MIDDLEBURG FINANCIAL CORP. 
By MIDDLEBURG, Va., Aug. 2, 2011 /PRNewswire/ -- Middleburg Financial Corporation (the "Company") (Nasdaq: MBRG), today announced net income of $1.2 million for the quarter ending June 30, 2011 representing an increase of 66% over the same quarter in 2010.
"The positive trends experienced by the Company in the first quarter of 2011 have continued into the second quarter. We achieved growth in both loans and deposits, an improved net interest margin, and a decline in our ratio of non performing assets to total assets during the quarter," commented Gary R. Shook, president and chief executive officer. He continued, "While our year over year quarterly earnings growth of 66% is certainly gratifying, we still face uncertainty on the problem loan front as well as with the regulatory direction of the banking industry in general. We will continue to focus our efforts on increasing profitability and expanding offerings in our existing corporate footprint. Additionally, we are pleased to have received approval from the regulators for a full service banking office in Richmond, Virginia. The office will be shared with Middleburg Trust Company, a wholly owned subsidiary of the Company located in Richmond."
Second Quarter 2011 Highlights:
-- Net income of $1.2 million or $0.17 per diluted share, up 66% compared
to second quarter of 2010;
-- Net interest margin of 3.78% compared to margin of 3.67% for second
quarter of 2010;
-- Total revenue of $15.4 million, up 6.4% compared to second quarter of
2010;
-- Loan growth of 2.4% during the quarter;
-- Total assets of $1.1 billion, an increase of 5.6% from March 31, 2011;
-- Deposits increased $43.0 million or 5.0% during the quarter;
-- Provision for loan losses for quarter decreased by 15.8% compared to
second quarter of 2010; and
-- Capital ratios continue to be strong: Tangible Common Equity Ratio of
8.47%, Total Risk-Based Capital Ratio of 14.2%, Tier I Risk-Based
Capital Ratio of 12.9%, and a Tier 1 Leverage Ratio of 9.1% at June 30,
2011.
Total Revenue
Total revenue was $15.4 million in the quarter ended June 30, 2011 compared to $14.0 million in the previous quarter and $14.5 million in the quarter ended June 30, 2010, representing an increase of 10.0% compared to the previous linked quarter and an increase of 6.4% compared to the calendar quarter ended June 30, 2010.
Net interest income was $9.4 million during the three months ended June 30, 2011, which was 4.0% higher than the quarter ended March 31, 2011 and an increase of 11.4% compared to the quarter ended June 30, 2010. The average yield on earning assets was 4.86% for the quarter ended June 30, 2011 compared to 4.91% for the previous quarter and 5.22% for the quarter ended June 30, 2010, representing a decrease of 5 basis points from the previous quarter and a decrease of 36 basis points from the quarter ended June 30, 2010. Average earning assets increased 3.5% compared to the previous quarter. Loan growth and an increase in investment securities drove the increase in earning assets during the second quarter. The decrease in yields on earning assets from the previous quarter reflected a 12 basis point decrease in yields for the loan portfolio partially offset by an increase of 28 basis points in the yield of the securities portfolio.
The average cost of interest bearing liabilities was 1.26% for the quarter ended June 30, 2011, compared to 1.30% in the previous quarter, and 1.82% for the quarter ended June 30, 2010, representing a decrease of 4 basis points from the previous quarter and a decrease of 56 basis points from the quarter ended June 30, 2010. Costs for wholesale borrowings decreased by 11 basis points during the quarter, while costs for retail deposits decreased by 3 basis points during the same period. The decline in the cost of retail deposits was driven by a 2 basis point decline in the cost of interest checking deposits. The cost of time deposits decreased by 7 basis points during the quarter as maturing CD's re-priced at lower rates. Cost of funds is calculated by dividing annualized total interest expense by the sum of average interest bearing liabilities and average demand deposits. Cost of funds was 1.11% for the quarter ended June 30, 2011 compared to 1.14% for the quarter ended March 31, 2011, a decrease of 3 basis points from the previous quarter
The net interest margin for the three months ended June 30, 2011 was 3.78%, compared to 3.80% for the previous quarter, and 3.67% for the quarter ended June 30, 2010, representing a decrease of 2 basis points from the previous quarter and in increase of 11 basis points compared to the quarter ended June 30, 2010.
The Company's net interest margin is not a measurement under accounting principles generally accepted in the United States, but it is a common measure used by the financial services industry to determine how profitably earning assets are funded. The Company's net interest margin is calculated by dividing tax equivalent net interest income by total average earning assets. Tax equivalent net interest income is calculated by grossing up interest income for the amounts that are non-taxable (i.e., municipal income) then subtracting interest expense. The tax rate utilized is 34%. Details on the calculation of the net interest margin are included in the "Key Statistics" table.
Non-interest income increased by $1.1 million or 22.4% when comparing the quarter ended June 30, 2011 to the previous quarter, and declined by $33,000 or 0.5% compared to the calendar quarter ended June 30, 2010. The primary reason for the higher non-interest income in the second quarter of 2011 relative to the prior quarter was an increase in gain-on-sale revenues from the Company's mortgage operations.
Southern Trust Mortgage originated $153.0 million in mortgage loans during the quarter ended June 30, 2011 compared to $136.4 million originated during the previous quarter, an increase of 12.2%, and $194.0 million originated during the quarter ended June 30, 2010, a decrease of 21.1% when comparing calendar quarters. Gains on mortgage loan sales increased by 38.2% when comparing the quarter ended June 30, 2011 to the previous quarter. Gains on mortgage loan sales increased by 2.4% when comparing the quarter ended June 30, 2011 to the quarter ended June 30, 2010. The increase in gain-on-sale revenue in the second quarter of 2011 was driven by an increase in margins during the second quarter.
The revenues and expenses of Southern Trust Mortgage for the three month period ended June 30, 2011 is reflected in the Company's financial statements on a consolidated basis following generally accepted accounting principles in the United States. The outstanding equity interest not held by the Company is reported on the Company's balance sheet as "Non-controlling interest in consolidated subsidiary" and the earnings or loss attributable to the non-controlling interest is reported on the Company's statement of income as "Net (income) / loss attributable to non-controlling interest."
Trust and investment advisory service fees earned by Middleburg Trust Company ("MTC") increased by 13.4% when comparing the quarter ended June 30, 2011 to the previous quarter, and increased by 12.3% compared to the quarter ended June 30, 2010. Trust and investment advisory fees are based primarily upon the market value of the accounts under administration. Total consolidated assets under administration by MTC were at $1.4 billion at June 30, 2011, an increase of 16.7% relative to March 31, 2011 and an increase of 27.2% relative to June 30, 2010.
Net securities gains were $87,000 during the quarter ended June 30, 2011 compared to net securities gains of $35,000 during the previous quarter and net securities losses of $37,000 during the quarter ended June 30, 2010.
Non-Interest Expense
Non-interest expense in the second quarter of 2011 increased by 5.9% compared to the previous quarter and increased by 5.6% compared to the quarter ended June 30, 2010.
Salaries and employee benefit expenses increased by $497,000 or 6.8% when comparing the second quarter of 2011 to the previous quarter, primarily due to an increase in commission expenses for mortgage loan officers. Expenses related to Other Real Estate Owned (OREO) increased by $262,000 or 76.2% when comparing the second quarter of 2011 to the previous quarter. Advertising expenses increased by $129,000 or 82.6% during the quarter as a result of expenses for bank-wide campaigns related to CD's and loans and advertising at the mortgage company. Other expenses, which include expenses such as supplies, travel and entertainment expenses fell by $338,000 or 19.8% when comparing the quarter ended June 30, 2011 to the previous quarter.
The Company's efficiency ratio which is represented by the ratio of non-interest expense to the sum of tax equivalent net interest income and non-interest income, excluding securities gains and losses, was 82.79% for the second quarter of 2011, compared to an efficiency ratio of 84.96% in the quarter ending March 31, 2011.
Asset Quality and Provision for Loan Losses
The provision for loan losses in the quarter ended June 30, 2011 was $1,087,000 compared to a $454,000 provision in the previous quarter and a provision of $1,291,000 in the quarter ended June 30, 2010, representing an increase of 139.4% from the previous quarter and a decrease of 15.8% from the quarter ended June 30, 2010.
The Allowance for Loan and Lease Losses (ALLL) at June 30, 2011 was $15.1 million representing 2.22% of total portfolio loans outstanding versus 2.20% at March 31, 2011 and 1.54% of total portfolio loans at June 30, 2010.
Loans that were delinquent for more than 90 days and still accruing were $3.2 million as of June 30, 2011 compared to $6.6 million as of March 31, 2011, representing a decrease of 50.8% during the quarter. The primary reason for the decrease in delinquent loans in the second quarter was because a large credit that was more than 90 days delinquent in the first quarter was moved to non-accrual status in the second quarter.
Non-accrual loans were $32.3 million at the end of the second quarter compared to $27.6 million as of March 31, 2011, representing an increase of 16.9% during the second quarter. The primary reason for the increase in non-accrual loans in the second quarter was because a large credit that was more than 90 days delinquent in the first quarter was moved to non-accrual status in the second quarter. Restructured loans were $112,000 at the end of the second quarter compared to $1.2 million as of March 31, 2011, representing a decrease of 91% during the quarter. The primary reason for the decrease in restructured loans in the second quarter was because certain loans that were classified as restructured as of March 31, 2011 were paid off in the second quarter. Other Real Estate Owned (OREO) was $6.2 million as of June 30, 2011 compared to $7.8 million as of March 31, 2011, representing a decrease of 20.5% during the second quarter. Non-performing assets were $41.9 million or 3.6% of total assets at June 30, 2011, compared to $43.3 million or 4.0% of total assets as of March 31, 2011.
Total Consolidated Assets
Total assets at June 30, 2011 were $1.1 billion, an increase of $60.4 million or 5.5% compared to total assets at March 31, 2011.
Growth in total portfolio loans was $15.8 million or 2.4% for the second quarter. The securities portfolio increased by $35.0 million or 13.5% in the second quarter relative to the previous quarter. Balances of mortgages held for sale increased by $14.3 million or 41.5% in the second quarter of 2011. Cash balances and deposits at other banks decreased by 4.4% in the second quarter of 2011.
Deposits and Other Borrowings
Total deposits increased by $43.0 million or 5.0% in the second quarter. Brokered deposits, including CDARS program funds, were $92.8 million at June 30, 2011, unchanged from March 31, 2011. FHLB advances were $77.9 million at June 30, 2011, up $5.0 million from March 31, 2011, or an increase of 6.8%.
Equity and Capital
Total shareholders' equity at June 30, 2011 was $102.7 million, compared to shareholders' equity of $98.4 million as of March 31, 2011. Retained earnings at June 30, 2011 were $39.3 million compared to $38.5 million at March 31, 2011. The book value of the Company's common stock at June 30, 2011 was $14.68 per share.
The Company's total risk-based capital ratio increased from 14.1% at December 31, 2010 to 14.2% at June 30, 2011, the Tier 1 risk-based capital ratio increased from 12.8% to 12.9% and the Tier 1 Leverage Ratio increased from 9.0% to 9.1% during the same period.
Caution about Forward Looking Statements
Certain information contained in this discussion may include "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements relate to the Company's future operations and are generally identified by phrases such as "the Company expects," "the Company believes" or words of similar import. Although the Company believes that its expectations with respect to the forward-looking statements are based upon reliable assumptions within the bounds of its knowledge of its business and operations, there can be no assurance that actual results, performance or achievements of the Company will not differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. For details on factors that could affect expectations, see the risk factors and other cautionary language included in the Company's Annual Report on Form 10-K for the year ended December 31, 2010, and other filings with the Securities and Exchange Commission.
About Middleburg Financial Corporation
Middleburg Financial Corporation is headquartered in Middleburg, Virginia and has two wholly owned subsidiaries, Middleburg Bank and Middleburg Investment Group, Inc. Middleburg Bank serves communities in Virginia with financial centers in Ashburn, Gainesville, Leesburg, Marshall, Middleburg, Purcellville, Reston, Warrenton and Williamsburg. Middleburg Investment Group owns Middleburg Trust Company, which is headquartered in Richmond, Virginia with offices in Middleburg, Alexandria and Williamsburg. Middleburg Financial Corporation is also the majority owner of Southern Trust Mortgage, which is based in Virginia Beach and provides mortgages through 17 offices in 11 states.
MIDDLEBURG FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except for per share data)
Unaudited
---------
For the Six Months
Ended June 30,
2011 2010
---- ----
INTEREST INCOME
Interest and fees on loans $19,466 $20,829
Interest and dividends on securities
available for sale
Taxable 3,150 2,028
Tax-exempt 1,165 1,293
----- -----
Dividends 72 43
Interest on deposits in banks and
federal funds sold 60 63
--- ---
Total interest and dividend income 23,913 24,256
------ ------
INTEREST EXPENSE
Interest on deposits 4,640 6,251
Interest on securities sold under
agreements to
repurchase 125 80
Interest on short-term borrowings 116 111
Interest on long-term debt 602 926
--- ---
Total interest expense 5,483 7,368
----- -----
NET INTEREST INCOME 18,430 16,888
Provision for loan losses 1,541 2,220
----- -----
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 16,889 14,668
------ ------
NONINTEREST INCOME
Service charges on deposit accounts 1,015 909
Trust services income 1,850 1,690
Gains on loans held for sale 6,785 6,474
Gains (losses) on securities
available for sale, net 122 469
Total other-than-temporary
impairment losses (17) (300)
Portion of (gain) loss recognized in
other
comprehensive income 16 52
--- ---
Net impairment losses (1) (248)
Commissions on investment sales 365 311
Fees on mortgages held for sale 241 834
Other service charges, commissions
and fees 249 256
Bank-owned life insurance 262 255
Other operating income (losses) 105 179
--- ---
Total noninterest income 10,993 11,129
------ ------
NONINTEREST EXPENSE
Salaries and employees' benefits 15,129 14,381
Net occupancy and equipment expense 3,316 3,094
Advertising 441 428
Computer operations 708 668
Other real estate owned 950 505
Other taxes 402 397
Federal deposit insurance expense 765 1,153
Other operating expenses 3,478 3,583
----- -----
Total noninterest expense 25,189 24,209
------ ------
Income before income taxes 2,693 1,588
Income tax expense 618 162
--- ---
NET INCOME 2,075 1,426
Net (income) loss attributable to
non-
controlling interest 351 112
--- ---
Net income attributable to
Middleburg
Financial Corporation $2,426 $1,538
====== ======
Earnings per share:
Basic $0.35 $0.22
Diluted $0.35 $0.22
Dividends per common share $0.10 $0.20
Unaudited
---------
For the Three Months
Ended June 30,
2011 2010
---- ----
INTEREST INCOME
Interest and fees on loans $9,731 $10,384
Interest and dividends on securities
available for sale
Taxable 1,751 1,090
Tax-exempt 604 600
--- ---
Dividends 36 22
Interest on deposits in banks and
federal funds sold 33 28
--- ---
Total interest and dividend income 12,155 12,124
------ ------
INTEREST EXPENSE
Interest on deposits 2,332 3,077
Interest on securities sold under
agreements to
repurchase 69 60
Interest on short-term borrowings 53 67
Interest on long-term debt 306 488
--- ---
Total interest expense 2,760 3,692
----- -----
NET INTEREST INCOME 9,395 8,432
Provision for loan losses 1,087 1,291
----- -----
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 8,308 7,141
----- -----
NONINTEREST INCOME
Service charges on deposit accounts 526 468
Trust services income 983 875
Gains on loans held for sale 3,938 3,844
Gains (losses) on securities
available for sale, net 87 (37)
Total other-than-temporary
impairment losses - (98)
Portion of (gain) loss recognized in
other
comprehensive income - 1
--- ---
Net impairment losses - (97)
Commissions on investment sales 185 167
Fees on mortgages held for sale 87 476
Other service charges, commissions
and fees 134 143
Bank-owned life insurance 139 130
Other operating income (losses) (55) 88
--- ---
Total noninterest income 6,024 6,057
----- -----
NONINTEREST EXPENSE
Salaries and employees' benefits 7,813 7,457
Net occupancy and equipment expense 1,640 1,490
Advertising 285 248
Computer operations 343 340
Other real estate owned 606 295
Other taxes 205 201
Federal deposit insurance expense 358 352
Other operating expenses 1,703 1,883
----- -----
Total noninterest expense 12,953 12,266
------ ------
Income before income taxes 1,379 932
Income tax expense 301 75
--- ---
NET INCOME 1,078 857
Net (income) loss attributable to
non-
controlling interest 121 (133)
--- ----
Net income attributable to
Middleburg
Financial Corporation $1,199 $724
====== ====
Earnings per share:
Basic $0.17 $0.10
Diluted $0.17 $0.10
Dividends per common share $0.05 $0.10
MIDDLEBURG FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except for share and per share data)
(Unaudited) (Unaudited)
June 30, March 31,
2011 2011
---- ----
ASSETS
Cash and due from banks $19,598 $22,060 $
Interest-bearing deposits with other
institutions 38,988 39,237
------ ------
Total cash and cash equivalents 58,586 61,297
Securities available for sale 293,393 258,412
Loans held for sale 48,689 34,407
Restricted securities, at cost 6,932 6,746
Loans receivable, net of allowance for
loan losses of $15,073 at June 30,
2011, $14,575 at March 31, 2011, and
$14,967 at December 31, 2010 663,242 647,985
Premises and equipment, net 21,393 20,908
Goodwill and identified intangibles 6,286 6,317
Other real estate owned, net of
valuation allowance of $1,006 at June
30,
2011, $1,187 at March 31, 2011, and
$1,486 at December 31, 2010 6,255 7,825
Prepaid federal deposit insurance 4,454 4,791
Accrued interest receivable and other
assets 35,437 35,601
------ ------
TOTAL ASSETS $1,144,667 $1,084,289 $
========== ==========
LIABILITIES
Deposits:
Non-interest-bearing demand deposits $131,191 $122,888 $
Savings and interest-bearing demand
deposits 460,518 448,065
Time deposits 316,776 294,502
------- -------
Total deposits 908,485 865,455
Securities sold under agreements to
repurchase 35,210 27,963
Short-term borrowings 5,692 4,244
Long-term debt 77,912 72,912
Subordinated notes 5,155 5,155
Accrued interest payable and other
liabilities 7,405 7,353
Commitments and contingent liabilities - -
--- ---
TOTAL LIABILITIES 1,039,859 983,082
--------- -------
SHAREHOLDERS' EQUITY
Common stock ($2.50 par value;
20,000,000 shares authorized,
7,000,824 issued; 6,996,932, 6,942,315,
and 6,925,437 outstanding at
June 30, 2011, March 31, 2011, and
December 31, 2010, respectively) 17,331 17,314
Capital surplus 43,150 43,105
Retained earnings 39,322 38,473
Accumulated other comprehensive income
(loss) 2,908 (480)
----- ----
Total Middleburg Financial Corporation
shareholders' equity 102,711 98,412
Non-controlling interest in
consolidated subsidiary 2,097 2,795
----- -----
TOTAL SHAREHOLDERS' EQUITY 104,808 101,207
------- -------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $1,144,667 $1,084,289 $
========== ==========
December
31,
2010
----
ASSETS
Cash and due from banks 21,955
Interest-bearing deposits with other
institutions 42,769
------
Total cash and cash equivalents 64,724
Securities available for sale 252,042
Loans held for sale 59,361
Restricted securities, at cost 6,296
Loans receivable, net of allowance for loan
losses of $15,073 at June 30,
2011, $14,575 at March 31, 2011, and $14,967 at
December 31, 2010 644,345
Premises and equipment, net 21,112
Goodwill and identified intangibles 6,360
Other real estate owned, net of valuation
allowance of $1,006 at June 30,
2011, $1,187 at March 31, 2011, and $1,486 at
December 31, 2010 8,394
Prepaid federal deposit insurance 5,154
Accrued interest receivable and other assets 36,779
------
TOTAL ASSETS 1,104,567
=========
LIABILITIES
Deposits:
Non-interest-bearing demand deposits 130,488
Savings and interest-bearing demand deposits 436,718
Time deposits 323,100
-------
Total deposits 890,306
Securities sold under agreements to repurchase 25,562
Short-term borrowings 13,320
Long-term debt 62,912
Subordinated notes 5,155
Accrued interest payable and other liabilities 7,319
Commitments and contingent liabilities -
---
TOTAL LIABILITIES 1,004,574
---------
SHAREHOLDERS' EQUITY
Common stock ($2.50 par value; 20,000,000 shares
authorized,
7,000,824 issued; 6,996,932, 6,942,315, and
6,925,437 outstanding at
June 30, 2011, March 31, 2011, and December 31,
2010, respectively) 17,314
Capital surplus 43,058
Retained earnings 37,593
Accumulated other comprehensive income (loss) (1,012)
------
Total Middleburg Financial Corporation
shareholders' equity 96,953
Non-controlling interest in consolidated
subsidiary 3,040
-----
TOTAL SHAREHOLDERS' EQUITY 99,993
------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 1,104,567
=========
QUARTERLY SUMMARY INCOME STATEMENTS
MIDDLEBURG FINANCIAL CORPORATION
(Unaudited. Dollars in thousands except per share data)
For the Three Months Ended
--------------------------
Jun. 30, Mar. 31, Dec. 31,
2011 2011 2010
--------- --------- ---------
Interest and Dividend
Income
Interest and fees on loans $9,731 $9,735 $9,887
Interest on securities
available for sale
Taxable 1,751 1,399 1,539
Exempt from federal income
taxes 604 561 600
Dividends 36 36 30
Interest on federal funds
sold and other 33 27 32
--- --- ---
Total interest and dividend
income $12,155 $11,758 $12,088
------- ------- -------
Interest Expense
Interest on deposits $2,332 $2,308 $2,623
Interest on securities sold
under agreements to
repurchase 69 56 61
Interest on short-term
borrowings 53 63 148
Interest on long-term debt 306 296 246
--- --- ---
Total interest expense $2,760 $2,723 $3,078
------ ------ ------
Net interest income $9,395 $9,035 $9,010
Provision for loan losses 1,087 454 655
----- --- ---
Net interest income (loss)
after provision
for loan losses $8,308 $8,581 $8,355
------ ------ ------
Other Income
Trust services income $983 $867 $838
Service charges on deposit
accounts 526 489 488
Net gains (losses) on
securities available for
sale 87 35 109
Total other-than-
temporary impairment gain
(loss) on securities - (17) (44)
Portion of (gain) loss
recognized in other
comprehensive income - 16 (85)
--- --- ---
Net other-than-temporary
impairment loss - (1) (129)
Commissions on investment
sales 185 180 169
Bank owned life insurance 139 123 112
Gain on loans held for sale 3,938 2,847 5,537
Fees on loans held for sale 87 154 570
Other service charges,
commissions and fees 134 115 114
Other operating income
(loss) (55) 160 169
--- --- ---
Total other income $6,024 $4,969 $7,977
------ ------ ------
Other Expense
Salaries and employee
benefits $7,813 $7,316 $7,748
Net occupancy expense of
premises 1,640 1,676 1,598
Other taxes 205 197 200
Advertising 285 156 386
Computer operations 343 365 316
Other real estate owned 606 344 842
Audits and examinations 156 126 219
Legal fees 176 89 50
FDIC insurance 358 407 386
Other operating expenses 1,371 1,560 2,401
----- ----- -----
Total other expense $12,953 $12,236 $14,146
------- ------- -------
Income (loss) before income
taxes $1,379 $1,314 $2,186
Income tax expense
(benefit) 301 317 573
Net income (loss) $1,078 $997 $1,613
Less: Net (income) loss
attributable to non-
controlling interest 121 230 (51)
Net income (loss)
attributable to Middleburg
Financial Corporation $1,199 $1,227 $1,562
====== ====== ======
Net income (loss) per
common share, basic $0.17 $0.18 $0.23
Net income (loss) per
common share, diluted $0.17 $0.18 $0.23
Dividends per common share $0.05 $0.05 $0.05
For the Three Months Ended
--------------------------
Sep. 30, Jun. 30,
2010 2010
--------- ---------
Interest and Dividend Income
Interest and fees on loans $9,832 $10,384
Interest on securities available for
sale
Taxable 1,166 1,090
Exempt from federal income taxes 621 600
Dividends 32 22
Interest on federal funds sold and
other 36 28
---
Total interest and dividend income $11,687 $12,124
------- -------
Interest Expense
Interest on deposits $3,160 $3,077
Interest on securities sold under
agreements to repurchase 63 60
Interest on short-term borrowings 134 67
Interest on long-term debt 372 488
---
Total interest expense $3,729 $3,692
------ ------
Net interest income $7,958 $8,432
Provision for loan losses 9,130 1,291
----- -----
Net interest income (loss) after
provision
for loan losses $(1,172) $7,141
------- ------
Other Income
Trust services income $807 $875
Service charges on deposit accounts 487 468
Net gains (losses) on securities
available for sale 288 (37)
Total other-than-temporary
impairment gain (loss) on
securities (557) (97)
Portion of (gain) loss recognized in
other comprehensive income (169) -
---- ---
Net other-than-temporary
impairment loss (726) (97)
Commissions on investment sales 142 167
Bank owned life insurance 136 130
Gain on loans held for sale 5,147 3,844
Fees on loans held for sale 477 476
Other service charges, commissions
and fees 97 143
Other operating income (loss) 42 88
---
Total other income $6,897 $6,057
------ ------
Other Expense
Salaries and employee benefits $7,665 $7,457
Net occupancy expense of premises 1,557 1,490
Other taxes 201 201
Advertising 257 248
Computer operations 340 340
Other real estate owned 666 295
Audits and examinations 96 162
Legal fees 96 167
FDIC insurance 368 352
Other operating expenses 3,141 1,554
-----
Total other expense $14,387 $12,266
------- -------
Income (loss) before income taxes $(8,662) $932
Income tax expense (benefit) (3,297) 75
Net income (loss) $(5,365) $857
Less: Net (income) loss
attributable to non-controlling
interest (423) (133)
Net income (loss) attributable to
Middleburg Financial Corporation $(5,788) $724
======= ====
Net income (loss) per common share,
basic $(0.83) $0.10
Net income (loss) per common share,
diluted $(0.83) $0.10
Dividends per common share 0.10 $0.10
MIDDLEBURG FINANCIAL CORPORATION
KEY STATISTICS
(Unaudited. Dollars in
thousands except per
share data) For the Three Months Ended
--------------------------
Jun 30, Mar 31, Dec 31,
2011 2011 2010
-------- -------- --------
Net income (loss) $1,199 $1,227 $1,562
Earnings (loss) per
share, basic $0.17 $0.18 $0.23
Earnings (loss) per
share, diluted $0.17 $0.18 $0.23
Dividend per share $0.05 $0.05 $0.05
Return on average total
assets -Year to Date 0.45% 0.46% -0.25%
Return on average total
equity -Year to Date 4.95% 5.11% -2.71%
Dividend payout ratio 29.41% 27.78% 22.21%
Non-interest revenue to
total revenue (1) 38.72% 35.02% 39.82%
Net interest margin (2) 3.78% 3.80% 3.60%
Yield on average earning
assets 4.86% 4.91% 4.78%
Yield on average
interest-bearing
liabilities 1.26% 1.30% 1.41%
Net interest spread 3.60% 3.61% 3.37%
Non-interest income to
average assets (3) 2.17% 1.82% 2.88%
Non-interest expense to
average assets (3) 4.67% 4.53% 5.09%
Efficiency ratio -QTD
(Tax Equiv) (4) 82.79% 84.96% 81.42%
(Unaudited. Dollars in thousands
except per share data) For the Three Months Ended
Sep 30, Jun 30,
2010 2010
-------- --------
Net income (loss) $(5,788) $724
Earnings (loss) per share, basic $(0.83) $0.10
Earnings (loss) per share, diluted $(0.83) $0.10
Dividend per share $0.10 $0.10
Return on average total assets -
Year to Date -2.11% 0.28%
Return on average total equity -
Year to Date -22.03% 2.85%
Dividend payout ratio NA 100.00%
Non-interest revenue to total
revenue (1) 38.56% 34.05%
Net interest margin (2) 3.27% 3.67%
Yield on average earning assets 4.74% 5.22%
Yield on average interest-bearing
liabilities 1.73% 1.82%
Net interest spread 3.01% 3.40%
Non-interest income to average
assets (3) 2.69% 2.39%
Non-interest expense to average
assets (3) 5.29% 4.73%
Efficiency ratio -QTD (Tax Equiv)
(4) 91.77% 81.78%
(1) Excludes securities gains and losses including OTTI adjustments.
(2) The net interest margin is calculated by dividing tax equivalent net
interest income by total average earning assets. Tax equivalent net
interest income is calculated by grossing up interest income for the
amounts that are non taxable (i.e., municipal income) then
subtracting interest expense. The tax rate utilized is 34%. The
Company's net interest margin is a common measure used by the
financial service industry to determine how profitably earning
assets are funded. Because the Company earns a fair amount of non
taxable interest income due to the mix of securities in its
investment security portfolio, net interest income for the ratio is
calculated on a tax equivalent basis as described above. This
calculation excludes net securities gains and losses.
(3) Ratios are computed by dividing annualized income and expense amounts
by quarterly average assets.
(4) The efficiency ratio is not a measurement under accounting principles
generally accepted in the United States. It is calculated by
dividing non interest expense by the sum of tax equivalent net
interest income and non interest income excluding gains and losses
on the investment portfolio. The tax rate utilized is 34%. The
Company calculates this ratio in order to evaluate its overhead
structure or how effectively it is operating.
MIDDLEBURG FINANCIAL CORPORATION
SELECTED FINANCIAL DATA BY QUARTER
(Unaudited. Dollars in
thousands except per Jun 30, Mar 31, Dec 31,
share data) 2011 2011 2010
------- ------- -------
BALANCE SHEET RATIOS
Loans to deposits
(Including HFS) 80.02% 80.53% 80.72%
Portfolio loans to
deposits 74.66% 76.56% 74.05%
Average interest-
earning assets to
average-interest
bearing liabilities 117.42% 117.58% 118.50%
PER SHARE DATA
Dividends $0.05 $0.05 $0.05
Book value (MFC
Shareholders) $14.68 $14.18 $14.02
Tangible book value (3) $13.78 $13.27 $13.10
SHARE PRICE DATA
Closing price $14.94 $17.75 $14.26
Diluted earnings
multiple (1) 21.97 24.65 15.50
Book value multiple(2) 1.02 1.25 1.02
COMMON STOCK DATA
Outstanding shares at
end of period 6,996,932 6,942,315 6,925,437
Weighted average shares
O/S Basic -QTD 6,977,503 6,940,154 6,937,801
Weighted average shares
O/S, diluted -QTD 6,980,331 6,943,189 6,938,359
CAPITAL RATIOS
Capital to Assets -
Common shareholders 8.97% 9.08% 8.79%
Capital to Assets -
with Noncontrolling
Interest 9.16% 9.33% 9.05%
Tangible common equity
ratio (4) 8.47% 8.54% 8.26%
Total risk based
capital ratio 14.16% 14.52% 14.10%
Tier 1 risk based
capital ratio 12.90% 13.26% 12.84%
Leverage ratio 9.11% 9.38% 9.04%
CREDIT QUALITY
Net charge-offs to
average loans 0.08% 0.12% 0.22%
Total non-performing
loans to total
portfolio loans 5.26% 5.36% 4.66%
Total non-performing
assets to total assets 3.66% 3.99% 3.54%
Non-accrual loans to:
total loans 4.76% 4.17% 4.46%
total assets 2.82% 2.55% 2.66%
Allowance for loan
losses to:
total portfolio loans 2.22% 2.20% 2.27%
non-performing assets 35.97% 33.65% 38.29%
non-accrual loans 46.67% 52.74% 50.93%
NON-PERFORMING ASSETS:
Loans delinquent over
90 days and still
accruing $3,242 $6,593 $909
Non-accrual loans 32,298 27,638 29,385
Restructured Loans 112 1,254 1,254
Other real estate owned
and repossessed assets 6,255 7,825 8,394
Total non-performing
assets $41,907 $43,310 $39,942
------- ------- -------
NET LOAN CHARGE-OFFS:
Loans charged off $621 $933 $1,600
Recoveries (32) (87) (42)
Net charge-offs $589 $846 $1,558
---- ---- ------
PROVISION FOR LOAN
LOSSES $1,087 $454 $655
------ ---- ----
ALLOWANCE FOR LOAN LOSS
SUMMARY
Balance at the
beginning of period $14,575 $14,967 $15,870
Provision 1,087 454 655
Net charge-offs (589) (846) (1,558)
Balance at the end of
period $15,073 $14,575 $14,967
------- ------- -------
(Unaudited. Dollars in
thousands except per Sep 30, Jun 30,
share data) 2010 2010
------- -------
BALANCE SHEET RATIOS
Loans to deposits
(Including HFS) 81.69% 83.43%
Portfolio loans to
deposits 73.05% 76.16%
Average interest-
earning assets to
average-interest
bearing liabilities 117.22% 117.69%
PER SHARE DATA
Dividends $0.10 $0.10
Book value (MFC
Shareholders) $14.22 $14.84
Tangible book value (3) $13.29 $13.91
SHARE PRICE DATA
Closing price $14.08 $13.91
Diluted earnings
multiple (1) NA 34.78
Book value multiple(2) 0.99 0.94
COMMON STOCK DATA
Outstanding shares at
end of period 6,915,687 6,914,687
Weighted average shares
O/S Basic -QTD 6,934,366 6,911,744
Weighted average shares
O/S, diluted -QTD 6,934,366 6,924,338
CAPITAL RATIOS
Capital to Assets -
Common shareholders 8.85% 9.67%
Capital to Assets -
with Noncontrolling
Interest 9.13% 9.92%
Tangible common equity
ratio (4) 8.32% 9.11%
Total risk based
capital ratio 13.54% 14.58%
Tier 1 risk based
capital ratio 12.29% 13.33%
Leverage ratio 9.08% 10.58%
CREDIT QUALITY
Net charge-offs to
average loans 0.47% 0.15%
Total non-performing
loans to total
portfolio loans 4.69% 2.81%
Total non-performing
assets to total assets 3.50% 2.64%
Non-accrual loans to:
total loans 4.57% 1.87%
total assets 2.69% 1.15%
Allowance for loan
losses to:
total portfolio loans 2.42% 1.54%
non-performing assets 40.84% 35.98%
non-accrual loans 53.04% 82.51%
NON-PERFORMING ASSETS:
Loans delinquent over
90 days and still
accruing $388 $6,188
Non-accrual loans 29,923 12,211
Restructured Loans 404 1,346
Other real estate owned
and repossessed assets 8,142 8,257
Total non-performing
assets $38,857 $28,002
------- -------
NET LOAN CHARGE-OFFS:
Loans charged off $3,351 $1,142
Recoveries (16) (56)
Net charge-offs $3,335 $1,086
------ ------
PROVISION FOR LOAN
LOSSES $9,130 $1,291
------ ------
ALLOWANCE FOR LOAN LOSS
SUMMARY
Balance at the
beginning of period $10,075 $9,870
Provision 9,130 1,291
Net charge-offs (3,335) (1,086)
Balance at the end of
period $15,870 $10,075
------- -------
(1) The diluted earnings multiple is calculated by dividing the period's
closing market price per share by the annualized diluted earnings
per share for the period. The diluted earnings multiple is a
measure of how much an investor may be willing to pay for $1.00 of
the Company's earnings. In quarters where the Company incurs net
losses, the diluted earnings multiple is not meaningful and is shown
as "NA".
(2) The book value multiple (or price to book ratio) is calculated by
dividing the period's closing market price per share by the period's
book value per share. The book value multiple is a measure used to
compare the Company's market value per share to its book value per
share.
(3) Tangible book value is not a measurement under accounting principles
generally accepted in the United States. It is computed by
subtracting identified intangible assets and goodwill from total
Middleburg Financial Corporation shareholders' equity and then
dividing the result by the number of shares of common stock issued
and outstanding at the end of the accounting period.
(4) The tangible common equity ratio is not a measurement under
accounting principles generally accepted in the United States. It
is computed by subtracting identified intangible assets and goodwill
from total Middleburg Financial Corporation shareholders' equity and
total assets and then dividing the adjusted shareholders' equity
balance by the adjusted total asset balance.
MIDDLEBURG FINANCIAL CORPORATION
Average Balances, Income and Expenses, Yields and Rates
-------------------------------------------------------
Three months ended June 30,
---------------------------
2011
----
Average Income/ Yield/
Rate
Balance Expense (2)
------- ------- -----
(Dollars in thousands)
Assets :
Securities:
Taxable $225,332 $1,787 3.18%
Tax-exempt (1) 55,400 915 6.62%
------ --- ----
Total securities $280,732 $2,702 3.86%
Loans (3) 701,701 $9,731 5.56%
Interest bearing deposits
in
other financial
institutions 47,222 32 0.27%
------ ---
Total earning assets $1,029,655 $12,465 4.86%
Less: allowances for
credit losses (14,672)
Total nonearning assets 94,479
------
Total assets $1,109,462
==========
Liabilities:
Interest-bearing
deposits:
Checking $294,374 $490 0.67%
Regular savings 96,570 205 0.85%
Money market savings 58,046 94 0.65%
Time deposits:
$100,000 and over 139,718 633 1.82%
Under $100,000 167,780 910 2.17%
------- --- ----
Total interest-bearing
deposits $756,488 $2,332 1.24%
Short-term borrowings 5,840 53 3.64%
Securities sold under
agreements
to repurchase 32,956 69 0.84%
Long-term debt 81,638 306 1.50%
Federal funds purchased 3 - 0.00%
--- ---
Total interest-bearing
liabilities $876,925 $2,760 1.26%
Non-interest bearing
liabilities
Demand deposits 122,380
Other liabilities 7,863
-----
Total liabilities $1,007,168
Non-controlling interest 1,999
Shareholders' equity 100,295
Total liabilities and
shareholders'
equity $1,109,462
==========
Net interest income $9,705
======
Interest rate spread 3.60%
Cost of funds 1.11%
Interest expense as a
percent of
average earning assets 1.07%
Net interest margin 3.78%
Three months ended June 30,
---------------------------
2010
----
Average Income/ Yield/
Rate
Balance Expense (3)
------- ------- -----
(Dollars in thousands)
Assets :
Securities:
Taxable $142,279 $1,112 3.13%
Tax-exempt (1) 56,248 909 6.48%
------ --- ----
Total securities $198,527 $2,021 4.08%
Loans (3) 709,042 $10,384 5.87%
Interest bearing deposits
in
other financial
institutions 47,566 28 0.24%
------ ---
Total earning assets $955,135 $12,433 5.22%
Less: allowances for
credit losses (9,956)
Total nonearning assets 92,346
------
Total assets $1,037,525
==========
Liabilities:
Interest-bearing
deposits:
Checking $286,485 $579 0.81%
Regular savings 77,173 188 0.98%
Money market savings 51,683 107 0.83%
Time deposits:
$100,000 and over 158,698 1,141 2.88%
Under $100,000 151,141 1,062 2.82%
------- ----- ----
Total interest-bearing
deposits $725,180 $3,077 1.70%
Short-term borrowings 6,030 67 4.46%
Securities sold under
agreements
to repurchase 24,977 61 0.98%
Long-term debt 55,375 488 3.53%
Federal funds purchased 35 - 0.00%
--- ---
Total interest-bearing
liabilities $811,597 $3,692 1.82%
Non-interest bearing
liabilities
Demand deposits 114,953
Other liabilities 6,328
-----
Total liabilities $932,878
Non-controlling interest 2,671
Shareholders' equity 101,976
Total liabilities and
shareholders'
equity $1,037,525
==========
Net interest income $8,741
======
Interest rate spread 3.40%
Cost of funds 1.60%
Interest expense as a
percent of
average earning assets 1.55%
Net interest margin 3.67%
(1) Income and yields are reported on tax equivalent basis assuming a
federal tax rate of 34%.
(2) All yields and rates have been annualized on a 365 day year.
(3) Total average loans include loans on non-accrual status.
MIDDLEBURG FINANCIAL CORPORATION
Average Balances, Income and Expenses, Yields and Rates
Six Months Ended June 30
------------------------
2011
----
Average Income/ Yield/
Rate
Balance Expense (2)
------- ------- -----
(Dollars in thousands)
Assets :
Securities:
Taxable $215,085 $3,222 3.02%
Tax-exempt (1) 54,691 1,765 6.51%
----- ----
Total securities $269,776 $4,987 3.73%
Loans (3) 698,183 19,466 5.62%
Interest bearing
deposits in
other financial
institutions 44,619 60 0.27%
------ ---
Total earning assets $1,012,578 $24,513 4.88%
Less: allowances for
credit losses (14,710)
Total nonearning assets 94,830
------
Total assets $1,092,698
==========
Liabilities:
Interest-bearing
deposits:
Checking $290,710 $976 0.68%
Regular savings 93,129 392 0.85%
Money market savings 59,451 195 0.66%
Time deposits:
$100,000 and over 135,205 1,238 1.85%
Under $100,000 168,156 1,838 2.20%
------- -----
Total interest-bearing
deposits $746,651 $4,639 1.25%
Short-term borrowings 5,789 117 4.08%
Securities sold under
agreements
to repurchase 31,141 125 0.81%
Long-term debt 78,205 602 1.55%
Federal Funds Purchased 2 - 0.00%
--- ---
Total interest-bearing
liabilities $861,788 $5,483 1.28%
Non-interest bearing
liabilities
Demand Deposits 122,370
Other liabilities 7,250
Total liabilities $991,408
Non-controlling
interest 2,397
Shareholders' equity 98,893
Total liabilities and
shareholders'
equity $1,092,698
==========
Net interest income $19,030
=======
Interest rate spread 3.60%
Cost of funds 1.12%
Interest expense as a
percent of
average earning assets 1.09%
Net interest margin 3.79%
Six Months Ended June 30
------------------------
2010
----
Average Income/ Yield/
Rate
Balance Expense (3)
------- ------- -----
(Dollars in thousands)
Assets :
Securities:
Taxable $131,074 $2,070 3.18%
Tax-exempt (1) 60,067 1,959 6.58%
------ ----- ----
Total securities $191,141 $4,029 4.25%
Loans (3) 694,025 20,829 6.05%
Interest bearing
deposits in
other financial
institutions 46,128 63 0.28%
------ ---
Total earning assets $931,294 $24,921 5.40%
Less: allowances for
credit losses (9,532)
Total nonearning assets 91,554
------
Total assets $1,013,316
==========
Liabilities:
Interest-bearing
deposits:
Checking $283,089 $1,180 0.84%
Regular savings 73,802 372 1.02%
Money market savings 51,321 222 0.87%
Time deposits:
$100,000 and over 160,065 2,291 2.89%
Under $100,000 144,086 2,185 3.06%
------- -----
Total interest-bearing
deposits $712,363 $6,250 1.77%
Short-term borrowings 5,428 111 4.12%
Securities sold under
agreements
to repurchase 23,319 81 0.70%
Long-term debt 50,781 926 3.68%
Federal Funds Purchased 23 - 0.00%
--- ---
Total interest-bearing
liabilities $791,914 $7,368 1.88%
Non-interest bearing
liabilities
Demand Deposits 110,496
Other liabilities 6,444
Total liabilities $908,854
Non-controlling
interest 2,698
Shareholders' equity 101,764
Total liabilities and
shareholders'
equity $1,013,316
==========
Net interest income $17,553
=======
Interest rate spread 3.52%
Cost of funds 1.65%
Interest expense as a
percent of
average earning assets 1.60%
Net interest margin 3.80%
(1) Income and yields are reported on tax equivalent basis assuming a
federal tax rate of 34%.
(2) All yields and rates have been annualized on a 365 day year.
(3) Total average loans include loans on non-accrual status.
SOURCE Middleburg Financial Corporation
