The Bank Slate


Blue Ridge in Va. raises $150M, reaffirms timeline for BaaS exit

Blue Ridge Bankshares in Charlottesville, Va., has completed its capital raise led by Kenneth Lehman and Castle Creek Capital and confirmed that will fully exit its Banking-as-a-Service business by the end of this year.

The $3.1 billion-asset company disclosed in a regulatory filing that it raised $150 million by selling common stock, convertible preferred stock, and warrants to buy preferred shares.

Blue Ridge said it will use the proceeds to reposition business lines, support organic growth and enhance its bank’s capital levels, among other things.

Castle Creek can appoint two directors to Blue Ridge’s board as long as its stake remains at or above 9.9%. It loses one director seat if its ownership dips below 9.9% and the other seat if its stake falls under 4.9%.

Lehman, who has the right to appoint his own director, would gain Castle Creek’s board rights as long as his stake remains at or above 4.9%.

Blue Ridge said it plans to shrink the size of its board to 13 directors – or 12 if Lehman elects against appointing a director.

As previously announced, the company and Lehman will work together to identify specific work-out assets and develop and adopt a mutually agreeable asset resolution plan. Castle Creek will have non-binding input.

Separately, Blue Ridge disclosed that it had appointed Ciaran McMullan, Trevor Montano and Tony Scavuzzo to its board. McMullen was CEO of Suncrest Bank from 2013 to 2022, while Montano is managing member of West Potomac Capital and was chief investment officer at the Treasury Department from 2014 to 2017. Scavuzzo is a managing principal at Castle Creek.

Finally, Blue Ridge disclosed that it expects to fully exit its Banking-as-a-Service business by the end of this year. The company “also continues to rationalize out-of-market and transactional loan relationships and increase secured funding sources to manage the exit of BaaS deposits.”

Blue Ridge noted that nonperforming loans have had “slight declines” since Dec. 31, due largely to pay-downs and recoveries on problem loans. The company expects noninterest expenses to continue to be elevated as it reduces exposure to fintech operations and addresses its consent order from the Office of the Comptroller of the Currency to the Bank.

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