BLUE RIDGE BANKSHARES, INC.  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  December 31,2012  Nature of Operations:  Consolidation Policy:  Cash and Cash Equivalents:  Investment Securities:  Loans:  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.  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.  Cash and cash equivalents include cash on hand and correspondent balances in other fmancial  institutions.  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 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.  9 (Continued) Notel. Natureof Operations and Significant Accounting Policies:  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. 