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BR

BLUE RIDGE BANKSHARES, INC. (BRBS)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 posted a net loss of $2.0M ($0.03 per diluted share), down from Q3 net income of $0.9M ($0.01), as MSR sales losses ($2.6M) and lower residential mortgage/fintech-related income offset cost reductions; NIM improved to 2.80% from 2.74% .
  • Asset quality strengthened: nonperforming loans fell to $25.5M (0.93% of total assets) from $32.1M (1.09%) in Q3 and 2.02% at YE2023; ACL/loans declined to 1.09% on charge-offs and mix changes .
  • Capital and liquidity remained solid: bank and company capital ratios exceeded OCC Consent Order minima, while core in-market deposits grew (+$28.1M QoQ, +$171.6M in 2024) and fintech BaaS deposits were effectively exited (0.0% of total deposits) .
  • Strategic transition advanced: exited 45 fintech BaaS depository partnerships in 2024 (-$445M fintech deposits), reduced headcount by 14%, and decided to exit fintech lending (from seven partners to three; exit to take several quarters), supporting community bank repositioning .
  • Estimates context: S&P Global Wall Street consensus data for Q4 2024 EPS and revenue was unavailable at time of request; result vs estimates cannot be assessed. Values were to be retrieved from S&P Global but were unavailable due to provider constraints.

What Went Well and What Went Wrong

What Went Well

  • Exited fintech BaaS depository operations and materially reduced wholesale reliance (-$113M), with deposits in primary footprint up ~$172M in 2024; “we had exited 45 fintech BaaS depository partnerships… reduced deposits from these sources by $445 million” .
  • Asset quality improved: nonperforming loans declined to $25.5M (0.93% of assets) vs $32.1M (1.09%) in Q3, aided by payoffs and portfolio repositioning .
  • Operating efficiency trending better: headcount down by 71 (14%) YoY; Q4 noninterest expense down 3% QoQ and 16% YoY, driven by lower salaries/benefits and remediation costs .

What Went Wrong

  • Sequential P&L deterioration: Q4 net loss ($2.0M) vs Q3 net income ($0.9M), with $2.6M loss on MSR sales and lower residential mortgage/fintech income despite NIM improvement .
  • Revenue pressures from de-risking: net interest income fell year-over-year (Q4 2024 $19.1M vs Q4 2023 $21.8M) on lower average loan balances; cost of deposits (2.86%) and funds (3.01%) remained elevated YoY .
  • Mixed credit provisioning dynamics: recovery of credit losses dropped to $1.0M from $6.2M in Q3, reflecting lower reserve needs offset by charge-offs in certain purchased and non-guaranteed GGL loans .

Financial Results

MetricQ4 2023Q3 2024Q4 2024
Net interest income ($USD Thousands)$21,763 $19,101 $19,125
Noninterest income ($USD Thousands)$4,064 $2,739 $2,814
Noninterest expense ($USD Thousands)$30,540 $26,495 $25,640
Net (loss) income ($USD Thousands)$(5,759) $946 $(2,003)
Diluted EPS ($USD)$(0.30) $0.01 $(0.03)
Net interest margin (%)2.92% 2.74% 2.80%
Cost of deposits (%)2.73% 2.91% 2.86%
Cost of funds (%)2.91% 3.09% 3.01%
Balance/KPI MetricQ4 2023Q3 2024Q4 2024
Loans held for investment ($USD Thousands)$2,430,947 $2,180,413 $2,111,797
Total deposits ($USD Thousands)$2,566,032 $2,346,492 $2,179,442
Fintech BaaS deposits ($USD Thousands)$370,968 $63,674 $233
Noninterest-bearing deposits (% of total)19.7% 19.6% 20.8%
Held-for-investment loan-to-deposit ratio (%)94.7% 92.9% 96.9%
Average interest-earning assets ($USD Thousands)$2,979,065 $2,796,116 $2,736,834
Fintech BaaS deposits to total deposits ratio (%)14.5% 2.7% 0.0%
Nonperforming loans to total assets (%)2.02% 1.09% 0.93%
ACL to loans held for investment (%)1.48% 1.17% 1.09%
Net charge-offs (recoveries) to avg loans (%)2.84% -0.61% 0.36%
Efficiency ratio (%)118.2% 121.3% 116.9%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Fintech BaaS depository operationsFY2024Expected exit by YE2024 Completed exit of 45 partnerships; BaaS deposits effectively eliminated Raised to achieved/completed
Fintech lending partnershipsMulti-quarterNot specified previouslyExiting fintech lending; reduced partners from 7 to 3; exit expected to take several quarters Initiated exit (strategic shift)
Capital ratios vs OCC minimaQ4 2024Exceeded OCC minima in Q3 Continued to exceed OCC minima in Q4 at bank and company levels Maintained above minima
Brokered deposits waiver statusQ4 2024FDIC waiver granted for 6 months in early Q3 Six-month extension received in late Q4 2024 Extended

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q4 2024)Trend
Regulatory remediationQ2: remediation costs reduced; capital raise supports OCC requirements . Q3: remediation progress; compliance submissions; expenses down .Costs further reduced; bank/company capital ratios exceed OCC minima .Improving compliance/expense trajectory
Fintech BaaS exitQ2: BaaS deposits ~7% of total; winding down . Q3: ahead of schedule; ~3% of deposits; full exit by YE .Completed exit of 45 BaaS depository partnerships; BaaS deposits ~0% .Completed exit
Fintech lendingQ2/Q3: not highlighted beyond fintech-related balances .Decision to exit fintech lending; partners reduced from 7 to 3; exit over several quarters .Strategic withdrawal
Deposits/mixQ2: core deposits stable; excluding fintech/wholesale +$69.8M YTD . Q3: excluding fintech/wholesale +$73.7M QoQ; brokered down .Excluding fintech/wholesale +$28.1M QoQ; brokered -$28.0M QoQ; uninsured 18.0% .Core growth; wholesale reduced
Asset qualityQ2: NPLs 1.57% of assets; specialty finance loan action . Q3: NPLs 1.09% of assets; recovery on specialty finance loan .NPLs 0.93% of assets; ACL 1.09%; charge-offs on certain GGL/purchased loans .Strengthening
Operating efficiencyQ2: noninterest expense down $3.1M QoQ; remediation down . Q3: noninterest expense down $2.8M QoQ .Headcount -14% YoY; noninterest expense -3% QoQ; -16% YoY .Improving

Management Commentary

  • “We had exited 45 fintech banking-as-a-service (‘BaaS’) depository partnerships… reduced deposits from these sources by $445 million… reduced dependency on wholesale funding by nearly $113 million… grew deposits in the Bank’s primary footprint by approximately $172 million.” — President & CEO G. William “Billy” Beale .
  • “We have decided to exit our fintech lending relationships… at one point… seven partnerships and are currently at three… expect it will be several quarters before we have completely exited.” — Beale .
  • “We ended 2024 with 71, or 14%, fewer employees than at the end of 2023… noninterest expense was down 3% from the third quarter and 16% lower than the fourth quarter of 2023.” — Beale .
  • “At the end of the fourth quarter, our nonperforming loans to total assets ratio was 0.93%… compared to 1.09%… and 2.02%… year-end 2023.” — Beale .
  • “We are highly focused on bringing our profitability to acceptable levels… It will take several quarters to rebuild our earning-asset base and to right-size our cost structure.” — Beale .

Q&A Highlights

  • No earnings call transcript was furnished in the company documents we reviewed for Q4 2024; highlights rely on prepared remarks and disclosures within the 8-K press release .
  • Management emphasized three priorities: regulatory remediation progress, operational efficiency acceleration, and positioning for profitable core growth; clarified exit plans and timelines for fintech activities .
  • Commentary reiterated capital adequacy above OCC minima and ongoing balance sheet repositioning away from non-core loans and higher-cost deposits .

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2024 EPS and revenue was unavailable at time of request due to provider constraints; as a result, we cannot assess beat/miss vs consensus. Values were intended to be retrieved from S&P Global but were unavailable.

Key Takeaways for Investors

  • The BaaS depository exit is complete and fintech lending exit is underway; this should reduce funding costs and operational complexity over time, but near-term earnings remain pressured by MSR losses and lower fee income from exited partnerships .
  • Core deposit momentum continued (+$28.1M QoQ; +$171.6M in 2024), while brokered balances declined; expect funding mix normalization to support NIM if rate backdrop stabilizes .
  • Asset quality metrics improved (NPLs 0.93% of assets; ACL 1.09%), but quarterly provision dynamics will remain sensitive to charge-offs within purchased and GGL portfolios during transition .
  • Capital levels exceed OCC minima at bank and company, providing capacity to absorb transition impacts; sensitivity remains to AOCI movements and balance sheet mix .
  • Operating efficiency actions (headcount and remediation cost reductions) are flowing through; sustained cost discipline is critical as earning-asset base rebuilds over several quarters .
  • With consensus estimates unavailable, positioning for catalysts hinges on continued deposit mix improvement, NIM stabilization, and evidence of recurring core profitability as fintech exits complete .
  • Near-term: watch for further MSR actions, fintech lending runoff, and credit cost trends; medium-term: focus on core loan growth in-market and efficiency ratio normalization toward peers .