MIDDLEBURG, Va., Jan. 30, 2017 /PRNewswire/ -- Middleburg Financial Corporation (the "Company") (Nasdaq: MBRG), today announced net income of $1.09 million, or $0.15 per diluted share, for the quarter ended December 31, 2016 and $8.06 million, or $1.13 per diluted share, for the full year 2016.
"On October 24, 2016, the Company announced a Definitive Agreement of a strategic merger of equals with Access National Corporation (NASDAQ: ANCX). We believe that this combination will result in Virginia's premier bank, with enhanced scale, improved efficiency and a well-diversified business model. The two companies have highly complementary businesses and geographic footprints with a greater market reach which creates significant opportunities for growth. Our strategic focus mirrors the attributes of the high net worth northern and central Virginia market and bodes well for us as we move forward," said Gary R. Shook, President and CEO of Middleburg Financial Corporation. "While the fourth quarter had some bumpiness from significant merger related expenses, we did see quality loan growth accompanied by a lower cost of funds and an expanded net interest margin. Loan growth came from all of our markets with a diversity of loan types. For the second year in a row Middleburg Investment Group ("MIG") produced record earnings of $1.2 million. With approximately $2 billion in assets under administration, MIG has the scale that will continue to drive increased profitability."
Fourth quarter and full year 2016 highlights :
-- The pending strategic merger with Access National Corporation is on track to close during the second quarter of 2017. -- Net income was $1.09 million, or $0.15 per diluted share, compared to $2.26 million, or $0.32 per diluted share, for the previous quarter and $781,000, or $0.11 per diluted share, for the same period in 2015. -- Total revenue was $13.53 million for the fourth quarter of 2016, higher by 14.09% compared to the previous quarter and an increase of 14.41% relative to the same period in 2015. -- The net interest margin expanded by 6 basis points to 3.17%, compared to 3.11% for the previous quarter and was unchanged relative to the same period in 2015. -- Cost of funds declined by 2 basis points to 36 basis points during the fourth quarter compared to 38 basis points for the previous quarter. The cost of funds for the full year 2016 was 38 basis points unchanged relative to the full year 2015. -- Reported earnings reflect merger related expenses of $1.05 million for the fourth quarter of 2016 and $1.29 million for the full year 2016. -- Loans held-for-investment increased by $14.21 million or 6.68% on an annualized basis during the fourth quarter of 2016. -- Deposits grew by 1.18% in 2016 to $1.05 billion at December 31, 2016, while non-interest bearing demand deposits grew by 5.37% during 2016. -- A loan loss provision of $1.80 million was recognized in the current quarter which resulted in a ratio of loan loss reserves to total loans of 1.33% and the ratio of reserves to nonaccrual loans was 179.90% at December 31, 2016.
TOTAL REVENUE
Total revenue, which is composed of net interest income and non-interest income (before any provision for loan losses), was $13.53 million for the fourth quarter of 2016, higher by 14.09% compared to the previous quarter and by 14.41% compared to the same period in 2015.
Net Interest Income
The Company recorded net interest income of $9.62 million for the fourth quarter of 2016, relatively unchanged compared to the previous quarter and higher by 1.53% compared to the same period in 2015. The net interest margin in the fourth quarter of 2016 was 3.17%, higher by 6 basis points ("bp") compared to the previous quarter and unchanged compared to the same period in 2015.
The following factors contributed to the change in net interest margin during the fourth quarter of 2016 compared to the previous quarter:
-- Yields on earning assets increased by 4 bp compared to the previous quarter. -- Yields on investment securities increased by 24 bp compared to the previous quarter. A significant portion of the investment portfolio is in residential mortgage backed securities ("MBS") and SBA securities. These securities experienced slower prepayments which had the effect of reducing premium amortization and increasing yields. Yields on floating rate securities, many of which have coupons that are indexed to either LIBOR or the Prime rate, increased following the decision by the Federal Reserve to raise the target Federal Funds rate by 25 bp in December of 2016. -- Yields on loans decreased by 7 bp compared to the previous quarter, as we experienced some payoffs and also added loans at lower yields. The compression in loan yields was partially offset by higher yields on floating rate loans following the decision by the Federal Reserve to raise the target Federal Funds rate by 25 bp in December of 2016. -- Cost of funds was 0.36%, compared to 0.38% for the previous quarter as we paid off some borrowings and higher cost time deposits.
The following table analyzes changes in net interest income comparing the fourth quarter of 2016 to the previous quarter and to the quarter ended December 31, 2015. Changes in tax-exempt income are presented on a tax-equivalent basis.
Quarters Ended (Dollars in thousands) December 31, 2016 vs. September 30, 2016 December 31, 2016 vs. December 31, 2015 Increase (Decrease) Due to Changes in: Increase (Decrease) Due to Changes in: Volume Rate Total Volume Rate Total ------ ---- ----- ------ ---- ----- Earning Assets: Securities: Taxable $(50) $210 $160 $(168) $(66) $(234) Tax-exempt (21) - (21) (34) (45) (79) Loans: Taxable (85) (139) (224) 506 (101) 405 Tax-exempt - (1) (1) - (1) (1) Interest on deposits with other banks and federal funds sold (2) 8 6 (1) 20 19 --- --- --- --- --- --- Total earning assets $(158) $78 $(80) $303 $(193) $110 ----- --- ---- ---- ----- ---- Interest-Bearing Liabilities: Checking $(2) $(1) $(3) $ - $14 $14 Regular savings 1 - 1 3 - 3 Money market savings 4 (1) 3 3 9 12 Time deposits: $100,000 and over (26) - (26) (7) (3) (10) Under $100,000 (21) 2 (19) 13 (49) (36) --- --- --- --- --- --- Total interest-bearing deposits $(44) $ - $(44) $12 $(29) $(17) Securities sold under agreements to repurchase - - - - 1 1 FHLB borrowings and other debt (57) 29 (28) (15) 23 8 --- --- --- --- --- --- Total interest-bearing liabilities $(101) $29 $(72) $(3) $(5) $(8) ----- --- ---- --- --- --- Change in net interest income $(57) $49 $(8) $306 $(188) $118 ==== === === ==== ===== ====
Comparing the fourth quarter of 2016 to the previous quarter, the table shows that the increase in interest income for securities was primarily due to higher yields stemming from reduced premium amortization on amortizing securities. We continue to manage the investment portfolio with a focus on liquidity while retaining a balance between fixed and floating rate investments. The decrease in interest income from loans in the fourth quarter relative to the previous quarter came from payoff activity accompanied by lower yields on new loan originations. Interest income from securities in the fourth quarter of 2016 was lower compared to the same quarter in 2015 as we sold some higher yielding securities in the fourth quarter of 2016 and used proceeds to fund loans and also pay off borrowings and maturing time deposits. Interest income from loans in the fourth quarter of 2016 was higher relative to the same period in 2015 primarily as a result of growth in loan balances in 2016. Competition for good credits continues to pressure loan rates.
Non-Interest Income
Non-interest income for the fourth quarter of 2016 increased by 74.51% compared to the previous quarter and was higher by 66.14% compared to the quarter ended December 31, 2015.
-- Total revenue generated by our wealth management group, Middleburg Investment Group ("MIG") increased by 1.46% to $1.19 million compared to the previous quarter and increased by 2.51% compared to the same quarter in 2015. Fee income is primarily based upon the market value of assets under administration which were $1.93 billion at December 31, 2016. -- Net gains from securities sold were $1.04 million for the fourth quarter and $1.55 million for the full year 2016. Securities were sold in order to fund loan originations and also to pay off borrowings and high cost maturing time deposits. -- Other operating income was $894,000 for the quarter ended December 31, 2016, an increase of 557.35% compared to the previous quarter and an increase of 102.26% compared to the quarter ended December 31, 2015. In the fourth quarter of 2016, there was a substantial recovery of approximately $191,000 in expenses related to an overdrawn deposit account that had previously been charged off and also insurance proceeds of approximately $560,000 were received related to previously incurred storm damage to two of our financial service centers.
NON-INTEREST EXPENSE
Non-interest expense for the fourth quarter of 2016 increased by 9.22% compared to the previous quarter and by 23.13% compared to the same period in 2015. Principal categories of non-interest expense that changed were the following:
-- Salaries and employee benefit expense decreased to $4.61 million for the current quarter compared to $4.73 million for the prior quarter and increased by 22.12% when compared to the same period in 2015. The increase in salary and benefit expenses in the fourth quarter of 2016 relative to the same period in 2015 was due to higher incentive accruals in the fourth quarter of 2016. -- Costs related to other real estate owned (OREO) decreased by $159,000 when compared to the prior quarter and increased by $25,000 when compared to the same period in 2015. OREO expenses were higher in the third quarter of 2016 due to valuation adjustments of $167,000 for several properties. -- Expenses from computer operations were $659,000 for the current quarter, $605,000 for the prior quarter and $801,000 for the quarter ended December 31, 2015. -- Legal and advisory fees increased to $1.34 million for the current quarter compared to $494,000 for the prior quarter and $328,000 for the quarter ended December 31, 2015. These increases were primarily due to legal and advisory fees that were incurred in the pending merger with Access National Corporation. -- Other operating expenses increased by 21.90% compared to the prior quarter and increased by 20.81% when compared to the same period in 2015. The primary reason for the increase was a $200,000 impairment of repossessed assets during the current quarter.
ASSET QUALITY
Total nonperforming assets increased to $25.45 million as of December 31, 2016 compared to $23.77 million at September 30, 2016 and $25.51 million at December 31, 2015.
-- Nonaccrual loans decreased to $6.34 million compared to $6.70 million as of September 30, 2016 and $8.78 million compared to December 31, 2015. -- Restructured loans that were accruing were $12.41 million compared to $12.39 million as of September 30, 2016 and $12.06 million as of December 31, 2015. -- Other real estate owned was $5.07 million compared to $3.39 million as of September 30, 2016 and $3.35 million as of December 31, 2015. -- Loans past due 90+ days and still accruing were $781,000 as of December 31, 2016 compared to $248,000 as of September 30, 2016 and $278,000 as of December 31, 2015. -- Repossessed assets were $843,000 as of December 31, 2016 compared to $1.04 million as of September 30, 2016 and December 31, 2015.
The Company's allowance for loan and lease losses ("ALLL") was $11.40 million or 1.33% of total loans at December 31, 2016 compared to $11.05 million or 1.37% of total loans at December 31, 2015. The Company recorded a provision for loan losses of $1.80 million in the fourth quarter of 2016 compared to a recovery of provision of $297,000 in the previous quarter and a provision for loan losses of $2.70 million for the same period in 2015.
CONSOLIDATED ASSETS
Total consolidated assets at December 31, 2016 were $1.27 billion, lower by 1.72% since December 31, 2015. Changes in major asset categories were as follows:
-- Cash balances and deposits with other banks decreased by $10.68 million compared to December 31, 2015. -- The securities portfolio decreased by $66.53 million compared to December 31, 2015, as we sold some securities to fund loans and pay off borrowings and maturing time deposits. -- Loans held-for-investment increased to $860.10 million as of December 31, 2016.
CONSOLIDATED LIABILITIES
Total consolidated liabilities at December 31, 2016 were $1.15 billion, a decrease of 2.16% compared to December 31, 2015. Deposits grew by $12.26 million for the full year 2016 to $1.05 billion as of December 31, 2016. Federal Home Loan Bank ("FHLB") borrowings decreased by $45.50 million from December 31, 2015 to $39.50 million at December 31, 2016.
SHAREHOLDERS' EQUITY AND CAPITAL
Shareholders' equity at December 31, 2016 was $126.68 million, compared to $123.55 million at December 31, 2015. Retained earnings at December 31, 2016 were $64.76 million compared to $60.39 million at December 31, 2015. During the quarter, the Company did not make any purchases under its share repurchase authorization and expects to refrain from any repurchases in deference to the pending merger. The tangible book value of the Company's common stock at December 31, 2016 was $17.10 per share versus $16.93 per share at December 31, 2015.
The Company's capital ratios remain well above regulatory minimum capital ratios as of December 31, 2016:
-- Tier 1 Leverage ratio was 9.73%, 5.73% over the regulatory minimum of 4.00% to be well capitalized. -- Common Equity Tier 1 Ratio was 15.61%, 8.61% over the regulatory minimum of 7.00% to be well capitalized. -- Tier 1 Risk-Based Capital Ratio was 16.25%, 7.75% over the regulatory minimum of 8.50% to be well capitalized. -- Total Risk Based Capital Ratio was 17.50%, 7.00% over the regulatory minimum of 10.50% to be well capitalized.
Caution about Forward Looking Statements
Certain information contained in this release 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. Risk and uncertainties related to the pending merger with Access National include, among others, ability to obtain regulatory approvals and meet other closing conditions to the transaction; delays in closing the transaction; changes in asset quality and credit risk; changes in interest rates and capital markets; the introduction, timing and success of business initiatives; competitive conditions; and the inability to recognize cost savings or revenues or to implement integration plans associated with the transaction. Annualized, pro forma, projected, and estimated numbers are used for illustrative purposes only, may not reflect actual results and may not be relied upon. For details on other 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, 2015, 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.
Additional Information About the Proposed Transaction and Where to Find It
Investors are urged to review carefully and consider all public filings by Access National and Middleburg with the Securities and Exchange Commission (the "SEC"), including but not limited to their Annual Reports on Form 10-K, their proxy statements, their Quarterly Reports on Form 10-Q, and their Current Reports on Form 8-K. The documents filed with the SEC may be obtained free of charge at the SEC's website at www.sec.gov. The documents filed by Access National with the SEC may also be obtained free of charge at Access National's website at www.accessnationalbank.com or by requesting them in writing to Access National Corporation, 1800 Robert Fulton Drive, Suite 300, Reston, VA 20191, Attention: Investor Relations. The documents filed by Middleburg with the SEC may also be obtained free of charge at Middleburg's website at www.middleburgbank.com or by requested them in writing to Middleburg Financial Corporation, 111 West Washington Street, Middleburg, Virginia 20117, Attention: Investor Relations.
In connection with the proposed transaction, Access National has filed a registration statement on Form S-4 with the SEC which includes a joint proxy statement of Access National and Middleburg and a prospectus of Access National. Once the registration statement is declared effective, a definitive joint proxy statement/prospectus will be sent to the shareholders of each company seeking the required shareholder approvals. Before making any voting or investment decision, investors and security holders of Access National and Middleburg are urged to read carefully the entire registration statement and joint proxy statement/prospectus when they become available, including any amendments thereto, because they will contain important information about the proposed transaction. Free copies of these documents may be obtained as described above.
Access National, Middleburg and certain of their directors and executive officers may be deemed participants in the solicitation of proxies from Access National and Middleburg shareholders in connection with the proposed transaction. Information about the directors and officers of Access National and their ownership of Access National common stock is set forth in the definitive proxy statement for Access National's 2016 annual meeting of shareholders, as previously filed with the SEC on April 18, 2016. Information about the directors and officers of Middleburg and their ownership of Middleburg common stock is set forth in the definitive proxy statement for Middleburg's 2016 annual meeting of shareholders, as previously filed with the SEC on April 12, 2016. Investors may obtain additional information regarding the interests of such participants by reading the registration statement and the joint proxy statement/prospectus when they become available. Free copies of these documents may be obtained as described above.
MIDDLEBURG FINANCIAL CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets (In thousands, except for share and per share data) (Unaudited) December 31, December 31, 2015 2016 ---- ASSETS Cash and due from banks $6,989 $5,489 Interest bearing deposits with other banks 21,555 33,739 ------ ------ Total cash and cash equivalents 28,544 39,228 Securities held to maturity, fair value of $10,095 and $4,163, respectively 10,683 4,207 Securities available for sale, at fair value 301,567 374,571 Restricted securities, at cost 4,542 6,411 Loans, net of allowance for loan losses of $11,404 and $11,046, respectively 848,693 794,635 Premises and equipment, net 19,021 19,531 Goodwill and identified intangibles, net 3,465 3,636 Other real estate owned, net of valuation allowance 5,073 3,345 Bank owned life insurance 23,925 23,273 Accrued interest receivable and other assets 27,130 26,026 ------ ------ TOTAL ASSETS $1,272,643 $1,294,863 ========== ========== LIABILITIES Deposits: Non-interest bearing demand deposits $248,567 $235,897 Savings and interest bearing demand deposits 578,851 560,328 Time deposits 225,640 244,575 ------- ------- Total deposits 1,053,058 1,040,800 Securities sold under agreements to repurchase 34,864 26,869 Federal Home Loan Bank borrowings 39,500 85,000 Subordinated notes 5,155 5,155 Accrued interest payable and other liabilities 13,387 13,485 ------ ------ TOTAL LIABILITIES 1,145,964 1,171,309 --------- --------- Commitments and contingencies SHAREHOLDERS' EQUITY Common stock ($2.50 par value; 20,000,000 shares authorized, 7,205,066 and 7,085,217, issued and outstanding, respectively) 17,608 17,330 Capital surplus 45,716 44,155 Retained earnings 64,755 60,392 Accumulated other comprehensive income (loss) (1,400) 1,677 ------ ----- TOTAL SHAREHOLDERS' EQUITY 126,679 123,554 ------- ------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,272,643 $1,294,863 ========== ==========
MIDDLEBURG FINANCIAL CORPORATION AND SUBSIDIARIES Consolidated Statements of Income (In thousands, except for per share data) (Unaudited) For the For the Three Months Ended December 31, Twelve Months Ended December 31, ------------ 2016 2015 2016 2015 ---- ---- ---- ---- INTEREST INCOME Interest and fees on loans $8,398 $7,995 $33,795 $32,479 Interest and dividends on securities Taxable 1,756 1,992 7,406 7,628 Tax-exempt 397 449 1,700 1,803 Dividends 72 69 310 265 Interest on deposits with other banks and federal funds sold 41 22 164 106 --- --- --- --- Total interest and dividend income 10,664 10,527 43,375 42,281 ------ ------ ------ ------ INTEREST EXPENSE Interest on deposits 865 882 3,535 3,462 Interest on securities sold under agreements to repurchase 1 - 3 64 Interest on FHLB borrowings and other debt 182 174 886 681 --- --- --- --- Total interest expense 1,048 1,056 4,424 4,207 ----- ----- ----- ----- NET INTEREST INCOME 9,616 9,471 38,951 38,074 Provision for loan losses 1,800 2,700 1,853 2,293 ----- ----- ----- ----- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 7,816 6,771 37,098 35,781 ----- ----- ------ ------ NON-INTEREST INCOME Service charges on deposit accounts 286 258 1,154 1,061 Trust services income 1,185 1,156 4,643 4,785 ATM fee income, net 197 204 762 797 Gains (losses) on sales of loans held for sale, net 9 (4) 32 (1) Gains on sales of securities available for sale, net 1,043 2 1,554 140 Commissions on investment sales 138 132 555 547 Bank owned life insurance 164 167 652 656 Other operating income 894 442 1,386 1,636 --- --- ----- ----- Total non-interest income 3,916 2,357 10,738 9,621 ----- ----- ------ ----- NON-INTEREST EXPENSE Salaries and employee benefits 4,605 3,771 18,757 18,435 Occupancy and equipment 1,317 1,383 5,254 5,436 Amortization 210 193 838 671 Computer operations 659 801 2,582 2,337 Other real estate owned, net 24 (1) 363 284 Other taxes 238 231 947 915 Federal deposit insurance 142 203 748 786 Audits and exams 136 114 589 585 Legal and advisory fees 1,342 328 2,407 1,029 Other operating expenses 1,347 1,115 4,474 4,379 ----- ----- ----- ----- Total non-interest expense 10,020 8,138 36,959 34,857 ------ ----- ------ ------ Income before income taxes 1,712 990 10,877 10,545 Income tax expense 620 209 2,813 2,715 --- --- ----- ----- NET INCOME $1,092 $781 $8,064 $7,830 ====== ==== ====== ====== Earnings per share: Basic $0.15 $0.11 $1.13 $1.10 Diluted $0.15 $0.11 $1.13 $1.09 Dividends per common share $0.13 $0.13 $0.52 $0.46
MIDDLEBURG FINANCIAL CORPORATION AND SUBSIDIARIES Quarterly Summary of Consolidated Statements of Income (Unaudited, Dollars In thousands, except for per share data) For the Three Months Ended December 31, September 30, June 30, March 31, December 31, 2016 2016 2016 2016 2015 ---- ---- ---- ---- ---- INTEREST INCOME Interest and fees on loans $8,398 $8,624 $8,543 $8,230 $7,995 Interest and dividends on securities Taxable 1,756 1,585 1,992 2,073 1,992 Tax-exempt 397 411 440 452 449 Dividends 72 82 87 69 69 Interest on deposits with other banks and federal funds sold 41 35 40 48 22 --- --- --- --- --- Total interest and dividend income 10,664 10,737 11,102 10,872 10,527 ------ ------ ------ ------ ------ INTEREST EXPENSE Interest on deposits 865 909 890 871 882 Interest on securities sold under agreements to repurchase 1 1 - 1 - Interest on FHLB borrowings and other debt 182 210 243 251 174 --- --- --- --- --- Total interest expense 1,048 1,120 1,133 1,123 1,056 ----- ----- ----- ----- ----- NET INTEREST INCOME 9,616 9,617 9,969 9,749 9,471 Provision for (recovery of) loan losses 1,800 (297) 50 300 2,700 ----- ---- --- --- ----- NET INTEREST INCOME AFTER PROVISION FOR (RECOVERY OF) LOAN LOSSES 7,816 9,914 9,919 9,449 6,771 ----- ----- ----- ----- ----- NON-INTEREST INCOME Service charges on deposit accounts 286 303 286 279 258 Trust services income 1,185 1,168 1,132 1,158 1,156 ATM fee income, net 197 190 211 164 204 Gains (losses) on sales of loans held for sale, net 9 11 3 9 (4) Gains on sales of securities available for sale, net 1,043 138 210 163 2 Commissions on investment sales 138 133 152 132 132 Bank owned life insurance 164 165 163 160 167 Other operating income 894 136 213 143 442 --- --- --- --- --- Total non-interest income 3,916 2,244 2,370 2,208 2,357 ----- ----- ----- ----- ----- NON-INTEREST EXPENSE Salaries and employee benefits 4,605 4,727 4,613 4,812 3,771 Occupancy and equipment 1,317 1,262 1,261 1,414 1,383 Amortization 210 210 209 209 193 Computer operations 659 605 598 720 801 Other real estate owned, net 24 183 (11) 167 (1) Other taxes 238 237 237 235 231 Federal deposit insurance 142 215 216 175 203 Audits and exams 136 136 165 152 114 Legal and advisory fees 1,342 494 350 221 328 Other operating expenses 1,347 1,105 1,113 909 1,115 ----- ----- ----- --- ----- Total non-interest expense 10,020 9,174 8,751 9,014 8,138 ------ ----- ----- ----- ----- Income before income taxes 1,712 2,984 3,538 2,643 990 Income tax expense 620 720 885 588 209 --- --- --- --- --- NET INCOME $1,092 $2,264 $2,653 $2,055 $781 ====== ====== ====== ====== ==== Earnings per share: Basic $0.15 $0.32 $0.37 $0.29 $0.11 Diluted $0.15 $0.32 $0.37 $0.29 $0.11 Dividends per common share $0.13 $0.13 $0.13 $0.13 $0.13
MIDDLEBURG FINANCIAL CORPORATION AND SUBSIDIARIES Selected Financial Data by Quarter (Unaudited, Dollars in thousands, except for per share data) December 31, September 30, June 30, March 31, December 31, 2016 2016 2016 2016 2015 ---- ---- ---- ---- ---- BALANCE SHEET RATIOS Loans to deposits 77.50% 77.50% 80.90% 76.07% 77.41% Average interest-earning assets to average interest-bearing liabilities 134.84% 134.84% 133.31% 132.30% 136.05% INCOME STATEMENT RATIOS Return on average assets (ROA) 0.33% 0.68% 0.80% 0.63% 0.24% Return on average equity (ROE) 3.36% 7.01% 8.47% 6.63% 2.45% Net interest margin (1) 3.17% 3.11% 3.26% 3.24% 3.17% Yield on average earning assets 3.51% 3.47% 3.63% 3.60% 3.52% Yield on securities 2.73% 2.49% 2.92% 2.95% 2.83% Yield on loans 3.96% 4.03% 4.11% 4.09% 4.01% Cost of funds 0.36% 0.38% 0.38% 0.39% 0.37% Efficiency ratio (5) 77.87% 74.43% 70.08% 73.22% 67.21% PER SHARE DATA Dividends $0.13 $0.13 $0.13 $0.13 $0.13 Book value 17.58 18.15 18.03 17.65 17.44 Tangible book value (4) 17.10 17.66 17.53 17.14 16.93 SHARE PRICE DATA Closing price $34.75 $28.28 $27.20 $21.60 $18.48 Diluted earnings multiple (2) 57.92 22.27 18.26 18.52 16.95 Book value multiple (3) 1.98 1.56 1.51 1.22 1.06 COMMON STOCK DATA Outstanding shares at end of period 7,205,066 7,103,358 7,101,390 7,094,602 7,085,217 Weighted average shares outstanding, basic 7,164,847 7,103,235 7,100,226 7,076,775 7,152,844 Weighted average shares outstanding, diluted 7,197,569 7,160,164 7,153,917 7,107,380 7,171,498 Dividend payout ratio 86.67% 40.63% 35.14% 44.83% 118.18% CAPITAL RATIOS Capital to assets 9.95% 9.66% 9.74% 9.29% 9.54% Leverage ratio 9.73% 9.59% 9.45% 9.40% 9.59% Common equity tier 1 ratio 15.61% 15.92% 15.44% 15.56% 15.61% Tier 1 risk based capital ratio 16.25% 16.57% 16.08% 16.22% 16.27% Total risk based capital ratio 17.50% 17.83% 17.34% 17.47% 17.52% CREDIT QUALITY Net charge-offs (recoveries) to average loans 0.19% (0.004)% (0.018)% 0.002% 0.39% Total nonperforming loans to total loans 2.27% 2.29% 2.29% 2.46% 2.62% Total nonperforming assets to total assets 2.00% 1.78% 1.84% 1.86% 1.97% Nonaccrual loans to: Total loans 0.73% 0.79% 0.82% 0.94% 1.09% Total assets 0.50% 0.50% 0.53% 0.57% 0.68% Allowance for loan losses to: Total loans 1.33% 1.32% 1.35% 1.37% 1.37% Nonperforming assets 44.82% 47.12% 47.72% 45.22% 43.30% Nonaccrual loans 179.90% 167.09% 165.24% 146.25% 125.75% NONPERFORMING ASSETS Loans delinquent 90+ days and still accruing $781 $248 $179 $511 $278 Nonaccrual loans 6,339 6,703 6,976 7,747 8,784 Restructured loans (not in nonaccrual) 12,410 12,386 12,407 12,027 12,058 Other real estate owned 5,073 3,387 3,553 3,727 3,345 Repossessed assets 843 1,043 1,043 1,043 1,043 --- ----- ----- ----- ----- Total nonperforming assets $25,446 $23,767 $24,158 $25,055 $25,508 ======= ======= ======= ======= =======
(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 services 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 December 31, 2016 2015 Average Income/ Yield/ Average Income/ Yield/ Balance Expense Rate (2) Balance Expense Rate (2) ------- ------- ------- ------- ------- ------- (Dollars in thousands) Assets: Securities: Taxable $304,429 $1,828 2.39% $332,163 $2,061 2.46% Tax-exempt (1) 49,236 602 4.86% 51,884 681 5.21% ------ --- ------ --- Total securities $353,665 $2,430 2.73% $384,047 $2,742 2.83% Loans: Taxable $842,541 $8,394 3.96% $791,590 $7,989 4.00% Tax-exempt (1) 540 7 5.16% 578 8 5.49% --- --- --- --- Total loans (3) $843,081 $8,401 3.96% $792,168 $7,997 4.01% Interest on deposits with other banks and federal funds sold 36,373 41 0.45% 38,348 22 0.23% ------ --- ------ --- Total earning assets $1,233,119 $10,872 3.51% $1,214,563 $10,761 3.52% Less: allowance for loan losses (11,169) (11,733) Total nonearning assets 81,596 79,695 ------ ------ Total assets $1,303,546 $1,282,525 ========== ========== Liabilities: Interest-bearing deposits: Checking $345,794 $191 0.22% $345,525 $177 0.20% Regular savings 132,795 62 0.19% 125,947 59 0.19% Money market savings 83,720 52 0.25% 78,918 40 0.20% Time deposits: $100,000 and over 141,318 310 0.87% 144,440 320 0.88% Under $100,000 107,087 250 0.93% 102,586 286 1.11% ------- --- ------- --- Total interest-bearing deposits $810,714 $865 0.42% $797,416 $882 0.44% Securities sold under agreements to repurchase 34,382 1 0.01% 28,663 - - % FHLB borrowings and other debt 55,818 182 1.30% 66,677 174 1.03% Federal funds purchased 54 - - % - - - % --- --- --- --- Total interest-bearing liabilities $900,968 $1,048 0.46% $892,756 $1,056 0.47% Non-interest bearing liabilities: Demand deposits 259,706 248,536 Other liabilities 13,644 15,016 ------ ------ Total liabilities $1,174,318 $1,156,308 Shareholders' equity 129,228 126,217 ------- ------- Total liabilities and shareholders' equity $1,303,546 $1,282,525 ========== ========== Net interest income $9,824 $9,705 ====== ====== Interest rate spread 3.04% 3.05% Cost of Funds 0.36% 0.37% Interest expense as a percent of average earning assets 0.34% 0.34% Net interest margin 3.17% 3.17%
(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 366 day year for 2016 and 365 day year for 2015. (3) Total average loans include loans on non-accrual status.
MIDDLEBURG FINANCIAL CORPORATION AND SUBSIDIARIES Average Balances, Income and Expenses, Yields and Rates (Unaudited) Twelve months ended December 31, 2016 2015 Average Income/ Yield/ Average Income/ Yield/ Balance Expense Rate (2) Balance Expense Rate (2) ------- ------- ------- ------- ------- ------- (Dollars in thousands) Assets: Securities: Taxable $320,250 $7,716 2.41% $319,705 $7,893 2.47% Tax-exempt (1) 50,373 2,576 5.11% 51,732 2,732 5.28% ------ ----- ------ ----- Total securities $370,623 $10,292 2.78% $371,437 $10,625 2.86% Loans: Taxable $834,810 $33,773 4.05% $771,207 $32,457 4.21% Tax-exempt (1) 604 33 5.46% 609 33 5.42% --- --- --- --- Total loans (3) $835,414 $33,806 4.05% $771,816 $32,490 4.21% Interest on deposits with other banks and federal funds sold 40,672 164 0.40% 49,201 106 0.22% ------ --- ------ --- Total earning assets $1,246,709 $44,262 3.55% $1,192,454 $43,221 3.62% Less: allowance for loan losses (11,311) (11,853) Total nonearning assets 80,980 77,456 ------ ------ Total assets $1,316,378 $1,258,057 ========== ========== Liabilities: Interest-bearing deposits: Checking $351,764 $767 0.22% $343,026 $693 0.20% Regular savings 130,357 241 0.18% 119,989 223 0.19% Money market savings 77,763 185 0.24% 70,239 136 0.19% Time deposits: $100,000 and over 146,406 1,290 0.88% 138,860 1,220 0.88% Under $100,000 111,097 1,052 0.95% 106,023 1,190 1.12% ------- ----- ------- ----- Total interest-bearing deposits $817,387 $3,535 0.43% $778,137 $3,462 0.44% Securities sold under agreements to repurchase 31,076 3 0.01% 30,095 64 0.21% FHLB borrowings and other debt 79,751 886 1.11% 68,977 681 0.99% Federal funds purchased 15 - - % 1 - - % --- --- --- --- Total interest-bearing liabilities $928,229 $4,424 0.48% $877,210 $4,207 0.48% Non-interest bearing liabilities: Demand deposits 247,214 241,996 Other liabilities 13,832 13,602 ------ ------ Total liabilities $1,189,275 $1,132,808 Shareholders' equity 127,103 125,249 ------- ------- Total liabilities and shareholders' equity $1,316,378 $1,258,057 ========== ========== Net interest income $39,838 $39,014 ======= ======= Interest rate spread 3.07% 3.14% Cost of Funds 0.38% 0.38% Interest expense as a percent of average earning assets 0.35% 0.35% Net interest margin 3.20% 3.27%
(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 366 day year for 2016 and 365 day year for 2015. (3) Total average loans include loans on non-accrual status.
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SOURCE Middleburg Financial Corporation