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Middleburg Financial Corp. Reports Operating Results (10-Q)

November 10, 2009 | About:
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10qk

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Middleburg Financial Corp. (MBRG) filed Quarterly Report for the period ended 2009-09-30.

Middleburg Financial Corporation has three wholly owned subsidiaries, The Middleburg Bank, The Tredegar Trust Company and Gilkison Patterson Investment Advisors, Inc. The Middleburg Bank serves Loudoun County, Virginia with 5 branches. The Tredegar Trust Company is headquartered inRichmond, Virginia with a branch office in Middleburg, Virginia. Gilkison Patterson Investment Advisors, Inc. is an investment management firm located in Alexandria, Virginia. Middleburg Financial Corp. has a market cap of $81 million; its shares were traded at around $12.1 with a P/E ratio of 27.5 and P/S ratio of 1.1. The dividend yield of Middleburg Financial Corp. stocks is 3.3%.

Highlight of Business Operations:

Net income for the three months ended September 30, 2009 decreased to $610,000 from $1.6 million for the three months ended September 30, 2008. Net charge-offs against the reserves for loan losses were $1.2 million during the three months ended September 30, 2009. The Company increased its reserves for loan losses, through recognition of bad debt expense, by $964,000 during the three months ended September 30, 2009. Total interest income decreased $46,000 or 0.3%, for the three months ended September 30, 2009, when compared to the same period in 2008. Interest and fees on loans were relatively unchanged at $12.0 million for each of the three months ended September 30, 2009 and 2008. Total interest expense decreased $836,000 to $4.6 million for the three months ended September 30, 2009, compared to the same period in 2008. Total other income increased $80,000 to $4.1 million for the three months ended September 30, 2009, when compared to the same period in 2008. Total other expense was $11.9 million for the three months ended September 30, 2009 compared to $10.0 million for the same period in 2008.

Total assets for the Company increased to $997.8 million at September 30, 2009, compared to $985.2 million at December 31, 2008, representing an increase of $12.6 million or 1.3%. Total average assets increased 10.4% from $918.1 million for the nine months ended September 30, 2008 to $1.0 billion for the same period in 2009. Total liabilities were $872.6 million at September 30, 2009, compared to $907.6 million at December 31, 2008. Total average liabilities increased $71.3 million or 8.5% to $909.1 million for the nine months ended September 30, 2009, compared to the same period in 2008. Average shareholders’ equity increased 32.9% or $25.3 million over the same periods.

Total loans, including loans held for sale at September 30, 2009 were $688.6 million, a decrease of $23.1 million from the December 31, 2008 amount of $711.7 million. Loans held for sale decreased to $36.8 million, or 5.3% of total loans at September 30, 2009, compared to $40.3 million, or 5.7% of total loans at December 31, 2008. The demand for refinancing and purchase money financing increased significantly during the nine months ended September 30, 2009 as a result of low interest rates when compared to the same period in 2008. Southern Trust Mortgage closed $785.8 million in loans for the nine months ended September 30, 2009, compared to $520.1 million for the nine months ended September 30, 2008. The Company experienced decreases in real estate construction loans, which were $81.7 million at September 30, 2009, compared to $105.7 million at December 31, 2008. Real estate mortgage loans of $511.1 million at September 30, 2009 increased slightly from the December 31, 2008 amount of $502.7 million. Commercial, financial and agricultural loans, which are primarily loans to businesses, decreased to $41.6 million at September 30, 2009, compared to $44.1 at December 31, 2008. Southern Trust Mortgage has a $5.0 million line of credit and a $50.0 million participation agreement with Middleburg Bank. The line of credit and the participation amounts are eliminated in the consolidation process and are not reflected in the Company’s consolidated financial statements. Net charge-offs were $4.5 million for the nine months ended September 30, 2009. The provision for loan losses for the nine months ended September 30, 2009 was $3.6 million compared to $4.7 million for the same period in 2008. The allowance for loan losses at September 30, 2009 was $9.2 million or 1.42% of total loans outstanding, excluding loans held for sale, compared to $10.0 million or 1.49% at December 31, 2008.

Time deposits decreased $32.8 million from December 31, 2008 to $301.5 million at September 30, 2009. Time deposits include brokered certificates of deposit, which decreased $19.9 million to $87.6 million at September 30, 2009 from the December 31, 2008 amount of $107.5 million. The brokered certificates of deposit have maturities ranging from two months to four years. Securities sold under agreements to repurchase (“Repo Accounts”) decreased $2.9 million from $22.7 million at December 31, 2008 to $19.8 million at September 30, 2009. The Repo Accounts include certain long-term commercial checking accounts with average balances that typically exceed $100,000 and the Tredegar Institutional Select account which includes accounts maintained by Middleburg Trust Company’s business clients.

Total shareholders’ equity was $125.2 million at September 30, 2009. This amount represents an increase of 61.4% from the December 31, 2008 amount of $77.6 million and is primarily due to the issuance of $22 million in January 2009 pursuant to the U.S. Treasury’s Capital Purchase Program, the private placement of $5.0 million in common stock under a stock purchase agreement and a public offering of 1,700,000 shares of common stock that resulted in proceeds of $17.1 million to the Company. As a result of these offerings, the number of shares of common stock underlying the warrant held by the U.S. Treasury was reduced by one –half. The Company expects to use the proceeds for general corporate purposes, including the redemption of all or a portion of our preferred stock and warrant issued as part of the Capital Purchase Program. Middleburg Financial Corporation’s shareholders’ equity, which excludes the non-controlling interest was $122.4 million at September 30, 2009, compared to $75.7 million at December 31, 2008. Shareholders’ equity related to common shareholders was $100.8 million at September 30, 2009. The book value of common shareholders was $14.61 per share at September 30, 2009 and $16.69 at December 31, 2008.

Net interest income for the three months ended September 30, 2009 totaled $9.4 million, compared to $8.6 million for the same period in 2008. When comparing the three months ended September 30, 2009 to the three months ended September 30, 2008, total interest income decreased 0.3% while total interest expense decreased 15.3%. Total interest income was relatively unchanged at $14.0 million for each of the three months ended September 30, 2009 and 2008. Total interest expense was $4.6 million for the three months ended September 30, 2009 compared to $5.5 million for the same period in 2008. Average earning assets increased $74.5 million to $937.1 million for the three months ended September 30, 2009 from $862.6 million for the three months ended September 30, 2008. Average interest bearing liabilities increased $42.4 million to $778.9 million for the three months ended September 30, 2009 when compared to the same period in 2008.

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