Blue Ridge Bankshares, Inc. Announces First Quarter 2022 Results
Blue Ridge Bankshares, Inc. Announces First Quarter 2022 Results
PR Newswire
CHARLOTTESVILLE, Va., April 28, 2022
CHARLOTTESVILLE, Va., April 28, 2022 /PRNewswire/ — Blue Ridge Bankshares, Inc. (the “Company”) (NYSE American: BRBS), the holding co…
Blue Ridge Bankshares, Inc. Announces First Quarter 2022 Results
PR Newswire
CHARLOTTESVILLE, Va., April 28, 2022
CHARLOTTESVILLE, Va., April 28, 2022 /PRNewswire/ -- Blue Ridge Bankshares, Inc. (the "Company") (NYSE American: BRBS), the holding company of Blue Ridge Bank, National Association ("Blue Ridge Bank") and BRB Financial Group, Inc. ("BRB Financial Group"), announced today financial results for the quarter ended March 31, 2022. For the first quarter of 2022, the Company reported net income from continuing operations of $17.4 million, or $0.93 earnings per diluted common share, compared to $12.8 million, or $0.68 earnings per diluted common share, for the fourth quarter of 2021, and $4.2 million, or $0.28 earnings per diluted common share, for the first quarter of 2021. Earnings per diluted common share for all periods presented is reflective of the 3-for-2 stock split effective April 30, 2021. Net income for all periods presented also reflected merger-related expenses, as further discussed below.
The Company reported total assets of $2.72 billion as of March 31, 2022, an increase from $2.67 billion as of December 31, 2021, while reported loans held for investment, excluding Paycheck Protection Program ("PPP") loans, grew $66.2 million in the first quarter of 2022, an annualized growth rate of 14.9%. The Company's commercial and industrial loan portfolio grew $59.9 million in the first quarter of 2022, an annualized growth rate of 74.7%.
The Company sold its majority interest in MoneyWise Payroll Solutions, Inc. ("MoneyWise") to the holder of the minority interest in MoneyWise in the first quarter of 2022. Asset and liability balances and income statement amounts related to MoneyWise are reported as discontinued operations for all periods presented.
The Company completed the merger of Bay Banks of Virginia, Inc. ("Bay Banks"), the holding company of Virginia Commonwealth Bank, into the Company on January 31, 2021. Immediately following the completion of the merger, Virginia Commonwealth Bank was merged into Blue Ridge Bank (collectively, the "Bay Banks Merger"). Earnings for the first quarter of 2021 included the earnings of Bay Banks from the effective date of the merger.
"The Company experienced robust loan demand to start the year", said Brian K. Plum, President and Chief Executive Officer of the Company. "We are seeing strong, sustained loan demand in our markets. Our team is doing outstanding work building on forward momentum across our geographies and business lines to capitalize on the meaningful opportunities which exist."
Fintech Business
The Company continues to grow its infrastructure to support the expansion of its fintech partners. The Company ended the first quarter of 2022 with active partnerships including Unit, Flexible Finance, Increase, Upgrade, Kashable, Jaris, Aeldra, Grow Credit, MentorWorks, and Marlette. Several of the Company's fintech partners are experiencing rapid adoption of their offerings, and consequently, the Company has benefited by significant deposit growth. Deposits related to fintech relationships were approximately $329 million as of March 31, 2022, up from approximately $189 million as of December 31, 2021. Loans held for sale and loans held for investment related to fintech relationships totaled $21.5 million and $24.1 million as of March 31, 2022 and December 31, 2021, respectively. Interest and fee income related to fintech partnerships represented approximately $1.3 million of revenue for the Company for both the first quarter of 2022 and fourth quarter of 2021. The Company's fintech relationships also generated assets under management of $48.4 million in BRB Financial Group's Trust Division as of March 31, 2022, compared to $0 at December 31, 2021.
Mortgage Division
The Company's mortgage division, which consists of a retail division operating as Monarch Mortgage and a wholesale division operating as LenderSelect Mortgage Group, reported net income of $2.3 million and $15 thousand for the first quarter of 2022 and fourth quarter of 2021, respectively. Income attributable to mortgage servicing rights was $6.7 million for the first quarter of 2022, an increase of $5.2 million compared to the fourth quarter of 2021. Mortgage servicing rights income in the first quarter of 2022 was attributable to fair value adjustments of $3.8 million and new servicing rights retained of $2.9 million. The increase in income attributable to mortgage servicing rights was partially offset by lower income from other residential mortgage banking activities, as quarterly mortgage volumes declined to $151.4 million for the first quarter of 2022 compared to $234.5 million for the fourth quarter of 2021. The decline in mortgage volumes in the first quarter of 2022 was primarily attributable to a decline in demand for mortgages as market interest rates increased significantly in the same period. Noninterest expenses reported for the Company's mortgage division were $6.9 million and $7.2 million for first quarter of 2022 and fourth quarter of 2021, respectively. The Company reduced mortgage personnel in both the fourth quarter of 2021 and the first quarter of 2022, resulting in total annualized noninterest expense savings of $1.5 million, the full benefit of which will be realized starting in the second quarter of 2022.
Income Statement
Net Interest Income
Net interest income was $23.7 million for the first quarter of 2022 compared to $20.9 million for the fourth quarter of 2021 and $20.0 million for the first quarter of 2021, while accretion of acquired loan discounts included in interest income was $2.7 million, $765 thousand, and $271 thousand for the same respective periods. Amortization of purchase accounting adjustments on assumed time deposits and borrowings, which reduced interest expense, was $502 thousand, $709 thousand, and $725 thousand in the same respective periods.
Included in interest income for the first quarter of 2022 and fourth and first quarters of 2021 were $393 thousand, $458 thousand, and $2.5 million, respectively, of PPP loan interest income and fees, net of costs. PPP loans were partially funded through the PPP Liquidity Facility ("PPPLF"), offered by the Federal Reserve Banks to fund PPP loans, and interest expense incurred for the PPPLF was $14 thousand, $46 thousand, and $304 thousand for the first quarter of 2022 and the fourth and first quarters of 2021, respectively.
Net interest margin for the first quarter of 2022 was 3.88% compared to 3.39% and 3.43% for the fourth and first quarters of 2021, respectively. Accretion and amortization of purchase accounting adjustments had a 53, 24, and 17 basis point positive effect on net interest margin for the same respective periods. In addition to the positive effect of these purchase accounting adjustments, net interest income and margin was positively affected by higher average balances of loans held for investment and higher rates on these loans, as well as lower funding costs, which declined to 0.36% for the first quarter of 2022 from 0.42% and 0.45% for the fourth and first quarters of 2021, respectively.
Provision for Loan Losses
The Company recorded a provision for loan losses of $2.5 million in the first quarter of 2022 compared to $117 thousand for the fourth quarter of 2021 and no provision in the first quarter of 2021. The increase in provision for loan losses in the first quarter of 2022 was primarily due to additional reserves for loan growth and higher specific reserves for three relationships.
Noninterest Income
Noninterest income for the first quarter of 2022 was $24.1 million compared to $21.9 million and $15.5 million for the fourth and first quarters of 2021, respectively. Mortgage banking income, including mortgage servicing rights, contributed $9.6 million, $5.9 million, and $12.7 million of noninterest income in the first quarter of 2022 and the fourth and first quarters of 2021, respectively. Included in noninterest income in the fourth quarter of 2021 was a $6.2 million gain on the termination of interest rate swaps that hedged interest rates on certain FHLB advances. Noninterest income in the first quarter of 2022 and the fourth quarter of 2021 included $9.4 million and $5.7 million, respectively, of fair value adjustments for the Company's equity investments, primarily in certain fintech companies.
Noninterest Expense
Noninterest expense for the first quarter of 2022 was $22.7 million compared to $25.1 million and $30.2 million for the fourth and first quarters of 2021, respectively. Salaries and employee benefit expenses decreased $1.3 million in the first quarter of 2022 from the fourth quarter of 2021, primarily due to higher health insurance, incentives, and discretionary benefit plan contribution expenses in the fourth quarter of 2021. Lower salaries and employee benefit expenses attributable to the mortgage division in the first quarter of 2022 compared to the fourth quarter of 2021 were partially offset by the addition of personnel to support the growing fintech business and commercial lenders. Merger-related expenses for the first quarter of 2022 and the fourth quarter of 2021 were $50 thousand and $171 thousand, respectively, attributable to the now-terminated FVCBankcorp, Inc. merger, while merger-related expenses of $9.0 million in the first quarter of 2021 were attributable to the Bay Banks Merger.
Balance Sheet
Loans held for investment, excluding PPP loans, increased $66.2 million to $1.84 billion at March 31, 2022 from $1.78 billion at December 31, 2021, an annualized growth rate of 14.9%. Most of this increase was attributable to net growth in commercial and industrial loans and commercial mortgages of $59.9 million and $46.7 million, respectively, partially offset by declines in commercial construction and consumer loans of $22.0 million and $12.5 million, respectively. Loans held for sale, which comprise primarily of residential mortgages, decreased $80.9 million to $41.0 million at March 31, 2022 from $121.9 million at December 31, 2021. This decline was primarily attributable to sales of mortgages into the secondary market in the first quarter of 2022 that exceeded mortgage originations due to the reasons noted previously.
Total deposits at March 31, 2022 were $2.35 billion, an increase of $56.3 million from December 31, 2021. Noninterest-bearing demand deposits grew $60.4 million primarily due to the Company's fintech partnerships, as noted previously.
The Company changed its accounting method for mortgage servicing rights from the amortization method to the fair value measurement method beginning in the first quarter of 2022. The after-tax difference in carrying values of its mortgage servicing rights assets under the two methods at the beginning of the quarter resulted in a positive cumulative effect adjustment to shareholders' equity of $3.5 million.
Asset Quality
Nonperforming loans, which include nonaccrual loans and loans 90 days or more past due and accruing interest1, totaled $14.4 million at March 31, 2022 and $16.1 million at December 31, 2021. The ratio of nonperforming loans to total assets was 0.53% and 0.60% at March 31, 2022 and December 31, 2021, respectively. The Company's allowance for loan losses was $12.0 million at March 31, 2022, or 0.65% as a percentage of gross loans held for investment, excluding PPP loans2, compared to 0.68% at December 31, 2021 and 0.79% at March 31, 2021. The decline in this ratio from December 31, 2021 to March 31, 2022 was primarily attributable to a partial charge-off of a nonaccrual commercial loan related to one relationship, partially offset by reserve needs for loan growth in the first quarter of 2022. Remaining acquired loan discounts related to loans acquired in the Company's completed mergers were $13.5 million as of March 31, 2022 and $16.2 million as of December 31, 2021.
1 Excludes purchased credit-impaired loans.
2 The Company holds no allowance for loan losses on PPP loans as they are fully guaranteed by the U.S. government.
Capital
The Company previously announced that on April 6, 2022 its board of directors declared a $0.1225 per common share quarterly dividend, payable April 29, 2022 to shareholders of record as of April 18, 2022. Tangible book value per share, a non-GAAP (defined below) measure, was $13.09 and $13.01 as of March 31, 2022 and December 31, 2021, respectively.
Primarily as a result of an increase in market interest rates in the first quarter of 2022, the market value of the Company's portfolio of securities available for sale declined approximately $22.6 million, which resulted in a corresponding after-tax decline in stockholders' equity of $17.9 million for the three months ended March 31, 2022. The accumulated other comprehensive loss ("AOCL") attributable to this securities portfolio as of March 31, 2022 was $21.5 million, or $1.14 per book value per share, compared to a $3.6 million AOCL, or $0.19 per book value per share, as of December 31, 2021.
Non-GAAP Financial Measures
The accounting and reporting policies of the Company conform to U.S. generally accepted accounting principles ("GAAP") and prevailing practices in the banking industry. However, management uses certain non-GAAP measures to supplement the evaluation of the Company's performance. Management believes presentations of these non-GAAP financial measures provide useful supplemental information that is essential to a proper understanding of the operating results of the Company's core businesses. These non-GAAP disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Reconciliations of GAAP to non-GAAP measures are included at the end of this release.
Forward-Looking Statements
This release of the Company contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent plans, estimates, objectives, goals, guidelines, expectations, intentions, projections, and statements of the Company's beliefs concerning future events, business plans, objectives, expected operating results and the assumptions upon which those statements are based. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate, or imply future results, performance or achievements, and are typically identified with words such as "may," "could," "should," "will," "would," "believe," "anticipate," "estimate," "expect," "aim," "intend," "plan," or words or phases of similar meaning. The Company cautions that the forward-looking statements are based largely on its expectations and are subject to a number of known and unknown risks and uncertainties that are subject to change based on factors which are, in many instances, beyond the Company's control. Actual results, performance or achievements could differ materially from those contemplated, expressed or implied by the forward-looking statements.
The following factors, among others, could cause the Company's financial performance to differ materially from that expressed in such forward-looking statements: (i) the strength of the United States economy in general and the strength of the local economies in which the Company conducts operations; (ii) geopolitical conditions, including acts or threats of terrorism and/or military conflicts, or actions taken by the United States or other governments in response to acts or threats of terrorism and/or military conflicts, which could impact business and economic conditions in the United States and abroad; (iii) the effects of the COVID-19 pandemic, including the adverse impact on the Company's business and operations and on the Company's customers which may result, among other things, in increased delinquencies, defaults, foreclosures and losses on loans; (iv) the occurrence of significant natural disasters, including severe weather conditions, floods, health related issues, and other catastrophic events; (v) the Company's management of risks inherent in its real estate loan portfolio, and the risk of a prolonged downturn in the real estate market, which could impair the value of the Company's collateral and its ability to sell collateral upon any foreclosure; (vi) changes in consumer spending and savings habits; (vii) technological and social media changes; (viii) the effects of, and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System, inflation, interest rate, market and monetary fluctuations; (ix) changing bank regulatory conditions, policies or programs, whether arising as new legislation or regulatory initiatives, that could lead to restrictions on activities of banks generally, or the Company's subsidiary bank in particular, more restrictive regulatory capital requirements, increased costs, including deposit insurance premiums, regulation or prohibition of certain income producing activities or changes in the secondary market for loans and other products; (x) the impact of changes in financial services policies, laws and regulations, including laws, regulations and policies concerning taxes, banking, securities and insurance, and the application thereof by regulatory bodies; (xi) the impact of changes in laws, regulations and policies affecting the real estate industry; (xii) the effect of changes in accounting policies and practices, as may be adopted from time to time by bank regulatory agencies, the Securities and Exchange Commission (the "SEC"), the Public Company Accounting Oversight Board, the Financial Accounting Standards Board or other accounting standards setting bodies; (xiii) the timely development of competitive new products and services and the acceptance of these products and services by new and existing customers; (xiv) the willingness of users to substitute competitors' products and services for the Company's products and services; (xv) the outcome of any legal proceedings that may be instituted against the Company; (xvi) reputational risk and potential adverse reactions of the Company's customers, suppliers, employees or other business partners; (xvii) the effects of acquisitions the Company may make, including, without limitation, the failure to achieve the expected revenue growth and/or expense savings from such transactions; (xiii) changes in the level of the Company's nonperforming assets and charge-offs; (xix) the Company's involvement, from time to time, in legal proceedings and examination and remedial actions by regulators; (xx) potential exposure to fraud, negligence, computer theft and cyber-crime; (xxi) the Company's ability to pay dividends; (xxii) the Company's involvement as a participating lender in the PPP as administered through the U.S. Small Business Administration; and (xiii) other risks and factors identified in the "Risk Factors" sections and elsewhere in documents the Company files from time to time with the SEC.
Blue Ridge Bankshares, Inc. | ||||||
Consolidated Statements of Operations (unaudited) | ||||||
For the Three Months Ended | ||||||
(Dollars in thousands except per share data) | March 31, 2022 | December 31, 2021 | March 31, 2021 | |||
Interest income: | ||||||
Interest and fees on loans | $ 23,899 | $ 21,685 | $ 21,363 | |||
Interest on taxable securities | 1,770 | 1,612 | 1,130 | |||
Interest on nontaxable securities | 75 | 62 | 52 | |||
Interest on deposit accounts and federal funds sold | 58 | 45 | 31 | |||
Total interest income | 25,802 | 23,404 | 22,576 | |||
Interest expense: | ||||||
Interest on deposits | 1,556 | 1,593 | 1,540 | |||
Interest on subordinated notes | 553 | 485 | 630 | |||
Interest on FHLB and FRB borrowings | 25 | 448 | 389 | |||
Total interest expense | 2,134 | 2,526 | 2,559 | |||
Net interest income | 23,668 | 20,878 | 20,017 | |||
Provision for loan losses | 2,500 | 117 | — | |||
Net interest income after provision for loan losses | 21,168 | 20,761 | 20,017 | |||
Noninterest income: | ||||||
Fair value adjustments of other equity investments | 9,364 | 5,686 | — | |||
Mortgage servicing rights | 6,738 | 1,493 | 3,371 | |||
Residential mortgage banking income, net | 2,821 | 4,365 | 9,301 | |||
Gain on sale of government guaranteed loans | 1,427 | 680 | 1,074 | |||
Bank and purchase card, net | 422 | 709 | 300 | |||
Wealth and trust management | 391 | 439 | 602 | |||
Service charges on deposit accounts | 315 | 391 | 327 | |||
Increase in cash surrender value of bank owned life insurance | 272 | 253 | 164 | |||
Gain on termination of interest rate swaps | — | 6,221 | — | |||
Other | 2,344 | 1,705 | 400 | |||
Total noninterest income | 24,094 | 21,942 | 15,539 | |||
Noninterest expense: | ||||||
Salaries and employee benefits | 14,096 | 15,362 | 13,903 | |||
Occupancy and equipment | 1,485 | 1,520 | 1,331 | |||
Data processing | 946 | 1,107 | 805 | |||
Legal, issuer, and regulatory filing | 382 | 299 | 576 | |||
Advertising and marketing | 428 | 405 | 279 | |||
Communications | 799 | 1,011 | 367 | |||
Audit and accounting fees | 141 | 227 | 189 | |||
FDIC insurance | 231 | 175 | 343 | |||
Intangible amortization | 397 | 412 | 351 | |||
Other contractual services | 534 | 631 | 853 | |||
Other taxes and assessments | 570 | 638 | 347 | |||
Merger-related | 50 | 171 | 9,019 | |||
Other | 2,630 | 3,185 | 1,872 | |||
Total noninterest expense | 22,689 | 25,143 | 30,235 | |||
Income from continuing operations before income tax | 22,573 | 17,560 | 5,321 | |||
Income tax expense | 5,153 | 4,733 | 1,078 | |||
Net income from continuing operations | 17,420 | 12,827 | 4,243 | |||
Discontinued operations: | ||||||
Income (loss) from discontinued operations before income taxes (including gain on | 426 | (41) | (7) | |||
Income tax expense (benefit) | 89 | (9) | (1) | |||
Net income (loss) from discontinued operations | 337 | (32) | (6) | |||
Net income | $ 17,757 | $ 12,795 | $ 4,237 | |||
Net income from discontinued operations attributable to noncontrolling interest | (1) | (2) | (9) | |||
Net income attributable to Blue Ridge Bankshares, Inc. | $ 17,756 | $ 12,793 | $ 4,228 | |||
Net income available to common stockholders | $ 17,756 | $ 12,793 | $ 4,228 | |||
Basic and diluted EPS from continuing operations (1) | $ 0.93 | $ 0.68 | $ 0.28 | |||
Basic and diluted EPS from discontinued operations (1) | 0.02 | — | — | |||
Basic and diluted EPS attributable to Blue Ridge Bankshares, Inc. (1) | $ 0.95 | $ 0.68 | $ 0.28 | |||
(1) Earnings per common share ("EPS") has been adjusted for all periods presented to reflect the 3-for-2 stock split that was effective April 30, 2021. | ||||||
Blue Ridge Bankshares, Inc. | ||||
Consolidated Balance Sheets | ||||
(Dollars in thousands except share data) | (unaudited) | December 31, 2021 (2) | ||
Assets | ||||
Cash and due from banks | $ 162,177 | $ 130,548 | ||
Federal funds sold | 74,294 | 43,903 | ||
Securities available for sale, at fair value | 375,484 | 373,532 | ||
Restricted equity investments | 8,385 | 8,334 | ||
Other equity investments | 23,943 | 14,184 | ||
Other investments | 16,010 | 12,681 | ||
Loans held for sale | 41,004 | 121,943 | ||
Paycheck Protection Program loans, net of deferred fees and costs | 22,853 | 30,406 | ||
Loans held for investment, net of deferred fees and costs | 1,843,344 | 1,777,172 | ||
Less allowance for loan losses | (12,013) | (12,121) | ||
Loans held for investment, net | 1,831,331 | 1,765,051 | ||
Accrued interest receivable | 9,505 | 9,573 | ||
Other real estate owned | 74 | 157 | ||
Premises and equipment, net | 24,668 | 26,624 | ||
Right-of-use asset | 6,766 | 6,317 | ||
Bank owned life insurance | 46,817 | 46,545 | ||
Goodwill | 26,826 | 26,826 | ||
Other intangible assets | 7,455 | 7,594 | ||
Mortgage derivative asset | 2,063 | 1,876 | ||
Mortgage servicing rights, net | 27,691 | 16,469 | ||
Mortgage brokerage receivable | 430 | 4,064 | ||
Other assets | 16,808 | 17,211 | ||
Assets of discontinued operations | — | 1,301 | ||
Total assets | $ 2,724,584 | $ 2,665,139 | ||
Liabilities and Stockholders' Equity | ||||
Deposits: | ||||
Noninterest-bearing demand | $ 766,506 | $ 706,088 | ||
Interest-bearing demand and money market deposits | 978,650 | 941,805 | ||
Savings | 152,105 | 150,376 | ||
Time deposits | 456,820 | 499,502 | ||
Total deposits | 2,354,081 | 2,297,771 | ||
FHLB borrowings | 10,108 | 10,111 | ||
FRB borrowings | 15,211 | 17,901 | ||
Subordinated notes, net | 39,970 | 39,986 | ||
Lease liability | 8,038 | 7,651 | ||
Other liabilities | 18,694 | 14,543 | ||
Liabilities of discontinued operations | — | 37 | ||
Total liabilities | 2,446,102 | 2,388,000 | ||
Commitments and contingencies | ||||
Stockholders' Equity: | ||||
Common stock, no par value; 25,000,000 shares authorized; 18,771,065 and | 194,679 | 194,309 | ||
Additional paid-in capital | 252 | 252 | ||
Retained earnings | 105,027 | 85,982 | ||
Accumulated other comprehensive loss | (21,476) | (3,632) | ||
Total Blue Ridge Bankshares, Inc. stockholders' equity | 278,482 | 276,911 | ||
Noncontrolling interest of discontinued operations | — | 228 | ||
Total stockholders' equity | 278,482 | 277,139 | ||
Total liabilities and stockholders' equity | $ 2,724,584 | $ 2,665,139 | ||
(1) Common stock as of the periods presented is reflective of the 3-for-2 stock split that was effective April 30, 2021. | ||||
(2) Derived from audited December 31, 2021 Consolidated Financial Statements. | ||||
Blue Ridge Bankshares, Inc. | |||||||||||
Quarter Summary of Selected Financial Data (unaudited) | |||||||||||
As of and for the Three Months Ended | |||||||||||
(Dollars and shares in thousands, except share data) | March 31, | December 31, | September 30, | June 30, | March 31, | ||||||
Income Statement Data: | 2022 | 2021 | 2021 | 2021 | 2021 | ||||||
Interest income | $ 25,802 | $ 23,404 | $ 23,754 | $ 33,812 | $ 22,576 | ||||||
Interest expense | 2,134 | 2,526 | 2,630 | 3,350 | 2,559 | ||||||
Net interest income | 23,668 | 20,878 | 21,124 | 30,462 | 20,017 | ||||||
Provision for loan losses | 2,500 | 117 | — | — | — | ||||||
Net interest income after provision for loan losses | 21,168 | 20,761 | 21,124 | 30,462 | 20,017 | ||||||
Noninterest income | 24,094 | 21,942 | 13,295 | 36,212 | 15,539 | ||||||
Noninterest expenses | 22,689 | 25,143 | 25,344 | 30,266 | 30,235 | ||||||
Income before income taxes | 22,573 | 17,560 | 9,075 | 36,408 | 5,321 | ||||||
Income tax expense | 5,153 | 4,733 | 2,214 | 7,711 | 1,078 | ||||||
Net income from continuing operations | 17,420 | 12,827 | 6,861 | 28,697 | 4,243 | ||||||
Net income (loss) from discontinued operations | 337 | (32) | (55) | (55) | (6) | ||||||
Net income | 17,757 | 12,795 | 6,806 | 28,642 | 4,237 | ||||||
Net (income) loss from discontinued operations attributable to | (1) | (2) | 4 | 4 | (9) | ||||||
Net income attributable to Blue Ridge Bankshares, Inc. | $ 17,756 | $ 12,793 | $ 6,810 | $ 28,646 | $ 4,228 | ||||||
Per Common Share Data: | |||||||||||
Basic and diluted EPS from continuing operations (1) | $ 0.93 | $ 0.68 | $ 0.36 | $ 1.54 | $ 0.28 | ||||||
Basic and diluted EPS from discontinued operations (1) | 0.02 | — | — | — | — | ||||||
Basic and diluted EPS attributable to Blue Ridge Bankshares, Inc. (1) | $ 0.95 | $ 0.68 | 0.36 | 1.54 | $ 0.28 | ||||||
Dividends declared - post-stock split basis | $ 0.1225 | $ — | $ 0.2400 | $ — | $ 0.1950 | ||||||
Book value per common share (1) | 14.84 | 14.76 | 14.48 | 14.32 | 12.88 | ||||||
Tangible book value per common share (1) - Non-GAAP | 13.09 | 13.01 | 12.69 | 12.49 | 11.02 | ||||||
Balance Sheet Data: | |||||||||||
Assets | $ 2,724,584 | $ 2,665,139 | $ 2,699,302 | $ 2,764,730 | $ 3,167,374 | ||||||
Loans held for investment (including PPP loans) | 1,866,197 | 1,807,578 | 1,771,531 | 1,832,847 | 2,289,374 | ||||||
Loans held for investment (excluding PPP loans) | 1,843,344 | 1,777,172 | 1,724,883 | 1,702,654 | 1,691,748 | ||||||
Allowance for loan losses | 12,013 | 12,121 | 12,614 | 13,007 | 13,402 | ||||||
Purchase accounting adjustments (discounts) on acquired loans | 13,514 | 16,203 | 16,985 | 16,987 | 18,691 | ||||||
Loans held for sale | 41,004 | 121,943 | 171,681 | 174,008 | 137,621 | ||||||
Securities available for sale, at fair value | 375,484 | 373,532 | 379,441 | 276,619 | 293,555 | ||||||
Deposits | 2,354,081 | 2,297,771 | 2,200,204 | 2,190,571 | 2,140,118 | ||||||
Subordinated notes, net | 39,970 | 39,986 | 40,503 | 46,149 | 54,588 | ||||||
FHLB and FRB advances | 25,319 | 28,012 | 158,972 | 222,502 | 692,789 | ||||||
Total stockholders' equity | 278,482 | 277,139 | 269,720 | 266,826 | 239,734 | ||||||
Weighted average common shares outstanding - basic (1) | 18,772 | 18,774 | 18,776 | 18,625 | 15,137 | ||||||
Weighted average common shares outstanding - diluted (1) | 18,789 | 18,795 | 18,799 | 18,646 | 15,154 | ||||||
Financial Ratios: | |||||||||||
Return on average assets (2) | 2.68% | 1.90% | 0.95% | 3.39% | 0.68% | ||||||
Operating return on average assets (2) - Non-GAAP | 2.68% | 1.92% | 1.16% | 3.50% | 1.84% | ||||||
Return on average equity (2) | 25.84% | 18.90% | 11.58% | 47.39% | 8.69% | ||||||
Operating return on average equity (2) - Non-GAAP | 25.89% | 19.10% | 11.87% | 49.01% | 23.29% | ||||||
Total loan to deposit ratio | 81.0% | 84.1% | 88.3% | 91.6% | 113.4% | ||||||
Held for investment loan to deposit ratio | 79.3% | 78.7% | 80.5% | 83.7% | 107.0% | ||||||
Net interest margin (2) | 3.88% | 3.39% | 3.32% | 3.82% | 3.43% | ||||||
Cost of deposits (2) | 0.27% | 0.29% | 0.29% | 0.29% | 0.36% | ||||||
Efficiency ratio | 47.5% | 59.1% | 74.0% | 45.7% | 85.2% | ||||||
Operating efficiency ratio - Non-GAAP | 47.4% | 58.7% | 69.8% | 43.8% | 60.0% | ||||||
Merger-related expenses (MRE) | 50 | 171 | 1,441 | 1,237 | 9,019 | ||||||
Capital and Asset Quality Ratios: | |||||||||||
Average stockholders' equity to average assets | 10.4% | 10.1% | 9.7% | 7.1% | 7.9% | ||||||
Allowance for loan losses to loans held for investment, excluding PPP loans | 0.65% | 0.68% | 0.73% | 0.76% | 0.79% | ||||||
Nonperforming loans to total assets | 0.53% | 0.60% | 0.56% | 0.43% | 0.17% | ||||||
Nonperforming assets to total assets | 0.53% | 0.61% | 0.57% | 0.45% | 0.19% | ||||||
Reconciliation of Non-GAAP Financial Measures (unaudited): | |||||||||||
Tangible Common Equity: | |||||||||||
Total stockholders' equity | $ 278,482 | $ 277,139 | $ 269,720 | $ 266,826 | $ 239,734 | ||||||
Less: Goodwill and other intangibles, net of deferred tax liability (3) | (32,716) | (32,942) | (33,224) | (34,153) | (34,556) | ||||||
Tangible common equity (Non-GAAP) | $ 245,766 | $ 244,197 | $ 236,496 | $ 232,673 | $ 205,178 | ||||||
Total shares outstanding (1) | 18,771 | 18,774 | 18,776 | 18,631 | 18,618 | ||||||
Book value per share | $ 14.84 | $ 14.76 | $ 14.48 | $ 14.32 | $ 12.88 | ||||||
Tangible book value per share (Non-GAAP) | 13.09 | 13.01 | 12.69 | 12.49 | 11.02 | ||||||
Tangible stockholders' equity to tangible total assets | |||||||||||
Total assets | $ 2,724,584 | $ 2,665,139 | $ 2,699,302 | $ 2,764,730 | $ 3,167,374 | ||||||
Less: Goodwill and other intangibles, net of deferred tax liability (3) | (32,716) | (32,942) | (33,224) | (34,153) | (34,556) | ||||||
Tangible total assets (Non-GAAP) | $ 2,691,868 | $ 2,632,197 | $ 2,666,078 | $ 2,730,577 | $ 3,132,818 | ||||||
Tangible common equity (Non-GAAP) | $ 245,766 | $ 244,197 | $ 236,496 | $ 232,673 | $ 205,178 | ||||||
Tangible stockholders' equity to tangible total assets (Non-GAAP) | 9.1% | 9.3% | 8.9% | 8.5% | 6.5% | ||||||
Operating return on average assets (annualized) | |||||||||||
Net income | $ 17,755 | $ 12,795 | $ 6,806 | $ 28,642 | $ 4,237 | ||||||
Add: MRE, after-tax basis (ATB) (4) | 40 | 135 | 1,138 | 977 | 7,125 | ||||||
Operating net income (Non-GAAP) | $ 17,795 | $ 12,930 | $ 7,944 | $ 29,619 | $ 11,362 | ||||||
Average assets | $ 2,653,987 | $ 2,687,204 | $ 2,749,909 | $ 3,383,015 | $ 2,475,912 | ||||||
Operating return on average assets (annualized) (Non-GAAP) | 2.68% | 1.92% | 1.16% | 3.50% | 1.84% | ||||||
Operating return on average equity (annualized) | |||||||||||
Net income | $ 17,755 | $ 12,795 | $ 6,806 | $ 28,642 | $ 4,237 | ||||||
Add: MRE, ATB (4) | 40 | 135 | 1,138 | 977 | 7,125 | ||||||
Operating net income (Non-GAAP) | $ 17,795 | $ 12,930 | $ 7,944 | $ 29,619 | $ 11,362 | ||||||
Average stockholders' equity | $ 274,887 | $ 270,730 | $ 267,670 | $ 241,731 | $ 195,103 | ||||||
Operating return on average equity (annualized) (Non-GAAP) | 25.89% | 19.10% | 11.87% | 49.01% | 23.29% | ||||||
Operating efficiency ratio | |||||||||||
Total noninterest expense | $ 22,691 | $ 25,445 | $ 25,637 | $ 30,548 | $ 30,512 | ||||||
Less: MRE | 50 | 171 | 1,441 | 1,237 | 9,019 | ||||||
Noninterest expense excluding MRE (Non-GAAP) | $ 22,641 | $ 25,274 | $ 24,196 | $ 29,311 | $ 21,493 | ||||||
Net interest income | 23,668 | 20,878 | 21,124 | 30,462 | 20,017 | ||||||
Noninterest income | 24,094 | 22,203 | 13,518 | 36,425 | 15,809 | ||||||
Total of net interest income and noninterest income | $ 47,762 | $ 43,081 | $ 34,642 | $ 66,887 | $ 35,826 | ||||||
Operating efficiency ratio (Non-GAAP) | 47.4% | 58.7% | 69.8% | 43.8% | 60.0% | ||||||
(1) Shares outstanding as of and for the periods stated are reflective of the 3-for-2 stock split that was effective April 30, 2021. | |||||||||||
(2) Annualized. | |||||||||||
(3) Excludes mortgage servicing rights. | |||||||||||
(4) Assumes an income tax rate of 21% and full deductibility. | |||||||||||
View original content to download multimedia:https://www.prnewswire.com/news-releases/blue-ridge-bankshares-inc-announces-first-quarter-2022-results-301535902.html
SOURCE Blue Ridge Bankshares, Inc.
Government
Four Years Ago This Week, Freedom Was Torched
Four Years Ago This Week, Freedom Was Torched
Authored by Jeffrey Tucker via The Brownstone Institute,
"Beware the Ides of March,” Shakespeare…
Authored by Jeffrey Tucker via The Brownstone Institute,
"Beware the Ides of March,” Shakespeare quotes the soothsayer’s warning Julius Caesar about what turned out to be an impending assassination on March 15. The death of American liberty happened around the same time four years ago, when the orders went out from all levels of government to close all indoor and outdoor venues where people gather.
It was not quite a law and it was never voted on by anyone. Seemingly out of nowhere, people who the public had largely ignored, the public health bureaucrats, all united to tell the executives in charge – mayors, governors, and the president – that the only way to deal with a respiratory virus was to scrap freedom and the Bill of Rights.
And they did, not only in the US but all over the world.
The forced closures in the US began on March 6 when the mayor of Austin, Texas, announced the shutdown of the technology and arts festival South by Southwest. Hundreds of thousands of contracts, of attendees and vendors, were instantly scrapped. The mayor said he was acting on the advice of his health experts and they in turn pointed to the CDC, which in turn pointed to the World Health Organization, which in turn pointed to member states and so on.
There was no record of Covid in Austin, Texas, that day but they were sure they were doing their part to stop the spread. It was the first deployment of the “Zero Covid” strategy that became, for a time, official US policy, just as in China.
It was never clear precisely who to blame or who would take responsibility, legal or otherwise.
This Friday evening press conference in Austin was just the beginning. By the next Thursday evening, the lockdown mania reached a full crescendo. Donald Trump went on nationwide television to announce that everything was under control but that he was stopping all travel in and out of US borders, from Europe, the UK, Australia, and New Zealand. American citizens would need to return by Monday or be stuck.
Americans abroad panicked while spending on tickets home and crowded into international airports with waits up to 8 hours standing shoulder to shoulder. It was the first clear sign: there would be no consistency in the deployment of these edicts.
There is no historical record of any American president ever issuing global travel restrictions like this without a declaration of war. Until then, and since the age of travel began, every American had taken it for granted that he could buy a ticket and board a plane. That was no longer possible. Very quickly it became even difficult to travel state to state, as most states eventually implemented a two-week quarantine rule.
The next day, Friday March 13, Broadway closed and New York City began to empty out as any residents who could went to summer homes or out of state.
On that day, the Trump administration declared the national emergency by invoking the Stafford Act which triggers new powers and resources to the Federal Emergency Management Administration.
In addition, the Department of Health and Human Services issued a classified document, only to be released to the public months later. The document initiated the lockdowns. It still does not exist on any government website.
The White House Coronavirus Response Task Force, led by the Vice President, will coordinate a whole-of-government approach, including governors, state and local officials, and members of Congress, to develop the best options for the safety, well-being, and health of the American people. HHS is the LFA [Lead Federal Agency] for coordinating the federal response to COVID-19.
Closures were guaranteed:
Recommend significantly limiting public gatherings and cancellation of almost all sporting events, performances, and public and private meetings that cannot be convened by phone. Consider school closures. Issue widespread ‘stay at home’ directives for public and private organizations, with nearly 100% telework for some, although critical public services and infrastructure may need to retain skeleton crews. Law enforcement could shift to focus more on crime prevention, as routine monitoring of storefronts could be important.
In this vision of turnkey totalitarian control of society, the vaccine was pre-approved: “Partner with pharmaceutical industry to produce anti-virals and vaccine.”
The National Security Council was put in charge of policy making. The CDC was just the marketing operation. That’s why it felt like martial law. Without using those words, that’s what was being declared. It even urged information management, with censorship strongly implied.
The timing here is fascinating. This document came out on a Friday. But according to every autobiographical account – from Mike Pence and Scott Gottlieb to Deborah Birx and Jared Kushner – the gathered team did not meet with Trump himself until the weekend of the 14th and 15th, Saturday and Sunday.
According to their account, this was his first real encounter with the urge that he lock down the whole country. He reluctantly agreed to 15 days to flatten the curve. He announced this on Monday the 16th with the famous line: “All public and private venues where people gather should be closed.”
This makes no sense. The decision had already been made and all enabling documents were already in circulation.
There are only two possibilities.
One: the Department of Homeland Security issued this March 13 HHS document without Trump’s knowledge or authority. That seems unlikely.
Two: Kushner, Birx, Pence, and Gottlieb are lying. They decided on a story and they are sticking to it.
Trump himself has never explained the timeline or precisely when he decided to greenlight the lockdowns. To this day, he avoids the issue beyond his constant claim that he doesn’t get enough credit for his handling of the pandemic.
With Nixon, the famous question was always what did he know and when did he know it? When it comes to Trump and insofar as concerns Covid lockdowns – unlike the fake allegations of collusion with Russia – we have no investigations. To this day, no one in the corporate media seems even slightly interested in why, how, or when human rights got abolished by bureaucratic edict.
As part of the lockdowns, the Cybersecurity and Infrastructure Security Agency, which was and is part of the Department of Homeland Security, as set up in 2018, broke the entire American labor force into essential and nonessential.
They also set up and enforced censorship protocols, which is why it seemed like so few objected. In addition, CISA was tasked with overseeing mail-in ballots.
Only 8 days into the 15, Trump announced that he wanted to open the country by Easter, which was on April 12. His announcement on March 24 was treated as outrageous and irresponsible by the national press but keep in mind: Easter would already take us beyond the initial two-week lockdown. What seemed to be an opening was an extension of closing.
This announcement by Trump encouraged Birx and Fauci to ask for an additional 30 days of lockdown, which Trump granted. Even on April 23, Trump told Georgia and Florida, which had made noises about reopening, that “It’s too soon.” He publicly fought with the governor of Georgia, who was first to open his state.
Before the 15 days was over, Congress passed and the president signed the 880-page CARES Act, which authorized the distribution of $2 trillion to states, businesses, and individuals, thus guaranteeing that lockdowns would continue for the duration.
There was never a stated exit plan beyond Birx’s public statements that she wanted zero cases of Covid in the country. That was never going to happen. It is very likely that the virus had already been circulating in the US and Canada from October 2019. A famous seroprevalence study by Jay Bhattacharya came out in May 2020 discerning that infections and immunity were already widespread in the California county they examined.
What that implied was two crucial points: there was zero hope for the Zero Covid mission and this pandemic would end as they all did, through endemicity via exposure, not from a vaccine as such. That was certainly not the message that was being broadcast from Washington. The growing sense at the time was that we all had to sit tight and just wait for the inoculation on which pharmaceutical companies were working.
By summer 2020, you recall what happened. A restless generation of kids fed up with this stay-at-home nonsense seized on the opportunity to protest racial injustice in the killing of George Floyd. Public health officials approved of these gatherings – unlike protests against lockdowns – on grounds that racism was a virus even more serious than Covid. Some of these protests got out of hand and became violent and destructive.
Meanwhile, substance abuse rage – the liquor and weed stores never closed – and immune systems were being degraded by lack of normal exposure, exactly as the Bakersfield doctors had predicted. Millions of small businesses had closed. The learning losses from school closures were mounting, as it turned out that Zoom school was near worthless.
It was about this time that Trump seemed to figure out – thanks to the wise council of Dr. Scott Atlas – that he had been played and started urging states to reopen. But it was strange: he seemed to be less in the position of being a president in charge and more of a public pundit, Tweeting out his wishes until his account was banned. He was unable to put the worms back in the can that he had approved opening.
By that time, and by all accounts, Trump was convinced that the whole effort was a mistake, that he had been trolled into wrecking the country he promised to make great. It was too late. Mail-in ballots had been widely approved, the country was in shambles, the media and public health bureaucrats were ruling the airwaves, and his final months of the campaign failed even to come to grips with the reality on the ground.
At the time, many people had predicted that once Biden took office and the vaccine was released, Covid would be declared to have been beaten. But that didn’t happen and mainly for one reason: resistance to the vaccine was more intense than anyone had predicted. The Biden administration attempted to impose mandates on the entire US workforce. Thanks to a Supreme Court ruling, that effort was thwarted but not before HR departments around the country had already implemented them.
As the months rolled on – and four major cities closed all public accommodations to the unvaccinated, who were being demonized for prolonging the pandemic – it became clear that the vaccine could not and would not stop infection or transmission, which means that this shot could not be classified as a public health benefit. Even as a private benefit, the evidence was mixed. Any protection it provided was short-lived and reports of vaccine injury began to mount. Even now, we cannot gain full clarity on the scale of the problem because essential data and documentation remains classified.
After four years, we find ourselves in a strange position. We still do not know precisely what unfolded in mid-March 2020: who made what decisions, when, and why. There has been no serious attempt at any high level to provide a clear accounting much less assign blame.
Not even Tucker Carlson, who reportedly played a crucial role in getting Trump to panic over the virus, will tell us the source of his own information or what his source told him. There have been a series of valuable hearings in the House and Senate but they have received little to no press attention, and none have focus on the lockdown orders themselves.
The prevailing attitude in public life is just to forget the whole thing. And yet we live now in a country very different from the one we inhabited five years ago. Our media is captured. Social media is widely censored in violation of the First Amendment, a problem being taken up by the Supreme Court this month with no certainty of the outcome. The administrative state that seized control has not given up power. Crime has been normalized. Art and music institutions are on the rocks. Public trust in all official institutions is at rock bottom. We don’t even know if we can trust the elections anymore.
In the early days of lockdown, Henry Kissinger warned that if the mitigation plan does not go well, the world will find itself set “on fire.” He died in 2023. Meanwhile, the world is indeed on fire. The essential struggle in every country on earth today concerns the battle between the authority and power of permanent administration apparatus of the state – the very one that took total control in lockdowns – and the enlightenment ideal of a government that is responsible to the will of the people and the moral demand for freedom and rights.
How this struggle turns out is the essential story of our times.
CODA: I’m embedding a copy of PanCAP Adapted, as annotated by Debbie Lerman. You might need to download the whole thing to see the annotations. If you can help with research, please do.
* * *
Jeffrey Tucker is the author of the excellent new book 'Life After Lock-Down'
Government
CDC Warns Thousands Of Children Sent To ER After Taking Common Sleep Aid
CDC Warns Thousands Of Children Sent To ER After Taking Common Sleep Aid
Authored by Jack Phillips via The Epoch Times (emphasis ours),
A…
Authored by Jack Phillips via The Epoch Times (emphasis ours),
A U.S. Centers for Disease Control (CDC) paper released Thursday found that thousands of young children have been taken to the emergency room over the past several years after taking the very common sleep-aid supplement melatonin.
The agency said that melatonin, which can come in gummies that are meant for adults, was implicated in about 7 percent of all emergency room visits for young children and infants “for unsupervised medication ingestions,” adding that many incidents were linked to the ingestion of gummy formulations that were flavored. Those incidents occurred between the years 2019 and 2022.
Melatonin is a hormone produced by the human body to regulate its sleep cycle. Supplements, which are sold in a number of different formulas, are generally taken before falling asleep and are popular among people suffering from insomnia, jet lag, chronic pain, or other problems.
The supplement isn’t regulated by the U.S. Food and Drug Administration and does not require child-resistant packaging. However, a number of supplement companies include caps or lids that are difficult for children to open.
The CDC report said that a significant number of melatonin-ingestion cases among young children were due to the children opening bottles that had not been properly closed or were within their reach. Thursday’s report, the agency said, “highlights the importance of educating parents and other caregivers about keeping all medications and supplements (including gummies) out of children’s reach and sight,” including melatonin.
The approximately 11,000 emergency department visits for unsupervised melatonin ingestions by infants and young children during 2019–2022 highlight the importance of educating parents and other caregivers about keeping all medications and supplements (including gummies) out of children’s reach and sight.
The CDC notes that melatonin use among Americans has increased five-fold over the past 25 years or so. That has coincided with a 530 percent increase in poison center calls for melatonin exposures to children between 2012 and 2021, it said, as well as a 420 percent increase in emergency visits for unsupervised melatonin ingestion by young children or infants between 2009 and 2020.
Some health officials advise that children under the age of 3 should avoid taking melatonin unless a doctor says otherwise. Side effects include drowsiness, headaches, agitation, dizziness, and bed wetting.
Other symptoms of too much melatonin include nausea, diarrhea, joint pain, anxiety, and irritability. The supplement can also impact blood pressure.
However, there is no established threshold for a melatonin overdose, officials have said. Most adult melatonin supplements contain a maximum of 10 milligrams of melatonin per serving, and some contain less.
Many people can tolerate even relatively large doses of melatonin without significant harm, officials say. But there is no antidote for an overdose. In cases of a child accidentally ingesting melatonin, doctors often ask a reliable adult to monitor them at home.
Dr. Cora Collette Breuner, with the Seattle Children’s Hospital at the University of Washington, told CNN that parents should speak with a doctor before giving their children the supplement.
“I also tell families, this is not something your child should take forever. Nobody knows what the long-term effects of taking this is on your child’s growth and development,” she told the outlet. “Taking away blue-light-emitting smartphones, tablets, laptops, and television at least two hours before bed will keep melatonin production humming along, as will reading or listening to bedtime stories in a softly lit room, taking a warm bath, or doing light stretches.”
In 2022, researchers found that in 2021, U.S. poison control centers received more than 52,000 calls about children consuming worrisome amounts of the dietary supplement. That’s a six-fold increase from about a decade earlier. Most such calls are about young children who accidentally got into bottles of melatonin, some of which come in the form of gummies for kids, the report said.
Dr. Karima Lelak, an emergency physician at Children’s Hospital of Michigan and the lead author of the study published in 2022 by the CDC, found that in about 83 percent of those calls, the children did not show any symptoms.
However, other children had vomiting, altered breathing, or other symptoms. Over the 10 years studied, more than 4,000 children were hospitalized, five were put on machines to help them breathe, and two children under the age of two died. Most of the hospitalized children were teenagers, and many of those ingestions were thought to be suicide attempts.
Those researchers also suggested that COVID-19 lockdowns and virtual learning forced more children to be at home all day, meaning there were more opportunities for kids to access melatonin. Also, those restrictions may have caused sleep-disrupting stress and anxiety, leading more families to consider melatonin, they suggested.
The Associated Press contributed to this report.
International
Red Candle In The Wind
Red Candle In The Wind
By Benjamin PIcton of Rabobank
February non-farm payrolls superficially exceeded market expectations on Friday by…
By Benjamin PIcton of Rabobank
February non-farm payrolls superficially exceeded market expectations on Friday by printing at 275,000 against a consensus call of 200,000. We say superficially, because the downward revisions to prior months totalled 167,000 for December and January, taking the total change in employed persons well below the implied forecast, and helping the unemployment rate to pop two-ticks to 3.9%. The U6 underemployment rate also rose from 7.2% to 7.3%, while average hourly earnings growth fell to 0.2% m-o-m and average weekly hours worked languished at 34.3, equalling pre-pandemic lows.
Undeterred by the devil in the detail, the algos sprang into action once exchanges opened. Market darling NVIDIA hit a new intraday high of $974 before (presumably) the humans took over and sold the stock down more than 10% to close at $875.28. If our suspicions are correct that it was the AIs buying before the humans started selling (no doubt triggering trailing stops on the way down), the irony is not lost on us.
The 1-day chart for NVIDIA now makes for interesting viewing, because the red candle posted on Friday presents quite a strong bearish engulfing signal. Volume traded on the day was almost double the 15-day simple moving average, and similar price action is observable on the 1-day charts for both Intel and AMD. Regular readers will be aware that we have expressed incredulity in the past about the durability the AI thematic melt-up, so it will be interesting to see whether Friday’s sell off is just a profit-taking blip, or a genuine trend reversal.
AI equities aside, this week ought to be important for markets because the BTFP program expires today. That means that the Fed will no longer be loaning cash to the banking system in exchange for collateral pledged at-par. The KBW Regional Banking index has so far taken this in its stride and is trading 30% above the lows established during the mini banking crisis of this time last year, but the Fed’s liquidity facility was effectively an exercise in can-kicking that makes regional banks a sector of the market worth paying attention to in the weeks ahead. Even here in Sydney, regulators are warning of external risks posed to the banking sector from scheduled refinancing of commercial real estate loans following sharp falls in valuations.
Markets are sending signals in other sectors, too. Gold closed at a new record-high of $2178/oz on Friday after trading above $2200/oz briefly. Gold has been going ballistic since the Friday before last, posting gains even on days where 2-year Treasury yields have risen. Gold bugs are buying as real yields fall from the October highs and inflation breakevens creep higher. This is particularly interesting as gold ETFs have been recording net outflows; suggesting that price gains aren’t being driven by a retail pile-in. Are gold buyers now betting on a stagflationary outcome where the Fed cuts without inflation being anchored at the 2% target? The price action around the US CPI release tomorrow ought to be illuminating.
Leaving the day-to-day movements to one side, we are also seeing further signs of structural change at the macro level. The UK budget last week included a provision for the creation of a British ISA. That is, an Individual Savings Account that provides tax breaks to savers who invest their money in the stock of British companies. This follows moves last year to encourage pension funds to head up the risk curve by allocating 5% of their capital to unlisted investments.
As a Hail Mary option for a government cruising toward an electoral drubbing it’s a curious choice, but it’s worth highlighting as cash-strapped governments increasingly see private savings pools as a funding solution for their spending priorities.
Of course, the UK is not alone in making creeping moves towards financial repression. In contrast to announcements today of increased trade liberalisation, Australian Treasurer Jim Chalmers has in the recent past flagged his interest in tapping private pension savings to fund state spending priorities, including defence, public housing and renewable energy projects. Both the UK and Australia appear intent on finding ways to open up the lungs of their economies, but government wants more say in directing private capital flows for state goals.
So, how far is the blurring of the lines between free markets and state planning likely to go? Given the immense and varied budgetary (and security) pressures that governments are facing, could we see a re-up of WWII-era Victory bonds, where private investors are encouraged to do their patriotic duty by directly financing government at negative real rates?
That would really light a fire under the gold market.
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