Middleburg Financial Corporation Announces Second Quarter 2015 Results

Jul 29, 2015, 12:00 ET from Middleburg Financial Corporation

MIDDLEBURG, Va., July 29, 2015 /PRNewswire/ -- Middleburg Financial Corporation (the "Company") (Nasdaq: MBRG), today announced net income of $2.28 million, or $0.32 per diluted share, for the quarter ended June 30, 2015.

"The second quarter of 2015 extended Middleburg's trend of strong earnings growth," commented Gary R. Shook, President and CEO of Middleburg Financial Corporation.  He added, "Earnings benefited from strong loan growth at Middleburg Bank and increased asset management fees from Middleburg Investment Group combined with good expense control and a reduction in loss reserves driven by loan upgrades and sales of nonperforming loans."

Second Quarter 2015 Highlights:

  • Net income of $2.28 million or $0.32 per diluted share, an increase of 22.91% compared to $1.86 million or $0.26 per diluted share for the second quarter of 2014.  Net income for the six months ended June 30, 2015 increased 23.35% to $4.73 million from $3.83 million over the same period in 2014.  Earnings per diluted share for the six months ended June 30, 2015 were $0.66 per share compared to $0.54 per share for the same period in 2014.
  • Net interest margin of 3.24%, lower by 16 bp compared to the previous quarter and 14 bp lower than the second quarter of 2014.  
  • Cost of funds was 38 bp, a decrease of 1 bp compared to the previous quarter and 14 bp lower than the second quarter of 2014. 
  • Net interest income was $9.31 million, a decrease of 3.30% compared to the previous quarter and 2.07% lower than the second quarter of 2014.  Net interest income was $18.94 million for the six months ended June 30, 2015, a decrease of 1.45% over net interest income reported for the same period for 2014.
  • Non-interest income for the quarter and six months ended June 30, 2015 was lower by 43.20% and 46.49%, compared to the quarter and six months ended June 30, 2014, respectively.  Non-interest income declined by 19.32% compared to the previous quarter.
  • Non-interest expense was $9.07 million, an increase of 1.90% compared to the previous quarter and 18.52% lower than the second quarter of 2014.  Non-interest expense fell by 22.77% compared to the six months ended June 30, 2014.
  • Efficiency ratio of 74.88%, compared to 68.35% for the previous quarter and 78.99% for the second quarter of 2014.  Year to date efficiency ratio of 71.51% compared to 75.54% for the prior year.
  • Total assets were $1.24 billion, an increase of 1.56% since December 31, 2014.  Total assets were $1.25 billion at June 30, 2014.
  • Total deposits were $1.01 billion, an increase of 1.66% since December 31, 2014.  Total deposits were $1.00 billion at June 30, 2014.
  • Loans held-for-investment grew to $773.09 million as of June 30, 2015, representing an annualized growth rate of 5.0% and a growth rate of 6.3% compared to June 30, 2014.  Loans held-for-investment were $754.85 million and $727.11 million at December 31, 2014 and June 30, 2014, respectively.  
  • Nonaccrual loans were $8.01 million or 1.04% of total loans, a decrease of 19.47% since December 31, 2014 and a decrease of 23.06% since June 30, 2014.
  • The allowance for loan losses declined by $130,000 compared to the previous quarter as a result of net recoveries of $295,000 and recovery of the provision for loan losses of $425,000.
  • The allowance for loan losses was 1.54% of total loans compared to 1.58% for the previous quarter and 1.56% at year-end 2014.
  • The ratio of nonperforming assets to total assets was 1.99% compared to 1.59% at December 31, 2014 and 1.57% at June 30, 2014.
  • Capital ratios continue to be strong: Total Risk-Based Capital Ratio of 18.28%, Tier 1 Risk-Based Capital Ratio of 17.04%, Common Equity Tier 1 Ratio of 16.35% and Tier 1 Leverage Ratio of 9.85% at June 30, 2015.  

TOTAL REVENUE

Total revenue, which is comprised of net interest income (before provision for loan losses) and non-interest income, was $11.74 million for the second quarter of 2015, representing a decrease of 7.12% compared to the previous quarter and a decrease of 14.83% compared to the second quarter of 2014.

Net Interest Income

The Company recorded net interest income of $9.31 million for the second quarter of 2015, representing a decrease of 3.30% compared to the previous quarter and a decrease of 2.07% compared to the quarter ended June 30, 2014.  The net interest margin was 3.24%, 16 bp lower when compared to the previous quarter and 14 bp lower than the quarter ended June 30, 2014.

The following factors contributed to the decrease in net interest margin during the second quarter of 2015:

  • Yields on earning assets decreased by 18 bp compared to the previous quarter, primarily due to a 25 bp decrease in loan yields and a 21 bp decrease in yields on investments.
  • Yields on investment securities were impacted by higher premium amortization stemming from faster prepayments on mortgage backed securities accompanied by lower book yields for securities that were added to the portfolio during the period.
  • Loan yields declined due to refinancing of existing loans and new loans getting booked at lower rates.
  • Cost of funds was 38 bp, relatively unchanged from the previous quarter.

The decrease in yields on earning assets resulted in total interest income of $10.35 million for the quarter, lower by 3.24% compared to the previous quarter.  Total interest income for the quarter declined by 5.38% compared to the quarter ended June 30, 2014 as yields on average earning assets fell by 29 bp while the balance of average earning assets increased by 1.98% during the period.    

Non-Interest Income

Non-interest income decreased by19.35% compared to the previous quarter and declined by 43.22% compared to the quarter ended June 30, 2014.  The primary reason for the decline in non-interest income compared to the quarter ended June 30, 2014 was due to the decline of gain on sale revenue from residential mortgage loans in the current period, stemming from the Company's sale of its majority interest in Southern Trust Mortgage during the second quarter of 2014.

  • Total revenue generated by our wealth management group, Middleburg Investment Group ("MIG") was $1.24 million for the quarter ended June 30, 2015, an increase of 2.05% compared to the previous quarter and higher by 17.60% when compared to the quarter ended June 30, 2014.  Fee income is based primarily upon the market value of assets under administration which were $1.97 billion at June 30, 2015, $1.87 billion at December 31, 2014 and $1.68 billion at June 30, 2014.
  • Other operating income was $223,000 for the quarter ended June 30, 2015, a decrease of 73.52% when compared to the previous quarter and a decrease of 19.78% when compared to the quarter ended June 30, 2014.  Most of the other operating income during the previous quarter was the recovery of expenses related to a loan workout that had previously been charged off.

NON-INTEREST EXPENSE

Non-interest expense increased by 1.90%  when compared to the previous quarter and decreased by 18.52% when compared to the quarter ended June 30, 2014.  Principal categories of non-interest expense that changed were the following: 


  • Salaries and employee benefit expenses increased by 2.58% when compared to the previous quarter and declined by 17.02% when compared to the quarter ended June 30, 2014.  The increase in salary and benefit expenses compared to the previous quarter was primarily due to an increase in commissions and payments of signing bonuses.  The decline in salary and benefit expenses compared to the second quarter of 2014 was primarily due to the sale of the Company's majority interest in Southern Trust Mortgage in the second quarter of 2014.
  • Occupancy and equipment expense declined by 8.44% compared to the previous quarter and by 26.98% compared to the same period in 2014.  The primary reason for lower expenses in this category compared to the previous quarter was primarily due to management's overall expense control initiative.  The year over year decline was primarily due to the sale of Southern Trust Mortgage in the second quarter of 2014.
  • Other expenses increased  by 13.72% compared to the previous quarter and decreased by 23.30% compared to the same period in 2014. Increased expenses related to deposit processing, professional and advisory fees were the primary reasons for the higher expenses when compared to the previous quarter.  The primary reason for lower expenses compared to the second quarter of 2014 was the sale of the Company's majority interest in Southern Trust Mortgage in the second quarter of 2014.

ASSET QUALITY

The allowance for loans losses was $11.89 million or 1.54% of total loans at June 30, 2015 compared to $11.79 million or 1.56% of total loans at December 31, 2014.  During the quarter, we sold $1.02 million of nonperforming loans and upgraded the risk rating of several loans, resulting in the release of reserves which led to a recovery of provision for loan losses of $425,000 during the second quarter.   Two loans from a single borrower relationship underwent a restructuring during the second quarter of 2015 and one of the loans was downgraded, which resulted in total nonperforming assets increasing to $24.77 million or 1.99% of total assets compared to $19.45 million or 1.59% to total assets at December 31, 2014, increased total troubled debt restructurings to $15.74 million at June 30, 2015 compared to $6.90 million at December 31, 2014, and increased substandard loans by 29.34% to $25.05 million at June 30, 2015 from $19.37 million at December 31, 2014.  While this loan was restructured and downgraded during the second quarter 2015, the Company had properly classified this loan as impaired at December 31, 2014.

Asset quality factors that continue to improve include loans that were delinquent for more than 90 days and still accruing remain minimal as a percentage of total loans of 0.02% as of June 30, 2015 and 0.004% as of December 31, 2014, past due loans decreased from $4.85 million at December 31, 2014 to $2.08 million at June 30, 2015, a decrease of 57.09%, and nonaccrual loans declined to $8.01 million as of June 30, 2015 from $9.94 million as of December 31, 2014.

CONSOLIDATED ASSETS

Total consolidated assets at June 30, 2015 were $1.24 billion, an increase of 1.56% since December 31, 2014.  Changes in major asset categories were as follows:

  • Cash balances and deposits with other banks decreased by $5.62 million compared to December 31, 2014.  
  • The Company deployed some of its excess liquidity into growing its securities portfolio which increased by $3.73 million compared to December 31, 2014.
  • Gross loan balances increased by $18.24 million from December 31, 2014.

CONSOLIDATED LIABILITIES

Total consolidated liabilities at June 30, 2015 were $1.12 billion, an increase of 1.49% compared to December 31, 2014. Total deposits increased by $16.37 million from December 31, 2014 to $1.01 billion as of June 30, 2015.  Federal Home Loan Bank borrowings increased by $15.00 million from December 31, 2014 to $70.00 million at June 30, 2015.

SHAREHOLDERS' EQUITY AND CAPITAL

Shareholders' equity at June 30, 2015 was $124.79 million, compared to $122.03 million at December 31, 2014.  Retained earnings at June 30, 2015 were $59.15 million compared to $55.85 million at December 31, 2014.  The book value of the Company's common stock at June 30, 2015 was $17.42 per share versus $17.11 per share at December 31, 2014.

The Company's capital ratios remain well above regulatory minimum capital ratios as of June 30, 2015:

  • Tier 1 Leverage ratio was 9.85%, 5.85% over the regulatory minimum of 4.00%.
  • Common Equity Tier 1 Ratio was 16.35%, 9.35% over the regulatory minimum of 7.00%.
  • Tier 1 Risk-Based Capital Ratio was 17.04%, 8.54% over the regulatory minimum of 8.50%.
  • Total Risk Based Capital Ratio was 18.28%, 7.78% over the regulatory minimum of 10.50%.

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, 2014, 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 AND SUBSIDIARIES

Consolidated Balance Sheets

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






(Unaudited)




June 30,
2015


December 31,
2014

ASSETS




Cash and due from banks

$

5,001



$

7,396


Interest bearing deposits with other banks

44,406



47,626


Total cash and cash equivalents

49,407



55,022


Securities held to maturity, fair value of $1,374 and $1,397, respectively

1,500



1,500


Securities available for sale, at fair value

351,990



348,263


Restricted securities, at cost

5,774



5,279


Loans, net of allowance for loan losses of $11,894 and $11,786, respectively

761,196



743,060


Premises and equipment, net

19,888



18,104


Goodwill and identified intangibles, net

3,722



3,807


Other real estate owned, net of valuation allowance of $663 and $755, respectively

3,402



4,051


Bank owned life insurance

22,940



22,617


Accrued interest receivable and other assets

22,166



21,154


TOTAL ASSETS

$

1,241,985



$

1,222,857






LIABILITIES




Deposits:




Non-interest bearing demand deposits

$

235,246



$

216,912


Savings and interest bearing demand deposits

526,985



523,230


Time deposits

243,221



248,938


  Total deposits

1,005,452



989,080


Securities sold under agreements to repurchase

24,049



38,551


Federal Home Loan Bank borrowings

70,000



55,000


Subordinated notes

5,155



5,155


Accrued interest payable and other liabilities

12,539



13,037


TOTAL LIABILITIES

1,117,195



1,100,823


Commitments and contingent liabilities




SHAREHOLDERS' EQUITY




Common stock ($2.50 par value; 20,000,000 shares authorized, 7,163,255 and 7,131,643,
issued and outstanding, respectively)

17,521



17,494


Capital surplus

45,063



44,892


Retained earnings

59,152



55,854


Accumulated other comprehensive income

3,054



3,794


TOTAL SHAREHOLDERS' EQUITY

124,790



122,034


TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

1,241,985



$

1,222,857


 


MIDDLEBURG FINANCIAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Income

(In thousands, except for per share data)


(Unaudited)


For the Three Months
Ended June 30,


For the Six Months
Ended June 30,


2015


2014


2015


2014

INTEREST AND DIVIDEND INCOME








Interest and fees on loans

$

8,014



$

8,493



$

16,257



$

17,299


Interest and dividends on securities








Taxable

1,792



1,792



3,698



3,410


Tax-exempt

449



537



910



1,121


Dividends

66



72



125



145


Interest on deposits with other banks and federal funds sold

31



47



61



73


Total interest and dividend income

10,352



10,941



21,051



22,048


INTEREST EXPENSE








Interest on deposits

848



995



1,703



1,997


Interest on securities sold under agreements to repurchase

17



81



62



161


Interest on FHLB borrowings and other debt

174



355



342



668


Total interest expense

1,039



1,431



2,107



2,826


NET INTEREST INCOME

9,313



9,510



18,944



19,222


(Recovery of) provision for loan losses

(425)



72



25



960


NET INTEREST INCOME AFTER (RECOVERY OF) PROVISION
FOR LOAN LOSSES

9,738



9,438



18,919



18,262


NON-INTEREST INCOME








Service charges on deposit accounts

612



622



1,170



1,180


Trust services income

1,243



1,057



2,461



2,105


Gaines (losses) on sales of loans held for sale

(6)



1,916



(6)



4,858


Gains on sales of securities available for sale, net

37



66



138



129


Commissions on investment sales

154



146



283



286


Bank owned life insurance

163



164



323



326


Gain on sale of majority interest in consolidated subsidiary



24





24


Other operating income

223



278



1,065



1,247


Total non-interest income

2,426



4,273



5,434



10,155


NON-INTEREST EXPENSE








Salaries and employee benefits

4,973



5,993



9,821



13,026


Occupancy and equipment

1,226



1,679



2,565



3,579


Advertising

101



131



234



294


Computer operations

522



510



1,012



969


Other real estate owned

25



12



92



179


Other taxes

231



220



454



417


Federal deposit insurance

184



230



395



468


Other operating expenses

1,807



2,356



3,396



4,335


Total non-interest expense

9,069



11,131



17,969



23,267


Income before income taxes

3,095



2,580



6,384



5,150


Income tax expense

815



667



1,656



1,415


NET INCOME

2,280



1,913



4,728



3,735


Net (income) loss attributable to non-controlling interest



(58)





98


Net income attributable to Middleburg Financial Corporation

$

2,280



$

1,855



$

4,728



$

3,833


Earnings per share:








Basic

$

0.32



$

0.26



$

0.66



$

0.54


Diluted

$

0.32



$

0.26



$

0.66



$

0.54


Dividends per common share

$

0.10



$

0.07



$

0.20



$

0.14


 

 


MIDDLEBURG FINANCIAL CORPORATION AND SUBSIDIARIES

Quarterly Summary Statements of Income

(Unaudited, Dollars In thousands, except for per share data)


For the Three Months Ended


June 30,

2015


March 31,

2015


December 31,

2014


September 30,

2014


June 30,

2014

INTEREST AND DIVIDEND INCOME










Interest and fees on loans

$

8,014



$

8,243



$

8,176



$

8,357



$

8,493


Interest and dividends on securities










Taxable

1,792



1,906



1,728



1,763



1,792


Tax-exempt

449



461



481



535



537


Dividends

66



59



64



84



72


Interest on deposits with other banks and federal funds sold

31



30



38



51



47


Total interest and dividend income

10,352



10,699



10,487



10,790



10,941


INTEREST EXPENSE










Interest on deposits

848



855



933



955



995


Interest on securities sold under agreements to repurchase

17



45



79



81



81


Interest on FHLB borrowings and other debt

174



168



160



209



355


Total interest expense

1,039



1,068



1,172



1,245



1,431


NET INTEREST INCOME

9,313



9,631



9,315



9,545



9,510


(Recovery of) provision for loan losses

(425)



450



450



550



72


NET INTEREST INCOME AFTER (RECOVERY
OF) PROVISION FOR LOAN LOSSES

9,738



9,181



8,865



8,995



9,438


NON-INTEREST INCOME










Service charges on deposit accounts

612



558



606



635



622


Trust services income

1,243



1,218



1,138



1,119



1,057


Gains (losses) on sales of loans held for sale

(6)





1



1



1,916


Gains on sales of securities available for sale, net

37



101



45



12



66


Commissions on investment sales

154



129



132



193



146


Bank owned life insurance

163



160



168



168



164


Gain on sale of majority interest in consolidated
subsidiary









24


Other operating income

223



842



260



152



278


Total non-interest income

2,426



3,008



2,350



2,280



4,273


NON-INTEREST EXPENSE










Salaries and employee benefits

4,973



4,848



5,134



4,441



5,993


Occupancy and equipment

1,226



1,339



1,336



1,262



1,679


Advertising

101



133



(65)



136



131


Computer operations

522



490



485



439



510


Other real estate owned

25



67



110



(33)



12


Other taxes

231



223



212



220



220


Federal deposit insurance

184



211



212



220



230


Other operating expenses

1,807



1,589



1,999



1,706



2,356


Total non-interest expense

9,069



8,900



9,423



8,391



11,131


Income before income taxes

3,095



3,289



1,792



2,884



2,580


Income tax expense

815



841



162



763



667


NET INCOME

2,280



2,448



1,630



2,121



1,913


Net loss (income) attributable to non-controlling interest









(58)


Net income attributable to Middleburg Financial Corporation

$

2,280



$

2,448



$

1,630



$

2,121



$

1,855


Earnings per share:










Basic

$

0.32



$

0.34



$

0.23



$

0.30



$

0.26


Diluted

$

0.32



$

0.34



$

0.23



$

0.30



$

0.26


Dividends per common share

$

0.10



$

0.10



$

0.10



$

0.10



$

0.07


 


 

MIDDLEBURG FINANCIAL CORPORATION AND SUBSIDIARIES

Selected Financial Data by Quarter

(Unaudited, Dollars in thousands, except for per share data)


June 30,


March 31,


December 31,


September 30,


June 30,


2015


2015


2014


2014


2014

BALANCE SHEET RATIOS










Loans to deposits

76.89

%


74.60

%


76.32

%


73.87

%


72.65

%

Average interest-earning assets to average
interest-bearing liabilities

135.72

%


136.04

%


133.54

%


130.14

%


128.37

%

INCOME STATEMENT RATIOS










Return on average assets (ROA)

0.73

%


0.80

%


0.53

%


0.69

%


0.61

%

Return on average equity (ROE)

7.31

%


8.01

%


5.31

%


7.00

%


6.30

%

Net interest margin (1)

3.24

%


3.40

%


3.31

%


3.36

%


3.38

%

Yield on average earning assets

3.59

%


3.77

%


3.72

%


3.79

%


3.88

%

Cost of funds

0.38

%


0.39

%


0.43

%


0.45

%


0.52

%

Efficiency ratio (5)

74.88

%


68.35

%


77.53

%


68.82

%


78.99

%

PER SHARE DATA










Dividends

$

0.10



$

0.10



$

0.10



$

0.10



$

0.07


Book value

17.42



17.51



17.11



16.97



16.73


Tangible book value (4)

16.90



16.99



16.58



16.43



16.19


SHARE PRICE DATA










Closing price

$

18.00



$

18.30



$

18.01



$

17.74



$

20.00


Diluted earnings multiple (2)

14.06



13.45



16.99



14.78



19.23


Book value multiple (3)

1.03



1.04



1.05



1.05



1.20


COMMON STOCK DATA










Outstanding shares at end of period

7,163,255



7,127,105



7,131,643



7,123,914



7,113,744


Weighted average shares O/S , basic - QTD

7,145,929



7,127,910



7,127,164



7,108,450



7,093,788


Weighted average shares O/S, diluted - QTD

7,167,165



7,148,702



7,146,140



7,134,262



7,117,826


Dividend payout ratio

31.25

%


29.41

%


43.48

%


33.33

%


26.92

%

CAPITAL RATIOS










Capital to assets - common shareholders

10.05

%


9.86

%


9.98

%


10.01

%


9.50

%

Leverage ratio

9.85

%


9.76

%


9.90

%


9.71

%


9.54

%

Common equity tier 1 ratio

16.35

%


16.49

%



N/A




N/A




N/A


Tier 1 risk based capital ratio

17.04

%


17.20

%


15.70

%


16.04

%


15.63

%

Total risk based capital ratio

18.28

%


18.45

%


16.95

%


17.30

%


16.88

%

CREDIT QUALITY










Net charge-offs/recoveries to average loans

(0.04)

%


0.03

%


0.46

%


0.09

%


0.23

%

Total nonperforming loans to total loans

2.63

%


1.83

%


1.89

%


1.63

%


2.10

%

Total nonperforming assets to total assets

1.99

%


1.46

%


1.59

%


1.50

%


1.57

%

Nonaccrual loans to:










  Total loans

1.04

%


1.26

%


1.32

%


1.01

%


1.43

%

  Total assets

0.64

%


0.76

%


0.81

%


0.61

%


0.83

%

Allowance for loan losses to:










  Total loans

1.54

%


1.58

%


1.56

%


1.57

%


1.58

%

  Nonperforming assets

48.03

%


65.23

%


60.59

%


63.18

%


58.50

%

  Nonaccrual loans

148.53

%


124.92

%


118.52

%


155.80

%


110.57

%

NONPERFORMING ASSETS










Loans delinquent 90+ days and still accruing

$

173



$

74



$

30



$

30



$

355


Nonaccrual loans

8,008



9,625



9,944



7,332



10,408


Restructured loans (not in nonaccrual)

12,138



4,262



4,295



4,522



4,552


Other real estate owned

3,402



3,402



4,051



5,064



4,356


Repossessed assets

1,044



1,070



1,132



1,132




  Total nonperforming assets

$

24,765



$

18,433



$

19,452



$

18,080



$

19,671




























(1)

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.

(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 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 AND SUBSIDIARIES

Average Balances, Income and Expenses, Yields and Rates

(Unaudited)


Three months ended June 30,


2015


2014


Average

Balance


Income/

Expense


Yield/

Rate (2)


Average

Balance


Income/

Expense


Yield/

Rate (2)


(Dollars in thousands)

Assets:












Securities:












Taxable

$

315,874



$

1,858



2.36

%


$

276,110



$

1,864



2.71

%

Tax-exempt (1)

51,199



680



5.33

%


57,394



814



5.69

%

Total securities

$

367,073



$

2,538



2.77

%


$

333,504



$

2,678



3.22

%

Loans:












   Taxable

$

764,101



$

8,009



4.20

%


$

744,009



$

8,487



4.58

%

   Tax-exempt  (1)

615



8



5.22

%


652



9



5.54

%

Total loans (3)

$

764,716



$

8,017



4.20

%


$

744,661



$

8,496



4.58

%

Interest on deposits with other banks and
federal funds sold

50,861



31



0.24

%


81,552



47



0.23

%

Total earning assets

$

1,182,650



$

10,586



3.59

%


$

1,159,717



$

11,221



3.88

%

Less: allowance for loan losses

(12,150)







(12,606)






Total nonearning assets

76,720







78,679






Total assets

$

1,247,220







$

1,225,790






Liabilities:












Interest-bearing deposits:












Checking

$

345,768



$

173



0.20

%


$

340,789



$

161



0.19

%

Regular savings

118,467



55



0.19

%


113,487



53



0.19

%

Money market savings

66,300



31



0.19

%


73,308



35



0.19

%

Time deposits:












$100,000 and over

129,519



286



0.89

%


123,527



317



1.03

%

Under $100,000

107,352



303



1.13

%


132,002



429



1.30

%

Total interest-bearing deposits

$

767,406



$

848



0.44

%


$

783,113



$

995



0.51

%

Securities sold under agreements to repurchase

29,168



17



0.25

%


35,114



81



0.93

%

FHLB borrowings and other debt

74,825



174



0.93

%


85,155



355



1.60

%

Federal funds purchased

4





%


4





%

Total interest-bearing liabilities

$

871,403



$

1,039



0.48

%


$

903,386



$

1,431



0.63

%

Non-interest bearing liabilities:












Demand deposits

237,560







194,779






Other liabilities

13,149







9,936






Total liabilities

$

1,122,112







$

1,108,101






Non-controlling interest












Shareholders' equity

125,108







117,689






Total liabilities and shareholders' equity

$

1,247,220







$

1,225,790






Net interest income



$

9,547







$

9,790




Interest rate spread





3.11

%






3.25

%

Cost of Funds





0.38

%






0.52

%

Interest expense as a percent of average earning assets





0.35

%






0.49

%

Net interest margin





3.24

%






3.38

%


(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 AND SUBSIDIARIES

Average Balances, Income and Expenses, Yields and Rates

(Unaudited)


Six months ended June 30,


2015


2014


Average

Balance


Income/

Expense


Yield/

Rate (2)


Average

Balance


Income/

Expense


Yield/

Rate (2)


(Dollars in thousands)

Assets:












Securities:












Taxable

$

312,875



$

3,823



2.46

%


$

276,510



$

3,555



2.59

%

Tax-exempt (1)

51,899



1,379



5.36

%


59,155



1,698



5.79

%

Total securities

$

364,774



$

5,202



2.88

%


$

335,665



$

5,253



3.16

%

Loans:












   Taxable

$

757,880



$

16,246



4.32

%


$

750,666



$

17,288



4.64

%

   Tax-exempt  (1)

615



16



5.25

%


652



17



5.26

%

Total loans (3)

$

758,495



$

16,262



4.32

%


$

751,318



$

17,305



4.66

%

Interest on deposits with other banks and
federal funds sold

56,003



61



0.22

%


65,268



73



0.23

%

Total earning assets

$

1,179,272



$

21,525



3.68

%


$

1,152,251



$

22,631



3.96

%

Less: allowance for loan losses

(11,907)







(13,101)






Total nonearning assets

76,473







80,133






Total assets

$

1,243,838







$

1,219,283






Liabilities:












Interest-bearing deposits:












Checking

$

341,471



$

339



0.20

%


$

336,690



$

322



0.19

%

Regular savings

116,902



108



0.19

%


113,262



105



0.19

%

Money market savings

67,909



63



0.19

%


74,864



71



0.19

%

Time deposits:












$100,000 and over

130,872



579



0.89

%


126,948



640



1.02

%

Under $100,000

108,851



614



1.14

%


131,385



859



1.32

%

Total interest-bearing deposits

$

766,005



$

1,703



0.45

%


$

783,149



$

1,997



0.51

%

Securities sold under agreements to repurchase

31,452



62



0.40

%


35,431



161



0.90

%

FHLB borrowings and other debt

70,431



342



0.98

%


85,155



668



1.54

%

Federal funds purchased

2





%


2





%

Total interest-bearing liabilities

$

867,890



$

2,107



0.49

%


$

903,737



$

2,826



0.63

%

Non-interest bearing liabilities:












Demand deposits

238,169







189,807






Other liabilities

13,283







9,549






Total liabilities

$

1,119,342







$

1,103,093






Non-controlling interest












Shareholders' equity

124,496







116,190






Total liabilities and shareholders' equity

$

1,243,838







$

1,219,283






Net interest income



$

19,418







$

19,805




Interest rate spread





3.19

%






3.33

%

Cost of Funds





0.38

%






0.52

%

Interest expense as a percent of average earning assets





0.36

%






0.49

%

Net interest margin





3.32

%






3.47

%

 

SOURCE Middleburg Financial Corporation



RELATED LINKS

http://www.middleburgbank.com