MIDDLEBURG, Va., July 22 /PRNewswire-FirstCall/ -- Middleburg Financial
Corporation (Nasdaq: MBRG) reported an increase in net income of 23.3% or
$328,000 from $1.4 million for the quarter ended March 31, 2005 to $1.7
million for the quarter ended June 30, 2005. Consolidated assets grew by 8.6%
or $54.8 million from $639.7 million at March 31, 2005 to $694.5 million at
June 30, 2005. Net loans increased a record quarterly high of $69.5 million
from $392.3 million at March 31, 2005 to $461.8 million at June 30, 2005.
Although increased funding costs negatively impacted the net interest margin
during the second quarter, bringing it to 4.16% for the quarter ended June 30,
2005 from 4.29% for the quarter ended March 31, 2005, other initiated cost
savings during the quarter have helped to improve both the Company's return on
average assets and equity and its efficiency ratio. Return on average assets
was 1.02% for the quarter ended June 30, 2005 compared to 0.93% for the
quarter ended March 31, 2005. Return on average equity was 13.13% for the
quarter ended June 30, 2005 compared to 11.09% for the quarter ended March 31,
2005. The Company's efficiency ratio was 61.45% for the quarter ended June
30, 2005 and 64.97% for the quarter ended March 31, 2005. See the "Financial
Summary" table at the end of this press release for a discussion of the
calculation of the efficiency ratio.
Total asset growth for the six months ended June 30, 2005 was 14.9% or
$88.4 million leading to total consolidated assets of $694.5 million at June
30, 2005. Total loan growth for the six months ended June 30, 2005 was 33.7%
or $116.3 million. Net income for the six months ended June 30, 2005 was $3.1
million, or $0.81 per diluted share. This is a 14.4% decrease from the $3.7
million, or $0.94 per diluted share, reported for the six months ended June
30, 2004. The return on average assets and return on average equity were 0.98%
and 12.18%, respectively, for the six months ended June 30, 2005.
When compared to the six months ended June 20, 2004, core operations for
the six months ended June 30, 2005 were impacted by increased funding costs,
an increase in the provision for loan losses due to the large amount of loan
growth experienced and expenses related to the staffing and opening of three
new facilities. The Company's Reston, Virginia financial service center
opened in November of 2004, a loan production office in Virginia Beach,
Virginia opened in April 2005 and the Warrenton, Virginia financial service
center is scheduled to open in the fourth quarter of 2005. When comparing the
six months ended June 30, 2004 to the six months ended June 30, 2005, the
contribution to diluted earnings per share by mortgage banking decreased by
$0.05 and is attributed to both a decline in production and narrowed margins.
The components of net income per diluted share are summarized below:
For the For the Six
Quarter Ended Months Ended
June 30, June 30,
2005 2004 2005 2004
Core Operations $ 0.40 $ 0.41 $ 0.73 $ 0.80
Mortgage Banking Operations 0.07 0.07 0.10 0.15
Security Gains (Losses) - (0.02) - 0.01
Amortization Expenses (0.02) (0.02) (0.02) (0.02)
Net Income Per Diluted
Share $ 0.45 $ 0.44 $ 0.81 $ 0.94
The Company continues efforts to implement its new business model. Under
the new model, all of the Company's financial services will be available at a
single branch, known as a financial service center location. The financial
service centers are larger than most traditional retail banking branches in
order to allow commercial, mortgage, retail and wealth management personnel
and services to be readily available to serve clients. The Company's recent
expansion is expected to negatively impact earnings in the current year.
Although its expansion into new markets may cost the Company earnings in the
near term, both management and the Board of Directors believe that the
investment in and commitment to assisting clients with the creation,
preservation and transfer of their wealth will result in positive future
returns for the Company and its shareholders.
"During the first half of 2005, we studied the components of our net
interest margin, efficiency and asset productivity ratios," reported Joseph L.
Boling, Chairman and CEO. "The results of the review are helping us to better
understand the issues that we expect will allow us to restore the positive
positions we had in these areas against our peers. Our aim is to move back to
high performance.
We continue to be convinced that our business model will have significant
impact in the markets we currently serve and in the three new markets we are
beginning to serve.
We believe that our growth in earning assets, coupled with the development
of several new deposits products, will assist the Company with its strategic
aims in the near term. The ongoing focus of improving our net interest
margin, efficiency and asset productivity ratios will help us fine tune the
Company for the future."
Net Interest Income and Net Interest Margin
The net interest margin declined from 4.26% for the six months ended June
30, 2004 to 4.22% for the six months ended June 30, 2005. The net interest
margin is calculated by dividing tax equivalent net interest income by total
average earning assets. Because a portion of interest income earned by the
Company is non taxable, the tax equivalent net interest income is considered
in the calculation of this ratio. Tax equivalent net interest income is
calculated by adding the tax benefit realized from interest income that is non
taxable to total interest income then subtracting total interest expense. The
tax rate utilized in calculating the tax benefit for each of the six months
ended June 30, 2005 and 2004 was 34%. The reconciliation of tax equivalent net
interest income, which is not a measurement under accounting principles
generally accepted in the United States, to net interest income is reflected
after the financial summary at the end of this press release. The Company's
annualized net interest income on a tax equivalent basis increased $3.7
million from $20.8 million for the six months ended June 30, 2004 to $24.5
million for the six months ended June 30, 2005. Total average earning assets
increased $96.1 million from June 30, 2004 to June 30, 2005.
Net interest income increased 18.4% from $9.9 million for the six months
ended June 30, 2004 to $11.7 million for the same period in 2005. Interest
income increased 28.9% while interest expense increased 65.0% when comparing
the six months ended June 30, 2005 to the same period in 2004. In particular,
interest income from loans increased $4.1 million or 47.2% when comparing the
six months ended June 30, 2005 to the same period in 2004. The majority of
the loan interest income increase was attributed to the increased volume of
the loan portfolio. Approximately $95.5 million, or 20.5%, of the loan
portfolio at June 30, 2005 is tied to the Wall Street Journal prime interest
rate. As a result, each 25 basis point increase to this index would result in
nearly $239,000 in additional annual interest income for that portion of the
loan portfolio. Interest income from the investment portfolio decreased
approximately $383,000 from the six months ended June 30, 2004 to $3.8 million
for the same period in 2005. The average balance of the investment portfolio
has decreased 12.3% over the same periods.
The Company's interest rate profile has a slightly liability sensitive
bias for the next 12 months. However, the liability sensitivity has been
reduced since the first quarter of 2005 with the Company's extension of some
of its short term borrowings and the growth experienced in non maturity
deposits. After 12 months, the profile then shifts toward intermediate and
long term asset sensitivity over a "one to two year" and "beyond two year"
time frame, respectively. Recent loan growth has been rapid and has outpaced
deposit growth. As a result, the recent funding increases have been made in
the more interest rate sensitive categories such as overnight borrowings and
shorter termed brokered certificates of deposit. Accordingly, further risk to
net interest income exists for a rapid rise in interest rates, especially with
the current flat yield curve shape. However, the largest exposure to net
interest income would result from a significant drop in market interest rates.
Based on conservative internal interest rate risk models and the assumption of
a sustained rising rate environment, the Company expects net interest income
to trend downward slightly throughout the next 12 months as mortgage related
assets extend and funding costs rise quickly. The expected decrease to net
interest income could be approximately 2.26% or $569,000 in a 12 month period
of rising rates of 200 basis points.
Non Interest Income
Non interest income increased 3.4% to $4.3 million for the six months
ended June 30, 2005 from $4.1 million for the same period in 2004.
Equity in earnings from affiliate, which reflects the 40% ownership
interest in Southern Trust Mortgage Company, LLC (STM), decreased 31.2% or
$274,000 from $879,000 for the six months ended June 30, 2004 to $605,000 for
the same period in 2005. STM closed $462.3 million in loans the first six
months of 2005 with 65.7% of its production attributable to purchase money
financings. For the same period in 2004, STM had closed $488.2 million in
loans with 63.7% of its production attributable to purchase money financings.
In February 2005, STM experienced a loan charge off which resulted in an
approximate decrease in income of $56,000 for the Company. STM continues to
focus on adding more lending officers in several of its offices in order to
increase its production efforts. Additionally, with their cost savings
efforts still in place, STM has decided to close another of its less
profitable offices. The Duluth, GA office was closed in late June 2005. STM
also originated and closed $18.9 million in new construction loans during the
six months ended June 30, 2005.
Service charges, which include both deposit fees and certain loan fees,
increased $131,000 or 13.8% to $1.1 million for the six months June 30, 2005,
compared to $948,000 for the same period in 2004. The majority of the increase
is related to service charges on deposits. In particular, overdraft service
charges and ATM and Visa check card fees have increased approximately $81,000
for the six months ended June 30, 2005 when compared to the same period in
2004. Gilkison Patterson Investment Advisors, Inc. (GPIA), a wholly owned
registered investment advisor, experienced a slight decrease in advisory fees
for the six months ended June 30, 2005. GPIA's total fees were $1.0 million
for the six months ended June 30, 2005 compared to $1.1 million for the same
period in 2004. As of June 30, 2005, GPIA managed approximately $567.2 million
in assets. At June 30, 2004, GPIA had managed approximately $584.0 million in
assets. Tredegar Trust Company, a wholly owned trust subsidiary, produced
fiduciary fees that increased 13.7% to $896,000 for the six months ended June
30, 2005, compared to $788,000 for the same period in 2004. Assets under
administration at Tredegar increased by $48.7 million or 8.6% from $567.4
million at June 30, 2004 to $616.1 million at June 30, 2005. Fiduciary fees
and investment advisory fees are based primarily upon the market value of the
accounts under administration/management.
Investment sales fees increased 6.1% to $365,000 for the six months ended
June 30, 2005, compared to $344,000 for the same period in 2004. The Company
now has three financial consultants working inside several of the branches and
expects continued improvement over 2004 results.
Income earned from the Bank's $10.8 million investment in Bank Owned Life
Insurance (BOLI) contributed $232,000 to total other income for the six months
ended June 30, 2005. The Company purchased $6.0 million of BOLI in the third
quarter of 2004 and another $4.8 million in the fourth quarter of 2004 to help
subsidize increasing employee benefit costs and expenses related to the
restructure of its supplemental retirement plans.
The components of non interest income are presented in the table below:
For the For the Six
Quarter Ended Months Ended
June 30, June 30,
(in thousands) 2005 2004 2005 2004
Fees from Deposits and Loans $ 579 $ 509 $1,079 $ 948
Fiduciary Fees 471 395 896 788
Investment Advisory Fees 506 539 1,024 1,085
Investment Sales Fees 160 169 365 344
Equity in Earnings from
Affiliate 411 418 605 879
Other Income 158 46 292 75
Non Interest Income $2,285 $2,076 $4,261 $4,119
Non Interest Expense
Non interest expense increased $1.8 million or 20.6% to $10.4 million for
the six months ended June 30, 2005, compared to $8.7 million for the same
period in 2004. As anticipated by the Company, efficiency has been negatively
impacted by increased operating expenses associated with the execution of its
new business model. When taken as a percentage of total average assets at
June 30, 2005, the annualized non interest expense for the six months ended
June 30, 2005, represents 3.27% of total average assets, only a slight
increase over the 3.26% for the same period in 2004. The decrease in net
interest margin from the six months ended June 30, 2004 to the six months
ended June 30, 2005 has also negatively impacted the Company's efficiency.
Additions to staff to support business development and retail branching
have contributed to the increase in salaries and employee benefits. The
Company employed approximately 21 more full time equivalent employees at June
30, 2005 than it did at June 30, 2004. Several experienced commercial lenders
were hired to support business development efforts in the Reston, Warrenton
and Virginia Beach areas. Additionally, various retail staff positions were
added to the Company's payroll in efforts to prepare for openings of the new
facilities. For the six month period ended June 30, 2005, non interest expense
related to the Reston financial service center was $450,000. Non interest
expense related to the preparation of the Warrenton financial service center
and the Virginia Beach loan production office were $226,000 and $92,000,
respectively, for the six months ended June 30, 2005. With the increased
investment sales production mentioned earlier, commissions paid on investment
sales fees increased 15.2% to $190,000 for the six months ended June 30, 2005
from $165,000 for the same period in 2004. Net occupancy and equipment
expense increased by $273,000 or 24.7% for the six months ended June 30, 2005
to $1.4 million compared to $1.1 million for the same period in 2004. In
addition to the increased occupancy costs related to the Company's new
locations, the renovation and expansion of the Purcellville branch contributed
nearly $53,000 to the increase due to additional depreciation and construction
related costs related to that project. Other expense increased 15.3% or
$347,000 to $2.6 million for the six months ended June 30, 2005 from $2.3
million for the same period in 2004. The increase was primarily the result of
increases in accounting/audit fees, computer expenses, courier expenses, and
educational expense, all resulting from the Company's growth.
The components of non interest expense are presented in the table below:
For the For the Six
Quarter Ended Months Ended
June 30, June 30,
(in thousands) 2005 2004 2005 2004
Salaries and Employee Benefits $ 3,039 $ 2,437 $ 6,090 $ 4,931
Sales Commissions 83 80 190 165
Net Occupancy & Equipment 676 528 1,377 1,104
Advertising 100 104 161 183
Other Operating Expenses 1,417 1,243 2,617 2,270
Non Interest Expense $ 5,315 $ 4,392 $10,435 $ 8,653
Total Consolidated Assets
Total assets increased 26.9% to $694.5 million at June 30, 2005 from
$547.2 million at June 30, 2004. Total loans, net of allowance for loan
losses, increased 62.3% or $177.3 million to $461.8 million at June 30, 2005
from $284.5 million at June 30, 2004. Considering the current interest rate
environment, the Company has been cautious about the amount and type of loan
growth it has added to the loan portfolio. Additional staff, a solid local
economy and the relationship with STM contributed to the strong loan growth
experienced. Non-performing loans decreased to $92,000 or less than 0.1% of
total loans outstanding at June 30, 2005. The loan loss provision was $1.1
million for the six months ended June 30, 2005. The allowance for loan losses
was $4.6 million or 0.98% of total loans outstanding at June 30, 2005. Net
recoveries were $4,000 for the six months ended June 30, 2005, compared to net
recoveries of $82,000 for the six months ended June 30, 2004. Based upon
internal analysis by the Company's credit administration department, which
factors among other things, the credit quality of the portfolio, the allowance
for loan losses was deemed adequate at 0.98% of total loans outstanding. The
Company enjoys a long standing history of solid credit quality and continues
to enjoy a strong growth market in which to operate.
The investment portfolio decreased $15.3 million or 8.5% to $164.2 million
at June 30, 2005 compared to $179.5 million at June 30, 2004. The net
unrealized gain in market value of the investment securities portfolio has
increased approximately $3.6 million from June 30, 2004 to June 30, 2005.
During 2004, management elected to utilize cash received from principal pay
downs, maturities and calls to fund loan growth rather than re-invest into the
investment portfolio. This strategy has decreased the size of investment
portfolio. In anticipation of rising interest rates, the Company has held to
an investment strategy that focuses on keeping the portfolio relatively short
by purchasing securities with maturities that on average do not exceed three
years. This strategy has impacted the Company's earnings by decreasing the
overall yield, but management believes the overall shorter duration is more
desirable in the current interest rate environment. At June 30, 2005, the tax
equivalent yield on the investment portfolio was 4.94%.
Deposits and Other Borrowings
Total deposits, which includes brokered deposits, increased 25.4% to
$523.9 million at June 30, 2005 from $417.9 million at June 30, 2004. Total
retail deposits, which excludes brokered deposits, increased 16.1% from $417.9
million at June 30, 2004 to $484.9 million at June 30, 2005. Two new deposit
products were developed and marketed during the second quarter of 2005. The
products were designed both to meet consumer interest and to allow the Company
to remain competitive with other financial institutions operating within the
Company's market area. Currently, the Company deems the products to be
successful in their goals and positively contributing to needed deposit
growth. During the second quarter of 2005, the Company issued $39.0 million
in brokered certificates of deposit. These brokered certificates of deposits
contributed 9.3% to the 25.4% increase in total deposits at June 30, 2005.
The Company had no brokered deposits at June 30, 2004. Approximately $14.0
million were issued in April with maturities ranging from three to five years
while the amounts of $9.7 million issued during May and the $15.2 million
during June had three month maturities.
Securities sold under agreements to repurchase with commercial checking
account clients totaled $20.8 million at June 30, 2005. Federal Home Loan Bank
advances increased $28.8 million or 74.7% to $67.3 million at June 30, 2005
from $38.5 million at June 30, 2004. The increased FHLB borrowings were
utilized to subsidize the nearly $177.0 million in net loan growth experienced
during the period from June 30, 2004 to June 30, 2005.
Equity
Stockholders' equity increased 12.7% from $46.8 million at June 30, 2004
to $52.7 million at June 30, 2005. The book value of the Company at June 30,
2005 was $13.87 per common share. Total common shares outstanding were
3,801,053 at June 30, 2005.
On June 15, 2005, the board of directors declared a $.19 per common share
cash dividend for shareholders of record as of July 6, 2005 and payable on
July 22, 2005.
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 Company's Annual Report on Form 10-K for the year
ended December 31, 2004, and other filings with the Securities and Exchange
Commission.
Middleburg Financial Corporation is headquartered in Middleburg, Virginia
and has three wholly owned subsidiaries, Middleburg Bank, Tredegar Trust
Company, and Gilkison Patterson Investment Advisors, Inc. Middleburg Bank
serves Loudoun, Fairfax, and western Fauquier Counties in Virginia with six
branches. Tredegar Trust Company is headquartered in Richmond, Virginia with
a branch office in Middleburg. Gilkison Patterson Investment Advisors, Inc. is
a SEC registered investment advisor located in Alexandria, Virginia.
MIDDLEBURG FINANCIAL CORPORATION
FINANCIAL SUMMARY
(dollars in thousands, except per
share data) For the Quarter
Ended June 30,
2005 2004 % Change
SUMMARY OF OPERATIONS
Interest Income - Loans $ 6,894 $ 4,421 55.9%
Interest Income - Investment & Other 1,859 2,021 -8.0%
Interest Expense - Deposits 1,417 741 91.2%
Interest Expense - Other Borrowings 1,229 671 83.2%
Net Interest Income $ 6,107 $ 5,030 21.4%
Provision for Loan Losses 669 110 508.2%
Net Interest Income After
Provision for Loan Losses $ 5,438 $ 4,920 10.5%
Non-Interest Income 2,285 2,076 10.1%
Net Securities Gains (Losses) (21) (102) -79.4%
Non-Interest Expense 5,315 4,392 21.0%
Income Before Taxes $ 2,387 $ 2,502 -4.6%
Income Taxes 650 774 -16.0%
Net Income $ 1,737 $ 1,728 0.5%
PER SHARE DATA
Net Income - Basic $ 0.46 $ 0.45 2.2%
Net Income - Diluted $ 0.45 $ 0.44 2.3%
Cash Dividends $ 0.19 $ 0.19 0.0%
Book Value
Common Shares Outstanding 3,801,053 3,803,552
Average Shares Outstanding, Basic 3,799,554 3,803,496
Average Shares Outstanding, Diluted 3,898,986 3,920,425
PROFITABILITY RATIOS
Return on Average Assets 1.02% 1.32%
Return on Average Equity 13.13% 15.06%
Net Interest Margin (tax equivalent
basis(1)) 4.16% 4.21%
Efficiency Ratio (2) 61.45% 60.25%
Dividend Payout 41.30% 42.22%
CAPITAL RATIOS
Leverage Ratio
Risk-Based Capital Ratios
Tier 1 Capital Ratio
Total Capital Ratio
Equity to Assets
Tangible Equity to Tangible Assets
Loans to Deposits
ASSET QUALITY
Non-Performing Loans
Loans Past Due 90 Days or More
Allowance for Loan Losses
Net (recoveries) Charge-Offs (12) (65)
Non-Performing Loans to Loans
Allowance for Loan Losses to Loans
Net (recoveries) Charge-Offs to
Average Loans 0.00% -0.02%
Allowance for Loan Losses to
Non-Performing Loans
AVERAGE BALANCES
Investment Securities Portfolio $ 167,586 $ 193,910 -13.6%
Loans 432,671 277,490 55.9%
Earning Assets 608,042 495,524 22.7%
Assets 672,214 540,612 24.3%
Deposits 477,681 380,655 25.5%
Stockholders' Equity 52,131 47,473 9.8%
SELECTED FINANCIAL DATA AT PERIOD END
Investment Securities Portfolio
Loans, net of allowance for loan losses
Earning Assets
Assets
Deposits
Stockholders' Equity
For the Six Months
Ended June 30,
2005 2004 % Change
SUMMARY OF OPERATIONS
Interest Income - Loans $ 12,678 $ 8,614 47.2%
Interest Income - Investment & Other 3,767 4,150 -9.2%
Interest Expense - Deposits 2,355 1,443 63.2%
Interest Expense - Other Borrowings 2,360 1,415 66.8%
Net Interest Income $ 11,730 $ 9,906 18.4%
Provision for Loan Losses 1,141 219 421.0%
Net Interest Income After
Provision for Loan Losses $ 10,589 $ 9,687 9.3%
Non-Interest Income 4,261 4,119 3.4%
Net Securities Gains (Losses) (21) 79 -126.6%
Non-Interest Expense 10,435 8,653 20.6%
Income Before Taxes $ 4,394 $ 5,232 -16.0%
Income Taxes 1,248 1,556 -19.8%
Net Income $ 3,146 $ 3,676 -14.4%
PER SHARE DATA
Net Income - Basic $ 0.83 $ 0.97 -14.4%
Net Income - Diluted $ 0.81 $ 0.94 -13.8%
Cash Dividends $ 0.38 $ 0.38 0.0%
Book Value $ 13.87 $ 12.31
Common Shares Outstanding 3,801,053 3,803,552
Average Shares Outstanding, Basic 3,801,143 3,803,322
Average Shares Outstanding, Diluted 3,905,438 3,921,225
PROFITABILITY RATIOS
Return on Average Assets 0.98% 1.38%
Return on Average Equity 12.18% 15.20%
Net Interest Margin (tax equivalent
basis(1)) 4.22% 4.26%
Efficiency Ratio (2) 63.13% 59.81%
Dividend Payout 45.78% 39.18%
CAPITAL RATIOS
Leverage Ratio 9.15% 10.07%
Risk-Based Capital Ratios
Tier 1 Capital Ratio 11.63% 16.09%
Total Capital Ratio 12.50% 17.25%
Equity to Assets 7.59% 8.55%
Tangible Equity to Tangible Assets 6.91% 7.64%
Loans to Deposits 89.01% 68.75%
ASSET QUALITY
Non-Performing Loans $ 92 $ 355 -74.1%
Loans Past Due 90 Days or More 14 28 -50.0%
Allowance for Loan Losses 4,563 2,906 57.0%
Net (recoveries) Charge-Offs (4) (82) -95.1%
Non-Performing Loans to Loans 0.02% 0.12% -83.3%
Allowance for Loan Losses to Loans 0.98% 1.01% -3.0%
Net (recoveries) Charge-Offs to
Average Loans 0.00% -0.03% -100.0%
Allowance for Loan Losses to
Non-Performing Loans 4962.77% 817.58% 507.0%
AVERAGE BALANCES
Investment Securities Portfolio $ 170,739 $ 194,796 -12.3%
Loans 399,495 270,910 47.5%
Earning Assets 580,520 484,402 19.8%
Assets 643,663 529,859 21.5%
Deposits 452,680 375,114 20.7%
Stockholders' Equity 51,836 48,242 7.4%
SELECTED FINANCIAL DATA AT PERIOD END
Investment Securities Portfolio 164,167 179,473 -8.5%
Loans, net of allowance for loan losses 461,781 284,488 62.3%
Earning Assets 625,971 501,262 24.9%
Assets 694,546 547,232 26.9%
Deposits 523,918 417,892 25.4%
Stockholders' Equity 52,725 46,804 12.7%
(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%. For the quarters ended
June 30, 2005 and 2004, net interest income on a tax equivalent basis
was $6.3 million and $5.3 million, respectively. For the six months
ended June 30, 2005 and 2004, net interest income on a tax equivalent
basis was $12.2 million and $10.3 million, respectively. See the
table below for a reconciliation of net interest income to tax
equivalent net interest income.
(2) The efficiency ratio is calculated by dividing non interest expense 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 is 34%. For the quarters ended June 30, 2005 and 2004, tax
equivalent net interest income was $6.3 million and $5.3 million,
respectively. For the six months ended June 30, 2005 and 2004, tax
equivalent net interest income was $12.2 million and $10.3 million,
respectively. See the table below for a reconciliation of net
interest income to tax equivalent net interest income. Total non
interest income, excluding gains and losses on the investment
portfolio, for the quarters ended June 30, 2005 and 2004, was $2.3
million and $2.1 million, respectively. Total non interest income,
excluding gains and losses on the investment portfolio, for the six
months ended June 30, 2005 and 2004, was $4.3 million and $4.1
million, respectively.
Reconciliation of Net Interest Income to
Tax Equivalent Net Interest Income
For the For the Six
Quarter Ended Months Ended
June 30, June 30,
(in thousands) 2005 2004 2005 2004
GAAP measures:
Interest Income - Loans $6,894 $4,421 $12,678 $ 8,614
Interest Income - Investments & Other 1,859 2,021 3,767 4,150
Interest Expense - Deposits 1,417 741 2,355 1,443
Interest Expense - Other Borrowings 1,229 671 2,360 1,415
Total Net Interest Income $6,107 $5,030 $11,730 $ 9,906
Plus:
NON-GAAP measures:
Tax Benefit Realized on Non- Taxable
Interest Income - Loans $ 1 $ 4 $ 3 $ 6
Tax Benefit Realized on Non- Taxable
Interest Income - Municipal Securities 194 211 410 438
Tax Benefit Realized on Non- Taxable
Interest Income - Corporate Securities 6 5 7 5
Total Tax Benefit Realized on Non-
Taxable Interest Income $ 201 $ 220 $ 420 $ 449
Total Tax Equivalent Net Interest Income $6,308 $5,250 $12,150 $10,355
SOURCE Middleburg Financial Corporation
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Related links:
http://www.middleburgbank.com
CONTACT:
Joseph L. Boling, Chairman & CEO,
+1-540-687-6377, ceo@middleburgbank.com, or Alice P. Frazier, EVP
& COO, +1-540-687-4801, coo@middleburgbank.com, or Kate J.
Chappell, SVP & CFO, +1-540-687-4816, cfo@middleburgbank.com, all
of Middleburg Financial Corporation
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