Blue Ridge Bankshares: Navigating Regulatory Remediation and Operational Efficiency

Blue Ridge Bankshares, Inc. (NYSE American: BRBS) recently announced its 2024 fourth quarter and full year results, highlighting the company's progress in regulatory remediation, operational efficiency, and capital allocation decisions. The company's strategic shift away from fintech banking-as-a-service (BaaS) depository operations has significantly impacted its financial performance and risk profile.



Regulatory Remediation and Operational Efficiency

Blue Ridge Bankshares has made significant strides in exiting its fintech BaaS depository operations, reducing its dependency on wholesale funding and fintech-related deposits. As of the end of 2024, the company had exited 45 fintech BaaS depository partnerships, reducing deposits from these sources by $445 million. This strategic move has allowed the company to grow deposits in its primary footprint by approximately $172 million, while also reducing nonperforming assets. At the end of the third quarter of 2024, the nonperforming loans to total assets ratio was 1.1%, compared to 1.4% in the prior quarter and 2.5% in the third quarter of 2023.

The company's focus on operational efficiency has led to a reduction in noninterest expenses. For the fourth quarter of 2024, noninterest expense was down 3% from the third quarter and 16% lower than the fourth quarter of 2023, driven by lower salaries and benefits costs and the large reduction of regulatory remediation costs. The company ended 2024 with 71, or 14%, fewer employees than at the end of 2023, contributing to the reduction in noninterest expenses.



Capital Allocation Decisions

Blue Ridge Bankshares has been positioning itself for future growth by allocating capital to support strategic initiatives and bolster its capital ratios. In 2024, the company raised substantial capital through private placements, which has helped it maintain strong capital levels as required by regulatory agreements. The company has also been focusing on growing in-market deposits and stabilizing its loan portfolio, which are key to driving profitable growth and maintaining strong capital levels.

Conclusion

Blue Ridge Bankshares' strategic shift away from fintech BaaS depository operations has positively impacted its financial performance and risk profile. The company's focus on regulatory remediation, operational efficiency, and capital allocation decisions has driven improvements in deposit growth, noninterest expense reduction, and nonperforming asset reduction. As the company continues to execute on its strategic initiatives, investors should monitor its future earnings reports to confirm the continuation of these trends.