The Virginia community bank joined NZBA, a global coalition of banks that have pledged to bring down carbon emissions from their lending and investment portfolios to zero on a net basis by 2050, in December 2021.

Since then, Blue Ridge's shares have lost 85% of their value following a spike in non-performing loans, its restating of earnings reports, and a U.S. bank regulator cracking down on its partnerships with financial technology startups because it found it to be "in troubled condition".

A Blue Ridge spokesperson told Reuters the bank decided against renewing its NZBA membership following a strategic review that focused on it overcoming its financial woes.

"Based on our growth and need to focus on deposits and community banking, we had to focus on our core business. We want to be cognizant on carbon emissions, and we did not feel we had the staffing resources to allocate to this," the spokesperson said.

While NZBA disclosed Blue Ridge's withdrawal last month, the reasons behind the exit had not been previously reported.

Probes into banks' membership of NZBA and other climate groups by Republican politicians opposed to limiting the financing of fossil fuels, including Virginia Attorney General Jason Miyares, did not factor into Blue Ridge's decision, the spokesperson said, adding Blue Ridge may rejoin NBZA in the future.

The Glasgow Financial Alliance for Net Zero (GFANZ), the organization under which NZBA sits and which is co-chaired by Mark Carney, a former central banker, and Mike Bloomberg, the founder of the eponymous financial information provider, did not respond to a request for comment.

Only nine of NZBA's 142 members hail from the United States, with the vast majority based in Europe. The eight other U.S. members are Amalgamated Bank, Areti Bank, Bank of America, Citi, JPMorgan Chase, Morgan Stanley, Goldman Sachs and Wells Fargo.

Signatories to the NZBA agree to set emission-reduction targets within 18 months of joining and publish their progress.

An NZBA report in December 2013 showed it had tripled the number of members since launch in April 2021, and that over two-thirds of members had set targets consistent with capping global warming to 1.5° Celsius by mid-century.

Last year, Germany's GLS Bank quit NBZA because some members of the coalition continued to finance new fossil-fuel infrastructure projects in Africa. Two other banks, Triodos from the Netherlands and Britain's Ecology Building Society, threatened to quit last year over what they argued were lax emission reduction targets, but did not follow through.

Other coalitions under GFANZ have had defections too. Most have been at the Net-Zero Insurance Alliance, where last year more than half its members quit citing fears they could be sued for colluding. This prompted the group to ease its membership rules.

Vanguard, the world's second biggest fund manager, left the Net Zero Asset Managers initiative in December 2022 citing the need to speak "independently" on issues of importance to its investors.

CONSENT ORDER

Many U.S. regional banks are on edge after New York Community Bancorp posted a surprise loss last week because of its exposure to parts of the office property and multifamily housing sectors, reviving investor fears about a potential repeat of last year's crisis that led to the demise of lenders such as Silicon Valley Bank and First Republic.

Last month, the Office of the Comptroller of the Currency, a U.S. bank regulator, issued a so-called consent order instructing Blue Ridge to improve its capital buffers and restrict its partnership with financial technology startups, citing lax financial controls.

Blue Ridge has said it will reduce its number of financial technology partners, to which it provides infrastructure so they can offer banking to consumers, from 50 to a "limited number". In December, it also raised $150 million by selling stock in a private placement to improve its financial health.

Blue Ridge is the seventh-largest bank in Virginia by deposit market share and has 27 bank branches. Its subsidiary Monarch Mortgage has 16 offices, from Maryland to South Carolina.

Blue Ridge posted a net loss of $51.8 million in 2023, compared to net income of $17 million in 2022.

(Reporting by Simon Jessop in London; Editing by Greg Roumeliotis and Christina Fincher)

By Simon Jessop