UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 29, 2015
___________
MIDDLEBURG FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
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| | | |
Virginia (State or other jurisdiction of incorporation) | 0-24159 (Commission File Number) | 54-1696103 (I.R.S. Employer Identification No.) |
| | |
111 West Washington Street Middleburg, Virginia (Address of principal executive offices) | 20117 (Zip Code) |
Registrant’s telephone number, including area code: (703) 777-6327
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition.
On July 29, 2015, Middleburg Financial Corporation (the “Company”) issued a press release reporting its financial results for the period ended June 30, 2015. A copy of the press release is being furnished as Exhibit 99.1 to this report and is incorporated by reference into this Item 2.02.
Item 8.01. Other Events.
On July 29, 2015, the Company announced the declaration of a cash dividend of $0.13 per share to shareholders of record on August 14, 2015, payable on August 28, 2015. A copy of the press release is being furnished as Exhibit 99.2 to this report and is incorporated by reference into this Item 8.01.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
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| |
Exhibit No. | Description |
99.1 | Press release dated July 29, 2015. |
99.2 | Press release dated July 29, 2015. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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| | | | |
| | MIDDLEBURG FINANCIAL CORPORATION |
| | | (Registrant) | |
| | | | |
| | | | |
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Date: July 29, 2015 | | By: | /s/ Gary R. Shook | |
| | | Gary R. Shook | |
| | | President and Chief Executive Officer |
| | | |
EXHIBIT INDEX
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| |
Exhibit No. | Description |
99.1 | Press release dated July 29, 2015 |
99.2 | Press release dated July 29, 2015 |
E A R N I N G S R E L E A S E
Press Contacts: Gary R. Shook, President & CEO 540-687-4801 or
pres@middleburgbank.com
Raj Mehra, EVP & CFO 540-687-4816 or
cfo@middleburgbank.com
Jeffrey H. Culver, EVP & COO 703-737-3470 or
coo@middleburgbank.com
MIDDLEBURG FINANCIAL CORPORATION ANNOUNCES SECOND QUARTER 2015 RESULTS
MIDDLEBURG, VA. – July 29, 2015 – Middleburg Financial Corporation (the “Company”) (Nasdaq: MBRG), today announced net income of $2.28 million, or $0.32 per diluted share, for the quarter ended June 30, 2015.
“The second quarter of 2015 extended Middleburg’s trend of strong earnings growth,” commented Gary R. Shook, President and CEO of Middleburg Financial Corporation. He added, “Earnings benefited from strong loan growth at Middleburg Bank and increased asset management fees from Middleburg Investment Group combined with good expense control and a reduction in loss reserves driven by loan upgrades and sales of nonperforming loans."
Second Quarter 2015 Highlights:
| |
• | Net income of $2.28 million or $0.32 per diluted share, an increase of 22.91% compared to $1.86 million or $0.26 per diluted share for the second quarter of 2014. Net income for the six months ended June 30, 2015 increased 23.35% to $4.73 million from $3.83 million over the same period in 2014. Earnings per diluted share for the six months ended June 30, 2015 were $0.66 per share compared to $0.54 per share for the same period in 2014. |
| |
• | Net interest margin of 3.24%, lower by 16 bp compared to the previous quarter and 14 bp lower than the second quarter of 2014. |
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• | Cost of funds was 38 bp, a decrease of 1 bp compared to the previous quarter and 14 bp lower than the second quarter of 2014. |
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• | Net interest income was $9.31 million, a decrease of 3.30% compared to the previous quarter and 2.07% lower than the second quarter of 2014. Net interest income was $18.94 million for the six months ended June 30, 2015, a decrease of 1.45% over net interest income reported for the same period for 2014. |
| |
• | Non-interest income for the quarter and six months ended June 30, 2015 was lower by 43.20% and 46.49%, compared to the quarter and six months ended June 30, 2014, respectively. Non-interest income declined by 19.32% compared to the previous quarter. |
| |
• | Non-interest expense was $9.07 million, an increase of 1.90% compared to the previous quarter and 18.52% lower than the second quarter of 2014. Non-interest expense fell by 22.77% compared to the six months ended June 30, 2014. |
| |
• | Efficiency ratio of 74.88%, compared to 68.35% for the previous quarter and 78.99% for the second quarter of 2014. Year to date efficiency ratio of 71.51% compared to 75.54% for the prior year. |
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• | Total assets were $1.24 billion, an increase of 1.56% since December 31, 2014. Total assets were $1.25 billion at June 30, 2014. |
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• | Total deposits were $1.01 billion, an increase of 1.66% since December 31, 2014. Total deposits were $1.00 billion at June 30, 2014. |
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• | Loans held-for-investment grew to $773.09 million as of June 30, 2015, representing an annualized growth rate of 5.0% and a growth rate of 6.3% compared to June 30, 2014. Loans held-for-investment were $754.85 million and $727.11 million at December 31, 2014 and June 30, 2014, respectively. |
| |
• | Nonaccrual loans were $8.01 million or 1.04% of total loans, a decrease of 19.47% since December 31, 2014 and a decrease of 23.06% since June 30, 2014. |
| |
• | The allowance for loan losses declined by $130,000 compared to the previous quarter as a result of net recoveries of $295,000 and recovery of the provision for loan losses of $425,000. |
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• | The allowance for loan losses was 1.54% of total loans compared to 1.58% for the previous quarter and 1.56% at year-end 2014. |
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• | The ratio of nonperforming assets to total assets was 1.99% compared to 1.59% at December 31, 2014 and 1.57% at June 30, 2014. |
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• | Capital ratios continue to be strong: Total Risk-Based Capital Ratio of 18.28%, Tier 1 Risk-Based Capital Ratio of 17.04%, Common Equity Tier 1 Ratio of 16.35% and Tier 1 Leverage Ratio of 9.85% at June 30, 2015. |
TOTAL REVENUE
Total revenue, which is comprised of net interest income (before provision for loan losses) and non-interest income, was $11.74 million for the second quarter of 2015, representing a decrease of 7.12% compared to the previous quarter and a decrease of 14.83% compared to the second quarter of 2014.
Net Interest Income
The Company recorded net interest income of $9.31 million for the second quarter of 2015, representing a decrease of 3.30% compared to the previous quarter and a decrease of 2.07% compared to the quarter ended June 30, 2014. The net interest margin was 3.24%, 16 bp lower when compared to the previous quarter and 14 bp lower than the quarter ended June 30, 2014.
The following factors contributed to the decrease in net interest margin during the second quarter of 2015:
| |
• | Yields on earning assets decreased by 18 bp compared to the previous quarter, primarily due to a 25 bp decrease in loan yields and a 21 bp decrease in yields on investments. |
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• | Yields on investment securities were impacted by higher premium amortization stemming from faster prepayments on mortgage backed securities accompanied by lower book yields for securities that were added to the portfolio during the period. |
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• | Loan yields declined due to refinancing of existing loans and new loans getting booked at lower rates. |
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• | Cost of funds was 38 bp, relatively unchanged from the previous quarter. |
The decrease in yields on earning assets resulted in total interest income of $10.35 million for the quarter, lower by 3.24% compared to the previous quarter. Total interest income for the quarter declined by 5.38% compared to the quarter ended June 30, 2014 as yields on average earning assets fell by 29 bp while the balance of average earning assets increased by 1.98% during the period.
Non-Interest Income
Non-interest income decreased by19.35% compared to the previous quarter and declined by 43.22% compared to the quarter ended June 30, 2014. The primary reason for the decline in non-interest income compared to the quarter ended June 30, 2014 was due to the decline of gain on sale revenue from residential mortgage loans in the current period, stemming from the Company's sale of its majority interest in Southern Trust Mortgage during the second quarter of 2014.
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• | Total revenue generated by our wealth management group, Middleburg Investment Group ("MIG") was $1.24 million for the quarter ended June 30, 2015, an increase of 2.05% compared to the previous quarter and higher by 17.60% when compared to the quarter ended June 30, 2014. Fee income is based primarily upon the market value of assets under administration which were $1.97 billion at June 30, 2015, $1.87 billion at December 31, 2014 and $1.68 billion at June 30, 2014. |
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• | Other operating income was $223,000 for the quarter ended June 30, 2015, a decrease of 73.52% when compared to the previous quarter and a decrease of 19.78% when compared to the quarter ended June 30, 2014. Most of the other operating income during the previous quarter was the recovery of expenses related to a loan workout that had previously been charged off. |
NON-INTEREST EXPENSE
Non-interest expense increased by 1.90% when compared to the previous quarter and decreased by 18.52% when compared to the quarter ended June 30, 2014. Principal categories of non-interest expense that changed were the following:
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• | Salaries and employee benefit expenses increased by 2.58% when compared to the previous quarter and declined by 17.02% when compared to the quarter ended June 30, 2014. The increase in salary and benefit expenses compared to the previous quarter was primarily due to an increase in commissions and payments of signing bonuses. The decline in salary and benefit expenses compared to the second quarter of 2014 was primarily due to the sale of the Company's majority interest in Southern Trust Mortgage in the second quarter of 2014. |
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• | Occupancy and equipment expense declined by 8.44% compared to the previous quarter and by 26.98% compared to the same period in 2014. The primary reason for lower expenses in this category compared to the previous quarter was primarily due to management's overall expense control initiative. The year over year decline was primarily due to the sale of Southern Trust Mortgage in the second quarter of 2014. |
| |
• | Other expenses increased by 13.72% compared to the previous quarter and decreased by 23.30% compared to the same period in 2014. Increased expenses related to deposit processing, professional and advisory fees were the primary reasons for the higher expenses when compared to the previous quarter. The primary reason for lower expenses compared to the second quarter of 2014 was the sale of the Company's majority interest in Southern Trust Mortgage in the second quarter of 2014. |
ASSET QUALITY
The allowance for loans losses was $11.89 million or 1.54% of total loans at June 30, 2015 compared to $11.79 million or 1.56% of total loans at December 31, 2014. During the quarter, we sold $1.02 million of nonperforming loans and upgraded the risk rating of several loans, resulting in the release of reserves which led to a recovery of provision for loan losses of $425,000 during the second quarter. Two loans from a single borrower relationship underwent a restructuring during the second quarter of 2015 and one of the loans was downgraded, which resulted in total nonperforming assets increasing to $24.77 million or 1.99% of total assets compared to $19.45 million or 1.59% to total assets at December 31, 2014, increased total troubled debt restructurings to $15.74 million at June 30, 2015 compared to $6.90 million at December 31, 2014, and increased substandard loans by 29.34% to $25.05 million at June 30, 2015 from $19.37 million at December 31, 2014. While this loan was restructured and downgraded during the second quarter 2015, the Company had properly classified this loan as impaired at December 31, 2014.
Asset quality factors that continue to improve include loans that were delinquent for more than 90 days and still accruing remain minimal as a percentage of total loans of 0.02% as of June 30, 2015 and 0.004% as of December 31, 2014, past due loans decreased from $4.85 million at December 31, 2014 to $2.08 million at June 30, 2015, a decrease of 57.09%, and nonaccrual loans declined to $8.01 million as of June 30, 2015 from $9.94 million as of December 31, 2014.
CONSOLIDATED ASSETS
Total consolidated assets at June 30, 2015 were $1.24 billion, an increase of 1.56% since December 31, 2014. Changes in major asset categories were as follows:
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• | Cash balances and deposits with other banks decreased by $5.62 million compared to December 31, 2014. |
| |
• | The Company deployed some of its excess liquidity into growing its securities portfolio which increased by $3.73 million compared to December 31, 2014. |
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• | Gross loan balances increased by $18.24 million from December 31, 2014. |
CONSOLIDATED LIABILITIES
Total consolidated liabilities at June 30, 2015 were $1.12 billion, an increase of 1.49% compared to December 31, 2014. Total deposits increased by $16.37 million from December 31, 2014 to $1.01 billion as of June 30, 2015. Federal Home Loan Bank borrowings increased by $15.00 million from December 31, 2014 to $70.00 million at June 30, 2015.
SHAREHOLDERS' EQUITY AND CAPITAL
Shareholders’ equity at June 30, 2015 was $124.79 million, compared to $122.03 million at December 31, 2014. Retained earnings at June 30, 2015 were $59.15 million compared to $55.85 million at December 31, 2014. The book value of the Company’s common stock at June 30, 2015 was $17.42 per share versus $17.11 per share at December 31, 2014.
The Company’s capital ratios remain well above regulatory minimum capital ratios as of June 30, 2015:
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• | Tier 1 Leverage ratio was 9.85%, 5.85% over the regulatory minimum of 4.00%. |
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• | Common Equity Tier 1 Ratio was 16.35%, 9.35% over the regulatory minimum of 7.00%. |
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• | Tier 1 Risk-Based Capital Ratio was 17.04%, 8.54% over the regulatory minimum of 8.50%. |
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• | Total Risk Based Capital Ratio was 18.28%, 7.78% over the regulatory minimum of 10.50%. |
Caution about Forward Looking Statements
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, 2014, and other filings with the Securities and Exchange Commission.
About Middleburg Financial Corporation
Middleburg Financial Corporation is headquartered in Middleburg, Virginia and has two wholly owned subsidiaries, Middleburg Bank and Middleburg Investment Group, Inc. Middleburg Bank serves communities in Virginia with financial centers in Ashburn, Gainesville, Leesburg, Marshall, Middleburg, Purcellville, Reston, Richmond, Warrenton and Williamsburg. Middleburg Investment Group owns Middleburg Trust Company, which is headquartered in Richmond, Virginia with offices in Middleburg, Alexandria and Williamsburg.
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MIDDLEBURG FINANCIAL CORPORATION AND SUBSIDIARIES |
Consolidated Balance Sheets |
(In thousands, except for share and per share data) |
| | | |
| (Unaudited) | | |
| June 30,
2015 | | December 31, 2014 |
ASSETS | | | |
Cash and due from banks | $ | 5,001 |
| | $ | 7,396 |
|
Interest bearing deposits with other banks | 44,406 |
| | 47,626 |
|
Total cash and cash equivalents | 49,407 |
| | 55,022 |
|
Securities held to maturity, fair value of $1,374 and $1,397, respectively | 1,500 |
| | 1,500 |
|
Securities available for sale, at fair value | 351,990 |
| | 348,263 |
|
Restricted securities, at cost | 5,774 |
| | 5,279 |
|
Loans, net of allowance for loan losses of $11,894 and $11,786, respectively | 761,196 |
| | 743,060 |
|
Premises and equipment, net | 19,888 |
| | 18,104 |
|
Goodwill and identified intangibles, net | 3,722 |
| | 3,807 |
|
Other real estate owned, net of valuation allowance of $663 and $755, respectively | 3,402 |
| | 4,051 |
|
Bank owned life insurance | 22,940 |
| | 22,617 |
|
Accrued interest receivable and other assets | 22,166 |
| | 21,154 |
|
TOTAL ASSETS | $ | 1,241,985 |
| | $ | 1,222,857 |
|
| | | |
LIABILITIES | | | |
Deposits: | | | |
Non-interest bearing demand deposits | $ | 235,246 |
| | $ | 216,912 |
|
Savings and interest bearing demand deposits | 526,985 |
| | 523,230 |
|
Time deposits | 243,221 |
| | 248,938 |
|
Total deposits | 1,005,452 |
| | 989,080 |
|
Securities sold under agreements to repurchase | 24,049 |
| | 38,551 |
|
Federal Home Loan Bank borrowings | 70,000 |
| | 55,000 |
|
Subordinated notes | 5,155 |
| | 5,155 |
|
Accrued interest payable and other liabilities | 12,539 |
| | 13,037 |
|
TOTAL LIABILITIES | 1,117,195 |
| | 1,100,823 |
|
Commitments and contingent liabilities | | | |
SHAREHOLDERS' EQUITY | | | |
Common stock ($2.50 par value; 20,000,000 shares authorized, 7,163,255 and 7,131,643, issued and outstanding, respectively) | 17,521 |
| | 17,494 |
|
Capital surplus | 45,063 |
| | 44,892 |
|
Retained earnings | 59,152 |
| | 55,854 |
|
Accumulated other comprehensive income | 3,054 |
| | 3,794 |
|
TOTAL SHAREHOLDERS' EQUITY | 124,790 |
| | 122,034 |
|
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 1,241,985 |
| | $ | 1,222,857 |
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| | | | | | | | | | | | | | | |
MIDDLEBURG FINANCIAL CORPORATION AND SUBSIDIARIES |
Consolidated Statements of Income |
(In thousands, except for per share data) |
| (Unaudited) |
| For the Three Months Ended June 30, | | For the Six Months Ended June 30, |
| 2015 | | 2014 | | 2015 | | 2014 |
INTEREST AND DIVIDEND INCOME | | | | | | | |
Interest and fees on loans | $ | 8,014 |
| | $ | 8,493 |
| | $ | 16,257 |
| | $ | 17,299 |
|
Interest and dividends on securities | | | | | | | |
Taxable | 1,792 |
| | 1,792 |
| | 3,698 |
| | 3,410 |
|
Tax-exempt | 449 |
| | 537 |
| | 910 |
| | 1,121 |
|
Dividends | 66 |
| | 72 |
| | 125 |
| | 145 |
|
Interest on deposits with other banks and federal funds sold | 31 |
| | 47 |
| | 61 |
| | 73 |
|
Total interest and dividend income | 10,352 |
| | 10,941 |
| | 21,051 |
| | 22,048 |
|
INTEREST EXPENSE | | | | | | | |
Interest on deposits | 848 |
| | 995 |
| | 1,703 |
| | 1,997 |
|
Interest on securities sold under agreements to repurchase | 17 |
| | 81 |
| | 62 |
| | 161 |
|
Interest on FHLB borrowings and other debt | 174 |
| | 355 |
| | 342 |
| | 668 |
|
Total interest expense | 1,039 |
| | 1,431 |
| | 2,107 |
| | 2,826 |
|
NET INTEREST INCOME | 9,313 |
| | 9,510 |
| | 18,944 |
| | 19,222 |
|
(Recovery of) provision for loan losses | (425 | ) | | 72 |
| | 25 |
| | 960 |
|
NET INTEREST INCOME AFTER (RECOVERY OF) PROVISION FOR LOAN LOSSES | 9,738 |
| | 9,438 |
| | 18,919 |
| | 18,262 |
|
NON-INTEREST INCOME | | | | | | | |
Service charges on deposit accounts | 612 |
| | 622 |
| | 1,170 |
| | 1,180 |
|
Trust services income | 1,243 |
| | 1,057 |
| | 2,461 |
| | 2,105 |
|
Gaines (losses) on sales of loans held for sale | (6 | ) | | 1,916 |
| | (6 | ) | | 4,858 |
|
Gains on sales of securities available for sale, net | 37 |
| | 66 |
| | 138 |
| | 129 |
|
Commissions on investment sales | 154 |
| | 146 |
| | 283 |
| | 286 |
|
Bank owned life insurance | 163 |
| | 164 |
| | 323 |
| | 326 |
|
Gain on sale of majority interest in consolidated subsidiary | — |
| | 24 |
| | — |
| | 24 |
|
Other operating income | 223 |
| | 278 |
| | 1,065 |
| | 1,247 |
|
Total non-interest income | 2,426 |
| | 4,273 |
| | 5,434 |
| | 10,155 |
|
NON-INTEREST EXPENSE | | | | | | | |
Salaries and employee benefits | 4,973 |
| | 5,993 |
| | 9,821 |
| | 13,026 |
|
Occupancy and equipment | 1,226 |
| | 1,679 |
| | 2,565 |
| | 3,579 |
|
Advertising | 101 |
| | 131 |
| | 234 |
| | 294 |
|
Computer operations | 522 |
| | 510 |
| | 1,012 |
| | 969 |
|
Other real estate owned | 25 |
| | 12 |
| | 92 |
| | 179 |
|
Other taxes | 231 |
| | 220 |
| | 454 |
| | 417 |
|
Federal deposit insurance | 184 |
| | 230 |
| | 395 |
| | 468 |
|
Other operating expenses | 1,807 |
| | 2,356 |
| | 3,396 |
| | 4,335 |
|
Total non-interest expense | 9,069 |
| | 11,131 |
| | 17,969 |
| | 23,267 |
|
Income before income taxes | 3,095 |
| | 2,580 |
| | 6,384 |
| | 5,150 |
|
Income tax expense | 815 |
| | 667 |
| | 1,656 |
| | 1,415 |
|
NET INCOME | 2,280 |
| | 1,913 |
| | 4,728 |
| | 3,735 |
|
Net (income) loss attributable to non-controlling interest | — |
| | (58 | ) | | — |
| | 98 |
|
Net income attributable to Middleburg Financial Corporation | $ | 2,280 |
| | $ | 1,855 |
| | $ | 4,728 |
| | $ | 3,833 |
|
Earnings per share: | | | | | | | |
Basic | $ | 0.32 |
| | $ | 0.26 |
| | $ | 0.66 |
| | $ | 0.54 |
|
Diluted | $ | 0.32 |
| | $ | 0.26 |
| | $ | 0.66 |
| | $ | 0.54 |
|
Dividends per common share | $ | 0.10 |
| | $ | 0.07 |
| | $ | 0.20 |
| | $ | 0.14 |
|
|
| | | | | | | | | | | | | | | | | | | |
MIDDLEBURG FINANCIAL CORPORATION AND SUBSIDIARIES |
Quarterly Summary Statements of Income |
(Unaudited, Dollars In thousands, except for per share data) |
| For the Three Months Ended |
| June 30, 2015 | | March 31, 2015 | | December 31, 2014 | | September 30, 2014 | | June 30, 2014 |
INTEREST AND DIVIDEND INCOME | | | | | | | | | |
Interest and fees on loans | $ | 8,014 |
| | $ | 8,243 |
| | $ | 8,176 |
| | $ | 8,357 |
| | $ | 8,493 |
|
Interest and dividends on securities | | | | | | | | | |
Taxable | 1,792 |
| | 1,906 |
| | 1,728 |
| | 1,763 |
| | 1,792 |
|
Tax-exempt | 449 |
| | 461 |
| | 481 |
| | 535 |
| | 537 |
|
Dividends | 66 |
| | 59 |
| | 64 |
| | 84 |
| | 72 |
|
Interest on deposits with other banks and federal funds sold | 31 |
| | 30 |
| | 38 |
| | 51 |
| | 47 |
|
Total interest and dividend income | 10,352 |
| | 10,699 |
| | 10,487 |
| | 10,790 |
| | 10,941 |
|
INTEREST EXPENSE | | | | | | | | | |
Interest on deposits | 848 |
| | 855 |
| | 933 |
| | 955 |
| | 995 |
|
Interest on securities sold under agreements to repurchase | 17 |
| | 45 |
| | 79 |
| | 81 |
| | 81 |
|
Interest on FHLB borrowings and other debt | 174 |
| | 168 |
| | 160 |
| | 209 |
| | 355 |
|
Total interest expense | 1,039 |
| | 1,068 |
| | 1,172 |
| | 1,245 |
| | 1,431 |
|
NET INTEREST INCOME | 9,313 |
| | 9,631 |
| | 9,315 |
| | 9,545 |
| | 9,510 |
|
(Recovery of) provision for loan losses | (425 | ) | | 450 |
| | 450 |
| | 550 |
| | 72 |
|
NET INTEREST INCOME AFTER (RECOVERY OF) PROVISION FOR LOAN LOSSES | 9,738 |
| | 9,181 |
| | 8,865 |
| | 8,995 |
| | 9,438 |
|
NON-INTEREST INCOME | | | | | | | | | |
Service charges on deposit accounts | 612 |
| | 558 |
| | 606 |
| | 635 |
| | 622 |
|
Trust services income | 1,243 |
| | 1,218 |
| | 1,138 |
| | 1,119 |
| | 1,057 |
|
Gains (losses) on sales of loans held for sale | (6 | ) | | — |
| | 1 |
| | 1 |
| | 1,916 |
|
Gains on sales of securities available for sale, net | 37 |
| | 101 |
| | 45 |
| | 12 |
| | 66 |
|
Commissions on investment sales | 154 |
| | 129 |
| | 132 |
| | 193 |
| | 146 |
|
Bank owned life insurance | 163 |
| | 160 |
| | 168 |
| | 168 |
| | 164 |
|
Gain on sale of majority interest in consolidated subsidiary | — |
| | — |
| | — |
| | — |
| | 24 |
|
Other operating income | 223 |
| | 842 |
| | 260 |
| | 152 |
| | 278 |
|
Total non-interest income | 2,426 |
| | 3,008 |
| | 2,350 |
| | 2,280 |
| | 4,273 |
|
NON-INTEREST EXPENSE | | | | | | | | | |
Salaries and employee benefits | 4,973 |
| | 4,848 |
| | 5,134 |
| | 4,441 |
| | 5,993 |
|
Occupancy and equipment | 1,226 |
| | 1,339 |
| | 1,336 |
| | 1,262 |
| | 1,679 |
|
Advertising | 101 |
| | 133 |
| | (65 | ) | | 136 |
| | 131 |
|
Computer operations | 522 |
| | 490 |
| | 485 |
| | 439 |
| | 510 |
|
Other real estate owned | 25 |
| | 67 |
| | 110 |
| | (33 | ) | | 12 |
|
Other taxes | 231 |
| | 223 |
| | 212 |
| | 220 |
| | 220 |
|
Federal deposit insurance | 184 |
| | 211 |
| | 212 |
| | 220 |
| | 230 |
|
Other operating expenses | 1,807 |
| | 1,589 |
| | 1,999 |
| | 1,706 |
| | 2,356 |
|
Total non-interest expense | 9,069 |
| | 8,900 |
| | 9,423 |
| | 8,391 |
| | 11,131 |
|
Income before income taxes | 3,095 |
| | 3,289 |
| | 1,792 |
| | 2,884 |
| | 2,580 |
|
Income tax expense | 815 |
| | 841 |
| | 162 |
| | 763 |
| | 667 |
|
NET INCOME | 2,280 |
| | 2,448 |
| | 1,630 |
| | 2,121 |
| | 1,913 |
|
Net loss (income) attributable to non-controlling interest | — |
| | — |
| | — |
| | — |
| | (58 | ) |
Net income attributable to Middleburg Financial Corporation | $ | 2,280 |
| | $ | 2,448 |
| | $ | 1,630 |
| | $ | 2,121 |
| | $ | 1,855 |
|
Earnings per share: | | | | | | | | | |
Basic | $ | 0.32 |
| | $ | 0.34 |
| | $ | 0.23 |
| | $ | 0.30 |
| | $ | 0.26 |
|
Diluted | $ | 0.32 |
| | $ | 0.34 |
| | $ | 0.23 |
| | $ | 0.30 |
| | $ | 0.26 |
|
Dividends per common share | $ | 0.10 |
| | $ | 0.10 |
| | $ | 0.10 |
| | $ | 0.10 |
| | $ | 0.07 |
|
|
| | | | | | | | | | | | | | | | | | | |
MIDDLEBURG FINANCIAL CORPORATION AND SUBSIDIARIES |
Selected Financial Data by Quarter |
(Unaudited, Dollars in thousands, except for per share data) |
| June 30, | | March 31, | | December 31, | | September 30, | | June 30, |
| 2015 | | 2015 | | 2014 | | 2014 | | 2014 |
BALANCE SHEET RATIOS | | | | | | | | | |
Loans to deposits | 76.89 | % | | 74.60 | % | | 76.32 | % | | 73.87 | % | | 72.65 | % |
Average interest-earning assets to average interest-bearing liabilities | 135.72 | % | | 136.04 | % | | 133.54 | % | | 130.14 | % | | 128.37 | % |
INCOME STATEMENT RATIOS | | | | | | | | | |
Return on average assets (ROA) | 0.73 | % | | 0.80 | % | | 0.53 | % | | 0.69 | % | | 0.61 | % |
Return on average equity (ROE) | 7.31 | % | | 8.01 | % | | 5.31 | % | | 7.00 | % | | 6.30 | % |
Net interest margin (1) | 3.24 | % | | 3.40 | % | | 3.31 | % | | 3.36 | % | | 3.38 | % |
Yield on average earning assets | 3.59 | % | | 3.77 | % | | 3.72 | % | | 3.79 | % | | 3.88 | % |
Cost of funds | 0.38 | % | | 0.39 | % | | 0.43 | % | | 0.45 | % | | 0.52 | % |
Efficiency ratio (5) | 74.88 | % | | 68.35 | % | | 77.53 | % | | 68.82 | % | | 78.99 | % |
PER SHARE DATA | | | | | | | | | |
Dividends | $ | 0.10 |
| | $ | 0.10 |
| | $ | 0.10 |
| | $ | 0.10 |
| | $ | 0.07 |
|
Book value | 17.42 |
| | 17.51 |
| | 17.11 |
| | 16.97 |
| | 16.73 |
|
Tangible book value (4) | 16.90 |
| | 16.99 |
| | 16.58 |
| | 16.43 |
| | 16.19 |
|
SHARE PRICE DATA | | | | | | | | | |
Closing price | $ | 18.00 |
| | $ | 18.30 |
| | $ | 18.01 |
| | $ | 17.74 |
| | $ | 20.00 |
|
Diluted earnings multiple (2) | 14.06 |
| | 13.45 |
| | 16.99 |
| | 14.78 |
| | 19.23 |
|
Book value multiple (3) | 1.03 |
| | 1.04 |
| | 1.05 |
| | 1.05 |
| | 1.20 |
|
COMMON STOCK DATA | | | | | | | | | |
Outstanding shares at end of period | 7,163,255 |
| | 7,127,105 |
| | 7,131,643 |
| | 7,123,914 |
| | 7,113,744 |
|
Weighted average shares O/S , basic - QTD | 7,145,929 |
| | 7,127,910 |
| | 7,127,164 |
| | 7,108,450 |
| | 7,093,788 |
|
Weighted average shares O/S, diluted - QTD | 7,167,165 |
| | 7,148,702 |
| | 7,146,140 |
| | 7,134,262 |
| | 7,117,826 |
|
Dividend payout ratio | 31.25 | % | | 29.41 | % | | 43.48 | % | | 33.33 | % | | 26.92 | % |
CAPITAL RATIOS | | | | | | | | | |
Capital to assets - common shareholders | 10.05 | % | | 9.86 | % | | 9.98 | % | | 10.01 | % | | 9.50 | % |
Leverage ratio | 9.85 | % | | 9.76 | % | | 9.90 | % | | 9.71 | % | | 9.54 | % |
Common equity tier 1 ratio | 16.35 | % | | 16.49 | % | | N/A | | N/A | | N/A |
Tier 1 risk based capital ratio | 17.04 | % | | 17.20 | % | | 15.70 | % | | 16.04 | % | | 15.63 | % |
Total risk based capital ratio | 18.28 | % | | 18.45 | % | | 16.95 | % | | 17.30 | % | | 16.88 | % |
CREDIT QUALITY | | | | | | | | | |
Net charge-offs/recoveries to average loans | (0.04 | )% | | 0.03 | % | | 0.46 | % | | 0.09 | % | | 0.23 | % |
Total nonperforming loans to total loans | 2.63 | % | | 1.83 | % | | 1.89 | % | | 1.63 | % | | 2.10 | % |
Total nonperforming assets to total assets | 1.99 | % | | 1.46 | % | | 1.59 | % | | 1.50 | % | | 1.57 | % |
Nonaccrual loans to: | | | | | | | | | |
Total loans | 1.04 | % | | 1.26 | % | | 1.32 | % | | 1.01 | % | | 1.43 | % |
Total assets | 0.64 | % | | 0.76 | % | | 0.81 | % | | 0.61 | % | | 0.83 | % |
Allowance for loan losses to: | | | | | | | | | |
Total loans | 1.54 | % | | 1.58 | % | | 1.56 | % | | 1.57 | % | | 1.58 | % |
Nonperforming assets | 48.03 | % | | 65.23 | % | | 60.59 | % | | 63.18 | % | | 58.50 | % |
Nonaccrual loans | 148.53 | % | | 124.92 | % | | 118.52 | % | | 155.80 | % | | 110.57 | % |
NONPERFORMING ASSETS | | | | | | | | | |
Loans delinquent 90+ days and still accruing | $ | 173 |
| | $ | 74 |
| | $ | 30 |
| | $ | 30 |
| | $ | 355 |
|
Nonaccrual loans | 8,008 |
| | 9,625 |
| | 9,944 |
| | 7,332 |
| | 10,408 |
|
Restructured loans (not in nonaccrual) | 12,138 |
| | 4,262 |
| | 4,295 |
| | 4,522 |
| | 4,552 |
|
Other real estate owned | 3,402 |
| | 3,402 |
| | 4,051 |
| | 5,064 |
| | 4,356 |
|
Repossessed assets | 1,044 |
| | 1,070 |
| | 1,132 |
| | 1,132 |
| | — |
|
Total nonperforming assets | $ | 24,765 |
| | $ | 18,433 |
| | $ | 19,452 |
| | $ | 18,080 |
| | $ | 19,671 |
|
| |
(1) | The net interest margin is calculated by dividing tax equivalent net interest income by total average earning assets. Tax equivalent net interest income is calculated by grossing up interest income for the amounts that are non taxable (i.e., municipal income) then subtracting interest expense. The tax rate utilized is 34%. The Company’s net interest margin is a common measure used by the financial service industry to determine how profitably earning assets are funded. Because the Company earns non taxable interest income due to the mix in its investment and loan portfolios, net interest income for the ratio is calculated on a tax equivalent basis as described above. This calculation excludes net securities gains and losses. |
| |
(2) | The diluted earnings multiple is calculated by dividing the period’s closing market price per share by the annualized diluted earnings per share for the period. The diluted earnings multiple is a measure of how much an investor may be willing to pay for $1.00 of the Company’s earnings. |
| |
(3) | The book value multiple (or price to book ratio) is calculated by dividing the period’s closing market price per share by the period’s book value per share. The book value multiple is a measure used to compare the Company’s market value per share to its book value per share. |
| |
(4) | Tangible book value is not a measurement under accounting principles generally accepted in the United States. It is computed by subtracting identified intangible assets and goodwill from total Middleburg Financial Corporation shareholders’ equity and then dividing the result by the number of shares of common stock issued and outstanding at the end of the accounting period. |
| |
(5) | The efficiency ratio is not a measurement under accounting principles generally accepted in the United States. It is calculated by dividing non-interest expense (adjusted for amortization of intangibles, other real estate expenses, and non-recurring one-time charges) by the sum of tax equivalent net interest income and non-interest income excluding gains and losses on the investment portfolio. The tax rate utilized in calculating tax equivalent amounts is 34%. The Company calculates and reviews this ratio as a means of evaluating operational efficiency. |
|
| | | | | | | | | | | | | | | | | | | | | |
MIDDLEBURG FINANCIAL CORPORATION AND SUBSIDIARIES Average Balances, Income and Expenses, Yields and Rates (Unaudited) |
| Three months ended June 30, |
| 2015 | | 2014 |
| Average Balance | | Income/ Expense | | Yield/ Rate (2) | | Average Balance | | Income/ Expense | | Yield/ Rate (2) |
| (Dollars in thousands) |
Assets: | | | | | | | | | | | |
Securities: | | | | | | | | | | | |
Taxable | $ | 315,874 |
| | $ | 1,858 |
| | 2.36 | % | | $ | 276,110 |
| | $ | 1,864 |
| | 2.71 | % |
Tax-exempt (1) | 51,199 |
| | 680 |
| | 5.33 | % | | 57,394 |
| | 814 |
| | 5.69 | % |
Total securities | $ | 367,073 |
| | $ | 2,538 |
| | 2.77 | % | | $ | 333,504 |
| | $ | 2,678 |
| | 3.22 | % |
Loans: | | | | | | | | | | | |
Taxable | $ | 764,101 |
| | $ | 8,009 |
| | 4.20 | % | | $ | 744,009 |
| | $ | 8,487 |
| | 4.58 | % |
Tax-exempt (1) | 615 |
| | 8 |
| | 5.22 | % | | 652 |
| | 9 |
| | 5.54 | % |
Total loans (3) | $ | 764,716 |
| | $ | 8,017 |
| | 4.20 | % | | $ | 744,661 |
| | $ | 8,496 |
| | 4.58 | % |
Interest on deposits with other banks and federal funds sold | 50,861 |
| | 31 |
| | 0.24 | % | | 81,552 |
| | 47 |
| | 0.23 | % |
Total earning assets | $ | 1,182,650 |
| | $ | 10,586 |
| | 3.59 | % | | $ | 1,159,717 |
| | $ | 11,221 |
| | 3.88 | % |
Less: allowance for loan losses | (12,150 | ) | | | | | | (12,606 | ) | | | | |
Total nonearning assets | 76,720 |
| | | | | | 78,679 |
| | | | |
Total assets | $ | 1,247,220 |
| | |
| | | | $ | 1,225,790 |
| | |
| | |
Liabilities: | |
| | |
| | | | |
| | |
| | |
Interest-bearing deposits: | |
| | |
| | | | |
| | |
| | |
Checking | $ | 345,768 |
| | $ | 173 |
| | 0.20 | % | | $ | 340,789 |
| | $ | 161 |
| | 0.19 | % |
Regular savings | 118,467 |
| | 55 |
| | 0.19 | % | | 113,487 |
| | 53 |
| | 0.19 | % |
Money market savings | 66,300 |
| | 31 |
| | 0.19 | % | | 73,308 |
| | 35 |
| | 0.19 | % |
Time deposits: | | | | | | | | | | | |
$100,000 and over | 129,519 |
| | 286 |
| | 0.89 | % | | 123,527 |
| | 317 |
| | 1.03 | % |
Under $100,000 | 107,352 |
| | 303 |
| | 1.13 | % | | 132,002 |
| | 429 |
| | 1.30 | % |
Total interest-bearing deposits | $ | 767,406 |
| | $ | 848 |
| | 0.44 | % | | $ | 783,113 |
| | $ | 995 |
| | 0.51 | % |
Securities sold under agreements to repurchase | 29,168 |
| | 17 |
| | 0.25 | % | | 35,114 |
| | 81 |
| | 0.93 | % |
FHLB borrowings and other debt | 74,825 |
| | 174 |
| | 0.93 | % | | 85,155 |
| | 355 |
| | 1.60 | % |
Federal funds purchased | 4 |
| | — |
| | — | % | | 4 |
| | — |
| | — | % |
Total interest-bearing liabilities | $ | 871,403 |
| | $ | 1,039 |
| | 0.48 | % | | $ | 903,386 |
| | $ | 1,431 |
| | 0.63 | % |
Non-interest bearing liabilities: | |
| | |
| | | | |
| | |
| | |
Demand deposits | 237,560 |
| | | | | | 194,779 |
| | | | |
Other liabilities | 13,149 |
| | | | | | 9,936 |
| | | | |
Total liabilities | $ | 1,122,112 |
| | |
| | | | $ | 1,108,101 |
| | |
| | |
Non-controlling interest | — |
| | | | | | — |
| | | | |
Shareholders' equity | 125,108 |
| | | | | | 117,689 |
| | | | |
Total liabilities and shareholders' equity | $ | 1,247,220 |
| | |
| | | | $ | 1,225,790 |
| | |
| | |
Net interest income | |
| | $ | 9,547 |
| | | | |
| | $ | 9,790 |
| | |
Interest rate spread | |
| | |
| | 3.11 | % | | |
| | |
| | 3.25 | % |
Cost of Funds | |
| | |
| | 0.38 | % | | |
| | |
| | 0.52 | % |
Interest expense as a percent of average earning assets | |
| | |
| | 0.35 | % | | |
| | |
| | 0.49 | % |
Net interest margin | |
| | |
| | 3.24 | % | | |
| | |
| | 3.38 | % |
| |
(1) | Income and yields are reported on tax equivalent basis assuming a federal tax rate of 34%. |
| |
(2) | All yields and rates have been annualized on a 365 day year. |
| |
(3) | Total average loans include loans on non-accrual status. |
|
| | | | | | | | | | | | | | | | | | | | | |
MIDDLEBURG FINANCIAL CORPORATION AND SUBSIDIARIES Average Balances, Income and Expenses, Yields and Rates (Unaudited) |
| Six months ended June 30, |
| 2015 | | 2014 |
| Average Balance | | Income/ Expense | | Yield/ Rate (2) | | Average Balance | | Income/ Expense | | Yield/ Rate (2) |
| (Dollars in thousands) |
Assets: | | | | | | | | | | | |
Securities: | | | | | | | | | | | |
Taxable | $ | 312,875 |
| | $ | 3,823 |
| | 2.46 | % | | $ | 276,510 |
| | $ | 3,555 |
| | 2.59 | % |
Tax-exempt (1) | 51,899 |
| | 1,379 |
| | 5.36 | % | | 59,155 |
| | 1,698 |
| | 5.79 | % |
Total securities | $ | 364,774 |
| | $ | 5,202 |
| | 2.88 | % | | $ | 335,665 |
| | $ | 5,253 |
| | 3.16 | % |
Loans: | | | | | | | | | | | |
Taxable | $ | 757,880 |
| | $ | 16,246 |
| | 4.32 | % | | $ | 750,666 |
| | $ | 17,288 |
| | 4.64 | % |
Tax-exempt (1) | 615 |
| | 16 |
| | 5.25 | % | | 652 |
| | 17 |
| | 5.26 | % |
Total loans (3) | $ | 758,495 |
| | $ | 16,262 |
| | 4.32 | % | | $ | 751,318 |
| | $ | 17,305 |
| | 4.66 | % |
Interest on deposits with other banks and federal funds sold | 56,003 |
| | 61 |
| | 0.22 | % | | 65,268 |
| | 73 |
| | 0.23 | % |
Total earning assets | $ | 1,179,272 |
| | $ | 21,525 |
| | 3.68 | % | | $ | 1,152,251 |
| | $ | 22,631 |
| | 3.96 | % |
Less: allowance for loan losses | (11,907 | ) | | | | | | (13,101 | ) | | | | |
Total nonearning assets | 76,473 |
| | | | | | 80,133 |
| | | | |
Total assets | $ | 1,243,838 |
| | |
| | | | $ | 1,219,283 |
| | |
| | |
Liabilities: | |
| | |
| | | | |
| | |
| | |
Interest-bearing deposits: | |
| | |
| | | | |
| | |
| | |
Checking | $ | 341,471 |
| | $ | 339 |
| | 0.20 | % | | $ | 336,690 |
| | $ | 322 |
| | 0.19 | % |
Regular savings | 116,902 |
| | 108 |
| | 0.19 | % | | 113,262 |
| | 105 |
| | 0.19 | % |
Money market savings | 67,909 |
| | 63 |
| | 0.19 | % | | 74,864 |
| | 71 |
| | 0.19 | % |
Time deposits: | | | | | | | | | | | |
$100,000 and over | 130,872 |
| | 579 |
| | 0.89 | % | | 126,948 |
| | 640 |
| | 1.02 | % |
Under $100,000 | 108,851 |
| | 614 |
| | 1.14 | % | | 131,385 |
| | 859 |
| | 1.32 | % |
Total interest-bearing deposits | $ | 766,005 |
| | $ | 1,703 |
| | 0.45 | % | | $ | 783,149 |
| | $ | 1,997 |
| | 0.51 | % |
Securities sold under agreements to repurchase | 31,452 |
| | 62 |
| | 0.40 | % | | 35,431 |
| | 161 |
| | 0.90 | % |
FHLB borrowings and other debt | 70,431 |
| | 342 |
| | 0.98 | % | | 85,155 |
| | 668 |
| | 1.54 | % |
Federal funds purchased | 2 |
| | — |
| | — | % | | 2 |
| | — |
| | — | % |
Total interest-bearing liabilities | $ | 867,890 |
| | $ | 2,107 |
| | 0.49 | % | | $ | 903,737 |
| | $ | 2,826 |
| | 0.63 | % |
Non-interest bearing liabilities: | |
| | |
| | | | |
| | |
| | |
Demand deposits | 238,169 |
| | | | | | 189,807 |
| | | | |
Other liabilities | 13,283 |
| | | | | | 9,549 |
| | | | |
Total liabilities | $ | 1,119,342 |
| | |
| | | | $ | 1,103,093 |
| | |
| | |
Non-controlling interest | — |
| | | | | | — |
| | | | |
Shareholders' equity | 124,496 |
| | | | | | 116,190 |
| | | | |
Total liabilities and shareholders' equity | $ | 1,243,838 |
| | |
| | | | $ | 1,219,283 |
| | |
| | |
Net interest income | |
| | $ | 19,418 |
| | | | |
| | $ | 19,805 |
| | |
Interest rate spread | |
| | |
| | 3.19 | % | | |
| | |
| | 3.33 | % |
Cost of Funds | |
| | |
| | 0.38 | % | | |
| | |
| | 0.52 | % |
Interest expense as a percent of average earning assets | |
| | |
| | 0.36 | % | | |
| | |
| | 0.49 | % |
Net interest margin | |
| | |
| | 3.32 | % | | |
| | |
| | 3.47 | % |
MIDDLEBURG FINANCIAL CORPORATION ANNOUNCES 30% INCREASE IN QUARTERLY DIVIDEND
Press Contacts: Gary R. Shook, President & CEO 540-687-4801 or
pres@middleburgbank.com
Raj Mehra, EVP & CFO 540-687-4816 or
cfo@middleburgbank.com
Jeffrey H. Culver, EVP & COO 703-737-3470 or
coo@middleburgbank.com
MIDDLEBURG, VA. - July 29, 2015 – The board of directors of Middleburg Financial Corporation (NASDAQ – MBRG) today announced a $0.13 per common share cash dividend for shareholders of record as of August 14, 2015, and payable on August 28, 2015. This represents a dividend increase of $.03 or 30% per share. Gary R. Shook, President and Chief Executive Officer of Middleburg Financial Corporation commented, “We are certainly quite pleased to pass along a portion of our improved earnings in the form of a dividend increase for our shareholders. With this increase we are comfortable that we are well capitalized and able to handle the Company’s continued growth going forward.”
Middleburg Financial Corporation is headquartered in Middleburg, Virginia and has two wholly owned subsidiaries, Middleburg Bank and Middleburg Investment Group, Inc. Middleburg Bank serves communities in Virginia with financial centers in Ashburn, Gainesville, Leesburg, Marshall, Middleburg, Purcellville, Reston, Richmond, Warrenton and Williamsburg. Middleburg Investment Group owns Middleburg Trust Company, which is headquartered in Richmond, Virginia with offices in Middleburg, Alexandria and Williamsburg.
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