Middleburg Financial Corporation Announces First Quarter 2013 Results

01 May, 2013, 10:30 ET from Middleburg Financial Corporation

MIDDLEBURG, Va., May 1, 2013 /PRNewswire/ -- Middleburg Financial Corporation (the "Company") (Nasdaq: MBRG), today announced net income of $1.3 million or $0.19 per diluted share for the first quarter of 2013.

"The real story for Middleburg in the first quarter relates to the significant drop in non-accrual loans and total non-performing assets," commented Gary R. Shook, president and CEO of Middleburg Financial Corporation.  "Non-accrual loans dropped 10% and total non-performing assets as a percentage of total assets fell to 2.77%.  Both of these metrics are continued evidence of the positive trend that began to take hold in early 2012." Mr. Shook continued, "Another positive for the quarter was the stabilization of the net interest margin.  While the current monetary policy of quantitative easing can contribute to margin compression, our management team is very focused on maintaining our margins with particular emphasis on cost of funds and loan yields."

First Quarter 2013 Highlights:

  • Net income of $1.3 million or $0.19 per diluted share, compared to $1.6 million or $0.23 per diluted share for the first quarter of 2012, a decrease of 19.0% when comparing calendar quarters;
  • Net interest margin of 3.45%, compared to 3.42% for the previous quarter and 3.69% for the first quarter of 2012;
  • Total revenue of $15.3  million, a decrease of 2.5% compared to the first quarter of 2012;
  • Total assets of $1.2 billion, a decrease of 1.9% compared to December 31, 2012;
  • Deposits decreased by $15.8 million or 1.6% since December 31, 2012;
  • Loans held-for-investment increased by $5.1 million or 0.7% since December 31, 2012;
  • Credit quality improved with Non Accrual Loans declining 7.6% since December 31, 2012;
  • The ratio of Non Performing Assets to Total Assets was 2.77% as of March 31, 2013 compared to 3.05% at December 31, 2012 and 3.21% at March 31, 2012;
  • Capital ratios continue to be strong: Tangible Common Equity Ratio of 9.0%, Total Risk-Based Capital Ratio of 15.6%, Tier 1 Risk-Based Capital Ratio of 14.4%, and a Tier 1 Leverage Ratio of 9.1% at March 31, 2013.

Total Revenue

Total revenue which is comprised of Net Interest Income (before a provision for loan losses) and Non Interest Income was $15.3 million in the quarter ended March 31, 2013, representing a decrease of 12.4% compared to the previous quarter and a decrease of $392,000 or 2.5% from the quarter ended March 31, 2012.

The net interest margin for the three months ended March 31, 2013 was 3.45%, compared to 3.42% for the previous quarter, and 3.69% for the quarter ended March 31, 2012, representing an increase of 3 basis points from the previous quarter and a decrease of 24 basis points compared to the quarter ended March 31, 2012.

Net interest income was $9.4 million during the three months ended March 31, 2013, which was 1.2% lower than the quarter ended December 31, 2012 and a decrease of 3.4% compared to the quarter ended March 31, 2012. The yield on average earning assets was 4.08% for the quarter ended March 31, 2013 unchanged from the previous quarter and 4.56% for the quarter ended March 31, 2012, representing no change from the previous quarter and a decrease of 48 basis points from the quarter ended March 31, 2012. Loan yields decreased by 4 basis points while the yield for the securities portfolio increased by 14 basis points from the previous quarter.  

The average annualized cost of interest bearing liabilities was 0.78% for the quarter ended March 31, 2013, compared to 0.82% in the previous quarter, and 1.06% for the quarter ended March 31, 2012, representing a decrease of 4 basis points from the previous quarter and a decrease of 28 basis points from the quarter ended March 31, 2012.  Annualized costs for interest bearing retail deposits decreased by 3 basis points from the previous quarter to 0.69% from 0.72% and decreased by 28 basis points from the same quarter last year.  The decline in the annualized cost of interest bearing retail deposits from both the previous quarter and the same quarter last year was due to reduced interest expenses broadly across deposit categories, including interest checking, savings and time deposits. An annualized cost for wholesale borrowings (excluding brokered deposits) was 1.47%, unchanged compared to the previous quarter and higher by 11 basis points compared to the quarter ended March 31, 2012.  

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 0.66% for the quarter ended March 31, 2013 compared to 0.69% for the quarter ended December 31, 2012, a decrease of 3 basis points.  Cost of funds decreased 25 basis points compared to the quarter ended March 31, 2012.

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 34.0%. Details on the calculation of the net interest margin are included in the "Key Statistics" table.

Non-interest income decreased by $2 million or 25.7% when comparing the quarter ended March 31, 2013 to the previous quarter and decreased by 0.9% compared to the quarter ended March 31, 2012. Gains on mortgage loan sales decreased by 34.3% when comparing the quarter ended March 31, 2013 to the previous quarter and increased by 1.1% when compared to the quarter ended March 31, 2012.  Gains on mortgage loan sales included in the accompanying statements of income are presented net of originator commissions incurred to originate the loans.  

Southern Trust Mortgage closed $191.1 million in mortgage loans during the quarter ended March 31, 2013 compared to $249.2 million closed during the previous quarter, and $210.8 million closed during the quarter ended March 31, 2012, a decrease of 23.3% compared to the previous quarter and a decrease of 9.3% when comparing the same calendar quarters. 

The revenues and expenses of Southern Trust Mortgage are 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 sheets as "Non-controlling interest in consolidated subsidiary" and the earnings or loss attributable to the non-controlling interest is reported on the Company's statements of income as "Net (income) / loss attributable to non-controlling interest."

Total revenue generated by our wealth management group, Middleburg Investment Group ("MIG") was $1.0 million for the quarter ended March 31, 2013 unchanged from the previous quarter and $1.1 million in the quarter ended March 31, 2012. Middleburg Investment Group is comprised of Middleburg Trust Company, a wholly owned subsidiary of the Company and Middleburg Investment Services, which is a division of Middleburg Bank.  Fee income is based primarily upon the market value of the accounts under administration. Total consolidated assets under administration by MIG were $1.5 billion at March 31, 2013, an increase of 6% relative to March 31, 2012.

Net securities gains were $47,000 during the quarter ended March 31, 2013 compared to losses of $7,000 during the previous quarter and gains of $140,000 during the quarter ended March 31, 2012.

The following table presents dollar and percentage changes in components of non-interest income for the periods ended March 31, 2013 and March 31, 2012:

MIDDLEBURG FINANCIAL CORPORATION 

Non-Interest Income

(in thousands)

For the three months ended

Dollar

Percent

3/31/2013

3/31/2012

Change

Change

Service charges on deposit accounts

$         534

$        530

$         4

0.8%

Trust services income

960

921

39

4.2%

Net gains on loans held for sale

3,893

3,852

41

1.1%

Net gains on securities available for sale

47

140

(93)

-66.4%

Net commissions on investment sales

94

147

(53)

-36.1%

Other service charges, commissions and fees

130

150

(20)

-13.3%

Bank-owned life insurance

120

122

(2)

-1.6%

Other operating income

150

122

28

23.1%

    Total non-interest income

$      5,928

$     5,984

$      (56)

-0.9%

Non-Interest Expense

Total non-interest expense in the first quarter of 2013 was 1% higher compared to the previous quarter and increased by $614,000 or 4.6% compared to the quarter ended March 31, 2012.  

Salaries and employee benefit expenses decreased by $479,000 or 5.8% when comparing the first quarter of 2013 to the previous quarter. Salaries and employee benefits increased by $442,000 or 6.0% versus the first quarter of 2012.  The increase in salaries and employee benefit expenses was primarily due to staffing expenses for the financial service center in Richmond which opened in the fourth quarter of 2012.

Expenses related to Other Real Estate Owned ("OREO") increased by $765,000 when comparing the first quarter of 2013 to the previous quarter and increased by $534,000 versus the quarter ended March 31, 2012. The increase in this expense was primarily related to losses incurred on the sale of two large OREO properties during the first quarter.  The liquidation of these properties reduced non-performing assets by approximately $2.0 million and contributed to the decline in the Company's non-performing assets ratio from 3.05% at December 31, 2012 to 2.77% at March 31, 2013.

Advertising expense was lower by 57.8% compared to the previous quarter and decreased by $32,000 or 10.7% from the quarter ended March 31, 2012.  Advertising expenses in the fourth quarter of 2012 were impacted by costs for promotions related to the Richmond financial service center.

Other operating expenses decreased by $429,000 or 15.6% from the quarter ended March 31, 2012 primarily due to lower mortgage banking related expenses.

The following table presents dollar and percentage changes in components of non-interest expense for the periods ended March 31, 2013 and March 31, 2012:

MIDDLEBURG FINANCIAL CORPORATION 

Non-Interest Expense

(in thousands)

For the three months ended

Dollar

Percent

3/31/2013

3/31/2012

Change

Change

Salaries and employees' benefits

$      7,799

$     7,357

$      442

6.0%

Net occupancy and equipment expense

1,805

1,778

27

1.5%

Advertising

268

300

(32)

-10.7%

Computer operations

461

385

76

19.7%

Other real estate owned

820

286

534

186.7%

Other taxes

192

203

(11)

-5.4%

Federal deposit insurance expense

265

258

7

2.7%

Other operating expenses

2,318

2,747

(429)

-15.6%

    Total non-interest expense

$    13,928

$   13,314

$      614

4.6%

 

The Company's efficiency ratio was 80.9% for the first quarter of 2013, compared to an efficiency ratio of 77.2% for the first quarter of 2012.  The efficiency ratio is not a measurement under accounting principles generally accepted in the United States.  The Company calculates its efficiency ratio by dividing non interest expense (adjusted for amortization of intangibles, other real estate expenses, and non-recurring one-time charges) 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 in calculating tax equivalent amounts is 34%. The Company calculates and reviews this ratio as a means of evaluating operational efficiency. 

Asset Quality and Provision for Loan Losses

Non Performing Asset balances have decreased by 11.0% since December 31, 2012 while net charge-offs have declined in three consecutive quarters beginning in the quarter ended September 30, 2012. Substantially all of the net charge-offs during the first quarter were fully reserved at December 31, 2012.  As a result of the drop in non-performing assets and charge-offs, the Company recorded a negative loan loss provision of $188,000 for the quarter ended March 31, 2013 versus $792,000 for the quarter ended March 31, 2012.  The negative provision allowed the reserve ratio to decrease to 1.89% of portfolio loans at March 31, 2013 from 2.02% at December 31, 2012.  After this quarter's reserve decrease, the coverage ratio for non-performing assets (allowance for loan losses balance divided by non-performing assets) increased to 40.2% of nonperforming assets from 37.9% at December 31, 2012. 

The Allowance for Loan and Lease Losses (ALLL) was $13.5 million representing 1.89% of loans held for investment at March 31, 2013 compared to $14.3 million representing 2.02% of loans held for investment at December 31, 2012.  The decrease in the ALLL balance as a percentage of loans held for investment occurred primarily due to an increase in the balance of loans held for investment and lower loss reserves resulting from improved credit quality over three consecutive quarters beginning in the quarter ended September 30, 2012. 

Loans that were delinquent for more than 90 days and still accruing were $812,000 as of March 31, 2013 compared to $1.0 million as of December 31, 2012, and $167,000 as of March 31, 2012, representing a decrease of 22.2% compared to the previous quarter and a 386.2% increase compared to the quarter ended March 31, 2012.

Non-accrual loans were $20.0 million at the end of the first quarter of 2013 compared to $21.7 million as of December 31, 2012 and $22.2 million at March 31, 2012, representing a decrease of 7.6% during the first quarter of 2013 and a decrease of 10.0% since March 31, 2012. Troubled debt restructurings that were performing as agreed were $4.9 million at the end of the first quarter of 2013, compared to $5.1 million for the quarter ended December 31, 2012, representing a decrease of 5.4% during the quarter. Other Real Estate Owned (OREO) was $7.9 million as of March 31, 2013 compared to $9.9 million as of December 31, 2012, representing a decrease of 20.4% during the first quarter of 2013. Total non-performing assets were $33.6 million or 2.77% of total assets at March 31, 2013, compared to $37.8 million or 3.05% of total assets as of December 31, 2012 and $38.6 million or 3.21% of total assets as of March 31, 2012.

The net loan charge-offs during the first quarter of 2013 were $615,000 compared to net charge-offs of $911,000 for the previous quarter and $554,000 in net loan charge-offs for the quarter ended March 31, 2012.

Total Consolidated Assets

Total assets at March 31, 2013 were $1.2 billion, lower by $23.0 million or 1.9% from December 31, 2012 and an increase of 0.9% from March 31, 2012.

Total loans held for investment increased by $5.1 million or 0.7% in the first quarter of 2013 from the end of the fourth quarter of 2012.  Loans held for investment increased by $32.2 million or 4.7% from March 31, 2012.  The securities portfolio (excluding restricted stock) increased by $12.2 million or 3.8% in the first quarter of 2013 relative to the previous quarter and increased by $8.1 million or 2.5% from March 31, 2012. Balances of mortgages held for sale decreased by $33.4 million or 40.7% at March 31, 2013 compared to the previous quarter end balance.  Cash balances and deposits at other banks decreased by 7.3% at the end of the first quarter of 2013 compared to the previous quarter end and increased by $5.4 million or 12.0% from the balances at March 31, 2012.   

Deposits and Other Borrowings

Total deposits decreased by $15.8 million or 1.6% from December 31, 2012 to March 31, 2013 and increased by $14.3 million or 1.5% from March 31, 2012.  Brokered deposits, including CDARS program funds, were $64.2 million at March 31, 2013, down 1.4% from December 31, 2012. FHLB advances were $85.0 million at March 31, 2013, an increase of $7.1 million compared to December 31, 2012.   

Equity and Capital

Shareholders' equity attributable to Middleburg Financial Corporation shareholders at March 31, 2013 was $114.8 million, compared to $113.9 million as of December 31, 2012 and $107.9 million at March 31, 2012.  Retained earnings at March 31, 2013 were $47.2 million compared to $46.2 million at December 31, 2012 and $42.4 million at March 31, 2012. The book value of the Company's common stock at March 31, 2013 was $16.28 per share versus $16.15 per share at December 31, 2012.

The Company's total risk-based capital ratio increased to 15.6% as of March 31, 2013 from 15.4% at December 31, 2012.  The Tier 1 risk-based capital ratio also increased from 14.1% at December 31, 2012 to 14.4% at March 31, 2013.  The Tier 1 Leverage Ratio remained unchanged from December 31, 2012 to March 31, 2013 at 9.1%.   

As depicted in the following table, the Company's risk-based capital ratios remain well above regulatory minimum capital ratios:

MIDDLEBURG FINANCIAL CORPORATION

Risk-Based Capital Ratios

March 31, 2013

(1)

MFC

Regulatory

Excess

Minimum

MFC

over

Requirement

Ratios

Minimum

Tier 1 Leverage Ratio

4.0%

9.1%

5.1%

Tier 1 Risk-Based Capital Ratio

4.0%

14.4%

10.4%

Total Risk-Based Capital Ratio

8.0%

15.6%

7.6%

(1) Under the regulatory framework for prompt corrective action.

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, 2012, 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,  Richmond, 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 offices in Virginia, Maryland, Georgia, North Carolina, and South Carolina.

MIDDLEBURG FINANCIAL CORPORATION 

Consolidated Balance Sheets

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

(Unaudited)

(Audited)

March 31,

December 31,

2013

2012

ASSETS

Cash and due from banks

$

6,697

$

7,139

Interest-bearing deposits with other institutions

43,753

47,276

     Total cash and cash equivalents

50,450

54,415

Securities available for sale

331,650

319,457

Loans held for sale

48,721

82,114

Restricted securities, at cost

7,005

6,990

Loans receivable, net of allowance for loan losses of $13,508 at

  March 31, 2013 and $14,311 at December 31, 2012

701,078

695,166

Premises and equipment, net

20,418

20,587

Goodwill and identified intangibles

5,975

6,017

Other real estate owned, net of valuation allowance of $348 at 

  March 31, 2013, and $1,707 at December 31, 2012

7,904

9,929

Prepaid federal deposit insurance

2,768

3,015

Accrued interest receivable and other assets

37,787

39,091

    TOTAL ASSETS

$

1,213,756

$

1,236,781

LIABILITIES

Deposits:

      Non-interest-bearing demand deposits

$

163,611

$

167,137

      Savings and interest-bearing demand deposits

515,082

522,740

      Time deposits

287,383

292,023

   Total deposits

966,076

981,900

Securities sold under agreements to repurchase

31,880

33,975

Short-term borrowings

519

11,873

FHLB borrowings

85,000

77,912

Subordinated notes

5,155

5,155

Accrued interest payable and other liabilities

7,426

8,844

Commitments and contingent liabilities

-

-

    TOTAL LIABILITIES

1,096,056

1,119,659

SHAREHOLDERS' EQUITY

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

7,051,587 and 7,052,554 issued and outstanding at 

March 31, 2013, and December 31, 2012, respectively)

17,365

17,357

Capital surplus

43,946

43,869

Retained earnings

47,209

46,235

Accumulated other comprehensive income

6,260

6,467

    Total Middleburg Financial Corporation shareholders' equity

114,780

113,928

Non-controlling interest in consolidated subsidiary

2,920

3,194

 

    TOTAL SHAREHOLDERS' EQUITY

117,700

117,122

    TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

1,213,756

$

1,236,781

 

MIDDLEBURG FINANCIAL CORPORATION 

Consolidated Statements of Income

(In thousands, except for per share data)

                         Unaudited 

For the Three Months

Ended March 31,

2013

2012

INTEREST AND DIVIDEND INCOME

Interest and fees on loans

$            8,964

$           9,782

Interest and dividends on securities available for sale

Taxable 

1,531

1,735

Tax-exempt

631

607

Dividends

56

44

Interest on deposits in other banks

30

24

    Total interest and dividend income

11,212

12,192

INTEREST EXPENSE

Interest on deposits

1,373

1,893

Interest on securities sold under agreements to 

  repurchase

80

83

Interest on short-term borrowings

29

148

Interest on long-term debt

295

297

    Total interest expense

1,777

2,421

NET INTEREST INCOME

9,435

9,771

Provision for (recovery of) loan losses

(188)

792

NET INTEREST INCOME AFTER PROVISION

FOR (RECOVERY OF) LOAN LOSSES

9,623

8,979

NONINTEREST INCOME

Service charges on deposit accounts

534

530

Trust services income

960

921

Net gains on loans held for sale

3,893

3,852

Net gains on securities available for sale

47

140

Total other-than-temporary impairment loss on securities

-

(10)

Portion of loss recognized in other 

  comprehensive income

-

10

    Net impairment loss on securities

-

-

Net commissions on investment sales

94

147

Fees on mortgages held for sale

17

42

Other service charges, commissions and fees

130

150

Bank-owned life insurance

120

122

Other operating income

133

80

    Total noninterest income

5,928

5,984

NONINTEREST EXPENSE

Salaries and employees' benefits

7,799

7,357

Net occupancy and equipment expense

1,805

1,778

Advertising

268

300

Computer operations

461

385

Other real estate owned

820

286

Other taxes

192

203

Federal deposit insurance expense

265

258

Other operating expenses

2,318

2,747

    Total noninterest expense

13,928

13,314

Income before income taxes

1,623

1,649

Income tax expense

363

416

NET INCOME

1,260

1,233

Net loss attributable to non-controlling interest

67

349

Net income attributable to Middleburg

  Financial Corporation

$            1,327

$           1,582

Earnings per share:

Basic

$             0.19

$             0.23

Diluted

$             0.19

$             0.23

Dividends per common share

$             0.05

$             0.05

QUARTERLY SUMMARY STATEMENTS OF INCOME

MIDDLEBURG FINANCIAL CORPORATION

(Unaudited. Dollars in thousands except per share data)

For the Three Months Ended

Mar. 31, 2013

Dec. 31, 2012

Sep. 30, 2012

June 30, 2012

Mar. 31, 2012

Interest and Dividend Income

  Interest and fees on loans

$           8,964

$           9,330

$           9,189

$       9,594

$           9,782

  Interest and dividends on securities available for sale

     Taxable 

1,531

1,432

1,537

1,704

1,735

     Tax Exempt

631

604

596

596

607

     Dividends

56

58

46

45

44

  Interest on deposits in other banks

30

36

39

25

24

      Total interest and dividend income

$         11,212

$         11,460

$         11,407

$     11,964

$         12,192

Interest Expense

  Interest on deposits

$           1,373

$           1,449

$           1,728

$       1,846

$           1,893

  Interest on securities sold under agreements to repurchase

80

82

83

84

83

  Interest on short-term borrowings

29

81

74

89

148

  Interest on FHLB borrowings and other debt

295

295

305

287

297

      Total interest expense

$           1,777

$           1,907

$           2,190

$       2,306

$           2,421

      Net interest income

$           9,435

$           9,553

$           9,217

$       9,658

$           9,771

Provision for (recovery of) loan losses

(188)

1,281

635

730

792

      Net interest income after provision

       for (recovery of) loan losses

$           9,623

$           8,272

$           8,582

$       8,928

$           8,979

Non-Interest Income

 Trust services income

$              960

$              923

$              928

$          979

$              921

 Service charges on deposit accounts

534

572

557

538

530

 Net gains (losses) on securities available for sale 

47

(7)

164

148

140

 Total other-than-temporary impairment loss on securities

-

-

-

(36)

(10)

   Portion of loss recognized in other comprehensive income

-

-

-

36

10

 Net other-than-temporary impairment loss

-

-

-

-

-

 Commissions on investment sales 

94

129

117

125

147

 Bank owned life insurance

120

96

118

123

122

 Gains on loans held for sale

3,893

5,926

6,161

5,075

3,852

 Fees on mortgages held for sale

17

43

37

64

42

 Other operating income

263

299

236

119

230

       Total non-interest income

$           5,928

$           7,981

$           8,318

$       7,171

$           5,984

Non-Interest Expense

  Salaries and employee benefits

$           7,799

$           8,278

$           7,276

$       7,506

$           7,357

  Net occupancy and equipment expense

1,805

1,785

1,732

1,755

1,778

  Other taxes

192

202

203

205

203

  Advertising

268

635

652

447

300

  Computer operations

461

471

322

394

385

  Other real estate owned 

820

55

1,506

874

286

  Federal deposit insurance expense

265

269

262

261

258

  Other operating expenses

2,318

2,103

1,883

1,869

2,747

       Total non-interest expense

$         13,928

$         13,798

$         13,836

$     13,311

$         13,314

       Income before income taxes

$           1,623

$           2,455

$           3,064

$       2,788

$           1,649

       Income tax expense

363

387

565

598

416

       Net income

$           1,260

$           2,068

$           2,499

$       2,190

$           1,233

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

67

(647)

(785)

(421)

349

       Net income attributable to Middleburg Financial Corporation

$           1,327

$           1,421

$           1,714

$       1,769

$           1,582

Net income per common share, basic

$             0.19

$             0.20

$             0.24

$         0.25

$             0.23

Net income per common share, diluted

$             0.19

$             0.20

$             0.24

$         0.25

$             0.23

Dividends per common share

$             0.05

$             0.05

$             0.05

$         0.05

$             0.05

 

 

MIDDLEBURG FINANCIAL CORPORATION

KEY STATISTICS

(Unaudited. Dollars in thousands except per share data)

For the Three Months Ended

 Mar 31, 2013

Dec 31, 2012

Sep 30, 2012

Jun 30, 2012

 Mar 31, 2012

Net income

$      1,327

$      1,421

$      1,714

$      1,769

$      1,582

Earnings per share, basic

$       0.19

$       0.20

$       0.24

$       0.25

$       0.23

Earnings per share, diluted

$       0.19

$       0.20

$       0.24

$       0.25

$       0.23

Dividend per share

$       0.05

$       0.05

$       0.05

$       0.05

$       0.05

Return on average total assets - QTD

0.44%

0.46%

0.55%

0.60%

0.54%

Return on average total equity - QTD

4.71%

4.96%

6.11%

6.50%

5.95%

Dividend payout ratio

26.57%

24.82%

20.53%

19.87%

22.11%

Non-interest revenue to total revenue (1)

38.40%

45.54%

46.94%

41.97%

36.47%

Net interest margin (2)

3.45%

3.42%

3.28%

3.57%

3.69%

Yield on average earning assets

4.08%

4.08%

4.03%

4.40%

4.56%

Cost of average interest-bearing liabilities

0.78%

0.82%

0.93%

1.00%

1.06%

Net interest spread

3.30%

3.26%

3.10%

3.40%

3.50%

Non-interest income to average assets(3)

1.93%

2.62%

2.66%

2.35%

1.93%

Non-interest expense to average assets(3)

4.57%

4.53%

4.52%

4.47%

4.50%

Efficiency ratio - QTD (Tax Equiv)  (4)

80.96%

76.51%

69.27%

72.68%

77.24%

(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 non taxable interest income due to the mix in its investment and loan portfolios, 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. Excludes securities gains and losses including OTTI adjustments.

(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 (adjusted for amortization of intangibles, other real estate expenses, and non-recurring one-time charges) 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 in calculating tax equivalent amounts is 34%. The Company calculates and reviews this ratio as a means of evaluating operational efficiency.

 

MIDDLEBURG FINANCIAL CORPORATION

SELECTED FINANCIAL DATA BY QUARTER

(Unaudited. Dollars in thousands except per share data)

 Mar. 31, 2013

Dec. 31, 2012

Sep. 30, 2012

June 30, 2012

 Mar. 31, 2012

BALANCE SHEET RATIOS

Loans to deposits (Including HFS)

79.01%

80.62%

79.73%

77.30%

80.21%

Portfolio loans to deposits

73.97%

72.26%

70.33%

70.33%

71.69%

Average interest-earning assets to

    average-interest bearing liabilities

123.60%

124.17%

123.02%

121.73%

120.99%

PER SHARE DATA 

Dividends

$               0.05

$               0.05

$               0.05

$               0.05

$               0.05

Book value (MFC Shareholders)

$             16.28

$             16.15

$             15.96

$             15.57

$             15.40

Tangible book value (3)

$             15.41

$             15.30

$             15.10

$             14.71

$             14.52

SHARE PRICE DATA 

Closing price

$             19.41

$             17.66

$             17.76

$             17.00

$             15.71

Diluted earnings multiple  (1)

25.54

22.08

18.50

17.00

17.08

Book value multiple(2)

1.19

1.09

1.11

1.09

1.02

COMMON STOCK DATA

Outstanding shares at end of period

7,051,587

7,052,554

7,052,554

7,052,554

7,005,315

Weighted average shares O/S Basic  - QTD

7,051,009

7,052,554

7,036,536

7,030,639

6,994,858

Weighted average shares O/S, diluted - QTD

7,082,354

7,069,603

7,051,860

7,042,111

7,000,169

CAPITAL RATIOS  

Capital to Assets - Common shareholders

9.46%

9.21%

9.10%

9.02%

8.97%

Capital to Assets - with Noncontrolling Interest

9.70%

9.47%

9.34%

9.19%

9.11%

Tangible common equity ratio (4)

9.01%

8.77%

8.66%

8.56%

8.50%

Leverage ratio

9.11%

9.10%

8.92%

8.99%

8.89%

Tier 1 risk based capital ratio

14.35%

14.09%

13.98%

13.66%

13.57%

Total risk based capital ratio

15.60%

15.35%

15.23%

14.92%

14.83%

CREDIT QUALITY

Net charge-offs to average total loans

0.08%

0.12%

0.22%

0.08%

0.07%

Total non-performing loans to total portfolio loans

3.59%

3.92%

4.02%

3.57%

3.88%

Total non-performing assets to total assets

2.77%

3.05%

3.22%

3.10%

3.21%

Non-accrual loans to:

      total portfolio loans

2.80%

3.05%

3.28%

2.74%

3.26%

      total assets

1.65%

1.75%

1.84%

1.54%

1.85%

Allowance for loan losses to:

      total portfolio loans

1.89%

2.02%

2.01%

2.18%

2.18%

      non-performing assets

40.22%

37.89%

35.05%

39.56%

38.53%

      non-accrual loans

67.48%

66.06%

61.46%

79.61%

66.80%

NON-PERFORMING ASSETS:

    Loans delinquent over 90 days and still accruing

$                812

$             1,044

$                860

$             1,372

$                167

    Non-accrual loans    

20,019

21,664

22,683

18,802

22,247

    Restructured loans (Not in non accrual)

4,854

5,132

4,302

4,334

4,056

    Other real estate owned and repossessed assets

7,904

9,929

11,933

13,335

12,095

Total non-performing assets 

$           33,589

$           37,769

$           39,778

$           37,843

$           38,565

NET LOAN CHARGE-OFFS:

    Loans charged off (QTD)

$                721

$             1,060

$             1,817

$                694

$                700

    Recoveries (QTD)

(106)

(149)

(154)

(72)

(146)

Net charge-offs  (QTD)

$                615

$                911

$             1,663

$                622

$                554

PROVISION FOR (RECOVERY OF) LOAN LOSSES 

$              (188)

$             1,281

$                635

$                730

$                792

ALLOWANCE FOR LOAN LOSS SUMMARY

Balance at the beginning of period

$           14,311

$           13,941

$           14,969

$           14,861

$           14,623

Provision

(188)

1,281

635

730

792

Net charge-offs

(615)

(911)

(1,663)

(622)

(554)

Balance at the end of period

$           13,508

$           14,311

$           13,941

$           14,969

$           14,861

(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.

(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 March 31, 

2013

2012

 Average 

 Income/ 

Yield/

 Average 

 Income/ 

Yield/

 Balance 

 Expense 

Rate  (2)

 Balance 

 Expense 

Rate  (2)

(Dollars in thousands)

Assets :

Securities:

   Taxable

$    265,972

$         1,587

2.42%

$    263,408

$         1,779

2.72%

   Tax-exempt (1)

67,252

956

5.77%

61,802

920

5.99%

       Total securities

$    333,224

$         2,543

3.09%

$    325,210

$         2,699

3.34%

Loans 

   Taxable

$    756,317

$         8,958

4.80%

$    744,776

$         9,782

5.36%

   Tax-exempt  (1)

687

9

5.31%

-

-

0.00%

       Total loans (3)

$    757,004

$         8,967

4.80%

$    744,776

$         9,782

5.36%

Interest bearing deposits in

      other financial institutions

57,904

30

0.21%

46,111

24

0.21%

       Total earning assets

$ 1,148,132

$       11,540

4.08%

$ 1,116,097

$       12,505

4.56%

Less: allowances for credit losses

(14,213)

(14,871)

Total nonearning assets

84,974

81,699

Total assets

$ 1,218,893

$ 1,182,925

Liabilities:

Interest-bearing deposits:

    Checking

$    333,028

$            234

0.28%

$    303,641

$            383

0.51%

    Regular savings

108,755

61

0.23%

105,010

115

0.44%

    Money market savings

78,085

47

0.24%

56,624

58

0.41%

    Time deposits:

       $100,000 and over

147,457

507

1.39%

142,688

572

1.61%

       Under $100,000

143,379

524

1.48%

180,176

765

1.71%

       Total interest-bearing deposits

$    810,704

$         1,373

0.69%

$    788,139

$         1,893

0.97%

Short-term borrowings

2,658

29

4.42%

12,379

148

4.81%

Securities sold under agreements

    to repurchase

34,103

80

0.95%

34,125

83

0.99%

FHLB borrowings and other debt

81,416

295

1.47%

87,792

297

1.36%

    Total interest-bearing liabilities

$    928,881

$         1,777

0.78%

$    922,435

$         2,421

1.06%

Non-interest bearing liabilities

    Demand Deposits

164,613

144,188

    Other liabilities

7,632

7,322

Total liabilities

$ 1,101,126

$ 1,073,945

Non-controlling interest

3,471

2,023

Shareholders' equity

114,296

106,957

Total liabilities and shareholders'

   equity

$ 1,218,893

$ 1,182,925

Net interest income

$         9,763

$       10,084

Interest rate spread

3.30%

3.50%

Cost of Funds

0.66%

0.91%

Interest expense as a percent of

    average earning assets

0.63%

0.87%

Net interest margin

3.45%

3.69%

(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



RELATED LINKS

http://www.middleburgbank.com