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

## BLUE RIDGE BANKSHARES, EVC. 

## Note 4. Loans Receivable and Related Allowance for Loan Losses (Continued) 

"Pass" rated credits are segregated from "Criticized" credits for the application of qualitative factors. 

Management has identified a number of qualitative factors which it uses to supplement the historical charge-off factor because these factors are likely to cause estimated credit losses associated with the existing loan pools to differ from historical loss experience. The qualitative factors are evaluated quarterly and updated using information obtained from intemal, regulatory, and govemmental sources. The Bank’s qualitative factors consist of: national and local economic frends and conditions; levels of and frends in delinquency rates and non-accmal loans; levels of and frends in the Bank’s borrowers in bankmptcy; trends in volumes and terms of loans; effects of changes in lending policies and strategies; and concenfrations of credit from a loan type, industry and/or geographic standpoint. 

Management reviews the loan portfolio on a quarterly basis using a defined, consistently applied process in order to make appropriate and timely adjustments to the ALLL. When information confirms all or part of specific loans to be uncollectible, these amounts are promptly charged off against the ALLL. 

The following tables summarize the primary segments of the ALLL, segregated into the amount required for loans individually evaluated for impairment and the amount required for loans collectively evaluated for impairment as of December 31, 2012 and 2011. Activity in the allowance is presented forthe each of the twelve months ended December 31, 2012 and 2011 (in thousands): 

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