content_image/181584.jpg
## Note 10. Other Real Estate Owned (Foreclosed Assets) 

## NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS December 31,2012 

## BLUE RIDGE BANKSHARES, INC. 

The Bank had the following amounts in Other Real Estate Owned at December 31,2012 and 2011: 

<img src='content_image/181584.jpg'>

The estimated realizable value is the net amount Bank management expects to realize from the sale of the foreclosed upon real estate. The net realizable amount takes into account realtor commissions and other anticipated costs associated with the disposition of real estate. All properties currently held in Other Real Estate Owned were obtained during 2012 and 2011. Adjustments to reduce the loan balance to net realizable value at the time the property was acquired were made to the Allowance for Loan Losses. Bank Management continues to monitor the properties for changes in value. Any decline in value would be charged to operations. 

Expenses associated with the maintenance and upkeep of Other Real Estate Owned are recorded as Other Real Estate Expense. The balance of Other Real Estate Owned is included with Other Assets on the Company’s Balance Sheet. 

## Note 11. Branch Acquisition 

The Bank acquired a branch in November 2011 in Albemarle County, VA from the Bank of Hampton Roads. The branch acquisition included the purchase of all deposit relationships, leasehold improvements, personal property and branch cash, select performing loans with no history of serious delinquency, and goodwill. Purchased deposit relationships totaled approximately $58,953,000 and included a Core Deposit Intangible premium of approximately $52,000, which is being amortized over its expected useful life and is included with Other Assets on the Balance Sheet. Short-term liabilities that re-price at least monthly were recorded at face value. Time deposits whose maturity was one month or longer were valued based on the discounted cash flows expected to be paid in future periods. This amount resulted in a liability that was approximately $555,000 greater than the face amounts ofthe deposits. The premium imbedded in the valuation of the time deposits will be amortized over the deposits expected life and the premium is expected to be fully amortized in approximately five years. The amortization will serve to reduce the contractual interest rates on these deposits to a rate consistent with market conditions when the deposits were assumed. 

The Bank purchased the branch in an effort to expand its geographic service area by targeting an atfractive market with the potential to provide continued balance sheet growth and new opportunities for the Bank. Bank management will evaluate at least annually the recorded value ofthe goodwill. In the event the asset suffers a decline in value based on criteria established in governing accounting standards, an impairment will be recorded. 

