Virginia (State or other jurisdiction of incorporation) | 0-24159 (Commission File Number) | 54-1696103 (I.R.S. Employer Identification No.) | |
111 West Washington Street Middleburg, Virginia (Address of principal executive offices) | 20117 (Zip Code) |
Exhibit No. | Description |
99.1 | Press release dated October 28, 2016. |
MIDDLEBURG FINANCIAL CORPORATION | ||||
(Registrant) | ||||
Date: October 28, 2016 | By: | /s/ Gary R. Shook | ||
Gary R. Shook | ||||
President and Chief Executive Officer | ||||
Exhibit No. | Description |
99.1 | Press release dated October 28, 2016 |
Press Contacts: | Gary R. Shook, President & CEO | 540-687-4801 or | |
pres@middleburgbank.com | |||
Raj Mehra, EVP & CFO | 540-687-4816 or | ||
cfo@middleburgbank.com | |||
Jeffrey H. Culver, EVP & COO | 703-737-3470 or | ||
coo@middleburgbank.com |
• | Net income for the quarter decreased by 14.66% to $2.26 million, or $0.32 per diluted share, compared to $2.65 million, or $0.37 per diluted share, for the previous quarter and compared to $2.32 million, or $0.32 per diluted share, for the same period in 2015. |
• | A combination of loan payoffs, refinancing activity and runoff in the securities portfolio, including sales, some of which were redeployed into loans, resulted in the net interest margin declining to 3.11%, compared to 3.26% for the previous quarter and 3.28% for the same period in 2015. |
• | Non-interest expenses increased by 4.83% and 0.91% compared to the previous quarter and the same period in 2015, respectively. This increase was primarily driven by merger related expenses of $165,100 and $236,600 for the quarter and nine months ended September 30, 2016, respectively. |
• | Total assets increased to $1.34 billion, higher by 3.10% since December 31, 2015. |
• | As a result of a large loan participation payoff, loans held-for-investment declined by $8.76 million or 1.02% during the quarter to $845.89 million. Loan balances have grown in 2016 by $40.21 million at an annualized growth rate of 6.65%. |
• | Deposit growth, driven by core deposits, continues to be strong increasing to $1.09 billion, or 4.87% since December 31, 2015. |
• | Asset quality continues to improve with nonaccrual loan balances declining by 23.69% compared to December 31, 2015. |
• | The allowance for loan losses was 1.32% of total loans compared to 1.37% as of December 31, 2015. |
• | Capital ratios continue to be strong: Total Risk-Based Capital Ratio of 17.83%, Tier 1 Risk-Based Capital Ratio of 16.57%, Common Equity Tier 1 Ratio of 15.92% and Tier 1 Leverage Ratio of 9.59% at September 30, 2016. |
• | Yields on earning assets decreased by 16 bp compared to the previous quarter. |
• | A combination of securities sales and refinancing activity caused yields on investment securities to decrease by 43 bp compared to the previous quarter. A significant portion of the investment portfolio is in residential mortgage backed securities ("MBS") and municipal bonds. The MBS holdings experienced higher prepayments which had the effect of increasing premium amortization and compressing yields. Call activity related to municipal bond holdings was a factor as well in lowering yields. |
• | Yields on loans decreased by 8 bp compared to the previous quarter, as we experienced higher loan payoffs, including a $9.10 million loan participation and added loans at lower yields. |
• | Cost of funds remained unchanged at 38 bp, compared to the previous quarter. |
Quarters Ended | ||||||||||||||||||||||||
(Dollars in thousands) | September 30, 2016 vs. June 30, 2016 Increase (Decrease) Due to Changes in: | September 30, 2016 vs. September 30, 2015 Increase (Decrease) Due to Changes in: | ||||||||||||||||||||||
Volume | Rate | Total | Volume | Rate | Total | |||||||||||||||||||
Earning Assets: | ||||||||||||||||||||||||
Securities: | ||||||||||||||||||||||||
Taxable | $ | (71 | ) | $ | (341 | ) | $ | (412 | ) | $ | (39 | ) | $ | (303 | ) | $ | (342 | ) | ||||||
Tax-exempt | (15 | ) | (28 | ) | (43 | ) | (5 | ) | (45 | ) | (50 | ) | ||||||||||||
Loans: | ||||||||||||||||||||||||
Taxable | 152 | (72 | ) | 80 | 722 | (326 | ) | 396 | ||||||||||||||||
Tax-exempt | — | — | — | — | 1 | 1 | ||||||||||||||||||
Interest on deposits with other banks and federal funds sold | (3 | ) | (2 | ) | (5 | ) | (3 | ) | 15 | 12 | ||||||||||||||
Total earning assets | $ | 63 | $ | (443 | ) | $ | (380 | ) | $ | 675 | $ | (658 | ) | $ | 17 | |||||||||
Interest-Bearing Liabilities: | ||||||||||||||||||||||||
Checking | $ | (3 | ) | $ | 4 | $ | 1 | $ | 3 | $ | 15 | $ | 18 | |||||||||||
Regular savings | — | 1 | 1 | 5 | — | 5 | ||||||||||||||||||
Money market savings | 1 | 3 | 4 | 6 | 12 | 18 | ||||||||||||||||||
Time deposits: | ||||||||||||||||||||||||
$100,000 and over | 12 | 1 | 13 | 9 | 5 | 14 | ||||||||||||||||||
Under $100,000 | 8 | (7 | ) | 1 | 46 | (69 | ) | (23 | ) | |||||||||||||||
Total interest-bearing deposits | $ | 18 | $ | 2 | $ | 20 | $ | 69 | $ | (37 | ) | $ | 32 | |||||||||||
Securities sold under agreements to repurchase | — | 1 | 1 | 1 | (2 | ) | (1 | ) | ||||||||||||||||
FHLB borrowings and other debt | (74 | ) | 40 | (34 | ) | 8 | 37 | 45 | ||||||||||||||||
Total interest-bearing liabilities | $ | (56 | ) | $ | 43 | $ | (13 | ) | $ | 78 | $ | (2 | ) | $ | 76 | |||||||||
Change in net interest income | $ | 119 | $ | (486 | ) | $ | (367 | ) | $ | 597 | $ | (656 | ) | $ | (59 | ) |
• | Total revenue generated by our wealth management group, Middleburg Investment Group ("MIG") increased by 3.18% to $1.17 million compared to the previous quarter and was unchanged when compared to the same quarter in 2015. Fee income is based primarily upon the market value of assets under administration which were $2.01 billion at September 30, 2016 and $1.91 billion at September 30, 2015. |
• | Net gains on securities sold were $138,000 and $511,000 for the quarter and the nine month period ended September 30, 2016. Securities were sold in order to fund loan originations. |
• | Other operating income was $136,000 for the quarter ended September 30, 2016, a decrease of 36.15% compared to the previous quarter and a decrease of 35.85% compared to the quarter ended September 30, 2015. Other operating income was $492,000 for the nine months ended September 30, 2016, a decrease of 58.79% compared to the same period in 2015. In the first quarter of 2015, there was a substantial recovery of approximately $500,000 in expenses related to a loan that had previously been charged off that was included in other operating income. Other operating income generally includes revenue from prepayment penalties, safe deposit charges, wire fees and other miscellaneous adjustments. |
• | Costs related to other real estate owned (OREO) increased by $194,000 when compared to the prior quarter and decreased by $10,000 when compared to the same period in 2015. Costs related to OREO increased by 18.95% for the nine month period ended September 30, 2016 when compared to the same period in 2015. During the first nine months of 2016, we recorded valuation adjustments of $355,000 for several properties resulting from updated appraisals. |
• | Computer operations expenses increased to $605,000 for the current quarter compared to $598,000 for the prior quarter and $524,000 for the quarter ended September 30, 2015. Computer operations expenses increased by 25.20% for the nine month period ended September 30, 2016 when compared to the same period in 2015. The primary reasons for these changes when comparing to the three and nine month periods of 2015 were costs related to the conversion to a new on-line banking platform. |
• | Other operating expenses increased by 9.30% compared to the prior quarter and increased by 4.92% when compared to the same period in 2015. Other operating expenses increased by 2.67% for the nine month period ended September 30, 2016 when compared to the same period in 2015. Included in this category were merger related expenses that totaled $165,100 and $236,600 for the quarter and nine months ended September 30, 2016, respectively. |
• | Nonaccrual loans declined by 23.69% to $6.70 million compared to $8.78 million as of December 31, 2015 and declined by 24.06% when compared to $8.83 million as of September 30, 2015. |
• | Restructured loans that were accruing were $12.39 million compared to $12.06 million as of December 31, 2015 and $12.11 million as of September 30, 2015. |
• | Other real estate owned was $3.39 million compared to $3.35 million as of December 31, 2015 and $3.87 million as of September 30, 2015. |
• | Loans past due 90+ days and still accruing were $248,000 as of September 30, 2016 compared to $278,000 as of December 31, 2015 and $224,000 as of September 30, 2015. |
• | Cash balances and deposits with other banks increased by $16.56 million compared to December 31, 2015. |
• | The securities portfolio decreased by $15.43 million compared to December 31, 2015, as we redeployed securities into higher yielding loans. |
• | Loans held-for-investment declined by $8.76 million during the quarter to $845.89 million as of September 30, 2016 as a result of a large loan participation payoff. Loan balances have grown in 2016 by $40.21 million or an annualized growth rate of 6.65%. |
• | Tier 1 Leverage ratio was 9.59%, 5.59% over the regulatory minimum of 4.00% to be well capitalized. |
• | Common Equity Tier 1 Ratio was 15.92%, 8.92% over the regulatory minimum of 7.00% to be well capitalized. |
• | Tier 1 Risk-Based Capital Ratio was 16.57%, 8.07% over the regulatory minimum of 8.50% to be well capitalized. |
• | Total Risk Based Capital Ratio was 17.83%, 7.33% over the regulatory minimum of 10.50% to be well capitalized. |
MIDDLEBURG FINANCIAL CORPORATION AND SUBSIDIARIES | |||||||
Consolidated Balance Sheets | |||||||
(In thousands, except for share and per share data) | |||||||
(Unaudited) | |||||||
September 30, 2016 | December 31, 2015 | ||||||
ASSETS | |||||||
Cash and due from banks | $ | 5,557 | $ | 5,489 | |||
Interest bearing deposits with other banks | 50,234 | 33,739 | |||||
Total cash and cash equivalents | 55,791 | 39,228 | |||||
Securities held to maturity, fair value of $10,957 and $4,163, respectively | 10,727 | 4,207 | |||||
Securities available for sale, at fair value | 352,618 | 374,571 | |||||
Restricted securities, at cost | 5,562 | 6,411 | |||||
Loans, net of allowance for loan losses of $11,200 and $11,046, respectively | 834,690 | 794,635 | |||||
Loans held for sale | 669 | — | |||||
Premises and equipment, net | 18,755 | 19,531 | |||||
Goodwill and identified intangibles, net | 3,507 | 3,636 | |||||
Other real estate owned, net of valuation allowance | 3,387 | 3,345 | |||||
Bank owned life insurance | 23,761 | 23,273 | |||||
Accrued interest receivable and other assets | 25,535 | 26,026 | |||||
TOTAL ASSETS | $ | 1,335,002 | $ | 1,294,863 | |||
LIABILITIES | |||||||
Deposits: | |||||||
Non-interest bearing demand deposits | $ | 267,017 | $ | 235,897 | |||
Savings and interest bearing demand deposits | 562,954 | 560,328 | |||||
Time deposits | 261,534 | 244,575 | |||||
Total deposits | 1,091,505 | 1,040,800 | |||||
Securities sold under agreements to repurchase | 31,540 | 26,869 | |||||
Federal Home Loan Bank borrowings | 63,500 | 85,000 | |||||
Subordinated notes | 5,155 | 5,155 | |||||
Accrued interest payable and other liabilities | 14,382 | 13,485 | |||||
TOTAL LIABILITIES | 1,206,082 | 1,171,309 | |||||
Commitments and contingencies | |||||||
SHAREHOLDERS' EQUITY | |||||||
Common stock ($2.50 par value; 20,000,000 shares authorized, 7,103,358 and 7,085,217, issued and outstanding, respectively) | 17,331 | 17,330 | |||||
Capital surplus | 44,186 | 44,155 | |||||
Retained earnings | 64,600 | 60,392 | |||||
Accumulated other comprehensive income | 2,803 | 1,677 | |||||
TOTAL SHAREHOLDERS' EQUITY | 128,920 | 123,554 | |||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 1,335,002 | $ | 1,294,863 |
MIDDLEBURG FINANCIAL CORPORATION AND SUBSIDIARIES | |||||||||||||||
Consolidated Statements of Income | |||||||||||||||
(In thousands, except for per share data) | |||||||||||||||
(Unaudited) | |||||||||||||||
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
INTEREST INCOME | |||||||||||||||
Interest and fees on loans | $ | 8,624 | $ | 8,227 | $ | 25,397 | $ | 24,484 | |||||||
Interest and dividends on securities | |||||||||||||||
Taxable | 1,585 | 1,938 | 5,650 | 5,636 | |||||||||||
Tax-exempt | 411 | 444 | 1,303 | 1,354 | |||||||||||
Dividends | 82 | 71 | 238 | 196 | |||||||||||
Interest on deposits with other banks and federal funds sold | 35 | 23 | 123 | 84 | |||||||||||
Total interest and dividend income | 10,737 | 10,703 | 32,711 | 31,754 | |||||||||||
INTEREST EXPENSE | |||||||||||||||
Interest on deposits | 909 | 877 | 2,670 | 2,580 | |||||||||||
Interest on securities sold under agreements to repurchase | 1 | 2 | 2 | 64 | |||||||||||
Interest on FHLB borrowings and other debt | 210 | 165 | 704 | 507 | |||||||||||
Total interest expense | 1,120 | 1,044 | 3,376 | 3,151 | |||||||||||
NET INTEREST INCOME | 9,617 | 9,659 | 29,335 | 28,603 | |||||||||||
Provision for (recovery of) loan losses | (297 | ) | (432 | ) | 53 | (407 | ) | ||||||||
NET INTEREST INCOME AFTER PROVISION FOR (RECOVERY OF) LOAN LOSSES | 9,914 | 10,091 | 29,282 | 29,010 | |||||||||||
NON-INTEREST INCOME | |||||||||||||||
Service charges on deposit accounts | 303 | 275 | 868 | 803 | |||||||||||
Trust services income | 1,168 | 1,168 | 3,458 | 3,629 | |||||||||||
ATM fee income, net | 190 | 209 | 565 | 593 | |||||||||||
Gains on sales of loans held for sale, net | 11 | 9 | 23 | 3 | |||||||||||
Gains on sales of securities available for sale, net | 138 | — | 511 | 138 | |||||||||||
Commissions on investment sales | 133 | 132 | 417 | 415 | |||||||||||
Bank owned life insurance | 165 | 166 | 488 | 489 | |||||||||||
Other operating income | 136 | 212 | 492 | 1,194 | |||||||||||
Total non-interest income | 2,244 | 2,171 | 6,822 | 7,264 | |||||||||||
NON-INTEREST EXPENSE | |||||||||||||||
Salaries and employee benefits | 4,727 | 4,793 | 14,152 | 14,544 | |||||||||||
Occupancy and equipment | 1,262 | 1,323 | 3,937 | 4,054 | |||||||||||
Amortization | 210 | 160 | 628 | 478 | |||||||||||
Computer operations | 605 | 524 | 1,923 | 1,536 | |||||||||||
Other real estate owned, net | 183 | 193 | 339 | 285 | |||||||||||
Other taxes | 237 | 230 | 709 | 684 | |||||||||||
Federal deposit insurance | 215 | 188 | 606 | 583 | |||||||||||
Audits and exams | 136 | 156 | 453 | 472 | |||||||||||
Other operating expenses | 1,599 | 1,524 | 4,192 | 4,083 | |||||||||||
Total non-interest expense | 9,174 | 9,091 | 26,939 | 26,719 | |||||||||||
Income before income taxes | 2,984 | 3,171 | 9,165 | 9,555 | |||||||||||
Income tax expense | 720 | 850 | 2,193 | 2,506 | |||||||||||
NET INCOME | $ | 2,264 | $ | 2,321 | $ | 6,972 | $ | 7,049 | |||||||
Earnings per share: | |||||||||||||||
Basic | $ | 0.32 | $ | 0.32 | $ | 0.98 | $ | 0.99 | |||||||
Diluted | $ | 0.32 | $ | 0.32 | $ | 0.98 | $ | 0.98 | |||||||
Dividends per common share | $ | 0.13 | $ | 0.13 | $ | 0.39 | $ | 0.33 |
MIDDLEBURG FINANCIAL CORPORATION AND SUBSIDIARIES | |||||||||||||||||||
Quarterly Summary of Consolidated Statements of Income | |||||||||||||||||||
(Unaudited, Dollars In thousands, except for per share data) | |||||||||||||||||||
For the Three Months Ended | |||||||||||||||||||
September 30, 2016 | June 30, 2016 | March 31, 2016 | December 31, 2015 | September 30, 2015 | |||||||||||||||
INTEREST INCOME | |||||||||||||||||||
Interest and fees on loans | $ | 8,624 | $ | 8,543 | $ | 8,230 | $ | 7,995 | $ | 8,227 | |||||||||
Interest and dividends on securities | |||||||||||||||||||
Taxable | 1,585 | 1,992 | 2,073 | 1,992 | 1,938 | ||||||||||||||
Tax-exempt | 411 | 440 | 452 | 449 | 444 | ||||||||||||||
Dividends | 82 | 87 | 69 | 69 | 71 | ||||||||||||||
Interest on deposits with other banks and federal funds sold | 35 | 40 | 48 | 22 | 23 | ||||||||||||||
Total interest and dividend income | 10,737 | 11,102 | 10,872 | 10,527 | 10,703 | ||||||||||||||
INTEREST EXPENSE | |||||||||||||||||||
Interest on deposits | 909 | 890 | 871 | 882 | 877 | ||||||||||||||
Interest on securities sold under agreements to repurchase | 1 | — | 1 | — | 2 | ||||||||||||||
Interest on FHLB borrowings and other debt | 210 | 243 | 251 | 174 | 165 | ||||||||||||||
Total interest expense | 1,120 | 1,133 | 1,123 | 1,056 | 1,044 | ||||||||||||||
NET INTEREST INCOME | 9,617 | 9,969 | 9,749 | 9,471 | 9,659 | ||||||||||||||
Provision for (recovery of) loan losses | (297 | ) | 50 | 300 | 2,700 | (432 | ) | ||||||||||||
NET INTEREST INCOME AFTER PROVISION FOR (RECOVERY OF) LOAN LOSSES | 9,914 | 9,919 | 9,449 | 6,771 | 10,091 | ||||||||||||||
NON-INTEREST INCOME | |||||||||||||||||||
Service charges on deposit accounts | 303 | 286 | 279 | 258 | 275 | ||||||||||||||
Trust services income | 1,168 | 1,132 | 1,158 | 1,156 | 1,168 | ||||||||||||||
ATM fee income, net | 190 | 211 | 164 | 204 | 209 | ||||||||||||||
Gains (losses) on sales of loans held for sale, net | 11 | 3 | 9 | (4 | ) | 9 | |||||||||||||
Gains on sales of securities available for sale, net | 138 | 210 | 163 | 2 | — | ||||||||||||||
Commissions on investment sales | 133 | 152 | 132 | 132 | 132 | ||||||||||||||
Bank owned life insurance | 165 | 163 | 160 | 167 | 166 | ||||||||||||||
Other operating income | 136 | 213 | 143 | 442 | 212 | ||||||||||||||
Total non-interest income | 2,244 | 2,370 | 2,208 | 2,357 | 2,171 | ||||||||||||||
NON-INTEREST EXPENSE | |||||||||||||||||||
Salaries and employee benefits | 4,727 | 4,613 | 4,812 | 3,771 | 4,793 | ||||||||||||||
Occupancy and equipment | 1,262 | 1,261 | 1,414 | 1,382 | 1,323 | ||||||||||||||
Amortization | 210 | 209 | 209 | 193 | 160 | ||||||||||||||
Computer operations | 605 | 598 | 720 | 801 | 524 | ||||||||||||||
Other real estate owned, net | 183 | (11 | ) | 167 | (1 | ) | 193 | ||||||||||||
Other taxes | 237 | 237 | 235 | 231 | 230 | ||||||||||||||
Federal deposit insurance | 215 | 216 | 175 | 203 | 188 | ||||||||||||||
Audits and exams | 136 | 165 | 152 | 113 | 156 | ||||||||||||||
Other operating expenses | 1,599 | 1,463 | 1,130 | 1,445 | 1,524 | ||||||||||||||
Total non-interest expense | 9,174 | 8,751 | 9,014 | 8,138 | 9,091 | ||||||||||||||
Income before income taxes | 2,984 | 3,538 | 2,643 | 990 | 3,171 | ||||||||||||||
Income tax expense | 720 | 885 | 588 | 209 | 850 | ||||||||||||||
NET INCOME | $ | 2,264 | $ | 2,653 | $ | 2,055 | $ | 781 | $ | 2,321 | |||||||||
Earnings per share: | |||||||||||||||||||
Basic | $ | 0.32 | $ | 0.37 | $ | 0.29 | $ | 0.11 | $ | 0.32 | |||||||||
Diluted | $ | 0.32 | $ | 0.37 | $ | 0.29 | $ | 0.11 | $ | 0.32 | |||||||||
Dividends per common share | $ | 0.13 | $ | 0.13 | $ | 0.13 | $ | 0.13 | $ | 0.13 |
MIDDLEBURG FINANCIAL CORPORATION AND SUBSIDIARIES | |||||||||||||||||||
Selected Financial Data by Quarter | |||||||||||||||||||
(Unaudited, Dollars in thousands, except for per share data) | |||||||||||||||||||
September 30, | June 30, | March 31, | December 31, | September 30, | |||||||||||||||
2016 | 2016 | 2016 | 2015 | 2015 | |||||||||||||||
BALANCE SHEET RATIOS | |||||||||||||||||||
Loans to deposits | 77.50 | % | 80.90 | % | 76.07 | % | 77.41 | % | 75.64 | % | |||||||||
Average interest-earning assets to average interest-bearing liabilities | 134.84 | % | 133.31 | % | 132.30 | % | 136.05 | % | 135.94 | % | |||||||||
INCOME STATEMENT RATIOS | |||||||||||||||||||
Return on average assets (ROA) | 0.68 | % | 0.80 | % | 0.63 | % | 0.24 | % | 0.73 | % | |||||||||
Return on average equity (ROE) | 7.01 | % | 8.47 | % | 6.63 | % | 2.45 | % | 7.33 | % | |||||||||
Net interest margin (1) | 3.11 | % | 3.26 | % | 3.24 | % | 3.17 | % | 3.28 | % | |||||||||
Yield on average earning assets | 3.47 | % | 3.63 | % | 3.60 | % | 3.52 | % | 3.63 | % | |||||||||
Yield on securities | 2.49 | % | 2.92 | % | 2.95 | % | 2.83 | % | 2.86 | % | |||||||||
Yield on loans | 4.03 | % | 4.11 | % | 4.09 | % | 4.01 | % | 4.20 | % | |||||||||
Cost of funds | 0.38 | % | 0.38 | % | 0.39 | % | 0.37 | % | 0.37 | % | |||||||||
Efficiency ratio (5) | 74.43 | % | 70.08 | % | 73.22 | % | 67.21 | % | 72.90 | % | |||||||||
PER SHARE DATA | |||||||||||||||||||
Dividends | $ | 0.13 | $ | 0.13 | $ | 0.13 | $ | 0.13 | $ | 0.13 | |||||||||
Book value | 18.15 | 18.03 | 17.65 | 17.44 | 17.65 | ||||||||||||||
Tangible book value (4) | 17.66 | 17.53 | 17.14 | 16.93 | 17.13 | ||||||||||||||
SHARE PRICE DATA | |||||||||||||||||||
Closing price | $ | 28.28 | $ | 27.20 | $ | 21.60 | $ | 18.48 | $ | 17.61 | |||||||||
Diluted earnings multiple (2) | 22.27 | 18.26 | 18.52 | 16.95 | 13.76 | ||||||||||||||
Book value multiple (3) | 1.56 | 1.51 | 1.22 | 1.06 | 1.00 | ||||||||||||||
COMMON STOCK DATA | |||||||||||||||||||
Outstanding shares at end of period | 7,103,358 | 7,101,390 | 7,094,602 | 7,085,217 | 7,162,716 | ||||||||||||||
Weighted average shares outstanding, basic | 7,103,235 | 7,100,226 | 7,076,775 | 7,152,844 | 7,162,930 | ||||||||||||||
Weighted average shares outstanding, diluted | 7,160,164 | 7,153,917 | 7,107,380 | 7,171,498 | 7,181,183 | ||||||||||||||
Dividend payout ratio | 40.63 | % | 35.14 | % | 44.83 | % | 118.18 | % | 40.63 | % | |||||||||
CAPITAL RATIOS | |||||||||||||||||||
Capital to assets | 9.66 | % | 9.74 | % | 9.29 | % | 9.54 | % | 10.02 | % | |||||||||
Leverage ratio | 9.59 | % | 9.45 | % | 9.40 | % | 9.59 | % | 9.84 | % | |||||||||
Common equity tier 1 ratio | 15.92 | % | 15.44 | % | 15.56 | % | 15.61 | % | 16.31 | % | |||||||||
Tier 1 risk based capital ratio | 16.57 | % | 16.08 | % | 16.22 | % | 16.27 | % | 16.99 | % | |||||||||
Total risk based capital ratio | 17.83 | % | 17.34 | % | 17.47 | % | 17.52 | % | 18.25 | % | |||||||||
CREDIT QUALITY | |||||||||||||||||||
Net charge-offs (recoveries) to average loans | (0.004 | )% | (0.018 | )% | 0.002 | % | 0.390 | % | (0.002 | )% | |||||||||
Total nonperforming loans to total loans | 2.29 | % | 2.29 | % | 2.46 | % | 2.62 | % | 2.71 | % | |||||||||
Total nonperforming assets to total assets | 1.78 | % | 1.84 | % | 1.86 | % | 1.97 | % | 2.07 | % | |||||||||
Nonaccrual loans to: | |||||||||||||||||||
Total loans | 0.79 | % | 0.82 | % | 0.94 | % | 1.09 | % | 1.13 | % | |||||||||
Total assets | 0.50 | % | 0.53 | % | 0.57 | % | 0.68 | % | 0.70 | % | |||||||||
Allowance for loan losses to: | |||||||||||||||||||
Total loans | 1.32 | % | 1.35 | % | 1.37 | % | 1.37 | % | 1.46 | % | |||||||||
Nonperforming assets | 47.12 | % | 47.72 | % | 45.22 | % | 43.30 | % | 43.73 | % | |||||||||
Nonaccrual loans | 167.09 | % | 165.24 | % | 146.25 | % | 125.75 | % | 129.15 | % | |||||||||
NONPERFORMING ASSETS | |||||||||||||||||||
Loans delinquent 90+ days and still accruing | $ | 248 | $ | 179 | $ | 511 | $ | 278 | $ | 224 | |||||||||
Nonaccrual loans | 6,703 | 6,976 | 7,747 | 8,784 | 8,827 | ||||||||||||||
Restructured loans (not in nonaccrual) | 12,386 | 12,407 | 12,027 | 12,058 | 12,106 | ||||||||||||||
Other real estate owned | 3,387 | 3,553 | 3,727 | 3,345 | 3,871 | ||||||||||||||
Repossessed assets | 1,043 | 1,043 | 1,043 | 1,043 | 1,044 | ||||||||||||||
Total nonperforming assets | $ | 23,767 | $ | 24,158 | $ | 25,055 | $ | 25,508 | $ | 26,072 |
(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 services 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 September 30, | |||||||||||||||||||||
2016 | 2015 | ||||||||||||||||||||
Average Balance | Income/ Expense | Yield/ Rate (2) | Average Balance | Income/ Expense | Yield/ Rate (2) | ||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||
Assets: | |||||||||||||||||||||
Securities: | |||||||||||||||||||||
Taxable | $ | 314,367 | $ | 1,667 | 2.11 | % | $ | 320,684 | $ | 2,009 | 2.49 | % | |||||||||
Tax-exempt (1) | 50,914 | 623 | 4.86 | % | 51,252 | 672 | 5.20 | % | |||||||||||||
Total securities | $ | 365,281 | $ | 2,290 | 2.49 | % | $ | 371,936 | $ | 2,681 | 2.86 | % | |||||||||
Loans: | |||||||||||||||||||||
Taxable | $ | 851,030 | $ | 8,618 | 4.03 | % | $ | 777,039 | $ | 8,222 | 4.20 | % | |||||||||
Tax-exempt (1) | 577 | 8 | 5.52 | % | 630 | 8 | 5.04 | % | |||||||||||||
Total loans (3) | $ | 851,607 | $ | 8,626 | 4.03 | % | $ | 777,669 | $ | 8,230 | 4.20 | % | |||||||||
Interest on deposits with other banks and federal funds sold | 39,315 | 35 | 0.35 | % | 46,671 | 23 | 0.20 | % | |||||||||||||
Total earning assets | $ | 1,256,203 | $ | 10,951 | 3.47 | % | $ | 1,196,276 | $ | 10,934 | 3.63 | % | |||||||||
Less: allowance for loan losses | (11,516 | ) | (11,870 | ) | |||||||||||||||||
Total nonearning assets | 80,465 | 77,155 | |||||||||||||||||||
Total assets | $ | 1,325,152 | $ | 1,261,561 | |||||||||||||||||
Liabilities: | |||||||||||||||||||||
Interest-bearing deposits: | |||||||||||||||||||||
Checking | $ | 350,110 | $ | 194 | 0.22 | % | $ | 343,584 | $ | 176 | 0.20 | % | |||||||||
Regular savings | 130,623 | 61 | 0.19 | % | 120,104 | 56 | 0.18 | % | |||||||||||||
Money market savings | 76,377 | 49 | 0.26 | % | 66,144 | 32 | 0.19 | % | |||||||||||||
Time deposits: | |||||||||||||||||||||
$100,000 and over | 153,108 | 336 | 0.87 | % | 148,998 | 322 | 0.86 | % | |||||||||||||
Under $100,000 | 116,061 | 269 | 0.92 | % | 103,897 | 291 | 1.11 | % | |||||||||||||
Total interest-bearing deposits | $ | 826,279 | $ | 909 | 0.44 | % | $ | 782,727 | $ | 877 | 0.45 | % | |||||||||
Securities sold under agreements to repurchase | 33,585 | 1 | 0.01 | % | 28,859 | 2 | 0.03 | % | |||||||||||||
FHLB borrowings and other debt | 71,731 | 210 | 1.17 | % | 68,416 | 165 | 0.96 | % | |||||||||||||
Total interest-bearing liabilities | $ | 931,595 | $ | 1,120 | 0.48 | % | $ | 880,002 | $ | 1,044 | 0.47 | % | |||||||||
Non-interest bearing liabilities: | |||||||||||||||||||||
Demand deposits | 250,705 | 242,983 | |||||||||||||||||||
Other liabilities | 14,379 | 12,815 | |||||||||||||||||||
Total liabilities | $ | 1,196,679 | $ | 1,135,800 | |||||||||||||||||
Shareholders' equity | 128,473 | 125,761 | |||||||||||||||||||
Total liabilities and shareholders' equity | $ | 1,325,152 | $ | 1,261,561 | |||||||||||||||||
Net interest income | $ | 9,831 | $ | 9,890 | |||||||||||||||||
Interest rate spread | 2.99 | % | 3.16 | % | |||||||||||||||||
Cost of Funds | 0.38 | % | 0.37 | % | |||||||||||||||||
Interest expense as a percent of average earning assets | 0.35 | % | 0.35 | % | |||||||||||||||||
Net interest margin | 3.11 | % | 3.28 | % |
(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 366 day year for 2016 and 365 day year for 2015. |
(3) | Total average loans include loans on non-accrual status. |
MIDDLEBURG FINANCIAL CORPORATION AND SUBSIDIARIES Average Balances, Income and Expenses, Yields and Rates (Unaudited) | |||||||||||||||||||||
Nine months ended September 30, | |||||||||||||||||||||
2016 | 2015 | ||||||||||||||||||||
Average Balance | Income/ Expense | Yield/ Rate (2) | Average Balance | Income/ Expense | Yield/ Rate (2) | ||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||
Assets: | |||||||||||||||||||||
Securities: | |||||||||||||||||||||
Taxable | $ | 325,562 | $ | 5,888 | 2.42 | % | $ | 315,507 | $ | 5,832 | 2.47 | % | |||||||||
Tax-exempt (1) | 50,755 | 1,974 | 5.20 | % | 51,680 | 2,051 | 5.31 | % | |||||||||||||
Total securities | $ | 376,317 | $ | 7,862 | 2.79 | % | $ | 367,187 | $ | 7,883 | 2.87 | % | |||||||||
Loans: | |||||||||||||||||||||
Taxable | $ | 832,214 | $ | 25,380 | 4.07 | % | $ | 764,337 | $ | 24,468 | 4.28 | % | |||||||||
Tax-exempt (1) | 625 | 26 | 5.56 | % | 620 | 25 | 5.39 | % | |||||||||||||
Total loans (3) | $ | 832,839 | $ | 25,406 | 4.07 | % | $ | 764,957 | $ | 24,493 | 4.28 | % | |||||||||
Interest on deposits with other banks and federal funds sold | 42,115 | 123 | 0.39 | % | 52,858 | 84 | 0.21 | % | |||||||||||||
Total earning assets | $ | 1,251,271 | $ | 33,391 | 3.56 | % | $ | 1,185,002 | $ | 32,460 | 3.66 | % | |||||||||
Less: allowance for loan losses | (11,359 | ) | (11,894 | ) | |||||||||||||||||
Total nonearning assets | 80,774 | 76,703 | |||||||||||||||||||
Total assets | $ | 1,320,686 | $ | 1,249,811 | |||||||||||||||||
Liabilities: | |||||||||||||||||||||
Interest-bearing deposits: | |||||||||||||||||||||
Checking | $ | 353,769 | $ | 576 | 0.22 | % | $ | 342,184 | $ | 517 | 0.20 | % | |||||||||
Regular savings | 129,538 | 180 | 0.19 | % | 117,981 | 164 | 0.19 | % | |||||||||||||
Money market savings | 75,762 | 133 | 0.23 | % | 67,314 | 95 | 0.19 | % | |||||||||||||
Time deposits: | |||||||||||||||||||||
$100,000 and over | 148,115 | 980 | 0.88 | % | 136,980 | 900 | 0.88 | % | |||||||||||||
Under $100,000 | 112,442 | 801 | 0.95 | % | 107,181 | 904 | 1.13 | % | |||||||||||||
Total interest-bearing deposits | $ | 819,626 | $ | 2,670 | 0.44 | % | $ | 771,640 | $ | 2,580 | 0.45 | % | |||||||||
Securities sold under agreements to repurchase | 29,966 | 2 | 0.01 | % | 30,578 | 64 | 0.28 | % | |||||||||||||
FHLB borrowings and other debt | 87,786 | 704 | 1.07 | % | 69,752 | 507 | 0.97 | % | |||||||||||||
Federal funds purchased | 2 | — | — | % | 2 | — | — | % | |||||||||||||
Total interest-bearing liabilities | $ | 937,380 | $ | 3,376 | 0.48 | % | $ | 871,972 | $ | 3,151 | 0.48 | % | |||||||||
Non-interest bearing liabilities: | |||||||||||||||||||||
Demand deposits | 243,020 | 239,791 | |||||||||||||||||||
Other liabilities | 13,896 | 13,126 | |||||||||||||||||||
Total liabilities | $ | 1,194,296 | $ | 1,124,889 | |||||||||||||||||
Shareholders' equity | 126,390 | 124,922 | |||||||||||||||||||
Total liabilities and shareholders' equity | $ | 1,320,686 | $ | 1,249,811 | |||||||||||||||||
Net interest income | $ | 30,015 | $ | 29,309 | |||||||||||||||||
Interest rate spread | 3.08 | % | 3.18 | % | |||||||||||||||||
Cost of Funds | 0.38 | % | 0.38 | % | |||||||||||||||||
Interest expense as a percent of average earning assets | 0.36 | % | 0.36 | % | |||||||||||||||||
Net interest margin | 3.20 | % | 3.31 | % |
(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 366 day year for 2016 and 365 day year for 2015. |
(3) | Total average loans include loans on non-accrual status. |
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