CEO of beleaguered Blue Ridge Bankshares resigns

arekmalang - stock.adobe.com

Brian Plum has abruptly resigned as president and CEO of Blue Ridge Bankshares, which has recently faced scrutiny from the Office of the Comptroller of the Currency. 

According to a Securities and Exchange Commission filing, Plum notified the $3.1 billion-asset company of his resignation on July 12, effective that day. Blue Ridge named William Beale as CEO of the Charlottesville, Virginia, company. Beale was already serving as CEO of the company's banking subsidiary.  

In a separate SEC filing also from July 12, the bank said that it would skip its third-quarter dividend payments to "preserve capital and available cash."

Blue Ridge did not immediately return a request for comment. 

In May, Blue Ridge hired Beale, who previously worked at Community Bankers Bank in Chesterfield, Virginia, to replace Plum as CEO of Blue Ridge Bank. At that time, Plum continued as CEO and president of the holding company. 

In a press release from May 8, Blue Ridge chairman Mensel D. Dean Jr. said that Beale would add "depth and experience" to the team, considering "growth opportunities" and "increasing complexity and challenges" in the banking industry.

Blue Ridge has recently been plagued by regulatory issues. In January 2022, Blue Ridge's proposed purchase of FVCBankcorp in Fairfax, Virginia, was called off because of concerns raised by the OCC. 

The company subsequently signed an agreement with the regulator to improve its anti-money laundering compliance and oversight of its fintech partners. That agreement requires the bank to get an nonobjection letter before it signs any agreements with new fintechs or adds new products with existing partners. 

The agreement did not outline the OCC's specific concerns. However, a week before the agreement was signed, Aeldra, a fintech that allows non-U.S. citizens in India to quickly open accounts in the U.S., closed accounts it had opened in partnership with Blue Ridge.

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Consumer advocates have also raised issues with Blue Ridge's tuition repayment product with MentorWorks Education Capital, a fintech that offers student financing through income-share agreements where borrowers pledge a portion of their future income to repay the loan. Critics were concerned that these loans could lead to predatory practices like expensive prepayment penalties. 

The OCC enforcement action also required Blue Ridge to adopt a Bank Secrecy Act risk program that covered any activities conducted by fintech partners. And it must develop a BSA audit program that covers fintech partners.

In January, Blue Ridge hired Kirsten Muetzel as president of the bank's new fintech division. Her resume includes a decade of working in the Federal Reserve System where her duties included supervising banks in banking-as-a-service partnerships. A press release from January noted that she would be responsible for "strengthening regulatory compliance." However, according to her LinkedIn profile, Muetzel left this position as of July.

In general, small bank-fintech partnerships have come under closer scrutiny over the last year. The Federal Deposit Insurance Corp. also took action this year against Cross River Bank in Teaneck, New Jersey, which has partnered with fintech lenders such as Affirm, Upstart, Rocket Loans and the former Kabbage. 

The FDIC, OCC and Federal Reserve recently released risk management guidance for banks looking to work with fintechs and other third parties.

"Business models that people thought were sustainable two years ago may be different now," said William Hockey, the co-founder of the de novo Column Bank that partners with various fintechs, in an interview with American Banker last year. "We need to make sure that our risk tolerance is aligned with our regulators."