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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Middleburg Financial Corp. | NASDAQ:MBRG | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 40.04 | 39.29 | 40.53 | 0 | 01:00:00 |
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Virginia
(State or other jurisdiction of incorporation or organization)
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54-1696103
(I.R.S. Employer Identification No.)
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111 West Washington Street
Middleburg, Virginia
(Address of principal executive offices)
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20117
(Zip Code)
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Title of each class
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Name of each exchange
on which registered
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Common Stock, par value $2.50 per share
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Nasdaq Stock Market
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Large accelerated filer
¨
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Accelerated filer
þ
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Non-accelerated filer
¨
(Do not check if a smaller reporting company)
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Smaller reporting company
¨
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ITEM 1.
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BUSINESS
|
•
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Loudoun County - 375,629
|
•
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Fairfax County - 1,142,234
|
•
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Fauquier County - 68,782
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•
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Prince William County - 451,721
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•
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13.19% of the nearly $6.1 billion in deposits in Loudoun County.
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•
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1.24% of the nearly $5.0 billion in deposits in the Reston market.
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•
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6.55% of the nearly $1.5 billion in deposits in Fauquier County.
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•
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3.81% of the nearly $1.3 billion in deposits in James City County.
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•
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0.52% of the nearly $4.3 billion in deposits in Prince William County.
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•
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0.09% of the nearly $19.2 billion in deposits in the City of Richmond.
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•
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banking and managing or controlling banks;
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•
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furnishing services to or performing services for its subsidiaries; and
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•
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engaging in other activities that the Federal Reserve has determined by regulation or order to be so closely related to banking as to be a proper incident to these activities.
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•
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acquiring substantially all the assets of any bank;
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•
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acquiring direct or indirect ownership or control of any voting shares of any bank if after such acquisition it would own or control more than 5% of the voting shares of such bank (unless it already owns or controls the majority of such shares); or
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•
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merging or consolidating with another bank holding company.
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•
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limit the extent to which a bank or its subsidiaries may engage in “covered transactions” with any one affiliate to an amount equal to 10% of such institution’s capital stock and surplus, and maintain an aggregate limit on all such transactions with affiliates to an amount equal to 20% of such capital stock and surplus; and
|
•
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require that all such transactions be on terms substantially the same, or at least as favorable, to the association or subsidiary as those provided to a non-affiliate.
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•
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Insurance of Deposit Accounts.
The Dodd-Frank Act changed the assessment base for federal deposit insurance from the amount of insured deposits to consolidated assets less tangible capital. The Dodd-Frank Act also made permanent the $250,000 limit for federal deposit insurance and increased the cash limit of Securities Investor Protection Corporation protection from $100,000 to $250,000.
|
•
|
Payment of Interest on Demand Deposits.
The Dodd-Frank Act repealed the federal prohibitions on the payment of interest on demand deposits, thereby permitting depository institutions to pay interest on business transaction and other accounts.
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•
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Creation of the Consumer Financial Protection Bureau.
The Dodd-Frank Act centralized significant aspects of consumer financial protection by creating a new agency, the CFPB, which is discussed in more detail below.
|
•
|
Debit Card Interchange Fees.
The Dodd-Frank Act amended the Electronic Fund Transfer Act (EFTA) to, among other things, require that debit card interchange fees be reasonable and proportional to the actual cost incurred by the issuer with respect to the transaction. The Federal Reserve Board adopted regulations setting the maximum permissible interchange fee as the sum of $0.21 per transaction and 5 basis points multiplied by the value of the transaction, with an additional adjustment of up to $0.01 per transaction if the issuer implements additional fraud-prevention standards. Although issuers that have assets of less than $10 billion are exempt from the Federal Reserve Board’s regulations that set maximum interchange fees, these regulations could significantly affect the interchange fees that financial institutions with less than $10 billion in assets are able to collect.
|
•
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Restrict the preemption of state law by federal law and disallow subsidiaries and affiliates of national banks from availing themselves of such preemption.
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•
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Impose comprehensive regulation of over-the-counter derivatives market, subject to significant rulemaking processes, which would include certain provisions that would effectively prohibit insured depository institutions from conducting certain derivatives businesses in the institution itself.
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•
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Require depository institutions with total consolidated assets of more than $10 billion to conduct regular stress tests and require large, publicly traded bank holding companies to create a risk committee responsible for the oversight of enterprise risk management.
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•
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Require loan originators to retain 5% of any loan sold or securitized, unless it is a “qualified residential mortgage,” subject to certain exceptions.
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•
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Prohibit banks and their affiliates from engaging in proprietary trading and investing in and sponsoring certain unregistered investment companies (the Volcker Rule).
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•
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Implement corporate governance revisions that apply to all public companies not just financial institutions.
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•
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engaging in short-term proprietary trading of securities, derivatives, commodity futures and options on these instruments for their own account;
|
•
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owning, sponsoring, or having certain relationships with hedge funds or private equity funds, referred to as “covered funds”.
|
ITEM 1A.
|
RISK FACTORS
|
•
|
open new financial service centers;
|
•
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attract deposits to those locations; and
|
•
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identify attractive loan and investment opportunities.
|
•
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excessive upfront points and fees (those exceeding 3% of the total loan amount, less “bona fide discount points” for prime loans);
|
•
|
interest-only payments;
|
•
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negative-amortization; and
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•
|
terms longer than 30 years.
|
•
|
actual loan loss history;
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•
|
volume, growth, and composition of the loan portfolio;
|
•
|
the amount of nonperforming loans and the value of their related collateral;
|
•
|
the effect of changes in the local real estate market on collateral values;
|
•
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the effect of current economic conditions on a borrower’s ability to pay; and
|
•
|
other factors deemed relevant by management.
|
ITEM 1B.
|
UNRESOLVED STAFF COMMENTS
|
ITEM 2.
|
PROPERTIES
|
ITEM 3.
|
LEGAL PROCEEDINGS
|
ITEM 4.
|
MINE SAFETY DISCLOSURES
|
ITEM 5.
|
MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
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Sales Price ($)
|
Dividends ($)
|
|||||||
|
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High
|
Low
|
|
||||||
2016:
|
1st quarter
|
$
|
22.35
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$
|
18.02
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$
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0.13
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2nd quarter
|
27.69
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22.00
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0.13
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|||
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3rd quarter
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29.24
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26.47
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0.13
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|||
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4th quarter
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36.66
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27.18
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0.13
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|||
2015:
|
1st quarter
|
$
|
18.50
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$
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17.90
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$
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0.10
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2nd quarter
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18.90
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17.41
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0.10
|
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|||
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3rd quarter
|
18.67
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16.60
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0.13
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|||
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4th quarter
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18.89
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17.20
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0.13
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(Dollars in thousands, except for per share amounts)
|
|
Total number of shares purchased
|
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Average price paid per share ($)
|
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Total number of shares purchased as part of a publicly announced plan
|
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Approximate value of shares that may yet be purchased under the plan
|
||||||
January 1, 2016 -
January 31, 2016
|
|
26,800
|
|
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$
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18.29
|
|
|
26,800
|
|
|
$
|
8,088,000
|
|
|
Period Ending December 31,
|
||||||
Index
|
2011
|
2012
|
2013
|
2014
|
2015
|
2016
|
|
Middleburg Financial Corporation
|
100.00
|
125.47
|
129.77
|
131.96
|
138.84
|
266.27
|
|
NASDAQ Composite
|
100.00
|
117.45
|
164.57
|
188.84
|
201.98
|
219.89
|
|
SNL Bank $1B-$5B
|
100.00
|
123.31
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179.31
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187.48
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209.86
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301.92
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ITEM 6.
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SELECTED FINANCIAL DATA
|
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Years Ended December 31,
|
||||||||||||||||||
(In thousands, except per share data)
|
2016
|
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2015
|
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2014
|
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2013
|
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2012
|
||||||||||
Balance Sheet Data:
|
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||||||||||
Assets
|
$
|
1,272,643
|
|
|
$
|
1,294,863
|
|
|
$
|
1,222,857
|
|
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$
|
1,227,753
|
|
|
$
|
1,236,781
|
|
Loans, net
|
848,693
|
|
|
794,635
|
|
|
743,060
|
|
|
715,160
|
|
|
695,166
|
|
|||||
Loans held for sale
|
—
|
|
|
—
|
|
|
—
|
|
|
33,175
|
|
|
82,114
|
|
|||||
Securities
|
316,792
|
|
|
385,189
|
|
|
355,042
|
|
|
335,203
|
|
|
326,447
|
|
|||||
Deposits
|
1,053,058
|
|
|
1,040,800
|
|
|
989,080
|
|
|
982,396
|
|
|
981,900
|
|
|||||
Shareholders’ equity
|
126,679
|
|
|
123,554
|
|
|
122,034
|
|
|
115,073
|
|
|
117,122
|
|
|||||
Average shares outstanding, basic
|
7,107
|
|
|
7,147
|
|
|
7,106
|
|
|
7,074
|
|
|
7,032
|
|
|||||
Average shares outstanding, diluted
|
7,151
|
|
|
7,167
|
|
|
7,127
|
|
|
7,107
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|
|
7,043
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|
|||||
Income Statement Data:
|
|
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|
|||||||||
Interest income
|
$
|
43,375
|
|
|
$
|
42,281
|
|
|
$
|
43,325
|
|
|
$
|
44,272
|
|
|
$
|
47,023
|
|
Interest expense
|
4,424
|
|
|
4,207
|
|
|
5,243
|
|
|
6,567
|
|
|
8,824
|
|
|||||
Net interest income
|
38,951
|
|
|
38,074
|
|
|
38,082
|
|
|
37,705
|
|
|
38,199
|
|
|||||
Provision for loan losses
|
1,853
|
|
|
2,293
|
|
|
1,960
|
|
|
109
|
|
|
3,438
|
|
|||||
Net Interest income after provision for loan losses
|
37,098
|
|
|
35,781
|
|
|
36,122
|
|
|
37,596
|
|
|
34,761
|
|
|||||
Non-interest income
|
9,184
|
|
|
9,481
|
|
|
14,080
|
|
|
24,121
|
|
|
29,009
|
|
|||||
Securities gains
|
1,554
|
|
|
140
|
|
|
186
|
|
|
418
|
|
|
445
|
|
|||||
Non-interest expense
|
36,959
|
|
|
34,857
|
|
|
40,561
|
|
|
54,041
|
|
|
54,259
|
|
|||||
Income before income taxes and non-controlling interest in consolidated subsidiary
|
10,877
|
|
|
10,545
|
|
|
9,827
|
|
|
8,094
|
|
|
9,956
|
|
|||||
Income taxes
|
2,813
|
|
|
2,715
|
|
|
2,341
|
|
|
1,931
|
|
|
1,966
|
|
|||||
Non-controlling interest in consolidated subsidiary (income) loss
|
—
|
|
|
—
|
|
|
98
|
|
|
(9
|
)
|
|
(1,504
|
)
|
|||||
Net income
|
8,064
|
|
|
7,830
|
|
|
7,584
|
|
|
6,154
|
|
|
6,486
|
|
|||||
Per Share Data:
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Net income, basic
|
$
|
1.13
|
|
|
$
|
1.10
|
|
|
$
|
1.07
|
|
|
$
|
0.87
|
|
|
$
|
0.92
|
|
Net income, diluted
|
1.13
|
|
|
1.09
|
|
|
1.06
|
|
|
0.87
|
|
|
0.92
|
|
|||||
Cash dividends
|
0.52
|
|
|
0.46
|
|
|
0.34
|
|
|
0.24
|
|
|
0.20
|
|
|||||
Book value
|
17.58
|
|
|
17.44
|
|
|
17.11
|
|
|
15.90
|
|
|
16.15
|
|
|||||
Tangible book value
(2)
|
17.10
|
|
|
16.93
|
|
|
16.58
|
|
|
15.14
|
|
|
15.30
|
|
|||||
Asset Quality Ratios:
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Nonperforming loans to total loans
|
2.51
|
%
|
|
2.62
|
%
|
|
1.89
|
%
|
|
3.46
|
%
|
|
3.92
|
%
|
|||||
Nonperforming assets to total assets
|
2.16
|
|
|
1.97
|
|
|
1.59
|
|
|
2.33
|
|
|
3.05
|
|
|||||
Net charge-offs to average loans
|
0.18
|
|
|
0.39
|
|
|
0.46
|
|
|
0.15
|
|
|
0.54
|
|
|||||
Allowance for loan losses to gross loans
|
1.33
|
|
|
1.37
|
|
|
1.56
|
|
|
1.83
|
|
|
2.02
|
|
|||||
Selected Ratios:
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Return on average assets
|
0.61
|
%
|
|
0.62
|
%
|
|
0.62
|
%
|
|
0.51
|
%
|
|
0.54
|
%
|
|||||
Return on average equity
|
6.34
|
|
|
6.25
|
|
|
6.40
|
|
|
5.40
|
|
|
5.86
|
|
|||||
Dividend payout
|
46.02
|
|
|
42.20
|
|
|
32.08
|
|
|
27.60
|
|
|
21.70
|
|
|||||
Efficiency ratio
(1)
|
73.80
|
|
|
70.86
|
|
|
75.10
|
|
|
82.12
|
|
|
73.86
|
|
|||||
Equity to assets (including non-controlling interest in consolidated subsidiary)
|
9.95
|
|
|
9.54
|
|
|
9.98
|
|
|
9.37
|
|
|
9.47
|
|
|||||
Tier 1 risk-based capital ratio
|
16.61
|
|
|
16.27
|
|
|
15.70
|
|
|
14.64
|
|
|
14.09
|
|
|||||
Common equity tier 1 capital ratio
|
15.97
|
|
|
15.61
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|||||
Total risk-based capital ratio
|
17.86
|
|
|
17.52
|
|
|
16.95
|
|
|
15.89
|
|
|
15.35
|
|
|||||
Leverage ratio
|
9.95
|
|
|
9.59
|
|
|
9.90
|
|
|
9.43
|
|
|
9.10
|
|
(1)
|
The ratio 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.
|
(2)
|
Tangible book value 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.
|
ITEM 7.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITON AND RESULTS OF OPERATIONS
|
|
Years Ended December 31,
|
|||||||||||||||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|||||||||||||||||||||||||||
(Dollars in thousands)
|
Average
Balance
|
|
Income/
Expense
|
|
Yield/
Rate
(2)
|
|
Average
Balance
|
|
Income/
Expense
|
|
Yield/
Rate
(2)
|
|
Average
Balance
|
|
Income/
Expense
|
|
Yield/
Rate
(2)
|
|||||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Taxable
|
$
|
320,250
|
|
|
$
|
7,716
|
|
|
2.41
|
%
|
|
$
|
319,705
|
|
|
$
|
7,893
|
|
|
2.47
|
%
|
|
$
|
282,198
|
|
|
$
|
7,193
|
|
|
2.55
|
%
|
Tax-exempt
(1)
|
50,373
|
|
|
2,576
|
|
|
5.11
|
%
|
|
51,732
|
|
|
2,732
|
|
|
5.28
|
%
|
|
56,729
|
|
|
3,238
|
|
|
5.71
|
%
|
||||||
Total securities
|
$
|
370,623
|
|
|
$
|
10,292
|
|
|
2.78
|
%
|
|
$
|
371,437
|
|
|
$
|
10,625
|
|
|
2.86
|
%
|
|
$
|
338,927
|
|
|
$
|
10,431
|
|
|
3.08
|
%
|
Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Taxable
|
$
|
834,810
|
|
|
$
|
33,773
|
|
|
4.05
|
%
|
|
$
|
771,207
|
|
|
$
|
32,457
|
|
|
4.21
|
%
|
|
$
|
741,028
|
|
|
$
|
33,810
|
|
|
4.56
|
%
|
Tax-exempt
(1)
|
604
|
|
|
33
|
|
|
5.46
|
%
|
|
609
|
|
|
33
|
|
|
5.42
|
%
|
|
643
|
|
|
34
|
|
|
5.29
|
%
|
||||||
Total loans
(3)
|
$
|
835,414
|
|
|
$
|
33,806
|
|
|
4.05
|
%
|
|
$
|
771,816
|
|
|
$
|
32,490
|
|
|
4.21
|
%
|
|
$
|
741,671
|
|
|
$
|
33,844
|
|
|
4.56
|
%
|
Interest-bearing deposits with other institutions
|
40,672
|
|
|
164
|
|
|
0.40
|
%
|
|
49,201
|
|
|
106
|
|
|
0.22
|
%
|
|
71,275
|
|
|
162
|
|
|
0.23
|
%
|
||||||
Total earning assets
|
$
|
1,246,709
|
|
|
$
|
44,262
|
|
|
3.55
|
%
|
|
$
|
1,192,454
|
|
|
$
|
43,221
|
|
|
3.62
|
%
|
|
$
|
1,151,873
|
|
|
$
|
44,437
|
|
|
3.86
|
%
|
Less: allowances for loan losses
|
(11,311
|
)
|
|
|
|
|
|
(11,853
|
)
|
|
|
|
|
|
(12,241
|
)
|
|
|
|
|
||||||||||||
Total non-earning assets
|
80,980
|
|
|
|
|
|
|
77,456
|
|
|
|
|
|
|
77,834
|
|
|
|
|
|
||||||||||||
Total assets
|
$
|
1,316,378
|
|
|
|
|
|
|
$
|
1,258,057
|
|
|
|
|
|
|
$
|
1,217,466
|
|
|
|
|
|
|||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Interest-bearing deposits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Checking
|
$
|
351,764
|
|
|
$
|
767
|
|
|
0.22
|
%
|
|
$
|
343,026
|
|
|
$
|
693
|
|
|
0.20
|
%
|
|
$
|
339,996
|
|
|
$
|
651
|
|
|
0.19
|
%
|
Regular savings
|
130,357
|
|
|
241
|
|
|
0.18
|
%
|
|
119,989
|
|
|
223
|
|
|
0.19
|
%
|
|
113,363
|
|
|
212
|
|
|
0.19
|
%
|
||||||
Money market savings
|
77,763
|
|
|
185
|
|
|
0.24
|
%
|
|
70,239
|
|
|
136
|
|
|
0.19
|
%
|
|
73,232
|
|
|
139
|
|
|
0.19
|
%
|
||||||
Time deposits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
$100,000 and over
|
146,406
|
|
|
1,290
|
|
|
0.88
|
%
|
|
138,860
|
|
|
1,220
|
|
|
0.88
|
%
|
|
125,904
|
|
|
1,232
|
|
|
0.98
|
%
|
||||||
Under $100,000
|
111,097
|
|
|
1,052
|
|
|
0.95
|
%
|
|
106,023
|
|
|
1,190
|
|
|
1.12
|
%
|
|
129,021
|
|
|
1,655
|
|
|
1.28
|
%
|
||||||
Total interest-bearing deposits
|
$
|
817,387
|
|
|
$
|
3,535
|
|
|
0.43
|
%
|
|
$
|
778,137
|
|
|
$
|
3,462
|
|
|
0.44
|
%
|
|
$
|
781,516
|
|
|
$
|
3,889
|
|
|
0.50
|
%
|
Securities sold under agreements to repurchase
|
31,076
|
|
|
3
|
|
|
0.01
|
%
|
|
30,095
|
|
|
64
|
|
|
0.21
|
%
|
|
36,899
|
|
|
318
|
|
|
0.86
|
%
|
||||||
FHLB borrowings and subordinated debt
|
79,751
|
|
|
886
|
|
|
1.11
|
%
|
|
68,977
|
|
|
681
|
|
|
0.99
|
%
|
|
70,141
|
|
|
1,036
|
|
|
1.48
|
%
|
||||||
Federal funds purchased
|
15
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
||||||
Total interest-bearing liabilities
|
$
|
928,229
|
|
|
$
|
4,424
|
|
|
0.48
|
%
|
|
$
|
877,210
|
|
|
$
|
4,207
|
|
|
0.48
|
%
|
|
$
|
888,557
|
|
|
$
|
5,243
|
|
|
0.59
|
%
|
Non-interest bearing liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Demand deposits
|
247,214
|
|
|
|
|
|
|
241,996
|
|
|
|
|
|
|
199,273
|
|
|
|
|
|
||||||||||||
Other liabilities
|
13,832
|
|
|
|
|
|
|
13,602
|
|
|
|
|
|
|
11,059
|
|
|
|
|
|
||||||||||||
Total liabilities
|
$
|
1,189,275
|
|
|
|
|
|
|
$
|
1,132,808
|
|
|
|
|
|
|
$
|
1,098,889
|
|
|
|
|
|
|||||||||
Shareholders’ equity
|
127,103
|
|
|
|
|
|
|
125,249
|
|
|
|
|
|
|
118,577
|
|
|
|
|
|
||||||||||||
Total liabilities and Shareholders’ equity
|
$
|
1,316,378
|
|
|
|
|
|
|
$
|
1,258,057
|
|
|
|
|
|
|
$
|
1,217,466
|
|
|
|
|
|
|||||||||
Net interest income
(1)
|
|
|
$
|
39,838
|
|
|
|
|
|
|
$
|
39,014
|
|
|
|
|
|
|
$
|
39,194
|
|
|
|
|||||||||
Interest rate spread
|
|
|
|
|
3.07
|
%
|
|
|
|
|
|
3.14
|
%
|
|
|
|
|
|
3.27
|
%
|
||||||||||||
Interest expense as a percent of average earning assets
|
|
|
|
|
0.35
|
%
|
|
|
|
|
|
0.35
|
%
|
|
|
|
|
|
0.46
|
%
|
||||||||||||
Net interest margin
|
|
|
|
|
3.20
|
%
|
|
|
|
|
|
3.27
|
%
|
|
|
|
|
|
3.40
|
%
|
(1)
|
Income and yields are reported on a tax equivalent basis assuming a federal tax rate of 34%.
|
(2)
|
Yields and rates have been annualized on a 366 day year for 2016 and a 365 day year for 2015 and 2014.
|
(3)
|
Total average loans include loans on nonaccrual status.
|
|
|
For the Years Ended December 31,
|
||||||||||
(Dollars in thousands)
|
|
2016
|
|
2015
|
|
2014
|
||||||
GAAP measures:
|
|
|
|
|
|
|
||||||
Interest income - loans
|
|
$
|
33,795
|
|
|
$
|
32,479
|
|
|
$
|
33,833
|
|
Interest income - investments & other
|
|
9,580
|
|
|
9,802
|
|
|
9,492
|
|
|||
Interest expense - deposits
|
|
3,535
|
|
|
3,462
|
|
|
3,889
|
|
|||
Interest expense - other borrowings
|
|
889
|
|
|
745
|
|
|
1,354
|
|
|||
Net Interest Income
|
|
$
|
38,951
|
|
|
$
|
38,074
|
|
|
$
|
38,082
|
|
Plus:
|
|
|
|
|
|
|
||||||
Non-GAAP measures:
|
|
|
|
|
|
|
||||||
Tax Benefit Realized on:
|
|
|
|
|
|
|
||||||
Non-taxable interest income - municipal securities
|
|
$
|
876
|
|
|
$
|
929
|
|
|
$
|
1,101
|
|
Non-taxable interest income - loans
|
|
11
|
|
|
11
|
|
|
11
|
|
|||
Tax Benefit Realized on Non-Taxable Interest Income
|
|
$
|
887
|
|
|
$
|
940
|
|
|
$
|
1,112
|
|
Tax Equivalent Net Interest Income
|
|
$
|
39,838
|
|
|
$
|
39,014
|
|
|
$
|
39,194
|
|
|
|
Years Ended December 31,
|
||||||||||||||||||||||
(Dollars in thousands)
|
|
2016 vs. 2015 Increase (Decrease) Due to Changes in:
|
|
2015 vs. 2014 Increase (Decrease) Due to Changes in:
|
||||||||||||||||||||
|
|
Volume
|
|
Rate
|
|
Total
|
|
Volume
|
|
Rate
|
|
Total
|
||||||||||||
Earning Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Taxable
|
|
$
|
14
|
|
|
$
|
(191
|
)
|
|
$
|
(177
|
)
|
|
$
|
917
|
|
|
$
|
(217
|
)
|
|
$
|
700
|
|
Tax-exempt
(1)
|
|
(71
|
)
|
|
(85
|
)
|
|
(156
|
)
|
|
(274
|
)
|
|
(232
|
)
|
|
(506
|
)
|
||||||
Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Taxable
|
|
2,481
|
|
|
(1,165
|
)
|
|
1,316
|
|
|
1,495
|
|
|
(2,848
|
)
|
|
(1,353
|
)
|
||||||
Tax-exempt
(1)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
1
|
|
|
(1
|
)
|
||||||
Interest bearing deposits with other institutions
|
|
(14
|
)
|
|
72
|
|
|
58
|
|
|
(48
|
)
|
|
(8
|
)
|
|
(56
|
)
|
||||||
Total earning assets
|
|
$
|
2,410
|
|
|
$
|
(1,369
|
)
|
|
$
|
1,041
|
|
|
$
|
2,088
|
|
|
$
|
(3,304
|
)
|
|
$
|
(1,216
|
)
|
Interest-Bearing Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Checking
|
|
$
|
18
|
|
|
$
|
56
|
|
|
$
|
74
|
|
|
$
|
6
|
|
|
$
|
36
|
|
|
$
|
42
|
|
Regular savings
|
|
19
|
|
|
(1
|
)
|
|
18
|
|
|
12
|
|
|
(1
|
)
|
|
11
|
|
||||||
Money market savings
|
|
16
|
|
|
33
|
|
|
49
|
|
|
(6
|
)
|
|
3
|
|
|
(3
|
)
|
||||||
Time deposits:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
$100,000 and over
|
|
66
|
|
|
4
|
|
|
70
|
|
|
127
|
|
|
(139
|
)
|
|
(12
|
)
|
||||||
Under $100,000
|
|
61
|
|
|
(199
|
)
|
|
(138
|
)
|
|
(273
|
)
|
|
(192
|
)
|
|
(465
|
)
|
||||||
Total interest-bearing deposits
|
|
$
|
180
|
|
|
$
|
(107
|
)
|
|
$
|
73
|
|
|
$
|
(134
|
)
|
|
$
|
(293
|
)
|
|
$
|
(427
|
)
|
Securities sold under agreements to repurchase
|
|
2
|
|
|
(63
|
)
|
|
(61
|
)
|
|
(50
|
)
|
|
(204
|
)
|
|
(254
|
)
|
||||||
FHLB borrowings and subordinated debt
|
|
114
|
|
|
91
|
|
|
205
|
|
|
(17
|
)
|
|
(338
|
)
|
|
(355
|
)
|
||||||
Total interest-bearing liabilities
|
|
$
|
296
|
|
|
$
|
(79
|
)
|
|
$
|
217
|
|
|
$
|
(201
|
)
|
|
$
|
(835
|
)
|
|
$
|
(1,036
|
)
|
Change in net interest income
|
|
$
|
2,114
|
|
|
$
|
(1,290
|
)
|
|
$
|
824
|
|
|
$
|
2,289
|
|
|
$
|
(2,469
|
)
|
|
$
|
(180
|
)
|
(Dollars in thousands)
|
|
Years Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Service charges on deposit accounts
|
|
$
|
1,154
|
|
|
$
|
1,061
|
|
|
$
|
1,163
|
|
Trust services income
|
|
4,643
|
|
|
4,785
|
|
|
4,362
|
|
|||
ATM fee income, net
|
|
762
|
|
|
797
|
|
|
739
|
|
|||
Gains (losses) on sales of loans held for sale, net
|
|
32
|
|
|
(1
|
)
|
|
4,860
|
|
|||
Gains on sales of securities available for sale, net
|
|
1,554
|
|
|
140
|
|
|
186
|
|
|||
Commissions on investment sales
|
|
555
|
|
|
547
|
|
|
611
|
|
|||
Bank owned life insurance
|
|
652
|
|
|
656
|
|
|
662
|
|
|||
Gain on sale of majority interest in consolidated subsidiary
|
|
—
|
|
|
—
|
|
|
24
|
|
|||
Other operating income
|
|
1,386
|
|
|
1,636
|
|
|
1,659
|
|
|||
Total non-interest income
|
|
$
|
10,738
|
|
|
$
|
9,621
|
|
|
$
|
14,266
|
|
(Dollars in thousands)
|
Years Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Salaries and employee benefits
|
$
|
18,757
|
|
|
$
|
18,435
|
|
|
$
|
22,601
|
|
Occupancy and equipment
|
4,881
|
|
|
5,106
|
|
|
6,177
|
|
|||
Advertising
|
200
|
|
|
288
|
|
|
365
|
|
|||
Amortization
|
1,211
|
|
|
1,001
|
|
|
791
|
|
|||
Computer operations
|
2,582
|
|
|
2,337
|
|
|
1,893
|
|
|||
Other real estate owned, net
|
363
|
|
|
284
|
|
|
256
|
|
|||
Other taxes
|
947
|
|
|
915
|
|
|
849
|
|
|||
Federal deposit insurance
|
748
|
|
|
786
|
|
|
899
|
|
|||
Audits and exams
|
589
|
|
|
585
|
|
|
630
|
|
|||
Legal and advisory fees
|
1,202
|
|
|
1,029
|
|
|
1,324
|
|
|||
Merger related expenses
|
1,289
|
|
|
—
|
|
|
—
|
|
|||
Other operating expenses
|
4,190
|
|
|
4,091
|
|
|
4,776
|
|
|||
Total non-interest expense
|
$
|
36,959
|
|
|
$
|
34,857
|
|
|
$
|
40,561
|
|
|
2016 Quarter Ended
|
||||||||||||||
(Dollars in thousands except per share data)
|
March 31
|
|
June 30
|
|
September 30
|
|
December 31
|
||||||||
Net interest income
|
$
|
9,749
|
|
|
$
|
9,969
|
|
|
$
|
9,617
|
|
|
$
|
9,616
|
|
Net interest income after provision for loan losses
|
9,449
|
|
|
9,919
|
|
|
9,914
|
|
|
7,816
|
|
||||
Other income
|
2,045
|
|
|
2,160
|
|
|
2,106
|
|
|
2,873
|
|
||||
Net securities gains
|
163
|
|
|
210
|
|
|
138
|
|
|
1,043
|
|
||||
Other expense
|
9,014
|
|
|
8,751
|
|
|
9,174
|
|
|
10,020
|
|
||||
Income before income taxes
|
2,643
|
|
|
3,538
|
|
|
2,984
|
|
|
1,712
|
|
||||
Net income
|
$
|
2,055
|
|
|
$
|
2,653
|
|
|
$
|
2,264
|
|
|
$
|
1,092
|
|
Diluted earnings per common share
|
$
|
0.29
|
|
|
$
|
0.37
|
|
|
$
|
0.32
|
|
|
$
|
0.15
|
|
Dividends per common share
|
0.13
|
|
|
0.13
|
|
|
0.13
|
|
|
0.13
|
|
|
2015 Quarter Ended
|
||||||||||||||
(Dollars in thousands except per share data)
|
March 31
|
|
June 30
|
|
September 30
|
|
December 31
|
||||||||
Net interest income
|
$
|
9,631
|
|
|
$
|
9,313
|
|
|
$
|
9,659
|
|
|
$
|
9,471
|
|
Net interest income after provision for loan losses
|
9,181
|
|
|
9,738
|
|
|
10,091
|
|
|
6,771
|
|
||||
Other income
|
2,754
|
|
|
2,201
|
|
|
2,171
|
|
|
2,355
|
|
||||
Net securities gains
|
101
|
|
|
37
|
|
|
—
|
|
|
2
|
|
||||
Other expense
|
8,748
|
|
|
8,881
|
|
|
9,090
|
|
|
8,138
|
|
||||
Income before income taxes
|
3,289
|
|
|
3,095
|
|
|
3,171
|
|
|
990
|
|
||||
Net income
|
$
|
2,448
|
|
|
$
|
2,280
|
|
|
$
|
2,321
|
|
|
$
|
781
|
|
Diluted earnings per common share
|
$
|
0.34
|
|
|
$
|
0.32
|
|
|
$
|
0.32
|
|
|
$
|
0.11
|
|
Dividends per common share
|
0.10
|
|
|
0.10
|
|
|
0.13
|
|
|
0.13
|
|
|
2014 Quarter Ended
|
||||||||||||||
(Dollars in thousands except per share data)
|
March 31
|
|
June 30
|
|
September 30
|
|
December 31
|
||||||||
Net interest income
|
$
|
9,711
|
|
|
$
|
9,510
|
|
|
$
|
9,545
|
|
|
$
|
9,316
|
|
Net interest income after provision for loan losses
|
8,823
|
|
|
9,438
|
|
|
8,995
|
|
|
8,866
|
|
||||
Other income
|
5,687
|
|
|
4,073
|
|
|
2,108
|
|
|
2,212
|
|
||||
Net securities gains
|
63
|
|
|
66
|
|
|
12
|
|
|
45
|
|
||||
Other expense
|
12,004
|
|
|
10,997
|
|
|
8,231
|
|
|
9,329
|
|
||||
Income before income taxes
|
2,569
|
|
|
2,580
|
|
|
2,884
|
|
|
1,794
|
|
||||
Net income
|
1,820
|
|
|
1,913
|
|
|
2,121
|
|
|
1,632
|
|
||||
Net (income) loss attributable to non-controlling interest
|
157
|
|
|
(59
|
)
|
|
—
|
|
|
—
|
|
||||
Net income attributable to Middleburg Financial Corporation
|
$
|
1,977
|
|
|
$
|
1,854
|
|
|
$
|
2,121
|
|
|
$
|
1,632
|
|
Diluted earnings per common share
|
$
|
0.28
|
|
|
$
|
0.26
|
|
|
$
|
0.30
|
|
|
$
|
0.22
|
|
Dividends per common share
|
0.07
|
|
|
0.07
|
|
|
0.10
|
|
|
0.10
|
|
|
Years Ended December 31,
|
||||||||||||||||||
(Dollars in thousands)
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
Real estate loans:
|
|
|
|
|
|
|
|
|
|
||||||||||
Construction
|
$
|
35,627
|
|
|
$
|
39,673
|
|
|
$
|
33,050
|
|
|
$
|
36,025
|
|
|
$
|
50,218
|
|
Secured by farmland
|
16,768
|
|
|
19,062
|
|
|
19,708
|
|
|
16,578
|
|
|
11,876
|
|
|||||
Secured by 1-4 family residential
|
314,045
|
|
|
280,096
|
|
|
265,216
|
|
|
273,384
|
|
|
260,620
|
|
|||||
Other real estate loans
|
283,613
|
|
|
258,035
|
|
|
255,236
|
|
|
260,333
|
|
|
254,930
|
|
|||||
Commercial loans
|
190,767
|
|
|
190,482
|
|
|
163,269
|
|
|
129,554
|
|
|
118,573
|
|
|||||
Consumer loans
|
19,277
|
|
|
18,333
|
|
|
18,367
|
|
|
12,606
|
|
|
13,260
|
|
|||||
Total gross loans
|
860,097
|
|
|
805,681
|
|
|
754,846
|
|
|
728,480
|
|
|
709,477
|
|
|||||
Less allowance for loan losses
|
11,404
|
|
|
11,046
|
|
|
11,786
|
|
|
13,320
|
|
|
14,311
|
|
|||||
Net loans
|
$
|
848,693
|
|
|
$
|
794,635
|
|
|
$
|
743,060
|
|
|
$
|
715,160
|
|
|
$
|
695,166
|
|
•
|
Total loans were $860.1 million, an increase of 6.8% from $805.7 million as of December 31, 2015.
|
•
|
Real estate construction loans consisted primarily of pre-sold 1-4 family residential loans and a marginal amount of commercial construction loans. These loans represented 4.1% of total loans, a decrease of approximately $4.0 million from $39.7 million.
|
•
|
Loans secured by farmland decreased by $2.3 million from $19.1 million to $16.8 million.
|
•
|
Loans secured by 1-4 family residential real estate represented 36.5% of total loans, an increase of $33.9 million.
|
•
|
Other real estate loans are typically non-farm, non-residential real estate loans which are, in most cases, owner-occupied commercial buildings. Other real estate loans represented 33.0% of total loans, an increase of $25.6 million.
|
•
|
Commercial loans, which consist of secured and unsecured loans to small businesses, increased by $285,000.
|
•
|
Consumer loans increased by $944,000 compared to 2015.
|
(Dollars in thousands)
|
Commercial, Financial and Agricultural
|
|
Real Estate Construction
|
||||
Within 1 year
|
$
|
3,602
|
|
|
$
|
4,626
|
|
Variable Rate:
|
|
|
|
|
|
||
1-5 years
|
28,474
|
|
|
10,006
|
|
||
After 5 years
|
70,337
|
|
|
10,302
|
|
||
Total
|
98,811
|
|
|
20,308
|
|
||
Fixed Rate:
|
|
|
|
|
|
||
1-5 years
|
14,337
|
|
|
7,654
|
|
||
After 5 years
|
74,017
|
|
|
3,039
|
|
||
Total
|
$
|
88,354
|
|
|
$
|
10,693
|
|
Total Maturities
|
$
|
190,767
|
|
|
$
|
35,627
|
|
•
|
All interest accrued but unpaid at the date the loan is placed on nonaccrual is either deducted from interest income or written-off as a loss.
|
•
|
Accruals of interest are discontinued until it becomes certain that both principal and interest can be repaid.
|
•
|
There may be actual losses that require additional provisions for loan losses to be charged against earnings.
|
|
Years ended December 31,
|
||||||||||||||||||
(Dollars in thousands)
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
Nonaccrual loans
|
$
|
8,359
|
|
|
$
|
8,784
|
|
|
$
|
9,944
|
|
|
$
|
19,752
|
|
|
$
|
21,664
|
|
Restructured loans
(1)
|
12,410
|
|
|
12,058
|
|
|
4,295
|
|
|
4,674
|
|
|
5,132
|
|
|||||
Accruing loans greater than 90 days past due
|
781
|
|
|
278
|
|
|
30
|
|
|
808
|
|
|
1,044
|
|
|||||
Total nonperforming loans
|
$
|
21,550
|
|
|
$
|
21,120
|
|
|
$
|
14,269
|
|
|
$
|
25,234
|
|
|
$
|
27,840
|
|
Other real estate owned
|
5,073
|
|
|
3,345
|
|
|
4,051
|
|
|
3,424
|
|
|
9,929
|
|
|||||
Repossessed Assets
|
843
|
|
|
1,043
|
|
|
1,132
|
|
|
—
|
|
|
—
|
|
|||||
Total nonperforming assets
|
$
|
27,466
|
|
|
$
|
25,508
|
|
|
$
|
19,452
|
|
|
$
|
28,658
|
|
|
$
|
37,769
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Allowance for loan losses
|
$
|
11,404
|
|
|
$
|
11,046
|
|
|
$
|
11,786
|
|
|
$
|
13,320
|
|
|
$
|
14,311
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Nonperforming loans to gross loans
|
2.5
|
%
|
|
2.6
|
%
|
|
1.9
|
%
|
|
3.5
|
%
|
|
3.9
|
%
|
|||||
Allowance for loan losses to nonperforming loans
|
52.9
|
%
|
|
52.3
|
%
|
|
82.6
|
%
|
|
52.8
|
%
|
|
51.4
|
%
|
|||||
Nonperforming assets to total assets
|
2.2
|
%
|
|
2.0
|
%
|
|
1.6
|
%
|
|
2.3
|
%
|
|
3.1
|
%
|
|
Years Ended December 31,
|
||||||||||||||||||
(Dollars in thousands)
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
Balance, beginning of year
|
$
|
11,046
|
|
|
$
|
11,786
|
|
|
$
|
13,320
|
|
|
$
|
14,311
|
|
|
$
|
14,623
|
|
Adjustment for the sale of majority interest in consolidated subsidiary
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(95
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Provision for loan losses
|
$
|
1,853
|
|
|
$
|
2,293
|
|
|
$
|
1,960
|
|
|
$
|
109
|
|
|
$
|
3,438
|
|
Charge-offs:
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Real estate loans:
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Construction
|
$
|
388
|
|
|
$
|
—
|
|
|
$
|
1,186
|
|
|
$
|
394
|
|
|
$
|
2,152
|
|
Secured by 1-4 family residential
|
1,021
|
|
|
344
|
|
|
1,380
|
|
|
785
|
|
|
893
|
|
|||||
Other real estate loans
|
126
|
|
|
9
|
|
|
747
|
|
|
97
|
|
|
760
|
|
|||||
Commercial loans
|
639
|
|
|
3,281
|
|
|
959
|
|
|
75
|
|
|
394
|
|
|||||
Consumer loans
|
20
|
|
|
57
|
|
|
36
|
|
|
30
|
|
|
72
|
|
|||||
Total charge-offs
|
$
|
2,194
|
|
|
$
|
3,691
|
|
|
$
|
4,308
|
|
|
$
|
1,381
|
|
|
$
|
4,271
|
|
Recoveries:
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Real estate loans:
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Construction
|
$
|
129
|
|
|
$
|
246
|
|
|
$
|
258
|
|
|
$
|
68
|
|
|
$
|
2
|
|
Secured by 1-4 family residential
|
395
|
|
|
359
|
|
|
342
|
|
|
140
|
|
|
388
|
|
|||||
Other real estate loans
|
32
|
|
|
28
|
|
|
110
|
|
|
37
|
|
|
86
|
|
|||||
Commercial loans
|
85
|
|
|
14
|
|
|
104
|
|
|
9
|
|
|
12
|
|
|||||
Consumer loans
|
58
|
|
|
11
|
|
|
95
|
|
|
27
|
|
|
33
|
|
|||||
Total recoveries
|
$
|
699
|
|
|
$
|
658
|
|
|
$
|
909
|
|
|
$
|
281
|
|
|
$
|
521
|
|
Net charge-offs
|
$
|
1,495
|
|
|
$
|
3,033
|
|
|
$
|
3,399
|
|
|
$
|
1,100
|
|
|
$
|
3,750
|
|
Balance, end of year
|
$
|
11,404
|
|
|
$
|
11,046
|
|
|
$
|
11,786
|
|
|
$
|
13,320
|
|
|
$
|
14,311
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Allowance for loan losses to gross loans
|
1.33
|
%
|
|
1.37
|
%
|
|
1.56
|
%
|
|
1.83
|
%
|
|
2.02
|
%
|
|||||
Net charge-offs to average loans
|
0.18
|
%
|
|
0.39
|
%
|
|
0.46
|
%
|
|
0.15
|
%
|
|
0.54
|
%
|
|
Real Estate Construction
|
Real Estate Secured by Farmland
|
1-4 Family Residential
|
Other Real Estate Loans
|
Commercial
|
Consumer
|
||||||||||||||||||||||||
|
Balance
|
% Total Loans
|
Balance
|
% Total Loans
|
Balance
|
% Total Loans
|
Balance
|
% Total Loans
|
Balance
|
% Total Loans
|
Balance
|
% Total Loans
|
||||||||||||||||||
2016
|
$
|
939
|
|
4.1
|
%
|
$
|
127
|
|
2.0
|
%
|
$
|
2,262
|
|
36.5
|
%
|
$
|
3,167
|
|
33.0
|
%
|
$
|
3,933
|
|
22.2
|
%
|
$
|
976
|
|
2.2
|
%
|
2015
|
905
|
|
4.9
|
|
192
|
|
2.4
|
|
3,341
|
|
34.8
|
|
3,761
|
|
32.0
|
|
1,706
|
|
23.6
|
|
1,141
|
|
2.3
|
|
||||||
2014
|
550
|
|
4.4
|
|
179
|
|
2.6
|
|
3,966
|
|
35.1
|
|
3,916
|
|
33.8
|
|
2,354
|
|
21.6
|
|
821
|
|
2.5
|
|
||||||
2013
|
847
|
|
5.0
|
|
166
|
|
2.3
|
|
6,734
|
|
37.5
|
|
3,506
|
|
35.7
|
|
1,890
|
|
17.8
|
|
177
|
|
1.7
|
|
||||||
2012
|
1,258
|
|
7.1
|
|
135
|
|
1.7
|
|
6,276
|
|
36.7
|
|
4,348
|
|
35.9
|
|
2,098
|
|
16.8
|
|
196
|
|
1.8
|
|
Available for Sale
|
Years Ended December 31,
|
||||||||||
(Dollars in thousands)
|
2016
|
|
2015
|
|
2014
|
||||||
U.S. government agency securities
|
$
|
73,184
|
|
|
$
|
78,940
|
|
|
$
|
41,397
|
|
Obligations of states and political subdivisions
|
63,373
|
|
|
75,593
|
|
|
57,740
|
|
|||
Mortgage-backed securities
|
107,984
|
|
|
144,438
|
|
|
201,336
|
|
|||
Other securities
|
57,026
|
|
|
75,600
|
|
|
47,790
|
|
|||
|
$
|
301,567
|
|
|
$
|
374,571
|
|
|
$
|
348,263
|
|
Held to Maturity
|
Years Ended December 31,
|
||||||||||
(Dollars in thousands)
|
2016
|
|
2015
|
|
2014
|
||||||
Obligations of states and political subdivisions
|
$
|
6,433
|
|
|
$
|
1,457
|
|
|
$
|
1,500
|
|
Corporate securities
|
4,250
|
|
|
2,750
|
|
|
—
|
|
|||
|
$
|
10,683
|
|
|
$
|
4,207
|
|
|
$
|
1,500
|
|
|
Due in 1 year
or less
|
|
Due after 1 year through 5 years
|
|
Due after 5 years through 10 years
|
|
Due after 10 years and Equities
|
|
Total
|
|||||||||||||||||||||||||
(Dollars in thousands)
|
Amount
|
|
Yield
|
|
Amount
|
|
Yield
|
|
Amount
|
|
Yield
|
|
Amount
|
|
Yield
|
|
Amount
|
|
Yield
|
|||||||||||||||
Securities available for sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
U.S. government agencies
|
$
|
340
|
|
|
46.47
|
%
|
|
$
|
1,050
|
|
|
2.34
|
%
|
|
$
|
6,765
|
|
|
2.43
|
%
|
|
$
|
65,029
|
|
|
2.18
|
%
|
|
$
|
73,184
|
|
|
1.85
|
%
|
Mortgage-backed securities
|
—
|
|
|
—
|
%
|
|
4,641
|
|
|
3.01
|
%
|
|
513
|
|
|
3.84
|
%
|
|
102,830
|
|
|
2.29
|
%
|
|
107,984
|
|
|
2.29
|
%
|
|||||
Other
(2)
|
100
|
|
|
1.30
|
%
|
|
7,651
|
|
|
2.61
|
%
|
|
20,564
|
|
|
2.54
|
%
|
|
52,204
|
|
|
309.00
|
%
|
|
80,519
|
|
|
2.54
|
%
|
|||||
Total taxable
|
$
|
440
|
|
|
15.92
|
%
|
|
$
|
13,342
|
|
|
2.65
|
%
|
|
$
|
27,842
|
|
|
2.93
|
%
|
|
$
|
220,063
|
|
|
2.52
|
%
|
|
$
|
261,687
|
|
|
2.23
|
%
|
Tax-exempt securities
(1)
|
337
|
|
|
1.50
|
%
|
|
520
|
|
|
2.88
|
%
|
|
5,330
|
|
|
2.67
|
%
|
|
33,693
|
|
|
3.57
|
%
|
|
39,880
|
|
|
2.43
|
%
|
|||||
Total securities available for sale
|
$
|
777
|
|
|
12.32
|
%
|
|
$
|
13,862
|
|
|
2.71
|
%
|
|
$
|
33,172
|
|
|
2.87
|
%
|
|
$
|
253,756
|
|
|
2.78
|
%
|
|
$
|
301,567
|
|
|
2.28
|
%
|
Securities held to maturity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Tax-exempt securities
(1)
|
$
|
—
|
|
|
—
|
%
|
|
$
|
—
|
|
|
—
|
%
|
|
$
|
—
|
|
|
—
|
%
|
|
$
|
6,433
|
|
|
2.58
|
%
|
|
$
|
6,433
|
|
|
2.58
|
%
|
Other
(2)
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
4,250
|
|
|
6.13
|
%
|
|
—
|
|
|
—
|
%
|
|
4,250
|
|
|
6.13
|
%
|
|||||
Total securities held to maturity
|
$
|
—
|
|
|
—
|
%
|
|
$
|
—
|
|
|
—
|
%
|
|
$
|
4,250
|
|
|
6.13
|
%
|
|
$
|
6,433
|
|
|
2.58
|
%
|
|
$
|
10,683
|
|
|
3.99
|
%
|
(1)
|
Yields on tax-exempt securities, which includes tax-exempt obligations of states and political subdivisions have been computed on a tax-equivalent basis assuming a federal tax rate of 34%.
|
(2)
|
Includes corporate securities, asset-backed securities and taxable obligations of states and political subdivisions.
|
|
Years Ended December 31,
|
|||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|||||||||||||||
(Dollars in thousands)
|
Amount
|
|
Rate
|
|
Amount
|
|
Rate
|
|
Amount
|
|
Rate
|
|||||||||
Non-interest-bearing deposits
|
$
|
247,214
|
|
|
|
|
|
$
|
241,996
|
|
|
|
|
|
$
|
199,273
|
|
|
|
|
Interest-bearing deposits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Checking
|
$
|
351,764
|
|
|
0.22
|
%
|
|
$
|
343,026
|
|
|
0.20
|
%
|
|
$
|
339,996
|
|
|
0.19
|
%
|
Regular savings
|
130,357
|
|
|
0.18
|
%
|
|
119,989
|
|
|
0.19
|
%
|
|
113,363
|
|
|
0.19
|
%
|
|||
Money market savings
|
77,763
|
|
|
0.24
|
%
|
|
70,239
|
|
|
0.19
|
%
|
|
73,232
|
|
|
0.19
|
%
|
|||
Time deposits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
$ 100,000 and over
|
146,406
|
|
|
0.88
|
%
|
|
138,860
|
|
|
0.88
|
%
|
|
125,904
|
|
|
0.98
|
%
|
|||
Under $ 100,000
|
111,097
|
|
|
0.95
|
%
|
|
106,023
|
|
|
1.12
|
%
|
|
129,021
|
|
|
1.28
|
%
|
|||
Total interest-bearing deposits
|
$
|
817,387
|
|
|
0.43
|
%
|
|
$
|
778,137
|
|
|
0.44
|
%
|
|
$
|
781,516
|
|
|
0.50
|
%
|
Total
|
$
|
1,064,601
|
|
|
|
|
|
$
|
1,020,133
|
|
|
|
|
|
$
|
980,789
|
|
|
|
|
Within three months
|
|
Three to six months
|
|
Six to twelve months
|
|
Over one year
|
|
Total
|
|
Percent of total deposits
|
|||||||||||
(Dollars in thousands)
|
|||||||||||||||||||||
$
|
19,064
|
|
|
$
|
35,897
|
|
|
$
|
63,886
|
|
|
$
|
16,058
|
|
|
$
|
134,905
|
|
|
12.8
|
%
|
(Dollars in thousands)
|
2016
|
|
2015
|
||||
Financial instruments whose contract amounts represent credit risk:
|
|
||||||
Commitments to extend credit
|
$
|
132,669
|
|
|
$
|
153,806
|
|
Standby letters of credit
|
4,998
|
|
|
3,718
|
|
(Dollars in thousands)
|
Payment due by period
|
||||||||||||||||||
|
Total
|
|
Less than
1 year
|
|
1 - 3 years
|
|
3 - 5 years
|
|
More than
5 years
|
||||||||||
Time deposits
|
$
|
225,640
|
|
|
$
|
151,293
|
|
|
$
|
63,864
|
|
|
$
|
10,483
|
|
|
$
|
—
|
|
Securities sold under agreements to repurchase
|
34,864
|
|
|
34,864
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Federal Home Loan Bank borrowings
|
39,500
|
|
|
29,500
|
|
|
10,000
|
|
|
—
|
|
|
—
|
|
|||||
Operating leases
|
21,147
|
|
|
1,666
|
|
|
4,685
|
|
|
1,408
|
|
|
13,388
|
|
|||||
Subordinated notes
|
5,155
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,155
|
|
|||||
Total Obligations
|
$
|
326,306
|
|
|
$
|
217,323
|
|
|
$
|
78,549
|
|
|
$
|
11,891
|
|
|
$
|
18,543
|
|
•
|
Total capital to risk-weighted assets was
17.9%
and
17.5%
, respectively.
|
•
|
Tier 1 capital to risk-weighted assets was
16.6%
and
16.3%
, respectively.
|
•
|
Common equity Tier 1 capital to risk weighted assets was
16.0%
and 15.6%, respectively.
|
•
|
Tier 1 capital to average assets (leverage ratio) was
10.0%
and
9.6%
, respectively.
|
(Dollars in thousands)
|
|
Securities sold under agreements to repurchase
|
||
At December 31:
|
|
|
||
2016
|
|
$
|
34,864
|
|
2015
|
|
26,869
|
|
|
2014
|
|
38,551
|
|
|
Weighted-average interest rate at year-end:
|
|
|
|
|
2016
|
|
0.01
|
%
|
|
2015
|
|
0.01
|
|
|
2014
|
|
0.80
|
|
|
Maximum amount outstanding at any month's end:
|
|
|
|
|
2016
|
|
$
|
35,660
|
|
2015
|
|
34,253
|
|
|
2014
|
|
43,989
|
|
|
Average amount outstanding during the year:
|
|
|
|
|
2016
|
|
$
|
31,076
|
|
2015
|
|
30,095
|
|
|
2014
|
|
37,035
|
|
|
Weighted-average interest rate during the year:
|
|
|
|
|
2016
|
|
0.01
|
%
|
|
2015
|
|
0.21
|
|
|
2014
|
|
0.86
|
|
•
|
ability to obtain regulatory approvals and meet other closing conditions to the pending merger with Access;
|
•
|
delays in closing the merger with Access;
|
•
|
the inability to recognize cost savings or revenues or to implement integration plans associated with the merger with Access;
|
•
|
deposit attrition, operating costs, customer losses and business disruption in connection with the merger, including adverse effects on relationships with employees;
|
•
|
termination of the merger agreement, or failure to complete the merger, could negatively impact our stock price and our future business and financial results;
|
•
|
further adverse changes in general economic and business conditions in the Company’s market area;
|
•
|
changes in banking and other laws and regulations applicable to the Company;
|
•
|
maintaining asset qualities;
|
•
|
the ability to properly identify risks in our loan portfolio and calculate an adequate loan loss allowance;
|
•
|
risks inherent in making loans such as repayment risks and fluctuating collateral values;
|
•
|
concentration in loans secured by real estate;
|
•
|
changing trends in customer profiles and behavior;
|
•
|
changes in interest rates and interest rate policies;
|
•
|
maintaining cost controls as the Company opens or acquires new facilities;
|
•
|
competition with other banks and financial institutions, and companies outside of the banking industry, including those companies that have substantially greater access to capital and other resources;
|
•
|
the ability to continue to attract low cost core deposits to fund asset growth;
|
•
|
the ability to successfully manage the Company’s growth or implement its growth strategies if it is unable to identify attractive markets, locations or opportunities to expand in the future;
|
•
|
reliance on the Company’s management team, including its ability to attract and retain key personnel;
|
•
|
demand, development and acceptance of new products and services;
|
•
|
problems with technology utilized by the Company;
|
•
|
maintaining capital levels adequate to support the Company’s growth; and
|
•
|
other factors described in Item 1A, “Risk Factors,” above.
|
ITEM 7A.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
•
|
Reports of Independent Registered Public Accounting Firm;
|
•
|
Consolidated Balance Sheets as of
December 31, 2016
and
2015
;
|
•
|
Consolidated Statements of Income for the Years Ended
December 31, 2016
,
2015
and
2014
;
|
•
|
Consolidated Statements of Comprehensive Income for the Years Ended
December 31, 2016
,
2015
and
2014
|
•
|
Consolidated Statements of Changes in Shareholders’ Equity for the Years Ended
December 31, 2016
,
2015
and
2014
;
|
•
|
Consolidated Statements of Cash Flows for the Years Ended
December 31, 2016
,
2015
and
2014
; and
|
•
|
Notes to Consolidated Financial Statements.
|
ITEM 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
ITEM 9A.
|
CONTROLS AND PROCEDURES
|
ITEM 9B.
|
OTHER INFORMATION
|
ITEM 10.
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
ITEM 11.
|
EXECUTIVE COMPENSATION
|
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
ITEM 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
ITEM 14.
|
PRINCIPAL ACCOUNTING FEES AND SERVICES
|
ITEM 15.
|
EXHIBITS, FINANCIAL STATEMENT SCHEDULES
|
(a)
|
(1) and (2). The response to this portion of Item 15 is submitted as a separate section of this report.
|
(3).
|
Exhibits:
|
2.1
|
Agreement and Plan of Reorganization, dated as of October 21, 2016, between Access National Corporation and Middleburg Financial Corporation, attached as Exhibit 2.1 to the current report and Form 8-K, filed October 25, 2016, incorporated herein by reference.
|
3.1
|
Amended and Restated Articles of Incorporation of the Company, attached as Exhibit 3.1 to the Company’s Annual Report on Form 10-K for the period ended December 31, 2008, incorporated herein by reference.
|
3.2
|
Articles of Amendment to the Articles of Incorporation of the Company, attached as Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed with the Commission on February 4, 2009, incorporated herein by reference.
|
3.3
|
Bylaws of the Company (restated in electronic format as of July 27, 2016), attached as Exhibit 3.1 to the Company's current report on Form 8-K filed July 28, 2016, incorporated herein by reference.
|
4.1
|
Warrant to Purchase Shares of Common Stock, dated January 30, 2009, attached as Exhibit 4.1 to the Company’s Annual Report on Form 10-K for the period ended December 31, 2009, incorporated herein by reference.
|
10.1
|
Agreement, dated as of July 18, 2011, between the Company and Joseph L. Boling, attached as Exhibit 10.1 to the Company’s current Form 8-K filed with the Commission on July 20, 2011, incorporated herein by reference.*
|
10.2
|
Middleburg Financial Corporation 2006 Equity Compensation Plan, as amended, attached as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Commission on April 26, 2006, incorporated herein by reference.*
|
10.3
|
Middleburg Financial Corporation Form of Performance Share Award Agreement, attached as Exhibit 10.3 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2008, incorporated herein by reference.*
|
10.4
|
Middleburg Financial Corporation Form of Restricted Share Award Agreement, attached as Exhibit 10.4 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2008, incorporated herein by reference.*
|
10.5
|
Middleburg Financial Corporation Form of Non-Qualified Stock Option Agreement, attached as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Commission on March 20, 2009, incorporated herein by reference.*
|
10.6
|
Middleburg Financial Corporation 2006 Management Incentive Plan, attached as Exhibit 10.3 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2005, incorporated herein by reference .*
|
10.7
|
Employment Agreement, dated as of April 28, 2010, between the Company and Gary R. Shook, attached as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Commission on April 28, 2010, incorporated herein by reference.*
|
10.8
|
Employment Agreement, dated as of May 7, 2010, between the Company and Raj Mehra, attached as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Commission on May 13, 2010, incorporated herein by reference.*
|
(b)
|
Exhibits
|
(c)
|
Financial Statement Schedules
|
MIDDLEBURG FINANCIAL CORPORATION
|
|||
|
|
|
|
Date:
|
March 15, 2017
|
By:
|
/s/ Gary R. Shook
|
|
|
|
Gary R. Shook
|
|
|
|
Chief Executive Officer
|
|
|
|
|
|
|
|
|
Date:
|
March 15, 2017
|
By:
|
/s/ Raj Mehra
|
|
|
|
Raj Mehra
|
|
|
|
Chief Financial Officer
|
|
|
|
|
|
|
|
|
Date:
|
March 15, 2017
|
By:
|
/s/ Tammy P. Frazier
|
|
|
|
Tammy P. Frazier
|
|
|
|
Chief Accounting Officer
|
Signature
|
Title
|
Date
|
/s/ John C. Lee, IV*
|
Chairman of the Board and Director
|
March 15, 2017
|
John C. Lee, IV
|
|
|
/s/ Gary R. Shook
|
Chief Executive Officer and President
|
March 15, 2017
|
Gary R. Shook
|
(Principal Executive Officer)
|
|
/s/ Raj Mehra
|
Executive Vice President and Chief Financial Officer
|
March 15, 2017
|
Raj Mehra
|
(Principal Financial Officer)
|
|
/s/ Tammy P. Frazier
|
Senior Vice President and Chief Accounting Officer
|
March 15, 2017
|
Tammy P. Frazier
|
(Principal Accounting Officer)
|
|
/s/ Howard M. Armfield*
|
Director
|
March 15, 2017
|
Howard M. Armfield
|
|
|
/s/ Henry F. Atherton, III*
|
Director
|
March 15, 2017
|
Henry F. Atherton, III
|
|
|
/s/ Childs F. Burden*
|
Director
|
March 15, 2017
|
Childs F. Burden
|
|
|
/s/ John Rust*
|
Director
|
March 15, 2017
|
John Rust
|
|
|
/s/ Alexander G. Green, III*
|
Director
|
March 15, 2017
|
Alexander G. Green, III
|
|
|
/s/ Gary D. LeClair*
|
Director
|
March 15, 2017
|
Gary D. LeClair
|
|
|
/s/ Keith W. Meurlin*
|
Director
|
March 15, 2017
|
Keith W. Meurlin
|
|
|
/s/ Janet A. Neuharth*
|
Director
|
March 15, 2017
|
Janet A. Neuharth
|
|
|
/s/ Mary Leigh McDaniel*
|
Director
|
March 15, 2017
|
Mary Leigh McDaniel
|
|
|
Exhibit No.
|
Description
|
2.1
|
Agreement and Plan of Reorganization, dated as of October 21, 2016, between Access National Corporation and Middleburg Financial Corporation, attached as Exhibit 2.1 to the current report and Form 8-K, filed October 25, 2016, incorporated herein by reference.
|
3.1
|
Amended and Restated Articles of Incorporation of the Company, attached as Exhibit 3.1 to the Company’s Annual Report on Form 10-K for the period ended December 31, 2008, incorporated herein by reference.
|
|
|
3.2
|
Articles of Amendment to the Articles of Incorporation of the Company, attached as Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed with the Commission on February 4, 2009, incorporated herein by reference.
|
|
|
3.3
|
Bylaws of the Company (restated in electronic format as of July 27, 2016), attached as Exhibit 3.1 to the Company's current report on Form 8-K filed July 28, 2016, incorporated herein by reference.
|
|
|
4.1
|
Warrant to Purchase Shares of Common Stock, dated January 30, 2009, attached as Exhibit 4.1 to the Company’s Annual Report on Form 10-K for the period ended December 31, 2009, incorporated herein by reference.
|
|
|
10.1
|
Agreement, dated as of July 18, 2011, between the Company and Joseph L. Boling, attached as Exhibit 10.1 to the Company’s current Form 8-K filed with the Commission on July 20, 2011, incorporated herein by reference.*
|
|
|
10.2
|
Middleburg Financial Corporation 2006 Equity Compensation Plan, as amended, attached as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Commission on April 26, 2006, incorporated herein by reference.*
|
|
|
10.3
|
Middleburg Financial Corporation Form of Performance Share Award Agreement, attached as Exhibit 10.3 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2008, incorporated herein by reference.*
|
|
|
10.4
|
Middleburg Financial Corporation Form of Restricted Share Award Agreement, attached as Exhibit 10.4 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2008, incorporated herein by reference.*
|
|
|
10.5
|
Middleburg Financial Corporation Form of Non-Qualified Stock Option Agreement, attached as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Commission on March 20, 2009, incorporated herein by reference.*
|
|
|
10.6
|
Middleburg Financial Corporation 2006 Management Incentive Plan, attached as Exhibit 10.3 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2005, incorporated herein by reference .*
|
|
|
10.7
|
Employment Agreement, dated as of April 28, 2010, between the Company and Gary R. Shook, attached as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Commission on April 28, 2010, incorporated herein by reference.*
|
|
|
10.8
|
Employment Agreement, dated as of May 7, 2010, between the Company and Raj Mehra, attached as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Commission on May 13, 2010, incorporated herein by reference.*
|
|
|
|
|
10.9
|
Executive Retirement Plan, as amended and restated through April 28,, 2010, attached as Exhibit 10.1 to the Company’s Current Report on Form 8-K/A, Filed with the commission on October 14, 2010, incorporated herein by reference*
|
|
|
10.10
|
Supplemental Benefit Plan, as amended and restated effective November 17, 2010, attached as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Commission on November 22, 2010, incorporated herein by reference.*
|
|
|
10.11
|
Stock Purchase Agreement, dated March 27, 2009, between the Company and David L. Sokol, attached as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Commission on March 31, 2009, incorporated herein by reference.*
|
|
|
10.12
10.13
|
First Amendment to Stock Purchase Agreement, dated October 27, 2010, between the Company and David L. Sokol, attached as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Commission on October 28, 2010, incorporated herein by reference.
Second Amendment to Stock Purchase Agreement, dated April 28, 2014, between the Company and David L. Sokol, attached as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Commission on April 30, 2014, incorporated herein by reference.
|
|
|
10.14
|
Employment Agreement, dated as of April 28, 2010, between the Company and Jeffrey H. Culver, attached as Exhibit 10.14 to the Company's Annual Report on Form 10-K for the year ended December 31, 2010, incorporated herein by reference.*
|
|
|
21.1
|
Subsidiaries of the Company.
|
|
|
23.1
|
Consent of Yount, Hyde & Barbour, P.C.
|
|
|
24.1
|
Power of Attorney
|
|
|
31.1
|
Rule 13a-14(a) Certification of Chief Executive Officer
|
|
|
31.2
|
Rule 13a-14(a) Certification of Chief Financial Officer.
|
|
|
32.1
|
Statement of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. § 1350.
|
|
|
101
|
The following materials from the Middleburg Financial Corporation Annual Report on Form 10-K for the year ended December 31, 2016 formatted in Extensible Business reporting Language (XBRL): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Changes in Shareholders’ Equity, (v) Consolidated Statements of Cash Flows, and (vi) Notes to Consolidated Financial Statements.
|
|
Page
|
|
|
|
|
|
|
|
|
|
|
MIDDLEBURG FINANCIAL CORPORATION AND SUBSIDIARIES
|
|||||||
CONSOLIDATED BALANCE SHEETS
|
|||||||
(Dollars in thousands, except for share and per share data)
|
|||||||
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
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)
|
17,636
|
|
|
17,330
|
|
||
Capital surplus
|
45,688
|
|
|
44,155
|
|
||
Retained earnings
|
64,755
|
|
|
60,392
|
|
||
Accumulated other comprehensive income (loss), net
|
(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
|
|||||||||||
(Dollars in thousands, except for per share data)
|
|||||||||||
|
Years Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
INTEREST INCOME
|
|
|
|
|
|
||||||
Interest and fees on loans
|
$
|
33,795
|
|
|
$
|
32,479
|
|
|
$
|
33,833
|
|
Interest and dividends on securities
|
|
|
|
|
|
|
|
|
|||
Taxable
|
7,406
|
|
|
7,628
|
|
|
6,900
|
|
|||
Tax-exempt
|
1,700
|
|
|
1,803
|
|
|
2,137
|
|
|||
Dividends
|
310
|
|
|
265
|
|
|
293
|
|
|||
Interest on deposits with other banks and federal funds sold
|
164
|
|
|
106
|
|
|
162
|
|
|||
Total interest and dividend income
|
43,375
|
|
|
42,281
|
|
|
43,325
|
|
|||
INTEREST EXPENSE
|
|
|
|
|
|
|
|
|
|||
Interest on deposits
|
3,535
|
|
|
3,462
|
|
|
3,889
|
|
|||
Interest on securities sold under agreements to repurchase
|
3
|
|
|
64
|
|
|
318
|
|
|||
Interest on FHLB borrowings and other debt
|
886
|
|
|
681
|
|
|
1,036
|
|
|||
Total interest expense
|
4,424
|
|
|
4,207
|
|
|
5,243
|
|
|||
NET INTEREST INCOME
|
38,951
|
|
|
38,074
|
|
|
38,082
|
|
|||
Provision for loan losses
|
1,853
|
|
|
2,293
|
|
|
1,960
|
|
|||
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES
|
37,098
|
|
|
35,781
|
|
|
36,122
|
|
|||
NON-INTEREST INCOME
|
|
|
|
|
|
|
|
|
|||
Service charges on deposit accounts
|
1,154
|
|
|
1,061
|
|
|
1,163
|
|
|||
Trust services income
|
4,643
|
|
|
4,785
|
|
|
4,362
|
|
|||
ATM fee income, net
|
762
|
|
|
797
|
|
|
739
|
|
|||
Gains (losses) on sales of loans held for sale, net
|
32
|
|
|
(1
|
)
|
|
4,860
|
|
|||
Gains on sales of securities available for sale, net
|
1,554
|
|
|
140
|
|
|
186
|
|
|||
Commissions on investment sales
|
555
|
|
|
547
|
|
|
611
|
|
|||
Bank owned life insurance
|
652
|
|
|
656
|
|
|
662
|
|
|||
Gain on sale of majority interest in consolidated subsidiary
|
—
|
|
|
—
|
|
|
24
|
|
|||
Other operating income
|
1,386
|
|
|
1,636
|
|
|
1,659
|
|
|||
Total non-interest income
|
10,738
|
|
|
9,621
|
|
|
14,266
|
|
|||
NON-INTEREST EXPENSE
|
|
|
|
|
|
|
|
|
|||
Salaries and employee benefits
|
18,757
|
|
|
18,435
|
|
|
22,601
|
|
|||
Occupancy and equipment
|
4,881
|
|
|
5,106
|
|
|
6,177
|
|
|||
Advertising
|
200
|
|
|
288
|
|
|
365
|
|
|||
Amortization
|
1,211
|
|
|
1,001
|
|
|
791
|
|
|||
Computer operations
|
2,582
|
|
|
2,337
|
|
|
1,893
|
|
|||
Other real estate owned, net
|
363
|
|
|
284
|
|
|
256
|
|
|||
Other taxes
|
947
|
|
|
915
|
|
|
849
|
|
|||
Federal deposit insurance
|
748
|
|
|
786
|
|
|
899
|
|
|||
Audits and exams
|
589
|
|
|
585
|
|
|
630
|
|
|||
Legal and advisory fees
|
1,202
|
|
|
1,029
|
|
|
1,324
|
|
|||
Merger related expenses
|
1,289
|
|
|
—
|
|
|
—
|
|
|||
Other operating expenses
|
4,190
|
|
|
4,091
|
|
|
4,776
|
|
|||
Total non-interest expense
|
36,959
|
|
|
34,857
|
|
|
40,561
|
|
|||
Income before income taxes
|
10,877
|
|
|
10,545
|
|
|
9,827
|
|
|||
Income tax expense
|
2,813
|
|
|
2,715
|
|
|
2,341
|
|
|||
NET INCOME
|
8,064
|
|
|
7,830
|
|
|
7,486
|
|
|||
Net loss attributable to non-controlling interest
|
—
|
|
|
—
|
|
|
98
|
|
|||
Net income attributable to Middleburg Financial Corporation
|
$
|
8,064
|
|
|
$
|
7,830
|
|
|
$
|
7,584
|
|
|
|
|
|
|
|
||||||
Earnings per share:
|
|
|
|
|
|
||||||
Basic
|
$
|
1.13
|
|
|
$
|
1.10
|
|
|
$
|
1.07
|
|
Diluted
|
$
|
1.13
|
|
|
$
|
1.09
|
|
|
$
|
1.06
|
|
MIDDLEBURG FINANCIAL CORPORATION AND SUBSIDIARIES
|
|||||||||||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
|
|||||||||||
(Dollars in thousands)
|
|||||||||||
|
Years Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
|
|
|
|
||||||
Net income
|
$
|
8,064
|
|
|
$
|
7,830
|
|
|
$
|
7,486
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
||||||
Unrealized holding gains (losses) arising during the period, net of tax of $1,091, $1,037, and ($1,979), respectively
|
(2,116
|
)
|
|
(2,015
|
)
|
|
3,841
|
|
|||
Reclassification adjustment for gains included in net income, net of tax of $528, $48, and $63, respectively
|
(1,026
|
)
|
|
(92
|
)
|
|
(123
|
)
|
|||
Unrealized gains (losses) on interest rate swaps, net of tax of ($34), $3, and $82, respectively
|
65
|
|
|
(6
|
)
|
|
(160
|
)
|
|||
Reclassification adjustment for (gain) loss on interest rate swap ineffectiveness included in net income, net of tax of $0, $2 and ($2), respectively
|
—
|
|
|
(4
|
)
|
|
4
|
|
|||
Total other comprehensive income (loss)
|
(3,077
|
)
|
|
(2,117
|
)
|
|
3,562
|
|
|||
Total comprehensive income
|
4,987
|
|
|
5,713
|
|
|
11,048
|
|
|||
Comprehensive loss attributable to non-controlling interest
|
—
|
|
|
—
|
|
|
98
|
|
|||
Comprehensive income attributable to Middleburg Financial Corporation
|
$
|
4,987
|
|
|
$
|
5,713
|
|
|
$
|
11,146
|
|
|
|
|
|
|
|
MIDDLEBURG FINANCIAL CORPORATION AND SUBSIDIARIES
|
|||||||||||||||||||||||
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
|
|||||||||||||||||||||||
(Dollars in thousands, except for share and per share data)
|
|||||||||||||||||||||||
|
|
|
|
|
|
||||||||||||||||||
|
Common Stock
|
|
Capital Surplus
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Income (Loss), Net
|
|
Non-Controlling Interest
|
|
Total
|
||||||||||||
Balance December 31, 2013
|
$
|
17,403
|
|
|
$
|
44,251
|
|
|
$
|
50,689
|
|
|
$
|
232
|
|
|
$
|
2,498
|
|
|
$
|
115,073
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net income
|
—
|
|
|
—
|
|
|
7,584
|
|
|
—
|
|
|
(98
|
)
|
|
7,486
|
|
||||||
Other comprehensive income, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
3,562
|
|
|
—
|
|
|
3,562
|
|
||||||
Cash dividends – ($0.34 per share)
|
—
|
|
|
—
|
|
|
(2,419
|
)
|
|
—
|
|
|
—
|
|
|
(2,419
|
)
|
||||||
Sale of majority interest in consolidated subsidiary
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,400
|
)
|
|
(2,400
|
)
|
||||||
Restricted stock vesting (15,425 shares)
|
39
|
|
|
(39
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Repurchase of restricted stock (4,732 shares)
|
(12
|
)
|
|
(113
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(125
|
)
|
||||||
Exercise of stock options (25,501 shares)
|
64
|
|
|
330
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
394
|
|
||||||
Share-based compensation
|
—
|
|
|
463
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
463
|
|
||||||
Balance December 31, 2014
|
$
|
17,494
|
|
|
$
|
44,892
|
|
|
$
|
55,854
|
|
|
$
|
3,794
|
|
|
$
|
—
|
|
|
$
|
122,034
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net income
|
—
|
|
|
—
|
|
|
7,830
|
|
|
—
|
|
|
—
|
|
|
7,830
|
|
||||||
Other comprehensive loss, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,117
|
)
|
|
—
|
|
|
(2,117
|
)
|
||||||
Cash dividends – ($0.46 per share)
|
—
|
|
|
—
|
|
|
(3,292
|
)
|
|
—
|
|
|
—
|
|
|
(3,292
|
)
|
||||||
Restricted stock vesting (16,359 shares)
|
41
|
|
|
(41
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Repurchase of restricted stock (4,576 shares)
|
(11
|
)
|
|
(72
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(83
|
)
|
||||||
Share-based compensation
|
—
|
|
|
605
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
605
|
|
||||||
Repurchase of common stock (77,500 shares)
|
(194
|
)
|
|
(1,229
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,423
|
)
|
||||||
Balance December 31, 2015
|
$
|
17,330
|
|
|
$
|
44,155
|
|
|
$
|
60,392
|
|
|
$
|
1,677
|
|
|
$
|
—
|
|
|
$
|
123,554
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net income
|
—
|
|
|
—
|
|
|
8,064
|
|
|
—
|
|
|
—
|
|
|
8,064
|
|
||||||
Other comprehensive loss, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,077
|
)
|
|
—
|
|
|
(3,077
|
)
|
||||||
Cash dividends – ($0.52 per share)
|
—
|
|
|
—
|
|
|
(3,701
|
)
|
|
—
|
|
|
—
|
|
|
(3,701
|
)
|
||||||
Restricted stock vesting (53,908 shares)
|
135
|
|
|
(135
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Repurchase of restricted stock (15,351 shares)
|
(38
|
)
|
|
(315
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(353
|
)
|
||||||
Share-based compensation
|
—
|
|
|
939
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
939
|
|
||||||
Exercise of stock options (6,650 shares)
|
16
|
|
|
76
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
92
|
|
||||||
Exercise of stock warrant (104,101 shares)
|
260
|
|
|
1,390
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,650
|
|
||||||
Repurchase of common stock (26,800 shares)
|
(67
|
)
|
|
(422
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(489
|
)
|
||||||
Balance December 31, 2016
|
$
|
17,636
|
|
|
$
|
45,688
|
|
|
$
|
64,755
|
|
|
$
|
(1,400
|
)
|
|
$
|
—
|
|
|
$
|
126,679
|
|
|
Years Ended December 31,
|
||||||||||
(Dollars in thousands)
|
2016
|
|
2015
|
|
2014
|
||||||
Cash Flows From Operating Activities
|
|
|
|
|
|
||||||
Net income
|
$
|
8,064
|
|
|
$
|
7,830
|
|
|
$
|
7,486
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
||||
Depreciation and amortization
|
2,584
|
|
|
2,352
|
|
|
2,339
|
|
|||
Provision for loan losses
|
1,853
|
|
|
2,293
|
|
|
1,960
|
|
|||
Gains on sales of securities available for sale, net
|
(1,554
|
)
|
|
(140
|
)
|
|
(186
|
)
|
|||
Loss on disposal of assets, net
|
115
|
|
|
67
|
|
|
59
|
|
|||
Originations of mortgage loans held for sale
|
(3,346
|
)
|
|
(1,597
|
)
|
|
—
|
|
|||
Proceeds from sales of mortgage loans held for sale
|
3,378
|
|
|
1,596
|
|
|
38,035
|
|
|||
(Gains) losses on sales of mortgage loans held for sale, net
|
(32
|
)
|
|
1
|
|
|
(4,860
|
)
|
|||
Premium amortization on securities, net
|
4,956
|
|
|
4,042
|
|
|
2,981
|
|
|||
Deferred income tax expense
|
746
|
|
|
109
|
|
|
1,181
|
|
|||
Gain on sale of majority interest in consolidated subsidiary
|
—
|
|
|
—
|
|
|
(24
|
)
|
|||
Share-based compensation
|
925
|
|
|
605
|
|
|
426
|
|
|||
(Gains) losses on sales of other real estate owned, net
|
(66
|
)
|
|
100
|
|
|
14
|
|
|||
Valuation adjustments on other real estate owned
|
310
|
|
|
79
|
|
|
(3
|
)
|
|||
Valuation adjustments on other assets held for sale
|
200
|
|
|
—
|
|
|
200
|
|
|||
Increase in bank owned life insurance cash surrender value
|
(652
|
)
|
|
(656
|
)
|
|
(662
|
)
|
|||
Changes in assets and liabilities:
|
|
|
|
|
|
||||||
Increase in other assets
|
(1,406
|
)
|
|
(4,826
|
)
|
|
(2,604
|
)
|
|||
Increase (decrease) in other liabilities
|
(98
|
)
|
|
448
|
|
|
2,447
|
|
|||
Net cash provided by operating activities
|
$
|
15,977
|
|
|
$
|
12,303
|
|
|
$
|
48,789
|
|
Cash Flows from Investing Activities
|
|
|
|
|
|
|
|
||||
Proceeds from maturity, calls, principal repayments and sales of securities available for sale
|
155,485
|
|
|
106,154
|
|
|
132,286
|
|
|||
Proceeds from maturity, calls, and principal repayments of held to maturity
|
44
|
|
|
43
|
|
|
—
|
|
|||
Purchases of securities held to maturity
|
(6,520
|
)
|
|
(2,750
|
)
|
|
(1,500
|
)
|
|||
Purchases of securities available for sale
|
(90,644
|
)
|
|
(139,556
|
)
|
|
(149,287
|
)
|
|||
(Purchases) redemptions of restricted stock, net
|
1,869
|
|
|
(1,132
|
)
|
|
1,501
|
|
|||
(Purchases) sales of bank premises and equipment, net
|
(978
|
)
|
|
(2,137
|
)
|
|
321
|
|
|||
Loan originations, net
|
(26,687
|
)
|
|
(13,941
|
)
|
|
(5,748
|
)
|
|||
Proceeds from sales of loans
|
4,412
|
|
|
1,124
|
|
|
5,492
|
|
|||
Purchases of loans
|
(36,321
|
)
|
|
(42,035
|
)
|
|
(34,042
|
)
|
|||
Proceeds from sale of majority interest in consolidated subsidiary, net
|
—
|
|
|
—
|
|
|
3,618
|
|
|||
Proceeds from sale of other real estate owned and repossessed assets
|
713
|
|
|
893
|
|
|
2,666
|
|
|||
Net cash provided by (used in) investing activities
|
$
|
1,373
|
|
|
$
|
(93,337
|
)
|
|
$
|
(44,693
|
)
|
Cash Flows from Financing Activities
|
|
|
|
|
|
|
|
|
|||
Increase in demand, interest-bearing demand and savings deposits
|
$
|
31,193
|
|
|
$
|
56,083
|
|
|
$
|
25,686
|
|
Decrease in certificates of deposit
|
(18,935
|
)
|
|
(4,363
|
)
|
|
(19,002
|
)
|
|||
Increase (decrease) in securities sold under agreements to repurchase
|
7,995
|
|
|
(11,682
|
)
|
|
4,012
|
|
|||
Increase (decrease) in FHLB borrowings
|
(45,500
|
)
|
|
30,000
|
|
|
(25,000
|
)
|
|||
Payment of dividends on common stock
|
(3,701
|
)
|
|
(3,292
|
)
|
|
(2,419
|
)
|
|||
Proceeds from exercise of options and warrant
|
1,742
|
|
|
—
|
|
|
394
|
|
|||
Excess tax benefit on share-based compensation
|
14
|
|
|
—
|
|
|
37
|
|
|||
Repurchases of common stock
|
(842
|
)
|
|
(1,506
|
)
|
|
(125
|
)
|
|||
Net cash provided by (used in) provided by financing activities
|
$
|
(28,034
|
)
|
|
$
|
65,240
|
|
|
$
|
(16,417
|
)
|
Decrease in cash and cash equivalents
|
(10,684
|
)
|
|
(15,794
|
)
|
|
(12,321
|
)
|
|||
Cash and cash equivalents at beginning of year
|
39,228
|
|
|
55,022
|
|
|
67,343
|
|
|||
Cash and cash equivalents at end of year
|
$
|
28,544
|
|
|
$
|
39,228
|
|
|
$
|
55,022
|
|
Supplemental Disclosures of Cash Flow Information
|
|
|
|
|
|
|
|
||||
Interest paid
|
$
|
4,447
|
|
|
$
|
4,200
|
|
|
$
|
5,341
|
|
Income taxes
|
$
|
1,525
|
|
|
$
|
3,710
|
|
|
$
|
800
|
|
Supplemental Disclosure of Non-Cash Transactions
|
|
|
|
|
|
|
|
||||
Unrealized gains (losses) on securities available for sale
|
$
|
(4,761
|
)
|
|
$
|
(3,192
|
)
|
|
$
|
5,634
|
|
Change in market value of interest rate swaps
|
$
|
99
|
|
|
$
|
(15
|
)
|
|
$
|
(236
|
)
|
Transfer of loans to other real estate owned and repossessed assets
|
$
|
2,645
|
|
|
$
|
984
|
|
|
$
|
4,438
|
|
Transfer of other real estate owned to premises and equipment
|
$
|
—
|
|
|
$
|
697
|
|
|
$
|
—
|
|
Note 1.
|
Nature of Banking Activities and Significant Accounting Policies
|
|
Years
|
Buildings and improvements
|
10-40
|
Furniture and equipment
|
3-15
|
Note 2.
|
Securities
|
|
December 31, 2016
|
||||||||||||||
(Dollars in thousands)
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
||||||||
Held to Maturity
|
|
|
|
|
|
|
|
||||||||
Obligations of states and political subdivisions
|
$
|
6,433
|
|
|
$
|
—
|
|
|
$
|
(594
|
)
|
|
$
|
5,839
|
|
Corporate securities
|
4,250
|
|
|
21
|
|
|
(15
|
)
|
|
4,256
|
|
||||
Total
|
$
|
10,683
|
|
|
$
|
21
|
|
|
$
|
(609
|
)
|
|
$
|
10,095
|
|
|
December 31, 2015
|
||||||||||||||
(Dollars in thousands)
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
||||||||
Held to Maturity
|
|
|
|
|
|
|
|
||||||||
Obligations of states and political subdivisions
|
$
|
1,457
|
|
|
$
|
—
|
|
|
$
|
(38
|
)
|
|
$
|
1,419
|
|
Corporate securities
|
2,750
|
|
|
24
|
|
|
(30
|
)
|
|
2,744
|
|
||||
Total
|
$
|
4,207
|
|
|
$
|
24
|
|
|
$
|
(68
|
)
|
|
$
|
4,163
|
|
|
December 31, 2016
|
||||||
(Dollars in thousands)
|
Amortized Cost
|
|
Fair Value
|
||||
Held to Maturity
|
|
|
|
||||
Due after five years through ten years
|
$
|
4,250
|
|
|
$
|
4,256
|
|
Due after ten years
|
6,433
|
|
|
5,839
|
|
||
Total
|
$
|
10,683
|
|
|
$
|
10,095
|
|
|
December 31, 2016
|
||||||||||||||
(Dollars in thousands)
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
||||||||
Available for Sale
|
|
|
|
|
|
|
|
||||||||
U.S. government agencies
|
$
|
73,546
|
|
|
$
|
209
|
|
|
$
|
(571
|
)
|
|
$
|
73,184
|
|
Obligations of states and political subdivisions
|
62,896
|
|
|
1,019
|
|
|
(542
|
)
|
|
63,373
|
|
||||
Mortgage-backed securities:
|
|
|
|
|
|
|
|
||||||||
Agency
|
98,549
|
|
|
646
|
|
|
(1,144
|
)
|
|
98,051
|
|
||||
Non-agency
|
9,991
|
|
|
16
|
|
|
(74
|
)
|
|
9,933
|
|
||||
Other asset backed securities
|
41,860
|
|
|
361
|
|
|
(616
|
)
|
|
41,605
|
|
||||
Corporate securities
|
16,648
|
|
|
—
|
|
|
(1,227
|
)
|
|
15,421
|
|
||||
Total
|
$
|
303,490
|
|
|
$
|
2,251
|
|
|
$
|
(4,174
|
)
|
|
$
|
301,567
|
|
|
December 31, 2015
|
||||||||||||||
(Dollars in thousands)
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
||||||||
Available for Sale
|
|
|
|
|
|
|
|
||||||||
U.S. government agencies
|
$
|
79,005
|
|
|
$
|
315
|
|
|
$
|
(380
|
)
|
|
$
|
78,940
|
|
Obligations of states and political subdivisions
|
74,071
|
|
|
1,956
|
|
|
(434
|
)
|
|
75,593
|
|
||||
Mortgage-backed securities:
|
|
|
|
|
|
|
|
|
|||||||
Agency
|
129,360
|
|
|
3,046
|
|
|
(745
|
)
|
|
131,661
|
|
||||
Non-agency
|
12,782
|
|
|
33
|
|
|
(38
|
)
|
|
12,777
|
|
||||
Other asset backed securities
|
58,958
|
|
|
426
|
|
|
(603
|
)
|
|
58,781
|
|
||||
Corporate securities
|
17,557
|
|
|
22
|
|
|
(760
|
)
|
|
16,819
|
|
||||
Total
|
$
|
371,733
|
|
|
$
|
5,798
|
|
|
$
|
(2,960
|
)
|
|
$
|
374,571
|
|
|
December 31, 2016
|
||||||
(Dollars in thousands)
|
Amortized Cost
|
|
Fair Value
|
||||
Available for Sale
|
|
|
|
||||
Due in one year or less
|
$
|
777
|
|
|
$
|
777
|
|
Due after one year through five years
|
9,020
|
|
|
9,219
|
|
||
Due after five years through ten years
|
25,004
|
|
|
24,174
|
|
||
Due after ten years
|
118,289
|
|
|
117,808
|
|
||
Mortgage-backed securities
|
108,540
|
|
|
107,984
|
|
||
Other asset backed securities
|
41,860
|
|
|
41,605
|
|
||
Total
|
$
|
303,490
|
|
|
$
|
301,567
|
|
(Dollars in thousands)
|
|
Less than Twelve Months
|
|
Twelve Months or Greater
|
|
Total
|
||||||||||||||||||
2016
|
|
Fair Value
|
|
Gross
Unrealized Losses |
|
Fair Value
|
|
Gross
Unrealized Losses |
|
Fair Value
|
|
Gross
Unrealized Losses |
||||||||||||
Held to Maturity
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Obligations of states and political subdivisions
|
|
$
|
5,839
|
|
|
$
|
(594
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,839
|
|
|
$
|
(594
|
)
|
Corporate securities
|
|
1,485
|
|
|
(15
|
)
|
|
—
|
|
|
—
|
|
|
1,485
|
|
|
(15
|
)
|
||||||
Total
|
|
$
|
7,324
|
|
|
$
|
(609
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7,324
|
|
|
$
|
(609
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Available for Sale
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. government agencies
|
|
$
|
46,700
|
|
|
$
|
(495
|
)
|
|
$
|
7,174
|
|
|
$
|
(76
|
)
|
|
$
|
53,874
|
|
|
$
|
(571
|
)
|
Obligations of states and political subdivisions
|
|
12,670
|
|
|
(257
|
)
|
|
6,968
|
|
|
(285
|
)
|
|
19,638
|
|
|
(542
|
)
|
||||||
Mortgage-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Agency
|
|
51,018
|
|
|
(634
|
)
|
|
13,020
|
|
|
(510
|
)
|
|
64,038
|
|
|
(1,144
|
)
|
||||||
Non-agency
|
|
5,379
|
|
|
(68
|
)
|
|
1,944
|
|
|
(6
|
)
|
|
7,323
|
|
|
(74
|
)
|
||||||
Other asset backed securities
|
|
7,007
|
|
|
(284
|
)
|
|
16,388
|
|
|
(332
|
)
|
|
23,395
|
|
|
(616
|
)
|
||||||
Corporate securities
|
|
5,912
|
|
|
(241
|
)
|
|
9,262
|
|
|
(986
|
)
|
|
15,174
|
|
|
(1,227
|
)
|
||||||
Total
|
|
$
|
128,686
|
|
|
$
|
(1,979
|
)
|
|
$
|
54,756
|
|
|
$
|
(2,195
|
)
|
|
$
|
183,442
|
|
|
$
|
(4,174
|
)
|
(Dollars in thousands)
|
|
Less than Twelve Months
|
|
Twelve Months or Greater
|
|
Total
|
||||||||||||||||||
2015
|
|
Fair Value
|
|
Gross Unrealized Losses
|
|
Fair Value
|
|
Gross Unrealized Losses
|
|
Fair Value
|
|
Gross Unrealized Losses
|
||||||||||||
Held to Maturity
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Obligations of states and political subdivisions
|
|
$
|
1,419
|
|
|
$
|
(38
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,419
|
|
|
$
|
(38
|
)
|
Corporate securities
|
|
1,970
|
|
|
(30
|
)
|
|
—
|
|
|
—
|
|
|
1,970
|
|
|
(30
|
)
|
||||||
Total
|
|
$
|
3,389
|
|
|
$
|
(68
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,389
|
|
|
$
|
(68
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Available for Sale
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. government agencies
|
|
$
|
46,000
|
|
|
$
|
(304
|
)
|
|
$
|
4,223
|
|
|
$
|
(76
|
)
|
|
$
|
50,223
|
|
|
$
|
(380
|
)
|
Obligations of states and political subdivisions
|
|
16,559
|
|
|
(324
|
)
|
|
1,082
|
|
|
(110
|
)
|
|
17,641
|
|
|
(434
|
)
|
||||||
Mortgage-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Agency
|
|
27,627
|
|
|
(402
|
)
|
|
9,911
|
|
|
(343
|
)
|
|
37,538
|
|
|
(745
|
)
|
||||||
Non-agency
|
|
7,842
|
|
|
(37
|
)
|
|
671
|
|
|
(1
|
)
|
|
8,513
|
|
|
(38
|
)
|
||||||
Other asset backed securities
|
|
25,399
|
|
|
(276
|
)
|
|
12,037
|
|
|
(327
|
)
|
|
37,436
|
|
|
(603
|
)
|
||||||
Corporate securities
|
|
10,740
|
|
|
(378
|
)
|
|
4,866
|
|
|
(382
|
)
|
|
15,606
|
|
|
(760
|
)
|
||||||
Total
|
|
$
|
134,167
|
|
|
$
|
(1,721
|
)
|
|
$
|
32,790
|
|
|
$
|
(1,239
|
)
|
|
$
|
166,957
|
|
|
$
|
(2,960
|
)
|
Note 3.
|
Loans, Net
|
|
2016
|
|
2015
|
||||||||||
(Dollars in thousands)
|
Outstanding
Balance
|
|
Percent of
Total Portfolio
|
|
Outstanding
Balance
|
|
Percent of
Total Portfolio
|
||||||
Real estate loans:
|
|
|
|
|
|
|
|
||||||
Construction
|
$
|
35,627
|
|
|
4.1
|
%
|
|
$
|
39,673
|
|
|
4.9
|
%
|
Secured by farmland
|
16,768
|
|
|
2.0
|
|
|
19,062
|
|
|
2.4
|
|
||
Secured by 1-4 family residential
|
314,045
|
|
|
36.5
|
|
|
280,096
|
|
|
34.8
|
|
||
Other real estate loans
|
283,613
|
|
|
33.0
|
|
|
258,035
|
|
|
32.0
|
|
||
Commercial loans
|
190,767
|
|
|
22.2
|
|
|
190,482
|
|
|
23.6
|
|
||
Consumer loans
|
19,277
|
|
|
2.2
|
|
|
18,333
|
|
|
2.3
|
|
||
Total Gross Loans
(1)
|
860,097
|
|
|
100.0
|
%
|
|
805,681
|
|
|
100.0
|
%
|
||
Less allowance for loan losses
|
11,404
|
|
|
|
|
|
11,046
|
|
|
|
|||
Net loans
|
$
|
848,693
|
|
|
|
|
|
$
|
794,635
|
|
|
|
(1)
|
Includes net deferred loan costs and premiums of
$3.3 million
and
$3.5 million
, respectively.
|
|
December 31, 2016
|
||||||||||||||||||||||
(Dollars in thousands)
|
30-59 Days Past Due
|
|
60-89 Days Past Due
|
|
90 Days Or Greater
|
|
Total Past Due
|
|
Current
|
|
Total Loans
|
||||||||||||
Real estate loans:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Construction
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
35,627
|
|
|
$
|
35,627
|
|
Secured by farmland
|
—
|
|
|
199
|
|
|
—
|
|
|
199
|
|
|
16,569
|
|
|
16,768
|
|
||||||
Secured by 1-4 family residential
|
—
|
|
|
—
|
|
|
514
|
|
|
514
|
|
|
313,531
|
|
|
314,045
|
|
||||||
Other real estate loans
|
312
|
|
|
—
|
|
|
2,104
|
|
|
2,416
|
|
|
281,197
|
|
|
283,613
|
|
||||||
Commercial loans
|
146
|
|
|
10
|
|
|
2,518
|
|
|
2,674
|
|
|
188,093
|
|
|
190,767
|
|
||||||
Consumer loans
|
88
|
|
|
4
|
|
|
1,871
|
|
|
1,963
|
|
|
17,314
|
|
|
19,277
|
|
||||||
Total
|
$
|
546
|
|
|
$
|
213
|
|
|
$
|
7,007
|
|
|
$
|
7,766
|
|
|
$
|
852,331
|
|
|
$
|
860,097
|
|
|
December 31, 2015
|
||||||||||||||||||||||
(Dollars in thousands)
|
30-59 Days Past Due
|
|
60-89 Days Past Due
|
|
90 Days Or Greater
|
|
Total Past Due
|
|
Current
|
|
Total Loans
|
||||||||||||
Real estate loans:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Construction
|
$
|
69
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
69
|
|
|
$
|
39,604
|
|
|
$
|
39,673
|
|
Secured by farmland
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19,062
|
|
|
19,062
|
|
||||||
Secured by 1-4 family residential
|
259
|
|
|
—
|
|
|
1,117
|
|
|
1,376
|
|
|
278,720
|
|
|
280,096
|
|
||||||
Other real estate loans
|
325
|
|
|
—
|
|
|
248
|
|
|
573
|
|
|
257,462
|
|
|
258,035
|
|
||||||
Commercial loans
|
1,242
|
|
|
15
|
|
|
31
|
|
|
1,288
|
|
|
189,194
|
|
|
190,482
|
|
||||||
Consumer loans
|
4
|
|
|
17
|
|
|
—
|
|
|
21
|
|
|
18,312
|
|
|
18,333
|
|
||||||
Total
|
$
|
1,899
|
|
|
$
|
32
|
|
|
$
|
1,396
|
|
|
$
|
3,327
|
|
|
$
|
802,354
|
|
|
$
|
805,681
|
|
|
2016
|
|
2015
|
||||||||||||
(Dollars in thousands)
|
Nonaccrual
|
|
Past due 90 days or more and still accruing
|
|
Nonaccrual
|
|
Past due 90 days or more and still accruing
|
||||||||
Real estate loans:
|
|
|
|
|
|
|
|
||||||||
Construction
|
$
|
29
|
|
|
$
|
—
|
|
|
$
|
204
|
|
|
$
|
—
|
|
Secured by 1-4 family residential
|
296
|
|
|
303
|
|
|
4,460
|
|
|
—
|
|
||||
Other real estate loans
|
1,976
|
|
|
128
|
|
|
1,186
|
|
|
248
|
|
||||
Commercial loans
|
4,187
|
|
|
350
|
|
|
1,036
|
|
|
30
|
|
||||
Consumer loans
|
1,871
|
|
|
—
|
|
|
1,898
|
|
|
—
|
|
||||
Total
|
$
|
8,359
|
|
|
$
|
781
|
|
|
$
|
8,784
|
|
|
$
|
278
|
|
December 31, 2016
|
|||||||||||||||||||||||||||
(Dollars in thousands)
|
Real Estate Construction
|
|
Real Estate Secured by Farmland
|
|
Real Estate Secured by 1-4 Family Residential
|
|
Other Real Estate Loans
|
|
Commercial
|
|
Consumer
|
|
Total
|
||||||||||||||
Pass
|
$
|
30,065
|
|
|
$
|
8,796
|
|
|
$
|
310,233
|
|
|
$
|
274,591
|
|
|
$
|
185,030
|
|
|
$
|
17,342
|
|
|
$
|
826,057
|
|
Special Mention
|
5,534
|
|
|
—
|
|
|
932
|
|
|
2,287
|
|
|
1,390
|
|
|
25
|
|
|
10,168
|
|
|||||||
Substandard
|
28
|
|
|
7,972
|
|
|
2,584
|
|
|
4,759
|
|
|
2,179
|
|
|
1,909
|
|
|
19,431
|
|
|||||||
Doubtful
|
—
|
|
|
—
|
|
|
125
|
|
|
1,976
|
|
|
2,168
|
|
|
—
|
|
|
4,269
|
|
|||||||
Loss
|
—
|
|
|
—
|
|
|
171
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
172
|
|
|||||||
Ending Balance
|
$
|
35,627
|
|
|
$
|
16,768
|
|
|
$
|
314,045
|
|
|
$
|
283,613
|
|
|
$
|
190,767
|
|
|
$
|
19,277
|
|
|
$
|
860,097
|
|
December 31, 2015
|
|||||||||||||||||||||||||||
(Dollars in thousands)
|
Real Estate Construction
|
|
Real Estate Secured by Farmland
|
|
Real Estate Secured by 1-4 Family Residential
|
|
Other Real Estate Loans
|
|
Commercial
|
|
Consumer
|
|
Total
|
||||||||||||||
Pass
|
$
|
30,114
|
|
|
$
|
10,566
|
|
|
$
|
271,721
|
|
|
$
|
243,768
|
|
|
$
|
183,532
|
|
|
$
|
16,347
|
|
|
$
|
756,048
|
|
Special Mention
|
9,024
|
|
|
—
|
|
|
896
|
|
|
7,254
|
|
|
3,638
|
|
|
42
|
|
|
20,854
|
|
|||||||
Substandard
|
535
|
|
|
8,496
|
|
|
6,818
|
|
|
5,827
|
|
|
2,301
|
|
|
1,943
|
|
|
25,920
|
|
|||||||
Doubtful
|
—
|
|
|
—
|
|
|
661
|
|
|
1,186
|
|
|
1,011
|
|
|
—
|
|
|
2,858
|
|
|||||||
Loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|||||||
Ending Balance
|
$
|
39,673
|
|
|
$
|
19,062
|
|
|
$
|
280,096
|
|
|
$
|
258,035
|
|
|
$
|
190,482
|
|
|
$
|
18,333
|
|
|
$
|
805,681
|
|
|
December 31, 2016
|
||||||||||||||||||
(Dollars in thousands)
|
Recorded Investment
|
|
Unpaid Principal Balance
|
|
Related Allowance
|
|
Average Recorded Investment
|
|
Interest Income Recognized
|
||||||||||
With no related allowance recorded:
|
|
|
|
|
|
|
|
|
|
||||||||||
Real estate loans:
|
|
|
|
|
|
|
|
|
|
||||||||||
Construction
|
$
|
28
|
|
|
$
|
28
|
|
|
$
|
—
|
|
|
$
|
28
|
|
|
$
|
—
|
|
Secured by farmland
|
7,972
|
|
|
7,972
|
|
|
—
|
|
|
7,951
|
|
|
239
|
|
|||||
Secured by 1-4 family residential
|
72
|
|
|
108
|
|
|
—
|
|
|
72
|
|
|
2
|
|
|||||
Other real estate loans
|
1,976
|
|
|
1,976
|
|
|
—
|
|
|
1,976
|
|
|
—
|
|
|||||
Commercial loans
|
585
|
|
|
3,585
|
|
|
—
|
|
|
706
|
|
|
16
|
|
|||||
Consumer loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total with no related allowance
|
$
|
10,633
|
|
|
$
|
13,669
|
|
|
$
|
—
|
|
|
$
|
10,733
|
|
|
$
|
257
|
|
With an allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Real estate loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Construction
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Secured by farmland
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Secured by 1-4 family residential
|
1,275
|
|
|
1,326
|
|
|
251
|
|
|
1,239
|
|
|
49
|
|
|||||
Other real estate loans
|
2,971
|
|
|
2,971
|
|
|
206
|
|
|
2,975
|
|
|
151
|
|
|||||
Commercial loans
|
4,019
|
|
|
4,019
|
|
|
2,539
|
|
|
5,088
|
|
|
—
|
|
|||||
Consumer loans
|
1,871
|
|
|
1,871
|
|
|
842
|
|
|
1,871
|
|
|
—
|
|
|||||
Total with a related allowance
|
$
|
10,136
|
|
|
$
|
10,187
|
|
|
$
|
3,838
|
|
|
$
|
11,173
|
|
|
$
|
200
|
|
Total
|
$
|
20,769
|
|
|
$
|
23,856
|
|
|
$
|
3,838
|
|
|
$
|
21,906
|
|
|
$
|
457
|
|
|
December 31, 2015
|
||||||||||||||||||
(Dollars in thousands)
|
Recorded Investment
|
|
Unpaid Principal Balance
|
|
Related Allowance
|
|
Average Recorded Investment
|
|
Interest Income Recognized
|
||||||||||
With no related allowance recorded:
|
|
|
|
|
|
|
|
|
|
||||||||||
Real estate loans:
|
|
|
|
|
|
|
|
|
|
||||||||||
Construction
|
$
|
100
|
|
|
$
|
100
|
|
|
$
|
—
|
|
|
$
|
106
|
|
|
$
|
—
|
|
Secured by farmland
|
7,903
|
|
|
7,903
|
|
|
—
|
|
|
7,903
|
|
|
237
|
|
|||||
Secured by 1-4 family residential
|
701
|
|
|
736
|
|
|
—
|
|
|
703
|
|
|
—
|
|
|||||
Other real estate loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Commercial loans
|
458
|
|
|
493
|
|
|
—
|
|
|
490
|
|
|
17
|
|
|||||
Consumer loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total with no related allowance
|
$
|
9,162
|
|
|
$
|
9,232
|
|
|
$
|
—
|
|
|
$
|
9,202
|
|
|
$
|
254
|
|
With an allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Real estate loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Construction
|
$
|
103
|
|
|
$
|
103
|
|
|
$
|
53
|
|
|
$
|
109
|
|
|
$
|
—
|
|
Secured by farmland
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Secured by 1-4 family residential
|
4,426
|
|
|
4,478
|
|
|
1,120
|
|
|
4,547
|
|
|
27
|
|
|||||
Other real estate loans
|
4,196
|
|
|
4,196
|
|
|
464
|
|
|
4,224
|
|
|
157
|
|
|||||
Commercial loans
|
1,059
|
|
|
4,059
|
|
|
27
|
|
|
2,315
|
|
|
100
|
|
|||||
Consumer loans
|
1,898
|
|
|
1,898
|
|
|
1,000
|
|
|
2,449
|
|
|
—
|
|
|||||
Total with a related allowance
|
$
|
11,682
|
|
|
$
|
14,734
|
|
|
$
|
2,664
|
|
|
$
|
13,644
|
|
|
$
|
284
|
|
Total
|
$
|
20,844
|
|
|
$
|
23,966
|
|
|
$
|
2,664
|
|
|
$
|
22,846
|
|
|
$
|
538
|
|
|
|
Year Ended December 31,
|
||||||||||||||||||||
(Dollars in thousands)
|
|
2016
|
|
2015
|
||||||||||||||||||
Class of Loan
|
|
Number of Contracts
|
|
Pre-Modification Outstanding Recorded Investment
|
|
Post-Modification Outstanding Recorded Investment
|
|
Number of Contracts
|
|
Pre-Modification Outstanding Recorded Investment
|
|
Post-Modification Outstanding Recorded Investment
|
||||||||||
Real estate loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Construction
|
|
1
|
|
|
$
|
38
|
|
|
$
|
38
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Secured by farmland
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
7,903
|
|
|
7,903
|
|
||||
Secured by 1-4 family residential
|
|
2
|
|
|
809
|
|
|
806
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Other real estate loans
|
|
2
|
|
|
1,240
|
|
|
1,240
|
|
|
4
|
|
|
4,283
|
|
|
3,872
|
|
||||
Total real estate loans
|
|
5
|
|
|
2,087
|
|
|
2,084
|
|
|
5
|
|
|
12,186
|
|
|
11,775
|
|
||||
Commercial loans
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
50
|
|
|
46
|
|
||||
Consumer loans
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
3,000
|
|
|
3,000
|
|
||||
Total
|
|
5
|
|
|
$
|
2,087
|
|
|
$
|
2,084
|
|
|
7
|
|
|
$
|
15,236
|
|
|
$
|
14,821
|
|
|
|
|
|
|
|
|
|
|
Note 4.
|
Allowance for Loan Losses
|
|
December 31, 2016
|
||||||||||||||||||||||||||
(Dollars in thousands)
|
Real Estate Construction
|
|
Real Estate Secured by Farmland
|
|
Real Estate Secured by 1-4 Family Residential
|
|
Other Real Estate Loans
|
|
Commercial
|
|
Consumer
|
|
Total
|
||||||||||||||
Allowance for loan losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Balance December 31, 2015
|
$
|
905
|
|
|
$
|
192
|
|
|
$
|
3,341
|
|
|
$
|
3,761
|
|
|
$
|
1,706
|
|
|
$
|
1,141
|
|
|
$
|
11,046
|
|
Charge-offs
|
(388
|
)
|
|
—
|
|
|
(1,021
|
)
|
|
(126
|
)
|
|
(639
|
)
|
|
(20
|
)
|
|
(2,194
|
)
|
|||||||
Recoveries
|
129
|
|
|
—
|
|
|
395
|
|
|
32
|
|
|
85
|
|
|
58
|
|
|
699
|
|
|||||||
Provision
|
293
|
|
|
(65
|
)
|
|
(453
|
)
|
|
(500
|
)
|
|
2,781
|
|
|
(203
|
)
|
|
1,853
|
|
|||||||
Balance December 31, 2016
|
$
|
939
|
|
|
$
|
127
|
|
|
$
|
2,262
|
|
|
$
|
3,167
|
|
|
$
|
3,933
|
|
|
$
|
976
|
|
|
$
|
11,404
|
|
Ending allowance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Ending allowance balance attributable to loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Individually evaluated for impairment
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
251
|
|
|
$
|
206
|
|
|
$
|
2,539
|
|
|
$
|
842
|
|
|
$
|
3,838
|
|
Collectively evaluated for impairment
|
939
|
|
|
127
|
|
|
2,011
|
|
|
2,961
|
|
|
1,394
|
|
|
134
|
|
|
7,566
|
|
|||||||
Total ending allowance balance
|
$
|
939
|
|
|
$
|
127
|
|
|
$
|
2,262
|
|
|
$
|
3,167
|
|
|
$
|
3,933
|
|
|
$
|
976
|
|
|
$
|
11,404
|
|
Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Individually evaluated for impairment
|
$
|
28
|
|
|
$
|
7,972
|
|
|
$
|
1,347
|
|
|
$
|
4,947
|
|
|
$
|
4,604
|
|
|
$
|
1,871
|
|
|
$
|
20,769
|
|
Collectively evaluated for impairment
|
35,599
|
|
|
8,796
|
|
|
312,698
|
|
|
278,666
|
|
|
186,163
|
|
|
17,406
|
|
|
839,328
|
|
|||||||
Total ending loans balance
|
$
|
35,627
|
|
|
$
|
16,768
|
|
|
$
|
314,045
|
|
|
$
|
283,613
|
|
|
$
|
190,767
|
|
|
$
|
19,277
|
|
|
$
|
860,097
|
|
|
December 31, 2015
|
||||||||||||||||||||||||||
(Dollars in thousands)
|
Real Estate Construction
|
|
Real Estate Secured by Farmland
|
|
Real Estate Secured by 1-4 Family Residential
|
|
Other Real Estate Loans
|
|
Commercial
|
|
Consumer
|
|
Total
|
||||||||||||||
Allowance for loan losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Balance at December 31, 2014
|
$
|
550
|
|
|
$
|
179
|
|
|
$
|
3,966
|
|
|
$
|
3,916
|
|
|
$
|
2,354
|
|
|
$
|
821
|
|
|
$
|
11,786
|
|
Charge-offs
|
—
|
|
|
—
|
|
|
(344
|
)
|
|
(9
|
)
|
|
(3,281
|
)
|
|
(57
|
)
|
|
(3,691
|
)
|
|||||||
Recoveries
|
246
|
|
|
—
|
|
|
359
|
|
|
28
|
|
|
14
|
|
|
11
|
|
|
658
|
|
|||||||
Provision
|
109
|
|
|
13
|
|
|
(640
|
)
|
|
(174
|
)
|
|
2,619
|
|
|
366
|
|
|
2,293
|
|
|||||||
Balance at December 31, 2015
|
$
|
905
|
|
|
$
|
192
|
|
|
$
|
3,341
|
|
|
$
|
3,761
|
|
|
$
|
1,706
|
|
|
$
|
1,141
|
|
|
$
|
11,046
|
|
Ending allowance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Ending allowance balance attributable to loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Individually evaluated for impairment
|
$
|
53
|
|
|
$
|
—
|
|
|
$
|
1,120
|
|
|
$
|
464
|
|
|
$
|
27
|
|
|
$
|
1,000
|
|
|
$
|
2,664
|
|
Collectively evaluated for impairment
|
852
|
|
|
192
|
|
|
2,221
|
|
|
3,297
|
|
|
1,679
|
|
|
141
|
|
|
8,382
|
|
|||||||
Total ending allowance balance
|
$
|
905
|
|
|
$
|
192
|
|
|
$
|
3,341
|
|
|
$
|
3,761
|
|
|
$
|
1,706
|
|
|
$
|
1,141
|
|
|
$
|
11,046
|
|
Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Individually evaluated for impairment
|
$
|
203
|
|
|
$
|
7,903
|
|
|
$
|
5,127
|
|
|
$
|
4,196
|
|
|
$
|
1,517
|
|
|
$
|
1,898
|
|
|
$
|
20,844
|
|
Collectively evaluated for impairment
|
39,470
|
|
|
11,159
|
|
|
274,969
|
|
|
253,839
|
|
|
188,965
|
|
|
16,435
|
|
|
784,837
|
|
|||||||
Total ending loans balance
|
$
|
39,673
|
|
|
$
|
19,062
|
|
|
$
|
280,096
|
|
|
$
|
258,035
|
|
|
$
|
190,482
|
|
|
$
|
18,333
|
|
|
$
|
805,681
|
|
|
December 31, 2014
|
||||||||||||||||||||||||||
(Dollars in thousands)
|
Real Estate Construction
|
|
Real Estate Secured by Farmland
|
|
Real Estate Secured by 1-4 Family Residential
|
|
Other Real Estate Loans
|
|
Commercial
|
|
Consumer
|
|
Total
|
||||||||||||||
Allowance for loan losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Balance at December 31, 2013
|
$
|
847
|
|
|
$
|
166
|
|
|
$
|
6,734
|
|
|
$
|
3,506
|
|
|
$
|
1,890
|
|
|
$
|
177
|
|
|
$
|
13,320
|
|
Adjustment for the sale of majority interest in consolidated subsidiary
|
—
|
|
|
—
|
|
|
(95
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(95
|
)
|
|||||||
Charge-offs
|
(1,186
|
)
|
|
—
|
|
|
(1,380
|
)
|
|
(747
|
)
|
|
(959
|
)
|
|
(36
|
)
|
|
(4,308
|
)
|
|||||||
Recoveries
|
258
|
|
|
—
|
|
|
342
|
|
|
110
|
|
|
104
|
|
|
95
|
|
|
909
|
|
|||||||
Provision
|
631
|
|
|
13
|
|
|
(1,635
|
)
|
|
1,047
|
|
|
1,319
|
|
|
585
|
|
|
1,960
|
|
|||||||
Balance at December 31, 2014
|
$
|
550
|
|
|
$
|
179
|
|
|
$
|
3,966
|
|
|
$
|
3,916
|
|
|
$
|
2,354
|
|
|
$
|
821
|
|
|
$
|
11,786
|
|
Ending allowance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Ending allowance balance attributable to loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Individually evaluated for impairment
|
$
|
66
|
|
|
$
|
—
|
|
|
$
|
1,370
|
|
|
$
|
294
|
|
|
$
|
292
|
|
|
$
|
647
|
|
|
$
|
2,669
|
|
Collectively evaluated for impairment
|
484
|
|
|
179
|
|
|
2,596
|
|
|
3,622
|
|
|
2,062
|
|
|
174
|
|
|
9,117
|
|
|||||||
Total ending allowance balance
|
$
|
550
|
|
|
$
|
179
|
|
|
$
|
3,966
|
|
|
$
|
3,916
|
|
|
$
|
2,354
|
|
|
$
|
821
|
|
|
$
|
11,786
|
|
Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Individually evaluated for impairment
|
$
|
246
|
|
|
$
|
7,903
|
|
|
$
|
5,613
|
|
|
$
|
4,531
|
|
|
$
|
846
|
|
|
$
|
3,019
|
|
|
$
|
22,158
|
|
Collectively evaluated for impairment
|
32,804
|
|
|
11,805
|
|
|
259,603
|
|
|
250,705
|
|
|
162,423
|
|
|
15,348
|
|
|
732,688
|
|
|||||||
Total ending loans balance
|
$
|
33,050
|
|
|
$
|
19,708
|
|
|
$
|
265,216
|
|
|
$
|
255,236
|
|
|
$
|
163,269
|
|
|
$
|
18,367
|
|
|
$
|
754,846
|
|
Note 5.
|
Premises and Equipment, Net
|
(Dollars in thousands)
|
2016
|
|
2015
|
||||
Land
|
$
|
2,068
|
|
|
$
|
2,068
|
|
Facilities
|
22,873
|
|
|
22,849
|
|
||
Furniture, fixtures, and equipment
|
11,729
|
|
|
11,676
|
|
||
Construction in process and deposits on equipment and land
|
1,842
|
|
|
1,455
|
|
||
|
38,512
|
|
|
38,048
|
|
||
Less accumulated depreciation
|
(19,491
|
)
|
|
(18,517
|
)
|
||
Total
|
$
|
19,021
|
|
|
$
|
19,531
|
|
(Dollars in thousands)
|
December 31, 2016
|
||
2017
|
$
|
1,666
|
|
2018
|
1,617
|
|
|
2019
|
1,624
|
|
|
2020
|
1,444
|
|
|
2021
|
1,408
|
|
|
Thereafter
|
13,388
|
|
|
|
$
|
21,147
|
|
Note 6.
|
Deposits
|
Note 7.
|
Borrowings
|
(Dollars in thousands)
|
Securities sold under agreements to repurchase
|
||
At December 31:
|
|
||
2016
|
$
|
34,864
|
|
2015
|
26,869
|
|
|
Weighted-average interest rate at year-end:
|
|
|
|
2016
|
0.01
|
%
|
|
2015
|
0.01
|
|
|
Maximum amount outstanding at any month's end:
|
|
|
|
2016
|
$
|
35,660
|
|
2015
|
34,253
|
|
|
Average amount outstanding during the year:
|
|
|
|
2016
|
$
|
31,076
|
|
2015
|
30,095
|
|
|
Weighted-average interest rate during the year:
|
|
|
|
2016
|
0.01
|
%
|
|
2015
|
0.21
|
|
Note 8.
|
Share-Based Compensation Plan
|
|
December 31,
|
|||||||||||||||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|||||||||||||||||||||||||||
(Dollars in thousands)
|
Shares
|
|
Weighted-Average Grant Date Fair Value
|
|
Aggregate Value
|
|
Shares
|
|
Weighted-Average Grant Date Fair Value
|
|
Aggregate Value
|
|
Shares
|
|
Weighted-Average Grant Date Fair Value
|
|
Aggregate Value
|
|||||||||||||||
Non-vested at the beginning of the year
|
153,399
|
|
|
$
|
17.17
|
|
|
|
|
134,108
|
|
|
$
|
16.66
|
|
|
|
|
119,250
|
|
|
$
|
16.39
|
|
|
|
||||||
Granted
|
53,500
|
|
|
20.76
|
|
|
|
|
36,150
|
|
|
18.50
|
|
|
|
|
41,533
|
|
|
17.65
|
|
|
|
|||||||||
Vested
|
(53,908
|
)
|
|
16.88
|
|
|
|
|
(16,359
|
)
|
|
15.91
|
|
|
|
|
(15,425
|
)
|
|
15.59
|
|
|
|
|||||||||
Forfeited or expired
|
(2,250
|
)
|
|
19.91
|
|
|
|
|
(500
|
)
|
|
18.07
|
|
|
|
|
(11,250
|
)
|
|
16.05
|
|
|
|
|||||||||
Non-vested at end of the year
|
150,741
|
|
|
$
|
18.50
|
|
|
$
|
5,238
|
|
|
153,399
|
|
|
$
|
17.17
|
|
|
$
|
2,835
|
|
|
134,108
|
|
|
$
|
16.66
|
|
|
$
|
2,415
|
|
|
2016
|
|
2015
|
|
2014
|
|||||||||||||||
|
Shares
|
|
Weighted-
Average
Exercise
Price
|
|
Shares
|
|
Weighted-
Average
Exercise
Price
|
|
Shares
|
|
Weighted-
Average
Exercise
Price
|
|||||||||
Outstanding at beginning of year
|
30,012
|
|
|
$
|
14.00
|
|
|
30,012
|
|
|
$
|
14.00
|
|
|
58,513
|
|
|
$
|
15.30
|
|
Granted
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Exercised
|
(6,650
|
)
|
|
14.00
|
|
|
—
|
|
|
—
|
|
|
(25,501
|
)
|
|
14.00
|
|
|||
Forfeited or expired
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,000
|
)
|
|
39.40
|
|
|||
Outstanding at end of year
|
23,362
|
|
|
$
|
14.00
|
|
|
30,012
|
|
|
$
|
14.00
|
|
|
30,012
|
|
|
$
|
14.00
|
|
Options exercisable at year end
|
23,362
|
|
|
$
|
14.00
|
|
|
30,012
|
|
|
$
|
14.00
|
|
|
30,012
|
|
|
$
|
14.00
|
|
Range of Exercise Prices
|
|
Options Outstanding
|
|
Weighted-Average Remaining Contractual Life (years)
|
|
Options Exercisable
|
||||
$
|
14.00
|
|
|
18,362
|
|
|
2.22
|
|
18,362
|
|
$
|
14.00
|
|
|
5,000
|
|
|
2.85
|
|
5,000
|
|
$
|
14.00
|
|
|
23,362
|
|
|
2.36
|
|
23,362
|
|
Note 9.
|
Employee Benefit Plans
|
Note 10.
|
Income Taxes
|
(Dollars in thousands)
|
2016
|
|
2015
|
||||
Deferred tax assets:
|
|
|
|
||||
Allowance for loan losses
|
$
|
3,877
|
|
|
$
|
3,756
|
|
Deferred compensation
|
687
|
|
|
647
|
|
||
Interest rate swap
|
67
|
|
|
99
|
|
||
Other real estate owned
|
288
|
|
|
257
|
|
||
Securities available for sale
|
654
|
|
|
—
|
|
||
Property and equipment
|
—
|
|
|
49
|
|
||
Other
|
1,427
|
|
|
2,028
|
|
||
Total deferred tax assets
|
$
|
7,000
|
|
|
$
|
6,836
|
|
Deferred tax liabilities:
|
|
|
|
|
|
||
Deferred loan costs, net
|
$
|
526
|
|
|
$
|
317
|
|
Securities available for sale
|
—
|
|
|
965
|
|
||
Property and equipment
|
79
|
|
|
—
|
|
||
Total deferred tax liabilities
|
$
|
605
|
|
|
$
|
1,282
|
|
Net deferred tax assets
|
$
|
6,395
|
|
|
$
|
5,554
|
|
(Dollars in thousands)
|
2016
|
|
2015
|
|
2014
|
||||||
Current tax expense
|
$
|
2,067
|
|
|
$
|
2,606
|
|
|
$
|
1,160
|
|
Deferred tax expense
|
746
|
|
|
109
|
|
|
1,181
|
|
|||
Total income tax expense
|
$
|
2,813
|
|
|
$
|
2,715
|
|
|
$
|
2,341
|
|
(Dollars in thousands)
|
2016
|
|
2015
|
|
2014
|
||||||
Computed "expected" tax expense
|
$
|
3,698
|
|
|
$
|
3,585
|
|
|
$
|
3,374
|
|
Increase (decrease) in income taxes resulting from:
|
|
|
|
|
|
|
|
|
|||
Tax-exempt income
|
(796
|
)
|
|
(829
|
)
|
|
(959
|
)
|
|||
Low income housing tax credits
|
(408
|
)
|
|
(120
|
)
|
|
(211
|
)
|
|||
Merger related expenses
|
267
|
|
|
—
|
|
|
—
|
|
|||
Other, net
|
52
|
|
|
79
|
|
|
137
|
|
|||
|
$
|
2,813
|
|
|
$
|
2,715
|
|
|
$
|
2,341
|
|
Note 11.
|
Related Party Transactions
|
(Dollars in thousands)
|
2016
|
|
2015
|
||||
Balance, January 1
|
$
|
1,369
|
|
|
$
|
3,804
|
|
Decrease due to status changes
|
—
|
|
|
(2,375
|
)
|
||
Principal additions
|
352
|
|
|
439
|
|
||
Principal payments
|
(130
|
)
|
|
(499
|
)
|
||
Balance, December 31
|
$
|
1,591
|
|
|
$
|
1,369
|
|
Note 12.
|
Contingent Liabilities and Commitments
|
Note 13.
|
Earnings Per Share
|
|
2016
|
|
2015
|
|
2014
|
|||||||||||||||
|
Shares
|
|
Per Share Amount
|
|
Shares
|
|
Per Share Amount
|
|
Shares
|
|
Per Share Amount
|
|||||||||
Earnings per share, basic
|
7,107,403
|
|
|
$
|
1.13
|
|
|
7,147,390
|
|
|
$
|
1.10
|
|
|
7,106,171
|
|
|
$
|
1.07
|
|
Effect of dilutive securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Stock options
|
11,461
|
|
|
|
|
|
6,805
|
|
|
|
|
|
6,939
|
|
|
|
|
|||
Warrant (See note 23)
|
32,026
|
|
|
|
|
13,192
|
|
|
|
|
13,491
|
|
|
|
||||||
Earnings per share, diluted
|
7,150,890
|
|
|
$
|
1.13
|
|
|
7,167,387
|
|
|
$
|
1.09
|
|
|
7,126,601
|
|
|
$
|
1.06
|
|
Note 14.
|
Retained Earnings
|
Note 15.
|
Financial Instruments With Off-Balance Sheet Risk and Credit Risk
|
(Dollars in thousands)
|
2016
|
|
2015
|
||||
Financial instruments whose contract amounts represent credit risk:
|
|
|
|
|
|
||
Commitments to extend credit
|
$
|
132,669
|
|
|
$
|
153,806
|
|
Standby letters of credit
|
4,998
|
|
|
3,718
|
|
Note 16.
|
Fair Value Measurements
|
Level I.
|
Quoted prices are available in active markets for identical assets or liabilities as of the reported date.
|
Level II.
|
Pricing inputs are other than the quoted prices in active markets, which are either directly or indirectly observable as of the reported date. The nature of these assets and liabilities includes items for which quoted prices are available but traded less frequently and items that are fair-valued using other financial instruments, the parameters of which can be directly observed.
|
Level III.
|
Assets and liabilities that have little to no pricing observability as of the reported date. These items do not have two-way markets and are measured using management’s best estimate of fair value, where the inputs into the determination of fair value require significant management judgment or estimation.
|
(Dollars in thousands)
|
|
December 31, 2016
|
||||||||||||||
Description
|
|
Total
|
|
Level I
|
|
Level II
|
|
Level III
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
||||||||
U.S. government agencies
|
|
$
|
73,184
|
|
|
$
|
—
|
|
|
$
|
73,184
|
|
|
$
|
—
|
|
Obligations of states and political subdivisions
|
|
63,373
|
|
|
—
|
|
|
63,373
|
|
|
—
|
|
||||
Mortgage-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Agency
|
|
98,051
|
|
|
—
|
|
|
98,051
|
|
|
—
|
|
||||
Non-agency
|
|
9,933
|
|
|
—
|
|
|
9,933
|
|
|
—
|
|
||||
Other asset backed securities
|
|
41,605
|
|
|
—
|
|
|
41,605
|
|
|
—
|
|
||||
Corporate securities
|
|
15,421
|
|
|
—
|
|
|
15,421
|
|
|
—
|
|
||||
Interest rate swaps
|
|
44
|
|
|
—
|
|
|
44
|
|
|
—
|
|
||||
Interest rate cap
|
|
9
|
|
|
—
|
|
|
9
|
|
|
—
|
|
||||
Liabilities:
|
|
|
|
|
|
|
|
|
||||||||
Interest rate swaps
|
|
242
|
|
|
—
|
|
|
242
|
|
|
—
|
|
(Dollars in thousands)
|
|
December 31, 2015
|
||||||||||||||
Description
|
|
Total
|
|
Level I
|
|
Level II
|
|
Level III
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
||||||||
U.S. government agencies
|
|
$
|
78,940
|
|
|
$
|
—
|
|
|
$
|
78,940
|
|
|
$
|
—
|
|
Obligations of states and political subdivisions
|
|
75,593
|
|
|
—
|
|
|
75,593
|
|
|
—
|
|
||||
Mortgage-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Agency
|
|
131,661
|
|
|
—
|
|
|
131,661
|
|
|
—
|
|
||||
Non-agency
|
|
12,777
|
|
|
—
|
|
|
12,777
|
|
|
—
|
|
||||
Other asset backed securities
|
|
58,781
|
|
|
—
|
|
|
58,781
|
|
|
—
|
|
||||
Corporate securities
|
|
16,819
|
|
|
—
|
|
|
16,819
|
|
|
—
|
|
||||
Interest rate swaps
|
|
73
|
|
|
—
|
|
|
73
|
|
|
—
|
|
||||
Interest rate cap
|
|
39
|
|
|
—
|
|
|
39
|
|
|
—
|
|
||||
Liabilities:
|
|
|
|
|
|
|
|
|
||||||||
Interest rate swaps
|
|
370
|
|
|
—
|
|
|
370
|
|
|
—
|
|
(Dollars in thousands)
|
|
December 31, 2016
|
||||||||||||||
|
|
Total
|
|
Level I
|
|
Level II
|
|
Level III
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
||||||||
Impaired loans
|
|
$
|
6,298
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6,298
|
|
Other real estate owned
|
|
$
|
5,073
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,073
|
|
Repossessed assets
|
|
$
|
843
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
843
|
|
|
|
|
|
|
|
|
|
|
||||||||
(Dollars in thousands)
|
|
December 31, 2015
|
||||||||||||||
|
|
Total
|
|
Level I
|
|
Level II
|
|
Level III
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Impaired loans
|
|
$
|
9,018
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
9,018
|
|
Other real estate owned
|
|
$
|
3,345
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,345
|
|
Repossessed assets
|
|
$
|
1,043
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,043
|
|
2016
|
|
Fair Value
(in thousands)
|
|
Valuation Technique
|
|
Unobservable Inputs
|
|
Range
(Weighted Average)
|
||
Impaired loans
|
|
$
|
1,134
|
|
|
Appraisals
|
|
Discount to reflect current market conditions and estimated selling costs
|
|
0% - 100% (14%)
|
Impaired loans
|
|
$
|
5,164
|
|
|
Present value of cash flows
|
|
Discount rate
|
|
6% - 8% (6%)
|
Other real estate owned
|
|
$
|
5,073
|
|
|
Appraisals
|
|
Discount to reflect current market conditions and estimated selling costs
|
|
10%
|
Repossessed assets
|
|
$
|
843
|
|
|
Market analysis
|
|
Discount to reflect current market conditions and estimated selling costs
|
|
70%
|
2015
|
|
Fair Value
(in thousands)
|
|
Valuation Technique
|
|
Unobservable Inputs
|
|
Range
(Weighted Average)
|
||
Impaired loans
|
|
$
|
5,434
|
|
|
Appraisals
|
|
Discount to reflect current market conditions and estimated selling costs
|
|
0% - 100% (17%)
|
Impaired loans
|
|
$
|
3,584
|
|
|
Present value of cash flows
|
|
Discount rate
|
|
6% - 8% (7%)
|
Other real estate owned
|
|
$
|
3,345
|
|
|
Appraisals
|
|
Discount to reflect current market conditions and estimated selling costs
|
|
10%
|
Repossessed assets
|
|
$
|
1,043
|
|
|
Market analysis
|
|
Historical sales activity
|
|
50%
|
(Dollars in thousands)
|
December 31, 2016
|
||||||||||||||||||
|
|
|
|
|
Fair value measurements using:
|
||||||||||||||
|
Carrying
Amount |
|
Total Fair Value
|
|
Level I
|
|
Level II
|
|
Level III
|
||||||||||
Financial assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
28,544
|
|
|
$
|
28,544
|
|
|
$
|
28,544
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Securities held to maturity
|
10,683
|
|
|
10,095
|
|
|
—
|
|
|
10,095
|
|
|
—
|
|
|||||
Securities available for sale
|
301,567
|
|
|
301,567
|
|
|
—
|
|
|
301,567
|
|
|
—
|
|
|||||
Loans, net
|
848,693
|
|
|
852,280
|
|
|
—
|
|
|
—
|
|
|
852,280
|
|
|||||
Bank owned life insurance
|
23,925
|
|
|
23,925
|
|
|
—
|
|
|
23,925
|
|
|
—
|
|
|||||
Accrued interest receivable
|
5,093
|
|
|
5,093
|
|
|
—
|
|
|
5,093
|
|
|
—
|
|
|||||
Interest rate swaps
|
44
|
|
|
44
|
|
|
—
|
|
|
44
|
|
|
—
|
|
|||||
Interest rate cap
|
9
|
|
|
9
|
|
|
—
|
|
|
9
|
|
|
—
|
|
|||||
Financial liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Deposits
|
$
|
1,053,058
|
|
|
$
|
1,051,245
|
|
|
$
|
—
|
|
|
$
|
1,051,245
|
|
|
$
|
—
|
|
Securities sold under agreements to repurchase
|
34,864
|
|
|
34,864
|
|
|
—
|
|
|
34,864
|
|
|
—
|
|
|||||
FHLB borrowings
|
39,500
|
|
|
39,530
|
|
|
—
|
|
|
39,530
|
|
|
—
|
|
|||||
Subordinated notes
|
5,155
|
|
|
5,159
|
|
|
—
|
|
|
5,159
|
|
|
—
|
|
|||||
Accrued interest payable
|
387
|
|
|
387
|
|
|
—
|
|
|
387
|
|
|
—
|
|
|||||
Interest rate swaps
|
242
|
|
|
242
|
|
|
—
|
|
|
242
|
|
|
—
|
|
(Dollars in thousands)
|
December 31, 2015
|
||||||||||||||||||
|
|
|
|
|
Fair value measurements using:
|
||||||||||||||
|
Carrying
Amount |
|
Total Fair Value
|
|
Level I
|
|
Level II
|
|
Level III
|
||||||||||
Financial assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
39,228
|
|
|
$
|
39,228
|
|
|
$
|
39,228
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Securities held to maturity
|
4,207
|
|
|
4,163
|
|
|
—
|
|
|
4,163
|
|
|
—
|
|
|||||
Securities available for sale
|
374,571
|
|
|
374,571
|
|
|
—
|
|
|
374,571
|
|
|
—
|
|
|||||
Loans, net
|
794,635
|
|
|
802,535
|
|
|
—
|
|
|
—
|
|
|
802,535
|
|
|||||
Bank owned life insurance
|
23,273
|
|
|
23,273
|
|
|
—
|
|
|
23,273
|
|
|
—
|
|
|||||
Accrued interest receivable
|
5,204
|
|
|
5,204
|
|
|
—
|
|
|
5,204
|
|
|
—
|
|
|||||
Interest rate swaps
|
73
|
|
|
73
|
|
|
—
|
|
|
73
|
|
|
—
|
|
|||||
Interest rate cap
|
39
|
|
|
39
|
|
|
—
|
|
|
39
|
|
|
—
|
|
|||||
Financial liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Deposits
|
$
|
1,040,800
|
|
|
$
|
1,040,016
|
|
|
$
|
—
|
|
|
$
|
1,040,016
|
|
|
$
|
—
|
|
Securities sold under agreements to repurchase
|
26,869
|
|
|
26,869
|
|
|
—
|
|
|
26,869
|
|
|
—
|
|
|||||
FHLB borrowings
|
85,000
|
|
|
85,033
|
|
|
—
|
|
|
85,033
|
|
|
—
|
|
|||||
Subordinated notes
|
5,155
|
|
|
5,157
|
|
|
—
|
|
|
5,157
|
|
|
—
|
|
|||||
Accrued interest payable
|
410
|
|
|
410
|
|
|
—
|
|
|
410
|
|
|
—
|
|
|||||
Interest rate swaps
|
370
|
|
|
370
|
|
|
—
|
|
|
370
|
|
|
—
|
|
Note 17.
|
Capital Requirements
|
|
Actual
|
|
Minimum Capital Requirement
|
|
Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions
|
||||||||||||
(Dollars in thousands)
|
Amount
|
|
Ratio
|
|
Amount
|
|
Ratio
|
|
Amount
|
|
Ratio
|
||||||
As of December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total Capital (to Risk- Weighted Assets):
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Consolidated
|
$
|
139,419
|
|
|
17.9%
|
|
$
|
62,436
|
|
|
8.0%
|
|
N/A
|
|
|
N/A
|
|
Middleburg Bank
|
131,725
|
|
|
17.0%
|
|
61,994
|
|
|
8.0%
|
|
$
|
77,492
|
|
|
10.0%
|
||
Tier 1 Capital (to Risk- Weighted Assets):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Consolidated
|
$
|
129,642
|
|
|
16.6%
|
|
$
|
46,827
|
|
|
6.0%
|
|
N/A
|
|
|
N/A
|
|
Middleburg Bank
|
122,016
|
|
|
15.8%
|
|
46,495
|
|
|
6.0%
|
|
$
|
61,994
|
|
|
8.0%
|
||
Common Equity Tier 1 Capital (to Risk-Weighted Assets):
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Consolidated
|
$
|
124,642
|
|
|
16.0%
|
|
$
|
35,121
|
|
|
4.5%
|
|
N/A
|
|
|
N/A
|
|
Middleburg Bank
|
122,016
|
|
|
15.8%
|
|
34,872
|
|
|
4.5%
|
|
$
|
50,370
|
|
|
6.5%
|
||
Tier 1 Capital (to Average Assets):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Consolidated
|
$
|
129,642
|
|
|
10.0%
|
|
$
|
52,142
|
|
|
4.0%
|
|
N/A
|
|
|
N/A
|
|
Middleburg Bank
|
122,016
|
|
|
9.4%
|
|
51,909
|
|
|
4.0%
|
|
$
|
64,886
|
|
|
5.0%
|
||
|
|
|
|
|
|
|
|
|
|
|
|
||||||
As of December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Total Capital (to Risk- Weighted Assets):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Consolidated
|
$
|
132,481
|
|
|
17.5%
|
|
$
|
60,495
|
|
|
8.0%
|
|
N/A
|
|
|
N/A
|
|
Middleburg Bank
|
127,418
|
|
|
17.0%
|
|
60,055
|
|
|
8.0%
|
|
$
|
75,068
|
|
|
10.0%
|
||
Tier 1 Capital (to Risk- Weighted Assets):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Consolidated
|
$
|
123,008
|
|
|
16.3%
|
|
$
|
45,371
|
|
|
6.0%
|
|
N/A
|
|
|
N/A
|
|
Middleburg Bank
|
118,013
|
|
|
15.7%
|
|
45,041
|
|
|
6.0%
|
|
$
|
60,055
|
|
|
8.0%
|
||
Common Equity Tier 1 Capital (to Risk-Weighted Assets):
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Consolidated
|
$
|
118,008
|
|
|
15.6%
|
|
$
|
34,028
|
|
|
4.5%
|
|
N/A
|
|
|
N/A
|
|
Middleburg Bank
|
118,013
|
|
|
15.7%
|
|
33,781
|
|
|
4.5%
|
|
$
|
48,794
|
|
|
6.5%
|
||
Tier 1 Capital (to Average Assets):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Consolidated
|
$
|
123,008
|
|
|
9.6%
|
|
$
|
51,301
|
|
|
4.0%
|
|
N/A
|
|
|
N/A
|
|
Middleburg Bank
|
118,013
|
|
|
9.2%
|
|
51,067
|
|
|
4.0%
|
|
$
|
63,834
|
|
|
5.0%
|
Note 18.
|
Goodwill and Intangibles Assets
|
|
|
December 31, 2016
|
|
December 31, 2015
|
||||||||||||
(Dollars In thousands)
|
|
Gross Carrying Value
|
|
Accumulated Amortization
|
|
Gross Carrying Value
|
|
Accumulated Amortization
|
||||||||
Identifiable intangibles
|
|
$
|
3,734
|
|
|
$
|
3,690
|
|
|
$
|
3,734
|
|
|
$
|
3,519
|
|
Unamortizable goodwill
|
|
3,421
|
|
|
—
|
|
|
3,421
|
|
|
—
|
|
(Dollars in thousands)
|
|||
2017
|
$
|
44
|
|
|
$
|
44
|
|
Note 19.
|
Subordinated Notes
|
Note 20.
|
Ownership of Southern Trust Mortgage
|
Note 21.
|
Condensed Financial Information – Parent Corporation Only
|
BALANCE SHEETS
|
|||||||
|
December 31,
|
||||||
(Dollars in thousands)
|
2016
|
|
2015
|
||||
ASSETS
|
|
|
|
||||
Cash on deposit with subsidiary bank
|
$
|
2,154
|
|
|
$
|
1,403
|
|
Investment in subsidiaries
|
126,694
|
|
|
125,900
|
|
||
Other assets
|
3,199
|
|
|
1,686
|
|
||
TOTAL ASSETS
|
$
|
132,047
|
|
|
$
|
128,989
|
|
LIABILITIES
|
|
|
|
|
|
||
Subordinated notes
|
$
|
5,155
|
|
|
$
|
5,155
|
|
Other liabilities
|
213
|
|
|
280
|
|
||
TOTAL LIABILITIES
|
5,368
|
|
|
5,435
|
|
||
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
||
Common stock
|
17,636
|
|
|
17,330
|
|
||
Capital surplus
|
45,688
|
|
|
44,155
|
|
||
Retained earnings
|
64,755
|
|
|
60,392
|
|
||
Accumulated other comprehensive income (loss), net
|
(1,400
|
)
|
|
1,677
|
|
||
TOTAL SHAREHOLDERS' EQUITY
|
126,679
|
|
|
123,554
|
|
||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
|
$
|
132,047
|
|
|
$
|
128,989
|
|
STATEMENTS OF INCOME
|
|||||||||||
|
Year End December 31,
|
||||||||||
(Dollars in thousands)
|
2016
|
|
2015
|
|
2014
|
||||||
INCOME:
|
|
|
|
|
|
||||||
Dividends from subsidiaries
|
$
|
6,870
|
|
|
$
|
5,383
|
|
|
$
|
3,440
|
|
Interest and dividends from investments
|
—
|
|
|
—
|
|
|
15
|
|
|||
Other income
|
2
|
|
|
17
|
|
|
—
|
|
|||
Total income
|
6,872
|
|
|
5,400
|
|
|
3,455
|
|
|||
EXPENSES:
|
|
|
|
|
|
|
|
|
|||
Salaries and employee benefits
|
1,240
|
|
|
919
|
|
|
746
|
|
|||
Legal and advisory fees
|
1,506
|
|
|
164
|
|
|
91
|
|
|||
Directors fees
|
352
|
|
|
274
|
|
|
280
|
|
|||
Interest expense
|
280
|
|
|
279
|
|
|
279
|
|
|||
Other
|
426
|
|
|
416
|
|
|
366
|
|
|||
Total expenses
|
3,804
|
|
|
2,052
|
|
|
1,762
|
|
|||
Income before allocated tax benefits and undistributed income of subsidiaries
|
3,068
|
|
|
3,348
|
|
|
1,693
|
|
|||
Income tax benefit
|
(1,081
|
)
|
|
(715
|
)
|
|
(753
|
)
|
|||
Income before equity in undistributed income of subsidiaries
|
4,149
|
|
|
4,063
|
|
|
2,446
|
|
|||
Equity in undistributed income of subsidiaries
|
3,915
|
|
|
3,767
|
|
|
5,138
|
|
|||
Net income
|
$
|
8,064
|
|
|
$
|
7,830
|
|
|
$
|
7,584
|
|
STATEMENTS OF CASH FLOWS
|
|||||||||||
|
December 31,
|
||||||||||
(Dollars in thousands)
|
2016
|
|
2015
|
|
2014
|
||||||
Cash Flows from Operating Activities
|
|
||||||||||
Net income
|
$
|
8,064
|
|
|
$
|
7,830
|
|
|
$
|
7,584
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|||
Equity in undistributed earnings of subsidiaries
|
(3,915
|
)
|
|
(3,767
|
)
|
|
(5,138
|
)
|
|||
Share-based compensation
|
925
|
|
|
605
|
|
|
426
|
|
|||
(Increase) decrease in other assets
|
(1,469
|
)
|
|
957
|
|
|
(1,099
|
)
|
|||
(Decrease) increase in other liabilities
|
(67
|
)
|
|
13
|
|
|
213
|
|
|||
Net cash provided by operating activities
|
3,538
|
|
|
5,638
|
|
|
1,986
|
|
|||
Cash Flows from Investing Activities
|
|
|
|
|
|
|
|
|
|||
Proceeds from sales, calls and maturities of available for sale securities
|
—
|
|
|
—
|
|
|
44
|
|
|||
Net cash provided by investing activities
|
—
|
|
|
—
|
|
|
44
|
|
|||
Cash Flows from Financing Activities
|
|
|
|
|
|
|
|
|
|||
Net proceeds from issuance of common stock
|
1,742
|
|
|
—
|
|
|
394
|
|
|||
Cash dividends paid on common stock
|
(3,701
|
)
|
|
(3,292
|
)
|
|
(2,419
|
)
|
|||
Repurchases of stock
|
(828
|
)
|
|
(1,506
|
)
|
|
(88
|
)
|
|||
Net cash used in financing activities
|
(2,787
|
)
|
|
(4,798
|
)
|
|
(2,113
|
)
|
|||
Increase (decrease) in cash and cash equivalents
|
751
|
|
|
840
|
|
|
(83
|
)
|
|||
Cash and Cash Equivalents at beginning of year
|
1,403
|
|
|
563
|
|
|
646
|
|
|||
Cash and Cash Equivalents at end of year
|
$
|
2,154
|
|
|
$
|
1,403
|
|
|
$
|
563
|
|
Note 22.
|
Segment Reporting
|
|
2016
|
||||||||||||||||||
(Dollars in thousands)
|
Commercial & Retail Banking
|
|
Wealth Management
|
|
Mortgage Banking
|
|
Intercompany Eliminations
|
|
Consolidated
|
||||||||||
Revenues:
|
|
||||||||||||||||||
Interest income
|
$
|
43,365
|
|
|
$
|
10
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
43,375
|
|
Trust services income
|
—
|
|
|
4,806
|
|
|
—
|
|
|
(163
|
)
|
|
4,643
|
|
|||||
Other income
|
6,204
|
|
|
—
|
|
|
—
|
|
|
(109
|
)
|
|
6,095
|
|
|||||
Total operating income
|
49,569
|
|
|
4,816
|
|
|
—
|
|
|
(272
|
)
|
|
54,113
|
|
|||||
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Interest expense
|
4,424
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,424
|
|
|||||
Salaries and employee benefits
|
16,473
|
|
|
2,284
|
|
|
—
|
|
|
—
|
|
|
18,757
|
|
|||||
Provision for loan losses
|
1,853
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,853
|
|
|||||
Other expense
|
17,556
|
|
|
918
|
|
|
—
|
|
|
(272
|
)
|
|
18,202
|
|
|||||
Total operating expenses
|
40,306
|
|
|
3,202
|
|
|
—
|
|
|
(272
|
)
|
|
43,236
|
|
|||||
Income before income taxes
|
9,263
|
|
|
1,614
|
|
|
—
|
|
|
—
|
|
|
10,877
|
|
|||||
Income tax expense
|
2,203
|
|
|
610
|
|
|
—
|
|
|
—
|
|
|
2,813
|
|
|||||
Net income
|
$
|
7,060
|
|
|
$
|
1,004
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8,064
|
|
Total assets
|
$
|
1,270,222
|
|
|
$
|
6,693
|
|
|
$
|
—
|
|
|
$
|
(4,272
|
)
|
|
$
|
1,272,643
|
|
Capital expenditures
|
$
|
978
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
978
|
|
Goodwill and other intangibles
|
$
|
—
|
|
|
$
|
3,465
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,465
|
|
|
2015
|
||||||||||||||||||
(Dollars in thousands)
|
Commercial & Retail Banking
|
|
Wealth Management
|
|
Mortgage Banking
|
|
Intercompany Eliminations
|
|
Consolidated
|
||||||||||
Revenues:
|
|
||||||||||||||||||
Interest income
|
$
|
42,270
|
|
|
$
|
11
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
42,281
|
|
Trust services income
|
—
|
|
|
4,951
|
|
|
—
|
|
|
(166
|
)
|
|
4,785
|
|
|||||
Other income
|
5,605
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,605
|
|
|||||
Total operating income
|
47,875
|
|
|
4,962
|
|
|
—
|
|
|
(166
|
)
|
|
52,671
|
|
|||||
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Interest expense
|
4,207
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,207
|
|
|||||
Salaries and employee benefits
|
16,130
|
|
|
2,305
|
|
|
—
|
|
|
—
|
|
|
18,435
|
|
|||||
Provision for loan losses
|
2,293
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,293
|
|
|||||
Other expense
|
16,237
|
|
|
1,120
|
|
|
—
|
|
|
(166
|
)
|
|
17,191
|
|
|||||
Total operating expenses
|
38,867
|
|
|
3,425
|
|
|
—
|
|
|
(166
|
)
|
|
42,126
|
|
|||||
Income before income taxes
|
9,008
|
|
|
1,537
|
|
|
—
|
|
|
—
|
|
|
10,545
|
|
|||||
Income tax expense
|
2,131
|
|
|
584
|
|
|
—
|
|
|
—
|
|
|
2,715
|
|
|||||
Net income
|
$
|
6,877
|
|
|
$
|
953
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7,830
|
|
Total assets
|
$
|
1,291,708
|
|
|
$
|
6,700
|
|
|
$
|
—
|
|
|
$
|
(3,545
|
)
|
|
$
|
1,294,863
|
|
Capital expenditures
|
$
|
2,137
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,137
|
|
Goodwill and other intangibles
|
$
|
—
|
|
|
$
|
3,636
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,636
|
|
|
2014
|
||||||||||||||||||
(Dollars in thousands)
|
Commercial & Retail Banking
|
|
Wealth Management
|
|
Mortgage Banking
|
|
Intercompany Eliminations
|
|
Consolidated
|
||||||||||
Revenues:
|
|
||||||||||||||||||
Interest income
|
$
|
43,149
|
|
|
$
|
14
|
|
|
$
|
450
|
|
|
$
|
(288
|
)
|
|
$
|
43,325
|
|
Trust services income
|
—
|
|
|
4,516
|
|
|
—
|
|
|
(154
|
)
|
|
4,362
|
|
|||||
Other income
|
5,349
|
|
|
—
|
|
|
5,121
|
|
|
(46
|
)
|
|
10,424
|
|
|||||
Total operating income
|
48,498
|
|
|
4,530
|
|
|
5,571
|
|
|
(488
|
)
|
|
58,111
|
|
|||||
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Interest expense
|
5,227
|
|
|
—
|
|
|
304
|
|
|
(288
|
)
|
|
5,243
|
|
|||||
Salaries and employee benefits
|
16,567
|
|
|
2,262
|
|
|
3,772
|
|
|
—
|
|
|
22,601
|
|
|||||
Provision for loan losses
|
1,926
|
|
|
—
|
|
|
34
|
|
|
—
|
|
|
1,960
|
|
|||||
Other expense
|
15,818
|
|
|
1,140
|
|
|
1,722
|
|
|
(200
|
)
|
|
18,480
|
|
|||||
Total operating expenses
|
39,538
|
|
|
3,402
|
|
|
5,832
|
|
|
(488
|
)
|
|
48,284
|
|
|||||
Income before income taxes and non-controlling interest
|
8,960
|
|
|
1,128
|
|
|
(261
|
)
|
|
—
|
|
|
9,827
|
|
|||||
Income tax expense
|
1,894
|
|
|
447
|
|
|
—
|
|
|
—
|
|
|
2,341
|
|
|||||
Net income
|
7,066
|
|
|
681
|
|
|
(261
|
)
|
|
—
|
|
|
7,486
|
|
|||||
Non-controlling interest in consolidated subsidiary
|
—
|
|
|
—
|
|
|
98
|
|
|
—
|
|
|
98
|
|
|||||
Net income attributable to Middleburg Financial Corporation
|
$
|
7,066
|
|
|
$
|
681
|
|
|
$
|
(163
|
)
|
|
$
|
—
|
|
|
$
|
7,584
|
|
Total assets
|
$
|
1,218,452
|
|
|
$
|
7,152
|
|
|
$
|
—
|
|
|
$
|
(2,747
|
)
|
|
$
|
1,222,857
|
|
Capital expenditures
|
$
|
911
|
|
|
$
|
6
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
920
|
|
Goodwill and other intangibles
|
$
|
—
|
|
|
$
|
3,807
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,807
|
|
Note 23.
|
Capital Purchase Program and Stock Warrant
|
Note 24.
|
Derivatives
|
|
December 31, 2016
|
||||||||||||||||||||
(Dollars in thousands)
|
Positions (#)
|
|
Notional Amount
|
|
Asset
|
|
Liability
|
|
Receive Rate
|
|
Pay Rate
|
|
Life (Years)
|
||||||||
Pay fixed - receive floating interest rate swap
|
1
|
|
$
|
5,155
|
|
|
$
|
—
|
|
|
$
|
160
|
|
|
0.87
|
%
|
|
2.59
|
%
|
|
3.8
|
Pay fixed - receive floating interest rate swap
|
1
|
|
$
|
10,000
|
|
|
$
|
—
|
|
|
$
|
38
|
|
|
0.60
|
%
|
|
1.43
|
%
|
|
2.0
|
|
December 31, 2015
|
||||||||||||||||||||
(Dollars in thousands)
|
Positions (#)
|
|
Notional Amount
|
|
Asset
|
|
Liability
|
|
Receive Rate
|
|
Pay Rate
|
|
Life (Years)
|
||||||||
Pay fixed - receive floating interest rate swap
|
1
|
|
$
|
5,155
|
|
|
$
|
—
|
|
|
$
|
226
|
|
|
0.32
|
%
|
|
2.59
|
%
|
|
4.8
|
Pay fixed - receive floating interest rate swap
|
1
|
|
$
|
10,000
|
|
|
$
|
—
|
|
|
$
|
71
|
|
|
0.23
|
%
|
|
1.43
|
%
|
|
3.0
|
|
December 31, 2016
|
|||||||||||||||||||||
(Dollars in thousands)
|
Positions (#)
|
|
Notional Amount
|
|
Asset
|
|
Liability
|
|
Receive Rate
|
|
Pay Rate
|
|
Life (Years)
|
|||||||||
Pay fixed - receive floating interest rate swap
|
1
|
|
|
$
|
3,508
|
|
|
$
|
15
|
|
|
$
|
—
|
|
|
1 month LIBOR plus 200 BP
|
|
|
3.90
|
%
|
|
10.9
|
Pay fixed - receive floating interest rate swap
|
1
|
|
|
1,663
|
|
|
—
|
|
|
29
|
|
|
1 month LIBOR plus 180 BP
|
|
|
4.09
|
%
|
|
7.9
|
|||
Pay floating - receive fixed interest rate swap
|
1
|
|
|
3,508
|
|
|
—
|
|
|
15
|
|
|
3.90
|
%
|
|
1 month LIBOR plus 200 BP
|
|
|
10.9
|
|||
Pay floating - receive fixed interest rate swap
|
1
|
|
|
1,663
|
|
|
29
|
|
|
—
|
|
|
4.09
|
%
|
|
1 month LIBOR plus 180 BP
|
|
|
7.9
|
|||
Total derivatives not designated
|
|
|
$
|
10,342
|
|
|
$
|
44
|
|
|
$
|
44
|
|
|
|
|
|
|
|
|
December 31, 2015
|
|||||||||||||||||||||
(Dollars in thousands)
|
Positions (#)
|
|
Notional Amount
(in thousands)
|
|
Asset
|
|
Liability
|
|
Receive Rate
|
|
Pay Rate
|
|
Life (Years)
|
|||||||||
Pay fixed - receive floating interest rate swap
|
1
|
|
|
$
|
3,760
|
|
|
$
|
—
|
|
|
$
|
21
|
|
|
1 month LIBOR plus 200 BP
|
|
|
3.90
|
%
|
|
11.9
|
Pay fixed - receive floating interest rate swap
|
1
|
|
|
1,706
|
|
|
—
|
|
|
52
|
|
|
1 month LIBOR plus 180 BP
|
|
|
4.09
|
%
|
|
8.9
|
|||
Pay floating - receive fixed interest rate swap
|
1
|
|
|
3,760
|
|
|
21
|
|
|
—
|
|
|
3.90
|
%
|
|
1 month LIBOR plus 200 BP
|
|
|
11.9
|
|||
Pay floating - receive fixed interest rate swap
|
1
|
|
|
1,706
|
|
|
52
|
|
|
—
|
|
|
4.09
|
%
|
|
1 month LIBOR plus 180 BP
|
|
|
8.9
|
|||
Total derivatives not designated
|
|
|
$
|
10,932
|
|
|
$
|
73
|
|
|
$
|
73
|
|
|
|
|
|
|
|
December 31, 2016
|
|||||||||||||||||||||||
(Dollars in thousands)
|
|||||||||||||||||||||||
Notional Amount
|
|
Termination Date
|
|
3-Month LIBOR Strike Rate
|
|
Premium Paid
|
|
Unamortized Premium at December 31, 2016
|
|
Fair Value
December 31, 2016
|
|
Cumulative Cash Flows Received
|
|||||||||||
$
|
10,000
|
|
|
September 8, 2018
|
|
2.00
|
%
|
|
$
|
70
|
|
|
$
|
70
|
|
|
$
|
9
|
|
|
$
|
—
|
|
December 31, 2015
|
||||||||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||||
Notional Amount
|
|
Termination Date
|
|
3-Month LIBOR Strike Rate
|
|
Premium Paid
|
|
Unamortized Premium at December 31, 2015
|
|
Fair Value
December 31, 2015
|
|
Cumulative Cash Flows Received
|
||||||||||
$
|
10,000
|
|
|
September 8, 2018
|
|
2.00
|
%
|
|
$
|
70
|
|
|
$
|
70
|
|
|
$
|
39
|
|
|
—
|
|
Note 25.
|
Accumulated Other Comprehensive Income (Loss), Net
|
(Dollars in thousands)
|
Unrealized Gains (Losses) on Securities
|
|
Cash Flow Hedges
|
|
Accumulated Other Comprehensive Income (Loss), Net
|
||||||
Balance December 31, 2013
|
$
|
261
|
|
|
$
|
(29
|
)
|
|
$
|
232
|
|
Unrealized holding gains (net of tax, $1,979)
|
3,841
|
|
|
—
|
|
|
3,841
|
|
|||
Reclassification adjustment (net of tax, $63)
|
(123
|
)
|
|
—
|
|
|
(123
|
)
|
|||
Unrealized gains on interest rate swaps (net of tax, $82)
|
—
|
|
|
(160
|
)
|
|
(160
|
)
|
|||
Reclassification adjustment (net of tax, $2)
|
—
|
|
|
4
|
|
|
4
|
|
|||
Balance December 31, 2014
|
3,979
|
|
|
(185
|
)
|
|
3,794
|
|
|||
Unrealized holding losses (net of tax, $1,037)
|
(2,015
|
)
|
|
—
|
|
|
(2,015
|
)
|
|||
Reclassification adjustment (net of tax, $48)
|
(92
|
)
|
|
—
|
|
|
(92
|
)
|
|||
Unrealized gains on interest rate swaps (net of tax, $3)
|
—
|
|
|
(6
|
)
|
|
(6
|
)
|
|||
Reclassification adjustment (net of tax, $2)
|
—
|
|
|
(4
|
)
|
|
(4
|
)
|
|||
Balance December 31, 2015
|
1,872
|
|
|
(195
|
)
|
|
1,677
|
|
|||
Unrealized holding losses (net of tax, $1,091)
|
(2,116
|
)
|
|
—
|
|
|
(2,116
|
)
|
|||
Reclassification adjustment (net of tax, $528)
|
(1,026
|
)
|
|
—
|
|
|
(1,026
|
)
|
|||
Unrealized losses on interest rate swaps (net of tax, ($34))
|
—
|
|
|
65
|
|
|
65
|
|
|||
Balance December 31, 2016
|
$
|
(1,270
|
)
|
|
$
|
(130
|
)
|
|
$
|
(1,400
|
)
|
Details about
Accumulated Other
Comprehensive Income (Loss)
|
Amount Reclassified from
Accumulated Other
Comprehensive Income (Loss)
|
Affected Line Item in the Consolidated Statements of Income
|
|||||||||||
(Dollars in thousands)
|
2016
|
|
2015
|
|
2014
|
|
|||||||
Securities available for sale
(1)
:
|
|
|
|
|
|
|
|||||||
Net securities gains reclassified into earnings
|
$
|
(1,554
|
)
|
|
$
|
(140
|
)
|
|
$
|
(186
|
)
|
Gains on sales of securities available for sale, net
|
|
Related income tax expense
|
528
|
|
|
48
|
|
|
63
|
|
Income tax expense
|
||||
Derivatives
(2)
:
|
|
|
|
|
|
|
|||||||
(Gain) loss on interest rate swap ineffectiveness
|
—
|
|
|
(6
|
)
|
|
6
|
|
Other operating expense
|
||||
Related income tax benefit
|
—
|
|
|
2
|
|
|
(2
|
)
|
Income tax expense
|
||||
Net effect on accumulated other comprehensive income (loss) for the period
|
(1,026
|
)
|
|
(96
|
)
|
|
(119
|
)
|
Net of tax
|
||||
Total reclassifications for the period
|
$
|
(1,026
|
)
|
|
$
|
(96
|
)
|
|
$
|
(119
|
)
|
Net of tax
|
Note 26.
|
Other Real Estate Owned ("OREO")
|
(Dollars in thousands)
|
December 31, 2016
|
|
December 31, 2015
|
||||
Balance at the beginning of year, net
|
$
|
3,345
|
|
|
$
|
4,051
|
|
Transfers from loans, net
|
2,645
|
|
|
287
|
|
||
Purchased loans
|
40
|
|
|
—
|
|
||
Sales proceeds
|
(713
|
)
|
|
(814
|
)
|
||
Gain (loss) on disposition
|
66
|
|
|
(100
|
)
|
||
Less valuation adjustments
|
(310
|
)
|
|
(79
|
)
|
||
Balance at the end of year, net
|
$
|
5,073
|
|
|
$
|
3,345
|
|
(Dollars in thousands)
|
December 31, 2016
|
|
December 31, 2015
|
||||
Real estate loans:
|
|
|
|
||||
Construction
|
$
|
946
|
|
|
$
|
853
|
|
Secured by 1-4 family residential
|
3,767
|
|
|
1,958
|
|
||
Other real estate loans
|
360
|
|
|
534
|
|
||
Total real estate loans
|
$
|
5,073
|
|
|
$
|
3,345
|
|
Note 27.
|
Low Income Housing Tax Credits
|
1 Year Middleburg Financial Corp. Chart |
1 Month Middleburg Financial Corp. Chart |
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