Middleburg Financial Corporation Announces Second Quarter 2014 Results
MIDDLEBURG, Va., July 30, 2014 /PRNewswire/ -- Middleburg Financial Corporation (the "Company") (Nasdaq: MBRG), today announced net income of $1.86 million for the quarter ended June 30, 2014, or $0.26 per diluted share.
"The broad based improvement in credit metrics and the reduction in nonperforming assets in the second quarter of 2014 was a continuation of the positive momentum that has been experienced by the Company this year," commented Gary R. Shook, President and CEO of Middleburg Financial Corporation. He continued, "the reduction in revenue during the second quarter was primarily due to the sale of our majority interest in Southern Trust Mortgage in May. The bank experienced strong deposit inflows during the quarter which increased liquidity but depressed net interest margins. We sold some nonperforming loans during the second quarter which lowered problem assets. Asset quality improved during the second quarter, and as a result the ratio of nonperforming assets to total assets was 1.57% at the end of the quarter. Expense reduction remains a priority for us. Operating expenses have fallen by 15.08% since the quarter ended June 30, 2013 as we have reduced staffing, rationalized marketing spending and shed real estate which in turn lowered OREO expenses."
"The 90th Anniversary of Middleburg Bank was on July 1, 2014, and as we approach a century of providing financial services to the communities in which we operate, we are committed to profitable growth and to delivering results for our shareholders."
Second Quarter 2014 Highlights:
- Net income of $1.86 million or $0.26 per diluted share for the quarter ended June 30, 2014, a decrease 6.17% compared to net income of $1.98 million or $0.28 per diluted share for the previous quarter and a decrease of 11.37% compared to net income of $2.09 million or $0.29 per diluted share for the second quarter of 2013;
- Net interest margin of 3.38% compared to 3.54% for the previous quarter and 3.40% for the quarter ended June 30, 2013;
- Net interest income of $9.51 million for the quarter ended June 30, 2014, a decrease of 2.07% compared to the previous quarter and an increase of 1.81% compared to the quarter ended June 30, 2013;
- Non-interest expenses of $11.13 million for the quarter ended June 30, 2014, a decrease of 8.27% compared to the previous quarter and a decrease of 15.08% compared to the quarter ended June 30, 2013;
- Total assets were $1.25 billion as of quarter end, an increase of 3.67% since the previous quarter and an increase of 2.03% since December 31, 2013;
- Total deposits were $1.00 billion as of quarter end, an increase of 4.39% since the previous quarter and an increase of 2.15% since December 31, 2013;
- Loans held-for-investment were $727.11 million as of quarter end, a decrease of 0.60% since the previous quarter and a decrease of 0.19% since December 31, 2013;
- Credit quality improved with nonaccrual loans totaling $10.41 million as of June 30, 2014, a decrease of 30.03% since the previous quarter and a decrease of 47.31% since December 31, 2013;
- The ratio of non-performing assets to total assets was 1.57% at June 30, 2014 compared to 2.04% at March 31, 2014, 2.33% at December 31, 2013 and 2.80% at June 30, 2013;
- Capital ratios continue to be strong: Tangible Common Equity Ratio of 9.22%, Total Risk-Based Capital Ratio of 16.88%, Tier 1 Risk-Based Capital Ratio of 15.63%, and a Tier 1 Leverage Ratio of 9.54% at June 30, 2014.
- On May 15, 2014, the Company sold its majority interest in Southern Trust Mortgage to a consortium of banks and the President of Southern Trust Mortgage.
TOTAL REVENUE
Total revenue, which is comprised of net interest income (before provision for loan losses) and non-interest income, was $13.78 million for the quarter ended June 30, 2014, representing a decrease of 11.60% compared to the previous quarter and a decrease of 16.06% compared to the quarter ended June 30, 2013.
Net Interest Income
The Company recorded net interest income of $9.51 million for the quarter ended June 30, 2014, representing a decrease of 2.07% compared to the previous quarter and an increase of 1.81% compared to the quarter ended June 30, 2013. The net interest margin declined to 3.38%, compared to 3.54% for the previous quarter and 3.40% for the quarter ended June 30, 2013.
The following factors contributed to the changes in the net interest margin for the quarter:
- Yields on earning assets declined by 17 bp during the quarter primarily due to the 14 bp decrease in loan yields.
- Loan yields declined for the following reasons:
- Following the sale of our majority interest in Southern Trust Mortgage on May 15, 2014, the balance of mortgages held for sale was reduced to conform to the bank's lending limits. The decline in interest income from mortgages held for sale was a contributor to lower loan yields.
- Another factor was large payoffs in commercial and 1-4 family loans and lower yields on loans booked during the quarter.
- Yields on securities increased by 13 bp during the quarter due to the decline in premium amortization.
- We experienced strong deposit inflows late in the second quarter. These funds are expected to be short-term in nature and as a result have not been deployed into longer term higher margin earning assets. The increase in earning assets was a major factor in depressing net interest margin during the second quarter.
Non-Interest Income
Non-interest income was lower by 27.34% and 39.65% compared to the previous quarter and the quarter ended June 30, 2013, respectively. The primary reasons for the decline in non-interest income compared to the prior quarter were reduced mortgage revenue during the second quarter and income from a large recovery in the first quarter of 2014 related to a previously charged off loan. Non-interest income was lower compared to the quarter ended June 30, 2013, primarily as a result of lower mortgage revenue stemming from a decline in loan originations during the second quarter of 2014. In addition, we sold our majority interest in Southern Trust Mortgage during the second quarter of 2014, which reduced revenue from gain on mortgage loan sales, but yielded a gain on sale of $24,000. The drop in mortgage revenue was partially offset by fees generated by our wealth management group. Fees earned by Middleburg Investment Group ("MIG") increased by 1.26% compared to the previous quarter and were higher by 7.03% compared to the quarter ended June 30, 2013. Fee income is based primarily upon the market value of the accounts under administration which were $1.68 billion at June 30, 2014 compared to $1.47 billion at June 30, 2013.
NON-INTEREST EXPENSE
Non-interest expense fell by 8.27% compared to the previous quarter and declined by 15.08% compared to the quarter ended June 30, 2013. Principal categories of non-interest expense that changed were the following:
- Salaries and employee benefit expense decreased by 14.79% compared to the previous quarter and was lower by 22.09% compared to the quarter ended June 30, 2013. The primary reason for lower salary and employee benefit expenses during the second quarter of 2014 was the sale of our majority interest in Southern Trust Mortgage on May 15, 2014. Staff reductions in 2013 at the bank and at Southern Trust Mortgage were the major reasons for the reduction in salary and benefits expenses compared to the second quarter of 2013.
- We streamlined campaign and product promotions, which continued to reduce advertising expenses significantly. Advertising expenses for the quarter declined by 19.63% compared to the previous quarter and 69.89% compared to the quarter ended June 30, 2013.
- Costs related to other real estate owned (OREO) declined during the quarter as ongoing expenses to maintain the properties fell. Expenses related to OREO decreased by 92.81% compared to the previous quarter and 91.55% compared to the quarter ended June 30, 2013.
- The Company wrote down the carrying value of a property acquired for future branch expansion by $200,000 in the second quarter.
Despite lower operating expenses, the efficiency ratio for the second quarter of 2014 increased to 78.99% compared to 75.19% for the previous quarter as revenue declined at a greater pace.
ASSET QUALITY
Asset quality continued to improve during the second quarter. The improvement in credit quality was broad based which was reflected in the lower provision for loan losses in the second quarter.
- Loans that were delinquent for more than 90 days and still accruing declined to $355,000 as of June 30, 2014 from $808,000 as of December 31, 2013 and $829,000 as of June 30, 2013.
- Nonaccrual loans declined to $10.41 million as of June 30, 2014 from $19.75 million as of December 31, 2013 and $20.38 million as of June 30, 2013, representing a decrease of 47.30% and 48.92%, respectively.
- Troubled debt restructurings that were performing as agreed totaled $4.55 million at June 30, 2014 compared to $4.67 million at December 31, 2013 and $5.37 million at June 30, 2013, representing an decrease of 2.61% and 15.17%, respectively.
- Total nonperforming assets were $19.67 million or 1.57% of total assets at June 30, 2014 compared to $28.66 million or 2.33% to total assets at December 31, 2013 and $34.14 million or 2.80% of total assets at June 30, 2013.
- We sold $3.6 million of nonperforming loans during the quarter and a large loan relationship paid off. Specific reserves associated with these loans totaled $1.59 million. The removal of these specific reserves contributed to a decline in the allowance for loan losses.
The allowance for loans losses was $11.51 million or 1.58% of total loans at June 30, 2014 compared to $13.23 million or 1.81% of total loans at the end of the previous quarter and $13.62 million or 1.93% of total loans at June 30, 2013.
CONSOLIDATED ASSETS
Total consolidated assets at June 30, 2014 were $1.25 billion, an increase of 2.03% since December 31, 2013. Changes in major asset categories were as follows:
- Cash balances and deposits at other banks increased by $51.88 million compared to December 31, 2013. The primary reason for the higher cash balances were deposit inflows late in the quarter. Due to the anticipated short term nature of these funds, they were not deployed into loans or securities and instead retained at the Federal Reserve.
- Securities available for sale increased by $1.24 million compared to December 31, 2013.
- Loans held for investment decreased by $1.37 million since December 31, 2013.
- Balances of mortgages held for sale decreased by $19.69 million compared to December 31, 2013. The decline in the balances of mortgages held for sale was the result of the sale of our majority interest in Southern Trust Mortgage on May 15, 2014 following which we reduced the balances to conform to our lending limits.
CONSOLIDATED LIABILITIES
Total consolidated liabilities at June 30, 2014 were $1.13 billion, an increase of 1.89% compared to December 31, 2013. The most significant change in liabilities was an increase in non-maturity deposits primarily due to inflows late in the quarter. The increase in non-maturity deposits was accompanied by a decline in time deposits. Total deposits increased by $21.10 million from December 31, 2013 to $1.00 billion as of quarter end June 30, 2014.
SHAREHOLDERS' EQUITY AND CAPITAL
Shareholders' equity attributable to Middleburg Financial Corporation shareholders at June 30, 2014 was $119.05 million, compared to $112.58 million at December 31, 2013. Retained earnings at June 30, 2014 were $53.53 million compared to $50.69 million at December 31, 2013. The book value of the Company's common stock at June 30, 2014 was $16.73 per share versus $15.90 per share at December 31, 2013.
The Company's capital ratios remain well above regulatory minimum capital ratios as of June 30, 2014:
- Tier 1 Leverage ratio was 9.54%, 5.54% over the regulatory minimum of 4.0%
- Tier 1 Risk-Based Capital Ratio was 15.63%, 11.63% over the regulatory minimum of 4.0%
- Total Risk Based Capital Ratio was 16.88%, 8.88% over the regulatory minimum of 8.0%.
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, 2013, 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 |
|||||||
Consolidated Balance Sheets |
|||||||
(In thousands, except for share and per share data) |
|||||||
(Unaudited) |
(Audited) |
||||||
June 30, |
December 31, |
||||||
ASSETS |
|||||||
Cash and due from banks |
$ |
6,289 |
$ |
6,648 |
|||
Interest-bearing deposits with other institutions |
112,934 |
60,695 |
|||||
Total cash and cash equivalents |
119,223 |
67,343 |
|||||
Securities available for sale, at fair value |
329,667 |
328,423 |
|||||
Loans held for sale |
13,484 |
33,175 |
|||||
Restricted securities, at cost |
6,404 |
6,780 |
|||||
Loans receivable, net of allowance for loan losses of $11,508 and $13,320, respectively |
715,598 |
715,160 |
|||||
Premises and equipment, net |
19,343 |
20,017 |
|||||
Goodwill and identified intangibles |
3,893 |
5,346 |
|||||
Other real estate owned, net of valuation allowance of $644 and $398, respectively |
4,356 |
3,424 |
|||||
Bank owned life insurance |
22,281 |
21,955 |
|||||
Accrued interest receivable and other assets |
18,486 |
26,130 |
|||||
TOTAL ASSETS |
$ |
1,252,735 |
$ |
1,227,753 |
|||
LIABILITIES |
|||||||
Deposits: |
|||||||
Non-interest bearing demand deposits |
$ |
198,407 |
$ |
185,577 |
|||
Savings and interest bearing demand deposits |
550,126 |
528,879 |
|||||
Time deposits |
254,962 |
267,940 |
|||||
Total deposits |
1,003,495 |
982,396 |
|||||
Securities sold under agreements to repurchase |
35,331 |
34,539 |
|||||
Federal Home Loan Bank borrowings |
80,000 |
80,000 |
|||||
Subordinated notes |
5,155 |
5,155 |
|||||
Accrued interest payable and other liabilities |
9,708 |
10,590 |
|||||
Commitments and contingent liabilities |
— |
— |
|||||
TOTAL LIABILITIES |
1,133,689 |
1,112,680 |
|||||
SHAREHOLDERS' EQUITY |
|||||||
Common stock ($2.50 par value; 20,000,000 shares authorized, 7,113,744 and 7,080,591, |
17,454 |
17,403 |
|||||
Capital surplus |
44,483 |
44,251 |
|||||
Retained earnings |
53,528 |
50,689 |
|||||
Accumulated other comprehensive income |
3,581 |
232 |
|||||
Total Middleburg Financial Corporation shareholders' equity |
119,046 |
112,575 |
|||||
Non-controlling interest in consolidated subsidiary |
— |
2,498 |
|||||
TOTAL SHAREHOLDERS' EQUITY |
119,046 |
115,073 |
|||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY |
$ |
1,252,735 |
$ |
1,227,753 |
MIDDLEBURG FINANCIAL CORPORATION |
|||||||||||||||
Consolidated Statements of Income |
|||||||||||||||
(In thousands, except for per share data) |
|||||||||||||||
(Unaudited) |
(Unaudited) |
||||||||||||||
For the Three Months |
For the Six Months |
||||||||||||||
2014 |
2013 |
2014 |
2013 |
||||||||||||
INTEREST AND DIVIDEND INCOME |
|||||||||||||||
Interest and fees on loans |
$ |
8,493 |
$ |
8,795 |
$ |
17,299 |
$ |
17,760 |
|||||||
Interest and dividends on securities available for sale |
|||||||||||||||
Taxable |
1,792 |
1,468 |
3,410 |
2,999 |
|||||||||||
Tax-exempt |
537 |
646 |
1,121 |
1,276 |
|||||||||||
Dividends |
72 |
54 |
145 |
110 |
|||||||||||
Interest on deposits in banks and federal funds sold |
47 |
29 |
73 |
59 |
|||||||||||
Total interest and dividend income |
10,941 |
10,992 |
22,048 |
22,204 |
|||||||||||
INTEREST EXPENSE |
|||||||||||||||
Interest on deposits |
995 |
1,253 |
1,997 |
2,626 |
|||||||||||
Interest on securities sold under agreements to repurchase |
81 |
81 |
161 |
161 |
|||||||||||
Interest on short-term borrowings |
— |
18 |
— |
47 |
|||||||||||
Interest on FHLB borrowings and other debt |
355 |
299 |
668 |
594 |
|||||||||||
Total interest expense |
1,431 |
1,651 |
2,826 |
3,428 |
|||||||||||
NET INTEREST INCOME |
9,510 |
9,341 |
19,222 |
18,776 |
|||||||||||
Provision for (recovery of) loan losses |
72 |
184 |
960 |
(4) |
|||||||||||
NET INTEREST INCOME AFTER PROVISION FOR (RECOVERY OF) |
9,438 |
9,157 |
18,262 |
18,780 |
|||||||||||
NON-INTEREST INCOME |
|||||||||||||||
Service charges on deposit accounts |
622 |
574 |
1,180 |
1,108 |
|||||||||||
Trust services income |
1,057 |
1,014 |
2,105 |
1,974 |
|||||||||||
Gains on loans held for sale |
1,916 |
4,483 |
4,858 |
8,376 |
|||||||||||
Gains on securities available for sale, net |
66 |
326 |
129 |
373 |
|||||||||||
Commissions on investment sales |
146 |
110 |
286 |
204 |
|||||||||||
Fees on mortgages held for sale |
23 |
58 |
51 |
75 |
|||||||||||
Bank owned life insurance |
164 |
123 |
326 |
243 |
|||||||||||
Gain on sale of majority interest in consolidated subsidiary |
24 |
— |
24 |
— |
|||||||||||
Other operating income |
255 |
392 |
1,196 |
655 |
|||||||||||
Total non-interest income |
4,273 |
7,080 |
10,155 |
13,008 |
|||||||||||
NON-INTEREST EXPENSE |
|||||||||||||||
Salaries and employee benefits |
5,993 |
7,692 |
13,026 |
15,492 |
|||||||||||
Occupancy and equipment |
1,679 |
1,787 |
3,579 |
3,592 |
|||||||||||
Advertising |
131 |
435 |
294 |
703 |
|||||||||||
Computer operations |
510 |
458 |
969 |
919 |
|||||||||||
Other real estate owned |
12 |
142 |
179 |
961 |
|||||||||||
Other taxes |
220 |
187 |
417 |
379 |
|||||||||||
Federal deposit insurance |
230 |
270 |
468 |
535 |
|||||||||||
Other operating expenses |
2,356 |
2,137 |
4,335 |
4,455 |
|||||||||||
Total non-interest expense |
11,131 |
13,108 |
23,267 |
27,036 |
|||||||||||
Income before income taxes |
2,580 |
3,129 |
5,150 |
4,752 |
|||||||||||
Income tax expense |
667 |
774 |
1,415 |
1,137 |
|||||||||||
NET INCOME |
1,913 |
2,355 |
3,735 |
3,615 |
|||||||||||
Net loss (income) attributable to non-controlling interest |
(58) |
(262) |
98 |
(195) |
|||||||||||
Net income attributable to Middleburg Financial Corporation |
$ |
1,855 |
$ |
2,093 |
$ |
3,833 |
$ |
3,420 |
|||||||
Earnings per share: |
|||||||||||||||
Basic |
$ |
0.26 |
$ |
0.30 |
$ |
0.54 |
$ |
0.48 |
|||||||
Diluted |
$ |
0.26 |
$ |
0.29 |
$ |
0.54 |
$ |
0.48 |
|||||||
Dividends per common share |
$ |
0.07 |
$ |
0.05 |
$ |
0.14 |
$ |
0.10 |
MIDDLEBURG FINANCIAL CORPORATION |
|||||||||||||||||||
Quarterly Summary Statements of Income |
|||||||||||||||||||
(Unaudited, Dollars In thousands, except for per share data) |
|||||||||||||||||||
For the Three Months Ended |
|||||||||||||||||||
June 30, |
March 31, |
December 31, |
September 30, |
June 30, |
|||||||||||||||
INTEREST AND DIVIDEND INCOME |
|||||||||||||||||||
Interest and fees on loans |
$ |
8,493 |
$ |
8,806 |
$ |
8,744 |
$ |
8,744 |
$ |
8,795 |
|||||||||
Interest and dividends on securities available for sale |
|||||||||||||||||||
Taxable |
1,792 |
1,617 |
1,638 |
1,468 |
1,468 |
||||||||||||||
Tax-exempt |
537 |
584 |
638 |
640 |
646 |
||||||||||||||
Dividends |
72 |
73 |
63 |
59 |
54 |
||||||||||||||
Interest on deposits in banks and federal funds sold |
47 |
26 |
31 |
43 |
29 |
||||||||||||||
Total interest and dividend income |
10,941 |
11,106 |
11,114 |
10,954 |
10,992 |
||||||||||||||
INTEREST EXPENSE |
|||||||||||||||||||
Interest on deposits |
995 |
1,002 |
1,094 |
1,190 |
1,253 |
||||||||||||||
Interest on securities sold under agreements to repurchase |
81 |
80 |
82 |
82 |
81 |
||||||||||||||
Interest on short-term borrowings |
— |
— |
17 |
59 |
18 |
||||||||||||||
Interest on FHLB borrowings and other debt |
355 |
313 |
311 |
303 |
299 |
||||||||||||||
Total interest expense |
1,431 |
1,395 |
1,504 |
1,634 |
1,651 |
||||||||||||||
NET INTEREST INCOME |
9,510 |
9,711 |
9,610 |
9,320 |
9,341 |
||||||||||||||
Provision for loan losses |
72 |
888 |
110 |
3 |
184 |
||||||||||||||
NET INTEREST INCOME AFTER PROVISION FOR |
9,438 |
8,823 |
9,500 |
9,317 |
9,157 |
||||||||||||||
NON-INTEREST INCOME |
|||||||||||||||||||
Service charges on deposit accounts |
622 |
557 |
593 |
590 |
574 |
||||||||||||||
Trust services income |
1,057 |
1,048 |
1,033 |
963 |
1,014 |
||||||||||||||
Gains on loans held for sale |
1,916 |
2,942 |
3,114 |
4,162 |
4,483 |
||||||||||||||
Gains on securities available for sale, net |
66 |
63 |
22 |
23 |
326 |
||||||||||||||
Commissions on investment sales |
146 |
140 |
107 |
159 |
110 |
||||||||||||||
Fees on mortgages held for sale |
23 |
28 |
— |
28 |
58 |
||||||||||||||
Bank owned life insurance |
164 |
162 |
105 |
125 |
123 |
||||||||||||||
Gain on sale of majority interest in consolidated subsidiary |
24 |
— |
— |
— |
— |
||||||||||||||
Other operating income |
255 |
941 |
431 |
78 |
392 |
||||||||||||||
Total non-interest income |
4,273 |
5,881 |
5,405 |
6,128 |
7,080 |
||||||||||||||
NON-INTEREST EXPENSE |
|||||||||||||||||||
Salaries and employee benefits |
5,993 |
7,033 |
7,385 |
7,750 |
7,692 |
||||||||||||||
Occupancy and equipment |
1,679 |
1,900 |
1,857 |
1,820 |
1,787 |
||||||||||||||
Advertising |
131 |
163 |
436 |
318 |
435 |
||||||||||||||
Computer operations |
510 |
458 |
485 |
456 |
458 |
||||||||||||||
Other real estate owned |
12 |
167 |
78 |
416 |
142 |
||||||||||||||
Other taxes |
220 |
197 |
186 |
186 |
187 |
||||||||||||||
Federal deposit insurance |
230 |
238 |
139 |
149 |
270 |
||||||||||||||
Other operating expenses |
2,356 |
1,979 |
3,134 |
2,210 |
2,137 |
||||||||||||||
Total non-interest expense |
11,131 |
12,135 |
13,700 |
13,305 |
13,108 |
||||||||||||||
Income before income taxes |
2,580 |
2,569 |
1,205 |
2,140 |
3,129 |
||||||||||||||
Income tax expense |
667 |
749 |
303 |
491 |
774 |
||||||||||||||
NET INCOME |
1,913 |
1,820 |
902 |
1,649 |
2,355 |
||||||||||||||
Net loss (income) attributable to non-controlling interest |
(58) |
157 |
224 |
(38) |
(262) |
||||||||||||||
Net income attributable to Middleburg Financial |
$ |
1,855 |
$ |
1,977 |
$ |
1,126 |
$ |
1,611 |
$ |
2,093 |
|||||||||
Earnings per share: |
|||||||||||||||||||
Basic |
$ |
0.26 |
$ |
0.28 |
$ |
0.16 |
$ |
0.23 |
$ |
0.30 |
|||||||||
Diluted |
$ |
0.26 |
$ |
0.28 |
$ |
0.16 |
$ |
0.23 |
$ |
0.29 |
|||||||||
Dividends per common share |
$ |
0.07 |
$ |
0.07 |
$ |
0.07 |
$ |
0.07 |
$ |
0.05 |
MIDDLEBURG FINANCIAL CORPORATION |
|||||||||||||||||||
Selected Financial Data by Quarter |
|||||||||||||||||||
(Unaudited, Dollars in thousands, except for per share data) |
|||||||||||||||||||
June 30, |
March 31, |
December 31, |
September 30, |
June 30, |
|||||||||||||||
2014 |
2014 |
2013 |
2013 |
2013 |
|||||||||||||||
BALANCE SHEET RATIOS |
|||||||||||||||||||
Loans to deposits |
72.46 |
% |
76.10 |
% |
74.15 |
% |
74.71 |
% |
73.50 |
% |
|||||||||
Average interest-earning assets to average interest-bearing liabilities |
128.37 |
% |
126.80 |
% |
126.87 |
% |
126.23 |
% |
125.09 |
% |
|||||||||
INCOME STATEMENT RATIOS |
|||||||||||||||||||
Return on average assets (ROA) |
0.61 |
% |
0.66 |
% |
0.37 |
% |
0.52 |
% |
0.69 |
% |
|||||||||
Return on average equity (ROE) |
6.30 |
% |
6.99 |
% |
3.92 |
% |
5.71 |
% |
7.25 |
% |
|||||||||
Net interest margin (1) |
3.38 |
% |
3.54 |
% |
3.43 |
% |
3.33 |
% |
3.40 |
% |
|||||||||
Yield on average earning assets |
3.87 |
% |
4.04 |
% |
3.94 |
% |
3.89 |
% |
3.97 |
% |
|||||||||
Cost of funds |
0.52 |
% |
0.52 |
% |
0.55 |
% |
0.59 |
% |
0.61 |
% |
|||||||||
Efficiency ratio (6) |
78.99 |
% |
75.19 |
% |
88.32 |
% |
81.19 |
% |
78.35 |
% |
|||||||||
PER SHARE DATA |
|||||||||||||||||||
Dividends |
$ |
0.07 |
$ |
0.07 |
$ |
0.07 |
$ |
0.07 |
$ |
0.05 |
|||||||||
Book value (MFC Shareholders) |
16.73 |
16.37 |
15.90 |
15.86 |
15.93 |
||||||||||||||
Tangible book value (4) |
16.19 |
15.62 |
15.13 |
15.03 |
15.09 |
||||||||||||||
SHARE PRICE DATA |
|||||||||||||||||||
Closing price |
$ |
20.00 |
$ |
17.61 |
$ |
18.04 |
$ |
19.28 |
$ |
19.10 |
|||||||||
Diluted earnings multiple (2) |
19.23 |
15.72 |
19.61 |
20.96 |
16.47 |
||||||||||||||
Book value multiple (3) |
1.20 |
1.08 |
1.11 |
1.21 |
1.20 |
||||||||||||||
COMMON STOCK DATA |
|||||||||||||||||||
Outstanding shares at end of period |
7,113,744 |
7,076,145 |
7,080,591 |
7,089,091 |
7,089,598 |
||||||||||||||
Weighted average shares O/S , basic - QTD |
7,093,788 |
7,078,470 |
7,096,260 |
7,080,244 |
7,072,587 |
||||||||||||||
Weighted average shares O/S, diluted - QTD |
7,117,826 |
7,103,785 |
7,130,272 |
7,118,208 |
7,102,670 |
||||||||||||||
Dividend payout ratio |
26.92 |
% |
25.05 |
% |
33.32 |
% |
30.43 |
% |
16.88 |
% |
|||||||||
CAPITAL RATIOS |
|||||||||||||||||||
Capital to assets - common shareholders |
9.50 |
% |
9.59 |
% |
9.20 |
% |
9.25 |
% |
9.28 |
% |
|||||||||
Capital to assets - with non-controlling interest |
9.50 |
% |
9.78 |
% |
9.40 |
% |
9.48 |
% |
9.50 |
% |
|||||||||
Tangible common equity ratio (5) |
9.22 |
% |
9.19 |
% |
8.76 |
% |
8.81 |
% |
8.83 |
% |
|||||||||
Leverage ratio |
9.54 |
% |
9.61 |
% |
9.42 |
% |
9.36 |
% |
9.32 |
% |
|||||||||
Tier 1 risk based capital ratio |
15.63 |
% |
14.67 |
% |
14.62 |
% |
14.58 |
% |
14.15 |
% |
|||||||||
Total risk based capital ratio |
16.88 |
% |
15.93 |
% |
15.88 |
% |
15.83 |
% |
15.41 |
% |
|||||||||
CREDIT QUALITY |
|||||||||||||||||||
Net charge-offs to average loans |
0.23 |
% |
0.13 |
% |
0.02 |
% |
0.03 |
% |
0.01 |
% |
|||||||||
Total nonperforming loans to total loans |
2.11 |
% |
2.76 |
% |
3.46 |
% |
3.63 |
% |
3.76 |
% |
|||||||||
Total nonperforming assets to total assets |
1.57 |
% |
2.04 |
% |
2.33 |
% |
2.51 |
% |
2.80 |
% |
|||||||||
Nonaccrual loans to: |
|||||||||||||||||||
Total loans |
1.43 |
% |
2.03 |
% |
2.71 |
% |
2.87 |
% |
2.88 |
% |
|||||||||
Total assets |
0.83 |
% |
1.23 |
% |
1.61 |
% |
1.69 |
% |
1.67 |
% |
|||||||||
Allowance for loan losses to: |
|||||||||||||||||||
Total loans |
1.58 |
% |
1.81 |
% |
1.83 |
% |
1.87 |
% |
1.93 |
% |
|||||||||
Nonperforming assets |
58.50 |
% |
53.54 |
% |
46.48 |
% |
43.86 |
% |
39.88 |
% |
|||||||||
Nonaccrual loans |
110.57 |
% |
88.92 |
% |
67.44 |
% |
65.20 |
% |
66.82 |
% |
|||||||||
NONPERFORMING ASSETS |
|||||||||||||||||||
Loans delinquent 90+ days and still accruing |
$ |
355 |
$ |
503 |
$ |
808 |
$ |
636 |
$ |
829 |
|||||||||
Nonaccrual loans |
10,408 |
14,876 |
19,752 |
20,525 |
20,376 |
||||||||||||||
Restructured loans (not in non-accrual) |
4,552 |
4,838 |
4,674 |
4,820 |
5,366 |
||||||||||||||
Other Real Estate Owned |
4,356 |
4,491 |
3,424 |
4,530 |
7,570 |
||||||||||||||
Total nonperforming assets |
$ |
19,671 |
$ |
24,708 |
$ |
28,658 |
$ |
30,511 |
$ |
34,141 |
(1) |
The net interest margin is calculated by dividing tax equivalent net interest income by total average earning assets. Tax equivalent net interest |
(2) |
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. |
(3) |
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. |
(4) |
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. |
(5) |
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. |
(6) |
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 Average Balances, Income and Expenses, Yields and Rates |
|||||||||||||||||||||
Three months ended June 30, |
|||||||||||||||||||||
2014 |
2013 |
||||||||||||||||||||
Average Balance |
Income/ Expense |
Yield/ Rate (2) |
Average Balance |
Income/ Expense |
Yield/ Rate (2) |
||||||||||||||||
(Dollars in thousands) |
|||||||||||||||||||||
Assets: |
|||||||||||||||||||||
Securities: |
|||||||||||||||||||||
Taxable |
$ |
276,110 |
$ |
1,864 |
2.71 |
% |
$ |
268,369 |
$ |
1,523 |
2.28 |
% |
|||||||||
Tax-exempt (1) |
57,394 |
814 |
5.69 |
% |
69,390 |
978 |
5.65 |
% |
|||||||||||||
Total securities |
$ |
333,504 |
$ |
2,678 |
3.22 |
% |
$ |
337,759 |
$ |
2,501 |
2.97 |
% |
|||||||||
Loans: |
|||||||||||||||||||||
Taxable |
$ |
744,009 |
$ |
8,460 |
4.56 |
% |
$ |
759,360 |
$ |
8,789 |
4.64 |
% |
|||||||||
Tax-exempt (1) |
652 |
9 |
5.54 |
% |
687 |
9 |
5.25 |
% |
|||||||||||||
Total loans (3) |
$ |
744,661 |
$ |
8,469 |
4.56 |
% |
$ |
760,047 |
$ |
8,798 |
4.64 |
% |
|||||||||
Interest on deposits in banks and federal |
81,552 |
47 |
0.23 |
% |
45,371 |
29 |
0.26 |
% |
|||||||||||||
Total earning assets |
$ |
1,159,717 |
$ |
11,194 |
3.87 |
% |
$ |
1,143,177 |
$ |
11,328 |
3.97 |
% |
|||||||||
Less: allowances for loan losses |
(12,606) |
(13,550) |
|||||||||||||||||||
Total nonearning assets |
78,679 |
79,748 |
|||||||||||||||||||
Total assets |
$ |
1,225,790 |
$ |
1,209,375 |
|||||||||||||||||
Liabilities: |
|||||||||||||||||||||
Interest-bearing deposits: |
|||||||||||||||||||||
Checking |
$ |
340,789 |
$ |
161 |
0.19 |
% |
$ |
319,704 |
$ |
210 |
0.26 |
% |
|||||||||
Regular savings |
113,487 |
53 |
0.19 |
% |
110,713 |
63 |
0.23 |
% |
|||||||||||||
Money market savings |
73,308 |
35 |
0.19 |
% |
75,733 |
43 |
0.23 |
% |
|||||||||||||
Time deposits: |
|||||||||||||||||||||
$100,000 and over |
123,527 |
317 |
1.03 |
% |
139,073 |
432 |
1.25 |
% |
|||||||||||||
Under $100,000 |
132,002 |
429 |
1.30 |
% |
142,217 |
505 |
1.42 |
% |
|||||||||||||
Total interest-bearing deposits |
$ |
783,113 |
$ |
995 |
0.51 |
% |
$ |
787,440 |
$ |
1,253 |
0.64 |
% |
|||||||||
Short-term borrowings |
— |
— |
— |
% |
2,090 |
18 |
3.45 |
% |
|||||||||||||
Securities sold under agreements to repurchase |
35,114 |
81 |
0.93 |
% |
34,204 |
81 |
0.95 |
% |
|||||||||||||
FHLB borrowings and other debt |
85,155 |
355 |
1.60 |
% |
90,155 |
299 |
1.33 |
% |
|||||||||||||
Federal funds purchased |
4 |
— |
— |
% |
— |
— |
— |
% |
|||||||||||||
Total interest-bearing liabilities |
$ |
903,386 |
$ |
1,431 |
0.63 |
% |
$ |
913,889 |
$ |
1,651 |
0.72 |
% |
|||||||||
Non-interest bearing liabilities: |
|||||||||||||||||||||
Demand deposits |
194,779 |
169,894 |
|||||||||||||||||||
Other liabilities |
9,936 |
6,917 |
|||||||||||||||||||
Total liabilities |
$ |
1,108,101 |
$ |
1,090,700 |
|||||||||||||||||
Non-controlling interest |
— |
2,835 |
|||||||||||||||||||
Shareholders' equity |
117,689 |
115,840 |
|||||||||||||||||||
Total liabilities and shareholders' equity |
$ |
1,225,790 |
$ |
1,209,375 |
|||||||||||||||||
Net interest income |
$ |
9,763 |
$ |
9,677 |
|||||||||||||||||
Interest rate spread |
3.24 |
% |
3.25 |
% |
|||||||||||||||||
Cost of Funds |
0.52 |
% |
0.61 |
% |
|||||||||||||||||
Interest expense as a percent of average earning assets |
0.49 |
% |
0.58 |
% |
|||||||||||||||||
Net interest margin |
3.38 |
% |
3.40 |
% |
|||||||||||||||||
(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, |
|||||||||||||||||||||
2014 |
2013 |
||||||||||||||||||||
Average Balance |
Income/ Expense |
Yield/ Rate (2) |
Average Balance |
Income/ Expense |
Yield/ Rate (2) |
||||||||||||||||
(Dollars in thousands) |
|||||||||||||||||||||
Assets: |
|||||||||||||||||||||
Securities: |
|||||||||||||||||||||
Taxable |
$ |
276,510 |
$ |
3,555 |
2.59 |
% |
$ |
267,177 |
$ |
3,109 |
2.35 |
% |
|||||||||
Tax-exempt (1) |
59,155 |
1,698 |
5.79 |
% |
68,327 |
1,933 |
5.70 |
% |
|||||||||||||
Total securities |
$ |
335,665 |
$ |
5,253 |
3.16 |
% |
$ |
335,504 |
$ |
5,042 |
3.03 |
% |
|||||||||
Loans: |
|||||||||||||||||||||
Taxable |
$ |
750,666 |
$ |
17,341 |
4.66 |
% |
$ |
757,913 |
$ |
17,748 |
4.72 |
% |
|||||||||
Tax-exempt (1) |
652 |
17 |
5.26 |
% |
687 |
18 |
5.28 |
% |
|||||||||||||
Total loans (3) |
$ |
751,318 |
$ |
17,358 |
4.66 |
% |
$ |
758,600 |
$ |
17,766 |
4.72 |
% |
|||||||||
Interest on deposits in banks and federal |
65,268 |
73 |
0.23 |
% |
51,603 |
59 |
0.23 |
% |
|||||||||||||
Total earning assets |
$ |
1,152,251 |
$ |
22,684 |
3.97 |
% |
$ |
1,145,707 |
$ |
22,867 |
4.03 |
% |
|||||||||
Less: allowances for loan losses |
(13,101) |
(13,905) |
|||||||||||||||||||
Total nonearning assets |
80,133 |
82,346 |
|||||||||||||||||||
Total assets |
$ |
1,219,283 |
$ |
1,214,148 |
|||||||||||||||||
Liabilities: |
|||||||||||||||||||||
Interest-bearing deposits: |
|||||||||||||||||||||
Checking |
$ |
336,690 |
$ |
322 |
0.19 |
% |
$ |
326,329 |
$ |
445 |
0.28 |
% |
|||||||||
Regular savings |
113,262 |
105 |
0.19 |
% |
109,740 |
123 |
0.23 |
% |
|||||||||||||
Money market savings |
74,864 |
71 |
0.19 |
% |
76,903 |
90 |
0.24 |
% |
|||||||||||||
Time deposits: |
|||||||||||||||||||||
$100,000 and over |
126,948 |
640 |
1.02 |
% |
143,242 |
939 |
1.32 |
% |
|||||||||||||
Under $100,000 |
131,385 |
859 |
1.32 |
% |
142,795 |
1,029 |
1.45 |
% |
|||||||||||||
Total interest-bearing deposits |
$ |
783,149 |
$ |
1,997 |
0.51 |
% |
$ |
799,009 |
$ |
2,626 |
0.66 |
% |
|||||||||
Short-term borrowings |
— |
— |
— |
% |
2,372 |
47 |
4.00 |
% |
|||||||||||||
Securities sold under agreements to repurchase |
35,431 |
161 |
0.90 |
% |
34,153 |
161 |
0.95 |
% |
|||||||||||||
FHLB borrowings and other debt |
85,155 |
668 |
1.54 |
% |
85,810 |
594 |
1.40 |
% |
|||||||||||||
Federal funds purchased |
2 |
— |
0.00 |
% |
— |
— |
0.00 |
% |
|||||||||||||
Total interest-bearing liabilities |
$ |
903,737 |
$ |
2,826 |
0.63 |
% |
$ |
921,344 |
$ |
3,428 |
0.75 |
% |
|||||||||
Non-interest bearing liabilities: |
|||||||||||||||||||||
Demand deposits |
189,807 |
167,268 |
|||||||||||||||||||
Other liabilities |
9,549 |
7,249 |
|||||||||||||||||||
Total liabilities |
$ |
1,103,093 |
$ |
1,095,861 |
|||||||||||||||||
Non-controlling interest |
— |
2,941 |
|||||||||||||||||||
Shareholders' equity |
116,190 |
115,346 |
|||||||||||||||||||
Total liabilities and shareholders' equity |
$ |
1,219,283 |
$ |
1,214,148 |
|||||||||||||||||
Net interest income |
$ |
19,858 |
$ |
19,439 |
|||||||||||||||||
Interest rate spread |
3.34 |
% |
3.28 |
% |
|||||||||||||||||
Cost of Funds |
0.52 |
% |
0.64 |
% |
|||||||||||||||||
Interest expense as a percent of average earning assets |
0.49 |
% |
0.60 |
% |
|||||||||||||||||
Net interest margin |
3.48 |
% |
3.42 |
% |
|||||||||||||||||
(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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