Middleburg Financial Corporation Announces Second Quarter 2013 Results

Aug 02, 2013, 10:00 ET from Middleburg Financial Corporation

MIDDLEBURG, Va., Aug. 2, 2013 /PRNewswire/ -- Middleburg Financial Corporation (the "Company") (Nasdaq: MBRG), today announced net income of $2.1 million or $0.29 per diluted share for the second quarter of 2013.

"The second quarter showed the results of our priorities which are loan growth, problem assets reduction and expense control, commented Gary R. Shook, president and Chief Executive Officer of Middleburg Financial Corporation.  "All of those factors contributed to our best quarterly net income since 2006.  With that said, we understand that we still have more to do as we endeavor to achieve best in class performance.  We are pleased with the strength of our loan pipeline and the growth in our wealth management operations.  Mortgage lending rebounded from the first quarter, amid strong purchase loan originations." Mr. Shook continued, "We are pleased to see economic momentum beginning to return to our primary Loudoun and Northern Virginia markets coupled with loan and deposit growth in the Richmond marketplace.  Problem assets are still somewhat elevated; however, we are making progress in reducing levels of problem loans and OREO."

Second Quarter 2013 Highlights:

  • Net income of $2.1 million or $0.29 per diluted share, compared to $1.8 million or $0.25 per diluted share for the second quarter of 2012, an increase of 18.3% when comparing calendar quarters;
  • Net interest margin of 3.40%, compared to 3.45% for the previous quarter and 3.57% for the second quarter of 2012;
  • Total revenue of $16.4  million, an increase of 6.9% compared to the first quarter of 2013;
  • Total assets of $1.2 billion, unchanged compared to March 31, 2013;
  • Deposits decreased by $4.2 million or 0.4% since March 31, 2013;
  • Loans held-for-investment decreased by $7.6 million or 1.0% since March 31, 2013, primarily due to elevated levels of payoffs;
  • The ratio of Non Performing Assets to Total Assets was 2.80% as of June 30, 2013 compared to 2.77% at March 31, 2013 and 3.10% at June 30, 2012;
  • Capital ratios continue to be strong: Tangible Common Equity Ratio of 8.8%, Total Risk-Based Capital Ratio of 15.4%, Tier 1 Risk-Based Capital Ratio of 14.2%, and a Tier 1 Leverage Ratio of 9.3% at June 30, 2013.

Total Revenue

Total revenue which is comprised of Net Interest Income (before a provision for loan losses) and Non Interest Income was $16.4 million in the quarter ended June 30, 2013, representing an increase of 6.9% compared to the previous quarter and a decrease of $408,000 or 2.4% from the quarter ended June 30, 2012.

Net interest income was $9.3 million during the three months ended June 30, 2013, which was 1.0% lower than the quarter ended March 31, 2013 and a decrease of 3.3% compared to the quarter ended June 30, 2012. The yield on average earning assets was 3.97% for the quarter ended June 30, 2013 compared to 4.08% for the previous quarter and 4.40% for the quarter ended June 30, 2012, representing a decrease of 11 basis points from the previous quarter and a decrease of 43 basis points from the quarter ended June 30, 2012. Loan yields decreased by 16 basis points while the yield for the securities portfolio decreased by 12 basis points from the previous quarter.  The primary reasons for the decline in loan yields were elevated levels of loan payoffs and lower yields on new loans.

The average annualized cost of interest bearing liabilities was 0.72% for the quarter ended June 30, 2013, compared to 0.78% in the previous quarter, and 1.00% for the quarter ended June 30, 2012, representing a decrease of 6 basis points from the previous quarter and a decrease of 28 basis points from the quarter ended June 30, 2012.  Annualized costs for interest bearing retail deposits decreased by 5 basis points from the previous quarter to 0.64% from 0.69% and decreased by 29 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 1.33%, a decrease of 14 basis points compared to the previous quarter and higher by 1 basis point compared to the quarter ended June 30, 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 0.61% for the quarter ended June 30, 2013 compared to 0.66% for the quarter ended March 31, 2013, a decrease of 5 basis points.  Cost of funds decreased 25 basis points compared to the quarter ended June 30, 2012.

The net interest margin for the three months ended June 30, 2013 was 3.40%, compared to 3.45% for the previous quarter, and 3.57% for the quarter ended June 30, 2012, representing a decrease of 5 basis points from the previous quarter and a decrease of 17 basis points compared to the quarter ended June 30, 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 increased by $1.1 million or 19.4% when comparing the quarter ended June 30, 2013 to the previous quarter and decreased by 1.3% compared to the quarter ended June 30, 2012. Gains on mortgage loan sales increased by 15.2% when comparing the quarter ended June 30, 2013 to the previous quarter and decreased by 11.7% when compared to the quarter ended June 30, 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 $209.8 million in mortgage loans during the quarter ended June 30, 2013 compared to $191.1 million closed during the previous quarter, and $233.5 million closed during the quarter ended June 30, 2012, an increase of 9.8% compared to the previous quarter and a decrease of 10.2% 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 $1.2 million for the quarter ended June 30, 2013 compared to $1.0 million in the previous quarter and $1.1 million in the quarter ended June 30, 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 June 30, 2013 and June 30, 2012.

Net gains on securities available for sale were $326,000 during the quarter ended June 30, 2013 compared to gains of $47,000 during the previous quarter and gains of $148,000 during the quarter ended June 30, 2012.

Other operating income was $392,000 during the quarter ended June 30, 2013 compared to $263,000 during the previous quarter and $119,000 during the quarter ended June 30, 2012. The primary reason for the increase in other operating income during the second quarter was related to an adjustment to fair market value of certain mortgage loans. Other operating income includes credit card fees, data processing fees and other miscellaneous income during the reporting period.   

The following table presents dollar and percentage changes in components of non-interest income for the periods ended June 30, 2013 and June 30, 2012:

MIDDLEBURG FINANCIAL CORPORATION 

Non-Interest Income

(in thousands)

For the three months ended

Dollar

Percent

6/30/2013

6/30/2012

Change

Change

Service charges on deposit accounts

$         574

$        538

$       36

6.7%

Trust services income

1,014

979

35

3.6%

Net gains on loans held for sale

4,483

5,075

(592)

-11.7%

Net gains on securities available for sale

326

148

178

120.3%

Net commissions on investment sales

110

125

(15)

-12.0%

Fees on mortgages held for sale

58

64

(6)

-9.4%

Bank-owned life insurance

123

123

-

0.0%

Other operating income

392

119

274

230.0%

    Total non-interest income

$      7,080

$     7,171

$      (91)

-1.3%

Non-Interest Expense

Total non-interest expense in the second quarter of 2013 was 5.9% lower compared to the previous quarter and decreased by $203,000 or 1.5% compared to the quarter ended June 30, 2012.  

Salaries and employee benefit expenses decreased by $107,000 or 1.4% when comparing the second quarter of 2013 to the previous quarter. Salaries and employee benefits increased by $186,000 or 2.5% versus the second quarter of 2012. 

Expenses related to Other Real Estate Owned ("OREO") decreased by $678,000 when comparing the second quarter of 2013 to the previous quarter and decreased by $732,000 versus the quarter ended June 30, 2012. The decrease in this expense relative to the previous quarter was primarily related to losses incurred on the sale of two large OREO properties during the first quarter of 2013 and fewer losses in the second quarter.

Advertising expense was higher by 62.3% compared to the previous quarter and decreased by $12,000 or 2.7% from the quarter ended June 30, 2012. The primary reason for higher advertising expenses during the quarter was new product and service promotions and expenses related to the bank's entrance into the Richmond market. Advertising expenses are cyclical and affected by spending on promotions.

Other operating expenses decreased by $181,000 or 7.8% from the previous quarter and increased by $268,000 or 14.3% compared to the quarter ended June 30, 2012. 

The following table presents dollar and percentage changes in components of non-interest expense for the periods ended June 30, 2013 and June 30, 2012:

MIDDLEBURG FINANCIAL CORPORATION 

Non-Interest Expense

(in thousands)

For the three months ended

Dollar

Percent

6/30/2013

6/30/2012

Change

Change

Salaries and employees' benefits

$      7,692

$     7,506

$      186

2.5%

Net occupancy and equipment expense

1,787

1,755

32

1.8%

Advertising

435

447

(12)

-2.7%

Computer operations

458

394

64

16.2%

Other real estate owned

142

874

(732)

-83.8%

Other taxes

187

205

(18)

-8.8%

Federal deposit insurance expense

270

261

9

3.4%

Other operating expenses

2,137

1,869

268

14.3%

    Total non-interest expense

$    13,108

$   13,311

$    (203)

-1.5%

The Company's efficiency ratio was 78.4% for the second quarter of 2013, compared to an efficiency ratio of 72.7% for the second 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

The Company recorded a provision for loan losses of $184,000 in the second quarter compared to a negative provision of $188,000 for the previous quarter and a provision of $730,000 for the quarter ended June 30, 2012 The Allowance for Loan and Lease Losses (ALLL) was $13.6 million representing 1.93% of loans held for investment at June 30, 2013 compared to $13.5 million representing 1.89% of loans held for investment at March 31, 2013.   

Loans that were delinquent for more than 90 days and still accruing were $829,000 as of June 30, 2013 compared to $812,000 as of March 31, 2013, and $1.4 million as of June 30, 2012, representing an increase of 2.1% compared to the previous quarter and a 40.8% decrease compared to the quarter ended June 30, 2012.

Non-accrual loans were $20.4 million at the end of the second quarter of 2013 compared to $20.0 million as of March 31, 2013 and $18.8 million at June 30, 2012, representing an increase of 1.8% during the second quarter of 2013 and an increase of 8.4% since June 30, 2012. Troubled debt restructurings that were performing as agreed were $5.4 million at the end of the second quarter of 2013, compared to $4.9 million for the quarter ended March 31, 2013, representing an increase of 10.2% during the quarter. Other Real Estate Owned (OREO) was $7.6 million as of June 30, 2013 compared to $7.9 million as of March 31, 2013, representing a decrease of 4.2% during the second quarter of 2013. Total non-performing assets were $34.1 million or 2.80% of total assets at June 30, 2013, compared to $33.6 million or 2.77% of total assets as of March 31, 2013 and $37.8 million or 3.10% of total assets as of June 30, 2012.

The net loan charge-offs during the second quarter of 2013 were $76,000 compared to net charge-offs of $615,000 for the previous quarter and $622,000 in net loan charge-offs for the quarter ended June 30, 2012.

Total Consolidated Assets

Total assets at June 30, 2013 were $1.2 billion, lower by $19.6 million or 1.6% from December 31, 2012 and unchanged from June 30, 2012.

Total loans held for investment decreased by $7.6 million or 1.1% in the second quarter of 2013 compared to the previous quarter.  The primary reason for the weakness was elevated levels of payoffs of existing loans. Loans held for investment increased by $21.1 million or 3.1% from June 30, 2012.  The securities portfolio (excluding restricted stock) decreased by $11.5 million or 3.5% in the second quarter of 2013 relative to the previous quarter. Balances of mortgages held for sale increased by $16.6 million or 34.1% at June 30, 2013 compared to the previous quarter end balance.  Cash balances and deposits at other banks increased by 15.9% at the end of the second quarter of 2013 compared to the previous quarter.

Deposits and Other Borrowings

Total deposits decreased by $4.2 million or 0.4% from the previous quarter.  Brokered deposits, including CDARS program funds, were $74.4 million at June 30, 2013, up 3.4% from the previous quarter. FHLB advances were $85.0 million at June 30, 2013, unchanged compared to the previous quarter.   

Equity and Capital

Shareholders' equity attributable to Middleburg Financial Corporation shareholders at June 30, 2013 was $112.9 million, compared to $114.8 million as of March 31, 2013 and $109.9 million at June 30, 2012.  Retained earnings at June 30, 2013 were $48.9 million compared to $47.2 million at March 31, 2013 and $43.8 million at June 30, 2012. The book value of the Company's common stock at June 30, 2013 was $15.93 per share versus $16.28 per share at March 31, 2013. The decline in shareholders equity during the second quarter was primarily due to a decrease in accumulated other comprehensive income (AOCI) of $3.7 million resulting from unrealized losses in available for sale securities.

The Company's total risk-based capital ratio decreased to 15.4% as of June 30, 2013 from 15.6% at March 31, 2013 and remained unchanged from December 31, 2012.  The Tier 1 risk-based capital ratio decreased from 14.4% at March 31, 2013 to 14.2% at June 30, 2013 and increased from 14.1% at December 31, 2012.  The Tier 1 Leverage Ratio increased to 9.3% at June 30, 2013 from 9.1% at March 31, 2013 and December 31, 2012.   

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

June 30, 2013

(1)

MFC

Regulatory

Excess

Minimum

MFC

over

Requirement

Ratios

Minimum

Tier 1 Leverage Ratio

4.0%

9.3%

5.3%

Tier 1 Risk-Based Capital Ratio

4.0%

14.2%

10.2%

Total Risk-Based Capital Ratio

8.0%

15.4%

7.4%

(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)

(Unaudited)

(Audited)

June 30,

March 31,

December 31,

2013

2013

2012

ASSETS

Cash and due from banks

$

7,312

$

6,697

$

7,139

Interest-bearing deposits with other institutions

51,164

43,753

47,276

     Total cash and cash equivalents

58,476

50,450

54,415

Securities available for sale

320,132

331,650

319,457

Loans held for sale

65,322

48,721

82,114

Restricted securities, at cost

7,005

7,005

6,990

Loans receivable, net of allowance for loan losses of $13,616 at June 30,

  2013, $13,508 at Mar. 31, 2013, and $14,311 at Dec.31, 2012

693,383

701,078

695,166

Premises and equipment, net

20,208

20,418

20,587

Goodwill and identified intangibles

5,932

5,975

6,017

Other real estate owned, net of valuation allowance of $348 at June 30,

  2013, $348 at Mar. 31, 2013, and $1,707 at Dec. 31, 2012

7,570

7,904

9,929

Prepaid federal deposit insurance

- -

2,768

3,015

Accrued interest receivable and other assets

39,172

37,787

39,091

    TOTAL ASSETS

$

1,217,200

$

1,213,756

$

1,236,781

LIABILITIES

Deposits:

      Non-interest-bearing demand deposits

$

174,459

$

163,611

$

167,137

      Savings and interest-bearing demand deposits

496,394

515,082

522,740

      Time deposits

291,021

287,383

292,023

        Total deposits

961,874

966,076

981,900

Securities sold under agreements to repurchase

35,783

31,880

33,975

Short-term borrowings

5,688

519

11,873

FHLB borrowings

85,000

85,000

77,912

Subordinated notes

5,155

5,155

5,155

Accrued interest payable and other liabilities

8,043

7,426

8,844

Commitments and contingent liabilities

-

-

-

    TOTAL LIABILITIES

1,101,543

1,096,056

1,119,659

SHAREHOLDERS' EQUITY

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

    7,089,598, 7,051,587 and 7,052,554 issued and outstanding at 

    June 30, 2013, Mar. 31, 2013, and December 31, 2012, respectively)

17,397

17,365

17,357

Capital surplus

44,000

43,946

43,869

Retained earnings

48,947

47,209

46,235

Accumulated other comprehensive income 

2,600

6,260

6,467

 

    Total Middleburg Financial Corporation shareholders' equity

112,944

114,780

113,928

Non-controlling interest in consolidated subsidiary

2,713

2,920

3,194

 TOTAL SHAREHOLDERS' EQUITY

115,657

117,700

117,122

    TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

1,217,200

$

1,213,756

$

1,236,781

 

 

MIDDLEBURG FINANCIAL CORPORATION 

Consolidated Statements of Income

(In thousands, except for per share data)

Unaudited 

Unaudited 

For the three months

For the six months

ended June 30,

ended June 30,

2013

2012

2013

2012

INTEREST AND DIVIDEND INCOME

Interest and fees on loans

$         8,795

$             9,594

$          17,760

$         19,376

Interest and dividends on securities available for sale

Taxable 

1,468

1,704

2,999

3,439

Tax-exempt

646

596

1,276

1,203

Dividends

54

45

110

89

Interest on deposits in other banks

29

25

59

49

    Total interest and dividend income

10,992

11,964

22,204

24,156

INTEREST EXPENSE

Interest on deposits

1,253

1,846

2,626

3,739

Interest on securities sold under agreements to 

  repurchase

81

84

161

167

Interest on short-term borrowings

18

89

47

237

Interest on FHLB borrowings and other debt

299

287

594

584

    Total interest expense

1,651

2,306

3,428

4,727

NET INTEREST INCOME

9,341

9,658

18,776

19,429

Provision for (recovery of) loan losses

184

730

(4)

1,522

NET INTEREST INCOME AFTER PROVISION

FOR (RECOVERY OF) LOAN LOSSES

9,157

8,928

18,780

17,907

NONINTEREST INCOME

Service charges on deposit accounts

574

538

1,108

1,068

Trust services income

1,014

979

1,974

1,900

Net gains on loans held for sale

4,483

5,075

8,376

8,927

Net gains (losses) on securities available for sale

326

148

373

288

Total other-than-temporary impairment losses

-

(36)

-

(46)

Portion of loss recognized in other 

  comprehensive income

-

36

-

46

Net other than temporary impairment losses

-

-

-

-

Net commissions on investment sales

110

125

204

272

Fees on mortgages held for sale

58

64

75

106

Bank-owned life insurance

123

123

243

245

Other operating income

392

119

655

349

    Total noninterest income

7,080

7,171

13,008

13,155

NONINTEREST EXPENSE

Salaries and employees' benefits

7,692

7,506

15,492

14,863

Net occupancy and equipment expense

1,787

1,755

3,592

3,533

Advertising

435

447

703

747

Computer operations

458

394

919

779

Other real estate owned

142

874

961

1,160

Other taxes

187

205

379

408

Federal deposit insurance expense

270

261

535

519

Other operating expenses

2,137

1,869

4,455

4,616

    Total noninterest expense

13,108

13,311

27,036

26,625

Income before income taxes

3,129

2,788

4,752

4,437

Income tax expense

774

598

1,137

1,014

NET INCOME

2,355

2,190

3,615

3,423

Net (income) attributable to non-

  controlling interest

(262)

(421)

(195)

(72)

Net income attributable to Middleburg

  Financial Corporation

$         2,093

$             1,769

$            3,420

$           3,351

Earnings per share:

Basic

$           0.30

$               0.25

$             0.48

$             0.48

Diluted

$           0.29

$               0.25

$             0.48

$             0.48

Dividends per common share

$           0.05

$               0.05

$             0.10

$             0.10

See accompanying notes to the consolidated financial statements.

 

 

QUARTERLY SUMMARY STATEMENTS OF INCOME

MIDDLEBURG FINANCIAL CORPORATION

(Unaudited. Dollars in thousands except per share data)

For the Three Months Ended

June 30, 2013

Mar. 31, 2013

Dec. 31, 2012

Sep. 30, 2012

June 30, 2012

Interest and Dividend Income

  Interest and fees on loans

$           8,795

$          8,965

$           9,330

$           9,189

$       9,594

  Interest and dividends on securities available for sale

     Taxable 

1,468

1,531

1,432

1,537

1,704

     Tax Exempt

646

630

604

596

596

     Dividends

54

56

58

46

45

  Interest on deposits in banks

29

30

36

39

25

      Total interest and dividend income

$         10,992

$        11,212

$         11,460

$         11,407

$     11,964

Interest Expense

  Interest on deposits

$           1,253

$          1,373

$           1,449

$           1,728

$       1,846

  Interest on securities sold under agreements to repurchase

81

80

82

83

84

  Interest on short-term borrowings

18

29

81

74

89

  Interest on FHLB borrowings and other debt

299

295

295

305

287

      Total interest expense

$           1,651

$          1,777

$           1,907

$           2,190

$       2,306

      Net interest income

$           9,341

$          9,435

$           9,553

$           9,217

$       9,658

Provision for loan losses

184

(188)

1,281

635

730

      Net interest income after provision

       for loan losses

$           9,157

$          9,623

$           8,272

$           8,582

$       8,928

Non-Interest Income

 Trust services income

$           1,014

$             960

$              923

$              928

$          979

 Service charges on deposit accounts

574

534

572

557

538

 Net gains (losses) on securities available for sale

326

47

(7)

164

148

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

-

-

-

-

(36)

   Portion of (gain) loss recognized in other comprehensive income

-

-

-

-

36

 Net other-than-temporary impairment loss

-

-

-

-

-

 Commissions on investment sales

110

94

129

117

125

 Bank owned life insurance

123

120

96

118

123

 Gains on loans held for sale

4,483

3,893

5,926

6,161

5,075

 Fees on mortgages held for sale

58

17

43

37

64

 Other operating income

392

263

299

236

119

       Total non-interest income

$           7,080

$          5,928

$           7,981

$           8,318

$       7,171

Non-Interest Expense

  Salaries and employee benefits

$           7,692

$          7,799

$           8,278

$           7,276

$       7,506

  Net occupancy and equipment expense

1,787

1,805

1,785

1,732

1,755

  Other taxes

187

192

202

203

205

  Advertising

435

268

635

652

447

  Computer operations

458

461

471

322

394

  Other real estate owned 

142

820

55

1,506

874

  Federal deposit insurance expense

270

265

269

262

261

  Other operating expenses

2,137

2,318

2,103

1,883

1,869

       Total non-interest expense

$         13,108

$        13,928

$         13,798

$         13,836

$     13,311

       Income before income taxes

$           3,129

$          1,623

$           2,455

$           3,064

$       2,788

       Income tax expense

774

363

387

565

598

       Net income

$           2,355

$          1,260

$           2,068

$           2,499

$       2,190

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

(262)

67

(647)

(785)

(421)

       Net income attributable to Middleburg Financial Corporation

$           2,093

$          1,327

$           1,421

$           1,714

$       1,769

Net income per common share, basic

$             0.30

$            0.19

$             0.20

$             0.24

$         0.25

Net income per common share, diluted

$             0.29

$            0.19

$             0.20

$             0.24

$         0.25

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

Jun. 30, 2013

 Mar. 31, 2013

Dec. 31, 2012

Sep. 30, 2012

Jun. 30, 2012

Net income

$     2,093

$     1,327

$     1,421

$     1,714

$     1,769

Earnings per share, basic

$       0.30

$       0.19

$       0.20

$       0.24

$       0.25

Earnings per share, diluted

$       0.29

$       0.19

$       0.20

$       0.24

$       0.25

Dividend per share

$       0.05

$       0.05

$       0.05

$       0.05

$       0.05

Return on average total assets - QTD

0.69%

0.44%

0.46%

0.55%

0.60%

Return on average total equity - QTD

7.25%

4.71%

4.96%

6.11%

6.50%

Dividend payout ratio

16.88%

26.57%

24.82%

20.53%

19.87%

Non-interest  revenue to total revenue (1)

41.96%

38.40%

45.54%

46.94%

41.97%

Net interest margin (2)

3.40%

3.45%

3.42%

3.28%

3.57%

Yield on average earning assets

3.97%

4.08%

4.08%

4.03%

4.40%

Cost of average interest-bearing liabilities

0.72%

0.78%

0.82%

0.93%

1.00%

Net interest spread

3.25%

3.30%

3.26%

3.10%

3.40%

Non-interest income to average assets(3)

2.23%

1.93%

2.62%

2.66%

2.35%

Non-interest expense to average assets(3)

4.34%

4.57%

4.53%

4.52%

4.47%

Efficiency ratio - QTD (Tax Equiv)  (4)

78.35%

80.96%

76.51%

69.27%

72.68%

(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)

Jun. 30, 2013

 Mar. 31, 2013

Dec. 31, 2012

Sep. 30, 2012

June 30, 2012

BALANCE SHEET RATIOS

Loans to deposits (Including HFS)

80.29%

79.01%

80.62%

79.73%

77.30%

Portfolio loans to deposits

73.50%

73.97%

72.26%

70.33%

70.33%

Average interest-earning assets to

    average-interest bearing liabilities

125.09%

123.60%

124.17%

123.02%

121.73%

PER SHARE DATA 

Dividends

$               0.05

$               0.05

$               0.05

$               0.05

$               0.05

Book value (MFC Shareholders)

$             15.93

$             16.28

$             16.15

$             15.96

$             15.57

Tangible book value (3)

$             15.09

$             15.41

$             15.30

$             15.10

$             14.71

SHARE PRICE DATA 

Closing price

$             19.10

$             19.41

$             17.66

$             17.76

$             17.00

Diluted earnings multiple  (1)

16.47

25.54

22.08

18.50

17.00

Book value multiple(2)

1.20

1.19

1.09

1.11

1.09

COMMON STOCK DATA

Outstanding shares at end of period

7,089,598

7,051,587

7,052,554

7,052,554

7,052,554

Weighted average shares O/S Basic  - QTD

7,072,587

7,051,009

7,052,554

7,036,536

7,030,639

Weighted average shares O/S, diluted - QTD

7,102,670

7,082,354

7,069,603

7,051,860

7,042,111

CAPITAL RATIOS  

Capital to Assets - Common shareholders

9.28%

9.46%

9.21%

9.10%

9.02%

Capital to Assets - with Noncontrolling Interest

9.50%

9.70%

9.47%

9.34%

9.19%

Tangible common equity ratio (4)

8.83%

9.01%

8.77%

8.66%

8.56%

Leverage ratio

9.32%

9.11%

9.10%

8.92%

8.99%

Tier 1 risk based capital ratio

14.15%

14.35%

14.09%

13.98%

13.66%

Total risk based capital ratio

15.41%

15.60%

15.35%

15.23%

14.92%

CREDIT QUALITY

Net charge-offs to average total loans

0.01%

0.08%

0.12%

0.22%

0.08%

Total non-performing loans to total portfolio loans

3.76%

3.59%

3.92%

4.02%

3.57%

Total non-performing assets to total assets

2.80%

2.77%

3.05%

3.22%

3.10%

Non-accrual loans to:

      total portfolio loans

2.88%

2.80%

3.05%

3.28%

2.74%

      total assets

1.67%

1.65%

1.75%

1.84%

1.54%

Allowance for loan losses to:

      total portfolio loans

1.93%

1.89%

2.02%

2.01%

2.18%

      non-performing assets

39.88%

40.22%

37.89%

35.05%

39.56%

      non-accrual loans

66.82%

67.48%

66.06%

61.46%

79.61%

NON-PERFORMING ASSETS:

    Loans delinquent over 90 days and still accruing

$                829

$                812

$             1,044

$                860

$             1,372

    Non-accrual loans    

20,376

20,019

21,664

22,683

18,802

    Restructured loans (Not in non accrual)

5,366

4,854

5,132

4,302

4,334

    Other real estate owned and repossessed assets

7,570

7,904

9,929

11,933

13,335

Total non-performing assets 

$           34,141

$           33,589

$           37,769

$           39,778

$           37,843

NET LOAN CHARGE-OFFS:

    Loans charged off (QTD)

$                128

$                721

$             1,060

$             1,817

$                694

    Recoveries (QTD)

(52)

(106)

(149)

(154)

(72)

Net charge-offs  (QTD)

$                  76

$                615

$                911

$             1,663

$                622

PROVISION FOR LOAN LOSSES 

$                184

$               (188)

$             1,281

$                635

$                730

ALLOWANCE FOR LOAN LOSS SUMMARY

Balance at the beginning of period

$           13,508

$           14,311

$           13,941

$           14,969

$           14,861

Provision

184

(188)

1,281

635

730

Net charge-offs

(76)

(615)

(911)

(1,663)

(622)

Balance at the end of period

$           13,616

$           13,508

$           14,311

$           13,941

$           14,969

(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 June 30, 

2013

2012

 Average 

 Income/ 

Yield/

 Average 

 Income/ 

Yield/

 Balance 

 Expense 

Rate  (2)

 Balance 

 Expense 

Rate  (2)

(Dollars in thousands)

Assets :

Securities:

   Taxable

$    268,369

$         1,523

2.28%

$    264,106

$         1,749

2.66%

   Tax-exempt (1)

69,390

978

5.65%

61,813

903

5.88%

       Total securities

$    337,759

$         2,501

2.97%

$    325,919

$         2,652

3.27%

Loans 

   Taxable

$    759,360

$         8,789

4.64%

$    749,834

$         9,616

5.16%

   Tax-exempt  (1)

687

9

5.25%

-

-

-

       Total loans (3)

$    760,047

$         8,798

4.64%

$    749,834

$         9,616

5.16%

Interest bearing deposits in

      other financial institutions

45,371

29

0.26%

48,025

25

0.21%

       Total earning assets

$ 1,143,177

$       11,328

3.97%

$ 1,123,778

$       12,293

4.40%

Less: allowances for credit losses

(13,550)

(15,138)

Total nonearning assets

79,748

83,781

Total assets

$ 1,209,375

$ 1,192,421

Liabilities:

Interest-bearing deposits:

    Checking

$    319,704

$            210

0.26%

$    310,262

$            334

0.43%

    Regular savings

110,713

63

0.23%

106,725

96

0.36%

    Money market savings

75,733

43

0.23%

57,566

49

0.34%

    Time deposits:

       $100,000 and over

139,073

432

1.25%

140,233

560

1.61%

       Under $100,000

142,217

505

1.42%

180,961

807

1.79%

       Total interest-bearing deposits

$    787,440

$         1,253

0.64%

$    795,747

$         1,846

0.93%

Short-term borrowings

2,090

18

3.45%

7,687

89

4.60%

Securities sold under agreements

    to repurchase

34,204

81

0.95%

32,268

84

1.03%

FHLB borrowings and other debt

90,155

299

1.33%

87,463

287

1.32%

Federal funds purchased

-

-

-

3

-

0.00%

    Total interest-bearing liabilities

$    913,889

$         1,651

0.72%

$    923,168

$         2,305

1.00%

Non-interest bearing liabilities

    Demand deposits

169,894

150,689

    Other liabilities

6,917

6,822

Total liabilities

$ 1,090,700

$ 1,080,679

Non-controlling interest

2,835

2,231

Shareholders' equity

115,840

109,511

Total liabilities and shareholders'

   equity

$ 1,209,375

$ 1,192,421

Net interest income

$         9,677

$         9,987

Interest rate spread

3.25%

3.40%

Cost of Funds

0.61%

0.86%

Interest expense as a percent of

    average earning assets

0.58%

0.82%

Net interest margin

3.40%

3.57%

(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 for 2013 and a 366 day year for 2012.

(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, 

2013

2012

 Average 

 Income/ 

Yield/

 Average 

 Income/ 

Yield/

 Balance 

 Expense 

Rate  (2)

 Balance 

 Expense 

Rate  (2)

(Dollars in thousands)

Assets :

Securities:

   Taxable

$    267,177

$         3,109

2.35%

$    263,757

$         3,528

2.69%

   Tax-exempt (1)

68,327

1,933

5.70%

61,808

1,823

5.93%

       Total securities

$    335,504

$         5,042

3.03%

$    325,565

$         5,351

3.31%

Loans 

   Taxable

$    757,913

$       17,748

4.72%

$    747,647

$       19,547

5.26%

   Tax-exempt  (1)

687

18

5.28%

-

-

0.00%

       Total loans (3)

$    758,600

$       17,766

4.72%

$    747,647

$       19,547

5.26%

Interest bearing deposits in

      other financial institutions

51,603

59

0.23%

47,174

49

0.21%

       Total earning assets

$ 1,145,707

$       22,867

4.03%

$ 1,120,386

$       24,947

4.48%

Less: allowances for credit losses

(13,905)

(15,005)

Total nonearning assets

82,346

82,625

Total assets

$ 1,214,148

$ 1,188,006

Liabilities:

Interest-bearing deposits:

    Checking

$    326,329

$            445

0.28%

$    306,953

$            717

0.47%

    Regular savings

109,740

123

0.23%

105,867

211

0.40%

    Money market savings

76,903

90

0.24%

57,095

106

0.37%

    Time deposits:

       $100,000 and over

143,242

939

1.32%

141,460

1,132

1.61%

       Under $100,000

142,795

1,029

1.45%

180,568

1,573

1.75%

       Total interest-bearing deposits

$    799,009

$         2,626

0.66%

$    791,943

$         3,739

0.95%

Short-term borrowings

2,372

47

4.00%

10,542

236

4.50%

Securities sold under agreements

    to repurchase

34,153

161

0.95%

33,196

167

1.01%

FHLB borrowings and other debt

85,810

594

1.40%

87,627

585

1.34%

Federal Funds Purchased

-

-

0.00%

2

-

0.00%

    Total interest-bearing liabilities

$    921,344

$         3,428

0.75%

$    923,310

$         4,727

1.03%

Non-interest bearing liabilities

    Demand Deposits

167,268

147,411

    Other liabilities

7,249

6,536

Total liabilities

$ 1,095,861

$ 1,077,257

Non-controlling interest

2,941

2,293

Shareholders' equity

115,346

108,456

Total liabilities and shareholders'

   equity

$ 1,214,148

$ 1,188,006

Net interest income

$       19,439

$       20,220

Interest rate spread

3.28%

3.45%

Cost of Funds

0.64%

0.89%

Interest expense as a percent of

    average earning assets

0.60%

0.85%

Net interest margin

3.42%

3.63%

(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 for 2013 and a 366 day year for 2012.

(3) Total average loans include loans on non-accrual status.

SOURCE Middleburg Financial Corporation



RELATED LINKS

http://www.middleburgbank.com