Segment Reporting

9 Months Ended

Sep. 30, 2013

Segment Reporting [Abstract]

Segment Reporting

Segment Reporting

The Company operates in a decentralized fashion in three principal business activities: retail banking services; wealth management services; and mortgage banking services.  Revenue from retail banking activities consists primarily of interest earned on loans and investment securities and service charges on deposit accounts.

Revenue from the wealth management activities is comprised of fees based upon the market value of the accounts under administration as well as commissions on investment transactions.  The wealth management services are conducted by Middleburg Investment Group.

Revenue from the mortgage banking activities is comprised of interest earned on loans and fees received as a result of the mortgage origination process.  The Company recognizes gains on the sale of loans as part of other income.  The mortgage banking services are conducted by Southern Trust Mortgage, LLC.

Middleburg Bank and the Company have assets in custody with Middleburg Trust Company and accordingly pay Middleburg Trust Company a monthly fee.  Middleburg Bank also pays interest to Middleburg Trust Company on deposit accounts with Middleburg Bank. As of September 30, 2013, Southern Trust Mortgage had no balances in interest bearing accounts with Middleburg Bank.  Southern Trust Mortgage has an outstanding line of credit of $5.0 million and a participation agreement of $75.0 million for which it pays interest to Middleburg Bank on any outstanding balance.  Middleburg Bank provides office space and data processing and accounting services to Southern Trust Mortgage for which it receives rental and fee income.  Transactions related to these relationships are eliminated to reach consolidated totals.

The following table presents segment information for the three months ended September 30, 2013 and 2012, respectively.

	For the three months ended
	September 30, 2013
	Retail Banking		Wealth Management		Mortgage Banking			Intercompany Eliminations			Consolidated
(In Thousands)
Revenues:
Interest income	$	10,750	$	4	$	520		$	(320	)	$	10,954
Trust and investment fee income	—		1,000		—			(37		)	963
Other income	899		—		4,358			(92		)	5,165
Total operating income	11,649		1,004		4,878			(449		)	17,082
Expenses:
Interest expense	1,574		—		380			(320		)	1,634
Salaries and employee benefits	4,183		393		3,174			—			7,750
Provision for loan losses	—		—		3			—			3
Other	4,240		223		1,221			(129		)	5,555
Total operating expenses	9,997		616		4,778			(449		)	14,942
Income before income taxes and non-controlling interest	1,652		388		100			—			2,140
Income tax expense	440		51		—			—			491
Net Income	1,212		337		100			—			1,649
Non-controlling interest in income of consolidated subsidiary	—		—		(38		)	—			(38		)
Net income attributable to Middleburg Financial Corporation	$	1,212	$	337	$	62		$	—		$	1,611
Total assets	$	1,202,151	$	12,192	$	52,281		$	(51,297	)	$	1,215,327
Capital expenditures	$	693	$	5	$	115		$	—		$	813
Goodwill and other intangibles	$	—	$	4,022	$	1,867		$	—		$	5,889
	For the three months ended
	September 30, 2012
	Retail Banking		Wealth Management		Mortgage Banking			Intercompany Eliminations			Consolidated
(In Thousands)
Revenues:
Interest income	$	11,262	$	2	$	630		$	(487	)	$	11,407
Trust and investment fee income	—		963		—			(35		)	928
Other income	1,164		—		6,306			(80		)	7,390
Total operating income	12,426		965		6,936			(602		)	19,725
Expenses:
Interest expense	2,115		—		562			(487		)	2,190
Salaries and employee benefits	3,912		358		3,006			—			7,276
Provision for (recovery of) loan losses	642		—		(7		)	—			635
Other	5,221		232		1,222			(115		)	6,560
Total operating expenses	11,890		590		4,783			(602		)	16,661
Income before income taxes and non-controlling interest	536		375		2,153			—			3,064
Income tax expense	514		51		—			—			565
Net Income	22		324		2,153			—			2,499
Non-controlling interest in income of consolidated subsidiary	—		—		(785		)	—			(785		)
Net income attributable to Middleburg Financial Corporation	$	22	$	324	$	1,368		$	—		$	1,714
Total assets	$	1,209,455	$	12,789	$	104,919		$	(91,202	)	$	1,235,961
Capital expenditures	$	6	$	—	$	—		$	—		$	6
Goodwill and other intangibles	$	—	$	4,193	$	1,867		$	—		$	6,060

The following table presents segment information for the nine months endedSeptember 30, 2013 and 2012, respectively.

	For the nine months ended
	September 30, 2013
	Retail Banking			Wealth Management		Mortgage Banking			Intercompany Eliminations			Consolidated
(In Thousands)
Revenues:
Interest income	$	32,742		$	11	$	1,398		$	(993	)	$	33,158
Trust and investment fee income	—			3,052		—			(115		)	2,937
Other income	3,363			—		13,161			(325		)	16,199
Total operating income	36,105			3,063		14,559			(1,433		)	52,294
Expenses:
Interest expense	4,956			—		1,099			(993		)	5,062
Salaries and employee benefits	12,485			1,623		9,134			—			23,242
Provision for (recovery of) loan losses	(9		)	—		8			—			(1		)
Other	12,930			910		3,699			(440		)	17,099
Total operating expenses	30,362			2,533		13,940			(1,433		)	45,402
Income before income taxes and non-controlling interest	5,743			530		619			—			6,892
Income tax expense	1,403			225		—			—			1,628
Net Income	4,340			305		619			—			5,264
Non-controlling interest in income of consolidated subsidiary	—			—		(233		)	—			(233		)
Net income attributable to Middleburg Financial Corporation	$	4,340		$	305	$	386		$	—		$	5,031
Total assets	$	1,202,151		$	12,192	$	52,281		$	(51,297	)	$	1,215,327
Capital expenditures	$	1,144		$	5	$	124		$	—		$	1,273
Goodwill and other intangibles	$	—		$	4,022	$	1,867		$	—		$	5,889
	For the nine months ended
	September 30, 2012
	Retail Banking			Wealth Management		Mortgage Banking			Intercompany Eliminations			Consolidated
(In Thousands)
Revenues:
Interest income	$	34,837		$	7	$	2,067		$	(1,348	)	$	35,563
Trust and investment fee income	—			2,932		—			(104		)	2,828
Other income	3,351			—		15,719			(425		)	18,645
Total operating income	38,188			2,939		17,786			(1,877		)	57,036
Expenses:
Interest expense	6,606			—		1,659			(1,348		)	6,917
Salaries and employee benefits	11,585			1,438		9,116			—			22,139
Provision for loan losses	2,127			—		29			—			2,156
Other	13,267			874		4,712			(529		)	18,324
Total operating expenses	33,585			2,312		15,516			(1,877		)	49,536
Income before income taxes and non-controlling interest	4,603			627		2,270			—			7,500
Income tax expense	1,319			259		—			—			1,578
Net Income	3,284			368		2,270			—			5,922
Non-controlling interest in income of consolidated subsidiary	—			—		(856		)	—			(856		)
Net income attributable to Middleburg Financial Corporation	$	3,284		$	368	$	1,414		$	—		$	5,066
Total assets	$	1,209,455		$	12,789	$	104,919		$	(91,202	)	$	1,235,961
Capital expenditures	$	541		$	—	$	—		$	—		$	541
Goodwill and other intangibles	$	—		$	4,193	$	1,867		$	—		$	6,060