MIDDLEBURG, Va., July 29, 2016 /PRNewswire/ — Middleburg Financial Corporation (the “Company”) (Nasdaq: MBRG), today announced record net income of $2.65 million, or $0.37 per diluted share, for the quarter ended June 30, 2016.
Second quarter 2016 highlights include:
“We are pleased with our strong second quarter performance, as continued growth in loans and deposits, disciplined expense management and improved asset quality led to a substantial increase in net income over both the prior quarter and prior year period. We continue to make progress against our strategic goals, and are encouraged by our ability to drive profitability and lower costs while improving our asset quality,” said Gary R. Shook, President and CEO of Middleburg Financial Corporation. “Looking forward to the rest of 2016, we feel confident in our ability to continue to create value for shareholders as we execute on our strategic initiatives to enhance profitability, improve efficiency and manage risk. We are also pleased to be able to return additional capital to shareholders via our stock repurchase program as well as through our increased dividend.”
STRATEGIC FOCUS FOR 2016
The Company remains focused on a number of strategic initiatives intended to grow the business and enhance shareholder value. Following is an update on the Company’s progress toward those goals.
Focus on Asset Quality
ADDITIONAL SECOND QUARTER HIGHLIGHTS
Additional operational highlights during the second quarter include:
Total revenue, which is composed of net interest income and non-interest income (before any provision for loan and lease losses), was $12.34 million for the second quarter of 2016, higher by 3.19% compared to the previous quarter and an increase of 6.82% compared to the same period in 2015.
Net Interest Income
The Company recorded net interest income of $9.97 million for the second quarter of 2016, an increase of 2.26% compared to the previous quarter and higher by 7.04% compared to the same period in 2015. The net interest margin in the second quarter of 2016 was 3.26%, higher by 2 bp compared to the previous quarter and compared to the same period in 2015.
The following factors contributed to the changes in net interest margin during the second quarter of 2016 compared to the previous quarter:
The following table analyzes changes in net interest income comparing the second quarter of 2016 to the previous quarter and to the quarter ended June 30, 2015.
Comparing the second quarter of 2016 to the previous quarter, the table shows the decrease in interest income for investments was driven by runoff in the securities portfolio, including sales during the quarter that was redeployed into higher yielding loans. We continue to manage the investment portfolio with a focus on liquidity while retaining a balance between fixed and floating rate investments. The increase in interest income from loans was due to strong growth in loan balances. The changes in interest income in the second quarter of 2016 compared to the same quarter in 2015 reflected increased interest income from investments driven by higher securities balances and lower premium amortization while the higher interest income from loans was largely due to growth in loan balances that more than offset lower loan rates. Competition for good credits continues to pressure loan rates.
Non-interest income increased by 7.34% compared to the previous quarter and was higher by 5.90% compared to the quarter ended June 30, 2015.
Non-interest expenses decreased by 2.92% compared to the previous quarter and by 1.46% compared to the same period in 2015. Principal categories of non-interest expenses that changed were the following:
Asset quality of the balance sheet improved in the second quarter with total nonperforming assets of $24.16 million as of June 30, 2016 compared to $25.51 million at December 31, 2015 and $24.77 million at June 30, 2015.
The Company increased its allowance for loan and lease losses (“ALLL”) to $11.53 million or 1.35% of total loans at June 30, 2016 compared to $11.05 million or 1.37% of total loans at December 31, 2015. The increase was largely due to loan growth which increased general reserves. The provision for loan losses was $50,000 in the second quarter of 2016 compared to a provision of $300,000 in the previous quarter and a recovery of provision of $425,000 for the same period in 2015.
Total consolidated assets at June 30, 2016 were $1.31 billion, higher by 1.50% since December 31, 2015. Changes in major asset categories were as follows:
Total consolidated liabilities at June 30, 2016 were $1.19 billion, an increase of 1.28% compared to December 31, 2015. Deposit growth continues to be strong with total deposits increasing by $15.57 million from December 31, 2015 to $1.06 billion as of June 30, 2016. Federal Home Loan Bank (“FHLB”) borrowings decreased by $5.50 million from December 31, 2015 to $79.50 million at June 30, 2016. The majority of FHLB borrowings mature in less than one year. We expect to retire those advances as they mature and replace them with core deposits.
SHAREHOLDERS’ EQUITY AND CAPITAL
Shareholders’ equity at June 30, 2016 was $128.04 million, compared to $123.55 million at December 31, 2015. Retained earnings at June 30, 2016 were $63.26 million compared to $60.39 million at December 31, 2015. On September 15, 2015, the Company’s Board of Directors authorized the repurchase of up to $10 million of the Company’s common stock, or approximately 8% of the Company’s outstanding shares. The repurchase program was effective immediately and runs through December 31, 2017. This program replaced the previous repurchase program adopted in 1999, pursuant to which the Company had 24,084 shares remaining eligible for repurchase. As of June 30, 2016, the Company had repurchased a total of 104,300 shares under the current plan, at a total cost of $1.91 million and for a weighted average price of $18.33. The tangible book value of the Company’s common stock at June 30, 2016 was $17.53 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 June 30, 2016:
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, 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.
SOURCE Middleburg Financial Corporation