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

## BLUE RIDGE BANKSHARES, INC. 

## Note 1. Nature of Operations and Significant Accounting Policies (Continued): 

## Bank Owned Life Insurance: 

The Bank owns and is the beneficiary of several single premium life insurance contracts insuring key employees of the Bank. The policies are stated at cash surrender value, with changes in value recorded in income for the year. 

## Advertising Costs: 

Advertising costs are expensed as incurred. 

## Bank Premises and Equipment: 

Bank premises and equipment are stated at cost, less any accumulated depreciation. Depreciation is recognized over the estimated usefiil lives ofthe assets on a straight-line basis. Maintenance and repairs are charged to operations as incurred. Gains and losses on dispositions are reflected in noninterest income or expense. 

## Income Taxes: 

Amounts provided for income tax expense are based on income reported for financial statement purposes rather than amounts currently payable imder income tax laws. Deferred taxes, which arise principally from temporary differences between the period in which certain income and expenses are recognized for financial accounting purposes and the period in which they affect taxable income, are included in the amounts provided for income taxes. 

## Eamings Per Share: 

Eamings per share are based on the weighted average number of shares outstanding. 

## Financial Instmments: 

In the ordinary course of business the Bank has entered into commitments to extend credit. Such fmancial instmments are recorded in the financial statements when they are fiinded. 

## Reclassified Amounts: 

Certain amounts have been reclassified from prior year financial statements to ensure consistent presentation with current year amounts. These reclassifications are for presentation purposes, and have no impact on overall financial information. 

## Subsequent Events: 

Subsequent events have been evaluated through March 18, 2013, the date the financial statements were available to be issued. 

## Note 2. Cash and Due From Banks 

The Bank has compensating balance agreements with its correspondent bank and The Federal Reserve Bank of Richmond. The total included in cash and due from banks related to these agreements at December 31,2012 and 2011 was $275,000. 

