactory, the collateral securing the loan may create a loan-to-value ratio in excess of 90 %, the debt service coverage ratio and global debt service coverage are unstable but mostly positive, and/or guarantor support, if any, is inadequate. Loans classified as Watch warrant additional monitoring by management. Risk Grade 6 – Special Mention: This grade is for loans that have potential weaknesses that deserve management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the Bank's credit position at some future date. Special Mention loans are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification. Special mention credits typically exhibit underwriting guideline tolerances and/or exceptions with no mitigating factors, or emerging weaknesses that may or may not be cured as time passes. Risk Grade 7 – Substandard: A substandard loan is inadequately protected by the current sound net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans classified as substandard must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt; they are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected. Loans consistently not meeting the repayment schedule should be downgraded further to substandard. Loans in this category are characterized by deterioration in quality exhibited by any number of well-defined weaknesses requiring corrective action. The weaknesses may include, but are not limited to: (1) high debt to worth ratios, (2) declining or negative earnings trends, (3) declining or inadequate 17 liquidity, (4) improper loan structure, (5) questionable repayment sources, (6) lack of well-defined secondary repayment source, and (7) unfavorable competitive comparisons. Such loans are no longer considered to be adequately protected due to the borrower's declining net worth, lack of earnings capacity, declining collateral margins, and/or unperfected collateral positions. The possibility of loss of a portion of the loan balance cannot be ruled out. The repayment ability of the borrower is marginal or weak and the loan may have exhibited excessive overdue status or extensions and/or renewals. Risk Grade 8 – Doubtful: Loans classified doubtful have all the weaknesses inherent in loans classified substandard, plus the added characteristic that the weaknesses make collection or liquidation in full on the basis of currently existing facts, conditions, and values highly questionable and improbable. However, these loans are not yet rated as loss because certain events may occur which would salvage the Bank's position, which can include, but not limited to (1) an injection of capital, (2) alternative financing, and (3) liquidation of assets or the pledging of additional collateral. Doubtful is a temporary grade where a loss is expected but is presently not quantified with any degree of accuracy. Once the loss position is determined, the amount is charged off against the allowance for loan losses. Risk Grade 9 – Loss : Loans classified loss are considered uncollectable and of such little value that their continuance as assets is not warranted. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer charging off the worthless loan, even though partial recovery may be effected in the future. Probable loss portions of doubtful loans are charged off promptly against the allowance for loan losses. There were no loans classified as doubtful or loss as of March 31, 2023. 18 The following table presents the amortized cost of loans held for investment by internal loan risk grade by year of origination as of March 31, 2023. Also presented are current period gross charge-offs by loan type for the three months ended March 31, 2023. Term Loans Amortized Cost Basis by Origination Year (Dollars in thousands) 2023 2022 2021 2020 2019 Prior Revolving Loans Total Commercial and industrial Risk Grades 1 - 4 $ 46,836 $ 145,311 $ 54,533 $ 36,707 $ 15,681 $ 20,557 $ 120,901 $ 440,526 Risk Grades 5 - 6 117 34,640 9,205 8,391 467 1,450 25,942 80,212 Risk Grade 7 — 40,262 — — 1,203 118 8,774 50,357 Total 46,953 220,213 63,738 45,098 17,351 22,125 155,617 571,095 Current period gross charge-offs — — 664 — — 9 126 799 Paycheck Protection Program Risk Grades 1 - 4 — — 7,988 — — — — 7,988 Total — — 7,988 — — — — 7,988 Real estate – construction, commercial Risk Grades 1 - 4 8,488 52,358 55,721 16,576 2,118 8,803 12,209 156,273 Risk Grades 5 - 6 — 5,571 6,301 722 — 710 10,282 23,586 Risk Grade 7 — — — — — 290 — 290 Total 8,488 57,929 62,022 17,298 2,118 9,803 22,491 180,149 Real estate – construction, residential Risk Grades 1 - 4 20,084 50,390 15,528 1,113 998 — 2,456 90,569 Risk Grades 5 - 6 — — 949 — — — — 949 Risk Grade 7 21 864 — — — — — 885 Total 20,105 51,254 16,477 1,113 998 — 2,456 92,403 Real estate – mortgage, commercial Risk Grades 1 - 4 28,993 250,028 117,823 153,436 44,957 151,324 20,171 766,732 Risk Grades 5 - 6 — 15,442 4,039 19,182 13,390 32,237 500 84,790 Risk Grade 7 — — 6,344 — 774 9,176 100 16,394 Total 28,993 265,470 128,206 172,618 59,121 192,737 20,771 867,916 Real estate – mortgage, residential Risk Grades 1 - 4 30,743 197,427 105,466 73,162 30,080 151,984 59,207 648,069 Risk Grades 5 - 6 22 1,282 24 2,112 2,508 6,852 878 13,678 Risk Grade 7 — 369 1,228 1,659 461 6,413 596 10,726 Total 30,765 199,078 106,718 76,933 33,049 165,249 60,681 672,473 Current period gross charge-offs — — — — — 13 — 13 Real estate – mortgage, farmland Risk Grades 1 - 4 — 729 1,328 — 1,657 2,372 184 6,270 Risk Grades 5 - 6 — — — — — 78 46 124 Total — 729 1,328 — 1,657 2,450 230 6,394 Consumer Risk Grades 1 - 4 18,113 18,718 5,544 4,515 2,292 1,320 7,284 57,786 Risk Grades 5 - 6 13 26 18 81 5 429 30 602 Risk Grade 7 — 50 109 115 104 141 — 519 Total 18,126 18,794 5,671 4,711 2,401 1,890 7,314 58,907 Current period gross charge-offs 38 97 39 12 36 6 269 497 Total Loans Risk Grades 1 - 4 $ 153,257 $ 714,961 $ 363,931 $ 285,509 $ 97,783 $ 336,360 $ 222,412 $ 2,174,213 Risk Grades 5 - 6 152 56,961 20,536 30,488 16,370 41,756 37,678 203,941 Risk Grade 7 21 41,545 7,681 1,774 2,542 16,138 9,470 79,171 Total $ 153,430 $ 813,467 $ 392,148 $ 317,771 $ 116,695 $ 394,254 $ 269,560 $ 2,457,325 Total current period gross charge-offs $ 38 $ 97 $ 703 $ 12 $ 36 $ 28 $ 395 $ 1,309 The following table presents an analysis of the change in the ACL by major loan segment for the period stated. Loan segments are presented as either commercial or consumer as follows: • Commercial – Commercial and industrial; PPP; real estate – construction, commercial; real estate – mortgage, commercial; and real estate – mortgage, farmland; and • Consumer – real estate – construction, residential; real estate – mortgage, residential; and consumer. 19 For the three months ended March 31, 2023 (Dollars in thousands) Commercial Consumer Total Balance, beginning of period $ 19,269 $ 3,670 $ 22,939 Impact of ASC 326 adoption ( 470 ) 4,492 4,022 Charge-offs ( 799 ) ( 510 ) ( 1,309 ) Recoveries 118 104 222 Net charge-offs ( 681 ) ( 406 ) ( 1,087 ) Provision for credit losses - loans 3,161 939 4,100 Balance, end of period $ 21,279 $ 8,695 $ 29,974 There were no material changes to the assumptions, loss factors (both quantitative and qualitative), or reasonable and supportable forecasts used in the estimation of the ACL and the provision for credit losses for loans held for investment as of and for the three months ended March 31, 2023. The following table presents the amortized cost of collateral-dependent loans as of the date stated. (Dollars in thousands) March 31, 2023 Commercial and industrial $ 71,984 Real estate – construction, residential 580 Real estate – mortgage, commercial 12,641 Real estate – mortgage, residential 772 Total collateral-dependent loans $ 85,977 Acquired Loans As of March 31, 2023 , the amortized cost of PCD loans totaled $ 58.2 million with an estimated ACL of $ 639 thousand. The remaining non-credit discount on PCD loans was $ 5.3 million as of March 31, 2023. Modified Loans The Company closely monitors the performance of borrowers experiencing financial difficulty to understand the effectiveness of its loan modification efforts. The following table presents information on modified loans as of the date stated. March 31, 2023 All Modifications (Dollars in thousands) Number of Loans Amortized Cost Amortized Cost of Modified Loans to Gross Loans by Category Financial Effect Modification - term extension Commercial and industrial 1 $ 37,271 6.53 % 13-month extension through January 2024 Modification - interest-only Real estate – mortgage, commercial 2 3,381 0.39 % Interest-only payments for six months Total 3 $ 40,652 1.65 % The modified commercial and industrial loan was performing in accordance with its modified terms during the first quarter 2023. The loan is collateral-dependent, management is closely monitoring, and the loan is adequately 20 collateralized as of March 31, 2023. The following table presents an aging analysis of the amortized cost of loans modified in the preceding 12 months as of the date stated. March 31, 2023 Payment Status (Amortized Cost) (Dollars in thousands) Current Loans 30-89 Days Past Due 90+ Days Past Due Commercial and industrial $ 37,271 $ — $ — Real estate – mortgage, commercial 3,360 — — Total modified loans $ 40,631 $ — $ — None of the loans in the preceding tables have had a payment default during the three months ended March 31, 2023. Six residential mortgage loans with a total amortized cost of $ 645 thousand we re in the process of foreclosure as of March 31, 2023 , compared to none as of December 31, 2022. Pre-ASC 326 Adoption Disclosures Prior to the adoption of ASC 326 on January 1, 2023, the Company calculated the allowance for loan losses under the incurred loss methodology. The following disclosures are presented under this previously applicable GAAP for the applicable prior periods. The following table presents the aging of the amortized cost of loans held for investment as of the date stated. December 31, 2022 (Dollars in thousands) 30-59 Days Past Due 60-89 Days Past Due Greater than 90 Days Past Due & Accruing Nonaccrual Total Past Due & Nonaccrual PCI Loans Current Loans Total Loans Commercial and industrial $ 488 $ 279 $ — $ 2,314 $ 3,081 $ 1,481 $ 585,487 $ 590,049 Paycheck Protection Program — — — — — — 11,967 11,967 Real estate – construction, commercial 1,136 19 — 714 1,869 — 181,432 183,301 Real estate – construction, residential 1,416 1,204 — — 2,620 7 73,972 76,599 Real estate – mortgage, commercial 6,199 297 6,234 1,658 14,388 51,223 799,378 864,989 Real estate – mortgage, residential 4,544 231 1,998 5,143 11,916 5,678 614,178 631,772 Real estate – mortgage, farmland — 75 — — 75 — 6,524 6,599 Consumer 880 200 28 495 1,603 359 45,461 47,423 Less: deferred loan fees, net of costs — — — — — — ( 1,640 ) ( 1,640 ) Total Loans $ 14,663 $ 2,305 $ 8,260 $ 10,324 $ 35,552 $ 58,748 $ 2,316,759 $ 2,411,059 The following table presents the aging of the amortized cost of PCI loans as of the date stated. December 31, 2022 (Dollars in thousands) 30-89 Days Past Due Greater than 90 Days Past Due & Accruing Current Loans Total Loans Commercial and industrial $ — $ — $ 1,481 $ 1,481 Real estate – construction, commercial — — 7 7 Real estate – mortgage, commercial — — 51,223 51,223 Real estate – mortgage, residential 354 — 5,324 5,678 Consumer — — 359 359 Total PCI Loans $ 354 $ — $ 58,394 $ 58,748 The following table presents the outstanding principal balance and related recorded investment of acquired loans included in the consolidated balance sheets as of the date stated. 21 (Dollars in thousands) December 31, 2022 PCI loans Outstanding principal balance $ 64,911 Recorded investment 58,748 Purchased performing loans Outstanding principal balance 513,461 Recorded investment 511,752 Total acquired loans Outstanding principal balance 578,372 Recorded investment 570,500 The following table presents the changes in accretable yield for PCI loans for the period stated. (Dollars in thousands) For the three months ended March 31, 2022 Balance, beginning of period $ 16,849 Accretion ( 3,512 ) Balance, end of period $ 13,337 The following table presents a summary of the loan portfolio individually and collectively evaluated for impairment as of the date stated. December 31, 2022 (Dollars in thousands) Individually Evaluated for Impairment Collectively Evaluated for Impairment Total Loan Balances Related Allowance for Loan Losses PCI loans: Commercial and industrial $ — $ 1,481 $ 1,481 $ — Real estate – construction, commercial — 7 7 — Real estate – mortgage, commercial — 51,223 51,223 3 Real estate – mortgage, residential — 5,678 5,678 — Consumer — 359 359 — Total PCI loans — 58,748 58,748 3 Originated and purchased performing loans: Commercial and industrial 39,247 549,321 588,568 15,272 Real estate – construction, commercial 521 182,773 183,294 1,637 Real estate – construction, residential — 76,599 76,599 628 Real estate – mortgage, commercial 4,567 809,199 813,766 2,353 Real estate – mortgage, residential 835 625,259 626,094 1,760 Real estate – mortgage, farmland — 6,599 6,599 4 Consumer — 47,064 47,064 1,282 Total originated and purchased performing loans 45,170 2,296,814 2,341,984 22,936 Gross loans 45,170 2,355,562 2,400,732 22,939 Less: deferred loan fees, net of costs — — ( 1,640 ) — Total $ 45,170 $ 2,355,562 $ 2,399,092 $ 22,939 The table above excludes PPP loans of $ 12.0 million as of December 31, 2022. PPP loans are fully guaranteed by the U.S. government; therefore, the Company recorded no allowance for loan losses for these loans. The following tables present information related to impaired loans held for investment by loan type as of and for the dates presented. 22 December 31, 2022 (Dollars in thousands) Recorded Investment Unpaid Principal Balance Related Allowance With no specific allowance recorded: Commercial and industrial $ 1,309 $ 1,289 $ — Real estate – construction, commercial 521 521 — Real estate – mortgage, commercial 4,438 4,404 — Real estate – mortgage, residential 835 834 — With an allowance recorded: Commercial and industrial $ 37,938 $ 37,911 $ 3,178 Real estate – mortgage, commercial 129 126 1 Total $ 45,170 $ 45,085 $ 3,179 For the three months ended March 31, 2022 (Dollars in thousands) Average Recorded Investment Interest Income Recognized With no specific allowance recorded: Commercial and industrial $ 5,305 $ 62 Real estate – construction, commercial 524 — Real estate – mortgage, commercial 11,880 48 Real estate – mortgage, residential 1,342 14 With an allowance recorded: Commercial and industrial $ 3,290 $ — Real estate – mortgage, commercial 88 — Real estate – mortgage, residential 59 — Total $ 22,488 $ 124 Impaired loans also include TDRs, and as of December 31, 2022, there were 11 TDRs totaling $ 1.1 million. The following table presents the analysis of the change in the allowance for loan losses by loan type for the period stated. (Dollars in thousands) For the three months ended March 31, 2022 Allowance for loan losses, beginning of period $ 12,121 Charge-offs Commercial and industrial ( 2,401 ) Real estate – construction ( 123 ) Real estate – mortgage ( 16 ) Consumer ( 279 ) Total charge-offs ( 2,819 ) Recoveries Commercial and industrial 74 Real estate – construction 12 Real estate – mortgage 4 Consumer 121 Total recoveries 211 Net charge-offs ( 2,608 ) Provision for loan losses 2,500 Allowance for loan losses, end of period $ 12,013 23 The following table presents the amortized cost of loans held for investment by internal loan grade as of the date stated. December 31, 2022 (Dollars in thousands) Grade 1 Prime Grade 2 Desirable Grade 3 Good Grade 4 Acceptable Grade 5 Pass/Watch Grade 6 Special Mention Grade 7 Substandard Total PCI loans: Commercial and industrial $ — $ — $ — $ 1,369 $ — $ 112 $ — $ 1,481 Real estate – construction, commercial — — — 7 — — — 7 Real estate – mortgage, commercial — — — 22,778 26,059 1,700 686 51,223 Real estate – mortgage residential — — — 1,453 1,985 — 2,240 5,678 Consumer — — — — 353 — 6 359 Total PCI loans — — — 25,607 28,397 1,812 2,932 58,748 Originated and purchased performing loans: Commercial and industrial 318 885 193,144 312,278 38,552 2,834 40,557 588,568 Paycheck Protection Program 11,967 — — — — — — 11,967 Real estate – construction, commercial — 361 14,223 156,027 8,504 3,365 814 183,294 Real estate – construction, residential — — 3,110 72,327 1,162 — — 76,599 Real estate – mortgage, commercial — 2,330 187,648 561,554 54,352 2,048 5,834 813,766 Real estate – mortgage residential — 7,311 233,697 365,511 11,858 — 7,717 626,094 Real estate – mortgage, farmland 549 — 1,315 4,609 126 — — 6,599 Consumer 197 — 21,330 24,731 256 — 550 47,064 Total originated and purchased performing loans 13,031 10,887 654,467 1,497,037 114,810 8,247 55,472 2,353,951 Gross loans $ 13,031 $ 10,887 $ 654,467 $ 1,522,644 $ 143,207 $ 10,059 $ 58,404 $ 2,412,699 Less: deferred loan fees, net of costs ( 1,640 ) Total $ 2,411,059 There were no loans classified as doubtful or loss as of December 31, 2022. Note 5 – Goodwill and Other Intangible Assets Goodwill and other intangible assets acquired in a business combination and determined to have an indefinite useful life are not amortized but tested for impairment at least annually or more frequently if events and circumstances exist that indicate that an impairment test should be performed. Intangible assets with definite useful lives are amortized over their estimated useful lives, which range from 5 to 12 years. Goodwill is the only intangible asset with an indefinite life on the consolidated balance sheets. As of March 31, 2023 and December 31, 2022 , the Company's goodwill totaled $ 26.8 million. The following table presents information on amortizable intangible assets included on the consolidated balance sheets as of the dates stated. March 31, 2023 (Dollars in thousands) Gross Carrying Value Accumulated Amortization Net Carrying Value Core deposit intangibles $ 9,626 $ ( 4,659 ) $ 4,967 Other amortizable intangibles 3,337 ( 2,108 ) 1,229 Total $ 12,963 $ ( 6,767 ) $ 6,196 December 31, 2022 (Dollars in thousands) Gross Carrying Value Accumulated Amortization Net Carrying Value Core deposit intangibles $ 9,626 $ ( 4,330 ) $ 5,296 Other amortizable intangibles 3,282 ( 1,995 ) 1,287 Total $ 12,908 $ ( 6,325 ) $ 6,583 Included in other amortizable intangibles were loan servicing assets of $ 843 thousand and $ 876 thousand at March 31, 2023 and December 31, 2022 , respectively, related to the servicing of the government guaranteed portion of 24 certain loans that the Company has sold. Loan servicing assets of $ 55 thousand were added during the three months ended March 31, 2023 . The amortization of these intangibles is included in interest and fees on loans in the consolidated statements of operations and totaled $ 87 thousand and $ 39 thousand for the three months ended March 31, 2023 and March 31, 2022, respectively. The Company retains servicing rights on residential mortgages originated and sold to the secondary market. The fair value of MSR assets was $ 27.1 million and $ 29.0 million as of March 31, 2023 and December 31, 2022 , respectively. Note 6 – Borrowings FHLB Borrowings The Bank has a line of credit from the FHLB secured by pledged qualifying real estate loans and securities. At March 31, 2023 and December 31, 2022 , based on pledged collateral, the line totaled $ 576.8 million and $ 525.1 million, respectively. The FHLB will lend up to 30 % of the Bank’s total assets as of the prior quarter end, subject to certain eligibility requirements, including adequate collateral. The Bank had borrowings from the FHLB totaling $ 239.1 million and $ 311.7 million at March 31, 2023 and December 31, 2022, respectively. FHL B borrowings required the Bank to hold $ 11.8 million and $ 14.7 million of FHLB stock at March 31, 2023 and December 31, 2022, respectively, which is included in restricted equity investments on the consolidated balance sheets. The Bank also has letters of credit with the FHLB in the amount of $ 67.6 million as of March 31, 2023 for the purpose of collateral for public deposits with the Treasury Board of the Commonwealth of Virginia. Outstanding letters of credit reduce the available balance of the borrowing facility with the FHLB, which was $ 270.1 million as of March 31, 2023. The following table presents information regarding FHLB advances outstanding as of the date stated. March 31, 2023 (Dollars in thousands) Balance Origination Date Stated Interest Rate Maturity Date Daily Rate Credit $ 189,100 5/6/2022 5.07 % 5/8/2023 Fixed Rate Credit 50,000 3/15/2023 4.07 % 3/15/2027 Total FHLB borrowings $ 239,100 Other Borrowings The Company had unsecured lines of credit with correspondent banks, which totaled $ 28.0 million as of both March 31, 2023 and December 31, 2022. These lines bear interest at the prevailing rates for such loans and are cancellable any time by the correspondent bank. As of March 31, 2023 and December 31, 2022, no ne of these lines of credit with correspondent banks were drawn upon. The Company had $ 39.9 million of subordinated notes, net, outstanding as of both March 31, 2023 and December 31, 2022 . The Company's subordinated notes are comprised of an issuance in October 2019 maturing October 15, 2029 (the “2029 Notes”) and an issuance in May 2020 maturing June 1, 2030 (the “2030 Note”). As of March 31, 2023 , the net carrying amount of the 2029 Notes was $ 25.2 million, inclusive of a $ 654 thousand purchase accounting adjustment (premium). For the three months ended March 31, 2023 and 2022, the effective interest rate on the 2029 Notes was 5.09 %, inclusive of the amortization of the purchase accounting adjustment (premium). As of March 31, 2023 , the net carrying amount of the 2030 Note, including capitalized, unamortized debt issuance costs, was $ 14.8 million. For the three months ended March 31, 2023 and 2022, the effective interest rate on the 2030 Note was 6.10 %. The Company has an immediately available and undrawn line with the BTFP of $ 29.8 million as of March 31, 2023. Note 7 – Derivative Financial Instruments and Hedging Activities The Company enters into interest rate swap agreements to accommodate the needs of its banking customers. The Company mitigates the interest rate risk entering into these swap agreements by entering into equal and offsetting swap 25 agreements with highly-rated third-party financial institutions. These back-to-back swap agreements are free-standing derivatives and are recorded at fair value in the consolidated balance sheets (asset positions are included in other assets and liability positions are included in other liabilities). The following tables present the notional and fair value of interest rate swap agreements as of the dates stated. March 31, 2023 (Dollars in thousands) Notional Amount Fair Value Interest rate swap agreement Receive fixed/pay variable swaps $ 2,178 $ ( 57 ) Pay fixed/receive variable swaps 2,178 57 December 31, 2022 (Dollars in thousands) Notional Amount Fair Value Interest rate swap agreement Receive fixed/pay variable swaps $ 2,178 $ ( 95 ) Pay fixed/receive variable swaps 2,178 95 As part of its efforts to sell originated government guaranteed and conventional residential mortgages into the secondary market, the Bank had entered into $ 13.3 million and $ 11.7 million of rate lock commitments with borrowers, net of expected fallout, as of March 31, 2023 and December 31, 2022 , respectively, and $ 8.3 million and $ 12.8 million of closed loan inventory waiting for sale, which were hedged by $ 15.8 million and $ 21.5 million in forward to-be-announced mortgage-backed securities as of March 31, 2023 and December 31, 2022 , respectively. Mortgage derivative assets totaled $ 455 thousand and $ 112 thousand as of March 31, 2023 and December 31, 2022 , respectively, and mortgage derivative liabilities were $ 57 thousand and $ 24 thousand as of March 31, 2023 and December 31, 2022 , respectively. Mortgage derivative assets and liabilities are included in other assets and other liabilities, respectively, in the consolidated balance sheets. Note 8 – Stock-Based Compensation The Company has granted time-based restricted stock awards (“time-based RSAs”) to employees and directors under the Blue Ridge Bankshares, Inc. Equity Incentive Plan. Time-based RSAs are considered fixed awards as the number of shares and fair value is known at the date of grant, and the fair value of the award at the grant date is amortized over the requisite service period, which is generally three years. Beginning in 2022, the Company began granting performance-based restricted stock awards (“PSAs”) to employees under the same plan, in addition to time-based RSAs. PSAs vest at the end of a three-year period contingent on the Company's achievement of financial goals and are being expensed on a straight-line basis over the same period with adjustments periodically based on projected achievement of the performance target, which may change the number of PSA shares that will ultimately vest. Time-based RSAs carry voting and dividend rights, while PSAs carry voting rights and are subject to deferred dividend payout restrictions. Compensation expense recognized in the consolidated statements of operations related to time-based RSAs and PSAs, net of forfeitures, was $ 479 thousand and $ 355 thousand f or the three months ended March 31, 2023 and 2022, respectively. During the three months ended March 31, 2023, no grants of time-based RSAs or PSAs were made, while forfeitures of time-based RSAs and PSAs relating to 14,632 shares of the Company's common stock were processed due to employee terminations. As of March 31, 2023, time-based RSAs and PSAs relating to 296,329 shares of the Company's common stock were outstanding, and unrecognized compensation expense related to these awards totaled $ 2.4 million . During the three months ended March 31, 2023 , stock options relating to 3,750 shares were exercised and stock options relating to 1,875 shares expired, resulting in stock options relating to 47,049 shares remaining outstanding as of March 31, 2023 . These options were assumed by the Company in connection with the Bay Banks Merger and expire between March 2024 and December 2029. 26 Note 9 – Leases The Company’s long-term lease agreements are classified as operating leases. Certain of these leases offer the option to extend the lease term and such extensions are included in the calculation of the lease liabilities to the extent the options are reasonably assured of being exercised. The lease agreements do not provide for residual value guarantees and have no restrictions or covenants that would impact dividends or require incurring additional financial obligations. The following tables present information about the Company’s leases as of the dates and for the periods stated. (Dollars in thousands) March 31, 2023 December 31, 2022 Right-of-use assets $ 6,470 $ 6,903 Lease liabilities $ 7,398 $ 7,860 Weighted average remaining lease term (years) 5.62 5.85 Weighted average discount rate 2.42 % 2.40 % For the three months ended March 31, (Dollars in thousands) 2023 2022 Operating lease cost $ 715 $ 555 Total lease cost 715 555 Cash paid for amounts included in the measurement of lease liabilities 599 736 The following table presents a maturity analysis of operating lease liabilities and reconciliation of the undiscounted cash flows to the total of operating lease liabilities as of the date stated. (Dollars in thousands) March 31, 2023 Nine months ending December 31, 2023 $ 1,484 Twelve months ending December 31, 2024 1,464 Twelve months ending December 31, 2025 1,191 Twelve months ending December 31, 2026 1,073 Twelve months ending December 31, 2027 990 Thereafter 1,786 Total undiscounted cash flows 7,988 Discount ( 590 ) Lease liabilities $ 7,398 Note 10 – Fair Value The fair value of a financial instrument is the current amount that would be exchanged between willing parties in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument. The Company records fair value adjustments to certain assets and liabilities and determines fair value disclosures utilizing a definition of fair value of assets and liabilities that states that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Additional considerations are involved to determine the fair value of financial assets in markets that are not active. The Company uses a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while 27 unobservable inputs reflect the Company’s market assumptions. The three levels of the fair value hierarchy based on these two types of inputs are as follows: Level 1 – Valuation is based on quoted prices in active markets for identical assets and liabilities. Level 2 – Valuation is based on observable inputs including quoted prices in active markets for similar assets and liabilities, quoted prices for identical or similar assets and liabilities in less active markets, and model-based valuation techniques for which significant assumptions can be derived primarily from or corroborated by observable data in the market. Level 3 – Valuation is based on model-based techniques that use one or more significant inputs or assumptions that are unobservable in the market. The following describes the valuation techniques used by the Company to measure certain financial assets and liabilities recorded at fair value on a recurring basis in the financial statements. 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, quoted prices of securities with similar characteristics, or discounted cash flows. 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. The carrying value of restricted FRB and FHLB stock approximates fair value based upon the redemption provisions of each entity and is therefore excluded from the following table. Rabbi trust assets The Company's rabbi trust is associated with a deferred compensation plan. The assets held by the rabbi trust are invested at the direction of the individual participants and are generally invested in marketable investment securities, such as common stocks and mutual funds or short-term investments (e.g., cash) (Level 1). Rabbi trust assets and the associated deferred compensation plan liability are included in other assets and other liabilities, respectively, in the consolidated balance sheets. Derivative financial instruments Derivative instruments used to hedge residential mortgage loans held for sale and the related interest rate lock commitments include forward commitments to sell mortgage loans and are reported at fair value utilizing Level 2 inputs. The fair values of derivative financial instruments are based on derivative market data inputs as of the valuation date and the underlying value of mortgage loans for rate lock commitments. The Company has interest rate swap assets and liabilities associated with certain customer commercial loans. The interest rate swap asset with the customer is offset with an equal swap agreement with a highly-rated third-party financial institution (i.e., “back-to-back”). Both the interest rate swap assets and liabilities are free-standing derivatives and are recorded at fair value utilizing Level 2 inputs. The following tables present the balances of financial assets measured at fair value on a recurring basis as of the dates stated. 28 March 31, 2023 (Dollars in thousands) Total Level 1 Level 2 Level 3 Securities available for sale State and municipals $ 51,662 $ — $ 51,662 $ — U.S. Treasury and agencies 62,152 — 62,152 — Mortgage backed securities 199,320 — 191,816 7,504 Corporate bonds 38,856 — 34,557 4,299 Total securities available for sale $ 351,990 $ — $ 340,187 $ 11,803 Other assets MSR assets $ 27,095 $ — $ — $ 27,095 Rabbi trust assets 577 577 — — Mortgage derivative asset 455 — 455 — Interest rate swap asset 57 — 57 — Other liabilities Mortgage derivative liability $ 57 $ — $ 57 $ — Interest rate swap liability 57 — 57 — December 31, 2022 (Dollars in thousands) Total Level 1 Level 2 Level 3 Securities available for sale State and municipals $ 50,993 $ — $ 50,993 $ — U.S. Treasury and agencies 67,162 — 67,162 — Mortgage backed securities 196,336 — 188,719 7,617 Corporate bonds 39,850 — 35,561 4,289 Total securities available for sale $ 354,341 $ — $ 342,435 $ 11,906 Other assets MSR assets $ 28,991 $ — $ — $ 28,991 Rabbi trust assets 584 584 — — Mortgage derivative asset 112 — 112 — Interest rate swap asset 95 — 95 — Other liabilities Mortgage derivative liability $ 24 $ — $ 24 $ — Interest rate swap liability 95 — 95 — The following table presents the change in corporate bonds and mortgage backed securities using Level 3 inputs for the periods stated. (Dollars in thousands) Corporate Bonds Mortgage Backed Securities Balance as of December 31, 2022 $ 4,289 $ 7,617 Fair value adjustments 10 ( 113 ) Balance as of March 31, 2023 $ 4,299 $ 7,504 As of March 31, 2023 , 10 corporate bonds totaling $ 4.3 million and 6 mortgage backed securities totaling $ 7.5 million were reported at their respective purchase prices and as Level 3 assets in the fair value hierarchy, as there were no observable market prices for similar investments. Mortgage Servicing Rights A third-party model is used to determine the fair value of the Company’s MSR assets. The model establishes pools of performing loans, calculates projected future cash flows for each pool, and applies a discount rate to each pool. As of March 31, 2023 and December 31, 2022 , the Company was servicing approximately $ 2.15 billion and $ 2.16 billion of loans, respectively. Loans are segregated into homogenous pools based on loan term, interest rates, and other similar characteristics. Cash flows are then estimated based on net servicing fee income and utilizing assumed servicing costs and prepayment speeds. The weighted average net servicing fee income of the portfolio was 28.4 basis points as of March 31, 2023 . Estimated base annual servicing costs were $ 75.00 to $ 85.00 per loan depending on the guarantor. 29 Prepayment speeds in the model are based on empirically derived data for mortgage pool factors and differences between a mortgage pool’s weighted average coupon and its current mortgage rate. The weighted average prepayment speed assumption used in the fair value model was 8.15 % as of March 31, 2023 . A base discount rate of 9.5 % to 11.5 % ( 9.81 % weighted average discount rate) was then applied to each pool’s projected future cash flows as of March 31, 2023. The discount rate is intended to represent the estimated market yield for the highest quality grade of comparable servicing. MSR assets are classified as Level 3. The following table presents the change in MSR assets as of the dates and for the periods stated. (Dollars in thousands) MSR Assets Balance as of December 31, 2022 $ 28,991 Additions 242 Fair value adjustments ( 2,138 ) Balance as of March 31, 2023 $ 27,095 Certain financial assets are measured at fair value on a nonrecurring basis in accordance with GAAP. The following describes the valuation techniques used by the Company to measure certain financial assets recorded at fair value on a nonrecurring basis in the financial statements. Other Equity Investments The fair value of other equity investments, including the Company's investments in certain fintech companies, is based on either observable market prices, if available, or observable market transactions for identical or significantly similar investments (Level 2). Collateral-dependent Loans Collateral-dependent loans with specific reserves are carried at fair value, which equals the estimated market value of the collateral less estimated costs to sell. Collateral may be in the form of real estate or business assets including equipment, inventory, and accounts receivable. A loan may have multiple types of collateral; however, the majority of the Company’s loan collateral is real estate. The value of real estate collateral is generally determined utilizing a market valuation approach based on an appraisal conducted by an independent, licensed appraiser outside of the Company using observable market data (Level 2). However, if the collateral value is significantly adjusted due to differences in the comparable properties or is discounted by the Company because of lack of marketability, then the fair value is considered Level 3. The value of business equipment is based upon an outside appraisal if deemed significant or the net book value on the applicable borrower’s financial statements if not considered significant. Likewise, values for inventory and accounts receivables collateral are based on financial statement balances or aging reports (Level 3). Fair value adjustments are recorded in the period incurred as provision for credit losses on the consolidated statements of operations. Loans Held for Sale Mortgage loans originated or purchased and intended for sale in the secondary market (i.e., loans held for sale) are carried at estimated market value in the aggregate. Changes in fair value are recognized in residential mortgage banking income, including MSRs on the consolidated statements of operations (Level 2). Certain consumer loans originated by the Bank and sourced by fintech partners are classified on the consolidated balance sheets as held for sale. After origination, these loans are sold directly to the applicable fintech partner or another investor at par, generally up to 10 days from origination. Due to the relatively short time between origination and sale, these loans are held at cost, which approximates fair value (Level 2). Government guaranteed loans, or portions thereof, intended for sale in the secondary market are classified as held for sale on the consolidated balance sheets and carried at the lower of cost or estimated fair market value (Level 2). Other Real Estate Owned ( “ OREO ” ) Certain assets such as OREO are measured at fair value less estimated costs to sell. Valuation of OREO is generally determined using current appraisals from independent appraisers (Level 2). If current appraisals cannot be obtained 30 prior to reporting dates, or if declines in value are identified after a recent appraisal is received, appraisal values are discounted, resulting in Level 3 estimates. If the Company markets the property with a real estate agent or broker, estimated selling costs reduce the listing price, resulting in a valuation based on Level 3 inputs. The following tables summarize assets that were measured at fair value on a nonrecurring basis as of the dates stated. March 31, 2023 (Dollars in thousands) Total Level 1 Level 2 Level 3 Other equity investments $ 22,960 $ — $ 22,960 $ — Collateral-dependent loans 7,165 — — 7,165 Loans held for sale 76,528 — 76,528 — December 31, 2022 (Dollars in thousands) Total Level 1 Level 2 Level 3 Other equity investments $ 23,776 $ — $ 23,776 $ — Impaired loans - Pre-ASC 326 34,888 — — 34,888 Loans held for sale 69,534 — 69,534 — OREO 195 — — 195 The following tables present quantitative information about Level 3 fair value measurements as of the dates stated. (Dollars in thousands) Balance as of March 31, 2023 Unobservable Input Range Collateral-dependent loans Discounted appraised value technique 7,165 Selling Costs 7 % (Dollars in thousands) Balance as of December 31, 2022 Unobservable Input Range Impaired loans - Pre-ASC 326 Discounted appraised value technique 34,743 Selling Costs 7 % - 10 % Discounted cash flows technique 145 Discount Rate 4 % - 11 % OREO Discounted appraised value technique 195 Selling Costs 7 % Fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practical to estimate the value is based upon the characteristics of the instruments and relevant market information. Financial instruments include cash, evidence of ownership in an entity, or contracts that convey or impose on an entity that contractual right or obligation to either receive or deliver cash for another financial instrument. The information used to determine fair value is highly subjective and judgmental in nature and, therefore, the results may not be precise. Subjective factors include, among other things, estimates of cash flows, risk characteristics, credit quality, and interest rates, all of which are subject to change. Since the fair value is estimated as of the balance sheet date, the amounts that will actually be realized or paid upon settlement or maturity on these various instruments could be significantly different. 31 The following tables present the estimated fair values, related carrying amounts, and valuation level of the financial instruments as of the dates stated. March 31, 2023 Fair Value Measurements (Dollars in thousands) Carrying Value Fair Value Level 1 Level 2 Level 3 Financial Assets Cash and due from banks $ 226,374 $ 226,374 $ 226,374 $ — $ — Federal funds sold 1,976 1,976 1,976 — — Securities available for sale 351,990 351,990 — 340,187 11,803 Restricted equity investments 18,388 18,388 — 18,388 — Other equity investments 22,960 22,960 — 22,960 — Other investments 26,538 26,538 — — 26,538 PPP loans receivable, net 7,988 7,988 — — 7,988 Loans held for investment, net 2,419,018 2,382,220 — — 2,382,220 Accrued interest receivable 14,915 14,915 — 14,915 — Bank owned life insurance 47,536 47,536 — 47,536 — MSR assets 27,095 27,095 — — 27,095 Financial Liabilities Noninterest-bearing demand deposits $ 594,518 $ 594,518 $ 594,518 $ — $ — Interest-bearing demand and money market deposits 1,326,655 1,326,655 — 1,326,655 — Savings deposits 143,530 143,530 — 143,530 Time deposits 696,344 693,332 — — 693,332 FHLB borrowings 239,100 239,045 — 239,045 — Subordinated notes, net 39,904 37,610 — — 37,610 December 31, 2022 Fair Value Measurements (Dollars in thousands) Carrying Value Fair Value Level 1 Level 2 Level 3 Financial Assets Cash and due from banks $ 77,274 $ 77,274 $ 77,274 $ — $ — Federal funds sold 1,426 1,426 1,426 — — Securities available for sale 354,341 354,341 — 342,435 11,906 Restricted equity investments 21,257 21,257 — 21,257 — Other equity investments 23,776 23,776 — 23,776 — Other investments 24,672 24,672 — — 24,672 PPP loans receivable, net 11,967 11,967 — — 11,967 Loans held for investment, net 2,376,153 2,321,042 — — 2,321,042 Accrued interest receivable 12,393 12,393 — 12,393 — Bank owned life insurance 47,245 47,245 — 47,245 — MSR assets 28,991 28,991 — — 28,991 Financial Liabilities Noninterest-bearing demand deposits $ 640,101 $ 640,101 $ 640,101 $ — $ — Interest-bearing demand and money market deposits 1,318,799 1,318,799 — 1,318,799 — Savings deposits 151,646 151,646 — 151,646 — Time deposits 391,961 352,294 — — 352,294 FHLB borrowings 311,700 311,700 — 311,700 — FRB borrowings 51 51 — 51 — Subordinated notes, net 39,920 37,689 — — 37,689 Note 11 – Minimum Regulatory Capital Requirements Banks and bank holding companies are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, possibly 32 additional discretionary, actions by regulators that, if undertaken, could have a direct material effect on the Company's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, financial institutions must meet specific capital guidelines that involve quantitative measures of assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. A financial institution's capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Pursuant to the final rules implementing the Basel Committee on Banking Supervision's capital guidelines for U.S. banks (the “Basel III rules”), the Bank must hold a capital conservation buffer above the adequately capitalized risk-based capital ratios of 2.50 % for all ratios, except the tier 1 leverage ratio. If a banking organization dips into its capital conservation buffer, it is subject to limitations on certain activities, including payment of dividends, share repurchases, and discretionary compensation to certain officers. Management believes as of March 31, 2023 and December 31, 2022, the Bank met all capital adequacy requirements to which it is subject. Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized; although, these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. At March 31, 2023, the most recent regulatory notification categorized the Bank as well capitalized under the regulatory framework. There are no conditions or events since that notification that management believes have changed the institution's category. As previously noted, the Company adopted CECL effective January 1, 2023. Federal and state banking regulations allow financial institutions to irrevocably elect to phase-in the after-tax cumulative effect adjustment at adoption to retained earnings ("CECL Transitional Amount") over a three-year period. The three-year phase-in of the CECL Transitional Amount to regulatory capital will be 25 %, 50 %, and 25 % in 2023, 2024, and 2025, respectively. The Bank made this irrevocable election effective with its first quarter 2023 call report. The following tables present the capital and capital ratios to which the Bank is subject and the amounts and ratios to be adequately and well capitalized as of the dates stated. Adequately capitalized ratios include the conversation buffer, if applicable. The CECL Transitional Amount was $ 5.5 million, of which $ 1.4 million reduced the regulatory capital amounts and capital ratios as of March 31, 2023. March 31, 2023 Actual For Capital Adequacy Purposes To Be Well Capitalized (Dollars in thousands) Amount Ratio Amount Ratio Amount Ratio Total risk based capital (To risk-weighted assets) Blue Ridge Bank, N.A. $ 307,024 11.12 % $ 289,940 10.50 % $ 276,133 10.00 % Tier 1 capital (To risk-weighted assets) Blue Ridge Bank, N.A. $ 277,898 10.06 % $ 234,711 8.50 % $ 220,905 8.00 % Common equity tier 1 capital (To risk-weighted assets) Blue Ridge Bank, N.A. $ 277,898 10.06 % $ 193,368 7.00 % $ 179,556 6.50 % Tier 1 leverage (To average assets) Blue Ridge Bank, N.A. $ 277,898 8.50 % $ 130,776 4.00 % $ 163,469 5.00 % 33 December 31, 2022 Actual For Capital Adequacy Purposes To Be Well Capitalized (Dollars in thousands) Amount Ratio Amount Ratio Amount Ratio Total risk based capital (To risk-weighted assets) Blue Ridge Bank, N.A. $ 303,876 11.22 % $ 286,161 10.50 % $ 272,535 10.00 % Tier 1 capital (To risk-weighted assets) Blue Ridge Bank, N.A. $ 279,125 10.31 % $ 231,470 8.50 % $ 217,854 8.00 % Common equity tier 1 capital (To risk-weighted assets) Blue Ridge Bank, N.A. $ 279,125 10.31 % $ 190,622 7.00 % $ 177,006 6.50 % Tier 1 leverage (To average assets) Blue Ridge Bank, N.A. $ 279,125 9.25 % $ 120,703 4.00 % $ 150,878 5.00 % Note 12 – Commitments and Contingencies In the ordinary course of operations, the Company is party to legal proceedings. Based upon information currently available, management believes that such legal proceedings, in the aggregate, will not have a material adverse effect on the Company’s business, financial condition, results of operations, or cash flows. Also, in the ordinary course of operations, the Company offers various financial products to its customers to meet their credit and liquidity needs. These instruments involve elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheets. The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instruments for commitments to extend credit and stand-by letters of credit written is represented by the contractual amount of these instruments. The Company uses the same credit policies in making commitments and conditional commitments as it does for on-balance sheet commitments. Subject to its normal credit standards and risk monitoring procedures, the Company makes contractual commitments to extend credit. Commitments generally have fixed expiration dates or other termination clauses and may require the payment of a fee. Since many of the commitments may expire without being completely drawn upon, the total commitment amounts do not necessarily represent future cash requirements. As of March 31, 2023 and December 31, 2022 , the Company had outstanding loan commitments of $ 707.9 million and $ 736.1 million , respectively. Conditional commitments are issued by the Company in the form of performance stand-by letters of credit, which guarantee the performance of a customer to a third party. As of March 31, 2023 and December 31, 2022, commitments under outstanding performance stand-by letters of credit totaled $ 0 and $ 655 thousand, respectively. Additionally, the Company issues financial stand-by letters of credit, which guarantee payment to the underlying beneficiary (i.e., third party) if the customer fails to meet its designated financial obligation. As of March 31, 2023 and December 31, 2022, commitments under outstanding financial stand-by letters of credit totaled $ 29.3 million and $ 29.8 mil lion, respectively. The credit risk of issuing stand-by letters of credit can be greater than the risk involved in extending loans to customers. Upon the adoption of ASC 326 on January 1, 2023, the Company recorded an increase in its reserve for unfunded commitments of $ 3.7 million. Most of this increase was attributable to higher funding assumptions of the underlying credit commitments, based on industry data available. For the three months ended March 31, 2023 , the Company recorded a recovery of provision for credit losses for unfunded commitments of $ 400 thousand, which was primarily attributable to lower balances of conditionally cancellable loan commitments. As of March 31, 2023 , the reserve for unfunded commitments was $ 5.1 million compared to $ 1.8 million as of December 31, 2022. The Company invests in various partnerships, limited liability companies, and SBIC funds. Pursuant to these investments, the Company commits to an investment amount to be fulfilled in future periods. At March 31, 2023 , the Company had future commitments outstanding totaling $ 17.7 million related to these investments. 34 Note 13 – Earnings Per Share The following table shows the calculation of basic and diluted earnings per share ("EPS") and the weighted average number of shares outstanding used in computing EPS and the effect on the weighted average number of shares outstanding of dilutive potential common stock for the periods stated. Basic EPS amounts are computed by dividing net income (the numerator) by the weighted average number of common shares outstanding (the denominator). Diluted EPS amounts assume the conversion, exercise, or issuance of all potential common stock instruments, unless the effect would be to reduce the loss or increase earnings per common share. Potential dilutive common stock instruments include exercisable stock options and PSAs. For the three months ended March 31, 2023 and 2022 , stock options and PSAs for 1,643 and 0 shares of the Company’s common stock, respectively, were considered anti-dilutive and excluded from the computation of diluted EPS. For the three months ended March 31, (Dollars in thousands, except per share data) 2023 2022 Weighted average common shares outstanding, basic 18,856,515 18,772,258 Effect of dilutive securities 3,506 17,087 Weighted average common shares outstanding, dilutive 18,860,021 18,789,345 Net income: Net income from continuing operations $ 1,604 $ 17,420 Net income from discontinued operations — 337 Net income from discontinued operations attributable to noncontrolling interest — ( 1 ) Net income attributable to Blue Ridge Bankshares, Inc. $ 1,604 $ 17,756 Basic earnings per share: Earnings per share from continuing operations $ 0.09 $ 0.93 Earnings per share from discontinued operations — 0.02 Earnings per share attributable to Blue Ridge Bankshares, Inc. $ 0.09 $ 0.95 Diluted earnings per share: Earnings per share from continuing operations $ 0.09 $ 0.93 Earnings per share from discontinued operations — 0.02 Earnings per share attributable to Blue Ridge Bankshares, Inc. $ 0.09 $ 0.95 Note 14 – Business Segments The Company has three reportable business segments: commercial banking, mortgage banking, and holding company activities. The commercial banking business segment makes loans to and generates deposits from individuals and businesses, while offering a wide array of general banking activities to its customers. It is distinct from the Company's mortgage banking division, which concentrates on individual and wholesale mortgage lending and sales activities. Activities at the holding company (or parent level) are primarily associated with investments, borrowings, and certain noninterest expenses. 35 The following tables present statement of operations items and assets by segment as of the dates and for the periods stated. As of and for the three months ended March 31, 2023 (Dollars in thousands) Commercial Banking Mortgage Banking Parent Only Eliminations Blue Ridge Bankshares, Inc. Consolidated NET INTEREST INCOME Interest income $ 42,742 $ 305 $ 6 $ — $ 43,053 Interest expense 15,002 139 553 — 15,694 Net interest income 27,740 166 ( 547 ) — 27,359 Provision for credit losses 3,700 — — — 3,700 Net interest income after provision for credit losses 24,040 166 ( 547 ) — 23,659 NONINTEREST INCOME Residential mortgage banking income, including MSRs — 1,303 — — 1,303 Gain on sale of guaranteed government loans 2,409 — — — 2,409 Service charges on deposit accounts 343 — — — 343 Increase in cash surrender value of bank owned life insurance 282 — — — 282 Other income 3,088 — ( 43 ) ( 99 ) 2,946 Total noninterest income 6,122 1,303 ( 43 ) ( 99 ) 7,283 NONINTEREST EXPENSE Salaries and employee benefits 12,628 2,661 — — 15,289 Other operating expenses 11,210 1,485 962 ( 99 ) 13,558 Total noninterest expense 23,838 4,146 962 ( 99 ) 28,847 Income (loss) from continuing operations before income tax expense 6,324 ( 2,677 ) ( 1,552 ) — 2,095 Income tax expense (benefit) 1,400 ( 583 ) ( 326 ) — 491 Net income (loss) $ 4,924 $ ( 2,094 ) $ ( 1,226 ) $ — $ 1,604 Total assets as of March 31, 2023 $ 3,270,452 $ 34,083 $ 299,450 $ ( 269,074 ) $ 3,334,911 As of and for the three months ended March 31, 2022 (Dollars in thousands) Commercial Banking Mortgage Banking Parent Only Eliminations Blue Ridge Bankshares, Inc. Consolidated NET INTEREST INCOME Interest income $ 25,183 $ 591 $ 28 $ — $ 25,802 Interest expense 1,546 35 553 — 2,134 Net interest income 23,637 556 ( 525 ) — 23,668 Provision for credit losses 2,500 — — — 2,500 Net interest income after provision for credit losses 21,137 556 ( 525 ) — 21,168 NONINTEREST INCOME Residential mortgage banking income, including MSRs — 9,559 — — 9,559 Gain on sale of guaranteed government loans 1,427 — — — 1,427 Service charges on deposit accounts 315 — — — 315 Increase in cash surrender value of bank owned life insurance 272 — — — 272 Other income 3,177 — 9,426 ( 82 ) 12,521 Total noninterest income 5,191 9,559 9,426 ( 82 ) 24,094 NONINTEREST EXPENSE Salaries and employee benefits 9,089 5,007 — — 14,096 Other operating expenses 6,581 1,936 158 ( 82 ) 8,593 Total noninterest expense 15,670 6,943 158 ( 82 ) 22,689 Income from continuing operations before income tax expense 10,658 3,172 8,743 — 22,573 Income tax expense 2,906 624 1,623 — 5,153 Net income from continuing operations $ 7,752 $ 2,548 $ 7,120 $ — $ 17,420 Discontinued Operations Income from discontinued operations before income taxes 426 — — — 426 Income tax expense 89 — — — 89 Net income from discontinued operations 337 — — — 337 Net income $ 8,089 $ 2,548 $ 7,120 $ — $ 17,757 Net income from discontinued operations attributable to noncontrolling interest ( 1 ) — — — ( 1 ) Net income attributable to Blue Ridge Bankshares, Inc. $ 8,088 $ 2,548 $ 7,120 $ — $ 17,756 Total assets as of March 31, 2022 $ 2,628,323 $ 64,419 $ 334,424 $ ( 302,582 ) $ 2,724,584 36 Note 15 – Changes to Accumulated Other Comprehensive Income (Loss), net The following tables present components of accumulated other comprehensive income (loss) for the periods stated. For the three months ended March 31, 2023 (Dollars in thousands) Net Unrealized (Losses) Gains on Available for Sale Securities Transfer of Securities Held to Maturity to Available For Sale Pension and Post-retirement Benefit Plans Accumulated Other Comprehensive (Loss) Income, net Balance as of December 31, 2022 $ ( 45,525 ) $ 425 $ ( 1 ) $ ( 45,101 ) Change in net unrealized holding gains on securities available for sale, net of deferred tax expense of $ 1,113 3,866 — — 3,866 Balance as of March 31, 2023 $ ( 41,659 ) $ 425 $ ( 1 ) $ ( 41,235 ) For the three months ended March 31, 2022 (Dollars in thousands) Net Unrealized Losses on Available for Sale Securities Transfer of Securities Held to Maturity to Available For Sale Pension and Post-retirement Benefit Plans Accumulated Other Comprehensive Loss, net Balance as of December 31, 2021 $ ( 4,056 ) $ 425 $ ( 1 ) $ ( 3,632 ) Change in net unrealized holding losses on securities available for sale, net of deferred tax benefit of $ 4,742 ( 17,844 ) — — ( 17,844 ) Balance as of March 31, 2022 $ ( 21,900 ) $ 425 $ ( 1 ) $ ( 21,476 ) Note 16 – Legal Matters On August 12, 2019, a former employee of Virginia Community Bankshares, Inc. (“VCB”) and participant in its Employee Stock Ownership Plan (the “VCB ESOP”) filed a class action complaint against VCB, Virginia Community Bank, and certain individuals associated with the VCB ESOP in the U.S. District Court for the Western District of Virginia, Charlottesville Division. The complaint alleges, among other things, that the defendants breached their fiduciary duties to VCB ESOP participants in violation of the Employee Retirement Income Security Act of 1974, as amended. The complaint alleges that the VCB ESOP incurred damages “that approach or exceed $ 12 million.” The Company automatically assumed any liability of VCB in connection with this litigation as a result of its 2019 acquisition of VCB. The outcome of this litigation is uncertain, and the plaintiff and other individuals may file additional lawsuits related to the VCB ESOP. The Company believes the claims are without merit and no loss has been accrued for this lawsuit. Note 17 – Subsequent Events On April 6, 2023 , the board of directors of the Company declared a quarterly dividend of $ 0.1225 per share, which was paid on April 28, 2023 , to shareholders of record of the Company's common stock as of the close of business on April 18, 2023 . A commercial and industrial loan in the amount of $ 37.3 million, which was modified during the first quarter of 2023, did not make a contractually due payment at the end of April 2023. An amendment to the loan agreement is under negotiation, and the loan continues to be adequately collateralized. 37 Item 2. Management’s Discussion and Analysis o f Financial Condition and Results of Operations The following presents management’s discussion and analysis of the Company’s consolidated financial condition and the results of our operations. This discussion should be read in conjunction with the unaudited consolidated financial statements and the notes thereto included in this Form 10-Q and the audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2022 (the “ 2022 Form 10-K ” ). Results of operations for the three months ended March 31, 2023 are not necessarily indicative of the results of operations for the balance of 2023, or for any other period. As used in this report, the terms “the Company,” “we,” “us,” and “our” refer to Blue Ridge Bankshares, Inc. and its consolidated subsidiaries. The term “Bank” refers to Blue Ridge Bank, National Association. Cautionary Note About Forward-Looking Statements The Company makes certain forward-looking statements in this Form 10-Q that are subject to risks and uncertainties. These forward-looking statements represent plans, estimates, objectives, goals, guidelines, expectations, intentions, projections, and statements of management’s beliefs concerning future events, business plans, objectives, expected operating results, and the assumptions upon which those statements are based. Forward-looking statements include without limitation, any statement that may predict, forecast, indicate, or imply future results, performance or achievements, and are typically identified with words such as “may,” “could,” “should,” “will,” “would,” “believe,” “anticipate,” “estimate,” “expect,” “aim,” “intend,” “plan,” or words or phases of similar meaning. The Company cautions that the forward-looking statements are based largely on management’s expectations and are subject to a number of known and unknown risks and uncertainties that are subject to change based on factors which are, in many instances, beyond its control. Actual results, performance, or achievements could differ materially from those contemplated, expressed, or implied by the forward-looking statements. The following factors, among others, could cause the Company’s financial performance to differ materially from that expressed in such forward-looking statements: (i) the strength of the United States economy in general and the strength of the local economies in which the Company conducts operations; (ii) geopolitical conditions, including acts or threats of terrorism and/or military conflicts, or actions taken by the United States or other governments in response to acts or threats of terrorism and/or military conflicts, which could impact business and economic conditions in the United States and abroad; (iii) the residual effects of the COVID-19 pandemic, including the adverse impact on the Company’s business and operations and on the Company’s customers which may result, among other things, in increased delinquencies, defaults, foreclosures and losses on loans; (iv) the occurrence of significant natural disasters, including severe weather conditions, floods, health related issues, and other catastrophic events; (v) the Company’s management of risks inherent in its real estate loan portfolio, and the risk of a prolonged downturn in the real estate market, which could impair the value of the Company’s collateral and its ability to sell collateral upon any foreclosure; (vi) changes in consumer spending and savings habits; (vii) deposit flows; (viii) technological and social media changes; (ix) the effects of, and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System, inflation, interest rate, market and monetary fluctuations; (x) changing bank regulatory conditions, policies or programs, whether arising as new legislation or regulatory initiatives, that could lead to restrictions on activities of banks generally, or the Company’s subsidiary bank in particular, more restrictive regulatory capital requirements, increased costs, including deposit insurance premiums, regulation or prohibition of certain income producing activities or changes in the secondary market for loans and other products; (xi) the impact of changes in financial services policies, laws and regulations, including laws, regulations and policies concerning taxes, banking, securities and insurance, and the application thereof by regulatory bodies; (xii) the impact of, and the ability to comply with, the terms of the formal written agreement between the Bank and the Office of the Comptroller of the Currency (the "OCC"); (xiii) the impact of changes in laws, regulations and policies affecting the real estate industry; (xiv) the effect of changes in accounting policies and practices, as may be adopted from time to time by bank regulatory agencies, the Securities and Exchange Commission (the “SEC”), the Public Company Accounting Oversight Board, the Financial Accounting Standards Board or other accounting standards setting bodies; (xv) the timely development of competitive new products and services and the acceptance of these products and services by new and existing customers; (xvi) the willingness of users to substitute competitors’ products and services for the Company’s products and services; (xvii) the outcome of any legal proceedings that may be instituted against the Company; (xviii) reputational risk and potential adverse reactions of the Company’s customers, suppliers, employees or other business partners; (xix) the ability to maintain adequate liquidity by retaining deposits customers and secondary 38 funding sources, especially if the Company's or industry's reputation become damaged; (xx) the effects of acquisitions the Company may make, including, without limitation, the failure to achieve the expected revenue growth and/or expense savings from such transactions; (xxi) changes in the level of the Company’s nonperforming assets and charge-offs; (xxii) the Company’s involvement, from time to time, in legal proceedings and examination and remedial actions by regulators; (xxiii) potential exposure to fraud, negligence, computer theft and cyber-crime; (xxiv) the Company’s ability to pay dividends; (xxv) the Company’s involvement as a participating lender in the Paycheck Protection Program ("PPP") as administered through the U.S. Small Business Administration; and (xxvi) other risks and factors identified in the “Risk Factors” sections and elsewhere in documents the Company files from time to time with the SEC. The foregoing factors should not be considered exhaustive and should be read together with other cautionary statements that are included in the 2022 Form 10-K including those discussed in the section entitled "Risk Factors." If one or more of the factors affecting forward-looking information and statements proves incorrect, then actual results, performance or achievements could differ materially from those expressed in, or implied by, forward-looking information and statements contained in this Form 10-Q. Therefore, the Company cautions not to place undue reliance on its forward-looking information and statements. The Company will not update the forward-looking statements to reflect actual results or changes in the factors affecting the forward-looking statements. New risks and uncertainties may emerge from time to time, and it is not possible for the Company to predict their occurrence or how these risks and uncertainties will affect it. Regulatory Matters On August 29, 2022, the Bank entered into a formal written agreement (the “Written Agreement”) with the OCC, the Bank's primary federal banking regulator. The Written Agreement principally concerns the Bank’s fintech line of business and requires the Bank to continue enhancing its controls for assessing and managing the third-party, Bank Secrecy Act/Anti-Money Laundering, and information technology risks stemming from its fintech partnerships. A complete copy of the Written Agreement was filed as an exhibit to a Form 8-K filed with the SEC on September 1, 2022 and can be accessed on the SEC’s website ( www.sec.gov ) and the Company’s website ( www.blueridgebankshares.com ). The Company is actively working to bring the Bank’s fintech policies, procedures, and operations into conformity with OCC directives. The Company reports that although work is progressing, many aspects of the Written Agreement require considerable time for completion, implementation, validation, and sustainability. Sale of MoneyWise Payroll Solutions, Inc. The Company sold its majority interest in MoneyWise Payroll Solutions, Inc. (“MoneyWise”) to the holder of the minority interest in MoneyWise in the first quarter of 2022. Asset and liability balances and income statement amounts related to MoneyWise are reported as discontinued operations for all periods presented. General There were no changes to the Critical Accounting Policies disclosed in Item 7 of the 2022 Form 10-K, except as noted in Part I, Note 2 - Adoption of New Accounting Standard of this Form 10-Q, which describes the Company's adoption of Accounting Standards Codification (“ASC”) 326 - Financial Instruments – Credit Losses (referred herein as “ASC 326” or “CECL”), effective January 1, 2023. Certain amounts presented in the consolidated financial statements of prior periods have been reclassified to conform to current year presentations. The reclassifications had no effect on net income, net income per share, total assets, total liabilities, or stockholders’ equity as previously reported. 39 Comparison of Financial Condition as of March 31, 2023 and December 31, 2022 Total assets were $3.33 billion as of March 31, 2023, an increase of $193.9 million from $3.14 billion as of December 31, 2022. Most of this increase was attributable to higher cash and due from banks balances, which increased $149.1 million to $226.4 million as of March 31, 2023 from $77.3 million as of December 31, 2022. Loans held for investment, excluding PPP loans, increased $49.9 million to $2.49 billion as of March 31, 2023 from $2.40 billion at December 31, 2022, an annualized growth rate of 8.32%. The allowance for credit losses ("ACL") increased $7.0 million to $30.0 million as of March 31, 2023 from $22.9 million as of December 31, 2022. Of this increase, $4.0 million was due to the adoption of ASC 326 on January 1, 2023. Total deposits as of March 31, 2023 were $2.76 billion, an increase of $258.5 million from December 31, 2022. The increase in the first three months of 2023 was primarily due to an increase of $304.4 million in time deposit balances, of which $293.0 million was attributable to brokered time deposits acquired, primarily in response to banking industry liquidity concerns that began in early March 2023. Partially offsetting this increase were lower noninterest-bearing demand deposit balances of $45.6 million. Deposits related to fintech relationships increased by $26.0 million, or 3.8%, from December 31, 2022 to $716.0 million as of March 31, 2023, and represented 27.6% and 25.9% of total deposits as of the same respective dates. Total stockholders’ equity decreased by $1.8 million to $257.6 million as of March 31, 2023 compared to $259.4 million at December 31, 2022. Of the decrease, $5.5 million was attributable to the adoption of ASC 326, which included an after-tax increase in the ACL and reserve for unfunded commitments of $2.6 million and $2.9 million, respectively. The fair value of the Company’s portfolio of securities available for sale ("AFS") increased in the first three months of 2023, primarily as a result of a modest decline in market longer-term interest rates, resulting in an after-tax increase in stockholders’ equity of $3.9 million. The Company does not have any investment securities classified as held to maturity as of March 31, 2023 or December 31, 2022. Comparison of Results of Operations for the Three Months Ended March 31, 2023 and 2022 For the three months ended March 31, 2023, the Company reported net income from continuing operations of $1.6 million, or $0.09 per diluted common share, compared to $17.4 million, or $0.93 per diluted common share, for the three months ended March 31, 2022. Income from continuing operations before income taxes for the first three months of 2022 included $9.4 million of fair value adjustments for the Company's equity investments, primarily in certain fintech companies, compared to a nominal amount for the same period of 2023. For the three months ended March 31, 2023 and 2022, income from continuing operations before income taxes included $1.1 million and $0, respectively, of costs incurred for professional services related to regulatory remediation efforts in connection with the Written Agreement. Net Interest Income. Net interest income is the amount by which interest earned on assets exceeds the interest paid on interest-bearing liabilities and is the Company’s primary revenue source. Net interest income is thereby affected by overall balance sheet growth, changes in interest rates, and changes in the mix of investments, loans, deposits, and borrowings. The Company’s principal interest-earning assets are loans to businesses, real estate investors, and individuals and its investment securities portfolio. Interest-bearing liabilities consist primarily of negotiable order of withdrawal and savings accounts, money market accounts, certificates of deposit, and Federal Home Loan Bank of Atlanta (“FHLB”) advances. A common net interest income measure is net interest margin. Net interest margin represents the difference between interest income and interest expense calculated as a percentage of average interest-earning assets. 40 The following table presents the average balance sheets for the three months ended March 31, 2023 and 2022. Also shown are the amounts of interest earned on interest-earning assets, with related tax-equivalent yields, and interest expense on interest-bearing liabilities, with related rates, as well as a volume and rate analysis of changes in net interest income for the periods stated. Average Balances, Income and Expense, Yields and Rates For the three months ended March 31, 2023 2022 Total Increase/ Increase/(Decrease) Due to (Dollars in thousands) Average Balance Interest Yield/ Rate (1) Average Balance Interest Yield/ Rate (1) (Decrease) Volume (2) Rate (2) Average Assets Taxable securities $ 374,956 $ 2,628 2.80 % $ 379,113 $ 1,770 1.87 % $ 858 $ (19 ) $ 877 Tax-exempt securities (3) 20,726 116 2.25 % 19,372 75 1.55 % 41 5 36 Total securities 395,682 2,744 2.77 % 398,485 1,845 1.85 % 899 (14 ) 914 Interest-earning deposits in other banks 107,614 941 3.50 % 94,710 35 0.15 % 906 5 901 Federal funds sold 8,890 99 4.45 % 51,460 22 0.17 % 77 (18 ) 95 Loans held for sale 40,024 282 2.82 % 73,710 621 3.37 % (339 ) (284 ) (55 ) Paycheck Protection Program loans (4) 10,265 20 0.78 % 27,081 393 5.80 % (373 ) (244 ) (129 ) Loans held for investment (4,5,6) 2,498,059 38,992 6.24 % 1,798,653 22,885 5.09 % 16,107 8,899 7,208 Total average interest-earning assets 3,060,534 43,078 5.63 % 2,444,099 25,801 4.22 % 17,277 8,343 8,934 Less: allowance for credit losses (24,722 ) (12,063 ) Total noninterest-earning assets 234,297 221,951 Total average assets $ 3,270,109 $ 2,653,987 Average Liabilities and Stockholders’ Equity: Interest-bearing demand, money market deposits, and savings $ 1,287,839 $ 8,259 2.57 % $ 1,082,743 $ 585 0.22 % $ 7,674 $ 111 $ 7,563 Time deposits (7) 513,642 3,072 2.39 % 483,236 971 0.80 % 2,101 61 2,040 Total interest-bearing deposits 1,801,481 11,331 2.52 % 1,565,979 1,556 0.40 % 9,775 172 9,603 FHLB borrowings (8) 328,223 3,810 4.64 % 10,110 11 0.44 % 3,799 346 3,453 FRB borrowings 4 — 0.40 % 16,379 14 0.34 % (14 ) (14 ) — Subordinated notes and other borrowings (9) 39,935 553 5.54 % 39,976 553 5.53 % — (1 ) 1 Total average interest-bearing liabilities 2,169,643 15,694 2.89 % 1,632,444 2,134 0.52 % 13,560 503 13,057 Noninterest-bearing demand deposits 808,425 720,226 Other noninterest-bearing liabilities 32,130 26,430 Stockholders' equity 259,911 274,887 Total average liabilities and stockholders’ equity $ 3,270,109 $ 2,653,987 Net interest income and margin (10) $ 27,384 3.58 % $ 23,667 3.87 % $ 3,717 $ 7,840 $ (4,122 ) Cost of funds (11) 2.11 % 0.36 % Net interest spread (12) 2.74 % 3.70 % (1) Annualized. (2) Change in income/expense due to both volume and rate has been allocated in proportion to the absolute dollar amounts of the change in each. (3) Computed on a fully taxable equivalent basis assuming a 21% income tax rate. (4) Includes deferred loan fees/costs. (5) Non-accrual loans have been included in the computations of average loan balances. (6) Includes accretion of fair value adjustments (discounts) on acquired loans of $688 thousand and $2.7 million for the three months ended March 31, 2023 and 2022, respectively. (7) Includes amortization of fair value adjustments (premiums) on assumed time deposits of $284 thousand and $474 thousand for the three months ended March 31, 2023 and 2022, respectively. (8) Includes amortization of fair value adjustments (premiums) on assumed FHLB borrowings of $0 and $3 thousand for the three months ended March 31, 2023 and 2022, respectively. (9) Includes amortization of fair value adjustments (premiums) on assumed subordinated notes of $25 thousand and $25 thousand for the three months ended March 31, 2023 and 2022, respectively. (10) Net interest margin is net interest income divided by average interest-earning assets. (11) Cost of funds is total interest expense divided by total interest-bearing liabilities and non-interest bearing demand deposits. (12) Net interest spread is the yield on average interest-earning assets less the cost of average interest-bearing liabilities. Average interest-earning assets were $3.06 billion for the three months ended March 31, 2023 compared to $2.44 billion for the same period of 2022, a $616.4 million increase. This increase was primarily attributable to growth in average balances of loans held for investment, excluding PPP loans, which increased $699.4 million in the 2023 period compared to the 2022 period, partially offset by lower average balances of federal funds sold, loans held for sale, and PPP loans. Total interest income (on a taxable equivalent basis) increased $17.3 million for the three-month period ended March 31, 2023 from the same period of 2022. This increase was primarily due to higher average balances and yields, including fee income, on loans held for investment, excluding PPP loans, and securities. Higher yields in the 2023 period were primarily attributable to loan growth and the re-pricing of variable rate loans in the higher interest rate environment, partially offset by lower accretion of purchase accounting adjustments (discounts) on acquired loans. Interest income in the first quarters of 2023 and 2022 included accretion of discounts on acquired loans of $688 thousand and $2.7 million, respectively. 41 Average interest-bearing liabilities were $2.17 billion for the three months ended March 31, 2023 compared to $1.63 billion for the same period of 2022, a $537.2 million increase. Interest expense increased by $13.6 million to $15.7 million for the three months ended March 31, 2023 compared to the same period of 2022. Cost of interest-bearing liabilities increased to 2.89% for the first quarter of 2023 from 0.52% for the first quarter of 2022, while cost of funds were 2.11% and 0.36% for the same respective periods. Higher cost of funds in the 2023 period was primarily due to higher rates on interest-bearing demand deposits, including fintech relationship deposits, money market accounts, brokered time deposits, and FHLB advances. Interest expense in the first quarters of 2023 and 2022 included the amortization of fair value adjustments (premium) on assumed time deposits of $284 thousand and $474 thousand, respectively, which was a reduction to interest expense. Net interest income (on a taxable equivalent basis) for the three months ended March 31, 2023 was $27.4 million compared to $23.7 million for the same period in 2022, an increase of $3.7 million. Net interest margin was 3.58% and 3.87% for the first quarters of 2023 and 2022, respectively. Accretion and amortization of purchase accounting adjustments had a 13 and 53 basis point positive effect on net interest margin for the same respective periods. Provision for Credit Losses. The Company recorded a provision for credit losses of $3.7 million in the first quarter of 2023 compared to $2.5 million in the first quarter of 2022. Provision for credit losses in the 2023 period was primarily attributable to specific reserves on collateral-dependent loans and quarterly loan growth, partially offset by a credit to provision for credit losses on unfunded commitments of $400 thousand. Noninterest Income . The following table presents a summary of noninterest income and the dollar and percentage change for the periods presented. For the three months ended (Dollars in thousands) March 31, 2023 March 31, 2022 Change $ Change % Fair value adjustments of other equity investments $ (51 ) $ 9,364 $ (9,415 ) (100.5 %) Residential mortgage banking income, including MSRs 1,303 9,559 (8,256 ) (86.4 %) Gain on sale of guaranteed government loans 2,409 1,427 982 68.8 % Wealth and trust management 432 391 41 10.5 % Service charges on deposit accounts 343 315 28 8.9 % Increase in cash surrender value of bank owned life insurance 282 272 10 3.7 % Bank and purchase card, net 340 422 (82 ) (19.4 %) Other 2,225 2,344 (119 ) (5.1 %) Total noninterest income $ 7,283 $ 24,094 $ (16,811 ) (69.8 %) Lower noninterest income in the first quarter of 2023 compared to the first quarter of 2022 was primarily attributable to lower residential mortgage banking income, including mortgage servicing rights ("MSR"), which was driven by higher market interest rates which lead to lower mortgage volumes in the 2023 period ($46.3 million) compared to the 2022 period ($151.4 million). The change in the fair value of MSR assets was a negative $2.1 million and a positive $3.8 million for the first quarter of 2023 and 2022, respectively. Also contributing to the decline was higher income from fair value adjustments of other equity investments in the first three months of 2022 attributable to the Company's equity investments, primarily in certain fintech companies. The Company records certain equity investments at fair value when an observable market event occurs, such as the issuance or transfer of shares of substantially similar investments. 42 Noninterest Expense. The following tables present a summary of noninterest expense and the dollar and percentage change for the periods stated. For the three months ended (Dollars in thousands) March 31, 2023 March 31, 2022 Change $ Change % Salaries and employee benefits $ 15,289 $ 14,096 $ 1,193 8.5 % Occupancy and equipment 1,569 1,485 84 5.7 % Data processing 1,346 946 400 42.3 % Legal 1,234 382 852 223.0 % Advertising and marketing 286 428 (142 ) (33.2 %) Communications 1,131 799 332 41.6 % Audit and accounting fees 146 141 5 3.5 % FDIC insurance 729 231 498 215.6 % Intangible amortization 355 397 (42 ) (10.6 %) Other contractual services 939 534 405 75.8 % Other taxes and assessments 802 570 232 40.7 % Regulatory remediation 1,134 — 1,134 100.0 % Merger-related — 50 (50 ) (100.0 %) Other 3,887 2,630 1,257 47.8 % Total noninterest expense $ 28,847 $ 22,689 $ 6,158 27.1 % Excluding regulatory remediation and merger-related expenses, noninterest expense increased $5.1 million for the three months ended March 31, 2023 compared to the same period of 2022. Higher noninterest expense for the 2023 period was primarily attributable to higher salaries and employee benefit expenses due to the addition of commercial lenders and support personnel and personnel to support the fintech business, partially offset by reduced headcount and lower commissions in the Company's mortgage division. Higher legal expenses in the 2023 period were primarily attributable to costs incurred for loan origination and on corporate, employee benefit plans, and other employment matters. Included in other noninterest expense in the 2023 period was a $0.9 million charge related to the sale of PPP loans in the second quarter of 2021. Income Tax Expense . Income tax expense from continuing operations for the three months ended March 31, 2023 and 2022 was $491 thousand and $5.1 million, respectively, resulting in an effective income tax rate of 23.4% and 22.8% for the same respective periods. Analysis of Financial Condition All loan portfolio and ACL information presented as of and for the three months ended March 31, 2023 is in accordance with ASC 326. All loan information presented prior to this period is presented in accordance with previously applicable GAAP. As a result, the presentation of information pre-ASC 326 and post-ASC 326 adoption will not be comparable for most disclosures. Loan Portfolio. The Company makes loans to commercial entities and to individuals. Loan terms vary as to interest rate, repayment, and collateral requirements based on the type of loan and the creditworthiness of the borrower. Credit risk tends to be geographically concentrated in that a majority of the loans are to borrowers located in the markets served by the Company. All loans are underwritten within specific lending policy guidelines that are designed to maximize the Company’s profitability within an acceptable level of business risk. 43 The following table presents the Company’s loan portfolio by category of loan and the percentage of loans in each category to total loans as of the dates stated. March 31, 2023 December 31, 2022 (Dollars in thousands) Amount Percent Amount Percent Commercial and industrial $ 571,095 23.2 % $ 590,049 24.4 % Paycheck Protection Program 7,988 0.3 % 11,967 0.5 % Real estate – construction, commercial 180,149 7.3 % 183,301 7.6 % Real estate – construction, residential 92,403 3.8 % 76,599 3.2 % Real estate – mortgage, commercial 867,916 35.3 % 864,989 35.8 % Real estate – mortgage, residential 672,473 27.4 % 631,772 26.2 % Real estate – mortgage, farmland 6,394 0.3 % 6,599 0.3 % Consumer 58,907 2.4 % 47,423 2.0 % Gross loans 2,457,325 100.0 % 2,412,699 100.0 % Less: deferred loan fees, net of costs (345 ) (1,640 ) Gross loans, net of deferred loans fees and costs 2,456,980 2,411,059 Less: allowance for credit losses (29,974 ) (22,939 ) Loans held for investment, net $ 2,427,006 $ 2,388,120 Loans held for sale (not included in totals above) $ 76,528 $ 69,534 The following table presents the remaining maturities, based on contractual maturity, by loan type and by rate type (variable or fixed), as of March 31, 2023. Variable rate Fixed rate (Dollars in thousands) Total Maturities One Year or Less Total 1-5 years 5-15 years More than 15 years Total 1-5 years 5-15 years More than 15 years Commercial and industrial $ 571,095 $ 147,642 $ 211,884 $ 180,833 $ 29,948 $ 1,103 $ 211,569 $ 105,017 $ 93,130 $ 13,422 Paycheck Protection Program 7,988 — — — — — 7,988 7,988 — — Real estate – construction, commercial 180,149 49,020 92,247 52,863 10,132 29,252 38,882 36,462 2,376 44 Real estate – construction, residential 92,403 21,745 16,286 14,697 — 1,589 54,372 1,578 3,129 49,665 Real estate – mortgage, commercial 867,916 34,254 452,922 66,892 218,392 167,638 380,740 211,325 161,950 7,465 Real estate – mortgage, residential 672,473 15,268 388,286 14,480 74,690 299,116 268,919 37,595 43,517 187,807 Real estate – mortgage, farmland 6,394 582 1,768 91 255 1,422 4,044 2,445 870 729 Consumer loans 58,907 5,861 7,062 6,898 164 — 45,984 25,431 20,491 62 Gross loans $ 2,457,325 $ 274,372 $ 1,170,455 $ 336,754 $ 333,581 $ 500,120 $ 1,012,498 $ 427,841 $ 325,463 $ 259,194 Allowance for Credit Losses . Management believes that the Company’s allowance for credit losses (“ACL”) was adequate as of March 31, 2023 and December 31, 2022. There can be no assurance, however, that adjustments to the ACL will not be required in the future. Changes in the economic assumptions underlying management’s estimates and judgments; adverse developments in the economy, on a national basis or in the Company’s market area; and changes in the circumstances of particular borrowers are criteria, among others, that could increase the level of the ACL required, resulting in charges to the provision for credit losses for loans. 44 The following table presents an analysis of the change in the ACL by loan type as of and for the periods stated. As of and for the three months ended (Dollars in thousands) March 31, 2023 March 31, 2022 ACL, beginning of period $ 22,939 $ 12,121 Impact of ASC 326 adoption 4,022 — Charge-offs Commercial and industrial (799 ) (2,401 ) Consumer (510 ) (418 ) Total charge-offs (1,309 ) (2,819 ) Recoveries Commercial and industrial 118 86 Consumer 104 125 Total recoveries 222 211 Net charge-offs (1,087 ) (2,608 ) Provision for credit losses - loans 4,100 2,500 ACL, end of period $ 29,974 $ 12,013 Ratio of net charge-offs to average loans outstanding during period: Commercial 0.17 % 0.82 % Consumer 0.19 % 0.18 % Total loans 0.17 % 0.58 % The ACL includes specific reserves for individually evaluated loans and a general allowance applicable to all loan categories; however, management has allocated the ACL by loan type to provide an indication of the relative risk characteristics of the loan portfolio. The allocation is an estimate and should not be interpreted as an indication that charge-offs will occur in these amounts, or that the allocation indicates future trends, and does not restrict the usage of the allowance for any specific loan or category. The following presents the allocation of the ACL by loan category and the percentage of loans in each category to total loans as of the dates stated. March 31, 2023 December 31, 2022 (Dollars in thousands) $ % of Loans $ % of Loans Commercial and industrial $ 8,284 23.2 % $ 15,272 24.4 % Paycheck Protection Program — 0.3 % — 0.5 % Real estate – construction, commercial 4,310 7.3 % 1,637 7.6 % Real estate – construction, residential 1,806 3.8 % 628 3.2 % Real estate – mortgage, commercial 8,671 35.3 % 2,356 35.8 % Real estate – mortgage, residential 5,285 27.4 % 1,760 26.2 % Real estate – mortgage, farmland 14 0.3 % 4 0.3 % Consumer 1,604 2.4 % 1,282 2.0 % $ 29,974 100.0 % $ 22,939 100.0 % The information in the table above excludes PPP loans, which carry no ACL as they are fully guaranteed by the U.S. government. Nonperforming Assets. Nonperforming assets consist of nonaccrual loans, loans past due 90 days and still accruing interest, and other real estate owned (“OREO”). OREO includes properties that have been substantively repossessed or acquired in complete or partial satisfaction of a loan. Such properties, which are held for resale, are carried at the lower of cost or fair market value, including a reduction for the estimated selling expenses. The following table presents summary information pertaining to nonperforming assets and certain asset quality ratios as of the dates stated. 45 (Dollars in thousands) March 31, 2023 December 31, 2022 Nonaccrual loans $ 28,557 $ 10,324 Loans past due 90 days and still accruing 2,167 8,260 Total nonperforming loans $ 30,724 $ 18,584 OREO — 195 Total nonperforming assets $ 30,724 $ 18,779 ACL $ 29,974 $ 22,939 Loans held for investment, including PPP loans $ 2,456,980 $ 2,411,059 Loans held for investment, excluding PPP loans $ 2,448,992 $ 2,399,092 Total assets $ 3,334,911 $ 3,141,045 ACL to total loans held for investment, including PPP loans 1.22 % 0.95 % ACL to total loans held for investment, excluding PPP loans 1.22 % 0.96 % ACL to nonperforming loans 97.56 % 123.43 % Nonperforming loans to total loans held for investment, including PPP loans 1.25 % 0.77 % Nonperforming loans to total loans held for investment, excluding PPP loans 1.25 % 0.77 % Nonperforming assets to total assets 0.92 % 0.60 % The increase in nonperforming loans at March 31, 2023 compared to December 31, 2022 was primarily due to two commercial loans totaling $13.0 million that were placed on nonaccrual status in the first quarter of 2023. The increase in the ratio of ACL to total loans held for investment, excluding PPP loans, at March 31, 2023 compared to December 31, 2022 was primarily attributable to the adoption of ASC 326 on January 1, 2023, which resulted in a $4.0 million increase in the ACL, specific reserve needs for collateral-dependent loans, and loan growth in the first three months of 2023. The remaining purchase accounting adjustments (discounts) related to loans acquired in the Bay Banks of Virginia, Inc. merger in 2021 and earlier acquisitions by the Company were $6.7 million and $7.9 million at March 31, 2023 and December 31, 2022, respectively. Modified Loans. The Company granted certain loan modifications to borrowers experiencing financial difficulties during the first quarter of 2023. The total amortized cost of these modified loans was $40.7 million, or 1.65% of gross loans held for investment, as of March 31, 2023. Of this amount, a $37.3 million commercial and industrial loan did not make a contractually due payment at the end of April 2023. An amendment to the loan agreement is under negotiation, and the loan continues to be adequately collateralized. Investment Securities. The investment portfolio is used as a source of interest income, credit risk diversification, and liquidity, as well as to manage rate sensitivity and provide collateral for short-term borrowings. Securities in the investment portfolio classified as securities AFS may be sold in response to changes in market interest rates, changes in the securities’ prepayment risk, increased loan demand, general liquidity needs, and other similar factors, and are carried at estimated fair value. The fair value of the Company’s AFS investment securities was $352.0 million as of March 31, 2023, a slight decrease from $354.3 million at December 31, 2022, primarily due to amortization of securities. Primarily as a result of a modest decline in market longer-term interest rates in the first three months of 2023, the Company’s portfolio of AFS securities had an unrealized gain of approximately $5.0 million in the same period. As of March 31, 2023 and December 31, 2022, the majority of the investment securities portfolio consisted of securities rated as investment grade by a leading rating agency. Investment grade securities are judged to have a low risk of default. At March 31, 2023 and December 31, 2022, securities with a fair value of $242.8 million and $241.9 million, respectively, were pledged to secure the Bank’s borrowing facility with the FHLB. As of March 31, 2023, the Company pledged securities with $29.9 million of par value (amortized cost and fair value of $29.8 million and $25.5 million, respectively) as collateral for the Bank Term Funding Program (“BTFP”) established by the Board of Governors of the Federal Reserve System. The Company reviews its AFS investment securities portfolio for potential credit losses at least quarterly. AFS investment securities with unrealized losses are generally a result of pricing changes due to changes in the current interest rate environment and not as a result of permanent credit impairment. The Company does not intend to sell, nor does it believe that it will be required to sell, any of its temporarily impaired AFS securities prior to the recovery of the amortized cost. No ACL has been recognized for AFS securities as of March 31, 2023. 46 Restricted equity investments consisted of stock in the FHLB (carrying basis $11.8 million and $14.7 million at March 31, 2023 and December 31, 2022, respectively), stock in the Federal Reserve Bank of Richmond (the "FRB") (carrying basis of $6.1 million at both March 31, 2023 and December 31, 2022, respectively), and stock in the Company’s correspondent bank (carrying basis of $468 thousand at both March 31, 2023 and December 31, 2022). Restricted equity investments are carried at cost. The Company holds various other equity investments, including shares in other financial institutions and fintech companies, totaling $23.0 million and $23.8 million as of March 31, 2023 and December 31, 2022, respectively, which are carried at fair value with any gain or loss reported in the consolidated statements of operations each reporting period. The following table presents the amortized cost of the investment portfolio by contractual maturities, as well as the weighted average yields for each of the maturity ranges as of and for the period stated. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. March 31, 2023 Within One Year One to Five Years Five to Ten Years Over Ten Years (Dollars in thousands) Amortized Cost Weighted Average Yield Amortized Cost Weighted Average Yield Amortized Cost Weighted Average Yield Amortized Cost Weighted Average Yield Total Amortized Cost Securities available for sale State and municipal $ — — % $ 5,299 2.40 % $ 30,658 1.92 % $ 23,451 2.37 % $ 59,408 U. S. Treasury and agencies 2 — % 17,486 0.97 % 47,563 1.85 % 7,000 2.11 % 72,051 Mortgage backed securities — — % 3,114 0.51 % 26,762 2.13 % 201,885 1.93 % 231,761 Corporate bonds 1,500 6.08 % 6,300 6.48 % 34,120 4.63 % 500 4.00 % 42,420 Total $ 1,502 $ 32,199 $ 139,103 $ 232,836 $ 405,640 Deposits. The principal sources of funds for the Company are core deposits (demand deposits, interest-bearing transaction accounts, money market accounts, savings deposits, and certificates of deposit), primarily from its market area. The Company’s deposit base includes transaction accounts, time and savings accounts, and other accounts that customers use for cash management purposes and which provide a source of fee income and cross-marketing opportunities as well as a low-cost source of funds. Time and savings accounts, including money market deposit accounts, also provide a relatively stable low-cost source of funding. Total deposits as of March 31, 2023 were $2.76 billion, an increase of $258.5 million from December 31, 2022, of which $304.4 million was due to higher time deposits, primarily brokered time deposits. The Company's relationships with fintech partners have resulted in approximately $716.0 million of deposits as of March 31, 2023, up from approximately $690.0 million as of December 31, 2022, a $26.0 million increase for the three months ended March 31, 2023. Estimated uninsured deposits totaled approximately $898 million as of March 31, 2023, or 32% of total deposits, compared to $923 million, or 37% of total deposits, as of December 31, 2022. Excluding fintech-related deposits, estimated uninsured deposits were 23% and 27% of total deposits as of March 31, 2023 and December 31, 2022, respectively. Approximately 21.5% of total deposits as of March 31, 2023 were composed of noninterest-bearing demand deposits compared to 25.6% as of December 31, 2022. In contrast, approximately 25.2% of total deposits as of March 31, 2023 were composed of time deposits compared to 15.7% as of December 31, 2022, which was primarily due to the acquisition of brokered time deposits in the first quarter of 2023. Brokered time deposits represented approximately 12.2% and 1.7% of total deposits as of March 31, 2023 and December 31, 2022, respectively. The following table presents maturities of time deposits for certificate of deposits of $250 thousand or greater as of the dates stated. (Dollars in thousands) March 31, 2023 December 31, 2022 Maturing in: 3 months or less $ 11,886 $ 10,642 Over 3 months through 6 months 15,941 14,699 Over 6 months through 12 months 33,477 15,423 Over 12 months 18,889 35,075 $ 80,193 $ 75,839 47 Borrowings. The following tables present information on the balances and interest rates on borrowings as of and for the periods stated. As of and for the three months ended March 31, 2023 (Dollars in thousands) Period-End Balance Highest Month-End Balance Average Balance Weighted Average Rate FHLB borrowings $ 239,100 $ 310,800 $ 328,223 4.64 % FRB borrowings — — 4 0.40 % As of and for the three months ended March 31, 2022 (Dollars in thousands) Period-End Balance Highest Month-End Balance Average Balance Weighted Average Rate FHLB borrowings $ 10,108 $ 10,110 $ 10,110 0.44 % FRB borrowings 15,211 17,197 16,379 0.34 % FHLB advances are secured by collateral consisting of a blanket lien on qualifying loans in the Company’s residential, multi-family, and commercial real estate mortgage loan portfolios, as well as selected investment securities. Subordinated notes, net, totaled $39.9 million as of both March 31, 2023 and December 31, 2022. The effective interest rate on the subordinated notes for the three months ended March 31, 2023 and 2022 was 5.54% and 5.53%, respectively. Liquidity . Liquidity is essential to the Company’s business. The Company’s liquidity could be impaired by unforeseen outflows of cash, including deposits, or the inability to access the capital markets. This situation may arise due to circumstances that the Company may be unable to control, such as general market disruption, negative views about the Company or the financial services industry generally, or an operational problem that affects the Company or a third party. The Company’s ability to borrow from other financial institutions on favorable terms or at all could be adversely affected by disruptions in the capital markets or other events. The Company has established a formal liquidity contingency plan that provides guidelines for liquidity management. Pursuant to the Company’s liquidity management program, it first determines its current liquidity position and then forecasts liquidity based on anticipated changes in the balance sheet. In this forecast, the Company expects to maintain a liquidity cushion. Management then stress tests the Company’s liquidity position under several different stress scenarios, from moderate to severe. Guidelines for the forecasted liquidity cushion and for liquidity cushions for each stress scenario have been established. Management also monitors the Company’s liquidity position through cash flow forecasting and believes its level of liquidity and capital is adequate to conduct the business of the Company. Deposits are the primary source of the Company’s liquidity. Cash flow from amortizing assets or maturing assets provides funding to meet the needs of depositors and borrowers. The Bank had unsecured federal fund lines available with correspondent banks for overnight borrowing totaling $28.0 million as of March 31, 2023 and December 31, 2022. These lines bear interest at the prevailing rates for such loan and are cancellable any time by the correspondent bank. As of March 31, 2023 and December 31, 2022, none of these lines of credit with correspondent banks were drawn upon. In addition to deposits and federal funds lines, the Company has access to various wholesale funding markets. These markets include the brokered certificate of deposit market, listing service deposit market, and the federal funds market. The Company is a member of the IntraFi Network (formerly, Promontory Interfinancial Network), which allows banking customers to access Federal Deposit Insurance Corporation (the “FDIC”) insurance protection through the Bank on deposits that exceed FDIC insurance limits. The Company also has one-way authority with the IntraFi Network for both Certificate of Deposit Account Registry Service and Insured Cash Sweep products which provides the Company the ability to access additional wholesale funding as needed. The Company also maintains secured lines of credit with the FHLB under which the Company can borrow up to the allowable amount for the collateral pledged. As of March 31, 2023, the Company had a credit line available of $576.8 million with the FHLB with outstanding advances totaling $239.1 million and letters of credit totaling $67.6 48 million, leaving the remaining credit availability of $270.1 million as of the same date. The letters of credit are for the benefit of the Treasury Board of the Commonwealth of Virginia to secure public deposits. The Company has an immediately available and undrawn line with the BTFP of $29.9 million as of March 31, 2023. The BTFP provides banks with additional liquidity via a secured line of credit collateralized by eligible pledged securities. Available credit is equal to the current par value of the pledged securities. Advances under the BTFP are up to a one-year term and are priced at the one-year overnight index swap rate plus 10 basis points, which is fixed for the term on the advance date. The Company utilized the FRB Paycheck Protection Program Liquidity Facility to partially fund PPP loans, which collateralize the advances. As of March 31, 2023 and December 31, 2022, FRB borrowings under this facility totaled $0 and $51 thousand, respectively. Capital. Capital adequacy is an important measure of financial stability and performance. The Company’s objectives are to maintain a level of capitalization that is sufficient to sustain asset growth and promote depositor and investor confidence. Banks and bank holding companies are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, possibly additional discretionary, actions by regulators that, if undertaken, could have a direct material effect on the Company's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, financial institutions must meet specific capital guidelines that involve quantitative measures of assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. A financial institution's capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Pursuant to the Basel Committee on Banking Supervision's capital guidelines for U.S. banks (the “Basel III rules”), the Bank must hold a capital conservation buffer of 2.50% above the adequately capitalized risk-based capital ratios for all ratios, except the tier 1 leverage ratio. If a banking organization dips into its capital conservation buffer, it is subject to limitations on certain activities, including payment of dividends, share repurchases, and discretionary compensation to certain officers. Management believes as of March 31, 2023, the Bank met all capital adequacy requirements to which it is subject. Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized; although, these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. At March 31, 2023, the most recent regulatory notification categorized the Bank as well capitalized under the regulatory framework. There are no conditions or events since that notification that management believes have changed the institution's categorization. Federal and state banking regulations place certain restrictions on dividends paid by the Company. The total amount of dividends which may be paid at any date is generally limited to retained earnings of the Company. As previously noted, the Company adopted CECL effective January 1, 2023. Federal and state banking regulations allow financial institutions to irrevocably elect to phase-in the after-tax cumulative effect adjustment at adoption to retained earnings ("CECL Transitional Amount") over a three-year period. The three-year phase-in of the CECL Transitional Amount to regulatory capital will be 25%, 50%, and 25% in 2023, 2024, and 2025, respectively. The Bank made this irrevocable election effective with its first quarter 2023 call report. The following tables present the capital and capital ratios to which the Bank is subject and the amounts and ratios to be adequately and well capitalized as of the dates stated. Adequately capitalized ratios include the conversation buffer, 49 if applicable. The CECL Transitional Amount was $5.5 million, of which $1.4 million reduced the regulatory capital amounts and capital ratios as of March 31, 2023. March 31, 2023 Actual For Capital Adequacy Purposes To Be Well Capitalized (Dollars in thousands) Amount Ratio Amount Ratio Amount Ratio Total risk based capital (To risk-weighted assets) Blue Ridge Bank, N.A. $ 307,024 11.12 % $ 289,940 10.50 % $ 276,133 10.00 % Tier 1 capital (To risk-weighted assets) Blue Ridge Bank, N.A. $ 277,898 10.06 % $ 234,711 8.50 % $ 220,905 8.00 % Common equity tier 1 capital (To risk-weighted assets) Blue Ridge Bank, N.A. $ 277,898 10.06 % $ 193,368 7.00 % $ 179,556 6.50 % Tier 1 leverage (To average assets) Blue Ridge Bank, N.A. $ 277,898 8.50 % $ 130,776 4.00 % $ 163,469 5.00 % December 31, 2022 Actual For Capital Adequacy Purposes To Be Well Capitalized (Dollars in thousands) Amount Ratio Amount Ratio Amount Ratio Total risk based capital (To risk-weighted assets) Blue Ridge Bank, N.A. $ 303,876 11.22 % $ 286,161 10.50 % $ 272,535 10.00 % Tier 1 capital (To risk-weighted assets) Blue Ridge Bank, N.A. $ 279,125 10.31 % $ 231,470 8.50 % $ 217,854 8.00 % Common equity tier 1 capital (To risk-weighted assets) Blue Ridge Bank, N.A. $ 279,125 10.31 % $ 190,622 7.00 % $ 177,006 6.50 % Tier 1 leverage (To average assets) Blue Ridge Bank, N.A. $ 279,125 9.25 % $ 120,703 4.00 % $ 150,878 5.00 % Off-Balance Sheet Activities Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. 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 Company evaluates each customer’s credit worthiness on a case-by-case basis, in a manner similar to that if underwriting a loan. The approved commitments to extend credit that were available but unused as of March 31, 2023 and December 31, 2022 totaled $707.9 million and $736.1 million, respectively. Conditional commitments are issued by the Company in the form of financial stand-by letters of credit, which guarantee payment to the underlying beneficiary (i.e., third party) if the customer fails to meet its designated financial obligation. As of March 31, 2023 and December 31, 2022, commitments under outstanding financial stand-by letters of credit totaled $29.3 million and $29.8 million, respectively. The credit risk of issuing stand-by letters of credit can be greater than the risk involved in extending loans to customers. Additionally, the Company issues performance stand-by letters of credit, which guarantee the performance of a customer to a third party. As of March 31, 2023 and December 31, 2022, commitments under outstanding performance stand-by letters of credit totaled $0 and $655 thousand, respectively. Upon the adoption of ASC 326 on January 1, 2023, the Company recorded an increase to its reserve for unfunded commitments of $3.7 million. For the three months ended March 31, 2023, the Company recorded a recovery of 50 provision for credit losses for unfunded commitments of $400 thousand. As of March 31, 2023, the reserve for unfunded commitments was $5.1 million compared to $1.8 million as of December 31, 2022. The Company invests in various partnerships, limited liability companies, and small business investment company funds. Pursuant to these investments, the Company commits to an investment amount that may be fulfilled in future periods. At March 31, 2023, the Company had future commitments outstanding totaling $17.7 million related to these investments. Interest Rate Risk Management As a financial institution, the Company is exposed to various business risks, including interest rate risk. Interest rate risk is the risk to earnings and value arising from volatility in market interest rates. Interest rate risk arises from timing differences in the repricing and maturities of interest-earning assets and interest-bearing liabilities, changes in the expected maturities of assets and liabilities arising from embedded options, such as borrowers' ability to prepay loans and depositors' ability to redeem certificates of deposit before maturity, changes in the shape of the yield curve where interest rates increase or decrease in a nonparallel fashion, and changes in spread relationships between different yield curves, such as U.S. Treasuries and other market-based index rates. The Company’s goal is to maximize net interest income without incurring excessive interest rate risk. Management of net interest income and interest rate risk must be consistent with the level of capital and liquidity that the Bank maintains. The Company manages interest rate risk through an asset and liability committee comprised of members of its board of directors and management (the “ALCO”). The ALCO is responsible for monitoring the Company’s interest rate risk in conjunction with liquidity and capital management. The Company employs an independent consulting firm to model its interest rate sensitivity that uses a net interest income simulation model as its primary tool to measure interest rate sensitivity. Assumptions for modeling are developed based on expected activity in the balance sheet. For maturing assets, assumptions are created for the redeployment of these assets. For maturing liabilities, assumptions are developed for the replacement of these funding sources. Assumptions are also developed for assets and liabilities that could reprice during the modeled time period. These assumptions also cover how management expects interest rates to change on non-maturity deposits such as interest checking, money market checking, savings accounts, as well as certificates of deposit. Based on inputs that include the current balance sheet, the current level of interest rates, and the developed assumptions, the model produces an expected level of net interest income assuming that market rates remain unchanged. This is considered the base case. The model then simulates the impact on net interest income based on specific changes in interest rates. The rate simulations are performed for a two-year period and include rapid rate changes of down 100 basis points to 300 basis points and up 100 basis points to 300 basis points. The results of these simulations are then compared to the base case. The following table presents the estimated change in net interest income under various rate change scenarios. The scenarios assume rate changes occur instantaneous and in a parallel manner, which means the changes are the same on all points of the rate curve. March 31, 2023 Instantaneous Parallel Rate Shock Scenario Change in Net Interest Income - Year 1 Change in Net Interest Income - Year 2 Change in interest rates: +300 basis points $ (12,201 ) (11.8 %) $ (10,384 ) (9.2 %) +200 basis points (7,242 ) (7.0 %) (5,815 ) (5.2 %) +100 basis points (3,132 ) (3.0 %) (2,248 ) (2.0 %) Base case -100 basis points 1,393 1.3 % (96 ) (0.1 %) -200 basis points 1,965 1.9 % (2,244 ) (2.0 %) -300 basis points 2,196 2.1 % (5,357 ) (4.8 %) The severity of the effect of instantaneous increases in interest rates as shown above is due to the timing of pricing change in the Company's interest-bearing liabilities compared to its interest-earning assets. A significant portion of the Company's deposits through its fintech partnerships reprice with changes in federal funds rates. Therefore, an 51 instantaneous change in this index rate results in a relative change in deposit costs. The Company contracts with its fintech partners and continually assesses the cost of these fintech-related deposits relative to sources of fees and other noninterest income earned from these partnerships. Stress testing the balance sheet and net interest income using instantaneous parallel shock movements in the yield curve of 100 to 300 basis points is a regulatory and banking industry practice. However, these stress tests may not represent a realistic forecast of future interest rate movements in the yield curve. In addition, instantaneous parallel interest rate shock modeling is not a predictor of actual future performance of earnings. It is a financial metric used to manage interest rate risk and track the movement of the Company’s interest rate risk position over a historical time frame for comparison purposes. The asset and liability repricing characteristics of the Company’s assets and liabilities will have a significant impact on its future interest rate risk profile. Item 3. Quantitative and Qualitati ve Disclosures about Market Risk This information is incorporated herein by reference to the information in section "Interest Rate Risk Management" within Part I, Item 2. "Management's Discussion and Analysis of Financial Condition and Results of Operations" of this Form 10-Q. Item 4. Controls and Procedures The Company maintains disclosure controls and procedures that are designed to provide assurance that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods required by the SEC and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. An evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of March 31, 2023 was carried out under the supervision and with the participation of management, including the Company’s Chief Executive Officer and Chief Financial Officer. Based on and as of the date of such evaluation, the aforementioned officers concluded that the Company’s disclosure controls and procedures were effective. The Company’s management is also responsible for establishing and maintaining adequate internal control over financial reporting. There were no changes in the Company’s internal control over financial reporting that occurred during the Company’s last fiscal quarter that materially affected, or are reasonably likely to materially affect, internal control over financial reporting. 52 PART II. OTHER INFORMATION Item 1. Legal Proceedings There have been no material developments in the status of the legal proceedings previously disclosed in Part I, Item 3 of the Company’s 2022 Form 10-K. In the ordinary course of its operations, the Company is a party to various legal proceedings. As of the date of this report, there are no pending or threatened proceedings against the Company, other than previously disclosed as stated in the preceding paragraph, that, if determined adversely, would have a material effect on the business, results of operations or financial position of the Company. Item 1A. Ri sk Factors The have been no material changes to the risk factors disclosed in the 2022 Form 10-K. Additional risks not presently known to us, or that we currently deem immaterial, may also adversely affect our business, financial condition, or results of operations. See also “Cautionary Note About Forward-Looking Statements,” included in Part 1, Item 2, of this Form 10-Q. Item 2. Unregistered Sales of Equi ty Securities and Use of Proceeds None Item 3. Defaults Upo n Senior Securities None Item 4. Mine Saf ety Disclosures None Item 5. Other Information None Item 6. E xhibits 31.1 Rule 13(a)-14(a) Certification of Chief Executive Officer. 31.2 Rule 13(a)-14(a) Certification of Chief Financial Officer. 32.1 Statement of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350. 101 The following materials from Blue Ridge Bankshares, Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2023, formatted in Inline Extensible Business Reporting Language (XBRL), include: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income (Loss), (iv) Consolidated Statements of Changes in Stockholders’ Equity, (v) Consolidated Statements of Cash Flows and (vi) related notes (filed herewith). 104 The cover page from Blue Ridge Bankshares, Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2023, formatted in Inline XBRL (included with Exhibit 101). 53 SIGNAT URES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. BLUE RIDGE BANKSHARES, INC. Date: May 10, 2023 By: /s/ Brian K. Plum Brian K. Plum President and Chief Executive Officer By: /s/ Judy C. Gavant Judy C. Gavant Executive Vice President and Chief Financial Officer 54