EX-99 2 ex99.htm Exhibit 99.1

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Middleburg Financial Corporation Announces 2006 Third Quarter Earnings



Contact:  

Joseph L. Boling, Chairman & CEO

540-687-6377 or

ceo@middleburgbank.com


Alice P. Frazier, EVP & COO

540-687-4801 or

coo@middleburgbank.com


Kate J. Chappell, SVP & CFO

540-687-4816 or

cfo@middleburgbank.com

 

MIDDLEBURG, VIRGINIA (October 23, 2006) – Middleburg Financial Corporation (NASDAQ – MBRG)

reported net income of $2.3 million, or $0.52 per diluted share, for the quarter ended September 30, 2006.  This represents an increase of 11.0% or $234,000 from the $2.1 million, or $0.54 per diluted share, for quarter ended June 30, 2006. Much of this increase resulted from fewer operating expenses incurred during the quarter.  When compared to the quarter ended September 30, 2005, net income for the quarter ended September 30, 2006 decreased by 3.0% or $73,000.  Much of this decrease resulted from decreased earnings from mortgage operations.  


Total consolidated assets were $772.6 million at September 30, 2006.  Increased funding costs continue to negatively impact the net interest margin, bringing it to 3.93% for the quarter ended September 30, 2006 from 3.96% for the quarter ended June 30, 2006 and 4.05% for the quarter ended September 30, 2005. However, cost savings during the third quarter 2006 have helped to improve the Company’s return on average assets and its efficiency ratio. Return on average assets was 1.21% for the quarter ended September 30, 2006 compared to 1.11% for the quarter ended June 30, 2006.  Return on average assets was 1.27% for the quarter ended September 30, 2005.  


The Company’s efficiency ratio was 60.42% for the quarter ended September 30, 2006 compared to 63.71% and 60.12% for the quarters ended June 30, 2006 and September 30, 2005, respectively. See the “Key Statistics” table toward the end of this press release for a discussion of the calculation of the efficiency ratio, which is not a measurement under accounting principles generally accepted in the United States.


As expected with both reduced earnings from mortgage operations and the issuance of additional equity in July 2006, the Company’s return on average equity considerably declined for the quarter ended September 30, 2006 when compared to the quarters ended June 30, 2006 and September 30, 2005.  Return on average equity was 12.47% for the quarter ended September 30, 2006 compared to 15.29% for the quarter ended June 30, 2006.  Return on average equity was 16.92% for the quarter ended September 30, 2005.


Net income for the nine months ended September 30, 2006 increased 16.8% to $6.5 million, or $1.58 per diluted share, from $5.5 million, or $1.42 per diluted share, for the same time period in 2005.  The net interest margin for the nine months ended September 30, 2006 decreased 18 basis points to 3.98% from 4.16% for the nine months ended September 30, 2005.  The return on average assets was 1.14% and 1.11% for the nine months ended September 30, 2006 and 2005, respectively.  The return on average equity was 14.09% and 14.07% for the nine months ended September 30, 2006 and 2005, respectively.  The efficiency ratios for the nine months ended September 30, 2006 and 2005 were 62.02% and 62.05%, respectively.





The components of net income per diluted share are summarized below:


 

For the Three Months Ended

 

For the Nine Months  Ended

 

September 30,

 

September 30,

 

2006

 

2005

 

2006

 

2005

Core Banking

$              0.45 

 

$            0.47 

 

$            1.38 

 

$            1.11 

Mortgage

 0.05 

 

0.12 

 

 0.13 

 

0.22 

Wealth Management

0.02 

 

 0.02 

 

0.07 

 

 0.09 

 

$              0.52 

 

$            0.62 

 

$            1.58 

 

$            1.42 



Earnings from core banking operations increased 24.9% to $1.38 per diluted share when comparing the nine months ended September 30, 2006 to September 30, 2005.  The increase in earnings year-to-date from core banking operations resulted from increases in interest income driven by the Company’s record 2005 loan growth.  However, earnings from core banking operations have been negatively impacted during 2006 by the Company’s reduced loan production and the compression of the net interest margin.  Considering the current interest rate and competitive market environment, the Company has been diligent about maintaining its credit quality and thereby cautious about the growth it has added to the loan portfolio.  


Earnings from mortgage operations of the Company decreased 43.0% from $0.22 per diluted share for the nine months ended September 30, 2005 to $0.13 per diluted share for the nine months ended September 30, 2006.  Although overall production has declined for Southern Trust Mortgage, LLC (STM), some of this decrease was attributed to narrowed margins resulting from shifts in the mix of retail and wholesale loan volume.  Earnings from wealth management operations declined 22.5% to $0.07 per diluted share for the nine months ended September 30, 2006 when compared to $0.09 per diluted share for the same time period in 2005.  Earnings from wealth management operations consists of net income of the Middleburg Investment Group, the non-bank subsidiary of the Company that generates revenues from trust and investment advisory activities through Middleburg Trust Company (MTC), a wholly owned trust subsidiary, Middleburg Investment Advisors, Inc. (MIA), a wholly owned registered investment advisor focused on fixed income investments, and Middleburg Bank Investment Sales, which is a division of Middleburg Bank. Much of the 22.5% decrease in net earnings was related to the decrease in net income generated by Middleburg Bank Investment Sales. Middleburg Bank Investment Sales net income decreased 64.7% when comparing the nine months ended September 30, 2005 to September 30, 2006 due to decreased sales resulting from fewer financial consultants employed during the nine months ended September 30, 2006.  Additionally, the resignation of a top producer in July 2006 heavily impacted the production for the quarter ended September 30, 2006. The Company is in the process of recruiting additional financial consultants.  


Net Interest Income and Net Interest Margin


The net interest margin declined from 4.16% for the nine months ended September 30, 2005 to 3.98% for the same time period in 2006. The decline in the net interest margin was mostly attributed to the steady rise in interest rates on deposits and borrowings to fund the earning asset growth.  


The Company’s net interest margin is not a measurement under accounting principles generally accepted in the United States, but it is a common measure used by the financial services industry to determine how profitably earning assets are funded. The Company’s 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%. Details on the calculation of the net interest margin are included in footnote (1) following the “Key Statistics” table below.


Net interest income increased 6.8% when comparing the quarter ended September 30, 2006 to the same time period in 2005. Net interest income increased 11.2% from $18.1 million for the nine months ended September 30, 2005 to $20.1 million for the nine months ended September 30, 2006. Interest income increased 29.4% while interest expense increased 71.0% when comparing the nine months ended September 30, 2006 to the same time period in 2005. The significant increase in interest expense resulted from both the increase in the average amount of short and long term funding from the nine months ended September 30, 2005 to the same period in 2006 and the 200 basis point increase in the Federal Funds rate and the 100 plus basis point increase in the three month LIBOR rate during that same period.  


Interest income from loans increased $2.1 million or 26.3% when comparing the quarter ended September 30, 2006 to the same time period in 2005.  Interest income from loans increased $7.7 million or 37.8% when comparing the nine months ended September 30, 2006 to the same time period in September 30, 2005.  While the yield on the loan portfolio increased by 59 basis points from September 30, 2005 to September 30, 2006, the majority of the increase in interest income from loans was attributable to the increased volume of the loan portfolio.  Average net loans increased $76.2 million from the nine months ended September 30, 2005 to the nine months ended September 30, 2006.  Interest income from the investment portfolio decreased $95,000 from the nine months ended September 30, 2005 to the same period in 2006 while the tax equivalent yield on the investment portfolio increased 50 basis points over that same time period. The average balance of the investment portfolio decreased $19.3 million or 11.6% from the nine months ended September 30, 2005 to the nine months ended September 30, 2006.

    

With large pay downs of short term funding afforded by the proceeds received in July 2006 from the Company’s common stock offering,  the Company’s near term exposure to a rising rate environment has been reduced and the balance sheet shows a more asset sensitive profile.   The expected decrease in net interest income could be approximately 1.17% or $27,000 in a 12-month period of rising rates of 200 basis points, based on modeling results at August 31, 2006.  


Non Interest Income


Non interest income decreased $688,000 or 23.7% when comparing the quarter ended September 30, 2006 to the same time period in 2005.  Non interest income decreased $585,000 or 8.2% when comparing the nine months ended September 30, 2006 to the same time period in 2005.  These decreases result from both a decrease in earnings from STM and fewer gains on sales of investment securities.  


Trust and investment advisory fees earned by MTC and MIA increased 0.3% or $3,000 when comparing the quarter ended September 30, 2006 to the same time period in 2005 and 5.5% or $158,000 when comparing the nine months ended September 30, 2006 to the same time period in 2005.  Trust and investment advisory fees are based primarily upon the market value of the accounts under administration/management.  Total consolidated assets under administration by MTC and MIA remained unchanged at $1.1 billion at September 30, 2005 and 2006.  


Service charges on deposits increased 1.5% from the quarter ended September 30, 2005 to the same time period in 2006.  Service charges on deposits increased $79,000 or 6.1% to $1.4 million for the nine months ended September 30, 2006, compared to $1.3 million for the same time period in 2005.  In particular, ATM and Visa check card fees have increased approximately $56,000 for the nine months ended September 30, 2006 when compared to the same period in 2005.




Investment sales fees decreased 30.8% or $45,000 from the quarter ended September 30, 2005 to the same time period in 2006.   Investment sales fees decreased 10.1% to $462,000 for the nine months ended September 30, 2006, compared to $513,000 for the same time period in 2005.  During July 2006, one of Middleburg Investment Sales’ top producers resigned from the company.  Middleburg Bank owns an interest in BI Investments Group, LLC (BI), which is a consortium of 32 community banks primarily based in Virginia.  This ownership interest allows the Company to use BI as its full-service broker-dealer.


Equity in earnings from affiliate, which reflects the 41.8% ownership interest in STM, decreased 49.1% or $346,000 from the quarter ended September 30, 2005 to the same time period in 2006.  STM closed $238.9 million in loans for the quarter ended September 30, 2006 with 58.5% of its production attributable to purchase money financings.  For the quarter ended September 30, 2005, STM closed $304.5 million in loans with 56.2% of its production attributable to purchase money financings.   Equity in earnings from affiliate decreased 39.7% or $520,000 from $1.3 million for the nine months ended September 30, 2005 to $789,000 for the same time period in 2006.  STM closed $681.4 million in loans for the nine months ended September 30, 2006 with 61.7% of its production attributable to purchase money financings.  For the nine months ended September 30, 2005, STM closed $801.2 million in loans with 63.0% of its production attributable to purchase money financings.  STM’s 2006 production levels have been negatively impacted by the tightening of the housing market and the impact that the increase in mortgage rates has had on the volume of refinance loans. Additionally, narrowed margins from the shift in production mix has negatively impacted its 2006 earnings.


Income earned from the Bank’s $10.8 million investment in Bank Owned Life Insurance (BOLI) contributed $111,000 and $122,000 for the quarters ended September 30, 2006 and 2005, respectively.  Income earned from BOLI contributed $324,000 to total other income for the nine months ended September 30, 2006 and $354,000 for the same time period in 2005.  The Company purchased BOLI in 2004 to help subsidize increasing employee benefit costs and expenses related to the restructure of its supplemental retirement plans.  


Other service charges, including fees from loans and other service fees, decreased $20,000 or 12.7% from the quarter ended September 30, 2005 to the same time period in 2006.   This decrease was driven mostly by reduced loan processing fees resulting from lower loan production levels during the third quarter of 2006. Other service charges increased $52,000 or 13.1% from the nine months ended September 30, 2005 to the same time period in 2006.  The increase was mostly attributed to the increase related to both additional safe deposit boxes that became available for rent and an increase in the safe deposit box rental fees in mid-year 2005.


Non Interest Expense


Non interest expense increased $30,000 or 0.5% from the quarter ended September 30, 2005 to the same time period in 2006.  Non interest expense increased $1.0 million for the nine months ended September 30, 2006 when compared to the same time period in 2005.  Salary and employee benefit expense increased 4.4% or $141,000 for the quarter ended September 30, 2006 when compared to the same time period in 2005. This increase results mostly from increases in the cost of health insurance. Salary and employee benefit expense increased 6.9% or $634,000 from the nine months ended September 30, 2005 to the same time period in 2006.  Mid year 2005, two experienced commercial lenders were hired to support business development efforts related to the Warrenton financial service center, which opened in October 2005. Additionally, various retail staff positions were added to the Company’s payroll in efforts to prepare for opening of the Warrenton facility.  $245,000 of the $634,000 increase in salary and employee benefit expense relates to the Company’s Warrenton financial service center.  


Net occupancy and equipment expense increased $37,000 or 5.3% when comparing the quarter ended September 30, 2005 to the quarter ended September 30, 2006.  This increase is driven mostly by the additional depreciation expense related to the Warrenton financial service center, which opened in October 2005. Net occupancy and equipment expense increased $191,000 or 9.2% to $2.3 million for the nine months ended



September 30, 2006 compared to $2.1 million for the same time period in 2005. The Company’s Warrenton location accounted for $157,000 to the net increase in occupancy expenses, due mostly to additional depreciation costs related to that facility.  


Other taxes, which is comprised of mostly bank franchise tax, increased 7.6% or $9,000 from the quarter ended September 30, 2005 to the same time period in 2006.  Other taxes increased 7.9% to $375,000 for the nine months ended September 30, 2006.  Computer operations expense increased $34,000 or 15.5% from the quarter ended September 30, 2005  to the quarter ended September 30, 2006.  Computer operations expense increased $70,000 or 10.7% from the nine months ended September 30, 2005 to the same time period in 2006.  These increases are related to increased  maintenance costs of in-house core operating and support systems resulting mostly from the Company’s growth.  Additional maintenance costs have also been incurred with coverage of the Company’s recently installed customer relationship management software.


Other operating expenses decreased $191,000 or 14.9% when comparing the quarter ended September 30, 2006 to the same time period in 2005.   Other operating expenses decreased 2.0% or $62,000 from $3.1 million for the nine months ended September 30, 2005 to $3.0 million for the same time period in 2006. The decreases resulted from decreases in various other expense categories including advisory, legal, educational, and travel.


Total Consolidated Assets


Total assets increased 6.8% to $772.6 million at September 30, 2006 from $723.3 million at September 30, 2005.  Total loans, net of allowance for loan losses, increased 13.2% or $64.9 million to $557.8 million at September 30, 2006 from $492.9 million at September 30, 2005.  Considering the current interest rate and competitive market environment, the Company has been diligent about maintaining its credit quality and thereby cautious about the growth it has added to the loan portfolio.  Additional staff, a solid local economy, the relationship with STM, and success of the business model, which focuses on high quality financial solutions to clients and increasing client introductions across business lines, are all believed to have contributed to the strong loan growth experienced.  


At September 30, 2006, there were no non performing loans, representing a decrease of $92,000 from September 30, 2005. Total loans past due 90 days or more were less than $1,000 at September 30, 2006  and declined slightly from the $1,000 at September 30, 2005. The loan loss provision was $418,000 for the nine months ended September 30, 2006.  The allowance for loan losses was $5.5 million or 0.98% of total loans outstanding at September 30, 2006.  Net charge offs were $48,000 for the nine months ended September 30, 2006, compared to net charge offs of $6,000 for the same time period in 2005. Based upon internal analysis by the Company’s credit administration department, which factors, among other things, the credit quality of the portfolio, the allowance for loan losses was deemed adequate at 0.98% of total loans outstanding.  


The investment portfolio decreased $13.1 million or 8.3% to $144.5 million at September 30, 2006 compared to $157.6 million at September 30, 2005.  During 2005 and 2006, management elected to utilize cash received from principal pay downs, maturities and calls in its investment portfolio to fund loan growth rather than re-invest into the investment portfolio.  This strategy decreased the size of the investment portfolio. In anticipation of rising interest rates, the Company has also held to an investment strategy that focuses on keeping the portfolio relatively short by purchasing securities with weighted average lives that typically do not exceed three years.  


Deposits and Other Borrowings


Total deposits, which includes brokered deposits, increased 7.7% to $560.3 million at September  30, 2006 from $520.1 million at September 30, 2005.  Total retail deposits, which excludes brokered deposits, increased 5.7% from $506.2 million at September 30, 2005 to $535.0 million at September 30, 2006. At September 30, 2006,



$25.2 million of the brokered certificates remained outstanding.  The Company had $13.9 million in brokered certificates of deposits at September 30, 2005.  


Securities sold under agreements to repurchase with commercial checking account clients decreased by $9.2 million or 22.0% from September 30, 2005 to $32.6 million at September 30, 2006. Federal Home Loan Bank advances and overnight borrowings decreased $6.4 million or 7.3% to $81.7 million at September 30, 2006 from $88.1 million at September 30, 2005.  During the third quarter of 2006, FHLB overnight borrowings were decreased with a portion of the proceeds received by the Company from its common stock issuance.   


Equity


In July 2006, the Company issued 676,552 shares of its common stock in an underwritten public offering, including the exercise of the underwriter’s over-allotment option.  The public price of $31.00 per share, less the underwriters’ commissions and expenses of the offering, resulted in net proceeds of $19.7 million to the Company.  The Company used the proceeds to increase its equity and to provide additional equity capital to the Bank to support the growth of operations.


Stockholders’ equity increased 44.9% from $53.6 million at September 30, 2005 to $77.6 million at September 30, 2006.   The book value of the Company at September 30, 2006 was $17.22 per common share.  Total common shares outstanding were 4,505,605 at September 30, 2006.


Joseph L. Boling, Chairman and CEO stated, “We are pleased with our performance given both the pause in the real estate market and the flat yield curve.  The capital we raised combined with our business model will allow us to continue our measured growth in this outstanding market.”


On September 20, 2006, the board of directors declared a $0.19 per common share cash dividend for shareholders of record as of  September 27, 2006 and payable on October 20, 2006.  


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, 2005, and other filings with the Securities and Exchange Commission.  


Middleburg Financial Corporation is headquartered in Middleburg, Virginia and has two wholly owned subsidiaries, Middleburg Bank and Middleburg Investment Group, Inc.  Middleburg Investment Group owns Middleburg Trust Company and Middleburg Investment Advisors, Inc.  Middleburg Bank serves Loudoun, Fairfax, and Fauquier Counties in Virginia with seven financial service centers.  Middleburg Trust Company is headquartered in Richmond, Virginia with a branch office in Middleburg. Middleburg Investment Advisors, Inc. is a SEC registered investment advisor located in Alexandria, Virginia.  








MIDDLEBURG FINANCIAL CORPORATION

 

 

 

SUMMARY INCOME STATEMENT

 

 

 

( Unaudited, dollars in thousands)

 

 

 

 

 

 

 

 

 

 

For the Nine Months

 

 

Ended September 30,

 

 

2006

 

2005

 

 

 

 

 

INTEREST INCOME

 

 

 

 

Interest and fees on loans

 $       28,217 

 

 $       20,471 

 

Interest on investment securities

            5,431 

 

            5,526 

 

Interest on short term investments

                  - 

 

                 - 

 

 

 

 

 

TOTAL INTEREST INCOME

 $       33,648 

 

 $       25,997 

 

 

 

 

 

INTEREST EXPENSE

 

 

 

 

Interest on deposits

 $         8,320 

 

 $         4,298 

 

Interest on borrowings

            5,214 

 

            3,616 

 

 

 

 

 

TOTAL INTEREST EXPENSE

 $       13,534 

 

 $         7,915 

 

 

 

 

 

NET INTEREST INCOME

 $       20,113 

 

 $       18,082 

 

 

 

 

 

PROVISION FOR LOAN LOSSES

               418 

 

            1,458 

 

 

 

 

 

NET INTEREST INCOME AFTER PROVISION

 

 

 

 

FOR LOAN LOSSES

 $       19,695 

 

 $       16,624 

 

 

 

 

 

NON INTEREST INCOME

 

 

 

 

Trust and investment advisory fee income

 $         3,060 

 

 $         2,902 

 

Service charges on deposits

            1,381 

 

            1,302 

 

Net gains on securities available for sale

                   1 

 

               252 

 

Commissions on investment sales

               462 

 

               513 

 

Equity in earnings from affiliate

               789 

 

            1,309 

 

Bank owned life insurance

               324 

 

               354 

 

Other service charges, commissions and fees

               452 

 

               400 

 

Other operating income

                 87 

 

               109 

 

 

 

 

 

TOTAL NON INTEREST INCOME

 $         6,556 

 

 $         7,141 

 

 

 

 

 

NON INTEREST EXPENSE

 

 

 

 

Salaries and employee benefits

 $       10,195 

 

 $         9,510 

 

Net occupancy expense of premises

            2,274 

 

            2,083 

 

Other taxes

               375 

 

               347 

 

Computer operations

               726 

 

               655 

 

Other operating expenses

            3,435 

 

            3,399 

 

 

 

 

 

TOTAL NON INTEREST EXPENSE

 $       17,004 

 

 $       15,995 

 

 

 

 

 

INCOME BEFORE TAXES

 $         9,248 

 

 $         7,771 

 

Income tax expense

            2,762 

 

            2,216 

 

 

 

 

 

NET INCOME

 $         6,486 

 

 $         5,555 













MIDDLEBURG FINANCIAL CORPORATION

 

 

 

 

 

 

 

 

 

 

SUMMARY INCOME STATEMENT

 

 

 

 

 

 

 

 

 

 

( Unaudited, dollars in thousands)

 

For the Three Months Ended

 

 

 

3Q06

 

2Q06

 

1Q06

 

4Q05

 

3Q05

 

 

 

 

 

 

 

 

 

 

 

 

INTEREST INCOME

 

 

 

 

 

 

 

 

 

 

 

Interest and fees on loans

 

 $      9,843 

 

 $      9,508 

 

 $      8,866 

 

 $      8,478 

 

 $      7,793 

 

Interest on investment securities

 

         1,850 

 

         1,794 

 

         1,787 

 

         1,737 

 

         1,754 

 

Interest on short term investments

 

               - 

 

               - 

 

               - 

 

               - 

 

                5 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL INTEREST INCOME

 

 $    11,692 

 

 $    11,302 

 

 $    10,653 

 

 $    10,215 

 

 $      9,552 

 

 

 

 

 

 

 

 

 

 

 

 

INTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

 

Interest on deposits

 

 $      3,154 

 

 $      2,641 

 

 $      2,525 

 

 $      2,226 

 

 $      1,943 

 

Interest on borrowings

 

         1,753 

 

         1,944 

 

         1,517 

 

         1,455 

 

         1,257 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL INTEREST EXPENSE

 

 $      4,907 

 

 $      4,585 

 

 $      4,042 

 

 $      3,681 

 

 $      3,200 

 

 

 

 

 

 

 

 

 

 

 

 

NET INTEREST INCOME

 

 $      6,785 

 

 $      6,717 

 

 $      6,611 

 

 $      6,534 

 

 $      6,352 

 

 

 

 

 

 

 

 

 

 

 

 

PROVISION FOR LOAN LOSSES

 

              55 

 

            113 

 

            250 

 

            286 

 

            317 

 

 

 

 

 

 

 

 

 

 

 

 

NET INTEREST INCOME AFTER PROVISION

 

 

 

 

 

 

 

 

 

 

 

FOR LOAN LOSSES

 

 $      6,731 

 

 $      6,604 

 

 $      6,361 

 

 $      6,248 

 

 $      6,035 

 

 

 

 

 

 

 

 

 

 

 

 

NON INTEREST INCOME

 

 

 

 

 

 

 

 

 

 

 

Trust and investment advisory fee income

 

 $         985 

 

 $      1,004 

 

 $      1,071 

 

 $      1,038 

 

 $         982 

 

Service charges on deposits

 

            471 

 

            474 

 

            436 

 

            481 

 

            464 

 

Net gains on securities available for sale

 

               - 

 

                1 

 

               - 

 

           (176)

 

            273 

 

Commissions on investment sales

 

            102 

 

            167 

 

            193 

 

            162 

 

            147 

 

Equity in earnings from affiliate

 

            358 

 

            328 

 

            103 

 

            220 

 

            704 

 

Bank owned life insurance

 

            111 

 

            109 

 

            104 

 

            104 

 

            122 

 

Other service charges, commissions and fees

 

            140 

 

            153 

 

            160 

 

            136 

 

            160 

 

Other operating income

 

              46 

 

              16 

 

              24 

 

             (85)

 

              49 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL NON INTEREST INCOME

 

 $      2,213 

 

 $      2,252 

 

 $      2,091 

 

 $      1,880 

 

 $      2,901 

 

 

 

 

 

 

 

 

 

 

 

 

NON INTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 $      3,371 

 

 $      3,347 

 

 $      3,477 

 

 $      3,610 

 

 $      3,230 

 

Net occupancy expense of premises

 

            743 

 

            790 

 

            741 

 

            715 

 

            706 

 

Other taxes

 

            125 

 

            125 

 

            125 

 

            118 

 

            116 

 

Computer operations

 

            257 

 

            235 

 

            233 

 

            210 

 

            223 

 

Other operating expenses

 

         1,093 

 

         1,372 

 

            970 

 

         1,273 

 

         1,284 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL NON INTEREST EXPENSE

 

 $      5,589 

 

 $      5,869 

 

 $      5,546 

 

 $      5,926 

 

 $      5,559 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME BEFORE TAXES

 

 $      3,354 

 

 $      2,987 

 

 $      2,906 

 

 $      2,202 

 

 $      3,377 

 

Income tax expense

 

         1,019 

 

            885 

 

            858 

 

            583 

 

            968 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME

 

 

 $      2,336 

 

 $      2,102 

 

 $      2,048 

 

 $      1,619 

 

 $      2,409 











MIDDLEBURG FINANCIAL CORPORATION

 

 

 

 

 

 

 

 

 

BALANCE SHEET

 

 

 

 

 

 

 

 

 

(dollars in thousands)

Unaudited

 

Unaudited

 

Unaudited

 

Audited

 

Unaudited

 

9/30/2006

 

6/30/2006

 

3/31/2006

 

12/31/2005

 

9/30/2005

 

 

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

 

   Cash and due from banks

 $        14,624 

 

 $         17,551 

 

 $        13,813 

 

 $          15,465 

 

 $        19,606 

   Interest-bearing balances in banks

                273 

 

                 563 

 

                288 

 

                  160 

 

                191 

   Securities at fair value

         144,540 

 

          145,910 

 

         149,967 

 

           149,591 

 

         157,612 

   Loans, net of allowance for loan losses

         557,803 

 

          551,825 

 

         543,399 

 

           520,511 

 

         492,900 

   Bank premises and equipment, net

           18,214 

 

            18,402 

 

           18,638 

 

             18,656 

 

           17,861 

   Other assets

           37,099 

 

            36,772 

 

           35,912 

 

             35,528 

 

           35,130 

  

 

 

 

 

 

 

 

 

 

         Total assets

 $      772,553 

 

 $       771,024 

 

 $      762,017 

 

 $        739,911 

 

 $      723,300 

 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders' Equity:

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

   Deposits:

 

 

 

 

 

 

 

 

 

      Non-interest bearing demand deposits

 $      123,508 

 

 $       140,019 

 

 $      121,809 

 

 $        128,641 

 

 $      128,697 

      Savings and interest-bearing demand deposits

         249,246 

 

          256,182 

 

         287,881 

 

           273,570 

 

         251,789 

      Time deposits

         187,235 

 

          165,367 

 

         136,138 

 

           149,221 

 

         139,579 

           Total deposits

 $      559,989 

 

 $       561,568 

 

 $      545,828 

 

 $        551,432 

 

 $      520,065 

 

 

 

 

 

 

 

 

 

 

   Federal funds purchased

                   - 

 

                    - 

 

                   - 

 

                     - 

 

             1,050 

   Securities sold under agreements to repurchase

           32,906 

 

            36,939 

 

           34,902 

 

             34,317 

 

           41,818 

   Federal Home Loan Bank advances

           26,700 

 

            44,000 

 

           51,275 

 

             24,100 

 

           30,600 

   Long-term debt

           55,000 

 

            55,000 

 

           55,000 

 

             57,500 

 

           57,500 

   Trust preferred capital notes

           15,465 

 

            15,465 

 

           15,465 

 

             15,465 

 

           15,465 

   Other liabilities

             4,894 

 

              3,372 

 

             5,014 

 

               3,621 

 

             3,232 

   Commitment and contingent liabilities

                   - 

 

                    - 

 

                   - 

 

                     - 

 

                   - 

          Total liabilities

 $      694,954 

 

 $       716,344 

 

 $      707,484 

 

 $        686,435 

 

 $      669,730 

 

 

 

 

 

 

 

 

 

 

Shareholders' Equity:

 

 

 

 

 

 

 

 

 

  Common stock, par value $2.50 per share

 $        11,264 

 

 $           9,523 

 

 $          9,523 

 

 $            9,515 

 

 $          9,515 

  Capital surplus

           23,667 

 

              5,459 

 

             5,459 

 

               5,431 

 

             5,376 

  Retained earnings

           43,463 

 

            41,984 

 

           40,605 

 

             39,281 

 

           38,385 

  Accumulated other comprehensive income (loss), net

              (796)

 

             (2,285)

 

           (1,054)

 

                (751)

 

                294 

           Total shareholders' equity

 $        77,598 

 

 $         54,681 

 

 $        54,533 

 

 $          53,476 

 

 $        53,570 

 

 

 

 

 

 

 

 

 

 

Total liabilities and shareholders' equity

 $      772,553 

 

 $       771,024 

 

 $      762,017 

 

 $        739,911 

 

 $      723,300 



















MIDDLEBURG FINANCIAL CORPORATION

 

 

 

 

 

 

 

 

 

 

KEY STATISTICS

 

For the Three Months Ended

 

 

 

3Q06

 

2Q06

 

1Q06

 

4Q05

 

3Q05

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income (dollars in thousands)

 

 $    2,336 

 

 $      2,102 

 

 $      2,048 

 

 $      1,619 

 

 $      2,409 

 

Earnings per share, basic

 

 $      0.53 

 

 $        0.55 

 

 $        0.54 

 

 $        0.43 

 

 $        0.63 

 

Earnings per share, diluted

 

 $      0.52 

 

 $        0.54 

 

 $        0.52 

 

 $        0.41 

 

 $        0.62 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average total assets

 

1.21%

 

1.11%

 

1.11%

 

0.89%

 

1.27%

 

Return on average total equity

 

12.47%

 

15.29%

 

15.17%

 

12.26%

 

16.92%

 

Dividend payout ratio

 

35.75%

 

34.43%

 

35.33%

 

44.19%

 

30.16%

 

Fee revenue as a percent of total revenue

 

15.91%

 

16.62%

 

16.41%

 

16.75%

 

21.58%

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin(1)

 

3.93%

 

3.96%

 

4.05%

 

3.99%

 

4.05%

 

Yield on average earning assets

 

6.69%

 

6.59%

 

6.45%

 

6.18%

 

6.03%

 

Yield on average interest-bearing liabilities

 

3.46%

 

3.21%

 

2.94%

 

2.68%

 

2.42%

 

Net interest spread

 

3.24%

 

3.38%

 

3.51%

 

3.50%

 

3.61%

 

Tax equivalent adjustment to net interest income (dollars in thousands)

 $       195 

 

 $         191 

 

 $         192 

 

 $         196 

 

 $         205 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest income to average assets

 

1.14%

 

1.18%

 

1.13%

 

1.11%

 

1.47%

 

Non-interest expense to average assets

 

2.89%

 

3.09%

 

2.93%

 

3.19%

 

3.11%

 

 

 

 

 

 

 

 

 

 

 

 

 

Efficiency ratio(2)

 

60.42%

 

63.71%

 

61.95%

 

65.49%

 

60.12%



(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%. For the quarters ended September 30, 2006 and 2005, net interest income on a tax equivalent basis was $7.0 million and $6.6 million, respectively.    See the table below for a reconciliation of net interest income to tax equivalent net interest income. 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 a fair amount of non taxable interest income due to the mix of securities in its investment security portfolio, net interest income for the ratio is calculated on a tax equivalent basis as described above.


(2)

The efficiency ratio is calculated by dividing non interest expense 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 is 34%. For the quarters ended September 30, 2006 and 2005, tax equivalent net interest income was $7.0 million and $6.6 million, respectively.  See the table below for a reconciliation of net interest income to tax equivalent net interest income. Total non interest income, excluding gains and losses on the investment portfolio, for the quarters ended September 30, 2006 and 2005, was $2.2 million and $2.6 million, respectively.  The Company calculates this ratio in order to evaluate its overhead structure or how effectively it is operating.  An increase in the ratio from period to period indicates the Company is losing a larger percentage of its income to expenses.  The Company believes that the efficiency ratio is a reasonable measure of profitability.






















MIDDLEBURG FINANCIAL CORPORATION

 

 

 

 

 

 

 

 

 

 

SELECTED FINANCIAL DATA BY QUARTER

 

 

 

 

 

 

 

 

 

 

 

 

 

3Q06

 

2Q06

 

1Q06

 

4Q05

 

3Q05

BALANCE SHEET RATIOS

 

 

 

 

 

 

 

 

 

 

 

Loans to deposits

 

100.59%

 

99.24%

 

100.54%

 

95.31%

 

95.53%

 

Average interest-earning assets to

 

 

 

 

 

 

 

 

 

 

 

    average-interest bearing liabilities

 

123.22%

 

122.27%

 

122.35%

 

123.58%

 

123.94%

 

 

 

 

 

 

 

 

 

 

 

 

PER SHARE DATA

 

 

 

 

 

 

 

 

 

 

 

Dividends

 

 $             0.19 

 

 $             0.19 

 

 $             0.19 

 

 $             0.19 

 

 $            0.19 

 

Book value

 

 $           17.22 

 

 $           14.36 

 

 $           14.32 

 

 $           14.07 

 

 $          14.09 

 

Tangible book value

 

 $           15.97 

 

 $           12.85 

 

 $           12.79 

 

 $           12.50 

 

 $          12.51 

 

 

 

 

 

 

 

 

 

 

 

 

SHARE PRICE DATA

 

 

 

 

 

 

 

 

 

 

 

Closing price

 

 $           34.05 

 

 $           30.83 

 

 $           35.00 

 

 $           30.75 

 

 $          34.35 

 

Diluted earnings multiple

 

                1.80 

 

                2.31 

 

                2.51 

 

                2.24 

 

               2.50 

 

Book value multiple

 

                1.98 

 

                2.15 

 

                2.44 

 

                2.19 

 

               2.44 

 

 

 

 

 

 

 

 

 

 

 

 

COMMON STOCK DATA

 

 

 

 

 

 

 

 

 

 

 

Outstanding shares at end of period

 

       4,505,605 

 

       3,809,053 

 

       3,809,053 

 

       3,806,053 

 

      3,806,053 

 

Weighted average shares outstanding

 

       4,394,724 

 

       3,809,053 

 

       3,807,786 

 

       3,803,075 

 

      3,802,082 

 

Weighted average shares outstanding, diluted

 

       4,482,970 

 

       3,899,198 

 

       3,904,965 

 

       3,906,443 

 

      3,906,146 

 

 

 

 

 

 

 

 

 

 

 

 

CAPITAL RATIOS

 

 

 

 

 

 

 

 

 

 

 

Total equity to total assets

 

10.04%

 

7.09%

 

7.16%

 

7.23%

 

7.41%

 

Total risk based capital ratio

 

15.20%

 

11.16%

 

11.70%

 

11.79%

 

12.31%

 

Tier 1 risk based capital ratio

 

14.30%

 

10.27%

 

10.80%

 

10.89%

 

11.42%

 

Leverage ratio

 

11.52%

 

8.29%

 

8.76%

 

8.60%

 

8.93%

 

 

 

 

 

 

 

 

 

 

 

 

CREDIT QUALITY

 

 

 

 

 

 

 

 

 

 

 

Net charge-offs to average loans

 

0.00%

 

0.01%

 

0.00%

 

0.00%

 

0.00%

 

Total non-performing loans to total loans

 

0.00%

 

0.00%

 

0.00%

 

0.02%

 

0.02%

 

Total non-performing assets to total assets

 

 

 

 

 

 

 

 

 

 

 

Non-accrual loans to:

 

 

 

 

 

 

 

 

 

 

 

      total loans

 

0.00%

 

0.05%

 

0.00%

 

0.02%

 

0.02%

 

      total assets

 

0.00%

 

0.03%

 

0.00%

 

0.01%

 

0.01%

 

Allowance for loan losses to:

 

 

 

 

 

 

 

 

 

 

 

      total loans

 

0.98%

 

0.98%

 

0.98%

 

0.98%

 

0.98%

 

     non-performing loans

 

0.00%

 

2130.08%

 

33562.50%

 

4321.85%

 

5236.56%

 

     non-accrual loans

 

0.00%

 

2138.43%

 

48818.18%

 

5844.32%

 

5293.48%

 

 

 

 

 

 

 

 

 

 

 

 

NON-PERFORMING ASSETS:

 

 

 

 

 

 

 

 

 

 

(dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

Loans delinquent over 90 days

 

 $                 - 

 

 $                  1 

 

 $                  5 

 

 $                31 

 

 $                 1 

 

Non-accrual loans    

 

                    - 

 

                 255 

 

                   11 

 

                   88 

 

                  92 

 

 

 

 

 

 

 

 

 

 

 

 

NET LOAN CHARGE-OFFS (RECOVERIES):

 

 

 

 

 

 

 

 

 

 

(dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

Loans charged off

 

 $                14 

 

 $                36 

 

 $                47 

 

 $                21 

 

 $               15 

 

(Recoveries)

 

                 (19)

 

                   (6)

 

                 (24)

 

                   (8)

 

                  (5)

 

Net charge-offs (recoveries)

 

                   (5)

 

                   30 

 

                   23 

 

                   13 

 

                  10 

 

 

 

 

 

 

 

 

 

 

 

 

PROVISION FOR LOAN LOSSES (dollars in thousands)

 

 $                55 

 

 $              113 

 

 $              250 

 

 $           1,744 

 

 $          1,458 

 

 

 

 

 

 

 

 

 

 

 

 

ALLOWANCE FOR LOAN LOSS SUMMARY

 

 

 

 

 

 

 

 

 

 

(dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

Balance at the beginning of period

 

 $           5,453 

 

 $           5,370 

 

 $           5,143 

 

 $           4,870 

 

 $          4,563 

 

Provision

 

                   55 

 

                 113 

 

                 250 

 

                 286 

 

                317 

 

Net charge-offs (recoveries)

 

                   (5)

 

                   30 

 

                   23 

 

                   13 

 

                  10 

 

Balance at the end of period

 

              5,513 

 

              5,453 

 

              5,370 

 

              5,143 

 

             4,870 





 

Average Balances, Income and Expenses, Yields and Rates

 

 Three Months Ended September 30,

 

 

 

2006

 

 

 

 

 

2005

 

 

 

 Average

 

 Income/

 

Yield/

 

 Average

 

 Income/

 

Yield/

 

 Balance

 

 Expense

 

Rate  (3)

 

 Balance

 

 Expense

 

Rate  (3)

 

 

 

 

 

                  (Dollars in thousands)

 

 

Assets :

 

 

 

 

 

 

 

 

 

 

 

Securities:

 

 

 

 

 

 

 

 

 

 

 

   Taxable

 $    113,922 

 

 $         1,455 

 

5.07%

 

 $    127,872 

 

 $         1,358 

 

4.21%

   Tax-exempt (1) (2)

         31,337 

 

               575 

 

7.28%

 

         32,591 

 

               600 

 

7.30%

       Total securities

 $    145,259 

 

 $         2,030 

 

5.54%

 

 $    160,463 

 

 $         1,958 

 

4.84%

Loans

 

 

 

 

 

 

 

 

 

 

 

   Taxable

 $    558,223 

 

 $         9,841 

 

6.99%

 

 $    481,191 

 

 $         7,791 

 

6.42%

   Tax-exempt  (1)

                89 

 

                   2 

 

8.92%

 

              113 

 

                   2 

 

7.02%

       Total loans

 $    558,312 

 

 $         9,843 

 

6.99%

 

 $    481,304 

 

 $         7,793 

 

6.42%

Federal funds sold

              738 

 

                 11 

 

5.91%

 

              558 

 

                   4 

 

2.84%

Interest on money market investments

                 - 

 

                 - 

 

- 

 

                 - 

 

                 - 

 

- 

Interest bearing deposits in

 

 

 

 

 

 

 

 

 

 

 

      other financial institutions

              329 

 

                   4 

 

4.82%

 

              129 

 

                   1 

 

3.08%

       Total earning assets

 $    704,638 

 

 $       11,888 

 

6.69%

 

 $    642,454 

 

 $         9,756 

 

6.02%

Less: allowances for credit losses

          (5,461)

 

 

 

 

 

         (4,670)

 

 

 

 

Total nonearning assets

         68,247 

 

 

 

 

 

         65,830 

 

 

 

 

Total assets

 $    767,424 

 

 

 

 

 

 $    703,614 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits:

 

 

 

 

 

 

 

 

 

 

 

    Checking

 $    133,169 

 

 $            794 

 

2.37%

 

 $      92,444 

 

 $            254 

 

1.09%

    Regular savings

         52,463 

 

               230 

 

1.74%

 

         54,301 

 

               212 

 

1.55%

    Money market savings

         64,398 

 

               157 

 

0.97%

 

         93,926 

 

               189 

 

0.80%

    Time deposits:

 

 

 

 

 

 

 

 

 

 

 

       $100,000 and over

       110,030 

 

            1,340 

 

4.83%

 

         82,016 

 

               683 

 

3.30%

       Under $100,000

         64,209 

 

               633 

 

3.91%

 

         75,765 

 

               604 

 

3.16%

       Total interest-bearing deposits

 $    424,269 

 

 $         3,154 

 

2.95%

 

 $    398,452 

 

 $         1,942 

 

1.93%

 

 

 

 

 

 

 

 

 

 

 

 

Federal Home Loan Bank Advances

         32,190 

 

               451 

 

5.56%

 

         30,637 

 

               298 

 

3.86%

Securities sold under agreements

 

 

 

 

 

 

 

 

 

 

 

    to repurchase

         35,290 

 

               390 

 

4.38%

 

         34,235 

 

               238 

 

2.76%

Long-term debt

         70,465 

 

               899 

 

5.06%

 

         60,356 

 

               706 

 

4.64%

Federal Funds Purchased

           1,046 

 

                 13 

 

4.93%

 

           1,004 

 

                 10 

 

3.95%

    Total interest-bearing liabilities

 $    563,260 

 

 $         4,907 

 

3.46%

 

 $    524,684 

 

 $         3,194 

 

2.42%

Non-interest bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

    Demand Deposits

       126,106 

 

 

 

 

 

       124,673 

 

 

 

 

    Other liabilities

           3,756 

 

 

 

 

 

         1,021 

 

 

 

 

Total liabilities

 $    693,122 

 

 

 

 

 

 $     650,378 

 

 

 

 

Shareholders' equity

         74,302 

 

 

 

 

 

         53,236 

 

 

 

 

Total liabilities and shareholders'equity

 $    767,424 

 

 

 

 

 

 $      703,614

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

 $         6,981 

 

 

 

 

 

 $         6,562 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate spread

 

 

 

 

3.24%

 

 

 

 

 

3.61%

Interest expense as a percent of

 

 

 

 

 

 

 

 

 

 

 

    average earning assets

 

 

 

 

2.76%

 

 

 

 

 

1.97%

Net interest margin

 

 

 

 

3.93%

 

 

 

 

 

4.05%

 

 

 

 

 

 

 

 

 

 

 

 

(1) Income and yields are reported on tax equivalent basis assuming a federal tax rate of 34%.

 

 

 

 

(2) Income and yields include dividends on preferred bonds which are 70% excludable for tax purposes.

 

 

 

(3) All yields and rates have been annualized on a 365 day year.

 

 

 

 

 

 

 

 






 

Average Balances, Income and Expenses, Yields and Rates

 

 Nine Months Ended September 30,

 

 

 

2006

 

 

 

 

 

2005

 

 

 

 Average

 

 Income/

 

Yield/

 

 Average

 

 Income/

 

Yield/

 

 Balance

 

 Expense

 

Rate  (3)

 

 Balance

 

 Expense

 

Rate  (3)

 

 

 

 

 

                    (Dollars in thousands)

 

 

Assets :

 

 

 

 

 

 

 

 

 

 

 

Securities:

 

 

 

 

 

 

 

 

 

 

 

   Taxable

 $    116,480 

 

 $         4,274 

 

4.91%

 

 $    133,584 

 

 $         4,299 

 

4.30%

   Tax-exempt (1) (2)

         30,900 

 

            1,699 

 

7.35%

 

         33,124 

 

            1,830 

 

7.39%

       Total securities

 $    147,380 

 

 $         5,973 

 

5.42%

 

 $    166,708 

 

 $         6,129 

 

4.92%

Loans

 

 

 

 

 

 

 

 

 

 

 

   Taxable

 $    546,830 

 

 $       28,213 

 

6.90%

 

 $    433,702 

 

 $       20,463 

 

6.31%

   Tax-exempt  (1)

                95 

 

                   6 

 

8.44%

 

              182 

 

                 11 

 

8.08%

       Total loans

 $    546,925 

 

 $       28,219 

 

6.90%

 

 $    433,884 

 

 $       20,474 

 

6.31%

Federal funds sold

              777 

 

                 28 

 

4.82%

 

              532 

 

                 11 

 

2.76%

Interest on money market investments

                 - 

 

                 - 

 

- 

 

                 - 

 

                 - 

 

- 

Interest bearing deposits in

 

 

 

 

 

 

 

 

 

 

 

      other financial institutions

              210 

 

                   8 

 

5.09%

 

              267 

 

                   5 

 

2.50%

       Total earning assets

 $    695,292 

 

 $       34,228 

 

6.58%

 

 $    601,391 

 

 $       26,619 

 

5.92%

Less: allowances for credit losses

          (5,337)

 

 

 

 

 

         (4,115)

 

 

 

 

Total nonearning assets

         68,428 

 

 

 

 

 

          63,695 

 

 

 

 

Total assets

 $    758,383 

 

 

 

 

 

 $   660,971 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits:

 

 

 

 

 

 

 

 

 

 

 

    Checking

 $    141,633 

 

 $         2,414 

 

2.28%

 

 $      85,800 

 

 $            531 

 

0.83%

    Regular savings

         55,893 

 

               713 

 

1.71%

 

         40,078 

 

               296 

 

0.99%

    Money market savings

         69,362 

 

               496 

 

0.96%

 

         91,794 

 

               442 

 

0.64%

    Time deposits:

 

 

 

 

 

 

 

 

 

 

 

       $100,000 and over

         89,805 

 

            2,968 

 

4.42%

 

         75,987 

 

            1,695 

 

2.98%

       Under $100,000

         62,241 

 

            1,730 

 

3.72%

 

         61,710 

 

            1,334 

 

2.89%

       Total interest-bearing deposits

 $    418,934 

 

 $         8,321 

 

2.66%

 

 $    355,369 

 

 $         4,298 

 

1.62%

 

 

 

 

 

 

 

 

 

 

 

 

Federal Home Loan Bank Advances

         37,119 

 

            1,452 

 

5.23%

 

         31,400 

 

               784 

 

3.34%

Securities sold under agreements

 

 

 

 

 

 

 

 

 

 

 

    to repurchase

         36,760 

 

            1,119 

 

4.07%

 

         33,696 

 

               619 

 

2.46%

Long-term debt

         70,483 

 

            2,607 

 

4.95%

 

         63,569 

 

            2,185 

 

4.60%

Federal Funds Purchased

              961 

 

                 36 

 

5.01%

 

           1,123 

 

                 28 

 

3.33%

    Total interest-bearing liabilities

 $    564,257 

 

 $       13,535 

 

3.21%

 

 $    485,157 

 

 $         7,914 

 

2.18%

Non-interest bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

    Demand Deposits

       128,933 

 

 

 

 

 

       121,052 

 

 

 

 

    Other liabilities

           3,633 

 

 

 

 

 

          2,376 

 

 

 

 

Total liabilities

 $    696,823 

 

 

 

 

 

 $     608,585 

 

 

 

 

Shareholders' equity

         61,560 

 

 

 

 

 

         52,386 

 

 

 

 

Total liabilities and   shareholders'equity

 $    758,383 

 

 

 

 

 

 $     660,971

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

 $       20,693 

 

 

 

 

 

 $       18,705 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate spread

 

 

 

 

3.37%

 

 

 

 

 

3.74%

Interest expense as a percent of

 

 

 

 

 

 

 

 

 

 

 

    average earning assets

 

 

 

 

2.60%

 

 

 

 

 

1.76%

Net interest margin

 

 

 

 

3.98%

 

 

 

 

 

4.16%

 

 

 

 

 

 

 

 

 

 

 

 

(1) Income and yields are reported on tax equivalent basis assuming a federal tax rate of 34%.

 

 

 

 

(2) Income and yields include dividends on preferred bonds which are 70% excludable for tax purposes.

 

 

 

(3) All yields and rates have been annualized on a 365 day year.

 

 

 

 

 

 

 

 






MIDDLEBURG FINANCIAL CORPORATION

 

 

 

 

 

 

 

 

 

RECONCILIATION OF NET INTEREST INCOME TO

 

 

 

 

 

 

 

 

 

TAX EQUIVALENT NET INTEREST INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AT PERIOD END

 

 

 

 

 

 

 

 

 

(dollars in thousands)

9/30/2006

 

6/30/2006

 

3/31/2006

 

12/31/2005

 

9/30/2005

GAAP measures:

 

 

 

 

 

 

 

 

 

  Interest Income - Loans

 $    28,217 

 

 $    18,374 

 

 $      8,867 

 

 $    28,949 

 

 $   20,471 

  Interest Income - Investments & Other

         5,431 

 

         3,581 

 

         1,786 

 

         7,263 

 

        5,526 

  Interest Expense - Deposits

         8,320 

 

         5,166 

 

         2,525 

 

         6,525 

 

        4,298 

  Interest Expense - Other Borrowings

         5,214 

 

         3,461 

 

         1,517 

 

         5,071 

 

        3,617 

Total Net Interest Income

 $    20,113 

 

 $    13,328 

 

 $      6,611 

 

 $    24,616 

 

 $   18,082 

Plus:

 

 

 

 

 

 

 

 

 

NON-GAAP measures:

 

 

 

 

 

 

 

 

 

  Tax Benefit Realized on Non- Taxable Interest Income - Loans

 $             1 

 

 $             1 

 

 $             1 

 

 $             5 

 

 $            8 

  Tax Benefit Realized on Non- Taxable Interest Income - Municipal Securities

            577 

 

            382 

 

            191 

 

            807 

 

           612 

  Tax Benefit Realized on Non- Taxable Interest Income - Corporate Securities

               - 

 

               - 

 

               - 

 

                8 

 

               4 

Total Tax Benefit Realized on Non- Taxable Interest Income  

 $         578 

 

 $         383 

 

 $         192 

 

 $         820 

 

 $        624 

 

 

 

 

 

 

 

 

 

 

Total Tax Equivalent Net Interest Income

 $    20,691 

 

 $    13,711 

 

 $      6,803 

 

 $    25,436 

 

 $   18,706 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FOR THE THREE MONTH PERIOD ENDED

 

 

 

 

 

 

 

 

 

(dollars in thousands)

9/30/2006 

 

6/30/2006 

 

3/31/2006 

 

12/31/2005 

 

9/30/2005 

GAAP measures:

 

 

 

 

 

 

 

 

 

  Interest Income - Loans

 $      9,843 

 

 $      9,507 

 

 $      8,867 

 

 $      8,478 

 

 $     7,793 

  Interest Income - Investments & Other

         1,850 

 

         1,795 

 

         1,786 

 

         1,737 

 

        1,759 

  Less: Interest Expense - Deposits

         3,154 

 

         2,641 

 

         2,525 

 

         2,226 

 

        1,942 

  Less: Interest Expense - Other Borrowings

         1,753 

 

         1,944 

 

         1,517 

 

         1,455 

 

        1,258 

Total Net Interest Income

 $      6,785 

 

 $      6,717 

 

 $      6,611 

 

 $      6,534 

 

 $     6,352 

Plus:

 

 

 

 

 

 

 

 

 

NON-GAAP measures:

 

 

 

 

 

 

 

 

 

  Tax Benefit Realized on Non- Taxable Interest Income - Loans

 $            - 

 

 $            - 

 

 $             1 

 

 $             1 

 

 $            1 

  Tax Benefit Realized on Non- Taxable Interest Income - Municipal Securities

            195 

 

            191 

 

            191 

 

            195 

 

           202 

  Tax Benefit Realized on Non- Taxable Interest Income - Corporate Securities

               - 

 

               - 

 

               - 

 

               - 

 

               2 

Total Tax Benefit Realized on Non- Taxable Interest Income  

 $         195 

 

 $         191 

 

 $         192 

 

 $         196 

 

 $        205 

 

 

 

 

 

 

 

 

 

 

Total Tax Equivalent Net Interest Income

 $      6,981 

 

 $      6,908 

 

 $      6,803 

 

 $      6,730 

 

 $     6,557