EX-99 2 ex99.htm

Exhibit 99.1


Middleburg Financial Corporation Announces 2007 Third Quarter Earnings

 

Contact:

Joseph L. Boling, Chairman & CEO

540-687-6377 or

 

 

ceo@middleburgbank.com

 

Gary R. Shook, President

540-687-4801 or

 

 

pres@middleburgbank.com

 

Kate J. Chappell, SVP & CFO

540-687-4816 or

 

 

cfo@middleburgbank.com

 

MIDDLEBURG, VIRGINIA (October 22, 2007) – Middleburg Financial Corporation (NASDAQ – MBRG)

reported asset growth of 8.7% since September 30, 2006, leading to total consolidated assets of $839.9 million at September 30, 2007. The net loan portfolio had an increase of 14.1% over the last 12 months, reaching $636.5 million at September 30, 2007. Net income was $5.9 million, or $1.29 per diluted share, for the nine months ended September 30, 2007. This represents a 9.0% decrease from $6.5 million, or $1.58 per diluted share, for the nine months ended September 30, 2006. For the three months ended September 30, 2007, net income was $1.9 million, or $0.41 per diluted share. This represents a decrease of 19.2% or $447,000 from $2.3 million, or $0.52 per diluted share, for the quarter ended September 30, 2006. These decreases resulted mostly from increased funding costs as well as decreased earnings from mortgage operations.

 

Return on average assets was 0.90% for the quarter ended September 30, 2007 compared to 1.21% for the quarter ended September 30, 2006. Return on average assets for the nine months ended September 30, 2007 and 2006 was 0.98% and 1.14%, respectively.

 

Return on average equity was 9.38% for the quarter ended September 30, 2007 compared to 12.47% for the quarter ended September 30, 2006. Return on average equity for the nine months ended September 30, 2007 and 2006 was 9.87% and 14.09%, respectively. In addition to the decline in net income, the return on average equity has been negatively impacted by the Company’s issuance of additional capital. 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 Middleburg Bank to support the growth of operations as it plans to open new financial service centers in the Virginia counties of Loudoun and Fauquier during 2008 and 2009.

 

 

 

 

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

 

 

For the Three Months Ended

 

September 30,

 

2007

 

2006

 

Net

 

Diluted Earnings

 

Net

 

Diluted Earnings

 

Income

 

Per Share

 

Income

 

Per Share

Core Banking

$ 1,675,037

 

$ 0.37

 

$ 2,026,533

 

$ 0.45

Mortgage

111,029

 

0.02

 

236,510

 

0.05

Wealth Management

102,215

 

0.02

 

72,568

 

0.02

 

$ 1,888,281

 

$ 0.41

 

$ 2,335,610

 

$ 0.52

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Nine Months Ended

 

September 30,

 

2007

 

2006

 

Net

 

Diluted Earnings

 

Net

 

Diluted Earnings

 

Income

 

Per Share

 

Income

 

Per Share

Core Banking

$ 5,249,016

 

$ 1.14

 

$ 5,666,555

 

$ 1.38

Mortgage

312,124

 

0.07

 

520,776

 

0.13

Wealth Management

338,198

 

0.08

 

298,351

 

0.07

 

$ 5,899,338

 

$ 1.29

 

$ 6,485,682

 

$ 1.58

 

 

Core banking operations have been impacted by a declining net interest margin resulting from the Company’s increased interest costs. Earnings from mortgage banking have been negatively affected by decreased production levels as well as narrowed margins resulting from shifts in the mix of retail and wholesale loan volume. Additionally, operational expenses with mortgage banking have increased with the hiring of several loan producers and support staff with the objective of increasing future loan production levels.

 

Net earnings of wealth management operations consists of the net income of the Middleburg Investment Group (MIG), the non-bank subsidiary of the Company that generates revenues from trust and investment advisory activities through its subsidiaries, Middleburg Trust Company (MTC), a trust subsidiary, and Middleburg Investment Advisors, Inc. (MIA), a registered investment advisor focused on fixed income investments, and through Middleburg Bank Investment Sales, which is a division of Middleburg Bank. For these operations, much of the 13.4% increase in net earnings for the nine months ended September 30, 2007, when compared to the same period in 2006, is related to the increase in gross fees generated by MTC.

 

Net Interest Income and Net Interest Margin

 

The net interest margin declined from 3.93% for the quarter ended September 30, 2006 to 3.67% for the same period in 2007. For the nine months ended September 30, 2006 compared to the same period in 2007, the net interest margin declined from 3.98% to 3.83%. The decline in the net interest margin was attributable to the steady rise in interest costs resulting from the Company’s change in funding mix. The Company has relied upon higher cost deposits and borrowed money to fund the 2007 earning asset growth.

 

“We continue to be challenged by the impact of narrowing margins. While we feel that the steep declines in net interest margin have leveled out, we do continue to face marketplace competition that will keep the issue in front of management as we budget for 2008,” commented Joseph L. Boling, Chairman and Chief Executive Officer. “Additionally, the issues facing the mortgage industry are reflected in our current earnings. We will use the opportunities that come from the acquisition of new loan officers and Southern Trust Mortgage’s continued position as a certified government lender to gain share as we move out of this cycle.”

 

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 0.1% when comparing the quarter ended September 30, 2007 to the same period in 2006. Interest income for the quarter ended September 30, 2007 increased 10.0% or $1.2 million when compared to the quarter ended September 30, 2006. Interest expense increased 23.7% when comparing the quarter ended September 30, 2007 to the same time period in 2006.

 

Net interest income increased 1.3% from $20.1 million for the nine months ended September 30, 2006 to $20.4 million for the nine months ended September 30, 2007. Interest income increased 9.6% while interest expense increased 21.8% when comparing the nine months ended September 30, 2007 to the same period in 2006. The increase in interest expense resulted mostly from the Company’s change in funding mix, which is reflected in the increase in the average amount of time deposits when comparing the nine months ended September 30, 2007 to the same period in 2006.

 

Interest income from the investment portfolio decreased $221,000 from the three months ended September 30, 2006 to the same period in 2007. Interest income from the investment portfolio decreased $373,000 from the nine months ended September 30, 2006 to the same period in 2007, while the tax equivalent yield on the investment portfolio increased 39 basis points over that same time period. The average balance of the investment portfolio decreased $17.6 million or 11.9% from September 30, 2006 to September 30, 2007.

 

Interest income from loans increased $1.4 million or 14.2% when comparing the quarter ended September 30, 2007 to the same period in 2006. Interest income from loans increased $3.6 million or 12.7% when comparing the nine months ended September 30, 2007 to the same period in September 30, 2006. While the yield on the loan portfolio increased by 13 basis points from September 30, 2006 to September 30, 2007, the majority of the increase in interest income from loans was attributable to the increased volume of the loan portfolio. Average net loans increased $57.9 million from the nine months ended September 30, 2006 to the nine months ended September 30, 2007.

 

Non Interest Income

 

Non interest income decreased $47,000 or 2.1% when comparing the quarter ended September 30, 2007 to the same period in 2006. This decrease resulted mostly from the reduced earnings from Southern Trust Mortgage Company, LLC. Non interest income increased $19,000 or 0.3% when comparing the nine months ended September 30, 2007 to the same period in 2006. The increase resulted from an increase in both trust fees generated by MTC and service charges on deposits.

 

Trust and investment advisory fees earned by MTC and MIA increased 8.9% or $87,000 when comparing the quarter ended September 30, 2007 to the same period in 2006 and 8.1% or $247,000 when comparing the nine months ended September 30, 2007 to the same period in 2006. 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 remain at $1.1 billion at September 30, 2007. Although MTC’s Richmond location experienced a decline in assets under administration since September 30, 2006, MTC continues to increase assets under administration within the Company’s Northern Virginia footprint, Loudoun and Fauquier Counties, where the Company’s business model has been fully executed and MTC’s trust officer works in several of the Company’s financial service centers. MTC’s assets under administration in Northern Virginia at September 30, 2007 grew by $22.8 million or 12.3% from $186.0 million under administration at September 30, 2006 to $208.9 million at September 30, 2007. MIA’s assets under administration remained relatively unchanged at $581.0 million when comparing September 30, 2006 to September 30, 2007.

 

 

“We are extremely encouraged by the fee growth produced by MIG and specifically MTC. We see the asset management and related financial planning services as key ingredients to our future success,” stated Joseph L. Boling. “Further, MTC’s new Williamsburg office set to open in January 2008 will place the Company in the center of one of the nation’s largest and most affluent retirement markets.”

 

Service charges on deposits increased 10.7% from the quarter ended September 30, 2006 to the same period in 2007. Service charges on deposits increased $122,000 or 8.9% to $1.5 million for the nine months ended September 30, 2007, compared to $1.4 million for the same period in 2006. In particular, overdraft service charges and ATM and Visa check card fees increased $100,000 for the nine months ended September 30, 2007 when compared to the same period in 2006.

 

Investment sales fees decreased 25.8% or $26,000 from the quarter ended September 30, 2006 to the same period in 2007. Investment sales fees decreased 13.7% to $398,000 for the nine months ended September 30, 2007, compared to $462,000 for the same period in 2006. During July 2006, one of Middleburg Investment Sales’ top producers resigned from the company. At September 30, 2007, the Company employed three financial consultants, including one hired in April 2007. The Company employed three financial consultants for the first six months of 2006, but only two from July 2006 to April 2007.

 

Equity in earnings from affiliate, which reflects the 41.8% ownership interest in STM, decreased 53.1% or $190,000 from the quarter ended September 30, 2006 to the same period in 2007. STM closed $203.6 million in loans for the quarter ended September 30, 2007 with 63.8% of its production attributable to purchase money financings. For the quarter ended September 30, 2006, STM closed $238.9 million in loans with 58.5% of its production attributable to purchase money financings. Equity in earnings from affiliate decreased 40.1% or $316,000 from $789,000 for the nine months ended September 30, 2006 to $473,000 for the same period in 2007. STM closed $660.2 million in loans for the nine months ended September 30, 2007 with 57.4% of its production attributable to purchase money financings. For the nine months ended September 30, 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. Mortgage banking operations were negatively impacted by decreased production levels and narrowed margins resulting from shifts in the mix of retail and wholesale loan volume. Additionally, earnings were negatively impacted by increased operational expenses with the hiring of several loan producers and support staff with the objective of increasing future loan production levels.

 

STM has experienced an increase in problem and repurchased loans in the third quarter. The majority of these problem loans are due to credit risk in their construction portfolio and early payment defaults of loans sold to investors, both of which are issues facing mortgage bankers in the current economic climate. STM has taken a proactive approach in addressing the problem loans. In early 2007, it implemented credit overlays and re-negotiated early payment default periods. These steps have helped mitigate the risks inherent in its portfolio. The increase in problem loans, however, will have a negative impact on STM’s 2007 earnings and cash flow. Earnings will be negatively impacted during the fourth quarter of 2007 by STM’s need to establish an adequate reserve for estimated loan losses in connection with these loans. STM is currently analyzing the problem loansand its construction portfolio and refining its methodology to estimate the expected loss and required reserve. STM’s current cash position will be hurt due to a curtailment requirement with its warehouse lender that requires a quarterly principal reduction on any problem loan that has been repurchased. In light of these developments, the Company recently engaged an independent firm to assist with valuing its investment in STM.

 

Income earned from the Bank’s $11.3 million investment in Bank Owned Life Insurance (BOLI) was $119,000 and $111,000 for the quarters ended September 30, 2007 and 2006, respectively. Income earned from BOLI was $339,000 for the nine months ended September 30, 2007 and $334,000 for the same period in 2006. The Company purchased $10.8 million in BOLI in 2004 and $485,000 BOLI in 2007 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 $19,000 or 13.5% when comparing the three months ended September 30, 2006 to the same period in 2007. This decrease primarily

 

reflects reduced loan processing fees resulting from an adjustment required by accounting standards governing such fees. The loan fees had been recorded to loan processing fee income during the second quarter of 2007, and adjusted out of loan processing fee income to deferred income during the third quarter of 2007. Other service charges increased $11,000 or 2.5% from the nine months ended September 30, 2006 to the same time period in 2007. The increase was mostly attributed to the increase in loan processing fees resulting from the increased loan production from September 30, 2006 to September 30, 2007.

 

Non Interest Expense

 

Non interest expense increased $487,000 or 8.7% from the quarter ended September 30, 2006 to the same period in 2007. Non interest expense increased $931,000 for the nine months ended September 30, 2007 when compared to the same period in 2006. Salary and employee benefit expense increased 3.4% or $115,000 for the quarter ended September 30, 2007 when compared to the same period in 2006. Salary and employee benefit expense increased 1.9% or $197,000 from the nine months ended September 30, 2006 to the same period in 2007.

 

Net occupancy and equipment expense increased $57,000 or 7.7% when comparing the quarter ended September 30, 2006 to the quarter ended September 30, 2007. This increase is driven mostly by the additional rent expense associated with the Company’s Middleburg Mortgage office in Ashburn, Virginia. Although STM reimburses the Company 100% for the rent of that facility, those reimbursements are reflected in the other income section of the income statement. Middleburg Mortgage began leasing the Ashburn location in December 2006. Net occupancy and equipment expense increased $144,000 or 6.4% when comparing the nine months ended September 30, 2006 to the same period in 2007. This increase results not only from the rent for the Ashburn office, but also the additional depreciation and construction related expense associated with the renovation of the Middleburg financial service center, which also serves as the Company’s headquarters, in 2007. The Company expects net occupancy and equipment expense to continue to increase as three new financial service centers open in the Virginia counties of Loudoun and Fauquier.

 

Other taxes, which is comprised primarily of bank franchise tax, increased 29.2% or $36,000 from the quarter ended September 30, 2006 to the same period in 2007. Other taxes increased 26.9% to $476,000 for the nine months ended September 30, 2007 when compared to the same period in 2006. The Virginia bank franchise tax assessment is equal to one percent of a bank’s net capital, as defined by the Commonwealth of Virginia. With the issuance of 676,552 shares of its common stock in an underwritten public offering in July 2006, the Company increased its capital level by $19.7 million and subsequently transferred $19.0 million to the banking subsidiary, resulting in the increase in bank franchise tax in 2007.

 

Computer operations expense increased $6,000 or 2.2% from the quarter ended September 30, 2006 to the quarter ended September 30, 2007. Computer operations expense increased $84,000 or 11.5% from the nine months ended September 30, 2006 to the same period in 2007. These increases are related to increased maintenance costs of in-house core operating and support systems resulting mostly from the Company’s growth.

 

Other operating expenses increased $272,000 or 24.9% when comparing the quarter ended September 30, 2007 to the same period in 2006. Other operating expenses increased 11.8% or $406,000 from $3.4 million for the nine months ended September 30, 2006 to $3.8 million for the same period in 2007. The increases resulted from increases in various other expense categories including advisory fees, legal fees, educational expenses, and travel expenses.

 

Total Consolidated Assets

 

Total assets increased 8.7% to $839.9 million at September 30, 2007 from $772.6 million at September 30, 2006. Total loans, net of allowance for loan losses, increased 14.1% or $78.7 million to $636.5 million at September 30, 2007 from $557.8 million at September 30, 2006. 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 the success of the financial service center 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, 2007, there were $1.4 million in non performing loans. At September 30, 2006, there were no non performing loans. Total loans past due 90 days or more were $64,000 at September 30, 2007 and less than $1,000 at September 30, 2006. The loans past due 90 days or more at September 30, 2007 was comprised of seven consumer loans and included approximately $48,000 due from one individual. To date, $16,000 of the $64,000 in total loans past due 90 days or more have been charged off while additional reserves have been allocated to the remaining balances.

 

The loan loss provision was $838,000 for the nine months ended September 30, 2007. The allowance for loan losses was $6.3 million or 0.98% of total loans outstanding at September 30, 2007. Net charge offs were $126,000 for the nine months ended September 30, 2007, compared to net charge offs of $48,000 for the same time period in 2006. 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 $20.9 million or 14.5% to $123.6 million at September 30, 2007 compared to $144.5 million at September 30, 2006. During 2006 and 2007, 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. At September 30, 2007, the tax equivalent yield on the investment portfolio was 5.80%.

 

Deposits and Other Borrowings

 

Total deposits, which includes brokered deposits, increased 2.8% to $575.4 million at September 30, 2007 from $560.0 million at September 30, 2006. Total retail deposits, which excludes brokered deposits, decreased 1.7% from $534.8 million at September 30, 2006 to $525.7 million at September 30, 2007. At September 30, 2007, $49.8 million of the brokered certificates remained outstanding. The Company had $25.2 million in brokered certificates of deposits at September 30, 2006.

 

During the third quarter of 2007, the Company began to offer a high yielding, short term certificate of deposit to its markets in order to obtain deposits and to broaden its client base. In order to open the high yield certificate of deposit, a client must bring new money to the Bank and open a demand deposit account. The demand deposit account must maintain a minimum balance throughout the term of the certificate of deposit to continue to earn the premium rate. The certificate of deposit promotion resulted in $36.0 million in new deposits during the quarter.

 

Securities sold under agreements to repurchase with commercial checking account clients increased by $8.3 million or 25.3% from September 30, 2006 to $41.2 million at September 30, 2007. Federal Home Loan Bank advances and overnight borrowings increased $48.8 million or 59.7% to $130.5 million at September 30, 2007 from $81.7 million at September 30, 2006. FHLB advances have provided the majority of funding for the Company’s 2007 loan growth.

 

Equity

 

Stockholders’ equity increased 3.7% from $77.6 million at September 30, 2006 to $80.5 million at September 30, 2007. The book value of the Company at September 30, 2007 was $17.86 per common share. Total common shares outstanding were 4,505,794 at September 30, 2007.

 

On September 21, 2007, the board of directors declared a $0.19 per common share cash dividend for shareholders of record as of September 27, 2007 and payable on October 19, 2007.

 

 

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, 2006, 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 Bank serves Loudoun, Fairfax, and Fauquier Counties in Virginia with seven financial service centers. Middleburg Investment Group owns Middleburg Trust Company and Middleburg Investment Advisors, Inc. 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,

 

%

 

 

2007

 

2006

 

Change

 

 

 

 

 

 

 

INTEREST INCOME

 

 

 

 

 

 

Interest and fees on loans

$ 31,812

 

$ 28,217

 

12.7%

 

Interest on investment securities

5,058

 

5,431

 

-6.9%

 

Interest on short term investments

-

 

-

 

0.0%

 

 

 

 

 

 

 

TOTAL INTEREST INCOME

$ 36,871

 

$ 33,648

 

9.6%

 

 

 

 

 

 

 

INTEREST EXPENSE

 

 

 

 

 

 

Interest on deposits

$ 10,833

 

$ 8,320

 

30.2%

 

Interest on borrowings

5,658

 

5,214

 

8.5%

 

 

 

 

 

 

 

TOTAL INTEREST EXPENSE

$ 16,491

 

$ 13,534

 

21.8%

 

 

 

 

 

 

 

NET INTEREST INCOME

$ 20,380

 

$ 20,113

 

1.3%

 

 

 

 

 

 

 

PROVISION FOR LOAN LOSSES

838

 

418

 

100.6%

 

 

 

 

 

 

 

NET INTEREST INCOME AFTER PROVISION

 

 

 

 

 

 

FOR LOAN LOSSES

$ 19,542

 

$ 19,695

 

-0.8%

 

 

 

 

 

 

 

NON INTEREST INCOME

 

 

 

 

 

 

Trust and investment advisory fee income

$ 3,307

 

$ 3,060

 

8.1%

 

Service charges on deposits

1,504

 

1,381

 

8.9%

 

Net gains on securities available for sale

-

 

1

 

-100.0%

 

Commissions on investment sales

398

 

462

 

-13.7%

 

Equity in earnings from affiliate

473

 

789

 

-40.1%

 

Bank owned life insurance

339

 

324

 

4.7%

 

Other service charges, commissions and fees

464

 

452

 

2.5%

 

Other operating income

90

 

87

 

3.8%

 

 

 

 

 

 

 

TOTAL NON INTEREST INCOME

$ 6,575

 

$ 6,556

 

0.3%

 

 

 

 

 

 

 

NON INTEREST EXPENSE

 

 

 

 

 

 

Salaries and employee benefits

$ 10,391

 

$ 10,195

 

1.9%

 

Net occupancy expense of premises

2,418

 

2,274

 

6.4%

 

Other taxes

476

 

375

 

26.9%

 

Computer operations

809

 

726

 

11.5%

 

Other operating expenses

3,840

 

3,435

 

11.8%

 

 

 

 

 

 

 

TOTAL NON INTEREST EXPENSE

$ 17,935

 

$ 17,004

 

5.5%

 

 

 

 

 

 

 

INCOME BEFORE TAXES

$ 8,182

 

$ 9,248

 

-11.5%

 

Income tax expense

2,283

 

2,762

 

-17.3%

 

 

 

 

 

 

 

NET INCOME

$ 5,899

 

$ 6,486

 

-9.0%

 

 

 

 

 

MIDDLEBURG FINANCIAL CORPORATION

 

 

 

 

 

 

 

 

 

 

SUMMARY INCOME STATEMENT

 

 

 

 

 

 

 

 

 

 

( Unaudited, dollars in thousands)

 

For the Three Months Ended

 

 

 

3Q07

 

2Q07

 

1Q07

 

4Q06

 

3Q06

 

 

 

 

 

 

 

 

 

 

 

 

INTEREST INCOME

 

 

 

 

 

 

 

 

 

 

 

Interest and fees on loans

 

$ 11,237

 

$ 10,592

 

$ 9,983

 

$ 9,944

 

$ 9,843

 

Interest on investment securities

 

1,628

 

1,661

 

1,770

 

1,806

 

1,850

 

Interest on short term investments

 

-

 

-

 

-

 

-

 

-

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL INTEREST INCOME

 

$ 12,866

 

$ 12,252

 

$ 11,753

 

$ 11,751

 

$ 11,692

 

 

 

 

 

 

 

 

 

 

 

 

INTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

 

Interest on deposits

 

$ 3,810

 

$ 3,505

 

$ 3,518

 

$ 3,374

 

$ 3,154

 

Interest on borrowings

 

2,261

 

1,971

 

1,426

 

1,580

 

1,753

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL INTEREST EXPENSE

 

$ 6,071

 

$ 5,476

 

$ 4,944

 

$ 4,953

 

$ 4,907

 

 

 

 

 

 

 

 

 

 

 

 

NET INTEREST INCOME

 

$ 6,795

 

$ 6,777

 

$ 6,809

 

$ 6,797

 

$ 6,785

 

 

 

 

 

 

 

 

 

 

 

 

PROVISION FOR LOAN LOSSES

 

279

 

407

 

152

 

82

 

55

 

 

 

 

 

 

 

 

 

 

 

 

NET INTEREST INCOME AFTER PROVISION

 

 

 

 

 

 

 

 

 

 

 

FOR LOAN LOSSES

 

$ 6,516

 

$ 6,370

 

$ 6,657

 

$ 6,716

 

$ 6,731

 

 

 

 

 

 

 

 

 

 

 

 

NON INTEREST INCOME

 

 

 

 

 

 

 

 

 

 

 

Trust and investment advisory fee income

 

$ 1,072

 

$ 1,130

 

$ 1,105

 

$ 1,054

 

$ 985

 

Service charges on deposits

 

521

 

516

 

466

 

488

 

471

 

Net (losses) gains on securities available for sale

-

 

-

 

-

 

(305)

 

-

 

Commissions on investment sales

 

128

 

144

 

127

 

93

 

102

 

Equity in earnings from affiliate

 

168

 

253

 

52

 

(109)

 

358

 

Bank owned life insurance

 

119

 

111

 

109

 

112

 

111

 

Other service charges, commissions and fees

 

121

 

173

 

170

 

155

 

140

 

Other operating income

 

36

 

26

 

28

 

72

 

46

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL NON INTEREST INCOME

 

$ 2,166

 

$ 2,352

 

$ 2,057

 

$ 1,560

 

$ 2,213

 

 

 

 

 

 

 

 

 

 

 

 

NON INTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

$ 3,486

 

$ 3,565

 

$ 3,340

 

$ 3,495

 

$ 3,371

 

Net occupancy expense of premises

 

800

 

800

 

818

 

750

 

743

 

Other taxes

 

161

 

159

 

156

 

125

 

125

 

Computer operations

 

263

 

289

 

258

 

257

 

257

 

Other operating expenses

 

1,367

 

1,326

 

1,148

 

1,579

 

1,094

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL NON INTEREST EXPENSE

 

$ 6,077

 

$ 6,139

 

$ 5,719

 

$ 6,206

 

$ 5,590

 

 

 

 

 

 

 

 

 

 

 

 

INCOME BEFORE TAXES

 

$ 2,605

 

$ 2,583

 

$ 2,994

 

$ 2,069

 

$ 3,353

 

Income tax expense

 

716

 

718

 

849

 

537

 

1,019

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME

 

 

$ 1,888

 

$ 1,866

 

$ 2,146

 

$ 1,532

 

$ 2,335

 

 

 

 

 

 

MIDDLEBURG FINANCIAL CORPORATION

 

 

 

 

 

 

 

 

BALANCE SHEET

 

 

 

 

 

 

 

 

(dollars in thousands)

Unaudited

Unaudited

 

Unaudited

 

Audited

 

Unaudited

 

9/30/2007

6/30/2007

 

3/31/2007

 

12/31/2006

 

9/30/2006

 

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

Cash and due from banks

$ 16,538

$ 16,028

 

$ 15,668

 

$ 18,391

 

$ 14,624

Interest-bearing balances in banks

520

48

 

394

 

164

 

273

Securities at fair value

123,642

128,460

 

134,048

 

135,435

 

144,540

Loans, net of allowance for loan losses

636,545

618,237

 

579,604

 

564,750

 

557,803

Bank premises and equipment, net

19,646

19,156

 

18,884

 

18,429

 

18,214

Other assets

43,050

40,347

 

39,171

 

35,136

 

37,099

 

 

 

 

 

 

 

 

 

Total assets

$ 839,940

$ 822,276

 

$ 787,767

 

$ 772,305

 

$ 772,553

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders' Equity:

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

Non-interest bearing demand deposits

$ 119,331

$ 121,799

 

$ 117,684

 

$ 128,300

 

$ 123,508

Savings and interest-bearing demand deposits

229,628

235,993

 

259,855

 

250,747

 

249,246

Time deposits

226,510

203,113

 

179,293

 

191,551

 

187,235

Total deposits

$ 575,469

$ 560,905

 

$ 556,833

 

$ 570,598

 

$ 559,989

 

 

 

 

 

 

 

 

 

Federal funds purchased

-

-

 

-

 

-

 

-

Securities sold under agreements to repurchase

41,216

39,261

 

39,922

 

38,474

 

32,906

Federal Home Loan Bank advances

50,500

97,400

 

64,000

 

34,000

 

26,700

Long-term debt

80,000

35,000

 

35,000

 

40,000

 

55,000

Trust preferred capital notes

5,155

5,155

 

5,155

 

5,155

 

15,465

Other liabilities

7,134

5,921

 

7,527

 

6,179

 

4,894

Commitment and contingent liabilities

-

-

 

-

 

-

 

-

Total liabilities

$ 759,475

$ 743,642

 

$ 708,437

 

$ 694,406

 

$ 694,954

 

 

 

 

 

 

 

 

 

Shareholders' Equity:

 

 

 

 

 

 

 

 

Common stock, par value $2.50 per share

$ 11,266

$ 11,264

 

$ 11,264

 

$ 11,264

 

$ 11,264

Capital surplus

23,567

23,531

 

23,519

 

23,503

 

23,667

Retained earnings

47,470

46,438

 

45,429

 

44,139

 

43,463

Accumulated other comprehensive income (loss), net

(1,838)

(2,600)

 

(882)

 

(1,008)

 

(796)

Total shareholders' equity

$ 80,464

$ 78,633

 

$ 79,329

 

$ 77,898

 

$ 77,598

 

 

 

 

 

 

 

 

 

Total liabilities and shareholders' equity

$ 839,940

$ 822,276

 

$ 787,767

 

$ 772,305

 

$ 772,553

 

 

 

 

 

 

 

MIDDLEBURG FINANCIAL CORPORATION

 

 

 

 

 

 

 

 

 

 

KEY STATISTICS

 

For the Three Months Ended

 

 

 

3Q07

 

2Q07

 

1Q07

 

4Q06

 

3Q06

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income (dollars in thousands)

 

$ 1,888

 

$ 1,866

 

$ 2,146

 

$ 1,532

 

$ 2,335

 

Earnings per share, basic

 

$ 0.42

 

$ 0.41

 

$ 0.48

 

$ 0.34

 

$ 0.53

 

Earnings per share, diluted

 

$ 0.41

 

$ 0.41

 

$ 0.47

 

$ 0.33

 

$ 0.52

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average total assets

 

0.90%

 

0.93%

 

1.09%

 

0.92%

 

1.21%

 

Return on average total equity

 

9.38%

 

9.35%

 

10.70%

 

9.21%

 

12.47%

 

Dividend payout ratio

 

45.34%

 

45.89%

 

39.90%

 

55.87%

 

35.75%

 

Fee revenue as a percent of total revenue

 

14.41%

 

16.11%

 

14.89%

 

11.72%

 

15.91%

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin(1)

 

3.67%

 

3.80%

 

4.02%

 

3.94%

 

3.93%

 

Yield on average earning assets

 

6.83%

 

6.77%

 

6.83%

 

6.72%

 

6.69%

 

Yield on average interest-bearing liabilities

 

3.85%

 

3.65%

 

3.50%

 

3.49%

 

3.46%

 

Net interest spread

 

2.98%

 

3.11%

 

3.33%

 

3.23%

 

3.24%

 

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

$ 260

 

$ 247

 

$ 251

 

$ 216

 

$ 195

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest income to average assets

 

1.07%

 

1.19%

 

1.07%

 

0.80%

 

1.15%

 

Non-interest expense to average assets

 

3.00%

 

3.12%

 

2.99%

 

3.20%

 

2.91%

 

 

 

 

 

 

 

 

 

 

 

 

 

Efficiency ratio(2)

 

65.47%

 

65.08%

 

62.35%

 

69.46%

 

60.42%

 

 

 

(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, 2007 and 2006, net interest income on a tax equivalent basis was $7.1 million and $7.0 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 not a measurement under accounting principles generally accepted in the United States. It 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, 2007 and 2006, tax equivalent net interest income was $7.1 million and $7.0 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, 2007 and 2006, was $2.2 million. 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

 

 

 

 

 

 

 

 

 

 

 

 

 

3Q07

 

2Q07

 

1Q07

 

4Q06

 

3Q06

BALANCE SHEET RATIOS

 

 

 

 

 

 

 

 

 

 

 

Loans to deposits

 

111.66%

 

111.28%

 

111.53%

 

105.25%

 

100.59%

 

Average interest-earning assets to

 

 

 

 

 

 

 

 

 

 

 

average-interest bearing liabilities

 

123.16%

 

123.85%

 

124.49%

 

123.82%

 

123.22%

 

 

 

 

 

 

 

 

 

 

 

 

PER SHARE DATA

 

 

 

 

 

 

 

 

 

 

 

Dividends

 

$ 0.19

 

$ 0.19

 

$ 0.19

 

$ 0.19

 

$ 0.19

 

Book value

 

17.86

 

17.45

 

17.61

 

17.29

 

17.22

 

Tangible book value

 

16.68

 

16.26

 

16.39

 

16.06

 

15.97

 

 

 

 

 

 

 

 

 

 

 

 

SHARE PRICE DATA

 

 

 

 

 

 

 

 

 

 

 

Closing price

 

$ 32.50

 

$ 32.50

 

$ 32.80

 

$ 36.99

 

$ 34.05

 

Diluted earnings multiple(1)

 

1.85

 

1.90

 

1.90

 

2.00

 

1.80

 

Book value multiple(2)

 

1.82

 

1.86

 

1.86

 

2.14

 

1.98

 

 

 

 

 

 

 

 

 

 

 

 

COMMON STOCK DATA

 

 

 

 

 

 

 

 

 

 

 

Outstanding shares at end of period

 

4,505,794

 

4,505,605

 

4,505,605

 

4,505,605

 

4,505,605

 

Weighted average shares outstanding

 

4,506,166

 

4,505,605

 

4,505,605

 

4,505,605

 

4,394,724

 

Weighted average shares outstanding, diluted

 

4,584,446

 

4,588,469

 

4,590,450

 

4,596,195

 

4,482,970

 

 

 

 

 

 

 

 

 

 

 

 

CAPITAL RATIOS

 

 

 

 

 

 

 

 

 

 

 

Total equity to total assets

 

9.58%

 

9.56%

 

10.07%

 

10.09%

 

10.04%

 

Total risk based capital ratio

 

12.95%

 

13.16%

 

13.63%

 

13.70%

 

15.20%

 

Tier 1 risk based capital ratio

 

12.03%

 

12.23%

 

12.71%

 

12.79%

 

14.30%

 

Leverage ratio

 

9.97%

 

10.12%

 

10.35%

 

10.26%

 

11.52%

 

 

 

 

 

 

 

 

 

 

 

 

CREDIT QUALITY

 

 

 

 

 

 

 

 

 

 

 

Net charge-offs to average loans

 

0.02%

 

0.01%

 

0.00%

 

0.00%

 

0.00%

 

Total non-performing loans to total loans

 

0.21%

 

0.21%

 

0.00%

 

0.00%

 

0.00%

 

Total non-performing assets to total assets

 

 

 

 

 

 

 

 

 

 

 

Non-accrual loans to:

 

 

 

 

 

 

 

 

 

 

 

total loans

 

0.21%

 

0.21%

 

0.00%

 

0.00%

 

0.00%

 

total assets

 

0.16%

 

0.16%

 

0.00%

 

0.00%

 

0.00%

 

Allowance for loan losses to:

 

 

 

 

 

 

 

 

 

 

 

total loans

 

0.98%

 

0.98%

 

0.98%

 

0.98%

 

0.98%

 

non-performing loans

 

439.53%

 

464.01%

 

0.00%

 

0.00%

 

0.00%

 

non-accrual loans

 

460.09%

 

464.01%

 

0.00%

 

0.00%

 

0.00%

 

 

 

 

 

 

 

 

 

 

 

 

NON-PERFORMING ASSETS:

 

 

 

 

 

 

 

 

 

 

(dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

Loans delinquent over 90 days

 

$ 64

 

$ 23

 

$ 22

 

$ 19

 

$ 0

 

Non-accrual loans

 

1,368

 

1,317

 

-

 

-

 

-

 

 

 

 

 

 

 

 

 

 

 

 

NET LOAN CHARGE-OFFS (RECOVERIES):

 

 

 

 

 

 

 

 

 

 

(dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

Loans charged off

 

$ 120

 

$ 37

 

$ 26

 

$ 16

 

$ 14

 

(Recoveries)

 

(25)

 

(12)

 

(20)

 

(4)

 

(19)

 

Net charge-offs (recoveries)

 

95

 

25

 

6

 

13

 

(5)

 

 

 

 

 

 

 

 

 

 

 

 

PROVISION FOR LOAN LOSSES (dollars in thousands)

 

$ 279

 

$ 407

 

$ 152

 

$ 82

 

$ 55

 

 

 

 

 

 

 

 

 

 

 

 

ALLOWANCE FOR LOAN LOSS SUMMARY

 

 

 

 

 

 

 

 

 

 

(dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

Balance at the beginning of period

 

$ 6,110

 

$ 5,728

 

$ 5,582

 

$ 5,513

 

$ 5,453

 

Provision

 

279

 

407

 

152

 

82

 

55

 

Net charge-offs (recoveries)

 

95

 

25

 

6

 

13

 

(5)

 

Balance at the end of period

 

6,294

 

6,110

 

5,728

 

5,582

 

5,513

 

 

(1)

The diluted earnings multiple (or price earnings ratio) is calculated by dividing the period’s closing market price per share by total equity per weighted average shares outstanding, diluted 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.

 

(2)

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.

 

 

 

 

 

Average Balances, Income and Expenses, Yields and Rates

 

Three Months Ended September 30,

 

 

 

2007

 

 

 

 

 

2006

 

 

 

Average

 

Income/

 

Yield/

 

Average

 

Income/

 

Yield/

 

Balance

 

Expense

 

Rate (3)

 

Balance

 

Expense

 

Rate (3)

 

(Dollars in thousands)

Assets :

 

 

 

 

 

 

 

 

 

 

 

Securities:

 

 

 

 

 

 

 

 

 

 

 

Taxable

$ 83,580

 

$ 1,087

 

5.16%

 

$ 113,922

 

$ 1,455

 

5.07%

Tax-exempt (1) (2)

42,148

 

764

 

7.19%

 

31,337

 

575

 

7.28%

Total securities

$ 125,728

 

$ 1,851

 

5.84%

 

$ 145,259

 

$ 2,030

 

5.54%

Loans

 

 

 

 

 

 

 

 

 

 

 

Taxable

$ 633,725

 

$ 11,237

 

7.03%

 

$ 558,223

 

$ 9,841

 

6.99%

Tax-exempt (1)

17

 

-

 

0.00%

 

89

 

2

 

8.92%

Total loans

$ 633,742

 

$ 11,237

 

7.03%

 

$ 558,312

 

$ 9,843

 

6.99%

Federal funds sold

1,973

 

23

 

4.62%

 

738

 

11

 

5.91%

Interest on money market investments

-

 

-

 

-

 

-

 

-

 

-

Interest bearing deposits in

 

 

 

 

 

 

 

 

 

 

 

other financial institutions

979

 

14

 

5.67%

 

329

 

4

 

4.82%

Total earning assets

$ 762,422

 

$ 13,125

 

6.83%

 

$ 704,638

 

$ 11,888

 

6.69%

Less: allowances for credit losses

(6,141)

 

 

 

 

 

(5,461)

 

 

 

 

Total nonearning assets

71,760

 

 

 

 

 

68,247

 

 

 

 

Total assets

$ 828,041

 

 

 

 

 

$ 767,424

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits:

 

 

 

 

 

 

 

 

 

 

 

Checking

$ 133,017

 

$ 842

 

2.51%

 

$ 133,169

 

$ 794

 

2.37%

Regular savings

52,043

 

263

 

2.00%

 

52,463

 

230

 

1.74%

Money market savings

53,715

 

164

 

1.21%

 

64,398

 

157

 

0.97%

Time deposits:

 

 

 

 

 

 

 

 

 

 

 

$100,000 and over

106,171

 

1,310

 

4.90%

 

110,030

 

1,340

 

4.83%

Under $100,000

103,133

 

1,231

 

4.74%

 

64,209

 

633

 

3.91%

Total interest-bearing deposits

$ 448,079

 

$ 3,810

 

3.37%

 

$ 424,269

 

$ 3,154

 

2.95%

 

 

 

 

 

 

 

 

 

 

 

 

Federal Home Loan Bank advances

67,161

 

961

 

5.68%

 

32,190

 

451

 

5.56%

Securities sold under agreements

 

 

 

 

 

 

 

 

 

 

 

to repurchase

39,371

 

424

 

4.27%

 

35,290

 

390

 

4.38%

Long-term debt

70,644

 

871

 

4.89%

 

70,465

 

899

 

5.06%

Federal funds purchased

281

 

4

 

5.65%

 

1,046

 

13

 

4.93%

Total interest-bearing liabilities

$ 625,536

 

$ 6,070

 

3.85%

 

$ 563,260

 

$ 4,907

 

3.46%

Non-interest bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

116,544

 

 

 

 

 

126,106

 

 

 

 

Other liabilities

6,094

 

 

 

 

 

3,756

 

 

 

 

Total liabilities

$ 748,174

 

 

 

 

 

$ 693,122

 

 

 

 

Shareholders' equity

79,867

 

 

 

 

 

74,302

 

 

 

 

Total liabilities and shareholders'

 

 

 

 

 

 

 

 

 

 

 

equity

$ 828,041

 

 

 

 

 

$ 767,424

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

$ 7,055

 

 

 

 

 

$ 6,981

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate spread

 

 

 

 

2.98%

 

 

 

 

 

3.24%

Interest expense as a percent of

 

 

 

 

 

 

 

 

 

 

 

average earning assets

 

 

 

 

3.16%

 

 

 

 

 

2.76%

Net interest margin

 

 

 

 

3.67%

 

 

 

 

 

3.93%

 

 

 

 

 

 

 

 

 

 

 

 

(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,

 

 

 

2007

 

 

 

 

 

2006

 

 

 

Average

 

Income/

 

Yield/

 

Average

 

Income/

 

Yield/

 

Balance

 

Expense

 

Rate (3)

 

Balance

 

Expense

 

Rate (3)

 

 

 

 

 

(Dollars in thousands)

 

 

Assets :

 

 

 

 

 

 

 

 

 

 

 

Securities:

 

 

 

 

 

 

 

 

 

 

 

Taxable

$ 88,255

 

$ 3,432

 

5.20%

 

$ 116,480

 

$ 4,274

 

4.91%

Tax-exempt (1) (2)

41,575

 

2,225

 

7.16%

 

30,900

 

1,699

 

7.35%

Total securities

$ 129,830

 

$ 5,657

 

5.83%

 

$ 147,380

 

$ 5,973

 

5.42%

Loans

 

 

 

 

 

 

 

 

 

 

 

Taxable

$ 604,777

 

$ 31,811

 

7.03%

 

$ 546,830

 

$ 28,212

 

6.90%

Tax-exempt (1)

32

 

2

 

8.36%

 

95

 

6

 

8.44%

Total loans

$ 604,809

 

$ 31,813

 

7.03%

 

$ 546,925

 

$ 28,218

 

6.90%

Federal funds sold

3,345

 

125

 

5.00%

 

777

 

28

 

4.82%

Interest on money market investments

-

 

-

 

-

 

-

 

-

 

-

Interest bearing deposits in

 

 

 

 

 

 

 

 

 

 

 

other financial institutions

820

 

33

 

5.38%

 

210

 

8

 

5.09%

Total earning assets

$ 738,804

 

$ 37,628

 

6.81%

 

$ 695,292

 

$ 34,227

 

6.58%

Less: allowances for credit losses

(5,874)

 

 

 

 

 

(5,337)

 

 

 

 

Total nonearning assets

69,965

 

 

 

 

 

68,428

 

 

 

 

Total assets

$ 802,895

 

 

 

 

 

$ 758,383

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits:

 

 

 

 

 

 

 

 

 

 

 

Checking

$ 142,526

 

$ 2,629

 

2.47%

 

$ 141,633

 

$ 2,414

 

2.28%

Regular savings

51,859

 

744

 

1.92%

 

55,893

 

713

 

1.71%

Money market savings

56,102

 

473

 

1.13%

 

69,362

 

495

 

0.95%

Time deposits:

 

 

 

 

 

 

 

 

 

 

 

$100,000 and over

116,842

 

4,316

 

4.94%

 

89,805

 

2,968

 

4.42%

Under $100,000

81,052

 

2,671

 

4.41%

 

62,241

 

1,730

 

3.72%

Total interest-bearing deposits

$ 448,381

 

$ 10,833

 

3.23%

 

$ 418,934

 

$ 8,320

 

2.66%

 

 

 

 

 

 

 

 

 

 

 

 

Federal Home Loan Bank advances

58,446

 

2,415

 

5.52%

 

37,119

 

1,452

 

5.23%

Securities sold under agreements

 

 

 

 

 

 

 

 

 

 

 

to repurchase

41,654

 

1,374

 

4.41%

 

36,760

 

1,119

 

4.07%

Long-term debt

50,961

 

1,850

 

4.85%

 

70,483

 

2,607

 

4.95%

Federal funds purchased

438

 

19

 

5.80%

 

961

 

36

 

5.01%

Total interest-bearing liabilities

$ 599,880

 

$ 16,491

 

3.68%

 

$ 564,257

 

$ 13,534

 

3.21%

Non-interest bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

117,281

 

 

 

 

 

128,933

 

 

 

 

Other liabilities

6,113

 

 

 

 

 

3,633

 

 

 

 

Total liabilities

$ 723,274

 

 

 

 

 

$ 696,823

 

 

 

 

Shareholders' equity

79,621

 

 

 

 

 

61,560

 

 

 

 

Total liabilities and shareholders'

 

 

 

 

 

 

 

 

 

 

 

equity

$ 802,895

 

 

 

 

 

$ 758,383

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

$ 21,137

 

 

 

 

 

$ 20,693

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate spread

 

 

 

 

3.13%

 

 

 

 

 

3.37%

Interest expense as a percent of

 

 

 

 

 

 

 

 

 

 

 

average earning assets

 

 

 

 

2.98%

 

 

 

 

 

2.60%

Net interest margin

 

 

 

 

3.83%

 

 

 

 

 

3.98%

 

 

 

 

 

 

 

 

 

 

 

 

(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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FOR THE FISCAL YEAR-TO-DATE PERIOD ENDED

 

 

 

 

 

 

 

 

 

(dollars in thousands)

9/30/2007

 

6/30/2007

 

3/31/2007

 

12/31/2006

 

9/30/2006

GAAP measures:

 

 

 

 

 

 

 

 

 

Interest Income - Loans

$ 31,812

 

$ 20,575

 

$ 9,983

 

$ 38,161

 

$ 28,217

Interest Income - Investments & Other

5,058

 

3,430

 

1,770

 

7,237

 

5,431

Interest Expense - Deposits

10,833

 

7,023

 

3,518

 

11,694

 

8,320

Interest Expense - Other Borrowings

5,658

 

3,397

 

1,426

 

6,794

 

5,214

Total Net Interest Income

$ 20,380

 

$ 13,585

 

$ 6,809

 

$ 26,910

 

$ 20,113

Plus:

 

 

 

 

 

 

 

 

 

NON-GAAP measures:

 

 

 

 

 

 

 

 

 

Tax Benefit Realized on Non- Taxable Interest Income - Loans

$ 1

 

$ 1

 

$ 1

 

$ 2

 

$ 1

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

757

 

497

 

250

 

792

 

577

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

-

 

-

 

-

 

-

 

-

Total Tax Benefit Realized on Non- Taxable Interest Income

$ 758

 

$ 498

 

$ 251

 

$ 794

 

$ 578

 

 

 

 

 

 

 

 

 

 

Total Tax Equivalent Net Interest Income

$ 21,138

 

$ 14,083

 

$ 7,059

 

$ 27,704

 

$ 20,691

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FOR THE THREE MONTH PERIOD ENDED

 

 

 

 

 

 

 

 

 

(dollars in thousands)

9/30/2007

 

6/30/2007

 

3/31/2007

 

12/31/2006

 

9/30/2006

GAAP measures:

 

 

 

 

 

 

 

 

 

Interest Income - Loans

$ 11,237

 

$ 10,592

 

$ 9,983

 

$ 9,944

 

$ 9,843

Interest Income - Investments & Other

1,628

 

1,661

 

1,770

 

1,806

 

1,850

Less: Interest Expense - Deposits

3,810

 

3,505

 

3,518

 

3,374

 

3,154

Less: Interest Expense - Other Borrowings

2,261

 

1,971

 

1,426

 

1,580

 

1,753

Total Net Interest Income

$ 6,795

 

$ 6,777

 

$ 6,809

 

$ 6,797

 

$ 6,785

Plus:

 

 

 

 

 

 

 

 

 

NON-GAAP measures:

 

 

 

 

 

 

 

 

 

Tax Benefit Realized on Non- Taxable Interest Income - Loans

$ -

 

$ -

 

$ 1

 

$ 1

 

$ -

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

260

 

247

 

250

 

215

 

195

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

-

 

-

 

-

 

-

 

-

Total Tax Benefit Realized on Non- Taxable Interest Income

$ 260

 

$ 247

 

$ 251

 

$ 216

 

$ 195

 

 

 

 

 

 

 

 

 

 

Total Tax Equivalent Net Interest Income

$ 7,055

 

$ 7,024

 

$ 7,059

 

$ 7,013

 

$ 6,981