Segment Reporting

9 Months Ended

Sep. 30, 2011

Segment Reporting [Abstract]

Segment Reporting

Note 7.                                Segment Reporting

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

Revenue from the wealth management activities is comprised of fees based upon the market value of the accounts under administration as well as commission on investment transactions.  The wealth management services are conducted by Middleburg Trust Company and the investment services department of Middleburg Bank.

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

Middleburg Bank and the Company have assets in custody with Middleburg Trust Company and accordingly pay Middleburg Trust Company a monthly fee.  Middleburg Bank also pays interest to Middleburg Trust Company and Southern Trust Mortgage on deposit accounts that each company has at Middleburg Bank.  Southern Trust Mortgage has an outstanding line of credit of $5.0 million and a participation agreement of $75.0 million for which it pays interest to Middleburg Bank on any outstanding balance.  Middleburg Bank provides office space and data processing services to Southern Trust Mortgage for which it receives rental and fee income.  Transactions related to these relationships are eliminated to reach consolidated totals.

The following table presents segment information for the nine months ended September 30, 2011 and 2010, respectively.

	For the Nine Months Ended												For the Nine Months Ended
	September 30, 2011												September 30, 2010
	Retail		Wealth		Mortgage			Intercompany					Retail			Wealth			Mortgage			Intercompany
	Banking		Management		Banking			Eliminations			Consolidated		Banking			Management			Banking			Eliminations			Consolidated
(In Thousands)
Revenues:
Interest income	$	35,076	$	8	$	2,008		$	(882	)	$	36,210	$	35,075		$	7		$	1,809		$	(948	)	$	35,943
Trust and investment
fee income		-		2,813		-			-			2,813		-			2,546			-			(49	)		2,497
Other income		2,480		552		12,770			(2	)		15,800		2,065			445			13,026			(7	)		15,529
Total operating income		37,556		3,373		14,778			(884	)		54,823		37,140			2,998			14,835			(1,004	)		53,969
Expenses:
Interest expense		8,051		-		1,055			(882	)		8,224		10,854			-			1,204			(961	)		11,097
Salaries and employee benefits		10,878		2,268		10,691			-			23,837		9,729			2,332			9,985			-			22,046
Provision for loan losses		2,641		-		(76	)		-			2,565		11,122			-			228			-			11,350
Other		11,094		962		3,375			(2	)		15,429		13,063			766			2,764			(43	)		16,550
Total operating expenses		32,664		3,230		15,045			(884	)		50,055		44,768			3,098			14,181			(1,004	)		61,043
Income (loss) before income taxes
and non-controlling interest		4,892		143		(267	)		-			4,768		(7,628	)		(100	)		654			-			(7,074	)
Income tax expense (benefit)		986		86		-			-			1,072		(3,171	)		36			-			-			(3,135	)
Net Income (loss)		3,906		57		(267	)		-			3,696		(4,457	)		(136	)		654			-			(3,939	)
Non-controlling interest in
(income)/loss of consolidated subsidiary		-		-		128			-			128		-			-			(311	)		-			(311	)
Net income (loss) attributable to
Middleburg Financial Corporation	$	3,906	$	57	$	(139	)	$	-		$	3,824	$	(4,457	)	$	(136	)	$	343		$	-		$	(4,250	)
Total assets	$	1,139,348	$	12,378	$	77,177		$	(75,247	)	$	1,153,656	$	1,079,410		$	15,677		$	88,905		$	(72,528	)	$	1,111,464
Capital expenditures	$	1,276	$	3	$	151					$	1,430	$	508		$	13		$	25		$	-		$	546
Goodwill and other intangibles	$	-	$	4,377	$	1,867		$	-		$	6,244	$	-		$	4,536		$	1,867		$	-		$	6,403

The following table presents segment information for the three months ended September 30, 2011 and 2010, respectively.

	For the Three Months Ended													For the Three Months Ended
	September 30, 2011													September 30, 2010
	Retail		Wealth		Mortgage			Intercompany						Retail			Wealth		Mortgage			Intercompany
	Banking		Management		Banking			Eliminations			Consolidated			Banking			Management		Banking			Eliminations			Consolidated
(In Thousands)
Revenues:
Interest income	$	11,956	$	2	$	683		$	(344	)	$	12,297		$	11,706		$	3	$	343		$	(365	)	$	11,687
Trust and investment
fee income		-		963		-			-			963			-			855		-			(48	)		807
Other income		869		187		5,602			(1	)		6,657			385			156		5,573			(24	)		6,090
Total operating income		12,825		1,152		6,285			(345	)		19,917			12,091			1,014		5,916			(437	)		18,584
Expenses:
Interest expense		2,684		-		401			(344	)		2,741			3,595			-		514			(380	)		3,729
Salaries and employee benefits		3,952		726		4,030			-			8,708			3,151			794		3,720			-			7,665
Provision for loan losses		1,100		-		(76	)		-			1,024			9,120			-		10			-			9,130
Other		3,708		321		1,341			(1	)		5,369			5,904			82		793			(57	)		6,722
Total operating expenses		11,444		1,047		5,696			(345	)		17,842			21,770			876		5,037			(437	)		27,246
Income (loss) before income taxes
and non-controlling interest		1,381		105		589			-			2,075			(9,679	)		138		879			-			(8,662	)
Income tax expense (benefit)		381		73		-			-			454			(3,357	)		60		-			-			(3,297	)
Net Income (loss)		1,000		32		589			-			1,621			(6,322	)		78		879			-			(5,365	)
Non-controlling interest in
(income)/loss of consolidated subsidiary		-		-		(223	)		-			(223	)							(423	)		-			(423	)
Net income (loss) attributable to
Middleburg Financial Corporation	$	1,000	$	32	$	366		$	-		$	1,398		$	(6,322	)	$	78	$	456		$	-		$	(5,788	)
Total assets	$	1,139,348	$	12,378	$	77,177		$	(75,247	)	$	1,153,656		$	1,079,410		$	15,677	$	88,905		$	(72,528	)	$	1,111,464
Capital expenditures	$	585	$	-	$	151		$	-		$	736		$	78		$	1	$	4		$	-		$	83
Goodwill and other intangibles	$	-	$	4,377	$	1,867		$	-		$	6,244		$	-		$	4,536	$	1,867		$	-		$	6,403