Middleburg Financial Corporation Announces First Quarter 2011 Results

MIDDLEBURG, Va., April 27, 2011 /PRNewswire/ -- Middleburg Financial Corporation (the "Company") (Nasdaq: MBRG), today announced net income of $1.2 million for the quarter ending March 31, 2011 representing an increase of 50.7% over the same quarter in 2010.

"First Quarter net income of $1.2 million created a nice foundation for continued earnings growth for Middleburg as we move forward into 2011," commented Gary R. Shook, President and Chief Executive Officer of Middleburg Financial Corporation. "While we were disappointed with the slight increase in non-performing assets, we are pleased with the strong growth in net interest income during the quarter, which helped to offset lower fee income from mortgage operations.  Our majority owned mortgage subsidiary, Southern Trust Mortgage capitalized upon recent disruptions in the market place by bringing aboard new loan officers and leadership, most notably in our Northern Virginia and Richmond markets." Mr. Shook went on to say, "Additionally, we are extremely pleased with the marked improvement in our commercial loan and investment management business pipelines These renewed signs of life bode well for the Company over the coming quarters.  While we do expect our non-performing assets to remain elevated through 2011, our strong focus on loan work-outs, sales of foreclosed properties, and expense controls along with new revenue growth creates the opportunity for increased profitability as the economy continues to improve."

First Quarter 2011 Highlights:

  • Net income of $1.2 million or $0.18 per diluted share, up 50.7% compared to first quarter of 2010;
  • Net interest margin of 3.80% compared to margin of 3.60% for fourth quarter of 2010;
  • Total revenue of $14.0 million, up 3.7%  compared to first quarter of 2010;
  • Loan growth of 0.5% during the quarter;
  • Total assets of $1.1 billion, down 1.8% from December 31, 2010;
  • Deposits decreased $24.9 million or 2.8% during the quarter;
  • Provision for loan losses for the quarter decreased by 51.1% compared to first quarter of 2010; and
  • Capital ratios continue to be strong: Tangible Common Equity Ratio of 8.54%, Total Risk-Based Capital Ratio of 14.5%, Tier I Risk-Based Capital Ratio of 13.3%, and a Tier 1 Leverage Ratio of 9.4% at March 31, 2011.

Total Revenue

Total revenue was $14.0 million in the quarter ended March 31, 2011 compared to $17.0 million in the previous quarter and $13.5 million in the quarter ended March 31, 2010, representing a decrease of 17.1% compared to the previous linked quarter and an increase of 3.7% compared to the calendar quarter ended March 31, 2010.    

Net interest income was $9.0 million during the three months ended March 31, 2011, which was unchanged compared to the quarter ended December 31, 2010 and an increase of 6.8% compared to the quarter ended March 31, 2010. The average yield on earning assets was 4.91% for the quarter ended March 31, 2011 compared to 4.78% for the previous quarter and 5.58% for the quarter ended March 31, 2010, representing an increase of 13 basis points from the previous quarter and a decrease of 67 basis points from the quarter ended March 31, 2010.   Average earning assets declined 3.1% compared to the previous quarter. The primary reason for the decline in earning assets during the first quarter was a reduction in balances of mortgage loans held-for-sale. The increase in yields on earning assets from the previous quarter reflected a decrease of 21 basis points in the yield of the securities portfolio and a 26 basis point increase in yields for the loan portfolio.      

The average cost of interest bearing liabilities was 1.30% for the quarter ended March 31, 2011, compared to 1.41% in the previous quarter, and 1.93% for the quarter ended March 31, 2010, representing a decrease of 11 basis points from the previous quarter and a decrease of 63 basis points from the quarter ended March 31, 2010.  Costs for wholesale borrowings increased by 2 basis points during the quarter, while costs for retail deposits decreased by 9 basis points during the same period.  The decline in the cost of retail deposits was driven by a 6 basis point decline in the cost of interest checking deposits and a 4 basis point decline in the cost of time deposits. Cost of funds is calculated by dividing total interest expense by the sum of average interest bearing liabilities and average demand deposits. Cost of funds was 1.14% for the quarter ended March 31, 2011 compared to 1.21% for the quarter ended December 31, 2010, a decrease of 7 basis points from the previous quarter

The net interest margin for the three months ended March 31, 2011 was 3.80%, compared to 3.60% for the previous quarter, and 3.94% for the quarter ended March 31, 2010, representing an increase of 20 basis points from the previous quarter and a decrease of 14 basis points compared to the quarter ended March 31, 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 declined by $3.0 million or 37.7% when comparing the quarter ended March 31, 2011 to the previous quarter, and declined by $103,000 or 2.0% compared to the calendar quarter ended March 31, 2010. The primary reason for the lower non-interest income in the first quarter of 2011 was a decline in gain-on-sale revenues from the Company's mortgage operations.

Southern Trust Mortgage originated $136.4 million in mortgage loans during the quarter ended March 31, 2011 compared to $227.7 million originated during the previous quarter, a decrease of 40%, and $149 million originated during the quarter ended March 31, 2010, a  decrease of 10% when comparing calendar quarters.  Gains on mortgage loan sales decreased by 48.6% when comparing the quarter ended March 31, 2011 to the previous quarter.  Gains on mortgage loan sales increased by 8.2% when comparing the quarter ended March 31, 2011 to the quarter ended March 31, 2010.  The decline in mortgage originations and the decrease in gain-on-sale revenue in the first quarter of 2011 was driven by an increase in mortgage rates during the first quarter.

The revenues and expenses of Southern Trust Mortgage for the three month period ended March 31, 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 operations as "Net (income) / loss attributable to non-controlling interest."

Trust and investment advisory service fees earned by Middleburg Trust Company ("MTC") increased by 3.5% when comparing the quarter ended March 31, 2011 to the previous quarter, and increased by 6.4% compared to the quarter ended March 31, 2010.  On January 3, 2011, Middleburg Investment Advisers was merged into Middleburg Trust Company and ceased operating as an independent company.  

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 $1.2 billion at March 31, 2011, a decrease of 7.6% relative to December 31, 2010 and an increase of 5.9% relative to March 31, 2010.  

Net securities gains were $34,000 during the quarter ended March 31. 2011 compared to net securities losses of $20,000 during the quarter ended December 31, 2010.  The net securities gains during the quarter ended March 31, 2011 included $1,000 of other than temporary impairment losses related to one trust preferred security identified as impaired under generally accepted accounting principles.

Non-Interest Expense

Non-interest expense in the first quarter of 2011 decreased by 13.5% compared to the previous quarter and increased by 2.5% compared to the quarter ended March 31, 2010.  

Salaries and employee benefit expenses decreased by $432,000 or 5.6% when comparing the first quarter of 2011 to the quarter ended December 31, 2010, primarily due to a decline in commission expenses. Expenses related to Other Real Estate Owned (OREO) decreased by $498,000 or 59.1% when comparing the first quarter of 2011 to the previous quarter. Other expenses, which include expenses such as supplies, travel and entertainment expenses fell by $841,000 when comparing the quarter ended March 31, 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 84.96% for the first quarter of 2011, compared to an efficiency ratio of 81.42% in the quarter ending December 31, 2010.  

Asset Quality and Provision for Loan Losses

The provision for loan losses in the quarter ended March 31, 2011 was $454,000 compared to a $655,000 provision in the quarter ended December 31, 2010 and a provision of $929,000 in the quarter ended March 31, 2010, representing a decrease of 30.7% from the previous quarter and a decrease of 51.1% from the quarter ended March 31, 2010.

The Allowance for Loan and Lease Losses (ALLL) at March 31, 2011 was $14.6 million representing 2.20% of total portfolio loans outstanding versus 2.27% at December 31, 2010 and 1.50% of total portfolio loans at March 31, 2010.

Loans that were delinquent for more than 90 days and still accruing were $6.6 million as of March 31, 2011 compared to $909,000 as of December 31, 2010. The increase in delinquent loans in the first quarter was primarily due to two credit relationships:

  1. Credit Relationship for $4.5 million –The loan has matured and negotiations are underway with the  borrower to resolve the delinquency status.  Management believes that the reserve provided for on this loan at March 31, 2011 is adequate.
  2. Credit Relationship for $1.6 million – The loan is secured with commercial real estate which is undergoing a tenant transition and is expected to be brought current in the near future.  Management believes that the loan is adequately collateralized and that no additional reserve is needed as of March 31, 2011.

Non-accrual loans were $27.6 million at the end of the first quarter compared to $29.4 million as of December 31, 2010, representing a decrease of 6.1% during the first quarter.  Restructured loans were $1.3 million at the end of the first quarter, unchanged from the balance of restructured loans as of December 31, 2010. Other Real Estate Owned (OREO) was $7.8 million as of March 31, 2011 compared to $8.4 million as of December 31, 2010, representing a decrease of 7.1% during the first quarter. Non-performing assets were $43.3 million or 4.0% of total assets at March 31, 2011, compared to $39.9 million or 3.5% of total assets as of December 31, 2010.  

Total Consolidated Assets

Total assets at March 31, 2011 were $1.1 billion, a decrease of $20.3 million or 1.8% compared to total assets at December 31, 2010.  

Growth in total portfolio loans was $3.2 million or 0.5% for the first quarter. The securities portfolio increased by $6.4 million or 2.5% in the first quarter relative to the previous quarter. Balances of mortgages held for sale declined by $5.0 million or 42.0% in the first quarter of 2011.   Cash balances and deposits at other banks decreased by 5.3% in the first quarter of 2011.  

Deposits and Other Borrowings

Total deposits decreased by 2.8% in the first quarter.  Brokered deposits, including CDARS program funds, were $93.1 million at March 31, 2011, down $29.2 million or 23.8% from December 31, 2010. Brokered deposit balances declined in the first quarter as the Company used proceeds from sales of mortgage loans to pay off maturing deposits. FHLB advances were $72.9 million at March 31, 2011, up $10 million from December 31, 2010, or an increase of 15.9%.    

Equity and Capital

Total shareholders' equity at March 31, 2011 was $98.4 million, compared to shareholders' equity of $97.0 million as of December 31, 2010. Retained earnings at March 31, 2011 were $38.5 million compared to $37.6 million at December 31, 2010. The book value of the Company's common stock at March 31, 2011 was $14.18 per share.  The Company's total risk-based capital ratio increased from 14.1% at December 31, 2010 to 14.5% at March 31, 2011, the Tier 1 risk-based capital ratio increased from 12.8% to 13.3% and the Tier 1 Leverage Ratio increased from 9.0% to 9.4% during the same period.  The increases in the risk-based capital ratios resulted from increased capital levels from December 31, 2010 to March 31, 2011 due to quarterly earnings and a slight decrease in average assets from the quarter ended December 31, 2010 to the quarter ended March 31, 2011.

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 Three Months






Ended March 31,






2011


2010

INTEREST INCOME






Interest and fees on loans

$            9,735


$         10,445


Interest and dividends on securities available for sale






Taxable



1,399


938



Tax-exempt


561


693



Dividends



36


21


Interest on deposits in banks and federal funds sold

27


35



   Total interest and dividend income

11,758


12,132









INTEREST EXPENSE






Interest on deposits


2,308


3,174


Interest on securities sold under agreements to





 repurchase



56


20


Interest on short-term borrowings

63


44


Interest on long-term debt

296


438



   Total interest expense

2,723


3,676









NET INTEREST INCOME


9,035


8,456


Provision for loan losses

454


929









NET INTEREST INCOME AFTER PROVISION





FOR LOAN LOSSES


8,581


7,527









NONINTEREST INCOME






Service charges on deposit accounts

489


441


Trust services income


867


815


Net gains on loans held for sale

2,847


2,630


Net gains on securities available for sale

35


506


Total other-than-temporary impairment (loss) gain on securities

343


(41)


Portion of (gain) loss recognized in other comprehensive income

(344)


(110)


   Net impairment loss on securities

(1)


(151)


Commissions on investment sales

180


144


Fees on mortgages held for sale

154


358


Other service charges, commissions and fees

115


113


Bank-owned life insurance

123


125


Other operating income


160


91



   Total noninterest income

4,969


5,072









NONINTEREST EXPENSE





Salaries and employees' benefits

7,316


6,924


Net occupancy and equipment expense

1,676


1,604


Advertising



156


180


Computer operations


365


328


Other real estate owned


344


210


Other taxes



197


196


Federal deposit insurance expense

407


801


Other operating expenses

1,775


1,700



   Total noninterest expense

12,236


11,943









Income before income taxes

1,314


656

Income tax expense


317


87








NET INCOME 

997


569

Net (income) loss attributable to non-




 controlling interest 

230


245


Net income attributable to Middleburg





 Financial Corporation


$            1,227


$              814









Earnings per share:






Basic



$             0.18


$             0.12


Diluted



$             0.18


$             0.12



MIDDLEBURG FINANCIAL CORPORATION

CONSOLIDATED BALANCE SHEETS

(In thousands, except for share and per share data)





(Unaudited)






March 31,


December 31,




2011


2010

ASSETS






Cash and due from banks

$

22,060

$

21,955


Interest-bearing deposits with other institutions


39,237


42,769


    Total cash and cash equivalents


61,297


64,724


Securities available for sale


258,412


252,042


Loans held for sale


34,407


59,361


Restricted securities, at cost


6,746


6,296


Loans receivable, net of allowance for loan losses of $14,575 at






 March 31, 2011 and $14,967 at December 31, 2010.


647,985


644,345


Premises and equipment, net


20,908


21,112


Goodwill and identified intangibles


6,317


6,360


Other real estate owned, net of valuation allowance of






 $1,187 at March 31, 2011 and $1,486 at December 31, 2010.


7,825


8,394


Prepaid federal deposit insurance


4,791


5,154


Accrued interest receivable and other assets


35,601


36,779









   TOTAL ASSETS

$

1,084,289

$

1,104,567







LIABILITIES






Deposits:






     Non-interest-bearing demand deposits

$

122,888

$

130,488


     Savings and interest-bearing demand deposits


448,065


436,718


     Time deposits


294,502


323,100



  Total deposits


865,455


890,306


Securities sold under agreements to repurchase


27,963


25,562


Short-term borrowings


4,244


13,320


Long-term debt


72,912


62,912


Subordinated notes


5,155


5,155


Accrued interest payable and other liabilities


7,353


7,319









   TOTAL LIABILITIES


983,082


1,004,574







SHAREHOLDERS' EQUITY 






Common stock ($2.50 par value; 20,000,000 shares authorized,







6,945,261 issued; 6,942,315 and 6,925,437 outstanding at







March 31, 2011 and December 31, 2010, respectively)


17,314


17,314


Capital surplus 


43,105


43,058


Retained earnings 


38,473


37,593


Accumulated other comprehensive loss 


(480)


(1,012)



   Total Middleburg Financial Corporation shareholders' equity


98,412


96,953


Non-controlling interest in consolidated subsidiary


2,795


3,040









   TOTAL SHAREHOLDERS' EQUITY


101,207


99,993















   TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

1,084,289

$

1,104,567




QUARTERLY SUMMARY INCOME STATEMENTS

MIDDLEBURG FINANCIAL CORPORATION

(Unaudited. Dollars in thousands except per share data)


For the Three Months Ended


Mar. 31, 2011


Dec. 31, 2010


Sep. 30, 2010


Jun. 30, 2010


Mar. 31, 2010

Interest and Dividend Income










 Interest and fees on loans

$            9,735


$            9,887


$           9,832


$          10,384


$          10,445

 Interest on securities available for sale










    Taxable

1,399


1,539


1,166


1,090


938

    Exempt from federal income taxes

561


600


621


600


693

    Dividends

36


30


32


22


21

 Interest on federal funds sold and other

27


32


36


28


35

     Total interest and dividend income

$          11,758


$          12,088


$         11,687


$          12,124


$          12,132

Interest Expense










 Interest on deposits

$            2,308


$            2,623


$           3,160


$            3,077


$            3,174

 Interest on securities sold under agreements to repurchase

56


61


63


60


20

 Interest on short-term borrowings

63


148


134


67


44

 Interest on long-term debt

296


246


372


488


438

     Total interest expense

$            2,723


$            3,078


$           3,729


$            3,692


$            3,676

     Net interest income

$            9,035


$            9,010


$           7,958


$            8,432


$            8,456

Provision for loan losses

454


655


9,130


1,291


929

     Net interest income (loss) after provision










      for loan losses

$            8,581


$            8,355


$         (1,172)


$            7,141


$            7,527

Other Income










Trust services income

$               867


$               838


$              807


$               875


$               815

Service charges on deposit accounts

489


488


487


468


441

Net gains (losses) on securities available for sale

35


109


288


(37)


506

Total other-than-temporary impairment gain (loss) on securities

343


(44)


(557)


(97)


(41)

  Portion of (gain) loss recognized in other comprehensive income

(344)


(85)


(169)


-


(110)

Net other-than-temporary impairment loss

(1)


(129)


(726)


(97)


(151)

Commissions on investment sales

180


169


142


167


144

Bank owned life insurance

123


112


136


130


125

Gain on loans held for sale

2,847


5,537


5,147


3,844


2,630

Fees on loans held for sale

154


570


477


476


358

Other service charges, commissions and fees

115


114


97


143


113

Other operating income

160


169


42


88


91

      Total other income

$            4,969


$            7,977


$           6,897


$            6,057


$            5,072

Other Expense










 Salaries and employee benefits

$            7,316


$            7,748


$           7,464


$            7,457


$            6,924

 Net occupancy expense of premises

1,676


1,598


1,557


1,490


1,604

 Other taxes

197


200


201


201


196

 Advertising

156


386


257


248


180

 Computer operations

365


316


340


340


328

 Other real estate owned

344


842


666


295


210

 Audits and examinations

126


219


96


162


115

 Legal fees

89


50


96


167


139

 FDIC insurance

407


386


368


352


801

 Other operating expenses

1,560


2,401


3,342


1,554


1,446

      Total other expense

$          12,236


$          14,146


$         14,387


$          12,266


$          11,943











      Income (loss) before income taxes

$            1,314


$            2,186


$         (8,662)


$               932


$               656

      Income tax expense (benefit)

317


573


(3,297)


75


87

      Net income (loss)

$               997


$            1,613


$         (5,365)


$               857


$               569

Less:  Net (income) loss attributable to non-controlling interest

230


(51)


(423)


(133)


245

      Net income (loss) attributable to Middleburg Financial Corporation

$            1,227


$            1,562


$         (5,788)


$               724


$               814











Net income (loss) per common share, basic

$              0.18


$              0.23


$           (0.83)


$              0.10


$              0.12

Net income (loss) per common share, diluted

$              0.18


$              0.23


$           (0.83)


$              0.10


$              0.12

Dividends per common share

$              0.05


$              0.05


0.10


$              0.10


$              0.10



MIDDLEBURG FINANCIAL CORPORATION

KEY STATISTICS

(Unaudited. Dollars in thousands except per share data)


For the Three Months Ended




Mar 31, 2011


Dec 31, 2010


Sep 30, 2010


Jun 30, 2010


Mar 31, 2010














Net Income (dollars in thousands)


$      1,227


$      1,562


$    (5,788)


$         724


$         814


Earnings (loss) per share, basic


$       0.18


$        0.23


$      (0.83)


$        0.10


$        0.12


Earnings (loss) per share, diluted


$       0.18


$        0.23


$      (0.83)


$        0.10


$        0.12


Dividend per share


$       0.05


$        0.05


$       0.10


$        0.10


$        0.10














Return on average total assets - Year to Date


0.46%


-0.25%


-2.11%


0.28%


0.33%


Return on average total equity - Year to Date


5.11%


-2.71%


-22.03%


2.85%


3.25%


Dividend payout ratio


27.78%


22.21%


NA


100.00%


84.90%


Non-interest revenue to total revenue (1)


35.02%


39.82%


38.56%


34.05%


28.00%














Net interest margin (2)


3.80%


3.60%


3.27%


3.67%


3.94%


Yield on average earning assets


4.91%


4.78%


4.74%


5.22%


5.58%


Yield on average interest-bearing liabilities


1.30%


1.41%


1.73%


1.82%


1.93%


Net interest spread


3.61%


3.37%


3.01%


3.40%


3.65%














Non-interest income to average assets (3)


1.82%


2.88%


2.69%


2.39%


1.93%


Non-interest expense to average assets (3)


4.53%


5.09%


5.29%


4.73%


4.90%














Efficiency ratio - QTD (Tax Equiv)  (4)


84.96%


81.42%


91.77%


81.78%


87.85%



  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 share data)


Mar 31, 2011


Dec 31, 2010


Sep 30, 2010


Jun 30, 2010


Mar 31, 2010

BALANCE SHEET RATIOS












Loans to deposits (Including HFS)


80.53%


80.72%


81.69%


83.43%


84.69%


Average interest-earning assets to












   average-interest bearing liabilities


117.58%


118.50%


117.22%


117.69%


117.51%

PER SHARE DATA












Dividends


$               0.05


$               0.05


$               0.10


$            0.10


$               0.10


Book value (MFC Shareholders)


$             14.18


$             14.02


$             14.22


$          14.84


$             14.65


Tangible book value (3)


$             13.27


$             13.10


$             13.29


$          13.91


$             13.71

SHARE PRICE DATA












Closing price


$             17.75


$             14.26


$             14.08


$          13.91


$             15.06


Diluted earnings multiple  (1)


24.65


15.50


NA


34.78


31.38


Book value multiple(2)


1.25


1.02


0.99


0.94


1.03













COMMON STOCK DATA












Outstanding shares at end of period


6,942,315


6,925,437


6,915,687


6,914,687


6,909,293


Weighted average shares O/S Basic  - QTD


6,940,154


6,937,801


6,934,366


6,911,744


6,909,293


Weighted average shares O/S, diluted - QTD


6,943,189


6,938,359


6,934,366


6,924,338


6,912,173

CAPITAL RATIOS  












Capital to Assets - Common shareholders


9.08%


8.79%


8.85%


9.67%


9.94%


Capital to Assets - with Noncontrolling Interest


9.33%


9.05%


9.13%


9.92%


10.20%


Tangible common equity ratio (4)


8.54%


8.26%


8.32%


9.11%


9.36%


Total risk based capital ratio


14.59%


14.10%


13.54%


14.58%


15.02%


Tier 1 risk based capital ratio


13.33%


12.84%


12.29%


13.33%


13.77%


Leverage ratio


9.37%


9.04%


9.08%


10.58%


10.71%

CREDIT QUALITY












Net charge-offs to average loans


0.12%


0.22%


0.47%


0.15%


0.04%


Total non-performing loans to total portfolio loans


5.36%


4.66%


4.69%


2.81%


2.00%


Total non-performing assets to total assets


3.99%


3.54%


3.50%


2.64%


1.88%


Non-accrual loans to:












     total loans


4.17%


4.46%


4.57%


1.87%


1.46%


     total assets


2.55%


2.66%


2.69%


1.15%


0.94%


Allowance for loan losses to:












     total portfolio loans


2.20%


2.27%


2.42%


1.54%


1.50%


     non-performing assets


33.65%


38.29%


40.84%


35.98%


51.43%


     non-accrual loans


52.74%


50.93%


53.04%


82.51%


102.67%

NON-PERFORMING ASSETS:












   Loans delinquent over 90 days and still accruing


$             6,593


$                909


$                388


$          6,188


$             3,544


   Non-accrual loans    


27,638


29,385


29,923


12,211


9,613


   Restructured Loans


1,254


1,254


404


1,346


-


   Other real estate owned and repossessed assets


7,825


8,394


8,142


8,257


6,034


Total non-performing assets


$           43,310


$           39,942


$           38,857


$        28,002


$           19,191

NET LOAN CHARGE-OFFS:












   Loans charged off


$                933


$             1,600


$             3,351


$          1,142


$                291


   (Recoveries)


(87)


(42)


(16)


(56)


(47)


Net charge-offs


$                846


$             1,558


$             3,335


$          1,086


$                244

PROVISION FOR LOAN LOSSES


$                454


$                655


$             9,130


$          1,291


$                929

ALLOWANCE FOR LOAN LOSS SUMMARY












Balance at the beginning of period


$           14,967


$           15,870


$           10,075


$          9,870


$             9,185


Provision


454


655


9,130


1,291


929


Net charge-offs


(846)


(1,558)


(3,335)


(1,086)


(244)


Balance at the end of period


$           14,575


$           14,967


$           15,870


$        10,075


$             9,870















  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.


Average Balances, Income and Expenses, Yields and Rates


Three Months Ended March 31




2011






2010




Average


Income/


Yield/


Average


Income/


Yield/


Balance


Expense


Rate  (2)


Balance


Expense


Rate  (2)


(Dollars in thousands)

Assets :












Securities:












  Taxable

$    204,725


$         1,435


2.84%


$    119,744


$            959


3.25%

  Tax-exempt (1)

53,974


850


6.39%


63,929


1,050


6.66%

      Total securities

$    258,699


$         2,285


3.58%


$    183,673


$         2,009


4.44%

Loans












  Taxable

$    694,628


$         9,735


5.68%


$    678,854


$       10,445


6.24%

      Total loans (3)

$    694,628


$         9,735


5.68%


$    678,854


$       10,445


6.24%

Federal funds sold

-


-


0.00%


-


-


0.00%

Interest bearing deposits in












    other financial institutions

41,980


27


0.26%


44,677


35


0.32%

      Total earning assets

$    995,307


$       12,047


4.91%


$    907,204


$       12,489


5.58%

Less: allowances for credit losses

(14,747)






(9,104)





Total nonearning assets

95,185






90,757





Total assets

$ 1,075,745






$    988,857

















Liabilities:












Interest-bearing deposits:












   Checking

$    287,005


$            486


0.69%


$    279,655


$            601


0.87%

   Regular savings

89,650


187


0.85%


70,393


183


1.05%

   Money market savings

60,872


101


0.67%


50,957


115


0.92%

   Time deposits:












      $100,000 and over

130,641


605


1.88%


161,447


1,152


2.89%

      Under $100,000

168,537


929


2.24%


136,953


1,123


3.33%

      Total interest-bearing deposits

$    736,705


$         2,308


1.27%


$    699,405


$         3,174


1.84%













Short-term borrowings

5,739


63


4.45%


4,843


44


3.68%

Securities sold under agreements












   to repurchase

29,308


56


0.77%


21,643


20


0.37%

Long-term debt

74,734


296


1.61%


46,136


438


3.85%

   Total interest-bearing liabilities

$    846,486


$         2,723


1.30%


$    772,027


$         3,676


1.93%

Non-interest bearing liabilities












   Demand Deposits

122,118






105,994





   Other liabilities

6,873






6,563





Total liabilities

$    975,477






$    884,584





Non-controlling interest

2,830






2,725





Shareholders' equity

97,438






101,548





Total liabilities and shareholders'












  equity

$ 1,075,745






$    988,857

















Net interest income



$         9,324






$         8,813















Interest rate spread





3.61%






3.65%

Cost of funds





1.14%






1.70%

Interest expense as a percent of












   average earning assets





1.11%






1.64%

Net interest margin





3.80%






3.94%













(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



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