The Bank Slate


Blue Ridge Bankshares in Va. exploring options to raise capital

Blue Ridge Bankshares in Charlottesville, Va., which is working under a written agreement with the Office of the Comptroller of the Currency, is “exploring options for raising capital.”

The $3.3 billion-asset company disclosed in a regulatory filing that the OCC is requiring its bank to establish individual minimum capital ratios “that are higher than those required for capital adequacy purposes generally.”

The bank falls short of the OCC’s required 10% leverage ratio and a 13% total capital ratio. Going forward, that could subject the bank to more regulatory requirements, including the need to develop a capital plan, asset sales, growth limitations or more enforcement actions.

Blue Ridge reported last month that it lost $41.4 million in the third quarter, largely reflecting a $26.8 million goodwill impairment charge that was “driven by the pressure” on the company’s stock price. It also included a $6 million settlement reserve for litigation tied to a 2019 acquisition.

The company also suspended its common stock dividend “until further notice … based on the desire to preserve capital” and said it would restate financial results for 2022 and the first half of this year after determining that it misclassified certain specialty finance loans that were placed on nonaccrual status. The restatements should result in a $2.6 million cumulative increase in net income.

“My focus since coming on board at Blue Ridge has been to ensure we are driving enhanced oversight, rigor and portfolio refinement into our operations so we can take better advantage of our inherent strengths and the opportunities before us,” Billy Beale, who became president and CEO earlier this year, said in last month’s press release.

“These focus areas involve our ongoing regulatory remediation efforts related to our fintech operations, as well as further advancing our team’s review of and controls over our loan portfolio and its risk profile,” he added.

Blue Ridge also said it was making progress with the OCC’s September 2022 order, completing a Bank Secrecy Act look-back requirement and closing Banking-as-a-Service accounts that were inactive or lacked proper documentation. Blue Ridge also developed a strategic road map for refining and rationalizing its fintech/BaaS line of business.

Blue Ridge incurred $3.8 million of remediation costs in the third quarter tied to the order.

“Fintech remains an important focus for Blue Ridge and I’m confident that our ongoing work with our primary regulator will enhance our position in how we serve this market,” Beale said.

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