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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, 2024

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.)

1801 Bayberry Court, Suite 101

Richmond, Virginia

23226

(Address of principal executive offices)

(Zip Code)

 

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

 

1807 Seminole Trail, Charlottesville, Virginia 22901

(Former Name or Former Address, if Changed Since Last Report)

 

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 1, 2024, the registrant had 22,982,622 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, 2024 (unaudited) and December 31, 2023

 

3

 

 

 

 

 

 

Consolidated Statements of Operations for the three months ended March 31, 2024 and 2023 (unaudited)

 

4

 

 

 

 

 

 

Consolidated Statements of Comprehensive (Loss) Income for the three months ended March 31, 2024 and 2023 (unaudited)

 

5

 

 

 

 

 

 

Consolidated Statements of Changes in Stockholders’ Equity for the three months ended March 31, 2024 and 2023 (unaudited)

 

6

 

 

 

 

 

 

Consolidated Statements of Cash Flows for the three months ended March 31, 2024 and 2023 (unaudited)

 

7

 

 

 

 

 

 

Notes to Consolidated Financial Statements

 

9

 

 

 

 

 

Item 2.

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

 

31

 

 

 

 

 

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

 

46

 

 

 

 

 

Item 4.

Controls and Procedures

 

47

 

 

 

 

 

PART II

OTHER INFORMATION

 

48

 

 

 

 

 

Item 1.

Legal Proceedings

 

48

 

 

 

 

 

Item 1A.

Risk Factors

 

48

 

 

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

49

 

 

 

 

 

Item 3.

Defaults Upon Senior Securities

 

49

 

 

 

 

 

Item 4.

Mine Safety Disclosures

 

49

 

 

 

 

 

Item 5.

Other Information

 

50

 

 

 

 

 

Item 6.

Exhibits

 

50

 

 

 

 

 

Signatures

 

 

51

 

2


 

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Blue Ridge Bankshares, Inc.

Consolidated Balance Sheets

 

 

(unaudited)

 

 

 

 

(Dollars in thousands except share data)

 

March 31, 2024

 

 

December 31, 2023 (1)

 

ASSETS

 

 

 

 

 

 

Cash and due from banks

 

$

117,464

 

 

$

110,491

 

Restricted cash

 

 

10,734

 

 

 

10,660

 

Federal funds sold

 

 

6,849

 

 

 

4,451

 

Securities available for sale, at fair value

 

 

314,394

 

 

 

321,081

 

Restricted equity investments

 

 

22,071

 

 

 

18,621

 

Other equity investments

 

 

12,863

 

 

 

12,905

 

Other investments

 

 

26,586

 

 

 

29,467

 

Loans held for sale

 

 

34,902

 

 

 

46,337

 

Loans held for investment, net of deferred fees and costs

 

 

2,394,089

 

 

 

2,430,947

 

Less: allowance for credit losses

 

 

(35,025

)

 

 

(35,893

)

Loans held for investment, net

 

 

2,359,064

 

 

 

2,395,054

 

Accrued interest receivable

 

 

14,696

 

 

 

14,967

 

Premises and equipment, net

 

 

21,968

 

 

 

22,348

 

Right-of-use asset

 

 

8,067

 

 

 

8,738

 

Bank owned life insurance

 

 

48,790

 

 

 

48,453

 

Other intangible assets

 

 

5,009

 

 

 

5,382

 

Mortgage servicing rights, net

 

 

27,843

 

 

 

27,114

 

Deferred tax asset, net

 

 

21,928

 

 

 

21,556

 

Other assets

 

 

22,959

 

 

 

19,929

 

Total assets

 

$

3,076,187

 

 

$

3,117,554

 

LIABILITIES & STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

Noninterest-bearing demand

 

$

496,375

 

 

$

506,248

 

Interest-bearing demand and money market

 

 

898,870

 

 

 

1,049,536

 

Savings

 

 

114,281

 

 

 

117,923

 

Time

 

 

956,250

 

 

 

892,325

 

Total deposits

 

 

2,465,776

 

 

 

2,566,032

 

FHLB borrowings

 

 

280,000

 

 

 

210,000

 

FRB borrowings

 

 

65,000

 

 

 

65,000

 

Subordinated notes, net

 

 

39,838

 

 

 

39,855

 

Lease liabilities

 

 

8,870

 

 

 

9,619

 

Other liabilities

 

 

35,797

 

 

 

41,059

 

Total liabilities

 

 

2,895,281

 

 

 

2,931,565

 

Commitments and contingencies (Note 8)

 

 

 

 

 

 

Stockholders’ Equity:

 

 

 

 

 

 

Common stock, no par value; 50,000,000 shares authorized at March 31, 2024 and December 31, 2023; 19,584,040 and 19,198,379 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively

 

 

198,004

 

 

 

197,636

 

Additional paid-in capital

 

 

252

 

 

 

252

 

Retained earnings

 

 

30,264

 

 

 

33,157

 

Accumulated other comprehensive loss, net of tax

 

 

(47,614

)

 

 

(45,056

)

Total stockholders’ equity

 

 

180,906

 

 

 

185,989

 

Total liabilities and stockholders’ equity

 

$

3,076,187

 

 

$

3,117,554

 

(1)
Derived from audited December 31, 2023 Consolidated Financial Statements.

 

See accompanying notes to unaudited consolidated financial statements.

3


 

Blue Ridge Bankshares, Inc.

Consolidated Statements of Operations

(unaudited)

 

 

For the three months ended

 

(Dollars in thousands, except per share data)

 

March 31, 2024

 

 

March 31, 2023

 

INTEREST INCOME

 

 

 

 

 

 

Interest and fees on loans

 

$

38,346

 

 

$

37,131

 

Interest on securities, deposit accounts, and federal funds sold

 

 

4,185

 

 

 

3,759

 

Total interest income

 

 

42,531

 

 

 

40,890

 

INTEREST EXPENSE

 

 

 

 

 

 

Interest on deposits

 

 

18,485

 

 

 

11,331

 

Interest on subordinated notes

 

 

560

 

 

 

553

 

Interest on FHLB and FRB borrowings

 

 

3,137

 

 

 

3,810

 

Total interest expense

 

 

22,182

 

 

 

15,694

 

Net interest income

 

 

20,349

 

 

 

25,196

 

(Recovery of) provision for credit losses - loans

 

 

 

 

 

(1,110

)

(Recovery of) provision for credit losses - unfunded commitments

 

 

(1,000

)

 

 

(400

)

Total (recovery of) provision for credit losses

 

 

(1,000

)

 

 

(1,510

)

Net interest income after (recovery of) provision for credit losses

 

 

21,349

 

 

 

26,706

 

NONINTEREST INCOME

 

 

 

 

 

 

Fair value adjustments of other equity investments

 

 

(7

)

 

 

(51

)

Residential mortgage banking income

 

 

2,664

 

 

 

3,199

 

Mortgage servicing rights

 

 

729

 

 

 

(1,896

)

Gain on sale of guaranteed government loans

 

 

110

 

 

 

2,409

 

Wealth and trust management

 

 

520

 

 

 

432

 

Service charges on deposit accounts

 

 

398

 

 

 

343

 

Increase in cash surrender value of bank owned life insurance

 

 

337

 

 

 

282

 

Bank and purchase card, net

 

 

242

 

 

 

340

 

Other

 

 

2,832

 

 

 

2,225

 

Total noninterest income

 

 

7,825

 

 

 

7,283

 

NONINTEREST EXPENSE

 

 

 

 

 

 

Salaries and employee benefits

 

 

16,045

 

 

 

15,289

 

Occupancy and equipment

 

 

1,524

 

 

 

1,569

 

Data processing

 

 

1,106

 

 

 

1,346

 

Legal and regulatory filings

 

 

447

 

 

 

1,234

 

Advertising and marketing

 

 

297

 

 

 

286

 

Communications

 

 

1,173

 

 

 

1,131

 

Audit and accounting fees

 

 

1,155

 

 

 

146

 

FDIC insurance

 

 

1,377

 

 

 

729

 

Intangible amortization

 

 

287

 

 

 

355

 

Other contractual services

 

 

1,717

 

 

 

939

 

Other taxes and assessments

 

 

943

 

 

 

802

 

Regulatory remediation

 

 

2,644

 

 

 

1,134

 

Other

 

 

3,759

 

 

 

3,887

 

Total noninterest expense

 

 

32,474

 

 

 

28,847

 

(Loss) income before income tax expense

 

 

(3,300

)

 

 

5,142

 

Income tax (benefit) expense

 

 

(407

)

 

 

1,172

 

Net (loss) income

 

$

(2,893

)

 

$

3,970

 

Basic and diluted (loss) earnings per share

 

$

(0.15

)

 

$

0.21

 

See accompanying notes to unaudited consolidated financial statements.

4


 

Blue Ridge Bankshares, Inc.

Consolidated Statements of Comprehensive (Loss) Income

(unaudited)

 

 

 

For the three months ended

 

(Dollars in thousands)

 

March 31, 2024

 

 

March 31, 2023

 

Net (loss) income

 

$

(2,893

)

 

$

3,970

 

Other comprehensive (loss) income:

 

 

 

 

 

 

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

 

 

(2,930

)

 

 

4,979

 

   Deferred income tax benefit (expense)

 

 

372

 

 

 

(1,113

)

Unrealized (losses) gains on securities available for sale arising during the period, net of tax

 

 

(2,558

)

 

 

3,866

 

Other comprehensive (loss) gain, net of tax

 

 

(2,558

)

 

 

3,866

 

Comprehensive net (loss) income

 

$

(5,451

)

 

$

7,836

 

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, 2024

 

(Dollars in thousands)

Shares of Common Stock

 

 

Common Stock

 

 

Additional Paid-in Capital

 

 

Retained Earnings

 

 

Accumulated Other Comprehensive Loss, net

 

 

Total

 

Balance at beginning of period

 

19,198,379

 

 

$

197,636

 

 

$

252

 

 

$

33,157

 

 

$

(45,056

)

 

$

185,989

 

Net loss

 

 

 

 

 

 

 

 

 

 

(2,893

)

 

 

 

 

 

(2,893

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,558

)

 

 

(2,558

)

Restricted stock awards, net of forfeitures

 

385,661

 

 

 

368

 

 

 

 

 

 

 

 

 

 

 

 

368

 

Balance at end of period

 

19,584,040

 

 

$

198,004

 

 

$

252

 

 

$

30,264

 

 

$

(47,614

)

 

$

180,906

 

 

 

 

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

 

 

$

97,682

 

 

$

(45,101

)

 

$

248,793

 

Cumulative effect adjustment due to adoption of accounting standard, net of income taxes

 

 

 

 

 

 

 

 

 

 

(8,111

)

 

 

 

 

 

(8,111

)

Net income

 

 

 

 

 

 

 

 

 

 

3,970

 

 

 

 

 

 

3,970

 

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

 

 

$

91,220

 

 

$

(41,235

)

 

$

246,735

 

 

 

See accompanying notes to unaudited consolidated financial statements.

6


 

Blue Ridge Bankshares, Inc.

Consolidated Statements of Cash Flows

(unaudited)

 

 

 

For the three months ended

 

(Dollars in thousands)

 

March 31, 2024

 

 

March 31, 2023

 

Cash Flows From Operating Activities

 

 

 

 

 

 

Net (loss) income

 

$

(2,893

)

 

$

3,970

 

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

433

 

 

 

444

 

Deferred income tax benefit

 

 

(372

)

 

 

(3,909

)

Recovery of credit losses

 

 

(1,000

)

 

 

(1,510

)

Accretion of fair value adjustments (discounts) on acquired loans

 

 

(329

)

 

 

(688

)

Accretion of fair value adjustments (premiums) on acquired time deposits

 

 

(97

)

 

 

(284

)

Accretion of fair value adjustments (premiums) on acquired subordinated notes

 

 

(25

)

 

 

(25

)

Proceeds from sale of mortgage loans held for sale

 

 

63,401

 

 

 

51,748

 

Mortgage loans held for sale, originated

 

 

(59,707

)

 

 

(45,231

)

Gain on sale of mortgage loans

 

 

(130

)

 

 

(364

)

Proceeds from sale of guaranteed government loans held for sale

 

 

1,605

 

 

 

33,049

 

Guaranteed government loans held for sale, originated

 

 

(293

)

 

 

(32,024

)

Gain on sale of guaranteed government loans

 

 

(110

)

 

 

(2,409

)

(Gain) loss on sale of other investments and other assets

 

 

(326

)

 

 

1

 

Investment amortization expense, net

 

 

136

 

 

 

162

 

Amortization of subordinated debt issuance costs

 

 

8

 

 

 

9

 

Intangible amortization

 

 

287

 

 

 

355

 

Fair value adjustments of other equity investments

 

 

7

 

 

 

51

 

Net adjustments attributable to mortgage servicing rights

 

 

(729

)

 

 

1,896

 

Increase in cash surrender value of bank owned life insurance

 

 

(337

)

 

 

(282

)

Decrease (increase) in accrued interest receivable

 

 

271

 

 

 

(2,556

)

Increase in other assets

 

 

(2,307

)

 

 

(2,004

)

(Decrease) increase in other liabilities

 

 

(5,011

)

 

 

9,780

 

Cash (used in) provided by operating activities

 

 

(7,518

)

 

 

10,179

 

Cash Flows From Investing Activities

 

 

 

 

 

 

Net decrease (increase) in loans held for investment

 

 

42,988

 

 

 

(53,353

)

Net increase in federal funds sold

 

 

(2,398

)

 

 

(550

)

Proceeds from calls, sales, paydowns, and maturities of securities available for sale

 

 

3,621

 

 

 

7,972

 

Proceeds from sale of other investments and other assets

 

 

5,204

 

 

 

193

 

Proceeds from sale of other real estate owned

 

 

 

 

 

264

 

Net change in restricted equity and other investments

 

 

(3,621

)

 

 

2,561

 

Purchase of premises and equipment

 

 

(53

)

 

 

(536

)

Capital calls of SBIC funds and other investments

 

 

(1,237

)

 

 

(1,682

)

Nonincome distributions from SBIC funds and other investments

 

 

220

 

 

 

141

 

Cash provided by (used in) investing activities

 

 

44,724

 

 

 

(44,990

)

Cash Flows From Financing Activities

 

 

 

 

 

 

Net decrease in demand, savings, and other interest-bearing deposits

 

 

(164,181

)

 

 

(45,843

)

Net increase in time deposits

 

 

64,022

 

 

 

304,667

 

Common stock dividends paid

 

 

 

 

 

(2,321

)

FHLB advances

 

 

350,000

 

 

 

510,000

 

FHLB repayments

 

 

(280,000

)

 

 

(582,600

)

FRB repayments

 

 

 

 

 

(51

)

Stock option exercises

 

 

 

 

 

26

 

Dividend reinvestment plan issuances

 

 

 

 

 

33

 

Cash (used in) provided by financing activities

 

 

(30,159

)

 

 

183,911

 

Net increase in cash and due from banks

 

 

7,047

 

 

 

149,100

 

Cash and due from banks and restricted cash at beginning of period

 

 

121,151

 

 

 

77,274

 

Cash and due from banks and restricted cash at end of period

 

$

128,198

 

 

$

226,374

 

 

7


 

 

Supplemental Schedule of Cash Flow Information

 

 

 

 

 

 

Cash paid for:

 

 

 

 

 

 

Interest

 

$

20,786

 

 

$

13,203

 

Income taxes

 

$

 

 

$

6

 

Non-cash investing and financing activities:

 

 

 

 

 

 

Unrealized (losses) gains on securities available for sale

 

$

(2,930

)

 

$

4,979

 

Restricted stock awards, net of forfeitures

 

$

368

 

 

$

479

 

Cumulative effect adjustment due to adoption of accounting standard, net of income taxes

 

$

 

 

$

(8,111

)

See accompanying notes to unaudited consolidated financial statements.

8


 

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, 2023, as amended (the “2023 Form 10-K”).

The Company's significant accounting policies are disclosed in Note 2 of the audited financial statements and notes for the year ended December 31, 2023 and are contained in the 2023 Form 10-K. There have been no significant changes to the application of significant accounting policies since December 31, 2023.

Restatement

On October 31, 2023, the Company and the Audit Committee of its board of directors, after consultation with the Company’s independent registered public accounting firm and the Office of the Comptroller of the Currency (“OCC”), the Bank's primary federal banking regulator, determined that certain specialty finance loans that, as previously disclosed, were placed on nonaccrual, reserved for, or charged off in the interim periods ended March 31, 2023 and June 30, 2023 should have been reported as nonaccrual, reserved for, or charged off in earlier periods. On November 14, 2023, the Company filed amendments to its Annual Report on Form 10-K for the year ended December 31, 2022 and its Quarterly Reports on Form 10-Q for the periods ended March 31, 2023 and June 30, 2023 to restate the consolidated financial statements included therein.

The Company does not believe that the restatements reflect any significant financial impact on the Company's financial condition as of March 31, 2024, or any trends in the Company's business or its prospects. The consolidated financial statements included in this Quarterly Report on Form 10-Q reflect the effects of the aforementioned restatement as of and for the quarterly period ended March 31, 2023.

Regulatory Matters

On January 24, 2024, the Bank consented to the issuance of a consent order (the “Consent Order”) with the OCC. The Consent Order generally incorporates the provisions of the formal written agreement (the "Written Agreement") entered into between the Bank and the OCC on August 29, 2022, as well as adding new provisions. The Written Agreement principally concerned the Bank’s fintech operations and required 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. The Consent Order adds time frames by which certain of the directives are required, requires the Bank to submit a strategic plan and a capital plan, and places further restrictions on the Company’s fintech operations. The Consent Order also requires the Bank to maintain a leverage ratio of 10.0% and a total capital ratio of 13.0%, referred to as minimum capital ratios. Complete copies of the Written Agreement and the Consent Order are included as Exhibits 10.14 and 10.15, respectively, to the 2023 Form 10-K.

Private Placement

On April 3, 2024, the Company closed and funded a private placement of securities pursuant to an amended and restated securities purchase agreement, dated April 3, 2024, with certain investors for gross proceeds of $150.0 million (the "Private Placement"). In the Private Placement, the Company issued and sold 3.4 million shares of common stock at a purchase price of $2.50 per common share, 14,150 shares of convertible Series B or Series C preferred stock at a purchase price of $10 thousand per preferred share, and 7,383 warrants to purchase convertible Series B or Series C preferred stock at an exercise price of $10 thousand per preferred share. Each share of convertible Series B and Series C preferred stock represents the equivalent of 4,000 shares of common stock. The Private Placement amends and replaces

9


 

the previously announced private placement of the Company's common stock and warrants that was announced on December 22, 2023.

The Company will use the net proceeds from the Private Placement to reposition business lines, support organic growth, and enhance capital levels of the Bank.

Recent Accounting Pronouncements (Issued But Not Adopted)

Improvements to Reportable Segment Disclosures. In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") No. 2023-07–Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires a public entity to disclose significant segment expenses and other segment items on an annual and interim basis and provide in interim periods certain disclosures that are currently required annually. Additionally, the ASU requires a public entity to disclose the title and position of the Chief Operating Decision Maker ("CODM"), as well as the metric that the CODM uses to gauge segment performance. The ASU does not change how a public entity identifies its operating segments, aggregates them, or applies the quantitative thresholds to determine its reportable segments. The new standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. This ASU requires retrospective application to all prior periods presented in the financial statements. The adoption of this ASU will only impact disclosures, with no impacts to results of operations, cash flows, and financial condition.

Improvements to Income Tax Disclosures. In December 2023, the FASB issued ASU No. 2023-09–Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires disclosure of disaggregated income taxes paid, prescribes standard categories for components of the effective tax rate reconciliation, and modifies other income tax-related disclosures. This standard is effective for annual periods beginning after December 15, 2024, with early adoption permitted. The ASU requires prospective application by providing the revised disclosures for the period ending December 31, 2025 and continuing to provide the pre-ASU disclosures for the prior periods, or alternately applying the amendments retrospectively by providing the revised disclosures for all period presented. The Company does not expect the adoption of this ASU to have a material effect on its consolidated financial statements.

Note 2 – Investment Securities and Other Investments

Investment securities classified as available for sale ("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, 2024

 

(Dollars in thousands)

 

Amortized
Cost

 

 

Gross
Unrealized
Gains

 

 

Gross
Unrealized
Losses

 

 

Fair
Value

 

Available for sale

 

 

 

 

 

 

 

 

 

 

 

 

   Mortgage backed securities

 

$

208,856

 

 

$

 

 

$

(37,634

)

 

$

171,222

 

   U.S. Treasury and agencies

 

 

79,633

 

 

 

 

 

 

(11,499

)

 

 

68,134

 

   State and municipal

 

 

50,513

 

 

 

 

 

 

(7,587

)

 

 

42,926

 

   Corporate bonds

 

 

36,895

 

 

 

 

 

 

(4,783

)

 

 

32,112

 

Total investment securities

 

$

375,897

 

 

$

 

 

$

(61,503

)

 

$

314,394

 

 


 

 

December 31, 2023

 

(Dollars in thousands)

 

Amortized
Cost

 

 

Gross
Unrealized
Gains

 

 

Gross
Unrealized
Losses

 

 

Fair
Value

 

Available for sale

 

 

 

 

 

 

 

 

 

 

 

 

   Mortgage backed securities

 

$

212,214

 

 

$

 

 

$

(35,244

)

 

$

176,970

 

   U.S. Treasury and agencies

 

 

79,856

 

 

 

 

 

 

(10,985

)

 

 

68,871

 

   State and municipal

 

 

50,682

 

 

 

 

 

 

(7,357

)

 

 

43,325

 

   Corporate bonds

 

 

36,902

 

 

 

12

 

 

 

(4,999

)

 

 

31,915

 

Total investment securities

 

$

379,654

 

 

$

12

 

 

$

(58,585

)

 

$

321,081

 

 

10


 

As of March 31, 2024 and December 31, 2023, securities with a fair value of $213.2 million and $35.9 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, 2024, the Company pledged securities with $69.0 million of par value (amortized cost and fair value of $69.7 million and $56.1 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 following table presents the amortized cost and fair value of securities AFS 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, 2024

 

(Dollars in thousands)

 

Amortized
Cost

 

 

Fair
Value

 

Due in one year or less

 

$

2,983

 

 

$

2,901

 

Due after one year through five years

 

 

46,624

 

 

 

42,215

 

Due after five years through ten years

 

 

122,346

 

 

 

104,433

 

Due after ten years

 

 

203,944

 

 

 

164,845

 

Total

 

$

375,897

 

 

$

314,394

 

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, 2024

 

 

 

 

 

 

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

 

Mortgage backed securities

 

 

85

 

 

$

5,103

 

 

$

(6

)

 

$

164,119

 

 

$

(37,628

)

 

$

169,222

 

 

$

(37,634

)

U.S. Treasury and agencies