Blue Ridge Bankshares BRBS Form 10-Q filing Q2 FY2026

Item 1. Financial Statements

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Derived from audited December 31, 2025 Consolidated Financial Statements.

See accompanying notes to unaudited consolidated financial statements.

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See accompanying notes to unaudited consolidated financial statements.

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See accompanying notes to unaudited consolidated financial statements.

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Blue Ridge Bankshares, Inc.

Consolidated Statements of Changes in Stockholders’ Equity

(unaudited)

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See accompanying notes to unaudited consolidated financial statements.

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See accompanying notes to unaudited consolidated financial statements.

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Notes to Consolidated Financial Statements (Unaudited)

Note 1 – Organization and Basis of Presentation

Blue Ridge Bankshares, Inc. (the “Company”) conducts its business activities primarily through its wholly-owned subsidiary bank, Blue Ridge Bank, National Association (the “Bank”) and its wealth and trust management subsidiary, BRB Financial Group, Inc. (the “Financial Group”). The Company exists primarily for the purposes of holding the stock of its subsidiaries, the Bank and the Financial Group.

The accompanying unaudited consolidated financial statements of the Company include the accounts of the Bank and the Financial Group and were prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and general practices within the banking industry. All significant intercompany balances and transactions have been eliminated in consolidation. These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Form 10-K”).

The Company's significant accounting policies are disclosed in Note 2 of the audited financial statements for the year ended December 31, 2025 included in the 2025 Form 10-K. There have been no significant changes to the application of significant accounting policies since December 31, 2025.

Certain amounts presented in the consolidated financial statements of prior periods have been reclassified to conform to current year presentations. The reclassifications had no effect on net income, net income per share, total assets, total liabilities, or stockholders’ equity as previously reported.

Special Cash Dividend and Warrants

On March 30, 2026, the Company announced a special cash dividend of $0.60 per share of the Company's common stock totaling approximately $54.1 million, of which $53.2 million was paid on April 27, 2026 to shareholders of record as of the close of business on April 13, 2026.

On March 30, 2026, the Company announced that the holders of outstanding warrants to purchase the Company's common stock (the "Warrants") representing a majority of shares of common stock underlying such Warrants approved an amendment and restatement of the Warrants (the "Warrant Amendment"). Pursuant to the Warrant Amendment, in connection with certain cash distributions to holders of the Company's common stock while the Warrants are outstanding, the per share exercise price of each Warrant is reduced by the per share dividend amount in lieu of cash distributions to Warrant holders, including the special cash dividends of $0.25 per share paid in November 2025 and $0.60 per share paid in April 2026. As a result, the previously accrued $6.1 million (for dividends to be paid upon exercise of the Warrants) was reversed in the first quarter of 2026, and, upon execution of the amended and restated Warrants, the strike price of the Warrants reduces to $1.65 per common share.

The table below presents information pertaining to the Warrants as of and for the periods stated.

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Recent Accounting Pronouncements (Issued But Not Adopted)

Improvements to Expense Disaggregation Disclosures. In January 2025, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) No. 2025-01–Income Statement–Reporting Comprehensive Income–Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which amended the effective date of ASU No. 2024-03 to clarify that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. The purpose of this ASU is to improve disclosures about a company's expenses and address requests from investors for more detailed information about the types of expenses (including employee compensation, depreciation, amortization, and depletion) in commonly presented expense captions. The Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements but will result in expanded income statement expense disaggregation disclosures beginning with its financial statements for the year ending December 31, 2027.

No other recent accounting pronouncements issued but not yet effective were deemed to have a material impact on the Company's consolidated financial statements.

Note 2 – Investment Securities and Other Investments

Investment securities classified as available for sale ("AFS") are carried at fair value in the consolidated balance sheets. The following tables present amortized cost, fair values, and gross unrealized gains and losses of investment securities AFS as of the dates stated. The Company had no investment securities classified as held to maturity as of June 30, 2026 or December 31, 2025.

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As of June 30, 2026 and December 31, 2025, securities with a fair value of $163.8 million and $174.3 million, respectively, were pledged as collateral for the Bank’s borrowing facility with the Federal Home Loan Bank of Atlanta ("FHLB").

The following table presents the amortized cost and fair value of investment securities AFS by contractual maturity as of the date stated. Expected maturities may differ from contractual maturities because underlying borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

The following tables present fair values and gross unrealized losses, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, as of the dates stated. The reference point for determining when securities are in an unrealized loss position is period-end; therefore, it is possible that a security's market value exceeded its amortized cost on other days during the past twelve-month period. Excluded from the tables below were securities whose amortized cost equaled their fair value or were in an unrealized gain position totaling $13.0 million and $42.4 million as of June 30, 2026 and December 31, 2025, respectively.

At June 30, 2026 and December 31, 2025, the majority of securities in an unrealized loss position were of investment grade; however, a portion of the portfolio does not have a third-party investment grade available (securities with fair values of $21.0 million and $23.5 million, respectively). These securities were primarily subordinated notes issued by bank holding companies that are classified as corporate bonds in the tables above. The Company evaluated the issuers of these individually, observing that each issuer had strong capital ratios and profitability, thereby indicating limited exposure to asset quality or liquidity issues, and identified no credit losses. Contractual cash flows for mortgage backed securities and U.S. Treasury and agencies are guaranteed and/or funded by the U.S. government and government agencies. State and municipal securities showed no indication that the contractual cash flows would not be received when due. The Company does not intend to sell, nor does it believe that it will be required to sell, any of its impaired securities prior to the recovery of the amortized cost. As of June 30, 2026 and December 31, 2025, there was no allowance for credit losses ("ACL") for the Company's securities AFS portfolio. Any impairment that has not been recorded through an ACL is recognized in accumulated other comprehensive income (loss).

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Restricted equity investments consisted of stock in the FHLB (carrying value of $8.9 million and $9.1 million as of June 30, 2026 and December 31, 2025, respectively), Federal Reserve Bank of Richmond (“FRB”) stock (carrying value of $7.4 million and $9.4 million as of June 30, 2026 and December 31, 2025, respectively), and stock in the Company’s correspondent bank (carrying value of $0.5 million at both June 30, 2026 and December 31, 2025). Restricted equity investments are carried at cost.

The Company has various other equity investments, including an investment in a financial technology company and limited partnerships, totaling $5.0 million and $4.9 million as of June 30, 2026 and December 31, 2025, respectively.

The Company also holds other investments, primarily in early-stage focused investment funds, which totaled $18.0 million and $20.8 million as of June 30, 2026 and December 31, 2025, respectively, and are reported in other investments on the consolidated balance sheets. During the second quarter of 2026, the Company recognized a $0.6 million loss upon the liquidation of an investment made in 2022. The loss reflects the difference between the investment’s carrying value and the distribution received upon the final liquidation of the investment subsequent to June 30, 2026. As of June 30, 2026 and December 31, 2025, the carrying value of this investment was $3.2 million and $6.3 million, respectively.

Note 3 – Loans, ACL, and OREO

The following table presents the amortized cost of loans held for investment as of the dates stated.

The Company has pledged certain commercial and residential mortgage loans as collateral for the Bank's borrowing facility with the FHLB. Loans totaling $637.0 million and $695.1 million were pledged with the FHLB as of June 30, 2026 and December 31, 2025, respectively. Additionally, the Company has pledged certain construction and commercial and industrial loans with a lendable value totaling $45.3 million and $72.8 million as of June 30, 2026 and December 31, 2025, respectively, as collateral for the Bank's borrowing facility with the FRB Discount Window.

The following tables present the aging of the recorded investment of loans held for investment by loan category as of the dates stated.

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The following tables present the recorded investment of nonaccrual loans held for investment with and without an ACL by loan category as of the dates stated.

The increase in nonaccrual loans since December 31, 2025 was primarily attributable to loans to a single out-of-market relationship originated prior to 2024 totaling $11.4 million. The loans, classified as commercial and industrial, remained current through May 2026 but became delinquent when the borrower failed to make its June 2026 payment. Consequently, the loans were placed on nonaccrual at June 30, 2026, and a reserve was established in the amount of $2.9 million.

The Company recognized $269 thousand and $290 thousand of interest income on nonaccrual loans during the three and six months ended June 30, 2026, respectively, compared to $30 thousand and $148 thousand for the same respective periods in 2025.

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The following table presents accrued interest receivable by loan type reversed from interest income associated with loans held for investment that were placed on nonaccrual status for the periods stated.

Credit Quality Indicators

The Company segments loans held for investment into risk categories based on relevant information about the expected ability of borrowers to repay debt, such as current financial information, historical payment performance, experience, collateral adequacy, credit documentation, and current economic trends, among other factors. Management assigns loan risk grades by a numerical system as an indication of credit quality of its portfolio of loans held for investment. The Company uses the following definitions for loan risk ratings and periodically evaluates the appropriateness of these ratings across its loan portfolio. Independent third-party loan reviews are performed periodically on the Company's loan portfolio and such reviews validate management's determination of loan risk grades. Bank regulatory agencies also periodically review the Company's loan portfolio, including loan risk grades and may, on occasion, change a grade based on their judgment of the facts at the time of review.

Risk Grade 1 – Strong: This grade is for the strongest of loans. These loans are extended to individuals or businesses where the probability of default is extremely low to the Bank and secured with liquid collateral where the loss given default is unlikely because of the source of repayment such as a lien on a deposit account held at the Bank. Character, credit history, and ability of individuals or company principals are excellent. High liquidity, minimum risk, strong ratios, and low servicing cost are present.

Risk Grade 2 – Minimal: This grade is for loans deemed exceptionally strong. These loans are within established guidelines and where the borrowers have documented significant overall financial strength with consistent and predictable cash flows. These loans have excellent sources of repayment, significant balance sheet liquidity, no significant identifiable risk of collection, and conform in all respects to policy, underwriting standards, and federal and state regulations (no exceptions of any kind). In addition, guarantor support, when provided, is deemed as excellent.

Risk Grade 3 – Acceptable: This grade is for loans deemed strong. These loans have adequate sources of repayment, with a minimal identifiable risk of collection. Generally, loans assigned this risk grade will demonstrate the following characteristics: (1) conformity in all respects with policy, guidelines, underwriting standards, and federal and state regulations (no exceptions of any kind), (2) documented historical cash flow that meets or exceeds required minimum guidelines, or that can be supplemented with verifiable cash flow from other sources, and (3) adequate secondary sources to liquidate the debt. In addition, guarantor support, when provided, is deemed strong.

Risk Grade 4 – Satisfactory: This grade is for satisfactory loans containing more but deemed acceptable risk, and where the borrower is deemed as sound. These loans have adequate sources of repayment, with minimal identifiable risk of collection. Loans assigned with this risk grade will demonstrate the following characteristics: (1) general conformity to the Bank's underwriting requirements, with limited exceptions to policy, product, or underwriting guidelines, and all exceptions noted have documented mitigating factors that offset any additional risk associated with the exceptions noted, (2) documented historical cash flow that meets or exceeds required minimum guidelines, or that can be supplemented with verifiable cash flow from other sources, and (3) adequate secondary sources to liquidate the debt. In addition, guarantor support, when provided, is deemed as satisfactory.

Risk Grade 5 – Watch: This grade is for satisfactory loans containing acceptable but elevated risk. These loans are characterized by borrowers who exhibit signs of financial stress or are experiencing unstable or unfavorable change(s) adversely impacting the current or expected financial condition. The borrower's management is considered to be satisfactory; however, the collateral securing the loan may have decreased in value, the debt service coverage ratio is inconsistent or breakeven but mostly positive, and/or guarantor support, if any, is deemed limited or marginal. Loans classified as Watch warrant additional monitoring by management.

Risk Grade 6 – Special Mention: This grade is for loans that have potential weaknesses that deserve management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the

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repayment prospects for the Bank's credit position potentially at a future date. Special Mention loans are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification. Special Mention credits typically do not conform to established guidelines and/or exceptions without mitigating factors, or have emerging weaknesses that may or may not be remedied with the passage of time.

Risk Grade 7 – Substandard: This grade is for loans inadequately protected by the current sound net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans classified as Substandard must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt; characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. Loans in this category are characterized by deterioration in quality exhibited by any number of well-defined weaknesses requiring corrective action. The weaknesses may include, but are not limited to: (1) current or expected unprofitable operations, (2) inadequate debt service coverage, (3) declining or inadequate liquidity, (4) improper loan structure, (5) questionable or weak repayment sources, and (6) lack of well-defined secondary repayment source. There is a distinct possibility of loss and the Bank may sustain loss if the deficiencies remain uncorrected.

Risk Grade 8 – Doubtful: Loans classified Doubtful have all the weaknesses inherent in loans classified Substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values highly questionable and improbable. However, these loans are not yet rated as loss because certain events may occur which would salvage the Bank's position, which can include, but are not limited to (1) an injection of capital, (2) alternative financing, and (3) liquidation of assets or the pledging of additional collateral. Doubtful is a temporary grade, where the Bank expects a loss but is presently not quantified with any degree of accuracy. Once the loss position is determined, the amount is recorded and charged off against the ACL.

Risk Grade 9 – Loss: Loans classified Loss are deemed uncollectible and of such little value that continuance as assets held for investment is no longer warranted. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer charging off the worthless loan, even though partial recovery may occur in the future. Probable loss amounts, either principal or interest, deemed uncollectible are charged off promptly against the ACL.

The following table presents the recorded investment of loans held for investment by internal loan risk grade by year of origination as of June 30, 2026. There were no loans classified as doubtful or loss (risk grades 8 or 9) as of the same date. Also presented are current period gross charge-offs by loan type for the six months ended June 30, 2026. Of the $3.5 million of gross charge-offs of revolving loans presented for the six-month period, $3.3 million were attributable to business and consumer credit cards originated through a partnership with a third-party company. The third-party provides limited credit loss protection to the Bank, and upon receipt, credits for losses are reported as

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recoveries, which were $3.3 million for the six months ended June 30, 2026. Since the inception of this partnership in early 2023, the Bank has not experienced a credit loss from this arrangement.

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The following table presents the recorded investment of loans held for investment by internal loan risk grade by year of origination as of December 31, 2025. There were no loans classified as loss (risk grade 9) as of the same date.

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The following tables present an analysis of the change in the ACL by loan segment for the periods stated.

Effective January 1, 2026, the Bank's ACL policy was amended to remove the requirement that special mention loans over $1.0 million be individually evaluated; as a result, six loans totaling $33.9 million were moved to collective evaluation. These loans had no reserves prior to the policy change, however when collectively evaluated in the first quarter of 2026 resulted in approximately $0.3 million of ACL. Other than the preceding change to the Bank's ACL policy, there were no material changes to the assumptions, loss factors (both quantitative and qualitative), or reasonable

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and supportable forecasts used in the estimation of the ACL and recovery of credit losses for loans held for investment as of and for the three and six months ended June 30, 2026.

Excluded from the estimation of the ACL as of both June 30, 2026 and December 31, 2025 were $8.6 million and $9.1 million, respectively, of accrued interest attributable to loans held for investment, which is included in accrued interest receivable on the consolidated balance sheets.

The following table presents the amortized cost of collateral-dependent loans that were individually evaluated for credit losses as of the dates stated.

The decline in collateral-dependent loans since December 31, 2025 was primarily attributable to the aforementioned change to the Bank's ACL policy effective January 1, 2026.

Acquired Loans

As of June 30, 2026 and December 31, 2025, the amortized cost of purchased credit deteriorated ("PCD") loans totaled $29.0 million and $29.8 million, respectively, with an estimated ACL of $0.2 million as of both dates. The remaining non-credit discount on PCD loans was $1.8 million and $2.0 million as of June 30, 2026 and December 31, 2025, respectively.

Troubled Loan Modifications

The Company closely monitors the performance of borrowers experiencing financial difficulty and grants certain loan modifications it would otherwise not consider. The Company refers to such loan modifications as troubled loan modifications ("TLMs").

The following table presents the amortized cost of loans designated as TLMs, categorized by loan type and type of concession granted, for the periods stated.

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During the three months ended June 30, 2026 and 2025, no new loans were designated as TLMs.

The following tables present additional information including the financial effects of TLMs as of and for the periods stated.

The following tables present an aging analysis of the amortized cost of loans designated as TLMs as of the dates stated.

As of June 30, 2026 and December 31, 2025, there were no unfunded commitments to borrowers with TLMs.

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The following table presents the amortized cost of loans designated as TLMs that were modified in the preceding twelve months and had a payment default during the periods stated.

OREO

As of June 30, 2026 and December 31, 2025, OREO included a property with a carrying value of $1.4 million that served as collateral for a government guaranteed loan. The guaranteed portion of the loan (90%) is owned by the U.S. Small Business Administration ("SBA"), and the Company is obligated to remit to the SBA its share of the liquidation proceeds upon the sale of the property. Accordingly, the Company recorded a $1.2 million liability, reported in other liabilities on the Company's consolidated balance sheets as of both June 30, 2026 and December 31, 2025, representing the SBA's contractual interest in the expected proceeds from the sale of the property.

As of June 30, 2026, seven residential mortgage loans with a total amortized cost of $2.8 million were in the process of foreclosure.

Note 4 – Borrowings

FHLB Borrowings

The Bank had borrowings from the FHLB totaling $150.0 million at both June 30, 2026 and December 31, 2025. The FHLB borrowings required the Bank to hold $8.9 million and $9.1 million of FHLB stock at June 30, 2026 and December 31, 2025, respectively, which is included in restricted equity investments on the consolidated balance sheets.

At June 30, 2026 and December 31, 2025, the Bank also had letters of credit outstanding with the FHLB in the amounts of $70.1 million and $51.2 million, respectively, of which $70.0 million and $50.0 million, respectively, were for the purpose of collateral for public deposits with the Treasury Board of the Commonwealth of Virginia as of the same respective dates. Outstanding letters of credit reduce the available balance of the borrowing facility with the FHLB.

At June 30, 2026, 1-4 family residential loans, multi-family residential loans, and commercial real estate loans classified as held for investment with a lendable value of $366.3 million and securities with a lendable value of $155.6 million were pledged for the borrowing facility with the FHLB.

At June 30, 2026 and December 31, 2025, the secured facility totaled $521.9 million and $565.5 million, respectively, based on pledged collateral. Available balances on the FHLB credit facility were $301.9 million and $364.4 million as of June 30, 2026 and December 31, 2025, respectively.

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The following table presents information regarding FHLB borrowings outstanding as of both June 30, 2026 and December 31, 2025.

FRB Borrowings

The Company may obtain advances from the FRB through its Discount Window. Advances through the FRB Discount Window are secured by qualifying pledged construction and commercial and industrial loans. The Company had secured borrowing capacity with the FRB Discount Window of $45.3 million and $72.8 million as of June 30, 2026 and December 31, 2025, respectively, of which the Company had no outstanding advances as of either date.

Other Borrowings

The Company had an unsecured line of credit with a correspondent bank available for overnight borrowing, which totaled $10.0 million as of both June 30, 2026 and December 31, 2025. This line bears interest at the prevailing rates for such loans and is cancelable any time by the correspondent bank. As of both June 30, 2026 and December 31, 2025, the Company had no outstanding advances on this unsecured line.

Subordinated Notes

The Company had $14.7 million of subordinated notes, net, outstanding as of both June 30, 2026 and December 31, 2025. Prior to June 1, 2025, the Company's subordinated notes had been comprised of a $15 million issuance in May 2020 maturing June 1, 2030 (the “2030 Note”), and a $25 million issuance in October 2019 maturing October 15, 2029 (the “2029 Notes”).

On June 1, 2025, the Company completed the $15.0 million redemption of the 2030 Note. The interest rate on the 2030 Note was 6.0% up to the redemption date. Interest expense on the 2030 Note was $0.2 million and $0.4 million for the three and six months ended June 30, 2025, respectively.

On July 15, 2025, the Company completed a $10.0 million partial redemption of the 2029 Notes. As of June 30, 2026, the interest rate on the 2029 Notes, which resets quarterly, was 8.01%. As of June 30, 2026, the net carrying amount of the 2029 Notes was $14.7 million, inclusive of a $0.2 million purchase accounting adjustment (premium). For the three months ended June 30, 2026 and 2025, the effective interest rate on the 2029 Notes was 7.43% and 7.48%, respectively, inclusive of the amortization of the purchase accounting adjustment. For the six months ended June 30, 2026 and 2025, the effective interest rate on the 2029 Notes was 7.68% and 7.44%, respectively, inclusive of the amortization of the purchase accounting adjustment (premium).

Subsequent to June 30, 2026, on July 15, 2026, the Company completed the redemption of the remaining balance of the 2029 Notes.

Note 5 – Fair Value

The fair value of a financial instrument is the current amount that would be exchanged between willing parties in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Company’s various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques.

The three levels of input that may be used to measure fair value are as follows:

Level 1 – Valuation is based on quoted prices in active markets for identical assets and liabilities.

Level 2 – Valuation is based on observable inputs including quoted prices in active markets for similar assets and liabilities, quoted prices for identical or similar assets and liabilities in less active markets, and model-based valuation techniques for which significant assumptions can be derived primarily from or corroborated by observable data in the market.

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Level 3 – Valuation is based on model-based techniques that use one or more significant inputs or assumptions that are unobservable in the market.

The following tables present the balances of financial assets measured at fair value on a recurring basis as of the dates stated.

As of December 31, 2025, there were no securities reported as Level 3 assets in the fair value hierarchy. During the second quarter of 2026, one security transferred from Level 2 to Level 3 as there was no observable market price for a similar investment. As of June 30, 2026, one corporate bond totaling $500 thousand was reported at its amortized cost and as a Level 3 asset in the fair value hierarchy.

The following tables summarize assets that were measured at fair value on a nonrecurring basis as of the dates stated.

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The following tables present quantitative information about Level 3 fair value measurements of assets measured on a nonrecurring basis as of the dates stated.

Fair values for collateral-dependent loans are generally based on third-party appraisals of the underlying collateral, adjusted for estimated selling costs and other factors considered appropriate by management. Such adjustments may include discount rates applied to the appraised fair value to reflect management’s estimate of the realizable value of the underlying collateral. These adjustments represent significant unobservable inputs and, accordingly, the resulting fair value measurements are classified within Level 3 of the fair value hierarchy.

The following tables present the estimated fair values, related carrying amounts, and valuation level of financial instruments as of the dates stated.

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Note 6 – 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, banks must hold a capital conservation buffer of 2.50% above the adequately capitalized risk-based capital ratios 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 may place certain restrictions on dividends paid by 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.

The Company adopted Accounting Standards Codification ("ASC") 326, Financial Instruments - Credit Losses (referred to herein as "current expected credit losses" or "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 (the "CECL Transitional Amount") over a three-year period. The three-year phase-in of the CECL Transitional Amount to regulatory capital was 25%, 50%, and 25% in 2023, 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 and was fully phased in the first quarter of 2026 as a reduction to the regulatory capital amounts and ratios. The

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full $8.1 million reduction is reflected as of June 30, 2026, compared to a $6.1 million reduction as of December 31, 2025.

The following tables present the capital ratios to which the Bank is subject to be adequately and well capitalized, as well as the capital and capital ratios for the Bank as of the dates stated. Adequately capitalized ratios include the conservation buffer, if applicable.

The decline in the Bank's capital amounts and capital ratios from December 31, 2025 was primarily attributable to the special cash dividend declared on March 30, 2026.

Note 7 – Commitments and Contingencies

In the ordinary course of operations, the Company offers various financial products to its customers to meet their credit and liquidity needs. These instruments involve elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheets. The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instruments for commitments to extend credit and stand-by letters of credit written is represented by the contractual amount of these instruments. The Company uses the same credit policies in making commitments and conditional commitments as it does for on-balance sheet commitments.

Subject to its normal credit standards and risk monitoring procedures, the Company makes contractual commitments to extend credit. Commitments generally have fixed expiration dates or other termination clauses and may require the payment of a fee. Since many of the commitments may expire without being completely drawn upon, the total commitment amounts do not necessarily represent future cash requirements. As of June 30, 2026 and December 31, 2025, the Company had outstanding loan commitments of $285.5 million and $247.2 million, respectively. Of these amounts, $35.7 million and $35.2 million were unconditionally cancelable at the sole discretion of the Company as of the same respective dates.

Conditional commitments are issued by the Company in the form of financial stand-by letters of credit, which guarantee payment to the underlying beneficiary (i.e., third party) if the customer fails to meet its designated financial obligation. As of June 30, 2026 and December 31, 2025, commitments under outstanding financial stand-by letters of credit totaled $9.7 million and $6.3 million, respectively. The credit risk of issuing stand-by letters of credit can be greater than the risk involved in extending loans to customers.

For the three and six months ended June 30, 2026, the Company recorded a $0.6 million provision for credit losses for unfunded commitments due to an increase in committed but unfunded lines of credit to commercial construction

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borrowers. The reserve for unfunded commitments, which is included in other liabilities on the consolidated balance sheets, was $1.4 million and $0.8 million as of June 30, 2026 and December 31, 2025, respectively.

The Company has investments in various partnerships and limited liability companies. Pursuant to these investments, the Company commits to an investment amount that may be fulfilled in future periods. At June 30, 2026 and December 31, 2025, the Company had future commitments outstanding totaling $4.6 million and $4.9 million, respectively, related to these investments.

Note 8 – Stock-Based Compensation

The Company has granted time-based restricted stock awards (“time-based RSAs”) to employees and directors, and performance-based restricted stock awards (“PSAs”) to employees, under equity incentive plans that have been approved by the Company's shareholders. Time-based RSAs are measured at grant-date fair value, based on the market price of the Company's common stock on the grant date, and the related compensation expense is recognized on a straight-line basis over the requisite service period, which is generally three years. Time-based RSAs carry voting rights and nonforfeitable rights to dividends. PSAs vest at the end of a specified performance period contingent upon the Company's achievement of financial performance goals. Compensation expense for PSAs is recognized over the performance period when achievement of the performance condition is considered probable, with periodic adjustments made as necessary. The performance goals for PSAs are generally based on a profitability measure for the Company, as established by the Company's board of directors or a committee thereof. PSAs carry voting rights and rights to dividends that are paid only if and when the PSAs vest.

Stock-based compensation expense, reported as a component of salaries and employee benefits in the consolidated statements of operations, was $0 and $0.2 million for the three and six months ended June 30, 2026, respectively, compared to $2.2 million and $2.4 million for the three and six months ended June 30, 2025, respectively.

Total unrecognized compensation expense related to time-based RSAs and PSAs as of June 30, 2026 totaled $1.9 million. The ultimate amount of expense recognized is dependent upon the achievement of performance goals, which are generally established for specific fiscal years.

The following table presents the activity in time-based RSAs and PSAs as of and for the periods stated.

Note 9 – Earnings Per Share

The following table shows the calculation of basic and diluted earnings per share ("EPS"), the weighted average number of shares outstanding used in computing EPS, the effect on the weighted average number of shares outstanding of dilutive potential common stock for the periods stated, and the weighted average number of securities excluded from the computation of diluted EPS because their effects would have been anti-dilutive. As a result of the net loss reported

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for both the three and six months ended June 30, 2026, all weighted average potentially dilutive securities have been excluded from the calculation of diluted EPS.

Note 10 – Segment Reporting

Until March 2025, the Company operated through three reportable business segments: bank and financial group (formerly referred to as commercial banking), holding company activities, and mortgage banking. The bank and financial group business segment originates loans to and generates deposits from individuals and businesses and offers a broad range of financial services to its customers. Holding company or parent level activities are primarily associated with investments, borrowings, and certain noninterest expenses. The mortgage banking segment was sold in March 2025. As a result of the disposition, the remaining business segments were aggregated and reported in total to the Company's Chief Operating Decision Maker (the "CODM"). The CODM now evaluates performance on a Company-wide basis.

The CODM evaluates the Company's performance based on net income (loss) and other measures of profitability, in order to evaluate staffing levels, assess resources for allocation to projects, and makes informed decisions on whether the Company's activities should be modified to align with the Company’s overall near- and long-term strategies. The CODM is regularly provided with revenue and expense information at a level consistent with that disclosed in the Company's consolidated statements of operations.

Note 11 – Legal Matters

In the ordinary course of operations, the Company is party to legal proceedings. Based upon information currently available, management believes that such legal proceedings, in the aggregate and excluding those noted below, will not have a material adverse effect on the Company’s business, financial condition, results of operations, or cash flows.

On December 20, 2024, a former Deputy Bank Secrecy Act Officer and manager at the Bank filed suit against the Company and the Company’s and the Bank’s Chief Executive Officer, in the Circuit Court of the City of Richmond (Virginia) alleging that she was retaliated against and constructively discharged in violation of the Virginia Whistleblower Protection Act, Va. Code § 40.1-27.3, and Bowman v. State Bank of Keysville, 331 S.E.2d 797 (Va. 1985). On December 30, 2024, the Company removed the matter to the United States District Court for the Eastern District of Virginia, where it subsequently filed a motion to dismiss. On July 18, 2025, the court granted the Company’s motion to dismiss. The case caption in the district court is Porter v. Blue Ridge Bankshares, Inc. (No. 3:24-cv-909 (E.D. Va.)) (the "Porter Case"). On August 15, 2025, the plaintiff appealed the dismissal of her claims to the U.S. Court of Appeals for the Fourth Circuit, Case No. 25-1970, asserting various violations of law. On August 7, 2026, the U.S. Court of Appeals for the Fourth Circuit affirmed the dismissal of Porter’s claims at the District Court level. Absent an unlikely appeal to the Supreme Court of the United States, this extinguishes Porter’s claims with prejudice.

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Note 12 – Subsequent Events

Subsequent to June 30, 2026, a commercial borrower with loans outstanding totaling $11.4 million reported that its business had ceased operations. The subject loans were on nonaccrual status as of June 30, 2026, and the Company had established a specific reserve for the loans based on management's estimate of expected credit losses. Management evaluated this subsequent development in accordance with the subsequent events guidance in ASC 855, Subsequent Events, and concluded that this event provided further evidence of conditions that existed as of June 30, 2026. Accordingly, the Company revised its estimate of expected credit losses resulting in a specific reserve of $2.9 million, which has been reflected in the Company's consolidated financial results herein as of and for three and six months ended June 30, 2026.

On July 15, 2026, the Company redeemed the remainder of the 2029 Notes totaling $14.7 million, inclusive of a $0.2 million purchase accounting adjustment (premium), plus accrued and unpaid interest of $0.3 million. Upon the completion of this redemption, the Company had no outstanding subordinated notes.

On August 7, 2026, the U.S. Court of Appeals for the Fourth Circuit affirmed the dismissal of the plaintiff's claims in the Porter Case.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following presents management’s discussion and analysis of the Company’s consolidated financial condition and the results of the Company's operations. This discussion should be read in conjunction with the unaudited consolidated financial statements and the notes thereto included in this Form 10-Q and the audited consolidated financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Form 10-K”). Results of operations for the three and six months ended June 30, 2026 are not necessarily indicative of the results of operations for the balance of 2026, or for any other period. As used in this report, the terms “the Company,” “we,” “us,” and “our” refer to Blue Ridge Bankshares, Inc. and its consolidated subsidiaries. The term “Bank” refers to Blue Ridge Bank, National Association.

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Special Cash Dividend and Warrants

On March 30, 2026, the Company announced a special cash dividend of $0.60 per share of the Company's common stock totaling approximately $54.1 million, of which $53.2 million was paid on April 27, 2026 to shareholders of record as of the close of business on April 13, 2026.

On March 30, 2026, the Company announced that the holders of outstanding warrants to purchase the Company's common stock (the "Warrants") representing a majority of shares of common stock underlying such Warrants approved an amendment and restatement of the Warrants (the "Warrant Amendment"). Pursuant to the Warrant Amendment, in connection with certain cash distributions to holders of the Company's common stock while the Warrants are

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outstanding, the per share exercise price of each Warrant is reduced by the per share dividend amount in lieu of cash distributions to Warrant holders, including the special cash dividends of $0.25 per share paid in November 2025 and $0.60 per share paid in April 2026. As a result, the previously accrued $6.1 million (for dividends to be paid upon exercise of the Warrants) was reversed in the first quarter of 2026, and, upon execution of the amended and restated Warrants, the strike price of the Warrants reduces to $1.65 per common share.

The table below presents information pertaining to the Warrants as of and for the periods stated.

General

There were no changes to the Critical Accounting Policies disclosed in Item 7 of the 2025 Form 10-K.

Certain amounts presented in the consolidated financial statements of prior periods have been reclassified to conform to current year presentations. The reclassifications had no effect on net income, net income per share, total assets, total liabilities, or stockholders’ equity as previously reported.

Comparison of Financial Condition as of June 30, 2026 and December 31, 2025

Total assets were $2.33 billion as of June 30, 2026, a decrease of $105.3 million from $2.43 billion as of December 31, 2025. Approximately half of this decrease was attributable to a decrease in cash and due from banks ($54.3 million), while the remainder was due to decreases in securities available for sale ($15.9 million), loans held for sale ($14.8 million) and loans held for investment ($12.3 million). Cash and due from banks declined due to the special cash dividend paid of $53.2 million and the reduction of brokered time deposits of approximately $52.9 million. The decline in available for sale securities was due to bonds called or matured ($9.6 million) and portfolio amortization ($16.4 million), partially offset by bond purchases ($11.1 million).

Included in the reduction of loans held for investment in the first half of 2026 were payoffs and paydowns of $32.2 million of out-of-market loans. The decline in loans held for sale reflected the Company's complete exit from its indirect fintech lending activities in the first quarter of 2026. The allowance for credit losses ("ACL") was $22.0 million and $19.4 million as of June 30, 2026 and December 31, 2025, respectively. The increase since year-end primarily reflects the addition of specific reserves for out-of-market loans. Loans held for investment increased $19.6 million during the second quarter of 2026, primarily driven by growth in commercial and residential mortgage loans.

During the second quarter of 2026, the Company partnered with a third-party residential mortgage originator, whereby the Company purchases adjustable-rate mortgage loans originated generally within its market area. Purchases under this program totaled $17.3 million during the second quarter of 2026, inclusive of purchase premiums. This program provides a primary mortgage product to the Company's consumer customers.

Total deposits were $1.86 billion as of June 30, 2026, a net decrease of $48.8 million from December 31, 2025. The decline in the first half of 2026 was primarily due to a $52.9 million decrease in brokered time deposits. Excluding the decline in brokered deposits, deposits increased $4.1 million in the first half of 2026.

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Total stockholders’ equity decreased by $48.3 million to $275.4 million as of June 30, 2026, from $323.7 million at December 31, 2025, primarily due to the special cash dividend ($54.1 million) announced March 30, 2026, partially offset by a $6.1 million reversal of accrued dividends due to the aforementioned Warrant Amendment.

Comparison of Results of Operations for the Three and Six Months Ended June 30, 2026 and 2025

For the three months ended June 30, 2026, the Company reported a net loss of $1.3 million, or ($0.01) per diluted common share, compared to net income of $1.3 million, or $0.01 per diluted common share, for the same period of 2025. Net loss for the three months ended June 30, 2026 included an after-tax $3.2 million provision for credit losses, compared to an after-tax benefit for recovery of credit losses of $0.5 million for the same period of 2025. Loans from a single out-of-market relationship originated prior to 2024 were placed on nonaccrual at June 30, 2026, and a reserve was established for the loans in the amount of $2.9 million ($2.3 million after tax). Net loss for the three months ended June 30, 2026 also included $0.3 million of after-tax expenses related to severance, compared to $0.2 million for the same period of 2025. Severance expenses include amounts associated with previously-announced executive officer transitions. The 2025 period also included an after-tax benefit of $1.0 million from the recovery of non-credit related amounts reserved for in the prior year, as the Company concluded outstanding exit activities with a former fintech banking-as-a-service (“BaaS”) partner.

For the six months ended June 30, 2026, the Company reported a net loss of $0.5 million, or ($0.01) per diluted common share, compared to net income of $0.9 million, or $0.01 per diluted common share, for the same period of 2025. Net loss for the six months ended June 30, 2026 included after-tax severance expenses of $1.7 million, while net income for the six months ended June 30, 2025 included after-tax severance costs of $0.8 million.

Net Interest Income. Net interest income is the excess of interest earned on loans, investments, and other interest-earning assets less the interest paid on deposits and borrowings and is the Company’s primary revenue source. Net interest income is thereby affected by overall balance sheet size, changes in interest rates, and changes in the mix of investments, loans, deposits, and borrowings. Net interest income for the three and six months ended June 30, 2026 was $16.5 million and $33.4 million, respectively, a decline of $3.3 million and $5.4 million from the same respective periods in 2025, primarily due to declines in average loan balances.

The following table presents the average balance sheets for the three months ended June 30, 2026 and 2025. Also shown are the amounts of interest earned on interest-earning assets, with related tax-equivalent yields, and interest

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expense on interest-bearing liabilities, with related rates, as well as a volume and rate analysis of changes in net interest income for the periods stated.

Average balances of interest-earning assets decreased $244.9 million to $2.28 billion for the three months ended June 30, 2026, compared to $2.53 billion for the same period of 2025. This decrease reflected lower average balances of loans held for investment and loans held for sale, reflective of the Company's efforts to selectively reduce its portfolio of out-of-market loans and its exit from its indirect fintech lending partnerships. The yield on average loans held for investment was 5.54% and 5.80% for the second quarters of 2026 and 2025, respectively. The decline in yield on loans held for investment was primarily due to a decline in higher yielding out-of-market loans and lower accretion of discounts on acquired loans. Accretion of discounts on acquired loans had a three and seven basis point positive effect on yield on loans held for investment for the respective periods. The exit of fintech lending operations, represented by loans held for sale, also had a unfavorable effect on yields on interest-earning assets.

Average balances of interest-bearing liabilities decreased $170.4 million to $1.65 billion for the three months ended June 30, 2026, compared to $1.82 billion for the same period of 2025. The decrease was primarily due to a $118.7 million reduction of average balances of brokered deposits, reported in time deposits, and a $19.9 million reduction in average borrowings due to the Company's redemption of a portion of its subordinated notes in the late second and early third quarters of 2025.

Cost of deposits was 2.25% for the three months ended June 30, 2026, compared to 2.47% for the same period of 2025, while cost of funds was 2.41% and 2.63%, for the respective periods. Lower cost of deposits and funds in the second quarter of 2026 relative to the year-ago period were primarily due to the reduction in average balances of higher cost brokered deposits paid off upon maturity and the partial redemption of the Company's subordinated notes. Cost of deposits, excluding brokered deposits, was 1.97% for the second quarter of 2026 compared to 2.05% for the second quarter of 2025.

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Net interest income (on a taxable equivalent basis) for the three months ended June 30, 2026 was $16.6 million compared to $19.9 million for the same period in 2025. Interest income declined $5.9 million to $28.9 million for the three months ended June 30, 2026, primarily due to the decline in average balances of loans held for investment, loans held for sale, and interest-earning deposits in other banks, which collectively declined $244.1 million from the three months ended June 30, 2025. Interest expense declined $2.6 million to $12.3 million for the three months ended June 30, 2026, largely driven by lower average balances of brokered deposits, which declined $118.7 million from the same period of 2025. Net interest margin was 2.91% and 3.15% for the second quarters of 2026 and 2025, respectively.

The following table presents the average balance sheets for the six months ended June 30, 2026 and 2025. Also shown are the amounts of interest earned on interest-earning assets, with related tax-equivalent yields, and interest expense on interest-bearing liabilities, with related rates, as well as a volume and rate analysis of changes in net interest income for the periods stated.

Average interest-earning assets were $2.31 billion for the six months ended June 30, 2026, compared to $2.57 billion for the same period of 2025, a $265.4 million decrease. This decrease was primarily due to declines in average balances of loans held for investment and loans held for sale, which decreased $217.5 million and $24.5 million, respectively, reflective of the Company's efforts to selectively reduce its portfolio of out-of-market loans and its exit from its indirect fintech lending partnerships. Total interest income (on a taxable equivalent basis) decreased $11.8 million for the six months ended June 30, 2026 from the same period of 2025, primarily due to loan portfolio reductions, while the yield on interest-earning assets declined 40 basis points. The yield on average loans held for investment was 5.52% and 5.75% for the first halves of 2026 and 2025, respectively. The decline in yield on loans held for investment was primarily due to a decline in higher yielding out-of-market loans and lower accretion of discounts on acquired loans. Accretion of discounts on acquired loans had a three and seven basis point positive effect on yield on loans held for investment for the same respective periods.

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Average interest-bearing liabilities were $1.66 billion for the six months ended June 30, 2026 compared to $1.86 billion for the same period of 2025, a $198.2 million decrease. Interest expense decreased by $6.5 million to $24.8 million for the six months ended June 30, 2026, compared to the same period of 2025.

Cost of deposits was 2.26% for the six months ended June 30, 2026, compared to 2.54% for the same period of 2025, while cost of funds decreased to 2.41% for the first half of 2026 from 2.71% for the first half of 2025. Lower cost of deposits and funds in the 2026 period was primarily the result of the payoff of higher cost brokered time deposits at maturity. Cost of deposits, excluding brokered deposits, was 1.97% for the first half of 2026 compared to 2.12% for the same period of 2025.

Net interest income (on a taxable equivalent basis) was $33.5 million for the six months ended June 30, 2026, compared to $38.9 million for the same period in 2025. Net interest margin was 2.90% and 3.02% for the first halves of 2026 and 2025, respectively.

Provision for (Recovery of) Credit Losses. A provision for credit losses on loans of $3.5 million was reported for the three months ended June 30, 2026, whereas a recovery of credit losses on loans of $0.7 million was reported for the three months ended June 30, 2025. The provision for credit losses on loans for the second quarter of 2026 was primarily due to additions to specific loan reserves, net loan charge-offs, and loan portfolio growth of $19.6 million for the quarter. The provision for credit losses on loans for the 2026 period included a $2.9 million reserve established for loans associated with a single out-of-market relationship originated prior to 2024. The recovery of credit losses on loans for the second quarter of 2025 was primarily due to loan portfolio reductions.

A provision for credit losses on loans of $2.9 million and a recovery of credit losses on loans of $0.7 million were reported for the six months ended June 30, 2026 and 2025, respectively.

A provision for credit losses on unfunded commitments was $0.6 million for the three and six months ended June 30, 2026. The second quarter of 2026 provision was due to an increase in committed but unfunded lines of credit to commercial construction borrowers. There was no provision for credit losses on unfunded commitments in the same respective periods of 2025.

Noninterest Income. The following tables present a summary of noninterest income and the dollar and percentage change for the periods presented.

The declines in residential mortgage banking income for the 2026 periods compared to the 2025 periods were attributable to the sale of the Company's mortgage division in the first quarter of 2025. The declines in other noninterest income for the comparative periods were primarily the result of the $0.6 million loss recognized in the second quarter of 2026 upon the liquidation of an equity method investment made in 2022, the Company's exit from fintech indirect

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lending in the first quarter of 2026, and the receipt of proceeds heldback from the 2024 sale of mortgage servicing rights.

Noninterest Expense. The following tables present a summary of noninterest expense and the dollar and percentage change for the periods stated.

As the Company transitioned to a more traditional community banking model and remediated the requirements under the consent order with the Bank's primary regulator, which was terminated in the fourth quarter of 2025, the number of employees decreased from 442 as of December 31, 2024, to 302 as of December 31, 2025, and to 269 as of June 30, 2026, or by 39% and 11%, respectively. As a result, the Company reported lower expenses for salaries and employee benefits and technology and communication costs. Included in salaries and employee benefits expense for the three and six months ended June 30, 2026 were severance costs of $0.4 million and $2.1 million, respectively, compared to $0.3 million and $1.0 million for the same respective periods of 2025. Higher advertising and marketing expenses for the 2026 periods compared to the 2025 periods were the result of marketing campaigns designed to drive growth, which launched in the second half of 2025. The decline in Federal Deposit Insurance Corporation ("FDIC") insurance premiums primarily reflected lower assessment rates for the 2026 periods relative to the 2025 periods. The declines in other noninterest expense during the 2026 periods relative to the 2025 periods were primarily due to lower third-party loan servicing costs and losses on the repurchase of loans previously sold.

Income Tax Expense. For the three and six months ended June 30, 2026, the effective income tax rates were 20.5% and 10.9%, respectively, compared to 27.0% and 2.8% for the three and six months ended June 30, 2025, respectively. The effective income tax rate for the first half of 2026 was primarily a result of the Company's marginal pre-tax loss in the period, while the effective income tax rate for the second quarter of 2025 was primarily driven by the potential elimination of deductibility of compensation costs in future taxable periods. The effective income tax rate for the six months ended June 30, 2025 included the effect of a $0.3 million favorable adjustment related to a change in the state tax rate applied to the accumulated unrealized loss on the available for sale securities portfolio.

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Analysis of Financial Condition

Loan Portfolio. The Company makes loans to commercial entities and to individuals. Loan terms vary as to interest rate, repayment, and collateral requirements based on the type of loan and the creditworthiness of the borrower. Credit risk tends to be geographically concentrated in that a majority of the loans are to borrowers located in the markets served by the Company. All loans are underwritten within specific lending policy guidelines that are established to maximize the Company’s profitability within an acceptable level of business risk.

The following table presents the Company’s loan portfolio by category of loan and the percentage of loans in each category to total loans as of the dates stated.

The Company has pledged certain qualifying loans as collateral for borrowing facilities. Commercial and residential mortgages totaling $637.0 million and $695.1 million were pledged with the Federal Home Loan Bank of Atlanta ("FHLB") as of June 30, 2026 and December 31, 2025, respectively. Construction and commercial and industrial loans totaling $45.3 million and $72.8 million as of June 30, 2026 and December 31, 2025, respectively, were pledged with the Federal Reserve Bank of Richmond (“FRB”) Discount Window.

The following table presents the Company’s portfolio of commercial real estate loans by property type as of the dates stated.

While the Federal Reserve has reduced the target Fed Funds rate by 175 basis points from a recent peak, the current lending environment for commercial real estate (“CRE”) loans has heightened risk due to a higher interest rate environment than had existed when the Company's loans may have been originated. Potential negative impacts may include higher debt service burdens for floating rate loans and fixed rate loans originated in a lower rate environment that reprice or mature, requiring renewal or refinancing. As these loans mature, they may be repriced at higher interest rates leading to increased debt service costs that can strain borrowers' ability to meet payment obligations. In some

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cases, the higher cost of refinancing may lead to loan defaults, particularly if property cash flows have not increased relatively.

Additionally, collateral values overall may be impaired by higher capitalization rates, further complicating refinancing efforts and increasing credit risk to the Bank. Certain CRE collateral types have experienced declining occupancy, demand, and rental rates, which could potentially lead to material declines in property level economics and further weaken borrowers' ability to service their debt.

The Bank’s credit administration department led by the Chief Risk Officer and Chief Credit Officer performs periodic analyses of emerging trends by geography and property type where the Bank has larger concentrations by CRE property type. These analyses include all real estate property types and geographic markets represented in the loan portfolio and are provided to the Bank's board of directors to assess whether the CRE lending strategy and risk appetite continue to be appropriate, considering changes in local market conditions and the Bank’s exposure to collateral type concentrations. Also, concentration limits by real estate collateral type are approved and monitored by the Bank's board of directors. As of June 30, 2026, the Bank was in compliance with board approved limits.

The following table presents the remaining maturities, based on contractual maturity, by loan type and by rate type (variable or fixed), as of June 30, 2026. Loans shown in the one year or less column are term loans that have a stated maturity date within twelve months. Variable rate loans reprice at various intervals (monthly or quarterly) and the rate is tied to a published index such as the Fed Prime rate, U.S. Treasury bond indices, or the Secured Overnight Funding Rate.

Allowance for Credit Losses. In determining the adequacy of the Company’s ACL, management makes estimates based on facts available at the time the ACL is determined. Such estimation requires significant judgment at the time made. Management believes that the Company’s ACL was adequate as of June 30, 2026 and December 31, 2025. There can be no assurance, however, that adjustments to the ACL will not be required in the future. Changes in the economic assumptions underlying management’s estimates and judgments, adverse developments in the economy, on a national basis or in the Company’s market area, and changes in the circumstances of particular borrowers are criteria, among others that could increase the level of the ACL required, resulting in charges to the provision for credit losses for loans. In addition, bank regulatory agencies periodically review the Bank's ACL and may require an increase in the ACL or the recognition of further loan charge-offs, based on their judgment of the facts at the time of their review that may differ than that of management.

The following tables present an analysis of the change in the ACL by loan type as of and for the periods stated.

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Of the $2.7 million and $3.1 million of loan charge-offs recognized during the three months ended June 30, 2026 and 2025, respectively, $1.8 million and $2.4 million for the same respective periods were attributable to business and consumer credit cards originated through a partnership with a third-party company. Under this arrangement, the third-party provides the Bank limited credit loss protection. Accordingly, the Bank records charge-offs based on the credit card portfolio activity and recognizes recoveries upon receipt of payments under the credit loss protection agreement, which fully offset these charge-offs during the same respective periods.

Of the $4.9 million and $5.9 million of loan charge-offs recognized during the six months ended June 30, 2026 and 2025, respectively, $3.3 million and $4.3 million for the same respective periods were attributable to this third-party arrangement. The Bank received payments under the credit loss protection agreement that fully offset these charge-offs during the respective periods. Since the inception of this partnership in early 2023, the Bank has not incurred any net credit losses under this program.

The ACL includes specific reserves for individually evaluated loans and a general allowance applicable to loans pooled by loan categories; however, management has allocated the ACL by loan type to provide an indication of the relative risk characteristics of the loan portfolio. The allocation is an estimate and should not be interpreted as an indication that charge-offs will occur in these amounts or that the allocation indicates future trends, and does not restrict the usage of the allowance for any specific loan or category. The following table presents the allocation of the ACL by loan category and the percentage of loans in each category to total loans as of the dates stated.

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Nonperforming Assets. The following table presents a summary of nonperforming assets and various measures as of the dates stated.

Loans are generally placed into nonaccrual status when they are past due 90 days or more as to either principal or interest or when, in the opinion of management, the collection of principal and/or interest is in doubt. A loan remains in nonaccrual status until the loan is current as to payment of both principal and interest or past due less than 90 days and the borrower demonstrates the ability to pay and remain current for a sustained period of time, generally six months, or when the loan otherwise becomes well-secured and in the process of collection. When cash payments are received, they are applied to principal first, then to accrued interest. It is the Company's policy not to record interest income on nonaccrual loans until the loan has returned to accrual status. In certain instances, accruing loans that are past due 90 days or more as to principal or interest may not be placed on nonaccrual status, if the Company determines that the loans are well-secured and are in the process of collection.

The changes in nonperforming loans, the ACL, and the related ratios above at June 30, 2026 from December 31, 2025 were primarily attributable to loans from a single out-of-market relationship originated prior to 2024 totaling $11.4 million. The loans, classified as commercial and industrial, remained current through May 2026 but became delinquent when the borrower failed to make its June 2026 payment. Consequently, the loans were placed on nonaccrual at June 30, 2026. Subsequent to June 30, 2026, the borrower reported that its business had ceased operations. In light of this development and management's estimate of expected credit losses, the Company established a reserve of approximately $2.9 million, as of June 30, 2026. The Company believes the credit issues affecting this borrower are unique and not systematic to the Company's overall portfolio.

OREO generally includes properties that have been substantively repossessed or acquired in complete or partial satisfaction of debt. Such properties, which are held for resale, are initially stated at fair value, including a reduction for the estimated selling expenses, which becomes the new carrying value.

In limited cases, the Bank may receive non-cash consideration, including equity interests, pursuant to negotiated or court-approved settlements with borrowers. The fair value of nonmarketable equity interests are generally estimated using a discounted cash flow analysis based on management’s assumptions regarding expected future cash flows, timing, and a risk adjusted discount rate. These assets, which are reported with OREO on the Company's consolidated balance sheets, are subsequently carried at the lower of cost or fair value, less estimated costs to sell, and are periodically evaluated for impairment. In subsequent periods, such properties are stated at the lower of the restated carrying value or fair value. As of both June 30, 2026 and December 31, 2025, the Company's nonmarketable equity interest assets totaled $0.2 million.

As of June 30, 2026 and December 31, 2025, OREO included a property with a carrying value of $1.4 million that served as collateral for a government guaranteed loan. The guaranteed portion of the loan (90%) is owned by the U.S. Small Business Administration ("SBA"), and the Company is obligated to remit to the SBA its share of the liquidation proceeds upon the sale of the property. Accordingly, the Company recorded a $1.2 million liability, reported in other liabilities on the Company's consolidated balance sheets as of both June 30, 2026 and December 31, 2025, representing the SBA's contractual interest in the expected proceeds from the sale of the property.

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Investment Securities. The investment portfolio is used as a source of interest income, credit risk diversification, and liquidity, as well as to manage interest rate sensitivity and provide collateral for borrowings. Securities in the investment portfolio classified as securities available for sale ("AFS") may be sold in response to changes in market interest rates, securities’ prepayment risk, liquidity needs, and other similar factors, and are carried at estimated fair value. The fair value of the Company’s investment securities AFS portfolio was $317.0 million as of June 30, 2026, a decrease of $15.9 million from $332.9 million at December 31, 2025. The decline in AFS securities was due to bonds called or matured ($9.6 million), portfolio amortization ($16.4 million), and fair value adjustments ($1.0 million), partially offset by bond purchases ($11.1 million). As a result of elevated market interest rates, the Company’s portfolio of AFS securities had net unrealized losses of approximately $41.3 million and $40.3 million as of June 30, 2026 and December 31, 2025, respectively, of which approximately 85% and 84%, respectively, were related to securities backed by U.S. government agencies.

As of June 30, 2026 and December 31, 2025, the majority of the investment securities portfolio consisted of securities rated investment grade by a leading rating agency. Investment grade securities are judged to have a low risk of default, to be of the best quality, and to carry the smallest degree of investment risk. At June 30, 2026 and December 31, 2025, securities with a fair value of $163.8 million and $174.3 million, respectively, were pledged to secure the Bank’s borrowing facility with the FHLB.

The Company reviews its investment securities AFS portfolio for potential credit losses at least quarterly. Investment securities AFS with unrealized losses are generally a result of pricing changes due to changes in the interest rate environment and not as a result of permanent credit impairment. The Company does not intend to sell nor does it believe that it will be required to sell any of its impaired securities prior to the recovery of the amortized cost. Due to these factors, no ACL has been recognized for AFS securities as of both June 30, 2026 and December 31, 2025.

Restricted equity investments consisted of stock in the FHLB (carrying basis $8.9 million and $9.1 million at June 30, 2026 and December 31, 2025, respectively), FRB stock (carrying value of $7.4 million and $9.4 million as of June 30, 2026 and December 31, 2025, respectively), and stock in the Company’s correspondent bank (carrying value of $0.5 million at both June 30, 2026 and December 31, 2025). Restricted equity investments are carried at cost.

The Company has various other equity investments, including an investment in a fintech company and limited partnerships, totaling $5.0 million and $4.9 million as of June 30, 2026 and December 31, 2025, respectively.

The Company also holds other investments, primarily in early-stage focused investment funds, which totaled $18.0 million and $20.8 million as of June 30, 2026 and December 31, 2025, respectively, and are reported in other investments on the consolidated balance sheets. During the second quarter of 2026, the Company recognized a $0.6 million loss upon the liquidation of an investment made in 2022. The loss reflects the difference between the investment’s carrying value and the distribution received upon the final liquidation of the investment subsequent to June 30, 2026. As of June 30, 2026 and December 31, 2025, the carrying value of this investment was $3.2 million and $6.3 million, respectively. Over the period it was held, the investment generated cumulative pre-tax income of approximately $1.9 million.

The Company had no investment securities classified as held to maturity as of June 30, 2026 or December 31, 2025.

The following table presents the amortized cost of the investment portfolio by contractual maturities, as well as the weighted average yields for each of the maturity ranges as of and for the period stated. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

Deposits. The principal sources of funds for the Company are deposits, including transaction accounts (demand and money market accounts), time deposits, and savings accounts, of customers in the Bank’s primary geographic market

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area. Such customers provide the Bank a source of fee income and cross-marketing opportunities and are generally a lower cost source of funding.

Brokered deposit balances are sourced through intermediaries and are an unsecured source of funding for the Bank. Brokered deposits were added throughout 2023 and early 2024 to enhance liquidity and in anticipation of the exit of the Company's fintech BaaS deposit operations. The Bank has a liquidity management program, with oversight of the Bank’s asset and liability committee (the “ALCO”), that sets forth guidelines and monitors for the desired maximum level of brokered deposits, which is 20.0% of total deposits. In recent quarters, the Company has reduced its level of brokered deposits by sourcing non-brokered deposits and with cash flows from the loan portfolio.

Total deposits decreased $48.8 million from $1.91 billion as of December 31, 2025 to $1.86 billion as of June 30, 2026, as:

• Brokered deposits decreased $52.9 million from $238.7 million, or 12.5% of total deposits, as of December 31, 2025 to $185.8 million, or 10.0% of total deposits, as of June 30, 2026; and
• Deposits, excluding brokered deposits, increased $4.1 million from $1.67 billion as of December 31, 2025 to $1.68 billion as of June 30, 2026.

Estimated uninsured deposits totaled approximately $430.3 million as of June 30, 2026, or 23.1% of total deposits, compared to $397.0 million, or 20.8% of total deposits, as of December 31, 2025. Uninsured deposit amounts are based on estimates as of the reported dates.

The following table presents a summary of average deposits and the weighted average rate paid for the periods stated. The decline in average balances for noninterest-bearing demand accounts reflects the exit of fintech-related deposits.

The following table presents maturities of time deposits for certificates of deposits of $250 thousand or greater as of the dates stated.

The Company's brokered deposits were issued in denominations of $1 thousand each under master certificates, and therefore are excluded from the table above.

Borrowings. The Company uses short-term and long-term borrowings primarily from the FHLB and FRB, to fund assets and operations. The following table presents information regarding the balances of borrowings as of June 30,

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2026 and December 31, 2025, and the average balances for the six months ended June 30, 2026 and year ended December 31, 2025. The weighted average rate was 3.84% and 3.87% for the same periods, respectively.

As of June 30, 2026, FHLB advances were secured by collateral consisting of a blanket lien on qualifying pledged loans in the Company’s residential, multifamily, and commercial real estate mortgage loan portfolios with a lendable value of $366.3 million, as well as selected pledged investment securities with a lendable value of $155.6 million. The FRB Discount Window borrowing facility was secured by qualifying pledged construction and commercial and industrial loans with a lendable value totaling $45.3 million as of June 30, 2026.

The Company had $14.7 million of subordinated notes, net, outstanding as of both June 30, 2026 and December 31, 2025. Prior to June 1, 2025, the Company's subordinated notes had been comprised of a $15 million issuance in May 2020 maturing June 1, 2030 (the “2030 Note”) and a $25 million issuance in October 2019 maturing October 15, 2029 (the “2029 Notes”).

On June 1, 2025, the Company completed the $15.0 million redemption of the 2030 Note. The interest rate on the 2030 Note was 6.0% up to the redemption date. Interest expense on the 2030 Note was $0.2 million and $0.4 million for the three and six months ended June 30, 2025, respectively, prior to the redemption date.

On July 15, 2025, the Company completed a $10.0 million partial redemption of the 2029 Notes. As of June 30, 2026, the interest rate on the 2029 Notes, which resets quarterly, was 8.01%. As of June 30, 2026, the net carrying amount of the 2029 Notes was $14.7 million, inclusive of a $0.2 million purchase accounting adjustment. For the three months ended June 30, 2026 and 2025, the effective interest rate on the 2029 Notes was 7.43% and 7.48%, respectively, inclusive of the amortization of the purchase accounting adjustment (premium). For the six months ended June 30, 2026 and 2025, the effective interest rate on the 2029 Notes was 7.68% and 7.44%, respectively, inclusive of the amortization of the purchase accounting adjustment (premium).

Subsequent to June 30, 2026, on July 15, 2026, the Company redeemed the remainder of the 2029 Notes totaling $14.7 million, inclusive of a $0.2 million purchase accounting adjustment (premium), plus accrued and unpaid interest totaling $0.3 million. Upon the completion of this redemption, the Company had no outstanding subordinated notes.

Liquidity. Liquidity is essential to the Company’s business. The Company’s liquidity could be impaired by unforeseen outflows of cash, including deposits, or the inability to access the capital and/or brokered funding markets. This situation may arise due to circumstances that the Company may be unable to control, such as general market disruption, negative views about the Company or the financial services industry generally, or an operational problem that affects the Company or a third party. The Company’s ability to borrow from other financial institutions on favorable terms or at all could be adversely affected by disruptions in the markets in which they operate or other events.

Deposits are the primary source of the Company’s liquidity. Cash flows from amortizing or maturing assets also provide funding to meet the liquidity needs of the Company. Deposits are sourced from the Bank’s customers and, as needed, through brokered deposit markets. The brokered deposit markets are accessed through brokers or through the IntraFi Network (“IntraFi”), of which the Bank is a member. IntraFi facilitates the Bank attaining brokered deposits via an on-line marketplace. The Bank also utilizes IntraFi's reciprocal deposit services to offer its high-value customers access to FDIC insurance through IntraFi's network of banks.

The Company has established a formal liquidity contingency plan that provides guidelines for liquidity management. Pursuant to the Company’s liquidity contingency plan, liquidity needs are forecasted based on anticipated changes in the balance sheet. In this forecast, the Company expects to maintain a liquidity cushion. Management then stress tests the Company’s liquidity position under several different stress scenarios, from moderate to severe. Guidelines for the forecasted liquidity cushion and for liquidity cushions for each stress scenario have been established and are reviewed by the ALCO. Management also monitors the Company’s liquidity position on a day-to-day basis through daily cash monitoring and short- and long-term cash flow forecasting and believes its sources of liquidity are adequate to conduct the business of the Company.

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The following table presents information on the Company's available sources of liquidity as of the date stated.

Estimated uninsured deposits at June 30, 2026 were approximately $430.3 million. In the unlikely event that uninsured deposit balances leave the Bank over a short period of time, management could satisfy the demand with its available liquidity.

Capital. Capital adequacy is an important measure of financial stability and performance. The Company’s objectives are to maintain a level of capitalization that is sufficient to support the Company's strategic objectives.

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.

Banks must hold a capital conservation buffer of 2.50% above the adequately capitalized risk-based capital ratios 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. Additionally, regulators may place certain restrictions on dividends paid by banks.

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 adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required.

The Company adopted Accounting Standards Codification 326, Financial Instruments - Credit Losses (referred to herein as "current expected credit losses" or "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 (the "CECL Transitional Amount") over a three-year period. The three-year phase-in of the CECL Transitional Amount to regulatory capital was 25%, 50%, and 25% in 2023, 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 and was fully phased in during the first quarter of 2026 as a reduction to the regulatory capital amounts and ratios. The

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full $8.1 million reduction is reflected as of June 30, 2026, compared to a $6.1 million reduction as of December 31, 2025.

The following tables present the capital ratios to which banks are subject to be adequately and well capitalized, as well as the capital and capital ratios for the Bank as of the dates stated. Adequately capitalized ratios include the conservation buffer, if applicable.

The decline in the Bank's capital amounts and capital ratios from December 31, 2025 was primarily attributable to the special cash dividend declared on March 30, 2026.

Commitments and Contingencies

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract and involve the same credit risk and evaluation as making a loan to a customer. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s credit worthiness, in a manner similar to that if underwriting a loan. As of June 30, 2026 and December 31, 2025, the Company had outstanding loan commitments of $285.5 million and $247.2 million, respectively. Of these amounts, $35.7 million and $35.2 million were unconditionally cancelable at the sole discretion of the Company as of the same respective dates.

Conditional commitments are issued by the Company in the form of financial stand-by letters of credit, which guarantee payment to the underlying beneficiary (i.e., third party) if the customer fails to meet its designated financial obligation. As of June 30, 2026 and December 31, 2025, commitments under outstanding financial stand-by letters of credit totaled $9.7 million and $6.3 million, respectively. The credit risk of issuing stand-by letters of credit can be greater than the risk involved in extending loans to customers.

For the three and six months ended June 30, 2026, the Company recorded a $0.6 million provision for credit losses for unfunded commitments due to an increase in committed but unfunded lines of credit to commercial construction borrowers. The reserve for unfunded commitments, which is included in other liabilities on the consolidated balance sheets, was $1.4 million and $0.8 million as of June 30, 2026 and December 31, 2025, respectively.

The Company has investments in various partnerships and limited liability companies. Pursuant to these investments, the Company commits to an investment amount that may be fulfilled in future periods. At June 30, 2026

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and December 31, 2025, the Company had future commitments outstanding totaling $4.6 million and $4.9 million, respectively, related to these investments.

Interest Rate Risk Management

As a financial institution, the Company is exposed to various business risks, including interest rate risk. Interest rate risk is the risk to earnings and value arising from volatility in market interest rates. Interest rate risk arises from timing differences in the repricing and cash flows of interest-earning assets and interest-bearing liabilities, changes in the expected cash flows of assets and liabilities arising from embedded options, such as borrowers' ability to prepay loans and depositors' ability to redeem certificates of deposit before maturity, changes in the shape of the yield curve where interest rates increase or decrease in a nonparallel fashion, and changes in spread relationships between different yield curves, such as U.S. Treasuries and other market-based index rates. The Company’s goal is to maximize net interest income without incurring excessive interest rate risk. Management of net interest income and interest rate risk must be consistent with the level of capital and liquidity that the Bank maintains. The Company manages interest rate risk through the ALCO comprised of members of management, with oversight by a committee of its board of directors. The ALCO is responsible for monitoring the Company’s interest rate risk in conjunction with liquidity and capital management, pursuant to policy guidelines approved by the board of directors.

The Company employs an independent firm to model its interest rate sensitivity that uses a net interest income simulation model as its primary tool to measure interest rate sensitivity. Assumptions for modeling are developed based on expected activity in the balance sheet. For maturing assets, assumptions are created for the redeployment of these assets. For maturing liabilities, assumptions are developed for the replacement of these funding sources. Assumptions are also developed for assets and liabilities that could reprice during the modeled time period. These assumptions also cover how management expects rates to change on non-maturity deposits, such as demand, money market, and savings accounts, as well as certificates of deposit. Based on inputs that include the current balance sheet, the current level of interest rates, and the developed assumptions, the model produces an expected level of net interest income assuming that market rates remain unchanged. This is considered the base case. The model then simulates what net interest income would be based on specific changes in interest rates. The rate simulations are performed for a two-year period and include rapid rate changes of down 100 basis points to 400 basis points and up 100 basis points to 400 basis points. The results of these simulations are then compared to the base case.

The following table presents the estimated change in net interest income under various rate change scenarios as of the date presented. The scenarios assume rate changes occur instantaneously and in a parallel manner, which means the changes are the same on all points of the rate curve. Estimated changes set forth below are dependent on material assumptions, such as those previously discussed.

Stress testing the balance sheet and net interest income using instantaneous parallel rate shock movements in the yield curve is a regulatory and banking industry practice. However, these stress tests may not represent a realistic forecast of future interest rate movements in the yield curve. In addition, instantaneous parallel rate shock modeling is not a predictor of actual future performance of earnings. It is a financial metric used to manage interest rate risk and track the movement of the Company’s interest rate risk position over a historical time frame for comparison purposes.

The Company's AFS securities portfolio is reported at fair value, with the unrealized gain or loss representing the difference in amortized cost and fair value reported net of tax as a component of shareholders' equity. Changes in

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market interest rates affect the valuation of the securities portfolio, as market interest rates at reporting dates may differ than those interest rates in effect when the securities were purchased. The Company does not intend to sell, nor does it believe it will be required to sell the AFS securities; therefore, any unrealized gains or losses in the Company's AFS securities portfolio are deemed temporary. Any unrealized gains or losses for individual securities will diminish as the securities reach maturity.

The asset and liability repricing characteristics of the Company’s assets and liabilities will have a significant impact on its future interest rate risk profile.