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CHARLOTTESVILLE, Va., Feb. 2, 2023 /PRNewswire/ -- Blue Ridge Bankshares, Inc. (the "Company") (NYSE American: BRBS), the holding company of Blue Ridge Bank, National Association ("Blue Ridge Bank" or the "Bank") and BRB Financial Group, Inc. ("BRB Financial Group"), announced today financial results for the quarter and full year ended December 31, 2022. 

For the fourth quarter of 2022, the Company reported net income from continuing operations of $6.3 million, or $0.33 earnings per diluted common share, compared to $2.7 million, or $0.15 earnings per diluted common share, for the third quarter of 2022, and $12.8 million, or $0.68 earnings per diluted common share, for the fourth quarter of 2021.  

For the year ended December 31, 2022, the Company reported net income from continuing operations of $27.6 million, or $1.47 earnings per diluted common share, compared to $52.6 million, or $2.95 earnings per diluted common share, for 2021.

"Our team had both a productive and challenging year," said Brian K. Plum, President and Chief Executive Officer of the Company. "We saw meaningful success and growth in our commercial banking efforts, and at the same time we appreciate the need to improve our fintech division operations, practices, and procedures to conform to the formal written agreement entered into with the Office of the Comptroller of the Currency. We are committed to doing the things necessary to rise to this challenge and lay the groundwork for future success."

"We announced in early January that Kirsten Muetzel has been named President of Blue Ridge Bank's Fintech Division," Plum continued. "Kirsten's background as a banking regulator, fintech executive, and bank consultant is perfectly suited for her new responsibilities overseeing our fintech division, managing a portfolio of partners, strengthening regulatory compliance, and working to advance our fintech strategy."

Plum added, "As we look ahead to 2023, we are preparing for a macroeconomic environment with credit pressure and increasing funding costs. We are emphasizing credit discipline and have calibrated incentive plans to further reward noninterest deposit growth.  We continue driving efforts to increase noninterest income to supplement net interest margin compression from the industry's expected rising funding costs."

Key highlights for the fourth quarter:

• Update on formal written agreement; Regulatory remediation costs decline
  • As previously disclosed, Blue Ridge Bank entered into a formal written agreement (the "Agreement") with the Office of the Comptroller of the Currency ("OCC") on August 29, 2022. The 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, BSA/AML, and IT risks stemming from its fintech partnerships. A complete copy of the Agreement was furnished in 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.mybrb.com). The Company is actively working to bring the Bank's fintech policies, procedures, and operations into conformity with OCC directives and believes its work to date has been delivered on schedule.
  • Remediation costs related to regulatory matters were $2.9 million for the fourth quarter of 2022, compared to $4.0 million for the third quarter of 2022, and $0 for the fourth quarter of 2021.
• Balance sheet growth and net interest margin expansion drive higher net interest income
  • Net interest income was $34.0 million for the fourth quarter of 2022, an increase of $5.3 million, or 18.4%, from the third quarter of 2022, and $13.1 million, or 62.6%, from the fourth quarter of 2021.
    • Purchase accounting adjustments ("PAA"), attributable primarily to the Company's 2021 merger with Bay Banks of Virginia, Inc., added $2.9 million to net interest income for the fourth quarter of 2022, compared to $1.1 million for the third quarter of 2022, and $1.5 million for the fourth quarter of 2021. The beneficial effect of PAA is likely to decline in 2023 from 2022 levels.
  • Loans held for investment, excluding Paycheck Protection Program ("PPP") loans, were $2.40 billion at December 31, 2022, an increase of $240.8 million, or 11.2%, from September 30, 2022, and $621.9 million, or 35.0%, from December 31, 2021. Loan growth as compared with the prior quarter and year-ago periods was mostly driven equally between the Company's investment in its government guaranteed, middle market, and specialized lending teams and its traditional core banking markets.
  • Deposits were $2.50 billion at December 31, 2022, an increase of $93.0 million, or 3.9%, from September 30, 2022, and $204.7 million, or 8.9%, from December 31, 2021. Deposit growth on a linked quarter basis was primarily driven by interest-bearing demand and money market deposits, partially offset by lower noninterest-bearing demand deposit balances. Deposit growth on a year-over-year basis was driven almost entirely by interest-bearing demand and money market deposits, partially offset by lower time deposit and noninterest-bearing demand deposit balances.
    • Deposits related to fintech relationships were approximately $690 million as of December 31, 2022, an increase of $161 million, or 30.0%, from September 30, 2022, and $501 million, or 265.1%, from December 31, 2021. Deposits related to fintech relationships represented 27.6% of total deposits at December 31, 2022, compared to 22.0% at September 30, 2022, and 8.2% at December 31, 2021. During the 2022 periods, there was a notable shift in the mix of fintech deposits (to interest-bearing from noninterest-bearing), as certain of the Company's fintech partners sought to optimize profitability amidst a more challenging operating environment.
  • Net interest margin was 4.83% for the fourth quarter of 2022, compared to 4.27% for the third quarter of 2022, and 3.39% for the fourth quarter of 2021. Net interest margin expansion during the fourth quarter of 2022, relative to both prior periods, reflected strong loan growth, higher loan and other interest-earning asset yields, a positive shift in the mix of interest-earning assets, and favorable PAA, partially offset by higher funding costs. 
    • PAA added 41 basis points, 17 basis points, and 24 basis points to net interest margin for the fourth quarter of 2022, third quarter of 2022, and fourth quarter of 2021, respectively. 
• Credit and capital stability provide stable foundation; Value creation through strong growth in tangible book value per share
  • Nonperforming loans, which include nonaccrual loans and loans 90 days or more past due and accruing interest¹, totaled $18.6 million, representing 0.59% of total assets, at December 31, 2022, compared to $10.1 million, representing 0.35% of total assets, at September 30, 2022, and $16.1 million, representing 0.60% of total assets at December 31, 2021.
  • The Company recorded a provision for loan losses of $4.0 million for the fourth quarter of 2022, compared to $3.9 million for the third quarter of 2022, and $0.1 million for the fourth quarter of 2021. Provision for the fourth quarter of 2022 was primarily attributable to loan growth and specific reserves for impaired loans.
  • The Company's allowance for loan losses represented 0.96%² of gross loans held for investment (excluding PPP loans) at December 31, 2022, compared to 0.95%² at September 30, 2022, and 0.68%² at December 31, 2021. The increase in this ratio from December 31, 2021 to December 31, 2022, was primarily attributable to additional allowance for loan growth during 2022 and greater qualitative factor adjustments, mainly due to less favorable economic conditions. Remaining acquired loan discounts related to loans acquired in the Company's completed mergers were $7.9 million as of December 31, 2022, $10.4 million as of September 30, 2022, and $16.2 million as of December 31, 2021.
  • The ratio of tangible stockholders' equity to tangible total assets was 7.3%³ at December 31, 2022, compared to 7.7%³ at September 30, 2022, and 9.3%³ at December 31, 2021. Tangible book value per common share was $12.00³ at December 31, 2022, compared to $11.51³ at September 30, 2022, and $13.01³ at December 31, 2021. The after-tax effect of the unrealized loss in the Company's available for sale investment portfolio was $45.1 million at December 31, 2022, compared to $49.4 million at September 30, 2022, and $3.6 million at December 31, 2021. The effect of the after-tax unrealized loss on tangible book value per common share was $2.38, $2.60, and $0.19, as of each of these respective period ends.
• Lower expenses reflect decline in regulatory remediation and personnel costs
  • Noninterest expense was $27.6 million for the fourth quarter of 2022, a decline of $1.7 million, or 5.7%, from the third quarter of 2022, and an increase of $2.4 million, or 9.6%, from the fourth quarter of 2021.
  • The decline relative to the prior quarter primarily reflects lower remediation costs related to the Agreement and lower salaries and employee benefit costs, primarily due to downward adjustments of incentive expense. The increase relative to the fourth quarter of the prior year primarily reflects higher regulatory remediation costs and legal, issuer, and regulatory filing costs, partially offset by lower salaries and employee benefit costs, primarily due to lower headcount in the Company's mortgage division.
• Cyclical challenges continue to pressure fee-based revenues
  • Noninterest income was $5.8 million for the fourth quarter of 2022, a decline of $2.1 million from the third quarter of 2022, and $16.1 million from the fourth quarter of 2021.
  • The decline in noninterest income on a linked quarter basis primarily reflects negative fair value adjustments to mortgage servicing rights, and lower gain on sale of government-guaranteed loans, due to the timing of sales of these loans. The decline relative to the fourth quarter of the prior year also reflects lower mortgage-related income, lower fair value adjustments of other equity investments, and a gain on the termination of interest rate swaps that occurred during the fourth quarter of 2021. 
  • Mortgage sale volumes were $52.4 million and $83.0 million for the fourth and third quarters of 2022, respectively, compared to $234.5 million for the fourth quarter of 2021.

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