Segment Reporting

9 Months Ended

Sep. 30, 2012

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 commissions on investment transactions. The wealth management services are conducted by Middleburg Investment Group.

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 and accounting 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 three months ended September 30, 2012 and 2011, respectively.

	For the three months ended													For the three months ended
	September 30, 2012													September 30, 2011
	Retail Banking		Wealth Management		Mortgage Banking			Inter-company Elimina-tions			Consolidated			Retail Banking		Wealth Management		Mortgage Banking			Inter-company Elimina-tions			Consolidated
(In Thousands)
Revenues:
Interest income	$	11,262	$	2	$	630		$	(487	)	$	11,407		$	11,956	$	2	$	617		$	(344	)	$	12,231
Trust and investment fee income		—		1,080		—			(35	)		1,045			—		1,032		—			—			1,032
Other income		1,046		—		6,307			(80	)		7,273			970		—		3,846			(1	)		4,815
Total operating income		12,308		1,082		6,937			(602	)		19,725			12,926		1,034		4,463			(345	)		18,078
Expenses:
Interest expense		2,115		—		562			(487	)		2,190			2,684		—		401			(344	)		2,741
Salaries and employee benefits		3,722		548		3,006			—			7,276			4,070		608		2,222			—			6,900
Provision for loan losses		570		—		65			—			635			1,100		—		(76	)		—			1,024
Other		5,146		309		1,220			(115	)		6,560			3,691		321		1,327			(1	)		5,338
Total operating expenses		11,553		857		4,853			(602	)		16,661			11,545		929		3,874			(345	)		16,003
Income before income taxes and non-controlling interest		755		225		2,084			—			3,064			1,381		105		589			—			2,075
Income tax expense		472		93		—			—			565			381		73		—			—			454
Net Income		283		132		2,084			—			2,499			1,000		32		589			—			1,621
Non-controlling interest in (income) of consolidated subsidiary		—		—		(785	)		—			(785	)		—		—		(223	)		—			(223	)
Net income attributable to Middleburg Financial Corporation	$	283	$	132	$	1,299		$	—		$	1,714		$	1,000	$	32	$	366		$	—		$	1,398
Total assets	$	1,209,455	$	12,789	$	104,919		$	(91,202	)	$	1,235,961		$	1,139,348	$	12,378	$	77,177		$	(75,247	)	$	1,153,656
Capital expenditures	$	6	$	—	$	—		$	—		$	6		$	585	$	—	$	151		$	—		$	736
Goodwill and other intangibles	$	—	$	4,193	$	1,867		$	—		$	6,060		$	—	$	4,377	$	1,867		$	—		$	6,244

The following table presents segment information for the nine months ended September 30, 2012 and 2011, respectively.

	For the nine months ended													For the nine months ended
	September 30, 2012													September 30, 2011
	Retail Banking		Wealth Management		Mortgage Banking			Inter-company Elimina-tions			Consolidated			Retail Banking		Wealth Management		Mortgage Banking			Inter-company Elimina-tions			Consolidated
(In Thousands)
Revenues:
Interest income	$	34,837	$	7	$	2,067		$	(1,348	)	$	35,563		$	35,076	$	8	$	2,008		$	(882	)	$	36,210
Trust and investment fee income		—		3,323		—			(104	)		3,219			—		3,018		—			—			3,018
Other income		2,960		—		15,719			(425	)		18,254			2,898		—		8,373			(2	)		11,269
Total operating income		37,797		3,330		17,786			(1,877	)		57,036			37,974		3,026		10,381			(884	)		50,497
Expenses:
Interest expense		6,606		—		1,659			(1,348	)		6,917			8,051		—		1,055			(882	)		8,224
Salaries and employee benefits		11,395		1,628		9,116			—			22,139			11,450		1,921		6,294			—			19,665
Provision for loan losses		2,127		—		29			—			2,156			2,641		—		(76	)		—			2,565
Other		13,191		951		4,711			(529	)		18,324			10,940		962		3,375			(2	)		15,275
Total operating expenses		33,319		2,579		15,515			(1,877	)		49,536			33,082		2,883		10,648			(884	)		45,729
Income (loss) before income taxes and non-controlling interest		4,478		751		2,271			—			7,500			4,892		143		(267	)		—			4,768
Income tax expense		1,277		301		—			—			1,578			986		86		—			—			1,072
Net Income (loss)		3,201		450		2,271			—			5,922			3,906		57		(267	)		—			3,696
Non-controlling interest in (income) loss of consolidated subsidiary		—		—		(856	)		—			(856	)		—		—		128			—			128
Net income (loss) attributable to Middleburg Financial Corporation	$	3,201	$	450	$	1,415		$	—		$	5,066		$	3,906	$	57	$	(139	)	$	—		$	3,824
Total assets	$	1,209,455	$	12,789	$	104,919		$	(91,202	)	$	1,235,961		$	1,139,348	$	12,378	$	77,177		$	(75,247	)	$	1,153,656
Capital expenditures	$	541	$	—	$	—		$	—		$	541		$	1,276	$	3	$	151					$	1,430
Goodwill and other intangibles	$	—	$	4,193	$	1,867		$	—		$	6,060		$	—	$	4,377	$	1,867		$	—		$	6,244