Merger creates $7 billion in assets, 60 locations across Southeast
By Randy Arrington
LURAY, Aug. 16 — On Sunday, Blue Ridge Bankshares Inc., the holding company of Luray-based Blue Ridge Bank, and HomeTrust Bancshares Inc., the holding company of Maryland-based HomeTrust Bank, signed a definitive merger agreement creating one of only three $5-10 billion major-exchange traded banks in the region.
The acquisition by HomeTrust generates combined assets of $7 billion and more than 60 locations across the Southeast. The all-stock transaction is valued at $448.1 million (or $4.28 per share).
“We are thrilled about the proposed combination with Blue Ridge and welcome their team and customers to HomeTrust. This represents a compelling opportunity to further expand our [five-state footprint and our] presence in the attractive Virginia market to accelerate our growth strategy,” said C. Hunter Westbrook, President and CEO of HomeTrust. “Blue Ridge brings a strong deposit franchise, a growing commercial loan portfolio, and deep local relationships that complement our existing footprint and capabilities. With our award-winning culture, combined size and capital strength, we are creating a more profitable, resilient, and relevant regional commercial bank, with top quarterly earnings and continued recognition as an employer of choice.”
Sunday’s merger ends the nearly 133-year history of Blue Ridge Bank. Chartered and organized in 1893 as “Page Valley Bank of Virginia”, the Luray-based bank would become Page County’s first banking institution after opening its doors on Monday, Jan. 3, 1894 with paid in capital of $15,000 and a charter maximum of $25,000.
The community bank grew slowly over the next century, opening its current headquarters on East Main Street in June 1974. It would be March 2002 before the local bank even opened its second branch, located in the Town of Shenandoah. By FY2015, what was now “Blue Ridge Bank” had expanded several times within the region and reported assets of $269 million.
By the close of FY2018, the balance sheet had doubled to nearly $540 million, and one year later it nearly doubled again to just under $1 billion. That’s when the real growth began.
Two key announcements came in December 2019 — first, Blue Ridge’s common stock was approved for listing on the New York Stock Exchange and first opened for trading on Dec. 23, 2019; second, the closing of a $42.5 million merger with Central Virginia-based Virginia Community Bankshares Inc., which was originally started in Louisa County. At the conclusion of that merger, Blue Ridge Bank was reported to have 15 branches and more than $950 million in assets.
Twelve days after ringing the bell on Wall Street on Jan. 2, 2020, Blue Ridge Bankshares announced the acquisition of Richmond-based LenderSelect Mortage Group (previously Atlantic Bay Mortage Group).
“The bank grew very quickly…with [two] mergers…and in between began the initiation of getting into fintech. That’s a lot of growth and change to put on the bank’s infrastructure at one time,” said former Blue Ridge CEO William Beale during a 2024 interview with PVN.
Numerous venture capitalists, according to an Oct. 10, 2023 article in American Banker, “considered [fintech] a silver bullet for community banks.” The banking-as-a-service concept basically utilizes technology to allow those outside the banking industry to provide banking services. Known in the industry as financial technology solutions, computer programs and systems enable or support financial services typically reserved for banking institutions.
With a tidal wave of new accounts under Blue Ridge Bank, total assets grew to $3.13 billion by 2022. Stock prices that stood about $9 per share in October 2020 grew to $18.57 a share one year later. The hot stock would cool to $13.54 per share by the end of 2022, just prior to a series of negative reports in 2023 that would trigger a wave of decline.
“When we got into fintech, we did not have good systems in place,” Beale told PVN. “All of these fintech accounts they were opening were Blue Ridge Bank accounts…it simply overwhelmed the capacity of the bank.”
At its height in 2022-23, Blue Ridge had more than 1 million customers, largely due to fintech. By 2024, they only reported about 80,000. Two years ago, the banks assets had continued to grow to $3.26 billion. However, damaging reports due to government oversight and tightening regulations over the fintech industry lead to quarterly losses in the tens of millions throughout 2023 and into 2024. While BRBS had still been selling at $13.54 a share in early December 2022, by Nov. 3, 2023 the stock had reached a low of $2.23.
Following Sunday’s merger, “each share of Blue Ridge common stock issued and outstanding immediately prior to the Effective Time [of the merger], subject to limited exceptions, will be converted into the right to receive 0.086 of a share of HomeTrust common stock (the ‘Exchange Ratio’), plus cash in lieu of any fractional shares,” according to the merger agreement filed with the U.S. Securities and Exchange Commission. While BRBS was trading at just under $4 a share at the time of the merger, HomeTrust was trading at just under $50 a share.
“Blue Ridge has completed a clean-up of legacy challenges and repositioned itself for profitability and growth.HomeTrust’s own transformation from a legacy thrift to a high-performing commercial bank provides a proven roadmap, product suite and talent base to accelerate Blue Ridge’s next chapter of success,” said Harry Golliday, interim President and CEO of Blue Ridge, in the Aug. 17 joint press release. “I am excited for our customers to become part of the HomeTrust organization, which is dedicated to being a great regional community bank, and for our associates to belong to the strategy of being a ‘best place to work.'”
There has been no indication of any staffing changes, but the merger will not officially be closed until early in the first quarter of 2027, according to the press release. Holders of about 25 percent of Blue Ridge’s outstanding warrants have agreed to exchange their warrants for HomeTrust common stock. Remaining warrant holders have the right to do the same with their warrants, or have their warrants rolled into newly issued HomeTrust warrants.
The transaction is intended to qualify as a tax-free reorganization for federal income tax purposes. Upon completion, HomeTrust stockholders are expected to own about 65 percent of the combined company, while Blue Ridge stockholders are expected to own about 35 percent. Two Blue Ridge directors will join the Board of Directors of HomeTrust.
•••
RELATED ARTICLES
The rise, fall and recovery of Blue Ridge Bank
Blue Ridge Bank touts new Operations Center with new merger on the horizon
Blue Ridge Bank keeps adding assets after ringing the bell on Wall Street
Be the first to comment