What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-10 compared with 2026-05-05 · 289 added, 172 removed, 407 unchanged (53% of the section changed)

2 unchanged sentences

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 the Company's Annual Report on Form 10-K for the year ended December 31, 2025 (the “ 2025 Form 10-K ” ).

Results of operations for the three months ended March 31, 2026 are not necessarily indicative of the results of operations for the balance of 2026, or for any other period.

Results of operations for the three and six months ended June 30, 2026 are not necessarily indicative of the results of operations for the balance of 2026, or for any other period.

As used in this report, the terms “the Company,” “we,” “us,” and “our” refer to Blue Ridge Bankshares, Inc.

39 unchanged sentences

Special Cash Dividend and Warrants

On March 30, 2026, the Company announced a special cash dividend of $0.60 per share of the Company's common stock totaling approximately $54.1 million.

The dividend was paid on April 27, 2026 to shareholders of record as of the close of business on April 13, 2026.

Also on March 30, 2026, the Company announced that the holders of outstanding warrants to purchase the Company's common stock (the "Warrants") representing a majority of shares of common stock underlying such Warrants approved an amendment and restatement of the Warrants (the "Warrant Amendment").

Pursuant to the Warrant Amendment, in connection with certain cash distributions to holders of the Company's common stock while the Warrants are outstanding, the per share exercise price of each Warrant is reduced by the per share dividend amount in lieu of cash distributions to Warrant holders, including the special cash dividends of $0.25 per share

paid in November 2025 and $0.60 per share paid in April 2026.

The Company had previously accrued $6.1 million for the November 2025 dividend to be paid if and when the Warrants are exercised.

As a result of the Warrant Amendment, the $6.1 million accrual was reversed in the first quarter 2026, and upon execution of the amended and restated Warrants, the strike price of the Warrants reduces to $1.65 per common share.

The table below presents information pertaining to the Warrants as of and for the period stated.

On March 30, 2026, the Company announced a special cash dividend of $0.60 per share of the Company's common stock totaling approximately $54.1 million, of which $53.2 million was paid on April 27, 2026 to shareholders of record as of the close of business on April 13, 2026.

On March 30, 2026, the Company announced that the holders of outstanding warrants to purchase the Company's common stock (the "Warrants") representing a majority of shares of common stock underlying such Warrants approved an amendment and restatement of the Warrants (the "Warrant Amendment").

Pursuant to the Warrant Amendment, in connection with certain cash distributions to holders of the Company's common stock while the Warrants are

outstanding, the per share exercise price of each Warrant is reduced by the per share dividend amount in lieu of cash distributions to Warrant holders, including the special cash dividends of $0.25 per share paid in November 2025 and $0.60 per share paid in April 2026.

As a result, the previously accrued $6.1 million (for dividends to be paid upon exercise of the Warrants) was reversed in the first quarter of 2026, and, upon execution of the amended and restated Warrants, the strike price of the Warrants reduces to $1.65 per common share.

The table below presents information pertaining to the Warrants as of and for the periods stated.

Warrants Issued April 3, 2024

4 unchanged sentences

Balance, March 31, 2026

Remaining exercise term (years) as of March 31, 2026

Warrants exercised

Balance, June 30, 2026

Remaining exercise term (years) as of June 30, 2026

Warrants Issued April 3, 2024

4 unchanged sentences

Balance, March 31, 2025

Warrants exercised

Balance, June 30, 2025

There were no changes to the Critical Accounting Policies disclosed in Item 7 of the 2025 Form 10-K.

1 unchanged sentence

The reclassifications had no effect on net income, net income per share, total assets, total liabilities, or stockholders’ equity as previously reported.

Comparison of Financial Condition as of March 31, 2026 and December 31, 2025

Total assets were $2.41 billion as of March 31, 2026, a decrease of $18.5 million from $2.43 billion as of December 31, 2025.

Most of this decrease was attributable to a $31.8 million decline in loans held for investment and a $14.8 million decline in loans held for sale, partially offset by an increase in cash and due from banks, which increased $30.7 million from December 31, 2025.

Included in the reduction of loans held for investment in the first quarter of 2026 were payoffs and paydowns of $24.1 million of out-of-market loans.

The decline in loans held for sale reflects the Company's complete exit from its indirect fintech lending activities in the first quarter.

The allowance for credit losses ("ACL") was $19.2 million and $19.4 million as of March 31, 2026 and December 31, 2025, respectively.

Total deposits were $1.89 billion as of March 31, 2026, a net decrease of $18.1 million from December 31, 2025.

The decline in the first quarter of 2026 was primarily due to a $31.5 million decrease in brokered time deposits.

Excluding the decline in brokered deposits, deposits increased $13.4 million in the first quarter of 2026.

Total stockholders’ equity decreased by $46.7 million to $277.0 million as of March 31, 2026, from $323.7 million at December 31, 2025, primarily due to the special cash dividend ($54.1 million) announced March 30, 2026, partially offset by a $6.1 million reversal of accrued dividends due to the aforementioned Warrant Amendment.

Comparison of Results of Operations for the Three Months Ended March 31, 2026 and 2025

For the three months ended March 31, 2026, the Company reported net income of $0.8 million, or $0.01 per diluted common share, compared to net loss of $0.4 million, or ($0.01) per diluted common share, for the same period of 2025.

Net income for the first quarter of 2026 included after-tax expenses of $1.3 million related to the transition of executive officers.

Net income for the first quarter of 2026 when excluding these transition expenses was $2.1 million, or $0.02 per diluted common share.

Net loss for the first quarter of 2025 included after-tax severance costs of $0.5 million and an after-tax $0.2 million loss on the sale of the mortgage division.

Comparison of Financial Condition as of June 30, 2026 and December 31, 2025

Total assets were $2.33 billion as of June 30, 2026, a decrease of $105.3 million from $2.43 billion as of December 31, 2025.

Approximately half of this decrease was attributable to a decrease in cash and due from banks ($54.3 million), while the remainder was due to decreases in securities available for sale ($15.9 million), loans held for sale ($14.8 million) and loans held for investment ($12.3 million).

Cash and due from banks declined due to the special cash dividend paid of $53.2 million and the reduction of brokered time deposits of approximately $52.9 million.

The decline in available for sale securities was due to bonds called or matured ($9.6 million) and portfolio amortization ($16.4 million), partially offset by bond purchases ($11.1 million).

Included in the reduction of loans held for investment in the first half of 2026 were payoffs and paydowns of $32.2 million of out-of-market loans.

The decline in loans held for sale reflected the Company's complete exit from its indirect fintech lending activities in the first quarter of 2026.

The allowance for credit losses ("ACL") was $22.0 million and $19.4 million as of June 30, 2026 and December 31, 2025, respectively.

The increase since year-end primarily reflects the addition of specific reserves for out-of-market loans.

Loans held for investment increased $19.6 million during the second quarter of 2026, primarily driven by growth in commercial and residential mortgage loans.

During the second quarter of 2026, the Company partnered with a third-party residential mortgage originator, whereby the Company purchases adjustable-rate mortgage loans originated generally within its market area.

Purchases under this program totaled $17.3 million during the second quarter of 2026, inclusive of purchase premiums.

This program provides a primary mortgage product to the Company's consumer customers.

Total deposits were $1.86 billion as of June 30, 2026, a net decrease of $48.8 million from December 31, 2025.

The decline in the first half of 2026 was primarily due to a $52.9 million decrease in brokered time deposits.

Excluding the decline in brokered deposits, deposits increased $4.1 million in the first half of 2026.

Total stockholders’ equity decreased by $48.3 million to $275.4 million as of June 30, 2026, from $323.7 million at December 31, 2025, primarily due to the special cash dividend ($54.1 million) announced March 30, 2026, partially offset by a $6.1 million reversal of accrued dividends due to the aforementioned Warrant Amendment.

Comparison of Results of Operations for the Three and Six Months Ended June 30, 2026 and 2025

For the three months ended June 30, 2026, the Company reported a net loss of $1.3 million, or ($0.01) per diluted common share, compared to net income of $1.3 million, or $0.01 per diluted common share, for the same period of 2025.

Net loss for the three months ended June 30, 2026 included an after-tax $3.2 million provision for credit losses, compared to an after-tax benefit for recovery of credit losses of $0.5 million for the same period of 2025.

Loans from a single out-of-market relationship originated prior to 2024 were placed on nonaccrual at June 30, 2026, and a reserve was established for the loans in the amount of $2.9 million ($2.3 million after tax).

Net loss for the three months ended June 30, 2026 also included $0.3 million of after-tax expenses related to severance, compared to $0.2 million for the same period of 2025.

Severance expenses include amounts associated with previously-announced executive officer transitions.

The 2025 period also included an after-tax benefit of $1.0 million from the recovery of non-credit related amounts reserved for in the prior year, as the Company concluded outstanding exit activities with a former fintech banking-as-a-service (“BaaS”) partner.

For the six months ended June 30, 2026, the Company reported a net loss of $0.5 million, or ($0.01) per diluted common share, compared to net income of $0.9 million, or $0.01 per diluted common share, for the same period of 2025.

Net loss for the six months ended June 30, 2026 included after-tax severance expenses of $1.7 million, while net income for the six months ended June 30, 2025 included after-tax severance costs of $0.8 million.

Net Interest Income.

Net interest income is the excess of interest earned on loans, investments, and other interest-earning assets less the interest paid on deposits and borrowings and is the Company’s primary revenue source.

Net interest income is thereby affected by overall balance sheet size, changes in interest rates, and changes in the mix of

investments, loans, deposits, and borrowings.

Net interest income for the three months ended March 31, 2026 was $16.9 million, a decline of $2.1 million from the same respective period in 2025, primarily due to a decline in average loan balances.

The following table presents the average balance sheets for the three months ended March 31, 2026 and 2025.

Net interest income is thereby affected by overall balance sheet size, changes in interest rates, and changes in the mix of investments, loans, deposits, and borrowings.

Net interest income for the three and six months ended June 30, 2026 was $16.5 million and $33.4 million, respectively, a decline of $3.3 million and $5.4 million from the same respective periods in 2025, primarily due to declines in average loan balances.

The following table presents the average balance sheets for the three months ended June 30, 2026 and 2025.

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 June 30,

Increase/(Decrease)

(Dollars in thousands)

Average Assets

Taxable securities

Tax-exempt securities (3)

Total securities

Interest-earning deposits in other banks

Federal funds sold

Loans held for sale

Loans held for investment (4,5,6)

Total average interest-earning assets

allowance for credit losses

Total noninterest-earning assets

Total average assets

Average Liabilities and Stockholders’ Equity:

Interest-bearing demand, money market, and savings

Total interest-bearing deposits

FHLB borrowings

Subordinated notes and other borrowings (8)

Total average interest-bearing liabilities

Noninterest-bearing demand deposits

Other noninterest-bearing liabilities

Stockholders' equity

Total average liabilities and stockholders’ equity

Net interest income and margin (9)

Cost of funds (10)

Net interest spread (11)

(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 21.96% and 22.32% income tax rate for the three months ended June 30, 2026 and 2025, respectively.

(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 $147 thousand and $370 thousand for the three months ended June 30, 2026 and 2025, respectively.

(7) Includes amortization of fair value adjustments (premiums) on assumed time deposits of $0 and $25 thousand for the three months ended June 30, 2026 and 2025, respectively.

(8) Includes amortization of fair value adjustments (premiums) on assumed subordinated notes of $14 thousand and $25 thousand for the three months ended June 30, 2026 and 2025, respectively.

(9) Net interest margin is net interest income divided by average interest-earning assets.

(10) Cost of funds is total interest expense divided by total interest-bearing liabilities and non-interest bearing demand deposits.

(11) Net interest spread is the yield on average interest-earning assets less the cost of average interest-bearing liabilities.

Average balances of interest-earning assets decreased $244.9 million to $2.28 billion for the three months ended June 30, 2026, compared to $2.53 billion for the same period of 2025.

This decrease reflected lower average balances of loans held for investment and loans held for sale, reflective of the Company's efforts to selectively reduce its portfolio of out-of-market loans and its exit from its indirect fintech lending partnerships.

The yield on average loans held for investment was 5.54% and 5.80% for the second quarters of 2026 and 2025, respectively.

The decline in yield on loans held for investment was primarily due to a decline in higher yielding out-of-market loans and lower accretion of discounts on acquired loans.

Accretion of discounts on acquired loans had a three and seven basis point positive effect on yield on loans held for investment for the respective periods.

The exit of fintech lending operations, represented by loans held for sale, also had a unfavorable effect on yields on interest-earning assets.

Average balances of interest-bearing liabilities decreased $170.4 million to $1.65 billion for the three months ended June 30, 2026, compared to $1.82 billion for the same period of 2025.

The decrease was primarily due to a $118.7 million reduction of average balances of brokered deposits, reported in time deposits, and a $19.9 million reduction in average borrowings due to the Company's redemption of a portion of its subordinated notes in the late second and early third quarters of 2025.

Cost of deposits was 2.25% for the three months ended June 30, 2026, compared to 2.47% for the same period of 2025, while cost of funds was 2.41% and 2.63%, for the respective periods.

Lower cost of deposits and funds in the second quarter of 2026 relative to the year-ago period were primarily due to the reduction in average balances of higher cost brokered deposits paid off upon maturity and the partial redemption of the Company's subordinated notes.

Cost of deposits, excluding brokered deposits, was 1.97% for the second quarter of 2026 compared to 2.05% for the second quarter of 2025.

Net interest income (on a taxable equivalent basis) for the three months ended June 30, 2026 was $16.6 million compared to $19.9 million for the same period in 2025.

Interest income declined $5.9 million to $28.9 million for the three months ended June 30, 2026, primarily due to the decline in average balances of loans held for investment, loans held for sale, and interest-earning deposits in other banks, which collectively declined $244.1 million from the three months ended June 30, 2025.

Interest expense declined $2.6 million to $12.3 million for the three months ended June 30, 2026, largely driven by lower average balances of brokered deposits, which declined $118.7 million from the same period of 2025.

Net interest margin was 2.91% and 3.15% for the second quarters of 2026 and 2025, respectively.

The following table presents the average balance sheets for the six months ended June 30, 2026 and 2025.

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,

For the six months ended June 30,

Increase/(Decrease)

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(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 21.96% and 22.32% income tax rate for the three months ended March 31, 2026 and 2025, respectively.

(3) Computed on a fully taxable equivalent basis assuming a 21.96% and 22.32% income tax rate for the six months ended June 30, 2026 and 2025, respectively.

(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 $165 thousand and $366 thousand for the three months ended March 31, 2026 and 2025, respectively.

(7) Includes amortization of fair value adjustments (premiums) on assumed time deposits of $1 thousand and $35 thousand for the three months ended March 31, 2026 and 2025, respectively.

(8) Includes amortization of fair value adjustments (premiums) on assumed subordinated notes of $14 thousand and $25 thousand for the three months ended March 31, 2026 and 2025, respectively.

(6) Includes accretion of fair value adjustments (discounts) on acquired loans of $311 thousand and $736 thousand for the six months ended June 30, 2026 and 2025, respectively.

(7) Includes amortization of fair value adjustments (premiums) on assumed time deposits of $1 thousand and $60 thousand for the six months ended June 30, 2026 and 2025, respectively.

(8) Includes amortization of fair value adjustments (premiums) on assumed subordinated notes of $28 thousand and $49 thousand for the six months ended June 30, 2026 and 2025, respectively.

(9) Net interest margin is net interest income divided by average interest-earning assets.

1 unchanged sentence

(11) Net interest spread is the yield on average interest-earning assets less the cost of average interest-bearing liabilities.

Average balances of interest-earning assets decreased $286.1 million to $2.33 billion for the three months ended March 31, 2026 compared to $2.62 billion for the same period of 2025.

Relative to the year-ago period, this decrease primarily reflected lower average balances of loans held for investment and lower average loans held for sale, reflective of the Company's exit of its indirect fintech lending partnerships, in addition to lower average interest-earning deposits in other banks.

The yield on average loans held for investment was 5.50% and 5.70% for the first quarters of 2026 and 2025, respectively.

Average interest-earning assets were $2.31 billion for the six months ended June 30, 2026, compared to $2.57 billion for the same period of 2025, a $265.4 million decrease.

This decrease was primarily due to declines in average balances of loans held for investment and loans held for sale, which decreased $217.5 million and $24.5 million, respectively, reflective of the Company's efforts to selectively reduce its portfolio of out-of-market loans and its exit from its indirect fintech lending partnerships.

Total interest income (on a taxable equivalent basis) decreased $11.8 million for the six months ended June 30, 2026 from the same period of 2025, primarily due to loan portfolio reductions, while the yield on interest-earning assets declined 40 basis points.

The yield on average loans held for investment was 5.52% and 5.75% for the first halves of 2026 and 2025, respectively.

The decline in yield on loans held for investment was primarily due to a decline in higher yielding out-of-market loans and lower accretion of discounts on acquired loans.

Accretion of discounts on acquired loans had a four and seven basis point positive effect on yield on loans held for investment for the same respective periods.

Interest income for the three months ended March 31, 2026 and 2025 included accretion of discounts on acquired loans of $0.2 million and $0.4 million, respectively.

Average balances of interest-bearing liabilities decreased $226.2 million to $1.67 billion for the three months ended March 31, 2026 compared to $1.90 billion for the same period of 2025.

The decline relative to the year-ago period was primarily due to a $138.8 million reduction of brokered deposits, reported in time deposits, and a $25.1 million reduction in borrowings attributable to the Company's redemption of a portion of its subordinated notes.

Cost of funds was 2.42% for the first quarter of 2026 compared to 2.78% for the first quarter of 2025, while cost of deposits was 2.27% and 2.62%, for the same respective periods.

Lower cost of funds and deposits in the first quarter of

2026 relative to the year-ago periods were primarily due to the reduction in brokered deposits and partial redemption of the Company's subordinated notes.

Cost of deposits, excluding brokered deposits, was 1.97% for the first quarter of 2026 compared to 2.19% for the first quarter of 2025.

Net interest income (on a taxable equivalent basis) for the three months ended March 31, 2026 was $16.9 million compared to $19.0 million for the same period in 2025.

Interest income declined $6.0 million to $29.4 million for the three months ended March 31, 2026 from $35.4 million for the three months ended March 31, 2025, while interest expense declined $3.9 million to $12.5 million from $16.4 million for the same respective periods.

Net interest margin remained unchanged at 2.90% for the first quarters of 2026 and 2025.

Recovery of Credit Losses .

A recovery of credit losses of $0.6 million was reported for the three months ended March 31, 2026, whereas none was reported for the three months ended March 31, 2025.

The recovery of credit losses for the first quarter of 2026 was primarily due to loan portfolio balance reductions of $31.8 million and $0.3 million of net loan recoveries, including an $0.8 million recovery on a loan charged off in 2022.

Accretion of discounts on acquired loans had a three and seven basis point positive effect on yield on loans held for investment for the same respective periods.

Average interest-bearing liabilities were $1.66 billion for the six months ended June 30, 2026 compared to $1.86 billion for the same period of 2025, a $198.2 million decrease.

Interest expense decreased by $6.5 million to $24.8 million for the six months ended June 30, 2026, compared to the same period of 2025.

Cost of deposits was 2.26% for the six months ended June 30, 2026, compared to 2.54% for the same period of 2025, while cost of funds decreased to 2.41% for the first half of 2026 from 2.71% for the first half of 2025.

Lower cost of deposits and funds in the 2026 period was primarily the result of the payoff of higher cost brokered time deposits at maturity.

Cost of deposits, excluding brokered deposits, was 1.97% for the first half of 2026 compared to 2.12% for the same period of 2025.

Net interest income (on a taxable equivalent basis) was $33.5 million for the six months ended June 30, 2026, compared to $38.9 million for the same period in 2025.

Net interest margin was 2.90% and 3.02% for the first halves of 2026 and 2025, respectively.

Provision for (Recovery of) Credit Losses .

A provision for credit losses on loans of $3.5 million was reported for the three months ended June 30, 2026, whereas a recovery of credit losses on loans of $0.7 million was reported for the three months ended June 30, 2025.

The provision for credit losses on loans for the second quarter of 2026 was primarily due to additions to specific loan reserves, net loan charge-offs, and loan portfolio growth of $19.6 million for the quarter.

The provision for credit losses on loans for the 2026 period included a $2.9 million reserve established for loans associated with a single out-of-market relationship originated prior to 2024.

The recovery of credit losses on loans for the second quarter of 2025 was primarily due to loan portfolio reductions.

A provision for credit losses on loans of $2.9 million and a recovery of credit losses on loans of $0.7 million were reported for the six months ended June 30, 2026 and 2025, respectively.

A provision for credit losses on unfunded commitments was $0.6 million for the three and six months ended June 30, 2026.

The second quarter of 2026 provision was due to an increase in committed but unfunded lines of credit to commercial construction borrowers.

There was no provision for credit losses on unfunded commitments in the same respective periods of 2025.

Noninterest Income .

2 unchanged sentences

(Dollars in thousands)

March 31, 2026

March 31, 2025

June 30, 2026

June 30, 2025

Service charges on deposit accounts

2 unchanged sentences

Residential mortgage banking income

Fair value adjustments of other equity investments

Loss on sale of securities available for sale

Total noninterest income

The Company reported higher service charges on deposit accounts during the three months ended March 31, 2026 compared to 2025, primarily due to the execution of a project in early 2025 to more closely align products and pricing with competitors in the markets in which the Bank operates.

The decline in residential mortgage banking income for the same comparative periods was attributable to the sale of the mortgage division late in the first quarter of 2025.

The $0.2 million loss on the sale of the mortgage division was included in other noninterest income in the 2025 period.

Additionally, the decline in other noninterest income for the 2026 period compared to 2025 was primarily driven by lower income from the Company's other investments.

For the six months ended

(Dollars in thousands)

June 30, 2026

June 30, 2025

Service charges on deposit accounts

Bank and purchase card interchange income, net

Wealth and trust management fees

Residential mortgage banking income

Loss on sale of securities available for sale

Total noninterest income

The declines in residential mortgage banking income for the 2026 periods compared to the 2025 periods were attributable to the sale of the Company's mortgage division in the first quarter of 2025.

The declines in other noninterest income for the comparative periods were primarily the result of the $0.6 million loss recognized in the second quarter of 2026 upon the liquidation of an equity method investment made in 2022, the Company's exit from fintech indirect

lending in the first quarter of 2026, and the receipt of proceeds heldback from the 2024 sale of mortgage servicing rights.

Noninterest Expense.

2 unchanged sentences

(Dollars in thousands)

March 31, 2026

March 31, 2025

June 30, 2026

June 30, 2025

Salaries and employee benefits

8 unchanged sentences

Total noninterest expense

Noninterest expense decreased $4.2 million to $18.7 million for the three months ended March 31, 2026, from the same period of 2025.

The decline relative to the prior period was primarily due to the termination of the consent order with the Bank's primary regulator, under which the Bank was operating until it was terminated in the fourth quarter of

Lower expenses resulting from the consent order termination were primarily in salaries and benefits, as the number of full-time employees declined by 70 full-time employees, or approximately 20%, since March 31, 2025, and lower technology costs, other contractual services, audit fees, and Federal Deposit Insurance Corporation ("FDIC") insurance premiums.

Included in salaries and employee benefits expense for the three months ended March 31, 2026 and 2025 were executive officer transition and severance costs of $1.7 million and $0.7 million, respectively.

The decrease in other noninterest expense in the first quarter 2026 compared to the same period of 2025 was primarily due to lower third-party loan servicing costs and losses on loans previously sold.

For the six months ended

(Dollars in thousands)

June 30, 2026

June 30, 2025

Salaries and employee benefits

Occupancy and equipment

Technology and communication

Legal and regulatory filings

Advertising and marketing

FDIC insurance

Intangible amortization

Other contractual services

Other taxes and assessments

Total noninterest expense

As the Company transitioned to a more traditional community banking model and remediated the requirements under the consent order with the Bank's primary regulator, which was terminated in the fourth quarter of 2025, the number of employees decreased from 442 as of December 31, 2024, to 302 as of December 31, 2025, and to 269 as of June 30, 2026, or by 39% and 11%, respectively.

As a result, the Company reported lower expenses for salaries and employee benefits and technology and communication costs.

Included in salaries and employee benefits expense for the three and six months ended June 30, 2026 were severance costs of $0.4 million and $2.1 million, respectively, compared to $0.3 million and $1.0 million for the same respective periods of 2025.

Higher advertising and marketing expenses for the 2026 periods compared to the 2025 periods were the result of marketing campaigns designed to drive growth, which launched in the second half of 2025.

The decline in Federal Deposit Insurance Corporation ("FDIC") insurance premiums primarily reflected lower assessment rates for the 2026 periods relative to the 2025 periods.

The declines in other noninterest expense during the 2026 periods relative to the 2025 periods were primarily due to lower third-party loan servicing costs and losses on the repurchase of loans previously sold.

Income Tax Expense .

For the three months ended March 31, 2026, the effective income tax rate was 24.9% compared to 51.2% for the three months ended March 31, 2025.

The effective income tax rate for the three months ended March 31, 2026 included the effect of limitations on the tax deductibility of certain costs.

The higher effective income tax rate in the 2025 period included the effect of a $0.3 million favorable adjustment related to a change in the state tax rate applied to the accumulated unrealized loss on the available for sale securities portfolio.

For the three and six months ended June 30, 2026, the effective income tax rates were 20.5% and 10.9%, respectively, compared to 27.0% and 2.8% for the three and six months ended June 30, 2025, respectively.

The effective income tax rate for the first half of 2026 was primarily a result of the Company's marginal pre-tax loss in the period, while the effective income tax rate for the second quarter of 2025 was primarily driven by the potential elimination of deductibility of compensation costs in future taxable periods.

The effective income tax rate for the six months ended June 30, 2025 included the effect of a $0.3 million favorable adjustment related to a change in the state tax rate applied to the accumulated unrealized loss on the available for sale securities portfolio.

Analysis of Financial Condition

5 unchanged sentences

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, 2026

June 30, 2026

December 31, 2025

12 unchanged sentences

(not included in totals above)

The Company has pledged certain qualifying loans as collateral for borrowings.

Commercial and residential mortgages totaling $665.7 million and $695.1 million were pledged with the Federal Home Loan Bank of Atlanta ("FHLB") as of March 31, 2026 and December 31, 2025, respectively.

The Company pledged as collateral for borrowings with the Federal Reserve Bank of Richmond (“FRB”) Discount Window certain construction and commercial and industrial loans totaling $71.1 million and $72.8 million as of March 31, 2026 and December 31, 2025, respectively.

The Company has pledged certain qualifying loans as collateral for borrowing facilities.

Commercial and residential mortgages totaling $637.0 million and $695.1 million were pledged with the Federal Home Loan Bank of Atlanta ("FHLB") as of June 30, 2026 and December 31, 2025, respectively.

Construction and commercial and industrial loans totaling $45.3 million and $72.8 million as of June 30, 2026 and December 31, 2025, respectively, were pledged with the Federal Reserve Bank of Richmond (“FRB”) Discount Window.

The following table presents the Company’s portfolio of commercial real estate loans by property type as of the dates stated.

March 31, 2026

June 30, 2026

December 31, 2025

4 unchanged sentences

Total real estate – commercial

While the Federal Reserve has reduced the target Fed Funds rate by 175 basis points from a recent peak, the current lending environment for commercial real estate (“CRE”) loans has heightened risk due to a higher interest rate environment than had existed when the majority of the Company's loans may have been originated.

Potential negative impacts may include higher debt service burdens for floating rate loans and fixed rate loans originated in a lower rate environment that reprice or mature, requiring renewal or refinancing.

As these loans mature, they may be repriced at higher interest rates leading to increased debt service costs that can strain borrowers' ability to meet payment obligations.

In some cases, the higher cost of refinancing may lead to loan defaults, particularly if property cash flows have not increased relatively.

cases, the higher cost of refinancing may lead to loan defaults, particularly if property cash flows have not increased relatively.

Additionally, collateral values overall may be impaired by higher capitalization rates, further complicating refinancing efforts and increasing credit risk to the Bank.

Certain CRE collateral types have experienced declining occupancy, demand, and rental rates, which could potentially lead to material declines in property level economics and further weaken borrowers' ability to service their debt.

The Bank’s credit administration department led by the Chief Risk Officer performs periodic analyses of emerging trends by geography and property type where the Bank has larger concentrations by CRE property type.

The Bank’s credit administration department led by the Chief Risk Officer and Chief Credit Officer performs periodic analyses of emerging trends by geography and property type where the Bank has larger concentrations by CRE property type.

These analyses include all real estate property types and geographic markets represented in the loan portfolio and are provided to the Bank's board of directors to assess whether the CRE lending strategy and risk appetite continue to be appropriate, considering changes in local market conditions and the Bank’s exposure to collateral type concentrations.

Also, concentration limits by real estate collateral type are approved and monitored by the Bank's board of directors.

As of March 31, 2026, the Bank was in compliance with all limits.

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, 2026.

As of June 30, 2026, the Bank was in compliance with board approved limits.

The following table presents the remaining maturities, based on contractual maturity, by loan type and by rate type (variable or fixed), as of June 30, 2026.

Loans shown in the one year or less column are term loans that have a stated maturity date within twelve months.

12 unchanged sentences

Real estate – farmland

Consumer loans

Allowance for Credit Losses .

1 unchanged sentence

Such estimation requires significant judgment at the time made.

Management believes that the Company’s ACL was adequate as of March 31, 2026 and December 31, 2025.

Management believes that the Company’s ACL was adequate as of June 30, 2026 and December 31, 2025.

There can be no assurance, however, that adjustments to the ACL will not be required in the future.

among others that could increase the level of the ACL required, resulting in charges to the provision for credit losses for loans.

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.

In addition, bank regulatory agencies periodically review the Bank's ACL and may require an increase in the ACL or the recognition of further loan charge-offs, based on their judgment of the facts at the time of their review that may differ than that of management.

The following tables present an analysis of the change in the ACL by loan type as of and for the periods stated.

For the three months ended March 31, 2026

For the three months ended June 30, 2026

(Dollars in thousands)

6 unchanged sentences

ACL, beginning of period

(Recovery of) provision for credit losses - loans

Provision for (recovery of) credit losses - loans

Net charge-offs

ACL, end of period

Ratio of net charge-offs to average loans outstanding

For the three months ended June 30, 2025

(Dollars in thousands)

Commercial and industrial

Real estate – construction, commercial

Real estate – construction, residential

Real estate – commercial

Real estate – residential

Real estate – farmland

ACL, beginning of period

Provision for (recovery of) credit losses - loans

Net charge-offs

ACL, end of period

Ratio of net charge-offs to average loans outstanding

For the six months ended June 30, 2026

(Dollars in thousands)

Commercial and industrial

Real estate – construction, commercial

Real estate – construction, residential

Real estate – commercial

Real estate – residential

Real estate – farmland

ACL, beginning of period

Provision for (recovery of) credit losses - loans

Net recoveries (charge-offs)

1 unchanged sentence

Ratio of net recoveries (charge-offs) to average loans outstanding

For the three months ended March 31, 2025

For the six months ended June 30, 2025

(Dollars in thousands)

6 unchanged sentences

ACL, beginning of period

Provision for (recovery of) credit losses - loans

(Recovery of) provision for credit losses - loans

Net recoveries (charge-offs)

1 unchanged sentence

Ratio of net recoveries (charge-offs) to average loans outstanding

Of the $2.3 million and $2.8 million of loan charge-offs for the three months ended March 31, 2026, and 2025, respectively, $1.6 million and $2.0 million for the same respective periods were attributable to business and consumer credit cards originated through a partnership with a third-party company.

The third-party provides limited credit loss protection to the Bank, and upon receipt, credits for losses are reported as recoveries.

Since the inception of this partnership in early 2023, the Bank has not experienced a credit loss from this arrangement.

Of the $2.7 million and $3.1 million of loan charge-offs recognized during the three months ended June 30, 2026 and 2025, respectively, $1.8 million and $2.4 million for the same respective periods were attributable to business and consumer credit cards originated through a partnership with a third-party company.

Under this arrangement, the third-party provides the Bank limited credit loss protection.

Accordingly, the Bank records charge-offs based on the credit card portfolio activity and recognizes recoveries upon receipt of payments under the credit loss protection agreement, which fully offset these charge-offs during the same respective periods.

Of the $4.9 million and $5.9 million of loan charge-offs recognized during the six months ended June 30, 2026 and 2025, respectively, $3.3 million and $4.3 million for the same respective periods were attributable to this third-party arrangement.

The Bank received payments under the credit loss protection agreement that fully offset these charge-offs during the respective periods.

Since the inception of this partnership in early 2023, the Bank has not incurred any net credit losses under this program.

The ACL includes specific reserves for individually evaluated loans and a general allowance applicable to loans pooled by loan categories;

2 unchanged sentences

The following table 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, 2026

June 30, 2026

December 31, 2025

9 unchanged sentences

(Dollars in thousands)

March 31, 2026

June 30, 2026

December 31, 2025

18 unchanged sentences

In certain instances, accruing loans that are past due 90 days or more as to principal or interest may not be placed on nonaccrual status, if the Company determines that the loans are well-secured and are in the process of collection.

The decline in nonperforming loans and the related ratios above for March 31, 2026 from December 31, 2025 primarily reflects loan paydowns in the first quarter of 2026.

The changes in nonperforming loans, the ACL, and the related ratios above at June 30, 2026 from December 31, 2025 were primarily attributable to loans from a single out-of-market relationship originated prior to 2024 totaling $11.4 million.

The loans, classified as commercial and industrial, remained current through May 2026 but became delinquent when the borrower failed to make its June 2026 payment.

Consequently, the loans were placed on nonaccrual at June 30, 2026.

Subsequent to June 30, 2026, the borrower reported that its business had ceased operations.

In light of this development and management's estimate of expected credit losses, the Company established a reserve of approximately $2.9 million, as of June 30, 2026.

The Company believes the credit issues affecting this borrower are unique and not systematic to the Company's overall portfolio.

OREO generally includes properties that have been substantively repossessed or acquired in complete or partial satisfaction of debt.

Such properties, which are held for resale, are initially stated at fair value, including a reduction for the estimated selling expenses, which becomes the new carrying value.

In subsequent periods, such properties are stated at the lower of the restated carrying value or fair value.

In limited cases, the Bank may receive non-cash consideration, including equity interests, pursuant to negotiated or court-approved settlements with borrowers.

2 unchanged sentences

In subsequent periods, such properties are stated at the lower of the restated carrying value or fair value.

As of March 31, 2026 and December 31, 2025, OREO included a property with a carrying value of $1.3 million that served as collateral for a government guaranteed loan.

As of both June 30, 2026 and December 31, 2025, the Company's nonmarketable equity interest assets totaled $0.2 million.

As of June 30, 2026 and December 31, 2025, OREO included a property with a carrying value of $1.4 million that served as collateral for a government guaranteed loan.

The guaranteed portion of the loan (90%) is owned by the U.S.

Small Business Administration ("SBA"), and the Company is obligated to remit to the SBA its share of the liquidation proceeds upon the sale of the property.

Accordingly, the Company recorded a $1.2 million liability, reported in other liabilities on the Company's consolidated balance sheets as both March 31, 2026 and December 31, 2025, representing the SBA's contractual interest in the expected proceeds from the sale of the property.

Accordingly, the Company recorded a $1.2 million liability, reported in other liabilities on the Company's consolidated balance sheets as of both June 30, 2026 and December 31, 2025, representing the SBA's contractual interest in the expected proceeds from the sale of the property.

Investment Securities.

The investment portfolio is used as a source of interest income, credit risk diversification, and liquidity, as well as to manage interest rate sensitivity and provide collateral for short-term borrowings.

The investment portfolio is used as a source of interest income, credit risk diversification, and liquidity, as well as to manage interest rate sensitivity and provide collateral for borrowings.

Securities in the investment portfolio classified as securities available for sale ("AFS") may be sold in response to changes in market interest rates, securities’ prepayment risk, liquidity needs, and other similar factors, and are carried at estimated fair value.

The fair value of the Company’s AFS investment securities portfolio was $331.9 million as of March 31, 2026, a decrease of $1.0 million from $332.9 million at December 31, 2025.

As a result of elevated market interest rates, the Company’s portfolio of AFS securities had net unrealized losses of approximately $40.3 million as of both March 31,

2026 and December 31, 2025, of which approximately 83% and 84%, respectively, were related to securities backed by U.S.

The fair value of the Company’s investment securities AFS portfolio was $317.0 million as of June 30, 2026, a decrease of $15.9 million from $332.9 million at December 31, 2025.

The decline in AFS securities was due to bonds called or matured ($9.6 million), portfolio amortization ($16.4 million), and fair value adjustments ($1.0 million), partially offset by bond purchases ($11.1 million).

As a result of elevated market interest rates, the Company’s portfolio of AFS securities had net unrealized losses of approximately $41.3 million and $40.3 million as of June 30, 2026 and December 31, 2025, respectively, of which approximately 85% and 84%, respectively, were related to securities backed by U.S.

government agencies.

As of March 31, 2026 and December 31, 2025, the majority of the investment securities portfolio consisted of securities rated investment grade by a leading rating agency.

As of June 30, 2026 and December 31, 2025, the majority of the investment securities portfolio consisted of securities rated investment grade by a leading rating agency.

Investment grade securities are judged to have a low risk of default, to be of the best quality, and to carry the smallest degree of investment risk.

At March 31, 2026 and December 31, 2025, securities with a fair value of $169.8 million and $174.3 million, respectively, were pledged to secure the Bank’s borrowing facility with the FHLB.

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.

At June 30, 2026 and December 31, 2025, securities with a fair value of $163.8 million and $174.3 million, respectively, were pledged to secure the Bank’s borrowing facility with the FHLB.

The Company reviews its investment securities AFS portfolio for potential credit losses at least quarterly.

Investment securities AFS with unrealized losses are generally a result of pricing changes due to changes in the 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 impaired securities prior to the recovery of the amortized cost.

No ACL has been recognized for AFS securities as of both March 31, 2026 and December 31, 2025.

Restricted equity investments consisted of stock in the FHLB (carrying basis $8.9 million and $9.1 million at March 31, 2026 and December 31, 2025, respectively), FRB stock (carrying value of $9.0 million and $9.4 million as of March 31, 2026 and December 31, 2025, respectively), and stock in the Company’s correspondent bank (carrying value of $0.5 million at both March 31, 2026 and December 31, 2025).

Due to these factors, no ACL has been recognized for AFS securities as of both June 30, 2026 and December 31, 2025.

Restricted equity investments consisted of stock in the FHLB (carrying basis $8.9 million and $9.1 million at June 30, 2026 and December 31, 2025, respectively), FRB stock (carrying value of $7.4 million and $9.4 million as of June 30, 2026 and December 31, 2025, respectively), and stock in the Company’s correspondent bank (carrying value of $0.5 million at both June 30, 2026 and December 31, 2025).

Restricted equity investments are carried at cost.

The Company has various other equity investments, including an investment in a fintech company and limited partnerships, totaling $5.0 million and $4.9 million as of March 31, 2026 and December 31, 2025, respectively.

The Company also holds investments in early-stage focused investment funds and low-income housing partnerships, which totaled $20.9 million and $20.8 million as of March 31, 2026 and December 31, 2025, respectively, and are reported in other investments on the consolidated balance sheets.

The Company had no investment securities classified as held to maturity as of March 31, 2026 or December 31, 2025.

The Company has various other equity investments, including an investment in a fintech company and limited partnerships, totaling $5.0 million and $4.9 million as of June 30, 2026 and December 31, 2025, respectively.

The Company also holds other investments, primarily in early-stage focused investment funds, which totaled $18.0 million and $20.8 million as of June 30, 2026 and December 31, 2025, respectively, and are reported in other investments on the consolidated balance sheets.

During the second quarter of 2026, the Company recognized a $0.6 million loss upon the liquidation of an investment made in 2022.

The loss reflects the difference between the investment’s carrying value and the distribution received upon the final liquidation of the investment subsequent to June 30, 2026.

As of June 30, 2026 and December 31, 2025, the carrying value of this investment was $3.2 million and $6.3 million, respectively.

Over the period it was held, the investment generated cumulative pre-tax income of approximately $1.9 million.

The Company had no investment securities classified as held to maturity as of June 30, 2026 or December 31, 2025.

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, 2026

June 30, 2026

Within One Year

9 unchanged sentences

Corporate bonds

The principal sources of funds for the Company are deposits, including transaction accounts (demand and money market accounts), time deposits, and savings accounts, of customers in the Company’s primary geographic market area.

Such customers provide the Bank a source of fee income and cross-marketing opportunities and are generally a lower cost source of funding for the Bank.

Such customers provide the Bank a source of fee income and cross-marketing opportunities and are generally a lower cost source of funding.

Brokered deposit balances are sourced through intermediaries and are an unsecured source of funding for the Bank.

1 unchanged sentence

The Bank has a liquidity management program, with oversight of the Bank’s asset and liability committee (the “ALCO”), that sets forth guidelines and monitors for the desired maximum level of brokered deposits, which is 20.0% of total deposits.

In recent quarters, the Company has reduced its level of higher-priced brokered deposits by sourcing non-brokered deposits and through cash flows from the loan portfolio, and expects to continue reducing brokered deposits in future periods to 10.0% or less of total deposits.

Total deposits decreased $18.1 million from $1.91 billion as of December 31, 2025 to $1.89 billion as of March 31, 2026, as:

• Deposits, excluding brokered deposits, increased $13.4 million from $1.67 billion as of December 31, 2025 to $1.69 billion as of March 31, 2026;

• Brokered deposits decreased $31.5 million from $238.7 million, or 12.5% of total deposits, as of December 31, 2025 to $207.2 million, or 10.9% of total deposits, as of March 31, 2026.

Estimated uninsured deposits totaled approximately $414.3 million as of March 31, 2026, or 20.3% of total deposits, compared to $397.0 million, or 19.1% of total deposits, as of December 31, 2025.

In recent quarters, the Company has reduced its level of brokered deposits by sourcing non-brokered deposits and with cash flows from the loan portfolio.

Total deposits decreased $48.8 million from $1.91 billion as of December 31, 2025 to $1.86 billion as of June 30, 2026, as:

• Brokered deposits decreased $52.9 million from $238.7 million, or 12.5% of total deposits, as of December 31, 2025 to $185.8 million, or 10.0% of total deposits, as of June 30, 2026;

• Deposits, excluding brokered deposits, increased $4.1 million from $1.67 billion as of December 31, 2025 to $1.68 billion as of June 30, 2026.

Estimated uninsured deposits totaled approximately $430.3 million as of June 30, 2026, or 23.1% of total deposits, compared to $397.0 million, or 20.8% of total deposits, as of December 31, 2025.

Uninsured deposit amounts are based on estimates as of the reported dates.

The following table presents a summary of average deposits and the weighted average rate paid for the periods stated.

The decline in average balances and rate for interest-bearing demand accounts reflects the exit of fintech BaaS depository operations.

For the three months ended

March 31, 2026

March 31, 2025

The decline in average balances for noninterest-bearing demand accounts reflects the exit of fintech-related deposits.

For the six months ended

June 30, 2026

June 30, 2025

(Dollars in thousands)

5 unchanged sentences

(Dollars in thousands)

March 31, 2026

June 30, 2026

December 31, 2025

4 unchanged sentences

The Company's brokered deposits were issued in denominations of $1 thousand each under master certificates, and therefore are excluded from the table above.

The Company uses short-term and long-term borrowings from various sources, including FHLB advances and FRB advances, to fund assets and operations.

The following table presents information on the balances of borrowings as of and for the periods ended March 31, 2026 and December 31, 2025.

The weighted average rate was 3.82% and 3.87% as of and for the same periods, respectively.

The Company uses short-term and long-term borrowings primarily from the FHLB and FRB, to fund assets and operations.

The following table presents information regarding the balances of borrowings as of June 30,

2026 and December 31, 2025, and the average balances for the six months ended June 30, 2026 and year ended December 31, 2025.

The weighted average rate was 3.84% and 3.87% for the same periods, respectively.

(Dollars in thousands)

3 unchanged sentences

FHLB borrowings

As of March 31, 2026, FHLB advances were secured by collateral consisting of a blanket lien on qualifying loans in the Company’s residential, multifamily, and commercial real estate mortgage loan portfolios with a lendable value of $384.7 million, as well as selected investment portfolio securities with a lendable value of $161.3 million.

advances through the FRB Discount Window were secured by qualifying pledged construction and commercial and industrial loans totaling $71.1 million as of March 31, 2026.

The Company had $14.7 million of subordinated notes, net, outstanding as of both March 31, 2026 and December 31, 2025.

As of June 30, 2026, FHLB advances were secured by collateral consisting of a blanket lien on qualifying pledged loans in the Company’s residential, multifamily, and commercial real estate mortgage loan portfolios with a lendable value of $366.3 million, as well as selected pledged investment securities with a lendable value of $155.6 million.

The FRB Discount Window borrowing facility was secured by qualifying pledged construction and commercial and industrial loans with a lendable value totaling $45.3 million as of June 30, 2026.

The Company had $14.7 million of subordinated notes, net, outstanding as of both June 30, 2026 and December 31, 2025.

Prior to June 1, 2025, the Company's subordinated notes had been comprised of a $15 million issuance in May 2020 maturing June 1, 2030 (the “2030 Note”) and a $25 million issuance in October 2019 maturing October 15, 2029 (the “2029 Notes”).

1 unchanged sentence

The interest rate on the 2030 Note was 6.0% up to the redemption date.

Interest expense on the 2030 Note was $0 and $0.2 million for the three months ended March 31, 2026 and 2025, respectively.

On July 15, 2025, the Company completed a $10.0 million partial redemption of its 2029 Notes.

As of March 31, 2026, the 2029 Notes bore an annual interest rate of 8.0%.

As of March 31, 2026, the net carrying amount of the 2029 Notes was $14.7 million, inclusive of a $0.2 million purchase accounting adjustment (premium).

For the three months ended March 31, 2026 and 2025, the effective interest rate on the 2029 Notes was 7.92% and 6.31%, respectively, inclusive of the amortization of the purchase accounting adjustment (premium).

Interest expense on the 2030 Note was $0.2 million and $0.4 million for the three and six months ended June 30, 2025, respectively, prior to the redemption date.

On July 15, 2025, the Company completed a $10.0 million partial redemption of the 2029 Notes.

As of June 30, 2026, the interest rate on the 2029 Notes, which resets quarterly, was 8.01%.

As of June 30, 2026, the net carrying amount of the 2029 Notes was $14.7 million, inclusive of a $0.2 million purchase accounting adjustment.

For the three months ended June 30, 2026 and 2025, the effective interest rate on the 2029 Notes was 7.43% and 7.48%, respectively, inclusive of the amortization of the purchase accounting adjustment (premium).

For the six months ended June 30, 2026 and 2025, the effective interest rate on the 2029 Notes was 7.68% and 7.44%, respectively, inclusive of the amortization of the purchase accounting adjustment (premium).

Subsequent to June 30, 2026, on July 15, 2026, the Company redeemed the remainder of the 2029 Notes totaling $14.7 million, inclusive of a $0.2 million purchase accounting adjustment (premium), plus accrued and unpaid interest totaling $0.3 million.

Upon the completion of this redemption, the Company had no outstanding subordinated notes.

Liquidity is essential to the Company’s business.

22 unchanged sentences

Unsecured line of credit

Available liquidity as of March 31, 2026

Available liquidity as of June 30, 2026

(1) Outstanding borrowings are comprised of advances of $150.0 million and letters of credit totaling $70.1 million, of which $70.0 million served as collateral for public deposits with the Treasury Board of the Commonwealth of Virginia.

Estimated uninsured deposits at March 31, 2026 were approximately $414.3 million.

In the unlikely event that uninsured deposit balances leave the Bank over a short period of time, management could more than satisfy the demand with cash on-hand and FHLB borrowing capacity.

Estimated uninsured deposits at June 30, 2026 were approximately $430.3 million.

In the unlikely event that uninsured deposit balances leave the Bank over a short period of time, management could satisfy the demand with its available liquidity.

Capital adequacy is an important measure of financial stability and performance.

6 unchanged sentences

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.

Additionally, regulators place certain restrictions on dividends paid by banks.

Additionally, regulators may place certain restrictions on dividends paid by banks.

Prompt corrective action regulations provide five classifications:

3 unchanged sentences

If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required.

The Company adopted ASC 326, Financial Instruments - Credit Losses (referred to herein as "current expected credit losses" or "CECL") effective January 1, 2023.

The Company adopted Accounting Standards Codification 326, Financial Instruments - Credit Losses (referred to herein as "current expected credit losses" or "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 to retained earnings (the "CECL Transitional Amount") over a three-year period.

1 unchanged sentence

The Bank made this irrevocable election effective with its first quarter 2023 call report.

The CECL Transitional Amount was $8.1 million and was fully phased in as a reduction to the regulatory capital amounts and ratios as of March 31, 2026, compared to a $6.1 million reduction as of December 31, 2025.

The CECL Transitional Amount was $8.1 million and was fully phased in during the first quarter of 2026 as a reduction to the regulatory capital amounts and ratios.

full $8.1 million reduction is reflected as of June 30, 2026, compared to a $6.1 million reduction as of December 31, 2025.

The following tables present the capital ratios to which banks are subject to be adequately and well capitalized, as well as the capital and capital ratios for the Bank as of the dates stated.

Adequately capitalized ratios include the conservation buffer, if applicable.

The following table also includes the capital adequacy ratios to which bank holding companies are subject.

March 31, 2026

June 30, 2026

Adequacy Purposes

3 unchanged sentences

Blue Ridge Bank, N.A.

Blue Ridge Bankshares, Inc.

Tier 1 capital (to risk-weighted assets)

Blue Ridge Bank, N.A.

Blue Ridge Bankshares, Inc.

Common equity tier 1 capital (to risk-weighted assets)

Blue Ridge Bank, N.A.

Blue Ridge Bankshares, Inc.

Tier 1 leverage (to average assets)

Blue Ridge Bank, N.A.

Blue Ridge Bankshares, Inc.

December 31, 2025

4 unchanged sentences

Blue Ridge Bank, N.A.

Blue Ridge Bankshares, Inc.

Tier 1 capital (to risk-weighted assets)

Blue Ridge Bank, N.A.

Blue Ridge Bankshares, Inc.

Common equity tier 1 capital (to risk-weighted assets)

Blue Ridge Bank, N.A.

Blue Ridge Bankshares, Inc.

Tier 1 leverage (to average assets)

Blue Ridge Bank, N.A.

Blue Ridge Bankshares, Inc.

The decline in the capital amounts and capital ratios for both the Bank and the Company as of March 31, 2026 from December 31, 2025 was primarily a result of the aforementioned special cash dividend declared in the first quarter of 2026.

The decline in the Bank's capital amounts and capital ratios from December 31, 2025 was primarily attributable to the special cash dividend declared on March 30, 2026.

Commitments and Contingencies

3 unchanged sentences

The Company evaluates each customer’s credit worthiness, in a manner similar to that if underwriting a loan.

As of March 31, 2026 and December 31, 2025, the Company had outstanding loan commitments of $253.6 million and $247.2 million, respectively.

As of June 30, 2026 and December 31, 2025, the Company had outstanding loan commitments of $285.5 million and $247.2 million, respectively.

Of these amounts, $35.7 million and $35.2 million were unconditionally cancelable at the sole discretion of the Company as of the same respective dates.

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, 2026 and December 31, 2025, commitments under outstanding financial stand-by letters of credit totaled $6.1 million and $6.3 million, respectively.

As of June 30, 2026 and December 31, 2025, commitments under outstanding financial stand-by letters of credit totaled $9.7 million and $6.3 million, respectively.

The credit risk of issuing stand-by letters of credit can be greater than the risk involved in extending loans to customers.

For the three months ended March 31, 2026 and 2025, the Company did not record a provision for credit losses for unfunded commitments.

The reserve for unfunded commitments, which is included in other liabilities on the consolidated balance sheets, was $0.8 million as of both March 31, 2026 and December 31, 2025.

For the three and six months ended June 30, 2026, the Company recorded a $0.6 million provision for credit losses for unfunded commitments due to an increase in committed but unfunded lines of credit to commercial construction borrowers.

The reserve for unfunded commitments, which is included in other liabilities on the consolidated balance sheets, was $1.4 million and $0.8 million as of June 30, 2026 and December 31, 2025, respectively.

The Company has investments in various partnerships and limited liability companies.

Pursuant to these investments, the Company commits to an investment amount that may be fulfilled in future periods.

At March 31, 2026 and December 31, 2025, the Company had future commitments outstanding totaling $4.7 million and $4.9 million, respectively, related to these investments.

At June 30, 2026

and December 31, 2025, the Company had future commitments outstanding totaling $4.6 million and $4.9 million, respectively, related to these investments.

Interest Rate Risk Management

18 unchanged sentences

The results of these simulations are then compared to the base case.

The following tables present the estimated change in net interest income under various rate change scenarios as of the dates presented.

The following table presents the estimated change in net interest income under various rate change scenarios as of the date presented.

The scenarios assume rate changes occur instantaneously and in a parallel manner, which means the changes are the same on all points of the rate curve.

Estimated changes set forth below are dependent on material assumptions, such as those previously discussed.

March 31, 2026

Instantaneous Parallel Rate Shock Scenario

Change in Net Interest Income - Year 1

Change in Net Interest Income - Year 2

Change in interest rates:

+400 basis points

+300 basis points

+200 basis points

+100 basis points

-100 basis points

-200 basis points

-300 basis points

-400 basis points

December 31, 2025

June 30, 2026

Instantaneous Parallel Rate Shock Scenario

15 unchanged sentences

The Company's AFS securities portfolio is reported at fair value, with the unrealized gain or loss representing the difference in amortized cost and fair value reported net of tax as a component of shareholders' equity.

Changes in market interest rates affect the valuation of the securities portfolio, as market interest rates at reporting dates may differ than those interest rates in effect when the securities were purchased.

market interest rates affect the valuation of the securities portfolio, as market interest rates at reporting dates may differ than those interest rates in effect when the securities were purchased.

The Company does not intend to sell, nor does it believe it will be required to sell the AFS securities;

therefore, any unrealized gains or losses in the Company's AFS

securities portfolio are deemed temporary.

therefore, any unrealized gains or losses in the Company's AFS securities portfolio are deemed temporary.

Any unrealized gains or losses for individual securities will diminish as the securities reach maturity.

4 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis