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 January 30, 2017. |
MIDDLEBURG FINANCIAL CORPORATION | ||||
(Registrant) | ||||
Date: January 30, 2017 | By: | /s/ Gary R. Shook | ||
Gary R. Shook | ||||
President and Chief Executive Officer | ||||
Exhibit No. | Description |
99.1 | Press release dated January 30, 2017 |
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 |
• | The pending strategic merger with Access National Corporation is on track to close during the second quarter of 2017. |
• | Net income was $1.09 million, or $0.15 per diluted share, compared to $2.26 million, or $0.32 per diluted share, for the previous quarter and $781,000, or $0.11 per diluted share, for the same period in 2015. |
• | Total revenue was $13.53 million for the fourth quarter of 2016, higher by 14.09% compared to the previous quarter and an increase of 14.41% relative to the same period in 2015. |
• | The net interest margin expanded by 6 basis points to 3.17%, compared to 3.11% for the previous quarter and was unchanged relative to the same period in 2015. |
• | Cost of funds declined by 2 basis points to 36 basis points during the fourth quarter compared to 38 basis points for the previous quarter. The cost of funds for the full year 2016 was 38 basis points unchanged relative to the full year 2015. |
• | Reported earnings reflect merger related expenses of $1.05 million for the fourth quarter of 2016 and $1.29 million for the full year 2016. |
• | Loans held-for-investment increased by $14.21 million or 6.68% on an annualized basis during the fourth quarter of 2016. |
• | Deposits grew by 1.18% in 2016 to $1.05 billion at December 31, 2016, while non-interest bearing demand deposits grew by 5.37% during 2016. |
• | A loan loss provision of $1.80 million was recognized in the current quarter which resulted in a ratio of loan loss reserves to total loans of 1.33% and the ratio of reserves to nonaccrual loans was 179.90% at December 31, 2016. |
• | Yields on earning assets increased by 4 bp compared to the previous quarter. |
• | Yields on investment securities increased by 24 bp compared to the previous quarter. A significant portion of the investment portfolio is in residential mortgage backed securities ("MBS") and SBA securities. These securities experienced slower prepayments which had the effect of reducing premium amortization and increasing yields. Yields on floating rate securities, many of which have coupons that are indexed to either LIBOR or the Prime rate, increased following the decision by the Federal Reserve to raise the target Federal Funds rate by 25 bp in December of 2016. |
• | Yields on loans decreased by 7 bp compared to the previous quarter, as we experienced some payoffs and also added loans at lower yields. The compression in loan yields was partially offset by higher yields on floating rate loans following the decision by the Federal Reserve to raise the target Federal Funds rate by 25 bp in December of 2016. |
• | Cost of funds was 0.36%, compared to 0.38% for the previous quarter as we paid off some borrowings and higher cost time deposits. |
Quarters Ended | ||||||||||||||||||||||||
(Dollars in thousands) | December 31, 2016 vs. September 30, 2016 Increase (Decrease) Due to Changes in: | December 31, 2016 vs. December 31, 2015 Increase (Decrease) Due to Changes in: | ||||||||||||||||||||||
Volume | Rate | Total | Volume | Rate | Total | |||||||||||||||||||
Earning Assets: | ||||||||||||||||||||||||
Securities: | ||||||||||||||||||||||||
Taxable | $ | (50 | ) | $ | 210 | $ | 160 | $ | (168 | ) | $ | (66 | ) | $ | (234 | ) | ||||||||
Tax-exempt | (21 | ) | — | (21 | ) | (34 | ) | (45 | ) | (79 | ) | |||||||||||||
Loans: | ||||||||||||||||||||||||
Taxable | (85 | ) | (139 | ) | (224 | ) | 506 | (101 | ) | 405 | ||||||||||||||
Tax-exempt | — | (1 | ) | (1 | ) | — | (1 | ) | (1 | ) | ||||||||||||||
Interest on deposits with other banks and federal funds sold | (2 | ) | 8 | 6 | (1 | ) | 20 | 19 | ||||||||||||||||
Total earning assets | $ | (158 | ) | $ | 78 | $ | (80 | ) | $ | 303 | $ | (193 | ) | $ | 110 | |||||||||
Interest-Bearing Liabilities: | ||||||||||||||||||||||||
Checking | $ | (2 | ) | $ | (1 | ) | $ | (3 | ) | $ | — | $ | 14 | $ | 14 | |||||||||
Regular savings | 1 | — | 1 | 3 | — | 3 | ||||||||||||||||||
Money market savings | 4 | (1 | ) | 3 | 3 | 9 | 12 | |||||||||||||||||
Time deposits: | ||||||||||||||||||||||||
$100,000 and over | (26 | ) | — | (26 | ) | (7 | ) | (3 | ) | (10 | ) | |||||||||||||
Under $100,000 | (21 | ) | 2 | (19 | ) | 13 | (49 | ) | (36 | ) | ||||||||||||||
Total interest-bearing deposits | $ | (44 | ) | $ | — | $ | (44 | ) | $ | 12 | $ | (29 | ) | $ | (17 | ) | ||||||||
Securities sold under agreements to repurchase | — | — | — | — | 1 | 1 | ||||||||||||||||||
FHLB borrowings and other debt | (57 | ) | 29 | (28 | ) | (15 | ) | 23 | 8 | |||||||||||||||
Total interest-bearing liabilities | $ | (101 | ) | $ | 29 | $ | (72 | ) | $ | (3 | ) | $ | (5 | ) | $ | (8 | ) | |||||||
Change in net interest income | $ | (57 | ) | $ | 49 | $ | (8 | ) | $ | 306 | $ | (188 | ) | $ | 118 |
• | Total revenue generated by our wealth management group, Middleburg Investment Group ("MIG") increased by 1.46% to $1.19 million compared to the previous quarter and increased by 2.51% compared to the same quarter in 2015. Fee income is primarily based upon the market value of assets under administration which were $1.93 billion at December 31, 2016. |
• | Net gains from securities sold were $1.04 million for the fourth quarter and $1.55 million for the full year 2016. Securities were sold in order to fund loan originations and also to pay off borrowings and high cost maturing time deposits. |
• | Other operating income was $894,000 for the quarter ended December 31, 2016, an increase of 557.35% compared to the previous quarter and an increase of 102.26% compared to the quarter ended December 31, 2015. In the fourth quarter of 2016, there was a substantial recovery of approximately $191,000 in expenses related to an overdrawn deposit account that had previously been charged off and also insurance proceeds of approximately $560,000 were received related to previously incurred storm damage to two of our financial service centers. |
• | Salaries and employee benefit expense decreased to $4.61 million for the current quarter compared to $4.73 million for the prior quarter and increased by 22.12% when compared to the same period in 2015. The increase in salary and benefit expenses in the fourth quarter of 2016 relative to the same period in 2015 was due to higher incentive accruals in the fourth quarter of 2016. |
• | Costs related to other real estate owned (OREO) decreased by $159,000 when compared to the prior quarter and increased by $25,000 when compared to the same period in 2015. OREO expenses were higher in the third quarter of 2016 due to valuation adjustments of $167,000 for several properties. |
• | Expenses from computer operations were $659,000 for the current quarter, $605,000 for the prior quarter and $801,000 for the quarter ended December 31, 2015. |
• | Legal and advisory fees increased to $1.34 million for the current quarter compared to $494,000 for the prior quarter and $328,000 for the quarter ended December 31, 2015. These increases were primarily due to legal and advisory fees that were incurred in the pending merger with Access National Corporation. |
• | Other operating expenses increased by 21.90% compared to the prior quarter and increased by 20.81% when compared to the same period in 2015. The primary reason for the increase was a $200,000 impairment of repossessed assets during the current quarter. |
• | Nonaccrual loans decreased to $6.34 million compared to $6.70 million as of September 30, 2016 and $8.78 million compared to December 31, 2015. |
• | Restructured loans that were accruing were $12.41 million compared to $12.39 million as of September 30, 2016 and $12.06 million as of December 31, 2015. |
• | Other real estate owned was $5.07 million compared to $3.39 million as of September 30, 2016 and $3.35 million as of December 31, 2015. |
• | Loans past due 90+ days and still accruing were $781,000 as of December 31, 2016 compared to $248,000 as of September 30, 2016 and $278,000 as of December 31, 2015. |
• | Repossessed assets were $843,000 as of December 31, 2016 compared to $1.04 million as of September 30, 2016 and December 31, 2015. |
• | Cash balances and deposits with other banks decreased by $10.68 million compared to December 31, 2015. |
• | The securities portfolio decreased by $66.53 million compared to December 31, 2015, as we sold some securities to fund loans and pay off borrowings and maturing time deposits. |
• | Loans held-for-investment increased to $860.10 million as of December 31, 2016. |
• | Tier 1 Leverage ratio was 9.73%, 5.73% over the regulatory minimum of 4.00% to be well capitalized. |
• | Common Equity Tier 1 Ratio was 15.61%, 8.61% over the regulatory minimum of 7.00% to be well capitalized. |
• | Tier 1 Risk-Based Capital Ratio was 16.25%, 7.75% over the regulatory minimum of 8.50% to be well capitalized. |
• | Total Risk Based Capital Ratio was 17.50%, 7.00% 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) | |||||||
December 31, 2016 | December 31, 2015 | ||||||
ASSETS | |||||||
Cash and due from banks | $ | 6,989 | $ | 5,489 | |||
Interest bearing deposits with other banks | 21,555 | 33,739 | |||||
Total cash and cash equivalents | 28,544 | 39,228 | |||||
Securities held to maturity, fair value of $10,095 and $4,163, respectively | 10,683 | 4,207 | |||||
Securities available for sale, at fair value | 301,567 | 374,571 | |||||
Restricted securities, at cost | 4,542 | 6,411 | |||||
Loans, net of allowance for loan losses of $11,404 and $11,046, respectively | 848,693 | 794,635 | |||||
Premises and equipment, net | 19,021 | 19,531 | |||||
Goodwill and identified intangibles, net | 3,465 | 3,636 | |||||
Other real estate owned, net of valuation allowance | 5,073 | 3,345 | |||||
Bank owned life insurance | 23,925 | 23,273 | |||||
Accrued interest receivable and other assets | 27,130 | 26,026 | |||||
TOTAL ASSETS | $ | 1,272,643 | $ | 1,294,863 | |||
LIABILITIES | |||||||
Deposits: | |||||||
Non-interest bearing demand deposits | $ | 248,567 | $ | 235,897 | |||
Savings and interest bearing demand deposits | 578,851 | 560,328 | |||||
Time deposits | 225,640 | 244,575 | |||||
Total deposits | 1,053,058 | 1,040,800 | |||||
Securities sold under agreements to repurchase | 34,864 | 26,869 | |||||
Federal Home Loan Bank borrowings | 39,500 | 85,000 | |||||
Subordinated notes | 5,155 | 5,155 | |||||
Accrued interest payable and other liabilities | 13,387 | 13,485 | |||||
TOTAL LIABILITIES | 1,145,964 | 1,171,309 | |||||
Commitments and contingencies | |||||||
SHAREHOLDERS' EQUITY | |||||||
Common stock ($2.50 par value; 20,000,000 shares authorized, 7,205,066 and 7,085,217, issued and outstanding, respectively) | 17,608 | 17,330 | |||||
Capital surplus | 45,716 | 44,155 | |||||
Retained earnings | 64,755 | 60,392 | |||||
Accumulated other comprehensive income (loss) | (1,400 | ) | 1,677 | ||||
TOTAL SHAREHOLDERS' EQUITY | 126,679 | 123,554 | |||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 1,272,643 | $ | 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 December 31, | For the Twelve Months Ended December 31, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
INTEREST INCOME | |||||||||||||||
Interest and fees on loans | $ | 8,398 | $ | 7,995 | $ | 33,795 | $ | 32,479 | |||||||
Interest and dividends on securities | |||||||||||||||
Taxable | 1,756 | 1,992 | 7,406 | 7,628 | |||||||||||
Tax-exempt | 397 | 449 | 1,700 | 1,803 | |||||||||||
Dividends | 72 | 69 | 310 | 265 | |||||||||||
Interest on deposits with other banks and federal funds sold | 41 | 22 | 164 | 106 | |||||||||||
Total interest and dividend income | 10,664 | 10,527 | 43,375 | 42,281 | |||||||||||
INTEREST EXPENSE | |||||||||||||||
Interest on deposits | 865 | 882 | 3,535 | 3,462 | |||||||||||
Interest on securities sold under agreements to repurchase | 1 | — | 3 | 64 | |||||||||||
Interest on FHLB borrowings and other debt | 182 | 174 | 886 | 681 | |||||||||||
Total interest expense | 1,048 | 1,056 | 4,424 | 4,207 | |||||||||||
NET INTEREST INCOME | 9,616 | 9,471 | 38,951 | 38,074 | |||||||||||
Provision for loan losses | 1,800 | 2,700 | 1,853 | 2,293 | |||||||||||
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES | 7,816 | 6,771 | 37,098 | 35,781 | |||||||||||
NON-INTEREST INCOME | |||||||||||||||
Service charges on deposit accounts | 286 | 258 | 1,154 | 1,061 | |||||||||||
Trust services income | 1,185 | 1,156 | 4,643 | 4,785 | |||||||||||
ATM fee income, net | 197 | 204 | 762 | 797 | |||||||||||
Gains (losses) on sales of loans held for sale, net | 9 | (4 | ) | 32 | (1 | ) | |||||||||
Gains on sales of securities available for sale, net | 1,043 | 2 | 1,554 | 140 | |||||||||||
Commissions on investment sales | 138 | 132 | 555 | 547 | |||||||||||
Bank owned life insurance | 164 | 167 | 652 | 656 | |||||||||||
Other operating income | 894 | 442 | 1,386 | 1,636 | |||||||||||
Total non-interest income | 3,916 | 2,357 | 10,738 | 9,621 | |||||||||||
NON-INTEREST EXPENSE | |||||||||||||||
Salaries and employee benefits | 4,605 | 3,771 | 18,757 | 18,435 | |||||||||||
Occupancy and equipment | 1,317 | 1,383 | 5,254 | 5,436 | |||||||||||
Amortization | 210 | 193 | 838 | 671 | |||||||||||
Computer operations | 659 | 801 | 2,582 | 2,337 | |||||||||||
Other real estate owned, net | 24 | (1 | ) | 363 | 284 | ||||||||||
Other taxes | 238 | 231 | 947 | 915 | |||||||||||
Federal deposit insurance | 142 | 203 | 748 | 786 | |||||||||||
Audits and exams | 136 | 114 | 589 | 585 | |||||||||||
Legal and advisory fees | 1,342 | 328 | 2,407 | 1,029 | |||||||||||
Other operating expenses | 1,347 | 1,115 | 4,474 | 4,379 | |||||||||||
Total non-interest expense | 10,020 | 8,138 | 36,959 | 34,857 | |||||||||||
Income before income taxes | 1,712 | 990 | 10,877 | 10,545 | |||||||||||
Income tax expense | 620 | 209 | 2,813 | 2,715 | |||||||||||
NET INCOME | $ | 1,092 | $ | 781 | $ | 8,064 | $ | 7,830 | |||||||
Earnings per share: | |||||||||||||||
Basic | $ | 0.15 | $ | 0.11 | $ | 1.13 | $ | 1.10 | |||||||
Diluted | $ | 0.15 | $ | 0.11 | $ | 1.13 | $ | 1.09 | |||||||
Dividends per common share | $ | 0.13 | $ | 0.13 | $ | 0.52 | $ | 0.46 |
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 | |||||||||||||||||||
December 31, 2016 | September 30, 2016 | June 30, 2016 | March 31, 2016 | December 31, 2015 | |||||||||||||||
INTEREST INCOME | |||||||||||||||||||
Interest and fees on loans | $ | 8,398 | $ | 8,624 | $ | 8,543 | $ | 8,230 | $ | 7,995 | |||||||||
Interest and dividends on securities | |||||||||||||||||||
Taxable | 1,756 | 1,585 | 1,992 | 2,073 | 1,992 | ||||||||||||||
Tax-exempt | 397 | 411 | 440 | 452 | 449 | ||||||||||||||
Dividends | 72 | 82 | 87 | 69 | 69 | ||||||||||||||
Interest on deposits with other banks and federal funds sold | 41 | 35 | 40 | 48 | 22 | ||||||||||||||
Total interest and dividend income | 10,664 | 10,737 | 11,102 | 10,872 | 10,527 | ||||||||||||||
INTEREST EXPENSE | |||||||||||||||||||
Interest on deposits | 865 | 909 | 890 | 871 | 882 | ||||||||||||||
Interest on securities sold under agreements to repurchase | 1 | 1 | — | 1 | — | ||||||||||||||
Interest on FHLB borrowings and other debt | 182 | 210 | 243 | 251 | 174 | ||||||||||||||
Total interest expense | 1,048 | 1,120 | 1,133 | 1,123 | 1,056 | ||||||||||||||
NET INTEREST INCOME | 9,616 | 9,617 | 9,969 | 9,749 | 9,471 | ||||||||||||||
Provision for (recovery of) loan losses | 1,800 | (297 | ) | 50 | 300 | 2,700 | |||||||||||||
NET INTEREST INCOME AFTER PROVISION FOR (RECOVERY OF) LOAN LOSSES | 7,816 | 9,914 | 9,919 | 9,449 | 6,771 | ||||||||||||||
NON-INTEREST INCOME | |||||||||||||||||||
Service charges on deposit accounts | 286 | 303 | 286 | 279 | 258 | ||||||||||||||
Trust services income | 1,185 | 1,168 | 1,132 | 1,158 | 1,156 | ||||||||||||||
ATM fee income, net | 197 | 190 | 211 | 164 | 204 | ||||||||||||||
Gains (losses) on sales of loans held for sale, net | 9 | 11 | 3 | 9 | (4 | ) | |||||||||||||
Gains on sales of securities available for sale, net | 1,043 | 138 | 210 | 163 | 2 | ||||||||||||||
Commissions on investment sales | 138 | 133 | 152 | 132 | 132 | ||||||||||||||
Bank owned life insurance | 164 | 165 | 163 | 160 | 167 | ||||||||||||||
Other operating income | 894 | 136 | 213 | 143 | 442 | ||||||||||||||
Total non-interest income | 3,916 | 2,244 | 2,370 | 2,208 | 2,357 | ||||||||||||||
NON-INTEREST EXPENSE | |||||||||||||||||||
Salaries and employee benefits | 4,605 | 4,727 | 4,613 | 4,812 | 3,771 | ||||||||||||||
Occupancy and equipment | 1,317 | 1,262 | 1,261 | 1,414 | 1,383 | ||||||||||||||
Amortization | 210 | 210 | 209 | 209 | 193 | ||||||||||||||
Computer operations | 659 | 605 | 598 | 720 | 801 | ||||||||||||||
Other real estate owned, net | 24 | 183 | (11 | ) | 167 | (1 | ) | ||||||||||||
Other taxes | 238 | 237 | 237 | 235 | 231 | ||||||||||||||
Federal deposit insurance | 142 | 215 | 216 | 175 | 203 | ||||||||||||||
Audits and exams | 136 | 136 | 165 | 152 | 114 | ||||||||||||||
Legal and advisory fees | 1,342 | 494 | 350 | 221 | 328 | ||||||||||||||
Other operating expenses | 1,347 | 1,105 | 1,113 | 909 | 1,115 | ||||||||||||||
Total non-interest expense | 10,020 | 9,174 | 8,751 | 9,014 | 8,138 | ||||||||||||||
Income before income taxes | 1,712 | 2,984 | 3,538 | 2,643 | 990 | ||||||||||||||
Income tax expense | 620 | 720 | 885 | 588 | 209 | ||||||||||||||
NET INCOME | $ | 1,092 | $ | 2,264 | $ | 2,653 | $ | 2,055 | $ | 781 | |||||||||
Earnings per share: | |||||||||||||||||||
Basic | $ | 0.15 | $ | 0.32 | $ | 0.37 | $ | 0.29 | $ | 0.11 | |||||||||
Diluted | $ | 0.15 | $ | 0.32 | $ | 0.37 | $ | 0.29 | $ | 0.11 | |||||||||
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) | |||||||||||||||||||
December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||||||
2016 | 2016 | 2016 | 2016 | 2015 | |||||||||||||||
BALANCE SHEET RATIOS | |||||||||||||||||||
Loans to deposits | 77.50 | % | 77.50 | % | 80.90 | % | 76.07 | % | 77.41 | % | |||||||||
Average interest-earning assets to average interest-bearing liabilities | 134.84 | % | 134.84 | % | 133.31 | % | 132.30 | % | 136.05 | % | |||||||||
INCOME STATEMENT RATIOS | |||||||||||||||||||
Return on average assets (ROA) | 0.33 | % | 0.68 | % | 0.80 | % | 0.63 | % | 0.24 | % | |||||||||
Return on average equity (ROE) | 3.36 | % | 7.01 | % | 8.47 | % | 6.63 | % | 2.45 | % | |||||||||
Net interest margin (1) | 3.17 | % | 3.11 | % | 3.26 | % | 3.24 | % | 3.17 | % | |||||||||
Yield on average earning assets | 3.51 | % | 3.47 | % | 3.63 | % | 3.60 | % | 3.52 | % | |||||||||
Yield on securities | 2.73 | % | 2.49 | % | 2.92 | % | 2.95 | % | 2.83 | % | |||||||||
Yield on loans | 3.96 | % | 4.03 | % | 4.11 | % | 4.09 | % | 4.01 | % | |||||||||
Cost of funds | 0.36 | % | 0.38 | % | 0.38 | % | 0.39 | % | 0.37 | % | |||||||||
Efficiency ratio (5) | 77.87 | % | 74.43 | % | 70.08 | % | 73.22 | % | 67.21 | % | |||||||||
PER SHARE DATA | |||||||||||||||||||
Dividends | $ | 0.13 | $ | 0.13 | $ | 0.13 | $ | 0.13 | $ | 0.13 | |||||||||
Book value | 17.58 | 18.15 | 18.03 | 17.65 | 17.44 | ||||||||||||||
Tangible book value (4) | 17.10 | 17.66 | 17.53 | 17.14 | 16.93 | ||||||||||||||
SHARE PRICE DATA | |||||||||||||||||||
Closing price | $ | 34.75 | $ | 28.28 | $ | 27.20 | $ | 21.60 | $ | 18.48 | |||||||||
Diluted earnings multiple (2) | 57.92 | 22.27 | 18.26 | 18.52 | 16.95 | ||||||||||||||
Book value multiple (3) | 1.98 | 1.56 | 1.51 | 1.22 | 1.06 | ||||||||||||||
COMMON STOCK DATA | |||||||||||||||||||
Outstanding shares at end of period | 7,205,066 | 7,103,358 | 7,101,390 | 7,094,602 | 7,085,217 | ||||||||||||||
Weighted average shares outstanding, basic | 7,164,847 | 7,103,235 | 7,100,226 | 7,076,775 | 7,152,844 | ||||||||||||||
Weighted average shares outstanding, diluted | 7,197,569 | 7,160,164 | 7,153,917 | 7,107,380 | 7,171,498 | ||||||||||||||
Dividend payout ratio | 86.67 | % | 40.63 | % | 35.14 | % | 44.83 | % | 118.18 | % | |||||||||
CAPITAL RATIOS | |||||||||||||||||||
Capital to assets | 9.95 | % | 9.66 | % | 9.74 | % | 9.29 | % | 9.54 | % | |||||||||
Leverage ratio | 9.73 | % | 9.59 | % | 9.45 | % | 9.40 | % | 9.59 | % | |||||||||
Common equity tier 1 ratio | 15.61 | % | 15.92 | % | 15.44 | % | 15.56 | % | 15.61 | % | |||||||||
Tier 1 risk based capital ratio | 16.25 | % | 16.57 | % | 16.08 | % | 16.22 | % | 16.27 | % | |||||||||
Total risk based capital ratio | 17.50 | % | 17.83 | % | 17.34 | % | 17.47 | % | 17.52 | % | |||||||||
CREDIT QUALITY | |||||||||||||||||||
Net charge-offs (recoveries) to average loans | 0.19 | % | (0.004 | )% | (0.018 | )% | 0.002 | % | 0.39 | % | |||||||||
Total nonperforming loans to total loans | 2.27 | % | 2.29 | % | 2.29 | % | 2.46 | % | 2.62 | % | |||||||||
Total nonperforming assets to total assets | 2.00 | % | 1.78 | % | 1.84 | % | 1.86 | % | 1.97 | % | |||||||||
Nonaccrual loans to: | |||||||||||||||||||
Total loans | 0.73 | % | 0.79 | % | 0.82 | % | 0.94 | % | 1.09 | % | |||||||||
Total assets | 0.50 | % | 0.50 | % | 0.53 | % | 0.57 | % | 0.68 | % | |||||||||
Allowance for loan losses to: | |||||||||||||||||||
Total loans | 1.33 | % | 1.32 | % | 1.35 | % | 1.37 | % | 1.37 | % | |||||||||
Nonperforming assets | 44.82 | % | 47.12 | % | 47.72 | % | 45.22 | % | 43.30 | % | |||||||||
Nonaccrual loans | 179.90 | % | 167.09 | % | 165.24 | % | 146.25 | % | 125.75 | % | |||||||||
NONPERFORMING ASSETS | |||||||||||||||||||
Loans delinquent 90+ days and still accruing | $ | 781 | $ | 248 | $ | 179 | $ | 511 | $ | 278 | |||||||||
Nonaccrual loans | 6,339 | 6,703 | 6,976 | 7,747 | 8,784 | ||||||||||||||
Restructured loans (not in nonaccrual) | 12,410 | 12,386 | 12,407 | 12,027 | 12,058 | ||||||||||||||
Other real estate owned | 5,073 | 3,387 | 3,553 | 3,727 | 3,345 | ||||||||||||||
Repossessed assets | 843 | 1,043 | 1,043 | 1,043 | 1,043 | ||||||||||||||
Total nonperforming assets | $ | 25,446 | $ | 23,767 | $ | 24,158 | $ | 25,055 | $ | 25,508 |
(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 December 31, | |||||||||||||||||||||
2016 | 2015 | ||||||||||||||||||||
Average Balance | Income/ Expense | Yield/ Rate (2) | Average Balance | Income/ Expense | Yield/ Rate (2) | ||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||
Assets: | |||||||||||||||||||||
Securities: | |||||||||||||||||||||
Taxable | $ | 304,429 | $ | 1,828 | 2.39 | % | $ | 332,163 | $ | 2,061 | 2.46 | % | |||||||||
Tax-exempt (1) | 49,236 | 602 | 4.86 | % | 51,884 | 681 | 5.21 | % | |||||||||||||
Total securities | $ | 353,665 | $ | 2,430 | 2.73 | % | $ | 384,047 | $ | 2,742 | 2.83 | % | |||||||||
Loans: | |||||||||||||||||||||
Taxable | $ | 842,541 | $ | 8,394 | 3.96 | % | $ | 791,590 | $ | 7,989 | 4.00 | % | |||||||||
Tax-exempt (1) | 540 | 7 | 5.16 | % | 578 | 8 | 5.49 | % | |||||||||||||
Total loans (3) | $ | 843,081 | $ | 8,401 | 3.96 | % | $ | 792,168 | $ | 7,997 | 4.01 | % | |||||||||
Interest on deposits with other banks and federal funds sold | 36,373 | 41 | 0.45 | % | 38,348 | 22 | 0.23 | % | |||||||||||||
Total earning assets | $ | 1,233,119 | $ | 10,872 | 3.51 | % | $ | 1,214,563 | $ | 10,761 | 3.52 | % | |||||||||
Less: allowance for loan losses | (11,169 | ) | (11,733 | ) | |||||||||||||||||
Total nonearning assets | 81,596 | 79,695 | |||||||||||||||||||
Total assets | $ | 1,303,546 | $ | 1,282,525 | |||||||||||||||||
Liabilities: | |||||||||||||||||||||
Interest-bearing deposits: | |||||||||||||||||||||
Checking | $ | 345,794 | $ | 191 | 0.22 | % | $ | 345,525 | $ | 177 | 0.20 | % | |||||||||
Regular savings | 132,795 | 62 | 0.19 | % | 125,947 | 59 | 0.19 | % | |||||||||||||
Money market savings | 83,720 | 52 | 0.25 | % | 78,918 | 40 | 0.20 | % | |||||||||||||
Time deposits: | |||||||||||||||||||||
$100,000 and over | 141,318 | 310 | 0.87 | % | 144,440 | 320 | 0.88 | % | |||||||||||||
Under $100,000 | 107,087 | 250 | 0.93 | % | 102,586 | 286 | 1.11 | % | |||||||||||||
Total interest-bearing deposits | $ | 810,714 | $ | 865 | 0.42 | % | $ | 797,416 | $ | 882 | 0.44 | % | |||||||||
Securities sold under agreements to repurchase | 34,382 | 1 | 0.01 | % | 28,663 | — | — | % | |||||||||||||
FHLB borrowings and other debt | 55,818 | 182 | 1.30 | % | 66,677 | 174 | 1.03 | % | |||||||||||||
Federal funds purchased | 54 | — | — | % | — | — | — | % | |||||||||||||
Total interest-bearing liabilities | $ | 900,968 | $ | 1,048 | 0.46 | % | $ | 892,756 | $ | 1,056 | 0.47 | % | |||||||||
Non-interest bearing liabilities: | |||||||||||||||||||||
Demand deposits | 259,706 | 248,536 | |||||||||||||||||||
Other liabilities | 13,644 | 15,016 | |||||||||||||||||||
Total liabilities | $ | 1,174,318 | $ | 1,156,308 | |||||||||||||||||
Shareholders' equity | 129,228 | 126,217 | |||||||||||||||||||
Total liabilities and shareholders' equity | $ | 1,303,546 | $ | 1,282,525 | |||||||||||||||||
Net interest income | $ | 9,824 | $ | 9,705 | |||||||||||||||||
Interest rate spread | 3.04 | % | 3.05 | % | |||||||||||||||||
Cost of Funds | 0.36 | % | 0.37 | % | |||||||||||||||||
Interest expense as a percent of average earning assets | 0.34 | % | 0.34 | % | |||||||||||||||||
Net interest margin | 3.17 | % | 3.17 | % |
(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) | |||||||||||||||||||||
Twelve months ended December 31, | |||||||||||||||||||||
2016 | 2015 | ||||||||||||||||||||
Average Balance | Income/ Expense | Yield/ Rate (2) | Average Balance | Income/ Expense | Yield/ Rate (2) | ||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||
Assets: | |||||||||||||||||||||
Securities: | |||||||||||||||||||||
Taxable | $ | 320,250 | $ | 7,716 | 2.41 | % | $ | 319,705 | $ | 7,893 | 2.47 | % | |||||||||
Tax-exempt (1) | 50,373 | 2,576 | 5.11 | % | 51,732 | 2,732 | 5.28 | % | |||||||||||||
Total securities | $ | 370,623 | $ | 10,292 | 2.78 | % | $ | 371,437 | $ | 10,625 | 2.86 | % | |||||||||
Loans: | |||||||||||||||||||||
Taxable | $ | 834,810 | $ | 33,773 | 4.05 | % | $ | 771,207 | $ | 32,457 | 4.21 | % | |||||||||
Tax-exempt (1) | 604 | 33 | 5.46 | % | 609 | 33 | 5.42 | % | |||||||||||||
Total loans (3) | $ | 835,414 | $ | 33,806 | 4.05 | % | $ | 771,816 | $ | 32,490 | 4.21 | % | |||||||||
Interest on deposits with other banks and federal funds sold | 40,672 | 164 | 0.40 | % | 49,201 | 106 | 0.22 | % | |||||||||||||
Total earning assets | $ | 1,246,709 | $ | 44,262 | 3.55 | % | $ | 1,192,454 | $ | 43,221 | 3.62 | % | |||||||||
Less: allowance for loan losses | (11,311 | ) | (11,853 | ) | |||||||||||||||||
Total nonearning assets | 80,980 | 77,456 | |||||||||||||||||||
Total assets | $ | 1,316,378 | $ | 1,258,057 | |||||||||||||||||
Liabilities: | |||||||||||||||||||||
Interest-bearing deposits: | |||||||||||||||||||||
Checking | $ | 351,764 | $ | 767 | 0.22 | % | $ | 343,026 | $ | 693 | 0.20 | % | |||||||||
Regular savings | 130,357 | 241 | 0.18 | % | 119,989 | 223 | 0.19 | % | |||||||||||||
Money market savings | 77,763 | 185 | 0.24 | % | 70,239 | 136 | 0.19 | % | |||||||||||||
Time deposits: | |||||||||||||||||||||
$100,000 and over | 146,406 | 1,290 | 0.88 | % | 138,860 | 1,220 | 0.88 | % | |||||||||||||
Under $100,000 | 111,097 | 1,052 | 0.95 | % | 106,023 | 1,190 | 1.12 | % | |||||||||||||
Total interest-bearing deposits | $ | 817,387 | $ | 3,535 | 0.43 | % | $ | 778,137 | $ | 3,462 | 0.44 | % | |||||||||
Securities sold under agreements to repurchase | 31,076 | 3 | 0.01 | % | 30,095 | 64 | 0.21 | % | |||||||||||||
FHLB borrowings and other debt | 79,751 | 886 | 1.11 | % | 68,977 | 681 | 0.99 | % | |||||||||||||
Federal funds purchased | 15 | — | — | % | 1 | — | — | % | |||||||||||||
Total interest-bearing liabilities | $ | 928,229 | $ | 4,424 | 0.48 | % | $ | 877,210 | $ | 4,207 | 0.48 | % | |||||||||
Non-interest bearing liabilities: | |||||||||||||||||||||
Demand deposits | 247,214 | 241,996 | |||||||||||||||||||
Other liabilities | 13,832 | 13,602 | |||||||||||||||||||
Total liabilities | $ | 1,189,275 | $ | 1,132,808 | |||||||||||||||||
Shareholders' equity | 127,103 | 125,249 | |||||||||||||||||||
Total liabilities and shareholders' equity | $ | 1,316,378 | $ | 1,258,057 | |||||||||||||||||
Net interest income | $ | 39,838 | $ | 39,014 | |||||||||||||||||
Interest rate spread | 3.07 | % | 3.14 | % | |||||||||||||||||
Cost of Funds | 0.38 | % | 0.38 | % | |||||||||||||||||
Interest expense as a percent of average earning assets | 0.35 | % | 0.35 | % | |||||||||||||||||
Net interest margin | 3.20 | % | 3.27 | % |
(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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