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Minimum Regulatory Capital Requirements
 12 Months Ended
Dec. 31, 2023
Regulatory Matters [Abstract]  
Minimum Regulatory Capital Requirements

Note 14. Minimum Regulatory Capital Requirements

Banks and bank holding companies are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, financial institutions must meet specific capital guidelines that involve quantitative measures of assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. A financial institution's capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

Pursuant to the final rules implementing the Basel Committee on Banking Supervision's capital guidelines for U.S. banks (the "Basel III rules"), banks must hold a capital conservation buffer above the adequately capitalized risk-based capital ratios of 2.50% for all ratios, except the tier 1 leverage ratio. If a banking organization dips into its capital conservation buffer, it is subject to limitations on certain activities, including payment of dividends, share repurchases, and discretionary compensation to certain officers. Federal and state banking regulations place certain restrictions on dividends paid by the Company. The total amount of dividends that may be paid at any date is generally limited to retained earnings of the Company.

Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized; although, these terms are not used to represent overall financial condition. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. As of December 31, 2023 and December 31, 2022, the Bank exceeded the thresholds to be considered well capitalized; however, the Bank's total risk based capital dropped below the capital conservation buffer as of December 31, 2023, subjecting the Bank to limitations on certain activities as previously noted.

In addition to the foregoing capital requirements, the Bank is subject to individual minimum capital ratios ("IMCRs") that are higher than those required for capital adequacy purposes, and under which the Bank is required to maintain a leverage ratio of 10.00% and a total capital ratio of 13.00%. As of December 31, 2023, the Bank did not meet these IMCRs. Until such levels are met and the Consent Order has been lifted, the Bank is deemed to be less than well capitalized, thus adequately capitalized.

Pursuant to the Economic Growth, Regulatory Relief and Consumer Protection Act of 2018, regulators have provided for an optional, simplified measure of capital adequacy, the community bank leverage ratio ("CBLR") framework, for qualifying community bank organizations. Banks that qualify may opt in to the CBLR framework beginning January 1, 2020 or any time thereafter. The CBLR framework eliminates the four required capital ratios disclosed below and requires the disclosure of a single leverage ratio, with a minimum requirement of 9.00%. The Company has not opted into the CBLR framework.

As previously noted, the Company adopted CECL effective January 1, 2023. Federal and state banking regulations allow financial institutions to irrevocably elect to phase-in the after-tax cumulative effect adjustment to retained earnings ("Day 1 CECL adjustment") over a three-year period. The three-year phase-in of the CECL Transitional Amount to regulatory capital was 25% in 2023, and will be 50% and 25% in 2024 and 2025, respectively. The Bank made this irrevocable election effective with its first quarter 2023 call report. The CECL Transitional Amount was $8.1 million, of which $2.0 million reduced the regulatory capital amounts and capital ratios as of December 31, 2023.

The following tables present the capital and capital ratios to which the Bank is subject and the amounts and ratios to be adequately and well capitalized as of the dates stated. Adequately capitalized ratios include the

conservation buffer, if applicable. Also presented are the IMCRs and the related capital amounts for both the leverage ratio and the total capital ratio as of December 31, 2023.

 

 

 

December 31, 2023

 

 

 

Actual

 

 

For Capital Adequacy Purposes

 

 

To Be Well Capitalized

 

 

Individual Minimum Capital Ratios

 

(Dollars in thousands)

 

Amount

 

 

Ratio

 

 

Amount

 

 

Ratio

 

 

Amount

 

 

Ratio

 

 

Amount

 

 

Ratio

 

Total risk based capital

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(To risk-weighted assets)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Blue Ridge Bank, N.A.

 

$

270,293

 

 

 

10.25

%

 

$

276,842

 

 

 

10.50

%

 

$

263,659

 

 

 

10.00

%

 

$

342,757

 

 

 

13.00

%

Tier 1 capital

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(To risk-weighted assets)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Blue Ridge Bank, N.A.

 

$

239,775

 

 

 

9.09

%

 

$

224,111

 

 

 

8.50

%

 

$

210,928

 

 

 

8.00

%

 

n/a

 

 

n/a

 

Common equity tier 1 capital

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(To risk-weighted assets)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Blue Ridge Bank, N.A.

 

$

239,775

 

 

 

9.09

%

 

$

184,562

 

 

 

7.00

%

 

$

171,379

 

 

 

6.50

%

 

n/a

 

 

n/a

 

Tier 1 leverage

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(To average assets)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Blue Ridge Bank, N.A.

 

$

239,775

 

 

 

7.49

%

 

$

128,001

 

 

 

4.00

%

 

$

160,001

 

 

 

5.00

%

 

$

320,003

 

 

 

10.00

%

 

 

 

December 31, 2022

 

 

 

Actual

 

 

For Capital Adequacy Purposes

 

 

To Be Well Capitalized

 

(Dollars in thousands)

 

Amount

 

 

Ratio

 

 

Amount

 

 

Ratio

 

 

Amount

 

 

Ratio

 

Total risk based capital

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(To risk-weighted assets)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Blue Ridge Bank, N.A.

 

$

301,097

 

 

 

10.93

%

 

$

289,246

 

 

 

10.50

%

 

$

275,473

 

 

 

10.00

%

Tier 1 capital

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(To risk-weighted assets)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Blue Ridge Bank, N.A.

 

$

268,545

 

 

 

9.75

%

 

$

234,152

 

 

 

8.50

%

 

$

220,379

 

 

 

8.00

%

Common equity tier 1 capital

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(To risk-weighted assets)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Blue Ridge Bank, N.A.

 

$

268,545

 

 

 

9.75

%

 

$

192,831

 

 

 

7.00

%

 

$

179,058

 

 

 

6.50

%

Tier 1 leverage

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(To average assets)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Blue Ridge Bank, N.A.

 

$

268,545

 

 

 

8.90

%

 

$

120,644

 

 

 

4.00

%

 

$

150,805

 

 

 

5.00

%