2014

Middleburg Financial Corporation Announces Second Quarter 2011 Results

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


Unaudited



For the Six Months


For the Three Months



Ended June 30,


Ended June 30,



2011


2010


2011


2010

INTEREST INCOME










Interest and fees on loans


$          19,466


$         20,829


$          9,731


$      10,384


Interest and dividends on securities available for sale











Taxable


3,150


2,028


1,751


1,090



Tax-exempt


1,165


1,293


604


600



Dividends


72


43


36


22


Interest on deposits in banks and federal funds sold


60


63


33


28



   Total interest and dividend income


23,913


24,256


12,155


12,124












INTEREST EXPENSE










Interest on deposits


4,640


6,251


2,332


3,077


Interest on securities sold under agreements to










 repurchase


125


80


69


60


Interest on short-term borrowings


116


111


53


67


Interest on long-term debt


602


926


306


488



   Total interest expense


5,483


7,368


2,760


3,692












NET INTEREST INCOME


18,430


16,888


9,395


8,432


Provision for loan losses


1,541


2,220


1,087


1,291












NET INTEREST INCOME AFTER PROVISION










FOR LOAN LOSSES


16,889


14,668


8,308


7,141












NONINTEREST INCOME










Service charges on deposit accounts


1,015


909


526


468


Trust services income


1,850


1,690


983


875


Gains on loans held for sale


6,785


6,474


3,938


3,844


Gains (losses) on securities available for sale, net


122


469


87


(37)


Total other-than-temporary impairment losses


(17)


(300)


-


(98)


Portion of (gain) loss recognized in other










 comprehensive income


16


52


-


1


   Net impairment losses


(1)


(248)


-


(97)


Commissions on investment sales


365


311


185


167


Fees on mortgages held for sale


241


834


87


476


Other service charges, commissions and fees


249


256


134


143


Bank-owned life insurance


262


255


139


130


Other operating income (losses)


105


179


(55)


88



   Total noninterest income


10,993


11,129


6,024


6,057












NONINTEREST EXPENSE










Salaries and employees' benefits


15,129


14,381


7,813


7,457


Net occupancy and equipment expense


3,316


3,094


1,640


1,490


Advertising


441


428


285


248


Computer operations


708


668


343


340


Other real estate owned


950


505


606


295


Other taxes


402


397


205


201


Federal deposit insurance expense


765


1,153


358


352


Other operating expenses


3,478


3,583


1,703


1,883



   Total noninterest expense


25,189


24,209


12,953


12,266












Income before income taxes


2,693


1,588


1,379


932

Income tax expense


618


162


301


75











NET INCOME


2,075


1,426


1,078


857

Net (income) loss attributable to non-









 controlling interest


351


112


121


(133)


Net income attributable to Middleburg










 Financial Corporation


$            2,426


$           1,538


$          1,199


$           724










Earnings per share:










Basic


$             0.35


$             0.22


$           0.17


$          0.10


Diluted


$             0.35


$             0.22


$           0.17


$          0.10


Dividends per common share


$             0.10


$             0.20


$           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,


December 31,




2011


2011


2010

ASSETS









Cash and due from banks


$

19,598

$

22,060

$

21,955


Interest-bearing deposits with other institutions



38,988


39,237


42,769


    Total cash and cash equivalents



58,586


61,297


64,724


Securities available for sale



293,393


258,412


252,042


Loans held for sale



48,689


34,407


59,361


Restricted securities, at cost



6,932


6,746


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



663,242


647,985


644,345


Premises and equipment, net



21,393


20,908


21,112


Goodwill and identified intangibles



6,286


6,317


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



6,255


7,825


8,394


Prepaid federal deposit insurance



4,454


4,791


5,154


Accrued interest receivable and other assets



35,437


35,601


36,779












   TOTAL ASSETS


$

1,144,667

$

1,084,289

$

1,104,567









LIABILITIES









Deposits:









     Non-interest-bearing demand deposits


$

131,191

$

122,888

$

130,488


     Savings and interest-bearing demand deposits



460,518


448,065


436,718


     Time deposits



316,776


294,502


323,100



  Total deposits



908,485


865,455


890,306


Securities sold under agreements to repurchase



35,210


27,963


25,562


Short-term borrowings



5,692


4,244


13,320


Long-term debt



77,912


72,912


62,912


Subordinated notes



5,155


5,155


5,155


Accrued interest payable and other liabilities



7,405


7,353


7,319


Commitments and contingent liabilities



-


-


-



   TOTAL LIABILITIES



1,039,859


983,082


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)


17,331


17,314


17,314


Capital surplus



43,150


43,105


43,058


Retained earnings



39,322


38,473


37,593


Accumulated other comprehensive income (loss)



2,908


(480)


(1,012)



   Total Middleburg Financial Corporation shareholders' equity



102,711


98,412


96,953


Non-controlling interest in consolidated subsidiary



2,097


2,795


3,040












   TOTAL SHAREHOLDERS' EQUITY



104,808


101,207


99,993





















   TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY


$

1,144,667

$

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


Jun. 30, 2011


Mar. 31, 2011


Dec. 31, 2010


Sep. 30, 2010


Jun. 30, 2010

Interest and Dividend Income










 Interest and fees on loans

$            9,731


$            9,735


$            9,887


$           9,832


$          10,384

 Interest on securities available for sale










    Taxable

1,751


1,399


1,539


1,166


1,090

    Exempt from federal income taxes

604


561


600


621


600

    Dividends

36


36


30


32


22

 Interest on federal funds sold and other

33


27


32


36


28

     Total interest and dividend income

$          12,155


$          11,758


$          12,088


$         11,687


$          12,124

Interest Expense










 Interest on deposits

$            2,332


$            2,308


$            2,623


$           3,160


$            3,077

 Interest on securities sold under agreements to repurchase

69


56


61


63


60

 Interest on short-term borrowings

53


63


148


134


67

 Interest on long-term debt

306


296


246


372


488

     Total interest expense

$            2,760


$            2,723


$            3,078


$           3,729


$            3,692

     Net interest income

$            9,395


$            9,035


$            9,010


$           7,958


$            8,432

Provision for loan losses

1,087


454


655


9,130


1,291

     Net interest income (loss) after provision










      for loan losses

$            8,308


$            8,581


$            8,355


$         (1,172)


$            7,141

Other Income










Trust services income

$               983


$               867


$               838


$              807


$               875

Service charges on deposit accounts

526


489


488


487


468

Net gains (losses) on securities available for sale

87


35


109


288


(37)

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

-


(17)


(44)


(557)


(97)

  Portion of (gain) loss recognized in other comprehensive income

-


16


(85)


(169)


-

Net other-than-temporary impairment loss

-


(1)


(129)


(726)


(97)

Commissions on investment sales

185


180


169


142


167

Bank owned life insurance

139


123


112


136


130

Gain on loans held for sale

3,938


2,847


5,537


5,147


3,844

Fees on loans held for sale

87


154


570


477


476

Other service charges, commissions and fees

134


115


114


97


143

Other operating income (loss)

(55)


160


169


42


88

      Total other income

$            6,024


$            4,969


$            7,977


$           6,897


$            6,057

Other Expense










 Salaries and employee benefits

$            7,813


$            7,316


$            7,748


$           7,665


$            7,457

 Net occupancy expense of premises

1,640


1,676


1,598


1,557


1,490

 Other taxes

205


197


200


201


201

 Advertising

285


156


386


257


248

 Computer operations

343


365


316


340


340

 Other real estate owned

606


344


842


666


295

 Audits and examinations

156


126


219


96


162

 Legal fees

176


89


50


96


167

 FDIC insurance

358


407


386


368


352

 Other operating expenses

1,371


1,560


2,401


3,141


1,554

      Total other expense

$          12,953


$          12,236


$          14,146


$         14,387


$          12,266











      Income (loss) before income taxes

$            1,379


$            1,314


$            2,186


$         (8,662)


$               932

      Income tax expense (benefit)

301


317


573


(3,297)


75

      Net income (loss)

$            1,078


$               997


$            1,613


$         (5,365)


$               857

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

121


230


(51)


(423)


(133)

      Net income (loss) attributable to Middleburg Financial Corporation

$            1,199


$            1,227


$            1,562


$         (5,788)


$               724











Net income (loss) per common share, basic

$              0.17


$              0.18


$              0.23


$           (0.83)


$              0.10

Net income (loss) per common share, diluted

$              0.17


$              0.18


$              0.23


$           (0.83)


$              0.10

Dividends per common share

$              0.05


$              0.05


$              0.05


0.10


$              0.10



MIDDLEBURG FINANCIAL CORPORATION

KEY STATISTICS

(Unaudited. Dollars in thousands except per share data)


For the Three Months Ended




Jun 30, 2011


Mar 31, 2011


Dec 31, 2010


Sep 30, 2010


Jun 30, 2010














Net income (loss)


$      1,199


$          1,227


$      1,562


$    (5,788)


$         724


Earnings (loss) per share, basic


$       0.17


$            0.18


$        0.23


$      (0.83)


$        0.10


Earnings (loss) per share, diluted


$       0.17


$            0.18


$        0.23


$      (0.83)


$        0.10


Dividend per share


$       0.05


$            0.05


$        0.05


$       0.10


$        0.10














Return on average total assets - Year to Date


0.45%


0.46%


-0.25%


-2.11%


0.28%


Return on average total equity - Year to Date


4.95%


5.11%


-2.71%


-22.03%


2.85%


Dividend payout ratio


29.41%


27.78%


22.21%


NA


100.00%


Non-interest  revenue to total revenue (1)


38.72%


35.02%


39.82%


38.56%


34.05%














Net interest margin (2)


3.78%


3.80%


3.60%


3.27%


3.67%


Yield on average earning assets


4.86%


4.91%


4.78%


4.74%


5.22%


Yield on average interest-bearing liabilities


1.26%


1.30%


1.41%


1.73%


1.82%


Net interest spread


3.60%


3.61%


3.37%


3.01%


3.40%














Non-interest income to average assets (3)


2.17%


1.82%


2.88%


2.69%


2.39%


Non-interest expense to average assets (3)


4.67%


4.53%


5.09%


5.29%


4.73%














Efficiency ratio - QTD (Tax Equiv)  (4)


82.79%


84.96%


81.42%


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 share data)


Jun 30, 2011


Mar 31, 2011


Dec 31, 2010


Sep 30, 2010


Jun 30, 2010

BALANCE SHEET RATIOS












Loans to deposits (Including HFS)


80.02%


80.53%


80.72%


81.69%


83.43%


Portfolio loans to deposits


74.66%


76.56%


74.05%


73.05%


76.16%


Average interest-earning assets to












   average-interest bearing liabilities


117.42%


117.58%


118.50%


117.22%


117.69%

PER SHARE DATA












Dividends


$               0.05


$                     0.05


$               0.05


$               0.10


$            0.10


Book value (MFC Shareholders)


$             14.68


$                   14.18


$             14.02


$             14.22


$          14.84


Tangible book value (3)


$             13.78


$                   13.27


$             13.10


$             13.29


$          13.91

SHARE PRICE DATA












Closing price


$             14.94


$                   17.75


$             14.26


$             14.08


$          13.91


Diluted earnings multiple  (1)


21.97


24.65


15.50


NA


34.78


Book value multiple(2)


1.02


1.25


1.02


0.99


0.94













COMMON STOCK DATA












Outstanding shares at end of period


6,996,932


6,942,315


6,925,437


6,915,687


6,914,687


Weighted average shares O/S Basic  - QTD


6,977,503


6,940,154


6,937,801


6,934,366


6,911,744


Weighted average shares O/S, diluted - QTD


6,980,331


6,943,189


6,938,359


6,934,366


6,924,338

CAPITAL RATIOS  












Capital to Assets - Common shareholders


8.97%


9.08%


8.79%


8.85%


9.67%


Capital to Assets - with Noncontrolling Interest


9.16%


9.33%


9.05%


9.13%


9.92%


Tangible common equity ratio (4)


8.47%


8.54%


8.26%


8.32%


9.11%


Total risk based capital ratio


14.16%


14.52%


14.10%


13.54%


14.58%


Tier 1 risk based capital ratio


12.90%


13.26%


12.84%


12.29%


13.33%


Leverage ratio


9.11%


9.38%


9.04%


9.08%


10.58%

CREDIT QUALITY












Net charge-offs to average loans


0.08%


0.12%


0.22%


0.47%


0.15%


Total non-performing loans to total portfolio loans


5.26%


5.36%


4.66%


4.69%


2.81%


Total non-performing assets to total assets


3.66%


3.99%


3.54%


3.50%


2.64%


Non-accrual loans to:












     total loans


4.76%


4.17%


4.46%


4.57%


1.87%


     total assets


2.82%


2.55%


2.66%


2.69%


1.15%


Allowance for loan losses to:












     total portfolio loans


2.22%


2.20%


2.27%


2.42%


1.54%


     non-performing assets


35.97%


33.65%


38.29%


40.84%


35.98%


     non-accrual loans


46.67%


52.74%


50.93%


53.04%


82.51%

NON-PERFORMING ASSETS:












   Loans delinquent over 90 days and still accruing


$             3,242


$                   6,593


$                909


$                388


$          6,188


   Non-accrual loans    


32,298


27,638


29,385


29,923


12,211


   Restructured Loans


112


1,254


1,254


404


1,346


   Other real estate owned and repossessed assets


6,255


7,825


8,394


8,142


8,257


Total non-performing assets


$           41,907


$                 43,310


$           39,942


$           38,857


$        28,002

NET LOAN CHARGE-OFFS:












   Loans charged off


$                621


$                      933


$             1,600


$             3,351


$          1,142


   Recoveries


(32)


(87)


(42)


(16)


(56)


Net charge-offs


$                589


$                      846


$             1,558


$             3,335


$          1,086

PROVISION FOR LOAN LOSSES


$             1,087


$                      454


$                655


$             9,130


$          1,291

ALLOWANCE FOR LOAN LOSS SUMMARY












Balance at the beginning of period


$           14,575


$                 14,967


$           15,870


$           10,075


$          9,870


Provision


1,087


454


655


9,130


1,291


Net charge-offs


(589)


(846)


(1,558)


(3,335)


(1,086)


Balance at the end of period


$           15,073


$                 14,575


$           14,967


$           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


2010


Average


Income/


Yield/


Average


Income/


Yield/


Balance


Expense


Rate  (2)


Balance


Expense


Rate  (3)


(Dollars in thousands)

Assets :












Securities:












  Taxable

$    225,332


$         1,787


3.18%


$    142,279


$         1,112


3.13%

  Tax-exempt (1)

55,400


915


6.62%


56,248


909


6.48%

      Total securities

$    280,732


$         2,702


3.86%


$    198,527


$         2,021


4.08%

Loans (3)

701,701


$         9,731


5.56%


709,042


$       10,384


5.87%

Interest bearing deposits in












     other financial institutions

47,222


32


0.27%


47,566


28


0.24%

      Total earning assets

$ 1,029,655


$       12,465


4.86%


$    955,135


$       12,433


5.22%

Less: allowances for credit losses

(14,672)






(9,956)





Total nonearning assets

94,479






92,346





Total assets

$ 1,109,462






$ 1,037,525

















Liabilities:












Interest-bearing deposits:












   Checking

$    294,374


$            490


0.67%


$    286,485


$            579


0.81%

   Regular savings

96,570


205


0.85%


77,173


188


0.98%

   Money market savings

58,046


94


0.65%


51,683


107


0.83%

   Time deposits:












      $100,000 and over

139,718


633


1.82%


158,698


1,141


2.88%

      Under $100,000

167,780


910


2.17%


151,141


1,062


2.82%

      Total interest-bearing deposits

$    756,488


$         2,332


1.24%


$    725,180


$         3,077


1.70%













Short-term borrowings

5,840


53


3.64%


6,030


67


4.46%

Securities sold under agreements












   to repurchase

32,956


69


0.84%


24,977


61


0.98%

Long-term debt

81,638


306


1.50%


55,375


488


3.53%

Federal funds purchased

3


-


0.00%


35


-


0.00%

   Total interest-bearing liabilities

$    876,925


$         2,760


1.26%


$    811,597


$         3,692


1.82%

Non-interest bearing liabilities












   Demand deposits

122,380






114,953





   Other liabilities

7,863






6,328





Total liabilities

$ 1,007,168






$    932,878





Non-controlling interest

1,999






2,671





Shareholders' equity

100,295






101,976





Total liabilities and shareholders'












  equity

$ 1,109,462






$ 1,037,525

















Net interest income



$         9,705






$         8,741















Interest rate spread





3.60%






3.40%

Cost of funds





1.11%






1.60%

Interest expense as a percent of












   average earning assets





1.07%






1.55%

Net interest margin





3.78%






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






2010




Average


Income/


Yield/


Average


Income/


Yield/


Balance


Expense


Rate  (2)


Balance


Expense


Rate  (3)


(Dollars in thousands)

Assets :












Securities:












  Taxable

$    215,085


$         3,222


3.02%


$    131,074


$         2,070


3.18%

  Tax-exempt (1)

54,691


1,765


6.51%


60,067


1,959


6.58%

      Total securities

$    269,776


$         4,987


3.73%


$    191,141


$         4,029


4.25%

Loans (3)

698,183


19,466


5.62%


694,025


20,829


6.05%

Interest bearing deposits in












     other financial institutions

44,619


60


0.27%


46,128


63


0.28%

      Total earning assets

$ 1,012,578


$       24,513


4.88%


$    931,294


$       24,921


5.40%

Less: allowances for credit losses

(14,710)






(9,532)





Total nonearning assets

94,830






91,554





Total assets

$ 1,092,698






$ 1,013,316

















Liabilities:












Interest-bearing deposits:












   Checking

$    290,710


$            976


0.68%


$    283,089


$         1,180


0.84%

   Regular savings

93,129


392


0.85%


73,802


372


1.02%

   Money market savings

59,451


195


0.66%


51,321


222


0.87%

   Time deposits:












      $100,000 and over

135,205


1,238


1.85%


160,065


2,291


2.89%

      Under $100,000

168,156


1,838


2.20%


144,086


2,185


3.06%

      Total interest-bearing deposits

$    746,651


$         4,639


1.25%


$    712,363


$         6,250


1.77%













Short-term borrowings

5,789


117


4.08%


5,428


111


4.12%

Securities sold under agreements












   to repurchase

31,141


125


0.81%


23,319


81


0.70%

Long-term debt

78,205


602


1.55%


50,781


926


3.68%

Federal Funds Purchased

2


-


0.00%


23


-


0.00%

   Total interest-bearing liabilities

$    861,788


$         5,483


1.28%


$    791,914


$         7,368


1.88%

Non-interest bearing liabilities












   Demand Deposits

122,370






110,496





   Other liabilities

7,250






6,444





Total liabilities

$    991,408






$    908,854





Non-controlling interest

2,397






2,698





Shareholders' equity

98,893






101,764





Total liabilities and shareholders'












  equity

$ 1,092,698






$ 1,013,316

















Net interest income



$       19,030






$       17,553















Interest rate spread





3.60%






3.52%

Cost of funds





1.12%






1.65%

Interest expense as a percent of












   average earning assets





1.09%






1.60%

Net interest margin





3.79%






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



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