## Notel. Natureof Operations and Significant Accounting Policies: 

## Nature of Operations: 

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

## BLUE RIDGE BANKSHARES, INC. 

Blue Ridge Bankshares, Inc. ("Company") through Blue Ridge Bank, Inc. ("Bank") operates under a charter issued by the Commonwealth of Virginia and provides commercial banking services. As a state chartered bank, the Bank is subject to regulation by the Virginia Bureau of Financial Institutions and The Federal Reserve Bank of Richmond. The Bank provides services to customers located primarily in the Piedmont and Shenandoah Valley regions ofthe Commonwealth of Virginia. 

## Consolidation Policy: 

The consolidated financial statements include the accounts of Blue Ridge Bankshares, Inc. and its wholly-owned subsidiaries, Blue Ridge Bank, Inc., Page Valley Investments, LLC, and PVB Properties, LLC. All significant intercompany balances and transactions have been eliminated. 

## Use of Estimates in the Preparation of Financial Statements: 

In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts in those statements. Actual results could differ significantly fi-om those estimates. A material estimate that is particularly susceptible to significant changes is the determination of the allowance for loan losses, which is sensitive to changes in local and national economic conditions. 

## Cash and Cash Equivalents: 

Cash and cash equivalents include cash on hand and correspondent balances in other fmancial institutions. 

## Investment Securities: 

Management determines the appropriate classification of securities at the time of purchase. If management has the intent and the Company has the ability at the time of purchase to hold securities until maturity, they are classified as held to maturity and carried at amortized historical cost. Securities not intended to be held to maturity are classified as available for sale and carried at fair value. Securities available for sale are intended to be used as part of the Company’s asset and liability management strategy and may be sold in response to changes in interest rates, prepayment risk or other similar factors. 

Amortization of premiums and accretion of discounts on securities are reported as adjustments to interest income using the effective interest method. Realized gains and losses on dispositions are based on the net proceeds and the adjusted book value of the securities sold using the specific identification method. Unrealized gains and losses on investment securities available for sale are based on the difference between book value and fair value of each security. These gains and losses are credited or charged to shareholders’ equity, whereas realized gains and losses flow through the Company’s current eamings. 

## Loans: 

Loans that management has the intent and ability to hold for the foreseeable fiiture or until maturity or payoff are stated at their outstanding unpaid principal balances, net of an allowance for loan losses and any deferred fees or costs. Interest income is accrued on the unpaid principal balance. Loan origination fees and costs are deferred and recognized as an adjustment ofthe yield (interest income) ofthe related loans. The Company is generally amortizing these amounts over the contractual life of the loan that are carried on the balance sheet net of any uneamed discount and the allowance for loan losses. Interest income on loans is based generally on the daily amount of principal outstanding. 

